Surety requirements still on hold
HCFA: Those without bonds face no penalties
The Baltimore-based Health Care Financing Administration’s Feb. 15 target to have final rules outlining surety bond requirements for home health providers has passed, and officials still aren’t sure when the rules will be published in the Federal Register.
According to HCFA’s press office, the final rules won’t be posted until the General Accounting Office (GAO), an independent investigative arm of Congress, completes its own report on surety bonds in home health.
"The GAO is currently reviewing it," a HCFA spokeswoman says. "When we get the GAO report, then the final rules will be published. You’re not going to see anything in the Federal Register for a while."
When the rules are eventually published, hospices that provide care in their patients homes will have 60 days to comply with the new rules.
With the latest postponement, HCFA says those providers with surety bonds will not face penalties. Those that have secured bonds can contact their fiscal intermediary and apply for a refund with the surety bond company.
The original deadline for home health agencies to secure surety bonds dates back to January 1998. But pressure from Congress led to a postponement and provider difficulty in securing bonds under the proposed rules has led to a further series of postponements.
Now, HCFA is unable to give a definitive answer as to whether the regulation will be reinstated or what changes it might face.
The surety bond requirement calls for home health providers to secure the larger of a $50,000 surety bond or one equal to 15% of annual Medicare reimbursement. Many home health providers, especially small or rural agencies, have been unsuccessful in meeting HCFA’s requirement and complained it was an unfair financial burden.
The provision was originally designed to fight the existence of fly-by-night home health operators seeking to defraud Medicare, but grew into an indemnity policy against overpayment. The net effect, its critics claimed, was that instead of weeding out fraudulent home care providers, the new rule appears so restrictive that surety bond companies are reluctant to provide bonding. These conditions have the potential of wiping out small agencies that are finding it difficult to find companies to underwrite the bonds, critics say. According to HCFA, 60% of home health agencies have yet to purchase bonds.
As of mid-November, 3,686 home health providers out of the 9,440 home health agencies serving Medicare patients have secured bonding. The small agencies —those with less $200,000 in annual Medicare reimbursement — are having the toughest time. HCFA reports 968 small home health agencies out of a total of 2,966 (32.6%) have obtained surety bonds.
Agencies with annual Medicare reimbursement greater than $1 million have been more successful in meeting the surety bond requirement. HCFA reports 46% of the 3,814 large agencies have received bonds.
As HCFA awaits the GAO assessment of its proposed surety bond requirement, critics are weighing in on HCFA’s rule-making process, and the surety bond issue is being used as a case in point.
Hospice Management Advisor’s sister publication, Home Health Business Report, reported in its Feb. 22, issue that the home health industry is increasingly filing lawsuits against HCFA, claiming the government agency has abused the rule-making process. Critics say HCFA bypassed the rule-making process when it implemented the surety bond requirement and major provisions of the interim payment system.
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