Progress on bonds but not nearly enough

HCFA agrees to `technical corrections'

Yes, the Health Care Financing Administration (HCFA) yielded to Congressional pressure to make "technical corrections" to the Surety Bond regulation, but, no, it doesn't appear many home health agencies will benefit.

At least that's the conclusion of industry experts such as William A. Dombi, vice president for law at the National Association for Home Care (NAHC) in Washington, DC. Disappointed at HCFA's failure to lower the requirement that surety bonds equal 15% of an agency's annual Medicare revenue amount, Dombi still hopes something further can be done so that smaller home health providers can afford bonds. "It's sort of like seeing the previews for a feature film at the movies. They show you the good parts, and you have no idea what the whole film is like. So, you wait for the movie reviews.

"The change [in the surety bond regulation] shows some promise and should open up the market somewhat," he says, "but there was no reference to changing the 15% amount of the bond."

What HCFA agreed to do in its final rule published March 4, 1998, is as follows:

· Limit liability to the bond in effect when it is determined that funds are owed to Medicare, regardless of when the overpayment or misdeed took place.

HCFA explains that bond writers will be liable only for determinations made during the year for which the bond is written or the "period of discovery." This ensures that bond writers are not responsible for money owed to Medicare for several years after a bond expires, making it easier to determine a bond company's actual risk and making bonds more affordable.

· Establish that bond writers have liability for an additional two years when a home health agency leaves the Medicare program.

The term of the bond will automatically extend two years after the date an agency is terminated from Medicare, voluntarily or not, HCFA says. This provides additional protection for Medicare and sets a clear limit on liability if Medicare terminates the agency.

· Give bond companies the right to appeal overpayment assessments if an agency fails to assign its right of appeal to the company.

HCFA believes this change recognizes that bond writers should have appeal rights. Bond writers would not, however, be able to appeal if an agency has appealed and lost.

In addition, the deadline, which was Feb. 27, has been removed, HCFA says, because some HHAs were unable to obtain a surety bond in time to meet the Feb. 27 date. Therefore, HCFA removed the date by which HHAs are required to submit the bonds to HCFA and/or the State Medicaid Agency [63 Fed Reg 10,729-10,731 (March 4, 1998)].

The American Federation of Home Health Agencies (AFHHA) of Silver Spring, MD, also opposes the surety bond rule as it now stands, even with the changes. The trade association, in an open letter to HCFA administrator Nancy-Ann Min DeParle, wrote, in part, "It is simply incorrect for HCFA to contend that `the majority of home health agencies will not be significantly affected by this rule.' Even with incorporation of HCFA's contemplated changes, the surety bond requirements are uniquely anti-small business and anti-competitive."

AFHHA concluded its letter by offering the following solutions:

· Base the home health surety bond requirement on the Florida bond model, i.e., $50,000 for new home health agencies.

· Remove the on-demand requirement of the bond.

· Permit seizure only in cases of bankruptcy, proven fraud, or overpayments - not on a repayment schedule - which remain after exhaustion of the appeals process.

· Eliminate cumulative liability.

· Establish a process whereby HHAs can reconcile conflicts between their financial and utilization records and those of the fiscal intermediaries.

· Hold HHAs that have made good faith but unsuccessful efforts to obtain a bond harmless for services provided after Jan. 1, 1998.

· Exempt from the requirement those agencies in under-served areas, e.g., the sole Medicare HHA in the Virgin Islands.

· Re-issue the surety bond requirements as a proposed rule, and eliminate any retroactive application.