1. TennCare Level I Cost Report Presentation to the Members of the Tennessee Health Care Association
October 17, 2007

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. Effect of Routine Charge on Rate

10. Charge for Routine Services
Medicare requirement
State’s position
Effect on rates
The truth about the issue

11. 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

12. Trend of Level I Statewide Ceiling

13. 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

14. 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

15. 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%

16. 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 = x pop. 65 and under
plus
.0120 x pop plus
.0600 x pop plus
.1500 x pop. 85

17. 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.

18. 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

19. Financing Existing Services
Keeping and retaining qualified personnel
Replacing infrastructure
Inflation
Changes in patient mix

20. Financing New or Expanded Services
Skilled care services
Home Care unit
CORF services
Home and community based services
Hospice unit
Assisted living

21. Planning for Succession
Attracting qualified personnel to replace key managers
Compensation
Retirement related costs
Succession plan

22. Issues Facing Purchasers
DEFRA calculations
Current leasing stance of State
Maintaining operating rate or getting it in line with reimbursement
Access to capital markets

23. Contact Information
William C. Matheney FHFMA,CPA MBA
Matheney Stees & Associates PC
6136 Shallowford Road Suite 101
Chattanooga, TN 37421AC
Phone
Fax