Learn about the current reimbursement updates for skilled nursing facilities including the current Medicaid methodology, per diem adjustments, OMIG Audits and cash receipt assessments - OConnor Davies - NYC CPA firm.

1. 2013 Health Care Forum
Reimbursement Update for Skilled
Nursing Facilities
December 3, 2013
Christopher J. McCarthy, MBA, CPA
Partner
Director-Health Care Services
Dorothea A. Russo, CPA
Partner
Health Care
cmccarthy@odpkf.com
drusso@odpkf.com

2. Agenda
• Current Medicaid Methodology
• Per Diem Adjustments
• Cash Receipts Assessment
• Third Party Payor Considerations
• OMIG Audits
2

3. Medicaid - Overview
• Inception to 12/31/85
• Facility-specific prospective cost based methodology – rolling base years
• 1/1/1986 – 3/31/2009 Cost-Based Methodology
• Facility-specific trended cost based methodology (PRI document for case mix and
1983 base year costs – patients “categorized” into 1 of 16 groups) CMI 4x/year
• 4/1/2009–12/31/2011 – Rebased Rate Methodology (rates finally issued 6/2011)
• Facility-specific cost based methodology that introduced Medicaid-Only and Scaleback Adjustments (MDS document for case mix and 2002 base year costs –
patients “categorized” into 1 of 53 groups )
• 1/1/2012–12/31/20XX - Statewide Pricing Methodology (initial rates issued 6/2012)
• Statewide allowable costs produces Mean Price for two Peer Groups (MDS
document for case mix and 2007 base year costs – patients “categorized” into 1 of
53 groups) CMI 2x/year
• 1/1/20XX-??? Medicaid Managed Care
• Negotiate Medicaid rates with MLTCs
3

4. The Current Medicaid Methodology
o 1/1/2012 – 12/31/2017* (See Rate Comparison 2012-2014)
Base Year = 2007 Costs
CMI
RATE PERIOD
1/2011
1/1/12 – 6/30/12
(PAID)
1/2012
7/2012
1/2013
7/2013
1/2014
7/1/12 – 12/31/12
1/1/13 – 6/30/13
7/1/13 – 12/31/13
1/1/14 – 6/30/14
7/1/14 – 12/31/14
(PAID-5% issue)
(Q4-2013)
(Q1-2014)
(?)
(?)
* Or whenever Medicaid Managed Care rates become effective
4

5. Medicaid - Reimbursement with Corridors
Ceiling
Mean
Base
5
$127
----------------------------
$110
$99

6. The Current Medicaid Methodology
Reimbursement without Corridors
o NO CORRIDORS
Mean
6
--------------------------------
$110

7. Overview of Non-Capital Components of Pricing Methodology for SNFs
(Effective January 1, 2012) – Source-NYSDOH Handout (HCS)
Non-Comparable
Component
Facility-Specific
Medicaid
Only
Case Mix
Adjustment
to Direct
Component
2014 (Year 3)
Transition Per
Diem
Direct Component
(50% Statewide
Direct Price +
50% Peer Group
Direct Price)
Indirect Component
(50% Statewide
Direct Price +
50% Peer Group
Direct Price )
WEF Adjustment to Direct
Component
(50% Facility Specific WEF +
50% Regional WEF)
WEF Adjustment to
Indirect Component
(50% Facility Specific WEF +
50% Regional WEF)
Per Diem add-ons
Other Per Diems
Bariatric ($17)
Dementia ($8)
TBI Extended Care ($36)
(if applicable)
Quality Measure
5% CMI Cap
Bedhold Adjust
7
Total
Operating
Price

