IT'S ONE OF the best-kept secrets of the Balanced Budget Act of 1997: Who is responsible for the provisions mandating consolidated billing for home health agencies and skilled nursing facilities?

Word has it that the Office of the Inspector General inititated the SNF requirement and that the House Ways and Means Committee's Health Subcommittee authored the HHA provision, but nobody, it seems, is rushing forward to take responsibility.

No wonder. The mandates have managed to stir up all sectors of the home health care industry that would be affected, inciting a grass-roots lobbying effort against them.

And this, in turn, has sparked the attention of some members of Congress who are now seeking to overturn these sections of the BBA.

Bundling the Billing WHAT'S AT STAKE is the home medical equipment industry's way of billing and being reimbursed by Medicare. With congressional reactions to Medicare fraud and abuse as a backdrop, the industry wound up with provisions in the BBA that required the Health Care Financing Administration to develop prospective payment systems for both HHAs and SNFs that includes streamlined billing.

The key 74-word passage concerning HHAs reads:

"In the case of home health services furnished to an individual who (at the time the item or service is furnished) is under a plan of care of a home health agency, payment shall be made to the agency (without regard to whether or not the item or service was furnished by the agency, by others under arrangement with them made by the agency, or under any other contracting or consulting arrangement, or otherwise)."

Because the Social Security Act's definition of home health services includes all durable medical equipment and supplies, this provision would cover virtually all of these services. With a SNF, only prosthetics, orthotics and supplies are separately reimbursable under Medicare Part B.

An Impossible Demand? ALTHOUGH THE PROVISIONS for HHAs and SNFs are not identical, the consolidated billing concept is the same as it relates to HME providers: Even if the equipment is supplied by an HME provider, the Medicare payment goes to the HHA or the SNF. The agency or facility would then have the responsibility for billing Medicare and reimbursing the HME provider, who would be prohibited from directly billing or receiving payment from Medicare for such equipment and services.

The HHA and SNF would be required to do the paperwork even if they are not equipped for the challenge of billing Part B Medicare, which is far different than the billing system under which they currently do business.

"HCFA is asking the HHA and the SNF to learn two new billing systems, and that's very difficult administratively and operationally," says Asela Cuervo, vice president of legal and government affairs for the National Association for Medical Equipment Services, Alexandria, Va. "This will cause problems for HCFA, for the HHA, the SNF, the HME providers-and will be completely confusing for beneficiaries. They didn't leave anybody out of this mess."

"The theory behind this is that some in Congress wanted to move to bundled payment for post-acute care," says Cara Bachenheimer, vice president of membership services for the Alexandria, Va.-based Health Industry Distributors Association. "But the unfortunate fact is that nobody considered the facts."

Indeed, she adds, the members of Congress who worked on the HHA provision "were thinking at the 36,000-foot level and some now admit they did not know what they were doing."

Timing Is Everything THERE IS SOME URGENCY about resolving the consolidated billing issue. No one knows how, when or even if consolidated billing will ever be implemented. But until further notice, it looms on the horizon.

For HHAs, implementation is linked to the start of the prospective payment system. After several false starts and a major delay caused by Year 2000 computer concerns, it is now scheduled to go into effect in October 2000.

For SNFs, implementation is on indefinite hold. It was originally linked to the PPS and was to have gone into effect July 1, 1998. That was delayed until Jan. 1, 1999, and now it is delayed again-probably until sometime next year-also because of Y2K concerns. In the final rule issued July 30, 1999, HCFA said it would publish a notice for the actual implementation date in the Federal Register at least 90 days in advance.

Whenever consolidated billing actually happens, it is clear from the organized opposition to it that HHAs, SNFs and HME providers are distraught over the potential consequences.

"Nobody is interested in this," says Mara Benner, executive director of the Home Health Services and Staffing Association, Alexandria, Va. "It's just going to put additional burdens on an overburdened industry."

