reimbursement update skilled nursing facilities

Reimbursement Update for Skilled Nursing Facilities

December 3, 2013

Christopher J. McCarthy, MBA, CPAPartnerDirector-Health Care [email protected]

Dorothea A. Russo, CPAPartnerHealth [email protected]

2013 Health Care Forum

mailto:[email protected]


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Agenda• Current Medicaid Methodology

• Per Diem Adjustments

• Cash Receipts Assessment

• Third Party Payor Considerations

• OMIG Audits

Medicaid - Overview• Inception to 12/31/85

• Facility-specific prospective cost based methodology – rolling base years• 1/1/1986 – 3/31/2009 Cost-Based Methodology

• Facility-specific trended cost based methodology (PRI document for case mix and 1983 base year costs – patients “categorized” into 1 of 16 groups) CMI 4x/year

• 4/1/2009–12/31/2011 – Rebased Rate Methodology (rates finally issued 6/2011)• Facility-specific cost based methodology that introduced Medicaid-Only and Scale-

back Adjustments (MDS document for case mix and 2002 base year costs – patients “categorized” into 1 of 53 groups )

• 1/1/2012–12/31/20XX - Statewide Pricing Methodology (initial rates issued 6/2012)• Statewide allowable costs produces Mean Price for two Peer Groups (MDS

document for case mix and 2007 base year costs – patients “categorized” into 1 of 53 groups) CMI 2x/year

• 1/1/20XX-??? Medicaid Managed Care• Negotiate Medicaid rates with MLTCs

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The Current Medicaid Methodologyo 1/1/2012 – 12/31/2017* (See Rate Comparison 2012-2014)

Base Year = 2007 Costs

CMI RATE PERIOD

1/2011 1/1/12 – 6/30/12 (PAID)

1/2012 7/1/12 – 12/31/12 (PAID-5% issue)

7/2012 1/1/13 – 6/30/13 (Q4-2013)

1/2013 7/1/13 – 12/31/13 (Q1-2014)

7/2013 1/1/14 – 6/30/14 (?)

1/2014 7/1/14 – 12/31/14 (?)

* Or whenever Medicaid Managed Care rates become effective

Medicaid - Reimbursement with Corridors

Ceiling $127

Mean - - - - - - - - - - - - - - - - - - - - - - - - - - - - $110

Base $99

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The Current Medicaid MethodologyReimbursement without Corridors

Mean - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $110

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o NO CORRIDORS

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Overview of Non-Capital Components of Pricing Methodology for SNFs(Effective January 1, 2012) – Source-NYSDOH Handout (HCS)

Direct Component (50% StatewideDirect Price +

50% Peer Group Direct Price)

WEF Adjustment to Direct Component

(50% Facility Specific WEF + 50% Regional WEF)

Medicaid Only

Case Mix Adjustment

to Direct Component

Indirect Component (50% StatewideDirect Price +

50% Peer Group Direct Price )

WEF Adjustment to Indirect Component

(50% Facility Specific WEF + 50% Regional WEF)

Per Diem add-ons Bariatric ($17) Dementia ($8)

TBI Extended Care ($36) (if applicable)

Non-Comparable Component

Facility-Specific

2014 (Year 3) Transition Per

Diem

Total Operating

Price

Other Per DiemsQuality Measure

5% CMI CapBedhold Adjust

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Statewide/Peer Group Prices Before AdjustmentStarting Point is 2007 Costs

2007 Base Year Costs 2007 2007 Base Year Per Diem

Direct-No B Direct B&D Indirect Days Direct-No B Direct B&D Indirect

HBF/300+ 2,021,456,748 1,994,922,588 1,058,925,166 13,843,911 146.02 144.10 76.49 <300 3,075,091,705 3,031,776,277 1,501,654,653 24,915,472 123.42 121.68 60.27

5,096,548,453 5,026,698,865 2,560,579,819 38,759,383 131.49 129.69 66.06

Per Diem Peer Group (50/50)

Combined HBF/300+ <300 HBF/300+ <300Direct-No B 131.49 146.02 123.42 138.76 127.46Direct B&D 129.69 144.10 121.68 136.90 125.69

Indirect 66.06 76.49 60.27 71.28 63.17

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Peer Group Prices:2012-2017

HBF/300+ <300

Direct-No B Direct B&D Indirect Direct-No B Direct B&D Indirect

Peer Group - 2012

Allowable cost per diem 138.76$ 136.90$ 71.28$ 127.46$ 125.69$ 63.17$ Ceiling application -19.54566% -19.54566% -19.54566% -19.54566% -19.54566% -19.54566%Ceiling cut (27.12) (26.76) (13.93) (24.91) (24.57) (12.35)

