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MHA Update Western Michigan Healthcare Financial Management Association (HFMA) Nov. 13, 2013 Vickie Kunz Senior Director, Health Finance Michigan Health & Hospital Association 1 Who is the MHA? • Advocacy organization representing all hospitals in Michigan. • Activities include: – State advocacy on proposed legislation, including Medicaid funding and policy activities – Federal advocacy and policy on Medicare and Medicaid issues – MHA Keystone Center – Quality Improvement Initiatives – BCBSM Contract Administration Process • Unique to Michigan 2 Payer Issues • The role of the MHA is to assist in resolving systematic payer issues. • Hospital contracts determine many terms and conditions and take precedence. • Communicate issues to Marilyn Litka-Klein or Vickie Kunz at the MHA. 3 FY 2014 Medicare MS-DRG Changes • See hospital-specific analysis claims distributed to CEOs/COOs/CFOs/RDs via email Oct. 31. • CMS maintained the 751 MS-DRGs. No major changes from FY 2013. • 85% of MS-DRGs have weight change of +/- 6%. • Some changes may be significant for your hospital. 4 Hospital Inpatient Claims Analysis • Table 1A – Average Medicare FFS CMI changes by clinical product line, 2013 to 2014. • Table 1B – Average Medicare Advantage CMI changes by clinical product line. • Table 2- Clinical product service line distribution, with comparisons to Michigan and US. • Table 3 – Severity-level distribution of your hospital’s top 50 core DRGs for both Medicare FFS and MA. • Table 4 – Average CMI changes using your hospital’s top 50 Medicare FFS core DRGs. • All tables include comparisons to Michigan and US. 5 Two Midnight Rule • Additional guidance released by CMS Nov. 1. • CMS will not conduct post-payment patient status reviews for claims with dates of admission between Oct. 1 and March 31, 2014. • Coding and medical necessity reviews continue. • CMS reconfirmed that MACs/RACs should evaluate the physician’s decision to admit based on info available at time of admission. • CMS will work with hospitals and MACs to determine if there are any additional exceptions. 6 Continued, Two Midnight Rule • CMS will proceed with “Probe and Educate” audits for IP claims submitted by acute care hospitals, LTCHs, CAHs, and IPFs for claims for admissions Oct. 1 – March 31. • Sample of 10 for most hospitals, 25 for larger hospitals • Previous CMS guidance indicated it would not audit CAHs. • MHA/AHA seeking CMS clarification. • See Sept. 30 and Nov. 11 MHA Monday Report. 7 Continued, Two Midnight Rule • Providers identified as having moderate/significant concerns will be subject to additional probe reviews on claims for Jan. 1 – March 31, 2014. • The number of claims reviewed will vary based on hospital size and concern level. • MHA/AHA continue to pursue delayed enforcement of the two-midnight policy until Oct. 1, 2014, and seek additional clarifications from CMS. 8 Inpatient Status – Cont. • Procedures on “Inpatient Only” list would not be required to meet two midnight requirement. • Hospitals can submit questions and/or suggested exceptions to the two-midnight benchmark to CMS at [email protected]. • Put “Suggested Exceptions to the 2-Midnight Benchmark” in the subject line. 9 Medicare Payment Challenges • Absent Congressional action, 2% sequestration across-theboard cut continues through FY 2021. • 2% reduction to annual rate update if hospital fails to comply with quality reporting program requirements. • Readmissions Reduction Program – Hospitals at risk for up to 2% payment penalty, increasing to 3% in FY 2015. • Value Based Purchasing – 1.25% payment withhold, hospitals can earn back that amount, earn more or earn less. • 1.25% withhold increases to 2% for FY 2017 and beyond • Hospital Acquired Condition (HAC) reduction program – 1% reduction to 25% of hospitals nationally. • Begins in FY 2015 10 VBP & Readm Reduction Program • Both began Oct. 1, 2012 (FY 2013), FY 2014 = Year 2. • VBP Program – Funded by 1.25% contribution from all IPPS hospitals, increasing to 2% in FY 2017. • Nationally, VBP program is budget-neutral with hospitals having an opportunity to earn more than their contribution. • Readmissions reduction program penalty increased from 1% to 2% in FY 2014 and then increasing to 3 % in FY 2015. • Unlike VBP program, readm reduction program is not budget neutral. 11 Inpatient Quality Reporting Program • For 2014 payment determinations, hospitals required to report on a 55 quality measures. • For FY 2015, hospitals required to report on 59 measures. • For FY 2016, hospitals required to report on 57 measures in order to receive the full IPPS marketbasket update. – Hospitals that fail to comply are subject to a 2.0 percentage point reduction to the IPPS marketbasket update for the applicable year. 12 HAC Reduction Program Overview • ACA-mandated – must start in FY 2015 • First program policies outlined in 2014 rule • 1% reduction in IPPS payments for hospitals with highest HAC “scores” − Would penalize 25 percent of hospitals nationally − Expected to reduce IPPS payments by about $300 million annually. 