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SNFs, Therapy Contracts and Fraud: Redux

Yes another SNF, another therapy contract and more fraud settlements.  The only thing that isn’t different is the contractor – RehabCare once again (a coincidence?…not likely). In news released late last week, a Maine SNF settled with the Department of Justice for $1.2 million, allegations of improper Medicare billings for “unnecessary, inflated, and unreasonable” therapy services.  As in the other cases I have covered herein, the therapy services provided at Ross Manor (the SNF) were through a contract with a division of RehabCare. Again, because the overbillings for inappropriate care and/or service are made by the SNF to Medicare under Part A, the liability for the improper payments and thus all remedies, lies with the SNF – not RehabCare.

In their statement, the parent of Ross Manor, First Atlantic Corporation stated that,”Throughout this matter, Ross Manor has worked with the government to understand where it can exercise more oversight of the billing and record-keeping practices of its contractors.” Not to belabor a point but REALLY? The concepts regarding SNF liability for contractor behavior and how to audit and prevent fraud aren’t complicated or difficult  For (likely) the final time, I will reiterate the issues and the processes that encapsulate the SNF/Therapy contractor/fraud issues and how to avoid the same.

  • Under Medicare, the SNF is the PROVIDER – not the therapy company/contractor.  Therefore, any claims submitted to Medicare are submitted by the SNF regardless of who provided the service.  If the claims are fraudulent, the SNF is responsible, not the contractor that provided the service, for repayment and any applicable fines, remedies, etc.  SNFs are free to contract with anyone or entity to  provide skilled nursing services (as defined in the federal Conditions of Participation) but in so doing, as the SNF is the provider, it cannot escape the False Claims liability for claims made to the federal government.  The therapy contractor does not bill the government – the SNF does.  The expectation is that the claim is lawful, correct, and for medically necessary and proper care.
  • The SNF must therefore, provide oversight to assure that all claims are proper and that the care was necessary and legitimate.  How? I recommend the following steps.
    • Contract with an external consultant knowledgeable in therapy and Medicare billing and periodically, audit your therapy contractor.  Review the provision of care, the documentation, and the billing/claims.  For SNFs that don’t know or have connections to such a consultant, feel free to contact me – I DO!
    • Institute a triple-check process for Medicare billing, each month.  This process requires certain parties to each Medicare claim to participate in a review methodology before claims are submitted.  Again, readers who need a triple-check format/framework, contact me and I will provide one at no charge.
    • Benchmark your MDS utilization and review it against regional and local data.  Comparatively, the utilization by RUG, length of stay, and thus Medicare per diem should follow regional and local trends.  If not, an explanation and inquiry is warranted.
    • Utilize your QAPI program to track care outcomes and Medicare related MDS data.  Monitor and follow this data to assure that care is proper and documentation consistent.
    • Institute a weekly Clinical Review program to monitor resident care progress (MDS changes, therapy progress, wounds, falls, discharges, hospitalizations, etc.).  Readers who need help here, contact me.
    • Finally, have MDS certified staff on site and actively involved in the final review and submission of all Medicare claims.  This staff must be employed by the facility, properly trained, and non-financially incented to any reimbursement goals or targets.

Last, I have a few current watch targets and tips for SNFs that use therapy contractors and/or are in the process of bidding or renewing a therapy contract.

  • Watch staff productivity and time – anything above 80% is a red flag.  Demand pay records and time sheets.
  • No resident on admission should immediately be placed into all three therapy disciplines.  I see this a lot and it is an outright harbinger of fraud.  Therapy, like any other service, must be justified by an evaluation, an order, and a treatment plan.  If every resident receives all three (speech, PT, OT), something is amiss.
  • Be wary of Speech being justified for demented residents as “cognitive retraining”.  This is frequently to almost always, a non-justifiable service and one that has no recognized diagnostic correlation or outcome measurement when the underlying disease is dementia. Cognitive retraining makes sense for neurological damage due to head injuries, strokes, etc. but is unwarranted as I see it (often) applied for dementia in an SNF.
  • Be wary of the Ultra High over-utilization.  Be particularly wary of the tendency to routine code to the RUG.  Make sure someone is keenly watching the ADL scoring here and how the minutes are justified.
  • Review your contract and look carefully at the Indemnification Clause(s).  Know your exposure should a False Claims circumstance arise or simpler, a billing audit/probe.  The contract likely (unless you negotiated it differently or had me do it) will only have the therapy company liable for the cost of therapy, not the loss of the Medicare revenue in total.  SNFs have huge exposure here.
  • If you are presently entertaining a contract or renewal, make sure you memorialize any promises made during the “courtship” or “proposal” phase in the final agreement.  I watch SNFs consistently bamboozled with false promises and specious claims of success, support, etc. the same of which never show in “writing” in the final agreement.  Make sure everything is in writing.  For help and a format for contracting, contact me

I do offer/provide numerous tools, forms, etc. free of charge to any reader who contacts me.  I also provide references to vetted, trustworthy sources for services upon request.  To contact me, go to the author page on this site (contact info), comment to a post or e-mail me at hislop3@msn.com.  If you comment to a post and want me to contact you, please leave valid contact information – can’t help without it.

