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Update: Maine
Care (LTC) Supplemental Payments


Read this if you are a Senior Living Facility in Maine.

Due to the recent and significant changes to the Maine LTC Supplemental Payment program, we felt it would be helpful to provide an overview of the program and outline the recent updates. 

Round one

In September 2021, the Department of Health and Human Services (DHHS) announced they would be issuing $123 million in payments to Nursing Facilities (NF), Residential Care Appendix C Facilities (RCF), and Adult Family Care Homes (AFCH) (including over $37 million in state funds combined with approximately $87 million in federal matching funds). Payments were made in two installments, one in September 2021 and a second in October 2021. These LTC Supplemental Payments were originally required to be used to offset costs associated with the Public Health Emergency (PHE) during the period from July 1, 2021, to June 30, 2022. In March 2022, the Office of MaineCare Services announced an extension to the date for the use of the funds received in September and October 2021 from June 30, 2022, to December 31, 2022. 

Acceptable uses of these funds include: 

  • To pay for increased costs related to ensuring recruitment and retention of direct care/frontline staff to meet facility needs. Compensation to staff to aid in recruitment and retention may include overtime pay and bonuses for essential personnel. Essential personnel are defined as anyone regularly working at the facility, although these payments should be primarily targeted toward direct care workers and/or those who are required to be in the facility on a day-to-day basis. Any compensation to staff is required to be reasonable. 
  • Payments to assist with:
    • Retention of other essential personnel
    • Non-communal dining 
    • Visitor/vendor screening 
    • Housekeeping and supplies
  • Testing supplies and/or costs
  • Personal protective equipment (PPE) and other face coverings necessitated by COVID-19 

Expenses paid for by other funding sources cannot be claimed against these funds.

For NFs and RCFs, the LTC Supplemental Payments will be reconciled at the same time as the provider’s annual cost report audit; however, the reconciliation of the LTC Supplemental Payment and the audit of the cost report will be performed independently. Providers are required to submit a financial reconciliation to the DHHS-Division of Audit with their cost report filing. The financial reconciliation must document the actual costs incurred for COVID-19-related expenditures compared to the LTC Supplemental Payments received. DHHS will review the submissions for reasonableness and necessity of the expenditures and settle on any overpayment. For cost report filings, any expenditures paid by the LTC Supplemental Payment should be removed from allowable costs through a cost report adjustment.

The full bulletin can be found at: Supplemental Payment Information for Sections 2, 67, and 97 Appendix C Providers

In October 2021, FAQs were released by DHHS, which were then updated in November 2021. Key takeaways are as follows:

  • Any recruitment or retention bonuses that are in compliance with the principles of reimbursement will be allowed.
  • Originally the LTC Supplemental Payments could not be used for the following direct care worker recruitment and retention efforts: housing vouchers, hotel rental fees for traveling workers, daycare subsidies, transportation assistance, etc. However, this was updated in the November 2021 FAQ update to clarify that providers may include the cost of housing expenses and daycare subsidies necessary to recruit and/or retain employees into the amount of any bonuses paid to employees. The criteria rationale for the amount of the bonus must be a part of a written policy (e.g., how much an employee may receive for housing and in what circumstances). The provider must make such payments to the employee and not directly to a landlord, hotel, daycare provider, etc. Bonus payments intended to offset housing, daycare, and transportation costs are allowable as an extraordinary circumstance during the PHE and will be excluded from rebasing calculations to determine future rates. 
  • Bonuses for contracted staff are an allowable use if the payments are coordinated and paid through the contractor organization and are reasonable and necessary to ensure adequate staffing.
  • Minimum wage is not a COVID-19-related cost; however, temporary increases to wages due to staffing shortages or incentive payments for recruitment or retention are allowable under the program. 
  • The payments may be used for:
    • A variety of activities intended to support CNA training. This includes but is not limited to costs to the facility of conducting or partnering with an external entity to conduct CNA trainings for staff, reimbursing employees for the costs of CNA training, or providing incentive bonuses to staff to engage in and/or complete CNA training and certification.
    • Expenses associated with international nurse recruitment, such as legal expenses specific to recruiting health- care workers.
    • COVID-19-related expenses such as installation of an HVAC system and renovations to help mitigate the spread of COVID-19.
  • The department recommends that providers use this funding for time-limited and/or one-time payments. 
  • Providers will not be required to get to the invoice level to justify costs. However, providers will need to show that they have allowable MaineCare expenses that are not covered by their regular rate of reimbursement. This can be done by demonstrating the cost per day for a particular expense line on the cost report has increased from pre-COVID-19 levels.
  • Providers cannot share the LTC Supplemental Payment for one facility with affiliated MaineCare NF or RCF providers.
  • Providers do not need to track expenses that are shared across facility types (e.g., utilities) separately by provider type. Instead, providers can use the same allocation methods as they would on cost reports to determine the percentage allocation for shared expenses for each level of care.

