The most award winning
healthcare information source.
TRUSTED FOR FOUR DECADES.
The Health Care Financing Administration (HCFA) dashed the hopes of home health agencies expecting the administration to reverse key parts of its controversial surety bond requirements as it issued its final revision to the rule today.
Experts say that while pending legislation, such as the recent bill proposed by Sens. Chuck Grassley (R-IA) and John Breaux (D-LA), and industry-funded lawsuits might still serve to change the requirement, HCFA isn’t likely to make further revisions on its own.
Adhering closely to the proposed revisions released on March 4, the final rule may allay the fears of surety bond companies worried about their potential liability, thus making it easier for agencies to obtain a bond. Despite criticism from the industry, the Small Business Administration, and some members of Congress, HCFA hasn't budged from its requirements that home health agencies secure a bond the greater of $50,000 or 15% of the annual amount received from Medicare. And they have to do it by July 31.
Specifically, agencies participating in Medicare must prove that they've obtained a bond within 60 days from the publication of today's final rule. For those participating in Medicaid, the compliance date is 120 days from now. But that doesn't change the beginning date of the term of the surety bond: All bonds must be retroactive to Jan. 1, 1998.
That's not much time, experts say, considering that only about one-third of agencies have yet secured bonds.
The final rule also includes the following points:
1 To induce bond companies to write more bonds, HCFA has modified its liability requirements by:
- Extending home health agency appeal rights to surety bond companies.
- Limiting the surety's company’s liability on the bond to the term during which HCFA determines that funds owed have become unpaid, regardless of when the overpayment took place.
- Establishing that the surety company's liability is not cumulative.
Also, the bond company will only be approached for payment after the home health agency has already been asked to pay.
2 HCFA is allowing agencies to secure an annual or continuous bond that can be renewed on a yearly basis. According to the National Association for Home Care in Washington, DC, "Continuous bonds may ease some of the administrative burden of securing a bond on a yearly basis."
3 HCFA also plans to scrap the 15% requirement after seven years, at which time only the $50,000 bond requirement will apply to all agencies. The agency says it's still examining the possibility of imposing some type of government security instead of a surety bond, but no decision on that has yet been made.
That's cold comfort to some home health experts. "The fact is, 65% of home health agencies won't be around seven years from now if this thing doesn't get changed substantially," says Ann Howard, executive director of the Silver Spring, MD-based American Federation of Home Health Agencies.
Privately, HCFA has confirmed that it's considering a further revision that would require agencies with reimbursement of less than $324,000 to obtain only one bond that would cover both Medicare and Medicaid. But, Howard says, some small agencies still will be hard pressed to afford even one.
"The [surety bond] rule is still a killer," she says. "It's going to provide marginal relief for the industry, but it's really not going to address the dilemma of small business home health agencies that couldn't get bonds before. This is not an answer at all."
Although HCFA will likely release another document by the end of the summer addressing some of the specific comments it’s received about the surety bond regulations, don't expect much to change. The document likely will only clarify HCFA's existing position. Howard believes any relief from the requirements at this point will have to come either from Congress or the courts. "I don't think HCFA's going to budge now," she says. "I think they're very pleased with what they've done."