HHS OIG Identifies Home Health Overpayments in LUPA Threshold Situations

WASHINGTON, D.C. (July 24, 2020)—The Centers for Medicare & Medicaid Services (CMS) could have saved $192 million by targeting home health claims for review with visits slightly above the threshold that triggers a higher Medicare payment, according to a new report from the Office of Inspector General (OIG) of the Department of Health & Human Services.

Home health agencies (HHAs) that provide four or fewer visits during the 60-day payment episode receive a standardized payment, the Low Utilization Payment Adjustment (LUPA). However, once the LUPA threshold is surpassed, Medicare payments usually increase substantially, which OIG creates an improper billing incentive for HHAs with claims slightly above the LUPA threshold.

OIG audited 120 Medicare payments to HHAs in 2017 for claims with five, six, or seven visits in a payment episode and found that 25 did not comply with medical necessity and coding requirements, while 91 did comply and four did not have the necessary documentation to determine compliance. The 25 non-compliant claims resulted in $41,613 in improper payments because the Medicare Administrative Contractors (MACs) did not analyze claim data or perform risk assessments to target for additional review those claims with visits slightly above the LUPA threshold.

OIG used the sample results of their audit to estimate that Medicare overpaid HHAs by $191.8 million during the 2017 audit period.

CMS created a new home health prospective payment system (PPS) in November 2018, called the Patient Driven Groupings Model, which took effect on the first of this year. However, OIG estimates that 20 of the 25 non-compliant claims, or 80%, in their sample under the previous system would still be non-compliant under the current system.

Beneficiaries not meeting the criteria for homebound under the Medicare home health benefit was the most frequent reason cited by the reviewers for improper payments, in 21 out of 25 claims.

The criteria for meeting homebound status has been a persistent area of vulnerability for claim denials for home health agencies. Determining whether the beneficiary meets the criteria can be very subjective and requires clear and accurate documentation to support the homebound status.

CMS in their response to the OIG findings agreed with the recommendation to recoup the improper payments and will instruct its MACs to review the 25 sampled claims to verify the OIG’s findings and recover any identified overpayments. The National Association for Home Care & Hospice (NAHC) has long been concerned about the accuracy of claims denials when reviewing for subjective criteria and believes that interrater reliability strategies should be part of any medical review process for denials related to subjective coverage rules.

OIG recommends that CMS:

(1) direct the MACs to recover the $41,613 in identified overpayments made to HHAs for the sampled claims;

(2) require the MACs to perform data analysis and risk assessments of claims with visits slightly above the applicable LUPA threshold and target these claims for additional review; and

(3) instruct the MACs to educate HHA providers on properly billing for home health services with visits slightly above the applicable LUPA threshold, which could have saved Medicare as much as $191.8 million during our audit period.

CMS agreed with OIG recommendations, commenting that:

• CMS will instruct its MACs to review the 25 sampled claims to verify our findings and recover any overpayments.
• Since the OIG audit period, the MACs have been analyzing data and performing reviews of home health claims that are slightly above the low volume threshold. CMS also stated that it will continue to encourage the MACs to perform data analysis and risk assessments of claims with visits slightly above the applicable LUPA threshold as part of the annual improper payment
• reduction strategy process and will continue to take any action deemed necessary.
• Published a booklet regarding the Medicare home health benefit in November 2019.
• MACs provide one-on-one education to providers as part of their review process.
• CMS will continue to educate home health providers on proper billing for home health services.

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