Statewide price-2012 111.63 110.14 57.35 102.54 101.12 50.82

Peer Group - 2013

Allowable cost per diem 138.76 136.90 71.28 127.46 125.69 63.17Ceiling application -14.96270% -14.96270% -14.96270% -14.96270% -14.96270% -14.96270%Ceiling cut (20.76) (20.48) (10.67) (19.07) (18.81) (9.45)

Statewide price-2013 117.99 116.41 60.61 108.38 106.88 53.72

Ceiling application 2014 -11.33780% -11.33780% -11.33780% -11.33780% -11.33780% -11.33780%Statewide Price -2014 123.02 121.37 63.19 113.00 111.43 56.00




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Per Diem Adjustments for 2014• Transition Adjustment

• Quality Adjustment

• Bedhold adjustment 1/1/2013 and 4/1/2013 (and beyond)

• Adjustment to Cap case Mix 5%

– Value per case mix point

• Capital Per Diem

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Transition Adjustment

o Transition (to “ease” $ impact of “new” methodology)o Starting Point – July 7, 2011 Medicaid rate

2012 1.75%

2013 2.50%

2014 5.00%

2015 7.50%

2016 10.00%

2017 Transition “completed”

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Quality Adjustment

2014 Nursing Home Quality Pool Methodology

- 14 Quality Measures (60 points)

- Compliance (20 points)

- Potentially avoidable hospitalizations (20 points)

- Rewarding of improvement in scoring over 2013

2014 Rate Effect

- Negative adjustment statewide ($50 million)

- Positive adjustment for facilities in top 3 quintiles

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Adjustment to Cap Case Mix at 5%1/1/2014

before CMI change

1/1/2014 after CMI

change

1/1/2014 limited

Statewide Direct Price 113.00 113.00 113.00

WEF Adjustment 1.0780 1.0780 1.0780

Facility Case Mix Adjustment 1.3223 1.1768 1.2562

WEF and Case Mix Adjusted Price 161.07 143.36 153.02

Adjustment to Cap Case Mix 5.0% 9.66

January, 2012 Limit of 5%Facility Specific Case Mix 1.20 1.1450% Peer Group/50% Statewide Case Mix .907504 .907504Facility Case Mix Adjustment 1.3223 1.2562

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Value per Case Mix Point

Case Mix Index July, 2013 1.0707

Case Mix Index January, 2012 1.2030

Case Mix point change (1.0707-.1.2030) -.1323

Direct Component at 1/1/2014 (before CMI change)

161.07

Direct Component at 1/1/2014 (after CMI change)

143.36

Change in Direct Component 17.71

Value per Case Mix point (17.71/13.23) 1.33

RUG Categ Index

Patient Count

Case mix total

RUG Categ Index

Patient Count

Case mix total

RUX 2.38 0.00 SSA 1.03 17.00 17.51RUL 1.98 0.00 CC2 1.12 2.00 2.24RVX 1.82 0.00 CC1 0.98 5.00 4.90RVL 1.61 0.00 CB2 0.91 2.00 1.82RHX 1.62 0.00 CB1 0.86 2.00 1.72RMX 1.96 2.00 3.92 CA1 0.77 0.00RLX 1.34 0.00 IB1 0.78 1.00 0.78RHC 1.40 32.00 44.80 PE2 0.80 1.00 0.80RHB 1.27 0.00 PE1 0.79 1.00 0.79RMC 1.27 19.00 24.13 PD1 0.72 1.00 0.72RMB 1.22 22.00 26.84 PC2 0.67 0.00RMA 1.17 3.00 3.51 PC1 0.66 0.00RLB 1.15 1.00 1.15 PB2 0.57 0.00SE3 1.70 1.00 1.70 PA2 0.48 0.00SE2 1.37 4.00 5.48 PA1 0.46 1.00 0.46SSC 1.12 20.00 22.40SSB 1.06 6.00 6.36 Total 143.00 172.03

CMI 1.2030

Calculating the Casemix

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Bedhold Adjustment• Per PHL Section 2808(25)(c)• 2013/2014 Budget calls for $40 million savings

– Continue paying Medicaid hospital bed holds at 50%

– Effective 4/1/13 negative per diem will reflect adjustment over the fiscal year 2013/2014

Part B Offset –2012 and After

• Used by Medicaid to “recapture” duplicate payments

• Per day adjusted for each facility’s CMI and WEF– 2012 $ 1.42– 2013 $ 1.50 – 2014 $ 1.57 – 2015 $ 1.59– 2016 $ 1.60 – 2017 $ 1.61

• Most recent talks with OMIG suggest that under Statewide Pricing Part B Offsets are not subject to audit

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Rate Processing Schedule (per DOH)

