Medicare Compliance & Reimbursement

Provider to file appeal in federal court over physical therapist compensation

Home health agencies continue to fall prey to stingy Medicare payment limits - and hundreds of thousands of dollars in home health agency reimbursement hangs in the balance.

The Centers for Medicare & Medicaid Services has applied contractor payment limits to directly employed physical therapists in a string of Provider Reimbursement Review Board decision reversals. And this time it could cost VNA-TIP HomeCare more than $310,000.

Then-regional home health intermediary Wellmark imposed contractor salary equivalency guidelines to the agency's directly employed PTs in 1993 and 1994 cost reporting years, because the HHA - then known as TIP of Illinois Health Services - paid the therapists per visit. The per-visit payment made the PTs' compensation subject to the "under arrangement" guidelines, Wellmark argued.

Good news: TIP argued the PTs were bona fide employees and not subject to the guidelines meant for outside, contracted therapists. And the PRRB agreed in a June decision.

Bad news: The agency's victory was short lived - CMS Administrator Mark McClellan has reversed the PRRB decision. As with previous PT compensation decisions, the Administrator said it is the payment method (per visit) and not the employment relationship that qualifies the compensation for "under arrangement" status, and thus subjects it to the guidelines. "The fee-for-service compensation of the Provider's therapists was the controlling factor in the application of the limits," CMS says.

And just because an employee meets the Internal Revenue Services' definition of bona fide employment doesn't mean the same standard applies for CMS, the Administrator argues. Directly employed staff paid per visit can still be considered contractors under CMS' own definitions, the agency maintains.

CMS offers the same arguments it has served up in every reversal of a PRRB PT compensation decision, criticizes attorney Joel Hamme with Powers Pyles Sutter & Verville in Washington. Courts have rejected "the rote arguments made in the past," points out Hamme, who represents VNA-TIP in the case.

CMS failed to address some unique arguments VNA-TIP raised in the review - namely, that the RHHIs haven't applied the guidelines uniformly and that the guideline payment limits weren't reasonable because they shot up significantly in a 1998 revision. "They were grossly low," Hamme notes.

It appears CMS is routinely reversing PRRB decisions on the PT compensation matter, Hamme observes. The agency may hope HHAs will give up rather than mount an expensive court battle.

But Alton, IL-based VNA-TIP isn't ready to throw in the towel. The agency expects to file a complaint in federal court, Hamme tells MLR. Unlike in some other cases, the hundreds of thousands of dollars at issue make a court battle worth the cost.

Whether the case will reach the litigation phase, giving HHAs another precedent-setting decision, remains [...]