2008 Medicare and Medicaid Reimbursement and Research Nursing Facility Payment Update Monday, Octobe

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2008 Medicare and Medicaid Reimbursement and
Research Nursing Facility Payment
UpdateMonday, October 6, 2008800am 930am
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Reimbursement Update

• William Hartung, Vice President Research, AHCA
• Joseph Lubarsky, President, Eljay, LLC
• Janice Zalen, Senior Director of Special
  Programs, AHCA
• Steven Gregory, Director of Medicaid
  Reimbursement and Research, AHCA
• Peter Gruhn, Director of Research, AHCA
• Elise Smith, Vice President Reimbursement, AHCA

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LTC Trend Tracker TMYour Gateway to
Performance Improvement

• William H. Hartung
• Vice President Research
• American Health Care Association

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LTC Trend Tracker TM

• Data collection
• AHCA member benefit
• No cost
• Must submit RUGs patient days on a monthly basis

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LTC Trend Tracker TM

• Operational Uses
• Medicare Patient Distribution Compare your
  distribution to that of your peers using
  Utilization RUGs Report to analyze Medicare
  census by major RUG categories
• Revenue And Cost Compare your revenue and cost
  to your peers using the Cost Report section of
  the LTC Trend Tracker
• Operational Issues - Compare your operations to
  your competitors using OSCAR Staffing Report,
  OSCAR Resident Report, OSCAR Survey Citations
  Report, and the CMS Quality Measures Report

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LTC Trend Tracker TM

• Central contact for each provider group
• Identifies region(s) for organization
• Authorizes employee access to view and submit
  information

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LTC Trend Tracker TM

• Public information OSCAR
• Staffing
• Resident characteristics
• Survey citations
• Quality measures
• Public information Medicare cost report
• Private information RUGs patient days

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LTC Trend Tracker TM

• Information available through public sources can
  be identifiable
• Information obtained from providers will not be
  identifiable, it will be aggregated for analysis
  purposes

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LTC Trend Tracker TM
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Peer Groups

• You will able to compare your facility or
  organization to the facilities as follows
• Geographic areas
• All (nation)
• State
• County
• City
• Zip Code
• Congressional District

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Peer Groups

• Geographic Areas (cont)
• Core Based Statistical Area (CBSA)
• Urban
• Rural
• Facility Type
• Freestanding
• Hospital-Based

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Peer Groups

• Ownership
• For-Profit
• Not-For-Profit
• Government
• Company Structure
• In A Chain
• Not In A Chain

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OSCAR Staffing Report

• OSCAR Staffing Report
• Total Staff Hours PPD
• Total Nursing Hours PPD
• Director Of Nursing/Assistant Director Of Nursing
• Direct Care Staff
• Registered Nurses
• Licensed Practical Nurses
• Nurses Aides

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OSCAR Staffing Report

• Total Therapy Hours PPD
• Occupational Therapy
• Physical Therapy
• Speech Therapy
• Other Therapy
• Dietary Services Hours PPD
• Housekeeping Hours PPD
• Administration Hours PPD

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OSCAR Staffing Report

• Other Professional Hours PPD
• Other Services Hours PPD

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OSCAR Staffing Report

• Additional breakdown by full-time, part-time, and
  contract percentage

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OSCAR Resident Report

• Information from last 3 full surveys
• Does not include complaint survey information
  currently
• Activities Of Daily Living Dependence
• Bathing -- Transferring
• Dressing -- Eating
• Toilet Use

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OSCAR Resident Report

• Bowel/Bladder Status
• Catheterized
• Catheterized Post Admission
• Bladder Incontinent
• Bowel Incontinent

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OSCAR Resident Report

• Mobility
• Physically Restrained
• Physically Restrained Without Order At Admission
• Ambulatory
• Bedfast
• Contractures
• Contractures Developed Post Admission
• Dementia

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OSCAR Resident Report

• Skin Integrity
• Pressure Sores Stage 2
• Pressure Sores Stage 2 Developed Post
  Admission
• Special Care
• Hospice
• Dialysis
• Pain Management Program

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OSCAR Resident Report

• Other
• Advance Directives
• Influenza Immunization
• Pneumococcal Vaccination

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OSCAR Survey Citations Report