Round two

In June 2022, DHHS announced they would be issuing an additional $25 million in state and federal funds in supplemental COVID-19 payments in August 2022 to NF, RCF, and AFCH. In August 2022, DHHS provided further information about the additional funds including the eligibility period for use of these funds, which is the state fiscal year (SFY) 2023 (July 1, 2022, to June 30, 2023). In February 2023, the date for the use of the funds received in August 2022 would be extended from June 30, 2023 to June 30, 2024. Payments were made in a lump sum in August 2022. Rules surrounding the use of funds did not change from those identified in round one.

The full bulletins can be found at:
Supplemental Payment Information for Sections 2, 67, and 97 Appendix C Providers 

COVID-19 Long Term Care Supplemental Payment Information for Section 2, 67, and 97 Appendix C Providers 

In addition, FAQs were updated by the department. Key takeaways were as follows:

  • The LTC Supplemental Payments can be used for increased costs for energy (e.g., fuel, heating oil), food, and other expenses stemming from pandemic-related challenges.

Cost report treatment

In March 2022, the DHHS-Division of Audit updated the cost report templates to include a new schedule, Schedule GG, to be used to report LTC Supplemental Payments received and the related expenditures, and to serve as the financial reconciliation required by DHHS which will be used to settle on any overpayment. This first version of Schedule GG was released with the following information from DHHS: 

  • The costs covered by the LTC Supplemental Payment need to be identified on Schedule GG at the expense line level. These funds were provided under the Extraordinary Circumstance Allowance principle. As such, only unforeseen and uncontrollable expenses due to the COVID-19 pandemic that are in excess of the regular rate of reimbursement are allowed for this funding. 
  • Instead of calculating the incremental cost increase for every expense line on the schedule of allowable costs, providers should first show there is a loss on the direct and routine components of their rate. If there is a savings on either the direct or routine component, this demonstrates that the costs are covered by the regular rate of reimbursement and the LTC Supplemental Payments were not needed. If there is a loss on either the direct or routine component, the use and offset of the LTC Supplemental Payments can only be offset up to the amount of the loss. The provider will then need to determine which expense line on the schedule of allowable costs includes the accounts to offset. 
  • There is a question included on Schedule GG asking if the identified expense is a one-time expense. This question will help DHHS at the time of NF rebasing. Any ongoing costs that were offset due to LTC Supplemental Payments will be added back at the time of rebasing. Any one-time expenses, such as retention bonuses due to COVID-19, will not be factored into the rebasing calculation.

