Reimbursement Primer for Compliance, Ethics and Legal Reimbursement Primer for Compliance, Ethics and Legal Officers: “Everything You Have Always Wanted to Know Officers: “Everything You Have Always Wanted to Know

AboutAbout Reimbursement but Were Afraid to Ask.” Reimbursement but Were Afraid to Ask.”

Post Acute Care: Nursing Facilities,Skilled Nursing Facilities, Assisted Living

April 17, 2007April 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, LLPModerated by Lawrence W. Vernaglia, Foley & Lardner, LLP

Session ObjectivesSession Objectives

► Gain insight into the market for the primary Gain insight into the market for the primary care sectors for Post Acute Care care sectors for Post Acute Care

► Obtain a general understanding of the Obtain a general understanding of the primary reimbursement streams for skilled primary reimbursement streams for skilled nursing facilities (“SNF”), assisted living nursing facilities (“SNF”), assisted living faciities (“ALF”), and nursing homes (“NH”).faciities (“ALF”), and nursing homes (“NH”).

► Gain insight into government Gain insight into government reimbursement compliance issues in this reimbursement compliance issues in this marketplacemarketplace

Post Acute CarePost Acute Care

►Discussion will be segmented into 3 Discussion will be segmented into 3 areas:areas: Industry Overview – Scott PlumbIndustry Overview – Scott Plumb

High Level Revenue Cycle Overview – JanineHigh Level Revenue Cycle Overview – Janine

Reimbursement Compliance Issues – Lynda Reimbursement Compliance Issues – Lynda

HilliardHilliard

► Questions and Answers from ParticipantsQuestions and Answers from Participants

Industry OverviewIndustry Overview

Provider Payer Mix ComparisonProvider Payer Mix ComparisonNursing homes are uniquely dependent upon Medicaid Nursing homes are uniquely dependent upon Medicaid

to provide quality health careto provide quality health care

Medicare49%

Medicaid34%

Private Pay/Other17%

Other7%

Medicaid12%

Private Pay40%

Medicare41%

Private Pay15.0%

Medicare15.9%

Other Payers (Insurance, Hospice)

1%

Medicaid 68.1%

Nursing Home Payer Mix Home Health Payer Mix

Acute Hospitals Payer Mix

$0.71

$0.13

$0.10$0.06

Based on Division of Health Care Finance and Policy nursing facility cost reports

The Nursing Facility “Dollar”:The Nursing Facility “Dollar”:Breakdown of Nursing Home SpendingBreakdown of Nursing Home Spending

Salaries and benefits represent 71 cents of every dollar Salaries and benefits represent 71 cents of every dollar spent by nursing facilitiesspent by nursing facilities

All Staff Wages & Benefits

General Expenses/Operating(Supplies, Food, Utilities & Liability Insurance)

Physical Plant(Mortgage and Property Taxes)

Administration (Administrator, Accounting, Clerical)

50,000 Nursing Facility Employees50,000 Nursing Facility EmployeesThe nursing facility provider community is a major The nursing facility provider community is a major

economic engineeconomic engineand is the largest employer in some communitiesand is the largest employer in some communities

Dietary10%

Laundry3%

Housekeeping6%

Social/ Medical7%

Direct Care Nursing Staff64%

Administrative8%

Maintenance

2%

Source: DHCFP Nursing Facility Annual Cost Reports

32,000

Social/Medical

$12.64$13.23

$14.28$14.87

$15.44$15.90

$16.40$16.88

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

1999 2000 2001 2002 2003 2004 2005 2006

Nursing Facility Direct Care Nursing Staff Nursing Facility Direct Care Nursing Staff Median Wage Increases:1999–2006 Median Wage Increases:1999–2006

Nursing facilities are good employersNursing facilities are good employers Average annual increase of 4.2% Average annual increase of 4.2%

