CMS Proposes New Pre-Claim Review for Home Health Agencies

June 01, 2018 - CMS is floating the idea of implementing another pre-claim review of Medicare claims submitted by home health agencies in at least five states, according to a recent notice of proposed information collection.

The federal agency proposed that home health agencies would have the option of demonstrating their compliance with Medicare reimbursement policies through either pre-claim or post-payment review or face a 25 percent payment reduction for nonparticipation.

The federal agency proposed to implement the new pre-claim review demonstration in Illinois, Ohio, North Carolina, Florida, and Texas. The demonstration could also extend to other states in the Palmetto/JM jurisdiction.

“This revised demonstration would help assist in developing improved procedures for the identification, investigation, and prosecution of potential Medicare fraud,” CMS wrote in the notice. “The demonstration would help make sure that payments for home health services are appropriate through either pre-claim or post-payment review, thereby working towards the prevention and identification of potential fraud, waste, and abuse; the protection of Medicare Trust Funds from improper payments; and the reduction of Medicare appeals.”

Under the potential pre-claim review demonstration, home health agencies that choose to participate in the demonstration would have 100 percent of their Medicare claims reviewed either prior to or after payment.

Home health agencies electing to participate would be subject to either pre-claim or post-payment review until the agency achieves a target compliance or claim approval rate, CMS elaborated. Once a home health agency reaches their target rate, the facility can choose to be removed from claim reviews.

However, CMS would occasionally check the home health agency’s claims to ensure Medicare reimbursement policy compliance.

The federal agency intends for the potential pre-claim review demonstration to significantly reduce Medicare fraud in the home health space.

Home health agencies continue to drive Medicare improper payment rates. In 2016, the improper payment rate for home health claims was 42 percent, accounting for 18.3 percent of the overall Medicare fee-for-service improper payment rate, according to the most recent data from CMS.

CMS projected the home health improper payments to total about $7.7 billion that year, largely because of insufficient documentation in claim submissions.

With home health agencies being a major source of Medicare fraud and improper payments, CMS has implemented pre-claim reviews in the past.

Most recently, the federal agency finalized a demonstration in Illinois, Florida, Texas, Michigan, and Massachusetts. Home health agencies in the states were supposed to submit claim reimbursement documentation to Medicare while the patient was receiving care at the facility.

CMS planned to penalize home health agencies that failed to submit pre-claim documentation by reducing their payments by 25 percent.

The demonstration launched in Illinois in August 2016. However, by April 2017, CMS paused the demonstration and suspended its rollout in Florida, the second state slated to participate.

CMS suspended the demonstrations after policymakers and industry groups decried the program, citing administrative burdens and patient access issues.

“This demonstration project imposes costs on patients, providers, and taxpayers,” a group of 116 Congress members stated in a May 2016 letter to CMS. “Delaying patient care while waiting for CMS to approve home health services may put patient health in jeopardy and cause patients to stay in the hospital longer than necessary.”

The Partnership for Quality Home Healthcare also called on CMS to abandon the pre-claim review demonstration and vowed to work with the agency to “develop program integrity solutions that are patient-centered and eliminate bad actors without disrupting access to care and increasing healthcare costs.”

Industry criticisms could spell trouble for the most recent iteration of the pre-claim review demonstration.

But the newly proposed initiative does contain one major difference: home health agencies can opt for post-payment review. Post-payment review could reduce the administrative burden associated with prior authorization.

Whether the modification to the pre-claim review demonstration will be enough to invite stakeholder praise remains to be seen. Stakeholders are welcome to comment on the proposal until July 30, 2018.