Updates to methodology for acceptable use of funds, Schedule GG, and round three

The latest news regarding LTC Supplemental Payments came in December 2022. The DHHS-Division of Audit updated the cost report templates again and included a streamlined Schedule GG. Providers will now only have to identify the total expenses in the Direct Care, Routine, Fixed/Capital, or Personal Care Services (PCS) components that were covered by the LTC Supplemental Payments. These amounts are then offset against allowable costs on a designated timeline for each component rather than at each expense line level. In addition, DHHS removed the question asking if the identified expense is a one-time expense. The change will apply to the fiscal year ends that include the designated timeframe for the use of the funds. Providers who have already filed cost reports and wish to adjust their Schedule GG can refile just Schedule GG on the simplified form. An entire updated cost report is not necessary or suggested as the DHHS-Division of Audit will incorporate the updated Schedule GG at the time of audit. Should DHHS get audited on the use of the funds, providers will need to supply detailed backup to support their claims on Schedule GG. 

As a result of the updated and streamlined Schedule GG, and discussions between the DHHS-Division of Audit, BerryDunn, and Maine Health Care Association (MHCA), MHCA released a follow-up correspondence which stated that the $123 million in COVID-19 Supplemental Funds (round one) can be used for all allowable costs to offset Medicaid shortfalls for 2021 and/or 2022. These funds need to be expended by December 31, 2022. The $25 million in COVID-19 Supplemental Funds (round two) can be used until June 30, 2023.

Finally, in February 2023, the Appropriations Committee voted unanimously to approve an additional $25 million in COVID-19 Supplemental Payments that was proposed in the Governor’s Supplemental Budget (LD 206) (round three). They also approved an extension on the use of the current $25 million in LTC Supplemental Payments (round two) to be used through June 30, 2024 (so both allocations will be available to facilities to use through June 30, 2024).

We believe there will be more information to come regarding the LTC Supplemental Payment program. 

If you have any questions on these changes or would like to talk about your specific needs, please contact our senior living team. We are here to help.

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2019 SNF PPS Final Rule: Rates and so much more

CMS has issued the final rule for the Prospective Payment System (PPS) and Consolidated Billing for Skilled Nursing Facilities (SNFs) for FY 2019 (scheduled to be published in the Federal Register on August 8, 2018). The rule:

  • Updates the PPS payment rates for SNFs for FY 2019 effective October 1, 2018.
  • Finalizes the payment system called the Patient-Driven Payment Model (PDPM) to replace the current Resource Utilization Groups, Version IV (RUG-IV) model beginning on October 1, 2019.
  • Finalizes revisions to the regulation text that describes a beneficiary’s SNF “resident” status under the consolidated billing provision and the required content of the SNF level of care certification.
  • Finalizes several operational aspects of the SNF Quality Reporting Program (QRP), which implements a 2% reduction to the SNF market basket percentage for that fiscal year to SNFs that do not satisfy reporting requirements.
  • Finalizes changes to the SNF Value Based Purchasing Program (VBP), which implements a 2% withhold to SNF Part A payments that can be earned back, based on a SNFs rehospitalization rate and level of improvement, as follows:
    • The 2% reductions and the SNF specific value-based incentive payment adjustment to SNF claims will occur simultaneously,
    • Continuation of the achievement and benchmark threshold rates as previously finalized in the FY 2018 SNF PPS final rule for FY 2020 and finalized the numerical values for FY 2021 based on the FY 2017 baseline period,
    • Adopted FY 2019 as the performance period for the FY 2021 SNF VBP program year and FY 2017 hospital discharges as the baseline period for the FY 2021 SNF VBP program year, 
    • Beginning with the FY 2022 program year and for subsequent program years adoption of a performance period and baseline period that is the 1-year period following the performance and baseline period for the previous program year,
    • SNFs with insufficient baseline period data will be scored based only on their achievement during the performance period, 
    • Low-volume SNFs, with less than 25 eligible stays during a performance period for a program year, will be assigned a performance score based on the average of all SNF performance scores, 
    • SNFs with observed readmission rates of zero may receive risk-standardized readmission rates that are greater than zero, and 
    • Adopted an Extraordinary Circumstances Exceptions policy that will exclude from the calculation of  the measure rate for the applicable baseline and performance periods the calendar months during which the SNF was affected by the extraordinary circumstance.

