Safeguarding Your Medicare Program Session F-1 October 7, 2007 2:00 – 4:00 PM Jane C. Belt, MS, RN, Consulting Manager B

1. Safeguarding Your Medicare Program Session F-1 October 7, 2007 2:00 – 4:00 PM Jane C. Belt, MS, RN, Consulting Manager Betsy V. Rust, CPA, Consulting Manager Plante & Moran, PLLC

2. Session Objectives • Identify MDS assessment issues affecting length of stay and RUG determination • Review documentation requirements and guidance in responding to Fiscal Intermediary (FI) Additional Documentation Requests (ADR) • Learn tools and metrics that can assist in evaluating your facility’s Medicare operations • Identify strategies for improving Medicare financial results • Considerations in ancillary service contracting and provider liability for consolidated billing 2

3. The Compelling Case for Medicare…. • Medicare operations typically generate per diem revenue in excess of operating expense • Higher operating margins than other payors and decreased reliance on Medicaid • Greater flexibility than other payors • Census building opportunity (attract private pay) 3

4. Average Financial Results – Medicare Operations *Based on 366 Ohio Cost Reports from 2004 and 2005 Results in other Midwest States range from $50 to $75 per patient day 4

5. Medicare Utilization • Ohio 14% • Indiana 13% • Illinois 12% • Kentucky 13% • Michigan 15% • Ohio Rehab 87% • National Rehab 83% 5

6. Elements of a Strong Medicare Program Metrics for Evaluation Marketing Cost Control Pre-Admissions Admissions Medicare Operations Ancillary Utilization and Efficiency Resident Assessments Care Planning Delivery, and Outcomes Documentation Metrics for Evaluation Metrics for Evaluation 6

7. Marketing is Critical • Target Audiences • Hospitals and Discharge Planners • Physician Specialty Groups • Consumers and their families • Marketing Strategies • Facility Open House • Print collateral materials • Internet • Other multimedia • Post Discharge Follow-up 7

8. Pre-Admission and Admissions • Admission Staff are critical to establishing and cultivating referral relationships • Utilize technology where possible • Accept admissions 24 hours a day and 7 days a week • Utilize a pre-admission screening tool to identify coverage, skilling services, probable RUG group, length of stay, cost issues 8

9. Metrics for Evaluating Admissions • Number of admission inquiries • Number of admissions • By referral source • By payor type • Number of patients declined • Census by payor type • Average length of stay • Competitor utilization 9

10. Resident Assessments • Minimum Data Set (MDS) is the most important cog in the Medicare wheel • Drives resident care planning • Influences regulatory process and oversight • Determines revenue rate (RUG) for care delivered • It is essential that all members of the interdisciplinary team have adequate training and expertise in the MDS process 10

11. Medicare – Pre PPS Financial Silo Regulatory Silo Little integration between Clinical and Financial Operations 11

12. Financial Success Under Medicare – The Olden Days • Maintain distinct part • Accountant utilizes cost allocation methodology to maximize reimbursement. • Spend up to limits on routine The Controller is the Man! 12

13. Financial Success Under Medicare – PPS Environment • Accurately capture assistance with ADLS, mood, services • Monitor ancillary utilization and efficiency • Selection of Assessment Reference Date Nurses Rule – Accountants Drool! 13

14. Creating a Winning Medicare Program The average Medicare rate has increased! The facility ADL score has really improved! MDS MDS The team must be talking the same language 14

15. Assessment Reference Date Nursing case mix index Activities of Daily Living (ADL) Therapy services (rehabilitation) index Therapy efficiency The MDS Language of Medicare Operations 15

16. Factors Influencing RUG Rate Rehab Case Mix Nursing Case Mix Therapy Minutes Estimated or Delivered Primary Diagnosis Extensive Services prior 7 or 14 Days ADL Score Mood and Behavior Selection of Assessment Reference Date 16

17. Separate index for Nursing and Rehab What’s case mix index?

18. Low Nursing Case Mix No Rehab index for non therapy categories

19. Calculation of Therapy Services Index Allows you to measure rehab volume with one metric Calculate using therapy days only Index of 1.10 Mostly High Monitor facility trend and comparison to State and National averages

20. Calculation of Nursing Case Mix Index Calculate with all days Allows facility to measure nursing acuity with one metric Monitor Trends

21. Nursing Case Mix Index • Monitor trends in the index • Are the trends consistent with resident population? • Do they indicate a need for modification to staffing levels or education? • How does the trend in the index compare to trends in operating costs? • National Average – 1.28 21

22. Therapy Case Mix Index • Monitor trends in the index • Are trends consistent with resident population? • Why the increase or decrease in services? • Does the index trend compare to the trend in operating costs? • How does the trend in therapy CMI compare to the trend in therapy efficiency? • National Average 1.27 22