• Survey Results
• Average Number Of Tags
• Deficiency Free Providers
• Immediate Jeopardy
• Substandard Quality Of Care
• Deficiencies Greater Than Or Equal To G
• Highest Scope And Severity
• Select Up To 10 F-Tags
• Scope And Severity
• Percentage Of Peer Facilities With F-Tag

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Cost Report

• Occupancy
• Occupancy Rate
• Medicare Utilization
• Medicare Average Length Of Stay Days

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Cost Report

• Costs And Revenues
• Net Income As Percentage Of Revenue
• Total Revenue PPD
• Days Accounts Receivable Outstanding
• Total Cost PPD
• Nursing Cost PPD
• Dietary Cost PPD
• Administrative And General Cost PPD

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Cost Report

• Costs And Revenues (cont)
• Professional Liability Insurance Cost Per Bed
• Direct Therapy Cost Per Medicare Therapy Day
• Direct Non-Therapy Cost Per Medicare Therapy Day
• Direct Pharmacy Cost Per Medicare Day

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Cost Report

• Staffing And Compensation
• Total Staff Hours PPD
• Average Staff Wage Rate
• Average Contract Labor Wage Rate
• Benefits As Percent Of Salary
• Salary And Benefits As Percentage Of Total Cost
• Bad Debt
• Total Reimbursable Bad Debt Per Medicare Patient
  Day
• Non-Dual Eligible Bad Debt Per Medicare Patient
  Day

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Utilization RUGs Report

• Average Licensed Beds
• Average Medicare Days
• Average Medicare Rate PPD

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Utilization RUGs Report

• Major RUG Classifications
• Classification Rehab Plus Extensive Services
• Classification Rehab
• Classification Extensive Services
• Classification Specialty Care
• Classification Clinically Complex
• Classification Impaired Cognition
• Classification Behavioral
• Classification Physical Function

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Utilization RUGs Report

• Therapy Intensity
• Therapy Intensity Ultra High
• Therapy Intensity Very High
• Therapy Intensity High
• Therapy Intensity Medium
• Therapy Intensity Low

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Utilization RUGs Report

• Other Statistics
• Other Statistics Clinically Complex Without
  Depression
• Other Statistics RUGs Without Restorative
  Nursing
• Other Statistics 20 RUG Categories
• Other Statistics Lowest ADL RUGs

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CMS Quality Measures Report

• Post Acute Care
• Delirium In Post Acute Residents, Adjusted
• Pain In Post Acute Residents, No Adjustment (AE
  Goal)
• Pressure Ulcers In Post Acute Residents, Adjusted
• Influenza Vaccination Provided PAC
• Pneumococcal Vaccination Provided PAC

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CMS Quality Measures Report

• Chronic Care
• Physical Condition And Depression
• Pain, Inadequate Management, Adjusted (AE Goal)
• Pressure Ulcers, (High Risk), No Adjustment (AE
  Goal)
• Pressure Ulcers, (Low Risk), No Adjustment
• Physical Restraints, No Adjustment (AE Goal)
• Depression/Anxious Mood Worsening, No Adjustment

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CMS Quality Measures Report

• Chronic Care
• Physical Functioning And Weight Loss
• Residents Who Lose Too Much Weight
• Late Loss ADL Worsening, No Adjustment
• Bedfast, No Adjustment
• Locomotion Worsening, Adjusted
• Urinary System
• Indwelling Catheter, Adjusted
• Incontinence, Bowel Or Bladder (Low Risk)
• Urinary Tract Infections, No Adjustment

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CMS Quality Measures Report

• Chronic Care
• Vaccination
• Influenza Vaccination Provided
• Pneumococcal Vaccination Provided

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Medicaid Update Trends in Medicaid
Reimbursement

• Joseph Lubarsky
• President
• Eljay, LLC

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Eljay 2008 Medicaid Shortfall StudyPreliminary
Findings

• 41 states provided 2006 cost and rate data
• Able to project 2008 shortfall by obtaining 2008
  Medicaid rates in 43 states (Two state
  contractors provided 2008 projected shortfall
  analysis but not 2006 cost and rate data).
• 2006 (2007 if available) data projected to 2008
  rate period using market basket.
• 2008 rates and costs also reflect impact of any
  new or expanded provider tax programs if not in
  base year costs and rates.
• Audited or desk-reviewed data available in
  approximately 67 of the states.