Under the Radar ALTHOUGH THE PROVISIONS directly affect Part B providers, they came in virtually under HME radar, say some industry leaders, because they were included in the Part A section of the BBA as part of prospective payment requirements for HHAs and SNFs.

"The BBA is hundreds and hundreds of pages, and the HHA provision shows up as a small number of lines that nobody in HME really paid attention to at first," says Bachenheimer. "And [members of Congress] vote on these things without even reading them. It's amazing, but it's true. That's the nature of the beast. There were very few hearings. I won't say it was rushed, but it was expedited, especially for the volume of what's in there."

According to Bachenheimer, officials at HCFA were as surprised as anyone in the industry when the complete text of the law was distributed. "Apparently, nobody from Congress ever consulted with anyone from HCFA," she says. "HCFA officials told us they never would have advocated this because it will be extremely difficult to implement. And you won't find any home health agencies that want it. [Durable medical equipment, prosthetics, orthotics and supplies] are costly, complicated and burdened by regulations and documentation. The agencies will probably have to outsource it anyway.

"This is supposed to fight fraud and abuse?" Bachenheimer asks rhetorically. "It doesn't make sense. Medicare can't track claims across contractors, which is what would be necessary. It's just screwy."

Fighting the Battle NAMES AND THE Home Care Coalition, an industry lobbying group, are helping to lead the fight against consolidated billing on the grounds that it is not well thought out.

Ostensibly devised to save Medicare money by reducing fraud and abuse, consolidated billing will create chaos for Medicare as well as all three industries it directly impacts, they assert. They also argue that the provisions ignore the complexities of the home health market and the separate reimbursement systems established by Medicare for HHAs, SNFs and HME providers.

Home health advocates have urged Congress to repeal-or at least delay-implementation of the mandates because they will have a negative impact on patient care, radically alter current home health benefits, and contradict Medicare's reimbursement systems and standards, and because they are not needed to implement PPS for HHAs.

According to Bachenheimer, the battle against consolidated billing for SNFs is the harder of the two to wage because there is a "perception of double billing and Medicare abuse in nursing homes." As some industry insiders also point out, it is difficult to make an effective argument against the logic of consolidated billing for SNFs because the patients in question are under continuous care at these long-term facilities.

Point by Point THE OBJECTIONS AGAINST HHA billing are more compelling-and heated. In a letter-writing campaign that began at the grass-roots level of providers and this summer recruited more than a half-dozen members of Congress, industry advocates spelled out their arguments in great detail.

It compromises patient care.

Consolidated billing would create a break in the continuum of care because the need for DMEPOS often outlasts the need for nursing, therapy or home health aide services provided by an HHA. For example, a provider supplying services to a beneficiary for a chronic condition would be forced to stop providing those services if the beneficiary were to experience an acute episode that required the nursing services of an HHA, which would assume the responsibility. Once the acute episode was resolved, the HHA would no longer be responsible for the services, and the beneficiary would need an HME provider again. As industry experts point out, the beneficiary would be thrown into chaos, and the administrative burden would affect not only the providers but also Medicare.

It jeopardizes current home health benefits.

HME providers are specialists in the equipment and services they supply, while HHAs are typically not specialists in equipment and supplies other than incidentals such as bandages and catheters. Consolidated billing, however, would force HHAs to enter the equipment and services industry-a role outside their area of expertise. They would be compelled to take on liabilities by entering into contracts with Part B service providers and also assume a new set of onerous administration costs.

It contradicts Medicare reimbursement systems and standards.

Provision of DMEPOS is not required in HHA conditions of participation. What's more, most HHAs are reimbursed by the Regional Home Health Intermediaries, not the Durable Medical Equipment Regional Carriers that handle Part B claims for HME. Because HHAs do not typically handle HME, they are not prepared to handle the complex Part B reimbursement system used exclusively for medical equipment claims. Rarely do they even have Medicare supplier numbers. Medicare also has separate requirements that trigger coverage for HME and HHA services. As a result, the administrative burden would be great not only on the HHAs but also on HCFA.