23. What is an ADL Score? I have no idea but I hope It’s a big number. I hear that the higher the ADL, the more the RUG rate…. Measures maximum assistance given by nursing staff over the last 7 days across all shifts. My staff are experts in capturing this…. 23

24. ADL Score and Impact on Reimbursement - Less is NOT More • The ADL score can be as low as 4 and as high as 18 • The lower the score the less assistance the resident needs from staff, the higher the score, the more dependent the resident is on staff and the more Medicare will reimburse the facility for the care and services rendered 24

25. ADL Score and Impact on Reimbursement - Less is NOT More • ADL score is 30% of each RUG rate • The ADL score is the sum of: • Bed mobility • Transfer • Eating • Toilet use • These ADLs are items in section G of the MDS

26. Know the ADL Definitions(MDS) • INDEPENDENT(0) = no help from staff • SUPERVISION(1)= staff uses eye and mouth – no hands • LIMITED ASSISTANCE(2) = staff uses hands to guide, but not bearing any weight of the resident • EXTENSIVE ASSISTANCE(3) = staff uses hands and IS bearing some/any of resident’s weight OR staff fully performed some part of the task • TOTAL DEPENDENCE(4) = staff performs entire task each and every time 26

27. Know the ADL Definitions 27

30. ALLEY, KIRSTI

31. HARTMAN, LISA

32. ADL ScoresBed mobility, transfer, toilet use and eating • Medicare average? • Goal = 13.24 • Medicaid average? • Goal = 12 • What percent independent (4-6 ADL score)? • Goal = < 20% Medicaid < 10% Medicare • Establish your benchmarks and monitor changes to identify need for staff education and training 32

33. Impact of Understating of ADLsWhat Is One Point Worth? RUX 16 - 18 RUL 7 - 15 $605.49 $531.74 $73.75 x 14 days = $1,032.50 Medicare Rates for Urban (Columbus, OH) – 10/1/07 33

34. How Much is 1 ADL Point Worth? Ext + Very High Rehab ADL Index = 7 RUG Category = RVL Rate = $428.09 However, if someone under codes bed mobility by 1 point (2 instead of 3), then: ADL Index = 6 RUG Category = RVA Rate - $352.87 Difference = $75.22 per day ($1,053.08 - 14) 34

35. Monitoring ADL Scores • Trend for facility • Comparison to statewide and national averages – 13.24 • Scrutiny of residents within one ADL point of next category to ensure accuracy • Scrutiny of residents with ADL scores <7 • Inability to capture new RUGs groups • High level of independence 35

36. ABC Nursing Home 36

37. Monitoring ADLs • 1 NA watches for transfer – staff NWB • 1 NA touches for toilet use – staff NWB • Part of toilet use is transfer • Needs >500 min of PT and OT • 1 NA for bed mobility • 2 NAs for transfer 37

38. ARD Selection (A3 on MDS) • Assessment Reference Date • Determines the observation period – the look-back date for answering all items on the MDS • MDS sections have a 7, 14, 30 or 90 day “look-back” period or “window” • Determines RUG classification 38

39. Accuracy is Essential • Who sets ARD? • Administrator, DON, ADON, Business Office Manager, SSD, MDS, Director of Rehab, Activities, Dietary 39

40. Why is the ARD so Important?Rate Variance Example • High acuity resident meets the criteria of several RUG III categories: Rehab, Extensive Services, Special Care, Clinically Complex • Rehab orders: day 1 evaluation; treatment begins on day 2 (<65 minutes) • Day 3 begins schedule that allows for 500 minutes • ADL index is 13 40

41. All Dates are NOT Created Equal Same resident, same care, same rehab, same cost of care BUT…very different reimbursement based on accurate ADL, clinical indicators, and ARD $19.48 per day x 14 days = $272.72 41

42. Therapy Services Revenue rate based on ranges of minutes using thresholds Cost based on method to deliver direct care and indirect cost 720 = Ultra High 500 = Very High 325 = High 150 = Medium 45 = Low 42

43. Therapy ServicesIf the World were Perfect…. • Resident would always need therapy exactly at threshold • Facility would get paid RUG rate for exact amount of therapy services rendered • Facility would pay contractor or staff for exact amount of therapy services 43

44. Therapy Reality • Resident needs vary • Therapy services can be provided to residents under arrangement or by employees • Providers need to monitor revenue and expense implications of resident care decisions 44

45. Therapy Service Options 45

46. Monitoring Therapy Services • What is the volume of services rendered to residents in general? • How many minutes over threshold are we treating in the facility? Trends? • Are we treating many residents at threshold? Trends? 46

47. Monitoring Therapy Services • Are we treating significantly over threshold? • Are we close to the next category based on minutes or days? • Are we accurately capturing residents that meet the requirements for the combination categories? 47

48. Monitoring Therapy Efficiency But many MDSs with significant treatment over threshold and many that were close to the next category Overall looks good 48

49. Monitoring Therapy Utilization by Resident

50. Monitoring Therapy Utilization by Resident 50