Improving the bottom line at FQHCs

Read this if your CFO has recently departed, or if you're looking for a replacement.

With the post-Covid labor shortage, “the Great Resignation,” an aging workforce, and ongoing staffing concerns, almost every industry is facing challenges in hiring talented staff. To address these challenges, many organizations are hiring temporary or interim help—even for C-suite positions such as Chief Financial Officers (CFOs).

You may be thinking, “The CFO is a key business partner in advising and collaborating with the CEO and developing a long-term strategy for the organization; why would I hire a contractor to fill this most-important role?” Hiring an interim CFO may be a good option to consider in certain circumstances. Here are three situations where temporary help might be the best solution for your organization.

Your organization has grown

If your company has grown since you created your finance department, or your controller isn’t ready or suited for a promotion, bringing on an interim CFO can be a natural next step in your company’s evolution, without having to make a long-term commitment. It can allow you to take the time and fully understand what you need from the role — and what kind of person is the best fit for your company’s future.

BerryDunn's Kathy Parker, leader of the Boston-based Outsourced Accounting group, has worked with many companies to help them through periods of transition. "As companies grow, many need team members at various skill levels, which requires more money to pay for multiple full-time roles," she shared. "Obtaining interim CFO services allows a company to access different skill levels while paying a fraction of the cost. As the company grows, they can always scale its resources; the beauty of this model is the flexibility."

If your company is looking for greater financial skill or advice to expand into a new market, or turn around an underperforming division, you may want to bring on an outsourced CFO with a specific set of objectives and timeline in mind. You can bring someone on board to develop growth strategies, make course corrections, bring in new financing, and update operational processes, without necessarily needing to keep those skills in the organization once they finish their assignment. Your company benefits from this very specific skill set without the expense of having a talented but expensive resource on your permanent payroll.

Your CFO has resigned

The best-laid succession plans often go astray. If that’s the case when your CFO departs, your organization may need to outsource the CFO function to fill the gap. When your company loses the leader of company-wide financial functions, you may need to find someone who can come in with those skills and get right to work. While they may need guidance and support on specifics to your company, they should be able to adapt quickly and keep financial operations running smoothly. Articulating short-term goals and setting deadlines for naming a new CFO can help lay the foundation for a successful engagement.

You don’t have the budget for a full-time CFO

If your company is the right size to have a part-time CFO, outsourcing CFO functions can be less expensive than bringing on a full-time in-house CFO. Depending on your operational and financial rhythms, you may need the CFO role full-time in parts of the year, and not in others. Initially, an interim CFO can bring a new perspective from a professional who is coming in with fresh eyes and experience outside of your company.

After the immediate need or initial crisis passes, you can review your options. Once the temporary CFO’s agreement expires, you can bring someone new in depending on your needs, or keep the contract CFO in place by extending their assignment.

Considerations for hiring an interim CFO

Making the decision between hiring someone full-time or bringing in temporary contract help can be difficult. Although it oversimplifies the decision a bit, a good rule of thumb is: the more strategic the role will be, the more important it is that you have a long-term person in the job. CFOs can have a wide range of duties, including, but not limited to:

• Financial risk management, including planning and record-keeping
• Management of compliance and regulatory requirements
• Creating and monitoring reliable control systems
• Debt and equity financing
• Financial reporting to the Board of Directors

If the focus is primarily overseeing the financial functions of the organization and/or developing a skilled finance department, you can rely — at least initially — on a CFO for hire.

Regardless of what you choose to do, your decision will have an impact on the financial health of your organization — from avoiding finance department dissatisfaction or turnover to capitalizing on new market opportunities. Getting outside advice or a more objective view may be an important part of making the right choice for your company.

BerryDunn can help whether you need extra assistance in your office during peak times or interim leadership support during periods of transition. We offer the expertise of a fully staffed accounting department for short-term assignments or long-term engagements―so you can focus on your business. Meet our interim assistance experts.

Read this if your company is considering outsourced information technology services.

For management, it’s the perennial question: Keep things in-house or outsource?

For management, it’s the perennial question: Keep things in-house or outsource? Most companies or organizations have outsourcing opportunities, from revenue cycle to payment processing to IT security. When deciding whether to outsource, you weigh the trade-offs and benefits by considering variables such as cost, internal expertise, cross coverage, and organizational risk.

In IT services, outsourcing may win out as technology becomes more complex. Maintaining expertise and depth for all the IT components in an environment can be resource-intensive.

