The year 1997 has been a busy regulatory year for home health agencies ("HHAs") that transact business with the Medicare program, and the trend promises to continue during 1998 and 1999. Owners and operators of HHAs should plan to keep their antennae tuned to the Clinton administration and the Health Care Financing Administration ("HCFA") for the near future in order to keep abreast of upcoming changes in the way that HHAs must operate clinically, administratively and financially. It is safe to predict that the world as HHAs have known it to date is about to change dramatically.
SUMMARY OF REGULATIONS
Medicare Conditions of Participation:
In March of 1997, HCFA proposed changes to the Conditions of Participation for HHAs, which are the operational rules by which Medicare-certified HHAs must function. Key among these proposals is a requirement that HHAs assess all patients within 48 hours of admission using a standard assessment tool known as the OASIS. These assessments are to be updated continuously until the patient is discharged from HHA care. The OASIS will form the basis for patient care planning, care delivery, and patient satisfaction assessment. HCFA intends to move its oversight of HHA clinical operations away from its previous process-based analysis toward an outcome based analysis, in a manner akin to the radical changes that swept the nursing home industry in the early 1990s. Additionally, HCFA is proposing that each HHA perform mandatory criminal background checks on home health aides that it employs, that HHAs inform patients of the expected outcomes of and barriers to care delivery, that a single HHA coordinate all clinical services prescribed by the patient's physician, and that the HHA conduct continuous quality improvement programs to identify and implement areas for performance improvement. Comments to these proposed regulations were due at HCFA in early June 1997 and there is no official projection at this time as to when HCFA might promulgate final regulations.
Reimbursement Structure:
The Balanced Budget Act of 1997 ("BBA of 97"), which was enacted by Congress in August of 1997, made a number of sweeping changes to the reimbursement structure of HHAs. Most significantly, by their first cost reporting period after October 1, 1999, HHAs will find themselves reimbursed by Medicare on a prospective payment system rather than the current cost reimbursement system. This change is a major means by which the Clinton administration plans to counteract what it perceives to be significant Medicare fraud and abuse in the HHA industry. In addition, HCFA will split HHA reimbursement between Medicare Part A for recuperative post-hospitalization services, and Part B for more long-term, chronic care. The Clinton administration claims that this change will make it easier for HCFA to track HHA payments in order to prevent fraud and abuse. (HCFA published a Program Memorandum in December which implements the Part A/Part B split.
Mandatory Surety Bond:
Starting in January 1998, HHAs will be required to post a minimum $50,000 surety bond with HCFA to protect the Medicare program against overpayments and other financial losses. Although HCFA promised regulations to implement this fast-approaching requirement by December 1, 1997, they have not been published to date. It is unclear whether, and how, HCFA will implement this bonding requirement on the statutory effective date.
Certification Moratorium and New Regulations:
In September 1997, President Clinton and DHHS Secretary Donna Shalala announced a moratorium on the entry of new HHAs into the Medicare program for a period of six months. The moratorium will give HCFA time to draft regulations intended to curb the explosion of new Medicare-certified HHAs and the explosion of Medicare dollars flowing into home health services. It is anticipated that the new regulations will contain a number of stiff provisions designed to weed out financially unstable HHAs before they become Medicare-certified, and to keep those HHAs that are initially certified from engaging in questionable financial practices while they participate in the Medicare program. Key anticipated provisions include:
- each new HHA must have a track record of serving private pay patients before it may apply for Medicare certification;
- each new HHA must demonstrate that it has sufficient non-Medicare funding on hand to cover its first three to six months of operation before it may be admitted into the Medicare program;
- each new and existing Medicare-certified HHA must submit an independent audit of its operations and practices as a condition of Medicare certification. Existing Medicare- certified HHAs will be required to re-enroll in the Medicare program every three years.
- each new HHA and existing Medicare-certified HHA must post the minimum $50,000 surety bond required by the BBA of 1997 in order to be eligible for Medicare participation.
- each new HHA and existing Medicare-certified HHA must fully disclose all affiliated entities. The Clinton administration believes that fraudulent and abusive activities are conducted by entities affiliated with the Medicare-certified HHA.
- the term "skilled services," currently used to describe the scope of Medicare-covered HHA services, will be defined.
- The term "intermittent" or "part time," used in existing HHA regulations to describe the covered duration of HHA services, will be defined.
HCFA will set standards for the scope and duration of particular HHA services, and will not pay HHAs for services that exceed these norms.
Although the six-month time duration of the HHA certification moratorium would suggest that HCFA should have these regulations available in March of 1998, there is no official time line for their publication. Indeed, HCFA has admitted on several occasions that the amount of work occasioned by the BBA of 1997 has put it far behind schedule on a number of fronts. HCFA acknowledges that deadlines, even those statutorily mandated, may not be met.
Audits and Claims Review:
Secretary Shalala promises to double the number of full Medicare audits of HHAs from the current 900 per year to 1800 per year, while simultaneously increasing the number of HHA claims reviewed by the Medicare fiscal intermediaries from 200,000 to 250,000 per year. In conjunction with the expansion of Operation Restore Trust into 12 new states and the implementation of the general anti-fraud provisions of the BBA of 1997 (including a $50,000 CMP for each instance of a kickback and a mandatory permanent exclusion of all convicted felons from Medicare participation), Secretary Shalala believes that these efforts will reduce HHA fraud and abuse.
Anti-steering:
Effective this past November, hospitals were prohibited from steering discharged patients to any particular HHA, including HHAs affiliated to the hospital. All Medicare-certified HHAs may insist that hospitals include them on a patient referral list, so long as they serve the patient's geographical area. Hospitals will be required in 1998 to identify in some fashion, pursuant to upcoming regulations, those HHAs with which they have an affiliation or financial interest. They will also be required to report affiliation and financial interest information to HCFA, including data on the number of discharged patients who received services from an affiliated HHA. HCFA will make this information available to the public in accordance with future regulations.
Physician Certifications of Need for HHA Services:
Also in November of 1997, HCFA withdrew its February 1996 interpretive letters which had stated that it may be illegal for hospital-employed physicians to certify a patient's need for HHA services if the patient was receiving those services from an HHA affiliated with the employing hospital. HCFA conceded that this interpretation may conflict with the provisions of Stark II, and may have caused unintended negative consequences for rural hospitals/HHAs as well as entities involved in integrated delivery systems. The withdrawal is effective as of December 1997. HCFA plans to address the issue of physician certification of the need for HHA services in its Stark II regulations which are promised to be released imminently.
Definition of "Homebound":
National disability groups are threatening litigation regarding the HCFA definition and application of the term "homebound," as used to define the scope of Medicare-covered HHA services. To date, HCFA has consistently held that a person who is able to leave his or her place of residence for extended periods of time is not "homebound," and hence is not eligible for HHA services as a covered Medicare benefit. Accordingly, some fiscal intermediaries have denied HHA benefits to quadriplegics who can leave their home in electric wheelchairs after they are assisted out of bed and assisted with normal ADLs by nurses and nurses aides. Clearly, such individuals would be homebound but for the intervention of the HHA services that physically place them in the adaptive devices that allow them to function in the community. This debate promises to pit disability advocates against Medicare bean counters, and to implicate broad national policy regarding the rights of disabled individuals and the core function of the Medicare program. The debate has spilled over to state Medicaid programs, which are questioning whether HHA services can be provided to individuals outside of the home, such as severely disabled children who cannot attend educational or other community programs without the constant assistance of nurses and aides.
Obviously, the regulatory agenda for HHAs in the coming months and years is extremely full.