8. Statewide/Peer Group Prices Before Adjustment
Starting Point is 2007 Costs
2007 Base Year Costs
Direct-No B
HBF/300+
<300
Direct B&D
2007
Indirect
2007 Base Year Per Diem
Days
Direct-No B Direct B&D Indirect
2,021,456,748 1,994,922,588 1,058,925,166
3,075,091,705 3,031,776,277 1,501,654,653
13,843,911
24,915,472
146.02
123.42
144.10
121.68
76.49
60.27
5,096,548,453 5,026,698,865 2,560,579,819
38,759,383
131.49
129.69
66.06
Per Diem
Direct-No B
Direct B&D
Indirect
Combined
131.49
129.69
66.06
HBF/300+
146.02
144.10
76.49
Peer Group (50/50)
<300
123.42
121.68
60.27
8
HBF/300+
138.76
136.90
71.28
<300
127.46
125.69
63.17

9. Peer Group Prices:2012-2017
HBF/300+
Direct-No B
<300
Direct B&D
Indirect
Direct-No B
Direct B&D
Indirect
Peer Group - 2012
Allowable cost per diem
Ceiling application
Ceiling cut
Statewide price-2012
$
138.76 $
136.90 $
71.28
-19.54566%
-19.54566% -19.54566%
(27.12)
(26.76)
(13.93)
$
127.46 $
125.69 $
63.17
-19.54566% -19.54566% -19.54566%
(24.91)
(24.57)
(12.35)
111.63
110.14
57.35
102.54
101.12
50.82
138.76
-14.96270%
(20.76)
136.90
-14.96270%
(20.48)
71.28
-14.96270%
(10.67)
127.46
-14.96270%
(19.07)
125.69
-14.96270%
(18.81)
63.17
-14.96270%
(9.45)
117.99
116.41
60.61
108.38
106.88
53.72
Ceiling application 2014
Statewide Price -2014
-11.33780%
123.02
-11.33780%
121.37
-11.33780%
63.19
-11.33780%
113.00
-11.33780%
111.43
-11.33780%
56.00
Ceiling application 2015
Statewide Price -2015
-10.30210%
124.46
-10.30210%
122.79
-10.30210%
63.94
-10.30210%
114.32
-10.30210%
112.74
-10.30210%
56.66
Ceiling application 2016
Statewide Price -2016
-9.88620%
125.04
-9.88620%
123.37
-9.88620%
64.23
-9.88620%
114.86
-9.88620%
113.26
-9.88620%
56.92
Ceiling application 2017
Statewide Price -2017
-9.47820%
125.61
-9.47820%
123.92
-9.47820%
64.52
-9.47820%
115.38
-9.47820%
113.78
-9.47820%
57.18
Peer Group - 2013
Allowable cost per diem
Ceiling application
Ceiling cut
Statewide price-2013
9

10. Per Diem Adjustments for 2014
•
Transition Adjustment
•
Quality Adjustment
•
Bedhold adjustment 1/1/2013 and 4/1/2013
(and beyond)
•
Adjustment to Cap case Mix 5%
– Value per case mix point
• Capital Per Diem
10

11. Transition Adjustment
o Transition (to “ease” $ impact of “new” methodology)
o Starting Point – July 7, 2011 Medicaid rate
2012
1.75%
2013
2.50%
2014
5.00%
2015
7.50%
2016
10.00%
2017
Transition “completed”
11

12. Quality Adjustment
2014 Nursing Home Quality Pool Methodology
- 14 Quality Measures (60 points)
- Compliance (20 points)
- Potentially avoidable hospitalizations (20 points)
- Rewarding of improvement in scoring over 2013
2014 Rate Effect
- Negative adjustment statewide ($50 million)
- Positive adjustment for facilities in top 3 quintiles
12

13. Adjustment to Cap Case Mix at 5%
1/1/2014
before CMI
change
1/1/2014
after CMI
change
1/1/2014
limited
Statewide Direct Price
113.00
113.00
113.00
WEF Adjustment
1.0780
1.0780
1.0780
Facility Case Mix Adjustment
1.3223
1.1768
1.2562
WEF and Case Mix Adjusted Price
161.07
143.36
153.02
Adjustment to Cap Case Mix 5.0%
9.66
January, 2012
Facility Specific Case Mix
Limit of 5%
1.20
Facility Case Mix Adjustment
13
.907504
.907504
1.3223
50% Peer Group/50% Statewide Case Mix
1.14
1.2562

