Affordable Care Act Section 3133 Medicare DSH

1. Affordable Care ActSection 3133 Medicare DSH HFMA Education Session # 3 February 21, 2013 Sec. 3133. Improvement to medicare disproportionate share hospital (DSH) payments. Presented by: Paul Bouganim Principal Financial Analyst Cedars-Sinai Medical Center

2. Agenda • New DSH Formulas and Projections • Wkst S-10 and Charity Care • CMS National Provider Call, January 8, 2013 – Donna Anglin, 2552PROplus, LLC. • Legal Update and Data Sources – John R. Hellow, Hooper Lundy & Bookman, Inc.

3. DSH Payment Formula Effective FY 2014(Discharges on/after 10/01/13) • Base DSH Payment • 25% of DSH payment computed under existing law – 42 CFR 412.106 • Plus • Add-on Payment - Product of three factors: • Factor 1 = 75% of national aggregate DSH payments under existing law • Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)? • Factor 3 = A hospital specific percentage of national aggregate charity care

4. DSH Payment Formula Effective FY 2014(Discharges on/after 10/01/13) • Add-on Payment: • Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)? • 1 minus the % change from 2013 to “most recent period” minus 0.1% in 2014 and minus 0.2% in 2015 through 2019 • Factor 3 = A hospital specific percentage of national aggregate charity care • Period not specified by Section 3133; left to Secretary to select period

5. Let’s Take a Look… (-0.2% for FY2015 to FY2019)

6. Huge Impact

7. Charity Care and Wkst S-10 – Nothing Ties! Financial Statements IRS Form 990 Worksheet S-10 OSHPD Medicare

8. Charity Care and Wkst S-10 • Financial Statements • Traditional Charity Care • Unpaid cost of Medicaid* • Unpaid cost of Medicare • Research • Other Community Benefits • IRS Form 990 (Schedule H) • Traditional Charity Care • Unpaid cost of Medicaid* • Unpaid cost of Medicare • Research • Other Community Benefits • *Including State/Local Government Programs Consolidated Financials • Medical Center Only • Excludes GME • Different Community Benefits

9. Charity Care and Wkst S-10 • Medicare (2552-10, Wkst S-10) • Traditional Charity Care • Unpaid cost of Medicaid* • Non-Medicare Bad Debts • OSHPD • Traditional Charity Care • Reported at gross charges • *Including State/Local Government Programs Likely to be the default definition of Charity Care for DSH, maybe… S-10 Also Used for EHR Incentive Payments!

10. Bonus Slide: (b) Medicare Share: IP Part A Days + IP Part C Days ÷ Total IP Days x [ (Total Charges - Charity Care Charges) ÷ Total Charges ]

11. Charity Care and Wkst S-10 Unpaid Cost of Medicaid Overall Facility Cost-to-Charge Ratio, Wkst C, Part I Gross Medi-Cal and Medi-Cal HMO Charges (Provider Records)

12. Charity Care and Wkst S-10 Traditional Charity Care • Gross Charges • Internal Report of all Accounts with Charity Code Write-Off • Separated between Accounts w/ Insurance Pmt and w/o Insurance Pmt • Any payments posted to account are offset • Charity Write-Off: Formal application and approval for Charity Care EHR!

13. Charity Care and Wkst S-10 Non-Medicare Bad Debt • Non-Medicare Bad Debt • End Game: • Unpaid Medicaid: $65,178,384 • Traditional Charity Care: $52,438,879 • Non-Medicare Bad Debt: $51,105,059 • $168,722,322 Ln 30 for DSH? Charity + Bad Debt Only