13 2% Sequestration Cut • Absent federal legislation, cuts continue through FY 2021. • 2% cut was applied to Medicare FFS claims beginning for dates of service on/after April 1. − effective 2013 – 2021 − mandated by the Budget Control Act of 2011. • Michigan annual impact projected at $144M. − IPPS payments reduced $95 million − OPPS payments reduced $34 million • May apply to MA payments depending upon hospital contractual agreement with MA plans. • Also applies to other Medicare payments including GME, bad debts, EHR incentive payments. 14 Medicare Advantage Plans • As of July 2013, 28 plans in Michigan, with 493,000 or approximately 27% of Michigan’s 1.8 million Medicare beneficiaries enrolled. − Up to 20 plans in some counties. • Review MA payment rate for all plans. • CAH entitled to Medicare cost reimbursement. • Each MA plan may determine own utilization model and is not required to maintain electronic transactions. • Many MA have instituted “RAC-like” utilization programs. • Matrix of MA plans by county available at MHA website – updated quarterly, with MHA Monday Report article. − Sept. 9 Monday Report. 15 MA Plans & Sequestration • CMS payments to plans were reduced for enrollment periods beginning on/after April 1, 2013. • Individual hospital contracts govern whether payments will be reduced. • In cases of non-contracted plans, plans have discretion whether to pass the 2% cut on to hospitals. • See May 13 MHA Monday Report. 16 Wage Index - CBSA Definitions • CMS did not make any changes to the current CBSA definitions based on the 2010 census but indicates that it will do so for FY 2015. 17 Wage Index Timeline Sept. 13 – Release of PUFs for FY 2015 AWI Oct. 1 – Effective date of FY 2014 AWI Oct. 9 – MHA Wage Index Workshop (webinar) (Free) FY 2015 AWI will be based on data from cost report FYEs: Sept. 2011 – Aug. 2012. Hospital staff have until Nov. 21 to request any needed changes to data. More aggressive deadline than past years 18 2014 Deductibles & Coinsurance • CMS recently announced. • Part A deductible increasing from $1,184 to $1,216. • Daily coinsurance: • $304 for days 61-90. • $608 for lifetime reserve days • $152 for days 21-100 of extended care services in a SNF. • See Nov. 4 MHA Monday Report. 19 Medicaid Issues 20 Healthy Michigan Plan • Expected to cover about 450,000 low-income adults who are currently uninsured but fail to meet current eligibility requirements. • Who would qualify? − Individuals that are at least 19 years old. − Those that are single, working with annual earnings up to $15,856 or in a family of four with earnings up to $32,499. • Based on 138% of 2013 FPL • Governor Snyder signed bill into law Sept. 16. • Would take effect 90 days after legislative session ends. • Session expected to end Dec. 12. 21 Cont., Healthy Michigan Plan • Waiver submitted to CMS Nov. 8. • MSA expects quick turnaround • MSA has been in contact with CMS prior to submission 22 Healthy Michigan Implementation • Uncertainty surrounding status of individual applications that may be submitted before law takes effect in midMarch 2014. • In the mean time… – MDCH developing a state-specific Healthy Michigan application – Expansion population will not be penalized for lacking coverage for first three months of 2014 • MHA working with coalition partners on ways to identify/track potential enrollees now 23 Medicaid Presumptive Eligibility • Presumptive eligibility = immediate access to services, coverage for those services • ACA expands PE privileges for hospitals • CMS banned use of outside entities in future PE determinations • MHA working with AHA to urge the reversal/modification of this ban • MHA working with DCH/DHS on getting state guidance to hospitals as soon as possible 24 Coverage on the Exchange • Single portal of application for 36 states, including Michigan: www.Healthcare.gov • What does coverage look like? – No denial for pre-existing conditions – Insurers must cover a minimum set of services called essential health benefits – Must organize their plan offerings into five levels of patient costsharing from least to most protective – No gender- or illness-based rate setting 25 Health Insurance Exchange • Health Insurance Marketplace/Exchange opened Oct. 1 for enrollment – lasts through March 31 • Launch dominated by technical glitches, website failures; some improvement in recent weeks – Improved speed – Site now permits users to see plans/prices without creating an account – Additional staffing in call center, Web chat feature • But… many still encountering problems and have resorted to paper/phone application • Site may not be fully functional until end of November 26 Michigan’s Exchange What does Michigan’s exchange look like? • 13 insurers offering multiple products 27 Michigan’s Exchange • Variety of plans (162), premiums and subsidies • Coverage begins as soon as January 1, 2014 for those enrolled by Dec. 15 • Wide range of prices dependent on age, tobacco use, county, etc. – Less than $140 to more than $1500 before subsidies – Michigan average: about $300 before subsidies 28 Who can receive a subsidy? • Individuals with household income between 100 and 400 percent of the FPL ($11,400 and $45,960) • Between 100 and 133 percent of the FPL: choose the exchange or a Healthy Michigan Medicaid managed care plan • Plans available through Medicaid are likely to be lower cost; co-pays, deductibles and premiums will apply to some higher-income Healthy Michigan Medicaid enrollees 29 Estimating Hospital Financial Impact • Hospital-specific model available for purchase at $5,000. • See MHA Advisory Bulletin # 1350, dated 9/16/13 for link to webinar PPT and recording. • In general, most believe bad debts will increase as individuals enroll in plans with higher deductibles/copays. 