HCAP, HOSPITAL FRANCHISE
FEE AND MEDICAID
REIMBURSEMENT CHANGES:
BRIEF UPDATES
October 16, 2013
OHA Annual Medicare & Medicaid Update
PRESENTATION OUTLINE
HCAP, HOSPITAL FRANCHISE FEE AND MEDICAID REIMBURSEMENT CHANGES
HOSPITAL CARE ASSURANCE PROGRAM (HCAP)
2013 HCAP Update and Timeline
Anticipated Changes in 2014-15
DSH Audit Impact
OHA Reform Discussions
HOSPITAL FRANCHISE FEE
2014-15 Policy Update
Projected Outcomes Analysis
Timeline
SFY 2014-15 BIENNIAL STATE BUDGET
Overview
Hospital-Related Medicaid Provisions
Other Medicaid Initiatives
QUESTIONS/ANSWERS
HCAP 2013- CHANGES &
OBSERVATIONS
• Additional $21.5M in total funding in 2013 vs. 2012
– $10.5M federal, $11M assessments ($577.9M total funding)
• Data source updated to use SFY 2012 Medicaid C.R.
– CY 2011 data for most hospitals ($1.67B total OBRA cap)
• Since June release of preliminary model:
– CMS announced revised allocations: up $0.8M in ‘12; $0.4M in ’13
– Single CAH corrected overstated Medicaid volumes
• Prevents overpayment
• Changes SW High DSH Threshold to 25.04%
– Revised model available online at: http://www.ohanet.org/wpcontent/uploads/2013/08/2013HCAPModelRevisedAugust82313.xl
sx
3
2013 HCAP PROCESS TIMELINE
ODM Proposes HCAP Rule
Public Hearing on HCAP Rule
Assessment #1 (inc. 2012)
Payment #1 (inc. 2012 catch-up)
Assessment #2
Payment #2
•
•
•
•
•
•
Oct 15
Nov 18
By Jan 10
By Jan 24
By Feb 5
By Feb 15
4
WHAT DRIVES THE DISTRIBUTION
OF EACH DOLLAR IN HCAP 2013?
61.1₵
HCAP Free Care Costs
17.9₵
5.2₵
7.9₵ 5.4₵ 2.5₵
Medicaid High Peer Medicaid
Costs
DSHGroup Losses
Uninsured
UC Costs
5
DSH AUDIT – EXAMPLE OF
POTENTIAL IMPACT
IN 2011…
Hospital A receives $10M
HCAP payment based on its CY
2009 Medicaid C.R., which
indicated OBRA cap costs of
$25M
IN 2014…
Myers & Stauffer review CY 2010 and
2011 hospital log submissions, which
only document $9M in OBRA cap costs.
Hospital A must now cut a $1M check to
ODM, which distributes the funds to
other eligible hospitals with OBRA cap
“room”
6
FORECAST: DSH CUTS
IMPACTING HCAP 2013-2021
Federal
Fiscal Year
Proj. Annual
DSH Cut
Proj. Cumulative
DSH Cut
2013
$0
-
2014
($23,409,393)
($23,409,393)
2015
($26,593,670)
($50,003,063)
2016
($23,484,407)
($73,487,470)
2017
($75,148,136)
($148,635,606)
2018
($197,637,663)
($346,273,269)
2019
($229,316,278)
($575,589,547)
2020
($151,067,472)
($726,657,019)
2021
($150,420,040)
($877,077,059)
7
Millions
HCAP – PROJECTED FEDERAL
FUNDING 2011-2019
$650
$600
$550
$500
$450
$400
$350
$300
$250
$200
2011
2012
2013
2014
Estimated Federal Share
2015
2016
2017
2018
Estimated Hospital Share
8
2019
MEDICAID EXPANSION IMPACT –
HCAP IMPLICATIONS
• Free care rule relevance
• Transfer of uncompensated costs to Medicaid managed
care enrollee hospital costs
• Increase in payment from uninsured to Medicaid MCP
levels
• What would expansion do to hospital DSH limits?
• What implications would it have on the current HCAP
distribution policy?
