STRATEGIC
HEALTHC ARE
ANALYTICS
Presentation to HFMA
Southern California
August 16, 2012
Medi-Cal Transformation:
Understanding the risks and
opportunities presented by the
unprecedented transformation of the
Medi-Cal Program
HOOPER HEALTHCARE CONSULTING
ABSHER HEALTHCARE CONSULTING
MANAGED CARE SUPPORT SYSTEMS
MEDI-CAL MANY MOVING PIECES
Managed
Care in
Rural Areas
SPD
Enrollment
in Managed
Care
Children’s
Health
Pilots
Medi-Cal
Transformation
APRDRG
Expansion
to Managed
Care
FFS to
APRDRG
Dual
Eligible
Pilots
AUGUST 1, 2012
2
MEDI-CAL MANY MOVING PIECES
 Other Key Items Related to Medi-cal
 Current Implementation of Low Income
Health Program
 Medicaid Expansion in 2014
 California Health Benefit Exchange
 Establishment of a Basic Health Plan for
those between 133-200% of FPL?
AUGUST 1, 2012
3
MEDI-CAL POPULATION RESPONSIBILITY
81%
80%
79%
78%
77%
76%
75%
74%
73%
72%
Medi-Cal FFS Acute Days as
a % of Total
2002
2006
2010
2002
2006
2010
Source: OSHPD Annual Financial Data
Reports
AUGUST 1, 2012
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MEDI-CAL POPULATION RESPONSIBILITY
 DHCS indicates that 22% of acute Inpatient Days would shift to
Managed Care as the patients are Classified as an Aid Code of Seniors
and Persons with Disabilities. This is from 2009 Data Set
 Makes financial planning much more difficult than in years past to
determine impact of the transition and financial planning related to
Utilization
 The range across facilities of a percentage of SPDs varies widely from
low of ~5% to high of 80%
 Managed Care to be expanded into rural counties, plus recent
expansion between 2010-2012 in other counties. Currently Managed
Care available in 28 counties
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CALIFORNIA MEDI-CAL FFS APRDRG
 APRDRG – All Patient Refined DRG
 Originally developed by 3M and National Association of Children’s Hospitals and
Related Institutions
 314 Base DRGs, with 4 levels of severity assigned
 29 Base Neonate and Normal Newborn DRGs
 12 Base Obstetrics DRGs
 Will require separate submission of mother and well baby claims
 No interim bills less than 30 days
 Discontinuation of daily TAR process
 Impact of Medi-Cal Recovery Audit Contractor Program?
 Contract Awarded in April 2012
 Beginning Scope is limited, but could expand
AUGUST 1, 2012
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CALIFORNIA MEDI-CAL APRDRG
 Intended as a “budget neutral” payment method
 DSH and Supplemental funding excluded
 Elements of California’s APRDRG payment method
 DRG with national weights
 Wage index adjuster
 Outliers
 Policy Adjusters
 Rural designation – Adjustment – Attempt to hold harmless at 5% corridor
for group
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CALIFORNIA MEDI-CAL APRDRG
 Program built based on 2009 database built by ACS/Xerox
 Required significant integration of multiple data sources to assign
the DRG
 Will drive the financial exposure limits through transitional pricing
corridors
 Significant assumptions made including the methodology for
eliminating the SPDs from the database and the exclusion of claims
without a discharge
 State will not update the data prior to implementation
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CALIFORNIA MEDI-CAL APRDRG
 Policy Adjusters
 1.25 for Neonate, Pediatric Care
 1.75 for Neonatal Care provided at a CCS Approved Neonatal Surgery
NICUs
 DHCS has stated intent to monitor continued appropriateness of policy
adjusters related to patient access
 Transfers
 No post-acute transfer adjustments
 Transfers to acute care subject to per diem based payment based on
average length of stay
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CALIFORNIA MEDI-CAL APRDRG
 4-year phased implementation beginning July 1, 2013
 Financial exposure mitigation through transitional pricing
corridors:
 +/- 5% maximum FY13-14
 +/- 10% maximum FY14-15
 +/- 15% maximum FY15-16
 Full DRG payment FY16-17 and beyond
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DHCS DATABASE BUILDING BLOCKS
2009 Paid
Claims
Match to paid claims
Provided diagnostic
information
All Medi-Cal FFS paid claims
Excluded denials
2009
OSHPD
Discharge
File
Assumptions
Inferred newborn claims
Exclusion of managed care
eligible
Exclusion of incomplete
claims
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CRITICAL ANALYTICAL SHORTCOMINGS
 Inadequacy of data used to build the program and potential
ramifications – Inaccurate Base Rate Setting
 Change in utilization of services since 2009
 Limitations on losses or gains as a result of transition
 Key payment drivers (i.e., adjusters, outliers, wage index)
 Impact of moving large FFS populations to managed care
 Pilot enrollment of dual eligible population; prospects for
expansion
 Rogers rate implications
 Adoption by managed care plans
AUGUST 1, 2012
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MEDI-CAL APRDRG DHCS DATASET
Care Category % of Total Revenue – 2009 Fee-ForService Estimates
<1%
4%
OB & Nursery - 39%
Neonate - 9%
33%
24%
Circulatory adult - 8%
Resp pediatric - 1%
Resp adult - 5%
Misc pediatric - 9%
9%
Misc adult - 22%
9%
8%
10%
3%
Gastroent adult - 7%
Other <1%
 48% of FFS Revenue will come from Obstetrics, nursery and neonatal care
 However a significant amount of care will still be delivered through the FFS system for
adults and pediatric cases.
