For providers of home health and home-based care, managing audits is an ongoing challenge. While the Prospective Payment System (PPS) had several iterations, it was the reimbursement model for the past 20 years. That comfort level changed with the Patient-Driven Groupings Model (PDGM), as billing has become an even more complex operation for agency back offices.

Under the new model, billing is conducted within a tighter timeframe. As such, the process requires much greater coordination across all departments within the agency, front and back, in order to collect all of the documentation necessary to make certain that PDGM’s shorter timeframes are met.

“Based on CMS CY2021 claims data, the difference in reimbursement from the first care period and second is $712. If that is not captured upfront, that can lead to not only over or understating revenue, but also additional work required by your billing team to investigate,” says Mike Freytag, managing partner of SimiTree, a revenue cycle, coding, professional services and talent management resource for post-acute and behavioral health organizations.

“We saw delays with MACs in correctly adjudicating claims under PDGM’s inception in 2020 and we saw that again recently with the NOA replacing no pay RAPs,” he adds. “It’s becoming even more imperative that once the EMR is set-up correctly for all PDGM payers, operations is well versed in how to denote these differences so that revenue and therefore A/R are computed correctly.”

Freytag offers a look at why RCM is becoming more challenging for providers to manage.

Revenue cycle management is becoming more complex

Furthermore, the requirements keep changing. In the past two years alone, Medicare’s upfront payment, the RAP, completely went away, creating serious cash flow issues for many agencies, Freytag notes.

Yet while the paper, as it were, went away, the paperwork did not. Agencies were still held to the same timeframe for billing; they just didn’t get the upfront payment for it. This year, the RAP was replaced by the Notice of Admission (NOA).

“Now, 10 months later, the industry is still untangling snarls and glitches,” he says.

In July, a Change Request had to address lingering issues when medical review coding on some claims were accidentally being erased when the claim was adjusted, triggering a request for additional record review for those agencies. There was also a problem in some transfer situations, when the NOA had to be canceled and resubmitted for the claim to process.

“These situations create a burdensome workload for agencies,” Freytag says.

Looking ahead, agencies will continue to battle increasing complexity, with more detailed information required for claims processing. As just one example, CMS is proposing that beginning in 2023, agencies will need to report new G codes for telehealth visits on all claims, breaking down services by disciplines, even though there will be no reimbursement for telehealth.

This new requirement for telehealth reporting was set out in the Proposed Rule for Home Health for 2023. Freytag sees five main takeaways from the proposed rule:

• Payment reduction of 4.2% means agencies will need to keep a closer eye on their best practice KPIs, including DSO, AR over 90, cash-to-revenue billed and bad debt ratios.
• Telecommunications reporting becomes vital, as voluntary claims reporting starts January 1, 2023, with mandatory reporting required by July 1, 2023.
• VBP baseline changed from CY 2019 to CY 2022
• RCM might be responsible for the timely submission of all OASIS, with OASIS E required for CY 2025.
• Agencies must watch PDGM recalibrations

“CMS is required to do a recalibration of the PDGM case-mix components each year to maintain budget neutrality,” Freytag says. “This year we will continue to see that, but unlike last year, the LUPA thresholds too will change. Billing departments will need to be equipped with tools to properly calculate reimbursement to ensure collections are appropriately identifying revenue adjustments.”

Payment-related audits are on the rise

Unfortunately for agencies, the Office of Inspector General (OIG) has specifically called for an increase in audits. This came in the wake of COVID-19, with the OIG looking harder for Medicare fraud and abuse. The most recent OIG Work Plan directs auditing agencies to increase scrutiny on health care to determine who took advantage of the pandemic to cheat the system.

This means agencies can expect to see more Medicare contractors looking over their shoulder at their billing to make certain everything is correct. CMS is highly interested in finding any overpayments so that they can take back that money.

And if they find a serious pattern of errors and inconsistencies, the agency audited can be at risk of further action such as fines and penalties, and even prosecution and prison time. In fact, the industry is already seeing some of this increased audit activity, he says. The spate this year of Targeted Probe and Educate, or TPE audits, and an uptick in some others as well, such as Recovery Audit Contractors, or RACs, have all made agencies tighten their focus around their revenue cycle management.

There are also program integrity auditors looking, and of course the MACs. There’s an alphabet soup of acronyms for all these auditors looking at agencies, and what they all have in common is that they’re looking for any money paid out by Medicare that they can take back.

Home health providers can take a proactive approach to RCM, billing and cash flow

The bottom line is this: payment-related audits can be time-consuming and expensive for agencies, even if minimal overpayments are found. The ideal situation, therefore, is to avoid them to the extent possible. That’s easier said than done, of course, especially considering that billing errors can trigger these audits.

That means that not only must agencies have competent, knowledgeable and reliable billing in place, but the entire revenue cycle needs to be well managed to insulate the agency against this kind of scrutiny and keep the agency on track for profitability.

This article is sponsored by SimiTree. To learn more about how to achieve stronger financial performance, call 800.949.0388 or visit SimiTreeHC.com.