AAHAM Winter Meeting
MHA UPDATE
December 21, 2012
Anne Hubbard, Assistant Vice President, Financial Policy & Advocacy
Rachel Schaaf, Financial Policy Analyst
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MHA Update Agenda
• Wavier Modernization Update
• RAC Update
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The Triple Aim
• Improving the experience of care
• Improving the health of populations
• Reducing per capita costs of health
care
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Waiver Modernization
• The federal government’s “Triple Aim:” value over
volume
• Value through
– Care coordination
– Population health management
• Hospital field’s readiness to manage value
– Healthcare Financial Management Association survey
2011
– Maryland Hospital Association survey 2012
(37/46 acute care hospitals responded)
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The Problem
Current Waiver Test
Triple Aim
Hinges on one waiver test only
Experience
of Care
A single variable
Medicare only
Inpatient measure only
vs.
Population
Health
Hospital only
No alignment of hospital/physician incentives
Per Person
Cost
No use of quality/safety/outcome metrics
Current waiver test becoming an anachronism
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Waiver Cushion
6
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Current Test vs. New Test
Current Test
New Test
Medicare Inpatient
Payment per
Discharge
Medicare Inpatient
and Outpatient
Payment per
Beneficiary
Cumulative Rate of
Growth
Annual Rate of
Growth
(1981 to present)
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Base Year
1981
MD vs. National
Growth Target
MD vs. MD
7
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Waiver Demonstration Framework
• Structure
– Two 3-year demonstrations – “3 + 3”
• Goal
– What do we aspire to achieve?
• Test
– For what will we be held accountable for achieving?
• How to Meet the Test and Goal
– What tools will we use to achieve both?
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The Structure
Two three-year demonstrations – “3 + 3”
• First three-year demonstration
– 2013 – 2015
– More clear
• Second three-year demonstration
– 2016 – 2018
– Less clear
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The “Goal”
First three-year demonstration
• The Goal –
– By the end of the first three years;
– Limit the rate of growth in;
– Total per capita inpatient and outpatient
regulated hospital revenue;
– To 3.57% or less
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The “Goal”
• Based on 10-year historical average annual
growth in Gross State Product (GSP)
– GSP averaged 3.6%
– Hospital regulated revenue averaged 6.8%
• But projected revenue growth (2013 – 2015)
is 3.5%
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The “Test”
First three-year demonstration
• The Test –
– By the end of the first three years;
– Limit the rate of growth in;
– Medicare per beneficiary inpatient and
outpatient regulated hospital revenue;
– To 2.62% or less
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The “Test”
• Because Medicare already grows slower
than the annual GSP average of 3.6%, a
proportional reduction for Medicare will be
made to guarantee savings
– Limits Medicare increase to no more than 2.6%
– Medicare spending equals 73% of total hospital
spending trend
– (3.6% x 73%) = 2.6%
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The “Tools”
•
•
•
•
•
•
•
•
Total Patient Revenue (TPR) – new models
Admissions Readmissions (ARR)
Volume Adjustments
Primary Care Medical Home
More links between payment and quality
Accountable Care Organization options
New “bundled” payment approaches
Physician gain sharing
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The “Transition”
•
•
•
•
•
•
Protection from current waiver test
Improved hospital annual updates
Process to articulate second three years
Insurance premium rate alignment
Review uncompensated care policy
Broaden HSCRC governance
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MHA Objectives
• Retain as much of the waiver subsidy as possible
• Pursue innovation in care delivery
• Our “critical few”
– Get out from under the existing waiver and payback
provisions
– Implement real care delivery tools
– Protection from Medicaid assessments
– Improved update
– Differential used as lever to achieve success under new
waiver
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Next Steps
• State to submit proposal
– Mid-December
• Federal government review and reply
– January
• Hospitals must assess support
• Failure will be painful; new waiver may be
painful
• Regardless, hospitals must prepare
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RAC Background
• Established as a three-year demonstration under Medicare
Modernization Act
• The Tax Relief Act of 2006 required a permanent implementation
• The Recovery Audit Contractor (RAC) identifies potential issues and
submits a letter to CMS requesting permission to review those
issues.
• CMS either approves or disapproves their request
• RAC can look-back three-years from the date the claim was paid
• Maryland’s RAC is Performant (formerly DCS)
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Issues RAC is Auditing in Maryland Hospitals
INPATIENT HOSPITAL
•
Renal and Urinary Tract Disorders -MS DRGs 657, 658, 660, 661, 663,
664, 666, 667-670, 673-675, 682-685, 691-700
•
MDC 5 – Conditions of the Circulatory System
•
MDC 6 – Diseases and Disorders of the Digestive System
•
Acute Inpatient Admission Respiratory Conditions – MD DRGs 177180, 190-198, 202-206
•
Cardiovascular Surgery Procedures – MS DRGs 246-254, 263-265
•
Dates of Death
•
Hospital Infections – MS DRGs 094-096, 177-179, 488-489, 539-541,
602-603, 689-690, 856-858, 862-869, 871-872, 977
•
Musculoskeletal Disorders – MS DRGs 542-566
•
Other Musculoskeletal Disorders – MS DRGs 516
Source: Performant Recovery
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Issues RAC is Auditing in Maryland Hospitals
INPATIENT HOSPITAL Continued
•
Neurological Disorders – MS DRGs 068-074, 103, 312
•
Vertigo & Other Labyrinth Disorders – MS DRG 149
•
Cardiac Catheterization for Ischemic Heart Disease – MS DRGs 286287
•
Chest Pain – MS DRG 313
•
Syncope – MS DRG 312
•
Transient Ischemic Attack – MS DRG 069
•
Chronic Obstructive Pulmonary Disease – MS DRGs 190-192
•
Heart Failure and Shock – MS DRGs 291-293
•
Atherosclerosis – MS DRGs 302-303
Source: Performant Recovery
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Issues RAC is Auditing in Maryland Hospitals
OUTPATIENT HOSPITAL
• Initial Infusion Services
• Colonoscopy – Excess Units
• Cataract Removal – Excess Units
• ECGs with Cardiac Cath Procedures
• Medical Unlikely Edits
• Vitamin D Assay Testing
• Rituximab – J12
• Adenosine 6mg & 30mg– Units Reported
Source: Performant Recovery
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Maryland RAC Audit Results
• There are 12 hospitals actively reporting in AHA’s RAC Trac
software. Maryland results are based on this data.
