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Patient Driven Payment Model―A year later

12.01.20

Read this if your senior living facility is receiving Medicare payments.

A year ago the senior living industry was challenged with the transition to the Patient-Driven Payment Model (PDPM). In the months leading up to the implementation of PDPM providers prepared for new regulations, conducted employee training, and forecasted financial performance. By all accounts the implementation of PDPM went off with very few glitches. 

That all changed in the beginning of 2020 when the coronavirus (COVID-19) pandemic upended the industry and Medicare occupancy levels diminished. COVID-19 overturned the way providers were providing care at their facilities. Providers have seen a decrease in utilization of therapy services and an increase in medical management cases. Providers anticipated delivering more concurrent physical therapy, which has become impossible with COVID-19. We understand how demanding COVID-19 related change management has been for skilled nursing facilities, and want to help you re-focus your attention on the critical tasks and procedures driving your Medicare reimbursement.

New federal fiscal year, new rates

The Medicare Final Rule for fiscal year 2021 did not contain any major policy changes to PDPM but did contain routine updates to coding and Medicare billing rates effective October 1, 2020. After changing Medicare billing rates, you should test your system by carefully reviewing a remittance advice and the accounts receivable report for October service dates. Look for any balances, big or small, to help ensure billing rates and contractuals are correct for all payers following Medicare rules. Note:

  • Small balances may indicate errors in system configuration, such as PDPM rates, sequestration, or value-based purchasing adjustment.
  • Larger balances may indicate a claim missed in the facility's triple-check meeting and billed at an incorrect PDPM rate. View the FFY2021 Medicare Rate Calculator.
  • Providers should review ICD-10 mappings on an annual basis for new and discontinued ICD-10 codes. 

Medicare Advantage plan enrollment is growing. What does it mean for your facility?

With the continuing growth of Medicare Managed Care/Advantage plans, it is important to review your facility’s contracts. 

  • Most Medicare Advantage programs have adopted PDPM, but have differing requirements for pre-authorizations and payment rates, so be sure you understand how each of these contracts reimburses your facility
  • If there are new Medicare Advantage plans in your area, evaluate the need to negotiate a contract to admit patients covered by the new plan. 
  • Update the list of plans your facility contracts with:
     
    • Carefully review contract rates and request rate changes if the payor does not follow the Medicare fee schedule. 
    • To avoid denied claims, update contact information and understand preauthorization requirements and any patient status updates. Distribute the updated list to your admissions and case management teams.

Check on your MDS coordinator

  • With the COVID-related shift in responsibilities, we see an increase in MDS position turnover. We recommend reviewing or developing a backup for your MDS coordinator, as completion of MDS is critical for billing and regulatory compliance. 
  • If your facility has limited resources for backup, evaluate sub-contracting options or reach out to your state’s Health Care Association for available resources. 

Update your consolidated billing resources

Consolidated billing errors could result in significant reductions of your bottom line. CMS updates guidance on consolidated billing regularly. We recommend checking the CMS listing and ensuring your admissions, clinical, and medical records teams use up-to-date information for admission decisions and coordination of care with external health care providers. Get more information.

COVID-19 impact

  • CMS provided a number of flexibilities to help facilities with COVID-related care. Please note, a number of these provisions are temporary, and are only effective during the state of emergency. We recommend at least a monthly review of regulatory guidance to help ensure compliance. Get more information.
  • While the COVID-19 diagnosis and codes were not specifically incorporated into PDPM in the 2021 final rule, be sure to appropriately code isolation stays in the nursing component, and document additional costs of testing, PPE, and labor, as well as support of skilled status need to protect against audit risk.

Have questions? Our Senior Living revenue cycle team is here to help. 

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Read this if you are a leader in the healthcare industry.

BerryDunn recently held its first annual Healthcare Leadership Summit. Here are some highlights of the topics, presentations, and discussions of the day. 

Healthcare CFO survey results

The day began with an industry update where Connie Ouellette and Lisa Trundy-Whitten had the opportunity to present with Rob Culburt, Managing Director, Healthcare Advisory, The BDO Center for Healthcare Excellence & Innovation. Rob shared highlights from a recent survey of healthcare CFOs by The BDO Center for Healthcare Excellence & Innovation, while Connie and Lisa reflected on the similarities between study results and hospital and senior living clients.

