Byline: Michele Conklin Rocky Mountain News Staff Writer
Dozens of small Colorado home health agencies may be forced out of business by a new federal regulation, industry officials are warning.
The federal agency that administers Medicare recently began requiring home health agencies to carry surety bonds that would repay the government in cases of fraud.
However, bond companies are refusing to cover small independent home health agencies, saying there is too much risk. At least half of Colorado's home health agencies fall into this category and may have trouble obtaining the bonds. Without them, they will not be allowed to serve Medicare patients.
``If you can't get a bond, you will be out of business,'' said Ellen Caruso, executive director of the Home Care Association of Colorado.
Home health agencies have until Feb. 27 to buy surety bonds for $50,000 or 15 percent of their annual Medicare billings, whichever amount is greater. If the government later finds that it has overpaid the home health agency, it could collect the money from the surety companies holding the bond.
The problem is that the bonds are open-ended, meaning the government can come after the money for years to come.
``You can't predict risk because you don't know the end (of the liability),'' said Lynn Schubert, president of the Surety Association of America. ``The surety companies can't figure out the risk, so they can't write the bonds.''
More than 200 of the association's members are approved by the government to write these bonds but all have refused to do so under the current requirements, Schubert said. The National Association of Home Care says it has found just one bond company taking applications and then only 3 out of 10 are being approved.
The Health Care Financing Administration, which administers Medicare and Medicaid, says it will consider making changes to the regulation and will work with agencies that cannot obtain bonds. The agency sees the bonds as a weapon in its war against fraud. The new requirement - which was extended this week to include medical equipment suppliers - is modeled after a similar Florida law. That law resulted in a 62 percent reduction in the number of equipment suppliers without hurting access to care for patients, the agency said.
``We now have more new rules in place that will fight fraud and abuse by keeping unprepared and fly-by-night home health operators out of Medicare,'' said Donna E. Shalala, secretary of Health and Human Services.
But the new law also may force reputable agencies out of business simply because they are small and do not have enough collateral or cash to obtain bonds. One company, MedLink, already has decided to get out of the business because of several new Medicare laws, including the bond requirement.
``Everything seems to be up in the air and who needs the headaches,'' said Jim Naylor, local administrator for the New York-based company. ``I think quite a few agencies are going to shut down.''
Other agencies said they are taking a wait-and-see attitude. Allcare Home Health was initially told it had a bond but then learned the three insurance companies that had approved them had pulled out, said President Binnie Bhasin.
``But we're in the same boat as everyone else,'' he said. ``If our record wasn't clean, then we'd worry.''
Home health agencies that are part of hospital systems or publicly traded national companies don't seem to be facing the same problem, industry officials say. That's because they have collateral and clout. Centura Health, Exempla and Columbia / HealthOne say they either have already gotten their bonds or have been told they won't have trouble.
Some see the new law as an advantage for large companies to gain market share at the expense of small agencies. ``This will lead to consolidation,'' said Sally Henze, director of Columbine Home Health in Fort Collins.
