Home Health & Hospice

An Agency Has the Final Word on Reasonable and Necessary Services

Homecare Insider, September 14, 2009

The Recovery Audit Contractors (RAC) have started posting issues.  So far, they are targeting hospital outpatient and physician services.  Homecare providers have more time to pay attention to what they do.  One focus should be reasonable and necessary services.  Here’s a recent question.

If the physician orders more services than we believe are reasonable and necessary, what should we do?  I am afraid some of these services might be denied.

A physician’s certification of the need for homecare services is important but it is the homecare agency that has the final word.  When a physician orders care, an agency must determine whether it believes Medicare will cover the services.  If the agency has the staff and is able to provide the care but fears there may be a denial, it should issue the Home Health Advance Beneficiary Notice (HHABN) Option Box 1.  This notifies the patient of the agency’s concern about noncoverage.  If the patient wants the services, he or she can accept liability and request a demand bill.  It is possible that the regional home health intermediary or Medicare Administrative Contractor might have a different opinion and determine that services are covered.  In that case, the agency’s concerns were overruled and it can provide the services.  

If, however, the agency does not have staff or cannot provide the care for its own reasons, HHABN Option Box 2 would be the notice to issue.  This informs the patient about the agency’s decision.  It does not affect the patient’s ability to seek services from another agency and ask that agency to bill Medicare or another payer.  That agency would have to evaluate the plan and come to its own conclusion about the coverage of services.

“The RAC Audit: Defensive Strategies” discusses the RAC’s concern about reasonable and necessary services and offers tips for your agency.  Learn more about this audio recording.