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Shortfall per Medicaid Patient DayAll States in
Each Year
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Preliminary Findings
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Percentage of Costs Covered by theRates All
States in each Year
44

Preliminary Findings
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State Tax Revenue and Total MedicaidSpending
Growth, 1997 2008
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Prelimiary Findings
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Top 10 Shortfall States in 2006
(PPD)Preliminary Findings
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Top 10 Shortfall States in 2008
(PPD)Preliminary Findings
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Combined Medicare/Medicaid Shortfall for 2006
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Preliminary Findings
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Approximate FY 2009 Average Medicaid Rate
Increases
3
5
3.5
4.4
5
4.4
4.5
1.8
1
1
5
1.7
5.6
0
5
0
5.5
2.2
1.4
1.7
5.5
3.2
3.7
6
4.8
0
5.5
4.1
6
0.5
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Preliminary Findings
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State Budget Problems Worsening 13 States Face
New Shortfalls
Source Center on Budget and Policy Priorities
Report 09/08/08
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Medicaid UpdateLong Term Care Reform

• Janice Zalen
• Senior Director Special Projects
• American Health Care Association

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Medicaid Reform Rebalancing

• Definition Take away institutional bias, i.e.,
  serve more people in the community
• Result More Medicaid dollars to HCBS and more
  acute residents in NFs
• Reason Cost containment changing personal
  preferences
• Vehicles 1915(c) and 1115 waivers, real choice
  systems change grants, aging and disability
  resource centers, DRA, MFP Demonstration Grants

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Medicaid Reform

• Section 1115 waiver RI Application
• State contribution would be capped at 23 of the
  state's general fund budget
• Annual federal block grant
• NF care only for highest need level
• DRA In 08 CMS issued proposed rules for
• Self-directed personal assistance services
• Benchmark benefits provision
• HCBS state plan services

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Current Status Rebalancing

• Medicaid spending for elderly and adults with
  physical disabilities
• 75 pays for nursing facility care in 2006
• Huge variation from state to state
• HCBS spending increased by 6.1 billion or 65
  from 01-06
• NF expenditures increased by 6.6 billion or 16
  from 01-06
• Medicaid spending for Developmental Disabilities
  population in 2006
• 39 to institutional care (ICFs/MR)
• Medicaid spending for all populations
• 63 to NFs and ICFs/MR
• 37 to HCBS

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AHCA / NCAL / Alliance LTC Finance Reform
Proposal

• Goal Help shape the future towards a
  sustainable array of quality LTC services
• Currently Medicare Medicaid pay almost 70 of
  LTC and post acute care costs
• LTC Finance Reform Proposal Highlights
• Infuses private funding into LTC system
• New Personal responsibility expectation federal
  catastrophic LTC coverage for Medicare eligibles
  major federal education campaign improved
  financial products to help prepare for LTC needs
• Exemption for low income individuals
• Benefits NF, ALF, HCBS, Medicare Advantage

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AHCA / NCAL / Alliance LTC Finance Reform
Proposal

• Post-Acute Care Highlights
• Site neutral prospective payment system
• National post-acute patient assessment tool
• Status of Proposal
• Released in January response favorable
• Some common ground with other proposals
• Bob Van Dyk presented to health innovations
  breakfast at the Republican Convention

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AHCA / NCAL / Alliance LTC Finance Reform
Proposal

• Next Steps
• Contract to score the proposal
• Estimate the budgetary effects of the proposal
• To be completed late January
• Continue to give presentations and to publicize
  the plan
• Additional Information
• http//www.ahcancal.org/advocacy/Documents/AHCA-A
  llianceJointHighlights.pdf

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Medicaid UpdateMedicare Advantage Special
Needs Plans

• Steven Gregory
• Director Medicaid Reimbursement and Research
• American Health Care Association

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Special Needs Plans (SNPs)

• SNPs are a type of Medicare Advantage Plan that
  serve select special needs groups
• Dual Eligibles
• Institutionalized Individuals
• Chronically Ill
• SNPs promote Medicare and Medicaid integration
• As of May 2008, close to 1.2 million Medicare
  beneficiaries were enrolled in SNPs offered by
  160 MA companies that collectively offer 769
  benefit options
• Dual SNP 844,010
• Institutional SNP 133,982
• Chronic SNP 188,679

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Managed Care Special Needs Plans Convention
Session F-3