14. Value per Case Mix Point
Case Mix Index July, 2013
1.0707
Case Mix Index January, 2012
1.2030
Case Mix point change (1.0707-.1.2030)
-.1323
Direct Component at 1/1/2014 (before
CMI change)
Direct Component at 1/1/2014 (after
CMI change)
Change in Direct Component
161.07
Value per Case Mix point (17.71/13.23)
14
143.36
17.71
1.33

15. Calculating the Casemix
RUG
Categ
RUX
RUL
RVX
RVL
RHX
RMX
RLX
RHC
RHB
RMC
RMB
RMA
RLB
SE3
SE2
SSC
SSB
Index
2.38
1.98
1.82
1.61
1.62
1.96
1.34
1.40
1.27
1.27
1.22
1.17
1.15
1.70
1.37
1.12
1.06
Patient Case mix
Count
total
0.00
0.00
0.00
0.00
0.00
2.00
3.92
0.00
32.00
44.80
0.00
19.00
24.13
22.00
26.84
3.00
3.51
1.00
1.15
1.00
1.70
4.00
5.48
20.00
22.40
6.00
6.36
RUG
Categ
SSA
CC2
CC1
CB2
CB1
CA1
IB1
PE2
PE1
PD1
PC2
PC1
PB2
PA2
PA1
Total
CMI
15
Index
1.03
1.12
0.98
0.91
0.86
0.77
0.78
0.80
0.79
0.72
0.67
0.66
0.57
0.48
0.46
Patient Case mix
Count
total
17.00
17.51
2.00
2.24
5.00
4.90
2.00
1.82
2.00
1.72
0.00
1.00
0.78
1.00
0.80
1.00
0.79
1.00
0.72
0.00
0.00
0.00
0.00
1.00
0.46
143.00
172.03
1.2030

16. Bedhold Adjustment
• Per PHL Section 2808(25)(c)
• 2013/2014 Budget calls for $40 million savings
– Continue paying Medicaid hospital bed
holds at 50%
– Effective 4/1/13 negative per diem will
reflect adjustment over the fiscal year
2013/2014
16

17. Part B Offset –2012 and After
• Used by Medicaid to “recapture” duplicate payments
• Per day adjusted for each facility’s CMI and WEF
– 2012 $ 1.42
– 2013 $ 1.50
– 2014 $ 1.57
– 2015 $ 1.59
– 2016 $ 1.60
– 2017 $ 1.61
• Most recent talks with OMIG suggest that under Statewide
Pricing Part B Offsets are not subject to audit
17

18. Rate Processing Schedule (per DOH)
Description
Rate Effective
Date
To BUDGET
To
eMedNY
UPDATE FOR 07/2012
MDS CENSUS
01/01/2013
04/01/2013
01/01/2014
11/29/2013
12/15/2013
Case mix updates limited to 5%
pending OMIG review
INITIAL REVISED
RATES
01/01/2014
12/20/2013
01/15/2014
Update DRAFT initial rates for:
1. Capital changes due by
12/2/2013
UPDATE FOR 01/2013
MDS
07/01/2013
01/01/2014
02/15/2014
02/28/2014
Case mix updates limited to 5%
pending OMIG review
OMIG audits of
01/2012 & 07/2012
MDS complete
UPDATE FOR 07/2013
MDS
Notes
Estimated March with cash
impacts Q2
01/01/2014
TBD
18
TBD
April 2014

19. Third Party Payor Considerations
• 2013 Medicaid rate changes for January 1st and July 1st based
on MDS submissions
• Cash receipts assessment reconciliations 2011-2013
• Results of OMIG MDS audits of January, 2012 and July, 2012
submissions
• Based on results of above OMIG MDS Audits consider estimate
for January, 2013 MDS submission (impacts revenue for July 1 –
December 31, 2013)
• Status of current OMIG audits other than MDS (e.g.
Property, Bedhold, etc.)
• Roll forward impact of previously finalized OMIG audits
19