It is not needed to implement PPS.

The PPS rate will not include non-routine medical equipment and supply services, so bundling DMEPOS services into the HHA benefit is not necessary to implement the PPS system.

Figuring Out the Mechanics ALL OF THIS has experts such as Maureen Hanna of Healthcare Reimbursement Consultants, Fountain Hills, Ariz., wondering how the HME provider will be paid, and who is responsible for non-coverage denials, bad debt or certificates of medical necessity, and equipment that becomes capped or downcoded to a less-expensive item.

"I'll be surprised if it's ever implemented," Hanna says. "It hasn't been thought through-they haven't considered the repercussions. Skilled nursing facilities, for example, are the legally responsible billing party and are prohibited from relinquishing or reassigning the actual legal responsibility for and control over a claim."

The HHA or SNF could outsource the billing to yet another party. But while this would simplify life a little for the HHA or SNF, industry analysts agree that it would further complicate the overall chain of reimbursement.

"All this will increase bookkeeping, administrative activities and overhead," says Mary St. Pierre, director of regulatory affairs for the National Association of Home Care. "Will the payment be adequate to cover the supplier and the added overhead? Will Medicare recognize those costs for the nursing homes? We already have horrendous financial problems because of the interim payment system, and it may not get better under the prospective payment system. Will the DME [providers] wait for payment until the HHAs get paid? And to whom do they appeal if there's a problem?"

The Payment Dilemma CONCERN ABOUT PASSING reimbursement through to the proper parties has led HCFA to essentially wash its hands of that part of the mess, advising SNFs and HME providers to take the issue into consideration during their own private business negotiations.

In its interim final rule on PPS for SNFs, HCFA did note its concern that if a SNF kept the difference between the applicable Part B fee schedule and the provider's actual charge for a service, the SNF could have incentive to provide unnecessary services. However, experts commenting on the rule argued against any restrictions in this area, and HCFA agreed that under current law, a SNF's relationship with its HME provider is a private contractual matter, and the terms of payment must be settled through direct negotiations between the two parties.

A provider concerned about the adequacy or timeliness of the SNF's payment would have to address that during negotiations, HCFA wrote, adding that it will have no role in adjudicating discrepancies.

In the home health industry, says St. Pierre, developing relationships between HME providers and HHAs will be critical as the two groups prepare for consolidated billing. "If this is going to work," she says, "they're going to have to find a way to work together."

The Bottom Line WHAT WILL THE ultimate impact be?

HCFA acknowledges some SNFs will not be able-or will choose not-to adapt to PPS and will drop out of the Medicare program. But HCFA also wrote that it believes providers will be able to negotiate "a fair amount of payment from the facilities."

NAMES and the coalition, meanwhile, have urged Congress to repeal the provisions. "We are pushing hard for a delay," says Cuervo. "It will take statutory language to eliminate consolidated billing, because it's in the law now. But its potential for confusion and disruption is great-especially for the patient."

And if enforced, she warns, "it could dramatically change the landscape of the industry." HC

Consolidated billing would require HME providers to monitor whether their customers are under the simultaneous care of an HHA and then adjust and redirect billing accordingly, even if only temporarily. The BBA also requires HCFA and DMERCs to track, monitor and accept reimbursement billing for equipment only from HHAs or SNFs if a patient is under their care.

Repeal of relevant BBA provisions?

Acquire, merge or align with local HHAs?

Renegotiate relationships with SNFs?

Industry and individual lobbying efforts?

HME providers will not be allowed to bill for any equipment provided to customers who are under the care-even temporarily-of an HHA or SNF.

Patients will be thrown into confusion and chaos, unsure whom to call or where to go for the HME they need.

If forced to bill for Medicare Part B equipment supplied by an HME provider, SNFs and HHAs may demand that HME providers accept even lower prices for their products.