Home Health & Hospice Week

LUPA threshold decreases far outweigh increases for next year.

While halving the massive productivity payment cut is the major reimbursement provision of the 2023 home health final rule, other requirements will also impact home health agencies’ payments.

For example: The Centers for Medicare & Medicaid Services finalizes a fixed-dollar loss (FDL) ratio change from 0.40 this year to 0.35 in 2023. That change will add $35 million in increased spending next year, CMS estimates (see related story, p. 302).

Reminder: The FDL is the mechanism CMS uses to make sure “outlier payments as a percentage of estimated total payments are not to exceed 2.5 percent,” as required by law, CMS notes in the final rule released Oct. 31. “There is a trade-off between the values selected for the FDL ratio and the loss-sharing ratio. 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 explains in the rule scheduled for publication in the Nov. 4 Federal Register. Once a period goes over the FDL, it qualifies for payments at 0.80 percent of estimated costs.

Other reimbursement-impacting provisions include those for:

• Diagnosis coding. CMS proposed “reassignment of 320 diagnosis codes to a different clinical group when listed as a principal diagnosis, reassignment of 37 diagnosis codes to a different comorbidity subgroup when listed as a secondary diagnosis, and the establishment of a new comorbidity subgroup for certain neurological conditions and disorders,” it reiterates in the final rule.

CMS follows through with most of the changes, but not all of them. For example, “after consideration of the public comments received, we are modifying our proposal of the 159 ICD–10 CM ‘unspecified’ diagnosis codes to be reassigned to N/A by excluding the four codes listed in Table 7.” Those codes are H20.9 (Unspecified iridocyclitis); M50.00 (Cervical disc disorder with myelopathy, unsp cervical region); N70.91 (Salpingitis, unspecified); and N70.92 (Oophoritis, unspecified).

• LUPAs. The rule updates Low Utilization Payment Adjustment thresholds, as CMS plans to do on an annual basis under the Patient-Driven Groupings Model.

Reminder: LUPA thresholds are at the 10th percentile of visits or two visits, whichever is higher, for each payment group.

Using 2021 claims data, CMS found most case-mix groups, 280, required no change in their LUPA threshold, LeadingAge notes in its analysis of the final rule. CMS did decrease the threshold by one visit for 120 case-mix groups; increase the threshold by one visit for 18 case-mix groups; decrease the threshold by two visits for 12 case-mix groups; and decrease the threshold by three visits for 2 case-mix groups, the trade group details.

CMS brushes off other LUPA policy suggestions, including to avoid LUPA changes based on COVID-19-era data. “We continue to believe that it is important to base the LUPA thresholds on actual PDGM utilization data and shift away from the use of data prior to the implementation of the PDGM. Using the most recent data ensures that payment aligns with the most recent cost of providing home health care services,” CMS emphasizes in the rule.

• Case mix recalibration. In addition to tweaking LUPA thresholds annually, CMS also recalibrates case mix weights on a yearly basis.

CMS defends using 2021 data to do this year’s recalibration. “Prolonging recalibration could lead to more significant variation in the case-mix weights than what is observed using CY 2021 utilization data. Therefore, we believe that utilizing CY 2021 data to recalibrate the CY 2023 case-mix weights is appropriate,” the agency says in the rule.

• Functional points and functional impairment level changes. New points and levels are in Tables 11 and 12 of the final rule. “Although functional points did decrease for many items, the functional thresholds also decreased (meaning fewer points are needed to qualify for the higher functional impairment levels),” CMS said in response to concerns from commenters.

Reminder: “The functional impairment level is determined by responses to certain OASIS items associated with activities of daily living and risk of hospitalization; that is, responses to OASIS items M1800-M1860 and M1033,” CMS reviews in the rule. Those OASIS answers receive points, and the sum of those points places the payment period into a functional impairment level.

As with other recalibrations, CMS defends its use of pandemic-era 2021 data to make the changes. “We feel that relationships seen in the CY 2021 data are going to be more similar to the relationships that we will eventually in see in CY 2023 data versus if we continued to use the relationships we see in the CY 2020 data,” CMS notes in the rule.

• Comorbidity adjustment subgroup changes. The final rule contains one less low comorbidity subgroup than proposed (22 vs. 23) and three less high comorbidity subgroups (91 vs. 94). It also finalizes a new neurological subgroup for nondiabetic neuropathy.

Reminder: “Thirty-day periods of care receive a comorbidity adjustment category [low, high, or none] based on the presence of certain secondary diagnoses reported on home health claims,” CMS notes in the rule.

Diagnosis coding changes affect many of the groups.

Note: The updated wage index, case mix weights, LUPA thresholds, and diagnosis code-related changes are in files in the “Downloads” section at www.cms.gov/medicaremedicare-fee-service-paymenthomehealthppshome-health-prospective-payment-system-regulations/cms-1766-f.