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State and Federal Health Policy Updates: Budget, Medicaid, and Funding Changes

Stay informed about the latest health policy and political updates at the state and federal level, including the state budget, major revenue proposals, Medicaid reductions, nursing home ATB payback, and VBP initiatives.

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State and Federal Health Policy Updates: Budget, Medicaid, and Funding Changes

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  1. State and Federal Health Policy/Political Updates HFMA Rochester Region Bob McLeod, Director State Fiscal Policy and Special Studies March 2018

  2. State Budget

  3. Big Picture

  4. Major Revenue Proposals • State tax reform • Insurer conversion proceeds • For-profit insurer tax • Opioid surcharge fee • Defer corporate tax credits • Internet tax

  5. Budget Timeline Executive budget released One-House budget bills Health/Medicaid Budget Hearing Mar. 31 Feb. 12 Jan. 16 March 12 – Assembly March 13 - Senate On-time budget deadline

  6. Health Budget Summary

  7. Funding

  8. Capital Investment Current scope of state-funded capital and capital related investments

  9. Capital Investment Areas where the state has funded capital and capital-related projects Based on funded projects under the CRFP, Essential, and Statewide I programs 80% hospital; 20% non-hospital Hospitals that have not yet accessed awards

  10. Supportive FundingFive-Year View: SFYs 2015-19 Note: Table excludes general VAP investments funded by NYS

  11. Details on Safety Net, CAH, and SCH Pool

  12. Medicaid DSH: Indigent Care Pool Extension • Extends current methodology 1 year to December 31, 2019 • Increases loss threshold to 17.5% • Retains 1% withhold for financial assistance compliance • Administration has promised stakeholder workgroup to determine how to implement ACA cuts if they occur

  13. Healthcare Shortfall Fund • $1 billion • Financed from portion of funds from health insurer conversions • Spending plan developed by Commissioner of Health

  14. Insurance Conversions/Sales from Not-for-Profit to For-Profit Entities • For example, Fidelis sale to Centene • Proceeds considered public assets (similar to Empire Blue Cross conversion) • Similarly directed to HCRA • $750 million per year over 4 years

  15. Minimum Wage Funding • Continues state’s commitment to fund Medicaid’s share of state-mandated minimum wage hike • $1.4 billion (total Medicaid) for providers(majority to home care) • Continues to fund direct labor costs only Funding Comparison (millions) Source: NYS DOH FY 2019 Executive Budget Highlights document

  16. Nursing Home 1% ATB Payback • Nursing homes are owed $280 million (total Medicaid) retroactively back to SFY 2014-15 • The proposal would stretch the payback over a 4 year period ($70 million total annually) • In addition to payback nursing home rates will be increased by 1% going forward (another $70 million) • DOH is determining whether the payback is subject to the provider assessment

  17. Medicaid Reductions

  18. Medicaid Global Cap Source: DOB • Extends Commissioners’ “superpowers” through 2019-20 • Redirects Medicaid funding to state’s general fund ($425 million) • Legislature must “buy back” restoration of cuts and finance new spending initiatives • Pharmacy: ($90 M) • LTC: ($365 M) • Managed care: ($142 M) • Hospitals (direct): ($26 - $34 M) • Transportation and other : ($49 -$158 M)

  19. Quality Initiatives • $34.1 million

  20. Rate-Based Capital Reimbursement • $13.4 million reduction • Establishes workgroup to streamline Medicaid capital rate methodology for hospitals and nursing homes • For hospitals, likely to change current inpatient method • DOH priority • Workgroup recommendation must include a 1% reduction in capital expenditures but reduction to be taken April 1, 2018 prior to workgroup activity

  21. Outpatient Payments • $10 million reduction • Reduces the outpatient payment for saline bags in hospital emergency rooms and clinics • $500 to $250 per bag • Attempts to align with costs and Medicare payment • DOH had initially grouped saline bags and higher cost medical equipment into the same APG

  22. LTC/MLTC Funding • Acute focus on LTC/MLTC for reductions — $365 million • Restricts MLTC eligibility for those placed in nursing homes for more than 6 months • Limits eligibility to individuals with a UAS score of 9 or more who need community-based LTC services for a continuous 120 days • Lock-in provision that limits changing plans in a 12-month period • Additional 2% cut for low quality performance • 1% cut to rate based capital • Reduction to payments for case-mix

  23. Program Integrity • $60 million in savings • Allows OMIG, if unsuccessful in recovery of an improper payment to a provider, to recover from the MCO • MCO would then be required to recover the payment from the provider within 6 months and can collect up to a 5% collection fee • Requires MCOs to promptly report any fraud, waste, and abuse • $5,000 fines on individuals and entities that violate any law, rule, or directive of the Medicaid program • Penalizes MCOs that report inaccurate data on cost reports

  24. VBP Initiatives • $55 million reduction • Increases penalties to MCOs that fail to meet VBP targets ($20 million) • Creates new baseline/benchmark rate for providers that are not advancing VBP goals ($15 million) • Modifies PCMH add-ons and differentiates for VBP contracting ($20 million) Allocates $44 million of state-only funds in SFY 2019-20 to fund supportive housing for high cost Medicaid members. Funding could be accessed by health plans, VBP contractors, and PPSs.

