Transcript MEDICARE WAGE INDEX - Western Michigan University

MHA Update
Healthcare Financial Management
Association
September 2012
Vickie R. Kunz
Senior Director
Health Finance
1
Medicare
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Inpatient Prospective Payment System (IPPS)
Post Acute Care Updates
Outpatient Therapy Caps
Proposed Rules
– Outpatient Prospective Payment System (OPPS)
– Home Health (HH)
• Medicare Advantage
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FY 2013 Medicare Rules
• For the first time, hospital financial
impact of readmissions reduction
program and inpatient value based
purchasing program (VBP) effective
Oct. 1.
• Due to opposition, CMS modified
proposed negative coding adjustment
from negative 2.7% to 1.9%.
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IPPS RULE SUMMARY
System Component
Change
Update Factor
(net of all rate
adjustments)
+2.8
Wage Index
No major policy changes; report to Congress mentioned
VBP
-1.0% with chance to earn back some, all, or more of program contribution
and new rules for 2015 and 2016 programs
Readmissions
Remain whole or subject to up to - 1.0%
GME/DSH
Technical changes/clarifications for counting beds, timely filing, and ACA
provisions for redistributing unused/closed hospital FTE slots
Low-Volume Adjustment
ACA changes expire, program reverts to more restrictive rules
Low-Cost County AddOn
ACA authorized payments to select hospitals expire
MDH/SCH Special Rural
Status
MDH program expires; SCH status could be terminated retroactively in certain
circumstances
IQR Program
55 Measures maintained for FFY 2014; 72 to 59 for FFY 2015 determinations.
60 for FFY 2016. HACs removed from IQR
Outlier Payments
2.5% threshold decrease from $22,385 to $21,821.
HAC DRG Payment
Policy
2 new categories; 2 new diagnoses for current category.
MS-DRGs
• No major changes made for FY 2013.
• CMS is maintaining current 751 MSDRGs.
• 85% of MS-DRGs will have weight
change of +/- 5%.
• See Table 5 in final rule for Excel file
containing relative weights.
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Impact on Top MS-DRGs
MS-DRG Description
470
871
292
Charge
Major Joint Replace/Reattachment ↑0.4%
Lower Extremities w/o CC/MCC
Septicemia w/o MV96+ hours with ↓ 1.5%
MCC
Heart failure & shock with CC
↓ 1.8%
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Cost Outlier Threshold
• Final 2012 threshold:
• Final 2013 threshold:
$22,385
$21, 821
• Represents a 2.5% decrease in the cost
outlier threshold, resulting in more cases
potentially qualifying for outlier payments.
• Threshold is adjusted annually based on
CMS’ projections for total outlier payments to
ensure that total outliers payments equal 5.1
percent of total IPPS payments.
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DSH & IME Payments
• Currently, services provided to a labor & delivery
patient are considered generally payable under the
IPPS, but beds where the services are provided are
excluded from available IPPS bed counts.
• Modification - CMS believes if a patient day is
counted since the services are generally payable
under IPPS, the bed should be considered available
and included in available bed count for IPPS.
• Will impact Medicare DSH & IME payment
adjustment calculations for cost reporting periods
beginning on/after Oct. 1, 2012.
• Will reduce IME reimbursement.
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Expiring IPPS Provisions
• Absent federal legislation, these expire
Sept. 30, 2012:
– Low volume adjustment
– Low-cost county add-on
– Medicare Dependent Hospital Status
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Wage Index
• No major changes for calculating the wage
indexes, rural floor budget neutrality or
administrative reclassification rules.
• FY 2013 index uses data from CRs beginning
during FY 2009 and occupational mix data
from the 2010 survey.
• National FY 2013 occupational-mix adjusted
average hourly wage: $37.4608.
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Wage Index Timeline
• Oct. 1, 2012 – Effective date of FY 2013 AWI
• Early Oct. 2012 – Release of PUF for FY 2014 AWI
• Oct. 2012 – MHA Wage Index Workshop (webinar) –
Tentatively scheduled for Oct. 24 am.
• Early Dec. 2012 – Deadline for change requests for
FY 2014 AWI.
• FY 2014 AWI will use data from cost report FYEs:
– Sept. 2010 – Aug. 2011
• Sep 30, 2010
Dec 31, 2010
Mar 31, 2011
June 30, 2011
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Wage Index Reform
• April 2012 – HHS Secretary issued Report to Congress as
mandated by the ACA.
• Proposal for a commuting based wage index methodology.
• Provider specific wage index which accounts for a hospital’s
cost of labor using commuting patterns, rather than grouping
hospitals by CBSAs.