It was no surprise the study found one of the most significant challenges CFOs are facing at both the national and local level is the sustained strain on healthcare systems amid the pandemic, and ongoing supply chain and workforce struggles. Additionally, providers are concerned about the upcoming reporting and regulation requirements. Also top of mind are the Provider Relief Fund (PRF) reporting requirements, as the requirements have been ambiguous and ever changing. There is also concern among survey respondents that a misinterpretation or reporting error could cause providers to have to pay back funding they received from PRF.

The BDO healthcare survey reported that 63% of the providers who responded to the survey are thriving, but 34% are just surviving. Out of those surveyed, 82% expect to be thriving in one year. You can view the full results of the survey here

Recruitment and retention in the current climate

Recruitment and retention of direct care providers are significant challenges within the senior living industry. Providers are facing workforce shortages that are forcing them to temporarily suspend admissions, take beds off line, and, in worst case scenarios close whole units or facilities. Sarah Olson, BerryDunn's Director of Recruiting and Bill Enck, Principal at BerryDunn discussed factors leading to the talent shortage, and shared creative short- and long-term recruitment and retention strategies to try.

Change management

The pandemic has forced many in healthcare to rethink how they operate their facilities. Employees have had to pivot on a moment’s notice, and in general do more with less. However, there are still initiatives that need to be undertaken and projects that must be completed in order for your facility to operate and remain financially viable. How do you manage the change associated with these projects? Can you manage the change without burning out your employees? Dan Vogt, BerryDunn Principal, and Boyd Chappell from Schoolcraft Memorial Hospital provided tips and strategies for managing change fatigue. 

Overall, the Leadership Healthcare Summit proved to be an informative and engaging event, and many new ideas and forward-looking strategies were shared to help enable providers to continue to weather current challenges and pistion themselves for success. For more in-depth information on these topics and others discussed, please visit our Healthcare Leadership Summit resources page

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Top three takeaways from BerryDunn's first annual Healthcare Leadership Summit 

Read this if you are applying for or have received Provider Relief Funds.

How much lost revenue and qualifying expenditures did you report for during Phase 1 PRF reporting? How much do you expect to report during Phase 2 reporting? If the total of the lost revenues and qualifying expenditures during these two reporting periods exceeds $750,000, you will be subject to additional audit requirements for the year ended December 31, 2021.

The additional audit requirements will vary depending on your entity structure (for-profit, not-for profit or governmental) and other federal funding received, such as grants from the Coronavirus Fund (CRF). Click here to learn more about federal funding subject to audit.

Not-for-profit entities have traditionally been subject to single audit requirements if they expended more than $750,000 in federal funding during a fiscal year. However, this has not typically been a requirement for commercial or for-profit entities. For-profit (commercial) organizations who received PRF and other HHS COVID-19 funds may be subject to an audit of federal programs for the first time.

Entities that expended more than $750,000 in PRF funds have two options:

  1. Single or program-specific audit in accordance with 45 CFR 75 Subpart F, or what is referred to as a single audit
    If an entity is subject to a single audit, the auditor will express an opinion on the financial statements under Generally Accepted Auditing Standards (GAAS), Generally Accepted Government Auditing Standards (GAGAS), will include a Schedule of Federal Expenditures (SEFA) as supplementary information, which will include all federal awards received through HHS. Auditor will express an opinion internal control over financial reporting and compliance with Government Auditing Standards, and on compliance and reporting on internal control under Uniform Guidance. The Uniform Guidance report will include a Schedule of Findings and Questioned Costs. Learn more about PRF and Single Audits here.  
  2. Financial audit in accordance with Generally Accepted Government Auditing Standards (GAGAS)
    If an entity is subject to a GAGAS Financial Audit, the auditor will express an opinion on the presentation of the Statement of Audited costs and Lost Revenues (the Schedule) under Generally Accepted Auditing Standards (GAAS) for the US Department of Health and Human Services. Auditor will issue a report under GAGAS on internal control over compliance as it relates to the Schedule, and if applicable, the report will include a Schedule of Findings and Questioned Costs. Not-for-profit entities can only use this option if they have no other federal programs.

