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Patient-Driven Groupings Model:

CMS Isn’t Budging On LUPAs

Published on Fri Jul 09, 2021

CMS Isn’t Budging On LUPAs

The factors that influence your payment rate are many under the relatively new Patient-Driven Groupings Model. Here’s what the home health payment proposed rule has to say on key reimbursement areas:

LUPA Thresholds

Along with PDGM came a confusing new variety of Low Utilization Payment Adjustment thresholds. Each of PDGM’s 432 case mix categories has its own LUPA threshold level ranging from two to six visits.

As part of its behavioral assumption payment decrease, the Centers for Medicare & Medicaid Services expected HHAs would mitigate LUPA episodes by adding visits. Specifically, “for one-third of LUPAs that are 1 to 2 visits away from the LUPA threshold HHAs will provide 1 to 2 extra visits to receive a full 30-day payment,” CMS recounts in the 2022 proposed rule published in the July 7 Federal Register. Instead, visits went down, and LUPA episodes increased in 2020 under PDGM.

“We evaluate utilization by comparing our simulated 30-day periods in our analytical files, to actual CY 2020 PDGM claims,” CMS explains in the proposed rule. “On average, the total number of visits decreased by 1.27 visits per 30-day period of care between CY 2018 and CY 2020.”

That translated to 8.6 percent of 30-day periods in 2020 being LUPAs while in 2018 and 2019 the simulated LUPA figures were 6.7 and 6.8 percent, respectively, CMS reveals in the proposed rule.

In the 2019 final rule that implemented PDGM, “we finalized our policy that the LUPA thresholds for each PDGM payment group would be reevaluated every year based on the most current utilization data available at the time of rulemaking,” CMS acknowledges.

But despite that statement and the new data, CMS still proposes to keep LUPA thresholds the same in 2022. “We have received anecdotal feedback from stakeholders that in CY 2020, HHAs billed more LUPAs because patients requested fewer in-person visits due the COVID-19 PHE,” the rule notes. “Visit patterns and some of the decrease in overall visits in CY 2020 may not be representative of visit patterns in CY 2022.”

CMS continues, “If we were to set the LUPA thresholds in this proposed rule using CY 2020 data and then set the LUPA thresholds again for CY 2023 using data from CY 2021, it is likely that there would be an increase in these thresholds due to the lower number of visits that occurred in CY 2020. Therefore, to mitigate any potential future and significant short-term variability in the LUPA thresholds due to the COVID-19 PHE, we are proposing to maintain the LUPA thresholds … in the CY 2020 HH PPS final rule … for CY 2022 payment purposes.”

Bottom line: “Maintaining the LUPA thresholds for CY 2022 is the best approach because it mitigates potential fluctu­ations in the thresholds caused by visit patterns changing from what we observed in CY 2020 potentially due to the PHE,” CMS says. The agency does specifically ask for feedback on this topic in public comments, however, which are due Aug. 27.

CMS may find the 8.6 percent LUPA figure for 2020 unpersuasive in any case because it has previously stated a desire to keep LUPAs in the 7-to-8 percent range.

LUPA Add-On

In addition to keeping LUPA thresholds static, CMS proposes another LUPA-related change: implementing a LUPA add-on payment for occupational therapist assessment visits.

Reminder: The home health payment system has long granted extra add-on payments when a LUPA episode is the first or only episode in a sequence of adjacent episodes, due to increased costs associated with such episodes. In the 2014 HH PPS final rule, CMS changed the methodology for calculating the LUPA add-on amount by finalizing three different LUPA add-on factors for skilled nursing, physical therapy, and speech language-pathology, based on which discipline conducts the assessment.

Thanks to a COVID-19 waiver that was made permanent this year in the Consolidated Appropriations Act, the Department of Health and Human Services will “permit an occupational therapist to conduct the initial assessment visit and to complete the comprehensive assessment … for home health services … if the home health plan of care … (1) does not initially include skilled nursing care; (2) includes occupa­tional therapy; and (3) includes physical therapy or speech language pathology,” the CAA says.

