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Disproportionate Share Hospital (DSH) Payments. Changes for the Upcoming Federal Fiscal Year 2014. Developed by: Annie Lee Sallee HTH Revenue Cycle Education Specialist annielee.sallee.hth@gmail.com. Learning Outcomes. At the end of this course, the participant should be able to:
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Disproportionate Share Hospital (DSH) Payments Changes for the Upcoming Federal Fiscal Year 2014 Developed by: Annie Lee Sallee HTH Revenue Cycle Education Specialist annielee.sallee.hth@gmail.com
Learning Outcomes At the end of this course, the participant should be able to: • Explain the Disproportionate Share Hospital (DSH) payments for Medicaid and Medicare. • Describe the upcoming changes to DSH payments that are a result of the Affordable Care Act (ACA). • Summarize how Medicare DSH payments will be made in the federal fiscal year 2014. • Identify what actions are necessary now.
There is a Difference • Medicaid DSH Payments – Payments made to states, and then states are able to determine distribution to hospitals with a few restrictions. • Medicare DSH Payments – Payments made directly to hospitals through an increase in normal DRG payments. The Affordable Care Act affects both programs.
A Brief History • Medicaid DSH was established in 1981 to provide federal funding to states to distribute payments to hospitals providing uncompensated care with some requirements related to Medicaid utilization. • Medicare DSH payments were enacted by section 9105 of the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 and became effective for discharges after May 1, 1986. Only provided to acute care hospitals covered under the IPPS. • Both programs provide funding to cover the high costs of treating the low-income population.
Eligible Hospitals • Two Methods to determine Medicare DSH eligibility: • 1. DSH Patient Percent = (Medicare SSI* Days / Total Medicare Days) + (Medicaid, Non-Medicare Days / Total Patient Days) Eligible if DSH Patient Percent Exceeds 15% • 2. Or, large urban hospitals that can demonstrate that more than 30 percent of their total net inpatient care revenues come from State and local governments for indigent care (other than Medicare or Medicaid). *Supplemental Security Income
How DSH is paid now • Large urban hospitals & huge rural hospitals receive more payment. • Small urban & rural hospitals receive less payment, and are capped at 12%.
FY 2014 IPPS Final Rule Changes • As a part of the Affordable Care Act (ACA), DSH payments are to be reduced beginning in FY 2014 through FY 2020. • Assumption: Uninsured population will decline as availability of coverage is increased through government programs.
Medicare DSH Payments in FY 2014 • Expect 25% of the payment you would have received under the current formula and the remaining 75% will fall into a DSH payment pool to be dispersed based on uncompensated care. • Two methods of payment: 1)pays hospitals on a per discharge basis, and 2)periodic payment based on how much uncompensated care was provided. • CMS’ definition of uncompensated care = Medicare DSH hospital’s insured low income days, or the sum of a hospital’s Medicare SSI days and Medicaid days. Hospitals will need to prepare financially for the impact of the 75% portion or periodic payment.
Payment from the National Pool, or the 75% portion (Individual Hospital Medicaid Days + Medicare SSI Days) / (National DSH Hospital Medicaid Days + National Medicare SSI Days) = Your DSH Payment from the Pool
Some Will Benefit, Others Will Not“Unintended Winners and Losers” CMS did not want hospitals to view expansion of Medicaid “deep discounting” as an increase of uncompensated care. Therefore, CMS has decided to include the low-income publicly insured patient population as a factor in the DSH uncompensated care payment. • The ACA’s reduction of DSH payments did not take into account that some states have decided not to participate in the Medicaid expansion. Thus, DSH payments will be reduced while uncompensated care will remain the same- a double whammy.
What Actions are Necessary? • Critical to perform Medicaid eligibility reviews • Enroll Medicare beneficiaries eligible for SSI. Seek to educate your low-income population on their benefits! • S-10 cost report accuracy is critical! For states not participating in the Medicaid expansion, the hope is that CMS will revise their uncompensated care definition and use the non-Medicare bad debts and charity care from the S-10 reports. • Ensure charity care write-offs claimed on Worksheet S-10 meet the definition of the hospital’s charity care policy. Each hospital’s charity care policy dictates what can be included on line 20 of the form. • Bad debts reported on cost report must also meet CMS’ definition. Educate Yourself on the S-10 Cost Report!
What Actions are Necessary?Worksheet S-10 Checklist • Net revenue on line 2, 9, and 13 should be your payments after contractual adjustments. • Line 6, 10, and 14 should be charges before contractual adjustments. • Line 8, 12, and 16 should not be zero. • Line 17 should only include grants that pay for charity care. • Line 20 should be charity charges excluding Medicare and Medicaid charges. • Line 26 should include Medicare bad debts subtracted on line 27. • Line 31 should agree to your financial statement amounts & for non-profits, it should agree to your 990.
What Actions are Necessary? • Estimate your future DSH payments. CMS has provided a FY 2014 impact file: • https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/FY-2014-IPPS-Final-Rule-Home-Page-Items/FY-2014-IPPS-Final-Rule-CMS-1599-F-Data-Files.html?DLPage=1&DLSort=0&DLSortDir=ascending • There are some tools online to help with this as well. For example: http://www.bkd.com/industries/health-care/hospitals/dsh-reimbursement-database.htm
What Actions are Necessary? • Talk with state representatives to discuss advantages of expanding Medicaid, and/or work to push for fairness for states not expanding Medicaid.
Learning Outcomes Now that you have completed this course, you should be able to: • Explain the Disproportionate Share Hospital (DSH) payments for Medicaid and Medicare. • Describe the upcoming changes to DSH payments that are a result of the Affordable Care Act (ACA). • Summarize how Medicare DSH payments will be made in the federal fiscal year 2014. • Identify what actions are necessary now.
References • http://www.hhs.gov/recovery/cms/dsh.html • http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/AcuteInpatientPPS/dsh.html • http://www.medicaid.gov/Medicaid-CHIP-Program-Information/By-Topics/Financing-and-Reimbursement/Medicaid-Disproportionate-Share-Hospital-DSH-Payments.html • National Health Law Program: www.apha.org/NR/rdonlyres/328D24F3.../NHELP_DSH_QA_final.pdf • http://www.healthcarereforminsights.com/2013/05/08/long-awaited-disproportionate-share-instructions-in-the-2014-ipps-proposed-rule/ • http://www.advisory.com/Daily-Briefing/2012/11/09/MedicaidMap
Disproportionate Share Hospital (DSH) Payments Changes for the Upcoming Federal Fiscal Year 2014 Developed by: Annie Lee Sallee HTH Revenue Cycle Education Specialist annielee.sallee.hth@gmail.com