Health Resources and Services Administration has opened the reconsideration period for Phase 4 and American Rescue Plan (ARP) rural payments

Providers who have received a determination of their Phase 4 and/or ARP rural payments can request reconsideration of their payments. The reconsideration window opened on February 1, 2022 and will close on 11:59 PM EST on May 2, 2022. In order to request reconsideration, providers will need:

  1. a copy of their payment determination letter,
  2. a DocuSign Envelope ID,
  3. contact information and Tax ID, and 
  4. the reason you believe your Phase 4/ARP rural payment was calculated incorrectly.

Important things to know when submitting your reconsideration request:

  • Providers who have not received a determination of the Phase 4/ARP rural payment should not file for reconsideration until payment determination has been received. You will be given at least 45 days after you receive your payment determination to file for reconsideration, even if you receive your payment determination after May 2, 2022.
  • Providers who missed the deadline for filing for Phase 4 or who did not check the box to be considered for the rural payment will not be able to revise or correct their application. Reconsideration will only be for providers who believe their payment was not calculated correctly.
  • Providers may request Phase 4 reconsideration, even if their Phase 3 reconsideration is still being reviewed

To learn more about PRF audit requirements, and the applicability to your organization please reach out to our team.

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Provider Relief Fund (PRF) audit requirements: What you need to know

Read this if you are a Skilled Nursing Facility (SNF) providing services to Medicare beneficiaries.

Skilled Nursing Facility (SNF) bad debt expenses resulting from uncollectible Medicare Part A and Part B deductible and coinsurance amounts for covered services are reimbursable under the Medicare Program on a full-utilization Medicare cost report. SNF providers can report allowable Medicare bad debt expense on Worksheet E, form CMS-2540-10. Currently Medicare reimburses 65% of the allowable amount, less sequestration, if applicable.  

BerryDunn maintains a database of SNF as filed Medicare cost reports nation-wide. We analyze data annually, looking for trends and opportunities to help providers optimize available reimbursement. Cost reports data shows that in 2018–2020, on average, 75% of facilities nation-wide reported allowable bad debts, and claimed, on average, close to $63,000 of reimbursable bad debts for Medicare Part A. 

To compare facilities of different sizes and Medicare utilization rate, we also show bad debts on per Medicare patient day basis (figure 2). In FY 2020, all US regions experienced an increase in reimbursable Medicare Part A debt, averaging $19.43 per Medicare patient day.  

Understanding the requirements for bad debts and utilizing this reimbursing opportunity could help your facility’s bottom line. 

Medicare bad debt checklist now available

To support SNFs with reimbursement for these costs, BerryDunn’s healthcare consulting team has developed a checklist that provides insight into the Medicare cost report opportunities. 

Download the checklist, and please contact us if you have any questions about your specific situation or would like to learn more.

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Medicare bad debt: Review sample procedures for Skilled Nursing Facilities

Read this if you are a Skilled Nursing Facility (SNF) providing services to Medicare beneficiaries.

There are a few Skilled Nursing Facilities (SNF) reimbursement opportunities on the Medicare cost report. Two of them could reimburse providers for sizable expenses that the majority of SNFs experience every year: the Utilization Review (UR) and Medicare bad debts. 

Utilization Review: Medicare cost report opportunities

UR meetings historically focused on managing lengths of patient stay and reducing costs. The implementation of the SNF value-based purchasing program and the related incentive payment adjustment, which resulted in a reimbursement rate increase or reduction by up to 2%, led some facilities to increased physician or medical director involvement in the UR management in order to improve clinical outcomes. 

With the increase in physicians’ UR time, there frequently is a cost increase for SNFs. CMS Provider Reimbursement Manual – Part 1, Chapter 21, Section 2126.2, outlines the requirements for 100% reasonable Medicare program UR cost reimbursement.  The only mechanism for SNFs to get reimbursement for these costs is through the Medicare cost report. 

Why is this important? BerryDunn maintains a database of SNF Medicare cost report filings and analyzes the data annually, looking for trends and opportunities to help providers optimize available reimbursement. The cost report data shows that from 2016 to 2019 only 1.95% of rural SNFs and 2.82% of urban facilities claimed reimbursable Medicare UR costs. Of the facilities claiming UR costs, the median requested reimbursement was $9,000 or $2.07 per Medicare patient day. 