Outsourced solutions allow IT teams to shift some of their focus from maintaining infrastructure to getting more value out of existing systems, increasing data analytics, and better linking technology to business objectives. The same can be applied to revenue cycle outsourcing, shifting the focus from getting clean bills out and cash coming in, to looking at the financial health of the organization, analyzing service lines, patient experience, or advancing projects.  

Once you’ve decided, there’s another question you need to ask
Lost sometimes in the discussion of whether to use outsourced services is how. Even after you’ve done your due diligence and chosen a great vendor, you need to stay involved. It can be easy to think, “Vendor XYZ is monitoring our servers or our days in AR, so we should be all set. I can stop worrying at night about our system reliability or our cash flow.” Not true.

You may be outsourcing a component of your technology environment or collections, but you are not outsourcing the accountability for it—from an internal administrative standpoint or (in many cases) from a legal standpoint.

Beware of a false state of confidence
No matter how clear the expectations and rules of engagement with your vendor at the onset of a partnership, circumstances can change—regulatory updates, technology advancements, and old-fashioned vendor neglect. In hiring the vendor, you are accountable for oversight of the partnership. Be actively engaged in the ongoing execution of the services. Also, periodically revisit the contract, make sure the vendor is following all terms, and confirm (with an outside audit, when appropriate) that you are getting the services you need.

Take, for example, server monitoring, which applies to every organization or company, large or small, with data on a server. When a managed service vendor wants to contract with you to provide monitoring services, the vendor’s salesperson will likely assure you that you need not worry about the stability of your server infrastructure, that the monitoring will catch issues before they occur, and that any issues that do arise will be resolved before the end user is impacted. Ideally, this is true, but you need to confirm.

Here’s how to stay involved with your vendor
Ask lots of questions. There’s never a question too small. Here are samples of how precisely you should drill down:

• What metrics will be monitored, specifically?
• Why do the metrics being monitored matter to our own business objectives?
• What thresholds must be met to notify us or produce an alert?
• What does exceeding a threshold mean to our business?
• Who on our team will be notified if an alert is warranted?
• What corrective action will be taken?

Ask uncomfortable questions
Being willing to ask challenging questions of your vendors, even when you are not an expert, is critical. You may feel uncomfortable but asking vendors to explain something to you in terms you understand is very reasonable. They’re the experts; you’re not expected to already understand every detail or you wouldn’t have needed to hire them. It’s their job to explain it to you. Without asking these questions, you may end up with a fairly generic solution that does produce a service or monitor something, but not necessarily all the things you need.

Ask obvious questions
You don’t want anything to slip by simply because you or the vendor took it for granted. It is common to assume that more is being done by a vendor than actually is. By asking even obvious questions, you can avoid this trap. All too often we conduct an IT assessment and are told that a vendor is providing a service, only to discover that the tasks are not happening as expected.

You are accountable for your whole team—in-house and outsourced members
An outsourced solution is an extension of your team. Taking an active and engaged role in an outsourcing partnership remains consistent with your management responsibilities. At the end of the day, management is responsible for achieving business objectives and mission. Regularly check in to make sure that the vendor stays focused on that same mission.

Follow these six steps to help your senior living organization improve cash flow, decrease days in accounts receivable, and reduce write offs.

From regulatory and reimbursement rule changes to new software and staff turnover, senior living facilities deal with a variety of issues that can result in eroding margins. Monitoring days in accounts receivable and creeping increases in bad debt should be part of a regular review of your facility’s financial indicators.

Here are six steps you and your organization can take to make your review more efficient and potentially improve your bottom line:

Step 1: Understand your facility’s current payer mix.

Understanding your payer mix and various billing requirements and reimbursement schedules will help you set reasonable goals and make an accurate cash flow forecast. For example, government payers often have a two-week reimbursement turn-around for a clean claim, while commercial insurance reimbursement may take up to 90 days. Discovering what actions you can take to keep the payment process as short as possible can lessen your average days in accounts receivable and improve cash flow.

Step 2: Gain clarity on your facility’s billing calendar.

Using data from Step 1, review (or develop) your team’s billing calendar. The faster you send a complete and accurate bill, the sooner you will receive payment.

Have a candid discussion with your billers and work on removing (or at least reducing) existing or perceived barriers to producing timely and accurate bills. Facilities frequently find opportunities for cash flow optimization by communicating their expectations for vendors and care partners. For example, some facilities rely on their vendors to provide billing logs for therapy and ancillary services in order to finalize Resource Utilization Groups (RUGs) and bill Medicare and advantage plans. Delayed medical supply and pharmacy invoices frequently hold up private pay billing. Working with vendors to shorten turnaround time is critical to receiving faster payments.

