As the director of finance for The CHMS Group, Gabe Guttman says many days feel like “a war on many fronts.”
With compressed Medicaid rates, a Medicare Advantage market dominated by a duopoly that holds most of the cards, and coming changes to the Medicare payment system for nursing homes, accurately capturing reimbursements is more vital than ever for the owner-operator — with Guttman serving as the point person for managing all of the revenue streams and their varying goals.
Founded in 2014 with the acquisition of a single facility in Pennsylvania, CHMS has since grown to 16 buildings in the greater Pittsburgh area and upstate New York, including properties in Buffalo and Rochester. Guttman works at the firm’s Long Island headquarters, ensuring the proper processing of government and insurance claims from the entire chain.
Prior to joining CHMS in January 2018, Guttman spent three years with Centers Health Care in the Bronx, working primarily in accounts receivable, billing, and collections.
In order to find out how an individual chain maximizes its revenue in a perpetually difficult operating landscape, SNN invited Guttman to participate in the latest edition of our Bottom Line interview series with CFOs, directors of finance, and other business-side leaders in the SNF space.
Know another skilled nursing finance leader who’d be interested in sitting down with SNN for a future Bottom Line feature — or are you one yourself? Drop me a line at email@example.com.
What are some of the biggest trends you’ve seen in your time in the industry?
Of course, cost-cutting is always at the top of everyone’s mind. I would say that’s the priority in certain companies. One of the benefits of working on the finance side is that I can focus on revenue and revenue enhancement, and not worry so much about rising minimum wage, or rising cost of pharmacy, or the cost of insurance and litigation, all of that stuff. That’s usually what gets most of the focus, especially out here in the Northeast, is the cost-cutting side.
But the revenue cycle side is where I live. The biggest trend we’re seeing is with the onset of PDPM coming up. That’s going to totally change the game with regards to everything we’re doing clinically.
Everyone seems to think that PDPM is going to be great for them. What’s your outlook?
Everyone … was saying how it’s going to be great: “PDPM is going to come, and it’s going to be a big boost for the nursing facility field to get away from strictly therapy-based revenue and be able to really tailor it to residents.”
I was kind of surprised at the confidence anyone has either way, meaning I think it’s going to be a lot more nuanced in terms of figuring out, once it starts, what we’re going to do. It may sound good, and some people may say it has a positive outlook, but I think once we get into it, it’s going to create a lot of uncertainty, I think.
Yeah, legally, it’s revenue-neutral — for every winner, there must be a loser.
Right. I think that part gets kind of kept quiet, because none of the REITs are going to be saying: “My operators are going to be the ones on the losing side.” Some of them certainly are going to be, and I think for everyone who’s overconfident about it, there are some people who are under-confident, and it’s going to meet somewhere in the middle, I would imagine.
What are some of the things you’re focusing on the revenue side to prepare?
The main focus is definitely going to be on the coding. A big part of the relationship that we have with the facilities from here in New York to there [in Pennsylvania] is the transmission of the information from the clinical software — we use PCC [PointClickCare] for our census and clinical — and getting that into the billing system we use. We don’t bill out of PCC.
So a lot of that is the communication: What codes can go on? What are the valid ICD-10s? What are the valid RUG scores that we’re using? And getting all of that communicated back and forth is only going to get more difficult, as the stakes go up now with each ICD-10 that you have.
There’s been some back-and-forth about how necessary ICD-10 coding is, but the consensus seems to be saying it is.
Yeah, you’re going to have to take the hospital approach and really get in there right from admission — as opposed to the current setup, where you have your five-day set and your 30-day set. You can really change the course of a stay for a skilled patient.
Now, you’re really going to have to go based on what you get on admission. It’s important to go through the referrals, important to go through all of that clinical data on admission, and get that set from day one. That way, you can build on it over the course of the stay.
What about Medicaid? We’re seeing all these waves of closures — what’s it like in New York and Pennsylvania?
[There’s] definitely chatter everywhere, in all states. Pennsylvania, we go on a case-mix basis, so we have a little bit more control about how the rates end up on the Medicaid side.
Listening to your podcast yesterday with Chad [Bogar], he was talking about the education. A lot of the difficulty with the Medicaid program is that the prospective beneficiaries aren’t educated on the details and what’s necessary on the Medicaid side. The nursing facilities, once they’re working with the resident after admission, are not only working from a ground zero in trying to get that eligibility done, they’re working from negative five just to try to get up to speed.
