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Industry Challenges, KPI’s and More!
October 7, 2020
Introduction to Our Panelists
Michael Kessler, CPA, CGMA
Partner – Health Care
Brandon Harlan, CPA
Partner – Health Care
Richard Snyder
Health Care Consultant
Kristopher Pattison
Sr. Mgr.– Clinical Consulting
Question & Answers • Q&A Chat Function ➽• Or Email questions to panelists
Overview
• Challenging Landscape
• Challenges Outside of COVID???
• Key Performance Indicators (KPI’s) and
Benchmarks
• Patient Driven Payment Model (PDPM)
• Patient Driven Groupings Model (PDGM)
• Questions
Challenging Landscape
COVID-19 Impact on the Industry• Providers need to adapt quickly
• Reconsider use of spaces and units
• Considerations for telehealth
• Evaluate increased cost structure
• Evaluate lost revenue
• Evaluate right sizing
• Will this lead to a new “norm”?
• Other considerations
Challenging Landscape
Census Impact• Skilled Nursing Facility (SNF)
- Quarantine
- Admissions
- Elective Procedures
• Personal Care (PC) / Assisted Living
Residences (ALRs)
- Family Concerns
- Necessity for Care
Challenging Landscape
Census Impact (continued)• Independent Living Facility (ILF)
- Market Conditions
- Reluctance to live in a
“communal” setting
Challenging Landscape
Staffing Impact• Increased recruitment and retention challenges
• Concern of employee exposure
• Work absence due to quarantine
• Unemployment financial incentive
• Negative stigma due to public perception/media
• Agency nursing
• Wage competition
Challenging Landscape
Access to Personal Protective Equipment• Challenges obtaining and accessing
Personal Protective Equipment (PPE)
• Increase in product cost
• Higher product usage
• Impact on reopening procedures
Challenging Landscape
Financial Considerations• Bond/Loan Covenant Impact
- Waivers
- How are banks considering government
funding in relation to covenants?
- Begin the conversation
• Stock Market
Challenging Landscape
Government Support• Payroll Protection Program (PPP)
$659 Billion
• CARES Act Provider Relief Funds (PRF)
$175 Billion
• Pennsylvania Senior Protection Act
$489 Million
Challenges Beyond COVID???
• MA MCO Contract Renewals
• Key Performance Indicators (KPI’s) and Benchmarks
• Patient Driven Payment Model (PDPM)
• Patient Driven Groupings Model (PDGM)
KPI’s / Benchmarking
Financial Ratios• Current Ratio - Measures the ability to meet current liabilities with current assets.
• Days in Accounts Receivable – Measures the time it takes to collect cash.
• Days Cash on Hand – Measures the number of days cash will last given a stoppage in collections.
• Debt to Equity / Net Assets – Measures how leveraged an entity is, against its equity / net assets.
• Operating Margin – Measures the portion of operating revenue available after operating expense is met.
• Average Payment Period – Measures average time it takes to pay an expense or liability.
• Debt Service Coverage Ratio – Reflects an entity’s ability to fund debt service with cash flow.
• Average Age of Plant – Measures an entity’s age of fixed assets and capital equipment.
KPI’s / Benchmarking
Financial Ratios2019
ALL MULTI SINGLE NFP PROFIT MULTI SINGLE
Current Ratio 2.04 1.35 2.26 1.77 2.42 High N/A N/A
Days in Accts. Receivable 33.34 31.22 34.11 34.45 31.68 Low 17.00 18.00
Days Cash on Hand 33.86 26.03 36.99 28.87 42.83 High 341.00 388.00
Debt to Equity / Net Assets 3.27 3.31 3.25 2.81 3.95 Low N/A N/A
Operating Margin 0.11% 0.88% -0.17% -0.49% 1.00% High 0.75% 0.26%
Avg. Payment Period 12.66 20.36 9.73 14.93 9.45 Low* N/A N/A
Debt Service Coverage 1.81 2.00 1.74 2.02 1.58 High 2.99 2.64
Avgerage Age of Plant 14.14 11.98 14.92 13.95 14.42 Low* 12.71 12.26
Number in Benchmark (ACT) 41
Number of For Profits 14
Number of NFPs 27
Number of Single Site 31
Number of Multi Site 10
CARF - Commission on Accreditation of Rehabilitation Facilities - Ratio's are 2019 CARF benchmarks, using 2018 information.
