Home Health & Hospice Week

HHAs are losing 2.5% of payments per year.

It’s not only the behavioral adjustment cut related to low utilization payment adjustments that’s the problem in the 2021 proposed rule for home health payment. PDGM’s whole LUPA methodology needs a rethink, many commenters told CMS in their comment letters.

Reminder: Under the Patient-Driven Groupings Model that the Centers for Medicare & Medicaid Services implemented Jan. 1, LUPA thresholds vary from two to seven visits, depending on the HHRG, and apply to half the time since the billing period dropped from 60 to 30 days.

There’s no doubt the COVID-19 pandemic has affected the number of LUPA episodes. “Like most other home health providers, LHC experienced extraordinary increases in LUPAs during the Public Health Emergency related to COVID-19,” national chain LHC Group Inc. says in its comment letter on the proposed rule.

In its Q1 earnings calls, LHC reported a 12.5 percent LUPA spike and Encompass Health a 14 percent spike (see HCW by AAPC, Vol. XXIX, No. 19).

But LUPAs were already higher than expected in January and February, “prior to the pandemic’s severe impact on healthcare delivery across the country,” Encompass Senior VP Justin Hunter points out in the chain’s comment letter to CMS. A recent study says the same (see story, p. 314).

Do this: “The frequency of LUPAs far exceeds the frequency assumed by CMS in the CY 2020 Final Rule,” LHC says. “CMS should adjust its LUPA policy for CY 2021 to reduce the LUPA threshold for all case-mix groups to two visits and reassess the impact during CY 2021,” the chain urges.

The prevalence of LUPAs isn’t the only reason to change the methodology. “CMS’s change in LUPAs threshold levels under the PDGM remains overly complicated,” judges Home Care Association of New York State’s Patrick Conole in the trade group’s comment letter. “CMS should consider going back to a single LUPA threshold,” Conole recommends.

10 Years Of Outlier Losses Add Up

Outliers haven’t gotten as much attention as LUPAs have under PDGM, but they are ripe for an overhaul too, multiple commenters said.

“The outlier provision withholds 5 percent of reim­bursements for home health agencies while imposing a 2.5 percent cap on outlier spending,” explains Anne-Marie Fontenot in her comment letter. “Administration for this provision is costly. Agencies would be better served if this 5 percent were reinstated into regular reimbursements, allowing owners and operators to account for reserves at their discretion," she tells CMS.

“The Outlier Provision has been a financial bane to the home health industry since implemented with PPS back in 2000,” judges accountant John Reisinger with Innovative Financial Solutions for Home Health in Tampa Florida. “More often than not over the last 20 years, the dollar amounts withheld to fund the Outlier Provision have NOT come back to the industry,” Reisinger maintains. “For almost all 20 years of PPS, there has been more withheld to fund the Outlier Provision than what has come back to the industry as Outlier Payments — the difference not coming back to home health in any manner or form.”

However, there were a few years when flagrant outlier abuse occurred, largely in the Miami area. In 2008, some Miami agencies were receiving between 65 and 80 percent of their Medicare revenues from outliers (see HCW by AAPC, Vol. 17, No. 36).

In addition to cracking down on the offending agencies, CMS initiated a 5 percent cap on outlier payments in 2011. “The Patient Protection and Affordable Care Act (PPACA) … stipulated that the withhold to fund the Outlier Provision be set at 5 percent, but also stipulated that the target for Outlier Payments for each year be set at 2.5 percent,” Reisinger recalls in his comment letter. “Therefore, since CY 2011, 50 percent of the amount withheld to fund the Outlier Payments … has been removed from available Home Health Spending.” That has cost agencies millions over the provision’s 10-year duration.

“CMS should end the Outlier Provision and add the 5 percent withheld to fund this provision back to home health spending and the National, Standardized 30-day Rate,” Reisinger tells CMS.