FY 2019 PPS rate calculations - CORRECTION

CMS issued a correction notice to the 2019 SNF PPS Final Rule on October 3, 2018.

The Interactive Rate Calculator incorporates provider-specific Value Based Purchasing (VBP) adjustments. Enter your facility’s provider number, to calculate your provider-specific VBP adjusted rates. 

Our senior living experts have calculated the FY 2019 SNF Medicare PPS rates based on the final rule for urban and rural areas of Maine, Massachusetts, New Hampshire, and Vermont. CMS projects that aggregate payments in FY 2019 to SNFs will increase $820 million, a 2.4% increase as required by the Bipartisan Budget Act of 2018. Absent this statutory requirement, the FY 2019 market basket update factor would have been 2%, a market basket index of 2.8% reduced by the multifactor productivity adjustment of 0.8%.

In addition to the estimated increase in Medicare payments to SNF’s of $820 million, CMS projects the overall impact of the SNF VBP as a reduction of $211 million in aggregate payments to SNFs during FY 2019, for an estimated net increase of $609 million.

The projected overall impact to providers in urban and rural areas is an average increase of 2.4% and 2.5%, respectively, in estimated payments compared with FY 2018. Providers in rural New England will experience an estimated increase in payments of approximately 1.6% while urban New England providers will experience an estimated increase in payments of 1.7% – actual impact will vary depending on the provider’s CBSA.

The updated rates reflect:

  • A 2.4% net market basket increase for FY 2019—the maximum market basket update allowed as a result of the Bipartisan Budget Act of 2018 which establishes a special rule for FY 2019 that requires the market basket percentage, after the application of the productivity adjustment, to be 2.4%.
  • A decrease in the labor-related weight from 70.8% for FY 2018 to 70.5% for FY 2019.

The applicable wage index continues to be based on the hospital wage data (from FY 2015) in the absence of SNF specific data.

BerryDunn has provided an interactive rate calculator to assist with the calculation of applicable rates and projected Medicare revenues for FY 2019. To access the interactive rate calculator click here.

Please note errors have been identified in the case-mix adjusted rates of the final rule; we believe our interactive rate calculator has corrected these errors; however, if CMS proposes any corrections to these rates, BerryDunn will update the interactive rate calculator as necessary.

Patient-Driven Payment Model

The final rule establishes a new classification system, the Patient-Driven Payment Model (PDPM), which ties SNF payments to patient conditions and care needs rather than volume of services provided to replace the current RUG-IV model. The new classification system is an updated version of the 2017 Advanced Notice of Proposed Rulemaking Resident Classification System Version 1 (RCS-1).

The implementation date for the final system is October 1, 2019 (FY 2020). The PDPM would completely replace RUGs for Medicare Part A Fee-For-Service payment to SNFs. Payment will be based on patient characteristics associated with care components. CMS finalized several core PDPM elements:

  • Payments will be the sum of five independently-determined, case-mix adjusted payment components plus a non-case-mix component (CMG).
  • Therapy minutes are no longer relevant in determining payment, rather patients are assigned to a CMG for each component using clinical information which differs by component.
  • A variable payment schedule was finalized in which payments will taper for physical therapy, occupational therapy and nontherapy ancillary services and will begin on different days for each component.
  • Elimination of multiple mandatory SNF PPS Assessments. PDPM requires only an admission and a discharge assessment and would permit an optional interim payment assessment which is intended to allow SNFs to reclassify patients into CMGs based on changes in condition.
  • Requirement to use ICD-10 diagnosis codes on the admission MDS and as part of physical therapy, occupational therapy, and nontherapy ancillary services classification into a CMG. ICD-10 coding on claims will now drive payment by assigning a diagnosis at admission and a CMG.
  • Combined limit on group and concurrent therapy of up to 25% of a resident’s treatment time per discipline per stay.

If you have any specific questions about the final rule or how it might impact your facility, please contact Tammy Brunetti or Kevin Ware.

Final rule for FY 2019 SNF PPS and consolidated billing

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.

