CMS Announces New, More Provider-Friendly Rules for Advanced and Accelerated Loan Repayment

The U.S. Centers for Medicare & Medicaid Services (CMS) announced amended terms Thursday for accelerated and advanced payments granted to Medicare-certified health care providers — including home health agencies — during the public health emergency.

Under the new “Continuing Appropriations Act” of 2021 and “Other Extensions Act,” repayment for providers will now begin one year after the advanced or accelerated payments were received.

The accelerated and advanced payment program was expanded in late March, meaning that providers would have been required to make payments starting in August, but when August came around, providers were not forced to begin paying back the money distributed to them.

Now, repayment will officially be delayed until one year after the payments were issued.

“In the throes of an unprecedented pandemic, providers and suppliers on the frontlines needed a lifeline to help keep them afloat,” CMS Administrator Seema Verma said in a press release. “CMS’s advanced payments were loans given to providers and suppliers to avoid having to close their doors and potentially causing a disruption in service for seniors. While we are seeing patients return to hospitals and doctors providing care we are not yet back to normal.”

In total, CMS has issued over $106 billion in payments to providers dealing with financial hardship and cash flow issues tied to COVID-19. CMS’s advanced and accelerated payment programs are generally granted to providers that, for example, are in an areas experiencing a natural disaster.

The distribution this time around, however, was one of the broadest — if not the broadest — distributions of upfront cash in the history of the program.

After the first year, there will be a tiered approach to a reimbursement cut-off, depending on how long providers take to pay back the money. That cut-off will range from just 25% of a provider’s reimbursement being cut off to 50%.

For instance, Medicare will automatically recoup 25% of Medicare payments that would usually be distributed to the provider for eleven months. Once that eleven-month period passes, recoupment will increase to 50% for the following six months.

If the home health provider is still unable to repay the total amount of the accelerated or advanced payments they received during that 29-month time period, CMS will issue letters requiring repayment of any outstanding balance, which will be subject to a 4% interest rate.

This means that providers will not only be gaining significantly more time to pay CMS back, but they will also be subject to a far lower interest rate if they are unable to repay in the designated time period. Usually, the interest rate would be closer to 10%. 

“This makes real accommodations for providers,” Judy Waltz, a partner at Milwaukee, Wisconsin-based law firm Foley & Lardner LLP, told Home Health Care News in September when the now-official CMS changes became a possibility. “Overall, the burden on providers is much, much more bearable.”

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Why the Proposed Medicare Rate Increase for 2021 Is ‘No Cause for Celebration’

Home health providers have experienced varying degrees of disruption to their business models over the past dozen or so years, from the Patient Driven Groupings Model (PDGM) to smaller regulatory changes.

But at the end of the day, the cost of doing business has gone up. And reimbursement levels don’t reflect that, according to Mark Sharp, a partner at the accounting, auditing and advisory firm BKD.

“For almost 10 years now, [there’s been an] effort to really change the way we deliver health care, taking us from a fee-for-service model to a model that focuses on value and quality,” Sharp said Tuesday at the National Association for Home Care & Hospice (NAHC) 2020 virtual Financial Management Conference. “So we’ve got the pressures of doing business more efficiently, but also doing it differently. That’s what we all have to deal with in today’s environment.”

The Centers for Medicare & Medicaid Services (CMS) has never properly adjusted rates to match higher costs for at least 12 years.

“Since 2008, we have never once seen a full inflationary rate increase,” Sharp said.

The disruption of PDGM could further slice home health margins. Heading into 2020, the new payment model was the industry’s primary and biggest fear.

Since, it has taken somewhat of a backseat to COVID-19. But while certain regulatory relief has been granted to home health agencies, PDGM’s rollout has not been paused.

CMS’s new proposed payment rule for 2021 would give home health agencies an estimated 2.6% rate increase, which would collectively mean about $540 million more for providers next year. But Sharp doesn’t find that particularly helpful.

“I find it a little bit ironic that we’re celebrating a [2.6%] base rate increase that still doesn’t cover the 3.1% inflation,” Sharp said. “We are in difficult times of maintaining profit margins in a landscape like this. When I look at this payment environment, I would envision we’d be having decreasing margins.”