• Goals and Objectives
• Understand trends in plan development and
  enrollment growth of Managed Care SNPs
• Gain awareness of the implications for providers
  in urban and rural areas who contract with SNPs
• Discuss proposed Congressional reforms to SNPs
• Presenters include
• Jill Mendlen, Tom Coble, Steve Chies
• Tuesday, October 7th at 1030 AM

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Medicare UpdateReimbursement Update

• Peter Gruhn
• Director of Research
• American Health Care Association

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CMS FY2009 SNF PPS Final Rule

• Final rule published August 8, 2008
• Final rule effective October 1, 2008
• SNF market basket increase of 3.4
• No forecast error adjustment of 3.3
• 128 add-on which began on October 1, 2004 for
  HIV/AIDS patient remains
• No market basket forecast error correction
  because error less than new threshold
• The labor-related share will be 69.783 down from
  70.249 in FY 2008
• CMS Financial Impact 780 million (11 ppd)

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SNF Reimbursement and FY 2010 Look Out

• The Deteriorating Federal Budget
• SNF PPS Forecast Error Adjustment
• The STRIVE project and SNF PPS Reform
• MDS 3.0 Implementation
• Wage Index Reform
• Nursing Home Value Based Purchasing (aka P4P)

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The Deteriorating Budget
Source OMB. 2008 and 2009 estimates from
Presidents FY2009 budget
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The Increase in Debt is Far Greater Than the 410
Bn Deficit
Source OMB, SBC.
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Baby Boomers and the Demographic Tidal Wave
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The Deteriorating Budget

• Last years FY 2008 Budget Proposal
• No market basket for 3 years, market basket 0.5
  percentage points for 2 years
• Phased elimination of Medicare bad debt
  reimbursement
• Survey revisit fee

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Forecast Error Adjustment Round 2

• 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 FY2009 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
• CMS proposed to recalibrate the nursing weights
  such that payments would be the same
• Payments for FY 2009 were estimated to decline by
  770 million

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Economic Impact of the 770 Forecast Error
Adjustment Cut
Reduction in federal, state, and local tax
revenue 661.3 million
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Forecast Error Adjustment

• AHCA commented extensively on the NPRM, and
  lobbied actively against the proposed adjustment
• In the final rule, CMS
• Decided not to proceed with the proposed
  recalibration at this time pending further
  analysis
• Was confident that it employed the correct
  recalibration approach
• Would continue to evaluate the issue, and expects
  to implement an adjustment in the future (FY
  2010?)

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Staff Time and Resource Intensity Verification
(STRIVE) Project

• Conducted for CMS by the Iowa Foundation for
  Medical Care (IFMC).
• Purpose To determine the amount of time that
  nursing home staff spend caring for residents,
  and examine and evaluate changes to the SNF PPS
  RUG-III payment system.
• First national nursing home time study update
  since the establishment of the RUG-III case mix
  weights back in 1997.
• Data collected from over 10,000 residents in 205
  facilities in 15 states

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STRIVE UpdateDistribution by State
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STRIVE Update

• CMS expected to update the nursing and therapy
  weights for FY 2010 using STRIVE data
• CMS is also reevaluating RUG-III and examine need
  for RUG-IV
• Examine lookback, examine special populations,
  reexamine rehab ext srv categories, analyze
  NTAS usage, adapt to MDS 3.0, etc.
• Phase 2 analytic report to be submitted to CMS in
  late 2008 / early 2009
• AHCA expects that the Phase 2 work will be the
  basis for a major refinement to the SNF PPS for
  the FY2010 SNF PPS proposed rule.

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STRIVE UpdateSpecial Population Distribution
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STRIVE Update

• CMS expected to update the nursing and therapy
  weights for FY 2010 using STRIVE data
• CMS is also reevaluating RUG-III and examine need
  for RUG-IV
• Examine lookback, examine special populations,
  reexamine rehab ext srv categories, analyze
  NTAS usage, adapt to MDS 3.0, etc.
• Phase 2 analytic report to be submitted to CMS in
  late 2008 / early 2009
• AHCA expects that the Phase 2 work will be the
  basis for a major refinement to the SNF PPS for
  the FY2010 SNF PPS proposed rule.

