1. Presented by: Lynda Laff Pat Laff Laff Associates 2011 2011 Annual Meeting Want To Improve Your Financial Outcomes – Manage Smarter! 1

2. Managing Smarter  Efficient Home Care Means…  Less care?  Fewer staff?  Cut middle management?  Eliminate PI programs?  Hiring freeze?  Eliminate all educational travel?  No IT system upgrades???  No “tools”? REALLY? Laff Associates 20112

3. How Did We Get Here?  Escalating health care costs – all sectors of the delivery system  CMS identified home care “behavioral changes” to influence payment  Practice variation among providers  Continued potentially avoidable events  Slow outcomes improvement  Continued re-hospitalization Laff Associates 20113

4. Continued Increase In Home Health Care Utilization 19972000*20091997– 2000 2000– 2009 Agencies10,9177,52810,961-31%46% Total spending (in billions)$17.7$8.5$18.9-52%123% Users (in millions)3.62.53.3-31%32% Number of visits per user72.636.839.4-49%7% % of FFS beneficiaries who used home health services 10.5%7.4%9.4%-30%27% Number of visits (in millions)258.290.6129.6-65%43% Visit type (percent of total) Skilled Nursing41%49%55% Home Health Aide48%31%16% Therapy10%19%28% Medical Social Services1% Laff Associates 20114

5. Costs Increase But… Outcomes Do Not Improve  Costs continue to escalate with little improvement in outcomes  Major variations in the cost of care delivery vs. patient outcomes  No substantial improvement in re-hospitalization rates  High numbers of potentially avoidable events  Inadequate communication and coordination of patient care Laff Associates 20115

6. Cost Savings Cost of hospital readmissions$15 Billion Annually Potentially avoidable hospital readmissions13.3% Savings if potentially avoidable hospital readmissions were prevented $12 Billion Annually 6Laff Associates 2011

7. Statistics Don’t Lie Medicare hospital patients in 2006 – 2007, readmitted for the same conditions that prompted their initial hospitalization” (AHRQ 2010) 25% Medicare hospital patients were readmitted in 30 days in 2009 20% Medicare patients re-hospitalized within 90 days 34% Medicare patients experiencing multiple hospital admissions (AHRQ, 2010). 42% Medicare patients experiencing multiple emergency department (ED) visits. (AHRQ, 2010). 38% 30-day Medicare readmission rates varied (2009) http://medpac.gov/documents/Jan11_RegionalVariation_report.pdf 12.9% Oregon 22.7% D.C. 7Laff Associates 2011

8. MedPAC Findings  Volume of services continued to rise  Beneficiaries without a prior hospitalization account for a rising share of episodes *  Changes in therapy distribution  “Providers target therapy visit thresholds used to adjust home health payments”.  “Volume changes since implementation of PPS provide evidence of providers targeting the ranges that appear most profitable”.  Conclusion: overutilization and inadequate care FYI- Check out your coding process and marketing strategies! Laff Associates 20118

9. MedPAC Recommendations 1.Increased medical review in counties with aberrant home health utilization; suspend payment and limit provider enrollment. 2.Establish a per episode co-pay for home health episodes that are not preceded by hospitalization or post-acute care use. 3.Begin a two-year rebasing of home health rates in 2011 for implementation in 2014 4.Modify the home health payment system to protect beneficiaries from stinting or lower quality of care in response to rebasing.. Laff Associates 20119

10. CMS Proposed Rule 2012 1.Base rate reduction of to $2,112.37 from $2,192.07 ($79.70 or 3.64%) 2.Revise the case weight structure to decrease emphasis on therapy thresholds and misuse of HTN codes  Eliminate HTN codes 401.1, 401.9 from case mix  Redistribute dollars/weights for clinical and functional levels  Remove weighting of therapy thresholds  Decelerate therapy resources with higher weights Laff Associates 201110

11. Manage Smarter  To be profitable management must:  Know what it costs to provide services — by discipline  Monitor and manage ALL aspects of agency operations from intake to billing  Create appropriate efficiencies  Prevent redundancy and unnecessary hand-offs  Promote standardization for entire agency Laff Associates 201111