From 2009 to 2011, profit margins across home health went from 5.3% to 2.8%, according to information shared during the Financial Management Conference. Since then, margins have held relatively steady around that 2.8% number.

“Since [2011], overall profit margins have remained stable. They’re not overly generous, but they’re stable from 2011, all the way through 2018,” Sharp said. “The question that I might ask is that: At what point is it going to become too difficult to maintain those margins?”

Part of the reason CMS hasn’t jumped to increase home health base reimbursement rates is likely due to the Medicare Payment Advisory Commission (MedPAC). For years, MedPAC commissioners have argued that home health providers are overpaid.

And MedPAC’s views of home health margins are far different than the industry’s.

According to MedPAC’s most recent calculations, freestanding home health agencies — about 85% of all agencies — had an aggregate margin of 15.3% in 2018..

“The 2018 margin is consistent with the historically high margins the home health industry has experienced since the Prospective Payment System (PPS) was implemented in 2000,” MedPAC officials in a July report. “The margins from 2001 to 2017 averaged [16.5%], indicating that most agencies have been paid well in excess of their costs under the PPS.”

The antidote to thinning margins

With COVID-19-related costs rising as well as PDGM coming into the picture — though data on PDGM has been encouraging thus far — agencies may need to adapt to keep margins closer to 3%.

Margins were 2.9%, 2.3%, 2.5% and 2.8% in 2015, 2016, 2017 and 2018, respectively.

“We do need to find new ways to streamline our processes and emphasize quality,” Sharp said. “[And] bring about a culture that we’re going to bring in patients, as well as recruit and retain the best staff.”

What Sharp and Stacy Olinger — the vice president of BJC Home Care — suggest is abiding by “lean principles.” St. Louis, Missouri-based BJC Home Care is a provider of home health, hospice, home infusion and palliative care, among other services.

“Lean” is a philosophy of improving workflow by minimizing waste in order to maximize value to the customer, according to Olinger, who presented with Sharp at the Financial Management Conference.

“[Becoming] lean — it is a journey and it’s also more than just a set of tools,” Olinger said. “It is an overall management philosophy and operating system, a production system that really does help you achieve the quadruple aim of health care.”

The philosophy is popular with many big-name businesses, including the car company Toyota. But it has not been applied in home health all that often.

It’s about eliminating non-value-added tasks and activities, implementing low- to no-cost solutions and simplifying processes, among other improvements.

With the not-so-generous rate adjustments, providers taking matters into their own hands when it comes to increasing margins might be their best bet.

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‘An Absolute Travesty’: Home Health Advocates Make Last-Ditch Effort to Delay Review Choice Demonstration

When the U.S. Centers for Medicare & Medicaid Services (CMS) announced that the Review Choice Demonstration (RCD) would resume for participating states in August, home-based care providers and advocates were up in arms over the decision.

But as the resumption date approaches, industry advocates are making a last-ditch effort to get CMS’s attention and persuade regulators to reconsider the move.

“I think it’s one of the most heartless, callous and hypocritical decisions that CMS could make at this time,” Tim Rogers, the president and CEO of the Association for Home & Hospice Care of North Carolina, told Home Health Care News.

RCD states include Illinois, Ohio, Texas, North Carolina and Florida. The latter two are just being introduced to the improper billing initiative.

In part, the resumption of RCD is so brutal due to recent developments in the battle against the coronavirus. Both Florida and North Carolina have rising COVID-19 case trends, according to data from John Hopkins University.

Currently, RCD is supposed to begin again on Aug. 3. Originally, the thought was that as long as a public health emergency persisted, CMS would continue its suspension of RCD.

But the public health emergency has been extended to at least Oct. 23, and CMS — as of now — is planning on moving forward with the demonstration despite that extension.

Rogers worked with the executive director of the Home Care Association of Florida (HCAF), Bobby Lolley, as well as the Partnership for Quality Home Healthcare, among other advocacy groups, to originally get a delay implemented when the COVID-19 crisis began.

“They listened to our concerns months ago, and they implemented the delay,” Rogers said.

