Medicare: Survive Today And Prepare For Tomorrow Monday October 11, 2010

Today and Tomorrow Is All About Health Care Reform Elise Smith Vice President, Finance Policy American Health Care Association

Health Care Reform Balancing Act Coverage Expansion Cost Containment Improvement in Quality

Cost Containment Strategy Direct -- Continue to Address and Improve Current Methodologies PPACA holds down increases in adjustments to provider payments in all categories Silo coverage and payment methodologies will continue as long as they must Future quality measurement will build on silo quality measurement Indirect -- Improve medical care delivery and improve health outcomes through: Development of new care delivery systems. E.g. bundling, accountable care organizations etc. Integration Co-coordination Co-operation

The A Team! Peter Gruhn -- RUG-IV: Selected Issues and Opportunities Joy Morrow -- MDS 3.0 and Operational Issues Pat Newberry -- Operationalizing MDS 3.0 and RUG-IV -- What’s Ahead For SNF Reimbursement Bill Ulrich -- Critical Current Billing Issues and More Jill Mendlen -- The Future!

RUG-IV: Selected Issues and Opportunities Peter Gruhn Director of Research American Health Care Association

RUG-IV: Realizing Opportunities The New RUG-IV: But Don’t Forget HR-III RUG-IV: Selected Issues and Opportunities Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities

The New RUG-IV Under RUG-IV, CMS will modify the eight levels of the RUG hierarchy and increase the number of case-mix groups from 53 to 66 in order to better distinguish between relative resource use both within and between RUG groups CMS believes that the new RUG-IV system will be more sensitive to differences in patient complexity and the SNF resources needed to provide quality care CMS believes that RUG-IV better targets payments to beneficiaries with greater needs Improved accuracy of Medicare payments Access to high quality SNF care will be maintained and enhanced

The New RUG-IV RUG-IV will be implemented in a budget neutral manner While budget neutral, RUG-IV will significantly affect the distribution of payments across a significantly regrouped and modified RUG-66 grouper However…

…But Don’t Forget About HR-III FY 2010 Final Rule: MDS 3.0 and RUG-IV implementation on Oct 1, 2010 Patient Protection Affordable Care Act (ACA): Mandated implementation of MDS 3.0 for FY 2011 1 year delay in implementation of RUG-IV FY 2012 Implementation of selected RUG-IV elements as originally set for FY 2011 (concurrent therapy and look-back changes)

RUG-IV versus HR-III Issues: RUG-IV designed to be implemented with MDS 3.0 RUG-III incompatible with MDS 3.0 Need to modify RUG-III and develop grouper to utilize MDS 3.0 to include RUG-IV elements Hybrid RUG-III (HR-III) PPS and grouper will not be ready for implementation on Oct 1, 2010

RUG-IV versus Hybrid RUG-III Response: CMS plans to apply interim payment rates based on MDS 3.0 and RUG-IV effective Oct 1, 2010 This way providers can be paid Once the necessary infrastructure is in place, CMS will retroactively adjust the rates to reflect HR-III SNF may need to resubmit claims using HR-III grouper HR-III will also be implemented in a budget neutral manner Legislation is pending in Congress to repeal HR-III, and proceed with implementation of RUG-IV as specified in last year’s final rule

RUG-IV: Selected Issues and Opportunities RUG-III/RUG-IV: Changes in Distribution Payment Rate Changes: Issues and Opportunities Therapy Contracting: Issues to Consider Assessment Window Pitfalls

RUG-IV: Issues and Opportunities: Changes in RUG Grouping/Distribution RUG Category RUG-III RUG-IV HR-III Total Rehab 90.2% 82.6% Rehab + Extensive 39.0% 4.0% 18.4% Rehabilitation 51.3% 78.6% 64.3% Extensive Services 3.7% 0.9% 5.9% Special Care 2.6% 8.9% 3.9% Clinically Complex 2.7% 4.7% 5.2% Behavioral & Impaired 0.2% 0.5% 0.3% Reduced Physical Function 0.6% 2.4% 2.0%

RUG-IV: Issues and Opportunities: Changes in RUG Grouping/Distribution RUG-III to RUG-IV: Factors Concurrent therapy adjustment Pre-admission lookback ADL scale and scoring Recategorization Other (No Section T, SOT OMRAs, Short stay policy) RUG-III to HR-III: Factors Resource: AHCA Medicare RUG-IV Rate Calculator

RUG-IV: Issues and Opportunities: RUG-IV & (Urban) Payment Rates RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate % Diff RUX $617.07 $869.42 40.9% $722.05 17.0% RUC $528.59 $634.27 20.0% $602.11 13.9% RVX $467.62 $786.66 68.2% $552.75 18.2% RVC $421.05 $551.51 31.0% $489.62 16.3% RHX $395.59 $722.91 82.7% $473.21 19.6% RHC $364.54 $487.76 33.8% $432.18 18.6% RMX $448.67 $668.30 49.0% $552.43 23.1% RMC $335.36 $434.73 29.6% $399.34 19.1% RLX $318.88 $593.60 86.2% $390.48 22.5% RLB $294.04 $431.05 46.6% $355.76 21.0%

RUG-IV: Issues and Opportunities: The Lookback Effect & (Urban) Payment Rates: The Lookback Effect RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate % Diff RUX $617.07 $869.42   $722.05 RUC $528.59 $634.27 2.8% $602.11 -2.4% RVX $467.62 $786.66 $552.75 RVC $421.05 $551.51 17.9% $489.62 4.7% RHX $395.59 $722.91 $473.21 RHC $364.54 $487.76 23.3% $432.18 9.2% RMX $448.67 $668.30 $552.43 RMC $335.36 $434.73 -3.1% $399.34 -11.0% RLX $318.88 $593.60 $390.48 RLB $294.04 $431.05 35.2% $355.76 11.6%

RUG-IV: Issues and Opportunities: Concurrent Therapy & (Urban) Payment Rates: RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate % Diff RUC $528.59 $634.27 20.0% $602.11 13.9% RVC $421.05 $551.51 31.0% $489.62 16.3% RHC $364.54 $487.76 33.8% $432.18 18.6% RMC $335.36 $434.73 29.6% $399.34 19.1% RLB $294.04 $431.05 46.6% $355.76 21.0%

RUG-IV: Issues and Opportunities: Concurrent Therapy & (Urban) Payment Rates: RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate % Diff RUC $528.59 $634.27   $602.11 RVC $421.05 $551.51 4.3% $489.62 -7.4% RHC $364.54 $487.76 15.8% $432.18 2.6% RMC $335.36 $434.73 19.3% $399.34 9.5% RLB $294.04 $431.05 28.5% $355.76 6.1% ?