Interdependencies and areas outside the billers’ control can also negatively influence revenue cycle and contribute to payment delays. Nursing and therapy department schedules, documentation, and the clinical team’s understanding of the principles of reimbursement all play significant roles in timeliness and accuracy of Minimum Data Sets (MDSs) — a key component of Medicare and Medicaid billing. Review these interdependencies for internal holdups and shorten time to get claims produced.

Step 3: Review billing practices.

Observe your staff and monitor the billing logs and insurance claim acceptance reports to locate and review rejected invoices. Since rejected claims are not accepted into the insurer’s system, they will never be reflected as denied on remittance advice documents. Review of submitted claims for rejections is also important as frequently billing software marks claims as billed after a claim is generated. Instruct billers to review rejections immediately after submitting the bill, so rework, resubmission, and payment are timely.

Encourage your billers to generate pull communications (using available reporting tools on insurance portals) to review claim status and resolve any unpaid or suspended claims. This is usually a quicker process than waiting for a push communication (remittance advice) to identify unpaid claims.

Step 4: Review how your facility receives payments.

Challenge any delays in depositing money. Many insurance companies offer payment via ACH transfer. Discuss remote check deposit solutions with your financial institution to eliminate delays. If the facility acts as a representative payee for residents, make sure social security checks are directly deposited to the appropriate account. If you use a separate non-operating account to receive residents’ pensions, consider same day bill pay transfer to the operating account.

Step 5: Review industry benchmarks.

This is critical to understanding where your facility stands and seeing where you can make improvements. BerryDunn’s database of SNF Medicare cost reports filed for FY 2015 - 2018 shows:

Step 6: Celebrate successes!

Clearly some facilities are doing it very well, while some need to take corrective action. This information can also help you set reasonable goals overall (see Step 1) as well as payer-specific reimbursement goals that make sense for your facility. Review them with the revenue cycle team and question any significant variances; challenge staff to both identify reasons for variances and propose remedial action. Helping your staff see the big picture and understanding how they play a role in achieving department and company goals are critical to sustaining lasting change AND constant improvement.

Change, even if it brings intrinsic rewards (like decreased days in accounts receivable, increased margin to facilitate growth), can be difficult. Acknowledge that changing processes can be tough and people may have to do things differently or learn new skills to meet the facility’s goal. By celebrating the improvements — even little ones — like putting new processes in place, you encourage and engage people to take ownership of the process. Celebrating the wins helps create advocates and lets your team know you appreciate their work. 

To learn more, contact one of our revenue cycle specialists.

Read this if you are a City/County Administrator, Building Official, Community Development Director, Planning Director, Development Services Manager or work with customers providing a service for a fee.

Planning and development service fees are, for many municipalities, often discussed but rarely changed. There are a number of reasons you might need to consider or defend your fee structure―complaints from developers, rising costs of operation, and changes in code or process are just a few. 

But when is the right time for a formal review of your service fees? There are several key organizational factors that should prompt an in-depth study of your fees, either internally or with the assistance of an objective advisor. It may be time for an update if:

• You’re considering a new permitting system. New technology may streamline your workflows, simplify processes for your customers, or necessitate changes in your staffing. All of these secondary changes can impact the cost of your services. In addition, if you’re anticipating significant changes to your fee structure or methodology (e.g., moving to full cost recovery), you’ll want to configure your new system to support that going forward.
• You have an enterprise development fund. Development fees are collected to cover the cost of providing a service. The methodology you use to charge fees should be based on defensible formulas that can withstand the scrutiny of your customers and cover the cost to provide the service. In addition, reserve funds should be adequate to ensure your development service is funded through the completion of the project. 
• The regulations in your municipality are changing. Perhaps your organization is moving to a unified or form-based code or making changes to the International Building or Fire Codes. Changes in the process and requirements for development may require a reevaluated fee structure.
• It’s been a while. Even if your organization is not experiencing any significant or sweeping change, small shifts can accumulate over the years, resulting in significant fee adjustments that may be tough for you to implement and for your customers to understand. Periodically reviewing service demand and benchmarking your individual fees against those of neighboring communities can help to avoid sticker shock.

