Federal Supplemental Payments Upper Payment Limit (UPL) The Basics Oklahoma

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1 Federal Spplemental Payments Upper Payment Limit (UPL) The Basics Oklahoma Agst 30,2016 OAHCP Eddie Parades SVP StoneGate Senior Living UPL Basics to Start Social Secrity Act section 42 CFR , 52, 54, 57, 66 and 67 allows for Federal Spplemental Payment UPL provisions UPL is designed to establish minimm payment amonts at the eqivalent of Medicare reimbrsement rates for similar services of care provided to Medicaid residents for qalified nrsing facilities that: Have a sorce of pblic fnding for the non-federal share (State s share) Choose to participate in the program The UPL program allows for access to additional Medicaid reimbrsement by means of implementing an Intergovernmental Transfer (IGT) fnded by a Non-State Government Organization (NSGO) owned nrsing facility and reslts in additional Federal Spplemental Payments p to the UPL NSGOs have the ability to access additional Medicaid fnds by fnding an IGT (State s share) to pll down Federal spplemental payments eqal to the difference between the Medicaid rate and the eqivalent Medicare rate UPL Economics Overview 1. State Medicaid rate pls Ancillaries (typically estimated at $5 PPD) Example: Medicaid rate of $145 and yo wold add +$5 PPD for similar Medicare rate of close to $150 PPD 2. Eqivalent Medicare RUG wold then be calclated for the same patient and same level of services (yor software package shold accommodate) Example: $275 PPD eqivalent Medicare RUG rate 3. Difference between Medicare rate yo wold receive at the UPL and the actal Medicaid rate yo did receive (pls the Ancillary add-on) Example: $275 -$150 = $125 Difference is the UPL 1

2 UPL Economics Overview (cont.) 4. The UPL amont then reqires the State s share or an IGT in order to draw down the fnds, meaning it takes 40% to prime the pmp and pll down matching Federal Fnds Example: $125 x 40% = $50 IGT or State s share 5. The net spplemental payment sbtracts the IGT amont (repayment to Hospital) which leaves the remaining Federal Match amont or new money as proceeds Example: $125 -$50 IGT = $75 Net Spplemental proceeds to the NSGO Hospital 6. NSGO Hospital retains their IGT and negotiated split of the Federal Fnds (for this illstrative prpose we shall se a simple 50/50% split) and Manager is paid a performance incentive for 50% of the Net Spplemental proceeds Example: $50 IGT + $37.50 Proceeds = $87.50 to Hospital Owner and $37.50 Proceeds to Nrsing Home Manager All at ZERO cost to the State! UPL Economics Overview (cont.) 1st Year 2nd Year 3rd Year Revene UPL Proceeds Facility Split of Spplemental Payment 562, , ,131 Revene Total $ 562,556 $ 554,344 $ 546,131 Expense Change of Ownership (CHOW) DADS filing fee (1,500) - - NSGO Hospital Management Agreements, OTA, and Sb-Lease Appraisals Coordination Estimate (3,750) - - Legal Consel Cost Estimate (15,000) - - Expense Total (20,250) - - Net Federal Spplemental Payment Proceeds $ 542,306 $ 554,344 $ 546,131 Model assmptions: - 1 facility - 45 Medicaid ADC - Delta of $125 (MCR Rate: $275 - MCD Rate: $150) - Participation fee of $6.50, $7.50, $8.50 (SNF & Hosp. split 50/50) Intergovernmental Transfer (IGT) CMS State Fnds 40% Federal Fnds 60% $75 NSGO $50 $125 STATE 2