April 7, 2015 Posted by | Skilled Nursing | , , , , , , , | 7 Comments

Hospice: Risk/Reward for Institutional Growth

With the hospice market (in most areas) fairly well saturated and the core (source) demand from traditional referral sources “flat”, growing census is a challenge for agencies. Some agencies have experienced referral growth but alas, length of stay has shortened. Others have experienced erosion as, while improper, the “skilled to death phenomenon” erodes days and referrals. Recall, the “skilled to death” concept is the SNF referral/discharge where the patient meets the 3-day prior inpatient criteria and “may” require a skilled service by Medicare SNF definition (nursing or therapy) even though the same is imprudent or not truly related to the patient’s condition. I have written about this issue before: It is fraudulent by all indications and merely a ploy to avoid out-of-pocket costs (applicable under hospice) for institutional care (at least for the first 20 days, if such meet the “skilled’ definition under the Medicare SNF benefit). The question oft asked of me is where can growth or additional days be found?  My answer is at the “institutional” end (sort of).  The reaction I soon get is “too much risk” or “been there, done that, got probed” or “those places won’t deal with hospice”.  The last comment is why I say “sort of”.

To start; Hospice is a perfect complement for an SNF, and Assisted Living Facility, a Memory Care facility or a Seniors Housing complex (including CCRCs). As I have written before, I encourage all of these groups to partner with a  (yes one) agency or perhaps two (no more).  By the way, and I have beat this issue to death with numerous people, it is perfectly legal and appropriate for an SNF or any other of the aforementioned provider types to partner with just one Hospice (you will find ample reference on this site and explanations as to why in the comments section, other posts, etc.). For an SNF, hospice is clear survey risk-reduction and efficiency enhancement for any patient/resident that is simply trending toward end-of-life, naturally.  The SNF COP (Medicare federal requirements) loathe patient/resident decline and thus, as patients/residents naturally trend toward death, the ante to prove all things interventionist to stave-off decline or at the least, justify that decline occurs despite best efforts to prevent, falls to the SNF.  As ridiculous as this is, it is the SNF reality.  Hospice and palliation, done right, resolve this issue and release (though not totally) the SNF, and the patient/resident, from the illogical burden (the patient/resident no longer bothered with weights, lab tests, etc.).  The benefit in the Assisted Living/Memory Care environment, while less regulated, is the ability of hospice to elongate a stay where perhaps, the resident has exceeded the regulatory care parameter (boundaries) set by the State.  In short, most states will allow residents to remain in the Assisted Living environment, even when the care required exceeds the regulatory boundary, if the purpose is to facilitate natural death in the environment rather than relocate the resident.

The risk for hospice today lies within the focus the CMS/Department of Health OIG and Department of Justice have placed on the industry, for agencies with large caseloads in institutional care settings.  The reason for such scrutiny is  the large (rather) amount of inappropriate enrollment and care provision exhibited by certain agencies (predominantly national agencies such as Vitas) in SNF and Assisted Living environments. Bluntly: These environments are the locus for a great deal of fraudulent activity in the industry. For those interested, the January OIG report on hospice activity in Assisted Living environments is available here: http://oig.hhs.gov/oei/reports/oei-02-14-00070.pdf  Understanding the level of scrutiny the Federal government is placing on hospices with a large institutional caseload is key to building a proper risk management model/approach.  To be sure, the agencies that play heavily in the SNF and Assisted Living environments will be audited more frequently.  When audit frequency increases, the risk for claim errata and mistakes increases (mathematically logical).  Knowing and understanding this risk is imperative to building a proper “institutional” care program.  The risk of improper enrollment/certification and insufficient care isn’t worth a comment as no agency should ever breach these risk areas as doing so is clear fraud.

(There is one additional somewhat looming risk and that is a possible payment reduction in the future as CMS continues to look at revamping and modernizing the Hospice benefit.  A concept within the discussions is a per diem reduction for any patient residing in an institutional care setting like an SNF or Assisted Living.  As I have no solid information, nor does anyone else, as to what (and when) CMS will do regarding a change in the Hospice benefit, I won’t integrate any additional comments regarding payment changes into this post).

Taking the risk into account as discussed prior, how would or should an agency integrate additional institutional patients into its caseload and build a risk management model.  The assumption is that a greater focus on an additional caseload will trigger scrutiny from the Medicare intermediary or perhaps, a CMS contracted auditor. Below I have outlined the approaches and recommendations I provide to hospice agencies.

