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Home Health Pre-Claim Reviews Are Here!

August 23, 2016 by  
Filed under Home Health & Hospice

Pre-Claim Reviews(August 23, 2016):  The home health pre-claim review demonstration project has now started and will be in place for at least the next three years. How did we get to this point?  Unfortunately, this demonstration project was initiated (in large part) based on the fact that  improper payment rate for home health claims has gone 17.3 % in FY 2013  to 51.38% in FY 2014 and 58.95% in FY 2015.

The Center for Medicare and Medicaid Services (CMS) has primarily attributed this increase due to the failure of home health agencies (and their referring physicians) to fully meet documentation requirements to support the medical necessity of the services.

I. Background:

Section 402(a)(1)(J) of the Social Security Amendments of 1967[1] authorizes the Secretary for the 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.”  Consistent with this authority, on February 5, 2016, the Centers for Medicare and Medicaid Services (CMS) published notice in the Federal Register that it intended to collect information that would be used by the agency to serve as a baseline estimate of probable fraud in payments for home health care services in the fee-for-service Medicare program.”  This baseline is to be comprised of information gathered from home health agencies, referring physicians and Medicare beneficiaries.

On June 8, 2016, CMS announced in the Federal Register (81 Fed. Reg. 37598) that five states would be part of the new Pre-Claim Review Demonstration project. For these states, preapproval is being required before final home health claims can be submitted.

  • Illinois (originally set to begin August 1, 2016)
  • Florida (no later than October 1, 2016).
  • Texas (no later than December 1, 2016).
  • Michigan (no later than January 1, 2016).
  • Massachusetts (no later than January 1, 2016).

II. What is CMS Telling Medicare Beneficiaries About the Pre-Claim Review Project?

CMS has notified beneficiaries by mail that a “new Pre-Claim Review Demonstration for Home Health Services” was to be initiated in Illinois on August 1, 2016.  (It was ultimately delayed until August 5, 2016). The letter sent to beneficiaries states that “This new demonstration doesn’t change your Medicare home health benefit and coverage requirements.”  CMS further outlines coverage requirements in its attached Fact Sheet, saying that a beneficiary must:

  • Be confined to the home at the time of services. Medicare considers you confined to the home (i.e., “homebound”) if:

(1) There exist a normal inability to leave the home, and

(2) Leaving home requires a considerable and taxing effort.

  • Additionally, one of the following must also be true:

(1) Because of illness or injury, you need the aid of supportive devices (such as a crutch, cane, wheelchair, or walker); the use of special transportation; or the assistance of another person in order to leave your home; or

(2) You have a condition such that leaving your home is medically contraindicated.

  • Be under the care of a physician;
  • Receive services under a plan of care established and periodically reviewed by a physician;
  • Need skilled services, which are services that only a skilled nurse or therapist can safely and effectively provide;
  • Have a face-to-face encounter (or visit) with a doctor or practitioner no more than 90 days before you start home health care or within 30 days after you start home health,

III. What is Palmetto GBA Telling Certifying Physicians and Practitioners?

By letter dated August 11, 2016, Palmetto GBA advised Illinois “Certifying Physician[s] / Practitioner[s]” patients that the Illinois Pre-Claim Review demonstration project for home health services began on August 1, 2016.   Palmetto GBA’s letter to certifying providers further stated that:

“As the certifying physician/practitioner, you are required under the Medicare program to supply the HHA or beneficiary face-to-face encounter visit notes as well as any other documentation that supports medical necessity for the home health care services ordered.”

Palmetto GBA’s letter further notes that to qualify for the Medicare home health care benefit, the patient must:

  • Be confined to the home;
  • Be under the care of a physician;
  • Be receiving services under a plan of care established and periodically reviewed by a physician;
  • Be in need of skilled nursing care on an intermittent basis or physical therapy or speech-language pathology; or have a continuing need for occupational therapy;
  • Have a face-to-face encounter with a medical provider as mandated by the Affordable Care Act for the initial episode of care.

Palmetto GBA’s letter to certifying providers concludes by stating that:

“What You Need to Know

. . . As the certifying physician/practitioner,  you are required under the Medicare program to supply the HHA or beneficiary face-to-face encounter visit notes as well as any other documentation that supports medical necessity for the home health care services ordered.”

Palmetto GBA’s letter concludes by noting: 

“Your Responsibility

If you are the certifying physician/practitioner for a Medicare patient, and plan to  order/refer home health care services, it is imperative that patient medical records include comprehensive clinical assessment data and are submitted to the HHA in a timely manner. Please watch this video on Home Health Face-to-Face  Documentation on Palmetto GBA’s website at”

IV. Is Participation in the Pre-Claim Review Project Really Voluntary?

Both CMS and Palmetto GBA state that the demonstration project is “voluntary.”  Is it really voluntaryAs Palmetto GBA’s own website acknowledges:

“Final claims submitted without a Pre-Claim Review request during the first three months of the demonstration from the start date in that state will not be subject to a payment reduction.”

