Wage Index Expert Review Programfor Houston-Baytown-Sugarland, TX

By R-C Healthcare Management Services, Inc.

Wage Index Expert Review Programfor the Houston-Baytown-Sugarland, TX

CBSA Wage Index Group

 

By R-C Healthcare Management Services, Inc.

July 21, 2005

For further information, please contact

Arnold Silver, Mike Webdale or

Ken Webdale at (800) 862-5368 or

(602) 995-9420

About R-C Healthcare Management

• Company’s Background and Experience• #1 in wage index consulting since 1990•  Clients include 24 hospital associations and 41 hospital

groups over the years•  Ongoing consultants to hospital associations in NY

(GNYHA), CA (HASC), Kansas City, CT and WI • We have worked with over 50% of U.S. hospital payroll

dollars• Estimated savings to clients – over $2 billion (and counting!)•  Principals are two former hospital CFO’s with 26 years of

experience in wage index consulting and analysis

Company’s Principals • Arnold P. Silver, CPA, FHFMA – President  46 years in hospital financial management CFO of three major medical centers National President of HFMA, 1974-75 Frederick C. Morgan Award, 1978 • Kenneth M. Webdale, CPA, FHFMA – Senior VP  36 years in accounting and finance 10 years as Assistant Administrator and CFO Public accounting, including Partner for 13 years

Wage Index Expert Review (WIER) Team of Experts

• Arnold P. Silver, CPA, FHFMA• Kenneth M. Webdale, CPA, FHFMA• Raymond J. Cisneros, CPA, FHFMA, CMCP• K. Michael Webdale, CPA• Daniel M. Silver, CHE, MHSA

• Theodore N. Giovanis, FHFMA, MBA

Short Biographies of WIER Team Experts

• Raymond J. Cisneros, CPA, FHFMA, CMCP Retired partner of Deloitte & Touche and former National Health

Care Practice Director CFO & COO at three major medical centers Past National Chairman of HFMA, 1981-82 • K. Michael Webdale, CPA  Experienced healthcare industry CPA Specialist in calculating and projecting area wage indices, training

hospital staff in wage index optimization techniques and providing assistance to hospitals filing appeals with FI’s or CMS

Active member of HFMA, HAF and ASCPA 

Short Biographies of WIER Team Experts

• Daniel M. Silver, CHE, MHSA Specialist in hospital revenue cycle and reimbursement issues

including the Medicare wage index and bad debt, analysis of specific hospital payment factors and validation of expected payments, regulatory updates and database analysis and reporting

Certified Diplomate in the American College of Healthcare Executives (ACHE), past president of Healthcare Administrators Forum of Arizona (HAF) and active member of HFMA 

• Theodore N. Giovanis, FHFMA, MBA  CEO of one of the country’s top regulatory consulting firms Former CFO at two major medical centers Washington representative for a big-six accounting firm Director of the Regulatory Affairs Agenda for the Washington, D.C.

office of HFMA

Company’s Resources

• Massive database of past wage index history for all U.S. hospitals

• Modeling capability for strategic planning purposes

• Database of new (PPS 20) wage index filings for all hospitals

Company’s Regulatory Practice Associates

• T. Giovanis & Company, Baltimore, MD – premier regulatory consulting firm

• MC AnalyTXs, Inc., Houston, TX – Medicare expert

consulting firm

Texas Hospitals and R-C Healthcare Management

Wage index improvement projects performed in:

• Amarillo, 1999

• Austin, 1999

• El Paso, 1999

• Houston (The Methodist Hospital), 1999

• Lubbock, 1999

• Texarkana, 1998

• Waco, 1999

History of National vs. Houston & Dallas AHW

PPS 15 PPS 16 PPS 17 PPS 18 PPS 19

National AHW $ 22.3096 $

23.2295 $ 24.7072 $ 26.3624 $ 28.0069 Percent Increase 2.5% 4.1% 6.4% 6.7% 6.2% Houston Wage Index 0.9631 0.9892 0.9834 0.9975 0.9997 Percent Change -1.0% 2.7% -0.6% 1.4% 0.2% Dallas Wage Index 0.9936 0.9998 0.9974 1.0068 1.0224 Percent Change 0.2% 0.6% -0.2% 0.9% 1.6%