* The determination of whether the benchmark should be High or Low, could vary based on an entity's individual circumstance.
Arnett Carbis Toothman, LLP CARF
KPI’s / Benchmarking
Financial Ratios - Definitions
• Current Ratio - Current Assets / Current Liabilities
• Days in Accounts Receivable – Net Accounts Receivable / (Residential and Health Care Revenue) / 365
• Days Cash on Hand – Unrestricted Cash and Investments / (Operating Expenses – Depreciation-Amortization) / 365
• Debt to Equity / Net Assets – Total Debt / Equity / Net Assets
• Operating Margin – Resident revenue – Resident expense / Resident revenue
• Average Payment Period – Accounts Payable / (Operation expense- Depreciation & Amortization) / 365
• Debt Service Coverage Ratio – (Net Income + Depreciation + Interest) / (Current LTD + Interest Expense)
• Average Age of Plant – Accumulated Depreciation / Annual Depreciation Expense
KPI’s / Benchmarking
Average Cost % of Total Average Cost % of Total Average Cost % of Total
Per Patient Day Cost Average Per Patient Day Cost Average Per Patient Day Cost Average
COST CENTERS All All For Profit For Profit Non Profit Non Profit
I. RESIDENT CARE COSTS
1 Nursing $107.59 33.87% $92.58 33.94% $122.60 33.82%
2 Director of Nursing 12.46 3.86% 10.95 3.89% 13.96 3.84%
3 Related Clerical Staff 2.85 0.88% 2.50 0.85% 3.19 0.90%
6 Social Services 3.41 1.01% 3.12 1.08% 3.69 0.97%
7 Resident Activities 6.16 1.84% 4.88 1.75% 7.44 1.91%
9 Pharmacy-Prescription Drugs 0.65 0.20% 0.63 0.23% 0.66 0.18%
10 Over-the-Counter Drugs 0.65 0.20% 0.63 0.23% 0.66 0.18%
11 Medical Supplies 4.34 1.37% 3.57 1.29% 5.10 1.43%
12 Laboratory and X-rays 1.08 0.31% 0.98 0.34% 1.18 0.29%
13 Physical,Occupational & Speech Therapy 23.69 6.87% 22.18 7.55% 25.19 6.36%
14 Oxygen 0.79 0.28% 0.80 0.33% 0.78 0.24%
15 Beauty & Barber Services 0.56 0.18% 0.32 0.12% 0.80 0.23%
20 TOTAL RESIDENT CARE COSTS $166.45 51.55% $145.00 52.25% $187.79 51.07%
II. OTHER RESIDENT RELATED COSTS
21 Dietary and Food $26.32 8.02% $20.16 7.26% $32.48 8.59%
22 Laundry and Linens 3.53 1.17% 2.82 1.05% 4.24 1.26%
23 Housekeeping 7.87 2.60% 6.61 2.45% 9.13 2.71%
24 Plant Operation & Maintenance 13.68 4.28% 11.44 4.10% 15.92 4.42%
28 TOTAL OTHER RESIDENT RELATED COSTS $52.38 16.57% $41.56 15.03% $63.18 17.73%
III. ADMINISTRATIVE COSTS
29 Administrative (Schedule G) $45.78 13.90% $37.62 13.31% $53.94 14.28%
30 Total Net Operating (NO) Costs $264.61 82.02% $224.18 80.59% $304.91 83.08%
IV. CAPITAL COSTS
31 Real Estate Taxes $1.63 0.48% $2.49 0.92% $0.77 0.15%
32 Major Movable Property 0.84 0.24% 0.93 0.28% 0.74 0.21%
33 Nursing Home Assessment 15.76 5.00% 21.47 8.09% 10.05 2.70%
34 Depreciation 24.36 6.23% 4.53 1.59% 44.19 9.70%
35 Interest on Capital Indebtedness 11.67 2.83% 4.91 1.73% 18.43 3.64%
36 Rent of Facility 9.75 2.93% 18.72 6.63% 0.78 0.17%
