2012 Business Meeting North Carolina Health Care Facilities Association Raleigh, NC

1. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC

2. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC Diane Packard Presiding

3. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC Secretary/Treasurer’s Report Kevin G. Cox

4. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC Nominating Committee Report Randy Uzzell

5. 2012-2014 Slate of Officers

6. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC Report From Capitol Hill Neil Pruitt

7. AHCA: “Forwarding our Commitment to Quality”Neil Pruitt, Jr.AHCA Chair

8. AHCA Strategic Plan • Strategy 1 – Redefining the Consumer Experience • Quality as an expectation • Focus on customer service • Strategy 2 – Becoming Part of the Solution • New relationships with CMS • Proactive political relationships • Strategy 3 – Thinking Differently • New payment models • Embrace the spectrum of services

9. AHCA Strategic Plan • Strategy 4 – Promoting Technology • Re-launch LTC Trend TrackerSMon a new platform • Enable members of all sizes to evaluate and adopt technology that advances quality and promotes efficiency • Strategy 5 – Being Present • Member participation in grassroots • Member participation in quality initiatives

10. New AHCA Quality Cabinet • AHCA Board of Governors endorsed establishing a new overarching Quality Cabinet • AHCA Quality Cabinet will coordinate and direct our collective efforts to advance quality of care and quality of life issues • Mary Ousley – former AHCA Chair and 2011 Friend of Quality awardee – will serve as Chair • Howie Groff – Former AHCA BOG Member and NCAL Chair – will serve as Vice Chair • AHCA’s Quality Cabinet will help to guide efforts of AHCA’s: • Quality Improvement Committee • Clinical Practice Committee • Survey/Regulatory Committee • Workforce Committee • Consumer Experience

11. Compiled from opinions of 257,676 employees Overall Consumer Satisfaction Overall Workforce Satisfaction Compiled from opinions of 90,576 residents and 140,828 family members Strategy 1: Redefining the Consumer Experience Source: The 2010 National Survey of Consumer &Workforce Satisfaction in Nursing Homes conducted by My InnerView.

12. Strategy 1: Redefining the Consumer Experience • Since 2009, nursing facility health survey citations have been on a steady decline and have dropped nearly a full percentage point in two years Every Medicare and Medicaid certified nursing facility in America must be surveyed once every 15 months

13. Conference Committee Action on Payroll Tax Cut and Doc Fix • Extends payroll tax cut and physician fee schedule until 12/31/12 • Therapy cap exceptions process continues until 12/31/12 • SNFs are a pay-for through a reduction of bad debt coverage • Dual eligibles reduced over three years • 2013 at 88% • 2014 at 76% • 2015 at 65% • Non-duals will be reduced this year from 70% to 65%

14. Bad Debt Opportunities • AHCA and its Finance Committee will work on budget neutral options to present to policymakers in an effort to limit the impact of the bad debt • AHCA to produce state-by-state data for state affiliates to help them fend off additional cuts from Medicaid • Any action will take place at the end of the year so Members of Congress will need to be educated on these options in advance

15. President’s Budget • Challenges • Reduce Medicare bad debt payments • Penalty for hospital readmissions • Threat to market basket • Lower provider tax rate • Blended FMAP rate formula • Opportunities • Site neutral bill • AHCA’s hospital readmission proposal

16. Strategy 2: Becoming Part of the Solution • Some at CMS, on The Hill and most advocacy groups view the sector as an obstacle to improving quality • CMS has rejected our notion that we are the cost and quality solution: • “analysis of recent quality measure data related to rehospitalizations, for example, which appears in the March 2011 Report to Congress suggests that quality of care within SNFs has not been improving….We (CMS) do not agree …that shifting patients…to a SNF setting is necessarily more beneficial to the patient…” (SNF PPS Final Rule, August 2011).

