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Palmetto’s Naughty List

If you are one of the 398 providers who had over 100 RAPs cancelled in the first quarter of this year, that might be a problem soon.

Palmetto GBA makes it abundantly clear that payment is not be withheld – rather an agency’s privileges to Request Anticipated Payment will be suspended and all payment will be held until the final claim is billed.  Agencies will also have to complete a corrective action plan and demonstrate compliance prior to having their privileges restored.

Other agencies may get a letter warning them to clean up their billing act or face a 0 percent rap payment in the future if they have between 50 and 100 RAPs auto cancelled.

For those clinicians who stay far, far away from billing, you probably already know that 50-60 percent of payment is made for a home health episode at the beginning of the episode and the balance paid when the final claim is dropped.  At least, that is how it works.  What technically happens behind the scenes is that when the final claim is dropped, the RAP is taken back from the agency and the total amount for the claim is paid.  An agency has about 4 months to bill the final claim prior to having the RAP cancelled.  (Thanks to all you business office people for reading patiently while I got the nurses and therapists up to speed).

I am in complete agreement with the underlying reasoning for the suspension of RAP payments in agencies with a high number of auto cancelled RAPs.  It is a patter that I see frequently in agencies who will not survive a ZPIC or RAC audit.  I do not agree with the way they implemented it.

Before asking agencies to correct the problems, Palmetto should have first asked why the problem occurred.  RAPs auto cancelled in the first quarter would include those patients who were admitted as Medicare patients and later converted to an HMO during open enrollment in November of 2012.  Floods and fires can destroy a building resulting in the need to obtain signatures a second time. Physicians leave the country for weddings and decide to stay 8 or 10 weeks longer than planned. 

So, I don’t think Palmetto GBA should have implemented this drastic policy prior to asking agencies if there was a reason. 

I am also confused by the use of an arbitrary number.  It seems to me – someone who works with fraud on a regular basis – that the likelihood that program integrity is threatened is reflected by the percent of auto cancellations as opposed to a raw number.  I am not the world’s best mathematician but I have seen fraudulent agencies who had about half of their RAPs taken back.  They did not withstand scrutiny, by the way.  On the other hand, the agency with 800 patients with an average length of stay of less than one episode may drop close to 500 RAPs per month so 100 auto cancels would equal close to 8 percent in a quarter.  That seems more like inefficiency to me.   

So, if you find yourself with a sudden need to write a corrective action plan, please let us know.  Not only can we do that for you but I know a hotshot biller who will make sure you never have this problem again. 

Nobody can do anything for you if the doc who gave the order lives in a Federal Penitentiary, was a resident at a local hospital ten episodes ago and has since returned to their homeland, or you accidentally admitted a patient to a physician who didn’t have license.  Save your money and call someone else if your plan of correction will involve any of those issues. 







4 Comments Post a comment
  1. Bucky Page #

    Our agency has not been affected; however, I am extremely disturbed at Palmetto’s rationale. 100 auto cancellations for a large agency that has 1000-1500 claims is a very SMALL percentage of raps being recouped vs 100 for a smaller agency. If they really wanted to do this and do it fairly, they would have gone by a percentage. From what I understand, they did not really give any of the 298 agencies anytime to respond or offer up a reason for the number of RAP cancellations.

    May 1, 2013

    • I agree with you. I do want to point out that the arbitrary numbers were not reported on the PGBA website. I did see some correspondence from Mary St. Pierre at NAHC sent to another client mentioning them. I find her to be extremely reliable as far as information goes.

      The obvious reason they did this is because if I suspend RAPs for large agencies, I get to keep more money than if I do it for small agencies. We know that the largest publicly traded companies have mechanisms in place to monitor these almost every second of the day. That leaves those very large free standing providers who may not be able to go 60 days without cash. If they were already having a lot of recalled RAPs, it stands to reason that their cash was already compromised. Unless they have an extremely healthy line of credit or are willing to use a factoring company, they will die. Depending on interest rates, they will die anyway.

      May 1, 2013
  2. Gail #

    I’m usually a very trusting, not unusually suspicious person by nature. But, is this kinda like the IRS scandal? Is there treachery afoot? Maybe, if the free standing providers have to fold, then where will all those patients go? I beginning to suspect ulterior motives here. Or am I 100% incorrect?

    May 15, 2013

    • ‘They’ – CMS is violating the intent of the laws right and left as far as I can tell. I do not know why. I know that Kathleen Sebelius is being investigated for soliciting funds for a Feel Good campaign about the ACA.


      May 15, 2013

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