1
LEGISLATIVE AND
REGULATORY UPDATE FOR
PPS HOSPITALS
May 16, 2013
2
Agenda
• FFY 2014 IPPS Proposed Rule
• Overall Financial Impact (Mike)
• Coding & Documentation Adjustments (Brad)
• Readmission Measures (Mike)
• Wage Index (Brad)
• Hospital Acquired Conditions Payment Reductions (Mike)
• Uncompensated Care / DSH (Brad)
• Graduate Medical Education (Mike)
• Short Inpatient Stays / Observation (Brad)
• Other Legislative and Regulatory Updates (Mike)
3
OVERALL FINANCIAL
IMPACT
4
Impact of Proposed Changes on
Operating Costs
Operating Cost Changes
Net rate adjustment
Readmissions Reduction Program
DRG weight & wage index adjustments, net of budget neutrality
Application of Frontier wage index
Medicare DSH changes
Expiration of MDH status
All
Hospitals
0.8%
-0.2%
0.1%
0.1%
-0.9%
-0.1%
5
Operating and Capital % Changes
All Hospitals
Urban Hospitals
Rural Hospitals
New England - Urban
New England - Rural
Operating
Cost
Changes
Capital
Changes
-0.1%
0.1%
-1.9%
0.2%
-2.9%
1.1%
1.2%
0.6%
2.3%
1.7%
6
Rebasing and Revising the
IPPS Market Basket
• Rebasing from FY 2006 to a more current FY 2010 will
have little impact on estimated Hospital Operating Index
Percent Change.
• Labor portion for markets with a wage index >1.00 would
change from the current 68.8% to 69.6%, slightly
increasing the impact of the wage index for hospitals with
a wage index above 1.00.
• Labor portion for markets with a wage index of =<1.00 will
remain at 62%.
7
Methodology for Calculation of the
Proposed Relative Weights for MS-DRGs
• CMS proposing to calculate the relative weights based on
19 Cost to Charge Ratios (CCRs), instead of the current
15 CCRs.
• CMS will use the FFY 2011 Medicare Cost reports filed on
form 2552-10.
• CMS will be adding new CCRs for 1) implantable devices,
2) MRIs, 3) CT scans, and 4) cardiac catheterization.
8
Proposed National Standardized Rates
ASSUMES FULL UPDATE (ALT - 2% REDUCTION)
FFY 2014
FFY 2013 % Change
Operating Standardized Amounts
Wage Index > 1.0
Labor-related
Nonlabor-related
3,741.72
1,634.32
3,679.95
1,668.81
1.7%
-2.1%
Wage Index <=1.0
Labor-related
Nonlabor-related
3,333.14
2,042.90
3,316.23
2,032.53
0.5%
0.5%
432.03
425.49
1.5%
40,622.06
40,397.96
0.6%
69.6%
62.0%
68.8%
62.0%
Capital Standard Federal Payment Rate
LTCH Standard Federal Rate
Labor Percentage
Wage Index > 1.0
Wage Index <=1.0
9
CODING &
DOCUMENTATION
ADJUSTMENTS
10
MS-DRG Documentation and Coding
Adjustment
• Section 631 of the American Taxpayer Relief Act of 2012
requires CMS to recoup $11B in FY 2014 - FY 2017.
• CMS has estimated that this will take an adjustment of
-9.3%.
• Proposing to take -0.8% if FFY 2014 and leave -8.5%
payment adjustment for the following 3 years.
11
MS-DRG Documentation and Coding
Adjustment
• FFY 2014
• FFY 2015 Prior year’s decrease and additional (0.8)%
• FFY 2016 Prior year’s decrease and additional (0.8)%
• FFY 2017 Prior year’s decrease and additional (0.8)%
(0.8)%
(1.6)%
(2.4)%
(3.2)%
• Question – Does that mean that in FFY 2018 the 3.2%
adjustment for FFY 2017 will be reversed, since in theory
the $11B will have been recouped?