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STATE DATA VS. HOSPITAL DATA
 What changes in case mix and services rendered to Fee-
For-Service beneficiaries occurred in subsequent years?
 State has signaled that they will not create databases for
2010, 2011, or 2012
 Has there been any change in the Fee-for-Service
population at a given hospital?
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HOSPITAL DATA: 2009 VS. 2010
Paid Claims Payment Amount
42,000,000
42,000,000
41,000,000
40,000,000
38,000,000
2009
2010
39,000,000
38,000,000
37,000,000
36,000,000
2009
2010
AUGUST 1, 2012
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2009 APRDRG PRICING – NON SPDS
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
Historical Payments
4,000,000
Projected Payment Amount
2,000,000
-
Critical to review services by Care Category to measure efficiencies,
areas to improve in, and to consider adjusting
AUGUST 1, 2012
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CALIFORNIA MEDI-CAL APRDRG:
MANAGED CARE
 Rogers Rate: Plans to pay out of network
providers at DRG rates
 Plans to be paid based on projected expenses
related to DRGs
 Plausible that plans will shift to DRG based
payment
 Have seen this play out in other states
 Potential Implications?
AUGUST 1, 2012
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DUAL ELIGIBLE PILOT PROJECTS
Dual Eligibles
 Who are they?
 There are 1.1 million dual eligibles in CA
 What services are they utilizing?
 What will be the impact on Utilization?
 DHCS projects a 20% decrease in inpatient utilization by
dual eligible beneficiaries enrolled in Medi-Cal HMOs
 The state estimates $675 million in general fund savings in
year 1 of demonstration
AUGUST 1, 2012
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DUAL ELIGIBLE PILOT PROJECT
 Implementation begins no earlier than March 2013 and no
later than June 2013
 CA plans to start with following 8 counties: Los Angeles, Orange, San Diego,
San Mateo, San Bernardino, Riverside, Alameda and Santa Clara
 CMS has announced that they will likely limit Dual Pilots Nationwide to
about 2 Million Enrollees (States have thus far proposed 3 Million Enrollees)
 Possibility that some counties may not proceed as anticipated given CMS
statements and increasing political pressure
 Rate Setting and Contract Negotiations with plans September –
October 2012
 Beneficiary and Provider Outreach – October 2012-June 2013
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DUAL ELIGIBLE PILOT PROJECT
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DUAL ELIGIBLE PILOT PROJECT
What can hospitals do to monitor and act strategically?
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DUAL ELIGIBLE PILOT PROJECT:
CALIFORNIA STATISTICS
Medicare FFS Days
28%
Dual Eligible
Non-Dual
72%
The initial enrollment will include 685,000 beneficiaries
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THE PERFECT STORM?
Medi-Cal
Managed Care
Health Benefit
Exchanges
Changing Payor
Mix Impact on
Supplemental
Funding
Medi-Cal DSH
Cuts
Dual Eligible
Pilots
Medi-Cal
Expansion
Medicare DSH
Cuts
Medi-Cal DRG
Quality Assurance
Fee
AUGUST 1, 2012
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STRATEGIC HEALTHCARE ANALYTICS
 Our Industry is data rich, but we
continue to face many challenges
using data effectively
 With declining reimbursements, and
growing demands from payers,
effective, actionable analytics become
all the more important
 Integrating and analyzing data from
disparate systems/sources can be the
key to creating useful analytics
AUGUST 1, 2012
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UTILIZING ANALYTICS
•Projecting fiscal
impact
•DRG vs. HMO
•Reimbursement
•Workgroup input
•Appeals process
•Trade group input
•Cost containment
strategies
•Data capture and
coding
Budgeting
Operational
Improvements
Advocacy
Strategic
Planning
•Service line
specific analysis
AUGUST 1, 2012
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WHERE DO YOU GO FROM HERE?
AUGUST 1, 2012
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CONTACT INFORMATION
Bryan Hooper
Hooper Healthcare Consulting, LLC
Email:bhooper@hhcllc.us.com
Phone: (714) 871-3494
Matt Absher
Absher Healthcare Consulting, LLC
Email: matt@absherconsulting.com
Phone: (530) 231-5305
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