Reimbursement revise

The home healthcare industry may be in store for changes in how Medicare pays its providers following the release of a report from the Government Accountability Office highlighting improper billing by three for-profit home healthcare companies.

“The reimbursement policy encourages gaming, and gaming is what’s occurred,” Sen. Chuck Grassley (R-Iowa) said in a news release. Grassley was one of two Senate Finance Committee members who requested the report. He and Sen. Max Baucus (D-Mont.), chairman of the committee, called for changes to Medicare’s reimbursement approach, as did the industry’s major association, the National Association for Home Care & Hospice.

“The system is flawed,” said Joe Hafkenschiel, president of the California Association for Health Services at Home, which represents home-care and hospice providers in the state. The method for reimbursing for home care—therapy in particular—needs to be reworked and the GAO report could spur such a change, he said.

Similarly, Val Halamandaris, president of the NAHC, said in a statement that “We have long been concerned that the current model discourages home health agencies from providing the care that was appropriate for the individual patient needs.” He said the group commends the Senate Finance Committee for drawing attention to the matter.

Of concern, though, is that the CMS will use a broad approach to fix the problem, potentially punishing providers that haven’t been abusing the system, Hafkenschiel said. “The larger issue is, do you target the people manipulating the system or do you punish everyone because of the bad actors?” he said in reference to home health agencies that are adjusting care to maximize profit. “I think there’s a growing feeling that we need to go after the fraud and abuse in the industry,” he said.

The industry already absorbed a 4.89% pay cut in 2011 from Medicare and is in line to see it cut again by 3.35% in 2012, assuming the CMS follows through with its plan in a proposed rule issued in July. A cut of that size for 2012 would result in a decrease of about $640 million compared with Medicare payments to the nation’s home health agencies in calendar 2011. The final rule is expected in November or early December.

Many of the problems cited in the GAO report, inspired by a story in the Wall Street Journal, concern billing for therapy, which can change reimbursement markedly when certain amounts of care are achieved. Congressional investigators found in an examination of records from public companies that Amedisys, Baton Rouge, La., Gentiva Health Services, Atlanta, and LHC Group, Lafayette, La., “encouraged therapists to target the most profitable number of therapy visits, even when patient need alone may not have justified such patterns.”

“Each company showed concentrated numbers of therapy visits at or just above the point at which a ‘bonus’ payment was triggered in the prospective payment system,” according to examples cited in the report. The report also says that Amedisys encouraged managers to meet a 10-visit threshold and that LHC Group managers, including CEO and chairman Keith Myers, “instructed employees to increase the number of therapy visits provided in order to increase case mix, a measurement of patient acuity, and revenue.”

Two of the companies in separate statements denied they were billing inappropriately. Amedisys wrote: “We are disappointed with the committee’s conclusions, and we stand by our company’s integrity, ethics and patient-care practices.”

Gentiva wrote that the company “maintains its belief that the company is providing the highest quality of care and receives payment within the standards set forth by the reimbursement system established by the (CMS).”

LHC pointed to a $65 million settlement the company agreed to last month (Oct. 3, p. 4) that resolves the matter of home therapy visits among other allegations. “LHC Group is pleased to have put this matter behind us, and we look forward to working cooperatively with (HHS’ inspector general’s office) under the terms of the corporate integrity agreement over the next five years.” LHC wrote in a statement.

The release of the report Oct. 3 was followed by steep declines in share prices of the four major publicly traded home health companies that day, with the companies above and Almost Family, which was examined by the investigators but not singled out for major billing issues by the GAO, closing down 8% to 33% in one day.