30 Medicaid Payment Reform • Jan. 1, 2014 target implementation – MSA is considering a phase-in approach. • Seven meetings held. • Representatives include small, medium, and large hospitals and CAHs • Several ideas discussed: · statewide inpatient rate with hospital adjustors, · Increase in output payments financed with reduced input rates · Recognition of hospital mission in payment adjustors. · DSH · Hospital Rate Adjustment • No definitive timeframe for MSA decision. 31 Medicaid Rate and Weight Update • MSA released a proposed policy to update hospital DRG rates and relative weights effective Jan. 1, 2014. • Final policy expected by Dec. 1. • Implementation of MS-DRG Grouper 31.0, implemented by Medicare Oct. 1. 32 Integrated Care Project • Phased-in implementation of pilot project expected to begin July 1, 2014. • Hospitals responsible to negotiate payment parameters in their contracts. • See Aug. 26 Monday Report for link to CMS FAQ document. • Regional implementation – 4 regions comprised: – 8 SW counties Macomb County – UP Wayne County 33 Integrated Care Project – Cont. • MSA is selecting plans to serve as ICOs with plans required to undergo readiness reviews. • Simultaneously, MSA is working to finalize an MOU with CMS to specify the conditions of Michigan’s wavier. • No guarantee of Medicare rates for I/P and O/P services • Ambiguity in rate for SNF payments 34 DSH Audits • Beginning with audits of FY 2011 DSH ceilings, hospitals subject to DSH payment recoveries if audits indicate DSH payments exceeded their actual DSH ceilings. • Prior year audit reports available on MSA’s website. 35 DSH Audits – Cont. • Prelim FY 2010 DSH audit results indicate that 21 hospitals would have had payment recoveries totaling $54 million. • FY 2010 DSH Payments received by these hospital include: • $ 6 million - regular $45 million pool • $ 1 million - small hospital pool • $18 M - tax-funded OP Uncompensated Care pool • $52 million- Indigent Care Agreement • $13 million - Governmental hospital • 2010 audit report due to CMS 12/31/13. 36 Revised DSH Policy • MSA will use a multiple-step DSH process: – Initial DSH calculation – Interim DSH settlement – 2 years after payment – Final DSH audit-related redistribution – 3 years after payment 37 DSH Calculation • FY 2011 Step 2 - MSA expects to complete by Jan. 31, 2014. • FY 2011 Step 3 - Audits expected to begin March 2014. • FY 2012 Step 2 – MSA expects to complete by April 30, 2014. • FY 2013 Step 1 - completed by MSA late July / early Aug. 2014 – Hospital opportunity to review MSA data and opt to decline or reduce DSH payments. 38 Medicaid Interim Payments • MSA released a final policy to change from bimonthly to monthly MIP and CIP payments effective July 1, subject to CMS approval. • This change will take effect Nov. 11. • MIP and CIP payments will be made the second Thursday of each month. 39 Primary Care Services • ACA mandated that Medicaid pay Medicare rates for certain primary care services provided by certain qualified providers: • Family Medicine, General Internal Medicine, Pediatrics • MSA began paying for services provided through Medicaid FFS but was awaiting CMS approval for its HMO methodology. 40 Cont., Primary Care Services • MSA anticipated that the increased payments would be distributed to Medicaid HMOs in late October. • HMOs are responsible for distributing these payments to eligible providers as soon as possible. • Provider review and appeal procedure will be implemented. • See Oct. 28 MHA Monday Report. 41 MHA Resources • Monday Report is available FREE to anyone and is distributed via email each Monday morning. – Go to website and select “Newsroom”, then Monday Report • MHA Monday Report – electronic publication issued weekly • Request password if you don’t have one. – Email Donna Conklin at [email protected] to obtain MHA member ID number • Advisory Bulletins – Extensive communications available only to MHA members, as needed. (Require password to obtain from website). • Hospital specific mailings as needed for various impact analyses, etc. • Periodic member forums • See mha.org for other resources. • Monthly Financial Survey (MFS) provides free benchmarking of financial and utilization statistics. 42 ???Questions??? Vickie Kunz Senior Director, Health Finance Michigan Health & Hospital Association 110 West Michigan Avenue, Suite 1200 Lansing, MI 48933 Phone: (517) 703-8608 Fax: (517) 703-8637 email: [email protected] 43