Tennessee Nursing Facility Case Mix Rate Setting Training May 21, - PDF document

Tennessee Nursing Facility Case Mix Rate Setting Training May 21, 2018 Presented by: Daniel Brendel Kevin Londeen, CPA CONTACT INFORMATION Myers and Stauffer 700 W. 47 th Street, Suite 1100 Kansas City, MO 64112 PH: (800) 374-6858 Email: TNCaseMix@mslc.com Website: www.mslc.com/Tennessee 2 1

DOWNLOAD INFORMATION Visit the Myers and Stauffer Tennessee Website www.mslc.com/Tennessee to download the following information: • Slides from this webinar • Training Library • Frequently Asked Questions (FAQ) Document • Resident Roster User Guide • Tennessee Web Portal User Guide 3 AGENDA 1 Case Mix System Overview 2 Cost Report Use in Rate Setting 3 Rate Setting Cost Component Calculation Overview Direct Care Cost Component Administrative & Operating Cost Component Capital (FRV) Component Cost-Based Component Quality Component 4 2

AGENDA 4 Adjustments to the Rate Budget Adjustment Factor (BAF) Phase-In Adjustment Questions & Answers 5 5 Case Mix System Overview 3

CASE MIX SYSTEM OVERVIEW What is Case Mix? • “Case” refers to residents • “Mix” refers to differences • “Case Mix” describes differences in residents within a population • A Case Mix Reimbursement System is any system that utilizes patient case mix index (CMI) or acuity during the rate setting process 7 CASE MIX SYSTEM OVERVIEW Why Case Mix? • Improve access to care for heavy care residents by paying more • Enhance quality of care by linking reimbursement to the resource needs and requirements of residents • Reduce financial incentives for “low needs” residents • Improve efficiency and contain costs by paying prospectively 8 4

CASE MIX SYSTEM OVERVIEW Tennessee Case Mix System • Price and cost hybrid based reimbursement system • Majority of rate components are “quality informed” • July 1 semi-annual rates will be updated for the following factors: • Changes in Facility Licensed Beds (as of April 1 prior) • Inflationary adjustments or rebase of medians • Facility specific Medicaid CMI changes • Capital Improvement Update Requests • Budget Adjustment Factor Changes 9 CASE MIX SYSTEM OVERVIEW Tennessee Case Mix System • January 1 semi-annual rates will be updated for the following factors: • Facility specific Medicaid CMI changes • Capital Improvement Update Requests • Budget Adjustment Factor Changes 10 5

CASE MIX OVERVIEW Tennessee Case Mix System • Case Mix Index Calculation • Case Mix Index is the average numerical value of the resident acuity in a nursing facility based on the applicable resource utilization group weights (RUG) • Resource Utilization Group-IV (RUG-IV) 48 Grouper Resident Classification System is used to classify residents 11 CASE MIX OVERVIEW Tennessee Case Mix System • Case Mix Index Calculation • Time Weighted (TW) CMI Calculation Method • CMI average of all applicable active MDS assessment weighted by the number of days in the period that the MDS assessment was considered active • See Appendix A for RUG Grouper and TW CMI example 12 6

RUG-IV 66-Group Rehabilitation Plus Extensive RUG-IV 48-Group MEDICARE GROUPER Extensive Services Rehabilitation MEDICAID GROUPER Extensive Rehabilitation Services Special Care Special Care High High Special Care Special Care Low Low Clinically Clinically Complex Complex Behavioral Symptoms & Behavioral Symptoms & Cognitive Performance Cognitive Performance Reduced Physical Reduced Physical Function Function 13 CASE MIX OVERVIEW Tennessee Case Mix System • Case Mix Index Calculation (cont.) • National Nursing-Only CMI Weights are utilized for the RUG-IV 48 Grouper • Index Maximization Classification Method • If a resident classifies into more than one RUG-IV group, the RUG with the greatest CMI is utilized 14 7

CASE MIX OVERVIEW Tennessee Case Mix System • Case Mix Index Calculation (cont.) • An End-Of-Therapy-Date reconciliation process is utilized to more accurately capture RUG classification • This process will occur through the M&S Tennessee MDS Web Portal • Both a preliminary and final resident roster report will be provided to facilities • This process allows facilities a set amount of time to correct and amend MDS records prior to rate setting use 15 CASE MIX OVERVIEW Tennessee Case Mix System • Case Mix Index Calculation (cont.) • For more detailed information on case mix index calculation, the following are available on the Myers and Stauffer website (www.mslc.com/Tennessee) • Resident Roster User Guide • TN Portal User Guide • Time-Weighted Case Mix Index Report Calendar 16 8