  1. Limit the settings and in advance, perform due diligence on the provider setting and the provider.  Partner with providers that have high quality, solid compliance histories (CMS 5 star, good survey history, well-regarded, etc.).  Lots of data sources for an agency to use exist to determine the quality of any setting, formal and anecdotal.
  2. Understand the compliance/code requirements of the institutional setting.  Hospices know their own requirements but all too frequent, don’t know the SNF requirements or Assisted Living requirements.  Become knowledgeable or acquire talent that is. This will make discussions and planning and ongoing internal auditing much more effective and efficient.
  3. Build a strong interface agreement with each institutional setting.  I have resources here if anyone needs.  The key point is define in writing, everything to the best of each parties ability – who does what, who is accountable for what, etc.  Focus on key risk areas such as documentation.
  4. Know the setting documentation and integrate the setting documentation into the hospice documentation/record.  For example, in an SNF make sure the hospice has copies of the MDS, care plans, pain and other assessments, ADL information/records.  Fundamentally, both parties should be seeing, recording and saying the same things.
  5. Structure your IDG/IDT process to incorporate a review of the institutional care setting’s documentation.  Make certain institutional care staff are part of the process.  I like to see the same representative group.
  6. Train key personnel – Hospice, the SNF, the Assisted Living, etc. on what each party is looking for in terms of care delivery, documentation, etc. Implement an ongoing program of inservice education.  I like to see, on the part of the hospice, the same individuals tasked to a site – limit rotation of staff.
  7. Develop institutional care pathways and algorithms for common disease states found in SNFs,  Assisted Living.  Many hospices use Local Coverage Determination criteria – I am not a huge fan unless the same are tweaked or updated recently.  CMS has clamped down on failure to thrive, generalized neuro, end-stage dementia as appropriate diagnosis/reasons for certification.  This is not to say that the same are irrelevant reasons for certification merely, more elaboration is required.  Look beneath the surface to find what is going on.  Institutional setting patients, particularly SNF patients, generally have a good medical record with tons of data.  Likewise, AMDA is a great pathway source.  Local universities with medical schools can help with identifying criteria for end-stage Parkinson’s, post stroke (CVA, hemorrhagic, etc.), heart failure, end stage diabetes with/without renal failure, etc.  Build your algorithm to assure key definitional points/milestones and share it with the institutional care setting.
  8. Utilize an external source to perform quarterly audits of your institutional caseload.  Have this individual/organization sit through an IDG/IDT and then review records, particularly focused on certifications/re-certifications and charting – both Hospice and the institutional site.  I like to have a focus on continuity of charting/documentation and clear role congruence between the parties (their staffs particularly).

 

 

 

February 19, 2015 Posted by | Hospice | , , , , , , , , | Leave a comment

Upcoming Webinar: SNF Therapy Contracts: Your Risks and What You Need to Know

Join me for this informative webcast to learn how to implement a shared risk arrangement with therapy contractors and discover a strategic way to monitor and limit compliance and monetary risk in terms of billing and liability under Medicare The CMS OIG and the Department of Justice are targeting SNFs with heavy therapy case-mix claims under Medicare. In this webinar, conducted for HC Pro, I will cover the nature of the current levels of compliance risk, False Claims actions, and contractual risks between an SNF and its therapy provider. I will also review current case examples involving Extendicare and RehabCare. Registration and more info. are available via the link below.

http://hcmarketplace.com/snf-therapy-contracts-shared-risk-arrangement-to-reduce-citation-risk?code= EW320945&utm_source=HCPro&utm_medium=email&utm_campaign=YL031015

February 4, 2015 Posted by | Assisted Living, Skilled Nursing | , , , , , , , , , | Leave a comment

Post-Acute Compliance 2015: OIG Targets

As is customary in late fall, the Office of the Inspector General (OIG) of the Department of Health and Human Services released its Fiscal Year work plan.  As a reminder or preface, the work plan is the summary of investigations and focal areas the OIG plans to undertake in the upcoming fiscal year and beyond to ensure program efficiency and integrity and to identify and prevent fraud, waste and abuse (the latter is the most relevant activity).  Each provider segment reimbursed by Medicare is covered, some more so than others depending on the prevailing nature of program expenditures.  As of late (most recent years), the post-acute sector is targeted principally due to the outlay/expenditure growth (Medicare) for hospice, home health and skilled nursing care.

Below is the categorical highlights (not exhaustive) found within the 2015 Work Plan (the full plan can be found here ( https://oig.hhs.gov/reports-and-publications/archives/workplan/2015/FY15-Work-Plan.pdf ;

Skilled Nursing Facilities

  • Medicare Part A Billing: Scrutiny on claim accuracy and appropriateness of billed charges, particularly focused on therapy utilization and RUGupcoding.  Recent False Claims Act cases withExtendicare illustrate how the OIG views Medicare payments for inappropriate utilization and for care that is clearly inadequate.  This is a major risk area for providers and no SNF should discount the exposure, particularly if any of the following elements within the organization’s operations are present.
    • Therapy services provided by an outside contractor.  The OIG has identified previously that there exists a correlation between certain therapy agency contractors and patters of upcoding.
    • Disproportionately higher (as a percentage of census/payer mix), Medicare utilization.  The common threshold level is 30% or lower of total census.  Higher Medicare days as a percent of overall payer mix is a red flag for the OIG or an outlier.
    • Low overall Part B therapy utilization.
    • Skewed RUG distribution where the majority of days are falling the highest paying therapy RUGs (particularly ultra-high with moderate to minimal ADL scores – minimum/moderate assist levels)
    • Longer length of stays at higher RUG levels – minimal or infrequent Change of Therapy without corresponding Change of Conditions or vice-versa.
  • Medicare Part B Billing: The converse to the point previous is enhanced focus by the OIG on over-utilization or inappropriate utilization of Part B therapy services when Part A is exhausted or unavailable.  The OIG has noticed a trend for providers wary of Part A scrutiny to shift utilization to Part B. Again, the focus is on inappropriate billing patterns and utilization trends above or beyond, the historical norm.
  • State Agency Survey Reviews: The OIG plans to review how frequently and how well, state survey agencies reviewed and verified, facility plans of correction for completeness and compliance.  The gist: enhanced/additional federal look behind visits and desk reviews.
  • Hospitalizations: The OIG intends to review the hospitalization trends of SNF patients, identifying patterns of utilization for manageable or preventable care issues. A 2011 review found that 25% of Medicare SNF patients were hospitalized in a given year and the OIG is of the opinion that a percentage (likely sizable) is preventable and potentially, indicative of quality problems at the SNF level.

