Despite stakeholder outcry, CMS launches home health prior-authorization demo

Despite outcry from industry stakeholders, advocates and beneficiaries, the CMS is moving forward with a three-year demonstration in which beneficiaries from five states would need to get prior approval before they get home health services.

The demonstration will launch in Florida, Illinois, Massachusetts, Michigan and Texas—states that are all tagged by the CMS as having high levels of improper payments.

The pre-claim review demonstration will begin in Illinois on Aug. 1, and the remaining states will phase in this year and next.

Under this demonstration, once home health services are ordered by physicians, theMedicare beneficiary can still immediately receive Medicare’s home health services. However, the home health agencies must submit supporting written evidence earlier than they normally would.

“CMS will help make sure that home health services are medically necessary without delaying or disrupting patient care or access,” the agency says of the approach.

Medicare will review the documentation to determine if all coverage requirements for home health services are met and will issue a pre-claim review decision generally within 10 days. If a claim is ultimately rejected, the agency can appeal.

In 2015, 59% of home healthcare payments, or more than $9 billion, were “improper.” The improper payment rate was 17.3% or $3 billion in 2013.

An improper payment can occur when funds go to the wrong recipient, the right recipient receives the incorrect amount of funds, documentation is not available to support a payment or the recipient uses funds in an improper manner. The tally includes fraudulent claims but is not a measure of fraud.

Prior to formally launching the effort, the CMS received comments from the public and the response was generally negative.

The pre-claim review “might be one more disincentive for home health agencies to provide services to people with more than the usual short-term, limited-service need,” said Matthew Shepard, spokesperson for the Center for Medicare Advocacy.

Industry stakeholders have said the proposed demonstration could punish home health agencies that don’t have a history of fraud.

The CMS estimates that administrative costs for industry will be $21.6 million for the first three years. However, getting the project off the ground will cost the federal government more than $300 million.