Back in September, we reported that the Medicare pre-claim review process had begun in Illinois, and by all accounts, the initiative was not going very well. Despite promises from CMS that the process would not delay the processing of claims or lead to problems with the delivery of care or reimbursements for legitimate claims, according to the agencies involved in the demonstration as well as the National Association of Home Care and Hospice, the transition was anything but smooth.

In fact, the issues have been so severe and so detrimental to the agencies participating, that the planned start date for the next state in the demonstration project, Florida, was pushed back by at least 30 days; originally, pre-claim reviews were set to begin in the Sunshine State on October 1, but due to concerns from the affected agencies as well as industry groups and lawmakers, CMS temporarily put that start date on hold. Agencies in Illinois, where the process began in August, will continue with the demonstration project, despite bottlenecks and other issues, but for now, no other states will be added to the project.

The Pre-Claim Review Demonstration Project

In an effort to fight fraud and waste, CMS implemented the Pre-Claim Demonstration for five states (Illinois, Florida, Michigan, Massachusetts, and Texas) on a rolling basis, with the expectation that the requirement would extend to all states after the demonstration period. The new process requires home health care providers to submit patient claims to CMS contractors for an audit before the final claim is submitted for payment. In theory, the audit would catch inappropriate billing and errors before the final claim reached CMS, thereby reducing the number of inappropriate claims.

However, the demonstration project has not gone as planned — in fact, some have described it as “a complete mess.” Among the many problems reported include:

• Trouble with the Medicare Administrative Contractor’s (MAC) electronic submission system. Agencies are required to submit claims for review using this system, which has been plagued with technical failures and other disruptions.

• Excess paperwork. Some agencies report needing to submit the same documentation several times, representing an unnecessary burden. CMS has attempted to alleviate this to some extent for those providers using Palmetto GBA, by allowing providers to submit documentation that supports multiple tasks once and then adding notes in subsequent tasks, but there is still a significant paperwork burden on agencies.

• Inappropriate denials. While CMS reports that more than 75 percent of the pre-claims submitted are not being approved or at least partially approved, providers are still having trouble getting legitimate claims approved. Many report that there is a lack of consistency in which claims are approved or denied; some have even reported that they resubmitted a denied claim with the same information and documentation, only to have it approved on resubmission.

Not only are these issues frustrating to home health agencies, but they are affecting agency operations as well. Some agencies report having problems with customer service, because when a pre-claim submission is denied, the Medicare contractor automatically generates a letter to the client stating that he or she is no longer eligible for services. This creates unnecessary stress and concern, and many agencies report having to work with customers to reassure them that their claims will be covered, and changes in customer perception of their agency as a result.

Perhaps even more concerning, though, is the effect that the pre-claim review process is having on cash flow and operational budgets. Agencies are reporting that not only does the pre-claim process add a costly administrative burden, but that the slowdowns in claim processing are affecting reimbursements. As a result, many agencies are being forced to make difficult choices regarding staffing and services, and some have even considered no longer accepting Medicare clients.

What the Delay Means

So what does the pre-claim review delay mean? Most importantly, it doesn’t mean that your agency is off the hook forever, since CMS is not canceling the demonstration entirely. The agency still plans, as of now, to continue with the project in the future once the kinks are worked out. An official start date for Florida will eventually be announced — with agencies given at least 30 days to prepare — and new start dates for the other demonstration states soon to follow. Illinois will continue to submit claims for audits before the final claim submission, but CMS is planning additional education and support for agencies in that state.

If your agency is not located in one of the demonstration states, it will most likely be some time before pre-claim reviews affect your business. However, it is still important to watch what is happening in the demonstration states, and prepare your agency now for the inevitable. This means focusing on your documentation processes and getting your home health software up-to-date, to ensure that you are prepared to collect and submit the required documentation for pre-claim reviews. One area that many HHA’s are struggling with is the physician order signature tracking, so you may need to make additional changes to your procedures to ensure you get those orders in time to submit the pre-claim authorization request.
As CMS moves forward with the Pre-Claim Review Demonstration, there will undoubtedly be more news about how it will affect agencies of all sizes. Stay tuned here for updates, and be sure to check out some of Complia Health’s resources to learn more about advanced software to help you run your business more efficiently.