12
READMISSION
MEASURES
13
Readmission Adjustment Factor
Floor Adjustment Factor for FY 2014
• The Ratio equals to 1 minus (the aggregate payments for excess
readmissions / the aggregate payments for all discharges).
• The hospital will receive an adjustment factor that is the greater of
the Ratio or a floor adjustment factor of 0.98 in FFY 2014.
• In other words, for FY 2014, a hospital subject to the Hospital
Readmissions Reduction Program would have an adjustment
factor that is between 1.0 and 0.98.
• In FFY 2015 the floor adjustment factor increase to .97 (or a
potential for 3% reduction to payments).
14
Readmission Measures
MedPAR Data to be Used
• FY 2014 CMS is proposing to determine aggregate payments
for excess readmissions and aggregate payments for all
discharges using data from MedPAR claims with discharge
dates that are on or after July 1, 2009, and no later than June
30, 2012.
• Medicare Advantage (MA) admission will continue to be
excluded.
• FY 2013,CMS excluded admissions for MA patients based on whether the
claim was identified as a MA claim in the MedPAR file or whether the FFS
payment amount on the claim was for an IME payment only.
• FY 2014, CMS would exclude admissions for patients enrolled in MA as
identified in the Enrollment Database.
15
Refinement of the Readmission Measures
New Measures for FFY 2015
• CMS is proposing to expand the applicable conditions and
procedures to include:
• Patients admitted for an acute exacerbation of COPD; and
• Patients admitted for elective total hip arthroplasty (THA) and total
knee arthroplasty (TKA).
• Bring to total 5 measures with the existing acute
myocardial infarction (AMI), heart failure (HF), and
pneumonia (PN) readmission measures.
16
Refinement of the Readmission Measures
CMS Planned Readmission Algorithm Version 2.1
• This algorithm is a set of criteria for classifying readmissions as
“planned”. The algorithm identifies typical planned admissions
that may occur within 30 days of discharge from the hospital.
• CMS Planned Readmission Algorithm based on 3 principles:
• A few specific, limited types of care are always considered planned
(obstetrical delivery, transplant surgery, maintenance chemotherapy,
rehabilitation);
• Otherwise, a planned readmission is defined as a non-acute readmission
for a scheduled procedure; and
• Admissions for acute illness or for complications of care are never
planned.
17
Refinement of the Readmission Measures
• CMS is proposing that if the first readmission is planned, it
will not count as a readmission, nor will any subsequent
unplanned readmission within 30 days.
• In other words, unplanned readmissions that occur after a
planned readmission and fall within the 30-day post
discharge timeframe would no longer be counted as
outcomes for the first admission.
• CMS estimates this will have a minimal impact.
18
Discharge/Transfer to Designated
Disaster Alternative Care Site
• CMS is proposing to add new patient discharge status
code 69 (Discharged/transferred to a designated disaster
alternative care site).
• Will only be used with three MS-DRGs :
• 280 (Acute Myocardial Infarction Discharged Alive with MCC),
• 281 (Acute Myocardial Infarction Discharged Alive with CC), and
• 282 (Acute Myocardial Infarction Discharged Alive without CC/MCC).
19
Discharges/Transfers With a Planned
Acute Care Hospital Inpatient Readmission
#
Description
#
Description
# Description
81
Home/Self care
86
HHA
91
LTCH
82
Short Term Hospital
87
Court / Law Enforcement
92
Nursing Facility certified
by MCaid not MCare
83
SNF
88
Federal Health Care
Facility
93
Psych Distinct Part Unit
84
Custodial / Supportive
care
89
Swing Bed
94
CAH
85
Cancer / Children's
Hospital
90
IRF / Rehab Distinct Part
Unit
95
Other Health Care
Institution
• Will only be used with three AMI MS-DRGs 280,281, 282.