In the rule, CMS proposes adding an OT LUPA add-on payment. “Currently, there are no sufficient data regarding the average excess of minutes for the first visit in LUPA periods where the initial and comprehensive assessments are conducted by occupational therapists,” the rule notes. “Therefore, we propose to utilize the PT LUPA add-on factor of 1.6700 as a proxy until we have CY 2022 data to establish a more accurate OT add-on factor.” The “similarity in the per-visit payment rates for both PT and OT make the PT LUPA add-on factor the most appropriate proxy,” CMS believes.

The add-on factor will apply to payment for the first skilled OT visit in qualifying LUPA periods, explains Simione Healthcare Consultants in online analysis of the rule.

CMS will also adjust regulations to reflect the OT change, points out the American Occupational Therapy Association. “AOTA long advocated for this change as a way to better recognize occupational therapy as an essential component of home health care and help identify and address patient need for occupational therapy services,” the trade group cheers in a release about the rule.

Outliers

CMS proposes to make a change to the Fixed-Dollar Loss figure that helps determine outlier payments.

How it works: “There is a trade-off between the values selected for the FDL ratio and the loss sharing ratio,” CMS explains in the proposed rule. “A high FDL ratio reduces the number of periods that can receive outlier payments, but makes it possible to select a higher loss-sharing ratio, and therefore, increase outlier payments for qualifying outlier periods. Alternatively, a lower FDL ratio means that more periods can qualify for outlier payments, but outlier payments per period must be lower.”

CMS proposes dropping the FDL significantly from 0.56 this year to 0.41 in 2022. “That would mean that more periods will be eligible for outlier payments in CY 2022,” the National Association for Home Care & Hospice says in its rule analysis. The loss sharing ratio would stay at 0.80.

Wage Index

Year-to-year wage index changes for home health agencies are always a wild card, with some areas seeing significant swings. This year that effect will be magnified for some agencies by a complete transition to new Office of Management and Budget wage index areas.

“In the FY 2021 HH PPS final rule … we finalized the proposal to adopt the revised OMB delineations with a 5 percent cap on wage index decreases, where the estimated reduction in a geographic area’s wage index would be capped at 5 percent in CY 2021 only and no cap would be applied to wage index decreases for the second year (CY 2022),” CMS recounts in the 2022 proposed rule.

Now that second year is arriving, and that means some wage index areas will see a big shift. “The 5 percent cap will be lifted in CY 2022,” the National Association for Home Care & Hospice emphasizes in its rule analysis.

One county saw a 33 percent increase to its wage index in 2021, when increases were not capped. Theoretically counties could see a similar drop in 2022 when decreases aren’t capped anymore either.

Resource: Look up your county’s new wage index in the “CY 2022 HH PPS Wage Index” file at www.cms.gov/center/provider-Type/home-Health-Agency-HHA-Center.

NOAs, Sequestration

While not new, CMS makes note of a few previous changes that will hit next year.

“We are reminding stakeholders of the policies finalized in the CY 2020 HH PPS final rule … and the implemen­tation of a new one-time Notice of Admission (NOA) process starting in CY 2022,” CMS says in the rule. “Starting in CY 2022, HHAs will submit a one-time NOA that establishes the home health period of care and covers all contiguous 30-day periods of care until the individual is discharged from Medicare home health services.”

The killer: “For the one-time NOA for CYs 2022 and beyond, we finalized a payment reduction if the HHA does not submit the NOA for CYs 2022 and beyond within 5 calendar days from the start of care,” the rule continues. “If an HHA fails to submit a timely NOA for CYs 2022 and beyond, the reduction in payment amount would be equal to a one-thirtieth reduction to the wage and case-mix adjusted 30-day period payment amount for each day from the home health start of care date until the date the HHA submitted the NOA.”

Any LUPA visits made during the period also won’t be paid if they fall before the NOA submission, CMS clarifies.

Plus: Sequestration will resume in 2022 unless there is further action by Congress, points out Brian Harris, SimiTree Financial Consulting Director, in the Simione analysis. “Sequestration is a 2 percent punitive Medicare reimbursement adjustment levied in 2011. Congress has suspended sequestration three times during the public health emergency, and the latest suspension expires at the end of this year,” Simione says.

Note: The 143-page rule is at www.govinfo.gov/content/pkg/FR-2021-07-07/pdf/2021-13763.pdf.

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