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CMS Implements HHA Pre-Claim Review Demonstration

On June 8, 2016, CMS finalized its plan for the implementation of a 3-year “demonstration” of Medicare pre-claim review for home health services. The trial will be carried out in 5 states: Florida, Illinois, Massachusetts, Michigan and Texas—all of which CMS terms as having “high incidences of fraud and improper payments” with regard to home health services. When CMS released the plan proposal in February, it was met with negative feedback from providers and Congress during the comment period, but CMS decided to go forward regardless, and it is important for home health agencies (HHAs) to adapt to the new requirements or else risk penalties or denial of payments.

According to the Department of Health and Human Services, 59% of home health service payments in 2015 were improper, up 41.7% from 2013’s improper payment rate of 17.3%. CMS hopes that pre-claim reviews will cut down on incorrect payments, not only caused by fraud, but also due to more prevalent causes such as insufficient documentation to support the medical necessity of the services, which is cited by CMS as the largest cause of erroneous funding.

The demonstration will require HHAs to submit pre-claim review requests to Medicare Administrative Contractors (MACs). These requests will include the same documentation normally provided to prove that the billed services meet the standards of Medicare reasonability and medical necessity, only submitted prior to the filing of the final claim.  The HHA should begin treatment of the patient while awaiting a determination on the pre-claim filing.  The HHA should submit the pre-claim review request after the Request for Anticipated Payment (RAP) is processed and within thirty (30) days of the first treatment provided to the patient, and the request should be submitted before the final claim is submitted for payment.  According to CMS, MACs “will make every effort” to issue a decision on a pre-claim review request within ten (10) business days for an initial request and twenty (20) business days for a resubmitted request following a non-affirmative decision. When a pre-claim request is approved, the HHA will be given a unique pre-claim tracking number which the HHA must submit with the claim itself to assure full and proper reimbursement.

Should the request be denied, the provider will be permitted to resubmit the claim with additional documentation an unlimited number of times. Aside from re-submission, HHAs still retain their right to an appeal if payment is denied based on lack of medical necessity or other bases not due to simple lack of documentation. Ultimately, however, even after a pre-claim request and claim is approved, HHAs may still be audited, on the basis of information not available at the time the pre-claim request was filed and processed.

On August 1, 2016, Illinois will become the first state to adopt the plan, with Florida following on October 1st, Texas starting on December 1st and Michigan and Massachusetts completing the roll-out on January 1, 2017. Three months after implementation within their respective states, HHAs who do not submit a pre-claim review before requesting payment for home health services will be penalized by 25% on any funds which are received—this penalty will not be appealable, making it important for Medicare HHAs within the five states to be informed on this new development so they can comply with all its requirements.

CMS is hosting a Special Open Door Forum (ODF) on Tuesday, June 14 at 2pmET to further discuss the pre-claim review demonstration.  We highly recommend HHAs in the demonstration states and all industry stakeholders that could be affected by the demonstration to participate in the ODF.  The conference call information for the ODF is: Participant Dial-In Number: 1-800-837-1935 and Conference ID #: 94873140.

Wachler & Associates represents healthcare providers and suppliers nationwide in a variety of health law matters, including compliance with and appeals of Medicare regulations and determinations. Our attorneys also advise health care entities on how to remain compliant with state fraud and abuse laws governing relationships between healthcare providers and referral sources. If you or your home health agency has any questions regarding compliance with the new pre-claim requests or other healthcare laws pertaining to Medicare or Medicaid, or healthcare regulatory compliance in general, please contact an experienced healthcare attorney at (248) 544-0888, or via email at You may also subscribe to our health law blog by adding your email at the top right of this page.

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