• Redistribution concerns if distribution is not reformed
thanks to DSH Audits
9
OHA HCAP REFORM DISCUSSIONS
– AN UPDATE
• Discussions since June with OHA Finance Ctte., Task
Force on Health Transformation, Board of Trustees
• 2 Tracks:
– DSH Cut Sustainability
– Sustainability of Model w/Potential Medicaid Expansion
• Finance Committee: No Changes based on DSH Cuts
• If Medicaid Expands, recommendations from
Finance/TF/Board in Q1 of 2014
• Goals:
– Fairness & Equity
– Avoid need for redistributions
10
FFY 2014-15 HOSPITAL FRANCHISE
FEE/SFY 2014-15 UPL UPDATE
• Fee/UPL Payments/MCP Incentive Payments/Base Rate
Support Reauthorized by state budget legislation (Am.
Sub. H.B. 59)
• New Inpatient & Outpatient Hospital Upper Payment Limit
State Plan Amendments (SPAs) required to:
– Update effective dates
– Update base data used to calculate UPLs (CY 2009 -> 2011)
• OHA Board recommended no changes to distribution
model
• CMS review process underway, but government shutdown
impact still to be determined
11
FFY 2014-15 HOSPITAL FRANCHISE
FEE/SFY 2014-15 UPL UPDATE
12
FY 14-15 BIENNIUM MODEL
UPDATE
• Estimated UPLs using new Medicaid and Medicare cost report
data (CY 2011)
• Included the cost of fee-for-service budget cuts to reimbursement
–
–
–
–
•
Readmissions, outpatient fee schedule, DRG exempt
Estimated $55.9 M annual fee-for-service cuts
Additional $64.4 M annual managed care cuts not included in UPL
Ohio Department of Medicaid (ODM) provided breakdown of cut impact
between FFS and managed care
Further adjustments:
– APR-DRG implementation
– Medicare payment increases
– Medicaid utilization estimates
• Estimated net outcome using draft ODM 2014 fee base
13
FY 14-15 UPL SPENDING ROOM –
PENDING CMS APPROVAL
Inpatient UPL
Gaps
Private
Public
State
Total
Outpatient UPL
Gaps
Private
Public
State
Total
Total UPL Gaps
Private
Public
State
Total
14-15
Biennium
12-13
Biennium
660,791,086
63,584,038
66,608,029
790,983,154
606,256,510
50,732,294
44,650,959
701,639,763
14-15
Biennium
12-13
Biennium
249,801,340
20,224,266
12,597,701
282,623,307
169,069,261
9,728,221
17,401,410
196,198,892
14-15
Biennium
12-13
Biennium
910,592,427
83,808,304
79,205,730
1,073,606,461
775,325,771
60,460,515
62,052,369
897,838,655
% Change
17%
39%
28%
20%
14
MEDICAID MANAGED CARE
INPATIENT INCENTIVE PROGRAM
• Five Medicaid MCPs agree
to continue program as long
as authorized by budget
legislation
• Continues at $162M per
year for contracted inpatient
care delivered to managed
care beneficiaries
• New hospital-plan contract
amendment process
required
Contract
Reporting Date
Anticipated
Payment Date
11/15/13
12/7/13
1/15/14
2/7/14
3/14/14
4/7/14
5/15/14
6/7/14
11/14/14
12/7/14
1/15/15
2/7/15
3/16/15
4/7/15
5/15/15
6/7/15
6/15/15
7/7/15
15
Millions
OHIO HOSPITAL FRANCHISE FEE
VS. OFFSETS SFY 2010-2015 PROJ.
$1,000
$800
$600
Franchise Fee
MCP Incentive
5% Rate Support
OP UPL
IP UPL
$400
$200
$0
($200)
2010
2011
2012
2013
2014
2015
($400)
($600)
SFY 2014-15 projections are DRAFT based on final SFY 2012 Medicaid
cost report data. Amounts are subject to change pending further refinement.