Hospice

  • Hospice in Assisted Living: The OIG will monitor the continued growth trend of hospice care provided in Assisted Living facilities.  Part of this initiative is couched in the requirement within the ACA for the Secretary (of HHS) to reform the hospice payment system.  The OIG indicates that it will gather data on hospice utilization, diagnoses, lengths of stay, etc. for residents in Assisted Living facilities.  Medpac has noted that for many providers, particularly the larger national chain organizations, that hospice care in this setting is typified by longer stays and thus, monitoring is warranted.
  • General Inpatient Care: OIG will continue to monitor the utilization of General Inpatient Care within the hospice benefit for appropriateness and potential abuse.  As General Inpatient Care pays a higher per diem and many hospices maintain their own inpatient units, the concern on the part of OIG is misuse or abuse for payment or, to mitigate (agency) staffing shortages where the better alternative for the patient is Continuous Care.

Home Health

  • Reimbursements/Payments: The OIG will continue to monitor payments made to agencies principally for accuracy.  Prior investigations by the OIG identified that at least on in four claims were incorrect and potentially, fraudulent.  This initiative is a continuation of ongoing concerns by the OIG of excessive fraud and or waste in the Home Health sector principally due to improper application of the Medicare benefit and lack of substantiated medical necessity and/or supported clinical documentation of appropriateness of care (e.g., therapies particularly).

LTAcHs and Inpatient Rehab Facilities

  • Adverse Events: The OIG is targeting both settings for an analysis of adverse events/temporary harm circumstances to patients in the setting (falls, infections, etc.).  Inpatient Rehab Facilities provide 11% of post-acute inpatient therapy services and growth over the past decade or so has been consistent and steady.  Questions however have arisen regarding the actual value of such care compared to the care received in an SNF. The SNF is reimbursed substantially lower than the IRF even though many SNFs staff sufficiently to provide the same level of therapy services (up to 3 hours per day).  Similar concerns have risen within the LTAcH setting as to cost vs. outcome and quality, particularly as compared other setting comparable, lower cost settings such as SNF.  There continues in Washington, a generalized view that post-acute payment reform is overdue, particularly given the rapid expansion of the sector.  Within the payment reform movement is the growing view that setting differentiation and thus payment differentiation at the inpatient level is no longer warranted and consolidation is required to rid the excess capacity and reward economically efficient providers that demonstrate higher quality outcomes (SNFs in particular as well as rural swing bed hospitals and to a lesser extent, home health providers and outpatient providers).

December 10, 2014 Posted by | Home Health, Hospice, Policy and Politics - Federal, Skilled Nursing | , , , , , , , , , , , , | Leave a comment

Therapy, Medicare Fraud, Extendicare: Lessons for SNFs

In mid-October,  the Justice Department announced a $38 million settlement with the SNF chain Extendicare, resolving a series of Medicare False Claims Act violations. The violations involved improper billing for services supposedly provided, provided unnecessarily, or for care that was substandard.  This series of violations included allegations of inappropriately billed therapy services; care billed for but not properly substantiated either by assessment or other documentation.  The settlement with Extendicare is the government’s largest to date with any SNF organization and evidence of a clear enforcement trend and pattern in the industry.

As a reminder, it is a violation of the False Claims Act for any Medicare provider to (most common);

  • Knowingly submit a claim for money to the government for services/care not provided.
  • Knowingly submit a claim for money to the government for services/care provided that is sub-standard.
  • Knowingly submit a claim for more money that the care or service is ordinarily worth or compensated (up-coding).
  • Creating (knowingly) a series or system of events, documentation, etc. to generate claims to Medicare for unnecessary or unwarranted care or services.

Fundamentally, the majority of the Extendicare case involved sub-standard care as a result of inappropriate staffing levels and adequacy of training. As alleged, the care across (at least) 33 facilities in multiple states was so deficient as to lead to infections, unnecessary hospitalizations, falls with head injuries and bed sores/decubiti.  The genesis of the investigation is a Whistleblower claim filed in Ohio (the genesis of most False Claims Act cases, known as Qui Tam).

As the title of this post proclaims, there are some lessons for providers in this tale of Extendicare woe.  First and foremost is the increasing enforcement activity of the Federal government with regard to Medicare activity in SNFs.  I have written about this before.  Second, SNF administrators and executives need to be aware of the False Claims Act triggers and steps for prevention.  Third, executives and administrators need to understand the intricacies of billing Medicare, their organizational revenue model and where the risks lie.  Specifically, and frequent readers have seen these points before, the following steps are fundamentally required to mitigate fraud and billing risks under Medicare.

