LUPAs Turning into Long-Term Problem for Home Health Agencies After PDGM

A year and a half into the Patient-Driven Grouping Model (PDGM), home health agencies’ feelings on the overhaul still vary.

And even if PDGM hasn’t been the “boogeyman” that was expected, it still needs tinkering from the U.S. Centers for Medicare & Medicaid Services (CMS), some insiders believe.

“I think the data clearly shows that CMS was not on top of the information that they had on hand at the time,” Arlene Maxim, a clinical consultant at Axxess, said on a webinar Tuesday. “Statistically, it was not on target in their projections as to how we would function as an industry. Clearly, they have some things to clean up.”


Dallas-based Axxess is a home health technology company that provides agencies with cloud-based software solutions.

The COVID-19 pandemic undoubtedly made PDGM’s effect on the industry murkier. It probably made any adjustments to the model a little bit tougher to execute as well.

The 2021 home health payment rule, as finalized by CMS, came out during a critical stretch in the public health emergency, shortly before another devastating wave emerged. At the time, providers had major gripes with a 1.9% increase in reimbursement that was substantially less than the 2.6% increase outlined in the proposed rule.


It final rule also kept the 4.36% behavioral adjustment intact, which many providers found to be unfair and based on a shaky premise in the first place. William A. Dombi, the president of the National Association for Home Care & Hospice (NAHC), expressed his disappointment with that aspect of the final rule in October.

“We are disappointed that CMS put off consideration of dropping the behavioral adjustment to payment rates based on its view that it needs a full year of data before it can act,” Dombi said. “We believe sufficient information is available to recognize that the behavioral changes assumed have not occurred.”

The average home health case payment in 2020 was estimated at $1,740, which was 3.7% off projections. The total home health case payments distributed in 2020 came out to nearly $1 billion less than anticipated, according to the health economics and policy consulting firm Dobson DaVanzo & Associates.

LUPAs persist

What was clearly exacerbated by the mixing COVID-19 and PDGM, however, was Low-Utilization Payment Adjustments (LUPAs).

Even as the pandemic subsides, agencies are still struggling to adjust to the different thresholds put forth by the payment model.

“LUPAs are a problem, and they were probably one of the most significant issues that we looked at going into PDGM,” Maxim said. “Even to this day — I’ve gone into a number of agencies in the past couple of weeks — and I find that the industry, overall, is not really clear on how to adjust from the old system to the new system.”

LUPAs are another area where there may have been some disconnect between home health agencies and the policymakers at CMS.

Under the Prospective Payment System (PPS), there was a single threshold — having to manage five visits over 60 days. Now, there are 432 thresholds to manage based on patient condition — and the time period is cut in half to just 30 days.

“I believe we’re still feeling that into 2021,” Maxim said. “Our LUPA rate went up to 15% in 2020, and that is not sustainable.”

For smaller agencies in particular, a LUPA rate even close to that number would be very problematic. They simply cannot afford to miss out on that amount of reimbursement, at that rate.

An issue that will naturally get better is missed visits. They were a major contributor to LUPAs in 2020, as both workers and patients feared coming into contact with one another.

“I think that this is going to go on for a while,” Maxim said. “And I do think that agencies need to take the time to study the LUPA rates within their organization and also determine how they can avoid missed visits [at all costs].”

But rectifying missed visits won’t fend off LUPAs entirely. There needs to be a more long-term solution for agencies, she explained.

Educating workers internally on how LUPAs work is one thing, but external adjustments may be needed as well. One of those could be telehealth reimbursement.

“I do think that if we are able to get reimbursed for telehealth, that’s certainly going to help us avoid these LUPA problems,” Maxim said.

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