– Commuting patterns represent where hospital employees reside.
– These areas would likely be group by ZIP codes or Census Tracts.
• Report did not recommend source of AHW data which could be:
– Medicare cost reports and occupational mix surveys
– BLS Data
– Other
• This is one of many reform proposals.
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Readmissions Reduction Program
• Established by the ACA and designed to
reduce Medicare IPPS payments for acute
care hospitals with higher than expected riskadjusted readmission rates related to certain
conditions.
– CAHs are excluded.
• Medicare payment reduction of up to 1
percent in FY 2013, increasing to 3 percent
in FY 2015.
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Cont., Readmissions Reduction
• CMS using 3 years of data to calculate readmission
rates.
– July 1, 2008 – June 30, 2011
• Defines a readmission as a hospital admission within
30 days from the date of discharge from the index
hospital (the initial hospitalization hospital)
– No adjustment for planned or unrelated readmissions.
• Hospitals subject to payment penalty for all IPPS
discharges if readmission rate higher than national
average for 3 medical conditions.
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Cont., Readmissions Reduction
• For FY 2013, CMS is using the following
measures, currently included in the hospital
IQR program and collected from Medicare
FFS claims data:
• Acute Myocardial Infarction
• Heart Failure
• Pneumonia
• Hospitals can either maintain full payment
levels or be subject to a hospital-specific
penalty of up to 1.0%.
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Cont., Readmissions
• Unlike VBP, readmissions reduction
program is not budget-neutral.
– Nationally, is expected to cut IPPS
payments by $300 million in FY 2013.
– Expected to reduce Michigan IPPS
payments to 55 hospitals by approximately
$14 million in FY 2013.
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• Medicare Value Based Purchasing Program
• Program is self-funded by hospital “contribution”
• Contribution based on Medicare FFS payment*
• 1.0% reduction in FY 2013
• Reduction increased by 0.25% each year
• 2.0% reduction for FY 2017 and beyond
• VBP performance determines P4P amount
• Budget-neutral
• Redistributive
• Best performers win, others break even or lose
• VBP payments are netted against contributions
* Payment reductions exclude IME, DSH low-volume hospitals and outliers.
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Medicare VBP Evolution
Process of Care
Patient Satisfaction
Patient Outcomes
Spending per Beneficiary
2013
2014
2015
70%
30%
45%
30%
20%
30%
25%
30%
20%
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Readmissions & VBP Adjustments
• CMS will calculate using base operating
DRG payment amounts which would
reflect the wage-adjusted DRG payment
plus new technology add-on payment.
– excludes DSH, IME, GME, outliers
• CMS not ready to adjust claims for VBP
performance effective Oct 1, 2012; will
adjust beginning Jan. 1, 2013.
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IPPS Final Rule Impact
• Hospital-specific impact analysis distributed
via email to CEOs, CFOs and RDs Aug. 16.
• Including detailed summary of final rule.
• Distribution included Directors of Patient Safety & Quality
Improvement.
• Impact report reflects readmissions and VBP factors.
–
VBP factors not final at this time as the CMS continues to review the
data.
• Hospital-specific readmissions analyses
distributed Sept. 7 via email to CEOs, CFOs,
and Directors of Patient Safety, Quality
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Improvement and Reimbursement.
VBP Program Analyses
• Sept. 5 - Distributed to PPS hospitals
• Sept. 12 – Distributed to CAHs and
other excluded hospitals
• Included CEO/CFO/ Directors of Patient
Safety, Quality Improvement and
Reimbursement.
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FY 2013 IPPS Final Rule
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IPPS Impact Report – Pg 2
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2% Sequestration Cut
• No guidance issued regarding how
implementation of the Medicare FFS 2% acrossthe-board sequestration cut
– effective 2013 – 2021
– mandated by the Budget Control Act of 2011.
• Michigan annual impact projected at $144M.
– IPPS payments reduced $95 million
– OPPS payments reduced $34 million
• Takes effect early 2013, unless Congress takes
other action.
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Post Acute Care Updates
• Inpatient Rehab – Facility-specific
impact reports distributed Aug. 20.
Statewide $1.6 million, 0.9% increase
• Inpatient Psych – Facility-specific
impact reports distributed Sept. 19.
• Statewide $2 million, 1.1% increase
• Skilled Nursing Facility – distributed
Sept. 18.
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OPPS & Home Health (HH)
• Proposed rules released early July.
• See Aug. 27 Monday Report for MHA
comment letters.
• Final rules expected by Nov. 1.
• Effective Jan. 1, 2013.
