Navigating the Hospice Initial Accreditation Process

Navigating the Hospice Initial Accreditation Process

by | Jul 31, 2022 | Compliance and Regulatory - Directors, Financials, Office Setup, Patient Care, Surveys and Accreditation

What is hospice initial accreditation and why is it important?

Hospice initial accreditation is a way to ensure delivery of consistent and high quality services across all accredited hospice agencies. The accreditation program ensures that the hospice agency is fully compliant with Medicare Conditions of Participation.  The program also reviews that the hospice is compliant with state and local laws. An on-site survey conducted by the accrediting organization evaluates the quality of the clinical care provided, quality and compliance of patient records, policies and procedures, and performance improvement.  Patient and family experiences and quality outcomes are also reviewed. The organization’s financial and long term viability is also studied via review of budgets and other related metrics.

When would a hospice want to complete the accreditation process?

A home hospice must complete the initial Medicare accreditation process before it is able to bill Medicare for services provided to patients. CMS has approved three accrediting organizations (AO) to conduct Medicare surveys and accreditation for hospice agencies: CHAP, ACHC, and JCAHO. These agencies have standardized accreditation and assessment processes although the requirements and actual on-site survey review may vary depending upon state and local regulations. 

There are six key elements of the initial accreditation process

  • File and obtain state home licensure
  • Register with accreditation organization
  • Obtain CMS 855A
  • Develop patient caseload – verify agency is meeting Conditions of Participation
  • Ensure Conditions of Participation are being met
  • On-site survey visit

We now discuss each of these elements in greater detail.

Element 1: The process begins with the hospice filing a state home hospice licensure. Each state has its own requirements for approval. So this process and its time lines will differ by state. 

Element 2: Register with one of the three accreditation organizations (AO). The AO will require a registration fee. Although the accreditation will be received from CMS, Medicare has granted authorization to AO to conduct the accreditation process on behalf of CMS. The AOs have local branches, allowing them to customize their surveys for state and local regulatory requirements.

Element 3: Confirm 855A is accepted by the Medicare Administrative Contractor (MAC) that is appropriate for the hospice agency’s region: Palmetto GBA, NGS or CGS.

Element 4: Develop patient caseload. Specifically, the hospice must have serviced five patients, with at least three active at the time that the AO conducts the survey. Further, although the hospice is not currently billing Medicare, all patients must be treated as if they are Medicare eligible. All documentation must be completed within the Medicare required time frames and services must be provided by employees, as per Medicare guidelines. 

Element 5: Ensure Conditions of Participation are being met. This element involves a number of different items. 

The first item is that the hospice agency must verify it is providing all core services using hospice agency employees. Core services include nursing, social work, and counseling including spiritual, bereavement, and dietician. These services must be provided using hospice employees. Contractors may not be used to provide these services.  Physician is also a core service but CMS permits the medical director and alternate medical director services to be provided using either hospice agency employees or contracted services.  

The second item is to very that the hospice agency is able to provide all non core services using either hospice agency employees or contractors. Non core services include the therapies: physical therapy, occupational therapy, and speech therapy.  Additionally, the agency must verify that it is able to provide aide services.  It also must be able to demonstrate that it has a bereavement program, even if this service is not yet being used.  

The third element is that the hospice agency must verify it can provide all four levels of care including routine, GIP, respite, and continuous care. Not all of these levels of care must be provided through hospice employees; the agency may contract to provide these levels of care. 

As a final element, the hospice agency should demonstrate that it can provide DME, pharmaceuticals, drugs and biologicals.

Element 6: On-site survey. Once the hospice confirms that that prior five elements are completed, it will indicate to the AO that it is ready for a Site Visit. The date of the Site Visit will not be announced to the hospice agency but will typically occur within 45 days of when the hospice agency indicates site readiness.  The survey will be conducted on-site over three consecutive days.  The AO will review patient medical records, accompany staff on patient home visits, and review both clinical and non-clinical hospice agency policies and procedures. The AO will also review the agency for financial viability by reviewing budgets and other related metrics.

What happens after the survey is completed?

After the AO completes the on-site survey, the hospice agency will be notified of the final findings of the survey. There are four possible outcomes.

  • Agency passed with no deficiencies
  • Agency passed with minor deficiencies; agency must write an action plan that must be accepted by the accrediting organization
  • Agency has major deficiencies; deficiencies must be resolved, followed by another three day survey
  • Agency failed the survey; agency must restart the entire process

What happens after a hospice agency is issued its accreditation letter?

The AO sends a copy of the accreditation letter to the state department of health. Upon receipt, the state will confirm that the agency continues to meet all state requirements for Medicare eligibility. CMS will also contact the Fiscal Intermediary to confirm that the agency is located and operating at the physical address indicated on the Medicare application. The hospice agency will then be issued a Provider Number, also referred to as CMS Certification Number (CCN).  

