Getting a Fair Shake

I am often hired by suppliers who complain that their area hospitals are being unfair and favoring one HME company over all others. I am also hired by suppliers who would like to establish a special relationship with the hospital but who realize this is a legally sensitive area requiring caution and creativity.

CMS has offered only a little commentary about this volatile area of the law, but it is quite useful in laying the foundation for a safe and profitable supplier-hospital relationship.

Section 4321(a) of the Balanced Budget Act of 1997 requires hospital discharge planners to provide patients with a complete list of providers of “home health services.”

However, according to a 1997 internal memo from CMS’ Office of Standards and Quality, the BBA does not require hospitals to alert discharged patients about every home medical equipment option. This important clarification of current CMS policy eases the way for hospitals and HME companies to establish “preferred provider agreements” and other special contractual arrangements.

There has been much confusion in the industry about how broadly the phrase “home health services” should be interpreted. Because of this, many collaborative options between hospitals and HME companies, hospices, home health agencies and other home care providers have been put on hold.

But the 1997 memo indicated that CMS interprets “home health services” as home health agencies. The memorandum, from Peter Bouxsein (then-acting director of the Office of Clinical Standards and Quality) to the Associate Regional Administrators for Medicare Regions IX, stated that the BBA requires only that hospitals “provide Medicare beneficiaries [with] a list of Medicare certified home health agencies (HHA) that serve [their patients’] geographic area.” Further, only those HHAs “that request to be listed” must be included.

In my experience, this narrow interpretation is generally not known to hospitals and home care suppliers. While other freedom of choice rules still apply to discharged hospital patients, this important clarification makes it much easier for hospitals to work with home medical equipment suppliers, and of respiratory, infusion or rehab therapies, to provide care for these discharged patients.

A preferred provider agreement is a formal contract arrangement that allows a provider of home care services to promise a hospital that it will guarantee the availability of specific services, as well as information accessibility, education services, etc., whenever patients are referred to it. The home care provider hopes for an increase in the hospital’s awareness of (and comfort with) the preferred provider, but this is not contractually required.

Of course, any preferred provider agreement should be administered carefully and with diligent attention to guidelines ensuring patient choice. Also, I recommend that these arrangements not include financial benefit to the hospital whenever possible. This avoids some of the structural and operational problems that can arise under the anti-kickback laws and other relevant self-referral laws.

While the BBA Section 4321(a) does not apply to suppliers, it does require patient disclosure of any relationships that include a financial benefit to the hospital. This rule applies to all home health care companies, even if the home care provider is not a home health agency covered by the section’s freedom of choice rules. Certain financial relationships will still pass legal muster. If the relationship does not tie utilization to payment, the arrangement can satisfy the requirements of the anti-kickback laws. But the devil is in the details. The parties also must check state law requirements.

I prefer setting up hospital-supplier preferred arrangements so that there is no financial element included in the relationship. After all, the hospital gains accessibility and availability from a quality service provider for its discharged patients. Sometimes the home care provider offers other enhanced services as well. So there is a real benefit to the hospital even without the financial aspect.

Neil Caesar is president of the Health Law Center (Neil B. Caesar Law Associates, PA), a national health law practice in Greenville, S.C. He also is a principal with Caesar Cohen Ltd., which offers compliance training, outsourcing and consulting and the author of the Home Care Compliance Answer Book. He can be reached by e-mail at [email protected] or by telephone at 864/676-9075.