20. Cash Receipts Assessment
• 2010 reconciliation completed and paid in January
2013
• The 2011 per diem was updated to the 2010
reconciled per diem
• The 2012 per diem has not been reconciled and was
paid at rate effective 4/1/05
• The 2010 reconciled per diem is the effective billing
rate for 1/1/13
20

21. Cash Receipts Assessment
Reimbursable
NonReimbursable
Total
April 1, 2011
6.0%
1.2%
7.2%
April 1, 2012
6.0%
1.0%
7.0%
November 1, 2012
– March 31, 2014
6.0%
0.8%
6.8%
21

22. Capital Per Diem
•
Notify DOH of errors via email to
bvapr@health.state.ny.us by December 2, 2013
•
Basis for Schedule VI is 2012 RHCF
•
2012 RHCF, Schedule Q – Facility Reported
Capital
22

23. Capital Per Diem (continued)
• Important RHCF schedules:
–
–
–
–
–
–
–
–
–
–
Schedule Q – Facility Reported Capital (new in 2012)
Part II and Part III (if applicable), Schedule 9
Part II and Part III (if applicable), Schedule 10 & 11
Part II and Part III (if applicable), Schedule 15
Part II and Part III (if applicable), Schedule 17
Part II , Schedule 8, 8A & 8D
Part IV, Exhibit A & B
Part IV, Exhibit E
Part IV, Exhibit I
Part I-3
23

24. Appeals
• Common Appeal issues (All Sponsorships)
– Property Insurance - if it was reported on a line other then the
preprinted line on Part II, Schedule 9
– Movable equipment rentals will not get reimbursed if there are
any discrepancies at all between summary schedules and details
schedules or equipment isn’t described.
– Real Estate taxes not getting pulled in from the Part III, etc.
– Over reimbursed mortgage-related costs as a result of refinancing
– Mortgage related costs (interest and/or amortization) not
included in first year of refinanced debt if DOH doesn’t have
evidence of approval.
24

25. Common OMIG Property Audit Adjustments
•
•
•
•
Auto rentals for vehicles without a travel log
Real estate tax refunds in subsequent year
Depreciation or rental for phone system
Interest and amortization on refinanced debt not
previously approved
• Working capital interest on debt with term in excess of
one year
• Maintenance/Supply costs included in ME Lease costs
• Any expense that can not be supported by an invoice
25

26. What will OMIG ask for?
•
•
•
•
•
•
•
•
•
•
•
Financial information
Related party transactions
Property, plant and equipment details
Statistical information
Mortgage documents and proof of payment
Insurance policies and invoices
Rental contracts and invoices
Health Recruitment & Retention Allowance
Access to independent auditor workpapers
Proof of funding of depreciation (earlier years)
And then some….
26

27. OMIG Audits
• OMIG will perform a 2002 base period audit (or a
subsequent year if there was a change of ownership)
on the operating costs included in rebased rates
effective 4/1/09-12/31/11.
• Cost report used for rebased rates is subject to audit
through 12/31/2014 per PHL section 2808-2b(d).
(2013/2014 Budget extended this to 2018)
• Currently, OMIG is performing property audits for rate
years 2006-2008 with rollforward adjustments
through 3/31/09.
27

28. OMIG Audits (cont’d)
• Other OMIG audits of nursing facilities:
– Bed hold audits
– Medicaid overpayment (aka NAMI) audits
– January, 2012 and July, 2012 MDS audits (currently being
conducted simultaneously)
– January, 2013 and July, 2013 MDS audits
28

29. Medicare PPS Rates FY 2013
• Net increase in rates of 1.3% made up of:
– Market Basket Increase of 2.3%
– Forecast Error Adjustment of -0.5%
– ACA mandated productivity adjustment of -0.4%
• 2% Sequester will continue until further notice
– Sequester only reduces payments; does not
change the rates
• Labor-Related Share 69.545%
29

