Coronavirus Consequence: Home Health Agencies See Spike in LUPAs

Coming into 2020, home health care providers were preparing for drastic changes to the way that low-utilization payment adjustments (LUPAs) were calculated, a nuance of the Patient-Driven Groupings Model (PDGM), which took effect Jan. 1.

However, what no one predicted is how the coronavirus would even further rock the LUPA landscape. Amid the COVID-19 emergency, providers big and small have seen a dramatic spike in the number of LUPAs they’re experiencing.

Amid the coronavirus, LUPA rates have reduced average reimbursement by about 75%, according to data from the National Association for Home Care & Hospice (NAHC). The same findings suggest that more than 67% of all home health agencies have seen their LUPAs rates at least double, with large and small providers both affected.


“The effects of PDGM have been greatly exacerbated by the COVID-19 pandemic,” Encompass Health Corporation (NYSE: EHC) CFO Doug Coltharp said on the company’s recent Q1 earnings call.

The Birmingham, Alabama-based company is one of the largest home health providers in the country, with 245 home health locations and 83 hospice locations across 37 states and Puerto Rico. The company also operates 134 hospitals across those geographies.

Encompass Health’s first quarter results were significantly impacted by the coronavirus, which took the nation by storm in March. Among the largest PDGM-related impacts the company has seen is a “substantial increase in LUPA episodes,” Coltharp said on the call.


“For Q1, our visits per episode declined to 16.3 versus 17.7 in the prior-year period,” he said, attributing the spike mostly to heightened anxiety from patients and families during the COVID-19 emergency.

LUPAs are a problem because they mean less money for home health agencies.

A provider gets a LUPA if they deliver fewer visits to a patient than the minimum mandated by the U.S. Centers for Medicare & Medicaid Services (CMS). If that happens, they also receive a standardized per-visit payment instead of getting reimbursement for the full episode of care, regardless of the reason for the LUPA.

While LUPA thresholds were relatively straightforward under the previously used Prospective Payment System (PPS), PDGM has shaken things up.

Before, providers were hit with a LUPA if they provided four or fewer visits in a 60-day episode of care. Now, there are 432 different LUPA scenarios, with thresholds ranging from two to six visits. 

As if that wasn’t complicated enough, the coronavirus has thrown another wrench into the home health reimbursement machine. Many home health patients have turned away aides prepared to deliver care, as Encompass Health experienced. On top of that, telehealth visits — which are often safer for patients and caregivers in light of the COVID-19 virus — are not reimbursable and do not count toward LUPA thresholds.

Still, sometimes telehealth visits are most appropriate. As such, providers argue taking the best possible care of patients must be prioritized over maximizing reimbursement.

“PDGM hasn’t been forgotten,” Brent Korte — chief home care officer at EvergreenHealth — told HHCN during a recent Disrupt podcast interview. “It’s been part of our decision-making, but when you’re having to make a choice between what PPE keeps our clinicians safe … and have we coded for all of our core comorbidities through PDGM? We’re going to choose the former.”

Based in the Seattle area, EvergreenHealth Home Care was one of the first home health agencies in the country to grapple with the coronavirus.

As a result, Evergreen, like Encompass, has seen LUPAs increase sharply. The trend highlights the need for reimbursement changes by CMS, Korte said.

The Partnership for Quality Home Healthcare (PQHH) agrees. The Washington, D.C.-based advocacy association identified rising LUPA rates as one of the largest problems the industry is facing in light of the coronavirus.

To help, PQHH is urging CMS to implement telehealth reimbursement and allow such visits to count toward LUPA thresholds, lack of which has caused “extreme hardship for providers,” the organization wrote in a letter to CMS.

“While telehealth visits certainly do not take the place of in-person visits, during the [public health emergency], it would make policy and public health sense to facilitate telehealth for home health providers by instituting a temporary payment mechanism to count them as in-person visits,” PQHH said.

*Editor’s note (July 1, 2020): An earlier version of this story incorrectly stated that there were 216 different LUPA scenarios under PDGM. HHCN has updated the story to reflect the correct LUPA landscape. 

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