37 Amortization - Capital Costs 0.50 0.13% 0.27 0.15% 0.72 0.12%
38 Other: See Attached 0.51 0.14% 0.03 0.02% 0.98 0.23%
39 TOTAL CAPITAL COSTS $65.02 17.98% $53.35 19.41% $76.66 16.92%
40 TOTAL ALL COSTS $329.63 100.00% $277.53 100.00% $381.57 100.00%
COST PER DAY
KPI’s / Benchmarking
Salary and Fringe Per Hour
Average Average Average Average Average Average
All For Profit Non Profit All For Profit Non Profit
Position
Registered Nurses $19.17 $16.23 $22.11 $5.10 $4.00 $6.20
Licensed Practical Nurses 21.90 20.46 23.34 5.10 4.00 6.20
Nurses Aides 38.44 32.94 43.94 9.10 6.45 11.75
Orderlies/Attendants 0.23 0.08 0.38 0.06 0.02 0.10
Other 0.98 0.18 1.78 0.27 0.04 0.50
Total of all Nursing Per Day $80.72 $69.89 $91.55 $19.63 $14.51 $24.75
Position
Registered Nurses $35.17 $34.90 $35.44 $11.29 $10.00 $12.58
Licensed Practical Nurses 25.11 24.53 25.68 5.75 4.74 6.75
Nurses Aides 16.14 15.71 16.57 3.74 3.06 4.41
Orderlies/Attendants 0.69 0.22 1.16 0.17 0.04 0.30
Other 3.50 2.24 4.75 0.87 0.40 1.33
Total of all Nursing Per Hour $80.61 $77.60 $83.60 $21.82 $18.24 $25.37
Hands on Nursing 3.71 3.39 4.02
Hands on Nursing
Salaries Per Day Fringes Per Day
Salaries Per Hour Fringes Per Hour
KPI’s / Benchmarking
Average Medicaid (MA) Rates / Average Case Mix Index (CMI)• Statewide MA CMI has fluctuated between 1.08 and 1.12 since Oct. 2015
• Statewide MA rates have increased steadily, but slightly, since Oct. 2015 from approximately $193 to
$201. That equates to a 4.14% over 4 ½ year period.
ALL NFP PROFIT HOSP. BASED
Average Medicaid Rate 200.92$ 208.40$ 195.28$ 240.31$
Average Medicaid CMI 1.09 1.07 1.11 1.03
All data as of April 1, 2020
PA SKILLED NURSING
KPI’s / Benchmarking
Pennsylvania Payor Mix – Statewide Averages
CENSUS
MEDICAID (70.75%) OTHER (22%) MEDICARE (7.25%)
KPI’s / Benchmarking
End Game• Is there opportunity to trim “fat”?
• 2% goal
• Debt refinancing – lower interest expense
• Census shift
• Part B revenue
• Lobby, Lobby, Lobby!
• Strategic Plan
• Button up compliance – Saves future cost and liabilities
• Insurance – Health / Workers Comp / Malpractice
Patient-Driven Payment Model (PDPM)
MDS Assessment Accuracy Practices
• Based on reviews, MDS assessment inaccuracies account for reimbursement losses between 9% and 20%
Most Common Opportunities
• Primary Diagnosis Selection
• MDS Assessment Reference Date (ARD) Selection
• Functional Scoring
• Interdisciplinary Collaboration
Opportunity 1: Primary Diagnosis Selection
• Typical coding of primary diagnosis
• SNF primary diagnosis is the same as hospital admitting diagnosis
• Hospital admitting diagnosis urinary tract infection (UTI)
• SNF Primary diagnosis in I0020B: N39.0 Urinary tract infection, site not specified
• Is the resident admitted to the SNF for the same reason as the hospital?