  • Monitor and review your submitted claims by RUGs against regional/local utilization patterns.  A facility’s utilization should not be fundamentally different than any other facility’s utilization within a region unless the facility is unique such as a specialty provider, attached or affiliated with a hospital, etc.  Additionally, I recommend that all facilities use an outside consultant (not affiliated with the organization) to periodically audit claims against the facility documentation.  The biggest risk providers run today is that the MDS and the resultant RUGs billed are not corroborated by the care provided and the documentation thereto, especially nursing.  I forgot how many times I have seen therapy RUGs billed at Ultra High C or B levels and found the resident noted as fundamentally ADL independent.  I also lost track of how many times I talked with a system executive and/or facility administrator about these issues and got a blank stare back (the classic “no clue” look).
  • Monitor and review your sub-contractors incident to care provided, especially therapy contractors. Any contractor that provides care, documents care and participates in any way in determining the service levels billed to Medicare must be separately monitored and audited.  Remember, the SNF holds 100% of all fraud/False Claims Act liability under Medicare, even in the activity was perpetrated by a contractor.  The government holds the provider with the Medicare provider agreement 100% responsible to accurately bill the program and to monitor the services provided by any contractor.  Again, I recommend facilities/organizations utilize an outside entity to review claims and to review the activity of contractors.  Having your contractors agree to and enter into, a compliance and facility level integrity agreement is also a “best practice”. For those who need more information here, contact me directly at hislop3@msn.com or comment to this post providing a valid e-mail for contact.
  • Get your organizational/facility level QAPI working and fast.  Providers need to monitor their care outcomes and address quality deficiencies.  See my related posts regarding QAPI on this site.  I recommend that providers monitor key risk areas such as hospitalizations, falls, infections, pressure sores, ADL decline, weight loss/dehydration, resident/family complaints, etc.  I also recommend extremely broad participation by discipline including staff CNAs, RNs, etc.  A strong QAPI program will keep leadership abreast of care outcomes and demand reviews and system improvements which help identify risk areas and proactively correct problem areas before systemic poor care occurs.  Again, I recommend using some outside resources as part of the process to assure integrity.  The resources don’t have to be paid consultants.  Again, anyone wanting more insight here and additional information, contact me directly.
  • Develop an audit and review system that is impartial and virtually blind to the organization.  Keep the schedules and structure at the very top, blind to almost any and all players that are part of the care provided/care billed system.  Boards and senior management must require independent risk analysis and assessments on a regular basis to assure billing and program integrity.  Remember, you cannot audit yourself!

On a concluding note.  Extendicare just announced a sale of it’s North America (U.S.) operations to a private investment group.  The reasons provided?  Unfavorable environment, Obamacare, too much regulation, poor reimbursement, etc.  The organization has been in decline for quite some time, especially in the U.S., predominantly due to a failed business model that emphasized total profitability above all other things – like care.  Unfortunately today, profitability and care go hand in hand or in other words, bad care equals no profit.

November 12, 2014 Posted by | Skilled Nursing | , , , , , , , , , | Leave a comment

Leading Age Nashville: Entry Fee Pricing Worksheet

Sorry for the slight delay.  I had hoped to have the file loaded on this site by the end of last week.  Unfortunately, other priorities piled in/up and thus, I am a tad tardy.  The worksheet is clearly marked on the Reports and Other Documents page.  Tabs at the bottom illustrate pricing worksheets for each contract type.  Each sheet has explanatory notes but anyone with questions may contact me directly via a comment to this post (please include an e-mail address for reply) or via e-mail to hislop3@msn.com. Happy Pricing!

 

November 3, 2014 Posted by | Senior Housing | , , , , , , , | Leave a comment

SNFs, Therapy Companies, and Billing Risk

Readers, followers (Twitter, etc.) and folks who have attended one or more of my industry conference presentations know that I routinely harp on the “risk/reward” relationship between SNFs and therapy companies (the contract therapy provides).  Last year at LeadingAge’s annual conference in Dallas, the principals from Theracore Management Group and me did a full session on the differences between in-house vs. contracted therapy programs, focusing on the risk areas of contracted therapy programs in the SNF.  In a recent post on this site regarding SNF compliance issues, I covered this topic “briefly” again (http://wp.me/ptUlY-h1 ). Just today, a daily briefing from McKnight’s reinforces “why” I harp on this subject as often as I can.  The article link is here: http://www.mcknights.com/38-million-settlement-shows-nursing-homes-must-oversee-their-therapy-providers-feds-say/article/370169/?DCMP=EMC-MCK_Daily&spMailingID=9388936&spUserID=MTU4ODcyNDAzNjMS1&spJobID=380417055&spReportId=MzgwNDE3MDU1S

