By Roni Glaser rglaser@mlg.com

Delivery of home health care services in New York is governed by state law and regulations as well as by federal Medicare and Medicaid statutory and regulatory mandates. This article will provide an overview of the various regulatory schemes affecting health care services provided in the home.

I. Federal Law and Regulation

A. Medicare and Medicaid-Operational Requirements

In New York State, certified home health agencies (CHHAs) may provide home health care services that are reimbursable by Medicare under Title XVIII of the Social Security Act. Codified in section 1891 of the Social Security Act (42 U.S.C. 1395bbb) and part 484 of the Secretary's regulations, the requirements for provider participation in the Medicare program are known as the "Conditions of Participation." These Conditions of Participation include protection by the agency of certain rights of patients, notices of changes of ownership and control, requirements for training and competency of aides, supervision of aides and adherence to plans of care, reporting of information, and other clinical and operational requirements.

Section 1891 also requires surveys of Medicare-certified agencies to be conducted at least every three years, and more often if circumstances warrant it. It provides for decertification if Medicare identifies deficiencies that involve immediate jeopardy to the health and safety of patients, or intermediate sanctions if it identifies deficiencies that do not immediately jeopardize the health and safety of patients. Intermediate sanctions can include civil money penalties not to exceed $10,000 for each day of noncompliance, suspension of payments due under the Program, and appointment of a temporary management to oversee operations of the agency while improvements are being made to come into compliance.

Both licensed and certified agencies in New York State may participate in the Medicaid program under Title XIX of the Social Security Act. Although the federal government establishes general guidelines for the program, Medicaid operational requirements are primarily the domain of each state. States establish their own eligibility requirements, the scope of services for which they will pay, and reimbursement rates for payment. States are required to offer Medicaid reimbursement for home health care for patients who are eligible for skilled nursing services. They may also receive federal funds if they provide reimbursement for rehabilitation and physical therapy services and for home and community-based care to patients with chronic conditions.

B. Medicare and Medicaid- Reimbursement Requirements

Since October 1, 2000, Medicare has reimbursed providers for home health care services through a Prospective Payment System (PPS) under section 1895 of the Social Security Act, 42 U.S.C. 1395fff. This system of reimbursement replaced the former retrospective reasonable-cost-based system. PPS uses a 60-day episode as the basic unit of payment, and provides adjustments for unanticipated events such as partial episode payments, adjustments for significant changes in condition, and other circumstances. Providers receive half of the expected payment at the inception of care and the remainder at the close of the 60-day episode.

While 50 percent of Medicaid reimbursement in New York State is received from the federal government (approximately 40 percent comes from the state and 10 percent from local social services districts), the state administers its own Medicaid reimbursement methodology. States are given broad discretion as to the method of payment they adopt. New York State has adopted a cost-based reimbursement mechanism that involves the submission of cost reports and the setting of rates based on a two-year retroactive incorporation of the costs incurred in a reporting year into the current year's rates.

II. State Law and Regulation

A. Operational Requirements

New York State regulates home health care agencies pursuant to Article 36 of the Public Health Law. Under PHL section 3602(2), a home care services agency is

an organization primarily engaged in arranging and/or providing directly or through contract arrangement one or more of the following: Nursing services, home health aide services, and other therapeutic and related services which may include, but shall not be limited to, physical, speech and occupational therapy, nutritional services, medical social services, personal care services, homemaker services, and housekeeper or chore services, which may be of a preventive, therapeutic, rehabilitative, health guidance, and/or supportive nature to persons at home.

Generally, no agency which provides these services may operate in New York State without the authorization of the Commissioner of Health, in the form of a license or an operating certificate.

New York recognizes two types of home care agencies: licensed home care services agencies (LHCSAs) and certified home health agencies (CHHAs). The former may provide home care services to individuals whose source of payment is Medicaid, private insurance or self-payment. The latter may provide services whose sources of reimbursement include any of those, but may also provide home care services to recipients of Medicare. CHHAs must undergo a certificate of need process which includes a determination of public need and financial feasibility by the Commissioner of Health. Long Term Home Health Care Programs (LTHHCPs), sometimes referred to as "nursing homes without walls" or "Lombardi Programs" (after their sponsor in the state legislature) may be operated only by hospitals or nursing homes that hold operating certificates under Article 28 of the Public Health Law, or by CHHAs. Patient capacity for LTHHCPs is also subject to an analysis of public need under a CON process. Currently, the Commissioner has imposed a moratorium on the establishment of new CHHAs, though additional patient capacity for LTHHCPs, also long subject to a moratorium, has recently been awarded in certain geographic localities in which the state believes that public need can be established.

Regulations of the Commissioner of Health pertaining to the approval and operation of home care agencies may be found at 10 NYCRR 760 through 763 (for CHHAs and LTHHCPs) and 10 NYCRR 765 and 766 (for LHCSAs). The rules for applications to operate or to change the ownership of CHHAs and LHCSAs are similar, though the former include additional rules for determination of public need and verification of financial resources to operate an agency, which rules do not apply to LHCSAs. Minimum standards for operation of programs by CHHAs and LHCSAs are also similar, though those for CHHAs more closely incorporate federal Medicare guidelines, and are thus stricter in certain respects. They both touch on areas including patient rights, admission and discharge, patient assessment and plans of care, maintenance of records, responsibilities of the governing body, personnel requirements and others.

B. Reimbursement Requirements

Medicaid reimbursement requirements for personal care services provided by home health care agencies are found at 18 NYCRR § 505.14. Section 505 also addresses private duty nursing and other services sometimes provided by home care agencies. Under the state Medicaid regulations, social services districts provide medical assistance to recipients and act as their case manager, either directly or through contracts with private home care agencies. Section 505.14 contains operational requirements pertaining only to Medicaid-reimbursed services, which supplement the Department of Health's program regulations. It also establishes a rate-setting methodology which entails the submission of actual operating costs for a rate year and the determination of a rate by the Department of Health utilizing the agency's allowable costs as reported, adjusted by trend factors, but not to exceed established ceilings. This rate includes an adjustment for profit for proprietary agencies, or surplus for voluntary agencies. New York City's personal care program, administered by the City Human Resources Administration, is an exception to this rate-setting methodology, and uses an RFP bidding process to select its vendors and set their rates.

While any licensed home care services agency in New York State is permitted to render services reimbursable by Medicaid, in reality such services may only be rendered pursuant to contracts with county social services agencies. Counties frequently maintain closed lists of vendors with whom they contract, that only periodically open up as need dictates.

A good tool to keep abreast of New York State's Medicaid news, including program requirements and billing and reimbursement issues, is the monthly publication of the Department of Health Office of Medicaid Management, "Medicaid Update," which is sent by e-mail and can be requested by sending an e-mail to medupdte@health.state.ny.us. A good Internet resource for information on Medicaid and Medicare, including access to the federal Home Health Agency Program Manual and other manuals, Program Transmittals and Program Memoranda, can be found at www.cms.hhs.gov/providers/hha.

Roni E. Glaser is a partner in the Health Law Practice of Meltzer, Lippe, Goldstein & Breitstone, LLP, located in Mineola, New York. Ms. Glaser represents health care providers in connection with business transactions, regulatory compliance, survey and enforcement actions, licensing, Medicaid audit, overpayment and fraud and abuse issues, provider contracting, HIPAA privacy, medical education accreditation, and employment matters. Ms. Glaser's practice focuses on issues affecting licensed and certified home health agencies, in New York State and nationally.