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Industry News: CMS Changes Capitalization Requirements for New Home Health Providers
July 30th, 2010
Recent Article about new Home Health Providers and IROF Letters from Palmetto GBA
Palmetto GBA released an article relating to the capitalization requirements for new Home Health providers. It seems that CMS has directed Palmetto GBA to revisit their calculations. This means that many new providers are being asked to re submit confirmation of capitalization funds using the new capitalization calculation at a much higher rate. CMS may have given Palmetto GBA direction that is not in line with the regulations that govern the capitalization requirements at 42 CFR 489.28. Here are some concerns regarding the new requirements.
1. The intermediary is asking for confirmation of the capitalization requirements after the provider agreement has been approved and entered into by CMS (i.e. the provider number has been issued).
2. The CFR is clear that CMS must not enter into a provider agreement with a home health agency until the capitalization requirements have been validated, therefore the validation of the initial capitalization requirements must be done prior to the issuance of the provider number.
3. Re-validating the capitalization requirements after the provider number has been issued is not in line with the CFR.
4. CMS is free to re-verify the initial reserve prior to the issuance of the provider number; however using a different formula is not appropriate. Palmetto GBA has not updated their capitalization calculator on its website to reflect the new higher capitalization requirements.
5. Currently the Intermediary is taking up to 180 days to re-confirm a three month initial capitalization requirement before they issue the tie in notice that will allow the provider to bill.
6. Palmetto is recalculating the capitalization requirements at rates that are sometimes 2-4 times greater than the initial requirement that was approved by Palmetto GBA.
The requirements from Palmetto GBA are listed on the Palmetto GBA website www.palmettogba.com. >From the home page, you will click on the link for "Regional Home Health & Hospice Intermediary (RHHI) on the left hand side of the screen. You will then need to click on "Articles" on the left hand side of the screen. From there you will need to click on "Home Health". Scroll down and find the article entitled "Capitalization Requirement for Home Health Agencies (HHAs). This should detail everything out for you.
Many new providers with pending 855A applications are receiving letters from Palmetto GBA requesting that they re-submit updated Initial Reserve Operating Funds (IROF) in the amount that Palmetto has calculated using the new calculations. Based upon the projected visits submitted on the 855A, PGBA recalculates the amounts required to be in the bank prior to approving the 855A. PGBA is using 3 comparable home health agencies in your area in the first year of service to calculate the capitalization amount. The comparable agencies are chosen considering such factors as geographic location and urban/rural status, number of visits, provider based vs. freestanding and proprietary vs. non-proprietary status.
Posted by Bryan Fryar in IROF LETTERS
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