17. Strategy 2: Becoming Part of the Solution • Proving our commitment to improving quality demands that we have better ways to measure our progress • Developing better outcome measures that can validate our claims and document our quality efforts is essential • AHCA will lead the quality issue by adopting significant quality efforts and programs

18. Strategy 3: Thinking Differently • Beginning in fiscal year 2012, CMS will rank hospitals based on 30-day readmission rate for the top three diagnoses causing the majority of readmissions: • Heart attack • Heart failure • Pneumonia • Hospitals that fail to meet CMS’ rehospitalization standards will have a percentage of total Medicare payments withheld: • 2013: up to 1% • 2014: up to 2% • 2015: up to 3% Source: Sections 1151 and 3025 of the Patient Protection and Affordable Care Act

19. CMS Five Star System Percent of Facilities Survey Star Rating Ranked within each State <20 >20 and <43.33 >43.33 and <66.67 >90 >66.67 and <90 Percentiles Bottom 20 percent within a state Top 10 percent (facilities with lowest survey score) within a state

20. AHCA Proposed Five Star • Proposed recommendations to revise Five Star rating system • Expand domains of measures used • Hospitalization • Rehab • Satisfaction • Expand measures within existing domain • Add turnover and retention • Change weights for each domain • Use targets/benchmarks to assign star rating rather than percentile ranking

21. Strategy 4: Promoting Technology • LTC Trend Tracker provides members with the ability to benchmark their quality, clinical and financial data • Domains - Staffing, Rehospitalization, Survey Findings, Medicare Cost Report, Medicare Utilization, Retention and Turnover, Resident Characteristics, Five Star Ratings, Five Star Staffing • Participants – 581 organizations; 4,061 facilities • Utilization – 1,300 reports per month (Jan. through Aug. 2011) up from 800 reports per month in 2010

22. LTC Trend Tracker Growth Multi and Single Organizations 2010 – 2011

23. Strategy 5: Being Present • AHCA Board of Governors Adopted Three Quality Principles: • Improvement in four clinical measures which are meaningful, measurable, and moveable: • 30-Day Hospital Readmission • Customer Satisfaction (Post-Acute and LTC) • Staff Turnover • Antipsychotic Rx Reduction • Development of a Therapy Outcome Measurement System • Promote Proactive Payment Models (January retreat) • AHCA will not be successful without the full support of our members

24. October 2011 Public Education MOTION: To formally replace the term “nursing home” with “skilled nursing care,” augmented by centers where appropriate, to describe our profession.

25. Breaking the Nursing Home Paradigm

26. State-of-the-Art Rehab Suite Aquatic Therapy Pool

27. Private Suites

28. Restaurant-Style Dining Rooms Sitting Rooms

29. Spa Movie Theater

30. Coffee Shop Internet Cafe

31. Breaking The “Nursing Home” Paradigm “The system should not overpay for certain patients, which creates incentives for nursing homes to spiff up their buildings and set staffing levels to entice profitable patients. I encourage CMS to continue taking steps to address these issues.” - Stark

32. Thank You!

33. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC CON Construction Rules Kristi Huff

34. Certificate of Need • House Select Committee on Certificate Of Need Process and Related Hospital Issues • Committee Charge: • To study House Bill 743 and House Bill 812; • The legal requirements and process governing DHHS determinations on applications for CON including an analysis of exceptions granted under policy AC-3; • Issues related to publicly owned hospitals including the appropriate role of State-owned hospitals; • Whether a hospital operating under a Certificate of Public Advantage (COPA) should be required to comply with the same rules, policies and limitations to each county in which it operates; • The extent to which a publicly owned hospital should engage in business with an entity having a COPA or operating under an exemption under the CON laws of the state; • Any other matter reasonably related to the above.

