Part of the home-care industry went to court last week to try to stop HCFA from implementing a regulation requiring agencies to have a surety bond, but it appears the government may agree to a delay on its own.
The Home Care Association of America, which represents 400 freestanding home health agencies, sued HCFA in U.S. District Court in Oklahoma City.
The Fort Lauderdale, Fla.-based HCAA seeks a preliminary injunction against the regulation, which is scheduled to take effect Feb. 27. There is no date set for a hearing in the case, said association Administrator Carmen Johnston.
The surety bond provision was enacted as part of the 1997 balanced-budget law. The bond could be called by HCFA to recover any improper reimbursements, fines or other debts of a home health agency.
On another front, several groups, including the American Hospital Association and the National Association for Home Care, are appealing to HCFA to voluntarily delay implementation of the surety bond rule.
According to several sources, HCFA is likely to grant the delay as it tries to sort out myriad complaints about the regulation.
"If technical changes are needed, we will make them as long as it doesn't impose a problem with our fight against fraud and abuse," a HCFA spokeswoman said.
In addition to challenging the surety bond regulation, the HCAA's federal lawsuit also seeks to stop HCFA from implementing new cost limits on home-care Medicare payments.
The cost limits and the surety bond requirements were enacted as part of last year's balanced-budget law.
Under provisions of the new law, home-care agencies must have a bond equal to the greater of $50,000 or 15% of their total Medicare reimbursements.
The HCAA said the cost of the bonds is prohibitive and that with less than two weeks to go before the law takes effect, fewer than 10 of the nation's more than 9,000 agencies have so far been able to fulfill the requirement.
Mary Grealy, the AHA's senior Washington counsel, said hospital-based home health agencies were also experiencing problems retaining the surety bonds.
One of the problems is home-care agencies must carry a new bond each year, she said. However, because claims for any given year aren't safe from a HCFA audit for several years, the agencies must actually hold multiple surety bonds. That adds to the exposure of the bond company and makes a bond harder and more expensive to obtain.
The new provisions were among many aimed at putting the brakes on runaway Medicare home-care spending, which the Congressional Budget Office projected will reach $18.2 billion in federal fiscal 1998, which ends Sept. 30. Before passage of the balanced-budget law last summer, the CBO projected home health spending would reach $21.1 billion in fiscal 1998.
The new payment system is in effect for agency fiscal years that began after Sept. 30, 1997. The interim system will end with implementation of a home-care prospective payment system on Oct. 1, 1999.
The new system will require Medicare to pay home health agencies the lesser of their actual costs, a per-visit limit or an aggregate agency payment limit that is based on the average cost of treating each of their Medicare patients. HCFA is concerned that the new law will give agencies an incentive to "dump" costlier patients.