In order to bill Medicare, the hospice agency must enroll in EDI and will be issued a Billing Number.  We discuss this process separately.

Where can you find more information?

This video from ACHC provides a description of the initial hospice accreditation process

Accounts Receivable by Payer

Accounts Receivable by Payer

by | Jul 25, 2022 | Accounts Receivable, Billing, Billing - General, Financials, Metrics and KPIs

Who are Hospice Agency Payers?

A payer is the company of government agency that pays the provider, i.e., the hospice agency, for the medical service that is administered to the patient.

For most hospice agencies, Medicare is the primary payer for hospice services. See, for example, this study published by Bazell et al., 2019, https://bit.ly/3RS805r.  The characteristics of payment vary by payer. As such, an agency should understand the distribution of its revenues and receivables across different payers.  In addition to understanding the breakdown of total receivables, the agency should look at distribution of receivables by payer – further broken down by aging bucket.

Expected time to be paid on a claim varies by payer. For example, payment for a Medicare claim is usually received within 14 days of the date the claim is submitted.  A claim submitted to a commercial payer will take longer and further varies by the commercial payer. It is important to monitor time until payment is received for each payer.  Delay in payment is an opportunity to quickly identify if there is a billing error that needs to be corrected.  Or, there may be an opportunity to improve the billing and collection process that will result in an increase in speed of collections.

It is also useful to compare your agency’s metrics to industry standards. Metrics that are worse than industry standards could point to areas of the collections process that could benefit from process improvement. 

Aging Accounts Receivables for Medicare and Commercial Payers

The following graph shows aging accounts receivable for the Medicare payer. As we see from the graph, over 90% of the receivables are less than two months old.

In contrast, here we can see the distribution of aging accounts receivable for commercial payers for the same hospice agency. 

In contrast to the Medicare accounts receivables, here only 43% of the receivables are less than two months old. 25% of the receivables are between four and eight months old. More significantly, more than 25% of the outstanding receivables are more than 12 months old – a sign that there may be a high number of receivables that may have to be written off.

What is the key takeaway?

Different payers have different payment patters and different rules for timely submission of claims. Hospice agencies need to have a good understanding of the distribution of their claims and the distribution of their outstanding accounts receivable to reduce the likelihood of write-offs.

Aging Accounts Receivable

Aging Accounts Receivable

by | Jul 25, 2022 | Accounts Receivable, Billing, Billing - General, Financials, Metrics and KPIs

What is Aging Accounts Receivable?

The age of accounts receivable (AR) is the time that has elapsed from the time the agency delivered the service to the patient until current date. Aging AR is typically grouped into monthly buckets (e.g., 0-30 days, 31-60 days, etc.). Total dollar value of outstanding (aging) AR should be monitored each month, grouped by monthly buckets. 

Consider the aging AR in the graph above.  The horizontal axis shows different buckets of AR, where Medicare is the payer. “Current” represents dollars outstanding for services rendered within the most recent 30 days.  “1 month” is dollars outstanding for services rendered in the most recent 31-60 days, etc.  The vertical axis represents the percentage of the total Medicare dollar amounts of AR in each of the aging buckets.

How is the Accounts Receivable Distributed over Aging Buckets?

The high dollar amounts in the the first AR bucket followed by a drastic drop in outstanding AR is typical for the Medicare payer. Most agencies bill on a regular cycle (biweekly or monthly) so the large volume of outstanding AR in the “Current” bucket is mostly comprised of services that have not yet been billed out or have just been billed out to Medicare. 

The outstanding AR drops but remains elevated in the “1 month” bucket. The agency is waiting to collect on services for which it has billed. It takes approximately 14 days to receive payment from Medicare. Aging AR is low in all remaining aging buckets. This is because the agency has billed and collected for most of its Medicare AR services.

What is Medicare Timely Filing?

Medicare claims must be filed no later than 12 months from the date services were provided. This includes resubmitting corrected claims that were unable to be processed. Again considering the aging AR in the graph above, note the volume of AR in the 10 month and 11 month aging buckets. AR in these aging buckets may be approaching Medicare’s timely filing deadline. Any claims in these buckets that have not yet been billed to Medicare will be not be able to be billed due to timely filing. The agency should quickly investigate the AR in these buckets. 

Most agencies have a greater than 99% collection rate for Medicare AR. There should not be significant Medicare AR that is uncollectible.

In addition to monitoring total dollar value of aging AR, there are other useful classifications and breakdowns of aging AR that should be monitored on a monthly or even weekly basis.