Knowledge of the Medicare Conditions of Participation and Familiarity of Plans of Care Can Help you Avoid Major Pitfalls

It’s hard enough in today’s health care environment for agencies to operate profitably and still provide quality care to their patients without exacerbating the problem by not having the proper knowledge of Medicare regulations. CMS has just published its 2005 home health rates which reflect a 2.3% increase, an increase which will evaporate as demands for increased wage rates and benefits continue. Gas prices will probably drive up the mileage allowance agencies pay their staff as well. States facing economic challenges foresee no additional funds to be allotted for their Medicaid programs. All of the above factors mandate an inward look at operations for efficiencies and economies. Two such examples are not really internal but revolve around operating “effectively” (i.e., patient admissions and intelligent billing practices).

Patient Accessibility and Admissions

One of the items on the OIG’s list of Medicare studies every year is patient accessibility. A key question is, are Medicare beneficiaries finding access to care or are they being denied care? It is the thought by many agencies that if a patient is Medicare eligible, he or she must be admitted or the agency would be in violation of the Medicare conditions of participation (COP). Many of these patients need multiple visits per day, which can be a recipe for financial disaster and create a situation the agency can’t avoid. Keep in mind that the thought process involved with the implementation of the PPS system on October of 2000 was that agencies would make money on some patients and lose money on others. CMS’s concern was that agencies would only take the former and ignore the latter. Given this scenario, the OIG has always looked for instances where an agency would deny access purely on a financial basis. Consequently, agencies feel compelled to admit all Medicare beneficiaries. However, by examining the actual conditions of participation, we find that it is the agency that has the final determination as to whether or not it has the resources to effectively implement the patient’s proposed plan of care. If the agency makes such a determination that the resources are not available, it has every right not to admit that patient. The caution here is to not admit privately insured patients with the same type of diagnosis.

Agencies should evaluate admissions individually, considering such things as staffing availability, access to resources (e.g., therapies), and financial ability to care for the patient. The patient’s quality of care is paramount when an agency decides whether or not it can provide the appropriate services. Providers should evaluate the agency’s ability to provide such care but with one eye on their financial viability as well.

THE MUCH MALIGNED (AND MISUNDERSTOOD) SCIC

To File or Not to File—That is the Question

The SCIC (Significant Change In Condition) is probably the least understood and the most misapplied billing change since Medicare PPS was established in October of 2000. Agencies are losing money on SCICs, sometimes without even knowing it. Let’s review how the SCIC is actually supposed to work.

The SCIC adjustment occurs when a beneficiary experiences a significant change in condition within an existing 60-day episode that was not envisioned in the original plan of care.

Agencies appear to make two basic mistakes with SCICs:

• Agencies will bill for the SCIC as soon as it happens without checking to see if the change in condition was actually expected in the original plan of care.
• Agencies often make no attempt to calculate the reimbursement effect between billing for the SCIC and not billing for it.

Agencies fail to remember that in billing for an SCIC, the payment reverts to a calculation based on the number of days at each HHRG designation in an episode with no payment at all between service dates.

The Medicare Benefit Policy Manual, Chapter 7, states that the agency is not constrained to bill for an SCIC for a higher HHRG if the net effect is a lower payment for the episode than if the SCIC had not occurred. Because the intent of the SCIC was not to lower the total episode payment when patients actually required more intensive services, the agency is not forced to bill for an SCIC in this circumstance. However, where the SCIC reflects a lower HHRG due to unanticipated improvement in patient condition, the SCIC must be billed.

Providers should immediately check their billing software. Does your software automatically bill an SCIC? If it does, it probably is costing you money. Some systems list all HHRGs on the final bill. This instructs the pricer software to automatically calculate the SCIC. If this is the case, call your vendor and have it changed. Rarely will an SCIC billing bring in more reimbursement than if you hadn’t billed it.

The key word to remember when considering an SCIC is “unanticipated.” Most improvements are a result of treatments received. You would think that the goal of treatment is patient improvement, so why would that constitute an SCIC? Conversely, there are times you expect a condition to worsen.

The timing of when an SCIC occurs can have a significant impact on whether to file an SCIC or not. In a case where a significantly higher HHRG (perhaps therapies are prescribed) occurs in an episode, it is probably more advantageous to bill an SCIC. When an SCIC occurs late in the 60-day episode under the same circumstances, it may be more beneficial not to bill the SCIC.

The following are a few sample illustrations:

Example #1: When to recognize an SCIC

Patient admitted 3/1/2004 with HHRG weight of C1F2S0 ($1,815.04).
Start of care is 3/1. At next visit, 3/5, patient transferred to hospital.
Care resumed on 3/12 with new HHRG weight of C2F3S2 ($4,264.04).
Patient discharged on 4/14/2004.

3/1/04 – 3/5/04 (5days) x $1,815.04 / 60 = $151.25
3/12/04 – 4/14/04 (33 days) x $4,264.04 / 60 = $2,345.22

Total episode payment with SCIC adjustment is $2,496.47
Total episode payment without SCIC adjustment is $1,815.04

Example #2: When not to recognize an SCIC

Patient admitted 3/1/04 with HHRG weight of C1F2S0 ($1,815.04).
Start of care is 3/1. At next visit, 3/30, patient transferred to hospital.
Care resumed on 4/8 with new HHRG weight of C2F2S0 ($2,130.52).
Patient discharged on 4/28/04.

3/1/04 – 3/30/04 (30 days) x $1,815.04 / 60 = $907.52
4/8/04 – 4/28/04 (20 days) x $2,130.52 / 60 = $710.17

Total episode payment with SCIC adjustment is $1,617.69
Total episode payment without SCIC adjustment is $1,815.04

Management’s Responsibility

It is incumbent upon management to maximize revenues wherever possible. Far too many SCICs are filed unnecessarily and/or unprofitably due to a misunderstanding of what really constitutes a significant change in condition and whether billing for that change has been evaluated financially.

Some Final Thoughts . . .

Faced with increasing reimbursement pressures at both the federal and state levels, providers need to clearly understand how the system works and how it can reward or penalize those who do not have a working understanding of the regulations and critical concepts. A good understanding of patient accessibility and the nuances of SCIC billing procedures is an absolute must. Management must effectively blend both the clinical and the financial functions of its agency to optimize reimbursement and operate profitably.