Source Proposed SNF Rule CMS 1351P Karen McDonald BSN RN KLM amp Associates LTC Consulting LLC Agenda Historical Payment System Medicare A RUGS IV 2012 Options Medicaid Challenges What Providers are Doing to Prepare ID: 692534
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Payment Challenges facing today’s nursing facilities Source: Proposed SNF RuleCMS -1351-P
Karen McDonald, BSN, RN
KLM & Associates, LTC Consulting, LLCSlide2
AgendaHistorical Payment SystemMedicare A RUGS IV 2012 Options
Medicaid Challenges
What Providers are Doing to PrepareSlide3
Nursing Facility Stats15693 Facilities54.6% Multi - Facility Chains
45.4% Independent
6.6 % Hospital based
67.5 % For Profit
25.7 % Non Profit
5.8 % Government RunMedicare Only 5.0%Medicaid Only 3.9%Dual Certified 91.1%
AHCA Nursing Home “Operational” Characteristics Report March 2011Slide4
Nursing Facility Stats1,394,537 Patients and Residents in 1,671,226 Beds = 83.4% occupancy
6.48% beds are dedicated to specialized services
73.1% Alzheimer’s
13.1 % Rehab
Average Staffing
Direct Care 3.63 HPPDRN .39 HPPDLPN .82 HPPDNursing Assistants 2.42 HPPD
What does that mean?
On average, each resident in a 24 hour period received 2.42 hours of direct care from a Certified Nursing Assistant
AHCA Nursing Home “Operational” Characteristics Report March 2011Slide5
ResidentsSickerBiggerNeedierSlide6
Residents StatisticsKey Payer Sources14.2 % Medicare
63.6 % Medicaid
22.2 % Other
Skin Integrity
6.57 % with Pressure Ulcers
3.68 % upon Admission78.25% have Preventative Skin Care in placeAHCA Nursing Home “Residents” Characteristics Report March 2011
CMS Form 672Slide7
Funding / PaymentRemember Payer Breakdown?14.2 % Medicare63.6% Medicaid22.2 % Other
Currently Medicare Patients help to pay for Medicaid Residents
Shortfall anticipated at $17.33/day / Resident
Unreimbursed allowable Medicaid charges in 2010 5.6B
Medicare margins can no longer compensate for increasing Medicaid shortfalls
Elimination of FMPA (stimulus $$ July 1, 2011)State revenue up should be able to coverSlide8
Funding / PaymentMedicareTransitions of CareMore home careFunding to follow the resident
Anticipated 12.5% RUGS plus an additional 1.5% inflation factor adjustment, Oct. 2011
Case Mix is the game
ADL’s drive the payment in many state Medicaid programs and the Medicare programSlide9
Minimum Data Set (MDS)Mandated Resident Assessment Instrument (RAI)Payment is based upon “groupers” (66)MedicareDay 5, 14, 30, 30, 30Medicaid (Case Mix Stated)
Quarterly after Part A stay
Rehab services are the driver for highest paymentSlide10
BackgroundJuly 1, 1998 (44 RUGS)SNF PPS per diem for all Medicare Part A routine, ancillary and capital related costsAdjusted to reflectWage rages
Patient case mix, RUGS (effort)
January 1, 2006 Refinements (53 RUGS)
Added 9 new categories
October 1, 2010 Refinements (66 RUGS)
MDS 3.0RUGS-III to RUGS-IV was mandated budget neutralSlide11
BackgroundOver ½ states utilize a RUGS based system for MedicaidMDS data drives the classificationNursing needsADL impairments
Cognitive status
Behavior problems
Medical diagnosis
Residents with more resource needs are assigned higher groups
Each October, CMS must issue new rates based upon “parity” and cost adjustmentsSlide12
RUGS-IVEight major classificationsRehabilitation Plus Extensive ServicesRehabilitationExtensive ServicesSpecial Care High
Special Care Low
Clinically Complex
Behavioral Symptoms
Cognitive Performance Problems
Reduced Physical FunctionSlide13
Rehab Plus Extensive 2 or more dependant ADLS
Receiving therapy
Has trach, vent, or infection isolation
Rehabilitation
2 or more dependant ADLS
Receiving therapyExtensive Services
2 or more dependant ADL’s
Trach, vent, or infection isolation
Special Care High
2 or more dependant ADL’s
Serious medical condition
Comatose, septic, DM, Quad, COPD, fever, IV, RT
Special Care Low
2 or more dependant ADL’s
CP, MS, Parkinson's etc all ADL dependantSlide14
Clinically Complex Pneumonia, hemiplegic, surgical or open wounds, burns, chemo, O2. IV, transfusions
Behavioral Symptoms and Cognitive Performance
ADL dependence of 5 or less
Behavior or cognitive problems
Reduce Physical Function
Residents who needs are primarily for support with activities of daily livingSlide15
So What is the Plan for FY 2012?Slide16
SNF Proposed RuleTwo OptionsOption A Recalibration of the Parity AdjustmentOption B Standard Update without RecalibrationSlide17
Option A RecalibrationBackgroundTo move from RUGS-III to RUGS-IV and stay budget neutral, CMS applied a 61% upward adjustment across all nursing CMI’s based upon analysis of 2009 dataComparable actual data available for quarter 1 2011 realized utilization patterns differed significantly from the projected
Number of residents grouped in the highest paying RUG therapy categories greatly exceeded expectations
Why?