12.  Clinical Management Information  Key Indicators  Routine Reports  Education  Clinical assessment  OASIS Accuracy  Supervision & Oversight  Documentation Timeliness  Care Plan Development  Clinical Quality - Accuracy  Continuity  Case management  Clinical model  Accountability/ Responsibility  Reward / incentive  Corrective Action Manage Smarter Laff Associates 201112

13. Smart Moves  Patient Centered Care  Patient Outcomes at or above state and national averages  End result outcomes  Process measures  HHCAPS  Best Practice implementation  “Right-size”  May or may not add or eliminate positions  Focus on function and responsibility  Invest in people  Right person for the position  Invest in education Laff Associates 201113

14. Smart Moves  Eliminate “warm body syndrome”  Stop “fixing”  Implement and integrate Telehealth  Increase focus on preventing emergent care  Increase focus on timely intervention and preventing Potentially Avoidable Events  Increase efficiency by increasing case capacity of case manager  Decrease unnecessary utilization Laff Associates 201114

15.  Case Weight  Case weight variance – SOC to EOE less than 2%  EOE case weight - (NOT SOC) is the case weight to “hang your hat on”  % of re-certifications and LOS  Worry if you have a LOS over 60 days!  Visit Utilization Averages  Ratio nursing/therapy - shoot for 5-7 SN vs. 3-4 therapy  Average visits per episode  Worry if average total visits per episode is over 17  Be aware that it must be improved if average IS 17 Management Reports / Statistics Laff Associates 201115

16. Management Reports / Statistics  Actual Revenue versus Anticipated Revenues  Downcodes  Actual revenue = EOE  Timeliness of RAP Submission  Set a standard of 7-14 days  % of Therapy Visits per Threshold  Look for therapy threshold “clusters” (will likely disappear in 2012) Laff Associates 201116

17. Management Reports / Statistics  Productivity by discipline  Actual # of patients visited (not weighted)  Cases Managed per Clinician  Goal of 20 – 25 (without telehealth)  Goal of 25-30 (with telehealth)  WHO IS REALLY MANAGING THE PATIENT?  OASIS Errors by Clinician  You cannot afford repeated errors! Laff Associates 201117

18. Smartest Moves  Productivity expectations  SN -Minimum average of 5 actual visits per day – 6 – 6.25 weighted visits  PT – Minimum average of 5.5 actual visits per day – 6.5 weighted visits  Supervisor/Manager – 1 per 5-7 FTEs (depends on function)  OASIS Reviewer – w/data manager - 75 - 85 patients  Adequate OASIS review process  Data management tool to decrease review time and increase accuracy Laff Associates 201118

19. Management Statistics  OASIS Corrections Completed  Do you ask for justification when errors not corrected?  Outcomes Improvement  Patient Declines – actual or documentation?  Potentially Avoidable Events  2011 Surveyor Guidelines  Tier I PAEs  Emergent care for injury caused by a fall at home  Emergent care for wound infections, deteriorating wound status. Laff Associates 201119

20. Potentially Avoidable Events  Tier 2 PAEs  Emergent Care for Improper Medication Administration, Medication Side Effects  Emergent Care for Hypo/Hyperglycemia  Substantial Decline in ≥ Three Activities of Daily Living  Discharged to the Community Needing Wound Care or Medication Assistance  Discharged to the Community Needing Toileting Assistance  Discharged to the Community with Behavioral Problems  Have you audited each of them?  Are your audits documented?  What have you done to prevent them in the future? Laff Associates 201120

21. You May Be At Risk If….  A review of operations and records indicates presence of one or all of the following;  Many OASIS item inconsistencies  Large variance in SOC/EOE  DX Coding errors  Very low average EOE case weight - 1.100  High LUPA rate – over 12%  Higher than average therapy utilization  LOS average over 60 days / multiple re-certifications  Multiple recertifications per patient with “rotating primary DX”  Skilled service provided to large % of patients is “Observation & Assessment” Laff Associates 201121

22.  Primary case management –  Clinician – with patient contact  May be RN or PT  Must be accountable for patient and financial outcomes  Accurate assessment  Appropriate care plan  Constant knowledge of;  Goals of care  Projected visits vs. actual  Team performance – Therapists must be included in the team  Patient response to care  Need for change in plan Accountability Laff Associates 201122

23. Smart Moves Accuracy  OASIS Accuracy  Who is reviewing the OASIS?  Is that a primary function?  Is that individual qualified? - RN COS-C  Manual review or Data Scrubber?  Duplicative functions  Corrections versus consequence….  Management oversight Laff Associates 201123

