Let’s Make a Deal!
May 14, 2012
There has never been any shortage of factors that add or decrease value to a home health agency. I am asked all the time if a home health agency is still a good investment. Watching my 401 (through a microscope), it occurs to me that most home health agencies are a better investment than anything related to the markets. The tricky part in making a deal lies in the fact that the number of unknowns has increased considerably with health care reform and regulatory scrutiny.
Basics:
When any healthcare facility transfers ownership, there are three options.
- The buyer assumes the provider agreement of the seller. This transaction can be done without any interruption in billing. There is no change in the provider number or license and the new owner completes paperwork in order for the change in ownership to be recognized by Medicare.
- Stock (or any organization that issues units or shares) is transferred from one party to another. An LLC for instance may have only have one member. If the member sells his interest in the LLC to another person, there has been no change of ownership because the LLC still owns the agency.
- The buyer buys the operations of an agency (license only) and has to reapply to become certified by Medicare. Nothing is billable until the last day of a successful certification survey. After that day passes, it may be another 3 months until claims can be dropped.
Complications
This used to be simple and I always steered clients to option 1. Option 2 is much easier but the buyer assumes all of the liability of the LLC, not just the Medicare history. Option 3 has never been attractive because the certification process is long and complicated and very expensive.
Things have changed, folks. A couple of weeks ago I was asked to help out an agency who had 30 claims requested by the Zone Contractor in 2009. The dates of service went back as far as 2006. In 2012 they received a letter stating that they owed CMS 1.96M. Oops. If that agency had been sold during those three years, the new owner would be responsible for the overpayment. Of course it will be appealed but lawyers and consultants need to be paid, too. And there is no guarantee that the appeals will be successful.
While a prospective buyer can query Medicare to determine if there are any outstanding liabilities, they cannot be assured that the agency will not be subjected to scrutiny that hasn’t occurred yet for claims submitted prior to the purchase. That ups the risk factor for option 1 considerably. In Louisiana alone, there are 128 ZPIC investigations and they are not public information.
Indemnity clauses address potential liabilities that have not been revealed at the time of sale but I have never seen any agreements that held the buyer harmless for the amount even approaching some of the ZPIC overpayments we have seen over the last year.
Effective last year, both option 1 and option 2 have a restriction on selling the agency within 36 months after the agency was certified or last changed ownership or until after 2 cost reports are filed. Buying late in the year and filing cost reports early can reduce the amount of time to closer to 24 months. That means that if the agency begins to tank and the only sane course of action is to sell out, the option may not be available. This restriction applies to stock transfers only when a majority of the stock is moved.
The third option – the expensive one is undoubtedly the safest. The agency, because it is licensed must be fully functional. That means a lease, an administrator/DON, patients (2), and all the other expenses that go along with an agency. Upon purchase, the agency must apply for accreditation through an accrediting body such as JCAHO or CHAP. This takes time and is an additional significant expense. It is becoming more attractive every day because this option offers something that the other two options do not – a squeaky clean provider number.
So a lot of people are steering clear of health care in general these days. That should mean that the demand for agencies is lower in general. Consider the agencies who are under scrutiny from a Zone contractor and are not expected to do well. One option is to simply procure another provider number while awaiting results. When the results and extrapolations are complete, the agency negotiates a settlement, files bankruptcy and runs its operations out of the new agency. By the way, this doesn’t mean the agency escapes the Medicare debt – they merely get to prolong their agony.
What that means for potential sellers is that there is a lot of desperate buyers out there. So while people who have never been in the industry are staying away for now, there are others who are facing certain demise who will pay more than an agency is worth to ensure their future business. How do you calculate these factors into the price?
You ready to make a deal? Call us. We’ll make sure you understand the pros and cons of each option and recommend a physician who can medicate you throughout the process.
Mandatory Reading
May 4, 2012
Every day I work to help my clients provide better care at lower costs so that we can all make a decent living. I have no issue with making money in healthcare. In fact, I am proud to get paid for work that ultimately helps patients. There is no law against making money. That is not to say that there aren’t any laws that affect us. If it has not come to your attention that healthcare is a highly regulated industry, then you are probably not reading this. Finding the on/off button on the computer would require more observation skills than you have.
Just to be clear, let me clarify the following regarding Physician Face to Face Encounters in Home Health.
- The physician must write his or her own narrative. Alternatively, he may dictate it and his staff may type it. A qualified NPP may perform and document the encounter but the certifying physician must sign beside the NPP. Make no mistake, you are not a qualified NPP.
- The Face to Face encounter is a condition of payment. Failure to follow the conditions of payment may result in credible allegations of fraud. Fraud may result in large financial penalties or jail and a great deal of embarrassment.
- The encounter must occur within 90 days prior to admission or within 30 days post admission. This does not mean that you are committing fraud if the signed F2F is not on the chart within 30 days post admission. If you sent the form out with the initial plan of care that went out late, it is very possible that the F2F will not be on the chart at day 30.
- On the other hand, if a patient was NOT seen within the time frame, you should discharge the patient using the appropriate documentation (ABN) and let the patient know why. Be very certain that the patient was in fact seen by the MD if you choose to wait for it. Alternatively, you could get your careplans out on time.
