The Medicaid Rebasing:
What It Will Mean For
Your Hospital
Webcast
February 24, 2014
Washington State Hospital
Association
Presenters
Scott Palafox
Health Care Authority
Section Manager
Hospital Finance & Premium Section
Dylan Oxford
Health Care Authority
Hospital Rates Manager
Hospital Finance & Premium Section
Claudia Sanders
Washington State Hospital Association
Senior Vice President
Policy Development
Andrew Busz
Washington State Hospital Association
Policy Manager, Finance
Policy Development
Washington State Hospital
Association
History
Washington State Hospital
Association
Institutional Payment Rebase
and Implementation
February 24, 2014
Topics
• Background
• Inpatient Services
• Outpatient Services
• Rebasing Issues
• System Changes
• Next Steps
5
Background
• Why Rebase?
– Update payment methods
– Analyze current payment incentives
– Improve specificity and reporting
• Goals
– Budget neutrality
– Establish stronger methods
– Focus on Medicaid services
6
Guiding Principles
Access
Ensure Medicaid clients have access to quality care.
Quality
Promote and reward high value, quality driven healthcare
services.
Efficiency
Equity
Provide incentives for efficient care.
Recognize resource intensity for all providers.
Predictability
Provide predictable, understandable payment methods.
Ensure payments can be replicated.
Transparency
Ensure payment methods and decisions are transparent.
7
Taskforce Meetings
• Designed to seek hospital input and improve
transparency
• Topics
– Relative weights
– Policy adjusters
– Reviewing and refining payment models
HCA would like to thank all of the hospitals for participating!
8
Inpatient
• All Patient Refined Diagnosis Related Groups
(APR-DRG)
– ICD-10 Compliant
– Severity of Illness (SOI)
• Increases specificity on services
• Relies on service intensity to determine payment
• New targeted implementation date is July 1st,
2014
9
Outliers
• Outliers will be determined based on a fixed loss
threshold of $40,000
– Loss is determined as the cost beyond base DRG
payment
– Cost is estimated based on billed charges x RCC
• The outlier adjustment factor will vary based on
SOI
– SOI 1 or 2 will pay 80% of costs above threshold
– SOI 3 or 4 will pay 95% of costs above threshold
10
Outpatient
• Enhanced Ambulatory Patient Grouping (EAPG)
– Extend OPPS methodology to additional services
– Larger service groups
• Pays more for major services, less for ancillary
• Removes dependency on Medicare
• New targeted implementation date is July 1st,
2014
11
Rebasing Issues
• Psychiatric Services
– HCA shifted $3.5M from acute inpatient services to
inpatient psychiatric services at acute hospitals
• Indirect Medical Education (IME) on Outpatient
– IME is currently applied to inpatient services
– HCA did not incorporate this in the final rates
• Transfer payments
– An issue was identified with transfers in the claims
baseline
– HCA recalculated the baseline payment amounts
12
Rebasing Issues (cont.)
• Budget Neutrality
– Caseload intensity
– Population change
– Claim coding
• Temporary Budget Neutrality Adjustment
– HCA will apply a 3% downward adjustment to FFS
rates
• Measuring
– HCA will begin analyzing neutrality six months after
implementation
13
System Changes
Inpatient
Relative Weights
HCA will use standard 3M relative weights , instead of
Washington state specific rates.
DRG Exclusions
Transplants, bariatric surgeries, and claims which group to
psychiatric, detox, or rehab DRGs will not pay DRG.
Rate Updates
HCA will update the rates annually, beginning July 2015. Rate
updates will include new wage and education adjustments.
Medical Education
HCA will not change the medical education adjustment in
inpatient rates.
Charge Cap
Payments will be limited to billed charges.
Caesarean delivery
HCA will pay Caesarean deliveries at the corresponding relative
weight(s).
14
System Changes
Outpatient
Relative Weights
HCA will use standard 3M relative weights.
Dental
HCA will pay dental services through EAPG.
EAPG exclusions
Durable Medical Equipment and Physical Therapy &
Rehabilitation will not pay EAPG.
Pediatric Services
HCA will apply an adjustment of 1.35 for EAPG services to
children under the age of 18 at any hospital.
Cancer Drugs
HCA will apply an adjustment of 1.10 for chemotherapy and
pharmacotherapy EAPGs.
Consolidated and
Ancillary EAPGs
HCA will pay at zero on procedures grouped to consolidated
and ancillary EAPGs based on default EAPG settings.
15
Next Steps
• Targeted implementation date of July 1st, 2014
• Hospital specific data requests
• Communication with MCOs
• Update Rules (WAC, SPA, MPG)
• System readiness
16
Questions and Comments
Washington State Hospital
Association
For More Information
Scott Palafox
Dylan Oxford
Health Care Authority
Section Manager
Hospital Finance & Premium Section
(360) 725 1848
ScottPalafox [at] hca.wa [dot] gov
Health Care Authority
Hospital Rates Manager
Hospital Finance & Premium Section
(360) 725 2130
DylanOxford [at] hca.wa [dot] gov
Andrew Busz
Washington State Hospital Association
Policy Development Team
Policy Director, Finance
(206) 216 2533
AndrewB [at] wsha [dot] org
Washington State Hospital
Association