HCAF and NAHC Coordinating Efforts for Immediate Resolution of Outlier Underpayments

Since January 2010 an error in Medicare’s home health payment system related to outlier payments has created ever-increasing underpayments to providers who serve the sickest of home health patients. Outlier payments are additional payments made to the 60-day case-mix adjusted episode payments for beneficiaries who incur unusually large costs. These beneficiaries received additional services to meet needs greater than are identified through the case-mix system. In response to abuses of outlier payments, CMS imposed an agency aggregate outlier cap such that no more than 10 percent of an HHA’s total payments would be paid as outlier payments.

Origin of Problem

However, a home health outlier underpayment problem originated shortly after the home health outlier cap calculation was installed in the Medicare system. At that time agencies began to experience interruption in their outlier payments, even though their total payments were below the10 percent cap. CMS made multiple attempts to correct the system’s malfunctioning claims processing software beginning in 2010, all of which have been unsuccessful. The only help offered to date by CMS is accelerated payment. However, the accelerated payment application process is burdensome, and approvals have taken several weeks to several months. In addition, accelerated payments have been limited to 70 percent of the total amount owed.

This problem resulted in underpayment of many home health agencies in 2010, 2011, and again in 2012. In order to determine the extent of this problem, the Home Care Association of Florida and the National Association for Home Care & Hospice (NAHC) surveyed home health agencies. Agencies that responded to HCAF’s and NAHC’s request for information reported underpayments ranging from tens of thousands to millions of dollars over the past three years.

Proposed Solution

HCAF wrote to Senator Bill Nelson, Florida’s senior senator currently serving on the Senate Finance Committee, which has jurisdiction over Medicare issues, and NAHC wrote to the Centers for Medicare & Medicaid Services (CMS) Administrator Marilyn Tavenner on behalf of members to request her assistance in the “immediate resolution” of this longstanding home health payment problem. In the letter, HCAF urged Senator Nelson to contact CMS and seek a fix for the calculation error and begin reimbursing agencies immediately. In addition, HCAF recommended that CMS include interest payments to providers.

Current Fix Status

CMS will test the latest outlier fix on June 21st. If successful, the program changes will be installed July 2nd. However, in light of earlier fix failures, NAHC felt it imperative to request alternative solutions. NAHC will keep members informed of the result of the test and CMS’ response to its letter.

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