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Policy Clarification for Home Health Agency (HHA) Parent, Branch, and Subunit Criteria
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Program Memorandum - State Survey Agencies
Department of Health and Human Services
Health Care Financing Administration
Transmittal No. 99-1 - Date AUGUST 1999
This Program Memorandum re-issues Program Memorandum 98-1 dated August 1998. The
only change is the discard date; all other material remains the same.
Change Request #N/A
SUBJECT: Policy Clarification: Home Health Agency ( HHA) Parent, Branch, and
Subunit Criteria
The purpose of this Program Memorandum is to consolidate and clarify the Health Care
Financing Administration’s (HCFA) guidelines for distinguishing between branch
office(s) and subunits of parent HHAs. Although these terms are defined at 42 CFR 484.2,
it has come to HCFA’s attention that there may be some variation among HCFA Regional
Offices (RO) and individual States as to how these definitions are applied when attempting
to categorize particular HHA locations as branches or subunits. These guidelines have been
issued previously in regulations and program manuals, as well as in letters to
ROs, HHA
providers, and various professional organizations. Also, HCFA has included in these
guidelines pertinent portions of Departmental Appeals Board (DAB) decisions where the
status of a particular HHA location (branch or subunit) was the issue.
One purpose of the Medicare HHA certification process is to ensure that providers meet
the Conditions of Participation (CoP) at 42 CFR PART 484, of which the regulatory
definitions of parent HHA, branch office, and subunit are a part. HCFA is also responsible
for ensuring that, consistent with §1861(v)(1)(A) of the Social Security Act, Medicare
only pays for those costs that are necessary for the efficient delivery of needed health
services. How a provider is paid for those services by Medicare is a decision of
HCFA. The
burden of demonstrating that a particular location is a branch, subunit, or parent is on
the HHA requesting such approval. These guidelines will be applied to all initial
applicants for Medicare participation and to all HHAs already in the Medicare program at
the time of the HHA’s routine resurvey.
In most cases, a survey of an existing, previously approved branch that you now
determine should be a subunit will not be needed. In such a situation, you should follow
the existing survey and certification rules for issuing a provider agreement and number to
the subunit, and use an effective date agreed upon by the RO Division of Medicare.
However, if you discover a "branch" that has never been identified to the State
agency (SA) or HCFA that is subsequently determined to be a subunit, an onsite survey in
accordance with the usual survey and certification rules will apply. Note that a subunit
may have branches. An onsite survey will also be necessary for any location where the HHA
has not provided services to Medicare beneficiaries in the past that the HHA now proposes
to operate as a branch, and that HCFA determines on the basis of the information provided,
is a subunit.
As part of the provider certification process, an existing Medicare approved HHA must
provide notification to HCFA of its proposal to add a nonparent location, i.e., branch or
subunit. HCFA must then determine if the CoP continue to be met with the inclusion of the
additional location. In the absence of notification, HCFA cannot determine whether the
requirements critical to health and safety are met at the nonparent location. A provider
may not bill Medicare for services provided by either a branch or subunit where the branch
or subunit is not a part of an approved HHA or where the branch or subunit has not been
determined to meet the applicable CoP.
While the HHA may notify the SA of its proposal to establish a nonparent location, and
the SA may make a recommendation to the HCFA RO in a particular case, it is the HCFA RO
which has the authority for determining the nonparent’s status as a branch or
subunit.
The following guidelines should be used when making a determination as to whether a
proposed HHA unit is a parent, branch, or subunit as defined at 42 CFR 484.2.
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In accordance with 42 CFR 484.2:
1. Parent agency means the agency that develops and maintains administrative
controls of subunits and/or branch offices;
2. Branch office means a location or site from which an HHA provides services
within a portion of the total geographic area served by the parent agency. The branch
office is part of the HHA and is located sufficiently close to share administration,
supervision, and services in a manner that renders it unnecessary for the branch
independently to meet the CoP as an HHA; and
3. Subunit means a semi-autonomous organization that does the following:
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Serves patients in a geographic area different from that of the parent
agency; and
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Must independently meet the CoP for HHAs because it is too far from the
parent agency to share administration, supervision, and services on a daily basis.