RUG-IV: Issues and Opportunities: The Lookback Effect & (Urban) Payment Rates RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate % Diff ES3 (SE3) $361.62 $661.20 82.8% $460.76 27.4% ES2 (SE2) $308.84 $517.58 67.6% $388.17 25.7% ES1 (SE1) $276.24 $462.34 67.4% $343.98 24.5% …   CE2 $270.03 $361.34 33.8% $336.09 CE1 $248.30 $332.93 34.1% $306.10 23.3%

Reimbursement Issues and Opportunities: The Lookback Effect & (Urban) Payment Rates: Extensive Services Qualifier Effect: IV Feeding RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate ES3 (SE3) $361.62 $460.76 ES2 (SE2) $308.84 $388.17 ES1 (SE1) $276.24 $343.98 HE1 $370.81 HD1 $348.71 HC1 $329.77 HB1 $326.62

Reimbursement Issues and Opportunities: The Lookback Effect & (Urban) Payment Rates: Extensive Services Qualifier Effect: IV Meds RUG-III (FY2010) RUG-IV (FY 2011) HR-III (FY2011) Rate ES3 (SE3) $361.62 $460.76 ES2 (SE2) $308.84 $388.17 ES1 (SE1) $276.24 $343.98 CE1 $332.93 CD1 $313.99 CC1 $277.69 CB1 $257.18 CA1 $219.30

Therapy Contracting: Issues To Consider Nursing Component Therapy Component Non Case Mix Component Overall RUG-III (FY 2010) RUX $274.76 $263.09 $79.22 $617.07 44.5% 42.6% 12.8% 100.0% RMC $166.10 $90.04 $335.36 49.5% 26.8% 23.6% RUG-IV (FY 2011) $566.57 $222.31 $80.54 $869.42 65.2% 25.6% 9.3% $288.81 $65.38 $434.73 66.4% 15.0% 18.5% HR-III (FY 2011) $374.03 $267.48 $722.05 51.8% 37.0% 11.2% $227.26 $91.54 $399.34 56.9% 22.9% 20.2%

Assessment Window Alert Resident Therapy Delivery and the Assessment Window CMS’s concern: MDS does not accurately reflect the services needed by and provided to the resident CMS’s guidance: “Therapy definitions and limitations must be applied consistently whether or not the resident is in the assessment window” “The therapy mode definitions must always be followed and apply regardless of when the therapy is provided in relationship to all assessment windows (i.e. applies whether or not the resident is in a look back period for an MDS assessment)”

Assessment Window Alert Issues: Possible inconsistency in therapy service delivery between the MDS and medical record Invites medical review by MACs, RACs, surveyors Would there be overpayment recovery and sanctions?

MDS 3.0 and Operational Issues Joy Morrow, RN, PhD Senior Clinical Consultant Hansen, Hunter, & Co., PC

How long it takes to do MDS 3.0 We believe published information is inaccurate From our in the field practice the process is longer BUT 3.0 is better Nurses like the relevance Residents like it Families like it I felt that I really knew the resident

Residents Must Be Interviewed Most residents will be able to be interviewed Do not inaccurately presume that resident cannot be interviewed without a professional attempt This compliance issue will be surveyed

Presumption of Coverage The original material from Baltimore sounded as if presumption of coverage was gone Not true – we still have the presumption with physician order for skilled service that resident is skilled until day 8 of skilled stay or ARD of 5-day assessment whichever occurs first

Hospital Observation Issues Lack of 3 day qualifying stay SNFs have difficulty discerning observation vs. inpatient Elderly are often not ready to be discharged home and… They are not eligible for SNF Part A Hospitals not always forthcoming with correct information re: observation stays

Most Beneficiaries Who Have Met Qualifying Hospital Stay Criteria Meet the criteria for skilled care Administrative criteria – complexity of non-skilled conditions… Safety and stability… Need for skilled professional nursing care RUG IV qualifiers Skilled nursing facility that provides some rehab “Rehab facility” that rarely provides skilled nursing

Look Back The questions that include look backs longer than admission forward are for information and care planning and overall clinical care They are not for reimbursement related to services prior to the SNF admission Most look backs are 7 days unless designated otherwise The top nine RUG categories will likely have far fewer days

Extensive Services Since admission – trach and vent care Isolation for active infective respiratory infection ADL score 2 or more Alone or combined with Rehab – not too likely in most of our facilities

Setting the ARD MDS nurse must know the facility payment rates Some nursing categories have better payment than therapy categories All patient/residents do not need therapy Enhance your skilled clinical nursing services

Skilled Nursing Staff nurses must understand the clinical services that they provide Accurate clinically appropriate documentation is a must Skilled prompts & check list programs are helpful IF the nurse is using clinical thinking while documenting

Critical Clinical Thinking What services am I providing that require skilled professional knowledge? What are the immediate health and safety needs of this patient/resident? What are the co-morbidities that I must consider and monitor? Does my documentation reflect these professional considerations?

