HCFA alters plans for provider-based change

Further policy clarification to come in May, maybe

In its second stealth maneuver involving an update of the Medicare provider based-status policy, the Health Care Financing Administration (HCFA) has changed its original course, deciding not to publish it in theFederal Register. . . yet.

As we reported in a Jan. 20, 1998, fax bulletin to our readers, HCFA said the change, which will establish a new, stricter definition of provider-based status for home health agencies, was to be published as a policy in the Federal Register in either January or February. The federal government agency now says it will instead distribute the proposed change to a core list of home care providers, attorneys, and home care industry representatives for an informal 30-day comment period.

After that, a HCFA spokeswoman says, the policy will be "produced as a final update to the Medicare reimbursement manual, then it will be codified as part of the hospital outpatient regulations to be published [in the Federal Register] in May."

Confirming the change in publishing procedure, Jim Murray, deputy counsel with the National Association for Home Care in Washington, DC, quipped, "HCFA says May, and I say may-be."

It was Murray who discovered the policy change plans earlier this year, and he has been in contact with HCFA ever since. However, he has not seen the clarification, although he is in line to receive a copy of it during the informal comment period.

Remember the 1996 program memorandum?

According to a HCFA official, the change will be just further clarification of the 1996 Program Memorandum (A 96-7), whose intent was to make certain that when a hospital was reimbursed by Medicare for providing services to a home health agency, the hospital actually provided the services. "There was no particular objective, just an update, I think."

But the National Association for Home Care (NAHC) and some hospital-affiliated providers don’t share such a sanguine view. Murray has said he believes that arrangements where subcontractors provide billing or management services, as with a management service organization (MSO), are at risk. "All hospital-based providers should be concerned about the new policy," he says, "especially multi-corporation hospital systems. They will be the most impacted."

David Baker, executive director of home care at St. Francis Health System in Peoria, IL, agrees. Calling the new police "onerous," Baker fears the worst for integrated delivery systems such as his. "This could be a death blow to hospital-based agencies," he warns.

HCFA, however, denies the clarification of provider-based status targets home health, saying skilled nursing facilities and outpatient departments will be affected too. The official says that HCFA is particularly concerned about hospitals that buy up physician practices and turn them into their outpatient departments. Those arrangements are not acceptable, the official explains.

"The [relationship] is supposed to be a seamless part of the main hospital facility. That’s why you get to recoup overhead. That’s legitimate. But to set up something down the road, if it’s fictitious, we don’t think that is legitimate."

The HCFA official says each provider-based situation must be "evaluated on a case-by-case basis" to determine its legitimacy. "Even now, though, a management service organization is not consistent with provider-based status."