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Final Home
Health Regulations Adjust Prospective Payment Rates and
Limit Sale/Transfer of
Medicare HHAs.
The Department of Health and Human
Services ("HHS"), through the Centers for Medicare and
Medicaid ("CMS"), issued final regulations (the
"Regulations") that (a) adjust Medicare Home Health
Prospective Payment System ("HH PPS") Rates for calendar
year 2010 and (b) prohibit the change of ownership, sale or transfer
of a Medicare certified home health agency's ("HHA")
provider agreement and Medicare billing privileges to a new owner if
the sale or transfer occurs within thirty-six (36) months following
the HHA's initial Medicare enrollment date.1
PPS Rates
According to the Regulations, CMS is
providing a two percent (2%) market basket increase for HH PPS rates
during calendar year 2010 and has imposed a ten percent (10%) cap on
outlier payments at the agency level. The 10% cap on outlier
payments means that in any calendar year, an individual HHA will
not receive more than ten percent (10%) of its total PPS payments
from outlier payments.
Sale/Transfer of a HHA
In August, HHS and CMS issued proposed
rules2 that prohibited the sale or transfer of a Medicare
certified HHA's provider agreement and Medicare billing privileges to
a new owner if the sale or transfer occurrs within thirty-six (36)
months following the HHA's initial Medicare enrollment date.
Therefore, such sale or transfer of the HHA within a 3-year period
would prohibit the transfer of the HHA's provider agreement and
Medicare billing privileges to the new owner. Thus, the new
owner of the HHA would be required to enroll in the Medicare program
as a new HHA and obtain a State survey or an accreditation from a CMS
approved accreditation organization.
Consistent with the proposed rule, the
final Regulations amend the current Conditions for Medicare payment
by adding 42 CFR 424.550(b)(1) which states:
If an owner of a home health agency
sells (including asset sales or stock transfers), transfers or
relinquishes ownership of the HHA within 36 months after the
effective date of the HHA's enrollment in Medicare, the provider
agreement and Medicare billing privileges do not convey to the new
owner. The prospective provider/owner of the HHA must instead:
(i) Enroll in the Medicare
program as a new HHA under the provisions of 424.510, and
(ii) Obtain a State survey or an
accreditation from an approved accreditation
organization.
CMS has identified a number of
instances where owners of HHAs have re-enrolled or have attempted to
enroll in the Medicare program for the specific purpose of selling
Medicare billing privileges and the related Medicare provider
agreement to a third-party by working with brokers or organizations
operating "turn-key" businesses for the sole purpose of
selling or transferring the HHA to a buyer. CMS believes that
such "turn-key" scenarios fall within the general intent
and purview of the prohibition against selling Medicare billing
numbers or privileges because the broker may focus more on selling
the HHA's billing privileges, rather than selling or transferring the
HHA itself. Therefore, according to CMS, the Regulation is
intended to limit "turn-key" arrangements and minimize the
level of fraud cited in the proposed rule preamble.3
Accordingly, any sale (including asset
sales or stock transfers) that is pending a Medicare contractor's
review and approval will be subject to the sale or transfer limits
under 42 CFR 424.550(b)(1), described above, as of January 1, 2010.
If you are currently buying or selling
a HHA or contemplating such purchase or sale, then such transaction
should be carefully reviewed and analyzed in accordance with the
Regulations promulgated by HHS and CMS.
* * *
If your HHA would like assistance in evaluating any aspect of the
Regulations or would like assistance in evaluating any current or
proposed change of ownership, sale, or transfer options, please
contact Gregory W. Moore directly at (248) 988-5842 or by email at gmoore@clarkhill.com or
Russell A. Kolsrud directly at (480) 684-1102 or by email at rkolsrud@clarkhill.com or contact
Michael W. Matthews directly at (248) 988-5870 or by email at mmatthews@clarkhill.com.
Clark Hill's
Health Care Team provides advice and general counsel to home health
agencies on matters such as:
· Business
Start-up and Planning;
· Medicare Provider Enrollment;
· Survey Preparation and Accreditation;
· Medicare Billing Questions;
· Risk and Compliance Issues;
· Joint Ventures, Sales, Acquisitions, Change of Ownership, and
Other Corporate Ventures;
· Managed Care Contracts and Third Party Payor Agreements;
· Labor and Employment Issues;
· General contracts with Medical Directors, Staffing Companies,
Suppliers, Vendors, and Therapists; and
· All Other Day-To-Day Operational Needs.
1See Federal
Register, Vol. 74, No. 216, November 10, 2009, Medicare Program;
Home Health Prospective Payment System; Rate Update for Calendar Year
2010.
2See Federal
Register, Vol. 74, No. 155, August 13, 2009 - Proposed Rule.
3See Federal
Register, Vol. 74, No. 155 August 13, 2009, pgs. 40970-40971.
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