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2013‐2014 Medicaid Rate Sheet UpdateSeptember 12, 2013

Christopher J. McCarthy, CPAPartnerDirector of Health Carecmccarthy@odpkf.com

Dorothea A. Russo, CPAPartnerHealth Caredrusso@odpkf.com

LeadingAge New YorkFinancial Managers Annual Conference

Agenda– Medicaid Rate History

– Per Diem Adjustments

– 2013 Capital rate review

– Budgeting for 2014

– OMIG Audits

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The Current Medicaid Methodology

o 1/1/2012 – 12/31/2017*• Base Year = 2007 Costs• Case mix computed 2x/yr using the MDS• CMI RATE PERIOD• 1/2011 1/1/12 – 6/30/12      (PAID)• 1/2012 7/1/12 – 12/31/12    (PAID)• 7/2012 1/1/13 – 6/30/13      (Q4)• 1/2013 7/1/13 – 12/31/13    (?)

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The Current Medicaid MethodologyoNO CORRIDORSo Transition (to “ease” $ impact of “new” methodology)

o Starting Point – July 7, 2011 Medicaid rate2012 1.75%2013 2.50%2014 5.00%2015 7.50% 2016 10.00%2017 Transition “completed”

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Overview of Non‐Capital Components of Pricing Methodology for SNFs(Effective January 1, 2012) – Source‐NYSDOH Handout (HCS)

Direct Component(50% StatewideDirect Price + 

50% Peer GroupDirect Price) 

WEF Adjustment to Direct Component

(50% Facility Specific WEF + 50% Regional WEF)

Medicaid Only

Case Mix Adjustment to Direct 

Component

Indirect Component(50% StatewideDirect Price + 

50% Peer GroupDirect Price )

WEF Adjustment to Indirect Component

(50% Facility Specific WEF + 50% Regional WEF) 

Per Diem add‐ons Bariatric ($17) Dementia ($8) 

TBI Extended Care ($36) (if applicable)

Non‐Comparable Component

Facility‐Specific

2013 (Year 2) Transition Per 

Diem 

Total Operating 

Price

Other Per DiemsQuality Measure5% CMI Cap

Bedhold Adjust

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Statewide/Peer Group Prices‐Starting Point

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Peer Group Prices:2012‐2017

Per Diem Adjustments for 2013

• Transition adjustment• Quality adjustment• CMI impact originally limited to 5%

– Value per case mix point• Bedhold adjustment 1/1/2013 and

4/1/2013

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Transition Adjustment: 2012 & 2013

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Transition Adjustment: 2014 & 2015

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Quality Adjustment

2013 Nursing Home Quality Pool Methodology-Quality measures (60 points)-Compliance (20 points)-Potentially avoidable hospitalizations (20 points)

2013 Rate Effect-Negative adjustment statewide ($50 million)-Positive adjustment for facilities in top 3 quintiles

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Adjustment to Cap Case Mix at 5%

1/1/2012 7/1/2012 7/1/2012limited

Statewide Direct Price 102.54 102.54 102.54

WEF Adjustment 1.0780 1.0780 1.0780

Facility Case Mix Adjustment 1.0138 1.3223 1.0689

WEF and Case Mix Adjusted Price 112.06 146.16 118.15

Adjustment to Cap Case Mix 5.0% 28.01

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January, 2011 Limit of 5%

Facility Specific Case Mix .92 .97

50% Peer Group/50% Statewide Case Mix .907504 .907504

Facility Case Mix Adjustment 1.0138 1.0689

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Value per Case Mix Point

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Case Mix Index January, 2012 1.2030

Case Mix Index January, 2011 .9194

Case Mix point change .2836Direct Component at 1/1/2012 112.06Direct Component at 7/1/2012 146.16Change in Direct Component 34.10Value per Case Mix point (34.10/28.36) 1.20

Bedhold Adjustment• Per PHL Section 2808(25)(c)• 2012/2013 Budget called for $40 million of savings– Effective 7/1/12 Medicaid hospital bed holds were retroactively paid at 50% (down from 95%).  This satisfies $16 million

– Effective 1/1‐3/31/13 State added negative per diem to recoup $24 million based on percentage of each facility’s Medicaid cost to statewide Medicaid cost.