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MDS 3.0 Update

• Goals for revision of MDS
• To make the MDS more clinically relevant while
  still achieving the federal payment mandates and
  quality measures
• To improve ease of use
• To improve accuracy
• To increase MDS efficiency
• To allow residents to be heard by introducing
  interview questions
• Early reviews suggest MDS 3.0 appears to be a
  significant improvement over MDS 2.0

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MDS 3.0 Update Timeline

• MDS 3.0 Implementation Announcement Oct 07
• Draft MDS 3.0 Released Jan 08
• MDS 2.0 3.0 crosswalk released Aug 08
• Draft MDS 3.0 specifications expected to be
  released to vendors and providers with
  preliminary STRIVE changes Nov 08

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MDS 3.0 Update Timeline

• Final MDS 3.0 specifications with STRIVE changes
  expected to be released Feb 09
• FY 2010 SNF payment update with Federal Register
  notice RUG changes Jul 09
• MDS 3.0 Implementation Oct 09 (FY 2010)
• Implementation could be delayed

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Wage Index Reform

• Tax Relief and Health Care Act of 2006 (TRHCA)
  mandated a revision to the inpatient hospital PPS
  wage index in FY 2009
• MedPAC made recommendations on an alternative
  wage index methodology
• CMS retained Acumen LLC to examine the current
  IPPS and proposed MedPAC alternative wage index
  methodologies
• Recommendations expected for FY 2010

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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 Group 200-250 facilities in 4 or 5 states
• Comparison Group Same size and distribution
• Participation is voluntary
• Contactor Abt and Associates

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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 provide high
  quality care 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.

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NHVBP Demonstration Update

• Proposed Performance Measures
• Staffing (level and turnover)
• Rate of potentially avoidable hospitalizations
• MDS-based resident outcome measures
• State survey based outcome measures

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NHVBP Demonstration Update

• Status The Demonstration is awaiting clearance
  from CMS to proceed.
• Next Steps
• Obtain OMB clearance on demo participation
  invitation letter to states OMB reviewing
• Solicit and select states
• Solicit nursing home participation
• Obtain OMB waiver clearance
• Data collection phase not likely to begin before
  mid-2009.

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Medicare UpdateReimbursement and Regulatory
Update

• Elise Smith
• Vice President Reimbursement
• American Health Care Association

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Medicare Administrative Contractors

• The MMA (2003) mandated that a new MAC authority
  replace current Part A FIs and Part B carriers
• This Medicare contracting reform must be
  implemented by 2011
• Currently -- 23 FIs and 17 carriers
• To be replaced by 19 MAC contractors
• 15 PartA/Part B MACs
• 4 specialty MACs for DME
• Solicitation to award takes 9 to 12 months
• Transition of workload 6-13 months after award

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Differences Between Current FI and MAC
Contracting

• Current Contracts
• Restrictions on who can compete
• Limited to reimbursing contractor cost
• Performance standards and criteria in Federal
  Register
• Either party may terminate
• Must submit monthly expenditure reports
  approval not needed to access funds
• Contracts/agreements renewed year to year

• Future Contracts
• Full and open competition
• Various types of contracts
• Performance standards in contract
• Only government may terminate contract
• Must submit voucher to get paid after approval of
  voucher
• Contract period of performance is a maximum of 5
  years and then recompeted

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MAC Benefits

• Serve as single point of contact for providers
  and suppliers for all claims related business
• Assist providers and suppliers with obtaining
  information on behalf of patients about items or
  services received from another provider or
  supplier that could affect claims payment
• Improved provider education and training
• Role for provider and suppliers in contractor
  evaluation via surveys
• Timeliness on claims processing and payment
• A more even distribution of claims processing
• Creation of a modernized administrate IT platform
  that incorporates the latest technological
  advances and standardization practices

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Timetable Overview

• First RFPs April 15, 2005
• Last award date -- September 2008
• FFS workload transitioned to MACs by October 2009

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MAC Part A/B Awards to Date
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15 Part A/B MAC Jurisdictions
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Part A/B MAC Jurisdiction States
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DME MAC Awards

• Jurisdiction A National Heritage Insurance
  Company
• Jurisdiction B AdminiStar Federal Inc.
• Jurisdiction C CIGNA
• Jurisdiction D Noridian

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Durable Medical Equipment
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Geographic Assignment Rule