Summarizing: Two SNF companies contracted with a division of RehabCare.  In the process of providing therapy services through the SNFs, RehabCare provided inappropriate levels of therapy services to residents covered by Medicare.  The problem here however, is that the liability for the inappropriate care and thus the repayment is the responsibility of the SNF, not the therapy company or in this case, RehabCare.  Why?  The provider of the service under the Provider Agreement with Medicare/Federal Government is the SNF, not the therapy company.  The SNF failed to exercise the required oversight to assure that the bills it was submitting to Medicare were accurate and clinically relevant.  As the same were not in this case, the Department of Justice on behalf of CMS collected $3.8 million in inaccurate payments.  The message (and one I HAVE POINTED OUT TIME AND AGAIN) is the SNF holds all the liability with respect to Medicare billing and the services/care provided.  This cannot be shifted to any contractor – therapy or other.  If the care is determined unwarranted or inappropriate, the SNF has the duty to identify the same, correct it, and file a notice with CMS to provide repayment.  Failure to do so opens the door for Civil Monetary Penalties and other damages, in addition to the amount inappropriately billed and received (see related posts on this site with regard to False Claims Act, Fraud, etc.).

In closing, I have five reminders/recommendations for SNFs on this subject area.  These are my standard “cautions” or action items in this arena but clearly, they bear repeating.

  1. Review in detail, your contract with your therapy provider.  The standard immunity clause in the industry is for the therapy company to immunize the SNF against the cost of therapy for any claim deemed inappropriate and thus, non-paid or requiring repayment from Medicare.  This language means that the therapy company will “write-off” the cost of the therapy services associated with the claim(s) to the SNF – a mere fraction of the overall revenue lost from the denied claim ($450 per day in revenue vs. $125 per day in therapy cost, for example).  The risk is that SNF can lose hundreds per day in this kind of contractual relationship.  Require shared risk agreements between your SNF and the therapy company.  For more on this concept, drop me a note in the comment section of this post with contact information and I’ll follow-up.
  2. Establish a “triple-check” system for all therapy related Medicare claims.  Don’t ever assume that any single claim or case doesn’t require a level of review beyond the RUG determined through the MDS process. This requires the SNF and the therapy company to review each claim.
  3. Have a member or group of members on your team that are MDS Bulls**t proof.  Get current on the MDS process (trained and ideally certified) and task that person or persons with periodic reviews of bills submitted and documentation.
  4. Utilize an outside resource to conduct periodic audits of your Medicare utilization, billed RUGs, etc. plus documentation.  Again, contact me for recommendations.  A few thousand is far “cheaper” than a few million.
  5. Never, never, ever dance the “happy dance” to higher revenue PPDs or greater billed volumes.  Take the skeptic approach which requires the question of, “why us”?  The old adage of something being too good to be true is right-on.  Any utilization pattern that is generating lots of days, lots of Ultra High days, high PPDs, etc. better be justified by your case-mix (high ortho, neuro, etc.) and lots of admission traffic.  If this isn’t reality, then the risk is high that the Medicare “envelope” is being pushed – and inappropriately so.

September 8, 2014 Posted by | Skilled Nursing | , , , , , , , , | 6 Comments

CMS Announces Final Rule for Hospice Payments for 2015

Yesterday, CMS confirmed the details of an earlier published proposed rule (May) set for publication on August 22, 2014 (final rule) regarding FY 2015 hospice payments.  Anyone wishing a copy of the Federal Register text, please contact me as provided on this site (either via comment or contact info. in Author page).  As is always the case with these final rules, CMS addresses multiple components of the programmatic rules, not just payment.  In other words, the “benefit” (coverage, eligibility, payments, etc.) are often adjusted or modified to codify other legislation (the ACA for example) or recommendations for congressional hearings and Medpac.  Such again is the case for Hospices.

A summary of the key provisions in the final rule are as follows.

  • Payment: Hospices will receive on average, an increase of 1.4% in reimbursement.  This is a function of a 2.1% increase in the market basket (inflation) minus a .7% in overall payments resulting from the 6th year of the 7 year phase-out of the BNAF (Budget Neutrality Adjustment Factor).  The 1.4% is applied to daily home care rate and the resulting rates for GIP and Continuous Home Care are $708 and $930 per day respectively.
  • Quality Reporting: Introduced in 2014, hospices are required to report certain quality measure data to CMS.  Failure to report the data equals a 2% reduction in payments.  For 2015, no new quality measures are forthcoming although CMS is requiring that all hospices participate in the CAHPS (Hospice Survey)/Hospice Quality Reporting Program for one month in the first quarter of 2015 and then monthly for April through December for payment implication in 2017 and then collect survey data Payment implications in 2018 require data collection for every calendar month in 2016.
  • Attending Physicians: Hospices will be required to identify the patient’s attending physician on the Election Form – at the time the patient elects the Hospice Benefit.
  • Notice of Eligibility/Notice of Termination: CMS defines prompt filing as 3 days after election or 3 days post revocation/termination.
  • CAP Determinations: CMS is requiring all hospices to finalize their aggregate cap calculations within 5 months after the CAP year-end (March 31) and re-pay any overages accordingly.  They are not issuing any requirement for such calculations on the inpatient cap.
  • Guidance on Hospice Eligibility: CMS issues further guidance on how a hospice should determine eligibility for hospice; essentially the determination of terminality.  The benefit requires the patient to be terminally ill and death to most probably occur within  6 months or less.  The guidance is that the Hospice Medical Director should consider the terminal diagnosis, the health conditions of the patient related or unrelated to the terminal condition and all other current clinical data relevant to the diagnoses. The point in this provision is CMS stating that physician’s must use clinical relevancy as the means for determining appropriate/inappropriate by “terminal” likelihood.

