The Impact of COVID-19 on Hospice and HHAs

We are about five months into the COVID-19 pandemic and the novel coronavirus continues to spread. Many companies have embraced a “business-as-usual” remote-office model that allows their employees to work safely from home. Post-acute care (PAC) and other healthcare providers don’t have that option, however, as they continue to deal with the impact of COVID-19 on their patients, their clinicians and other employees, and the community at large. The lasting impact of COVID-19 is still unknown, but we’re taking a look at what has happened so far, what’s happening now, and what might be ahead for hospice and home health agencies (HHAs).

For HHAs, the pandemic came on the heels of PDGM (Patient-Driven Groupings Model) implementation, which halved HHA billing periods and began the phase-out of pre-payment or RAPs (Request for Anticipated Payments). Agencies hadn’t recovered from the significant cash flow effects of PDGM when the coronavirus hit. Suddenly all elective surgeries were cancelled, patients were refusing care, and LUPA (low utilization) rates began to rise. PPE supplies were in short supply, and telehealth became an unavoidable (yet non-reimbursable) necessity almost overnight.

The National Association for Home Care and Hospice (NAHC) released survey reports on April 30th (survey conducted from April 6-17, focusing on March HHA data) and June 30th (survey conducted from June 3-18, focusing on May HHA data). Respondents in both the April and June studies indicated the same top three concerns about their future:

  • patient safety due to inadequate personal protective equipment (PPE) supplies
  • inability to utilize telehealth services as an adjunct to in-person care, due to non-reimbursement by Medicare
  • significant reduction in revenues

Safety and PPE

COVID-related PPE includes gowns, gloves, N95 respirators, masks, goggles, hand sanitizer, and disinfectants. Many of these items were in scarce supply—if available at all—in the early weeks of the pandemic, as demand for them increased exponentially across the healthcare sector and beyond. Employees were reluctant to enter homes without proper protection, and patients were equally reluctant to admit them. The shortage threatened the safety of both patients and staff, a significant problem in and of itself, and it also impacted staff morale and agency revenue. Agencies’ PPE budgets exploded as their requirements increased drastically. In May, NAHC president William A. Dombi said that the cost of providing patient care had gone up an average of 9.7%, largely due to increased need for and purchase of PPE for agency employees.

While PPE shortages are rarely in the news anymore, many HHAs still report limited supplies. In the June NAHC study, 42% of respondents reported less than a 20-day supply of PPE on hand (down from 65% in the April study), and nearly 72% reported less than a 30-day supply on hand (down only 10% from April).

Most agencies are still reeling from the financial impact of the increased demand and initial supply shortage. Some worry that agencies may be so “in the hole” with costs that supplies may not be utilized the way they are intended (ie., masks that used to be discarded between patients are now being reused over the course of a day or even multiple days).

Hospice agencies have similar concerns. A May 27th NAHC survey of hospices from nearly every U.S. state and territory was conducted over the first three weeks of May. PPE topped the list of items contributing to increased costs and lost revenue in the survey.


For the past five months, telehealth has been in the news continuously. Pre-COVID hesitancy and skepticism about the technology have been almost universally replaced with acceptance and even enthusiasm—for providers and patients alike.

HHA providers may be the healthcare segment that can benefit the most from telehealth technology, but they also may be the least enthusiastic. This is because telehealth services, however crucial, are not reimbursable by Medicare. NAHC has been lobbying Congress and the Centers for Medicare & Medicaid Services (CMS) to change this—even before COVID-19—but the CY 2021 Home Health Proposed Payment Rule released in June still does not include telehealth reimbursement. The 2021 proposed rule states that agencies will continue to be allowed to report the costs of telehealth technology as an allowable administrative cost (line 5 of the cost report). Allowable telehealth technology includes remote patient monitoring (ie., ECG, blood pressure, and glucose monitoring), teletypewriter (TTY) technology, and two-way real-time audio-visual (A/V) telecommunications technology (not be audio only).

