1. Modeling the Impact of Hospice Payment Reform Pennsylvania Homecare Association Annual Meeting May 18-20, 2011 by Andrea Devoti, President/CEO Neighborhood Health Agencies, Inc. David J. Berman, CPA, CVA, Principal, Simione Consultants, LLC

2. The Challenges Ahead

3. MedPAC’s Report

4. 2 Key MedPAC Recommendations for Hospice Reimbursement 1.U-shaped payment 2. Improvement of Data Collection

5. Hospice Recommendations 1. U-shaped Payment Curve Congress should direct the Secretary to change the Medicare payment system to have relatively higher payments per day at the beginning of the episode and relatively lower payments per day as the length increases with a higher payment for the costs associated with patient death at the end of the episode. MedPAC recommends implementing the payment system changes in 2013 with a brief transitional period. The first year of the payment system should be done is a budget neutral manner.

6. Hospice Recommendations (cont) 2. Improvement of Data Collection The Secretary should collect additional data on hospice care and improve the quality of all data collected to facilitate the management of the hospice benefit. Additional data could be collected from claims as a condition of payment and from hospice cost reports.

7. Medicare Hospice Margin The aggregate Medicare margin was 5.9 percent in 2007. MedPAC projects the margin will be 4.6 percent in 2010. This estimate excludes the costs of bereavement services (about 1.5% of total costs) and marketing which are not reimbursable by Medicare.

8. Summary of Data Collected Over the Length of Stay Nursing Visits and Time HHA Visits and Time Medical Social Service Visit and Time Physical Therapy Visits and Time Speech Therapy Visits and Time Occupational Therapy Visits and Time

9. Summary of Data Collected (con’t) Medical Social Service Phone Calls – Time on Call All Time needs to be in 15 minute Intervals Future Data Chaplains/Spiritual Counselors Volunteers

10. Why are They Collecting the Data 1. Need to look at utilization of services over the lengths of stay and the intensity of the visits. 2. Cost out services to determine the Routine Home Care Cost in the beginning and end of length of stay. 3. Costs can be determined on an hourly or per visit basis. 4. They need to capture the cost of drugs and HME over the episode. 5. Looking at Site of Care

11. How Do We Prepare for the Future 1. Track same data within your agency. 1. Visit utilization over the length of stay. 2. Site of Care and Diagnosis 3. Breakdown visits into 15 minute intervals. a) Determine the length of visits at the front and back end of the length of stay and compare to visits in the middle. b) Determine direct cost per visit based on time studies. 4. Based on Cost Analysis determine cost in beginning and end of episode divide by number of days to determine cost per day.

12. Hypothetical Examples of U-Shaped Reimbursement

13. Assumptions for “Hypothetical” Scenarios: 1. Reimbursement 1. Increased Routine Home Care Rate by 10% for beginning and end of Length of Stay. 2. Decreased Routine Home Care Rate by 10% for middle of Length of Stay. 2. Costs 1. Estimated Average Cost Per Visit (based on Hospice Cost Report) does not account for time differential. 2. Direct versus Indirect Cost per Visit 3. Cost Per Day for ancillaries based on actual. 3. Utilization of Services based on actual patient data by Diagnosis; Length of Stay and Site of Care.

14. Assumptions for “Hypothetical” Scenarios: 4. These are Hypothetical Examples 5. The Data used in the following examples is REAL. 6. There are 8 different scenarios analyzed: 1. Site of Care (Nursing Home vs. Home) 2. Diagnosis(Cancer vs. Non Cancer) 3. Length of Stay(Short vs. Longer)