Model of Improvement for PPS 20Impact of 1 Percentage Point Increase in the Wage Index

Houston-Baytown-Sugarland, TX CBSA

Medicare Discharges x

Average CMI x

Labor Portion of the DRG x

1 Percentage Point x

Additional Impact =

Impact of 1 Percentage

Point 157,720 1.5381 $ 2,923.11 0.01 150%* $ 10,636,721

* Estimated Additional Impact of Outliers, IME, DSH, Capital, Outpatient, SNF and Home Health

Optimization Strategies for Houston-

Baytown-Sugarland CBSA Hospitals Address the following areas:• Dietary, laundry and housekeeping• Occupational mix adjustment• Houston’s O/M is .0031 and has a very

small impact• Report salaried and contracted LPN’s, nurse

aides, medical assistants and patient transport

Improvement Potential

• If all of the major hospitals with salaries in excess of $200 million were brought up to at least the national average hourly wage, the CBSA’s wage index would improve by 1 percentage point

• If all of the major hospitals were brought up to the CBSA average, the improvement would be 3 percentage points

• If all of the major hospitals were brought up to the level of the highest salaried hospital in the CBSA (St. Luke’s at $32.30), the improvement would be 5 percentage points

• We estimate WEIR will improve the wage index by 2 – 3 percentage points

Wage Index Expert Review (WIER) Program Overview

• The Wage Index Expert Review includes the following for each participating hospital: 

• An on-site, detailed review of all of the source data that contributed to the hospital’s Worksheet S-3, Parts II and III with verification and reconciliation of the data and research conducted for any potentially out-of-standard areas; 

• An in-depth review of hospital books and documents to determine if additional items should be included or modified in order to generate increased reimbursement dollars; 

• Preparation of the S-3 refiling and the revision letter for the hospital to submit to its fiscal intermediary; 

• An exit interview at the completion of the on-site review visit for the purpose of informing hospital personnel of wage index filing findings; 

• Follow-up of the resubmission through the hospital’s fiscal intermediary and CMS as needed, including a verification that all revisions have been updated in each Public Use File to ensure that the proper revisions are used in the calculation of the Area Wage Index for each CBSA;  

• Preparation of a report on the results of the WIER for each hospital; and 

• Strategic assistance with occupational mix filings.

Wage Index Expert Review (WIER) Program Overview

WIER Program’s Proven Results

• The superiority of R-C Healthcare Management’s WIER Program was recently proven in the New York City metropolitan area: 

• The WIER Program goal was an AHW increase of approximately 2.6%. 

• Competition was stiff among R-C Healthcare Management and several large accounting firms that recently entered the wage index consulting field.

• The market was divided, primarily between R-C Healthcare Management and E&Y.

WIER Program’s Proven Results

• In approximately two months, R-C Healthcare Management performed the WIER program at 34 major NYC hospitals (in addition to client hospitals in CT, MO and WI).

• The final results in NYC:

• R-C Healthcare Management 2.7% increase in AHW

• Nearest competitor 1.0% increase in AHW

• Other competitor (6.6%) loss in AHW

Conclusion

Why R-C Healthcare Management? • One of the founders of the wage index consulting industry• Mature, highly-experienced staff of wage index consulting

professionals• State-of-the-art knowledge of national wage index issues and

accounting protocols based upon:-Position as industry leader in wage index consulting-Longevity of client relationships

• Broad-based, nationwide experience in assisting all sizes of hospitals and CBSA’s to optimize their Medicare AHW’s and AWI’s

Conclusion

• Proven results• Have impacted the NYC AWI by at least $100 million per year

for the past 12 years• Developed a teaching hospital plan for the St. Louis area that

added $50 million in value• Found a 0.2% error in the final national AHW calculation

– National impact = $250 million– Client impact = $ 10 million

• Long-standing, well-developed working relationships with CMS and FI’s throughout the country

• Industry-wide reputation for honesty, integrity, and effectiveness that has endured for many years

R-C Healthcare Management Services, Inc.

11801 N. Tatum Blvd., Ste. 132

Phoenix, AZ 85028

(800) 862-5368

Admin@rcmgmt.com