Three reasons to consider hiring an interim CFO

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.

Oxymoron of the month: Outsourced accountability

More and more emphasis is being put on cybersecurity by companies of all sizes. Whether it’s the news headlines of notable IT incidents, greater emphasis on the value of data, or the monetization of certain types of attacks, an increasing amount of energy and money is going towards security. Security has the attention of leadership and the board and it is not going away. One of the biggest risks to and vulnerabilities of any organization’s security continues to be its people. Innovative approaches and new technology can reduce risk but they still don’t prevent the damage that can be inflicted by an employee simply opening an attachment or following a link. This is more likely to happen than you may think.

Technology also doesn’t prepare a management team for how to handle the IT response, communication effort, and workforce management required during and after an event. Technology doesn’t lessen the operational impact that your organization will feel when, not if, you experience an event.

So let’s examine the human and operational side of cybersecurity. Below are three factors you should address to reduce risk and prepare your organization for an event:

  1. People: Create and maintain a vigilant workforce
    Ask yourself, “How prepared is our workforce when it comes to security threats and protecting our data? How likely would it be for one of our team members to click on a link or open an attachment that appear to be from our CFO? Would our team members look closely enough at the email address and notice that the organization name is different by one letter?”

    According to the 2016 Verizon Data Breach Report, 30% of phishing messages were opened by the target across all campaigns and 12% went on to click on the attachment or link.

    Phishing email attacks directed at your company through your team range from very obvious to extremely believable. Some attempts are sent widely and are looking for just one person to click, while others are extremely targeted and deliberate. In either case, it is vital that each employee takes enough time to realize that the email request is unusual. Perhaps there are strange typos in the request or it is odd the CFO is emailing while on vacation. That moment your employees take to pause and decide whether to click on the link/attachment could mean the difference between experiencing an event or not.

    So how do you create and cultivate this type of thought process in your workforce? Lots of education and awareness efforts. This goes beyond just an annual in-service training on HIPAA. It may include education sessions, emails with tips and tricks, posters describing the risk, and also exercises to test your workforce against phishing and security exploits. It also takes leadership embracing security as a strategic imperative and leading the organization to take it seriously. Once you have these efforts in place, you can create culture change to build and maintain an environment where an employee is not embarrassed to check with the CFO’s office to see if they really did send an email from Bora Bora.
  1. Plan: Implement a disaster recovery and incident response plan 
    Through the years, disaster recovery plans have been the usual response. Mostly, the emphasis has been on recovering data after a non-security IT event, often discussed in context of a fire, power loss, or hardware failure. Increasingly, cyber-attacks are creeping into the forefront of planning efforts. The challenge with cyber-events is that they are murkier to understand – and harder for leadership – to assist with.

    It’s easier to understand the concept of a fire destroying your server room and the plan entailing acquiring new equipment, recovering data from backup, restoring operations, having good downtime procedures, and communicating the restoration efforts along the way. What is much more challenging is if the event begins with a suspicion by employees, customers, or vendors who believe their data has been stolen without any conclusive information that your company is the originating point of the data loss. How do you take action if you know very little about the situation? What do you communicate if you are not sure what to say? It is this level of uncertainty that makes it so difficult. Do you have a plan in place for how to respond to an incident? Here are some questions to consider:
    1. How will we communicate internally with our staff about the incident?
    2. How will we communicate with our clients? Our patients? Our community?
    3. When should we call our insurance company? Our attorney?
    4. Is reception prepared to describe what is going on if someone visits our office?
    5. Do we have the technical expertise to diagnose the issue?
    6. Do we have set protocols in place for when to bring our systems off-line and are our downtime procedures ready to use?
    7. When the press gets wind of the situation, who will communicate with them and what will we share?
    8. If our telephone system and network is taken offline, how we will we communicate with our leadership team and workforce?

By starting to ask these questions, you can ascertain how ready you may, or may not be, for a cyber-attack when it comes.