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As defined in 42 CFR 484.2, supervision means authoritative procedural
guidance by a qualified person for the accomplishment of a function or activity. Unless
otherwise specified in this part, the supervisor must be on the premises to supervise an
individual who does not meet the qualifications specified at 42 CFR 484.4. References to
supervision are found at 42 CFR 484.14(d), 484.30(a), 484.32, 484.34 and 484.36(d).
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Administration means those CoP described at Subpart B of 42 CFR 484.
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Services means those CoP described at Subpart C of 42 CFR 484.
In determining whether an applicant is a branch, parent, or subunit,
these guidelines should be applied on a case-by-case basis and in consideration of all
factors in the individual case.
The regulations require that a branch must be "sufficiently close" to share
administration, supervision, and services in a manner that makes it unnecessary for the
branch to meet the CoP on its own. To accomplish this, the parent agency must be
physically located so that sharing of administration, supervision, and services with the
branch can occur on a daily basis. If the parent is not capable of sharing such functions
with the branch on a daily basis, then the nonparent office or location must independently
meet the CoP. Supervision requires, unless it is otherwise specified in the regulations,
that a qualified person be physically present during the provision of services by any
individual who does not meet the qualifications specified at 42 CFR 484.4. Reliance on a
telephone, facsimile, or other electronic device as opposed to the physical presence of
the supervisor does not satisfy this requirement. A major aspect of supervision is
supervision of the HHA’s personnel in the furnishing of services to patients on the
patients’ premises.
Mileage and travel time are appropriate factors to consider, on a case-by-case basis,
in making the determinations regarding the regulatory requirements of "sufficiently
close." Additional factors include "serves patients in a geographic area
different from that of the parent" and "too far from the parent to share
administration, supervision, and services on a daily basis." While factors relating
to each determination may vary, the DAB recently concluded that where the driving time
between a parent office and branch had the potential to take as long as one and one half
hours, it was too long to ensure safe and timely treatment of the branch’s patient on
a shared basis with the parent. (See Homelife Nursing Inc. v. HCFA, DAB Decision No.CR 417
(March 26, 1996).)
"Geographic area," in terms of the regulatory HHA definition, generally means
the location, i.e., address of the clients served by the parent and nonparent. If the
nonparent office is located within a portion of the total geographic area served by the
parent, but serves patients outside the geographic area, then the nonparent should not be
a branch and would be classified as a subunit. This is consistent with the subunit
definition that applies to a nonparent office that serves patients in a geographic
location different from the parent.
In addition, consider that the sharing of HHA administration, supervision, and services
may occur at any time and could flow in either direction, i.e., parent to branch or branch
to parent.
1. If a nonparent reports directly to the home or corporate office or some other
office other than the alleged parent HHA, it is more likely a subunit rather than a branch
and as such must independently meet the CoP.
2. If the parent HHA and the nonparent use totally different staffs, it is less
likely they are sharing functions on a daily basis, and it is therefore less likely that a
parent/branch relationship exists.
3. The fact that the nonparent office is located in a different metropolitan
statistical area (MSA/Non-MSA) from that of the parent is a consideration in making
determinations about geographic areas. Commuting patterns are one consideration in the
establishment of MSAs. If the parent and nonparent are in different MSAs, it may reflect
that the nonparent is not within sufficient proximity to the parent to share functions on
a daily basis. This is especially true if the parent and nonparent are in non-contiguous
MSAs.
4. If the parent and nonparent are incapable of sharing emergency functions,
including services, on a daily basis, the nonparent is probably not a branch.
5. State licensure laws which define parent, branch, and/or subunit are a
consideration in making nonparent determinations, but it is the definitions in the Federal
regulations (42 CFR 484.2) that must be satisfied in making parent, branch, or subunit
determinations. If an HHA operates across State lines follow the instructions in §2184 of
the State Operations
Manual
(exit DHS). The SA in the State in which the parent
is located should take the lead in coordinating with the adjacent State to resolve parent
and nonparent issues.
6. The fact that the Joint Commission on the Accreditation of Healthcare
Organizations or the Community Health Accreditation Program have awarded branch status to
a location will not affect HCFA’s parent/nonparent decision. HCFA’s
determination will be based on its independent application of its regulations to the facts
in the case.
The above guidelines are to be applied on a case-by-case basis and applied as uniformly
as possible consistent with proper program administration.
This Program Memorandum may be discarded after August 31, 2000.
For further information, contact Mike Goldman at (410) 786-6813.
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