20
WAGE INDEX
21
Core-Based Statistical Areas
for the Hospital Wage Index
• On 2/28/2013, OMB issued OMB Bulletin No. 13-01, which
established revised delineations for Metropolitan Statistical
Areas, Micropolitan Statistical Areas, and Combined
Statistical Areas,
• There are new CBSAs, urban counties that become rural,
rural counties that become urban, and existing CBSAs that
have been split apart.
• In addition, the effect of the new designations on various
hospital reclassifications, the outmigration adjustment, and
treatment of Lugar hospitals located in certain rural counties.
22
Core-Based Statistical Areas
for the Hospital Wage Index
• CMS believes the data is not available in time to be
incorporated into this year’s rulemaking cycle.
• To allow for sufficient time to assess the new changes and
their ramifications, CMS intends on to proposing changes
to the wage index based on the newest CBSA changes in
the FY 2015 proposed rule.
23
OMB BULLETIN NO. 13-01
Expected FFY 2015 CBSA Assignments
• Released February 28, 2013.
• Approximately 170 hospitals assigned to different market.
• Rural floor in Massachusetts and Connecticut could be
impacted if implemented.
Provider
Number
070021
220010
220029
220033
220035
220080
220174
220016
Name
WINDHAM COMM MEM HOSP & HATCH HOSP
LAWRENCE GENERAL HOSPITAL
ANNA JAQUES HOSPITAL
BEVERLY HOSPITAL CORPORATION
NORTH SHORE MEDICAL CENTER
HOLY FAMILY HOSPITAL, A CARITAS FAMILY HOSPITAL
MERRIMACK VALLEY HOSPITAL
BAYSTATE FRANKLIN MEDICAL CENTER
County
WINDHAM, CT
ESSEX, MA
ESSEX, MA
ESSEX, MA
ESSEX, MA
ESSEX, MA
ESSEX, MA
FRANKLIN, MA
CBSA
Connecticut
Peabody, MA
Peabody, MA
Peabody, MA
Peabody, MA
Peabody, MA
Peabody, MA
Springfield, MA
Post Reclass CBSA
Connecticut
Boston-Quincy, MA
Boston-Quincy, MA
Boston-Quincy, MA
Boston-Quincy, MA
Boston-Quincy, MA
Boston-Quincy, MA
Springfield, MA
FFY 2015 Projected new CBSA
before RECLASS
Worcester
Cambridge-Newton-Framingham
Cambridge-Newton-Framingham
Cambridge-Newton-Framingham
Cambridge-Newton-Framingham
Cambridge-Newton-Framingham
Cambridge-Newton-Framingham
Massachusetts
24
Imputed Rural Floor
• CMS is proposing to extend the imputed floor policy (both
the original methodology (NJ – 35 hospitals) and the
alternative methodology (RI - 4 hospitals) for one
additional year, through September 30, 2014, while they
continue to explore potential wage index reforms.
25
Change in Payments from Rural Floor
with Budget Neutrality
State
Massachusetts
California
Connecticut
New Jersey*
Nevada
New Hampshire
Rhode Island*
Vermont
Maine
Indiana
Ohio
Pennsylvania
Illinois
Florida
Texas
New York
* Imputed rural floor
# of
Provider
# of Provider
Paid Rural
Floor
% of Provider
Paid Rural
Floor
% Change in
Payments
Change (in
Millions)
61
308
32
64
24
13
11
6
20
89
137
157
127
168
322
166
60
178
27
35
19
9
4
0
0
4
3
6
5
5
3
2
98.4%
57.8%
84.4%
54.7%
79.2%
69.2%
36.4%
0.0%
0.0%
4.5%
2.2%
3.8%
3.9%
3.0%
0.9%
1.2%
5.6%
0.9%
4.9%
0.4%
1.6%
0.8%
0.5%
-0.4%
-0.5%
-0.5%
-0.4%
-0.5%
-0.6%
-0.4%
-0.5%
-0.6%
$169.10
$86.40
$75.00
$14.80
$10.90
$3.60
$1.70
($0.80)
($2.40)
($12.90)
($17.70)
($21.80)
($26.80)
($29.60)
($31.90)
($46.50)
26
FFY 2014 Proposed Rule Wage Index
27
FFY 2014 Proposed Rule Wage Index
28
Occupational Mix Survey
• The next Occupational Mix Survey will use the provider’s
data from Calendar year 2013
• The results will be used to adjust payments in FFY 2016,
2017 and 2018.
