Calculate LUPA payments with professional Home Health Billing Services

According to a recently published report by CMS, Medicare improperly paid some claims for home health services with up to 7 visits in a payment episode. In home health billing, a LUPA (Low Utilization Payment Adjustment) applies when a patient receives fewer visits than the required threshold. This mostly occurs during a 30-day payment period under the Medicare Healthcare Prospective Payment System (PDGM). When a LUPA applies, Medicare generally pays the home health agency for each qualifying visit provided rather than paying the full 30-day episode-period rate. Medicare’s PDGM usually reimburses home health services in 30-day periods. The applicable LUPA threshold varies based on the patient’s payment classification and the relevant billing requirements. 

Accurate LUPA payment calculations enable home health agencies to avoid claim errors, receive the correct Medicare payments, and maintain steady revenue. However, calculating LUPA payments can be challenging for home health clinics, which is why they hire outsourced home health billing services. Even though providers have in-house billing staff, the process becomes more streamlined with the help of professional billing companies. 

How is LUPA payment calculation done in Home Health Billing? 

In home health reimbursement, LUPA payments are calculated in the following ways: 

1. Identifying the applicable 30-day payment period and HIPPS code - Home health billing teams need to establish which 30-day payment period the claim covers. They must also confirm the correct HIPPS (Health Insurance Prospective Payment System) code to determine whether the claim is subject to a LUPA adjustment. 
    
   According to Medicare's PDGM, home health clinics are paid in 30-day periods. The start and end dates must be verified by the billing team. The HIPPS code is reported on the home health claim that represents the applicable payment classification. The code reflects the following: 

•  Admission source and timing of care 
• Clinical grouping based on the principal diagnosis 
• Functional impairment level 
• Applicable comorbidity adjustment 

 
If the patient instead receives three or more qualifying visits, the period generally qualifies for the case-mix-adjusted 30-day payment, subject to other applicable payment adjustments. 

1. Verifying the LUPA threshold and current CMS rules - This means confirming the minimum number of qualifying visits Medicare requires for a specific patient's 30-day payment period before deciding how the claim should be paid. The home health billing team verifies patient's payment classification which is based on certain factors. These include source or admission, timing of the payment period, clinical grouping, and comorbidity adjustment.  
    
   It is equally important to verify the threshold using the current CMS rules. After confirming the HIPPS code, the billing team must identify the calendar year, enter the correct HIPPS code, and confirm return of the threshold. Medicare generally pays the claim if the home health agency (HHA) furnished only two qualifying visits.  
    
2. Determining whether the visit count falls below the applicable threshold – This is an important step in deciding whether Medicare applies a LUPA under the PDGM model. Each Medicare PDGM payment group has its own threshold, generally ranging from 2 to 6 visits. The applicable threshold depends on the patient's payment classification and the rules for the year of service.  
    
   This review determines whether the number of visits provided falls below the LUPA threshold for the patient's assigned payment group. If the threshold is not met, Medicare reimburses the agency based on the services delivered rather than the standard 30-day payment amount. 

Performing the necessary steps for LUPA calculation can be challenging for home health providers. One reason HHAs hire professional home health billing services is that these services help improve the LUPA payment calculation process. 

How do outsourced billing companies assist in LUPA payment calculations? 

With in-house teams, home health clinics have limited access to billing expertise. Moreover, it is a costly affair to train the existing staff in changing billing rules. Outsourced home health billing services support the LUPA payment calculation in the following ways: 

1. Reviewing visit documentation and claim details – The professional billing teams review records for skilled nursing, occupational therapy, and other applicable home health visits. They check whether each home health visit is supported by appropriate clinical documentation. The billing teams also verify the date of service, visit notes, and duplicate entries.  
    
   In case of claim details, the billing company checks the claim information against the patient’s records, which includes the following: 

• The 30-day payment period and its start date 
• The patient's HIPPS code and applicable PDGM payment group 
• The number of visits recorded for each discipline 
• The admission date and other relevant claim information 
• Whether any corrected or previously submitted claims affect the payment calculation 

It is the responsibility of the billing team to use the applicable threshold rather than assuming that every patient has the same threshold.  

2. Validating LUPA thresholds against current CMS guidance – LUPA thresholds are updated periodically by CMS. This makes it necessary to hire outsourced home health billing services to verify the threshold applicable to the year of service. The billing company keeps track of regulatory updates issued by CMS. These include annual Home Health Prospective Payment System (HH PPS) final rules and revisions to PDGM payment tables. 
 
Additionally, the outsourced billing companies verify the patient’s HIPPS code and use the threshold table for the correct year of service. This helps in identifying the required number of visits. 
 

3. Monitoring claim denials and underpayments - Claim results are reviewed, and Medicare payments are compared with the expected reimbursement amounts. Outsourced home health billing companies investigate discrepancies and correct eligible claims to help agencies receive accurate payments. The billing team routinely examines Medicare remittance advice using ERA. This review helps identify denied claims and payments that differ from the expected reimbursement. 
Denial and underpayment tracking methods are maintained by billing companies to identify recurring issues, including outdated thresholds, missing documentation, or omitted add-on payments.  

Factors to consider before home health billing outsourcing 

Apart from profit maximization, providers must prioritize the safety of their patient data. This can be made possible by hiring a company that offers services adhering to HIPAA guidelines. Most home health billing companies have trained professional and certified coders that ensure accurate claim submission. This results in timely payments and uninterrupted cash flow in the operations. Home care centers must choose carefully and ask for client references from the outsourced partner. This helps to understand the efficiency of the third-party firm in providing home health billing services.