Post Acute Care: Nursing Facilities, Skilled Nursing Facilities, Assisted Living April 17, 2007

1. Reimbursement Primer for Compliance, Ethics and Legal Officers: “Everything You Have Always Wanted to Know About Reimbursement but Were Afraid to Ask.” Post Acute Care: Nursing Facilities, Skilled Nursing Facilities, Assisted Living April 17, 2007 • Janine Boudreau, Janine Boudreau Healthcare Consulting, Inc. • Lynda Hilliard, Senior Manager, Life Sciences & Healthcare Regulatory Services,Deloitte & Touche LLP • W. Scott Plumb, Senior Vice President, Massachusetts Extended Care Federation • Moderated by Lawrence W. Vernaglia, Foley & Lardner, LLP

2. Session Objectives • Gain insight into the market for the primary care sectors for Post Acute Care • Obtain a general understanding of the primary reimbursement streams for skilled nursing facilities (“SNF”), assisted living faciities (“ALF”), and nursing homes (“NH”). • Gain insight into government reimbursement compliance issues in this marketplace

3. Post Acute Care • Discussion will be segmented into 3 areas: • Industry Overview – Scott Plumb • High Level Revenue Cycle Overview – Janine • Reimbursement Compliance Issues – Lynda Hilliard • Questions and Answers from Participants

4. Industry Overview

5. Provider Payer Mix ComparisonNursing homes are uniquely dependent upon Medicaid to provide quality health care Nursing Home Payer Mix Home Health Payer Mix Acute Hospitals Payer Mix

6. The Nursing Facility “Dollar”:Breakdown of Nursing Home SpendingSalaries and benefits represent 71 cents of every dollar spent by nursing facilities Administration (Administrator, Accounting, Clerical) Physical Plant (Mortgage and Property Taxes) General Expenses/Operating (Supplies, Food, Utilities & Liability Insurance) All Staff Wages & Benefits Based on Division of Health Care Finance and Policy nursing facility cost reports

7. 50,000 Nursing Facility EmployeesThe nursing facility provider community is a major economic engineand is the largest employer in some communities Social/Medical 32,000 Source: DHCFP Nursing Facility Annual Cost Reports

8. Nursing Facility Direct Care Nursing Staff Median Wage Increases:1999–2006Nursing facilities are good employers Average annual increase of 4.2% 3.0% 3.1% 3.0% 3.8% 4.1% 7.9% 4.6% Sources: MECF Annual Wage Surveys 1999-2006

9. 3,700 Nursing Facility Direct Care Staff Vacancies Despite Investment in Staff Wages & Benefits, Significant Vacancies Exist Certified Nurse Aide 1,800 Sources: DHCFP Annual Nursing Facility Cost Reports and MECF Annual Wage Surveys

10. Average Daily Minutes of Nursing Care Reimbursed By Medicaid*1 Source: MassHealth and Division of Health Care Finance and Policy; Prepared by: Massachusetts Extended Care Federation *1The average daily minutes of nursing care reimbursed by Medicaid (197 minutes in 2007) falls short of the average daily minutes of care provided by nursing homes (204 minutes in 2007).

11. Medicaid Nursing Facility Resident Acuity – 2006Nearly all nursing home residents require extensive nursing care % of Total Medicaid Residents in Case Mix Category MMQ Category H J,K L,M N,P R,S T Minutes (Range) 30 30.1 – 110 110.1 – 170 170.1 – 225 225.1 – 270 270.1+ Minutes (Median) 30 81 142 199 244 288 Source: MassHealth Unaudited Management Nursing Minutes Score

12. Nursing Facility MEDICAIDUNCOMPENSATED CARE Per Day, 1999-2006$500,000 annual Medicaid loss per Medicaid participating nursing facility Sources: 1999-2004 BDO Seidman Reports; MECF Estimates 2005-2006 *User Fee Program Implemented (2003); User Fee Program Maintained In Subsequent Years