• CMS will be using the same rules and definitions that are
currently in use as well as the same survey form.
29
HOSPITAL ACQUIRED
CONDITIONS PAYMENT
REDUCTION
30
Hospital Acquired Conditions
Reduction Program
• Section 3008 of the ACA requires a 1% reduction in payment to
hospitals in the top (worst performing) quartile in FFY 2015.
• Use the 24-month period from July 1, 2011 through June 30, 2013
as the applicable time period for the AHRQ measures (Domain 1)
and Calendar 2012 and 2013 for the CDC measures (Domain 2) to
be applied to FFY 2015 payment.
• Domain 1 and Domain 2 would be equally weighted if the date is
available to create a Total HAC Score.
• Hospitals will have a period of 30 days to review and submit
corrections for their Total HAC Scores for the HAC Reduction
Program.
31
Hospital Acquired Conditions
Reduction Program
Domain 1: AHRQ Patient Safety Indicators
Proposed Approach:
Alternative Approach:
6 individual measures
One composite of 8 component
(FY 2015 onward)
indicators
(FY 2015 onward)
PSI-3 (Pressure ulcer rate)
PSI-5 (Foreign object left in body)
PSI-6 (Iatrogenic pneumothorax rate)
PSI-10 (Postoperative physiologic and
metabolic derangement rate)
PSI-12 (Postoperative PE/DVT rate)
PSI-15 (Accidental puncture & laceration rate)
PSI-90
PSI-3 (Pressure ulcer rate)
PSI-6 (Iatrogenic pneumathorax rate)
PSI-7 (Central venous catheter related blood
stream infections rate)
PSI-8 (Postoperative hip fracture rate)
PSI-12 (Postoperative PE/DVT rate)
PSI-13 (Postoperative sepsis rate)
PSI-14 (Wound dehiscence rate)
PSI-15 (Accidental puncture & laceration rate)
32
Hospital Acquired Conditions
Reduction Program
Domain 2: CDC HAI Measures Apply to Proposed Approach
and Alternative Approach
(Multiple FYs)
• Central Line-associated Blood Stream Infection (CLABSI) (FY 2015 onward)
• Catheter-associated Urinary Tract Infection (CAUTI) (FY 2015 onward)
• Surgical Site Infection (SSI):
◦ SSI Following Colon Surgery (FY 2016 onward)
◦ SSI Following Abdominal Hysterectomy (FY 2016 onward)
• Methicillin-resistant Staphylococcus aureus (MRSA) Bacteremia (FY 2017 onward)
• Clostridium difficile (FY 2017 onward)
33
UNCOMPENSATED CARE /
DSH PAYMENTS
34
New Uncompensated Care Payment
• Section 3313 of the ACA reduces Federal DSH payments
by 75% and replaces it with a payment for
Uncompensated Care.
• Three factors multiplied in the calculation:
• Factor 1 is a pool of the 75% of empirical DSH payment for all
DSH hospitals nationally,
• Factor 2 is 1- the % reduction in the uninsured plus a statutory
addition, and
• Factor 3 is hospital-specific value of uncompensated care relative
to the estimated uncompensated care amount for all DSH
hospitals.
35
New Uncompensated Care Payment
Factor 3
• Cost reporting worksheet S-10 not used to calculate uncompensated
care for FFY 2014 in proposed rule due to concerns over the
reliability of the data in the new worksheet.
• CMS has selected a method of using Insured low-income patient
days (defined as inpatient days of Medicaid patients plus inpatient
days of Medicare SSI patients).
• Creating a fraction of the DSH provider’s insured low income days /
Total insured low income days of all DSH providers.
