TennCare Level I Cost Report Presentation to the Members of the Tennessee Health Care Association October 17, 2007
Learning Objectives Understand the components and flow of Tennessee Level I Nursing Home cost report Understand ways to improve the information reported Learn ways to legitimately maximize reimbursement
Purpose of the Tennessee Level I Cost Report Set rates of payment for individual facilities Gather cost data for establishment of maximum payment rate Monitor the cost of institutional healthcare in Tennessee
Basic Information Required to be Filed State prescribed cost reporting form Nurse aide training forms Working trial balance Depreciation schedule Copies of management contract Copies of significant leases Supporting attachments
Flow of the Level I Report General facility information Statistical data Balance Sheet Summary Income Statement Administrator, Charge and Ownership data Detail of Expenses FTE data
Flow of the Level I Report (continued) Adjustments to Expenses Schedule H Breakdown of Revenue and Allocation of Cost Depreciation information Loan Information Reconciliation of Equity Certification Page Nurse Aide Training Forms
Common Cost Report Issues State unable to agree the trial balance to the cost report Supporting schedules missing Schedule H not completed Non-patient revenue not offset Cost of free meals not offset
Schedule H Has always existed Used to allocate overhead to non-Level I services State offered “amnesty” for two years Will cause a nominal decrease in payment rate
Effect of Routine Charge on Rate
Charge for Routine Services Medicare requirement State’s position Effect on rates The truth about the issue
How Does the State Use the Level I Cost Report To establish the Ceiling 50th Percentile 75th Percentile To set individual facility rates To plan for the future
Trend of Level I Statewide Ceiling
Individual Facility Rates Based on facility’s most recent cost report. Trended forward using an inflation rate with a ceiling Includes incentives and return on equity
Planning for the Future Determine changes in the reimbursement methodology Determine ways to reduce utilization Determine the size of the healthcare delivery system Assist legislature in developing new services
Growing Nursing Home Eligible Population Based on the 2000 US Census by the year 2030 the percentage of Tennessee’s population over age 65 is expected to grow by approximately 8%
State Health Service Plan The State of Tennessee Guideline for Growth indicates the following formula be used for approval of nursing home beds: County Bed need = .0005 x pop. 65 and under plus .0120 x pop. 65-74 plus .0600 x pop. 75-84 plus .1500 x pop. 85
Cumberland County Calculation Population Category Number in Pop. Factor Beds Pop under 65 37,187 .0005 185.94 Pop 65-74 5923 .0120 71.08 Pop 74-84 2905 .0600 174.30 Pop over 85 787 .1500 118.00 Total 549.32 There are currently 361 nursing home beds in Cumberland County. This represents a shortage of about 188 beds.
Issues Facing Providers How to finance existing services How to finance new or expanded services How to plan for succession Stand alone or join larger organization
Financing Existing Services Keeping and retaining qualified personnel Replacing infrastructure Inflation Changes in patient mix
Financing New or Expanded Services Skilled care services Home Care unit CORF services Home and community based services Hospice unit Assisted living
Planning for Succession Attracting qualified personnel to replace key managers Compensation Retirement related costs Succession plan
Issues Facing Purchasers DEFRA calculations Current leasing stance of State Maintaining operating rate or getting it in line with reimbursement Access to capital markets
Contact Information William C. Matheney FHFMA,CPA MBA Matheney Stees & Associates PC 6136 Shallowford Road Suite 101 Chattanooga, TN 37421AC Phone 800-556-1076 Fax 800-556-1075 Email bmatheney@matheneystees.com