We have seen numerous articles about growing frustration among hospitals related to denied inpatient claims and the increasing use of observation status. The challenges continue to grow with the new policy that allows hospitals to re-bill under Part B for services denied during an inpatient stay.

Hospitals have one more thing to consider, however: were beneficiaries in an open home health episode at the time services were rendered?

Hospitals are receiving denials on claims for therapy services and supplies provided during observation stays, and home health agencies are receiving phone calls and bills from hospitals requesting payment. So, why is this happening now when it has not happened in the past? Well, it did happen in the past, but very infrequently. During a home health episode of care, only the primary home health agency (HHA) can bill for services included in a beneficiary’s home health benefit – including for therapy and medical supplies.

Because institutionalized beneficiaries cannot receive home care, consolidated billing issues do not apply. However, services provided during an observation stay are subject to Home Health Prospective Payment System (HHPPS) consolidated billing. Patients on observation stays lasting only a day are less likely to have these types of services provided, but as the days pass and the hospitals try to ensure a safe transition of the beneficiaries back to their homes, the use of therapy increases.

Here’s the problem with billing the HHA: the HHA may not be able to include the service(s) in their episode of care, and therefore they are not responsible for paying the hospital. In accordance with Medicare conditions of participation and Medicare coverage guidelines governing home health, the beneficiary’s plan of care must include the physician-ordered services provided by the HHA directly or under arrangement – and the services must not be provided outside the beneficiary’s home, except under those circumstances in which he or she needs to use medical equipment that is too cumbersome to bring home. A HHA may not include services on their claims unless they have physician orders, a contract with the hospital, and documentation of the service, as well as prior knowledge of the services provided.

It is the responsibility of all providers to protect beneficiaries from unexpected liability by notifying them of the possibility that they may be responsible for any payment. Home health agencies must inform the beneficiary of consolidated billing at the time of admission to home health; however, beneficiaries do not always retain this information and may not be aware of their hospital admission status. Hospitals must determine if a beneficiary is receiving home health services and understand that Medicare will not pay for the services subject to HHPPS consolidated billing separately.

Prior to rendering Part B services, the hospital first must ask the beneficiary and/or family if he or she currently is receiving home health services, then check with its Medicare Administrative Contractor to determine if the beneficiary has been in an open home health episode. A hospital only may bill the beneficiary if it completes the appropriate advance beneficiary notice and the beneficiary chooses to receive the services, understanding the potential financial liability.

About the Author

Bonny Kohr, RN, CHCE, HCS-D, is the manager of clinical services for FR &R Healthcare Consulting, Inc. She is a registered nurse, certified homecare coding specialist, and certified homecare and hospice executive. Bonny has worked 23 years in home health care, beginning as a field staff nurse, then as a clinical director, and finally as the chief operating officer.

Contact the Author


To comment on this article please go to editor@racmonitor.com

Share This Article