• Secretary has the authority to use estimates of uncompensated care,
which is non-reviewable neither administratively nor judicially.
36
New Uncompensated Care Payment
• CMS is estimating that Factor 1 will be $9.2535B or
about 7% higher than amount calculated from the NPRM
FFY2014 IPPS impact file.
• CMS is using the March 20, 2010 CBO projection for
2013 (18%) and the February 5, 2013 CBO projection of
uninsured for all residents for 2014 (16%) for Factor 2.
• By statue CMS must reduce Factor 2 by -0.1% for FFY
2014.
• A table of hospital specific Factor 3 is on CMS’ website
where they publish SSI% by year.
37
New Uncompensated Care Payment
Example Calculation
Estimate DSH payments Nationally for
all DSH hospitals in FFY 2014
Factor 1 (75% of total)
Estimated FY 2013 uninsured rate
Estimated FY 2014 uninsured rate
Stautory reduction
Formula for Factor 2
Factor 2
$12,338.0
in $M
$9,253.5
in $M (other 25% was paid as DSH)
18.0%
from CBO
16.0%
from CBO
-0.1%
FFY 2015-17 increases to -0.2%
(1-((18%-16%)/18%))-0.1
0.888
Providers Mcaid & SSI days
Estimated National Mcaid & SSI days
Factor 3
10,000
35,880,857
0.0002787
Interim Uncompensated Care Payment
$2,289,823
Product of Factors 1, 2 and 3
38
New Uncompensated Care Payment
• In the case of hospitals that CMS estimated would receive a
Medicare DSH payment for a fiscal year and that received
interim DSH payments and uncompensated care payments,
but are found to be ineligible for DSH payments at cost report
settlement, CMS would recover the overpayment.
• CMS is proposing to only calculate the denominator once, at
the time of the IPPS final rule. CMS will not recalculate the
denominator of Factor 3 at the time when cost reports are
settled and final eligibility determinations for uncompensated
care and Medicare DSH payments.
39
New Uncompensated Care Payment
• Like the rest country, as a whole New England hospitals will see a
payment reduction with Rhode Island seeing a small increase.
Sum of
Proposed
Factor 3
State
Connecticut
1.1396%
Maine
0.3395%
Massachusetts
2.2361%
New Hampshire
0.1386%
Rhode Island
0.3869%
Vermont
0.0968%
Estimate of
Difference
from Empirical
DSH
$ (15,110,000)
$ (7,310,000)
$ (68,350,000)
$ (1,130,000)
$ 10,140,000
$ (6,410,000)
One thing to keep in mind is that it appears there may be some errors CMS’ determination of
which hospital will get DSH for FFY 2014 and since you have to get Federal DSH to qualify for
an uncompensated care payment we expect some revisions when the final rule is published.
40
New Uncompensated Care Payment
Sole Community Hospitals
• Same processes of interim and final payments for SCHs that is
proposed for eligible IPPS DSH hospitals.
• One key difference, SCHs are paid the higher of the Federal
rate or a hospital-specific payment rate, under Section
1886(d)(3) of the Act specifically provides that SCH payments
are to be made on a per-discharge basis.
• Since the Uncompensated Care payment will not be made on
a per-discharge basis the payment would not be accounted for
in determining whether an SCH is paid the higher of the
Federal rate or the hospital-specific rate.
41
Allina Health Services v. Sebelius
• On November 15, 2012 the Federal District Court of DC issued
a favorable decision for DSH providers.
• The court ruled that CMS could not include Medicare
Advantage / HMO days in the calculation of the Medicare
fraction (SSI%).
• In most case this will increase the Medicare fraction (SSI%).
• CMS has appealed the decision and will continue with it
practice of including MA.
• Provider should file cost reports with this as a protested item
and appeal all NPRs within 180 days to protect their rights.
