Michigan Patient Accounting Association (MPAA) May 16, 2014

1. Michigan Patient Accounting Association (MPAA)May 16, 2014 MHA Update Vickie R. Kunz Senior Director, Health Finance Michigan Health & Hospital Association

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

3. Payer Issues • The role of the MHA is to assist in resolving systematic payer issues. • Individual hospital contracts determine terms and conditions and take precedence. • Communicate issues to Marilyn Litka-Klein or Vickie Kunz at the MHA.

4. Federally Facilitated Marketplace (FFM) • Through close of enrollment, Michigan’s enrollment exceeded HHS projections. • Approximately 38% of the eligible population has enrolled. • 272,539 Michigan residents have “enrolled” in a marketplace (state or federal) insurance plan. • 29% are ages 18-34 • 88% selected Silver plan level or higher • 87% receiving premium assistance

5. Healthy Michigan Plan • As of May 12, there are 237,329 individuals enrolled in the HMP • Top Counties by % of Population Enrolled: • Genesee, Ogemaw, Muskegon, Lake, Otsego • Top Counties by # People Enrolled: • Wayne, Macomb, Oakland, Genesee, Kent • Enrollment figures released by MDCH every Monday at 3 p.m. • Hospitals that experience any enrollment issues are reminded to alert MDCH by submitting an email detailing the problem to healthymichiganplan.gov or by contacting Ruthanne Sudderth at the MHA via email: rsudderth@mha.org

6. Healthy Michigan Plan • Presumptive eligibility for the HMP population will take effect July 1. • MDCH’s position on third party eligibility vendors is still unclear. • Hospitals can’t delegate their authority to determine PE to third party contractors. • Third party vendors may assist hospitals.

7. Medicaid

8. FY 2015 Executive Budget Recommendations • Released by Governor Snyder Feb. 5. • Maintains current hospital payment rates. • Funds Healthy Michigan Plan. • Does not include $36 million for special funding to small and rural hospitals • Does not include the $4.3 million “one-time appropriation” for Graduate Medical Education payments. • Budget must go through House and Senate before being finalized – June target for finalization.

9. Recovery Audit Contractor (RAC) • MDCH recently approved these target areas for review: • Credit Balance Audits – review provider records to determine whether overpayments related to credit balances exist. • Duplicate payments, incorrect billings, etc. • HMS has been instructed to exclude claims that span 2 midnights for dates of admission between Oct 1, 2013 and March 31, 2015. Claims that meet these conditions will not be selected for review. • See May 5 MHA Monday Report which includes a link to MI RAC webpage.

10. Hospital Payment Recoveries • DSH • Revised MSA DSH policy will result in hospital payment recoveries/redistributions in late May for FY 2011 Step 2. • MSA expects to complete FY 2012 Step 2 DSH process in July. • Hospitals will be subject to additional payment recoveries if DSH audit results indicate that they received DSH payments in excess of DSH limit calculated as part of the audit process. • Other • Hospitals also subject to Medicaid fee-for-service upper payment limit recoveries upon cost report filing and settlement.

11. ICD-10 Business-to-Business Testing • Despite implementation delay to Oct. 1, 2015, MDCH testing efforts continue. • MHA strongly encourages hospitals to test ICD-10 claims processing with all payers. • MDCH offering ICD-10 compliant B2B testing for providers pursuing CMS Level II compliance. • Providers should test ICD-10 claims and inquiry transactions using the CHAMPS B2B system. • Work with clearinghouses or billing agents • Submit claims using Michigan’s Single Sign-on (SSO) process

12. Medicare

13. FY 2015 IPPS Proposed Rule • Annual Rate Update • Outlier Threshold Proposed to Increase by 19% • From $21,748 to $25,799 • Would result in fewer cases qualifying for an outlier payment. • Disproportionate Share Hospital (DSH) Payments • New CBSAs • Short-stay payment method • CAH Physician Certification • Quality-based reforms

14. Inpatient Operating Rate Update

15. Medicare DSH Payments • For FY 2014 and after, the ACA mandated changes to the methodology for calculating DSH payments to hospitals. • Hospitals receive 25% of Medicare DSH funds based on the former statutory formula. • The remaining 75% flows into a separate “Uncompensated Care” pool for DSH hospitals. • Annual reduction to this pool to reflect the expected decrease in the number of uninsured individuals. • $132 million national reduction proposed for FY 2015 • Pool distributed based on each hospital’s proportion of uncompensated care.