  1. Practice: Prepare your team with table top exercises  
    Given the complexity and diversity of the threats people are encountering today, no single written plan can account for all of the possible combinations of cyber-attacks. A plan can give guidance, set communication protocols, and structure your approach to your response. But by conducting exercises against hypothetical situations, you can test your plan, identify weaknesses in the plan, and also provide your leadership team with insight and experience – before it counts.

    A table top exercise entails one team member (perhaps from IT or from an outside firm) coming up with a hypothetical situation and a series of facts and clues about the situation that are given to your leadership team over time. Your team then implements the existing plans to respond to the incident and make decisions. There are no right or wrong answers in this scenario. Rather, the goal is to practice the decision-making and response process to determine where improvements are needed.

    Maybe you run an exercise and realize that you have not communicated to your staff that no mention of the event should be shared by employees on social media. Maybe the exercise makes you realize that the network administrator who is on vacation at the time is the only one who knows how to log onto the firewall. You might identify specific gaps that are lacking in your cybersecurity coverage. There is much to learn that can help you prepare for the real thing.

As you know, there are many different threats and risks facing organizations. Some are from inside an organization while others come from outside. Simply throwing additional technology at the problem will not sufficiently address the risks. While your people continue to be one of the biggest threats, they can also be one of your biggest assets, in both preventing issues from occurring and then responding quickly and appropriately when they do. Remember focus on your People, Your Plan, and Your Practice.

The three P's of improving your company's cybersecurity soft skills

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:

Skilled Nursing Facilities: Days in Accounts Receivable

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.

Six steps to gain speed on collections

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.

New Patient Driven Payment Model from CMS―What to expect and what to do

Good fundraising and good accounting do not always seamlessly align. While they all feed the same mission, fundraisers work to meet revenue goals while accountants focus on recording transactions in compliance with accounting standards. We often see development department totals reported to boards that are not in line with annual financial statements, causing confusion and concern. To bridge this information gap, here are five accounting concepts every not-for-profit fundraiser should know:


GAAP Accounting: Generally Accepted Accounting Principles (GAAP) refers to a common set of accounting standards and procedures. There are as many ways for a donor to structure a gift as there are donors?GAAP provides a common foundation for when and how you should record these gifts.


Pledges: Under GAAP, if there is a true, unconditional “promise to give,” you should record the total pledge as revenue in the current year (with a little present value discounting thrown in the mix for payments expected in future periods). A conditional pledge relies on a specific event happening in the future (think matching gift) and is not considered revenue until that condition is met. (See more on pledges and matching gifts here.) 


Intentions: We sometimes see donors indicating they “intend” to donate a certain amount in the future. An intention on its own is not considered a true unconditional promise under GAAP, and isn’t recorded as revenue. This has a big impact with planned giving as we often see bequests recorded as revenue by the development department in the year the organization is named in the will of the donor—while the accounting guidance specifically identifies bequests as intentions to give that would generally not be recorded by the finance team until the will has been declared valid by the probate court.


Restrictions: Donors often impose restrictions on some contributions, limiting the use of that gift to a specific time, program, or purpose. Usually, a gift like this arrives with some explicit communication from donors, noting how they want to apply the gift. A gift can also be considered restricted to a specific project if it is made in direct response to a solicitation for that project. The donor restriction does not generally determine when to record the gift but how to record it, as these contributions are tracked separately.

5. Gifts vs. Exchange: New accounting guidance has been released that provides more clarity on when a gift or grant is truly a contribution and when it might be an exchange transaction. Contact us if you have any questions.

Understanding the differences in how the development department and finance department track these gifts will allow for better reporting to the board throughout the year—and fewer surprises when you present financial statements at the end of the year. Stay tuned for parts two and three of our contribution series. Have questions? Please contact Emily Parker of Sarah Belliveau.


Accounting 101 for development directors: Five things to know

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.

Can outsourcing increase revenues and reduce cycle time? Yes, if it's the right fit