State and Federal Reimbursement Changes and their Impact on Your Facility

1. THIE HOT TOPICSOctober 2, 2019Changes in State and Federal Reimbursement and How it Affects your FacilityBy: Brent Fullerand Mark Havins

2. Agenda • 1115 Waiver Update • UHRIP Update • Key State Legislative Changes • Managed Care Contract Issues • Trends in Rural Healthcare • RHC Update • Key Federal Legislative Act

3. 1115 Waiver • UncompensatedCare • DY9 State UC cap was increased up to $3.87 billion • Move from UC tool calculation to S10 • UC Tool request was due Sept. 20th • Reversal of CHAT lawsuit • US Court of Appeals in DC reverses lower court’s opinion • $200m hit for Ryder 38 Hospitals • How will HHSC recoup? • UC Withhold/UPL Obligation • Withheld UC Payments for DY 3-6 • HHSC to direct $400 million through the UHRIP Program • Small Public Rider 38 - $9 million • Small Private Rider 38 - $3 million

4. DSH Payments • Changes in Hospital Specific Limit (HSL) Proposal • HSL is to be renamed as “State Payment Cap (SPC)” • HHSC has decided not to change the current calculation method. • Current CMS Method vs MACPAC Method • CMS Method includes dual eligible payments and costs • MACPAC Method excludes cost and payments for all Medicaid eligible patients for whom Medicaid is not the primary payor. • Results increase DSH payments that serve a high share of Medicaid-only patients. • Run models to determine effect on Rural Hospitals • MACPAC Method is better for Hospitals with a high volume of dual eligible patients

5. 1115 Waiver • DSRIP • DY9 begins reduction of available amounts • Achieving metrics and measures more difficult than previous waiver • Many participants dropping out

6. Uniform Hospital Rate Increase Program (UHRIP) • Was created in a cooperative manner by hospitals, public & private, in each service delivery area (SDA) • Only pertains to Medicaid MCO payments. • All Hospitals are covered through pooled IGT. • Hospitals have agreements (LOAs) with the MCO for certain reconciliations that are undertaken without HHSC. • UHRIP mandates cooperation • If no cooperation, program fails.

8. UHRIP 1.0 • Went from $600 million in Year 1 to $1.6 billion in Year 2 • Only affects MCO payments • Receive benefit on paid claims • Benefit is held by MCO until claims are paid • IGT in May for claims paid from September – March • Rural Hospital benefit is less due to DSH issues. • DSH IGT is better return than UHRIP IGT

9. UHRIP 2.0 Proposal • Starts September 2020 • Change from increased paid claims to lump sum payment • HHSC determines the rate increase vs current application • Limits ability to tailor increases based on IGT availability and impact on DHS • IGT is not tied up as long • A uniform dollar increase per encounter as opposed to a rate increase per claim • Possibly weighted based on acuity

10. UHRIP 2.0 (Continued) • Benefit is calculated on previous quarter encounters • Paid claims for the previous quarter are tabulated • IGT and Payments made 6 months after quarter ends • IGT is submitted and receive a lump sum • Similar to UC and DSRIP • Will require a quality component ?? • Rural Hospitals are currently exempt from quality measures

11. Key Legislative Bills • Senate Bill 170 – Add on for Rural Medicaid Payments • House Bill 3934 – Collaboration in Insurance Contract Negotiations • House Bill 1 – Budget Appropriations for SB170 • Key Players • Senator Perry – District 28 • Senator Kolkhoust – District 18 • Representative Burrows – District 83 • Representative Price – District 87

12. Senate Bill 170 • Took effect September 1, 2019 • Increases Medicaid payments for Rural Hospitals • Rural Hospital is a CAH, Sole Community Hospital, Rural Referral Center (RRC) – in an rural MSA. • Payments will take two forms: • 24% increase in inpatient claims payments (24% increase in your Standard Dollar Amount) • $ 500 add-on payment for each baby delivered • This legislation is designed to cover services through traditional and MCO payment plans • However, many MCO plan contracts include language that may exclude this increase from applying. • Contracts may include a ”lesser of billed charges or Standard Dollar Amount” clause • May need a review of contract stipulations and / or charge structure to see this increase in payment through the MCO’s. 12

13. How to get Insurance Companies to Re-Negotiate • Pressure from HHSC and Legislatures. • Letter to HHSC from TORCH • Senator Perry addressing Insurance Commission • Collaborative Negotiating • Problems • Insurance Negotiation practices • Delayed payment and Denial practices • Cancel Contracts

14. House Bill 3934 • Changes the Insurance Code • Gives Authority to Rural Hospitals to establish a Health Care Collaborative • An entity that undertakes to arrange for medical and health care services for insurers, HMOs and other payors • Consists of Physicians and/or Rural Hospitals • Rural Hospital • Licensed Hospital with 75 or fewer beds • In a county with a population of 50,000 or less • Is a CAH, Rural Referral Center or a Sole Community Hospital

