CMS Announces the Resumption of Pre-Claim Review for Home Health Services in Five States

In a notice published on May 31, 2018, the Centers for Medicare and Medicaid Services (CMS) announced that it intends to resume the pre-claim review demonstration program for home health services in five states. CMS had previously started to implement pre-claim review in several states in late 2016, but that roll out was postponed indefinitely following pushback from the home health industry and several members of Congress.

What is Pre-Claim Review?

Under the Medicare statute, CMS has wide discretion to implement “demonstration” programs to investigate or prosecute fraud in the Medicare program or improve the provision of care or other health services in the program. In 2016, CMS explained that it had elected to implement pre-claim review due to high error rates for home health services and the substantial risk of improper payments. The Office of Inspector General (OIG) has previously warned that home health services are, in its view, particularly susceptible to waste, fraud, and abuse.

The 2016 pre-claim review process was intended to function in a manner similar to pre-payment review: providers were required to submit records to their Medicare Administrative Contractor (MAC) for review prior to payment. If the MAC determined that the documentation did not satisfy applicable coverage requirements, the claim would be provisionally “non-affirmed” and the provider would have the opportunity to resubmit the records at a later date. Once the claim was approved (i.e., “provisionally affirmed”), the MAC would process and pay the provider’s claim normally. If the provider did not submit a pre-claim review request for a particular claim, that claim would be subject to a 25% reduction in payment.

CMS had initially targeted Illinois, Texas, Florida, Massachusetts, and Michigan for pre-claim review. The process went live in Illinois in early August 2016, and it was so chaotic that CMS postponed implementation in Florida. On April 1, 2017, CMS suspended the pre-claim review process in Illinois, and it never expanded the demonstration to other states.

What’s Different About the Revamped Pre-Claim Review Process in 2018?

The new pre-claim review program differs from the 2016 version in several key respects. As an initial matter, the states targeted for implementation have changed; CMS intends to implement pre-claim review in Texas, Florida, Illinois, North Carolina, and Ohio. All of these states fall within the jurisdiction of Palmetto GBA, one of the MACs responsible for processing home health and hospice claims.

CMS now states that home health agencies will be given the choice of participating in 100% pre-payment claims review or 100% post-payment claims review for an undetermined period of time. These reviews will cease once the provider reaches an unspecified, target affirmation rate. After that time, CMS may perform intermittent “spot checks” to ensure ongoing compliance by the home health agency. If a provider does not wish to participate in the 100% pre- or post-payment review process, its claims will be subject to a 25% payment reduction.

It is important to emphasize that the parameters of this new pre-claim review process are very general, and CMS is soliciting comments and feedback from the provider community and other stakeholders about how to effectively implement this demonstration. This means that the actual pre-claim review program that resumes may be somewhat different than the model announced by CMS.

As things stand now, the revamped version of the pre-claim review process appears far less burdensome than the original program that rolled out in 2016. Under the 2018 proposal, providers have the option of selecting 100% post-payment reviews. This means that the provider will likely not have to disrupt its normal billing patterns and face delays in reimbursement as it would under a pre-payment model. In addition, pre-payment review was previously slated to remain in effect for 3 years in the five target states. CMS’ most recent proposal, however, indicates that providers will be relieved from pre-claim review after they reach an undetermined target approval rate. While CMS has not provided any details as to what that rate will be or how long it could take an agency to reach it, this is far more preferable to a 3-year long review process.

Conclusion

Although home health providers in Texas, Florida, Illinois, Ohio, and North Carolina certainly have no reason to celebrate the resumption of pre-claim review, the general contours of CMS’ announcement suggest the process will be less onerous than the 2016 version. Although CMS has not announced a launch date for pre-claim review, home health agencies should begin taking steps now to ensure they are prepared.

Adam Bird is a partner in the healthcare practice group at Calhoun Bhella & Sechrest LLP. Please contact him at (202) 804-6031 or abird@cbsattorneys.com to set up a consultation. 

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