1. Community Forum R EHOBOTH M C K INLEY C HRISTIAN H EALTH C ARE S ERVICES February 12, 2014

2. RMCHCS Board of Trustees- Officers Priscilla Smith, Chair; Business Owner – 2006 Kathy Head, RN, MSN, Vice Chair; Nursing Program Instructor– 2007 Yogash Kumar, Secretary; Business Owner, City Council member – 2011 David Bischoff, Treasurer; Business Owner – 2009 Michelle Stam-MacLaren, MD, RMCHCS Chief of Staff; Pediatrician – 2010 2

3. RMCHCS Board of Trustees- County Appointees Mary Ann Armijo, Media Executive – 2014 Dave Dallago, Business Owner – 2014 Brett Newberry, Professional Services Owner – 2014 Yogash Kumar, Business Owner, City Council member – 2011 3

4. RMCHCS Board of Trustees- Community Members David Bischoff, Business Owner – 2009 Angelo DiPaolo, Public School Administrator (retired) – 2011 Jennifer Dowling, Business Owner – 2009 Sue Eddy, Private School Department Manager – 2009 Kathy Head, RN, MSN, Nursing Program Instructor– 2007 John Luginbuhl, Pastor – 2012 Priscilla Smith, Business Owner – 2006 Shannon Tanner, Business Owner – 2009 4

5. RMCHCS Administration Barry L. Mousa, FACHE Chief Executive Officer High School: New Bremen, Ohio Bachelors Degree: Indiana University, IPFW, Ft Wayne, Indiana Masters Degree: Trinity University, San Antonio, Texas Professional Certifications: Certified Public Accountant (inactive) Board Certified Health Care Executive Health Care Experience: Florida, Georgia, Illinois, Indiana, Louisiana, New Jersey, New Mexico, Ohio, Texas, Virginia 5

6. RMCHCS Administration Robert Baker, Director of Plant Operations – 2011 Ina Burmeister, Chief Development Officer – 2008 Bart Hansen, Chief Financial Officer – 2011 John Mezoff MD, Chief Medical Officer – 2013 Mike Nye – Vice President, Professional Services and Compliance Officer – 1983 Nancy Santiesteban – Chief Nursing Officer – 1998 Kimothy Sparks – Chief Quality Officer – 2013 Tracy Towns – Chief Human Resources Officer - 2012 6

7. RMCHCS Department Directors Jim Bancuk – Clinic Operations - 2013 Larry Booker – Diagnostic Imaging - 2009 Donna Corley – Emergency Services - 1989 Rosemary Coyne – Home Health/Hospice - 2010 Melinda Graton – Health Information Management (interim) - 2014 Phillip Hager – Patient Financial Services (interim) - 2013 Patty Johnson – Surgical Services (staff interim) - 1994 Harry Kallipolitis – Case Management - 2013 Misty Leyba – Medical/Surgical/ Pediatrics/ICU - 1998 Cassandra Lopez – Laboratory - 1997 Art Macias – Pharmacy - 1996 Tom Gonzales – Information Technology - 1996 Edward Placencio – Materials Management - 1992 Doug Turner –Cardiopulmonary, Physical and Respiratory Therapy, Sleep Lab - 2008 7

8. Key Issues Being Addressed Revenue and Services Medicaid Program Reimbursement Shortfall Sole Community Provider Payment Program Emergency Services Decisions that Positively Affect the Medicaid “Gap” Critical Access Hospital Designation East Campus 8

9. RMCHCS Services -Cardiopulmonary / Cardiac Rehabilitation -Clinic Services—medical and surgical specialties -Counseling - Outpatient Behavioral Health -Diagnostic Imaging (MRI, CT, Mammography, Ultrasound, X-Ray) -Emergency Services -Home Health / Hospice - -ICU -Laboratory -Medical / Surgical -Pediatrics -Pharmacy -Physical and Speech Therapy -Respiratory Therapy -Sleep Lab -Surgery -Women’s Health 9

10. RMCHCS Statistics 201120122013 Utilization Statistics Acute Inpatients3,2873,0412,628 Births495505486 Average Length of Stay 3.043.002.89 Emergency Room Visits 22,13821,88420,300 Inpatient Surgeries1,004954554 Outpatient Surgeries1,8591,7921,705 10

11. RMCHCS Revenue Sources 201120122013 Net Patient Revenue $ 49.3 M $ 47.1 M $ 42.4 M Gross Patient Revenue by Payor Source Medicare 33%36%34% Medicaid 29%28%29% BCBS/Commercial 31%28% Self-Pay 7%8%9% 11

12. Non-Patient Supplemental Payments 201120122013 Sole Community Provider payments All of New Mexico $ 278.8 M $ 220.7 M $ 159.3 M RMCHCS $ 11.4 M $ 8.4 M $ 5.7 M % of State 4.1%4.0%3.6% % of Net Patient Revenue 23%19%13% Mill Levy Receipts $ 1.6 M $ 1.5 M 12