• Providers who are not in a special category will
  be assigned to the MAC that covers the state
  where the provider is located. There are two
  exceptions
• Exception 1 -- A qualified chain provider (QCP)
  may request that its members providers be served
  by a single A/B MAC specifically, the A/B MAC
  that covers the state where the QCPs home office
  is located. QCP is defined as (42 CFR
  421.404(b)(2)
• Ten or more hospitals, SNFs, and/or critical
  access hospitals, under common ownership or
  control, collectively totaling 500 or more
  certified bedsor
• Five or more hospitals, SNFs, and/or critical
  access hospitals, under common ownership or
  control in three or more contiguous states,
  collectively totaling 300 or more certified beds
• CMS may assign non-QCP providers, as well as ESRD
  providers to an A/B MAC outside of the prevailing
  geographic assignment rule only to support the
  implementation of MACs or to serve some other
  compelling interest of the Medicare program
• Exception 2 Provider-based entities (e.g.,
  hospital-based SNF) will be assigned to the MAC
  that covers the state where the main parent
  provider is assigned.

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Local Coverage Determinations

• As is current practice, MACs will be required to
  develop LCDs in accordance with chapter 13 of the
  Program Integrity Manual.
• As the MACs commence operations in their
  jurisdictions, each MAC will consolidate all the
  LCDs for its jurisdiction by selecting the least
  restrictive LCD from the existing LCDs on the
  topic.
• National coverage decisions will continue to be
  issued by CMS.

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Additional MAC Information

• See MLN Matters Numbers MM5979, SE0624, and
  SE0642 which can be found at http//www.cms.hhs.
  gov/mlnmattersarticles/
• SE0624 includes a chart listing all the states in
  the various primary and special and jurisdictions
  and the procurement schedule for each
  jurisdiction
• MAC information is also available on the CMS web
  at http//www.cms.hhs.gov/MedicareContractingRefo
  rm/

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Recovery Audit Contract (RACs)

• Purpose of the pilot required by the MMA (2003)
• To determine whether use of RACs is
  cost--effective
• Identify and collect Part A and Part B Medicare
  claims overpayments and underpayments that were
  not previously identified by the MACs
• Division of Work
• Medicare Secondary Payer Overpayments
• Non-MSP Claims review
• The Demo in 3 States
• California, Florida and New York (with
  responsibility for Arizona, SC and MA)
• Selected because they are the largest states in
  terms of Medicare utilization
• Pilot ended in March 2008
• Tax Relief and Health Care Act of 2006 Expands
  program to all states no later than January 1,
  2010!

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Payment to RACs

• RAC paid on contingency basis Starting March 1,
  2006, RACs received an equivalent percentage for
  all underpayment and overpayment identifications
• Providers permitted to appeal any negative
  determinations to their MAC

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What and Who Are the RACs?

• Private audit/consulting firms who contract with
  the DHHS to carry out the Medicare Claims reviews
• Legislation directed that the RACs could not be
  fiscal intermediaries or carriers
• Preference given to contractors who have
  demonstrated proficiency for cost control or
  recovery audits with private insurers, health
  plans or providers

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5 Contracts Awarded March 28, 2005

• California
• Claim RAC PRG-Schultz
• California claims RAC responsible for the claims
  submitted to the Arizona Medicare Administrative
  Contractor (MAC) Arizona plus the claims
  submitted to Mutual of Omaha from providers in
  California and Arizona
• Medicare Secondary Payer (MSP) RAC -- Diversified
  Collection Services
• Florida
• Claim RAC Health Data Insights
• Florida claims RAC responsible for SC plus the
  claims submitted to Mutual of Omaha from
  providers in FL and SC
• MSP RAC Public Consulting Group
• New York
• Claim RAC -- Connolly Consulting
• NY claims RAC responsible for MA plus the claims
  submitted to Mutual of Omaha from providers in
  NY and MA
• MSP RAC Public Consulting Group

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Summary of Net Savings in RAC Demo Both Claims
RACs and MSP RACs

• CMS Evaluation Report (6/28/2008) -- March 2005
  through March 27, 2008
• Total Improper Payments Corrected -- 1,030.5
• Overpayments collected -- 992.7M
• Underpayments paid back -- 37.8M
• PRG IRF Re-reviews -- 14M
• Cost to Operate RAC Demonstration -- 201.3M
• Net Savings to the Trust Funds -- 693.6M

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Overpayments Collected By Provider Type Through
3/27/08 Claim RACs Only

• Inpatient hospital -- 85 -- 828.3M
• Inpatient Rehabilitation Facility -- 6 -- 59.7M
• Outpatient Hospital -- 4 -- 44M
• Physician -- 2 -- 19.9M
• Skilled Nursing Facility -- 2 -- 16.3M
• Durable Medical Equipment -- 1 -- 6.3M
• Ambulance/Lab/Other -- lt1 -- 5.4M