Finally, the ACA requires the Secretary of DHHS to make recommendations regarding benefit reform and begin the same thereto, no earlier than October 31, 2013.  Nothing in the rule gives any indication of wholesale movement toward payment reform.  The glimpses remain the same in the discussion sections of trends in utilization patterns; primarily declining Continuous Care stays and increasing live discharges.  As before, the outlook appears to be for a payment system that is bell-shaped – higher in the first days of the stay, moderating at stability, and again higher at the end or near death.  CMS shows nothing about how this might work other than to continue to make vague references to a system similar.

August 5, 2014 Posted by | Hospice | , , , , , , | Leave a comment

CMS Issues Proposed Home Health Rule for 2015

Just ahead of the Fourth of July holiday, CMS released its proposed home health rule changes for FY 2015.  As common, the proposal includes rate changes/modifications and clarifications and adjustments to Conditions of Participation.  The proposed rule continues a path for CMS and the industry of rate reduction/rate rebasing and movement toward greater emphasis on “pay for performance” or should I say, payment reductions for inadequate quality reporting.  Following is my summary analysis of key provisions in the proposed rule.

Rate/PPS Update: The target is a payment reduction/spending reduction of .3% or $58 million.  This is exclusive of the 2% sequestration cuts.  This proposal also includes the effect of year 2 of a 4 year rebasing effort to the HH PPS schedule.  The rate mechanics flow as such: A 2.2% increase/payment update less rebasing updates to the national 60 day episode payment rate, less the national per visit rate conversion, less the non-routine supplies conversion factor.  The 2.2% increase incorporates a market basket update of 2.6% less the productivity factor of .4%, totaling an increase of 2.2% prior to the adjustments. The Non-Routine Supply reduction is 2.8% and the national 60 day per episode payment includes a planned decrease of $80.95 to $2,922.76.

Face to Face Requirement: CMS is proposing a simplification to the current requirement, eliminating the current narrative note requirement from the encounter.  Physicians and/or the discharging facility must still document in the patient’s medical record the need for home-based care (skilled).  Re-certifications will still require a face-to-face encounter.  CMS also is proposing to eliminate payment to the physician for any face-to-face encounter if the such encounter occurs when the patient is NOT eligible for coverage under the HH Medicare benefit.

Wage Index Changes: Wage indexes inflate or deflate nationalized rates based on relevant location, labor costs.  CMS is proposing to update the Home Health Wage Index based on more current data from the Office of Management and Budget (data known as the CBSA or Core Based Statistical Area).  The proposed changes would phase-in over a one-year transition period, moving on a blended basis of 50% current Wage Index data and 50% 2015 (updated) data.  What we know so far is that providers feeling the biggest shifts are those that reside in the 37 counties presently considered part of an urban area shifting to rural and the 105 counties considered rural shifting to an urban area.  For further information on this topic, contact me (via the contact page on this site) or see the actual proposed rule.

Quality Reporting: CMS is proposing to set a minimum submission level of OASIS assessments for 2015 at 70% (less than this level imputes a 2% payment reduction to the provider) and then in subsequent years, move the percentage required for submission up by 10% (e.g., 80% in 2016).

Therapy Reassement Time Frames: The proposed rule would shift the requirement for a licensed therapist to re-assess the therapy plan of care and need from “as close to day 13 and day 19 as possible” to every calendar 14 days.

Coverage for Insulin: CMS is seeking clarification and input into the current list of coverage codes for insulin care (table 28) as to their adequacy in determining the need for skilled care for insulin management in the home. The program does not cover care for individuals capable of self-administration or who have another “person” willing to provide insulin administration as needed.

Revised Definitions for Speech Language Pathologists: Provides clarification that a Speech Language Pathologist is someone who has a graduate degree (accredited) in Speech/Language Pathology, or: is licensed by his/her state and has completed 350 hours of supervised clinical time, or; has at least 9 months experience unsupervised, or; has completed a national competency exam approved by the Secretary of HHS.

Value-Based Purchasing: CMS is offering for comment, a proposed Value Based Purchasing demonstration program in up to 8 states, similar to the hospital program.  In this approach, agencies would  receive a 5% to 8% adjustment in payment for  meeting performance criteria across a designate performance period.

July 9, 2014 Posted by | Home Health | , , , , , , , | Leave a comment

Analysis: Kindred Pursuit of Gentiva

In news just released, Kindred (the post-acute, skilled, rehab and LTAcH behemoth) has made two separate offers to purchase control of Gentiva, the latest a $14 per share offer consisting of half cash, half stock ($7 and $7). An earlier offer of $13 per share was rejected and it appears the $14 offer will see the same fate. Prior to the news, Gentiva stock was trading in the mid $6 range, down 20% over the preceding 12 months.  The value of the “deal” is pegged at $1.6 billion with $533 million of the total in cash and stock, the balance in assumed Gentiva debt.  On a combined basis, Kindred/Gentiva would weigh-in at $7.2 billion in annual revenues, operating in 47 states.