Opportunity 1: Primary Diagnosis Selection
• Critical Thinking• Hospital discharge diagnoses: UTI, Septicemia,
Metabolic Encephalopathy
• What is the resident’s primary reason for skilled services in the SNF?
• UTI?
• Septicemia?
• Metabolic Encephalopathy?
• Physician Certification indicates the resident had been admitted to the SNF for PT, OT, and SLP treatment due to difficulty walking, muscle weakness, balance and coordination problems, and changes in mental status.
Opportunity 1: Primary Diagnosis Selection
• Critical Thinking• What is the primary skilled service being provided?
• Rehabilitation
• What diagnosis most closely represents the need for skilled care??
• UTI? - Treated in the hospital
• Sepsis? - Treated in the hospital
• Still coded these on the MDS??
YESRAI: The items in this section are intended to code diseases
that have a direct relationship to the resident’s:
- Current function status
- Cognitive status
- Mood or behavior status
- Medical treatments
- Nursing monitoring
- Risk of death
Opportunity 1: Primary Diagnosis Selection
• Encephalopathy
• Difficulty in thinking and concentrating, short-term memory loss, speech and language difficulties
• Addressed in SLP Treatment Plan
• Difficulty planning and carrying out tasks
• Addressed in OT Treatment Plan
• Motor impairment, such as difficulty walking, tremor, loss of muscle movement, weakness, or rigidity
• Addressed in PT Treatment Plan
Opportunity 1: Primary Diagnosis Selection, UTI versus Encephalopathy
Prime Dx:
(I0020B)N39.0
Urinary tract infection,
site not specified
Medical Management
PT CMG / RATE: TI $ 68.65
OT CMG / RATE: 66.73
PT/OT Rate: $ 135.38
Alt. Dx:
(I0020B)G93.41
Metabolic encephalopathy Acute Neuro
PT CMG / RATE: TM $ 77.15
OT CMG / RATE: 73.52
$ 150.67
Increase in PT/OT Rate: $ 15.29
AND impacts SLP rate $8-$27 per day! Potential increase: $23-$42!!
Opportunity 2: MDS ARD Selection
• MDS nurses love to set the Assessment Reference
Date (ARD) for the 8th day of the stay.
• But why??• Once upon a time, therapy days and minutes impacted
Medicare payment
• Therapy days and minutes now have NO impact on payment under PDPM.
• While Medicare Advantage Plans are slowly adopting PDPM, many still use RUG-based reimbursement methodologies.
• Know your payor!
Rehab
Ultra-
High!!!
Opportunity 2: MDS ARD Selection
• Two ways an earlier MDS ARD can be advantageous under PDPM:
1. Parenteral/IV Feeding while not a residentgenerates one of the highest nursing component categories – Special Care High.
2. Residents cognition tends to be most impaired earliest in the admission.
• Earlier Brief Interview for Mental Status (BIMS) often generates lower BIMS score, higher SLP component category.
Opportunity 2: MDS ARD Selection
Example:
• Resident discharged after treatment of UTI and dehydration on July 21
• Hospital treatment:
• IV antibiotics – last dose July 21
• IV Fluids were running in the hospital through July 20
• MDS ARD set for July 28 (day 8), and no Nursing component services were available for capture on the MDS
• PBC1 (Physical Function Reduced) was the Nursing component Case Mix Group (CMG)
Nursing CMG Component Base
Rate (Urban) 2020
Nursing CMG Case
Mix Index
Nursing Component
Rate
PBC1 $105.92 1.13 $119.69
Opportunity 2: MDS ARD Selection
Example:
• Alternate, earlier MDS ARD
• MDS ARD set for July 26 (day 6), and IV fluids from July 20 are now in the MDS lookback period and can be coded at K0510A1 Parenteral/IV feeding while not a resident
• HBC1 (Special Care High) is now the Nursing component CMG
Nursing CMG Component Base Rate (Urban) 2020
Nursing CMG Case Mix Index
Nursing ComponentRate
PBC1 $105.92 1.13 $119.69
HBC1 $105.92 1.86 $197.01
Rate increase: $77.32 PER DAY
Opportunity 3: Interdisciplinary Collaboration
• Several MDS sections require interdisciplinary input, yet are assigned to one department
• Examples:• MDS Section C
• MDS Section D
• MDS Section I (discussed previously)
• MDS Section GG is one example
• MDS Section J
• MDS Section K is another section that requires interdisciplinary input
• MDS Section O
Opportunity 3: Interdisciplinary Collaboration
• Nutritional Status Collaboration – Section K Example• Dietician typically responsible for completion of Section K in the MDS
• Assessment practices:
• Nursing
• Gathers medication and clinical information
• IVF in the hospital
• Height and Weight
• Daily intakes – Fluid and Meal %
• SLP
• Completes admission screening or evaluation
• Updates nursing and nutrition when changes are made
• Diet upgrade/downgrade,
• Swallowing precautions, etc.