After this three month period:

“If a Home Health Agency in a demonstration state does not submit a Pre-Claim Review request, the final claim will be subject to pre-payment review. . . If no Pre-Claim Review request was submitted and the claim is determined  through pre-payment medical review to be payable, it will be paid with a 25 percent reduction of the full claim amount. . . The 25 percent payment reduction is non-transferable to the beneficiary. . . The 25 percent payment reduction is not subject to appeal.“  (emphasis added).

V. How Will a “Request for Anticipated Payment” (RAP) be Handled?

RAPs are not subject to the Pre-Claim Review process. At this time, no changes in the RAP submission process is anticipated – RAPs should be submitted in the normal process — there will not be any changes in the process and payment of a RAP.  A home health agency must submit a final claim within 120 days of the start of the episode OR 60 days after the paid date of the RAP. Please keep in mind, if a final claim has not been submitted in a timely fashion, the RAP will continue to be automatically cancelled.

VI. How Will a “Low Utilization Payment Adjustment” (LUPA) be Handled?

Home health services for less than 60days will still be subject to Pre-Claim Review, with the following exception:

  • LUPAs occur when four or fewer visits are provided in a 60 day episode. LUPAs are not subject to the Pre-Claim Review process.

VII. How Should Services With Modifier GY be Handled?

Home health services that are not covered by Medicare should be appended with a GY Modifier.  This modifier reflects the fact that the item or service does not meet the definition of a Medicare covered benefit.  Home health services billed with a GY Modifier are not subject to Pre-Claim Review.

VIII. How Should Services With Modifier GA be Handled?

Use of a GA Modifier indicates that that a provider expects an item or service to be denied because it is not reasonable and necessary.  The most common example of this situation would be for home health services that do not appear to meet the requirements under the applicable LCD.   It is appropriate to report this modifier when a beneficiary refuses to sign an ABN.  Importantly, the presence or absence of the GA Modifier does not influence Medicare’s determination for payment.  Therefore, Pre-Claim Review IS STILL REQUIRED for home health services billed with a GA Modifier.

IX. When Will Home Health Services in Texas be Subject to Pre-Claim Review?

Unless delayed (as it was for a few days in Illinois), the Pre-Claim Review process is currently scheduled to apply to all 60-day episodes of care that BEGIN on or after December 1, 2016.  This will include:

  • Initial certifications of care.
  • Recertifications of care. If a beneficiary is discharged and readmitted to the same agency within the same 60-day episode of care, these claims are subject to the Pre-Claim Review process.
  • If a new admission (start of care OASIS) is required, a new Pre-Claim Review request must be submitted by the agency.
  • If a beneficiary transfers to another home health agency during a 60-day episode of care, the RECEIVING home health agency must submit a Pre-Claim Review Please note, even if a beneficiary with a “provisionally affirmed decision” transfers to another home health agency during the same 60-day episode of care, the RECEIVING home health agency must still submit its own Pre-Claim Review request.

X. What Happens When a Claim is Submitted for Pre-Claim Review?

CMS is requiring that Palmetto make a decision and notify an agency within 10 business days (excluding federal holidays) of the initial submission for Pre-Claim Review.   Palmetto will assign a “Unique Tracking Number” (UTN) to each decision.  The decision will advise the submitting agency whether the claim is “affirmed” or non-affirmed.”   Each decision will include:

  • The UTN that has been assigned to the episode / decision.
  • Which HCPCS were affirmed.
  • A detailed explanation of which requirements were not met (if any).
  • Importantly, a provisional affirmation decision is only a preliminary finding that a future claim submitted to Medicare for the service likely meets Medicare’s coverage, coding and payment requirements.
  • A provisional affirmative decision only applies to the episode for which the Pre-Claim Review request was submitted.

XI. What Happens When Some HCPCS Codes Are Affirmed and Some are Denied?

In some instances, you may find that a Pre-Claim Review decision includes both affirmed and non-affirmed HCPCS codes. Should this occur, you can:

  • Submit the final claim with all the HCPCS codes with the UTN and the provisionally affirmed HCPCS will approve for payment and the non-affirmed HCPCS will deny with appeals rights.
  • Resubmit the PCR for the non-affirmed HCPCS codes which would result in a new UTN based on that decision which would then need to be used on the final claim.

XII. What Does it Mean When a Non-Affirmed Decision is Issued by Palmetto?

More often than not, it means that the documentation submitted does not meet one or more of Medicare’s requirements. Each notification of non-affirmation will include:

  • The UTN for the non-affirmed claim.
  • A listing of which HCPCS codes were not affirmed.
  • A detailed explanation of which requirements have not been met in order for the HCPCS codes at issue to qualify to be affirmed.

XIII. Impact of Home Health Pre-Claim Reviews on Small and Mid-Sized Home Health Agencies in Texas.

Your costs to process a claim will be significantly higher for the next three years.  The additional paperwork and effort to submit an episode for Pre-Claim Review are non-compensated and will likely prove challenging for agencies currently facing rising costs and ever-diminishing profit margins.

