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MHA Update

MHA Update. HFMA Insurance & Reimbursement Committee May 21, 2013 Vickie R. Kunz Senior Director Health Finance. 1. Who is the MHA?. Advocacy organization representing all hospitals in Michigan. Services include:

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MHA Update

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  1. MHA Update HFMA Insurance & Reimbursement Committee May 21, 2013 Vickie R. Kunz Senior Director Health Finance 1

  2. Who is the MHA? • Advocacy organization representing all hospitals in Michigan. • Services include: • State advocacy on proposed legislation, including Medicaid funding and policy activities • Federal advocacy and policy on Medicare and Medicaid issues • MHA Keystone Center – Quality Improvement Initiatives • BCBSM Contract Administration Process • Unique to Michigan

  3. Payer Issues • Hospitals are reminded that a role of the MHA is to assist in resolving systematic payer issues. • Hospital contracts determine many terms and conditions and take precedence. • Communicate issues to Marilyn Litka-Klein or Vickie Kunz at the MHA.

  4. Medicare IPPS & LTCH Proposed Rules IRF Proposed Rule SNF Proposed Rule Medicare Advantage 4

  5. IPPS Proposed Rule Overview • Rate update = +0.5 percent • Limited coding adjustments • Medicare DSH policy changes • Inpatient admission guidance • VBP Program: FY 2016-2019 program proposals • Readmissions Reduction Program: FY 2014 and 2015 proposals • HAC Reduction Program: FY 2015 proposals • IQR Program updates voluntary EHR-based reporting • Expiration of low-volume adjustment criteria and MDH program

  6. IPPS Proposed Rule • For hospitals that comply with IQR requirements, overall rate change after budget neutrality is a net 0.5 percent increase comprised of: ↑ Plus 2.5 percent marketbasket increase ↓Minus 0.4 percentage point productivity adjustment ↓Minus 0.3 percentage point ACA-mandated adjustment ↓Minus 0.8 percent ATRA-mandated coding adjustment ↓Minus 0.2 percent offset for - IP admission guidance ↓Minus 0.3 percent budget neutrality adjustment This excludes the impact of the 2 percent sequester.

  7. Retrospective Coding Adjustment • The American Taxpayer Relief Act (ATRA) included a coding reduction of $11 billion (or 9.3%) over four-years. • This authority allows CMS to retroactively recoup for increases in IP payments that the agency believes occurred during FY 2008 – 2013 solely due to hospital coding improvements.

  8. Cont., Coding Adjustment • For FY 2014, the CMS proposes to phase-in the implementation with a 0.8 percent reduction. • The adjustment will need to increase in the subsequent three years in order for the CMS to recoup the mandated amount. • ATRA analysis distributed to hospitals Jan. 10 indicates a cut of nearly $437 million to Michigan IPPS payments during FY 2014 – 2017.

  9. Payment Rate Update

  10. Standardized Operating Amounts For Hospitals with an Area Wage Index Greater Than 1.0 (69.6 Percent Labor Share / 30.4 Percent Non-Labor Share) 10

  11. Standardized Operating Amounts, cont’d. For Hospitals with an Area Wage Index Less Than or Equal to 1.0 (62.0 Percent Labor Share / 38.0Percent Non-Labor Share) 11

  12. Capital Payment Update • Proposed federal capital rate of $432.03, up from the current $425.49. • a 1.5 percent increase. 12

  13. MS-DRGs • No major changes made for FY 2014. • CMS proposes to maintain the current 751 MS-DRGs. • 85% of MS-DRGs will have weight change of +/- 6%. • See Table 5 in final rule for Excel file containing relative weights.

  14. Cont., MS-DRGs • See May 6 Monday Report article which includes a link to an Excel file which compares current to proposed relative weights. • Also see MHA Advisory Bulletin # 1344 in May 6 Weekly Mailing. • Hospitals can use their inpatient claims analysis distributed November 2012 to estimate impact of updated MS-DRG weights.

  15. Impact on Top MS-DRGs

  16. Cost Outlier Threshold • Final 2013 threshold: $21, 821 • Proposed 2014 threshold: $24,140 • Represents a 10.6% increase in the cost outlier threshold, resulting in fewer cases being eligible for outlier payments. • Threshold is adjusted annually based on CMS’ projections for total outlier payments to ensure that total outliers payments equal 5.1 percent of total IPPS payments. 16

  17. DSH & IME Payments • CMS proposes to include days for labor & delivery services in the Medicare GME payment adjustment calculations for cost reporting periods beginning on/after Oct. 1, 2013. • This policy would reduce GME payments to hospitals and may impact the eligibility of hospitals seeking SCH status. • CMS recently adopted this policy change for the Medicare DSH purposes. 17

  18. Cont. DSH Changes • CMS proposes to readopt its policy of counting the days of patients enrolled in MA plans in the Medicare fraction of the traditional DPP percentage. • CMS is appealing a recent court ruling that disallowed the inclusion of these days.