24.  Adequate education  Validate and reinforce  How do you know?  What checks are in place?  How long does it take?  Who is validating what?  Were the suggested corrections actually made?  What “tools” do you use?  Are there repeated errors? If so – WHY?  Repeated errors cost money Smart Moves Laff Associates 201124

25. Do You Ever Have Enough Staff?  How do you know????  It depends……..  Clinical Model  Agency Size and Scope  Geography  Volume  Paper or Point of Care  Clerical versus Clinical Function Laff Associates 201125

26. When is Enough Enough?  The Clinical Director comes to you and says “I don’t have enough nurses to see all these new patients. What’s the first thing you do? a. Call a temp agency b. Put an add in the paper c. Review statistics Laff Associates 201126

27. Need More Staff???  Review Statistics!!!  Validate Need Before You Jump the Gun!  Must ensure you are adequately staffed…but not over staffed!!!  Management  Field Staff Laff Associates 201127

28. Staffing-Statistics to Review  Number of ACTIVE patients on your census list  “Clean” census list  All discharges removed at least weekly  Identify why “old” patients remain – someone is not “managing” well…  Expectations for staff productivity  Visits per day, per week  Actual performance of staff – how many actual un- weighted visits per day did they perform last week?  Identify “weakest links” and investigate why…. Laff Associates 201128

29. Standardize Productivity  Do you expect the same level performance from each clinician?  If not – why not?  Are your expectations per clinician met?  Are they reasonable? Maybe too reasonable???  Do you use remote monitoring?  Do you supervise, monitor and enforce the expectations?  Or are you using the “warm body approach?”  Is there a consequence for non-performance? Laff Associates 201129

30. Set Realistic Expectations  Number of visits per day is dependent upon your clinical model;  Do your field nurses case manage a census of patients”  If so – is the number consistent among your staff?  Do you have admission nurses?  Do you use a point of care documentation system?  How many miles does a clinician average per day/week?  How are they compensated?  How often are the patients’ care case conferenced? Laff Associates 201130

31. Smartest Moves…It Depends…  Primary Care Case Management  Clinician manages – 20 – 25 patients…it depends….  Effective use of Telehealth will increase clinician case capacity  Responsible for entire episode of care  Responsible for patient and financial outcomes  Don’t come into the office to get NRS  Adequate supervision  Supervision – primary responsibility  Ability to enforce process and policy for productivity, OASIS corrections, appropriate care delivery Laff Associates 201131

32. Financial Achieving Positive Financial Outcomes Let’s talk about controlling costs….  Direct Cost per Visit by Discipline  Compensation methodology and incentives  Productivity and efficiency of staff  Case Capacity  Outcome achievement  Consider a Weekender Program!  Appropriate utilization of services and supplies  Frequencies and durations  Provision of supplies  Clinical oversight Laff Associates 201132

33. Financial Achieving Positive Financial Outcomes  Gross profit issues – Control the Direct Cost/Visit & NRS  Direct Costs are the majority of agency’s total operating expenses  The majority of the direct cost/visit is compensation and related taxes (staff and direct supervision)  The cost/visit of premium-based fringes is directly proportional to visits made  The cost of mileage/auto reimbursement is directly related to geographically sequential patient scheduling, the size of the territory and a global vision of the entire week  An agency specific formulary and trunk supply protocol, electronic ordering with independent oversight and patient specific direct delivery reduces costs and increases productivity Laff Associates 201133

34. Weekender Program  Begins Friday at noon..ends Monday at noon  Friday admissions – patients with weekend follow-up visits  Monday morning conference call with weekday RNs  Converts Agency from 5 days/ week plus weekends to 7 days/week  Frequencies spread over 7 days, not just 5 days  Do all weekend visits  Takes weekend on-call  Eliminates weekday staff weekend rotation and compensatory time Laff Associates 201134

35. Weekender Program  Shares case management responsibilities with weekday RN – patients with weekend frequencies  Weekend differentials apply  Considered full-time for Fringe Benefits Laff Associates 201135