30. Medicare Prospective Payment System Rates for
FY2014 NYC and Westchester CBSA # 35644
10/01/13 10/01/12
RUG-IV Fed.Pay Adjusted
GROUP
Rates Fed. Rate
RUX
RUL
RVX
RVL
RHX
RHL
RMX
RML
RLX
RUC
RUB
RUA
RVC
RVB
RVA
RHC
RHB
RHA
924.35
904.21
822.74
738.14
745.43
664.85
683.79
627.38
600.51
700.76
700.76
585.95
601.17
520.60
518.58
523.84
471.47
415.08
900.24
880.62
801.28
718.89
725.98
647.51
665.94
611.01
584.85
682.48
682.48
570.66
585.49
507.01
505.06
510.18
459.17
404.25
Inc. in
Rate
24.11
23.59
21.46
19.25
19.45
17.34
17.85
16.37
15.66
18.28
18.28
15.29
15.68
13.59
13.52
13.66
12.30
10.83
%
Change
in Rate
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
30
10/01/13 10/01/12
RUG-IV Fed.Pay Adjusted
GROUP
Rates Fed. Rate
HB1
LE2
LE1
LD2
LD1
LC2
LC1
LB2
LB1
CE2
CE1
CD2
CD1
CC2
CC1
CB2
CB1
CA2
416.87
517.59
432.99
497.45
416.87
437.01
368.53
414.85
352.41
461.18
424.93
437.01
400.76
382.62
354.43
354.43
328.25
300.04
406.00
504.09
421.69
484.47
406.00
425.61
358.92
404.03
343.22
449.15
413.84
425.61
390.30
372.65
345.19
345.19
319.68
292.21
Inc. in
Rate
10.87
13.50
11.30
12.98
10.87
11.40
9.61
10.82
9.19
12.03
11.09
11.40
10.46
9.97
9.24
9.24
8.57
7.83
%
Change
in Rate
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%

31. Medicare Prospective Payment System Rates for
FY2014 (NYC and Westchester CBSA # 35644) – cont’d
10/01/13 10/01/12
RUG-IV Fed.Pay Adjusted
GROUP Rates Fed. Rate
RMC
RMB
RMA
RLB
RLA
ES3
ES2
ES1
HE2
HE1
HD2
HD1
HC2
HC1
HB2
460.20
432.00
355.46
447.43
288.30
843.90
660.60
590.10
569.96
473.27
533.70
445.07
503.48
420.90
497.45
448.19
420.73
346.18
435.75
280.77
821.89
643.37
574.71
555.09
460.93
519.78
433.46
490.36
409.92
484.47
Inc. in
Rate
12.01
11.27
9.28
11.68
7.53
22.01
17.23
15.39
14.87
12.34
13.92
11.61
13.12
10.98
12.98
%
Change
in Rate
10/01/13 10/01/12
RUG-IV Fed.Pay Adjusted
GROUP Rates Fed. Rate
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
CA1
BB2
BB1
BA2
BA1
PE2
PE1
PD2
PD1
PC2
PC1
PB2
PB1
PA2
PA1
31
279.90
318.18
304.07
263.79
251.70
424.93
404.78
400.76
380.62
344.35
328.25
291.98
279.90
241.63
231.56
272.59
309.87
296.14
256.91
245.13
413.84
394.22
390.30
370.68
335.37
319.68
284.37
272.59
235.32
225.51
Inc. in
Rate
7.31
8.31
7.93
6.88
6.57
11.09
10.56
10.46
9.94
8.98
8.57
7.61
7.31
6.31
6.05
%
Change
in Rate
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%
2.68%

32. Contact Information
www.ODPKF.com
Christopher J. McCarthy, Partner
cmccarthy@odpkf.com
914.341.7018
Dorothea A. Russo, Partner
drusso@odpkf.com
914.341.7087
500 Mamaroneck Avenue
Harrison, NY 10528
914.381.8900
15 Essex Road
Paramus, NJ 07652
201.712.9800
665 Fifth Avenue
New York, NY 10022
212.286.2600
555 Hudson Valley Avenue
New Windsor, NY 12553
845.220.2400
32
Keith Solomon, Partner
ksolomon@odpkf.com
914.341.7078
One Stamford Landing
Stamford, CT 06902
203.323.2400
100 Great Meadow Rd
Wethersfield, CT 06109
860.257.1870