Figure 1 Source: HCRIS as filed full utilization SNF cost reports, 2017 - 2019

Optimize your reimbursement: Utilization Review checklist available

To support SNFs with reimbursement for these costs, BerryDunn’s healthcare consulting team has developed a checklist that provides insight on the Medicare cost report opportunities. Download the Utilization Review checklist.

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Leaving money on the table? Reimbursement opportunities for Skilled Nursing Facilities

Read this if you are applying for or have received Provider Relief Funds.

Phase 3 reconsiderations

The Health Resources and Services Administration (HRSA) announced in late September that providers who believed their Provider Relief Funding (PRF) Phase 3 payment was not calculated correctly could request a reconsideration. Providers have until 11:59 EST on November 12th to request a reconsideration. 

If you believe your payment wasn’t calculated properly here is what you need to know:

  1. Carefully review the PRF Phase 3 Calculation methodology  
  2. The reconsideration process is only meant for payment decisions where the provider received less than expected (including no payment). Reconsideration requests that require a change in methodology or policy will not be accepted.
  3. The application must be completed in DocuSign  
  4. You will not be able to change information from the original submission, this is not an opportunity to fix or make changes to the original application. You will not be able to submit new or revised information. HRSA will reach out to you for clarifying information.
  5. Phase 3 reconsideration payments will come from the unobligated balances of the Phase 3 general distribution
  6. Applying for a Phase 3 reconsideration does not affect your eligibility for a Phase 4 distribution

Phase 4 provider relief payments and American Rescue Plan (ARP) rural distributions

HRSA will be distributing $17 Billion in Phase 4 PRF and $8.5 Billion in ARP rural distributions. 75 % of the Phase 4 payments will be based on changes in operating revenues and expenses from July 1, 2020 through March 31, 2021. The remaining 25% will be based on Medicare and Medicaid volumes. Smaller providers will be reimbursed at a higher percentage for their changes in operating revenues and expenses. The ARP rural distribution will be based only on Medicare and Medicaid volumes. Access the PRF Application and Attestation Portal here. Applications will close at 11:59 EST on November 3rd. The ARP rural distribution is expected to be distributed around Thanksgiving and the PRF around mid- December.

Important things to know when submitting your application

  1. Providers will be able to apply for both programs in the same application. Even if your facility is not designated as rural you should apply for the rural distribution, as it is based on the region your from which your residents were admitted.
  2. The application will require you to enter and submit supporting documentation for operating revenues and expenses for calendar quarters Q1, Q3, and Q4 of 2019, Q3 & Q4 of 2020, and Q1 of 2021.
  3. Phase 4 funds are considered a general distribution payment under the PRF reporting requirements and can be used to cover eligible lost revenues and expenses attributable to coronavirus.
  4. ARP rural payments must be utilized by the entity that was eligible for the funding.
  5. Providers will have until December 31, 2022 to spend amounts received from this round of funding and will have until March 31, 2023 to report the use of the funds.

Provider relief reporting portal

HRSA opened the Provider Relief Funds (PRF) reporting portal on July1, 2021, for Phase 1 PRF reporting. In Phase 1, providers will be reporting on the use of PRF received prior to June 30, 2020. While Phase 1 reporting is due September 30, 2021, HRSA has provided a 60-day grace period for the reporting period. Providers will be considered out of compliance with the reporting requirements if they do not submit reporting by November 30, 2021. Providers can submit their reporting on the Provider Relief Fund portal

  1. Providers must register for the reporting portal, this is not the same portal as the application and attestation portal. The portal registration must be completed in one session. Follow the link to the Portal Registration User guide
  2. Providers can only report on eligible lost revenues and expenditures related to payments received before June 30, 2020. Providers are not yet allowed to report on payments received subsequent to June 30, 2020. See the June 11, 2021 Reporting Requirements Notice for more detail on reporting requirements.
  3. The period of availability for Phase 1 lost revenues and eligible expenditures is January 1, 2020 through June 30, 2021.
  4. It is extremely helpful to complete the HRSA provider portal worksheets prior to beginning the portal data entry. 
  5. Providers should return unused funds as soon as possible after submitting their report. All unused funds must be returned no later than 30 days after the end of the grace period. (December 31, 2021)
  6. Provider Relief Funds are considered federal awards under Assistance Listing Number (ALN) 93.948. Providers, both for-profit and not-for-profit may be subject to a Uniform Guidance Audit if they expend more than $750,000 of federal awards during the provider’s fiscal year. 