$12.64$13.23

$14.28$14.87

$15.44$15.90

$16.40$16.88

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

1999 2000 2001 2002 2003 2004 2005 2006

Sources: MECF Annual Wage Surveys 1999-2006

4.6%

7.9%4.1%

3.8%3.0%

3.1%3.0%

3,700 Nursing Facility Direct Care 3,700 Nursing Facility Direct Care Staff Vacancies Staff Vacancies

Despite Investment in Staff Wages & Benefits, Significant Despite Investment in Staff Wages & Benefits, Significant

Vacancies ExistVacancies Exist

Certified Nurse Aide1,900

Licensed Practical Nurse800

Registered Nurse1,100

Sources: DHCFP Annual Nursing Facility Cost Reports and MECF Annual Wage Surveys

Certified Nurse Aide

1,800

Average Daily Minutes of Nursing Average Daily Minutes of Nursing Care Reimbursed By MedicaidCare Reimbursed By Medicaid*1*1

197.0

185.9

196.3194.2

190.6

175

180

185

190

195

200

FY95-97 FY98-00 FY01-03 FY04-06 FY07

Movi

ng A

vera

ge M

MQ

Sco

re

Unaudited Management Minutes

*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).

Source: MassHealth and Division of Health Care Finance and Policy; Prepared by: Massachusetts Extended Care Federation

Medicaid Nursing Facility Medicaid Nursing Facility Resident AcuityResident Acuity – 2006 – 2006

Nearly all nursing home residents require extensive Nearly all nursing home residents require extensive nursing carenursing care

26.0%

15.0%

3.0%

13.0%

20.0%

24.0%

0%

5%

10%

15%

20%

25%

30%

Category 1 Category 2 Category 3 Category 4 Category 5 Category 6

% 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+

Source: MassHealth Unaudited Management Nursing Minutes Score

Minutes (Median) 30 81 142 199 244 288

Nursing Facility MEDICAIDNursing Facility MEDICAIDUNCOMPENSATED CARE Per Day, 1999-2006UNCOMPENSATED CARE Per Day, 1999-2006

$500,000 annual Medicaid loss per Medicaid participating nursing $500,000 annual Medicaid loss per Medicaid participating nursing

facilityfacility

$15$16

$18

$21$20

$16

$18

$21

$0

$5

$10

$15

$20

$25

1999 2000 2001 2002 *2003 2004 2005 2006(Proj)

Sources: 1999-2004 BDO Seidman Reports; MECF Estimates 2005-2006

*User Fee Program Implemented (2003); User Fee Program Maintained In Subsequent Years

Consumer Satisfaction in Consumer Satisfaction in Massachusetts Nursing HomesMassachusetts Nursing Homes

Independent state survey shows nursing facility consumers are Independent state survey shows nursing facility consumers are highly satisfiedhighly satisfied

87%

13%

0% 0% 0%

0

10

20

30

40

50

60

70

80

90

100

Very Satisfied Satisfied Neutral Dissatisfied Very Dissatisfied

Source: Massachusetts DPH Nursing Home Satisfaction Survey Results, December 2005

% of nursing homes

Consumers who are:

Nursing Facility Spending As a Percentage Nursing Facility Spending As a Percentage of Total Medicaid Spending: FY1999-FY2006of Total Medicaid Spending: FY1999-FY2006

22.5%

24.3%

26.4%25.6%

25.7%

28.2%

30.1%

31.5%

22

23

24

25

26

27

28

29

30

31

32

1999 2000 2001 2002 2003 2004 2005 2006

% 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

Continuum of Long Term CareContinuum of Long Term Care

► Short Term CareShort Term Care► Hip FracturesHip Fractures► Knee Knee

ReplacementsReplacements► StrokeStroke► Cardiac DiseaseCardiac Disease

► Long Term CareLong Term Care► Alzheimer’s DiseaseAlzheimer’s Disease► Advanced DementiaAdvanced Dementia► Multiple IllnessesMultiple Illnesses► Congestive Heart Congestive Heart