• Dietician
• Completes initial nutrition assessment, risk identification
• Reviews information provided and completes MDS Section K
• Often a documentation review
Opportunity 3: Interdisciplinary Collaboration
• Nutritional Status Collaboration – Section K Example• Nutritional risk
• NTA Component
• BMI calculations (height and weight)
• NTA Component
• Swallowing problems
• SLP Component
• Diet Consistency
• SLP Component
• Parenteral/IV feedings
• Nursing Component
• Percentage intake by artificial means
• NTA Component
• Nursing Component
What percentage of your PDPM assessments fall
into the Medical Management category?
• Does your team use a standard admission/
5-day MDS ARD?
• Are they meeting to discuss diagnoses
and treatments impact payment prior to
committing to an ARD?
• INTERDISCIPLINARY COLLABORATION
• What tools are being used
• Nutritional Risk identification
• Hydration Needs
• PT/OT functional score
• Nursing functional score
• How are relevant diagnoses deemed
active?
Key Considerations - PDPM
Patient-Driven Groupings Model (PDGM)
• In early February of 2018, section 51001 of the
Bipartisan Budget Act of 2018 (BBA of 2018)
became law and included several requirements
for home health payment reform, effective
January 1, 2020
• Relies more heavily on clinical characteristics
• Eliminates the use of therapy service thresholds
• Moving from 60-day to 30-day periods as a basis
for payment
• 30 day periods are then categorized into 432
case-mix adjusted Home Health Resource
Groups (HHRGs)
Patient-Driven Groupings Model (PDGM)
HHRGs subgroups based on following
categories:
• Admission source (community or institutional) from
claim
• Timing of the 30-day period (early or late) from claim
• Clinical grouping (12 subgroups based on principal
Dx) from claim
• Functional Impairment level (low, medium, or high)
from OASIS
• Comorbidity adjustment (none, low, or high) from
claim
Patient-Driven Groupings Model (PDGM)
Admission Source and Time Periods - Claims• Admission source
• Institutional – patient had an acute or post-
acute admissions/stays within 14 days of
Start of Care (SOC) includes hospitals,
inpatient rehab facility, long term care
hospitals, skilled nursing facility, and inpatient
psychiatric facility
• Community – all other admission sources
and late 30-day periods
• Two time periods
• Early – first 30-day period of care (initial)
• Late – those 30-day periods of care that
follow (second/subsequent)
Patient-Driven Groupings Model (PDGM)
Clinical Grouping – Principal Diagnosis on Claim• Each 30-day period categorized into one
• 12 clinical groups
• Most common types of care provided by HHAs
• Principal diagnosis
• Refinement of claim
Patient-Driven Groupings Model (PDGM)
Clinical Grouping – Principal Diagnosis on Claim
Clinical Groups Primary Reason for HH Encounter is to
Provider
Musculoskeletal Rehab Therapy (PT, OT or SLP) for a musculoskeletal condition
Neuro/Stroke Rehab Therapy (PT, OT or SLP) for a neurological condition or stroke
Wounds – Post-Op Wound Aftercare & Skin/Non-
Surgical Wound Care
Assessment, treatment & evaluation of a surgical wound(s); assessment,
treatment & evaluation of non-surgical wounds, ulcers, burns, and other
lesions
Behavioral Health Care Assessment, treatment & evaluation of psychiatric conditions
Complex Nursing Interventions Assessment, treatment & evaluation of complex medical & surgical conditions including IV< TPN, enteral nutrition, ventilator, and ostomies
Patient-Driven Groupings Model (PDGM)
Clinical Grouping – Principal Diagnosis on Claim
