1. MEDICARE PROSPECTIVE PAYMENT SYSTEM UPDATE “How to do more with less from CMS” Presented by Sheila Gunter, CEO VNA of Cordele, Inc.

2. Current System Effective 10/1/2000 Effective 10/1/2000 80 Different Payment Scenarios 80 Different Payment Scenarios HHRG’s and HIPPS HHRG’s and HIPPS OASIS Driven OASIS Driven Clinical Domain Clinical Domain Functional Domain Functional Domain Service Utilization Service Utilization

3. Revised System Effective 1/1/2008 Effective 1/1/2008 153 Different Payment Scenarios 153 Different Payment Scenarios HHRGs and HIPPS HHRGs and HIPPS Four equation model Four equation model Early Episodes (1 st and 2 nd ) with fewer than 14 therapy visits Early Episodes (1 st and 2 nd ) with fewer than 14 therapy visits Early Episodes (1 st & 2 nd ) with 14+ therapy visits Early Episodes (1 st & 2 nd ) with 14+ therapy visits Later Episodes (3 rd +) with fewer than 14 therapy visits Later Episodes (3 rd +) with fewer than 14 therapy visits Later Episodes (3 rd +) with 14+ therapy visits Later Episodes (3 rd +) with 14+ therapy visits OASIS Driven OASIS Driven Clinical Clinical Functional Functional Service Utilization Service Utilization

4. PPS Base Rates 2007 rate - $2,339.00 2007 rate - $2,339.00 New rates New rates Episodes beginning in 2007 and ending in 2008 - $2,355.96 Episodes beginning in 2007 and ending in 2008 - $2,355.96 Episodes beginning in 2008 - $2,300.60 Episodes beginning in 2008 - $2,300.60

5. Case Mix Creep Adjustment Rationale: CMS estimates increases in PPS payments are due to agencies scoring practices which in affect, result in higher case mix weights. Therefore, CMS has instituted a “case mix creep” adjustment reducing the PPS case mix adjustments by 2.75% in 2008, 2009 and 2010 and 2.71% in 2011. Rationale: CMS estimates increases in PPS payments are due to agencies scoring practices which in affect, result in higher case mix weights. Therefore, CMS has instituted a “case mix creep” adjustment reducing the PPS case mix adjustments by 2.75% in 2008, 2009 and 2010 and 2.71% in 2011.

6. HHRG’S AND HIPPS’S FORGET EVERYTHING YOU THOUGHT YOU KNEW ABOUT HHRG AND HIPPS CODES BECAUSE NOTHING IS AS IT WAS. FORGET EVERYTHING YOU THOUGHT YOU KNEW ABOUT HHRG AND HIPPS CODES BECAUSE NOTHING IS AS IT WAS.

7. Episodes and Equations Episodes Episodes MO110 – new OASIS item MO110 – new OASIS item Early = 1 st and 2 nd adjacent episode (Equation 1 and/or 3) Early = 1 st and 2 nd adjacent episode (Equation 1 and/or 3) Late = 3 rd or more adjacent episode (Equation 2 and/or 4) Late = 3 rd or more adjacent episode (Equation 2 and/or 4) Adjacent episode Adjacent episode An episode is considered as adjacent as long as there is not more than a break in service (admission/recertification through discharge) of more than 60 days. An episode is considered as adjacent as long as there is not more than a break in service (admission/recertification through discharge) of more than 60 days.

8. Episodes and Equations cont’d Equation 1 = 1 st and 2 nd episode and 0-13 therapy visits Equation 1 = 1 st and 2 nd episode and 0-13 therapy visits Equation 2 = 1 st and 2 nd episode and 14+ therapy visits Equation 2 = 1 st and 2 nd episode and 14+ therapy visits Equation 3 = 3 rd or more episodes and 0-13 therapy visits Equation 3 = 3 rd or more episodes and 0-13 therapy visits Equation 4 = 3 rd or more episodes and 14+ therapy visits Equation 4 = 3 rd or more episodes and 14+ therapy visits

9. Clinical Domain Diagnosis – MO230/240/246 Diagnosis – MO230/240/246 (Eliminated Payment Diagnoses - MO245 (Eliminated Payment Diagnoses - MO245 Therapies – MO250 Therapies – MO250 Vision – MO390 Vision – MO390 Pain – MO420 Pain – MO420 Pressure Ulcers – MO450 & MO460 Pressure Ulcers – MO450 & MO460 Stasis Ulcers – MO476 Stasis Ulcers – MO476 Surgical Wounds – MO488 Surgical Wounds – MO488 Dyspnea – MO490 Dyspnea – MO490 Urinary Incontinence – MO530 Urinary Incontinence – MO530 Bowel Incontinence – MO540 Bowel Incontinence – MO540 Ostomy – MO550 Ostomy – MO550 Injectable drugs – MO800 (new) Injectable drugs – MO800 (new)