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Problems Reported in California

• Recoupment before appeal
• Violating statute of limitations many denials
  going back more than three years
• Contractor PRG-Schultz -- quality of medical
  review alleged to be poor
• RAC receives a contingency fee even if
  overpayment determinations are later overturned

105
AHCA Initiatives

• Letters of June 21, September 25, and October 3,
  2007 to CMS outlining problems
• Personal communications with CMS and the Hill
• Hill letters to CMS
• Filed comments on the CMS RAC RFP for expansion
  of the program

106
CMS Improvements to The RAC Permanent Program

• Having all new issues a RAC wishes to pursue for
  overpayments validated by CMS or an independent
  RAC Validation Contractor and to share the
  upcoming new issues with provider organizations
• Requiring each new RAC to hire a physician
  medical director as well as certified coders
• Requiring the RACs to pay back contingency fees
  when an improper payment determination is
  overturned at any level of appeal
• Changing from a 4-year look-back period to a
  3-year look-back period
• Adding a maximum look-back date of October 1,
  2007
• Adding a Web-based application that will allow
  providers to look up the status of medical record
  reviews

107
Additional CMS Mandated Improvements that Were
Not Required Or Were Optional Under Demo

• Coding experts
• Credentials of reviewers provided upon request
• External validation process
• Limits on of medical records requested CMS
  will establish uniform limits
• Reason for review listed on request for records
  letters and overpayment letters
• Public disclosure of RAC contingency fees

108
CMS RAC Expansion Plans

• By 2010, CMS plans to have 4 RACs in place each
  RAC to be responsible for ¼ of the country
• First Wave of States to Be Included in The
  National Program -- Oct 2008
• Arizona, Colorado, Florida, Indiana,
• Maine, Massachusetts, Michigan, Minnesota,
  Montana
• New Hampshire, New Mexico, New York, North Dakota
• Rhode Island, South Carolina, South Dakota, Utah,
  Vermont, Wyoming 
• Second Wave  -- March 2009
• California, Hawaii, Nevada, Oklahoma, Texas
• Third Wave August 2009
• Rest of the states

109
Part B Competitive Bidding

• MMA Section 301 Competitive Bidding Areas
• MMA Section 302 Quality standards for certain
  items
• MMA Section 302 -- Process of accreditation
• MMA Section 302 -- Phase-in competitive bidding
  programs program to occur in
• 10 of the largest Metropolitan Statistical Areas
  (MSAs) called Competitive Bid Areas (CBAs) in
  2008
• 70 additional MSAs or CBAs in 2009 and
• additional areas after 2009.
• Proposed rule May 1, 2007
• Final Rule April 10, 2007

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Competitive Bid Areas in 2008

• Charlotte-Gastonia-Concord, NC-SC
• Cincinnati-Middletown, OH-KY-IN
• Cleveland-Elyria-Mentor, OH
• Dallas-Fort Worth-Arlington, TX
• Kansas City, MO-KS
• Miami-Fort Lauderdale-Miami Beach, FL
• Orlando-Kissimmee, FL
• Pittsburgh, PA
• Riverside-San Bernadino-Ontario, CA
• San Juan-Caguas Guaynabo, PR

111
Product Categories

• Oxygen Supplies and Equipment
• Standard Power Wheelchairs, Scooters, and Related
  Accessories
• Complex Rehabilitative Power Wheelchairs and
  Related Accessories
• Mail-Order Diabetic Supplies
• Enteral Nutrients, Equipment, and Supplies
• Continuous Positive Airway Pressure (CPAP)
  Devices, Respiratory Assist Devices (RADs), and
  Related Supplies and Accessories
• Hospital Beds and Related Accessories
• Negative Pressure Wound Therapy (NPWT) Pumps and
  Related Supplies and Accessories
• Walkers and Related Accessories and
• Support Surfaces (Group 2 and 3 mattresses and
  overlays) in Miami-Fort Lauderdale-Miami Beach,
  FL and San Juan-Caguas-Guaynabo, PR only