Medication Mgmt., Teaching & Assessment (MMTA) Primary Reason for HH Encounter is to Provide
Assessment, Eval, Teaching & Med Mgmt
MMTA – Surgical Aftercare For surgical aftercare
MMTA – Cardiac/Circulatory For cardiac or other circulatory related conditions
MMTA – Infectious Disease/Neoplasms/Blood-forming Diseases For cardiac or other circulatory related conditions
MMTA – Endocrine For endocrine related conditions
MMTA – GI/GU For gastrointestinal or genitourinary related conditions
MMTA – Respiratory For respiratory related conditions
MMTA – Other For a variety of medical & surgical conditions not classified in
one of the previously listed groups
Patient-Driven Groupings Model (PDGM)
Functional Impairment Levels – from OASIS• Each 30-day period designated
• Low, Medium, High Impairment
• Based on responses to eight OASIS items
• Points are inversely related to a patient’s
functional status
• Low is the highest functioning patient and
high is the lowest
• Points vary between clinical groups
• Points are assigned based on responses to eight
OASIS items
Patient-Driven Groupings Model (PDGM)
Functional Impairment Levels – from OASIS• OASIS Items – Functional Impairment Level
• M1800 – Grooming
• M1810 – Current ability to dress upper body safely
• M1820 – Current ability to dress lower body safely
• M1830 – Bathing
• M1840 – Toilet transferring
• M1850 – Transferring
• M1860 – Ambulation and locomotion
• M1033 – Risk for hospitalization
Patient-Driven Groupings Model (PDGM)
Comorbidity Adjustments – Secondary Dx(s) from Claim
• No – Low – High
• Based on presence (or lack of) secondary
diagnosis
• No: no reported secondary diagnosis
exists; secondary dx doesn’t meet the
criteria for a comorbidity adjustment
• Low: there is a reported secondary
diagnosis that falls within one of the HH
specific individual comorbidity subgroups
• 13 comorbidity subgroups
• High: there are two or more secondary
diagnoses that are associated with higher
resource use when reported together
versus if reported separately
• 34 comorbidity subgroup interactions
Patient-Driven Groupings Model (PDGM)
Low Utilization Payment Adjustments (LUPAs)• Low number of visits aren’t case-mix adjusted
• Paid on a per-visit basis
• Each of the 432 payment groups has a specific
LUPA threshold – range from 2 – 6 visits
• Thresholds for each payment group will be
reevaluated every year
• Will vary for a 30-day period depending on
assigned payment group
Patient-Driven Groupings Model (PDGM)
PDGM KPI Measurements
• CMS 2020 Final Rule projections
KPI PDGM Benchmark
Average Margin 16.4%
Average Payment $1,927 per period
LUPAs 7.4% of periods
Average Episode length 47 days or 1.6 payment periods
Average Visits per Period 10.5 per period
Key Considerations
Key Considerations• Is your intake team getting all needed
information to maximize
reimbursement?
• Is your billing team keeping up with
the increased volume of Medicare
billing?
• Are you managing your LUPA rate?
• Do you have KPIs for your Home
Health Agency?
Questions
Name Email Address Phone Number
Michael Kessler [email protected] 724.658.1565
Kristopher Pattison [email protected] 724.658.1565
Brandon Harlan [email protected] 724.658.1565
Richard Snyder [email protected] 724.658.1565
The information provided is not a substitute for professional advice or
services. We strive for accuracy yet, keep in mind, information of this
nature changes regularly. You should consult a qualified professional
advisor before taking any action.
Thank You for Joining Us
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