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Outpatient Therapy Caps
• Will apply to outpatient therapy services
provided by hospital outpatient
departments Oct. 1 – Dec. 31, 2012.
• All Medicare outpatient therapy services
provided in 2012 are counted in
determining this limit, regardless of
where provided.
• See MHA Advisory Bulletin # 1329,
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dated Sept. 10.
Medicare Advantage Plans
• As of July 2012, 30 plans in Michigan, with 447,000 or
approximately 26% of Michigan’s 1.7 million Medicare beneficiaries
enrolled.
– Up to 20 plans in some counties.
• Review MA payment rate for all plans.
• CAH entitled to Medicare cost reimbursement.
• Each MA plan may determine own utilization model and is not
required to maintain electronic transactions.
• Many MA have instituted “RAC-like” utilization programs.
• Matrix of MA plans by county available at MHA website – updated
quarterly, with MHA Monday Report article.
– See Aug. 13 Monday Report for latest info
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Continued, MA Plans
• Unlike Medicare FFS, each MA plan may
determine its own utilization model and is not
required to maintain uniform electronic
payment processes with hospitals.
• As Medicare enrollees continue to select MA
plans, the variety of plans and payment
processes may result in increased utilization
scrutiny and administrative effort at hospitals.
• MA plans may conduct their own RAC-like
audits.
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Medicare 10-Year Revenue Forecast
• Distributed to CEOs/CFOs/Directors of
Reimbursement and Government
Relations on Feb. 7.
• Comprehensive analysis of Medicare
revenue and payment reductions for
2012 – 2021, including:
– Affordable Care Act-authorized changes
– Budget Control changes (Sequestration)
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Michigan MAC Transition
• Most hospitals transitioned from fiscal intermediary
National Government Services (NGS) for Pt A and
Wisconsin Physicians Services (WPS) as Pt B
carrier.
• MAC will perform Medicare FFS claims processing,
enrollment, education, provider audits.
• Audit Contact: Paul Hula, Senior Manager Regional
Audit
• Phone: (402) 995-0382 Email: [email protected]
• See WPS website for more contacts.
– www.wpsmedicare.com
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Medicaid Issues
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FY 2013 Budget
• Supplemental appropriation restored $8.8
million in FY 2012 GME payments.
– $163 million GME Pools
• $100 million HMO & $63 Million FFS
– Additional funds distributed upon CMS approval.
• MHA and hospital advocacy efforts resulted in
restoration of $8.8 million in GME funding and
$36 million pool for hospitals that provide
service to those in rural areas.
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OB Services
• Budget included 20% increase in
physician rate payments for certain
obstetrical services beginning Oct. 1.
– Both Medicaid FFS & HMO
• MSA final policy released Aug. 31
• Includes listing of eligible procedure codes
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Primary Care Services
• ACA mandates that physicians be paid
at Medicare rates rather than usual
Medicaid rates for certain primary care
services beginning Jan. 1, 2013.
• Higher rates will apply to certain primary
care services provided by physicians
designated as family medicine, general
internal medicine or pediatric medicine.35
Cont., Primary Care Services
• Beginning Oct. 1, Medicaid-enrolled
physicians should update their specialty
designation in CHAMPS.
• MSA final policy released Aug. 31.
• Certain services paid at Medicare rates
in 2013 and 2014.
• or at 2009 rate if higher
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Urgent Care Centers
• MSA released final policy indicating that
providers may enroll to participate in
Medicaid as an Urgent Care Center (UCC).
• Enrollment starts Oct. 1, for dates of service
Jan. 1, 2012 and after.
• Must be open seven days a week, and offer
evening, weekend and holiday hours.
• Must accept walk-in patients of all ages
during hours open to see patients.
• Must communicate with patient’s PCP.
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Statewide Rate Consideration
• Key changes from current MSA rate
development:
– Use 1 year of cost report data to calculate
hospital cost ratio rather than 2 years.
– Use most recent Medicare wage index
rather than blending two years.
• Includes recognition of approved Medicare
geographic reclassifications.
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Cont., Statewide Rate
• MSA released a revised hospital impact
analysis on June 28.
• See MHA Advisory Bulletin 1326
regarding MSA’s proposed move to a
statewide DRG rate.
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CSHCS Beneficiaries
• Enrollment into HMOs for children
dually eligible for Title V and XIX.
• Change effective Oct. 1, with enrollment
effective Nov. 1, 2012.
• Currently, hospital payments for this
population of 20,000 children are
approximately $135 million annually.
– How will MSA handle population shift for
MACI & HRA purposes?