15. Trends in Rural HealthcareTransition to Managed Care • Growing transition in payments to managed care • Medicaid made this transition several years ago • Growing trend of Medicare patients are transitioning to Advantage Plans (MA) • Consideration in consistency in payment / aggregate reimbursement between traditional Medicare and Medicaid reimbursement models and managed care plans • Current Transitional trends – Texas • Medicaid MCO accounts for 94% of the aggregate claims volume • Medicare enrollment in Texas is approximately 36% of the Medicare population • Medicare Advantage enrollment has doubled in the past decade and increased, on average, 8-10% per year • CBO projects Medicare Advantage to at 50% or greater of the aggregate Medicare population by 2029. • Growing number of Medicare beneficiaries as baby boomers age into Medicare 15

16. Trends in Rural HealthcareTransition to Managed Care • Medicare • Medicare Advantage continues to grow – (36% of Medicare population in Tx) • Topics of Consideration with Medicare Advantage Plans • Contract language – ensuring consistency in payment between Traditional and Advantage Payment Plans • Periodic Internal Claims Review to ensure that Advantage Plans are paying claims in same manner as traditional – there is a growing amount of A/R among the Advantage plans. • Take Away - • Systematic determination if there is a short-fall in payment amounts between Traditional and Advantage plans for similar services. • Consider Identification of Charges by Payer • Comparative Analysis of Reimbursement between Traditional and Advantage Plans 16

17. Definition of an RHC visit per Section 40 of Chapter 13 of the Medicare Benefits Policy Manual An RHC visit is a medically-necessary medical or mental health visit, or a qualified preventive health visit. The visit mist be a face-to-face (one-on-one) encounter between the patient and a physician, NP, PA, CNM, CP, or a CSW during which time one of more RHC services are rendered. A Transitional Care Management (TCM) service can also be an RHC visit. Services furnished must be within the practitioner’s state scope of practice, and only services that require the skill level of the RHC or practitioner are considered RHC visits.

18. Practitioner defined • Physician Assistant (PA) • Nurse Practitioner (NP) • Certified Nurse Mid-wife (CNM) • Clinical Psychologist (CP) • Physician • Clinical Social Worker (CSW) • Visiting Nurse - homebound patients (RN, LVN, or LPN) • Not Practitioner in RHC • Lab Technician • Other health care staff- example of radiology tech, EKG tech, or Ultrasound technician, Dietician • CRNA • Sonographer • Licensed Professional Counselor (LPC)

19. RHC Patient defined • Individuals who receive services at the RHC • Individuals who receive services at a location other than the RHC for which the RHC bills the service or is financially responsible for the provision of service. • Individuals whose cost of care is included in the cost report of the RHC

20. Covered Services – RHC visit • An RHC service: • Primary Care Diagnosis • 992xx CPT codes • Office or other outpatient visit for the E & M…. • 993xx CPT codes • Nursing facility care services • Services and supplies incident to the practitioner services • Nursing Home Visit for primary care diagnosis • Transitional Care Management Service (30 day TCM period) • Qualified Preventable Health Services • Initial Preventable Physical Exam (IPPE) • Annual Wellness Visit (AWV) • Expanded Services for RHC after Oct 2016 – covers many urgent care type visits • Billing 96372 Injection w an RHC visit

21. New Legislation EnactedFuture of Charity Reporting for UC • Charity vs Bad Debt • Charity Policy – defines attributes of Charity qualifications And Bad Debt qualifications. • Documentation for Bad Debt and Charity • Federal Register Mandate • Patient Accounting System Records • Patient records required for Submission with reporting in Cost Report 21

22. New LegislationRural Ambulance Provisions • New interpretative Guidelines for rural based Ambulances Services to Cost-Based CAH providers. • Traditional interpretation of 35 mile rule • New interpretive guidelines to the 35 mile rule • Exception – if another EMS provider within 35 miles is “not legally authorized” to provides patient transfer services to the Critical Access Hospital (CAH) • CAH Based Ambulance services may be eligible to receive cost-based reimbursement. 22

23. New LegislationRural Health Clinic Modernization Act of 2019 • S. 1037 –J. Barrasso (R- WY) – April 2019 • H.R 2788 – A. Smith (R – NE) – May 2019 • Updates provision for lab services and diagnostic services performed through the RHC. • Allows RHCs to contract with Physician Asst and Nurse Practitioners. This eliminates the need to employ a mid-level in the RHC. • Allows RHCs to be the distant site for telehealth visit. This allows for RHC rates for a telehealth visit, as opposed to a site facility fee only for telehealth. • Sets new Medicare Cap rates beginning in FFY 2020 – $105 / visit, FFY 2021 - $110 / visit, and FFY 2022 - $115 / visit. 23

24. THIE HOT TOPICSOctober 2, 2019Thank You!By: Brent Fullerand Mark HavinsPh (806) 791-1591DHCG.com