Several new software tools offer the ability to track Case Weight, but the creator of one of those tools says merely tracking Case Weight is not a fully accurate way to learn whether your PPS payments are where they should be. There is a much better set of indicators, according to Lewis, Inc. president Jeff Lewis. Learn them and use them and you will have a better idea of whether your payments are correct than you can know by looking at Case Weight alone.
Editor’s note: While this story uses information gathered from experiences with one vendor’s software product, it is not the author’s intention to promote that product but to describe universally available tools based on new ways of using them.
It starts with MedPAC
The Medicare Payment Advisory Council (MedPAC) believes, and tries to achieve with each annual recommendation to Congress, that home health care payments should cover your costs. This payment philosophy begs the question, “How do they know the cost of my average home health episode?”
The answer can be found embedded within the PPS payment formula itself. From the accurate OASIS assessment to the plan of care there should be no discrepancy, no disconnect between cost and HHRG payment. MedPAC asserts that the system is designed so that you will not incur a loss if you run an efficient operation. If you do not operate efficiently, MedPAC is unrepentant about its payment rate recommendations squeezing your profit margins, even all the way to zero.
Genesis of the proper Medicare payment
There are three places to look for clues about whether your payments are aligned with patient need, in other words, if you are submitting claims in amounts that reflect Medicare’s expectations based on patient need. Each of the three is a component of your overall episode payment:
- Diagnosis codes
- OASIS assessments and
- Therapy visits
Therapy visits need not absorb much of our attention here as therapy management is easily understood. There may be many payment levels but the number of therapy visits and the revenue they produce have zero mystery. We will spend our remaining ink on two components least understood but with most influence on payments, diagnosis coding and OASIS answers.
Diagnosis coding and OASIS answers can be highly subjective, leaving plenty of room for a potentially disastrous clash between clinician subjectivity and auditor interpretation. One is motivated by professional compassion to care for patients. The other is motivated by the chance to return federal or state dollars to the treasury.
Continuous, repetitive, ongoing training of every staff member entrusted to complete OASIS assessments is an agency’s single most important tool in its effort to support accurate payment amounts. However, after training gets your staff to the point where coding and OASIS are sufficiently accurate so that the payment formula produces correct payments for your episodes, how do you know when those payments are correct?
The traditional answer, “Case Weight,” is too general and insufficient to fully explain what makes up a correct payment. Do you know the components that make up case weight?
Case Weight
“Hold on a minute,” says the developer of a new service designed to help providers maximize their payments. “Before you answer, you need to decide what it is you need to know.” According to Jeff Lewis, president of Lewis, Inc., case weights are a poor proxy for what you really want to know. “It is the lazy answer,” he chides, “that everyone accepts because they think it means more than it does.”
“Case weights are made up of eight components. What you want to know is the status and trending of all eight components, not merely the one number used to represent their overall effect. Chart 1 illustrates his point.
The top line in Chart 1 shows one agency’s case weight over a period of eight months. It fluctuates exactly how you might expect it to over that period of time. The lines below track the eight factors that make up the average. “You can plan around the information available within the fundamentals that create the case weight number,” Lewis asserts, “but you cannot plan around case weight alone.”
In the Chart 1 example, this provider might notice a case weight decline from December to January and conclude, without direct evidence, that it means they need more coding training.
“They may very well need some coding training,” Lewis counters, “but that has nothing to do with the January drop. By separating case weight into its components and examining each component individually, a different cause of the case weight decline becomes clear. The orange line, representing LUPA losses, jumped in January, coinciding with case weight decline. Following the LUPA line, we can see that the LUPA loss was almost gone by April. That, therefore, is the phenomenon worth spending some time investigating.”
Next look at the January to February case weight increase. If you do not examine the underlying components, you would think it a cause for celebration. Again, Lewis sees it differently.
“That jump is solely due to an increase in payments that result from the Service component,” he explains. “Notice, however, that Clinical payments, the red line, actually showed the largest drop of the year during the same time period. Something dire happened with this agency’s assessments that month but they never knew it, never took corrective action, because they thought everything was looking up. They were fooled because they were only looking at the case weight line. This demonstrates the power of looking at each payment component separately.”
Taking corrective action where it can have the most impact
There are three components to your case weight that are beyond your control, according to Lewis. The base episode payment that all episodes start with, the wage adjustment and the late episode adjustment all come directly from the PPS payment calculation.
Assuming there is also nothing you can do about your LUPA losses, there are four remaining payment components that you can, and must, control:
- Service
- Clinical
- Functional
- Supplies
Most often, agencies do focus on these when they try to improve OASIS accuracy, through training for example, but Lewis recommends studying each one separately.
Avoid the Service trap: Although the Service payment is typically the largest variable in the payment calculation, remember that you pay dearly for every service dollar you get. Your costs generally go up as the payment from this component goes up so the net to your bottom line is minimal.
Clinical, Functional, and Supply payment components are different. They depend on the quality of the assessment but your visit and supply costs resulting from them can remain high even if a faulty or incomplete assessment causes these payments to fall.
Conversely, if your assessments are more complete and more accurate, the resulting, justified payment increase goes right to your bottom line because your costs do not increase.
