How Can You Increase Your Agency’s Referral Potential?

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Originally published in Market Research Letter: January/February 2013

Be Aware of These 6 Questionable Billing Metrics That May Be Red Flags

Today, people often Google someone they just met in a social setting to see if he or she checks out as a potential romantic partner. In the same way, organizations with the power to invite home health agencies (HHAs) and hospices into the “referral club” are now beginning to check them out before asking them to the table. As a result, accrediting bodies may no longer be the sole source attesting to an agency’s quality. Plus, there will likely be a proliferation of new data sources used to judge an agency’s attractiveness to partner.

In this current healthcare reform environment — with the advent of readmission penalties, accountable care organizations (ACOs), and bundled payments — partnering has become increasingly important. When it comes to forming a partnership, questions that organizations will ask about an agency include:

  • Does this HHA/hospice do business in an upright fashion?
  • Is this HHA/hospice compliant?

In a recent report, the Office of the Inspector General (OIG) outlined six metrics that it considered potential red flags of questionable billing practices for HHAs:

Questionable Billing Metrics
Metric (per beneficiary) How the Metric Is Calculated Thresholds for 2010
Average outlier payment Medicare makes outlier payments to HHAs that provide services to beneficiaries who incur unusually high costs. This measure is based on the total outlier payments each HHA was paid in a given year relative to the number of beneficiaries for whom the HHA billed Medicare. Each HHA’s total outlier payments were also calculated relative to total Medicare payments. $403
Average number of visits This measure is based on the total number of visits each HHA billed in a given year relative to the number of beneficiaries for whom the HHA billed Medicare.
See how to use HMR’s data to calculate
91
Percentage of beneficiaries for whom other HHAs billed Medicare When multiple HHAs bill for services provided to the same beneficiary during the same time period, there is potential for fraud through beneficiary sharing. This measure is based on the percentage of each HHA’s beneficiaries for whom at least one other HHA billed Medicare. 61%
Average late episodes In a series of episodes, late episodes (i.e., third and subsequent) have higher payment rates than early episodes. This measure is based on the total number of late episodes each HHA billed in a given year relative to the number of beneficiaries for whom the HHA billed Medicare.
See how to use HMR’s data to calculate
2
Average therapy visits Beneficiaries who require a greater number of therapy services have episodes with higher payment rates. This measure is based on the total number of therapy visits each HHA billed in a given year relative to the number of beneficiaries for whom the HHA billed Medicare.
See how to use HMR’s data to calculate
24
Average payments This measure is based on the total payment for home health services that each HHA received in a given year relative to the number of beneficiaries for whom the HHA billed Medicare.
See how to use HMR’s data to calculate
$11,653

How Can You Calculate These Questionable Billing Metrics?

To calculate some of these metrics for your organization and your competitors, you can use information obtained from cost reports or Healthcare Market Resources. Click here to see how to use Healthcare Market Resources’ reports to calculate your local competitor’s compliance.

In addition, Healthcare Market Resources will have a compliance report available this summer that calculates all six metrics for home health agencies, as well as additional compliance metrics, such as the percentage of low case weight patients, for example, which may be indicative of patients with questionable homebound status.

How Will These Questionable Billing Metrics Be Used?

Keep in mind that management teams judging home care providers may go beyond simply expecting compliance for these billing metrics, requiring that their partners be below the questionable threshold levels. If there are sufficient providers in a market, for example, the bar could be raised to 80% or below the market average for these metrics to help assure the safety of the relationship.

As we have discussed in prior articles, ACOs and managed care organizations (MCOs) may take this comparison one step further and look at how agencies manage patients from a resource perspective. They may invite into the “referral club” only those providers who meet their minimum standards on Medicare Home Health Compare, while utilizing fewer visits to accomplish these results.

HHAs may have been incentivized in the past by their internal agenda to maximize reimbursement per patient, such as with higher case weights, fewer low-utilization payment adjustments (LUPAs), and more episodes. In today’s world of healthcare reform, however, the preferred behavior may be dramatically different.

Healthcare Market Resources can help you understand, adapt, and react to these changes. Email us or give us a call at 215-657-7373 to learn more today.