  19. Medicaid SSI Category • MSA recently announced that data is now available for hospitals to validate their SSI ratio data provided by CMS and used for Medicare DSH payment calculations. • Hospitals often find Medicaid patient days that are not included in CMS file for individuals approved for Michigan Medicaid in SSI category. • Potential to increase Medicare DSH payments. • See MHA Advisory Bulletin #1343 from May 6 WM.

  20. FTEs at CAHs • For purposes of IME and GME payments, a hospital may not claim FTE resident training that occurred at a CAH. • However, if the CAH itself incurs the costs of training, then the CAH may receive 101% of the reasonable cost incurred for resident training.

  21. Expiring IPPS Provisions • These provisions were extended by the ATRA. Absent subsequent federal legislation, these expire Sept. 30, 2012: • Low volume adjustment • Estimated $10.7 M increase to Michigan IPPS payments in FY 2013. • Medicare Dependent Hospital Status • Estimated $1.2 M increase to FY 2013 payments.

  22. Wage Index • No major changes for calculating the wage indexes, rural floor budget neutrality or administrative reclassification rules. • FY 2014 index based on hospital data from CRs ending during FY 2011 and occupational mix data from the calendar 2010 survey. • National FY 2014 occupational-mix adjusted average hourly wage: $38.3620. • See link to Michigan AWI values in A/B #1344.

  23. Labor Related Share • Hospitals with an AWI > than 1.0: • Slight increase from 68% to 69.6% • Will result in a positive impact on hospitals • Hospitals with AWI < or =1.0: • By law, remains at 62%.

  24. CBSA Definitions • CMS does not propose to make any changes to the current CBSA definitions based on the 2010 census but indicates that it will likely do so for FY 2015.

  25. Occupational Mix Survey • CMS required to collect data every three years on the occupational mix of employees for PPS hospitals participating in Medicare. • 2010 survey data used for FY 2014. • Hospitals completed and submitted the revised survey by July 1, 2011.

  26. Wage Index Timeline • May 3 – CMS release of updated PUFs • May 8 – MHA distribution of hospital-specific wage and occupational mix worksheets that compare data from May CMS file to that from February file. • June 3 – Deadline for hospitals to submit correction requests to both CMS and their FI/MAC. • Oct. 1, 2013 – Effective date of FY 2014 AWI • Early Oct. 2013 – Release of PUF for FY 2015 AWI • Mid-to-Late Oct. 2013 – MHA Wage Index Workshop (webinar) • FY 2015 AWI will use data from cost report FYEs: • Oct. 2011 – Sept. 2012 26

  27. Overview: ACA DSH Changes Medicare Current DSH $ ($11 B) 25% Paid Under Traditional Method 75% Dedicated to New Pool Step 1: Reduce Pool [relative to insurance pick up rates] Step 2: Distribute Pool [base on uncompensated care]

  28. Medicare DSH Proposals:Reductions • By the numbers: • Estimated total DSH funding for FY 2014 = $12.3 B • Estimated 25% rate-based and paid under traditional formula = $3.1 B • Estimated 75% for uncompensated care payments = 9.3 B • Proposal for reducing funding dedicated to uncompensated care payment: • Use CBO’s March 2010 and February 2013 insurance rate estimates • FY 2013 = 18% uninsured • FY 2014 = 16% uninsured • Result = 11.2% reduction; amount for uncompensated care payment = $8.2 B (about $1.0 B cut) • [(16% / 18% - 1) = 11.1% plus legislated 0.1 percentage point = 11.2%]

  29. Medicare DSH ProposalsRedistributions • Proposal for distributing funding dedicated to uncompensated care payment: • Use low-income patient days as proxy • Medicaid days and Medicare SSI days • numerators of current DSH % calculation • CMS may use cost report worksheet S-10 in future years • Cites unreliable data as decision to use proxy • Calculate uncompensated care payment factor • Hospital's low-income patient days relative to all DSH hospital low-income patient days

  30. Cont., DSH Changes • Projected changes would reduce Medicare DSH payments to Michigan hospitals by $57m. • $31 million due to total $1 billion cut • $26 million cut due to methodology change • Pending legislation to delay for 2 years.

  31. Medicare Proposed Changes to Inpatient Status • Proposal for patient to spend two midnights in hospital • RAC would “presume” these are ok • Anything less than 2 two midnights would be outpatient, unless documentation in medical record supports need for inpatient care • These have been most of RAC denials nationally • CMS impact is $220 million increase, the 0.2% reduction included in inpatient operating rate.

  32. Readmissions Reduction Program • Established by the ACA and designed to reduce Medicare inpatient payments for acute care hospitals with higher than expected risk-adjusted readmission rates related to certain conditions. • CAHs are excluded. • Began Oct. 1, 2012 (FY 2013) • Medicare payment reduction increasing from 1 percent to 2 percent in FY 2014 and then increasing to 3 percent in FY 2015.

  33. Cont., Readmissions Reduction • Uses 3 years of data from an updated 3-year period to calculate readmission rates. • July 1, 2009 – June 30, 2012 • Defines a readmission as a hospital admission within 30 days from the date of discharge from the index hospital (the initial hospitalization hospital) • Hospitals either maintain full payment levels or be subject to payment penalty of up to 2% in FY 2014 for all IPPS discharges if readmission rate higher than national average for 3 medical conditions.

