Industry Challenges, KPI’s and More! Challenges KPIs.pdf · 2020. 9. 22. · KPI’s / Benchmarking Financial Ratios 2019 ... 23 Housekeeping 7.87 2.60% 6.61 2.45% 9.13 2.71%

Industry Challenges, KPI’s and More!

October 7, 2020

Introduction to Our Panelists

Michael Kessler, CPA, CGMA

Partner – Health Care

[email protected]

Brandon Harlan, CPA

Partner – Health Care

[email protected]

Richard Snyder

Health Care Consultant

[email protected]

Kristopher Pattison

Sr. Mgr.– Clinical Consulting

[email protected]

Question & Answers • Q&A Chat Function ➽• Or Email questions to panelists

mailto:[email protected]:[email protected]

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


Census Impact• Skilled Nursing Facility (SNF)

- Quarantine

- Admissions

- Elective Procedures

• Personal Care (PC) / Assisted Living

Residences (ALRs)

- Family Concerns

- Necessity for Care


Census Impact (continued)• Independent Living Facility (ILF)

- Market Conditions

- Reluctance to live in a

“communal” setting


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


Access to Personal Protective Equipment• Challenges obtaining and accessing

Personal Protective Equipment (PPE)

• Increase in product cost

• Higher product usage

• Impact on reopening procedures


Financial Considerations• Bond/Loan Covenant Impact

- Waivers

- How are banks considering government

funding in relation to covenants?

- Begin the conversation

• Stock Market


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.


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


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


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


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


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


Pennsylvania Payor Mix – Statewide Averages

CENSUS

MEDICAID (70.75%) OTHER (22%) MEDICARE (7.25%)


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?


• 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.


• 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


• 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!!!


• 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.


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


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


• 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


• 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)


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


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)


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


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


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


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


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


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


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


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
mailto:[email protected]:[email protected]

Documents

Industry Challenges, KPI’s and More! Challenges KPIs.pdf · 2020. 9. 22. · KPI’s / Benchmarking Financial Ratios 2019 ... 23 Housekeeping 7.87 2.60% 6.61 2.45% 9.13 2.71%