The Medicare home health benefit is an emerging hot spot for recoupment. Home health claims have received a prominent position in the Office of Inspector General (OIG) 2012 Work Plan just as home health claims increasingly are falling under the jurisdiction of Recovery Audit Contractor reviews. Most vexing for providers is the attention received by the general press and The United States Senate Committee on Finance, commonly called the Senate Finance Committee (SFC), regarding the medical necessity of home health claims.
According to Medicare's standard analytic file data, Medicare home health payments in 2008 totaled more than $17.1 billion—an average of $2,783 per claim. In 2009, such payments exceeded $18.8 billion, at an average of $2,873 per claim. These amounts highlight the significance of recent increases in industry scrutiny. Thus, providers would be wise to begin developing strategies for addressing both retrospective and prospective issues.
BACKGROUND
The home health benefit covers services for homebound beneficiaries who require the provision of intermittent skilled services. Skilled services encapsulate skilled nursing, physical therapy, occupational therapy and speech-language pathology. There are no requirements addressing prior levels of care such as the need for a qualifying inpatient admission. However, beneficiaries are required to be under the care of a physician who has conducted a face-to-face examination and helps establish and periodically review a treatment plan of care. Beneficiaries who meet these criteria are able to freely select the home health provider of their choice.
Once an eligible beneficiary selects a home health provider, reimbursements are determined using the Prospective Payment System (PPS). Under PPS, which was adopted in October of 2000, providers are paid a predetermined rate for each 60-day period of home healthcare, referred to as an "episode." The payment rates for each episode are determined according to a patient's clinical and functional conditions, as well as on the need for skilled therapies. Special payment rates—either per diem rates or partial episode payments—are triggered in certain incidences such as when fewer than five total visits are delivered during a 60-day episode or a patient is discharged before 60 days.
PAYMENT BASICS
Medicare PPS reimbursement is based on a sophisticated set of payment codes and formulas that incorporate a variety of patient variables. The complexity of the formula somewhat overshadows the disproportional weight placed on the amount of skilled therapies provided during an episode in payment determination.
Reimbursement is subject to conformance with case mix adjusted payment categories called Home Health Resource Group (HHRG). The HHRG must be in line with patient assessments, which are captured and reported to Medicare using a standard collection tool called the Outcome and Assessment Information Set (OASIS). Based on the OASIS, a beneficiary is assigned to one of 153 HHRGs according to clinical, functional and service dimensions. The dimensions are scored pursuant to a beneficiary's diagnosis (clinical); ability to perform activities of daily living (functional); and need for skilled physical, occupational or speech therapies (service). Physical, occupational and speech therapies collectively are referred to as "skilled therapies."
When used in Medicare claims, HHRGs are represented as one of 918 Health Insurance Prospective Payment System (HIPPS) codes. HIPPS codes add specificity to a HHRG code and include two additional pieces of information impacting reimbursement: most significantly, episode timing and, to a lesser extent, need for non-routine supplies.
Episode timing was introduced to Medicare PPS in 2008. The adjustment reassigns the HHRG clinical, functional and service domain values into five categories according to a combination of the episode's position in a continuous sequence of episodes and the number of therapy visits provided. Four of the categories are based on whether the episode is defined as early (first or second episode) or late (third and subsequent episodes) and whether the episode has zero to 13 therapy visits or 14 to 19 visits. The fifth category exists for episodes with 20 or more therapy visits regardless of the episode timing. These episode timing categories attempt to differentiate providers' resource use based on both levels of continuous episode and therapy utilization. The Medicare PPS is calibrated to provide higher payments for both later episodes, as well as higher levels of therapy utilization.
Prior to 2008, the reimbursement model did not incorporate episode timing. Additionally, the early Medicare PPS model included only one level of therapy utilization adjustment. Once a 10th skilled therapy visit occurred, the skilled therapy portion of the Medicare PPS payment was doubled. This increase was adjusted in 2008 to be more gradual, with payment levels increasing at the sixth, 14th and 20th therapy visits.