If any of these scenarios sound familiar, you may want to consider a fee review, which may consist of benchmarking against similar jurisdictions. Not sure what level of review your organization needs? Our dedicated government consultants include former planners and community development leaders who have walked in your shoes and can talk through the considerations with you.
 

Read this if you are a Nursing Home Administrator, Admissions Coordinator, MDS Nurse, Nursing Home Owner, Business Office Manager, Case Manager, Nursing Home CEO, CFO, or COO.

Patient Driven Payment Model (PDPM) implementation is less than three months away. Is your facility ready for admissions under PDPM? The way you think about admissions and the admission process will change under PDPM. Some highlights:

• The resident’s clinical characteristics will now be the determinant of payment rather than therapy provided.
• Facilities that admit medically complex residents—those who need higher levels of potentially expensive care, including high-cost medications, ventilator care, and care for residents with HIV/AIDS—will receive reimbursement that more closely reflects those higher costs.
• PDPM will eliminate the 14-day, 30-day, 60-day and 90-day assessments and will only require a five-day and discharge assessment. 
• The five-day assessment will drive payment for the entire resident stay unless there is change in the resident’s clinical characteristics. 

With the elimination of the five scheduled assessments under PDPM, facilities will save time spent on assessments; however, PDPM will require a higher degree of accuracy on the Day Five assessment. For proper reimbursement, your staff will have to gather all relevant clinical information on the resident in a shorter period of time. A strong admissions team and processes will help you achieve financial success under PDPM. 

Screening residents for admission will also become more critical for appropriate reimbursement. Under RUGS-IV, most facilities relied only on their admissions coordinator to handle admissions. Under PDPM, facilities are going to have to involve more team members in the pre-admission process to ensure proper and thorough screening of residents. 

Since PDPM focuses on all the resident’s clinical characteristics, you will need pre-admission input from many team members, including but not limited to physicians, nurses, therapy providers, and case management. You will need to assess many other elements up front―if you miss something in the screening, you won’t receive adequate reimbursement. 

With payment tied not only to the residents' primary reasons for being in the facility, but also the comorbidities that affect their health, you need to know more about potential residents prior to admission. The admissions team will need to get a comprehensive background on each resident―including all comorbidities, recent surgical history, and other clinical characteristics and services that determine a resident’s case-mix.

For example, in some cases, two diagnoses, such as aftercare for major joint surgery and an infectious complication, may compete for the primary diagnosis. These two diagnoses would place the resident in different clinical categories and would result in different rates of reimbursement. Working as a team, your staff will have to determine which of these diagnoses most accurately reflects the characteristics of the resident, the services needed by that resident, and the resources that he or she requires.

To emphasize again, under the new PDPM assessment schedule, facilities cannot make changes to resident clinical characteristics on the five-day assessment unless a resident has a significant change in status and the facility performs an interim payment assessment. You really only have one shot at getting it right!

Here are some actions you can take now to strengthen your admissions process:

Standardize practices―Examine inconsistent and/or manual practices within the revenue cycle that may cause delays in gathering documentation and, ultimately, delay billing. Policies and procedures should include items such as team members and responsibilities, pre-admission screening procedures, protocols for communicating with physicians and the admitting hospital, and procedures for capturing and storing supporting documentation. This can help capture all information needed for proper reimbursement.

Review changes to the Minimum Data Set (MDS)―The entire admissions team needs to understand the changes to the MDS so that they capture all the required resident information. There are nearly 40 new MDS items that directly influence a resident’s clinical classification and payment rates. The most significant of these?

• I0020B―To report the ICD-10-CM primary diagnosis code representing the main reason for Skilled Nursing Facility (SNF) admission
• J2100-J5000―New patient surgical history items that affect the PDPM physical and occupational therapy and speech-language pathology components
• I8000―To report comorbidities that affect non-therapy ancillaries
• O425A1-O0425C5―To capture discharge information on therapy delivery over the course of the resident's entire Part A stay, including use of group and concurrent therapy.

Educate staff―Train your staff on the new processes and tools, as these processes directly impact daily job functions. In addition, staff should have an understanding of the functions of the entire revenue cycle so they can see how their functions affect the overall reimbursement of the facility.

Review and monitor―To better prepare for PDPM, you should review your resident charts to understand what information you are currently documenting and know what additional information you will need to gather upon admission. Even though you are not yet billing under PDPM, you can start gathering and documenting that additional information. Review your facility's utilization review and triple check processes. You should have a cross-functional utilization review team that includes a physician or mid-level practitioner to ensure comprehensive reviews. Once you begin documenting, under PDPM you will need to audit MDS to be sure they are accurate and supported by medical documentation.