10. Clinical Diagnoses Expanded Blindness Blindness Blood disorders Blood disorders Cancer Cancer Diabetes Diabetes Gait abnormality Gait abnormality Gastrointestinal disorders Gastrointestinal disorders Heart disease Heart disease Hypertension Hypertension Neuro – brain, peripheral & stroke Neuro – brain, peripheral & stroke

11. Clinical Diagnoses Expanded (cont’d) Multiple Sclerosis Multiple Sclerosis Ortho – leg & other disorders Ortho – leg & other disorders Psych – affected and other psychoses Psych – affected and other psychoses Psych – degenerative & other organic psychiatric disorders Psych – degenerative & other organic psychiatric disorders Pulmonary Pulmonary Skin – traumatic wounds, burns & post-op Skin – traumatic wounds, burns & post-op Skin – ulcers & other Skin – ulcers & other

12. Diagnosis Factor In 2008, PPS payments will be based on a broad spectrum of diagnoses, not just the primary diagnosis. In 2008, PPS payments will be based on a broad spectrum of diagnoses, not just the primary diagnosis. Record all patient’s diagnoses. Record all patient’s diagnoses. Payments will be tied to both diagnosis and clinical conditions, i.e. OASIS data, and both must be present in combination in order to generate payment under the Clinical Domain. Payments will be tied to both diagnosis and clinical conditions, i.e. OASIS data, and both must be present in combination in order to generate payment under the Clinical Domain.

13. Clinical and diagnosis payment combinations Clinical and diagnosis payment combinations : Clinical and diagnosis payment combinations : Primary diagnosis or other diagnosis = Dysphagia and Primary or other diagnosis = Neuro 3 – Stroke Primary diagnosis or other diagnosis = Dysphagia and Primary or other diagnosis = Neuro 3 – Stroke Primary diagnosis or other diagnosis = Dysphagia and M0250 = 3 (Enteral) Primary diagnosis or other diagnosis = Dysphagia and M0250 = 3 (Enteral) Primary diagnosis or other diagnosis = Gastrointestinal disorders and M0550 = 1 or 2 Primary diagnosis or other diagnosis = Gastrointestinal disorders and M0550 = 1 or 2 Primary diagnosis or other diagnosis = Gastrointestinal disorders and Primary or other diagnosis = Neuro 1 or Neuro 2 or Neuro 3 or Neuro 4 Primary diagnosis or other diagnosis = Gastrointestinal disorders and Primary or other diagnosis = Neuro 1 or Neuro 2 or Neuro 3 or Neuro 4 Primary or other diagnosis = Heart Disease and M0250 = 1 or 2 Primary or other diagnosis = Heart Disease and M0250 = 1 or 2 Primary or other diagnosis = Neuro 1 - Brain disorders and M0530 = 1 or 2 Primary or other diagnosis = Neuro 1 - Brain disorders and M0530 = 1 or 2 Primary or other diagnosis = Neuro 1 - Brain disorders and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Neuro 1 - Brain disorders and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Neuro 1 or Neuro 2 and M0680 = 2 or more Primary or other diagnosis = Neuro 1 or Neuro 2 and M0680 = 2 or more Primary or other diagnosis = Neuro 3 and at least one of the following M0690 = 1 or M0680 = 2 or more Primary or other diagnosis = Neuro 3 and at least one of the following M0690 = 1 or M0680 = 2 or more Primary or other diagnosis = Neuro 3 and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Neuro 3 and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Neuro 4 and at least one of the following M0670 = 2 or more or M0680 = 2 or more Primary or other diagnosis = Neuro 4 and at least one of the following M0670 = 2 or more or M0680 = 2 or more Primary or other diagnosis = Neuro 4 and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Neuro 4 and at least one of the following M0690 = 2 or more or M0700 = 3 or more Primary or other diagnosis = Ortho 1 and M0460 = 1, 2, 3, or 4 Primary or other diagnosis = Ortho 1 and M0460 = 1, 2, 3, or 4 Primary or other diagnosis = Ortho 1 or Ortho 2 and M0250 = 1 or 2 Primary or other diagnosis = Ortho 1 or Ortho 2 and M0250 = 1 or 2 Primary or other diagnosis = Pulmonary disorders Primary or other diagnosis = Pulmonary disorders Primary or other diagnosis = Pulmonary disorders and M0700 = 1 or more Primary or other diagnosis = Pulmonary disorders and M0700 = 1 or more Primary or other diagnosis = Skin 1 or Skin 2 and M0250 = 1 or 2 Primary or other diagnosis = Skin 1 or Skin 2 and M0250 = 1 or 2

