The Hidden Compliance and Revenue Gap in Home Health: 3 Failures Costing Agencies Millions

The following is a guest article by Matt Saucedo, Founder of ClientCare.pro

Home health agencies are losing revenue they have already earned. Not from payer disputes or rate cuts, but from operational gaps that silently drain the bottom line. These are not edge cases. They are systemic failures baked into how most agencies manage their revenue cycle.

Here are three of the most common, and the technology approaches that are beginning to close them.

Failure 1: Eligibility Verification that Stops at Admission

Most home health agencies run a single eligibility check when a patient is admitted and rely on that snapshot for the duration of the episode. In a hospital or physician practice setting, real-time eligibility checking is now standard. In home health, it is the exception.

The problem is that coverage changes mid-episode. Medicaid managed care plans disenroll patients for procedural reasons. Medicare Advantage plans shift. Coordination of benefits changes goes undetected. The agency continues delivering care, paying caregivers, and submitting claims against coverage that no longer exists. The denial arrives 30 to 60 days later. By then, the care has been delivered, and the cost has been absorbed.

The technology fix is straightforward: automated eligibility verification through electronic 270/271 transactions, run on a weekly or bi-weekly cadence rather than once at intake. These payer inquiries return real-time coverage status directly from the insurance source. The infrastructure to do this at scale has existed in the acute care setting for over a decade. What has changed is that API-based clearinghouse platforms now make it accessible to smaller post-acute providers at a fraction of the historical cost.

Failure 2: Exclusion Screening Treated as a One-Time Event

CMS guidance expects monthly re-screening of staff against the OIG List of Excluded Individuals and Entities and the SAM.gov debarment database. The intent is clear: agencies must not bill federal healthcare programs for services rendered by excluded individuals.

In practice, most agencies screen at hire and never again. An employee excluded after their original background check, whether for fraud, license revocation, or controlled substance violations, continues working and billing Medicare or Medicaid without the agency’s knowledge. A single missed exclusion can trigger per-item civil monetary penalties, repayment demands, and, in severe cases, program exclusion for the agency itself. Last year, a home health agency paid $6.5 million to settle False Claims Act allegations tied to exactly this kind of gap.

The technology approach: automated screening against LEIE and SAM.gov databases on a monthly cadence, with alerts when a match is detected. The data is publicly available. The OIG publishes monthly supplemental files with new exclusions and reinstatements. The barrier has never been data access. It has been operational discipline, and that is what automation solves.

Failure 3: PDGM Comorbidity Undercoding

The Patient-Driven Groupings Model reimburses based on clinical complexity, including secondary diagnoses that increase the payment weight for each 30-day episode. When comorbidity codes documented in clinical notes are not carried through to billing, the agency delivers complex care and gets paid at a lower rate.

Industry analysis suggests roughly 40% of home health agencies are not capturing the full comorbidity adjustment available under PDGM. For a 100-patient agency, the gap typically runs between $15,000 and $20,000 per year. This is not a coding knowledge problem. The clinical documentation often supports the higher reimbursement. The disconnect happens in the handoff between clinical staff and the billing system. A nurse documents a patient’s COPD alongside their primary wound care diagnosis. The OASIS assessment captures the functional limitation. But when the claim is assembled, the comorbidity is either sequenced incorrectly or omitted entirely.

The technology approach: pre-submission billing code validation that cross-references ICD-10 and HCPCS codes against current CMS reference tables, flags retired or unacceptable codes, and identifies diagnosis resequencing opportunities that would increase the PDGM payment weight. This is not new in the hospital setting. What is new is its availability at price points practical for a 100-patient home health agency.

The Margin Pressure Makes This Urgent

CMS finalized a 1.3% aggregate Medicare payment decrease for home health in 2026, the fourth consecutive year of reductions. MedPAC has recommended an additional 7% cut for 2027. The home health CERT improper payment rate, while improved from its 2014 peak of 51.4%, still represents over a billion dollars in annual overpayments that invite increased scrutiny.

Under this margin environment, agencies that treat the revenue cycle as a back-office function rather than a real-time intelligence layer will continue losing revenue they have already earned. The technology to close these gaps exists today. The question for home health IT leaders is not whether to adopt it, but how much longer they can afford not to.

About Matt Saucedo

Matt Saucedo is the Founder of ClientCare.pro, a revenue intelligence platform for home health agencies that automates eligibility verification, OIG exclusion screening, and PDGM billing code optimization. He is based in Southern California.