You will only have until Day Eight of a resident stay to capture and document all the resident's clinical characteristics that drive payment for the entire stay. It is more important than ever to have a clearly defined, well-executed plan for getting the right information to the right people as soon as possible.

Read more
You can read Part One of this series here. Part Three is coming soon.

Get ready with our PDPM Checklist!

Download our helpful PDPM checklist and see what you need to do. 

On October 1, 2019, the Medicare Skilled Nursing Facility (SNF) payment system will transition from RUGS-IV to the Patient Driven Payment Model. This payment model is a major change from the way SNFs are currently reimbursed. Under PDPM, International Classification of Disease, Tenth Edition (ICD-10) diagnosis codes and other patient clinical characteristics, such as the patient’s activities of daily living (ADL) and recent surgeries, will be used as the basis for patient classification and reimbursement.

Resident days up to September 30 will be paid under RUGS–IV and resident days from October 1 forward will be paid under PDPM. This includes patients admitted prior to September 30. There will be no transition period. The change to PDPM represents the most significant change to Medicare A SNF PPS reimbursement since its implementation in 1998. To ensure a smooth transition, prevent denials, and avoid resulting cash flow disruptions, your revenue cycle team needs to be prepared for PDPM. This article outlines steps your facility can take to prepare for PDPM.

Know your current revenue cycle performance

In order to know how you are performing under PDPM, you need to know your current revenue cycle performance. Are there current processes delaying the completion of the Minimum Data Set (MDS)? What is your current case mix? How long does it take the facility to close the month and generate bills? If you have inefficiencies in your workflow and processes, now is the time to fix them. Are there open lines of communication between financial and clinical operations? Financial and clinical must work together to make PDPM work for the facility’s long-term sustainability.

Facilities should be benchmarking their key revenue cycle indicators including, but not limited to, accounts receivable aging comparisons, days in accounts receivables, and collections as a percentage of revenues. Benchmarking can help a facility detect issues early on and resolve them before they become a bigger problem.

Providers will need to communicate with IT providers to be sure they configure electronic health record systems and financial systems for compliance with PDPM. MDS software must be robust enough to help MDS coordinators manage the new process or else facility reimbursement will be affected.

Understand how ICD-10 coding impacts reimbursement under PDPM

Do you know how diagnoses are currently captured on your facility’s MDS? Most facilities are not tracking or monitoring ICD-10 diagnosis codes, as the majority of diagnoses don’t impact quality measures or reimbursement. The implementation of PDPM will require the use of ICD-10 diagnosis codes, which are more detailed and call for accurate documentation. For SNF providers, this means the old ways of documenting resident assessments on the MDS won’t work under the new model.

One of the most important changes under PDPM is that ICD-10 diagnoses will be the key drivers for reimbursement. ICD-10 diagnosis codes will be used to place a resident into one of 10 PDPM clinical categories, that will determine the payment components for physical therapy (PT), occupational therapy (OT), speech (SLP), and skilled nursing services, as well as non-therapy ancillaries (NTA).

How can your facility prepare for ICD-10 diagnosis coding?

• Determine the diagnoses codes your facility uses most frequently.
• Compare the codes you most frequently use to the CMS PDPM Clinical Category Mapping
• If codes map to “Return to Provider” you need to review the patient record to find a more specific primary diagnosis
• Make sure you capture the resident’s comorbidities on I8000 to ensure appropriate payment for Non-Therapy Ancillaries (NTA).
• Aftercare codes will be the primary diagnosis if that is the primary reason for the admission.

Preparing for ICD-10 coding requires a coordinated care team. Communicate with anyone who contributes to the diagnosis documentation, including the physician, medical director, PT/OT/SLP, and other specialty care professionals such as wound specialists or dietitians to understand why the resident is there. Identifying the reason the resident is there and assigning the correct diagnosis code will help a facility to be successful with PDPM.

Review the changes being made to the Minimum Data Set (MDS)

In early January, CMS issued a draft version of the MDS 3.0. The draft indicates that there are more than 80 items will be added, deleted, or changed for PDPM implementation. There are 40 new items that will impact reimbursement rates. These changes fall into three categories:

1. Streamlined assessment policies 
2. New PDPM assessment item sets
3.  Additions to MDS items

The MDS assessments will be more streamlined under PDPM. There are only two required assessments: the five-day assessment and the discharge assessment. The five-day assessment must be completed between days one and eight and will be effective for the entire length of stay unless an optional assessment is performed. The 14-day, 30-day, 60-day and 90-day assessments have been discontinued. The discharge assessment will not impact reimbursement―however, this is where therapy will be reported. Facilities also have the option to perform an interim payment assessment if the patient’s clinical characteristics change. This assessment must be completed within 14 days of the change in characteristics and can affect reimbursement.

