Home care groups knock PPS split payment, LUPA, outlier
January 4, 2000 8 minutes read
Home care groups knock PPS split payment, LUPA, outlier
By MATTHEW HAY
HHBR Washington Correspondent
BALTIMORE The national home care associations weighed in favorably on the Health Care Financing Administration’s (HCFA; Baltimore) decision to include a 60-day episode of care in its proposed rule for a home health prospective payment system (PPS), but faulted the agency for its proposed split payment reimbursement methodology, Low Utilization Payment Adjustment (LUPA), and inadequate outlier payment. Those and other shortcomings were detailed in comments submitted immediately prior to the Dec. 27 deadline.
The American Federation of HomeCare Providers (AFHP; Washington) endorsed the 60-day continuous episode of care included in the proposed rule, but said that it was offset by HCFA’s outlier provision, LUPA, failure to provide for adequate consideration of wound care patients, and failure to consider the absence of a caregiver.
The National Association for Home Care (NAHC; Washington) told HCFA the proposed 60-day episode definition is in line with the findings that the PPS demonstration project’s 120 day episode is too long to properly manage, but faulted the agency’s methodology in numerous other areas.
The Home Care Association of America (HCAA; Jacksonville) agreed that the 60-day episode is an accurate measurement of most, but not all home health visits. But it added that unlimited consecutive episode recertifications should be included in the final rule to ensure adequate access to home health services.
Split payment
All the groups criticized HCFA’s split payment approach to reimbursement with only 50% payment for the initial claim, but differed slightly in their suggested remedy. NAHC urged HCFA to modify the split payment to 90% on the initial claim and 10% on the final claim.
"A 90/10 split allows Medicare to recognize delays inherent in payment while balancing those cases where additional payment is due with claims where the home health agency has been overpaid," said NAHC. "With 73% of visits provided in the first 30 days of an episode and the front-loaded administrative costs, a 90% initial payment is necessary to meet the cash flow needs of a home health agency."
HCAA went one step further. "We would like to see 100% of the payment upfront instead of getting only 50% up front and the balance of payment at the end of the 60 day episode," the agency said. "At worst, we feel a 90% up front and 10% at the end or 80% up front and 20% at the end of the episode period [is required]."
Because the agency’s fiscal intermediaries will be able to perform any adjustments in payment in real time instead of waiting for year-end cost reports to settle with agencies, argued HCAA, there is no need to delay payment to the end of the 60 day episode. HCAA contended that agencies will actually be waiting 74 days to receive the balance of payment. "Unlike large hospitals and even skilled nursing facilities, most home health agencies do not have the capital necessary to float such delays in payment," argued HCAA.
NAHC pointed out that under the current proposed rule an initial claim can be submitted only after a home health agency has received signed and dated physician’s orders for care, a signed and dated physician’s certification that the patient meets the Medicare conditions for payment, and a physician’s certification. "It is not unusual for it to take 10 to 30 days for home health agencies to secure this documentation," NAHC asserted.
AFHP contended that at least two-thirds of care is rendered in the first 30 days while reduced acuity, fewer skilled visits, and fewer total visits are characteristic as a patient nears discharge. The initial visit should also be weighted differently, AFHP argued, because it requires extensive patient assessment and completion of OASIS.
NAHC reported that its analysis of claims nationwide also shows that "the vast majority" of services to home health patients within a 60-day episode occurs early in that episode. "It is NAHC’s information that 73% of all visits are rendered within the first 30 days," said the association. "By day 20, 59% of the visits from the 60-day episode are rendered." Moreover, NAHC argued that since most home health services costs are payroll-related, a 50% initial payment level will fall far short of the costs accrued prior to the receipt of payment.
Outlier
According to NAHC, the proposed rule for PPS includes the use of an outlier payment that is statutorily authorized, but not required. NAHC pointed out that under the BBA, if HCFA proceeds with an outlier payment, the total estimated expenditures must not exceed 5% of total home health services payments. To meet that expenditure limitation, HCFA proposed an outlier eligibility threshold using a fixed-dollar loss and calculated the outlier payment using a loss-sharing ratio. HCFA chose a fixed-dollar loss of 1.07 and loss-sharing ratio of .60, which together are estimated to affect 7.5% of total episodes with an average outlier payment per episode at 62% of the standard episode payment amount.
"While it is understood that HCFA proposes an outlier payment that merely supplements the standard episode payment rate rather than covers the true cost of serving patients with extraordinarily high resource needs, the result from the proposed outlier payment methodology falls far short of mitigating the disincentives to serve high-cost patients," said NAHC.
According to NAHC, two particular classes of patients stand out as candidates for outlier payments, including insulin-dependent diabetics who cannot self-inject insulin and have no alternative caregivers, and patients with intense wound care needs over a finite period of time. "Many of these patients’ care needs are met in one to three episodes with the cost of care between $10,000 and $40,000 over that period," said NAHC. As a result, it said the outlier payment methodology should be modified to provide a full standardized cost payment for patients in those two patient classes. In addition, NAHC argued that the methodology should be modified to raise the eligibility threshold and reduce the loss-sharing ratio in order to provide a level of payment that meets the cost of caring for patients with extraordinary needs.