16
NET OUTCOME CHARACTERISTICS
•
UPL payments must be based on Medicaid FFS utilization
– Losing hospitals average 0.9 Medicaid FFS discharges per bed annually
• Statewide average: 2.0
• Top 10% of net gain hospitals: 4.1
•
61% of previous net negatively impacted hospitals have losses reduced
in new model
– Of 39% that lose more, majority saw significant decreases
(33% - 71%) in inpatient Medicaid volumes
•
Several CAHs among small net negatively impacted facilities
– Lack of inpatient Medicaid volumes
– Rural/CAH payments mixed and based on inpatient FFS Medicaid
•
•
Majority of top 10% of net losers either State psych hospital or belong to
a system
Options presented by HMA largely ineffective in reducing losses among
independent hospitals
17
HOSPITAL-SPECIFIC ESTIMATES
• OHA awaiting potential Controlling Board action on
Medicaid expansion
– If expansion approved, OHA to request opportunity to revise SPAs
based on increased Medicaid utilization
• Cuts associated with expansion could resurface and impact UPLs
• Potential 100% federally funded supplemental payments based on
expansion…wait and see
– If expansion not approved, OHA will immediately begin process of
sending out hospital-specific sheets to member hospitals
• Assessment rate will be set at proposed rate of 2.579425% of hospital
Modified, Adjusted Total Facility Costs (HCAP tax base less Medicare
expenses)
• Collection schedule: 25% due on March 3, March 31 & 50% on May 5
18
SFY 2014-15 OHIO STATE BUDGET –
IN BRIEF
Understanding H.B. 59 from a general perspective
Overall
- $121.1B in total biennial
spending, up $14.8B from ‘12-13
Tax/Revenue Changes
- Phased-in 10% cut in personal
income tax rates, 50% cut for small
businesses
- 0.25% increase in state sales tax
rate
Education Changes
- K-12: Increased funding over ‘1213 by over $800M
- Higher Ed: Formula based on
graduation vs. enrollment;
increased by $238M
Local Government Changes
- Continues cuts to local
governments, rolls back state
support of local property taxes
Health Care Changes
- No Medicaid expansion
- Simplifies Medicaid eligibility
standards
- Authorizes ACA-mandated PCP
rates
- Unifies Medicaid budget and
creates ODM
- Increases quality accountability
for MCPs and NFs
19
STATE SPENDING 1975-2015 (STATE
FUNDING ONLY)
20
OHIO HOSPITALS AT-A-GLANCE
8,000
1,450
7,950
1,400
7,900
7,850
1,350
7,800
1,300
7,750
7,700
1,250
7,650
1,200
7,600
7,550
1,150
2008
2009
2010
TOTAL INPATIENT DAYS
2011
2012
MEDICAID DAYS
21
Thousands
Thousands
RECENT INCREASES IN MEDICAID VOLUMES
PROPOSED HOSPITAL BUDGET
PROVISIONS
Expand
Medicaid to
138% FPL
$1.08B
Eliminate 5%
Base Rate
Support
$260M
Continue OHADesigned HFF
Programs
$657M
Reduce Hospital
Readmissions
Reduce
Payment to
DRG-Exempt
$12M
Cut OP
Reimbursement
$103M
$67M
Cut Capital rates
to 85% of
Medicaid Cost
$58M
22
ENACTED HOSPITAL BUDGET
PROVISIONS
Continue OHADesigned HFF
Programs
$657M
Reduce Hospital
Readmissions
$103M
Reduce
Payment to
DRG-Exempt
$12M
Cut OP
Reimbursement
$67M
23
OHA PEER GROUP ANALYSIS:
CURRENT VS. NEW APR PAY/COST
120%
100%
80%
60%
40%
20%
0%
Old Payment w/MC Inflator to Cost
New Payment w/MC Inflator to Cost
24
EPISODIC PAYMENT
DEVELOPMENT
• State Innovations Model (SIM) Planning Grant
– Testing Grant Application in process
– Built on McKinsey & Co. work in Arkansas, Tennessee
• Goal: 80-90% of Ohio pop. in some value-based
payment model within 5 years (PCMH & Episodes)
• Initial Episode selection: Asthma, COPD, Perinatal, PCI,
Hip/Knee Replacements
– Define Principal Accountable Provider (PAP) or
“quarterback”
• PAP at-risk based on adjusted cost per episode performance
upon retrospective review
– Gain Sharing
– Risk Sharing
25
QUESTIONS?