The MDS has two new item sets: 1) Interim Payment Assessment (IPA), used for optional assessment if a patient’s characteristics change; and 2) Optional State Assessment (OSA), which will be used by states where RUGS-IV is the basis for Medicaid payments. The IPA should only be used if a patient’s clinical characteristics are not expected to change in the short term.

Significant changes to MDS items are in the following sections:

1. Section I: SNF Primary Diagnosis – Item I0020B will allow providers to report, using an ICD-10 diagnosis code, the patient's primary SNF diagnosis. This item will ask, “What is the primary reason the patient is being admitted into the SNF?”
2. Section J: Patient Surgical History – To capture information that may be relevant to classifying a resident in a PDPM clinical category, J1000 – J5000 identifies major surgeries from the most recent hospital stay.
3. Section O: Discharge Therapy Items – Items 0425A1-O0425C5 will be added to Section O to document therapy delivery information. Therapy delivery will only be reported on the discharge MDS and must include information by each discipline, mode of therapy, and minutes received by the patient. Group and concurrent therapy cannot exceed 25% of total therapy.
4. Section GG: Interim Performance – This section is the basis for the resident’s functional analysis. Section GG is more standardized and has more comprehensive measures of functional status. Providers need to be sure to complete Section GG in its entirety as missing responses will receive zero points for the functional score calculation. Section GG is taking on an increased importance under PDPM, as CMS’s goal for this section is to standardize assessment items across payment settings.

Over the years, the MDS has primarily been utilized as an assessment tool to drive the plan of care with little impact to reimbursement. With implementation of PDPM, and the shift from therapy-driven reimbursement to clinical characteristics as the basis for reimbursement, the MDS will be vital to obtaining proper reimbursement. You may need to revise the systems you currently have in place to make sure that the information critical to reimbursement is recorded accurately on the five-day assessment. Missing an item on the five-day MDS will impact reimbursement for the entire resident stay.

Skilled Nursing Facilities will need internal processes, workflows, and staff training in place well before October 1, 2019, in order to be successful under PDPM. Preparation for PDPM is key and it will take teamwork from the entire facility. Focusing on each of the areas outlined above—even if it is just to confirm that you’ve addressed the issue—will put you in good shape to meet the looming deadline. Without a doubt, there will be things that arise at the last minute or processes that don’t work as planned. Don’t panic. We can help you address issues and problems or work with you to create a new workflow process. Just give us a call.

Get ready with our PDPM Checklist!

Download our helpful PDPM checklist and see what you need to do. 

Effective October 1, 2019, Skilled Nursing Facilities (SNF)s will be reimbursed under a new payment system.

The existing case mix classification group, Resource Utilization Group IV (RUG- IV) will be replaced with a new case mix model, the Patient Driven Payment Model (PDPM). CMS has indicated factors leading to the change in the payment system include over utilization of therapy and incentives for longer lengths of stay.

Background and overview
PDPM is one of the initiatives resulting from the Improving Medicare Post-Acute Care Transformation Act of 2014 (the IMPACT Act). The IMPACT Act requires standardized patient assessment data across post-acute care (PAC) settings to enable:

• Comparisons of quality and information exchange across post-acute settings
• Improvement of Medicare beneficiary outcomes through shared-decision making, care coordination, and enhanced discharge planning
• Non-therapy ancillaries (NTA) payment is determined by a base rate and separate CMI. NTA is a variable payment, paid at 300% for the first three days, and then reduced to 100% after day four.
• Payments based on patient characteristics

PDPM will be a significant shift in how SNFs are paid, and facilities need to start preparing for the change. PDPM:

• Removes therapy minutes as a determinant of payment and creates a new model where payment is linked to differences in clinical characteristics
• Creates a separate payment component for non-therapy ancillaries (NTA), using resident characteristics to predict utilization of these services
• Focuses on clinically relevant factors and ICD-10 diagnosis codes to determine payment

Value Base Purchasing (VBP), SNF Quality Reporting Program and PDPM are all initiatives advancing the IMPACT act and moving payment from fee for service to value. SNFs have been reporting quality measures since May 2017, and are subject to a 2% (VBP) payment adjustment if they don’t submit the quality measures.