42
Medicare Advantage Days in the
Medicare Fractions for DSH
• In November 2012 Federal District Court for the District of
Columbia in a ruling in the case of Allina Health Services, et al.,
v. Sebelius held putting MA patient days in the Medicare
fraction was not a logical outgrowth of prior regulation.
• CMS is appealing the decision.
• “However, in an abundance of caution and for the reasons
discussed above, in this proposed rule, we are proposing to
readopt the policy of counting the days of patients enrolled in
MA plans in the Medicare fraction of the DPP.”
43
Metropolitan Hospital v. Sebelius
• On November March 27, 2013 the Federal District
Appeals Court of Western Michigan issued a unfavorable
decision for DSH providers.
• The dispute is related to dual-eligible exhausted benefit
days.
• Dual-eligible patient exhausts his or her coverage for a
particular spell of illness, then the subsequent patient
days are called “dual-eligible exhausted benefit days” and
are generally paid by Medicaid as the payor of last resort.
44
Metropolitan Hospital v. Sebelius
• In the FFY 2005 IPPS final rule, CMS issued adopting a
policy to include the days associated with dual-eligible
beneficiaries in the Medicare fraction on the basis that
they are and continue to be “entitled to benefits under
[Medicare] part A”.
• Majority of the court agreed.
45
GRADUATE MEDICAL
EDUCATION
46
Counting of Inpatient Days for
Medicare Payment or Eligibility Purposes
• Patient days associated with maternity patients who were
admitted as inpatients and were receiving ancillary labor and
delivery services at the time the inpatient routine census is taken
would be included in the Medicare utilization calculation.
• This will reduce direct GME payments since direct GME
payments are partially based upon a hospital’s Medicare
utilization ratio.
• The change in the treatment of maternity patient would cause the
denominator (hospital’s total inpatient days) to increase at a
higher rate than the numerator (hospital’s Medicare inpatient
days)
47
Residents That Train at CAHs
• Section 5504(a) of the Affordable Care Act on a prospective
basis to specifically identify the setting in which time spent by
residents training outside of the hospital setting may be
counted for both direct GME and IME purposes, a hospital’s
ability to count residents not training in the hospital is now
limited to only those settings that are “nonproviders.”
• Since CAH is defined as a provider in the statute, CMS is
proposing that, effective October 1, 2013, a hospital may not
claim the time FTE residents are training at a CAH for IME
and/or direct GME purposes.
48
Residents That Train at CAHs
• A CAH may incur the costs of training the FTE residents
for the time that the FTE residents rotate to the CAH, and
receive payment based on 101 percent of its Medicare
reasonable costs under § 413.70 of the regulations.
49
Per Resident Amount
• The proposed rule provides notice of the expiration of the
freeze applied to certain Per Resident Amount (PRA).
• Hospital-specific PRA that exceeded 140% the locality-
adjusted national average PRA is set to expire October 1,
2013, the usual full CPI-U update will take place.
• If you’re a provider that has previously had your PRA frozen
since you exceeded the 140% criteria, I might hold off on
budgeting the increase for 1-2 years (since this might be a
ripe target for future reductions).
50
SHORT INPATIENT STAYS /
OBSERVATION
51
Clarification on Short Inpatient Stays
• Hospital inpatient admissions spanning 2 midnights in the
hospital would generally qualify as appropriate for
payment under Medicare Part A.
• According to CMS’ estimate this change would increase
IPPS expenditures by approximately $220 million
• CMS will use exceptions and adjustments authority under
section 1886(d)(5)(I)(i) of the Act to make a reduction of
0.2 percent to the standardized amount to make this a
budget neutral item.
52
Part B Payments to Providers
Denied Inpatient Payment
• On March 13, 2013, CMS concurrently released an
immediately effective administrative ruling - CMS Ruling 1455R and a proposed rule – CMS 1455-P.
• Reversing CMS policy prevented hospitals from billing on an
outpatient basis when inpatient services denied payment on
basis that the services should have been outpatient.