3 UPL Strctre Owner/Operator/License Holder reqires a CON/CHOW transfer to a Non-State Governmental Organization (NSGO) typically a Conty/City Hospital Trst Athority or other NSGO NSGO Hospital enters into a Management Agreement, Sb-Lease, OTA with the previos Operator, who now becomes the new Manager NSGO Hospital mst receive all Medicare and Medicaid payments and demonstrate Ownership oversight (note: Medicare/Medicaid checks go into a Hospital based depository accont) NSGO Hospital pays Manager: 1. Base Management Fee (at FMV rate) 2. Sb-lease (at FMV rate) 3. Operating Expenses (depository accont is swept every 5 days - negotiated) 4. PLUS Management Incentive fee of the Srpls Working Capital and new Spplemental Payments eqal to their % split Note: Manager s EBITDAR Eqals to what they wold have otherwise received previosly pls their split of UPL NSGO Hospital is paid back the IGT and retains the spplemental payments eqal to their % split UPL national scope Crrently active in 10 States and Indiana was the first for nearly 15 years 4 additional States are aggressively looking to enter the program CMS ($24B program - incldes Provider Assessment Fee programs) 1. Program will contine as it is interwoven into the healthcare system 2. New proposed Reglations will be coming ot at the end of this year 3. Will layot basic framework, information and data gathering 4. Will not inclde a care criteria component at this time - relationship between State and Provider A nmber of other States have the approved State Plan Amendment to allow for the program, bt do not choose to tilize as their Medicaid rates are high enogh to not generate a delta at the level it makes sense to implement. 3

4 Those are the Basics There are a nmber of steps which need to be initiated, nances to watch ot for, and hrdles to overcome - in the end the UPL is an impactfl program which offers the opportnity for Nrsing Centers and NSGO Hospitals to provide improved access to qality care which or frail elderly and disabled Medicaid recipients deserve. I believe or residents have earned the best we and or Nation can offer and a rate closer to $200 PPD allows the resorces to achieve that - staffing, wages, environment, eqipment, services, and with a reasonable/fair retrn. (Note: average Medicaid rate in the Nation is approximately $187 PPD) Or Oklahoma road towards UPL - Timeline Meeting with Eddie/Tom and presents UPL idea Board begins de diligence OAHCP Board spports UPL initiative OAHCP leads UPL concept approval May 2014 Febrary 2015 Smmer 2015 May 2016 Presentation to OAHCP OAHCP hires otside UPL Work Grop begins Awaiting SPA and CMS Board Jne 2014 conslting law firm Jly 2015 discssions with OHCA Agst 2015 Approvals Crrent Or Oklahoma Road Towards UPL - Hrdles 1. CON definition and langage of ownership and for NSGO Hospital - Resolved with passing of legislation 2. Geographical limits for Hospital Athority to only operate within their Conty - Resolved with passing of legislation 3. OHCA challenges with Medicaid data gathering of RUGs and calclations of UPL - Resolved with otside Consltant Agreement; Meyers and Staffer 4. OHCA reqirement for qality performance component to payments received - Agreement reached with OHCA 5. OHCA reqirement for a portion of the payment to cover additional Administrative costs and to benefit all Nrsing Homes in the State - Agreement reached with OHCA 6. OHCA to sbmit State Plan Amendment to CMS for program approval - In progress and hopefl to sbmit SPA with CMS approval this Late-Smmer 4

5 Oklahoma UPL Model Concept (Note: TBD final pblication) UPL Concept paper and model overview verbally agreed to by OHCA, bt not yet final prodct as adjstments will likely occr from CMS reviews - this is to the best of or knowledge today: Fnding Flow: The base spplemental payment is to be calclated at 75% of the UPL. Demonstration of meeting the Care Criteria will allow for achievement of the remaining 25% of the UPL. Achieving a single Care Criteria will reslt in recognition of an additional 5% of the UPL. Achievement of all five of the Care Criteria reslts in realization of 100% of the UPL. OHCA will confirm Qality Criteria metrics have been attested as met and will calclate the nonfederal share amont to be transferred by an IGT entity in order to draw the federal fnding for the UPL payments, within 10 days after the end of the qarter period. OHCA will provide notification of the identified nonfederal share amont statement and the IGT entity will make an Intergovernmental Transfer of fnds within 5 bsiness days. If the IGT is made within the appropriate 5 bsiness day timeframe, the UPL Federal Spplemental payments will be then be disbrsed to the NSGO entity within 10 days. A Participation fee will be assessed on each participating Nrsing Facility in the UPL program, in the form of a Per Patient Per Medicaid Day calclation, to be phased in over a 3 year period: Year 1: $6.50 PPMD Year 2: $7.50 PPMD Year 3: $8.50 PPMD, or the eqivalent of 10% of Nrsing Home Medicaid Bdget, whichever is less All participation fee dollars are to be held in a separate set aside fnd by OHCA to cover administrative costs related to the UPL program, with any srpls of these fnds to be sed to spplement nrsing facility Medicaid rates for all Nrsing Facilities. The participation fees will be over and above the dollars sbmitted by the NSGO to fnd the IGT necessary to reach the UPL. Program Reqirements: o NSGO Reqirements: Execte agreement with OHCA Provide proof and identify sorce of - Intergovernmental Transfer (IGT) Provide proof of ownership as Licensed Operator of the Nrsing Facility Provide certification of NSGO entity OHCA to be provided with exected Management Agreement between NSGO and Manager 5