16. New Core-Based Statistical Areas • CMS proposes to use 2010 census results for determining CBSAs which are used for Medicare wage index purposes. • 5 Michigan counties will have a change in status: • Ionia & Newaygo – Rural instead of part of Grand Rapids CBSA • Midland – Becoming its own CBSA instead of Rural • Montcalm – Becoming part of Grand Rapids CBSA instead of Rural • Ottawa – Part of Grand Rapids CBSA instead of Holland/Grand Haven

17. Transition to New CBSAs • To mitigate the negative financial impact: • CMS proposes a 3-year transition period for hospitals located in an urban county that would become rural. • CMS would assign the urban value index value based on FY 2014 classifications for all 3 years. • CMS proposes to use a blended wage index in FY 2015 for hospitals that will experience a decrease in wage index exclusively due to the new CBSAs.

18. Two-Midnight Policy • Finalized in FY 2014 IPPS rule. • Under the two-midnight rule, CMS will generally consider hospital admissions spanning two midnights as appropriate for payment under the IPPS. • Hospital stays or less than two midnights will be generally be considered outpatient cases, regardless of clinical severity. • CMS reiterates that there may be rare and unusual circumstances not yet identified that justify IP admission and payment absent an expectation of care spanning two midnights. CMS encourages comments at SuggestedExceptions@cms.hhs.gov, with “Suggested Exceptions to the Two-Midnight Benchmark” in the subject line.

19. Payment for Short-Stay Cases • CMS solicits comments on an alternative payment methodology for short IP stays specifically: • how it might be designed • how short IP stays would be defined • how appropriate payment would be determined.

20. Physician Certification at CAHs • At a CAH, a physician must certify that the beneficiary may reasonably be expected to be discharged or transferred to a hospital within 96 hours after admission to the CAH. • CMS currently requires CAHs to complete, sign and document this certification prior to the beneficiary’s discharge. • CMS proposes to allow CAHs to complete this certification no later than one day before the date on which the IP claim is submitted.

21. Quality Based Programs • Value Based Purchasing Program • Payment withhold increases from 1.25% to 1.5%. • Hospitals have opportunity to earn more or less or break even. • Readmissions Reduction Program • Maximum payment reduction increasing from 2 % to 3%. • Hospitals can maintain current payment levels or experience decrease up to 3%. • Hospital-Acquired Conditions Program • Will reduce payments to hospitals scoring in the top quartile for HAC rates • 25% of hospitals nationally will experience a 1% payment reduction.

22. Meaningful Use/ IQR • Incentives ending for many hospitals – penalties starting. • CMS expected to release list of penalized hospitals in Sept. 2014. • Connects Inpatient Quality Report and Meaningful Use programs to update factor for PPS hospitals. • MU exposure increases over 3 years beginning FY 2015; IQR holds constant. • (MU = 25%, 50%, 75% / IQR = 25%) • CAHs = cost-based payments reduced; exposure increases over 3 years beginning FY 2015. • (-0.33%, -0.66%, -1%)

23. Medicare Advantage Plans • As of April 2014, 28 plans in Michigan, with 556,000 or approximately 31% of Michigan’s 1.8 million Medicare beneficiaries enrolled. • Up to 21 plans in some counties. • Review MA payment rate for all plans. • CAH entitled to Medicare cost reimbursement. • Each MA plan may determine own utilization model and is not required to maintain electronic transactions. • Many MA have instituted “RAC-like” utilization programs. • Matrix of MA plans by county available at MHA website – updated quarterly, with MHA Monday Report article. • May 5 MHA Monday Report.