14. Functional Domain Components unchanged Components unchanged Dressing – MO650 or MO660 Dressing – MO650 or MO660 Bathing – MO670 Bathing – MO670 Toileting – MO680 Toileting – MO680 Transferring – MO690 Transferring – MO690 Ambulation – MO700 Ambulation – MO700

15. Service Utilization Domain Therapy Utilization Only Therapy Utilization Only Three Thresholds – 6, 14 & 20 visits Three Thresholds – 6, 14 & 20 visits Graduated payment increases Graduated payment increases Four equations applied to episodes and Four equations applied to episodes and numbers of therapy visits anticipated numbers of therapy visits anticipated MO825 based on 10 therapy visit threshold ELIMINATED MO825 based on 10 therapy visit threshold ELIMINATED MO826 based on number of predicted therapy visits indicated MO826 based on number of predicted therapy visits indicated

16. Four Equation Methodology Equations 1 and 3 Service Domain Equations 1 and 3 Service Domain First and second episodes 0-13 therapy visits First and second episodes 0-13 therapy visits S2 – 6 visits S3 – 7 to 9 visits S4 – 10 visits S5 – 11 to 13 visits

17. Four Equation Methodology (cont’d) Equations 2 and 4 Service Domain Equations 2 and 4 Service Domain Third or more episodes 14 to 19 therapy visits Third or more episodes 14 to 19 therapy visits S1 – 14 to 15 visits S1 – 14 to 15 visits S2 – 16 to 17 visits S2 – 16 to 17 visits S3 – 18 to 19 visits S3 – 18 to 19 visits All Episodes 20+ therapy visits S1 – 20+ visits

18. Case Mix Scoring Dimension 1 st & 2 nd Episodes 3 rd + Episodes All Episodes 0-13Therapy Visits Visits14-19 Therapy Visits 0-13TherapyVisits14-19TherapyVisits 20 + Therapy Visits Equation1234 (2 or 4) Clinical (sum of (sum of points) points)C1 0 to 4 0 to 2 0 to 4 C2 5 to 9 5 to 12 3 to 4 5 to 12 C310+13+5+13+13+ Functional (sum of points) F1 0 to 3 0 to 5 0 to 8 0 to 5 F2 4 to 5 6 to 8 9 to 13 6 to 8 F36+9+14+14+9+ ServiceUtilization (number of therapy therapy visits) visits)S1 0 to 5 14 to 15 0 to 5 14 to 15 20+ S26 16 to 17 6 S3 7 to 9 18 to 19 7 to 9 18 to 19 S41010 S5 11 to 13

19. Clinical Scoring Domain Impact Equation 1 (1 st & 2 nd Episodes) 0 – 13 Therapy$1,322.92Base=C1 Equation 2 (1 st & 2 nd Episodes) 14 – 19 Therapy$3,659.31Base=C1 Equation 3 (3 rd or more Episodes) 0 – 13 Therapy$1,485.47Base=C1 Equation 4 (3 rd or more Episodes) 14 – 19 Therapy$3,979.88Base=C1Episodes (All Episodes) 20+Therapy$5,788.19Base=C1 Base + C2 $342.36 C3 $722.64 Base + C2 $569.40 C3 $1,227.33 Base + C2 $131.91 C3 $648.40 Base + C2 $623.43 C3 $1,350.61 Base + C2 $485.17 C3 $1,212,35 Ex: C2 = Ex: C2 =$1,665.28 Ex: C3 = $4,886.64 Ex: C2 = $1,617.38 Ex: C3 = $5,330.49 Ex: C2 = $6,273.36

20. Functional Scoring Domain Impact Equation 1 (1 st & 2 nd Episodes) 0 – 13 Therapy$1,322.92 Base = C1FI Equation 2 (1 st & 2 nd Episodes) 14 – 19 Therapy$3,659.31 Base = C1FI Equation 3 (3 rd or more Episodes) 0 – 13 Therapy$1,485.47 Base = C1FI Equation 4 (3 rd or more Episodes) 14 – 19 Therapy$3,979.88 Base = C1FI Episodes (All Episodes) 20+Therapy$5,788.19 Base = C1FI Base + F2 $201.15 F3 $391.18 Base + F2 $264.04 F3 $429.54 Base + F2 $304.00 F3 $592.10 Base + F2 $297.18 F3 $681.32 Base + F2 $430.23 F3 $916.53 Ex: C1F2 = $1,524.07 Ex: C1F3 = $4,088.85 Ex: C1F2 = $1,789.47 Ex: C1F3 = $4,661.20 Ex: C1F2 = $6,218.42

