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«DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Parts 409, 424, and 484 [CMS-1560-F] RIN 0938-AP55 Medicare ...»

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Moreover, we have seen instances – notably, though not exclusively, in South Florida and Texas - in which specific HHAs have changed ownership on a frequent basis. The new owners, however, have been mere nominal figures.

We also stated in the proposed rule that the problems we identified have been seen with HHAs on a far greater scale than with any other type of certified provider. The dramatic rise in the number of HHAs in relation to the increase in Medicare beneficiaries has not been duplicated by any other certified provider types.

2. Provisions of the Proposed Regulation

We proposed the following payment safeguard provisions:

• In §424.530(a)(8), we proposed to deny Medicare billing privileges to a prospective HHA if the HHA is determined, under proposed 42 CFR 489.19, to be sharing, leasing, or

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• In §424.535(a)(11), we proposed to revoke the Medicare billing privileges of an HHA that is determined, under proposed 42 CFR 489.19, to be sharing, leasing, or subleasing its practice location or base of operations identified in section 4 of its Medicare provider enrollment application with or to another Medicare-enrolled HHA or supplier.

• In §424.540(b)(3), we proposed to exclude home health agencies from the existing language in §424.540(b)(3), which states that the reactivation of Medicare billing privileges does not require a new certification of the provider or supplier by the State survey agency or the establishment of a new provider agreement.

• In §424.540(b)(3)(i), we proposed to require that an HHA whose Medicare billing privileges are deactivated under the provisions found at 42 CFR 424.540(a) must obtain an initial State survey or accreditation by an approved accreditation organization before its Medicare billing privileges can be

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• In §424.550(b)(1), we proposed to require that if the 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.

• In §424.550(b)(1)(i), we proposed that in the situation described in proposed §424.550(b)(1), the prospective owner of the HHA must instead enroll in the Medicare program as a new HHA under the provisions of §424.510.

• In §424.550(b)(1)(ii), we proposed that in the situation described in proposed §424.550(b)(1), the prospective owner of the HHA must obtain a State survey or an accreditation from an approved accreditation organization.

• In §489.12(a)(5), we proposed that CMS deny a provider agreement to a prospective HHA that is determined to be sharing, leasing, or subleasing its practice location or base of operations identified in section 4 of its Medicare provider enrollment application with or to another Medicare enrolled HHA or supplier in violation of the HHA space sharing

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• In §489.19(a), we proposed that an HHA be prohibited from sharing its practice location or base of operations identified in section 4 of its Medicare provider enrollment application with another Medicare-enrolled HHA or supplier.

• In §489.19(b), we proposed that an HHA be prohibited from leasing or subleasing its practice location or base of operations identified in section 4 of its Medicare provider enrollment application with another Medicare-enrolled HHA or

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We also solicited comments on whether there were legitimate business reasons for a Medicare-enrolled HHA to share space with another Medicare-enrolled HHA or supplier when there is common ownership. Likewise, we solicited comments on whether there were legitimate business reasons for a Medicare-enrolled HHA to be co-located with another Medicare-enrolled HHA or supplier when there was no common ownership. Finally, we solicited comments on whether there were legitimate business reasons for a Medicare-enrolled HHA to engage in leasing or subleasing arrangements with a Medicare-enrolled supplier when there was common ownership.

3. Analysis of and Responses to Public Comments

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response to the proposed payment safeguard rule. The following

is a summary of the comments received and our responses:

a. Sharing and Leasing of Space Comment: Several commenters opposed the space-sharing provision in proposed 42 CFR 489.19(a). These commenters contend that this provision could preclude arrangements in which an HHA also provides unrelated services from a single location, for example, influenza vaccine clinics under a supplier number;

outpatient therapy services under Medicare Part B; preventive nutrition services; hospice services; DME; and infusion supplies and services. One commenter stated that many health systems operate out of a single practice location in the provision of a broad array of items and services. Another commenter, too, stated that corporations often operate multiple provider and supplier types out of the same location; an HHA, for instance, might operate a DMEPOS supplier and a hospice out of the same site. Another commenter noted that arrangements in which an HHA, hospice and DMEPOS share a common location would be known to CMS via the respective providers’/suppliers’ completion of the applicable CMS-855 application, which already enables CMS to monitor such arrangements closely; the commenter added that

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disrupt such arrangements if they are currently in compliance.

Yet another commenter noted that a number of HHAs are commonly owned and operated as a result of organizational mergers and are involved in completely legitimate arrangements; the commenter did not understand why such arrangements should be disrupted.

Response: Based on these and other comments received regarding proposed §489.19(a) and our concern that a broad-based prohibition on co-location policy may negativity impact the health care delivery for some services, we have decided not to include this provision in the final rule. However, we continue to have concerns about these arrangements and will consider our administrative remedies to address our concerns. We are especially concerned about an HHA that maintains a practice location in one State and furnishes services to Medicare beneficiaries in another State. We are also concerned about the HHAs that have merged or consolidated their operations into a single practice location, but continue to operate as distinct entities.

