Home Health Rules: PPS Capitalization Requirements

What they're going to require is the applicant to meet the capitalization requirements throughout the application process until three months after certification. Now, it's not just that you've written down you've met the capitalization requirements. It must be verifiable. They must be able to confirm that you have in fact met the capitalization requirements. Read this expert healthcare information provided by our expert in one of the healthcare audio conferences.

So when are you going to verify capitalization? One, if they're going to require submitting verification with your application for enrolment.

At any time during the period where a state agency or accrediting organization is making the decision. This means at any time once you've submitted your application, they can come back and ask you to again provide them with a verification of the capitalization that you've vouched for in your application.

And then, once you have been certified, any time during the three months immediately following the certification, they can come back and say, “Hey, we want verification of your capitalization again.” They can request this at any time during the process. You have 30 days to respond to such a request.

Our expert mentioned in a latest health system conference that you should anticipate multiple requests during the application process. And this is because CMS thinks this is a great idea. They think that - and this a quote straight out of the comments, “We believe the Medicare contractors should verify that the prospective HHA is in medical compliance.” And doing that includes asking you for verification of your capitalization.

They believe that in the past, providers have submitted verification with their application and then quickly gotten rid of whatever it was they were paying for to provide that capitalization requirement or spent the money that was in their savings account and that the agencies may not have been capitalized throughout the process.

And so this is CMS' response. They think by requiring you to verify at various points during the process and by encouraging the contractors to ask you to verify it, that's going to force agencies to maintain that capitalization throughout the process and either weed out applicants who wouldn't otherwise apply or couldn't have afforded to apply or identify folks that have applied and are still playing the game because they can't make the verification requirements.

It's important to note, if you do not supply the request for verification within 30 days, they will either bounce your application or if you've been granted privileges, they will revoke your billing privileges. So if you don't comply to these healthcare guidelines, you're done.

So it's very important when you're in the application process, it is one more thing you have to be in the lookout for from the contractor. You have to be prepared when you get that request that it gets to someone who knows what it means, how important it is, that they can respond quickly and that you're prepared to respond quickly.

Because if you miss that deadline, even after they've already issued your recertification - and keep in mind the whole point of this is the original idea behind capitalization is that you have the financial wherewithal to stay in business while you're in that certification period because you wouldn't be getting paid for the services as per the home health guidelines.

But even now, when you're then approved and you are certified, they can still ask. So you want to be ready for that and ready to respond and respond properly.

Now, how are they going to determine capitalization? CMS stated it's no longer necessary for you to report the number of visits you intend to do so they can identify what your capitalization requirements would be. And they removed this because they feel that this gave an incentive to agencies to underreport visits in order to reduce the capitalization amount.

So they've stated that they will compare the prospective home health agency with similarly situated home health agencies that are already enrolled. Now, that doesn't really tell us a lot about how they're going to get to a number.

In the old system, they'd take the number of visits you said you're going to do then determine on prospective cost based on an existing area, multiply the prospective cost with the number of visits you reported and come up with a number according to the home health rules.

Now, they're going to look at you and look at similarly situated agencies but it's not clear how they're going to identify similarly situated agencies and what information they're going to use in that regard. They've clarified they will only use full cost reports for comparisons. They will not use low utilization or no utilization cost reports.

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