Description Rate Effective Date

To BUDGET To eMedNY

Notes

UPDATE FOR 07/2012 MDS CENSUS

01/01/201304/01/201301/01/2014

11/29/2013 12/15/2013 Case mix updates limited to 5% pending OMIG review

INITIAL REVISED RATES

01/01/2014 12/20/2013 01/15/2014 Update DRAFT initial rates for: 1. Capital changes due by

12/2/2013

UPDATE FOR 01/2013 MDS

07/01/201301/01/2014

02/15/2014 02/28/2014 Case mix updates limited to 5% pending OMIG review

OMIG audits of 01/2012 & 07/2012 MDS complete

Estimated March with cash impacts Q2

UPDATE FOR 07/2013 MDS

01/01/2014 TBD TBD April 2014

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Third Party Payor Considerations• 2013 Medicaid rate changes for January 1st and July 1st based

on MDS submissions• Cash receipts assessment reconciliations 2011-2013• Results of OMIG MDS audits of January, 2012 and July, 2012

submissions• Based on results of above OMIG MDS Audits consider estimate

for January, 2013 MDS submission (impacts revenue for July 1 – December 31, 2013)

• Status of current OMIG audits other than MDS (e.g. Property, Bedhold, etc.)

• Roll forward impact of previously finalized OMIG audits

Cash Receipts Assessment

• 2010 reconciliation completed and paid in January 2013

• The 2011 per diem was updated to the 2010 reconciled per diem

• The 2012 per diem has not been reconciled and was paid at rate effective 4/1/05

• The 2010 reconciled per diem is the effective billing rate for 1/1/13

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Cash Receipts Assessment

ReimbursableNon-

Reimbursable TotalApril 1, 2011 6.0% 1.2% 7.2%April 1, 2012 6.0% 1.0% 7.0%November 1, 2012 – March 31, 2014 6.0% 0.8% 6.8%

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Capital Per Diem

• Notify DOH of errors via email to [email protected] by December 2, 2013

• Basis for Schedule VI is 2012 RHCF

• 2012 RHCF, Schedule Q – Facility Reported Capital


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Capital Per Diem (continued)

• Important RHCF schedules:– Schedule Q – Facility Reported Capital (new in 2012)– Part II and Part III (if applicable), Schedule 9– Part II and Part III (if applicable), Schedule 10 & 11– Part II and Part III (if applicable), Schedule 15– Part II and Part III (if applicable), Schedule 17– Part II , Schedule 8, 8A & 8D– Part IV, Exhibit A & B– Part IV, Exhibit E– Part IV, Exhibit I– Part I-3

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Appeals• Common Appeal issues (All Sponsorships)

– Property Insurance - if it was reported on a line other then the preprinted line on Part II, Schedule 9

– Movable equipment rentals will not get reimbursed if there are any discrepancies at all between summary schedules and details schedules or equipment isn’t described.

– Real Estate taxes not getting pulled in from the Part III, etc.

– Over reimbursed mortgage-related costs as a result of refinancing

– Mortgage related costs (interest and/or amortization) not included in first year of refinanced debt if DOH doesn’t have evidence of approval.

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Common OMIG Property Audit Adjustments

• Auto rentals for vehicles without a travel log• Real estate tax refunds in subsequent year• Depreciation or rental for phone system• Interest and amortization on refinanced debt not

previously approved• Working capital interest on debt with term in excess of

one year• Maintenance/Supply costs included in ME Lease costs• Any expense that can not be supported by an invoice

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What will OMIG ask for? • Financial information• Related party transactions• Property, plant and equipment details• Statistical information• Mortgage documents and proof of payment• Insurance policies and invoices• Rental contracts and invoices• Health Recruitment & Retention Allowance• Access to independent auditor workpapers• Proof of funding of depreciation (earlier years)• And then some….

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OMIG Audits• OMIG will perform a 2002 base period audit (or a

subsequent year if there was a change of ownership) on the operating costs included in rebased rates effective 4/1/09-12/31/11.

• Cost report used for rebased rates is subject to audit through 12/31/2014 per PHL section 2808-2b(d). (2013/2014 Budget extended this to 2018)

• Currently, OMIG is performing property audits for rate years 2006-2008 with rollforward adjustments through 3/31/09.

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OMIG Audits (cont’d)• Other OMIG audits of nursing facilities:

– Bed hold audits

– Medicaid overpayment (aka NAMI) audits

– January, 2012 and July, 2012 MDS audits (currently being conducted simultaneously)

– January, 2013 and July, 2013 MDS audits

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Medicare PPS Rates FY 2013

• Net increase in rates of 1.3% made up of:– Market Basket Increase of 2.3%– Forecast Error Adjustment of -0.5%– ACA mandated productivity adjustment of -0.4%