Default Payment Exceptions Remain in effect for allowed circumstances: Resident discharged during 1st 8 days Late assessment – default up to ARD

More Assessments – Quite a Few More Some assessments will require sophisticated thinking to ensure appropriate reimbursement Combined assessments will need careful thought Split RUG assessments

Start of Therapy (SOT) OMRA Optional (even though called “required”) May be needed to get appropriate reimbursement Is used to qualify resident for rehab RUG MDS will be rejected if the MDS does not calculate to rehab category

SOT Details (cont.) Facility clinical management needs to manage types of MDSs and communicate with therapy The SOT assessment is shorter assessment Payment starts on first therapy day even when only one therapy is starting

End of Therapy OMRA Required – establishes non-therapy RUG when therapies are discontinued But skilled care continues. ARD must be set 1-3 days after all therapies dc’d Payment is adjusted to non-therapy Which ARD you pick will NOT affect payment Payment changes as of last day of therapy

Short Stay Policy Therapy is pro-rated based on average daily therapy minutes actually provided Therapy minutes are divided between the days that treatment minutes were provided Treatment minutes must still meet the 15 minutes per day requirement

Short Stay Policy Includes 8 Requirements for the Start of Therapy MDS It requires a competent MDS nurse who considers the RUG categories Assesses the payment for each category Short stay policy may work best for stays that are only 4 days or less Latest news from 3.0 facility practice…

Biggest Decision For CEO/DON Do I have the right person in the right job? Is each MDS nurse competent – exhibiting critical clinical thinking? Is he/she willing to embrace the culture change and really interview and examine each resident? Is each MDS nurse able to examine and interpret RUG rates considering resident needs and appropriate reimbursement? Does facility need to reassign some roles/tasks?

CEO/DON Must Understand Complexity of 3.0 Transition time needed Importance of performing job correctly Correct number of MDS nurses Difference between Medicare MDSs and non-Medicare MDSs Considerations for case-mix states

Always Have Manual Open Use the RAI manual with every MDS Read the instructions Read the MDS form instructions Have a facility policy/guideline that requires MDS nurses to use the RAI manual

Concerns Since the SOT OMRA is optional, nurses may tend to not do them We believe that more often than not this will be detrimental to facility reimbursement It is essential that you learn how to combine the SOT OMRAs with the regularly scheduled PPS assessments

The New Interviews Are Validated They are excellent tools You may need to look at competency of staff to decide who should perform these specific interviews. MSW vs. RN vs. well-trained social worker with B.S. degree, etc. Do not rush resident to answer – let them process the question – allow at least 30 seconds

Changes to ADL Scoring Must we verify 3 occurrences? If so, how should this be done? Will more effort be required re: ADLs and documentation? (Rule of 3 does not apply to bathing)

ADL Documentation ADL flow sheets ??? Computer programs – very good but training and review are needed Interviews with direct care givers including documentation of interview is very good Daily Part A documentation sheet with limited important prompts might be a good tool

ADL Assistance does not include: Family Ambulance staff Wording has changed to state “staff”

Facility Responsibility Regarding Therapy Services Facility must oversee therapy services That is, make sure that all medical co-morbidities are being considered… …that the resident can tolerate the length and duration of therapy That individual & other therapy is performed appropriately That therapists are timing each individual residents therapy time DON often performs this task

Concurrent Therapy (Sept 2010) The therapy mode definitions (individual, concurrent, group), must always be followed and provide regardless of when the therapy is provided in relationship to all assessment windows (i.e. applies whether or not the resident is in a look back period for an MDS assessment What does this mean?

Therapy Aides and Students Aides cannot provide skilled services Only the time an aide spends on set-up for skilled services may be coded on the MDS (i.e., set up the treatment area for wound therapy) & This set up must be directly supervised Therapy students must have line-of-sight supervision of the professional therapist

Determining Therapy Minutes Treatment starts when resident begins first treatment activity or task Treatment ends when resident finishes with last apparatus or intervention/task Count the total minutes including time spent for a therapeutic purpose Do not include any other type of break in the total minutes Do not round to nearest 5th minute

Restorative Nursing Program The Part A program is underutilized Appropriate for some at discharge from hospital Very good for some who have completed their more intensive therapy program… But needs further care to ensure safety & stability prior to moving to a lower level of care (assisted living, home, etc) (Transfers, toileting etc… round the clock)

Culture Change No more one hour comprehensive assessments behind closed doors No more 5 minute or “no” minute resident interviews

The MDS Assessment Is To Be Completed… …by face-to-face interview with resident …by face-to-face interview with staff & family …by review of record An MDS may not be generated after the resident is discharged (unless sudden death, discharge) An MDS may not be generated from only a review of the record

Care Tool (of the future) Standardized assessment across all disciplines MDS will no longer be used

Latest News After “press” time

Life is Change …Growth is Optional Sophisticated, educated companies will do alright with regulatory changes

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Patricia Newberry Executive Director of Clinical Reimbursement UHS – Pruitt Corporation

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities RUG assignment does not mean skilled care criteria are met

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities RUG IV: 8 Classifications, 66 Groups Rehabilitation Plus Extensive Services (9) Rehabilitation (14) Extensive Services (3) Special Care High (8) Special Care Low (8) Clinically Complex (10) Behavioral Symptoms and Cognitive Performance (4) Reduced Physical Function (10)

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Key Changes: Change in Nursing Extensive and Rehab + Extensive Hospital Look Back: Eliminated for all except IV Fluids/Feeding Therapy Delivery System ADL Index: Level across each group Addition of Higher Nursing Acuity

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Key Changes: Change in Nursing Extensive and Rehab + Extensive Ventilator / Respirator Tracheostomy Care Isolation for Infection Diseases – per CDC regulation % of Rehab + Extensive service will drop to < 2% Rates for these categories have increased significantly

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Key Changes: Hospital Look Back: Eliminated for all except IV Fluids/Feeding pre admission All special services can be captured if provided post admission: in house, ER, MD office

Operationalizing MDs 3.0 and RUG-IV: Realizing Opportunities Key Changes: Therapy Delivery System Individual – Group – Concurrent Impact on RUG level as well as increase in needed rehab staff and clinical appropriateness of time in Rehab Example: 50% Concurrent; 25% Group; 25% Individual RUG level RUB, 25%+ increase in staff time and resident in rehab in active treatment 5 hours per day at 6 X week Example: 60% Individual; 20% Group; 20% Concurrent RUG level RUB, 10-15% increase in staff time and resident in rehab in active treatment 3 – 3.5 hours per day at 6X week.