24. MA Plans and Sequestration • CMS recently clarified that the 2% Medicare payment reduction does not change Medicare fee-for-service payment rates or fee schedules since the 2% reduction applies to the final payment amount. • This cut was being inappropriately passed on to some providers. • Hospitals are encouraged to review the term of their individual contracts with MA plans and ensure that accurate payments are being made.

25. ???Questions??? Vickie Kunz Senior Director, Health Finance Michigan Health & Hospital Association 110 West Michigan Avenue, Suite 1200 Lansing, MI 48933 Phone: (517) 703-8608 Fax: (517) 703-8637 email: vkunz@mha.org

26. Payment Limitation - Uninsured • E-Alert distributed Jan. 15 to CEOs, CFOs, and various other titles • Healthy Michigan Plan includes a provision that hospitals cannot require payment for service of more than 115% of Medicare from certain uninsured individuals beginning March 14. • Law specifies that a hospital participating in the medical assistance program under the act and rending services to an uninsured individual shall accept 115% of Medicare rates as payment in full if their annual income level is up to 250% FPL. • See MHA Advisory Bulletin # 1352, dated Oct. 28, 2013, for guidance on methodology to calculate the effective Medicare payment rate. • Important that hospitals be prepared to communicate their updated payment policies in the event they receive requests from patients, consumers or local media. • Ensure that hospital employees are prepared to direct all phone, email and in-person inquires to the appropriate individual or department who can respond to requests for payment estimates.

27. Cont., Payment Limitation • MHA recommends: • Hospitals be prepared to communicate their updated payment policies in the event they receive requests from patients, consumers or local media. • Hospital employees be prepared to direct all phone, email and in-person inquires to the appropriate individual or department who can respond to requests for payment estimates for the service requested. • Staff may consider answering “no more than Medicare rates plus 15% prior to the specific calculation for each patient. • Preparing hospital staff to answer similar inquires from patients in ER, observation, inpatient and outpatient settings of the hospital. • Updating hospital website contact as necessary to reflect these newly adopted policies.

28. Cont., Payment Limitation • Some hospitals are adding language to patient statements indicating that if patient is uninsured and annual income is <250% FPL, patient is eligible for a discount from billed charges and to contact the PFS department (or other designated area) for further information. • Provides additional time to calculate amount due from patient • Some hospital have established “call centers” to answer pricing inquires for the most common procedures. • To reduce administrative burden, some hospitals will discount the amount due from all uninsured patients regardless of income. • For inpatient services, most hospitals have indicated they plan to calculate the payment amount on the specific discharge, and perhaps calculate some common ones in advance. • For outpatient services, some hospitals may use an average for discussion purposes, but the actual amount due to the patient cannot be an average.

29. IRS 501 (r) Proposed Regulations • Proposed federal regulations impose additional requirements on hospitals for maintaining tax-exempt status. • Regulations not yet finalized; date for finalization unknown. • Proposed regulations require: • A community health needs assessment (CHNA) must be conducted every 3 years. • Adoption of a written financial assistance policy (FAP) by hospitals for emergency and other medically necessary care. • Limits on the amount that hospitals can charge FAP-eligible individuals for emergency and other medically necessary services. • Limits on extraordinary collection actions including: • Reporting to credit agencies. • Selling an individual’s debt to another party and pursing a legal or judicial action against an individual.

30. IRS 501 (r) Proposed Payment Limitations • Proposed regulations allow two methods for determining amounts generally billed (AGB), which is the limit for FAP-eligible individuals: • “look back” method – on an annual basis hospital would calculate an average percentage based on all claims that have paid in full to the hospital by either Medicare alone or Medicare and all private health insurers. • Includes deductibles/co-payments from patients • “Prospective Medicare “method – Hospitals determine AGB by using the same billing and coding process used for a Medicare FFS beneficiary, including the patient pay amounts. • Does not include Medicare Advantage.

31. How Can Hospitals Be Prepared? • Be ready to implement the federal regulations when finalized. • Most believe there will be little change between proposed regulations and final regulations. • Hospitals are encouraged to review their existing FAP/charity care policies. • Healthy Michigan Law • IRS Regulations proposed, not yet final. • More to come