MAHAP/MPAA /HFMA Mount Pleasant, Michigan Sept. 19, 2014

1. MAHAP/MPAA /HFMAMount Pleasant, MichiganSept. 19, 2014 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 and policy on Medicaid funding and policy issues • 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(mklein@mha.org) or Vickie Kunz (vkunz@mha.org) at the MHA.

4. Examples of MHA Involvement in Other Issues • Other activities identified by/for the MHA membership • Maximize federal funding in state Quality Assurance Assessment Program (QAAP) • Medicaid implementation of Critical Access Hospital takeback that included “reject” vs “no-pay”, impact on Medicare reimbursement • Michigan Managed Care Rebid process • Medicaid implementation of MI Health Link (formerly dual eligible project) • HFMA/MPAA/ACMA, etc. outreach • BCBSM DRG validation audits

5. CMS RAC Appeals Settlement Proposal • Administrative Law Judge (ALJ) appeals back log – CMS proposes 68% of funds due if hospital withdraws all pending appeals. • Hospitals must submit request for settlement by Oct. 31, 2014. • CMS to provide payment 60 days after CMS acceptance • No timeframe for CMS to accept • PPS hospitals and CAHs are eligible- Rehab and Psych Hospitals are not eligible. • See Sept. 15 MHA Monday Report Article which includes a link to CMS’ Sept. 9 presentation.

6. CMS ALJ Settlement Proposal – cont. • These claims would not be counted for Medicare GME and other cost report reimbursement purposes. • Many hospitals that have appealed to the ALJ have had positive outcomes, therefore diminishing the value of this proposal. • Due to the significant backlog at the ALJ, it may be years before a hospital receives a positive decision and its payment under the current appeals process. • Hospitals are encouraged to carefully evaluate whether to request settlement.

7. IPPS 2015 Final Rule

8. IPPS 2015 Final Rule Summary

9. 2 Midnight Rule & Short-Stay Payment Policy • No changes adopted for two-midnight policy finalized in FY 2014 IPPS rule. • CMS will continue seeking input on short stay payment methodology. • No consensus in comments received

10. Reporting of Hospital Charges • ACA provision requires hospitals to make public a list of standard charges for items/services, including a list of charges for services by MS-DRGs. • No deadline for compliance but sets expectation that hospitals should update the information at least annually, or more often as appropriate. • CMS states that hospitals should either make public a list of their standard charges or their policies for allowing the public to view a list of charges in response to an inquiry. • Can use charge master

11. General Quality-Based Program Themes • Increased financial exposure each year (max exposure shown below) HAC = Hospital Acquired Condition (HAC) Reduction Program; RRP = Readmission Reduction Program; VBP = Value Based Purchasing Program

12. Medicaid

13. FY 2015 Budget • New $11 million OB Stabilization Pool – GF/Federal $ • Maintained GME Funding • Restored $4.3 million • Continued Rural Access Pool - $35.6 million – GF/Federal $ • New tax-funded $85 Million DSH Pool • $70 Million to be distributed to Large/Urban Hospitals • $15 Million to be distributed to Small/Rural Hospitals • More aligned with hospital provider tax paid to support these payments.

14. Hospital Reimbursement Reform Initiative • 2013 meetings with hospitals, MSA steering committee finalizing areas to implement • Representatives include small, medium, and large hospitals and CAHs • Several ideas discussed: • statewide inpatient rate with hospital adjustors, • APR-DRG for inpatient • Increase in outpatient payments financed with reduced inpatient rates • Medicaid OPPS rates are 53% of Medicare OPPS rates • DSH methodology changes • HRA methodology changes • GME methodology changes

15. Newborn Claim Requirements • Dates of service Oct. 1, 2014 and after • Type of admission/visit • Birth weight • C-section/inductions related to gestational age • Both FFS & HMO claims • Informational edits, but will be required Jan. 1, 2015

16. Healthy Michigan Plan • Enrollment as of Sept. 15 was 385,000 • Statewide $53 million in HRA payments • No QAAP tax associated with these payments. • All counties have achieved enrollment • Additional appropriation required for FY 2015 as enrollment has exceeded budget • Despite 100% federal funding, there may be some resistance in the legislature to pass the additional funding bill

17. Continued, Healthy Michigan Plan • CMS confirmed that HMP inpatient days should be included for Medicare DSH calculations. • Hospital registration staff encouraged to use CHAMPS to determine which patients are HMP versus regular Medicaid. • Can use 270/271 batch transactions • Hospitals required to report both FFS and HMO HMP data separately on MMF.