Operationalizing MDs 3.0 and RUG-IV: Realizing Opportunities Key Changes: Assessment Changes Start of Therapy OMRA End of Therapy OMRA Short Stay

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Key Changes: ADL Index: Level across each group Impact on Rehab RUGs: Nursing resources RxA vs RxB. Recognition of additional nursing resources needed

Operationalizing MDS 3.0 and RUG-IV: Realizing Opportunities Key Changes: Addition of Higher Nursing Acuity COPD & SOB while lying flat DM and insulin orders and insulin injections Special Care High Categories

What’s Ahead For SNF Reimbursement Peter Gruhn Director of Research American Health Care Association

SNF PPS: What’s Ahead The Market Basket and Productivity Adjustments The Market Basket and IPAB Recalibration (Future budget neutrality forecast error projection) Part B Therapy Caps Non-Therapy Ancillary Services Index Wage Index Pay-For-Performance

Market Basket Market Basket Market Basket “Forecast Error” Full market basket set in statute Could only be changed by Congress But PPACA allows IPAB to change starting in fiscal year 2015 Market Basket “Forecast Error” Applied when actual market basket index and projected market basket index is 0.5% or more different

PPACA Productivity Adjustment 10-year moving average of changes in the annual economy-wide private nonfarm business multi-factor productivity (as projected by the Secretary for the 10-year period ending with the applicable fiscal year, year, cost reporting period, or other annual period) The most recent data from the Bureau of Labor Statistics would indicate a 1.4% productivity adjustment for skilled nursing facilities.

Productivity Adjustment Skilled nursing facilities – fiscal year 2012 Inpatient acute hospitals - 2012 Long-term care hospitals – rate year 2012 Inpatient rehabilitation facilities – fiscal year 2012 Home health agencies - 2015 Psychiatric hospitals – rate year 2012 Hospice care – 2013 Dialysis – 2012 Outpatient hospitals – 2012 Ambulance services – 2011 Ambulatory surgical centers – 2011 Laboratory services – 2011 Certain durable medical equipment – 2011 Prosthetic devices – 2011

Independent Payment Advisory Board (IPAB) Develops and submits detailed proposals to Congress and the President to reduce Medicare spending First set of recommendations due in 2014 for 2015 implementation HHS Secretary must implement IPAB’s proposals to achieve savings unless Congress adopts alternative proposals with equivalent savings IPAB must submit drafts of its proposals to MedPAC and HHS for their review prior to submission to Congress IPAB must engage in regular communications with MACPAC.

IPAB’s Reach Can recommend payment adjustment only for provider categories not already hit in PPACA with market basket adjustments for the given year For example, inpatient hospitals (DRG) already have prescribed market basket hits in addition to productivity adjustments for several years – thus, IPAB has no authority to adjust their rates

Recalibration In 2006, CMS refined the SNF PPS CMIs to better account for resource use of medically complex patients (RUG-53) using 2001 data CMS adjusted the nursing weights so that payments under RUG-44 and RUG 53 would be the same In the FY2010 SNF PPS NPRM, CMS reported that Medicare expenditures were higher under RUG-53 than they would have been under RUG-44 based on actual 2006 data For FY 2010 CMS recalibrated the nursing weights such that payments would be the same Payments for FY 2010 were estimated to decline by $1.05 billion (about $16 ppd) Recalibration for RUG-III/RUG-IV transition in FY 2013?

Part B Therapy Caps PPACA of 2010 extended therapy caps exceptions process through December 31, 2010 Cap applies to OT services, and PT and SLP services CY 2010 cap: $1,860 CY 2011 cap: TBD (Medicare Physician Fee Schedule) Will the exceptions process be extended?

Part B: Proposed MPPR Policy CY 2011 Medicare Physician Fee Schedule (MPFS) notice of proposed rulemaking (NPRM)proposed to expand the multiple procedure payment reduction policy (MPPR) to Part B therapy services CMS proposed to apply a 50 percent payment reduction to the practice expense (PE) component of the second and subsequent therapy services for multiple “always” therapy services furnished to a single patient in a single day

Part B: Proposed MPPR Policy Issues and concerns: Inadequate notice and regulatory impact analysis (insufficient information on methodology and data were made available in the NPRM) CMS analysis flawed No data from institutional settings was used by CMS Underestimation of impact overall and on institutional settings Incorrect insights on patterns of service delivery Duplication analysis flawed (RVU construction issue) PE and speech therapy Operational (billing and claim processing issues) Substantial advocacy effort by AHCA and other assoc Stay Tuned: CY 2011 MPFS final rule expected by Nov 1

Part B: Therapy Cap Alternatives CY 2011 MPFS NPRM asked for comment on three potential alternatives to capping therapy services Option 1: Collect better data on functional status and severity of patient needs Option 2: Arbitrary caps coupled with denial of payment Option 3: New intervention and complexity based payment system AHCA submitted comments on the 3 options and asked CMS to also examine a new episodic-based PPS for Part B therapy services

Wage Index Reform Tax Relief and Health Care Act of 2006 (TRHCA) mandated a revision to the IPPS wage index MedPAC made recommendations on an alternative wage index methodology (2007) CMS contractor Acumen LLC evaluated and made recommendations on revision/alternative CMS FY2011 IPPS NPRM requested comments on Acumen recommendations CMS will take into account comments as it evaluates recommendations/next steps Revised wage index for FY 2012? Stay tuned

