Home Health & Hospice Week

Will rising LUPA rates bring agency closures?

Home health agencies knew they’d be grappling with increased Low Utilization Payment Adjustments under the Patient-Driven Groupings Model in 2020. But then COVID-19 kicked the problem into high gear.

“To some extent, higher rates of LUPAs under PDGM were expected,” notes Sharon Harder of consulting firm C3Advisors in Wheaton, Illinois. That’s especially true “for agencies accustomed to front loading visits into the first few weeks with very few visits after the first four,” she points out.

Recap: Experts warned LUPAs would in-crease when the Centers for Medicare & Medicaid Services adopted PDGM’s 30-day episode, and that agencies should mitigate and manage the reimburse­ment-cutting adjustments under the new payment system (see Eli’s HCW, Vol. XXVIII, No. 19).

Now data from a recent National Association for Home Care & Hospice survey shows just how much PDGM and COVID-19 are affecting LUPA rates. The survey with 1,119 respondents shows that “52 percent of HHAs with below national average LUPAs in March 2019 report at least a tripling of LUPAs in March 2020,” the trade group says.

Plus: Sixty-seven percent of all HHAs report “at least a doubling of LUPAs,” NAHC says.

Those survey results mirror what the clients of Tom Boyd with Simione Healthcare Consultants in Rohnert Park, California, have seen, Boyd tells Eli. Some agencies “were surprised and unaware that they were not alone,” Boyd relates.

Many HHAs in COVID-19 hot spots are faring even worse. In Louisiana, where New Orleans emerged as an outbreak area, LUPA rates have increased “four-fold for many providers,” reports consultant Pam Warmack with Clinic Connections in Ruston, Louisiana.

The financial fallout of the LUPA change is severe, industry experts warn. “LUPAs are clearly higher than anyone predicted because of the pandemic,” notes physical therapist Cindy Krafft with Kornetti & Krafft Health Care Solutions. “With percentages that high, the revenue impacts are significant.”

LUPA rates reduce an episode’s average reimbursement by about 75 percent, NAHC says in its survey results. That equals about $1,500 over a 30-day period.

“The big increase in LUPAs can destabilize the financial foundation of an HHA,” warns NAHC President William Dombi. “In doing so, the HHA has a heightened risk of closing down,” Dombi tells Eli.

“Imagine trying to navigate a new payment system, PDGM … and then COVID totally throws everything into chaos,” Warmack laments.

And in Texas, add the Review Choice Demonstration, although CMS did pause RCD just weeks after the demo began (see Eli’s HCW, Vol. XXIX, No. 12-13). “This has been the perfect storm for home health,” Warmack says.