In October of 2018, SNFs began receiving a payment adjustment based on hospital readmissions under the SNF Quality Reporting Program. The implementation of PDPM will be one more step towards moving reimbursement for care from volume to value.

PDPM shifts payment to residents with complex clinical needs, and targets the resources towards beneficiaries with diverse care needs. Its goal is to aim care at the more medically complex patients. There are six components in the daily rate:

• Physical therapy
• Occupational therapy
• Speech therapy
• Nursing
• Non-therapy ancillary services
• Non-case mix

The components are all taken from the five-day minimum data set (MDS), and assigned a daily rate based on that components case mix index (CMI). Therapy is broken out into the three disciplines (physical, speech and occupational), with each having its own base rate and case mix index:

• Therapy payment is a variable payment paid at 100% for the first 20 days, and then reduced by 2% every seven days. 
• Nursing services payment is a base rate with a separate case mix, with no variable payment.
• Non-therapy ancillaries (NTA) payment is determined by a base rate and separate CMI. NTA is a variable payment, paid at 300% for the first three days, and then reduced to 100% after day four.

Under PDPM, payment is based on each aspect of the resident’s care. Payment is still a per diem payment—however, it is adjusted to reflect varying costs throughout the resident’s stay.

The admissions process is going to be critical to ensure appropriate payment. Accurate coding of patient conditions must occur at the time of admission, and while the information coming from the hospital will be helpful, facilities cannot rely on hospital information when coding the MDS. Diagnosis and accurate coding are critical to assigning the appropriate case mix group to make certain there is adequate payment for the stay.

Patients over Paperwork
PDPM emphasizes patients over paperwork, as it eliminates the current (MDS) schedule. The new model only requires an assessment at five days and a final discharge assessment.

Facilities can perform an optional interim payment assessment within 14 days of a change in the resident’s characteristics. An interim payment assessment will not reset the NTA and therapy payments to day one. CMS is still working on guidance as to how you will need to report this.

If a patient leaves the facility and is away from the facility for less than three days, then the stay is considered the same admission. If the resident is away for more than three days, the admission is considered a new admission, and the NTAs and therapy payments are returned to day one payment.

The MDS has been an important tool in driving resident care over that last 30 years, and is relied upon for reimbursement and quality data. With the implementation of PDPM, the MDS will become even more important to reimbursement. As payment shifts from therapy focus to clinical characteristics focus, there will need to be more detailed documentation to support the medical condition. Under RUGs, there are approximately 20 items on the MDS which impact reimbursement?under PDPM, there will be approximately 160 items which impact reimbursement.

The implementation of PDPM will increase the importance of the role of the MDS coordinator. Facilities need to invest in a strong MDS coordinator to ensure appropriate assessment and documentation that support medical conditions—which drive payment.

While therapy minutes will no longer drive payment under PDPM, you still have to monitor them. Therapy will be reported on the final discharge MDS, separately by discipline. MDS will report therapy minutes by one-to-one sessions, concurrent, and group therapy. Total therapy delivered concurrently and/or in group sessions cannot be more than 25% of total therapy time.

Given the depth and breadth of the changes to the payment system, facilities need to begin preparing for the change now. What can you do in preparation for PDPM?

Educate yourself so you can plan for the transition to PDPM:

• Know what is driving your current payments
• Assess the skills of your staff and know your gaps
• Attend education sessions
• Train or retrain MDS nurse and billers on ICD-10 and the MDS
• If you don’t already have care teams, form care teams
• Determine who with in the facility should be on care teams

Align resources to be sure you are ready to bill on October 1, 2019:

• Determine your hiring and training needs
• Look at therapy contracts, how do they align with new payment model
• Talk to software vendors to be sure they will be ready for the new MDS and ICD-10

For more information or assistance with PDPM contact Lisa Trundy-Whitten.

Cost increases and labor issues have contributed to the rise of outsourcing as an option for senior living and health care providers.  While outsourcing of all types is a growing trend — from the C-suite to food service, it is a decision that should be considered carefully, as lack of planning could result in significant long-lasting financial, public relations and personnel losses. Let’s examine the outsourcing of billing services and collections.

If you are concerned with efficiencies and focusing on your core business needs — nursing care and rehabilitation — then your facility owners and management may have or are currently considering outsourcing one or both end stages of the revenue cycle.

There are some compelling reasons to outsource.