Nursing Home Value Based Purchasing (NHVBP) Demonstration 3 year demonstration to test whether a performance-based reimbursement system can: Improve the quality of nursing home care Without increasing Medicare expenditures Demonstration offers financial incentives to participating nursing facilities that demonstrate: The ability to provide high quality care and/or Improve the level of care they provide Demo began July 1, 2009 Contactor: Abt and Associates

NHVBP Demonstration Update Demo must be budget neutral Incentive pool to be created from Medicare savings achieved through higher quality care Eligible for incentive payments if have high performance and/or show significant improvement in the quality of care Savings computed at the state level Incentive payments to be distributed based on the number of Medicare resident days If no savings, no incentive payments

NHVBP Demonstration Update Performance Measures Nurse staffing (level and turnover) Hospitalization rates MDS outcomes Survey deficiencies

NHVBP Demonstration Update Status: The Demonstration received approval in November 2008 and is underway Data collection phase began in July 2009 Baseline analysis complete Year 1 data collection complete 177 participants (38 AZ, 78 NY, 61 WI) Participation is voluntary Evaluation of Year 1 expected Summer 2011 Data collection phase ends June 2012 Final report due June 2013

NHVBP Demonstration Update Section 3006 of the ACA requires the Secretary to develop a plan for a VBP program for SNFs and HHAs Plan shall consider: Selection of quality measures Reporting, collection and validation of quality data Structure of payments Methods of public disclosure Report to Congress due October 1, 2011

Critical Current Billing Issues and More Bill J. Ulrich President/CEO Consolidated Billing Services, Inc

Summary of Current Events MDS Transition Billing PPS and Part A Billing 3 – day Qual hospital stay No pay billing MACs Allow Medicare Bad Debt SNF ABN Updated Medicare Cost Report Timely Billing RAC Audits What’s hot Therapy Caps Enrollment 855 Consolidated Billing Facility Fee Under Arrangement Agreement

MDS Transition Billing

MDS Transition Billing Transition applies to only those residents who have covered Part A days in September and October 2010 When RUG assignment from one SNF PPS assessment covers days in September and October

Transition Billing RUG-III can be calculated from MDS 2.0 and MDS 3.0 RUG-IV can’t be calculated from MDS 2.0 Require MDS 3.0 to calculate RUG-IV Assessments will be rejected MDS 2.0 ARD 10/01/10 or later MDS 3.0 ARD 09/30/10 or earlier

Transition Billing In order to receive payment for covered days in September 2010 must have a RUG-III MDS 2.0 or MDS 3.0 In order to receive payment for covered days in October 2010 must have a RUG-IV Need an MDS 3.0

Transition Billing - Options May opt for default payment under specific circumstances (in addition to current policy) May opt to complete MDS 2.0 and MDS 3.0 same type –MDS 2.0 in September and MDS 3.0 early October May opt to “substitute” MDS 3.0 for previous type of MDS 3.0 May opt to “substitute” MDS 3.0 for same type of MDS 2.0

Transition Billing Transition does not apply When payment ends 09/30/10 or sooner Medicare stay ends 09/30/10 or sooner SNF PPS payment for assessment ends 09/30/10 When payment begins 10/01/10 or later Medicare care stay begins 10/01/10 or later SNF PPS payment for assessment begins 10/01/10

Transition Billing Transition does not apply Medicare Start Dates 07/03/10 => Day 90, 9/30 is last paid day for 60-day 08/02/10 => Day 60, 9/30 is last paid day for 30-day 09/01/10 => Day 30, 9/30 is last paid day for 14-day 09/17/10 => Day 14, 9/30 is last paid day for 5-day Must have MDS 2.0 for September payment days and MDS 3.0 for October payment days

Default When a resident Part A stay ends 10/01/10 –10/04/10 May opt to not complete applicable PPS assessment Required to complete discharge assessment (OBRA rules apply) Expectation is that this will be rare event

Billing Transition on UB-04 Example – option 2 Substitute MDS 3.0 60 day for MDS 30 day Continue Rev Code 0022 May need additional row Use correct ARD / HIPPS Combination ARD Days HIPPS Comment 10/12/10 22 RUC/ 60 days used for 30 day 10/12/10 9 RUC/ 60 day MDS

PPS & Part A Billing Issues 3-day stay, No Pays, MACs

Observation Stay Three day inpatient stay is limited by observation days Observation Stay A well defined set of specific, clinically appropriate services, which include ongoing short term treatment, assessment and reassessment that are furnished while a decision is being made regarding whether a patient will require further treatment as hospital inpatient. Medicare manual provisions suggest than an observation stay should not last more than 24 to 48 hours. Beneficiaries are often not aware that observation stays may limit their access to the post acute care benefit.

Qualifying Hospital Stay Do not bill Span code 70 on claims when 3 day transfer criteria is not met If Medicare beneficiary dis-enrolls from MA Plans During SNF Stay 3 day stay waived if qualifies for covered service on effective date Eligible for number of days remaining that would not have been used If after SNF discharge Must have 3 day stay 30 day transfer rule does not apply

No Pay Billing Medicare Skilled Submit monthly covered claim Benefits exhaust Remain in certified bed CMS = if not in certified bed, patient should return Not Medicare Skilled If patient came in not skilled Do not submit claim If patient came in skilled Submit no-pay claim with discharge status when patient leaves certified bed

Billing Benefits Exhaust Benefits exhaust claim with a drop in level of care within the month Patient remains in the Medicare-certified area of the facility after the drop in level of care Use appropriate bill type 212 or 213 Bill types 210 or 180 should not be used for benefits exhaust claims submission). Occurrence Code 22 Covered Days and Charges = Submit all covered days and charges as if the beneficiary had days available up until the date active care ended. Patient Status Code = 30 (still patient).