35. Certificate of Need (continued) • 3 public hearings across the state: Fletcher, Mt. Holly, and Wilmington • Topics of discussion include: • Appeals process • Raising monetary thresholds in the law for diagnostic centers, major medical equipment, renovations, expedited reviews • SHCC Appointments made by Governor and legislature • Whether State Ethics Act should apply to the SHCC • Transparency in the CON process

37. Construction Rules Review • Governor’s Executive Order 70: identify rules that are burdensome, duplicative, or impose unnecessary costs • Nursing Home Physical Plan Rules review – meeting with Construction Section and DHSR leadership

38. Construction Rules Review (continued) • Areas likely to be changed: • Exempt certain small projects from a plan review (and fee) • Eliminate references to a “nurse’s station” or nursing unit in the rule • Bath/shower rooms – for every 120 beds • Soiled utility/soiled linen rooms • Handrails – maximum opening between handrails of 12 feet

39. 2012 Business MeetingNorth Carolina Health Care Facilities AssociationRaleigh, NC Payment For Services John Barber Sam Clark

40. What’s Up With Our Medicaid Rates? There has been some confusion and uncertainty surrounding nursing home rates. The state is currently working on a State Plan Amendment that will address multiple rate changes. NCHCFA will review the SPA before it is sent to CMS for approval.

41. What’s Up With Our Medicaid Rates? Provider Assessment Increase • The provider assessment, currently assessed at an overall rate of approximately 5.5%, will be increased to 6%. • The increase will be approximately $1 per non-Medicare day. • The effective date of this change will be January 1, 2012. • Medicaid rates will be increased to repay the provider the Medicaid portion of the assessment.

42. What’s Up With Our Medicaid Rates? Case-Mix Adjustments The frozen case-mix will be unfrozen and the rates effective April 1, 2012 will be adjusted for acuity using the December 31, 2011 snapshot date. Quarterly CMI adjustments will resume beginning on July 1, 2012.

43. What’s Up With Our Medicaid Rates? Rate Reduction The current 3.51% rate reduction will be adjusted to an amount needed to achieve a 2.17% average reduction for the state fiscal year (July 1, 2011-June 30,2012). This will be effective January 1, 2012. The rate reduction will be adjusted again effective July 1, 2012 to ensure that the annual reduction in SFY 2013 will be 2.17% plus the impact of any other adjustments approved by the legislature.

44. Fair Rental Value • Aging of facilities • April Updates • Cost per square foot $142 increased to $147 • Most location factors will increase

45. Medicare Bad Debt • The final agreement on Medicare "doc fix" legislation will reduce Medicare reimbursement for uncollectible bad debt, but not as much as in the bill originally passed by the House last fall. • Section 3201 - Reducing Bad Debt Payments – This provision would phase down the bad debt reimbursements to 65 percent beginning in FY2013 for providers who are currently being reimbursed at 70 percent, while phasing in the reduction to 65 percent over three years for those who are reimbursed at 100 percent of their bad debt. (88%, 76%, 65%)    • Effective for cost reports beginning on or after 10/1/12. • The legislation also extends the therapy caps exceptions process through December 31, 2012.

46. National Issues • Mike Cheek with AHCA will be addressing more of the national issues during the Tuesday morning session.

47. HMS Credit Balance Reviews • HMS has completed their first round of reviews. • Most of the findings have involved • Resident monthly liability in the month moving from Medicare to Medicaid • Medicare Part C Co-insurance paid by Medicaid for dual eligible residents • NCHCFA recently met with the State and HMS on the outstanding issues. • HMS is getting ready to start round two.

48. Medicaid RACs • Medicare RACs have been around for several years, but have been concentrating on hospital issues. • States are required to contract with Medicaid RACs. • NC is preparing an RFP. • Can’t review items that have already been reviewed.

49. The audits of the 2009 cost reports have been called off. The MDS reviews continue. MDS reviews of snapshot dates not used for setting rates are purely educational. Rates are not adjusted. After the M&S audit was completed, they choose multiple REHAB RUGs from the CMI report, asked to see the Start of therapy, END of therapy dates and the log showing they were treated. These are strictly information gathering audits that DMA has asked them to do. It is not reflected on the report she gives to center and she says she has no idea of what the purpose of the audits are. She has just been told to gather the data. Cost Report Audits and the MDS Reviews

50. The Medicaid cost report as you have known it is no more. NCHCFA and other interested parties are currently working with DMA. Moving forward, nursing homes will Use the Medicare cost report, 9/30 year end not required File supplemental schedules to account for certain Medicaid specific items More information to come Medicaid Cost Report Transition