Written by Laurie Salmons, Sparkle Sparks and Catherine Bella, Clinical Consulting Managers at McBee

The landscape of home health care has undergone significant transformations over the years, with each change bringing new challenges and opportunities for those in the industry.

Evolution of Home Health Payment Systems

The turn of the century marked a crucial shift with the introduction of the Prospective Payment System (PPS). Suddenly, agencies were being paid for an entire 60-day certification period, known as the episode of care, rather than per visit. However, the Balanced Budget Act ensured that these changes remained budget-neutral, forcing agencies to adapt to a new payment model.

The Outcome and Assessment Information Set (OASIS) came into play in 2000, adding complexity to the reimbursement landscape. Additionally, the face-to-face requirement, starting in 2011, meant agencies had to make a quantum shift to fulfill the demands of this new model.

Impact of PDGM on Episode Management

The Patient-Driven Groupings Model (PDGM) further revolutionized home health by focusing on patient acuity for reimbursement. Unlike PPS, PDGM breaks down the 60-day episode into two 30-day billing periods, each with its own LUPA (Low Utilization Payment Adjustment) threshold. This has led to an expansion of HIPPS codes to 432 different combinations, requiring agencies to adapt to a more intricate billing system.

COVID-19 added another layer of complexity to home health practices. Regulations were temporarily relaxed to ensure timely patient care, but adapting to these changes and then reverting to pre-pandemic standards presented a unique set of challenges for agencies.

The transition from OASIS-D1 to OASIS-E introduced a version that captures more information about patients, including transportation and social determinants of health. This expanded view aims to facilitate more personalized care plans, addressing the social factors that can impact patient outcomes and hospitalization risks.

CMS Assumptions and Budget Neutrality

Budget neutrality, stemming from the Balanced Budget Act, is a constant challenge in the home health industry. CMS, tasked with making sure changes don’t incur additional costs, started making assumptions about behavioral changes due to reimbursement alterations. This focus on clinical groupings, co-morbidity coding, and LUPA thresholds has influenced how agencies operate under PDGM.

CMS believes it has overpaid agencies by $5 billion since 2020 due to the changes introduced by PDGM. As a result, budget constraints for home health in 2024 have significantly impacted the allocation of funds for agencies.

Value-Based Purchasing Changes

Value-Based Purchasing (VBP) adds another layer of evaluation to home health agencies. The current components include a claims-based process which monitors both acute care hospitalization and emergency department use without hospitalization during the first 60 days of home health use, OASIS components, and patient satisfaction through the Home Health Care Consumer Assessment of Healthcare Providers and Systems (HHCAHPS). Just when agencies thought they had it all figured out, CMS changed the baseline year for HHVBP once again.

When faced with such challenges, agencies can turn these “lemons” into lemonade by focusing on their key performance indicators (KPIs). These vital measurements gauge a company’s overall performance. In home health, these indicators are crucial for strategic, financial, clinical and operational success.

One of the critical home health KPIs is Periods per Episode (PPE). Under PDGM agencies have one 60-day certification episode, but that certification episode is broken down into two separate 30-day billing periods, each with its own LUPA threshold. The number of billing periods affects both patient outcomes and agency finances. If clinicians focus solely on the first 30 days, this could result in missed opportunities for a second billing period and less optimal care for the patient.

Recertification Rate is another crucial home health KPI. It reflects the percentage of 60-day home health certification episodes that are recertification episodes rather than new starts of care. Understanding and optimizing this rate is essential for managing patient care effectively. As of 2022, the national average for the recertification rate is 36.54%. Agencies must assess how their rate compares to this benchmark as well as state and local metrics. then ensure that clinical staff have the tools to support informed decision-making  regarding when to recertify versus discharge a patient.

The LUPA rate is a key metric calculated based on billing periods that don’t meet specific visit thresholds. Understanding and managing the LUPA rate is crucial for agencies under PDGM. Unlike the previous payment model, PDGM introduces two 30-day billing periods, each with its own LUPA threshold.  Preventing LUPA is not just about meeting visit quotas; it’s about delivering the right care to the patient at the right time, keeping the patient engaged and preventing hospitalizations or ED use.

Functional Status Level is the percentage of patients falling into high, medium, or low functional impairment categories. This information is derived from the patient’s primary diagnosis/clinical grouping in combination with scoring of the OASIS data functional items embedded in the comprehensive assessment. Understanding the functional status of patients is vital for tailoring care plans to their specific needs. These items can be key predictors of falls when scored accurately, which is crucial when you consider falls are among the leading reasons for hospitalization in the elderly.

Interdisciplinary team collaboration is emphasized as a crucial factor in preventing outliers. Excessive visits from various disciplines without proper coordination can quickly lead to financial and operational challenges impacting outcomes. Agencies must ensure that their interdisciplinary teams work cohesively to provide efficient and effective care.

Effectively utilizing Electronic Medical Records (EMR) and ensuring clinicians understand the financial implications of their decisions are paramount. EMR alerts play a crucial role in helping clinicians recognize when they are approaching a subsequent 30-day billing period. Educating clinicians about the true cost of LUPA can lead to more informed decision-making, aligning with the agency’s financial and operational goals.

In navigating the ever-evolving landscape of home health, agencies must not only adapt to industry changes but also focus on continuous improvement. Key Performance Indicators serve as a compass, guiding agencies through challenges, helping maintain financial viability, and ensuring exceptional patient-centered care.

As we continue to face changes in regulations, payment models, and quality metrics, agencies that leverage their understanding of these challenges and proactively address their KPIs will be well-positioned for success. In an industry where patient outcomes, patient satisfaction and financial sustainability are intricately linked, the effective management of KPIs becomes not just a measure of performance but a commitment to delivering the best possible care to those in need.


McBee Episode Management Services

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