Residents aren’t excited to part with their income, which is part of the Medicaid program in most states — whether that’s through a QIT or through a trust or any other method. A lot of people think: “If I’m on Medicaid, I’m covered; I have insurance.” They don’t even know where they’re starting from in terms of: Yeah, you have insurance, but you’ve still got to pay.
On the public relations side, people say: “Oh, these Medicaid facilities make all this money from Medicaid.” But every dollar of income earned by residents is deducted from the Medicaid reimbursement.
You think, “Oh, yeah, these facilities rake it in on Medicaid.” There’s definitely large deductions going on behind the scenes, right off of the reimbursement on top.
Is that true in all states?
It varies state by state a little bit — different states have different allowances for different things. Some residents are able to keep $50 a month, some are able to keep $100. It varies a little, but the general rule is that Medicaid beneficiaries have to remain below a certain asset level, and if they’re earning an income every month, they’re going to quickly outreach that asset level in a couple of months. And then they’ll be back to being ineligible for Medicaid and have to spend back down.
Most states, at least that I’m familiar with, do have that monthly spend-down which comes out of the income and has to be paid to the facility — and then the local Medicaid program deducts that from the payment.
And then the reimbursement often doesn’t match the cost of caring for Medicaid residents.
Exactly. Even in a state like Pennsylvania, where the rates aren’t flat — it’s case-mix based, so there is some mobility and the rates change. We don’t have the same issues that they’re having in Wisconsin or in Washington. Still, those deductions come off that resident income, and it definitely takes a chunk out of what the reimbursement could and should be.
So how do you counterbalance those Medicaid stresses?
That’s definitely the challenge that we face at the finance level at every facility, but in Pennsylvania for sure. One of the things that I hear providers talking about in the industry in general is that 40% or 50% of their revenue comes from Medicaid. To me, I thought that was actually kind of low. I think providers out in Pennsylvania — and I know certainly in upstate New York — I thought that number would be higher, closer to the 60s or 70s in terms of percentage of overall revenue coming from Medicaid. That was pretty startling.
Okay, 63% or 65% of your revenue is from Medicaid: How are you making sure sure you collect on that? Because if not, that’s a huge chunk of your operating needs that are gone.
There are a number of factors that go into working through the Medicaid process. One of the things that we do very well is we have a streamlined process that goes from the application time through the billing of the actual claims to Medicaid.
I serve as the middleman in between the facilities and our billing office to keep that process smooth — that the application’s getting done, the adjudications from the local offices are being given with approvals, hopefully, for the Medicaid beneficiaries, and then the claims are being billed within the timeframe to get that collected.
Are there any billing pressures on Medicare?
It feels like on most days that it’s a war on many fronts with regards to the Medicare side, on the Medicaid side, and then you throw in insurance and private companies all working in the same space. We’re kind of, as the skilled nursing facility, in the middle as the traffic cop, trying to make everyone work together so we can keep the doors open.
To the question, Medicare is definitely more simplistic because there’s no eligibility component. You either you have it or you don’t. Either you earned it or you didn’t. Either you paid in or you didn’t. Once you’re paid in, once you have the Medicare eligibility, then in terms of the billing side, it’s really much more simple than on the Medicaid side — where you have to earn that eligibility. You have to apply. You have to have the financial verification and do all that.
What about Medicare Advantage? Are you seeing the rate pressures that we’ve been hearing about in recent years?
We have an interesting situation with regard to Medicare Advantage. Of course the enrollment is up — that has been well [known] across the industry, is that Medicare Advantage enrollment is up. In western Pennsylvania, the University of Pittsburgh Medical Center plays a huge role in the market. I wouldn’t say it dominates the market, but it definitely has the upper hand in the market.
Between them and Highmark, a division of Blue Cross Blue Shield, they really have the Medicare Advantage market cornered in that regard. Besides the pressures that everyone’s seeing, we have that additional lack of leverage, where there’s pretty much two big players. They hold the leverage as far as contracting, in terms of length of stay, in terms of rates, all of that.
It’s tough out there.
It’s what keeps it fun. It’s definitely tough out there, but that’s what keeps us going.
This interview has been condensed and edited.