Is the Periodic Interim Payment (PIP) Approach the Right Option for Hospice Providers?

Now that the conversion to ICD-10 is on the horizon, providers are concerned that payments could be disrupted during the conversion process.  While there are options for the government to advance monies to providers experiencing a hardship, this process can take time and many providers may not have the resources to weather the storm.  Between now and the ICD-10 conversion, scheduled to start on October 1, 2014, agencies need to plan for possible payment disruptions.

PIP might offer a path to reliable cash flows when payments may otherwise be disrupted by offering a reliable bi-weekly payment that is adjusted each quarter. General rules governing PIP payments to providers are outlined below:

  • New providers must generally have at least three months of experience and a Medicare Administrative Contractor (MAC) may require one filed cost report.
  • Payment is made bi-weekly unless the agency elects a longer period (not to exceed one month).
  • Payment is based on total estimated payments for the reporting period, which is generally the three-month period preceding the current quarter.
  • Each payment is made two weeks after the end of the bi-weekly period of service.
  • Approval of the election is at the discretion of the intermediary/MAC and must be specifically requested.
  • If PIP is granted by the intermediary/MAC, it may continue to be used only when the intermediary is assured that the provider continues to meet requirements necessary to remain on PIP (e.g., timely and accurate submission of information requested by the intermediary) and that proper payments are being made under this method.
  • To remain on PIP, providers must submit 85% of their bills timely and accurately.  Timely and accurately means that 85% of bills (with a few exceptions) are submitted within 30 days of discharge and pass front-end edits for consistency and completeness.
  • To remain on PIP, providers must file timely cost reports.
  • Bi-weekly payments are reevaluated quarterly, underpayments are paid in a lump sum, and overpayments must be refunded.
  • Providers may opt out of PIP at any time.
  • PIP is available to hospice agencies, skilled nursing facilities and hospitals.  Home Health providers are not eligible for this type of payment method.

A potential downside to PIP is that if your census is growing, payments will likely lag cash flow needs and, if census is dropping, payments will likely exceed cash flow needs resulting in a lump sum adjustment either to or from the intermediary/MAC.  Consequently, accurate budgeting and cash management skills are amplified when PIP is elected.

If you would like to pursue this option please contact either Ken Hooper or Leia Neely and we will assist you in making the request.

DISCLAIMER:  This post contains only summary information and highlights; it should be read in conjunction with the full article or document provided as a link.  Any advice or recommendations given is general and specific questions should be directed to professional counsel.

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