To date, Gentiva has held fast that it is not for sale and that its present plan, implemented as One Gentiva will create more shareholder value over-time than the Kindred offer.  In December, I wrote a similar analysis post on Gentiva/Harden (the merger) and the home health industry.  The post can be found at http://wp.me/ptUlY-fV . In this post, I commented on the clear flaws in the One Gentiva strategy; principally the broadening of reimbursement risk strategy that is at the core of this strategy.  While Gentiva posted a modest recent quarter profit after $180 million loss, virtually all of the reported gain was a result of accretion from the Harden transaction, not improved operations.  For example, adjusted income attributable to Gentiva shareholders for the first quarter 2014 was $4,8 million compared to $7.1 million twelve months prior.  Net cash provided by operating activities for the first quarter was negative $17.7 million vs. negative $20.6 million one-year prior – not a resounding improvement.  Essentially, the fundamentals of the company are not improving and in some cases, set to erode going forward as the lion share of its revenues are Medicare home health and Medicare hospice (Odyssey) driven (88.5%).  Both Medicare programs face down reimbursement trend pressure, home health dramatically more so than hospice.  Hospice however, is under enormous industry-wide pressure due to continued fraud investigations among major players and the loom of federal program reform (the Medicare hospice benefit).  Essentially, hospice is a no-growth industry now.

Reviewing multiple factors and general industry trends plus the health policy and economic outlooks for both companies and the post-acute industry globally, below is my analysis of the factors influencing (or should influence) the Kindred and Gentiva position.

Kindred: Where Gentiva has a reimbursement risk concentration problem, Kindred has a location of care or outlet concentration problem.  Kindred is brick and mortar deep/heavy, actually too heavy.  Institutional outlets, especially in-scale and capacity are shrinking.  The revenue needs required to support institutional care, on a post-acute basis, are increasing while reimbursement is flat to falling.  The LTAcH and SNF trends are flat and the operational efficiencies available to any provider are minimal, save offloading or minimizing debt. The quality expectations evidenced in regulation and pay-for-performance models won’t allow any significant reductions in variable costs today.  To be an institutional player of success, one must have broad clinical capacity, right-sized bed compliments that match payer demand (occupied by the highest payers at high occupancy levels) and non-institutional outlets to capture discharge revenues plus participate in global contract arenas and networks (ACOs, etc.).  Kindred lacks the home health/hospice scale, especially on a matching outlet basis in its respective markets.  Gentiva adds this element, though at a bit of a risk via the amount of debt that Kindred would assume.  The acquisition is not without risk or a sure-winner.  True Gentiva brings the home health/hospice/community care component that Kindred needs as well as the scale to be immediately impactful, it simultaneously adds another level of reimbursement risk and industry risk that Kindred already has on a large-scale.  Managing and integrating the Gentiva elements into Kindred’s longer range provider of choice model will not come easy.  Likewise, the Gentiva acquisition will only mask temporarily, the fact that Kindred needs to right-size its own portfolio post its acquisitions of Rehabcare and Integracare (the latter a Texas limited home health/hospice provider) while still holding and operating, too much inpatient real estate that isn’t optimally performing in many markets.  In essence, the play makes sense but not fully positive until all the pieces are brought tightly together; a difficult and time-consuming endeavor.

Gentiva: Gentiva has the same problems that Amedysis has and had – it needs to shrink but it can’t.  Gentiva has too much debt and in a reimbursement environment that trends flat to down, it cannot grow itself out of its debt problem by “more of the same”.  It’s diversification strategy through the Harden acquisition is too little, too late and not scalable fast enough to have meaningful impact.  It similarly, can reduce expenses fast-enough via consolidation as it must chase revenue growth to survive and the revenue growth that pays the most is Medicare – a risk concentration it already has too much of.  It needed to re-tool 8 to 10 years ago, balancing its revenue model and expanding its clinical capabilities beyond the typical home health outlet.  Additionally, it needed to become more local-market centric and not simply a Medicare reimbursement machine like Amedysis (an accident waiting to happen).  The notion that its One Gentiva plan can create more value for Gentiva shareholders that the Kindred offer is wrong-headed.  Sans takeover talk, Gentiva trades between $6 and $8 and no upward trajectory is visible.  A simple return analysis illustrates that a Gentiva shareholder will wait at least 18 months or more to equal a return of $14 today, excluding opportunity costs on the investment.  Similarly, the risk concentration elements that could turn such an outlook even more dire are more than double on the Gentiva holding than on a comparable dollar for dollar holding with Kindred.  Kindred simply has more ways to generate revenue, a more stable expense base, lower fixed costs and less reimbursement risk concentration than Gentiva.  If Gentiva chooses not to sell, holding out for more than $14, I think the shareholders will pressure such a move in the near-term future.  The Kindred offer, with debt assumption is in my opinion,  a max value offer that 12 months from now, is off the table.

 

 

 

 

 

May 15, 2014 Posted by | Home Health | , , , , , , , , , , | Leave a comment