CASE MIX OVERVIEW Tennessee Case Mix System Other System Changes: • Billing Changes • Revenue Code 191 will be used for the blended rate • Revenue Code 192 will be used ONLY for ERC 17 Cost Report Use in Rate Setting 9

COST REPORT USE IN RATE SETTING Two separate cost reporting forms will be used for Medicaid rate setting purposes: • Medicare Cost Report Form • CMS 2540-10 cost reporting form (free-standing) • CMS 2552-10 cost report form (hospital-based) • Medicaid Supplemental Cost Report Form • TN specific Microsoft Excel-based cost report form 19 COST REPORT USE IN RATE SETTING • MediCARE Cost Reporting Form • Basis for overall allowable cost • MediCAID Supplemental Cost Reporting Form • Basis for rate component classification and Medicaid allowable cost 20 10

COST REPORT USE IN RATE SETTING MediCARE Cost Reporting Form • Primary worksheets used for Medicaid rate setting • Worksheet A series • A, A-6, A-8, A-8-1, A-8-2 • Determine total allowable cost center expense • Worksheet B series • B-1, B part I • Apportionment of general service (overhead) expense to revenue producing and non-reimbursable cost centers 21 COST REPORT USE IN RATE SETTING MediCAID Supplemental Cost Reporting Form • Schedule B-2 Provider Census • Medicaid CR census information used for rate setting • Provider private room resident days used for quality incentive calculation for FRV rate 22 11

COST REPORT USE IN RATE SETTING MediCAID Supplemental Cost Reporting Form • Schedule C Specific Cost • Schedule C captures costs that will be segregated from their root Medicare CR cost center (Wkrsht A, Col 7 amounts), in order to be treated separately for Medicaid rate setting classification purposes • MediCAID CR schedule C costs will in essence create a subscripted cost center line for each cost item listed for cost component tracking purposes 23 COST REPORT USE IN RATE SETTING MediCAID Supplemental Cost Reporting Form • Schedule D Medicaid-Only Adjustments • Schedule D captures Medicaid only cost report adjustments, in order to adjust MediCARE CR (Wrksht A, Col. 7) expense to comply with Medicaid allowable cost guidance • Owner/Administrator cost limits, straight-line depreciation, Medicaid covered services, provider assessment expense, bad debt, etc. • Creates Medicaid allowable cost totals 24 12

COST REPORT USE IN RATE SETTING Rate Setting Mechanics • MediCARE CR Wkrsht A, Col. 7 is the base for MediCAID rate setting • All MediCARE CR general service cost center expense and routine SNF/NF cost center expense will be designated as Administrative and Operating cost component expense • All direct ancillary expense (lines 40-59.99) is excluded from Medicaid rate setting • All direct and indirect costs to outpatient, special purpose, and non- reimbursable cost centers (lines 60.00 – 99.99) are excluded from Medicaid rate 25 COST REPORT USE IN RATE SETTING Medicaid Medicaid Medicaid Medicaid CR CR CR CR Medicare Medicare Salary Other Salary Other Col. 7 Salary Col. 7 Other Reclasses Reclasses Adjust. Adjust. Ln. # Description Exp. Exp. (Sch. C) (Sch. C) (Sch. D) (Sch. D) Total 9.00 Nursing Administration 747,130 141,615 (732,776) (1,000) (2,000) (25,000) 127,969 9.00 Reconcile DON - - 450,763 1,000 - - 451,763 9.00 Reconcile RN - - 137,001 - - - 137,001 9.00 Reconcile MDS Coord. - - 145,012 - - - 145,012 26 13

COST REPORT USE IN RATE SETTING Rate Setting Mechanics • Only expenses listed on MediCAID CR schedule C can be included in a cost component other than Administrative and Operating or Excluded • Appendix B contains a cost center crosswalk for Medicaid rate setting purposes • MediCAID CR schedule D and C changes are incorporated into the MediCARE CR • Each cost center is tracked separately through the MediCARE cost-finding apportionment process 27 COST REPORT USE IN RATE SETTING Rate Setting Mechanics • Allocated Overhead expense will be included as follows for Medicaid rate setting purposes: • Cost allocated to reimbursable ancillary cost center will be included in the same cost component as the original expense. • Costs allocated to outpatient, special purpose, and non- reimbursable cost centers (lines 60.00-99.99) will be excluded • Pooled Employee Benefits will be allocated to cost components based on percentage of salary expense 28 14