6 o Nrsing Facility Reqirements Mst be crrently licensed as a Skilled Nrsing Home provider Operating license mst be held by NSGO Mst be a Focs on Excellence participant Certification of Eligibility for UPL Program (TBD) mst be filed 60 days prior to entrance of the qarter New NSGO participants may only enter the UPL program at the start of each qarter o Performance component Care Criteria Reqirements: (validation metrics TBD) 1. UPL partnering entities will develop a written plan towards the redction and mitigation of nnecessary Retrn to Acte Admissions (RTA). Reslting otcome to improve efficiency and care avoidance costs to the overall Medicaid program. Each NSGO mst sign an attestation attesting that they will have the plan implemented within six (6) months of being in the program. i. RTA management tool which identifies those residents at high risk for potential RTA ii. RTA management tools to spport effective commnications iii. Advance directive planning and implementation iv. Application of QA/PI methodology in review of RTAs for root case analysis and teaching needs 2. Participating bildings will implement a pro-active Pnemonia/Fl Vaccination program, which will reslt in improved vaccination scores above a facility specific baseline, as measred sing the CMS Qality Metrics. Reslting otcome to improve efficiency and care avoidance costs to the overall Medicaid program. (metrics to be discssed) i. Latest 3 Qtr. Avg. of CMS Measre Code 411 and 415 to establish baseline ii. Crrent measre code 411 and 415 score iii. Written plan for fl & pnemonia vaccination program to address new admissions and crrent resident 3. Participating bildings will be reqired to flly participate in the Oklahoma Health Aging Initiative as promoted by the Governor and OSDH. Reslting otcome to improve qality of care in cooperation with and confirmation by the QIO by implementing at least one strategy. ( Sbmission of Living Longer Better pledge at ok.gov website) i. Prevent & Redce Falls ii. Improve Ntrition iii. Increase Physical Activity iv. Redce Depression 4. Participating bildings will be reqired to be enrolled into the FOE program and actively take part in the Resident/Family Satisfaction reqirements with written plan to inclde: i. Condct satisfaction srveys in accordance to FOE ii. Analysis and trending of srvey reslts with identification of areas for improvement iii. Plans and action towards identified areas of improvement 6

7 5. Participating bildings will be reqired to demonstrate improvement above the facility specific baseline in the 5-Star Qality Measres composite scoring. Metrics will be determined based pon CMS Nrsing Home Compare composite score over the trailing 12 month period. Nrsing facilities with Qality Measres star ratings of 3 or better over the trailing 12-month period or showing improvement in composite scoring, will be recognized as meeting this care criteria. i. Latest available 3-Qtr. avg. of CMS Qality Measre star rating to establish baseline ii. Participation of star rating of 3 or better or demonstration of improvement with no 2 Qtrs. consistently below 3 stars Contined Participation Reqirement If a participant fails to achieve at least one of the Care Criteria for two consective qarters, they will be sspended from the program for the following one qarter UPL Items to Consider Ownership appetite to transfer CON/License, Risk vs. Reward decision Lender consents to spport transfer of CON/License/AR to Hospital Landlord consents to spport transfer of CON/License/AR to Hospital Assets, time, knowledge, which will be reqired to develop, execte, and manage UPL participation (Do yo need help?) Start-p costs to become UPL eligible and contined compliance i.e. Legal/Appraisals/CHOW/potential Medicaid billing delays and working capital impact Hospital Partner selection i.e. location, relationship, board, IGT capacity, Management Agreement parameters, oversight discssions, and NSGO certification, etc. Q & A with Discssion 7