Establish separate private duty entities
Make a clear distinction in day-to-day operations
By Mary BaumgartnerSenior Medicare Reimbursement Manager
Patrice Del Grosso, RN, BSN, CHCE
Senior Manager of Home Health Agency Planning and Development
Colleen Sanders, RN
Program Development Manager of Paraprofessional Staff Development
Interim HealthCare
Fort Lauderdale, FL
Providing care in today’s complex health care market has created a greater need for providers to offer a "one-stop-shop" service. This one-stop shop creates a multifunctional agency that no longer provides care just to the Medicare-eligible client, but to a wide range of clients with varying payer sources.
Although Medicare reimburses on a cost basis, which means there is no profit built into the rates that a home health agency is reimbursed for Medicare services, private duty home health agencies have several reasons to seek Medicare certification as follows:
• the ability to provide services to a wider range of patients;
• broader referral base, as certification is a requirement for many contracts;
• new referral sources that have both Medicare and non-Medicare patients to refer;
• a guarantee to your clients and potential clients that your office provides a service that meets a minimal standard set by federal regulations and is regularly monitored by state agencies;
• partial reimbursement of overhead costs that your agency would be incurring regardless of whether you participated in the Medicare program.
Several factors make the organization of these businesses an important consideration. When all clients from payer sources other than Medicare receive services via a Medicare-certified home health agency, they are subject to the same federal regulations as the Medicare-eligible client. Services provided to non-Medicare clients in a noncertified agency, though, would be exempt from the federal regulations.
Some agencies, therefore, choose to provide services separate from their Medicare agency. In order to accomplish this, the agency needs to either legally or functionally separate the provision of care and the management of that care. A separate licensure and/or a separate corporation for the business are an example of a legal separation or subdivision. (Federal law defines a home health agency as a "public or private organization or a subdivision of such an agency or organization.")
When a surveyor is evaluating if a separate entity exists, he or she will look for a clear distinction in the day-to-day operations. The separation in delivery and management of care in the multifunctional organization needs to be clearly recognized by the surveyor to remain exempt from Medicare Conditions of Participation.
The distinction is referred to as a separate entity. We have outlined below several elements to evaluate when structuring a separate entity from a Medicare-certified business. This should not be considered an all-inclusive list, but rather guidelines to assist in determining the clarity of the separation.
1. Advertisement: public information via print, radio, or television.
• separate advertisements;
• separate listings in the telephone book;
• separate brochures that describe the services provided by that organization (entity).
2. Environmental issues related to the surroundings and basic equipment needed for basic operations.
• separate office space within the architectural structure, including but not limited to entryway, work areas, filing areas, training rooms, conference rooms, and break rooms;
• separate off-site storage space;
• separate telephone and fax lines;
• separate utilities;
• separate file cabinets for client records.
3. Office supplies.
• separate purchase and inventory control for office supplies including, but not limited to, general desktop supplies, copier supplies, fax supplies, and kitchen supplies;
• separate copy machines;
• separate fax machines.
4. Client supplies.
• separate storage of client document and forms;
• separate storage and ordering of durable medical equipment;
• separate medical supplies and soft goods.
5. Employee supplies.
• separate inventory of personal protective equipment.
6. Employees.
• Separation of personnel. Do not share employees between entities. Sharing employees, however, is allowable if mechanisms are in place and approved by the Medicare intermediary to capture and report their costs accurately within the routine accounting records.
• Use separate time sheets if employee works for both the Medicare-certified agency and the separate entity.
• Use separate record keeping, such as payroll and benefits.
7. Employee files. Separate employee files that contain at least the following documents that are not shared through duplication:
• an original application, not a copy;
• an original I-9, not a copy;
• an original W-4, not a copy.
Careful consideration and planning is essential prior to electing this structure for your organization. It is also important that you discuss your agency’s structure with your Medicare intermediary. Electing for a structure different than you are currently operating under may require the approval of your intermediary. Be prepared to discuss your proposed structure with your intermediary in detail, and document your discussions in writing. Also insist that their approval be given to you in writing.
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