CMS: Pre-Claim Could Cost Home Health Industry $40 Million Annually

The Centers for Medicare & Medicaid Services (CMS) has—once again—identified Illinois as ground zero for its newly proposed trial run of the pre-claim review demonstration (PCRD) for home health. Other key details of the resurrected model are also starting to emerge, including the proposal’s potential $40 million annual price tag for home health agencies.

Under CMS’ proposed demonstration, announced late Tuesday, home health providers will have to show Medicare compliance by participating in either 100% pre-claim review or 100% post-payment review until they reach a target affirmation rate of 90%, based on a minimum of 10 pre-claim requests or claims submitted.

Once that target is hit, providers can opt out of ubiquitous claims review and, instead, accept a 5% spot check to ensure continued compliance. Home health agencies can also, alternatively, continue participating in claims review based on a statistically valid random sample, according to CMS.


Similar to the first iteration of PCRD—suspended in April 2017 because of widespread problems in Illinois—the new CMS proposal lets providers forgo reviews by taking a 25% payment reduction on all claims submitted for home health services. CMS has dubbed its new proposal “the Review Choice Demonstration,” but it’s effectively a change in name only, home health advocates argue.

“When we look at what’s come out, it really seems like not much more than a regurgitation of what was pre-claim review, even with the new options that are there,” Bill Dombi, president of the National Association for Home Care & Hospice (NAHC), told Home Health Care News. “The new option of post-pay review has its benefits—and its burdens, too—but it’s still an intense, complex review.”

New details emerge 


CMS has started to slowly release more details since announcing its Review Choice Demonstration proposal earlier this week.

The proposal calls for the five-year demonstration to begin in Illinois, later expanding to Ohio and North Carolina, then Texas and Florida. Perhaps most notably, CMS has the option to further expand the demonstration into other states under the jurisdiction of Medicare Administrative Contractor (MAC) Palmetto/JM, putting nearly one-third of the United States squarely in the demonstration’s sights.

Illinois, Ohio, North Carolina, Texas and Florida were picked for the demonstration because they are “known areas of fraudulent behavior” and have been found to either have high home health improper payment rates or high denial rates, according to CMS. Over the past several years, CMS’ Comprehensive Error Rate Testing (CERT) program has found the national home health improper payment rate to be between 32% and 59%.

CMS initially launched pre-claim review in Illinois in August 2016. CMS has not specifically stated why it has again targeted Illinois as the launch state.

The demonstration will begin no earlier than Oct. 1 of this year, according to CMS.

“Nothing was seemingly learned from the Illinois experience that’s reflected in this new model,” Dombi said. “And it’s hard to imagine that nothing was learned from it.”

Analyzing costs 

When PCRD was originally introduced in Illinois, home health agencies had to, at times, hire extra staff just to help with the added paperwork and processing requirements. If often took agencies more than an hour to put together initial pre-claim review submissions, with revisions routinely taking more than an hour, too, Joy Cameron, vice president of policy and innovation for ElevatingHOME, told HHCN.

“Agencies were hiring clinicians just to do administrative work,” Cameron said. “I hate to see high-qualified clinicians doing paperwork and not caring for patients.”

CMS estimates its new proposal would cost home health agencies in Illinois, Ohio, North Carolina, Florida and Texas about $24 million per year in extra administrative burden. If expanded to the entire Palmetto/JM jurisdiction, though, that cost would swell to roughly $40 million per year. CMS came up with its estimates under the presumption that submissions and resubmissions would only take 30 minutes to complete.

The federal cost associated with performing review for home health services under the revised demonstration would be about $393 million during the entire five-year demonstration period, according to CMS.

“We took a position back in 2016, when [pre-claim review] was first introduced, opposing it,” David Totaro, chief government affairs officer for privately held Bayada Home Health Care, told HHCN said. “It seems to be, in review of what was just introduced, that it doesn’t seem to be any different. There were some minor changes, but it still seems very cumbersome to home health agencies.”

Other home health providers have, so far, largely declined to comment on the pre-claim review proposal as they await further details.

More information will be released in coming months, a CMS spokesperson told HHCN via email.

Written by Robert Holly

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