Section 402(a)(1)(J) of the Social Security Amendments of 1967 authorizes the Secretary for the U.S. Department of Health and Human Services (HHS) to develop demonstration projects that:
“develop or demonstrate improved methods for the investigation and prosecution of fraud in the provision of care or services under the health programs established by the Social Security Act.” 
The home health pre-claim review demonstration project was initiated by CMS due to the increase over the last three fiscal years of improper payment rates for home health claims. On June 8, 2016, CMS announced in the Federal Register  that five states would be involved in this new project to collect information to compile a “baseline estimate of probable fraud in payments for home health care services in the fee-for-service [FFS] Medicare program”. These five states include Illinois, Florida, Michigan, Massachusetts, and Texas. Furthermore, the goal of the project was to assess the use of pre-claim reviews as a means of reducing Medicare FFS expenditures for home health services by reducing improper payments while maintaining or improving the quality of care experienced by the beneficiary.”
II. Pre-Claim Review Demonstration Process:
Under the pre-claim review demonstration process requires home health agencies are strongly encouraged to request a preliminary confirmation of coverage by submitting home health claims and associated clinical documentation, for review after services have begun but before the final claim for services is submitted for payment. The home health pre-claim review process is designed to better help ensure that applicable medical necessity, documentation, coverage, coding and billing rules are met before a claim is submitted to Medicare for payment.
The pre-claim review process does not create new clinical home health documentation requirements. Rather, home health agencies are only required to submit the same information they currently maintain for payment. As mentioned, they will do so earlier in the process, which will help assure that all relevant coverage and clinical documentation requirements are met before the claim is submitted for payment. CMS contends that the pre-claim review process will not delay care to Medicare beneficiaries and will not alter the Medicare home health benefit.
Home health agencies in one of the five demonstration states have been advised that if they do not submit their claims through the pre-claim review process, those claims will be flagged for prepayment review and will essentially treated like an ADR. Moreover, after the first three months of the program, even if found to qualify for coverage and payment, CMS intends to reduce payment by 25% on each claim that is not submitted through the pre-claim demonstration review process.
The decision by CMS to postpone the implementation of the pre-claim review demonstration in Florida was influenced, in large part, by the advocacy of supportive political and home health industry groups. The postponement of the pre-claim review demonstration project is a major victory for health care providers in Florida, Michigan, Massachusetts, and Texas. Unfortunately, However, the implementation of the demonstration project is inevitable so providers should continue to prepare for the impact it will have on their health care practice. The exact start dates for Florida, Michigan, Massachusetts, and Texas have yet to be announced, but the dates will be provided on CMS’ website at least 30 days in advance to the implementation. Providers can expect a staggered start beginning with Florida, which provides additional time for preparation.
Robert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents home health agencies around the country in connection with Medicare audits and compliance matters. Our firm also represents health care providers in connection with federal and state regulatory reviews and investigations. For a free consultation, call Robert at: 1 (800) 475-1900.
-  42 U.S.C. 1395b-1(a)(1)(J).
-  Id.
-  81 Fed. Reg. 37598.
-  “Pre-Claim Review Demonstration for Home Health Services in Illinois,” available at http://www.palmettogba.com/Palmetto/Providers.Nsf/files/Workshop_Home_Health_PCR_Workshop_Series.pdf/$File/Workshop_Home_Health_PCR_Workshop_Series.pdf
-  See the Palmetto GBA website for helpful resources, available at http://www.palmettogba.com/palmetto/providers.nsf/docsCat/Providers~JM%20Home%20Health%20and%20Hospice~Home%20Health%20Pre-Claim%20Review.