If home health care providers sometimes feel that government agencies treat the industry like a pre-ball Cinderella when it comes to payment rates, a new report from the Office of Inspector General (OIG) will not make them feel any better. Though CMS continues to look for reasons to reduce payment rates to home care agencies, it apparently resists efforts to cut rates for insurance companies participating in the Medicare Advantage program.
Background
The Medicare Payment Advisory Commission (MedPAC / The Commission) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission’s statutory mandate is quite broad: In addition to advising Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare. The Commission’s 17 members bring diverse expertise in the financing and delivery of health care services. Commissioners are appointed to three-year terms (subject to renewal) by the Comptroller General and serve part time. Appointments are staggered; the terms of five or six Commissioners expire each year.
In recent years, MedPAC has focused attention on the level of professional skill with which home care nurses and therapists complete the Outcome and Assessment Information Set (OASIS) when assessing patient conditions. As clinical documentation skills have improved since 1999, and OASIS assessments have grown more accurate, episodic payments to home health agencies have increased an average of $200 per episode per year. In response, MedPAC has advised Congress to reduce the home health payment rate by 2.75% per year for three consecutive years until an approximate 8% cut has been achieved.
MedPAC has never addressed the underpayments made to home health agencies during the early years of OASIS use, before nurses and therapists developed the level of accuracy they enjoy today. However, industry watchers and data analysis experts, including Jeff Lewis, founder and former owner of Lewis, Inc., a home care software vendor, have studied OASIS data and estimated underpayments at between 10% and 15% during those years.
Medicare Advantage
The Balanced Budget Act of 1997 (BBA) established the Medicare+Choice (M+C) program with the purported goal of providing a wider range of health plan choices to Medicare beneficiaries. The BBA also modified the payment methodology under the program to correct excess payments, reduce geographic variations in payments, and align payments to reflect beneficiaries’ health status. Six years later, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) increased payments and redesignated the Medicare+Choice program as Medicare Advantage (MA). Participating insurance companies are designated as MA organizations.
In rare cases, the MA program supplements home health agency revenue by paying for services to patients and increasing an agency’s patient census. Most of the time, however, MA has been a burden for three reasons, two are the fault of the MA organization, the other lays at the feet of CMS itself. Summarized here, these three problems have previously been explored in detail in Tim Rowan’s Home Care Technology Report. Links to these previous articles are provided.
1) As is the custom when insurance companies pay for home health services, each visit must be pre-authorized. Often, providers have to fight to justify the need for every visit, and often hire a specially trained person just to conduct those battles with insurance company denial desk personnel. Patients enrolled in MA plans, therefore, almost always result in lower revenue and higher costs for providers. (See HCTR, 8/15/07)
2) MA sales representatives have often been overly aggressive with elderly prospective clients. Many state insurance commissioners issued cease and desist orders in recent years after it was discovered that some agents were visiting elderly people in their homes, supposedly to explain the new prescription drug benefit to them. By the time they left, they had signatures not only on Medicare Part D enrollment forms but on Part C (Medicare Advantage) forms as well. Often, the beneficiaries later claimed, they had no idea they were signing up for both plans. (See HCTR, 5/28/08) If these beneficiaries were in the middle of a Medicare home health episode or even if they began one within the next few weeks, the provider agency had no way of knowing they should send their claim to the MA organization instead of to their RHHI. All too frequently, when they finally learned about the patient’s enrollment only because their RHHI denied their claim, they were later told by the insurance company, “We did not order those services. We will not pay for them.”
3) Sometimes, weeks or months passed between the time a patient signed a MA enrollment form and the time their name appeared on the government’s Common Working File as a client of a particular MA plan. This happens because the insurance company is given 30 days to report new enrollments and CMS only updates the CWF once per month. A 2008 study, reported in Home Care Technology Report (see HCTR 10/8/08), revealed that names appear in the CMS database after the date MA enrollment begins fully 35% of the time.
Choosing whom to protect
With this as a background, it would be understandable to assume that CMS would look to MA organizations at least as often as to Medicare health provider organizations when looking for ways to extend the life of the Medicare Trust Fund. Consider, however, this spring’s report from the Office of Inspector General, titled “Compendium of Unimplemented OIG Recommendations.”
Page 3: CMS overestimated certain hospital cost items and should reduce payment rates by 7.5%. CMS agreed with the OIG recommendations.
Page 19: CMS and its FIs incorrectly processed 74% of DPNA actions (denial of payment for new admissions), with 40% of the cases resulting in overpayments to Skilled Nursing Facilities. CMS should send DPNA instructions promptly, address communication breakdowns, require confirmation that instructions are received and understood and update its guidance for DPNA claims. CMS agreed with the OIG recommendations.
Page 37: CMS should strengthen program safeguards to prevent improper payment for facet joint injection services, clarify billing instructions for bilateral services and act to resolve the undocumented, medically unnecessary and miscoded services the OIG found. CMS agreed with the OIG recommendations.
Page 41: CMS should strengthen the Medicare DMEPOS supplier enrollment process to ensure suppliers meet Medicare supplier standards, including conduct more unannounced site visits to determine whether suppliers exist at the addresses on record. CMS agreed with the OIG recommendations.
After another dozen or so agreements, this paragraph appears under the title “Modify Payments to Medicare Advantage Organizations”:
“The 1997 data and estimates used as the basis to calculate monthly capitation payments to MA organizations were flawed, resulting in higher-than-necessary payments. Based on numerous reviews (which are summarized in our September 2000 report), studies by other agencies, and MA organization data, we concluded that from CY 1997 through CY 2000, MA organizations received more funds than necessary to deliver the Medicare package of covered services. Medicare payments funded excessive administrative costs, and MA organizations did not account for investment income earned on Medicare funds.
“Improper payments made in Medicare fee-for-service (FFS) expenditures also contributed to the flaws in the 1997 managed care base rates. Our review of Medicare’s 1996 and 1997 financial statements identified substantial FFS improper payments. The standardized county rates for 1997 were calculated using 1996 base FFS expenditure data, and the overpayment errors were carried over into the 1997 managed care rates. We estimated the 1996 FFS error rate as 14 percent of FFS benefit payments.
“Recommendations: CMS should modify monthly capitation rates to a level fully supported by empirical data.”
“Estimated savings: $1.97 billion, based on the 3.077% overstatement of 1997 base rates applied to 2006 managed care payments.”
Response: “CMS did not concur with our recommendation to modify payments to MA organizations, noting that the BBA and the BBRA had increased these payments.”
Status: “Because the 1997 base rate was flawed, we have concerns that Federal payments to MA organizations continue to be excessive. We are updating our examination of MA organization payments and continue to recommend that CMS modify monthly capitation rates to a level fully supported by empirical data.”
Moral: If you want CMS to pay you more than is justified by the value of the services you render, it is better to be an insurance company than a healthcare provider organization.
