Home health aide visits have been plummeting in recent years, and the Centers for Medicare & Medicaid Services (CMS) has issued a request for information to understand what might be happening.
Here is a look at the request and what it could mean for any organization interested in home health billing [1].
How Home Health Aide Use Factors into Home Health Care Billing
Home health aide services are part of case-mix adjustment. After a practitioner prescribes home health for a patient, the Home Health Agency Center (HHA) is tasked with assessing the patient condition, along with determining elements like therapy, skilled nursing care, medical social services, and also the need for home health aide services. This happens at the beginning of the 60-day certification period and must be done for every subsequent 60-day certification, something that directly intersects with home health billing guidelines.
The case-mix adjustment to the national 30-day payment rate is determined using certain OASIS items describing the patient condition, along with other information that’s reported on Medicare home health care billing claims including:
- Admission source
- Clinical grouping
- Timing of the 30-day period
- Comorbidity adjustment
The Decline of Home Health Aide
Between the years of 1998 to 2019, Medicare-covered home health aide visits fell by 90%. For years, the Center for Medicare Advocacy worked to make sure Medicare beneficiaries were able to receive Medicare-covered home health, including the use of aide services. So, in 2022, they filed a lawsuit, representing Medicare beneficiaries who rely on the services of aides to live safely – a number of disabled and older people that’s estimated to be in the tens of thousands [2].
The suit argues that while Medicare law allowed coverage of up to 35 hours a week of services from home health aides for hands-on, personal care, patients have struggled to access anywhere close to this, something that results in serious impacts to their health. But many see the problem as starting with the agency itself, including leadership at the National Association for Home Care & Hospice (NAHC).
An earlier class action lawsuit was filed in 1987 on behalf of NAHC and home care patients. The successful suit resulted in Congress modifying the law to essentially codify the outcome of the lawsuit. This meant individuals would be able to qualify for 28 to 35 hours each week for home health. During this time, home health aides were a leading service, beating out even nursing care. But two things changed this dynamic. The Balanced Budget Act of 1997 cut blood draws from benefits that qualified someone for the home health aide benefit. Second, a change in home health billing also contributed to the shift through the Interim Payment System.
Payment Systems and Home Health Billing
The Interim Payment system was established to change how Medicare reimbursed home health care billing for services. It moved from paying based on costs incurred to a prospective payment system. This meant a shift to fixed payments for agencies based on the condition of the patient and the services they need as opposed to cost of care. The result was that within 18 months, 40% of home health agencies shut down and the volume of patients receiving services through the Medicare program dropped from 3.5 million to 2.1 million. Overall, this decreased provider willingness to service patients that needed high levels of services from home health aides since there was now a cap on the level of reimbursement they could receive.
When the Prospective Payment System was introduced in 2000, it was at a time where home health aide services were already decreasing. The episode of payment for these services is about $2,000 for 30 days. An additional 30 days of services from home health aides comes to between $3,000 and $4,000 according to NAHC President, Bill Dombi, who says this would leave an agency getting paid $2,000 to provide $5,000 to $6,000 of care.
Providers Push Back on Home Health Aide Use
CMS received almost 100 comments on the issue. They all had a similar theme, saying that the decline in use does not reflect a decline in need for the services. Some commenters noted that even though Medicare laws allow for a large number of hours, the provision is falling off – something that affects patients who need a mix of skilled and aide services to maintain their best health and safety. Vince Moffitt, President and CEO of Basin Health Companies explains, “We’ve always provided home health aide services to clients, however, due to a reduction in reimbursement rates over the years, these services have been something that we have had to limit. It boils down to decreased reimbursement rates. Our operational costs continue to increase and our episodic payments can’t support extra services.”
Providers who are concerned with the future impact on home health billing should keep an eye on CMS and how they respond to future input on the topic. They should also work to ensure they’ve explored every possible outcome in home health care billing and outsourcing to ensure fiscal health in an uncertain future.