The NAHC surveys indicated a slight increase in telehealth use, even without direct reimbursement: 43.6% of HHAs reported using one or more telehealth modalities on the June survey, up from 39.5% in April. It seems likely that this percentage won’t increase significantly until CMS changes its stance on telehealth reimbursement, as the costs associated with the technology can be prohibitive.

Reimbursement issues aside, there have been some concerns raised about telehealth utilization in the home health arena. For many agencies that are struggling to accommodate patients’ desire for remote care, the technological options available (and affordable) are limited. There is also a technology barrier for older patients, and HHAs must consider their patients’ knowledge and capabilities. Without any specific guidance, agencies are having to figure it out for themselves; they are using Zoom, FaceTime, Skype—any platform they can get— and accepting any cybersecurity risk that may imply. Some HHA employees question the clinical efficacy of the technology, as well. They are concerned about the loss of face-to-face interaction and how it can impact clinical and psycho-social assessments, and say there is often no substitute for a comforting physical presence.

Telehealth is faring better in the hospice arena, most probably due to hospice patients’ refusal of in-person visits during the COVID-19 crisis: more than 95% of respondents reported patient visit refusals in NAHC’s May hospice survey. More than 84% of respondents reported using telecommunications technology to provide services to Medicare hospice patients, and about 82% reported using two-way A/V communications. Not surprisingly, more than 62% of agencies identified the use of telecommunications technology as the most impactful flexibility permitted by CMS during this current health crisis.

Taking a Closer Look at Hospice and Home Health Agencies

The onset of the coronavirus crisis brought abrupt and significant change for many PAC providers. One Pennsylvania agency reported in March that their hospice visits had plummeted immediately, as patients refused agency visitations due to infection worries. At the same time, their home health agency (HHA) census “went crazy,” as area hospitals discharged everyone possible to home health in order to clear out beds for COVID patients. As of mid-July, the provider’s combined visit count was still down over 20%.

Thornberry Agency Data

To gain a more personal perspective, we took a look at both average daily census and weekly visit count data for Thornberry customer agencies over an 18-week sample period, from early March (pre-COVID crisis) through mid-July. We included all agency types in our data overview: HHA-only, hospice-only, and those agencies that provide both hospice and home health services. We also included all agency sizes, from those with census numbers in the dozens to those with census numbers in the thousands.

With only one week of pre-COVID data available, we have assumed—for the sake of this overview—that any change in data or data averages of less than 10% might represent a normal fluctuation. For this overview, therefore, we consider an increase or decrease “significant” only if it equals or exceeds 10%. This consideration applies to all weekly and averaged census and visit data.

“Dip”: For this overview, we define “Dip” as the largest significant drop in census or visit data at any point during the sample period (i.e., we compared the average daily census or weekly visit count for Week 1 to that of the lowest census or visit data recorded throughout the sample period). 

“Net Change”: We define “Net Change” (and “Net Increase” or “Net Decrease”) as the difference between pre-COVID data and the data for the last week of the sample period (i.e., we compared the average daily census or weekly visit count for Week 1 to that of Week 18).

Average Daily Census

Two-thirds of Thornberry agencies saw a significant Dip in average daily census (i.e., down 10% or more from pre-COVID census at some point during the 18-week sample period).

  • One-third of agencies saw Dips of greater than 20%.
  • One of our smallest agencies saw the largest Dip: their census was down 52% in mid-May.
  • More than 90% of agencies have shown a significant recovery (up 10% or more) from their lowest census Dip.

More than 40% of our agencies saw no significant Net Change in average daily census by the end of the sample period.

  • About 32% of agencies saw a Net Decrease in average daily census; the average decrease was 21%.
  • About 28% of agencies saw a Net Increase in average daily census; the average increase was 15%.

There was no notable correlation between changes in average daily census and agency size, but we did see some correlation by agency type.

  • An equal percentage (two-thirds) of each agency type saw a significant Dip in daily census numbers, but the average Dip was greater for HHAs.
    • The average Dip for HHA-only agencies was 27%; hospice-only agencies saw an average Dip of 19%.
  • More hospice-only agencies (45%) than HHA-only agencies (20%) saw a significant Net Decrease by the end of the sample period.
  • Of those agencies that did see a significant Net Decrease, the average Net Decrease was higher for HHA-only agencies (28%) than for hospice-only agencies (13%).

