CMS moves forward with 25% pay reduction under RCD in Florida and North Carolina

Beginning April 1, home health agencies in Florida and North Carolina will be subject to a 25 percent reduction in payment if they choose not to participate in Medicare’s ongoing Review Choice Demonstration (RCD).

Although RCD has been fully implemented in both states since September, 2021, the Center for Medicare and Medicaid Services (CMS) has not previously implemented the 25 percent penalty for non-participants.

"Following a large advocacy effort in Florida and North Carolina asking for relief due to the COVID-19 public health emergency, CMS allowed providers in those states to transition to full implementation," said Principal J'non Griffin, who oversees outsourced RCD, coding and OASIS review services for SimiTree.

"Now the last phase of the transition is ending, and the full penalty will be applied to any agency in those states opting not to participate," she said.

A rocky implementation

RCD has had a rocky implementation over the past few years, with numerous delayed starts, pauses, implementation transitions and even a name change and complete makeover at one point. It was originally launched as the Pre-Claim Review demonstration in Illinois.

Now known as RCD, the demonstration in its current form was launched in 2018 as a CMS initiative to improve provider compliance with Medicare program requirements and reduce the number of Medicare appeals. It applies to Ohio and Texas as well as Illinois, Florida and North Carolina.

Prior to the pandemic, RCD was generally expected to extend to other states, in the same way that CMS has expanded other models after initial testing in a limited number of states. But the declaration of a national public health emergency in March 2020 paused RCD in Illinois, Ohio and Texas, and delayed its launch in Florida and North Carolina until last fall.

Providers in RCD states are required to choose whether to submit their documentation for review either before claim processing or post-payment. After participating for several months, and with a successful record of affirmations, providers are allowed to choose from other review options as well.

Instead of participating in RCD, providers may opt instead to take a 25 percent penalty on all reimbursement. However, taking the 25 percent cut in pay does not protect agencies from any normal post-payment medical review by Medicare contractors.

"CMS has not been levying this 25 percent penalty in Florida and North Carolina, the last two states to join RCD," Griffin said. “But on March 2, it announced that the grace period will end this April. The 25 percent penalty will apply to all claims submitted on or after April 1, 2022.

"This is another indication that CMS is ready to get back to business as usual after some lee-way during the public health emergency," Griffin said.

Need help with RCD?

SimiTree offers is available to help agencies with RCD in a number of ways, including providing full outsourced RCD services. Our consultants make the pre-claim submission for agencies, ensuring all documents are organized prior to clinical record submission.

We can make short work of RCD backlogs, assist with ADRs or an appeal process, train new agency staff in the process for pre-claim reviews, conduct spot check reviews of documentation and processes to validate or identify areas of vulnerability, and more.

Use the form below to reach out to us today, and let’s get started making your organization healthier overall, so that you can focus on patient care.

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