“We never were led to believe that it was going away.”

Two weeks ago, Lolley helped lead an effort to get U.S. senators involved. Republican Senator Marco Rubio had helped similarly with the Pre-Claim Review Demonstration (PCRD), RCD’s failed predecessor.

Naturally, HCAF and Florida home health providers looked to enlist his help once again.

And those efforts paid off: Rubio’s staff reached out to CMS on behalf of the providers who voiced concerns to them about the resumption of RCD. In turn, CMS asked that providers send them emails directly about their reservations.

As of Friday, over 1,000 emails had been sent to CMS. More than 4,600 RCD-related emails have been sent total, whether that be to politicians, advocacy groups or government agencies, Lolley told HHCN.

“That is a good-sized number, but it needs to be bigger, and we’re going to be pushing this week to make that number larger,” Lolley said. “So if these emails from providers get the attention we think, I think that’ll lead into us getting some sort of meeting with someone higher up in CMS.”

Advocates involved in the effort hope to double those numbers by week’s end.

Lolley said that he is hoping that CMS’s decision was simply an oversight and that, once things get talked out, the agency will understand why this is the wrong move amid a national health care crisis.

“If we can just talk to them and make sure that they understand how difficult things are for the home health sector here in Florida … I can’t imagine anybody going forward with this,” Lolley said. “I don’t think it will go away. But I do feel fairly confident that they would delay it. How long would they delay it? I’m not sure. But I do believe that if it just can be brought to the attention of the right people, they’ll see clearly that this should not happen.”

Why RCD hurts right now

In Florida, the hospitals have teetered around full capacity for over a month. When it gets to that level, hospitals need to start pushing out their more stable patients — and that’s when home health really comes in handy.

That means that referrals for home health agencies have been through the roof, Lolley said, and that running an agency is more hectic than ever.

Additionally, because of the virus’s resurgence in the state, many administrative and clerical staff are still working from home or working in a COVID-19-related position for the time being.

In North Carolina, many home health agencies owned or managed by hospital systems have begun helping out by sending workers to conduct testing where they’re needed or doing other COVID-19 type work, Rogers said. Those are the ones that would be utilized in RCD work previously.

“These staff members that would be the ones doing the documentation or reviewing the documentation prior to the claim submission are now remote,” Rogers said.

Even without COVID-19 circumstances, RCD is a bit of an undertaking for home health providers.

Now, given the increased referrals and new regulations, providers feel that it is just unfair to bestow another burden on them right now, Linda Murphy, the founder and COO of Concierge Home Care in Florida, recently told HHCN.

“I think CMS’s timeline is aggressive considering the state of emergency,” Murphy said. “We are seeing a spike in quarantined team members due to outside exposures. We are now mandated to test our team members every two weeks. … We are [already] asking so much of our clinical teams to meet the challenges and demands.”

Concierge Home Care is a home health provider with nine locations in northern Florida.

While CMS is resuming RCD, it is simultaneously still allowing — and encouraging — remote patient monitoring, non-physician home health certification and hospital-to-home health hand-offs, in general. That seems backwards to advocates for RCD suspension.

CMS is acknowledging the increasingly large and tough role home health plays while also increasing its burden amid COVID-19, they feel.

That’s why Lolley, Rogers and others feel so strongly about their cause. They’re going to keep hitting up members of Congress, CMS and anyone else who will listen over the next week.

Congress withholds the right to halt CMS from moving forward with RCD re-implementation.

“They classify home health as such an important aspect of the clinical continuum during COVID-19,” Rogers said. “And then they augment them and push them aside during COVID-19 in order for them to do RCD, audits and paper chase, and ultimately diminish their role in clinical care — it’s an absolute travesty.”

Rogers and Lolley are both cautiously optimistic that they’ll be able to get something done and are hoping it will be by this upcoming Friday, July 31.

“Granted, if it were implemented, we would complete our learning curve just like Illinois, Ohio and Texas,” Lolley said. “But they didn’t have a learning curve in the middle of a worldwide pandemic, and their state wasn’t in the center of that virus. The timing, it’s just crazy. It’s crazy to try to do this.”

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