• The data is cumulative through September 2012
• All audits seen by Maryland hospitals are for One-Day Stays
• 77 percent of hospitals report having denials overturned during the
discussion period
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Source: AHA RAC Trac
Maryland RAC Audit Results
9,000
$74 Million
8,000
8,000
7,000
6,000
5,000
4,000
$26 Million
3,000
3,000
$7 Million
$5.5 Million
2,000
$18 Million
2,000
1,000
$1.5 Million
1,300
1,500
500
-
Total Record
Requests
Records with
no errors
Records
Pending
Determination
# of Appeals
Appeals
Appeals still in
Filed
Overturned for
Process
Provider
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Source: AHA RAC Trac
Nationwide RAC Audit Results
• 60 percent of medical records reviewed by RAC did not contain any
overpayment. Region A is higher at 65 percent with no
overpayment.
• 61 percent of medical necessity denials reported were for one-day
stays provided in the wrong setting.
• Hospitals are appealing 40 percent of RAC denials and have a 74
percent overturn rate but three-fourths of all appeals are still in
process.
• Region A has the highest average value of a medical record
requested at $10,019.
• 96 percent of all denials were complex, requiring a medical record
for review.
Source: AHA Quarterly RAC
Report
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Nationwide vs. Region A RAC Audit Denials
100%
90%
84% 86%
82%
80%
74%
72%
70%
60%
56%
50%
41%
Nation
44%
Region A
40%
30%
20%
10%
0%
Short-stay Medically Hospitals Appealing at
Unnecessary Denials
least 1 Denial
Source: AHA Quarterly RAC
Report
Denials that have
been Appealed
Denial Overturn Rate
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Administrative Law Judge (ALJ) Appeals
• There are four levels of appeals in the RAC program, the ALJ
decides appeals at the third level.
• The ALJ may either conduct a hearing or make a decision after
reviewing the evidence in the case file (an on-the-record review).
• The ALJ decision may be fully, partially or unfavorable to the
appellant.
• The issue with ALJ appeals is the same standards are not always
applied.
Source: OIG Improvements are
Needed at the Administrative Law
Judge Level of Medicare Appeals
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Administrative Law Judge (ALJ) Appeals
• CMS did a study of all ALJ appeals and found that 85 percent of
appeals decided by ALJs were filed by providers.
• ALJs reversed prior-level decisions for 56 percent of appeals,
deciding fully in favor of appellants.
• The majority of appeals fully in favor of the appellant were for
hospitals, 72 percent.
• ALJ appeals are randomly assigned thus not providing clinical
expertise and generally deferring to the physician’s opinion on
treatment.
• There are no written policies on how ALJs should handle suspected
fraud.
Source: OIG Improvements are
Needed at the Administrative Law
Judge Level of Medicare Appeals
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Changes Needed at the ALJ Level
•
CMS needs to develop policies and provide training to ALJ staff.
•
CMS needs to clarify policies that are interpreted differently.
•
CMS needs to make case files consistent across the levels of appeal. They
should specify how the documents should be organized and identify a checklist
or other method for identifying the documents in the case files.
•
CMS needs to revise regulations to provide additional guidance to ALJs about
accepting new evidence.
•
CMS needs to implement a process to monitor appeals of providers under
federal investigation.
•
CMS needs to establish a filing fee to prevent frequent fliers from appealing all
cases.
•
CMS needs to implement a quality assurance process to review ALJ decisions.
•
CMS needs to evaluate if specialization among ALJs would improve efficiency.
•
CMS needs to develop policies on handling suspected fraud.
•
CMS needs to maintain a better presence at ALJ appeals.
Source: OIG Improvements are
Needed at the Administrative Law
Judge Level of Medicare Appeals
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How are Maryland Hospitals Handling RAC?
• All hospitals have a different structure.
• Most have some form of a RAC Coordinator handling all inquiries
and appeals.
• Some also have Nurses that are handling the filing of their appeals
or auditing cases prior to appeal.
• Others contract with outside agencies to file their appeals.
• Many hospitals are having success having denials overturned in the
discussion period. One hospital had 50 percent of denials
overturned during the discussion period.
• One strategy being implemented is to ask for the appropriate
physician to review the claim. Do not allow a psychiatrist to review a
cardiology claim.
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How are Maryland Hospitals Handling RAC?
• ALJs recently began allowing Observation services to be billed if
denied for inappropriate level of care.
• The ALJ decision MUST specify that payment should be rendered
for observation level of care.
• If the ALJ does not specify then the hospital may only bill for
observation if there was an order for observation in the chart.
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Questions?
Anne Hubbard – 410-540-5081- ahubbard@mhaonline.org
Rachel Schaaf – 443-561-2038 - Rschaaf@mhaonline.org
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