• Under the new policy, when an audit determines an inpatient
service was not medically necessary, a hospital may be able to
rebill Medicare Part B for outpatient services.
53
Part B Payments to Providers
Denied Inpatient Payment
• Hospitals denied for inpatient services may bill separately on a
Part B outpatient claim for any outpatient services provided
during the three-day payment window.
• A hospital denied payment for an inpatient admission must
choose between:
• 1) Submitting Part B for reasonable and necessary services, or
• 2) Maintaining its request for payment of services on a Part A claim.
• Be Careful - Hospitals cannot simultaneously requests for
payment under both Parts A and B for the same services.
54
OTHER LEGISLATIVE /
REGULATORY UPDATES
55
Low-Volume Hospital Definition and Payment
Adjustment for FY 2014 and Subsequent Years
• For FY 2014, the low-volume hospital qualifying criteria
and payment adjustment methodology revert to that which
was in effect prior to the amendments made by the
Affordable Care Act and the ATRA.
• Under this criteria a hospital must be more than 25 road
miles from another hospital and have less than 200 total
discharges.
56
Medicare Dependent Hospital
• Section 606 of the American Taxpayer Relief Act of 2012
extends the MDH program through only FY 2013,
effective FY 2014, the MDH program is set to expire.
• Keep your eye out for another potential extension of this
deadline.
57
Physician Order for Admission
• The physician order must be present in the medical
record and be supported by the physician admission and
progress notes, in order for the hospital to be paid for
hospital inpatient services under Medicare Part A.
• The following language is proposed for payment:
“(b) The order must be furnished by a qualified and licensed practitioner
who has admitting privileges at the hospital as permitted by State law,
and who is responsible for the inpatient care of the patient at the hospital.
The practitioner may not delegate the decision (order) to another
individual who is not responsible for the care of that patient, is not
authorized by the State to admit patients, or has not been granted
admitting privileges applicable to that patient by the hospital’s medical
staff.”
58
Physician Payment Sunshine Act
• Final rule issued February 1, 2013 and will be effective August
1, 2013.
• Requires drug, biological and medical device manufacturers to
disclose annually payments made to physicians and teaching
hospitals (Covered Recipients) when related to “covered
products”.
• It also requires manufacturers and GPO to disclose certain
ownership and investment interest of Covered Recipients and
their immediate family.
• Information will be published to a website available to the
general public.
59
OIG Issues Updated
Self-Disclosure Protocol
• The protocol provides guidance on how to:
• Investigate the suspected misconduct,
• Quantify any damages, and
• Report the conduct to the OIG.
• First published in 1998, and update via OIG “Open Letters” in
2006,2008 and 2009.
• The OIG reaffirmed its presumption, included in the 2008 Open
Letter, against requiring a Corporate Integrity Agreement when
resolving disclosed conduct;
60
OIG Issues Updated
Self-Disclosure Protocol
• Providers are expected to disclose in good faith resolving liability
within the Civil Monetary Penalties Law’s (“CMPL”) 6 year statute of
limitations;
• Recognition of the OIG‘s use of various damage calculation
methodologies that are tied to the type of conduct disclosed
(including the OIG’s practice of requiring a minimum multiplier of 1.5
times damages);
• Setting a $10,000 minimum settlement for disclosures not involving
potential Anti Kickback Statue violations (involving AKS - $50,000
minimum settlement);and
• Billing-related issues must use a sample of at least 100 and use the
mean to estimating damages.
61
Healthcare Price Transparency
• CMS released the hospital-specific charges for the more than
3,000 U.S. hospitals that receive Medicare IPPS payments for
the top 100 most frequently billed MS-DRGs paid under
Medicare.
• The average of Medicare payments to the provider for the DRG
including the DRG amount, teaching, disproportionate share,
capital, and outlier payments for all cases. Also included in
Total Payments are co-payment and deductible amounts that
the patient is responsible for and payments by third parties for
coordination of benefits.