- When my clients’ referral sources steer their referrals to the agencies that don’t make them worry about ‘all the bureaucratic paperwork bulls***’, a competitive edge is created against which ethical agencies cannot compete.
- If a physician signs said bureaucratic paperwork and a visit had not been made, you have found yourself an accomplice in fraud. Understand this. The Feds want you more than the doc because even the wealthiest docs don’t bill as much as a home health agency does and it is not a condition of payment for MDs.
- The right FBI agent will not disclose that to the doctor. Instead, the FBI will convince the MD that capital punishment is a very real possibility unless he or she rats you out. Consider that referral source who will sign anything you put in front of him or her a potential witness in your next fraud case.
- If being morally superior is not enough incentive for you to follow the rules, then consider that while most people get away with it, some do not. Those who do not will readily tell you that it is a good idea to follow the rules before you attract the attention of the Feds.
- If being morally superior is not enough and you are willing to take the chance of being on a federal radar, there is always the possibility that I personally will find out who you are. If that happens, you will wish you were caught by the FBI because I am not nearly so nice. Ask Bill Borne.
- Don’t mess with my clients. They are trying to survive by doing the right thing.
Chances are the people who circumvent the rules to make life easier for physicians and steer referrals away from your agency will never get caught. That’s the truth. Nobody has a policy or talks openly about it. Instead, bonuses and positions are contingent upon the amount of claims billed and so a real incentive to take shortcuts presents itself and pleading ignorance is a valid option. If a visit was made on the day documented on the F2F, it would be very difficult to prove that the MD didn’t write the narrative. So that leaves agencies with the choice of doing something that violates the conditions of payment and probably never getting caught or losing referrals. Are you starting to get why my mood has gone south?
I help a lot of people who have done things resulting in the appearance of fraud. I help people who have actually submitted fraudulent claims. I have not ever nor will I ever help anybody submit a fraudulent claim. I would like to tell you that it is because I am morally superior but the truth is, it just isn’t necessary to take even the smallest risk. Sick people will always be around and their will always be ways for us to improve care. In fact, if we did all that we were capable of, CMS and Congress would be at our doors asking us how we wanted our money – direct deposit or cashier’s check.
Do the right thing, y’all. I don’t like being angry. And remember, it is all about me.
Thanks AdvanceMed!
May 1, 2012
Still working a ZPIC so I am short on time to keep you up to speed. Luckily, AdvanceMed has done most of my blogging for me tonight. On a spreadsheet from the Zone, there is a column for the reasons for denial. Below are some examples. Read your charts and see if maybe one or more claims could be denied for the same reason. If the answer is yes, it isn’t too late to do something about it. Call us!
The documentation provided does not support that the skilled nurse visits are reasonable and necessary. The nurse continued to visit for observation and assessment when there were no acute changes in condition and no changes in the plan of care. There was no documentation of any complicating factors or inherent complex services that would require a skilled professional to be safely and effectively provided. There had been adequate time since start of care of XXXXX to have completed teaching in previous episodes. The medications: glimeperide, quinapril, atenol, and aspirin are indicated as new on the 485; however, there is no skilled service documented related to these medications.
The documentation provided does not support that skilled nurse visits are reasonable and necessary. The SN continued to visit for observation and assessment when there was no acute change in condition, no new orders, or change in the plan of care. There has been sufficient time since the start of care of xxxx to complete the teaching that was provided in this episode. The documentation provided does not support an exacerbation of the diagnoses as indicated per the 485. There was no documentation of any complicating factors or inherent complex services that would require a skilled professional to be safely and effectively provided. The documentation provided does not support an exacerbation of the diagnoses.
The skilled nurse continued to visit for observation and assessment of patient’s condition when there was no acute change in condition, and no new orders or change in the treatment plan. There was no documentation of any complicating factors or inherent complex services that would require a skilled professional to be safely and effectively provided. The documentation does not indicate that there is likelihood of a change in patient’s condition that requires skilled nursing personnel to identify and evaluate the patient’s need for possible modification of treatment or initiation of additional medical procedures. The records provided do not support an exacerbation of the diagnoses as noted on the 485, or a severity rating of 4 for the arthropathy diagnosis. There has been sufficient time since start of care date of xxxxx to complete teaching.
The documentation provided does not support that the skilled nurse visits are reasonable and necessary. Sufficient time has been allowed to accomplish teaching in previous episodes since the start of care date of xxxx. The nurse provided teaching related to a medication that was not new or changed. The nurse continued to provide observation and assessment when there were no new orders or change in the plan of care. There was no documentation of any complicating factors or inherent complex services that would require a skilled professional to be safely and effectively provided.
The documentation provided does not support that the skilled nurse visits are reasonable and necessary. The skilled nurse provided teaching on hypertension, fall precautions, range of motion exercises to help joint pain and relieve pressure on bony areas, low sodium diet, taking all meds as ordered, and ways to keep BP down. There has been sufficient time since start of care of xxxx in which to have completed this teaching.