Weekly Visit Count

An overview of the weekly visit count for Thornberry agencies presents a grim picture. Every agency except one saw a significant Dip in weekly visit counts (i.e., down 10% or more from pre-COVID visit count at some point during the 18-week sample period).

  • The average Dip was a decrease of 36% from pre-COVID normals; 15% of our agencies experienced Dips in excess of 50%.

More than half of our agencies saw a significant Net Decrease in weekly visit count by the end of the sample period; the average decrease was 32%.

  • About 30% of agencies saw no significant Net Change in weekly visit count.
  • About 17% of agencies saw a Net Increase in weekly visit count; the average increase was 19%.

There was no notable correlation between changes in weekly visit count and agency size, but we did see significant correlations by agency type.

  • Hospice-only agencies saw an average Dip of 49%; HHA-only agencies saw an average Dip of 31%.
  • Two of our hospice agencies (one small and one mid-sized) saw their weekly visit counts Dip more than 80%; neither saw significant lasting recovery during the sample period.
  • An equal percentage of each agency type saw a Net Decrease in weekly visit count, but hospice-only agencies saw the largest decreases:
    • Net Decreases averaged 46% for hospice-only agencies; HHA-only agencies saw Net Decreases averaging 25%.

Revenue Reduction: The Bottom Line

In the April NAHC survey, 85% of respondents nationwide—noted equally by rural HHAs—reported COVID-related revenue reductions: more than half reported reductions in excess of 15%; nearly one third reported reductions in excess of 20%. Two months later, these numbers had fallen slightly but were still significant. The June survey saw 82.4% of respondents reporting revenue reductions: 45% reported reductions in excess of 15%; more than one-quarter reported reductions in excess of 20%.

The studies found that revenue reductions have been primarily related to two factors: decreases in new admissions (reported by 79% of respondents in April and 67% in June) and patient refusal to accept all physician-ordered care in order to avoid the risk of virus transmission (reported by about 97% of respondents in April and 87% in June).

For HHAs nationally, both census and visit volume are down, resulting in significant financial pressure on agencies across the country. According to NAHC, the pandemic has triggered “an unprecedented disruption” to home health agency infrastructure, and agencies are experiencing “significant financial stress.” 

Revenue reductions have impacted jobs, as well. Job reallocations, furloughs, and layoffs have been common among PAC providers, and throughout the healthcare arena. The April NAHC study reported a 54% reduction in HHA clinical staff and a 52.8% reduction in administrative staff. By June, reductions in clinical staff had almost recovered (down to 6%), but administrative staff reductions were still at 47%.

“The recent, follow-up survey continues to strongly suggest that home health agencies need financial supports and Medicare policy relief in order to continue to serve COVID-19 infected patients,” said Dombi, “as well as the other 3.5 million Medicare beneficiaries who utilize cost effective, high quality care at home each year.”

LUPA Effects

High LUPA (Low Utilization Payment Adjustment) rates can contribute significantly to reduced revenue for HHAs. LUPA payments apply when agencies don’t deliver a minimum number of in-person visits to a patient over the 30-day period of care; LUPA thresholds vary from two to six visits, depending on the patient scenario.  LUPA reduces average HHA reimbursement by approximately 75% or $1500 over the 30-day period payment unit. Decreases in visit volume associated with the COVID-19 pandemic triggered a sharp rise in LUPA rates, exacerbating a situation already complicated by new PDGM LUPA thresholds. 

Understandably, HHAs in COVID-19 hot spots have generally seen the greatest jump in LUPA rates. According to Home Health Care News and BlackTree Healthcare Consulting, national LUPA rates reached an average high of 11.9% at the early height of the coronavirus in March. The LUPA rate for the first four months of 2020 was 12.7% in Washington state, where the earliest U.S. outbreaks of COVID-19 occurred. Other early hot spots (New York and Massachusetts) also saw above-average LUPA rates for the first four months of the year. 

