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Medicaid DSH. John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014. THA – Who We Are.
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Medicaid DSH John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014
THA – Who We Are • The Texas Hospital Association is a nonprofit trade association representing Texas hospitals and health systems. In addition to providing a unified voice for health care, THA serves its 500+ members with timely information, data analysis, education on essential operational requirements, networking and leadership opportunities.
Medicaid DSH - Outline • FY2011 • FY2012-13 – Waiver DY1 & DY2 • FY2014-15 – DY3 & DY4 • FY2016 and Beyond
FY2011 DSH (and Before) • DSH & UPL – Pre-Waiver • Programs Related to each other • Public Hospitals have incentive to Fund DSH • Fully Funded for Every Year
DSH Funding Incentive • UPL at Maximum – No Other Funds Available • IGT ~$0.40 • Paid $1.00 • DSH • IGT ~$0.40 • Paid ~$0.55
Medicaid DSH - Outline • FY2011 • FY2012-13 – Waiver DY1 & DY2 • FY2014-15 – DY3 & DY4 • FY2016 and Beyond
FY2012 Financing Transformation • Transformation Waiver • Shifting Landscape • DSH & UC - Closer Connection • Additional PCP Costs Allowed for UC • Result = Alternate Funding Opportunities for Public Hospitals • DSH Audit • Dollars Recouped beginning in Program Year 2011
FY2012 - Shifting Landscape • FY2011 UPL $2.8B • FY2012 UC & DSRIP $4.2B • DSH & UC Closely Aligned • Medicaid Shortfall Growing Larger
Medicaid Disproportionate Share FY2012 • Public Hospitals Agree to Fund $502M of $569 Potential • DSH Dollars Unspent • THA Forms Task Force on DSH
THA Task Force Concepts 2012-2013 • Medicaid Disproportionate Share Hospital Task Force – 6/1/2012 • the money follows the work • shared responsibility for funding the Medicaid DSH program • protection for the most vulnerable classes of hospitals
UC and DSRIP Funding= $29B UC/UPL Transition- $466M
Medicaid DSH FY2013 - Issues • FY 2013 Payments – 100% Amounts - $138M GR $323M IGT • New DSH Rule • Lubbock and Odessa drop out of 8 hospital coalition leaving big 6 • DSH is Regionalized • Pass 3 Rural Funding Mechanism Developed • GR and IGT are separated • Texas Children’s Lawsuit • Max TPL payment = Cost • DSH paid @ 90% (10% Expected)
Medicaid DSH - Outline • FY2011 • FY2012-13 – Waiver DY1 & DY2 • FY2014-15 – DY3 & DY4 • FY2016 and Beyond
Medicaid Disproportionate Share FY2014 • New Rider 86 covers DSH & UC • $300M GR authorized for FY2014 & FY2015 • 2014 = $160M • 2015 = $140M • No General Revenue Funds appropriated after FY2015 • Other Budget Riders not written in this manner
Medicaid DSH Rider 86 • Proportional allocation of supplemental hospital payments among large public, small public, and non-public providers • Mechanisms though which Medicaid payments are made through managed care organizations • Recommended statutory changes and any other legislative direction needed to fully implement the plan
Medicaid DSH Rider 86 (cont’d) • Assess the extent to which supplemental payments are needed to cover Medicaid and uninsured/uncompensated care costs • Transition plan from supplemental payments to rates that recognize improvements in quality of patient care, the most appropriate use of care, and patient outcomes • No General Revenue Funds appropriated after FY2015
Medicaid DSH Rider 86 (cont’d) • FY 2014 request must show a measurable progress in developing the plan • FY 2015 request should include the final plan • No GR funds may be expended for FY 15 until plan is finalized
Medicaid DSH FY2014 2011-Before Transformation Waiver • Non-State Hospital DSH Pool = $1.2B • UPL Payments = $2.8B • Total = $4.0B 2014-After Transformation Waiver • FY2014 UC & DSRIP = $6.2B • FY2014 DSH Non State = $1.3B • Total = $7.5B
2014 DSH – Attributes - 1 • State-owned hospitals – No change • 2013 – Regional Approach (RHP) • 2014 – Hospitals in statewide pools • 2013 – Funds for Low Income and Medicaid • 2014 – Days added together
2014 DSH – Attributes - 2 • 2013 - GR funded non RHP areas • 2014 – Hospitals share in GR and related FF • 2014 – 3 Pools = all GR and FF in Pools 1&2 shared by all (e.g. net DSH proceeds) • 2014 - Pool 3 = IGT back to IGT hospitals • 2013 – Pass 3 Methodology in place • 2014 – No change • 2013 – 6 Large public hospitals transfer for their region • 2014 – Fed Funds on IGT by 6 shared by all
2014 DSH – Attributes - 3 • 2013 – no provision • 2014 – Most other public hospitals IGT ½ of their DSH (Lubbock & Ector IGT for themselves) • 2014 – Non-8 public hospitals have their days weighted such that net DSH is equal • 2014 – Big 6 = $377 total = $396
2014 UC Attributes - 1 • UC funds are divided into seven pools • state-owned hospitals • COTH members (6 large public) • other public hospitals • private hospitals • physician group practices • governmental ambulance • publicly owned dental providers
2014 UC Attributes - 2 • Pool amounts are Allocated pro-rata • Allocation basis: • Hospitals - Post DSH Payment unpaid HSL • Other groups – UC Cost
2014 UC Attributes - 3 • 6 Large transferring hospitals receive “bump” on allocation basis (pre-allocation basis) • UC pre-allocation “bump” equals amount of DSH IGT made for other hospitals
$284M added to 6 UC Pool • Net DSH proceeds = $1.344B - $395M IGT = $949M • Big 6 = 23% of $949M net proceeds • Total IGT = $395M * 23% = $93M • $377M – $93M = $284M • $284M = UC bump for big 6
2014 UC Attributes - 4 • Special Provision for smaller (Rider 38) hospitals: • The reduction in future years is limited to decreases in UC Pool • E.g. $3.9 billion to 3.1 billion • Reduction is still significant but no greater than this amount • Applies to county < 60k, RRC,SCH,CAH
2014-17 Key Dates • Fall 2014 - FY 2014 DSH paid (1/2 paid) • Jan 2015 – 84th TX Leg in session • Spring 2015 – last half of 2014 DSH Paid • June 2015 TX Leg leaves • FY2015 DSH – needs final plan • FY2016 – last year of 5 year waiver • 2017 DSH cuts begin
Medicaid DSH - Outline • FY2011 • FY2012-13 – Waiver DY1 & DY2 • FY2014-15 – DY3 & DY4 • FY2016 and Beyond
Medicaid DSH – Future Years • Composition of 84th Legislature • Federal DSH Allotment • DSH Audit Outcomes • Waiver Extension/Renewal/Replacement • Available UC Funds • CMS Negotiation / Federal Outlook • Medicaid Shortfall ~$3B
Questions? John Berta Texas Hospital Association 512/465-1556 jberta@tha.org