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Leveraging Medicare-Like Rates

Leveraging Medicare-Like Rates. 2019 Tribal Self-Governance Consultation Conference Elliott A. Milhollin Hobbs, Straus, Dean & Walker LLP. Medicare-Like Rates Can Achieve Significant Savings.

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Leveraging Medicare-Like Rates

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  1. Leveraging Medicare-Like Rates 2019 Tribal Self-Governance Consultation Conference Elliott A. Milhollin Hobbs, Straus, Dean & Walker LLP

  2. Medicare-Like Rates Can Achieve Significant Savings • Tribes have a federal right to limit what they pay hospitals to what the Medicare program would pay for the same service – the Medicare-Like Rate. • Medicare-Like Rates are significantly lower than full billed charges and often lower than charges negotiated through a PPO Agreement. • Implementing Medicare-Like Rates can result in tremendous savings to Tribal health care programs, freeing up additional resources for Tribes and their members.

  3. Two Types of Medicare Like Rates – Hospital and Non-hospital • Hospital providers must accept Medicare Like Rates in order to remain enrolled in Medicare • IHS regulations establish Medicare Like Rates for Non-hospital providers, but they are not required to accept them as a condition of participating in Medicare.

  4. Medicare-Like Rates - Hospital • Section 506 of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (MMA) amended the Social Security Act to require any Medicare-participating inpatient hospital to: • Agree to be a Contract Health Services (CHS) provider; and • Accept no more than the Medicare-Like Rate for CHS-referred patients.

  5. Hospital MLR • The Medicare-Like Rate cap applies only to hospitals that provide inpatient hospital services, including: • Long-term care hospitals; • Independent inpatient rehabilitation facilities; and • Inpatient psychiatric facilities. • Entities not currently subject to the MLR: • Non-hospital providers, such as clinics not affiliated with a hospital and physicians and physician groups not employed directly by a hospital; and • Hospitals that do not participate in Medicare and do not sign a Medicare provider agreement.

  6. Hospitals must accept the MLR • Section 506 of the MMA and the MLR regulations at 42 CFR 136.30 require hospitals to accept payment at the Medicare rate from CHS programs as a condition of participating in the Medicare Program. • Hospitals that do not accept Payment at the Medicare-Like Rate will no longer be able to receive payment from the Medicare program for any patient they serve.

  7. The Hospital MLR Applies to All Levels of Care • The Hospital Medicare-Like Rate applies to all levels of care provided by a hospital, including: • Inpatient • Outpatient • Skilled Nursing facilities • All other departments of the hospital, no matter where located • The Hospital Medicare-Like Rate does not cover care provided by providers at a hospital that are not directly employed by the hospital, including: • Physicians who have privileges at the hospital but are not employed by the hospital; • Other professionals who are not employed directly by the hospital; and • Outside services such as laboratories and independent diagnostic facilities

  8. Non-Hospital MLR • IHS issued final regulations at 42 C.F.R. Part 136, Subpart I). Became effective May 20, 2016. • Applies to payments to providers and suppliers not already covered by the existing “Hospital MLR.” • Unlike Hospital MLR, it is not a condition of Medicare participation, which means nonhospital providers do not have to accept payment at MLR in order to participate in Medicare. • Implementing non-hospital MLR an option for tribal programs, but required for IHS.

  9. Non-Hospital MLR • Tribal programs must opt in by adding language to ISDEAA agreement. • Rate to be paid depends on whether the PRC program has negotiated a specific rate with the provider.

  10. The MLR Only Applies to PRC Referrals • The MLR only applies to services authorized by an IHS or tribal PRC program. • If a patient does not obtain a PRC authorization, the MLR will not apply, and the hospital may charge the full negotiated rate, or if no rate has been negotiated, full billed charges. • This means that MLR only applies to individuals who qualify for PRC. It does not apply to non-Indian employees, for example.

