Referrals

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Sunday, August 31, 2003

ROCHESTER, Ind. - A ruling that an Indiana hospital violated patient freedom of choice requirements is more proof that state and federal regulators are getting serious about discharge improprieties.

The discharge infraction involved an HHA, but the ramifications are larger and could play into the hands of HMEs who feel hospitals discharge - or downstream - patients disproportionately and unfairly to their own HME companies or partners, said Elizabeth Hogue, a healthcare attorney in Burtonville, Md.

“This is new and radical,” Hogue said. “I’ve never known a state licensure body to do what they did in Indiana.”

Among other things, Woodlawn Hospital, referred a patient to its own home health agency (HHA) without giving the patient a list of HHAs to choose from, as required by federal freedom of choice requirements, according to an Indiana State Department of Health document.

The state issued the hospital a statement of deficiencies in March and required it to submit a plan of correction.

“That case is not about home health agencies,” said Neil Caesar, president of the Health Law Center in Greenville, S.C. “That case is about discharge planning.”

Whether other states follow Indiana’s precedent remains to be seen. The case does, however, along with an April OIG bulletin that took hospitals to task for downstreaming patients, indicate that regulators are preparing to scrutinize more closely hospital discharge behavior, say Hogue and others.

“Providers need to realize they can fight these things, but the vast majority roll over on this issue,” Caesar said.

In a June HME NewsPoll, 88% of 110 respondents said local hospitals unfairly refer patients to wholly-owned HMEs or joint-venture HME partners.

Anecdotally, Caesar estimates that only one in 100 providers who feel hospitals ignore freedom of choice regulations ever do anything about it. Often that’s because providers feel they’ll see even fewer referrals if they make a stink. Of those that do take action, 80+% of the cases resolve in the provider’s favor, Caesar estimated.

A favorable resolution doesn’t mean a provider will see a dramatic increase in referrals, but there is “piece of mind” in knowing the hospital is complying with freedom of choice requirements. Secondly, when there is a fair system in place, providers can go about building a better relationship with the hospital, and that could lead to increased referrals in the future, Caesar said.

That said, hospitals can generally craft a freedom of choice compliance plan that allows them to legally refer 85% of DME and other ancillary healthcare business to their own companies or to joint venture partners, Caesar said.

“That’s fine, but a lot of them aren’t even doing that,” Herb Paserman of Allcare Medical in Old Bridge, N.J.

“They are coming in and saying, ‘You need a bed. You need oxygen. You need a wheelchair.’ Then they place the order without even discussing it with the patient.” HME

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