36. Financial Achieving Positive Financial Outcomes Who owns the patient?  Using a combination of Admission and Visit RNs /LPNs challenges both good clinical and financial outcomes  Lacks care consistency and continuity  Limited, if any, patient care oversight  Cause of patient dissatisfaction  Primary Care Case Management achieves all of the desired patient care outcome goals and is the best approach towards best financial outcomes  Completely integrates with incentive compensation for both the field clinician and their immediate supervisor! Laff Associates 201136

37. Financial Achieving Positive Financial Outcomes  Align Clinical and Case Conference Models with Compensation!  Incentive Compensation…  Determines ownership of the patient, resource utilization and care oversight and outcomes achieved  Matches clinician responsibilities and achievements  Not based upon the length of time or just a fixed salary to accomplish their patient needs  Reinforces consistency and continuity of patient care  Reduces the direct cost of care for those disciplines Laff Associates 201137

38. Financial Achieving Positive Financial Outcomes Key Ingredients!  Effective Clinical Management (Supervisory) staff  Primary Case Management  Case Conference Model – Controls visit utilization  Every Patient…Every 14 days from SOC date!  Reviews prior 14 days utilization and outcome achievement  Plans next 14 days utilization and outcome goals  Tools for efficiency  Laptops with power cords to car power source and air-cards  Smart cell phones  Patient specific electronic ordering and delivery of NRS Laff Associates 201138

39. Financial Achieving Positive Financial Outcomes Primary Care Case Managers are responsible for the:  Case Management of their patients  Primary visits, including admission, resumptions and recerts, most follow-ups and the discharge.  Achieve the desired patient outcomes and HH-CAHPs results  Self scheduling!  Places responsibility where it belongs  Provides for more autonomy and control of clinician’s day…  Eliminates the cost of schedulers Laff Associates 201139

40. Incentive Based Compensation  Compensates the staff for what they do, not for how long it takes them to complete what they do!  Rewards efficiency, productivity, capacity and clinical (HH-CAHP) outcomes achievement  Improves team chemistry…Encourages under- performing staff to improve or seek a successful career elsewhere  Assures that clinicians meet and exceed individual productivity and case capacity goals  Applies to Weekender staff IT WORKS! Laff Associates 201140

41. Incentive Based Compensation  Can apply to all disciplines, depending upon patient census and discipline demand  Exempt status does not apply to LPNs, PTAs, COTAs and HHAs (FLSA)  Most effective for RNs, PTs and OTs – Supervisory responsibility – Visits are Unique – No portion of compensation is based on time (Hourly) Laff Associates 201141

42. Visit Weights  Visit weighting – Based the Requirements and Complexities of completing OASIS C – Admission (evaluation) Visit1.90 – Non-OASIS Evaluation Visit - mainly therapy1.60 – Resumption Visit1.30 – Recertification Visit1.20 – Discharge Visit1.25 – Follow-up Visit1.00 – Virtual Telephone Visit (Telehealth) 0.25 Laff Associates 201142

43. Questions Often Asked ( Visit Weight – Time Equivalents Based upon OASIS C) Visits /DayFollow-upAdmissionResumptionRecert.Discharge Visit Value1.001.901.301.201.25 5.0096 minutes 1hr 36min 182.4 minutes 3 hrs 2min 124.8 minutes 2 hrs 5min 115.2 minutes 1 hr 55min 120.0 minutes 2 hrs 5.2591.4 minutes 1hr 31 min 173.7 minutes 2hrs 54min 118.9 minutes 1hr 59min 109.7 minutes 1hr 50min 114.3 minutes 1hr 54min 5.5087.3 minutes 1hr 27min 165.8 minutes 2hrs 46min 113.5 minutes 1hr 53min 104.7 minutes 1hr 45min 109.9 minutes 1hr 49min 5.7583.5 minutes 1hr 23min 158.6 minutes 2hrs 39min 108.5 minutes 1hr 49min 100.2 minutes 1hr 40min 104.4 minutes 1hr 44min 6.0080 minutes 1hr 20min 152 minutes 2hrs 32min 104 minutes 1hr 44min 96 minutes 1hr 36min 100 minutes 1hr 40min Includes hands-on, documentation, travel, conference and case management time 43Laff Associates 2011

