Home Health & Hospice Week

LUPA, PEP and SCIC oversights can equal a big 'ka-ching' for Medicare.

If you think payment adjustments aren't stealing from your bottom line, it's probably time for a little detective work. Benchmarking your payment adjustment rates in three crucial areas is the first step in ferreting out problems.

Lost opportunity: Many agencies will take swift action if they notice a soaring low utilization payment adjustment (LUPA) rate, but other payment adjustment problems often go unnoticed.

"Some just don't hit the radar screen," says consultant M. Aaron Little of BKD in Springfield, MO.

Starting point: First, identify your payment change rates--all of which play into your Medicare profit margin. Key measures include the following three adjustments:

• LUPAs. If you have a patient who receives four or fewer visits, you wind up with a LUPA. A high percent of LUPA episodes could suggest a low acuity patient population and will bring down total Medicare payments, suggests BKD, which produces the National Home Health Operations Dashboard in conjunction with Eli Research.

But in analyzing your data, be sure you're comparing yourself both to national norms and a comparable peer group.

That could be agencies within your state or a smaller subset, such as agencies of a comparable size within your state. To track your numbers meaningfully, tap into a benchmarking report that serves up state, regional, and local data.

Nationally, the median rate for LUPAs hovers around 10 percent, but the median in your state might be higher. In New York, for example, the median is 15.3 percent while in California it's only 9 percent.

Hidden advantage: One good reason to know if your LUPA rate is high: It could mean that you're forced into repayments at inopportune times, especially if you're a smaller agency.

Don't do this: A small agency that's cash hungry may be inclined to bill for an episode too promptly, reports Rose Kimball, founder of Med Care Administrative Services in Dallas. If the agency subsequently finds that the patient needs or receives fewer than five visits, it will have to pay back the difference to Medicare.

• PEPs. Partial episode payments represent adjustments made when a patient is discharged and readmitted within a 60-day episode causing a reduced episode payment. The culprit: anything from agency competition to poor discharge and billing practices. Nationally, the median PEP rate is 2 percent.

Example: A high PEP rate could indicate a care-management problem, such as too-early discharges, suggests BKD consultant Karen Vance.

Tip: If you have a high PEP rate in conjunction with a high LUPA rate, take steps to see if your care delivery practices are adequate.

• SCICs. Significant change in condition episodes are significant in two major ways, reports Little. They are the only claim adjustment that's initiated by the provider--and a high percentage of SCICs could indicate poor billing and poor assessment practices.

"Getting a handle on why your SCIC rate is high can really open up a lot of opportunity to strengthen operations," says Little.

Case in point: A Missouri agency plagued by a SCIC rate of about 8 percent found that it could stave off future losses that had amounted to nearly half a million dollars over a period of two years.

Essential: Keep in mind that you're in the driver's seat when it comes to deciding to bill SCIC claims that result in higher billing codes, stresses Little. 

Note: For information on Eli's 2007 Home Health Operations Dashboard, which includes the agency, local, regional and national benchmarks discussed in this article, call 1-888-779-3718 ext. 326 or send an e-mail to dashboard@eliresearch.com.