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3 home health success drivers in 2022

Jan 20, 2022

By Brian Lebanion, Natalie Alexander and Jena Weitzer

Diverse patient populations and varying rules and policies make managing a home health agency (HHA) a challenging business. You must be able to meet each patient’s needs in terms of service coordination and quality of care balanced against Medicare, Medicaid and private insurance.

The fundamental question of a patient’s suitability for home health services at the referral stage must also be assessed in accordance with an agency’s specific policies and in accordance with the Federal Conditions of Participation. 

To help you and your agency thrive in the year ahead, it’s important to be aware of rule changes within this complex landscape. Here are three strategic areas to pay attention to that will help reduce operational obstacles and improve resource management at your agency.

1. PDGM financial referral forecasting

Does a patient meet the criteria for admission in terms of needs, social factors, safety and available resources?  Look closely at the referral to garner information to help you determine how well the patent fits an agency’s policies for admission. It’s important to know your agency’s policies addressing all the issues involved in whether a patient is an appropriate candidate for your agency’s services before a patient is accepted.

You may benefit from a forecasting tool that helps you individualize the decision-making process and ensures that the level of care needed doesn’t exceed resources.

The PDGM Financial Referral Forecaster is a tool that helps agencies forecast revenue and cost of services over a 60-day period based on care needs of a patient.  The forecaster takes into account a variety of factors related to the agencies’ specific costs per visit, wage index (which is tied to the agency’s location) and historic utilization trends. It relies on the patient-driven groupings model (PDGM) that prioritizes patient needs over volume of care and cuts the payment period into 30-day equal time periods, an important rule change that took effect January 1, 2020.

The forecaster enables you to maximize available resources and control utilization of services by reducing unnecessary home visits and costs. It ensures compliance with required Conditions of Participation necessary for home health agencies to accept patents by ensuring the agency can adequately and reasonably provide the level of care the patient needs in a fiscally sound fashion. 

2. NOA rule change

HHAs no longer need to submit a request for anticipated payment (RAP) to Medicare every 30 days, under new rules that took effect on January 1, 2022. Instead, HHAs will now file a one-time notice of admission (NOA) for the entire length of stay using Type of Bill (TOB) 32A, instead of a RAP for each 30-day period of care (POC).

The NOA is a one-time claim to be submitted directly to Medicare when a patient admits for Home Health services

Remember that a TOB 329 for POCs will be submitted for each 30-day claim following initial submission of the NOA. The National Uniform Billing Committee has redefined TOB 329 to represent an original claim, rather than an adjustment, for all claims with “from dates” on or after January 1, 2022.

NOAs will continue to require a verbal or written order from the physician that contains the services required for the initial visit, and that visit must have been conducted at the start of care.

NOAs not submitted within five days will result in a reduction of payment until it has been received.

It’s important to look at admissions reports and to track visits and admissions to avoid a reduction in reimbursement when NOAs are not received within the 5-day required timeframe. NOAs that are initially submitted to Medicare timely but are returned due to errors are subjected to the decrease in reimbursement if not corrected timely. Monitoring the Medicare RTP daily will also ensure full payment on the 30-day billing period claims.

3. Cost per visit

It’s also critical to determine accurate cost per visit rates and understand how to use this information to drive profit margins and compliance.

The task of putting together your agency’s annual cost report can be as daunting as it indispensable. While it’s tempting to put it off, don’t. Look at trial balances of expenses before the end of the year to make sure your costs are classified correctly, an essential step in ensuring you are receiving proper reimbursements.

When cost report preparers compile your trial balance, they sort it into cost centers on the cost report. Then the government agency MedPAC takes this information from the cost report and gives it to the Centers for Medicare and Medicaid Services.

This exercise will yield information about your overall profit margin. That’s why you need to look at the cost per visit closely on the cost report. MedPAC knows the kinds of margins you’re making, and this analysis can affect future payments for your agency.

So how do you calculate your cost per visit? When you get your cost report, look at Schedule C to find cost per visit information. It’s broken down by each type of direct care visit, so you can see exactly what your spending on those services are on a cost per visit basis, along with administrative costs apportioned to those amounts.

You’ll see how well your actual costs reflected your estimated costs. And you’ll be able to tell from reimbursement levels whether you’re making money on these visits or need to focus on cutting costs.

Cost reports will help you know if your agency is utilizing home health visits correctly. You’ll be able to compare your cost per visit cited in the cost report with what you are being reimbursed for, so you’ll have a clear picture of your net profit.

In short, the information from the cost report helps you understand if a payer fits with your agency and enables you to spend money to make sure patients are getting the best care.

How Wipfli can help

Wipfli advisors are prepared to help you and your home health agency stay on top of the complex rules and polices that affect your resource management and delivery of services. Learn more about compliance issues, operational obstacles and financial management in our recent webcast Wipfli Home Health: Revenue Cycle Management and PDGM Referral Forecasting Tool.

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Brian Lebanion, MBA, CPC, RNC
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