Low Utilization Payment Adjustment

With the implementation of Patient-Driven Groupings Model (PDGM), the Low Utilization Payment Adjustment (LUPA) thresholds changed from four or less visits to a threshold that ranges between two and six visits. Under PDGM, each of the 432 case-mix groups has a threshold to determine if the period of care would receive a LUPA. On Medicare claims, these case-mix groups are represented as Health Insurance Prospective Payment System (HIPPS) codes. 

Under PDGM each of the case mix groups has a threshold to determine if the period of care would receive a LUPA. For periods of care beginning on or after January 1, 2020, if a home health agency provides fewer than the threshold of visits specified for the period’s HHRG, they will be paid a standardized per visit payment instead of a payment for a 30-day period of care. Payments for 30-day periods with a low number of visits are not case-mix adjusted, but instead paid on a per-visit basis using the national per-visit rates.

Case-Mix Adjustment
Case-mix adjustment payment for 30 day periods are made using 432 possible groups. In particular, 30-day periods are placed into different subgroups for each of the following five categories:

1. Admission source (two subgroups): community or institutional admission source
2. Timing of the 30-day period (two subgroups): early or late
3. Clinical grouping (twelve subgroups): musculoskeletal rehabilitation; neuro/stroke rehabilitation; wounds; Medication Management, Teaching, and Assessment (MMTA)
   1. Surgical aftercare; MMTA — cardiac and circulatory; MMTA — endocrine; MMTA — gastrointestinal tract and genitourinary system; MMTA — infectious disease, neoplasms and blood-forming diseases; MMTA — respiratory; MMTA — other; behavioral health; or complex nursing interventions
4. Functional impairment level (three subgroups): low, medium or high
5. Comorbidity adjustment (three subgroups): none, low or high based on secondary diagnoses
    

LUPA Threshold Changed to a Variable Threshold
Medicare makes a LUPA payment for 30-day periods where the number of visits is below the case-mix group’s threshold.

• Each of the 432 case-mix groups has a threshold that determines if the 30-day period gets a LUPA
• For each case-mix group, the 10th percentile value of visits is used to create a case-mix, group-specific LUPA threshold with a minimum threshold of at least two for each group
• Medicare pays for a 30-day period with a total number of visits below the LUPA threshold per-visit rather than paying the case-mix adjusted 30-day payment amount

For LUPA periods that occur as the only period or the first period in a sequence of adjacent periods for a patient, Medicare makes an increased payment for the front-loading of assessment costs and administrative costs.

Billing a Notice of Admission (NOA) is required is for billing period of care claims, including LUPA claims. Medicare only requires one NOA (TOB 032A) for any series of HH periods of care beginning with admission to home care and ending with discharge. If the NOA is late, there will be a penalty applied. For LUPAs, no per-visit payments shall be made for visits that occurred on days that fall within the period of care prior to the submission of the NOA.

LUPA thresholds are located on Palmetto GBA’s Low Utilization Payment Adjustment (LUPA) Threshold Lookup tool or on the Centers for Medicare & Medicaid Services's (CMS's) Home Health Agency (HHA) Center web page, as a downloaded file.

References

• Low Utilization Payment Adjustment (LUPA) Threshold Lookup
• Medicare Benefit Policy Manual Ch. 7 (PDF)
• Medicare Claims Processing Manual Ch. 10 (PDF)
• Home Health Agency (HHA) Center (CMS Website)