• 2% Sequester will continue until further notice– Sequester only reduces payments; does not

change the rates• Labor-Related Share 69.545%

RUG-IV GROUP

10/01/13 Fed.Pay

Rates

10/01/12 Adjusted Fed. Rate

Inc. in Rate

% Change in Rate

RUG-IV GROUP

10/01/13 Fed.Pay

Rates


Inc. in Rate

% Change in Rate

RUX 924.35 900.24 24.11 2.68% HB1 416.87 406.00 10.87 2.68%RUL 904.21 880.62 23.59 2.68% LE2 517.59 504.09 13.50 2.68%RVX 822.74 801.28 21.46 2.68% LE1 432.99 421.69 11.30 2.68%RVL 738.14 718.89 19.25 2.68% LD2 497.45 484.47 12.98 2.68%RHX 745.43 725.98 19.45 2.68% LD1 416.87 406.00 10.87 2.68%RHL 664.85 647.51 17.34 2.68% LC2 437.01 425.61 11.40 2.68%RMX 683.79 665.94 17.85 2.68% LC1 368.53 358.92 9.61 2.68%RML 627.38 611.01 16.37 2.68% LB2 414.85 404.03 10.82 2.68%RLX 600.51 584.85 15.66 2.68% LB1 352.41 343.22 9.19 2.68%RUC 700.76 682.48 18.28 2.68% CE2 461.18 449.15 12.03 2.68%RUB 700.76 682.48 18.28 2.68% CE1 424.93 413.84 11.09 2.68%RUA 585.95 570.66 15.29 2.68% CD2 437.01 425.61 11.40 2.68%RVC 601.17 585.49 15.68 2.68% CD1 400.76 390.30 10.46 2.68%RVB 520.60 507.01 13.59 2.68% CC2 382.62 372.65 9.97 2.68%RVA 518.58 505.06 13.52 2.68% CC1 354.43 345.19 9.24 2.68%RHC 523.84 510.18 13.66 2.68% CB2 354.43 345.19 9.24 2.68%RHB 471.47 459.17 12.30 2.68% CB1 328.25 319.68 8.57 2.68%RHA 415.08 404.25 10.83 2.68% CA2 300.04 292.21 7.83 2.68%

Medicare Prospective Payment System Rates for FY2014 NYC and Westchester CBSA # 35644

RUG-IV GROUP

10/01/13 Fed.Pay

Rates


Inc. in Rate

% Change in Rate

RUG-IV GROUP

10/01/13 Fed.Pay

Rates


Inc. in Rate

% Change in Rate

RMC 460.20 448.19 12.01 2.68% CA1 279.90 272.59 7.31 2.68%RMB 432.00 420.73 11.27 2.68% BB2 318.18 309.87 8.31 2.68%RMA 355.46 346.18 9.28 2.68% BB1 304.07 296.14 7.93 2.68%RLB 447.43 435.75 11.68 2.68% BA2 263.79 256.91 6.88 2.68%RLA 288.30 280.77 7.53 2.68% BA1 251.70 245.13 6.57 2.68%ES3 843.90 821.89 22.01 2.68% PE2 424.93 413.84 11.09 2.68%ES2 660.60 643.37 17.23 2.68% PE1 404.78 394.22 10.56 2.68%ES1 590.10 574.71 15.39 2.68% PD2 400.76 390.30 10.46 2.68%HE2 569.96 555.09 14.87 2.68% PD1 380.62 370.68 9.94 2.68%HE1 473.27 460.93 12.34 2.68% PC2 344.35 335.37 8.98 2.68%HD2 533.70 519.78 13.92 2.68% PC1 328.25 319.68 8.57 2.68%HD1 445.07 433.46 11.61 2.68% PB2 291.98 284.37 7.61 2.68%HC2 503.48 490.36 13.12 2.68% PB1 279.90 272.59 7.31 2.68%HC1 420.90 409.92 10.98 2.68% PA2 241.63 235.32 6.31 2.68%HB2 497.45 484.47 12.98 2.68% PA1 231.56 225.51 6.05 2.68%

Medicare Prospective Payment System Rates for FY2014 (NYC and Westchester CBSA # 35644) – cont’d

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Contact Information

15 Essex RoadParamus, NJ 07652201.712.9800

555 Hudson Valley Avenue New Windsor, NY 12553845.220.2400

Christopher J. McCarthy, Partner [email protected]

914.341.7018

500 Mamaroneck AvenueHarrison, NY 10528 914.381.8900

665 Fifth AvenueNew York, NY 10022212.286.2600

One Stamford LandingStamford, CT 06902203.323.2400

Dorothea A. Russo, Partner [email protected]

914.341.7087

www.ODPKF.com

100 Great Meadow RdWethersfield, CT 06109860.257.1870

Keith Solomon, Partner [email protected]

914.341.7078



http://www.pkfod.com/


reimbursement update skilled nursing facilities

Business

cash receipts

sheet1base

indirect componentscorridor

annual cost

case mix applied

casemix updates

case mix point

case mix results