13. RMCHCS Revenue Challenges 201120122013 Revenue Cycle Woes: Claim Filing Errors $ 3.5 M $ 4.7 M $ 1.9 M Filed, Not Medically Necessary $ 0.7 M $ 1.2 M $ 0.6 M Other $ 0.0 M $ 0.3 M Health Fair / POS Discounts $ 0.0 M $ 0.4 M $ 0.3 M Total $ 4.2 M $ 6.6 M $ 3.1 M 13

14. RMCHCS Underfunding Impact 14 YEAR Net Cost of Medicaid Care and Inpatient Indigent Care SCP Payments Net Underfunding (made up by other payers and reserves) 2011 $ 15.7 M $ 11.4 M $ 4.3 M 2012 $ 12.1 M $ 8.4 M $ 3.7 M 2013 $ 8.5 M est. $ 5.7 M $ 2.8 M est.

15. Sole Community Provider Program -1 Since 1994 the Sole Community Provider program has been a core funding mechanism to supplement Medicaid payments for many New Mexico hospitals June 2011—HSD suspends SCP payments o CMS alleges that sources of funds from counties were non-bona fide donations or in-kind transfers from hospitals o SFY 2011 SCP total = $279 M January 2012—HSD agrees to settlement with CMS o NM hospitals to repay $7.9 M of CMS-calculated $53 M overpayment (for 2009). NMHA says $1 B SCP overpayments for 2000-2008. o RMCHCS repays $843,000 for 2009 (SCP reduced $2.5 M in SFY 2012) o SCP payments restored at a lower amount—SFY 2012 = $221 M 15

16. Sole Community Provider Program -2 December 2012—HSD suspends SCP payments o 2 nd time in 18 months o CMS determines SCP payment errors in HSD’s historical calculations o CMS investigation jeopardizes entire SCP program May 2013—HSD agrees to settlement with CMS o SCP program transitions under Centennial Care waiver effective 1/1/14 o CMS agrees to not review other years funding source and payment calculations. January 2014—Centennial Care SCP program for 28 rural hospitals plus UNMH, if the underlying funds source is predictable and stable o Safety Net Care Pool (SNCP) program = $192.1 M total amount o $68.9 M for indigent care (maximum CMS would permit) o $132.2 M for Medicaid Inpatient rate increase (HSD estimates ~ 75%) 16

17. Safety Net Care Pool Funding Plan House Bill (HB) 350 and Senate Bill (SB) 368 establish county gross receipts tax equivalency—generates $36.4 M Governor Martinez proposes $9 M of general state funds to augment county funding Total of $45.1 M needed by state to maximize federal match—total funds $192.1 M 17

18. Emergency Services Emergency Physician Providers contacted – Apogee – EmCare – Hospital Physician Partners (Lovelace Health System provider) – Pegasus Emergency Management (CHS system provider) – Presbyterian Hospital & Healthcare Services – Schumacher Group – University of New Mexico Medical Group 18

19. Three Ways to Positively Affect the “GAP” in MEDICAID reimbursement Reduce overall costs of operations— – costs for the proportionate share of Medicaid will be reduced Decrease Medicaid volume— – direct reduction on Medicaid costs, reimbursement gap, and losses Increase revenue from non-Medicaid volume— – profit generated from these services will reduce the Medicaid reimbursement gap 19

20. Increasing Medicare Reimbursement by Critical Access Hospital Designation -1 Critical Access Hospitals (CAH) receive cost-based reimbursement from Medicare versus prospectively determined inpatient and outpatient fixed reimbursement rates. Some hospitals find that cost-based reimbursement is advantageous, and some will not. Each hospital must perform its own financial analysis. The Critical Access Hospital program is a Medicare reimbursement status only. Critical Access Hospital is a change in hospital provider designation for Medicare, and not a downgrade. 20

21. Conversion to Critical Access Hospital (CAH) status does not mean losing services. Many hospitals can expand services knowing that Medicare costs will be 100% reimbursed. CAHs must maintain an annual average length of stay of 96 hours or less for their acute care patients. CAHs may have a maximum of 25 acute care inpatient beds. CAHs must provide 24-hour emergency services. As of June 30, 2013, there are 1,332 certified Critical Access Hospitals located throughout the United States and nine in New Mexico. 21 Increasing Medicare Reimbursement by Critical Access Hospital Designation -2

22. East Campus Changes Behavioral Health Services (BHS) Service Lines o inpatient addictions recovery program o outpatient individual therapy counseling The BHS service lines have lost significant money for many years. Medicaid volume in Addictions Program = 94% in 2013 The buildings at East Campus are aging and very expensive to maintain Inpatient Addictions Recovery program closing 2/28/14 Outpatient Therapy Counseling relocating to Main Campus on Red Rock Drive 22

23. Rehoboth McKinley Christian Health Care Services 23