When choosing to outsource, your facility can reduce or even eliminate the challenge of keeping up with increasing complexities of medical billing, staff development and retraining, software costs, and workforce challenges. Smaller facilities can mitigate billing office resource shortages caused by staff vacations, medical leaves and turnover via outsourcing portions of their revenue cycle processes.

Because of a variety of software options, extensive coding and evolving reimbursement policies, professional billing and collection companies may be more efficient, delivering a stronger cash flow by reducing the rate of denied or rejected claims and assuring accurate coding. As facilities normally pay either a “per claim” fee or a percentage of their patient service revenue for this service, the facility’s cost fluctuates with changes in census or payer mix. Facilities may serve their customers better by decreasing insurance denials and reducing balance transfers to patients.

Outsourcing may help organizations to focus on their core business: senior living services.

Your facility should assess your organization’s readiness, fit and contract limitations prior to outsourcing. Here are some things to consider.

1. Be accountable. It is your facility’s ultimate responsibility to comply with all applicable rules and regulations, including HIPAA. And while signing a business associate agreement is a step in right direction, it may not guarantee peace of mind.

• Ask a potential vendor about data transmission, storage, sharing, access and destruction policies, as well as processes designed to monitor compliance. Question any recent breaches or unauthorized access incidents — how were they handled? As HIPAA non-compliance and unauthorized access to protected health information (PHI) may result in financial penalties and bad publicity, you should evaluate the need to consult with an expert.
• Ensure the vendor knows your state’s facility licensing regulations. For example, some states prohibit charging patients or residents any collection fees. Some states or payers require refunds for any overpayments to within certain defined periods. A good vendor will meet your state’s regulations. Ask to review their standard collection forms and collection procedures and protect your organization from unexpected non-compliance tags. 

2. Communicate. Discuss what information they require, when, in what format, and how they will make corrections. In-house billing staff can normally access a resident’s medical file, whether electronic or paper, or inquire with the facility operations team regarding a particular claim. This is not the case with an external vendor. 

• To outsource effectively, you need to designate an in-house position to respond to missing information requests promptly. Facilities operating on web-based medical records software should evaluate the risks of granting a billing vendor even limited access to residents’ electronic medical files.
• Review contract terms for any up charges assessed by the vendor if your facility can’t respond to information requests in a timely fashion. 

3. Understand and agree upon the scope of the contract. Contract scope misunderstanding can have long-lasting financial implications for the facility, and result in increased bad debt. Your management team should compile a list of assumptions and agreement terms not stated clearly in the contract, and address them in a meeting before accepting the terms. At a minimum, get answers to these questions:

• Is the vendor submitting bills for all types of payers, levels of care and billing forms, including private, private long-term care insurance, adult day and outpatient, or only certain electronic claims?
• Is the vendor responsible for notifying your organization of any delays with claim processing, payer requests for supporting medical records and any other identified administrative requests and rejections? If so, how fast and in what format?
• Is the vendor responsible for assisting with regulatory compliance reporting, such as required data for a cost report preparation, audit, etc.?
• What minimum quality assurance steps does the vendor apply when generating and processing claims, and how do they remedy identified issues?
• Is the vendor only submitting bills or are they also working on collections?
• Is the facility or a vendor responding to resident requests for additional information or questions about the billing statements?

4. Maintain alignment with the organization’s philosophy and vision. As with any other area of operations you consider outsourcing, outsourcing billing and collections requires careful examination of its impact on customer service and community relations. If a vendor produces co-pay and private pay invoices or statements, will you have control over the format and presentation of these mailings? If a vendor is engaged to perform collections follow up, your management team needs to understand collections procedures and methods used and ensure they are a good fit with your mission.

5. Set goals and benchmarks. Your management should analyze days in accounts receivable, accounts receivable aging trends, and cash as a percent of net revenue monthly, and then meet with the vendor promptly to understand the causes of any undesired trends and work on remedial plan. 

6. Understand your organization’s reasons for outsourcing. If your facility struggles with completing resident pre-admission screening, obtaining prior authorizations, or staying on top of Medicaid applications and recertifications — stop. Outsourcing is very unlikely to remedy these situations and could even make them worse. We recommend seeking the assistance of an experienced revenue cycle or process improvement consultant before outsourcing any portion of the billing and collections process.

The BerryDunn Senior Living team welcomes your feedback, and is always one phone call or email away, should your organization need to take a deeper look at revenue cycle and process improvement opportunities.