HCFA backs off some bond requirements
HCFA backs off some bond requirements
With as many as 70% of all home health agencies failing to qualify for surety bonds, the Baltimore-based Health Care Financing Administration (HCFA) may be rethinking its contentious, and often confusing, surety bond requirements.
In a letter to Congress, HCFA administrator Nancy-Ann DeParle acknowledged that the agency has gotten complaints about "technical concerns" that "were not apparent during pre-rulemaking discussions we had with members of the public and industry representatives." As a result, the agency may make revisions that "should help smaller, reputable agencies, such as non-profit visiting nurse associations, obtain bonds without weakening the bond requirement's ability to block agencies that should not be billing Medicare," DeParle says.
The public comment period for the regulations, which were published in the Jan. 5 Federal Register, ends March 6. The "technical revisions" will be published in the Federal Register "any day now," according to HCFA, but the agency refuses to hint at what the revisions may entail - despite the fact that home health agencies are still required to notify their fiscal intermediaries in writing by Feb. 27 if they haven't been able to secure a bond.
"It's a nightmare," says Mary Greeley, Washington counsel of the American Hospital Association. "There's no answer yet, but people are being told, 'You have to [take action] by Feb. 27, even though we're going to change the rules.'"
To make matters worse, it's not entirely clear what forms agencies are supposed to submit by Feb. 27, says Jeff Kincheloe, associate director of government affairs at the National Association for Home Care (NAHC), based in Washington, DC. In fact, various fiscal intermediaries have developed different systems and criteria about what kinds of documentation they require.
"HCFA has a procedure already spelled out about requesting a delay that required three rejections from surety bond companies," Kincheloe says. While NAHC's understanding now is that HCFA is likely to be more flexible in reviewing delay requests, some issues remain unresolved.
"For example, say you're an agency that hasn't been outright rejected, but the bond company is imposing a collateral requirement or a personal liability requirement that you simply cannot accept," he says. "Does that constitute a rejection or not? We would argue that it does."
Indeed, the issues of collateral and personal liability are at the heart of many free-standing agencies' inability to secure surety bonds. According to NAHC, some companies are requiring agencies to post collateral up to three times the value of the bond itself, while others include provisions holding agency stakeholders personally liable for losses. NAHC estimates that 70% of agencies have failed to qualify.
Bonding companies have imposed such conditions, Kincheloe says, because HCFA's current regulations place them at severe risk. "The statute of limitations for a home health surety bond is six years," he says. "So if a company issued a bond of $100,000, its potential liability could be $600,000. In essence, their liability is far greater than the amount of the bond."
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