  34. Cont., Readmissions Policy • CMS proposes to modify the calculation of readmission rates to better account for planned readmissions. • Expected to reduce current national AMI readmissions rate by 1 percentage point. • Expected to reduce heart failure readmissions rate by 1.5 percentage points. • Expected to reduce pneumonia readmissions rate by 0.7 percentage points.

  35. Cont., Readmissions Reduction • CMS is using the following measures, currently included in the hospital IQR program and collected from Medicare FFS claims data, for use in FY 2014: • Acute Myocardial Infarction • Heart Failure • Pneumonia

  36. Cont., Readmissions • Starting with FY 2015, CMS has the authority to expand the policy to additional conditions. • Proposes to add two 30-day readmissions measures to the program. • COPD • Total hip and knee arthroplasties

  37. Cont., Readmissions • Unlike VBP, readmissions reduction program is not budget-neutral. • Nationally, is expected to cut IPPS payments by $175 million in FY 2014, down from $300 million in FY 2013. • FY 2013 policy was expected to reduce Michigan IPPS payments by approximately $14 million.

  38. Value Based Purchasing - What’s at Stake Under VBP? • Program is self-funded by hospital “contribution” • Contribution based on Medicare FFS payment* • 1.0% reduction in FY 2013 • FY 2014 Reduction increases to 1.25% • 2.0% reduction for FY 2017 and beyond • VBP performance determines P4P amount • Budget-neutral • Redistributive • Best performers win, others break even or lose • VBP payments are netted against contributions * Payment reductions exclude IME, DSH low-volume hospitals and outliers.

  39. Medicare VBP Evolution

  40. HAC Reduction Program Overview • ACA-mandated – must start in FY 2015 • First program policies outlined in 2014 rule • 1% reduction in IPPS payments for hospitals with highest HAC “scores” • Would penalize 25% of hospitals nationally • For determining FY 2015 penalties, CMS proposes to use up to 8 quality measures grouped into 2 domains.

  41. IPPS Proposed Rule Impact • Hospital-specific DSH analysis to be distributed week of May 20. • Hospital-specific overall impact analysis to be distributed via email to CEOs, CFOs and RDs shortly after. • Including detailed summary of proposed rule. • Distribution to include Directors of Patient Safety & Quality Improvement. • Impact report reflects readmissions and VBP factors. • VBP factors not final at this time as the CMS continues to review the data. 41

  42. IPPS PROPOSED RULE SUMMARY

  43. 2% Sequestration Cut • ATRA delayed to March 1. • 2% cut was applied to Medicare FFS payments beginning for dates of service on/after April 1. • effective 2013 – 2021 • mandated by the Budget Control Act of 2011. • Michigan annual impact projected at $144M. • IPPS payments reduced $95 million • OPPS payments reduced $34 million • May apply to MA payments depending upon hospital contractual agreement with MA plans.

  44. Outpatient Therapy Services • 2013 collection of claims-based data on patient functional status over an episode of PT, OT and SLP services. • All therapists will be required to report new G-codes and modifiers on the claim form: • initial evaluation, every 10 visits and at discharge. • testing period thru June 30, after that date, claims will reject.

  45. LTCH Proposed Rule • Base rate $40,622.06 for those that submit quality data; $39,823.99 for those that don’t comply. • Includes a net 1.1 percent update • “25% Rule” - CMS is moving forward with full adoption of the 25% rule after a 5-year moratoria and additional one-year statutory relief. • Reduces payment to an IPPS-comparable amount for referrals from general acute hospitals that exceed a 25 percent threshold.

  46. Cont., LTCH Proposed Rule • CMS adopted an LTCH-specific marketbasket value beginning with FY 2013. • Net 1.1% increase after: ↑ Plus 2.5 percent marketbasket increase ↓Minus 0.4 percentage point productivity adjustment ↓Minus 0.3 percentage point ACA-mandated adjustment ↓Minus 1.3 percent budget neutrality cut (second of three) ↑ Plus 0.6 percent for short-stay and high-cost outlier

  47. Cont., LTCH Proposed Rule • CMS’s ongoing research on a potential approach to focus the LTCH setting on the treatment of “medically stable but high-acuity patients” known as “chronically critically ill” (CCI). • Encourages LTCHs to admit CCI patients and ensure that these frame the “core patient population”.

  48. Cont., LTCH Proposed Rule • Full LTCH payment would be limited to patients who met CCI criteria upon discharge from acute hospital. • Non-CCI patients would be paid an IPPS-comparable amount.

  49. LTCHQR Program • Beginning with FY 2014 payments, LTCHs must submit data on 3 quality measures being collected in FY 2012 or be subject to 2 percentage point penalty. • Proposal to add three new measures for the FY 2017 reporting program.

  50. Inpatient Rehab Facilities Net 1.8% increase after:Plus 2.5 percent marketbasket update↓Minus 0.4 percentage point productivity adjustment↓Minus 0.3 percentage point ACA- mandated adjustment

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