21. Service Domain Scoring Impact Equation 1 (1 st & 2 nd Episodes) 0 – 13 Therapy$1,322.92 Base = C1F1S1 Equation 2 (1 st % 2 nd Episodes) 14 – 19 Therapy$3,659.31 Base = C1F1S1 Equation 3 (3 rd or more Episodes) 0 – 13 Therapy$1,485.47 Base = C1F1S1 Equation 4 (3 rd or more Episodes) 14 – 19 Therapy$3,979.88 Base = C1F1S1 Episodes (All Episodes) 20+Therapy$5,788.19 Base = C1F1S1 Base + S2 $608.45 S3$1083.40S4$1,570.38 S5 $1,970.41 Base + S2 $353.49 S3 $644.75 Base + S2 $794.16 S3 $1,253.67 S4 $1,755.87 S5 $2,152.49 Base + S2 $263.13 S3 $617.98 Base + C(2 or 3) + F (2 or 3)

22. EXAMPLES SERVICE DOMAIN IMPACT Equation 1 (1 st & 2 nd Episodes) 0 – 13 Therapy Equation 2 (1 st % 2 nd Episodes) 14 – 19 Therapy Equation 3 (3 rd or more Episodes) 0 – 13 Therapy Equation 4 (3 rd or more Episodes) 14 – 19 TherapyEpisodes (All Episodes) 20+Therapy C2F2S1 = $1,866.43 C3F3S2 = $5,669.67 C2F2S3 = $3,175.05 C1F3S2 = $4,924.33 C3F3S1 = $7,917.07 C1F3S5 = $3,684.51 C2F2S3 = $5,137.50 C3F3S4 = $4,481.84 C1F1S3 = $4,597.86 C1F2S1 = $6,218.42

23. This is what is going through your mind at this point in the presentation. “You have got to be kidding me!!!!!” “You have got to be kidding me!!!!!” “What!!!!!! You mean you are actually serious!!!!!!”

24. This is what is going through my mind at this point in the presentation. “I’m too old to run away and join the circus so we have to make this work!”

25. “How to do more with less from CMS” Be prepared Be prepared Educate, educate, educate Educate, educate, educate PPS revisions PPS revisions Assessment skills Assessment skills OASIS data items OASIS data items Analyze current case mix Analyze current case mix Run calculations to gauge impact of PPS revisions Run calculations to gauge impact of PPS revisions Design and implement financial strategies to assure financial viability Design and implement financial strategies to assure financial viability Analyze business practices Analyze business practices Documentation system Documentation system Medical supplies ordering/distribution Medical supplies ordering/distribution Timeliness factors Timeliness factors

26. Work as a team Work as a team ̶ Executive Management ̶̶ Supervisory Staff ̶ Nurses ̶ Therapists ̶ Aides ̶ Medical Records Coordinator ̶ MIS Department ̶ Billing Department Assure accuracy Assure accuracy ̶ OASIS assessments ̶ Diagnosis coding ̶ Billing

27. Work smart Work smart Organize your caseload to save Organize your caseload to save travel time and expense ̶ Achieve the best outcome by care planning and by care planning and co-ordination co-ordination ̶ Employ technology to save time and expense Telehealth Telehealth Telephone Visits Telephone Visits

28. Work with the “Three E’s” in mind Work with the “Three E’s” in mind Effective Effective Be effective in all you do because your Be effective in all you do because your patients are counting on you. patients are counting on you. Efficient Efficient Be efficient in all you do because your Be efficient in all you do because your employer (VNA) is counting on you. employer (VNA) is counting on you. Enthusiastic Enthusiastic Be enthusiastic in all you do because your Be enthusiastic in all you do because your co-workers are counting on you. co-workers are counting on you.

29. Q&A’s

30. In conclusion……. Always remember a code is just a series of numbers and letters, But a patient is a person whom we try to make better. An equation is just another mathematical term we employ, But a patient is a person and into their life we bring some joy. A payment mode is just a method for CMS to dispense money, But a patient is a person whose day we can make sunny. So never lose sight of that person for whom we give service and care. Provide for their needs and do for them what is right and what is fair. For a patient is a person and their care is our sacred trust; Their needs are individual and providing them is a must. It’s because of our patients that we will continue to survive. So, we’ll all pull together and for knowledge we’ll strive. We’ll learn to do more with less and be prudent and smart, Because a patient is a person who has first place in our heart. sbg sbg