UPDATE: Palmetto Weighs in on RAP Payment Suppression

Late last Friday, HCAF learned that Palmetto GBA plans to suppress RAP payments to home health agencies with a large number of auto-cancelled RAPs. Click here for the full announcement.

Palmetto states:

“Providers are given the greater of 120 days after the start of the episode or 60 days after the paid date of the RAP to submit the final claim. If the final claim is not submitted within the specified time, the RAP will auto-cancel and the provider must resubmit the RAP before submitting the final claim. It is expected that instances where the RAP is auto-cancelled for no submission of a final claim should be minimal.”

Palmetto GBA is monitoring the number of RAPs that are auto-cancelled due to providers not filing a final claim. In accordance with Medicare regulations, contractors have the authority to revoke a provider’s privilege to receive payment on the RAP. Therefore, providers identified with a high number of RAP auto-cancels due to no final claim will be notified that their RAPs will be set to pay at zero percent. The payment suppression will continue until a Corrective Action Plan is submitted and the provider can demonstrate improvement in timely billing of final claims. We will not be withholding the RAP payment, we will simply not pay RAPs for these aberrant providers. The affected providers will only be paid for final claims.

Other providers that are identified to have RAPs auto-cancelled for no final claims that are below the acceptable threshold will be notified that their current billing practices are unacceptable and their RAPs are being monitored. If improvement is not noted within a reasonable amount of time, future RAPs may be set to pay at zero percent.”

Details are slowly emerging, but here is what we know thus far. RAP payments are being suspended for 298 home health agencies because they failed to submit final claims for 100 or more RAPS between January and April. The agencies’ performance will be monitored and RAP payments restored if improvement occurs. The targeted agencies had 100 or more RAPS auto-cancelled with some as high as 1300-4000.

Palmetto is the only MAC suppressing RAP payments at this time. However, all MACs have the authority to do so (see below from the July 3, 2000 Federal Register notice for the roll-out of PPS).

In paragraph (c)(2) of this section, we specify that ‘‘HCFA has the authority to reduce or disapprove requests foranticipated payments in situations when protecting Medicare program integrity warrants this action.

Regulation 4099.43(c)(ii).(2) Reduction or disapproval of anticipated payment requests. HCFAhas the authority to reduce or disapprove requests for anticipated payments in situations when protecting Medicare program integrity warrants this action. Since the request for anticipated payment is based on verbal orders as specified in paragraph (c)(1)(i) and/or a prescribing referral as specified in (c)(1)(ii) of this section and is not a Medicare claim for purposes of the Act (although it is a ‘‘claim’’ for purposes of Federal, civil, criminal, and administrative law enforcement authorities, including but not limited to the Civil Monetary Penalties Law (as defined in 42 U.S.C. 1320a–7a (i) (2)), the Civil False Claims Act (as defined in 31 U.S.C. 3729(c)), and the Criminal False Claims Act (18 U.S.C. 287)), the request for anticipated payment will be canceled and recovered unless the claim is submitted within the greater of 60 days from the end of the episode or 60 days from the issuance of the request for anticipated payment. Providers who wind up having their RAP’s suppressed do have an opportunity to exit RAP suppression, if they show sufficient improvement in the number of RAP’s that are auto-cancelled.

HCAF is working closely with NAHC to advocate on behalf of providers. We will share more information and/or guidance as it becomes available. Stay tuned!


The National Association for Home Care & Hospice has “advised” Palmetto that they should remove providers with acceptable explanations for their high RAP count immediately. NAHC pointed out that MAC authority to suppress RAP payments is based on program integrity and therefore this action should be limited to those cases. Industry representatives recommended consideration or a second layer of information (e.g., large provider, no final claims, high LUPA episodes) to consider before placing a provider on RAP suppression.

NAHC made a point that any agency that can identify a legitimate reason (e.g., unsuccessful efforts to get orders/F2F signed, temporary staffing problem during the first quarter, new software or software problems) should be removed immediately from RAP Payment Suppression. NAHC also recommended a short timeline for removal for agencies that don’t have sufficient reasons for immediate removal if they implement their plan of correction promptly and show improvement at one month, not three months of monitoring as stated in the letters.

Agencies need to take immediate action. They must first determine whether Palmetto’s findings are correct, rebut if incorrect, or develop a plan of correction if correct. They should send documented evidence (per Palmetto) of their situation that supports their request for rescinding the RAP suppression immediately. If the majority of the auto-cancelled RAP episodes resulted with a final claim payment they should send that evidence as well. If the agency has a large number of Medicare claims, they should send information to demonstrate that the percent of RAPs being auto-cancelled is small and therefore suppression of RAP payment is unjustified in their case.

The agencies should send their analysis of cause (again, with supporting evidence) and corrective action plan to Palmetto as soon as possible. This should be done by fax to ensure immediate consideration. Palmetto promised a quick review.

We also would suggest that agencies monitor outstanding RAPs and, if you believe they will be unable to submit the final claim before the 120 days due to problems with required documentation, should cancel those RAPs before they are auto-cancelled.

Stay tuned for more updates.

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