  11. PRC Eligibility • CHS regulations provide that generally a person will be eligible for services when a person: • Is eligible for IHS services (i.e., is of Indian or Alaska Native descent and belongs to the Indian community served by the local facilities and program); and • Resides on a reservation or within the Tribal Contract Health Service Delivery Area; • Has been authorized for CHS care or meets the emergency eligibility requirements; • Has a medical need that is within the medical priorities of the CHS program; • The needed services are not reasonably accessible or available at the IHS facility; and • Applies for and uses all alternate resources that are available and accessible.

  12. PRC Coordination with Self-Insured Plans • Tribes can achieve MLR savings for self-insured plans for members by coordinating care between PRC and Tribal Self-Insurance • PRC pays, qualifying care for MLR, and Self-Insured Plans supplement PRC • MLR only applies to individuals who are eligible for PRC – It does not apply to non-Indian employees who may be covered by Tribal Self-Insurance.

  13. Payor of Last Resort Rule • IHS PLR rule – 42 C.F.R. § 136.61. • Section2901(b) of the ACA: “Health programs operated by . . . Indian tribes, tribal organizations . . . shall be the payer of last resort for services provided by such . . . tribes, or organizations to individuals eligible for services through such programs, notwithstanding any Federal, State, or local law to the contrary.” • Section 206(f) of the IHCIA prevents IHS from seeking recovery from tribal self-insurance unless tribe gives written permission • IHS policy of excludes Tribal self-insurance plans from the definition of alternate resource in Section 2-3.8I of the IHS PRC Manual.

  14. Redding Decision • IHS refuses to pay CHEF claims to Redding Rancheria because it believes its Tribal Self-Insurance plan is an alternate resource • Court rejects IHS argument. • Court holds Tribal Self-Insurance is not an alternate resource, and recent change to the law in the ACA did not make it an alternate resource. • Court holds that Tribal self-insurance can coordinate benefits with PRC .

  15. New IHS PRC Manual Changes Definition of Self-Insured Plan Tribal Self-Insurance.  A health plan that is funded solely by a Tribe or Tribal organization and for which the Tribe or Tribal organization assumes the burden of payment for health services covered under the plan either directly or through an administrator.  The Any portion of the cost of care that is the responsibility of a reinsurer or stop loss plan maywill not be re-insured, but the Tribe or considered Tribal organization must bear some risk Self-Insurance.

  16. New IHS PRC Manual Payor of Last Resort • Exception to the IHS Payor of Last Resort – Tribal Self-Insurance Plans. For purposes of IHS administered PRC programs, the Agency will not consider Tribally funded self-insured health plans to be alternate resources for purposes of the IHS’s Payor of Last Resort Rule. IHS will assume that a Tribe does not wish for its self-insured plan to be an alternate resource for purposes of PRC and IHS will treat the plan accordingly, once IHS receives documentation to show that the plan is tribal self-insurance. IHS will only treat the Tribe’s plan as an alternate resource for purposes of PRC if either of the following occurs: • 1. IHS has not received documentation to show that the plan is tribal self-insurance, or • 2. IHS receives a tribal resolution from the Tribe’s governing body, which clearly states that the Tribe would like IHS to treat the self-insured plan as an alternate resource for purposes of PRC. .

  17. REMINDER: This process applies to IHS operated PRC programs. Tribes and Tribal organizations operating PRC programs may choose to follow this coordination process, or they may adopt a different process for addressing this issue. To the extent any Tribal self-insurance plan has reinsurance or stop loss insurance from which claims are paid by entities other than the Tribe or Tribal organizations, such reinsurance or stop loss insurance shall not be considered Tribal self-insurance; provided that the fact that a Tribal self-insurance plan has reinsurance or stop loss insurance does not mean that the Tribal self-insurance shall be considered an alternate resource. .

  18. Elliott Milhollin Hobbs, Straus, Dean & Walker LLP 2120 L Street, NW Washington, DC 20037 Emilhollin@hobbsstraus.com .

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