15. Case 1: Facts Length of stay – 23 days Cancer Diagnosis Visits – 22 Location of Patient – Home

16. Case 1: Utilization of Services |-----------------------13 Days-----------------------|5 Days

17. Case 1: Cost of Service

18. TOTAL GAIN (LOSS) ON THIS CASE$ (408.78)

19. Case 2: Facts Length of stay – 23 days Non-Cancer Diagnosis Visits – 15 Location of Patient – Home

20. Case 2: Utilization of Services |-----------------------13 Days-----------------------|5 Days

21. Case 2: Cost of Service

22. TOTAL GAIN (LOSS) ON THIS CASE$ 294.66

23. Case 1 & 2 Analysis Home

24. Case 3: Facts Length of stay – 10 days Cancer Diagnosis Visits – 17 Location of Patient – Nursing Home

25. Case 3: Utilization of Services |-----------------------00 Days-----------------------|5 Days

26. Case 3: Cost of Service

27. TOTAL GAIN (LOSS) ON THIS CASE($ 844.99)

28. Case 4: Facts Length of stay – 14 days Non-Cancer Diagnosis Visits – 26 Location of Patient – Nursing Home

29. Case 4: Utilization of Services |------------------------4 Days-----------------------|5 Days

30. Case 4: Cost of Service

31. TOTAL GAIN (LOSS) ON THIS CASE($ 1,333.75)

32. Case 3 & 4 Analysis Nursing Home

33. Case 5: Facts Length of stay – 87 days Non-Cancer Diagnosis Visits – 69 Location of Patient – Home

34. Case 5: Utilization of Services |-----------------------77 Days-----------------------|5 Days

35. Case 5: Cost of Service

36. TOTAL GAIN (LOSS) ON THIS CASE$ 2,518.20

37. Case 6: Facts Length of stay – 75 days Cancer Diagnosis Visits – 78 Location of Patient – Home

38. Case 6: Utilization of Services |-----------------------65 Days-----------------------|5 Days

39. Case 6: Cost of Service

40. TOTAL GAIN (LOSS) ON THIS CASE($ 1,679.91)

41. Case 5 & 6 Analysis Home

42. Case 7: Facts Length of stay – 91 days Cancer Diagnosis Visits – 51 Location of Patient – Nursing Home

43. Case 7: Utilization of Services |-----------------------81 Days-----------------------|5 Days

44. Case 7: Cost of Service

45. TOTAL GAIN (LOSS) ON THIS CASE$ 3,301.12

46. Case 8: Facts Length of stay – 83 days Non-Cancer Diagnosis Visits – 85 Location of Patient – Nursing Home

47. Case 8: Utilization of Services |-----------------------73 Days-----------------------|5 Days

48. Case 8: Cost of Service

49. TOTAL GAIN (LOSS) ON THIS CASE($ 1,079.01)

50. Case 7 & 8 Analysis Nursing Home

51. Average Visits per Day for Each Case’s Time Period

52. Average Visits per Day

53. Average Nursing Hours per Visit

54. Summary of Hypothetical Cases

55. Reimbursement Comparison Routine Home Care Base Rate: $158.51

56. Questions that need to be addressed 1. Why am I losing money on certain patients? Cost per visit High Caseload per discipline of service Productivity Transportation Costs Indirect Costs 2. Need to compare analysis by diagnosis.

57. Questions that need to be addressed 3. Need to look at mix of services over the length of stay. 4. Need to look at frequency of visits. 5. Need to look at additional funding for support services, i.e. Music Therapy Art Therapy

59. A Tradition of Caring Since 1912 So, What Can One Hospice Do? Neighborhood Hospice’s Response to These Numbers

60. A Tradition of Caring Since 1912 Meetings with all staff -Reviewed 8 cases -Reviewed proposed payment structure vs. current -Reviewed staffing patterns

61. A Tradition of Caring Since 1912 Reviewed Financial Goal -To break-even + 3-4% -Cover next year’s raises, insurance cost increases, payment decreases and mileage

62. A Tradition of Caring Since 1912 Reviewed 2009 Cost Report -Aggregate CPD for hospice -$150.51 vs. $155.83 per day

63. A Tradition of Caring Since 1912 Increase Expected Productivity of Staff -4-5 in private homes -5-6 or 6-7 in SNFs

64. A Tradition of Caring Since 1912 Eliminated Direct care positions 2 full time RN positions – Third position covering for triage manager overnight One 24 hour MSW 2 C.N.A. positions

65. A Tradition of Caring Since 1912 Discussed Contributions -Staff expect to be used for charity care -Being used to cover paid care overages

66. A Tradition of Caring Since 1912 Reviewing All Processes and Procedures IDT Bereavement Pastoral Care Social Work Liaisons

67. A Tradition of Caring Since 1912 Reviewed all contracts -Renegotiated pharmacy, DME, linen, food services -Added 2 nd DME and pharmacy

68. A Tradition of Caring Since 1912 Face to Face Encounters -Already doing to ensure no ADRs or denied payment, so we do not feel this is a threat

69. A Tradition of Caring Since 1912 Reviewing Care Provision Methodology -Currently Teams with Team Leader vs. all Case Manager -Has not had the desired effect and may be eliminated.

70. A Tradition of Caring Since 1912 Reviewing Staffing and Staffing Patterns - Case loads - Territories - Mileage

71. A Tradition of Caring Since 1912 Looking at: -Mix of services and scheduling of those services -Use of volunteers

72. A Tradition of Caring Since 1912 Thank you! - Any questions?