CMS: Incorrect Payments on Some LUPA Claims Due to Common Working File Edit

Situation Report | March 22, 2021

The U.S. Centers for Medicare and Medicaid Services (CMS) has recently issued Change Request (CR) 12085 regarding a Correction to Period Sequence Edits on Home Health Claims.

It addresses an edit in the Common Working File (CWF) that bypasses period of care sequencing on Low Utilization Payment Adjustment (LUPA) claims. Before the implementation of the Patient-Driven Groupings Model (PDGM), this bypass was correct. If the claim had four or fewer visits, it would correctly result in a LUPA payment regardless of whether it was an early or late episode. 

In some cases, however, the sequencing bypass under PDGM has resulted in incorrect payments on LUPA claims. Some claims are incorrectly being identified and paid as LUPAs rather than paid by the Health Insurance Prospective Payment System (HIPPS) code. 

“The claims appear to be LUPAs based on the early/later determination made by the Grouper,” CMS states in the CR. “But if the claim is grouped as early, say, but should be later based on CWF information, that is not being identified right now. If it is not a LUPA based on the later period HIPPS code’s threshold, it should be paid based on the HIPPS code.”   

The issue has been occurring since January 1, 2020 with the beginning of PDGM and will not be corrected until July 2021. The Medicare Administrative Contractors (MACs) will recode and correct payments on impacted claims if brought to their attention.

Home health providers will need to review LUPA claims to determine whether they should have been paid on the HIPPS code. CMS is waiving the timely filing restrictions to accommodate older claims that will need to be adjusted.