13. Consumer Satisfaction in Massachusetts Nursing HomesIndependent state survey shows nursing facility consumers are highly satisfied % of nursing homes Consumers who are: Source: Massachusetts DPH Nursing Home Satisfaction Survey Results, December 2005

14. Nursing Facility Spending As a Percentage of Total Medicaid Spending: FY1999-FY2006 % of Total Medicaid Spending Sources: SFY 1999-2004 Actual (MassHealth Budget Office); SFY 2005-FY2006 Massachusetts Taxpayers Foundation (April 2005 Report, p.14) and MECF Nursing Home Data

15. Short Term Care Hip Fractures Knee Replacements Stroke Cardiac Disease Long Term Care Alzheimer’s Disease Advanced Dementia Multiple Illnesses Congestive Heart Failure Advanced Diabetes Neurological (MS, Severe Brain Injury) Hospice Continuum of Long Term Care At Home:Routine Care At Home:Informal Support AssistedLiving Facility-Based Care At Home:Formal Support

16. High Level Revenue Cycle

17. Pre-Admission Checklist • Review and Log Referral • Verify Benefits • Co-Insurance • Medicaid – Eligibility Date/Type • Managed Care – Policy • Hospice – Provider • Other – Review with Administrator • Price Out P.O. Medications • Call for IV Medication Pricing • Review Clinical Information with DON or designee • Review Whole Referral with Administrator/COO • Offer Bed Immediately for Approvals • Contact Chief Clinical Officer for Denials • Admissions Stand Up Meeting • Assign Guardian Angel • Sign Resident In

18. Payor Mix • Medicare • HMO/Managed Care • Private • Medicaid

19. Special Populations • Palliative • Hospice • HIV

20. Billing Cycle • Pre-billing for: • Private • Patient Paid Amount (PPA) • HMO/Managed Care • Prior Authorization • Medicare/Medicaid • Verifying level prior to actual billing

21. Rebilling and Reconciliation • Credit Balances • Adjustments • Denied or Suspended Claims

22. Reimbursement Compliance Issues

23. SNFs - Focus of 2007 OIG Work Plan Billing/Reimbursement • Skilled Nursing Facilities’ Involvement in Consecutive Inpatient Stays • Skilled Nursing Facility Payments for Day of Discharge • Skilled Nursing Facility Consolidated Billing • Submission of Skilled Nursing Facility No-Pay Bills • HMB (Hospice) Payments to Nursing Home

24. SNFs - Focus of 2007 OIG Work Plan Covered Services • Skilled Facility Rehabilitation and Infusion Therapy • Imaging and Laboratory Services in Nursing Homes • Implementation of Medicare Part D in Nursing Facilities • Inappropriate Psychotherapy Services in Nursing Facilities

25. SNFs - Focus of 2007 OIG Work Plan • Quality of Care and Licensing Concerns • Nursing Home Residents’ Minimum Data Set Assessments and Care Planning • Enforcement Actions Against Noncompliant Nursing Homes

26. Assisted Living Facilities • Primarily Private Pay • Medicaid Nursing Home Waiver • Future State • Need to set up systems for monitoring coverage requirements and on-going eligibility • Eligible for certain Part A, Part B and HMB benefits in their home • Home Health services – Part A/B • Hospice Medicare Benefit – ALF = Home

27. Nursing Homes • Primarily Medicaid and Private Pay • Medicare Part B Coverage • For those NH patients who have exceeded their 100 day SNF benefit, they can receive Part B services, e.g, Rehab Services: • Based on Medicare eligibility (enrolled in Part B) • Documentation supports medical necessity • Physician orders are present and meet reimbursement requirements

28. Question and Answer Session • Janine Boudreau, Janine Boudreau Healthcare Consulting, Inc. • Lynda Hilliard, Senior Manager, Life Sciences & Healthcare Regulatory Services,Deloitte & Touche LLP • W. Scott Plumb, Senior Vice President, Massachusetts Extended Care Federation • Moderated by Lawrence W. Vernaglia, Foley & Lardner, LLP