Metrics Matter: Home Health Grew by 8.4%. Do You Know Why?
Medicare reimbursements for home health grew by 8.4% from 2007 to 2008. This rapid rise in payments – in a time when the base payment rate declined by 2.9% – has surely gotten the attention of the Centers for Medicare and Medicaid Services (CMS), the Medicare Payment Advisory Commission (MedPAC), and Congress. While 2008 was the first year of the “new” prospective payment system (PPS), this changeover accounted for only a small portion of the increase. In this month’s Metrics Matter, we analyze the factors that drove the growth in home health national revenue.
Based on our analysis of 2007 and 2008 Medicare Claims data, we conclude the following:
- Discharges, which are “delayed” admissions, grew by 0.46%. This means that the level of referrals to home health remained essentially flat.
- Episodes climbed by 5.1%. This means that episodes per discharge jumped from 1.73 in 2007 to 1.81 in 2008, a 4.6 % increase.
- Medicare home health payments hit $17.2 billion in 2008 – up from $15.8 billion in 2007 – which is an 8.4% increase.
- Average reimbursement per episode grew to $2,782, a 3.1% move upward compared to $2,697 in 2007. This accomplishment goes against the 2.9% decline in base payment rate from $2,339 to $2,270.
- Average case weight increased to 1.30 on final claims compared to 1.27 in 2007 – a 2.3% positive change.
- The remaining difference can be accounted for thanks to the following:
- A decrease in the impact of low utilization payment adjustments (LUPAs)
- Partial episodic payments (PEPs) and other revenue adjustments
- Elimination of the Significant Change in Condition (SCIC) payment adjustment under the new PPS methodology.
Washington Will Be Watchful
To those in Washington, the factors that drove this growth appear to be within the control of the home health agencies – namely the patient assessment and treatment plan (full episodes and case weight) and the determination that the patient needs additional care (recerts). The fact that reimbursement levels overshot government forecasts has prompted regulators and Congress to question the industry’s integrity.
Worksheet for Individual Home Health Agencies
This analysis can also have value at the individual agency level, so we’ve designed a worksheet to help you calculate these metrics for your agency. The following is an example of a home health agency’s revenue growth:
Click here to download a worksheet and calculate these metrics for your organization.
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