State of Alabama Proposed Payment Rates For SFY 2009 For Medicaid Inpatient and Disproportionate Share Hospital Payments

1. State of Alabama Proposed Payment Rates For SFY 2009 For Medicaid Inpatient and Disproportionate Share Hospital Payments

2. Items to Discuss • State Financing Between SFY 2008 and SFY 2009 • Payments to Hospitals Between SFY 2008 and SFY 2009 • Calculation of Medicaid Per Diem Rates • Calculation of DSH Payments • Comparison of Payments to Cost • Items to Consider

3. State Financing Between SFY 2008 and SFY 2009

4. Hospital Payments Between SFY 2008 and SFY 2009

5. Reason for Decrease in Public Hospitals • Use of Certified Public Expenditures for Financing • Public Hospitals Certify 100% of Cost – Basically Incur State Share • Recalculation of Cost For Determination of CPE

6. Reason for Increase in Private Hospitals • State Dollars Used For Hospital Payments ($1 equals $3.12 of total payment) • State Dollar and Federal Share must be paid to private hospitals

7. Determination of Medicaid Per Diem Amount • Cost Reports With Ending Dates Occurring During State Fiscal Year 2007 Were Used • Cost Was Inflated Using South Region CPI • Inflated Cost Divided By 2007 Cost Report Days To Determine Per Diem • Use of 2007 Cost Report Days Allows Increase In Cost To Be Based Solely On Cost Increase And Not Volume

8. Calculation of Medicaid Per Diem Rate

9. Determination of Medicaid Per Diem Amount • Medicaid Paid Days for State Fiscal Year 2005 and State Fiscal Year 2007 were obtained. • A percentage increase was determined for each hospital from SFY 2005 to SFY 2007. • If provider saw a decrease in visits then the rate of increase was held constant. • The rate of increase was applied to the SFY 2007 days to calculate the SFY 2009 days. • The calculated SFY 2009 days were multiplied by the cost per diem to determine estimated expenditures.

10. Calculation of Medicaid Per Diem Rate

11. Determination of Medicaid Per Diem Amount • All hospitals expenditures reduced by percentage of $77 million. • All hospitals expenditures reduced by 32.02% to allow for Federal Share of CPE payments. • Payments to public hospitals reduced by 3%. • Payments to private hospitals reduced by 20%.

12. Determination of Medicaid Per Diem Amount • Add back made for the following: • Children’s Hospital • USA Women’s And Children’s Hospital • Adjustments applied to estimated expenditures • Adjusted expenditures divided by calculated SFY 2009 days to determine Medicaid per diem rate.

13. Calculation of Medicaid Per Diem Rate

14. Determination of DSH Payments • Public hospitals estimated of DSH cost from review of SFY 2006 was multiplied by market basket for FFY 2007, FFY 2008 and FFY 2009 to estimate SFY 2009 cost • Private hospitals cost was calculated as follows: • Error Rate in uncompensated cost from reviewed SFY 2006 to estimated SFY 2006 public hospitals was applied to private hospital SFY 2006 cost • Adjusted SFY 2006 was multiplied by market basket for FFY 2007, FFY 2008 and FFY 2009 to estimate SFY 2009 cost

15. Determination of DSH Payments • Estimated DSH cost was multiplied by the following payment percentages:

16. Calculation of DSH Payments

17. Payment to Cost • DSH monies used to help support Medicaid operations. • Private providers are paid approximately 47% of cost, excluding Children’s Hospital • Public providers are paid 57% of cost, excluding USA Women’s and Children’s Hospital

18. Items to Consider • Public hospital cost report settlement for inpatient services • Additional CPE cost could result in approximately 68% being returned to the hospitals. • Private hospitals partnering with the State and counties to pull down additional DSH monies from the Federal government.

19. QUESTIONS ????