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Bed Hold Adjustment (cont’d)

• 2013/2014 Budget calls for $40 million savings– Continue paying Medicaid hospital bed holds at 50%

– Effective 4/1/13 negative per diem will reflect adjustment over the fiscal year 2013/2014

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Capital Rate Review• 2012 RHCF, Schedule Q – Facility

Reported Capital• Sample rate for Voluntary facility

– How do the amounts get to the rate sheet?

• Common items of appeal

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Tracing Capital Amounts to Schedule VI– Review of sample Voluntary rate sheet

• Important RHCF schedules:– Part II and Part III (if applicable), Schedule 9– Part II and Part III (if applicable), Schedule 10 & 11– Part II and Part III (if applicable), Schedule 15– Part II and Part III (if applicable), Schedule 17– Part II , Schedule 8, 8A & 8D– Part IV, Exhibit B– Part IV, Exhibit E– Part IV, Exhibit I– Part I‐3

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Common OMIG Property Audit Adjustments

• Auto rentals for vehicles without a travel log• Sales tax included in the operating component• Real estate tax refunds in subsequent year• Depreciation or rental for phone system• Interest and amortization on refinanced debt not 

previously approved• Working capital interest on debt with term in excess of 

one year• Maintenance/Supply costs included in ME Lease costs• Any expense that can not be supported by an invoice

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Appeals

• Common Appeal issues (All Sponsorships)– Property Insurance ‐ if it was reported on a line other then the 

preprinted line on Part II, Schedule 9

– Adjustments to average equity (for cost and lease basis facilities)

– Movable equipment rentals will not get reimbursed if there are any discrepancies at all between summary schedules and details schedules or equipment isn’t described.

– Real Estate taxes not getting pulled in from the Part III, etc.

– Over reimbursed mortgage related costs as a result of refinancing

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OMIG Audits• OMIG will definitely perform a base period audit for 2002 (or a subsequent year if there was a change of ownership)  on the operating costs included in Rebased rates effective 4/1/09‐12/31/11.  

• Cost report used for rebased rates is subject to audit through 12/31/2014 per PHL section 2808‐2b(d). (2013/2014 Budget extends this to 2018)

• Currently, OMIG is performing property audits for rate years 2006‐2008 with rollforward adjustments through 3/31/09.

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OMIG Audits (cont’d)• Other OMIG audits of nursing facilities:

– Bed hold audits

– Medicaid overpayment (aka NAMI) audits

– January, 2012 and July, 2012 MDS’s audits

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What will OMIG ask for?• Financial information• Related party transactions• Property, plant and equipment details• Statistical information• Mortgage documents and proof of payment• Insurance policies and invoices• Rental contracts and invoices• Health Recruitment & Retention Allowance• Access to independent auditor workpapers• Proof of funding of depreciation (earlier years)• And then some….

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Contact Information

15 Essex RoadParamus, NJ  07652201.712.9800

555 Hudson Valley Avenue New Windsor, NY 12553845.220.2400

Christopher J. McCarthy, Partnercmccarthy@odpkf.com

914.341.7018

500 Mamaroneck AvenueHarrison, NY 10528   914.381.8900

665 Fifth AvenueNew York, NY 10022212.286.2600

One Stamford LandingStamford, CT 06902203.323.2400

Dorothea A. Russo, Partnerdrusso@odpkf.com

914.341.7087

www.ODPKF.com

29 BroadwayNew York, NY 10006212.867.8000

100 Great Meadow RdWethersfield, CT 06109860.257.1870

Keith Solomon, Partnerksolomon@odpkf.com

914.341.7078

Line No. 1/1/2012 7/1/2012 Inc (Dec) 1/1/2013 Inc (Dec) 4/1/2013 Inc (Dec) Inc (Dec)

1 Facility Specific Non Comp Price 9.53$ 9.53$ -$ 9.53$ -$ 9.53$ -$ 9.53$ -$ 2 Statewide Direct Price 102.54 102.54 108.38 5.84 108.38 - 113.00 4.62 3 WEF Adjustment 1.0780 1.0780 1.0780 1.0780 1.0780 4 Facility Case Mix Adjustment 1.0138 1.3223 1.3223 1.3223 1.3223 5 WEF and Case Mix Adjusted Price 112.06 146.16 34.10 154.49 8.33 154.49 - 161.07 6.58 6 Statewide Indirect Price 50.82 50.82 53.71 2.89 53.71 - 56.00 2.29 7 WEF Adjustment 1.0437 1.0437 1.0437 1.0437 1.0437 8 WEF Adjusted Indirect Price 53.04 53.04 - 56.06 3.02 56.06 - 58.45 2.39 9 Total Operating Component 174.63 208.73 34.10 220.08 11.35 220.08 - 229.05 8.97