According to AFHP, the fixed dollar loss amount that must be met for every case mix category before qualifying for outlier payments combined with the guaranteed loss of 40% of reimbursement beyond that threshold figure guarantees a significant financial loss on every outlier patient. AFHP argued that home health agencies will know that certain patients, such as wound care or blind diabetics, are likely to result in significant underpayment and avoid those patients.
"HCFA has developed a system geared to discriminate against those beneficiaries who constitute the most complex and costly cases," AFHP argued. On low reimbursement cases, AFHP said the outlier payments may be especially inadequate because agencies must first incur a fixed dollar loss of $2179 before receiving 60% of the amount beyond that threshold. "The inclusion of LUPA makes it very difficult for home health agencies to balance high cost patients with lower cost ones," argued AFHP. "If patients are sick and need home health services in order to remain at home, the required care should be adequately reimbursed."
AFHP said HCFA should remedy that by reimbursing reasonable costs incurred on outlier patients based on capped per-visit rates similar to national LUPA per-visit rates while also clarifying how and when outlier payments will be made. Absent home health services, those patients will have to obtain care in higher cost hospital or nursing home settings, AFHP added.
LUPA
According to AFHP, per visit LUPA rates are significantly lower than current costs per visit for many home care providers and will cause additional financial losses as agencies incur additional costs related to OASIS, 15 minute incremental reporting, new PPS-related training, as well as administrative procedures and reporting systems. The group argued that for the PPS outlier system to preserve and restore access for medically complex patients, home health agencies must be able to offset losses with lower cost case mix payments. Otherwise, some agencies may be tempted to increase frequencies to qualify for a full episodic payment, the group warned.
AFHP argued that HCFA should eliminate the LUPA except for cases involving one or two visits. For cases that involve LUPAs, AFHP said HCFA should reduce per-visit costs by allowing a short form OASIS or increase the LUPA per visit rates by a minimum of 20%.
NAHC agreed that LUPAs should be eliminated from the system, particularly for first episodes. At a minimum, NAHC said the LUPA payment amounts should be increased to reflect the true costs of episodes with less than five visits by basing payments on the average cost of low volume episodes. "These amounts will more accurately affect the cost of providing these visits and the increased administrative overhead costs associated with them, such as conducting both an OASIS admission assessment admission at the beginning of the episode and discharge assessment at the conclusion of the episode.
NAHC said the LUPA is destined to create inefficiencies in patient care and cause serious financial hardships for agencies because it is not case-mix adjusted and is based on the average visit amount for full 60-day episodes. "Without case-mix adjustment, LUPAs are a greater financial risk for agencies than episode-based payments," argued NAHC. "They also discourage agencies from reducing unnecessary visits."
According to NAHC, agencies are reporting that LUPAs will account for 20% or more of total episodes, well above the 12% of episodes that HCFA estimates. "HCFA has no data to support its assumptions regarding the LUPA as this element of the proposed PPS was not part of the HCFA per-episode demonstration," the association added.
Calculating the average per visit amounts of low-volume episodes is particularly important for LUPAs because there is no case-mix adjustment built into the payment, NAHC added. "If HCFA’s goal is to encourage agencies to make fewer visits without sacrificing quality, then the PPS must not interfere with this goal," argued NAHC. "LUPAs as they are currently designed will create disincentives to provide low-volume episodes because agencies will want to avoid falling into the LUPA payment category."
NAHC said HCFA could reduce unnecessary episodes through oversight and review of low-volume episodes or consider using LUPAs only for second or subsequent episodes to reduce the incentive to stretch a single episode into a second.
AFHP also argued that the loss of periodic interim payment (PIP) will have a significant impact on providers and that small agencies will be particularly hard hit. "Small home health agencies, many of them not currently on PIP, will not have borrowing power to sustain operations through cash flow disruptions, whereas many larger home health companies will," said the group.
AFHP urged HCFA to eliminate the payment floor of 14 days, provide for payment within five to seven days after submission of data electronically, and allow payment of a final episode claim where discharge occurs before the end of 60 day episode period. In addition, the group said HCFA and the fiscal intermediaries must modify their systems to allow for daily billing, the processing of initial billings, and multiple billings in a single month.
"HCFA needs to have contingency plans ready to provide for uninterrupted cash flow in the event of systems failure next October, including accelerate payments made at the start of services," concluded FAHP. "Short of these changes, AFHP said PIP must be retained.
NAHC also urged HCFA to allow for billing upon receipt of verbal orders and certification from the physician, establish a maximum standard for processing of claims under medical review and allow submission of final bill prior to close of 60-day episode period.
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