FailureFailure► Advanced DiabetesAdvanced Diabetes► Neurological (MS, Neurological (MS,

Severe Brain Injury)Severe Brain Injury)► HospiceHospice

At Home:Routine Care

At Home:Informal Support

At Home:Formal Support

AssistedLiving

Facility-Based Care

High Level Revenue CycleHigh Level Revenue Cycle

Pre-Admission ChecklistPre-Admission Checklist► Review and Log ReferralReview and Log Referral► Verify BenefitsVerify Benefits► Co-InsuranceCo-Insurance► Medicaid – Eligibility Date/TypeMedicaid – Eligibility Date/Type► Managed Care – PolicyManaged Care – Policy► Hospice – ProviderHospice – Provider► Other – Review with AdministratorOther – Review with Administrator► Price Out P.O. MedicationsPrice Out P.O. Medications► Call for IV Medication PricingCall for IV Medication Pricing► Review Clinical Information with DON or designeeReview Clinical Information with DON or designee► Review Whole Referral with Administrator/COOReview Whole Referral with Administrator/COO► Offer Bed Immediately for ApprovalsOffer Bed Immediately for Approvals► Contact Chief Clinical Officer for DenialsContact Chief Clinical Officer for Denials► Admissions Stand Up MeetingAdmissions Stand Up Meeting► Assign Guardian AngelAssign Guardian Angel► Sign Resident InSign Resident In

Payor MixPayor Mix

►MedicareMedicare►HMO/Managed CareHMO/Managed Care►PrivatePrivate►MedicaidMedicaid

Special PopulationsSpecial Populations

►PalliativePalliative►HospiceHospice►HIVHIV

Billing CycleBilling Cycle

►Pre-billing for:Pre-billing for: PrivatePrivate Patient Paid Amount (PPA)Patient Paid Amount (PPA) HMO/Managed CareHMO/Managed Care

►Prior AuthorizationPrior Authorization

Medicare/MedicaidMedicare/Medicaid►Verifying level prior to actual billingVerifying level prior to actual billing

Rebilling and ReconciliationRebilling and Reconciliation

►Credit BalancesCredit Balances►AdjustmentsAdjustments►Denied or Suspended ClaimsDenied or Suspended Claims

Reimbursement Compliance Reimbursement Compliance IssuesIssues

SNFs - Focus of 2007 OIG Work PlanBilling/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

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

SNFs - Focus of 2007 OIG Work Plan

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

Assisted Living Facilities

► Primarily Private PayPrimarily Private Pay► Medicaid Nursing Home WaiverMedicaid Nursing Home Waiver

Future State Future State Need to set up systems for monitoring coverage Need to set up systems for monitoring coverage

requirements and on-going eligibilityrequirements and on-going eligibility

► Eligible for certain Part A, Part B and HMB Eligible for certain Part A, Part B and HMB benefits in their homebenefits in their home Home Health services – Part A/BHome Health services – Part A/B Hospice Medicare Benefit – ALF = HomeHospice Medicare Benefit – ALF = Home

Nursing Homes

►Primarily Medicaid and Private PayPrimarily Medicaid and Private Pay►Medicare Part B CoverageMedicare Part B Coverage

For those NH patients who have exceeded For those NH patients who have exceeded their 100 day SNF benefit, they can receive their 100 day SNF benefit, they can receive Part B services, e.g, Rehab Services:Part B services, e.g, Rehab Services:

►Based on Medicare eligibility (enrolled in Part B)Based on Medicare eligibility (enrolled in Part B)►Documentation supports medical necessityDocumentation supports medical necessity►Physician orders are present and meet Physician orders are present and meet

reimbursement requirementsreimbursement requirements

Question and Answer Question and Answer

SessionSession

► 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, Moderated by Lawrence W. Vernaglia, Foley & Lardner, LLPLLP