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Hospital Rate Setting Methods for State Fiscal Year 2011

Hospital Rate Setting Methods for State Fiscal Year 2011. March 3, 2010 Department of Health Services Division of Health Care Access and Accountability. Agenda. Timeline/Process/Goals of Rate Setting Overview of Base Rate Setting Methodology

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Hospital Rate Setting Methods for State Fiscal Year 2011

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  1. Hospital Rate Setting Methods for State Fiscal Year 2011 March 3, 2010 Department of Health Services Division of Health Care Access and Accountability

  2. Agenda • Timeline/Process/Goals of Rate Setting • Overview of Base Rate Setting Methodology • Overview of Rate Setting Changes Implemented in FY 10 • Rate Changes/Updates • Rate Reform 1.0

  3. Agenda (cont.) • Updates and Potential Changes to the FY 11 Hospital Rates: • Rate Updates • Methodology changes • Rate Reform 2.0 • Core Plan/Basic Plan Updates • Coleman & Williams Audit • Questions

  4. Timeline 12/11/2008 4

  5. Process • March 3, 2010- Kickoff Meeting for FY11 Hospital Rate Setting • Discussion of CY10 rate setting process • Overview of rate setting methodology • Overview of potential FY11 policy changes • March 31, 2010 • Discussion of Hospital Budget • Discussion of UPL • Mid-year interim FY 10 preliminary assessment analysis

  6. Process • April 28, 2010 • Presentation of DRG weights • Presentation of Rate Reform 2.0 changes • May 26, 2010 • Presentation of final rates • Rate Reform Proposals to be adopted • Discussion of future improvements • All meetings will be from 9:00-11:00 at WHA

  7. Goals • Better Communication Between DHS and Hospitals. • Transparency within the rate setting process. • Obtain feedback for hospital to eliminate administrative burden associate with the hospital payment methodology • To discuss policy changes prior to implementation

  8. Overview of Inpatient and Outpatient Hospital Rate Setting Methodology 8

  9. Rate Setting Overview • Analyze Prior Year Expenditures and Caseload • Determine Base Rate By Projecting Future Caseload Growth and Case Mix • Obtain Most Recently Available Audited Cost Report from HCRIS • Obtain MMIS data for Cost Reporting Periods • Recalibrate DRG Weights

  10. Rate Setting Overview • Calculate Inpatient Rates • DRG Reimbursement for ACHs • Provider Specific Cost Based Rates for CAHs • Per diem rates for Rehab and Psych Hospitals • Calculate Outpatient Rates • All inclusive hospital specific cost based per visit rate methodology • Determine Access payments (inpatient & outpatient)

  11. DRG Recalibration Adopt most recent available DRG grouper (V27 for 2011) Aggregate 3 years of paid Medicaid claims and group to new Medicare grouper (FY 07-FY 09) Calculate median cost of each claim by DRG code Eliminate outlier claims (2 standard deviations above the mean) Calculate DRG weight for each DRG code

  12. Inpatient Rate Setting Methodology Calculate CAH provider specific cost based rates and project payments to determine remaining funding Calculate budget neutral base rate for Acute Care Hospitals, then apply provider adjustments Wage Index Capital Direct and Indirect Medical Education Rural Hospital Adjustment DSH Adjustment Trim Points

  13. Inpatient Rate Setting Methodology (continued) Calculate budget neutral per diem rates for psych and rehab hospitals. Once rates established, project payments based upon projected utilization and case mix. Adjust rates as necessary to remain within budget. Project outcomes as a result of rate updates.

  14. Outpatient Rate Setting Methodology Calculate OP Medicaid cost. Project payments for CAHs, determine remaining base funding budget. Apply budget neutral factor to non CAHs. Project payments using projected volume.

  15. Determine Access payments (inpatient & outpatient) • Determine access payment funding levels from hospital assessment. Withhold $5 million for pay for performance. • Apportion access payments between FFS / HMO and IP and OP • Evaluate utilization projections for ACH, Rehab providers, and outpatient visits for FFS population • Compute per discharge and per visit access payments • Determine the level of Access payments attributable to HMO through the per member per month • Determine P4P payment methodology to allocate the $5 million P4P.

  16. Upper Payment Limit (UPL) • In FY 10 • Inpatient- Payments account for 97% of Medicare UPL • Outpatient- Payments account for 96% of Medicare UPL • With a CAH Assessment in FY 10 • Inpatient- Payments in FY 10 account for 99% of Medicare UPL • Outpatient- Payments in FY 10 account for 98% of Medicare UPL

  17. Upper Payment Limit (UPL) • For FY 11 looking at Cost-Based Calculation of UPL. • All Medicaid payments, including supplemental payments, are included in the UPL calculation

  18. Overview of FY10

  19. Overview of Rate Setting Changes Made in FY 10 General Changes • Limited Capital • Reduced DSH Payments • Limited Appeals (Audited Reports) • Access Payments (AcuityVolume) • Used Grouper 26 • Eliminated Hold Harmless • Supplemental Payments (Trauma, Rural, UW) • Critical Access Hospital Assessment (Proposed) • Updated P4P Methodology

  20. Rate Reform 1.0 Update 12/11/2008 20

  21. Overview of FY 11

  22. SFY11 Rate Component Changes • Grouper 27 • Updated FY 11 P4P Requirements • Start collecting HCPCs and CPT codes inorder to implement APCs in FY 12

  23. SFY11 Rate Methodology Changes • Refine Access payment methodology due to South East Region HMO RFP • Eliminate CAH Settlements • Align Rehab Rates to Psych Per Diem Calculations • Pay Labs on Max Fee Schedule • Move EACH payments into base rates • Rate Reform 2.0 Changes • Reform DSH payment methodology to pay DSH as a lump sum payment • Revise rural hospital payment adjustment (eliminate WI wage index criteria) • Other Suggested Changes ???

  24. Rate Reform 2.0 Hospital Ideas(Note: List currently includes ideas collected through 2/19/10. Ideas are not ranked or endorsed by DHS) 12/11/2008 24

  25. Core Plan and Basic Plan Updates • Core Plan • 25 outpatient visit limit • Basic Plan Hospital Benefit • Inpatient • Covers one initial inpatient stay per enrollment year prior to application of the member’s $7,500 deductible • Authorization needed for payment • Transplants are non-covered services • Co-payment=$100 • No Payment for outliers

  26. Core Plan and Basic Plan Updates (continued) • Outpatient • Covers 5 outpatient visits per enrollment year prior to application of the member’s $7,500 deductible • Authorization needed for payment • Co-payment=$60 • Emergency Room (ER) Visits • Covers 5 ER visits per enrollment year • After 5 visits, the benefit is considered exhausted and all subsequent ER visits will not be covered • ER visits do not count towards the member’s deductible • Co-payment=$60 • Training will be forthcoming

  27. Coleman & WilliamsDisproportionate Share Hospital Payment Audit • CMS issued new regulation on December 19, 2009 requiring auditing and reporting requirements for DSH payments. • DHS contracted with Coleman & Williams to complete audit. • Audit will be completed on hospitals that received DSH payments in FY 2005 and 2006. • Letters will be sent requesting information from hospitals on March 5, 2010.

  28. CONTINUED PROCESS IMPROVEMENTS • DHS staff available to work with individual hospitals to address any specific concerns. jasonA.helgerson@wisconsin.gov james.johnston@wisconsin.gov curtis.cunningham@wisconsin.gov kristae.willing@wisconsin.gov • Next Meeting-March 31, 2010 from 9:00-11:00 at WHA

  29. Questions

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