Billing For Denial Notice Patient previously dropped to non-skilled care. Provider needs Medicare denial notice for other insurers Bill Type = 210 (SNF no-payment bill type) Statement Covers From and Through Dates days provider is billing, which may be submitted as frequently as monthly, in order to receive a denial for other insurer purposes No-payment billing shall start the day following the date active care ended. Days and Charges = Non-covered days and charges beginning with the day after active care ended Occurrence Span Code 74 = include the statement covers period of this claim. Condition Code 21 (billing for denial). Patient Status Code = Use appropriate code.

Bed Hold Payment Nursing Home Pub 100-04 Claims Process Manual Trans 1522 CR 6030 Date: 5/30/08 Effect: 6/30/08 Imp: 6/30/08 Charges to the Beneficiary for admission or readmission are not allowable. When temporary leaving the resident can choose to make a bed hold payment. What is bed hold payment? Already been admitted to facility Has established living space More than simple agreement to allow re-admission Maintain personal effects in a particular living space.

Revised Reporting of Assessment Dates [ARD] on UB-04 Pub 100-04 Claims Process Manual Trans 2011 CR 7019 Date: 7/30/10 Effect: 1/1/11 Imp: 1/3/11 Currently ARD is reported in F.L. 45 Implements new occurrence code 50 for reporting of ARD For DOS on or after January 1, 2011 Must include an occurrence code 50 for each revenue code 0022 Code 50 = ARD Not required for default HIPPS HIPPS must be in the order the beneficiary received that care

Allowable Bad Debt Write-offs

Medicare Bad Debt Allowable bad debt Medicare Advantage Dual Eligible – Paid at 100% Private – Paid at 70% Medicare Advantage Not an allowable Medicare bad debt Reasonable Collection Effort Use of collection agencies 120 day rule Must bill policy for Dual Eligible

Collecting Co-Pay & Deductible Provider may bill beneficiary for the following items: Part A or B deductible Part A or B co-insurance Services that are not covered by Medicare Provider may request and/or collect: Part A co-insurance on or after the day in which it applies Part B deductible or co-insurance on or after the provision of service to which it applies SNF may require, request and accept a deposit or other payment for services if it is clear the services are not covered by Medicare

Medicare Advantage Co-insurance Most Medicare Advantage plans have a co-pay Uncollected co-pay is not a Medicare allowable Bad Debt This leaves Provider at risk of bad debt for Medicaid dual eligible residents Recommend Re-negotiate with Medicare Advantage Some plans will pay co-pay if Provider can show Medicaid will not Send claim to State Medicaid plan Once it is denied send claim to Medicare Advantage plan asking for payment

SNF ABN 10055

SNF ABN – CMS 10055 Pub 100-04 Claims Process Manual Trans 1983 CR 6987 Date: 6/11/10 Effect: 6/11/10 Imp: 7/12/10 Clarifies the use of Notices of non-coverage and denial letters by skilled nursing facilities. SNFs may continue using either the notice of non-coverage or the SNFABN for items and services expected to be denied under Medicare Part A

Revised SNF ABN Use for both Part A and Part B ABN is not required for care that is excluded by Statue or fails to meet technical benefit requirement See voluntary uses Mandatory uses Not reasonable and necessary Custodial care Voluntary Care that fails to meet the definition of Medicare benefit Care that is explicitly excluded from coverage under the social security act Routine eye care, routine foot care

Medicare Cost Report Updates

Medicare Cost Report Update CMS Transmittal 18 Date 9/8/10 Provider Reimbursement Manual Updates Chapter 35 Skilled Nursing Facility Complex Cost Report A full cost report is required. Simplified method cost report is not allowed after July 1, 1998 Modification of S-7 to allow New RUG effective October 1, 2010. Worksheet B Part III and B-1, Part II are eliminated Changes to electronic reporting specifications for CR Ending on or after October 1, 2010

Timely Billing

Timely Claims Filing Pub 100-20 One Time Notice Trans 697 CR 6960 Date: 5/7/10 Effect: 1/1/10 Imp: 10/4/10 Reduces maximum filing timeframe for Medicare claims Claims with DOS prior to 10/1/09 Use old rule [due 12/31/10] Claims with DOS 10/09 to 12/09 Must be billed by 12/31/10 Claims with DOS after 1/1/10 Must be billed within 1 calendar year One exception 42 CFR 424.44(b)(1) Error or misrepresentation by designated official

Timely Claims Filing Pub 100-20 One Time Notice Trans 734 CR 7080 Date: 7/30/10 Effect: 1/1/11 Imp: 1/3/11 Updates CR 6960 to ensure standards are established related to dates of service Institutional claims – use claim through date in determining timeliness. For physician and suppliers, use the “from” date in determining timelines. UB-04 should be based on “through date for both A and B.

RAC Audits

RAC Audits of Nursing Facilities Section 302 of the Tax Relief and Health Care Act of 2006 made the RAC Program permanent and required the Secretary to expand the program to all 50 states by no later than 2010. Four Regions Region A: Diversified Collection Services Region B: CGI Region C: Connolly, Inc. Region D: Health Data Insights, Inc Phase-In strategy by Provider Type RAC audits are not to start until outreach has occurred for that Provider type in that state. All Issues review by the RAC must first be approved by CMS and posted to the RAC website

What is a RAC? Mission The RACs detect and correct past improper payments so that CMS and Carriers, FIs, and MACs can implement actions that will prevent future improper payments: Providers can avoid submitting claims that do not comply with Medicare rules CMS can lower its error rate Taxpayers and future Medicare beneficiaries are protected

RAC Audits of Nursing Facilities Document Limits / Self Disclosure Additional Document Limits for SNF 10% of the average monthly Medicare claims (max 200) per 45 days per NPI Provider Self Disclosure If a provider does a self-audit and identifies improper payments, the provider should report the improper payments to their claim processing contractor. If the claim processing contractor agrees that they are improper, the claims will be adjusted and no longer available for RAC review (for that issue).

