This Critical Combo Could ‘Blow Up’ Home Health Agency Revenue Cycles

The Review Choice Demonstration (RCD) for Illinois home health agencies started on Saturday, with more than three-quarters of providers taking the pre-claim review route.

For the most part, affected agencies have expressed confidence moving forward under RCD, an initiative from the Centers for Medicare & Medicaid Services (CMS) meant to curb improper billing. The bigger concern, agency owners and operators say, is how RCD will play out after the Patient-Driven Groupings Model (PDGM) goes live.

“It’s going to blow up the revenue cycle of businesses,” Peter Miska — owner of Burr Ridge, Illinois-based Phoenix Home Care — told Home Health Care News. “There’s going to be cash-flow issues everywhere.”


RCD — set to launch in Ohio, Texas, North Carolina and Florida after Illinois — requires participating agencies to show compliance with Medicare rules through either pre-claim or post-payment review processes. Agencies can also opt for minimal post-payment review with a 25% payment reduction — or pick from additional choices if they’ve demonstrated strong Medicare compliance.

Set for a Jan. 1 implementation date, PDGM is the most significant change to how home health providers are reimbursed in roughly two decades. Once PDGM kicks in, providers should expect a 12% to 15% reduction in cash flow in January and a more than 20% reduction in February, experts predict.

“[It will be] March before you see the light of day,” Melinda Gaboury, co-founder and CEO of consulting firm Healthcare Provider Solutions Inc., said at the 2019 Illinois HomeCare & Hospice Council leadership conference. “So if you are a cash strapped agency already, there should be some specific cash flow planning before Jan. 1.”


To withstand the critical RCD-PDGM combination, home health providers should try to get their Request for Anticipated Payment (RAP) claims down as quickly as possible, according to Miska, whose independently owned agency provides a mix of nursing and therapy services throughout eight Chicago-area counties. Phoenix Home Care achieved a 100% affirmation rate under the previous Pre-Claim Review Demonstration (PCRD), so it’s taking the same pre-claim path under RCD, he said.

“It’s going to be interesting to see in the next 12 to 24 months who is going to stay in the business — hospital-based agencies included,” Miska said.

In fiscal year 2018, improper Medicare fee-for-service payments totaled $31.6 billion, according to federal watchdog the Government Accountability Office. Home health improper payments totaled at least $3.2 billion.

CMS has long tried to lower those figures. With that in mind, it was surprising to see regulators give providers a post-payment review option in addition to pre-claim — and the chance to “play with money for six to 12 months,” Miska said.

“[CMS] could still be paying and chasing,” he said. “I think it’s better to get prior approval for everything than have to go through the work and problems of post-payment audits.”

Jane Shekman — CEO of Northbrook, Illinois-based LifeCare Home Health & In-Home Services — agreed. LifeCare Home Health & In-Home Services provides Medicare-certified home health, private-duty nursing and non-medical home care services throughout five Chicago-area counties.

“We’re doing 100% pre-claim review because we feel very comfortable and confident with that,” Shekman, whose agency acheived a 99% affirmation rate under PCRD, told HHCN. “I hope that RCD goes well for everyone and that home health agencies prove we have a good name behind us.”

The combination of RCD and PDGM is further complicated by the fact the upcoming payment overhaul halves the traditional 60-day unit of payment to a mere 30 days. It’s unclear how Medicare administrative contractor (MAC) Palmetto GBA will respond to that new reality.

The same holds true for home health referral partners in Illinois, who will have to learn the ins and outs of both RCD and PDGM at the same time, Shekman and Miska warned.

“The concern that I do have — and I think every agency has — is that as a home health agency, we have little control over the quality of documentation that is being provided to us,” Shekman said. “We spend a lot of times developing our own forms, educating physicians and facilities. As much time as we are prepared and are doing it, it’s still largely up to facilities, discharge planners, social workers and physicians to provide detailed enough information that complies with [CMS rules].”

“Am I ready for RCD? Yes,” Miska said. “I don’t think the referral sources are ready for it. It’s going to definitely change the way that they think about things.”

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