Denial Management Just Got Even Harder – And It Might Be Time To Rethink Your Revenue Cycle Management Services
Denial management – the full process of identifying denied claims, reviewing, resolving them, and increasing efficiency of the process – has always been important to the healthcare revenue cycle. Many providers outsource the denial portion of their revenue cycle management services to revenue cycle management companies for efficiency, especially as the process has become more complex and payers become increasingly creative in denying claims.
But in the last year, the importance of efficient denial management to providers and revenue cycle management companies has increased. This is because of growing losses and increases in denials themselves.
Providers Are Losing Significant Amounts of Money
For providers concerned about revenue cycle management services and how they impact denials, a new survey provides valuable guidance.
A recent survey found that more than 40% of providers questioned reported losing over half a million dollars every year from claim denials. A full 18% reported losing more than one million dollars annually. As a result, 43% of the respondents report that they are prioritizing denials management in 2024 [1].
While this is a growing concern, it highlights the importance of a strategic focus on revenue cycle management services with an emphasis on denials.
The Source of the Problem
While the reasons for denial leakage can be multi-faceted, including inefficiency and a lack of training, there appears to be one key source of recent issues around denials. Payers are increasing denials.
Kodiak RCA published a recent analysis of payer behavior and found a jump in claim denials and delays that are “wreaking havoc on providers’ revenue cycle performance” and are also blamed for contributing to health systems’ dwindling cash reserves and volatility in their accounts receivable [2].
Their analysis found a jump in overall initial denial rates, with an increase of 10.15% in 2020 to 11.2% in 2022. This trend continued to 11.99% in the Q1-Q3 of 2023. But there were also deeper insights. It found an uptick in the percentage of payer claim value in 90-day-plus accounts receivables for 2020-2023. This increase broke out to a jump of 19% to 36% for patients with Medicare Advantage and 27% to 36% for those with commercial coverage. The group concluded that it was clear that the leading driver of aged AR over 90 days is related to increases in initially denied claims. This is because these claims require more time and resources from the medical practices, hospitals, and health systems that have to resolve them. Other reports have confirmed their findings.
A report from the American Hospital Association (AHA), looked at financial data of more than 1,300 hospitals and health systems. It found denial increases of 55.7% for Medicare Advantage payers and 20.2% for commercial payers from the beginning of 2022 and half way through 2023 [3].
This has created what it calls “significant volatility” across the country for accounts receivable. Measured in every $1 million in net patient service revenue, the measurement saw variation from its bottom at $18,896 in May 2023 to its highest point of $33,598 in February 2023. Monthly variability reached as high as $14,287 under commercial payers and $8,872 for Medicare Advantage.
A key problem with these trends is that they aren’t isolated. If providers aren’t reimbursed promptly, it interrupts not only cash flows, but also patients. If payer denials lag, providers then are delayed in billing patients. This can be frustrating for patients and can negatively impact the possibility that patients will pay their bills. The analysis points to insurers denying and delaying claims as a contributing factor in the 3.6% reduction in self payments after insurance collection from commercial payers, attributing it to an “out-of-sight-out-of-mind” dynamic.
Options in Denials Management
When examining your revenue cycle management services and denials, it’s important to consider multiple options, including working with revenue cycle management companies.
Keeping Things In House
Many providers’ first instinct is to look at their denial challenges and find ways to address the issues with the resource they have. This can be a good option if you have a strong, center-of-excellence approach to denial management. Ask yourself if you’re:
- Identifying every possible denial
- Appealing every case possible with high levels of success
- Aware of and resolving any inefficiencies in your processes and workflows
- Working with clinicians to ensure high levels of clinical documentation integrity
- Leveraging data analytics to their fullest extent
Working With Revenue Cycle Management Companies
If you feel you are lagging in any of these areas, working with revenue cycle management companies might be a good consideration.
The benefit here is that you can immediately take advantage of their efficiencies and expertise. This is critical in an environment where denials are increasing because time is of the essence. Many practices and providers do not have cash on hand to last the amount of time it would take to overhaul or hire a denials team, so outsourcing is likely the fastest way to see improvement in their denial management results.
If you’re looking to change your approach to revenue cycle services to match shifting trends in denials, contact us today.