Type of RAC Reviews Automated Review Automated Review Coding Erorrs Black and white issues No prior contact Automated Review Coding Erorrs NCCI Edits Complex Review for Coding Errors Request Medical Records Complex Review for Medical Necessity Request for Medical Records

RAC Audits Prepare for Medical Record Request Tell your RAC the precise address and contact person they should use when sending Medical Record Request Letters When necessary, check on the status of your medical record (Did the RAC receive it?)

Appeal RAC Finding When Necessary The appeal process for RAC denials is the same as the appeal process for Carrier/FI/MAC denials Do not confuse the “RAC Discussion Period” with the Appeals process If you disagree with the RAC determination…Do not stop with sending a discussion letter File an appeal before the 120thday after the Demand letter

Redetermination [1st level] and Reconsideration [2nd level] Limitation on Recoupment extends to the 1stand 2ndlevel appeal ONLY. Medicare will not begin recoupment of overpayments (or will cease recoupment that has started) when it receives notice that the provider has requested a redetermination (first level appeal) or a reconsideration second level appeal at the Qualified Independent Contractor(QIC). After the QIC determination, Medicare will begin to recoup on any remaining outstanding over payment.

RAC Review Hot Issues [SNF] Region D Part B – Duplicate payment [Automated] Ambulance during inpatient stay Ambulance SNF to SNF transfer Part B NCCI Edits SNF Consolidated Billing Excessive units for untimed codes

Enrollment 855

Enrollment Revalidation Pub 100-20 One Time Notice Trans 558 CR 6486 Date: 9/14/09 Effect: 10/23/09 Imp: 10/23/09 CMS will being limited Provider revalidation Focus on top 50 skilled nursing facility billers By State

SNF Consolidated Billing Facility Fee, Under Arrangement

Facility Services billed by Ambulatory Surgical Centers Pub 100-04 Claims Processing Manual Trans 1911 CR 6702 Date: 2/5/10 Effect: 1/1/08 Imp: 7/6/10 New edit will prevent separate payment for facility costs billed by ASC for Part A SNF Stays Ambulatory surgeries performed at an outpatient hospital are excluded from SNF CB This exclusion does not apply to facility services provided by freestanding ASC New edit assures that CMS bundles these services back to the SNF.

Physician Office Visit When the physician visits patient in the hospital Hospital is billing SNF for a room charge, technical component of 99214 (rev code 510) 99214 does not have a technical / professional component designation SNF help files indicates this is not a bundled code At least one FI is indicating that the code is bundled back to the SNF CMS is in the process of reviewing the issue Recommendation – Don’t pay the code

Health Care Reform and the Future of SNFs Jill Mendlen President and CEO Family Choice of New York LightBridge Hospice & Palliative Care Vice-Chair, Finance Committee, AHCA

CMS Launches a New Approach to Health Care Triple Aim Population Health Per Capita Cost Experience of Care Prevention - Reduction of medical errors/ patient safety Based on best science available Cost Reduction- Specifically NOT by withholding or reducing care Integrated Care- Journeys not Fragments Patient centered

Change is Underway Federal Coordinated Health Care Office Managed Care Center for Medicare and Medicaid Innovations: Bundling Payment Pilot- 2013 ACOs – 2012 Pay for Performance (Value Based Purchasing)-2011 Demos Began 2009 20 Payment and Delivery Models for Innovation Medical Homes -2010 Federal Coordinated Health Care Office

Current System Payment and Delivery Silos Medicare Medicaid Inpatient Hospital Managed Care Long Term Hospital Physicians Inpatient Rehab Home Health SNF

Future Payment and Care Management Models Medicare Medicaid Medical Homes Dual Care Models ACOs Bundled Payors Managed Care

Complex Universe for SNFs Hospitals ACO’s SNF Bundled Payers Medical Home Managed Care

Managed Care

Implications for Managed Care Plans Government payments to managed care plans moving toward parity with fee-for-service Medicare Increased regulatory and compliance scrutiny Plans may choose to make up any losses from payment cuts by increasing premiums or cost-sharing or reducing negotiated rates with providers SNP contracts with states will expand Medicaid managed care Increased focus on transitions, quality outcomes, and beneficiary satisfaction 36 million baby boomers will become Medicare beneficiaries in the next 10 years

Bundling

Theory of Bundling Combining payments, ordinarily paid to multiple providers to treat a given patient, into a single, “bundled” payment Providing providers with an incentive to cooperate with one another and coordinate care throughout the entire episode of a patient’s illness The theory -- Providers who have shared financial incentives via bundling will work together to optimize both the services they provide and their reimbursement As with capitation, this creates a significant risk that providers could stint on the care that’s needed in order to maximize their reimbursement

National Pilot Program on Payment Bundling Section 3023 The Secretary shall develop a pilot program for integrated care during an episode of care provided to an applicable beneficiary around a hospitalization Implementation not later than January 1, 2013 Duration of pilot – 5 years Secretary to submit plan for implementation of an expansion of the pilot program no later than January 1, 2016 May expand the program after January 1, 2016 if it reduces spending and either does not reduce quality of care or improves quality of care

Statutory Components That Must Be Addressed Scope of services Duration of episode Selection of patient assessment instrument Method of payment Selection of bundler or accountable entity Selection of quality and outcome metrics

Additional Components Patient choice Selection of risk or case mix adjustment Liability Medicare benefit changes, e.g. copayments, deductibles, 3-day stay

1. Conditions and Services Ten conditions to be selected for the pilot program Services that can be covered: Acute care inpatient hospitalizations Physician services delivered inside and outside of the acute care hospital setting Outpatient hospital services, including emergency department visits Post-acute services including home health, skilled nursing, inpatient rehabilitation, long term care hospital; and other services that the Secretary determines appropriate

2. Episode of Care To start 3 days prior to a qualifying admission to the hospital And span the length of the hospital stay and 30 days following the patient discharge The Secretary may determine that another time frame is more appropriate for purposes of the pilot The Secretary may waive such provisions of Title 18 as may be necessary to carry out the pilot program.