62
Healthcare Price Transparency
The Numbers and What They Don’t Tell
DRG Summary for Medicare Inpatient Prospective Payment Hospitals, FY2011
Top 100 DRGs Based on Total Discharges
Note: Includes discharges from Hospitals located within the 50 United States and District of Columbia
Hospitals with fewer than 11 discharges within a DRG have been suppressed for that DRG
DRG Definition
470 - MAJOR JOINT REPLACEMENT OR
REATTACHMENT OF LOWER EXTREMITY W/O MCC
Provider Id
Provider Name
Provider City
15-0160
INDIANA ORTHOPAEDIC HOSPITAL LLC
INDIANAPOLIS
Total
Discharges
529
15-0024
15-0084
15-0128
15-0169
15-0074
15-0056
WILLIAM N WISHARD MEMORIAL HOSPITAL
ST VINCENT HOSPITAL & HEALTH SERVICES
COMMUNITY HOSPITAL SOUTH
COMMUNITY HOSPITAL NORTH
COMMUNITY HOSPITAL EAST
INDIANA UNIVERSITY HEALTH
INDIANAPOLIS
INDIANAPOLIS
INDIANAPOLIS
INDIANAPOLIS
INDIANAPOLIS
INDIANAPOLIS
51
275
222
204
117
153
Average Covered
Charges
$30,053
Average Total
Payments
$11,532
$39,160
$48,699
$50,200
$50,891
$52,244
$66,477
$19,095
$14,227
$11,682
$12,949
$14,234
$20,906
63
Quality Data Reporting Requirements
• Objectives
• High impact
• Improved quality and efficiency
• Align with HITECH
• Maximize use of electronic data gathering
• Releasing more of the detailed measurement results in
addition to composite data.
• Various changes made adding and removing quality
measures with an aim toward meeting above objectives.
64
Proposed Changes for Hospitals
Excluded from IPPS
• Applicable to:
• IRFs
• IPFs
• LTCHs
• CAH
• Children’s hospitals
• Certain Cancer hospitals
• Except for CAHs, each of these now has their own prospective
payment methodology, potentially with a transition period
• Transition period is over for IRFs, IPFs, and LTCHs.
• The increases for IRFs and IPFs are in separate Federal Registers.
65
Proposed Changes for Hospitals
Excluded from IPPS
Children’s and Cancer Hospitals
• Children’s and certain Cancer hospitals are still on a costbased formula subject to a cap, which is increased annually.
• The IPPS market basket is being revised and rebased to a
2010 base year.
• The increase for FFY 2014 is 2.5%.
Critical Access Hospitals (CAHs)
• Adding as a condition for participation, that CAH must provide
IP services (and not by outsourcing).
66
Proposed Changes for Hospitals
Excluded from IPPS
Long-Term Care Hospitals (LTCHs)
Market basket increase
2.5%
Less: MFP adjustment
(0.4%)
Less: Productivity adjustment
(0.3%)
Net increase
1.8%
• TEFRA to LTCH PPS transition adjustment of -3.75% established
in FFY 2013 was spread over 3 years, increasing annually to
arrive at the full adjustment. Second year of transition will occur
as planned.
• Moratorium on applying the 25% referral requirement from a single
hospital will expire 10/1/13.
67
Questions and Answers
Thank you!
68
Presenters
Brad Bowman, MBA
Mike Laine, CPA
Mobile: 317-459-9146
brad.bowman@corefinanceteam.com
• 24 years experience
• Formerly PwC Director leading
regulatory services and new service
development
• National speaker on regulatory
changes
Mobile: 317-435-0879
mike.laine@corefinanceteam.com
• 30 years experience
• Started CFT in 2008
• Former E&Y leader of HSAS Finance
• Specializing in reimbursement
strategies, M&A, and strategic financial
planning
Core Finance Team
Office: 317-876-0670
3901 West 86th Street, Suite 310
Indianapolis, IN 46268
Specializing in Medicare payment
optimization, mergers and acquisitions,
and strategic financial analysis for
hospitals and health systems.