10 DEM, BMI, TBI Per Diem Add Ons 0.97 0.82 (0.15) 0.82 - 0.82 - 0.82 - 11 Transition Adjutment 69.17 69.17 - 58.01 (11.16) 58.01 - 44.47 (13.54) 12 Quality Adjustment - - - - - - - - - 13 Misc. Per Diem Adjustments - - - - - - - - - 14 Adj Per PHL Section 2808(25)c) - - - (4.66) (4.66) (0.90) 3.76 (0.90) - 15 Adjustment to Cap Case Mix 5.0% * - - - - - - - - 16 Total Price 244.77 278.72 33.95 274.25 (4.47) 278.01 3.76 273.44 (4.57) 17 Capital Per Diem 63.92 63.92 - 61.90 (2.02) 61.90 - 61.81 (0.09) 18 Total Price + Capital Per Diem 308.69$ 342.64$ 33.95$ 336.15$ (6.49)$ 339.91$ 3.76$ 335.25$ (4.66)$

* Note: With 5% cap on CMI change facility had a $28.14 adjustment on Line 15.

Estimated 2014

LeadingAge Health Care CenterRate Analysis

2012-2014

1

2

Seep.

1.068

118.1

28.0

28.1

4 342.6Finalrate

effective

3

4

5

6

Line No.

COST

ACCT LINE

FAC REPORTED

ALLOW

CAPITAL

TracebackReim

bursed Capital

1Depreciation

12,982,376

*

3,005,656

0.92712,786,544

2

Interest 3

1,850,084

*1,645,494

A

0.92711,525,538

3

Rent1

-

4 Insurance

562,299

*

62,299

0.906956,499

5

Return On Equity

3-

-

6

Return Of Equity

1-

-

7

Other (Boiler Insurance)

52,506

*

2,506

0.90692,273

-

-

8

Amortization

123,280

*

-

0.9271-

-

-

12

Depreciation2

81,352

*81,352

0.9271

75,421

13Interest

3-

-

14

Rent A35

15,575

*15,575

1.0000

15,575

15Rent B

48,940

*

8,940

0.90698,108

16

Rent C5

18,197

*18,197

0.9069

16,503

17Rent D

5123,821

*

23,821

1.000023,821

18

Rent E10

1,593

*1,593

0.9534

1,519

19Rent F

14231

*

231

0.8069186

50

Insurance (Auto)5

7,007

*7,007

0.9069

6,355

NO

N-TREN

ED ITEMS:

-

-

58O

rgn/Start-Up

-

-

59Sales Tax

-

-

60O

ther-

-

61

WCI Expense

564,773

*

23,861

B0.9069

21,640

INCO

ME O

FFSET-

62

Other Interest

3(249,694)

(249,694)

0.9271

(231,491)

63W

CI Expense5

(64,773)

(23,861)

0.9069(21,640)

64

Other

-

Total4,827,567

*

4,622,977

4,286,851

Patient Days 69,352

*

Per Diem61.81

$

Allowable M

ortg InterestSchedule 17Prinicipal

**1,774,309

O

vermortgaging %

0.9274

Allowable Am

ount1,645,494

A

WCI Threshold

Bed Capacity202

Per Bed lim

it2,250

Principal Lim

it454,500

Estim

ated 2014 Allowable %

5.25%Allow

able WCI

23,861

B

*Traced to 2012 RHCF

**Traced to 2012 Schedule 17

LeadingAge H

ealth Care C

enterC

apital Rate Sum

mary

2014

BLDG/FIXED EQ

UIPM

ENT

LAND/LEASEHELD IM

PR:

MO

VEABLE EQU

IPMEN

T

LeadingAge Health Care Center

*

Note: N

o WCI if facility has either positive N

I or a transfer of assets

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7000000N LeadingAge Health Care Center RHCF-4 Cost Report DCN: (none)03-Sep-13, 11:07 AMReport Period: 01/01/12 - 12/31/12 - 1 -

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10

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2013-2014 Medicaid Rate Sheet Update_McCarthy Russo.pdf2013-2014 Medicaid Rate Sheet Update (2)