Your BerryDunn Senior Living team is here to help you navigate the Provider Relief Fund reporting and compliance requirements. Please contact us if you have any questions or would like to talk about your specific situation. 
 

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The latest updates on Provider Relief Funds

Read this if you work in senior living. 

We are all pressed for time these days, especially in senior living and long-term care facilities, where the pandemic has taken a toll on the health of our residents, the well-being of our employees, and the state of our finances. Across the nation, losses from patient care have increased significantly from 2016-2020. In the Northeast, losses from patient care increased 17% from 2016-2019, and in the western United States, they increased by 52% from 2016-2019.

With so many time and financial pressures, why is the development of a labor management program an important investment of your time? Because labor management is important to the financial success of your facility.

Labor management factors to consider:

  • Labor is the largest expense in a facility—between 2016 and 2019 labor-related costs, including contract labor and employee benefits, represented between 48%-53% of the expenses reported on the Medicare cost report 
  • With a growing trend of hiring outsourced therapy, housekeeping, laundry, dietary, and other functions, actual labor related costs could be significantly higher
  • Increased COVID-19 expense may not be fully covered by reimbursement rates
  • Facilities are experiencing increased agency use to fill nursing vacancies, resulting in higher direct labor cost per patient day

The senior living industry is already facing severe nursing shortages and, according to the Bureau of Labor Statistics, at least 2.5 million more workers will be needed by 2030 to care for the so-called “silver tsunami”. Argentum has projected that 1.2 million new workers—mostly Certified Nursing Assistants, aides and Registered Nurses—will be needed in senior living through 2025.

Workforce shortages are not only occurring in nursing departments, but throughout all of our departments, as senior living competes with the retail and hospitality industry to fill ancillary positions.

The benefits of creating a labor management program

The development of a well-executed labor management program may result in:

Clarity on optimal staffing and competency levels in all departments
Labor budgets and schedules adjusted for both census and patient needs can help facilities have the right people in the right place at the right time. Time invested in this initiative improves patient outcomes, staff morale, and your organization’s bottom line. 

Stronger community integration and leadership
Most senior living facility positions are filled by recruiting locally. Understanding local demographic trends and developing a forward-looking strategy for staff acquisition, retention, and development (both personal and professional) may help a facility become an employer of choice and minimize vacancies. 

Achieving community recognition
A labor management program may help your facility better understand your CMS star rating as it relates to staffing, and tailor a response to publicly available ratings. 

Improved regulatory compliance and response to changes in tax and other policy
Many recent laws have varying provisions for organizations based on size, which is measured by number of employees or full-time employee equivalents. Well-structured labor reports may help your organization respond to regulatory changes promptly.

Opportunities for reimbursement optimization
By understanding your labor structure and compensation arrangements, you may be able to increase reimbursement though more accurate cost reporting (such as utilization review reimbursement on the Medicare cost report). Medicaid reimbursement methodologies vary by state. In many cases, correct classification of labor into reimbursable and non-reimbursable departments, as well as allocations between units, may be key. 

Improved bottom line
Understanding and managing labor statistics may help facilities improve their bottom line, both short and long term, by aligning costs and revenue trends.

Labor management is a key tool to drive efficiency and increase quality across all departments in your facility. Building a high-performing workforce culture and implementing labor management tools will help you gain efficiencies, reduce costs, and produce quality outcomes. The stakes are high right now—facilities that can build a strong culture and workforce will be the facilities that are successful in the future.

If you need assistance or have questions about your specific situation, please contact our senior living consulting team. We’re here to help. 

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Six steps for a successful labor management program 

Our senior living and long-term care professionals have compiled this guide to financial resources for senior living providers, segregated by federal and state programs.

In this guide, you will receive a breakdown of the critical components of each program, related compliance requirements, payment and accounting considerations, and the provider type for which the program is available.

Included on the guide is a publication date. Please check back regularly for updates.

READ THE GUIDE NOW

We're here to help.
If you have any questions, please contact a member of our senior living consulting team.

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Senior living COVID-19 financial resources guide