Home Health & Hospice Week

What case mix, payment ratio data say about your agency's status.

You know pay for performance is around the corner, but do you know how you plan to navigate home health's coming payment realities?

If you're not sure, it's time to give your benchmarking data another look, experts suggest.

Increasingly, agencies are employing benchmarking "dashboards" to guide them to their goals, notes Mark Sharp of BKD, a consulting firm that produces a benchmarking report offered jointly with Eli Research.

"Outcome data and comparative benchmarking are becoming the norm for successful organizations," agrees researcher and consultant Patrice Spath, a partner with Brown-Spath & Associates in Forest Grove, OR. Why? Agencies are mining data to distinguish themselves from the competition, she explains.

By looking at a benchmarking dashboard--typically comprised of select indicators and their relationships--you can gain valuable data-driven insights that help you see the current status of your business and how to achieve future payment goals. A variety of dashboard reports are available to the industry.

Take Stock Of Your Strengths

Consider what these four key dashboard indicators might tell you about your future profitability:

1. Average unadjusted episode payment. Use this measure to get a handle on your patients' acuity levels and the resulting case mix weights of your episodes, advises Sharp.

What the measure means: The episode payment indicator represents the average final payment Medicare pays your agency for episodes that were not subject to a payment adjustment, such as LUPAs.

2. Estimated average case-mix weight. This is an important, basic measure, particularly for agencies that are less than confident about the accuracy of their OASIS data, says Sharp. 

Reality check: Achieving accurate OASIS as-sessments consistently is still a struggle for many home health agencies, experts agree. About 60 percent of agencies have data integrity issues, according to audits conducted by Fazzi Associates, a consulting firm based in Northampton, MA.

What the measure means: Looking at your average case-mix weight alone won't help you assess your profitability, but it will steer you toward OASIS accuracy and fewer compliance concerns.

Example: The median case mix weight in the 2006 National Home Health Operations Dashboard Report is 1.2106. If yours hovers in the lower quartile of 1.0791, you should probably perform a self audit for OASIS accuracy, advises Sharp. If it approaches or exceeds the upper quartile of 1.3465, you may be a target for federal auditors.

3. Average payment per episode. An average payment per episode measure reflects the average final payment your agency receives for all Medicare episode, including adjusted claims.

What the measure means: In addition to indicating the acuity level of your patients, the item reflects the financial impact payment adjustments are having on your profits, offers Sharp.

4. Estimated average payment ratio. Finally, a benchmarking report or dashboard might offer a more complex measure that gives you insights about how the other indicators relate. BKD, for example, employs a proprietary formula that estimates the ratio between an agency's average episode payment and the base PPS payment rate.

What the measure means: The resulting number, explains Sharp, can help your agency get a solid understanding of how payment adjustments are affecting episode payments.

Example: If your agency's average case mix weight is comparable to the industry, but your average payment ratio is lower than the industry's, you should investigate why your episodes are being adjusted more than others, says Sharp.

Note: For information on the 2006 Home Health Operations Dashboard, offered by Eli Research and BKD, call 1-888-779-3718 x326 or send an inquiry by e-mail to dashboard@eliresearch.com. The report includes the agency, local, regional and national benchmarks discussed in this article.