112
Competitive Bidding Delayed

• Section 154 of the Medicare Improvements for
  Patients and Providers Act of 2008 (enacted July
  15, 2008) delayed DMEPOS for 18 months January
  2010
• The bidding process will begin again for the
  first round CBAs in 2009 and the second round in
  2011
• New law terminated contracts that the government
  awarded to 325 suppliers
• Original DME payment rates in effect prior to
  July 1, 2008 were reinstated retroactively
• However, all DMEPOS suppliers must be accredited
  by September 30, 2009

113
Part B Therapy Caps

• Originally enacted in the Balanced Budget Act
  (BBA) of 1997
• Successive postponements by CMS and moratoria due
  to NASL and AHCA legislative and litigation
  efforts
• Caps reimposed on January 1, 2006
  --approximately 1,740 per beneficiary
• Deficit Reduction Act of 2005 (S. 1932) --
  Congress required CMS to develop medically
  necessary exceptions process for 2006
• CMS developed Two Step Exceptions process
• Auto-exceptions process related to conditions and
  criteria
• Secondary process calling for more documentation

114
Exceptions Process Extended

• Medicare Improvements for Patients and Providers
  Act of 2008 (enacted July 15, 2008) extended
  therapy caps exceptions process through December
  31, 2009
• Prior to new law exceptions process terminated on
  July 1, 2008
• Claims submitted with the therapy cap exceptions
  modifier were to be processed as soon as the
  payment rates had been activated
• Claims submitted without the modifier, and
  rejected or denied, were to be resubmitted with
  the modifier for reimbursement
• PT and SLP services together -- cap is 1810 for
  CY 2008
• For OT services, cap is 1810 for CY 2008

115
Key Issue Need For An Alternative Payment
Methodology

• The cap is not clinically driven, and extension
  of exceptions process is a continual legislative
  cliff hanger
• Need for clinically driven model
• AHCA ongoing efforts with other stakeholders
  (NASL and the Alliance for Quality Nursing Home
  Care) to collect and analyze data as a basis for
  future efforts
• Consistent communication with both the Hill and
  CMS
• CMS contracted with Research Triangle Institute
  (RTI) to develop payment method alternatives to
  current system
• RTI Project
• 5 year project
• Developing a data collection tool for
  ambulatory population
• Appears to split ambulatory vs non-ambulatory
  population with post-acute demo CARE tool to be
  used for non-ambulatory population

116
Social Security AgencyMaster-Sub Account Issue

• Social Security recipients can currently direct
  deposit into accounts related to pay-day
  lenders, check cashing services, various
  non-financial institutions, recipient investment
  accounts, religious order pooled accounts, and
  nursing facility resident trust funds
• All are under threat of being prohibited
• Wall Street Journal expose and hearing on pay-day
  lender and check cashing abuses
• SSA revisiting key statutory prohibition on
  assignment of the benefit
• AHCA opposing strongly Nursing facility
  resident trust fund is bonded, and process is
  highly regulated

117
Identity Theft Red Flag Regulations

• New FTC legislation and regulations have been
  adopted to deter, detect, and mitigate identity
  theft
• Red flag regulations become effective November 1,
  2008
• Regulations Have Two Parts -- Both apply to LTC
  facilities
• Part 1 Use of credit reports verification of
  addresses
• Part 2 Applies to any entity that provides
  goods or services w/o demanding payment up front
• Memo and guideline/checklist provided by AHCA
  General Counsel firm of Reed Smith

118
Contact Us

• LTC Trend Tracker 651-772-6556
  customer.support_at_LTCTrendTracker.com
• William Hartung 202-898-2841 whartung_at_ahca.org
• Joe Lubarsky 502-245-8895jlubarsky_at_insightbb.com
  
• Janice Zalen 202-898-2831 jzalen_at_ahca.org
• Steven Gregory 202-898-2849 sgregory_at_ahca.org
• Peter Gruhn 202-898-2819 pgruhn_at_ahca.org
• Elise Smith 202-898-6305 esmith_at_ahca.org

119
Questions?
120
LTC Trend Tracker TM

• To Sign Up Your Organization To Use LTC Trend
  Tracker TM
• Visit The LTC Trend Tracker TM Registration Page
  At http//www.LTCTrendTracker.com
• Call LTC Trend Tracker At 651-772-6556
• For More Information About LTC Trend Tracker TM
• Visit The LTC Trend Tracker TM At
  http//www.LTCTrendTracker.com
• Call Bill Hartung (202-898-2841)
• or Peter Gruhn (202-898-2819)