Michigan Patient Accounting Association (MPAA) March 14, 2014

1. Michigan Patient Accounting Association (MPAA)March 14, 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, including Medicaid funding and policy activities • 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. Healthy Michigan Plan • March 4 – MHA, MDCH and Enroll Michigan Partners Hosted First Healthy Michigan training via webinar – nearly 700 participants. • MHA working to finalize a toolkit for hospitals, health centers, and other stakeholders to assist them with reaching out to patients, educating staff and more. • Future webinars to be scheduled. • Transition of ABW population in Healthy Michigan effective April 1. • MDCH goal of enrolling 322,000 individuals in 2014. • Patients, caregivers and others are encouraged to text “InfoMI” to 69866 to receive updates. • Updates available at www.enrollmichigan.com.

5. Healthy Michigan • Law takes effect March 14. • Waiver approved by CMS Dec. 30 • Coverage start date on/around April 1, 2014 • Transition of Adult Benefit Waiver group • MI Health Account – providers don’t collect copays once enrollee is in an HMO. • Services/coverage can’t be denied for failure to pay copays (CMS condition of waiver approval) • MDCH evaluation of inappropriate ER use by beneficiaries • Guidelines for what hospitals can accept in payment from the low-income uninsured

6. Healthy Michigan • MDCH working on next CMS requirements • Single, coordinated effort by MDCH, MHA and other Enroll Michigan partners to educate and enroll • MDCH goal: 322,000 enrolled in 2014 • Jan. 9 kick-off call • Activities will run approximately six months • Enrollment training for hospitals, others • Earned and paid media components

7. Healthy Michigan • Focus of MHA and hospitals: • Support the MDCH outreach/enrollment plan • Advocate for appropriation of $1.5 billion in federal funds needed to continue program in 2015

8. Federally Facilitated Marketplace (FFM) • As of Feb. 12, nationwide, 3.3 million have “enrolled” in a marketplace (state or federal) plan • 25% are ages 18-34 • 62% selected Silver plans; 12% Gold; 7% Platinum; just 19% bronze • 82% receiving premium assistance

9. Federally Facilitated Marketplace (FFM) • Where does Michigan stand? • 112,000 enrolled in a marketplace plan • 73% selected a Silver plan; just 12% chose Bronze • Role of cost-sharing subsidies in plan selection • 86% of enrollees getting premium assistance • 26% are ages 18-34; 34% ages 55-64

10. 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.

11. 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.

12. 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.

13. 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.

14. 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.

15. 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

16. Presumptive Eligibility • ACA expands presumptive eligibility (PE) privileges for hospitals • Michigan currently allows PE just for pregnant women/children • ACA expands PE to other income-based groups (Healthy Michigan) • Expect roll-out of PE for Healthy Michigan in June • Working with MDCH to expedite

17. Presumptive Eligibility • Use of third-party vendors still in question • July 2013 final rule banned hospitals’ use of vendors in PE process • Strong advocacy of member hospitals, MHA, AHA • CMS modified its position in January • Michigan not yet complying with modified CMS guidelines; work to be done

18. Continued, Presumptive Eligibility • MDCH offering training on the new healthcare coverage application for existing Medicaid programs. • Second Monday of each month from 2-4 p.m. • Register by emailing Laurthel Hayes at MAXIMUS, Michigan’s healthcare enrollment contractor. • Indicate which training session you’d like to participate in.

19. Medicaid

20. 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.

21. Integrated Care Demonstration Project • Phased-in implementation of pilot project expected to begin July 1, 2014, although a delay may occur. • Hospitals responsible to negotiate payment parameters in their contracts. • Regional implementation • 4 regions comprised: • 8 SW counties Macomb County • UP Wayne County

22. Integrated Care Project – Cont. • In December, the MSA announced the names of plans selected to serve as ICOs with plans currently conducting readiness reviews. • Simultaneously, MSA is working to finalize an MOU with CMS to specify the conditions of Michigan’s wavier. • Two separate capitation rates • One for Medicare, developed by CMS • One for Medicaid, developed by MSA • Hospitals required to negotiate contractual terms with individual plans. • Default payment rates for non-contracted hospitals not yet defined. • Target to begin July 1, but may be delayed.

23. Integrated Care Forum • Rescheduled for April 8 in Kalamazoo. • Available in person or by phone. • See March 17 MHA Monday Report for further info.

24. ICD-10 Businesss-to-Business Testing • See March 10 MHA Monday Report. • Recent CMS announcement that there will be no further delayed in the Oct. 1, 2014 implementation date. • 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

25. Medicare

26. Two-Midnight Policy • In late February, CMS released additional guidance • CMS clarified that MACs will re-review claim denials that occurred prior to --and do not comply with-- the guidance issued Jan. 30. • CMS is waiving the 120-day timeframe to file appeals for claim denials that occurred prior to 1/30/14, provided they are filed before 9/30/14. • CMS extended the prepayment Probe & Educate audits through 9/30/14. • MACs are expected to request all documentation by June 2014, with the expectation that all claims will be reviewed prior to 9/30/14.

27. Cont., Two-Midnight Policy • CMS posted the Medicare Inpatient Hospital Probe & Educate Status which includes a summary of initial findings from the prepayment reviews conducted to date. • MACs can review a sample of 10 claims from most hospitals and 25 for large hospitals. • Reasons for denial of payment for include lack of an order to admit to inpatient, lack of documentation to support expectation of a 2-midnight stay, and admission for observation vs. inpatient. • CMS’ FAQs have been updated to include this additional info. • To prevent future denials, hospitals should ensure their documentation supports the necessity for inpatient status.

28. Federal Activity Ongoing • 24% physician cut delayed to March 31. • Long-term funding? • Extend sequestration to fund restoration of unemployment benefits • Hospitals remain target for additional cuts

29. Medicare Payment Challenges • Absent Congressional action, 2% sequestration across-the-board cut continues through FY 2023. • 2% reduction to annual rate update if hospital fails to comply with quality reporting program requirements. • Readmissions Reduction Program – Hospitals at risk for up to 2% payment penalty, increasing to 3% in FY 2015. • Value Based Purchasing – 1.25% payment withhold, hospitals can earn back that amount, earn more or earn less. • 1.25% withhold increases to 2% for FY 2017 and beyond • Hospital Acquired Condition (HAC) reduction program – 1% reduction to 25% of hospitals nationally. • Begins in FY 2015

30. Medicare Advantage Plans • As of January 2014, 28 plans in Michigan, with 514,000 or approximately 29% of Michigan’s 1.8 million Medicare beneficiaries enrolled. • Up to 29 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. • Jan. 27 Monday Report.

31. ???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