18. Michigan Health Link (Dual Eligibles) • Phased-in implementation of pilot project expected to begin January 1, 2015. • Hospitals responsible to negotiate payment parameters in their contracts. • Nine plans in Macomb/Wayne, two in 8 SW counties, one in UP • No guarantee of Medicare rates for I/P & O/P • Ambiguity in rate for SNF payments

19. BCBSM DRG Validation • Consultant found BCBSM erred in removing codes for BMI and cerebral edema • Other audit areas for improvement • Sept. 24 education session, webinar available • 2014 audits will be reviewed for compliance with consultant findings • MHA advocated for retroactive adjustment • BCBSM has not finalized retroactive policy

20. Nov. 4 Voters Will Decide…. • U.S. Senate (1 seat, open) • U.S. House of Representatives (14 seats, 4 open) • Governor • Attorney General • Secretary of State • State Supreme Court (2R incumbents, 1 open seat) • State Senate (38 seats, 10 open seats) • State House of Representatives (110 seats, 41 open seats)

21. Dates to Remember • Last day to register for general election: Oct. 6  • General election: Nov. 4

22. MHA Resources • Monday Report is available FREE to anyone and is distributed via email each Monday morning. • Go to website and select “Newsroom”, then Monday Report • MHA Monday Report – electronic publication issued weekly • Request password if you don’t have one. • Email Donna Conklin at dconklin@mha.org to obtain MHA member ID number • Advisory Bulletins – Extensive communications available only to MHA members, as needed. (Require password to obtain from website). • Hospital specific mailings as needed for various impact analyses, etc. • Periodic member forums • See mha.org for other resources. • Monthly Financial Survey (MFS) provides free benchmarking of financial and utilization statistics.

23. ???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

24. DRG Operating Rate – 2015 Final Rule • Labor and Non-Labor Related Standard Rates

25. Rate Update with Meaningful Use and Inpatient Quality Reporting PASSES BOTH MU AND IQR FAILS BOTH MU AND IQR FAILS MU FAILS IQR • Incentives ending for many; penalties starting up • Connects IQR and MU Programs to update factor for PPS hospitals • Creates 4 update scenarios going forward • MU exposure increases over 3 years beginning 2015; IQR holds constant (MU = 25%; 50%; 75% | IQR = 25%) • CAHs = cost-based payment reduced; exposure increases over 3 years beginning 2015 (-0.33%; -0.66%; -1.0%)

26. Cost Outlier Threshold & Capital Rates • Final FY 2014 threshold: $21,748 • Final FY 2015 threshold: $24,758 • Represents a 13.8 percent 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 so that total outliers payments approximate 5.1 percent of total IPPS payments. • Final FY 2015 federal capital rate of $434.26, up from the current $429.31 • 1.15 percent increase

27. Medicare Advantage Plans • As of July 2014, 30 plans in Michigan, with 564,000 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. • Aug. 11 MHA Monday Report.

28. 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

29. Michigan Loses Seniority • U.S. Senate • Sen. Carl Levin (35 yrs) • U.S. House of Representatives • Rep. John Dingell (59 yrs) • Rep. Dave Camp (23 yrs) • Rep. Mike Rogers (13 yrs) • Rep. Gary Peters (5 yrs) • Rep. Kerry Bentivolio (2 yrs) Total experience + seniority lost = 137 years

30. General Election 2014 - State Legislature • Senate – 38 seats • 10 open seats • First election since 2011 redistricting • 29 open seats in 2010 • Majority Leader Randy Richardville is term limited • House of Representatives – 110 seats • 41 open seats • 70 lawmakers will have no more than 2 years of legislative experience • Speaker of the House Jase Bolger is term limited

31. Election 2014 — Call to Action • Meet your candidates for state House and Senate, and candidates for Congress • Use MHA election tools available on the MHA election web page • http://www.mha.org/mha/elections.htm • Election Materials (table tent, posters, brochure) • Election Snapshot • Candidate Listing • Redistricting Information • Non-partisan sources

32. Objective & Useful Information