So, there you have it. What you are looking at represents about 2M dollars in denials.
Questions?
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Thanks, HEALTHCAREfirst!
April 30, 2012
Bobby, Deanna and Meghan
Making it Happen at HEALTHCAREfirst
Now would be a good time to offer my sincerest gratitude to my hosts last week at the HEALTHCAREfirst Conference. I learned a lot of interesting things and met some really cool people. The most fascinating thing that I learned is where all the Healthcare First Data is stored. If you use Healthcare First software, you may not want to know the answer so I will leave that alone for now.
Although data storage is fascinating to be sure, I have never grown tired of hanging out with home health professionals. I learn more from y’all than anyone will ever learn from Haydel Consulting Services. Since I came home to a ZPIC requiring my attention, let me just briefly highlight some of the things I learned.
- The easiest way to protect yourself from Medical Review is to ensure that your zip code is not in Chicago.
- There are agencies – read carefully, Louisiana clients – that actually have average lengths of stay close to 30 days for Medicare patients.
- I don’t think there is a perfect place for the driving involved in home health. Did you know that there are agencies who pay for nurses to have chains put on their tires?
- Hospice providers may feel a little left out at times. I guess that is why they are receiving ADRs and other regulatory audits, at an alarming rate. PGBA, et al, did not want them to feel neglected.
- The Hard Rock Café in San Antonio is a great place to watch a parade during Fiesta.
More than ever, agencies are finding their revenue vulnerable as the result of extensive and robust (that’s a computer word) regulatory review by our Payor Source. HEALTHCAREfirst is stepping up to the plate to assist agencies in maintaining the integrity of their data. This is a good thing for the majority of providers who want to do more than simply survive in the upcoming years of uncertainty. But I caution you,HEALTHCAREfirst and all of their competitors sell software. You can push any button you want on the finest computer in the world and you won’t get nursing judgment or compassion to jump out of your machine.
Having said that, a cocktail of good solid data, strong leadership and intelligent, creative nurses is a plan for an agency that will enjoy financial and clinical outcomes long after this period of scrutiny settles .
So, I learned a lot and more importantly, I met some great people. It is really fun to meet a stranger who understands exactly what I do for a living and shares my love of the home health industry (inclusive of hospice, of course). My own family isn’t really sure what exactly I do for a living and I am not sure that anyone who isn’t on the playing field really knows how the game is played. So, it was fun meeting everyone and if I promised to call and you haven’t heard from me, please send an email. I have your card under a ZPIC letter so don’t take a chance on it getting lost!
Thanks to HEALTHCAREfirst and thanks to all of their clients who made San Antonio a really fun place to hang out for a few days last week.
Finding Mr. or Ms. Right
April 15, 2012
Too often, we settle on Mr. or Ms. Right Now when it comes to hiring nurses. This is especially of the Director of Nursing position because we are compelled to have a DON who meets requirements and to notify CMS and most states if the position is vacant and it should never be vacant for any length of time.
Ideally, most agencies have an RN already groomed for the position in their team leader positions. For these agencies, the burden then goes to hiring the right team leaders or whatever title your agency calls these alternate RN’s in the office.
Sadly, experience only goes so far in home health. It all depends on where the employee candidate was employed in the past. My suggestion is that when you hire any Registered Nurse for the office, you hire them with the awareness that they may be your director one day. After you determine that they meet al the paper qualifications, call them back in for a more in depth interview and ask some hard questions.
- What do you feel the biggest challenge to field nurses is at this time?
- If I told you that our average case mix weight I less than 1.0, what would concern you?
- If the average case mix weight was 1.9, would you be concerned?
- Describe your idea of quality management? What tasks do you feel are most important?
- In your opinion, which is more important? Getting paperwork in on time or getting it correct?
- Several nurses have threatened to quit because they believe they are not paid as much as your competitor pays their nurses. What do you do?
- Your patient has diabetes and arthritis. Which is the best code to use?
- What are three reasons that you might get in touch with the administrator over the weekend?
- Describe your computer skills. Do you use the computer only for work? Do you enjoy social websites? Do you use the computer a lot at home?
- What do you think a good average number of visits per episode should be?
There are no right or wrong answers and if a candidate is unfamiliar with the area discussed, it should not automatically disqualify them. If you are a legitimate agency, the response to number 7 is that the best code for the patient is the one that describes the patient’s condition. Number 8 will give you an idea of how comfortable the nurses is in taking responsibility.
The most important thing when hiring a nurse isn’t that she know all the answers. The important thing is that you are fully aware of where her shortcomings are and that the candidate is willing to learn. These questions will also give you an idea of the character and business sense of the potential candidate.
Agencies who use this level of scrutiny when filling all RN positions in the office are generally able to transition a current nurse into the DON position in the event of an sudden event. This has happened to my clients numerous times over the years. Losing a DON suddenly due to an accident or an abrupt termination is painful but it doesn’t have to be devastating if you have someone ready to assume the position.
It is so very difficult to work short handed. It is even more difficult to work when one or more of your RN’s is not able to perform. That’s when both clinical and financial health take a huge hit. Take the time to hire the right people. Trust me.