As indicated in the preamble, having multiple HHAs at a single site makes it extremely difficult to determine which HHA is in operation at a given time, which HHA has actual control

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thus does not have a valid practice location, it is considered to be non-operational and, by extension, out of compliance with the HHA conditions of participation and with 42 CFR 424.510(a)(6). If the HHA thereafter bills for services out of that non-operational site, it does so inappropriately.

Comment: Several commenters stated that the ability of HHAs to share a practice location and centralized back office operations with other HHAs - or other Medicare providers and suppliers - improves efficiency and helps to keep down the costs associated with these operations by reducing rent and enabling the sharing of, for instance, billing staff and computer systems. One commenter added that such co-located entities allocate costs separately to each provider and supplier in the same way that hospitals do for their departments. Several other commenters stated that to require these HHAs and suppliers to move to separate locations if proposed 42 CFR 489.19(a) were finalized, would be unduly burdensome and costly to them; it would, for instance, require each formerly co-located provider or supplier to have separate staffs and computer systems.

Response: Based on these and other comments received regarding proposed §489.19(a), we have decided not to finalize

–  –  –

Comment: One commenter stated that having a shared practice location for various providers and suppliers is a normal, cost-efficient method of health care delivery without any program integrity concerns. The only reason these shared practice locations have more than one provider or supplier number is that Medicare operates an enrollment system that requires separate numbers. In this same vein, another commenter stated that a centrally located organization has been forced to obtain several provider numbers in order to cover its entire service area. In other cases, the commenter, added, HHAs that deliver services across State lines (for decades, in some cases) are currently forced to obtain separate provider numbers because the States that they served have decided not to establish reciprocity agreements with bordering States.

Response: As stated above, based on these and other comments received regarding proposed §489.19(a), we have decided not to finalize this provision in the final rule.

Comment: Several commenters stated that, under proposed 42 CFR §489.19(a), a hospital-based HHA would not be able to share space with a DMEPOS supplier that is also owned and operated by the hospital. The commenter suggests that such arrangements

–  –  –

Response: As stated above, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: One commenter urged CMS to identify more effective ways to identify the few fraudulent providers and suppliers that apply for multiple Medicare numbers for the same location. The commenter believed that CMS should establish a vetting process rather than the blanket denial of co-locations.

By the same token, this vetting process must do more than allow use of the same address with separate suite numbers, as that would not be a sufficient deterrent to fraudulent providers.

Response: As stated above, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: Several commenters urged CMS to refine its proposed 42 CFR 489.19(a) to allow HHAs to share a practice location with other licensed and certified entities to use a shared practice location as long as the co-location arrangement is not used or has not been used for fraudulent or abusive purposes.

Response: As stated above, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: One commenter urged CMS to eliminate its proposal

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Medicare billing privileges of an HHA on the grounds that it shares a practice location with another entity that is a Medicare-certified HHA. The commenter also stated that due process procedures should be used in instances where an existing HHA is discovered to share a practice location with another HHA or supplier, and that it would be unreasonable to revoke the HHA’s billing privileges on that ground if there is no concern about fraud or abuse by the organization.

Response: As stated above, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: Several commenters stated that HHAs should be able to share practice locations with other HHAs and suppliers if there is common ownership involved.

Response: As previously stated, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: Several commenters requested that CMS clarify the specific situations in which an HHA may be co-located with another entity. Another commenter stated that the space-sharing prohibition smacked of too much government interference into how HHAs do business and would do nothing for patient care.

Response: As stated above, we have decided not to finalize

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Comment: One commenter disagreed with our prohibition on leasing arrangements in proposed §489.19(b). The commenter contended that there are a variety of services that one agency may not be equipped to handle and must rely on relationships with other vendors to meet the full needs of their patients.

The proposed prohibition could, therefore, hinder beneficiary access to required services.

Response: Based on these and other comments received regarding proposed §489.19(b), we have decided not to finalize this provision in the final rule.

Comment: One commenter agreed with our proposal to prohibit an HHA from sharing space with another HHA, stating that this practice raises questions as to the viability and legitimacy of the HHA and could confuse surveyors by rendering it difficult for them to identifying which HHA they are actually evaluating.

Response: While we appreciate the commenter’s support, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: Another commenter supported proposed 42 CFR 489.19(a), but sought clarification that it would not prohibit

–  –  –

related organizations such as a long-term home health program, a managed long-term care program, and a licensed certified home health services agency.

Response: While we appreciate the commenter’s support, we have decided not to finalize proposed §489.19(a) in the final rule.

Comment: One commenter supported our proposal to prevent HHAs from sharing practice locations and operations to the extent that there is no common ownership involved. This commenter went on to say that the practice of co-location makes it difficult for State surveyors and accreditors to clearly identify which agency is under review.

Response: While we appreciate the commenter’s support, we have decided not to finalize proposed §489.19(a) in the final rule.

b. Change of Ownership Provisions Comment: Several commenters agreed with our proposal to prohibit the conveyance of a provider agreement to the new owner of an HHA if the change of ownership takes place within 36 months of the HHA’s enrollment in Medicare. One commenter noted that the proposal would: (1) eliminate situations in which HHAs

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entities that will ultimately be the operator, and (2) ensure that persons who will operating HHAs have an understanding of the business requirements before receiving a provider agreement.

Response: We appreciate the support of these commenters.



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