CURRENT ISSUES FACED BY PROVIDERS
A great deal of oversight was sparked by a Wall Street Journal article published on April 26, 2010 ("Home Care Yields Medicare Bounty"). The article analyzed the change in therapy utilization from 2007 to 2008 and concluded that therapy utilization at key reimbursement levels changed so rapidly that financial considerations outranked medical necessity when determining skilled therapy levels.
The most visible byproduct of The Wall Street Journal article was the action taken by the SFC, which issued a report in September of 2011 and initiated hearings on the topic. In its report, the SFC accuses the nation's four largest Medicare home health providers of tailoring their care to maximize reimbursement. The SFC's investigation included a review of e-mails and other documents, as well as analysis of Medicare claims data. The SFC investigation resulted in the inclusion of a recommendation that the Centers for Medicare & Medicaid Services stop using the number of therapy visits as the overriding factor in payment determination and recalibrate PPS to better address patient health and well-being. Regardless of future payment model modifications, one clear consequence is the need to fully assess and document the medical necessity and provision of skilled therapies.
Another area of regulatory attention has centered on the homebound coverage requirement. Defining homebound status, however, is unclear because of the ambiguity observed in guidance. The Medicare Benefit Policy Manual, for instance, allows that "occasional absences from the home for nonmedical purposes; e.g., an occasional trip to the barber, a walk around the block or a drive... would not necessitate a finding that the patient is not homebound..." The manual further goes on to state that "...if the absences are undertaken on an infrequent basis or are of relatively short duration and do not indicate that the patient has the capacity to obtain the health care provided outside rather than in the home."
A safe conclusion to draw from this guidance is that homebound status is loosely defined. The lack of clarity in determining homebound status exposes providers who do not sufficiently document patient status at the onset of episodes to unfavorable audit findings, either in the context of contractor reviews or of those conducted by the OIG and the Department of Justice.
Medical necessity issues beyond the need for skilled therapy visits and a patient's homebound status extend to beneficiaries recertified by providers for long sequences of episodes. There is no cap on the home health benefit; however, coverage is dependent on a beneficiary continuing to meet the overall coverage requirements. A beneficiary recertified for many episodes in a row, as described above, will result in higher payments for providers once the beneficiary enters the third episode of care. Given the weighting of payment rates toward later episodes, it is prudent for providers to ensure they fully document the medical necessity of beneficiaries who have long episode sequences.
Providers also face risk from enforcement organizations that are becoming increasingly sophisticated in their use of data analysis and screening to identify risk patterns. This has motivated many of the larger provider organizations to develop their internal compliance assessment teams to proactively identify and resolve or explain apparent issues. Providers not actively analyzing patterns and trends in their own claims run the risk of allowing unusual trends and/ or problematic behaviors to develop over the long term, resulting in large and costly investigations and/or potential settlements.
FUTURE CONSIDERATIONS
As the Medicare home health benefit is utilized by an ever growing number of beneficiaries, the way in which the benefit is defined, regulated and reimbursed will continue to evolve. Aside from regulatory risks, which appear to be the imminent issue, providers must be cognizant of payment adjustments that either are planned or are being discussed.
Healthcare reform already has defined certain reductions to payment levels occurring in 2013 and beyond. These payment rate reductions are known and can be fully incorporated into management budgets. Potentially more significant, however, are changes to the current reimbursement system that are weighted significantly toward the provision of skilled therapy. The SFC, as well as the Medicare Payment Advisory Commission, has advocated for the transition to a payment model that increases the impact of patients' clinical conditions and outcomes. This exposes significant risk to providers who have focused patient acquisition efforts on those who require therapy.
CONCLUSION
Utilization of the Medicare home health benefit is increasing as patients spend less time in acute settings such as hospitals and skilled nursing facilities. As patient volume increases, regulatory attention from contractor auditors, whistleblowers and the Department of Justice similarly will intensify. At the same time, home health coverage criteria and reimbursement logic have long been complex and confusing with the additional risk of potential significant changes due to healthcare reform. Thus, providers should make an extra effort to familiarize themselves with both past and present coverage guidance and, as appropriate, consider carefully how their claims compare with that guidance.
The views expressed herein are those of the author and do not necessarily represent the views of FTI Consulting, Inc. or its other professionals. (c)FTI Consulting, Inc., 2012. All rights reserved.