44. Incentive Based Compensation  Bonus structure for Primary Care Case Managers  Calendar quarter or 12 week period (based upon payroll periods)  Accumulated Visit Weights = $ per hands-on visit for every visit  Total Cases Managed = % of earnings for the measured period  Outcomes Achieved = % of earnings for the measured period  Bonus structure for their immediate “supervisors”  Same as above, plus  Other to address problem areas, such as  OASIS error rates  Timeliness of corrections, etc.  Time to RAP and EOE billing Laff Associates 201144

45. Case Study Alterna-Care Home Health Agency  Located in Central Illinois  Main office located in Springfield, IL with branches in Jacksonville, and Litchfield, IL  Serves over 2000 patients annually in 31 contiguous counties  Free-standing for profit agency  Over 50 employees 45Laff Associates 2011

46. Benefits of Incentive Compensation  Lost a nurse and didn’t have to be replaced  Improved communication with nurses and supervisor  Documentation is timely and better quality  Telehealth is being used more consistently and the telephone follow up visits are visit weighted  Incentive compensation has improved ER and Hospital outcomes 46Laff Associates 2011

47. Incentive Compensation Results  Nursing productivity increased  Timeliness of documentation improved. For the first time anyone can remember, all nurses notes were completed within 24 hours.  MD verbal orders and recertifications were completed on time  Visit frequency orders were accurate  Case loads increased per nurse  Nurses made more visits per day and made more money  Monitors were in patient homes and no longer on the shelves 47Laff Associates 2011

48. Average Patient Caseload 2009 vs. 2010  2009 -7.5 nurses with an average monthly case load of 36.3 (unduplicated patients)  2010 -6.5 nurses with an average monthly case load of 44.9 (unduplicated patients) (excludes PT only patients) 48Laff Associates 2011

49. Visit Productivity Average Visits Per Nurse 2009JanFebMaAprMayJunJulyAugSeptOctNovDec Avg. cases/RN 222122242823202120242324 Monthly Undup. Census 223233229240253229205208195216210213 No. of Nurses 101110 9 999 2010 Avg. Cases/RN 24313027303532273129 37 Monthly Undup. Census 216252242222247279264237241257260257 No. of Nurses 988888 8 9 8 9 9 7 49Laff Associates 2011

50. HHCAHPS HHCAPSHIGHER % ARE BETTER % RANKING Care of Patients99%92% (Top 8%) Communications Between Providers and Patients95%90% (Top 10%) Specific Care Issues91%82% (Top 18%) % of Patients who Rated Agency 9 or 1095%83% (Top 17%) % of Patients who would Recommend Agency83%56% (Top 44%) 50Laff Associates 2011

51. Average Nurse 11 Month Salary  2009 - Average 11 month comp. was $ 38,412  2010 - Average 11 month comp. was $ 46,362  Increase of $ 7,950 = 20.69%  2009 - Total Per Diem comp was $ 31,022  2010 - Total Per Diem comp was $ 10,119  Reduction of $ 20,903 = 67.38%  2009 - Direct Cost per Nursing Visit - $ 79.71  2010 - Direct Cost per Nursing Visit - $ 63.90  Reduction of $ 15.81 = 19.83% 51Laff Associates 2011

52. Incentive Compensation Results  Nurses did not complain!  Comments:  “I’m really working hard”  “It’s difficult to get your paperwork done with this many patients”  “But, I’m not complaining”  Supervisor states nurses are content  No problem getting nurses to see patients on weekends!!!  No push back when given a new admission in their territory! 52Laff Associates 2011

53. Incentive Compensation The Results  The Direct and Total Cost per Visit were substantially reduced!  Visits per episode were effectively reduced  Incentive compensation increased efficiency throughout the entire organization  Quality of patient care was positively impacted  Accounting department is able to bill timely  Clinical staff are rewarded for their hard work  Communication with clinical managers improved  Telehealth being utilized to its fullest capabilities 53Laff Associates 2011

54. Effective Episode Management  Reduces episode cost, increases efficiency and communication, and improves clinical and financial outcomes  Integrates:  Clinical Supervisory Management and Oversight  Primary Care Case Management  Goals and Performance  Can enhance compensation and reward excellent performance Laff Associates 201154

55. Lynda Laff, RN, COS-C Pat Laff, CPA Laff Associates Consultants in Home Care & Hospice Phone: (843) 671-4170 Email: llaff@laffassociates.com Email: plaff@laffassociates.com Website: www.laffassociates.com Contact Information Laff Associates 201155