Movement from concurrent to individualized therapySlide18
Option A RecalibrationBackgroundParity was not achieved and RUGS-IV triggered a significant increase in overall paymentsConclusionThe 61% increase would have to be lowered to 22.55% if applied equally across all CMI’s
Most change was reflected only in rehab groups, so the decrease only applies to the nursing CMI for the RUG-IV therapy groupsSlide19
Projected utilization was .18% of days, it was actually .60%
Projected utilization was lower or as expectedSlide20
Option A RecalibrationImpactIf parity decreased across the rehab groups and left as is for the others, the impact is an increase only to 19.81% for the rehab groups (not 61%) Results in a $4.47 billion change in reimbursement2012 market basket inflation adjustment is $530 million resulting in a net $3.94 billion savings to CMS or a net 11.3% decrease to nursing facilities Slide21
Option A RecalibrationIssuesUtilization of 1 quarter of dataIncrease coincides with movement to RUGS-IV and MDS 3.0Movement away from concurrent to individual and group therapy hence greater costs
SNF proposed rule would eliminate the existing incentive to substitute group therapy for concurrent and individualized therapy
CMS maintains that concurrent therapy should be the exception, group only 25% but they did not anticipate the cost of moving to individual therapySlide22
Option B Update without RecalibrationRecognizing that this increase may be a temporary aberrance resulting from the limited 2011 data, the movement to RUGS-IV and the MDS 3.0They reserve the option to do nothing except normal wage index and market basket changesNeither plan reflects changes to the AIDS add onSlide23
Comparable RatesRUG-IV
Urban-A
Urban-B
Rural-A
Rural-B
RUX735.16882.55
752.19
893.01
RVX
654.35
798.53
596.61
798.67
RHX
592.85
733.83
530.66
726.59
RMX
498.97
678.39
537.89
666.47
RUC
557.34
643.85
582.28
664.94
RVC
478.13
559.83
492.53
570.59
RHC
416.63
495.13
423.51
498.52
RMC
366.00
441.30
367.99
439.93
RLB
355.85
437.55
351.85
429.91
ES3
671.15
671.18
648.24
648.24Slide24
DistributionRehab plus Extensive Urban 2.65%Rural 2.09 %RehabUrban 89.32 %Rural 87.82%
Extensive Services
Urban .58%
Rural .45%Slide25
Medicaid FMAP Funds decrease to many states on July 1, 2011Anticipated state revenues better than expected hence proposed Medicaid cuts not as great as expectedBottom line, if Medicare Part A rates cut and any Medicaid cut, the impact is great to any facilitySlide26
How are Providers Preparing?LobbyAHCA and The Alliance for Quality Health CareAttacking on the employment sideLTC represents the 2
nd
largest employer in the nations health care sector
Data integrity, how can they base on 1 quarter
Revenue side
Increase the acuity of the resident admitted to increase the Rehab plus Extensive patient loadDecrease returns to hospital, close the back doorExpense sideBudgeted $PPD’sChanging mix of staffDecreasing overhead at “corporate” or management levelSlide27
Bottom Line SNF Rule remains out for commentAnticipate Option A will be passedSlide28
Questions and answers