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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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Comment: One commenter supported our proposed change of ownership provision, acknowledging our concerns about turn-key sales of new HHAs where there is no assurance that the buyer can maintain compliance with the conditions of participation.

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Comment: One commenter suggested that CMS allow transactions involving sales and transfers of ownership of HHAs currently enrolled in Medicare for less than 3 years that are in process as of January 1, 2010 to proceed.

Response: We disagree and believe that an HHA change of ownership application that is pending as of January 1, 2010 should be subject to the provisions of this final rule.

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requirements of 42 CFR 424.550(b)(1) could lead to the total devaluation of certain HHAs, and that purchasers will be unable to bill for services provided for periods as long as a year

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significant investment of capital needed to start and operate an HHA in the current regulatory environment, an owner – in selling its HHA for entirely legitimate reasons – should be able to recoup its investment.

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should be established, nor do we believe that the three-year period should be reduced. As previously stated, the purpose of this requirement is to ensure that HHAs that are sold remain in compliance with Medicare’s conditions of participation. We stress that 42 CFR 424.550(b)(1) in no way prohibits an owner from selling its HHA. It merely requires that the HHA enroll as a new provider, undergo a State survey or accreditation, and sign a new provider agreement prior to being able to bill Medicare for services once again.

Comment: Several commenters requested that CMS reduce the

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to unduly prohibit legitimate sales of HHAs. One such commenter added that agencies that undergo changes of ownership that occur within 1 year fit the CMS description of “turn-key” operation.

Response: We do not believe that a change in proposed 42 CFR 424.550(b)(1) is warranted. We continue to believe that a 3-year period is appropriate. We believe that this change will help to ensure that individuals establishing a HHA are doing so with a long-term view of furnishing services, rather than establishing a business for the purpose of selling it a short time later. In addition, we believe that this time-frame will allow CMS to assess whether the HHA is operating in compliance with the conditions of participation and other program requirements.

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424.550(b)(1) goes beyond the issue of “turn-key” operations.

If an HHA undergoes a change of ownership, CMS - at the current time - generally does not perform a State survey pursuant thereto. CMS therefore has no sure way of knowing whether the HHA, under its new ownership and management, is in compliance with the HHA conditions of participation – regardless of whether the ownership change occurred 12, 24, or 36 months after the

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determination, there is a risk that the newly-purchased HHA, without having been appropriately vetted via the survey process, will bill for services when it is out of compliance with the conditions of participation. And in light of the frequency of inappropriate practices, as outlined in the GAO report, of HHAs relative to other provider types, we believe it is imperative that we ensure that the newly-purchased HHA be subject to an appropriate level of review.

c. Deactivation Provisions Comment: Several commenters expressed concern that the deactivation provision in proposed §424.540(b)(3) could disadvantageously affect HHAs that bill Medicare on either an infrequent basis or not at all. They stated that since Medicare deactivates a provider’s Medicare billing privileges if the provider has not billed Medicare for 12 consecutive months, HHAs that only sporadically bill Medicare not only may have their billing privileges deactivated frequently, but will, under the aforementioned proposed provision, have to undergo a State survey each time it seeks to reactivates these privileges. This will, the commenter believes, impose a very significant burden on such providers. One commenter also: (1) expressed concern

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affect its ability to bill Medicaid, and (2) asked whether, if it owned an HHA and a hospice and both were enrolled in Medicare, a deactivation of its HHA billing privileges would affect its ability to continue billing for hospice services.

Another commenter urged CMS to consult with state Medicaid programs prior to implementing this proposed provision. Yet another commenter stated that it was their understanding that the requirement to obtain an initial state survey under proposed §424.540(b)(3) would be commensurate to decertification. With long timelines for obtaining surveys and with Medicare having categorized HHA surveys as Tier-4 priority, this would put HHAs out of business and, in turn, impact Medicaid-only businesses that require Medicare certification – with the end result, the commenter stated, of harming Medicaid patients. Similar concerns were expressed by a commenter regarding HHAs that only bill Medicare Advantage plans.

Response: We recognize that proposed §424.540(b)(3) could delay an HHA’s ability to reactivate its Medicare billing privileges, especially if the HHA bills only sporadically and is thus susceptible to frequent deactivations. However, we believe that this is outweighed by the strong need to verify that HHAs

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months of non-billing remain in compliance with Medicare’s conditions of participation and other regulatory provisions. We also believe that this approach will help ensure that Medicare beneficiaries receive services from qualified HHA providers.

CMS does not currently conduct a State survey when a provider seeks to reactivate its Medicare billing privileges.

As is the case with ownership changes, CMS therefore has no sure way of knowing whether the HHA, after not billing Medicare for at least a 12-month period, is still in compliance with the HHA conditions of participation; indeed, it is possible that the period of non-billing was due to the fact that the HHA was not in operation at the time. Unless CMS can determine whether the HHA is in compliance with the conditions of participation, the HHA may have its billing privileges reactivated and begin billing for services again without having been appropriately reviewed via the survey process. This could lead to inappropriate billings if HHA is indeed out of compliance with such conditions. As with 42 CFR 424.550(b)(1), we believe that 42 CFR 424.540(b)(3)(i) will help close the gap noted by the GAO in “screening potential and current HHAs” by ensuring that the new owners in an HHA ownership change are properly screened.

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Medicare Advantage billing under Medicare, the deactivation of a provider’s Medicare billing privileges does not mean that the provider is no longer enrolled in Medicare. In fact, the Medicare provider agreement remains in effect. Accordingly, a deactivated HHA is still certified as a Medicare HHA.