While CMS has issued deadlines (10 business days / 20 business days) for Palmetto to issue decisions in initial requests and resubmissions, it remains to be seen whether these deadlines will be met.  Home health agencies should anticipate delays, regardless of the goals that have been set for Palmetto. Even if Palmetto is able to process Pre-Claim review requests within its stated deadlines, home health agencies should expect to receive a significant percentage of denials (at least until it becomes more clear what Palmetto expect to see).  These denials will result in cash-flow delays.

Unfortunately, the administrative appeals process remains broken.  If you are unable to obtain a provisionally affirmed decision, you will likely face 3 – 5 years appealing a denial through Medicare’s appeal process.  Unless small and mid-sized agencies work to aggressively improve their compliance with applicable LCD rules, documentation, coverage and payment requirements, we anticipate a number of closures over the next three years.

Pre-Claim ReviewsRobert 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 and other health care providers around the country in connection with Medicare, Medicaid and private payor audit actions. 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.


[1] 42 U.S.C. 1395b-1(a)(1)(J).

OIG Report on the Nationwide Background Check Program

OIG's Nationwide Background Check Program details risks faced by home health agencies.(July 23, 2014):  Rightly or wrongly, critics of our nation’s long-term care system have long cited incidents of patient abuse, neglect, and the alleged misappropriation of funds among the identified widespread problems many seniors face when receiving long-term care and treatment services.  In an effort to address these problems, legislators were sure to include provisions in the Affordable Care Act (ACA) aimed at reducing the likelihood that an individual with a prior criminal conviction will be hired to care for seniors.  Section 6201 of the ACA established the framework for a nationwide program to conduct background checks at the state level of all individuals seeking employment in direct patient access positions within long-term care facilities or with long-term care providers.  Notably, the term “long-term care” includes skilled nursing facilities, nursing homes, home health agencies, long-term care hospitals and residential care facilities.  The term also includes intermediate care facilities for individuals with intellectual disabilities. The purpose of this article is to examine the actions of home health agencies and whether or not they are meeting their obligations to properly conduct background checks on prospective employees who would have direct patient access is hired.  In response to a recent Congressional request, the Department of Health and Human Services, Office of Inspector General (OIG) initiated two evaluations regarding the employment of individuals with criminal convictions in one specific type of long-term care environment: home health agencies (HHAs). Following the first evaluation, OIG published a report setting out its findings, many of which will be invaluable to CMS its administration of the “Nationwide Background Check Program.”

I. Purpose of the Nationwide Background Check Program Study:

As OIG report reflects, the agency surveyed state officials from all 50 states (and the District of Columbia) to determine:

     1.  State requirements for conducting background checks for prospective HHA employees,

     2.  Job positions for which states require HHAs to conduct background checks, and

     3.  Types of convictions that states consider to be disqualifying from HHA employment.

II. Results of the Nationwide Background Check Program Study:

OIG also found that the practices below are being followed:

1. Forty-one states

  • require HHAs to conduct background checks on potential employees, and
  • verify this compliance.

2. Ten states have no background check requirement, but four of these reported that they have plans to implement background check requirements in the future.

3. Thirty-five states specify convictions that disqualify individuals from employment.

4. Sixteen states allow an individual who has been disqualified from employment to submit an application to have his/her conviction(s) waived.

The thirty-five states that specify convictions that disqualify individuals from HHA all have different disqualifying convictions. For example, Wisconsin prohibits an individual from HHA employment if he was convicted of homicide, battery, and sexual assault. Minnesota, on the other hand, groups disqualifying convictions into categories which are split up by the time that must have elapsed between the discharge of the sentence imposed and eligibility for HHA employment. Minnesota’s categories are:

     1.  7 years (misdemeanor domestic assault)

     2.  10 years (misdemeanor receiving stolen property)

     3.  15 years (felony robbery)

     4.  Forever (kidnapping)

III. Final Remarks:

While federal laws and regulations requiring that HHA’s conduct background checks on potential employees  or prohibit HHAs from hiring individuals who have been convicted of crimes, HHAs must comply with State background check laws to participate in Medicare. The OIG study revealed that states have very different requirements in regard to whether background checks have to be conducted, what sources of information need to be checked, which job postings must have background checks, and what types of convictions disqualify an individual from HHA employment.

In 2012, HHAs provided services to approximately 3.5 million Medicare beneficiaries and Medicare paid nearly $18.5 billion for these services.  Given these huge numbers, it is easy to see why HHA background checks are important to protect patients and avoid Medicare fraud.

In addition to suggesting that the information in the report will be useful to CMS in administering the Nationwide Background Check Program, OIG also states the study may be useful to states that are considering establishing or enhancing background-check requirements.

Robert W. Liles

Liles Parker attorneys represent health care suppliers and providers around the country in connection with regulatory compliance reviews, Medicare audits, HIPAA Omnibus Rule risk assessments, privacy breach matters, and State Medical Board inquiries. Robert W. Liles, Esq., is a Managing Partner at Liles Parker, Attorneys & Counselors at Law.  Call Robert for a free consultation at: 1 (800) 475-1906.