Increases in LUPA rates haven’t been limited to COVID hotspots, however. The June NAHC study found that 57.5% of all HHAs had LUPA volumes above the Pre-Covid national total of 8%. The April and June NAHC studies also looked at HHAs with pre-COVID LUPA rates below the national average:

  • 47% of HHAs reported at least a doubling of LUPAs in May, down from 67% in April.
  • 39% of HHAs reported at least a tripling of LUPAs in May, down from 52% in April.

In June Home Health Care News reported that national LUPA rates had started to trend back down from their early highs at the beginning of the COVID crisis. “I think we’ve gotten a little bit more efficient with just how we’re caring for patients and making sure that we adapt as an industry to this ‘new normal,’” said BlackTree Managing Principal Nick Seabrook. However, the number of COVID cases continues to rise, and new hot spots are emerging all the time. It seems likely that LUPA rates could rise again, even as agencies learn to adjust to the new PDGM visit thresholds.

Looking to the Future

It’s evident to most that the coronavirus isn’t going anywhere soon. The pandemic continues virtually unabated in the majority of states nationwide, and July and August have seen an alarming increase in COVID numbers. How prepared are we to face the continued and perhaps increasing onslaught of COVID-19? 

Revenue Projections

According to NAHC, Medicare home health reimbursement has dropped by about 20% while operational costs have decreased only slightly. Patient service costs have increased due to reduced staff productivity, infection control expenses, increased administrative burden, and isolation/quarantining of caregivers suspected of exposure to the virus. None of these factors is likely to change through the second half of 2020.

In the May NAHC hospice study, 60% of hospices responding anticipated a decrease in annual revenues during CY2020, and over 80% expected costs to increase. The majority of hospice respondents cited the increased costs associated with PPE as a significant factor. Hospices have called for more federal funding of PPE supplies.

In March, Congress passed the CARES (Coronavirus Aid, Relief, and Economic Security) Act, with HHA funding equaling 6.2% of 2019 Medicare fee-for-service revenue. According to NAHC, “a step was taken toward mitigation of the estimated 20% in overall losses to HHAs due to COVID-19”. However, additional financial relief is needed to continue to stabilize the financial foundation and infrastructure of home health agencies. Without significant financial supports, the HHA delivery system is at risk of significant long-term harm from these factors beyond their control.” NAHC continues to push for additional provider relief funding for home health and hospice providers.

Collaboration and Interoperability

The COVID crisis has highlighted the need for collaboration throughout the healthcare continuum and the value of integrated electronic health records (EHRs) and health information exchanges (HIEs). HIEs in particular have played an important part in the centralized data capture and reporting that are critical to coordinating a state- or county-level response. Kim Chaundy, senior director of Pennsylvania’s Keystone HIE (KeyHIE), said their existing data infrastructure allowed them to rapidly add the information needed for the pandemic; KeyHIE used their data to help predict rising hot spot areas throughout the region. 

The need for collaboration has in turn highlighted the importance of reliable, secure interoperability from your EMR solution. Cybersecurity has been a concern for HHAs and other healthcare providers since the advent of the electronic medical record (EMR). Interoperability with EHRs and HIEs has brought the issue to the forefront. As more and more devices are connected through the IoMT (internet of medical things), cybersecurity becomes ever more critical. 

Is There Any Good News?

While CMS continues to balk at reimbursement for Telehealth services, they have offered one welcome COVID-relief change that we hope will become permanent. The CARES Act allows physician assistants (PAs), nurse practitioners (NPs) and other non-physician practitioners to sign home health documents. NAHC had been advocating for this change since 2007.

At NAHC’s Financial Management Conference and Expo, held virtually in July, Dombi spoke of “silver lining” elements to the COVID crisis: “In the short term and long term, one of the greatest silver linings in this is the opportunity to show the breadth and depth of what can be done in home care.” Telehealth reimbursement is still NAHC’s top priority, and the organization is hopeful that relevant legislation is in the near future.