Deactivation simply means that the provider, prior to having its Medicare billing privileges reactivated, must: (1) submit the information requested in §424.540(b)(1) and (2) undergo a State survey or obtain accreditation to ensure that it remains in compliance with the applicable conditions of participation.

Indeed, as previously indicated, there have been instances where HHAs are sold to nominal owners when the real operators are individuals who were later found to be engaging in fraudulent activity. Our current inability to conduct a State survey for most changes of ownership hinders CMS’s ability to fully vet and review the HHA, its new owners, and the new operations, and makes it more likely that such sham operations can continue to exist.

With respect to situations in which a provider owns an HHA and a hospice and the billing privileges of the HHA are deactivated for 12 consecutive months of non-billing, this does

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billing privileges remain intact, as the HHA and the hospice are separate providers, are separately enrolled, and have separate provider agreements.

Finally, we do intend to notify State Medicaid agencies about the implementation of this provision.

Comment: Another commenter stated that proposed §424.540(b)(3) would require those HHAs that primarily or even exclusively bill Medicaid but who are required to be enrolled in Medicare as a prerequisite thereto to submit at least one Medicare claim per year or see their Medicare billing privileges rescinded.

Response: As we previously stated, the deactivation of a provider’s Medicare billing privileges is not the same as the revocation of these privileges. A deactivated provider remains enrolled in Medicare, whereas a revoked provider loses its Medicare billing privileges and is no longer enrolled in the program.

Comment: Several commenters suggested that for providers enrolled in Medicare and Medicaid, CMS not deactivate a provider’s Medicare billing privileges for non-billing if the provider has submitted a bill for or been paid by Medicaid

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Response: The regulatory provisions in 42 CFR 424.540 regarding 12 consecutive months of Medicare non-billing do not allow for the level of Medicaid billings to be a consideration in the deactivation of a provider’s Medicare billing privileges.

This is because Medicare and Medicaid are two completely separate health programs. If we expanded 42 CFR 424.540 to allow a provider’s billing history with other health plans to be a factor in determining whether to deactivate a provider’s Medicare billing privileges, a situation could arise where a provider has not submitted a bill to Medicare for a 10-year period but has not been deactivated because the HHA has billed another program each year within that span. This would, in our view, defeat the purpose of 42 CFR 424.540. Besides, and as already stated, the deactivation of Medicare billing privileges does not mean that Medicare billing privileges have been revoked.

Comment: One commenter noted that the revised 42 CFR 424.540(b)(3) appears to require a new certification, but the unaltered 42 CFR 424.540(c) regarding the effective (date) of deactivation still provides that deactivation does not have any effect on a provider’s participation agreement. The commenter

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with the changes to paragraph (b). Another commenter understood the changes §424.540 to mean that we now equate the requirement to obtain an initial State survey with decertification. In light of the extremely long timelines for obtaining initial surveys from States and accrediting organizations, the commenter stated such a requirement would put many legitimate home health agencies that are part of the 2,000 agencies that CMS estimates will be deactivated out of business.

Response: We agree that there is a discrepancy. We have therefore not included our proposed revision to §424.540(b)(3) in the final rule. We believe that this change will eliminate the perception that deactivation and decertification are one in the same.

Comment: One commenter expressed support for our proposed changes regarding space sharing, ownership changes, and deactivations, stating that the instances of fraud and abuse reported by CMS justify changes. The commenter suggested, however, that CMS consult with the HHS Office of Inspector General, the Government Accounting Office, and the U.S.

Department of Justice for alternative perspectives on the appropriate length of billing inactivity that warrants a State

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Response: We appreciate both the commenter’s support for our proposed provisions and the suggestion regarding the consultation of other law enforcement bodies. We have, in fact, consulted with other agencies in the past regarding the 12-month deactivation policy outlined in §424.540(a)(1). However, we believe that they would support every effort on our part to ensure that HHAs remain in compliance with Medicare’s conditions of participation before their Medicare billing privileges are reactivated. We further believe that 12 consecutive months of non-billing by the provider - a lengthy period in and of itself

- constitutes sufficient justification for CMS to attempt to reconfirm that the provider meets the HHA conditions of participation.

d. General Comments Comment: One commenter believed that CMS, in its proposed program safeguard initiatives, was attempting to use a “broad brush” approach to combating fraud, that CMS seems to view all home health providers as fraudulent, and that the proposed initiatives will harm honest HHAs. The commenter also stated that the States with the highest levels of HHA fraud do not have significant barriers to entry, such as a state-mandated

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consider the correlation between CON states and the frequency of fraud and abuse. Finally, the commenter recommended, in lieu of the proposed program integrity initiatives, increased funding of survey and certification efforts and urged CMS to seek out the root cause of fraudulent behavior.

Response: We recognize that the vast majority of HHAs participating in the Medicare program are honest. However, the information cited in the preamble to the proposed rule – as well as the conclusions drawn by the Health and Human Services’ Office of Inspector General – provide reason and concern for us that HHA fraud is a prevalent problem that, and in our view, warrants additional review and action to address this issue.

Comment: Several commenters expressed concern about the impact of proposed §424.540(c) and §424.550(b) on State survey agencies and accreditation organizations. They contended that these agencies and organizations have experienced – and, in some cases, are still experiencing – major backlogs in the number of pending HHA request for certification or accreditation. Some State agencies, another commenter stated, are not conducting new HHA surveys at all at the current time. Requiring a new survey/accreditation pursuant to each change of ownership and

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