Home health agencies face unique reimbursement challenges under the Patient-Driven Groupings Model (PDGM), and one of the most critical is the Low Utilization Payment Adjustment (LUPA). Understanding how LUPA works — and how to manage it effectively — is essential for maintaining financial health, compliance, and quality care delivery.
What is a LUPA?
A Low Utilization Payment Adjustment (LUPA) occurs when a home health agency provides fewer visits during a 30-day payment period than the threshold assigned to that patient’s case-mix group under PDGM.
Instead of receiving the full episodic reimbursement, the agency is paid per-visit at a much lower rate, resulting in significant revenue loss.
How CMS Calculates LUPA Thresholds
Under PDGM, each 30-day period of care is grouped into a Home Health Resource Group (HHRG).
Each HHRG has a unique LUPA threshold (ranging from 2 to 6 visits in most cases).
If the agency provides visits below that threshold, the payment automatically adjusts to per-visit rates.
Example:
Threshold: 4 visits.
Agency provides only 3 visits.
The claim triggers LUPA, and instead of full episodic payment, the agency receives visit-based reimbursement.
Why LUPA Rates Matter
Financial Impact: High LUPA rates reduce reimbursement and profitability.
Survey Readiness: CMS and state surveyors may examine documentation and care planning if a pattern of LUPAs suggests inadequate patient care.
Quality Measures: Consistent under-utilization can negatively impact clinical outcomes and patient satisfaction.
Common Causes of LUPAs
Inaccurate Initial Assessment
Poor Scheduling & Coordination
Hospitalizations or Early Discharge
Staffing Shortages
Documentation Issues
Strategies to Reduce LUPA Rates
1. Strengthen the Comprehensive Assessment (§484.55)
Ensure the SOC assessment captures all care needs.
Accurately document comorbidities, functional impairments, and therapy requirements.
2. Develop a Strong Plan of Care (§484.60)
Base visit frequency on clinical necessity, not convenience.
Coordinate among nursing, therapy, and aide staff to optimize scheduling.
3. Improve Scheduling Processes
4. Monitor LUPA Analytics
Regularly track agency-wide LUPA rates.
Identify patterns by clinician, diagnosis, or referral source.
5. Educate Staff & Patients
Documentation & Compliance Considerations
Surveyors may review cases with LUPAs to ensure the patient received adequate care. Agencies must demonstrate that:
The number of visits provided met the patient’s actual clinical needs.
Any skipped visits (hospitalization, refusal, cancellation) were properly documented.
The plan of care was updated as needed.
Accurate documentation not only prevents survey deficiencies but also supports the medical necessity of care delivered.
Key Takeaways
LUPA = reduced reimbursement when visits fall below CMS thresholds.
Agencies must balance clinical necessity and financial sustainability by planning visits carefully.
High LUPA rates can indicate compliance risks and care quality concerns.
Proactive assessment, care planning, scheduling, and documentation are the best defenses against unnecessary LUPAs.
Understanding and managing Low Utilization Payment Adjustment (LUPA) rates is essential for home health agencies under PDGM. With proper assessment, care coordination, and compliance practices, agencies can reduce LUPA risks, protect revenue, and continue delivering high-quality patient care.