  25. Additional Items

  26. Coverage

  27. Coverage • Essential Health Plan • About 700,000 enrollees • Retains coverage despite loss of federal CSR support • Uses assortment of approaches to fund

  28. Critical Non-Budget Items

  29. Non-Budget Items

  30. Post-Budget Timeframe

  31. Assembly and Senate Budget Bills

  32. Assembly Budget Bill (still analyzing) • Healthcare Shortfall Fund: $1 billion "healthcare stabilization account“. • specifies a broad purpose "for health, health care and health coverage" pursuant to a memorandum of understanding between the Governor and Legislature • Capital: $100 million increase to $525 million. • Safety Net: $40 million but uses the phrase "enhanced safety net" as included in 2017 legislation that passed the Legislature but was vetoed by the Governor to include: • 1) hospitals that serve a high share of Medicaid and uninsured patients; or • 2) public hospitals, including those operated by SUNY, public benefit corporations, counties, and other municipalities; or • 3) is federally designated as a Critical Access Hospital or Sole Community Hospital. • Trend Factor: Restore a Medicaid TF for hospitals, SNF, home care, and others. • Selected Proposals (relative to Governor’s Proposals) : • Rejects cut to capital reimbursement for hospitals and nursing homes • Rejects cut to the hospital quality pool and redirect some of its fund (including cuts to the emergency room payment penalty that was part of that proposal. • Accepts the quality-related cut to nursing homes. We are further reviewing other continuing care proposals, given their magnitude, some of which did not require statutory authority.

  33. Senate Budget Bill (on first read) • Healthcare Shortfall Fund: $1 billion "healthcare stabilization account“. • Capital: $75 million increase to $500 million. • Safety Net: $40 million ($20M appropriation for SFY 2018-19): • Criteria to include “geographic location and facility specific characteristics” as determined by the Commissioner • Must include but not limited to federal designated Critical Access Hospitals or Sole Community Hospitals • Selected Proposals (relative to Governor's proposals): • Rejects reduced capital reimbursement for hospitals and nursing homes • Rejects cut the hospital quality pool and redirect some of its fund (including cuts to the emergency room payment penalty that was part of that proposal. • Proposes language that would prohibit the state from reducing he reimbursement rate for hospital emergency services provided to Medicaid enrollees. • Rejects the quality-related cut to nursing homes. We are further reviewing other continuing care proposals, given their magnitude, some of which did not require statutory authority.

  34. Medicaid Rates, Audits, and Year End Letter

  35. Medicaid Rate Update • Inpatient FFS - January 1, 2018 • Weights (with Grouper 34) • 2018 Budget capital • Audited capital for 2014 and 2015 • Updated Minimum wage • 2% Across-the-board: • Received CMS approval • Still at DOB(distribution expected in SFY 2018-19) • Rebasing: DOH is targeting late spring/early summer for updated SIWs, School of Nursing, IME/DME (2015), WEF (2016, 2017, 2018). • Exempt Units/Hospital Rebasing - DOH has not started this file yet, but will be compiling soon. We will reproduce and analyze as we receive more information from them.

  36. Selected Audits • ICR • 2015- completed • 2016 – DOH selecting vendor (RFP with anticipated contract start date of 9/1/2018) • DSH • 2014 - Completed - report submitted to CMS • 2015 – Planning is in process • HCRA Surcharge • Wave 1 (21 providers): stared: Jan/Feb 2016: 13 ongoing • Wave 2 (all payers): completed • Wave 3 (13 providers): started Oct 2016: 13 ongoing • Wave 4 (21 providers): started Jan/Feb 2017: 21 ongoing • Wave 5 (all payers): ongoing

  37. HCRA Surcharge Audit

  38. DOH provides Year-End Letter insert #hashtag

  39. Federal Update insert #hashtag

  40. Delays and Extensions • Medicaid DSH • Low Volume Payments • MDH insert #hashtag

  41. Bipartisan Budget Act of 2018

  42. BBA of 2018: HANYS Priorities

  43. NYS Medicaid DSH Funding Detail • The Medicaid DSH program will provide roughly $3.5 billion in funding in 2017 • The program is divided into 4 distinct pools: $339 M in UPL payments are also provided as DSH-like funding to voluntary hospitals making their actual DSH payments about $995 M. This level of funding is required by state law.

  44. Medicaid DSH Funding Distribution Detail(excludes OMH DSH)

  45. ACA’s Medicaid DSH Cuts • ACA-mandated Medicaid DSH reductions were scheduled to begin in FFY 2014 and would have sunset in 2020 • The first reductions were delayed to FFY 2020 (Oct. 1, 2019) and cuts were extended by a total of five years (through 2025) through additional legislation • The ACA and subsequent legislation mandates specific federal Medicaid DSH allotment reductions that total $44 billion nationwide between FFY 2020 and 2025 $1B increase

  46. ACA’s Medicaid DSH Cuts and CMS’ Proposed Implementation Generally, ACA requires the following to implement the cuts: • Impose a smaller percentage reduction on low DSH states • Impose the largest percentage reductions on: • States that have the lowest percentages of uninsuredindividuals • States that do not target their DSH payments on hospitals with high levels of uncompensated care • States that do not target their DSH payments on hospitals with high volumes of Medicaid inpatients NYS aligned its DSH program with this formula in 2013 Effect on NY (current share of DSH funding = 14.7%):

  47. BBA of 2018: Offsets

  48. 340B Threats

  49. HANYS Federal Advocacy Priorities

  50. Thank You

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