What Happens After the 30th day? The Secretary shall establish procedures, in the case where an applicable beneficiary requires continued post acute care services after the last day of the episode of care, under which payment for such services shall be made.

3. Selection of Patient Assessment Instrument The Secretary shall determine which patient assessment instrument (such as the Continuity Assessment Record and Evaluation (CARE) tool) shall be used under the pilot program to evaluate the applicable condition of an applicable beneficiary for purposes of determining the most clinically appropriate site for the provision of post-acute care to the applicable beneficiary.

4. Method of Payment The Secretary shall develop payment methods for the pilot program for entities participating in the pilot program. Such payment methods may include bundled payments and bids from entities for episodes of care. The Secretary shall make payments to the entity for services covered under this section. Appears to be budget neutral, i.e. can’t cost any more than would have w/o pilot

Method of Payment continued……. Shall include payment for the furnishing of applicable services and others such as care coordination, medication reconciliation, discharge planning, transitional care services, and other patient-centered activities as determined appropriate by the Secretary. A bundled payment shall be comprehensive, covering the costs of applicable services and be made to the entity which is participating in the pilot program.

5. Who Holds The Bundle? Not specifically determined by the legislation “An entity comprised of providers of services and suppliers including a hospital, a physician group, a skilled nursing facility and a home health agency may submit an application to the Sectary to provide applicable services.” Requirement for entities to participate in the pilot program shall ensure that beneficiaries have an adequate choice of providers Separate bundle for continuing care hospitals

6. Quality Measures Process, outcome and structure and include: Functional status improvement. Reducing rates of avoidable hospital readmissions. Rates of discharge to the community. Rates of admission to an emergency room after a hospitalization. Incidence of health care acquired infections. Efficiency measures. Measures of patient-centeredness of care. Measures of patient perception of care. Secretary would have authority to delete, revise, and add quality measures

Related CMS Initiatives To Date CMS is testing the CARE Tool under the Post Acute Care (PAC) Payment Reform Demonstration to standardize patient assessment information in post acute settings CMS is promoting better alignment of financial incentives among providers with the following: Acute Care Episode (ACE) Demonstration CMS is engaged though contractors with extensive research on: Development of episode groupers Determination of episode costs Development of episode pricing

Accountable Care Organizations “Shared Savings Program” “ACOs” Medicare Program Must Be established by January 1, 2012

PPACA Definition of an ACO An organization whose primary care physicians are accountable for coordinating care for at least 5,000 Medicare beneficiaries Having a hospital or specialist in the ACO is optional Patients assigned to ACO using primary care claims

ACO Requirements Required capabilities: Distribute bonuses Define processes to promote evidence-based medicine Report on quality and cost measures Be patient-centered The beneficiary can still choose any provider inside or outside of the ACO

ACO Requirements Have a formal legal structure to receive and distribute shared savings Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum) Agree to participate in the program for not less than a 3-year period Have sufficient information regarding participating ACO health care professionals to support beneficiary assignment and for the determination of payments for shared savings

ACO Responsibilities under PPACA Responsible for high quality and low cost Cost growth allowance is a fixed amount Quality targets must also be met, Secretary has discretion over measures and targets The ACO must coordinate care. This implies the ACO: Is responsible for direct communication among providers Has a system for knowing when its patients are admitted and will be discharged from the local hospital

Benefits for the ACO Payments made to ACOs in the same manner they are made under Part A and Part B   Participating ACOs that meet specified quality performance standards eligible to receive a share of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount.  

How Could ACOs Generate Savings? Reduce unnecessary services Admissions Readmissions Other Switch to lower priced provider Lower price sector Lower price provider within a sector

Implications for SNFs ACOs will not be the payment source for SNFs but they will: Manage the care of patients across the spectrum Have an impact on the choice of post-acute providers Work to reduce costs Monitor Quality SNFs must: Make themselves known to ACOs Provide top quality care At a reasonable cost

The Medical Home

Definition A patient-centered medical home refers to physician practices that improve patient care through the help of health coaches, nurses, dietitians and others, as well as with coordinated electronic health records. The practices must focus on patient wellness, chronic disease management, reducing medical complications and improving access to care to prevent visits to the emergency department.

Essential Functions of a Patient-Centered Medical Home* Provide each patient with an ongoing relationship with a personal physician who is trained to provide first-contact, continuous, and comprehensive care. Provide care for acute and chronic conditions, preventive services, and end-of-life care, or arrange for other professionals to provide these services. Coordinate care across all elements of the health care system, with coordination facilitated by the use of registries and information technology. Provide enhanced access to care through systems such as open scheduling, expanded hours, and new options for communication between patients and the practice’s physicians and staff. * Adapted from the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association.

CMS Demonstration To determine if a medical home could provide better health care at lower cost to people with Medicare. A 3-year project required by the Tax Relief and Health Care Act of 2006, for rural, urban, and underserved areas in up to eight states. A board-certified physician will provide comprehensive and coordinated care as the “personal physician” to Medicare beneficiaries with multiple chronic illnesses. The doctors selected will receive a care management fee, in addition to the payments for whatever Medicare-covered services they may provide. Project to be implemented in 2010.

Implications for SNFs Medical Homes will not be the payment source for SNFs but they will: Manage the care of patients across the spectrum Have an impact on the choice of all providers SNFs must: Make themselves known to Medical Homes Provide top quality care At a reasonable cost

Conclusions Change will take time but the pace will pick up SNFs must: Provide cost, quality outcome and satisfaction data Sustain and improve quality Manage costs Contemplate diversification Reach out to systems, managed care plans, bundled payers, ACOs, Medical Homes Offer value, good patient skilled nursing management and good transition management

Questions?

Contact Information Elise Smith T: 202-898-6305, Email: esmith@ahca.org Peter Gruhn T: 202-898-2819, Email: pgruhn@ahca.org William Hartung T: 202-898-2841, Email: whartung@ahca.org

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