Corrective action tools
It was these realizations that led Lewis to create a service that shows this information to agency financial managers. “Revenue Intelligence” creates detailed reports by pulling data directly from an agency’s Medicare account and displaying graphs of payment movements over time. Subscribers to the service have begun to target corrective training programs at specific problems.
The goal, Lewis is quick to point out, is to help providers maximize their Medicare revenue to the level it is supposed to be. By analyzing payments component by individual component, providers can actually begin to claim the dollar amounts that Medicare intends them to have and that provide the necessary funds to properly care for each patient.
Two real-world examples demonstrate the point
Chart 2 shows an anonymous but real provider’s clinical payment chart over eight months, beginning with July 2008. Notice that the agency’s clinical payment fell $84 from an average of $490 down to $406 per episode.
Assuming that this provider’s patients did not all suddenly change, this reveals an $84 dollar per episode cut to the bottom line. It happened from July to September and they have never recovered, so they were likely unaware that it happened. Their payment fell and they simply grew accustomed to the lower payment.
Not all changes happen slowly. Chart 3 is a provider with chronic instability in their clinical payments.
At first glance, one might be tempted to assume that their patient mix actually changes that much. Upon closer examination, however, with a software tool Lewis uses, Revenue Intelligence, reports reveal a once hidden cause. Compare the payment of recert episodes to the episodes they follow. The Chart 3 agency historically shows an average $19 clinical recert payment decline from the episodes they follow. Armed with this information, it is easy to look for months that show clinical recert payments unusually disconnected from their prior episode payments.
This agency experienced just such a deviation, with one particular month’s recert payments totally disconnected from its own historical average. The month of February had a drop in clinical recert payments of $127. The only way those payments could be so disconnected from prior episode payments is if their assessments were equally disconnected from prior episode assessments.
Remember that we are looking at the exact same set of patients, just 60 days later. Finding a $127 decline where a $19 decline was expected means that something radical happened with those recert assessments done in February.
Knowing that, it is a safe bet that the same change affected other February assessments in addition to the recert assessments. In fact, further investigation did reveal that this agency’s average clinical payment fell $97 from $532 in January to $435 in February. That piece of information might have gone unnoticed forever if the first one had not raised a red flag.
Taken together, these two clues tell management exactly what needs to be done.
Patients do not simply change that much, assessments do. This agency now needs to learn what in its assessment process changed during February, a relatively easy task.
Simply pulling an armful of February recerts should tell the story.
Perhaps an experienced nurse retired and was replaced. Perhaps someone was on vacation or maternity leave. Perhaps a new hire was put in place. Whatever the cause, management knows precisely where to look for it and is likely to find it. The corrective action called for, supporting one person with additional training or perhaps a temporary mentor, makes more sense than dragging the entire staff to an OASIS refresher on a Saturday.
A new way of thinking about episode payments
In our interview, Lewis acknowledged that this kind of thinking, examining clinical and functional payments individually, might take some time to get used to. He is certain, however, that it is critical to understand how your assessments are driving your payments. “With this information, the mystery is gone. You see what is going on in a way you can understand it so that you know exactly what to do in order to fix it. Then you can watch in the coming months to verify that your corrective actions worked and remain working.”
The tool he developed to enable this level of understanding is promoted as an information service, not a repair tool. “It cannot directly change your payments,” Lewis warns. “However, it does a lot of the legwork that some consultants spend the first day or two figuring out.”
In workshops he delivers explaining his methodology, Lewis jokingly refers to Revenue Intelligence as “The 2009 Consultant Full-Employment Act.” Since it is not a HIPAA-controlled document, he encourages providers to send it each month to their consultants, accountants, board members or anyone who has an interest in seeing the full revenue picture.
“Clinical consultants might not have much interest in the DSO and A/R sections,” he adds, “but I’ve seen them perform miracles because they can often find the root causes of anything going wrong at a home health agency.”
Returning to what has become his constant theme, Lewis finished with a warning. MedPAC, he is certain, plans to continue to reduce home health payments every year for the foreseeable future. Following that, it is anyone’s guess what impact healthcare reform will have on the industry. Improving payment accuracy, which often, though not always, means higher payments, is an appropriate activity for agencies and their consultants and software providers.
This particular tool offers information that enables agency management to make a renewed commitment to episode management and to focus corrective efforts on the areas that will produce results. “My company’s clients have access to my Episode Master product but others can receive great services from Home Health Gold, HSS, PPS Plus, OCS and SHP. These services are absolute requirements today but you have to actually use them. Simply writing a monthly check is not enough to get their benefit.
“I think we have all had clients with these services who just quit using them after a time. They pay a price that often goes unnoticed. We see our monthly Revenue Intelligence reports as just an inexpensive way to push attention back to their data, making sure they know when anything slips.”
Revenue Intelligence evaluates a provider’s revenue from the points of view of Census, Assessment, Billing, Collection, and DSO. Its data comes directly from CMS claims and is delivered monthly as a Power Point presentation or PDF document. Using this or a similar product, agency financial management can regain control over payments far more effectively than simply tracking Case Weight.