The following is a guest article by Matt Saucedo, Founder of ClientCare.pro

Home health agencies are losing revenue they have already earned. Not from payer disputes or rate cuts, but from operational gaps that silently drain the bottom line. These are not edge cases. They are systemic failures baked into how most agencies manage their revenue cycle.

Here are three of the most common, and the technology approaches that are beginning to close them.

Failure 1: Eligibility Verification that Stops at Admission

Most home health agencies run a single eligibility check when a patient is admitted and rely on that snapshot for the duration of the episode. In a hospital or physician practice setting, real-time eligibility checking is now standard. In home health, it is the exception.

The problem is that coverage changes mid-episode. Medicaid managed care plans disenroll patients for procedural reasons. Medicare Advantage plans shift. Coordination of benefits changes goes undetected. The agency continues delivering care, paying caregivers, and submitting claims against coverage that no longer exists. The denial arrives 30 to 60 days later. By then, the care has been delivered, and the cost has been absorbed.

The technology fix is straightforward: automated eligibility verification through electronic 270/271 transactions, run on a weekly or bi-weekly cadence rather than once at intake. These payer inquiries return real-time coverage status directly from the insurance source. The infrastructure to do this at scale has existed in the acute care setting for over a decade. What has changed is that API-based clearinghouse platforms now make it accessible to smaller post-acute providers at a fraction of the historical cost.

Failure 2: Exclusion Screening Treated as a One-Time Event

CMS guidance expects monthly re-screening of staff against the OIG List of Excluded Individuals and Entities and the SAM.gov debarment database. The intent is clear: agencies must not bill federal healthcare programs for services rendered by excluded individuals.

In practice, most agencies screen at hire and never again. An employee excluded after their original background check, whether for fraud, license revocation, or controlled substance violations, continues working and billing Medicare or Medicaid without the agency’s knowledge. A single missed exclusion can trigger per-item civil monetary penalties, repayment demands, and, in severe cases, program exclusion for the agency itself. Last year, a home health agency paid $6.5 million to settle False Claims Act allegations tied to exactly this kind of gap.

The technology approach: automated screening against LEIE and SAM.gov databases on a monthly cadence, with alerts when a match is detected. The data is publicly available. The OIG publishes monthly supplemental files with new exclusions and reinstatements. The barrier has never been data access. It has been operational discipline, and that is what automation solves.

Failure 3: PDGM Comorbidity Undercoding

The Patient-Driven Groupings Model reimburses based on clinical complexity, including secondary diagnoses that increase the payment weight for each 30-day episode. When comorbidity codes documented in clinical notes are not carried through to billing, the agency delivers complex care and gets paid at a lower rate.

Industry analysis suggests roughly 40% of home health agencies are not capturing the full comorbidity adjustment available under PDGM. For a 100-patient agency, the gap typically runs between $15,000 and $20,000 per year. This is not a coding knowledge problem. The clinical documentation often supports the higher reimbursement. The disconnect happens in the handoff between clinical staff and the billing system. A nurse documents a patient’s COPD alongside their primary wound care diagnosis. The OASIS assessment captures the functional limitation. But when the claim is assembled, the comorbidity is either sequenced incorrectly or omitted entirely.

The technology approach: pre-submission billing code validation that cross-references ICD-10 and HCPCS codes against current CMS reference tables, flags retired or unacceptable codes, and identifies diagnosis resequencing opportunities that would increase the PDGM payment weight. This is not new in the hospital setting. What is new is its availability at price points practical for a 100-patient home health agency.

The Margin Pressure Makes This Urgent

CMS finalized a 1.3% aggregate Medicare payment decrease for home health in 2026, the fourth consecutive year of reductions. MedPAC has recommended an additional 7% cut for 2027. The home health CERT improper payment rate, while improved from its 2014 peak of 51.4%, still represents over a billion dollars in annual overpayments that invite increased scrutiny.

Under this margin environment, agencies that treat the revenue cycle as a back-office function rather than a real-time intelligence layer will continue losing revenue they have already earned. The technology to close these gaps exists today. The question for home health IT leaders is not whether to adopt it, but how much longer they can afford not to.

About Matt Saucedo

Matt Saucedo is the Founder of ClientCare.pro, a revenue intelligence platform for home health agencies that automates eligibility verification, OIG exclusion screening, and PDGM billing code optimization. He is based in Southern California.