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DSH Audits
• Beginning with audits of FY 2011 DSH
ceilings, hospitals subject to DSH
payment recoveries if audits indicate
DSH payments exceeded their actual
DSH ceilings.
• Prior year audit reports available on
MSA’s website.
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Proposed DSH Policy
• MSA has not finalized policy but
proposes multiple-step DSH process:
– Initial DSH calculation
– Interim DSH settlement
– Final DSH audit-related redistribution
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Initial DSH Calculation
• MSA would calculate near the end of the state FY
using data from hospital cost reports ending during
the second previous state FY.
• Hospitals would review MSA’s initial calculation.
– Cost reports for FYEs 2010 will be used for 2012
initial calculations.
– If hospital declines DSH during this step, the
decision is irrevocable and the hospital is not
eligible for any DSH for that FY.
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Interim DSH Settlement
• MSA would recalculate DSH ceilings,
payments and Medicaid utilization rates
using new cost report data.
• MSA would recover and reallocate
funds to other eligible hospitals for that
specific pool.
– During 2013, the MSA would use data from
cost reports ending during calendar year
2012 to complete this step.
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Final DSH Settlement
• Final DSH audit would occur three
years after state FY.
• Would recover and reallocate funds for
public hospital DSH to remaining
eligible hospitals for that pool then funds
recovered from other DSH pools plus
unspent funds recouped would be
reallocated to eligible hospitals.
– DSH audits for state FY 2012 will be done 45
FY 2012 DSH Payments
• Payments from $45 million regular DSH
pool and $51 million tax-funded DSH
pool to be distributed in September.
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Medicaid Interim Payments
• MSA evaluating the continuation of
interim payments (MIP) based on
recommendation from a recent
Michigan auditor general report.
• MSA recently convened a smaller
workgroup to obtain input and will
complete its review in next few months.
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Integration of Individuals Dually Eligible for
Medicare and Medicaid
•
•
•
•
•
Michigan one of 15 states.
Would impact 200,000 individuals
CMS approval is required
Implementation target: Jan – June 2014.
Draft plan submitted to CMS includes two contracts
which would coordinate care:
– Existing prepaid inpatient health plans (PIHPs) for
behavioral health services
– Integrated care organizations (ICOs) for physical
health services.
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GME & HRA Payments
• Sept GME Payments
• Sept HRA Payments
• Sept HRA Tax Due
-
Sep 24
Oct 5
Oct 19
• Q4 Psych HRA Pmts
• Q4 Psych Tax Due
-
Oct 4
Oct 18
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Historical Info - QAAPs
• See MHA Advisory Bulletin # 1303 in
Feb. 18, 2011 weekly mailing.
– Provides description of tax base and
revenue distribution for each of the 4
QAAPS
• FFS, HMO, DSH, Psych
50
AHA Survey Results
• Annual MHA Advisory Bulletin that
compares 2010 AHA Survey results for
Michigan hospitals to those nationally.
• Includes margins, ED visits, OP visits,
IP admissions, days, births, ALOS, etc.
• See MHA Advisory Bulletin # 1320,
included in 04/16/12 weekly mailing.
• Powerpoint and Excel files available.
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Michigan Hospital Margins
(2001 – 2010)
8%
7.2%
6%
4.9%
5.2%
4.9%
4.9%
4%
3.4%
2.4%
2.2%
2.8%
1.8%
2%
3.0%
1.9%
2.4%
1.4%
1.6%
1.9%
1.7%
0.8%
0%
-0.3%
-2%
-1.8%
-1.5%
-1.6%
-2.6%
-4%
2.8%
-3.3%
2001
-3.0%
2002
-1.6%
-2.8%
-2.6%
-3.2%
2003
2004
Patient Margin
Source: AHA Annual Survey
2005
2006
2007
Operating Margin
2008
2009
2010
Total Margin
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BCBSM Regulatory Overhaul Proposed
• Governor Snyder’s proposal announced Sept. 11.
• In 2014, BCBSM would transition from regulation
under PA 350 to become a nonprofit mutual
insurance company regulated under the insurance
code like all other Michigan health insurers.
– 4.4 million policy holders would own BCBSM
• BCBSM would be required to contribute $1.5 billion
over 18 years to a new nonprofit entity whose
purpose is to fund initiatives to foster healthier
lifestyles, provide better access and improve public
health.
Cont., Proposed BCBSM Changes
• It’s estimated that BCBSM would pay
approximately $100 million annually in
business and property taxes to state and
local government.
• Protect senior citizens by freezing
Medigap coverage rates for 4 years.
• Subject to approval by Michigan legislature
and BCBSM board.
• MHA evaluating changes and will
communicate with members.
MHA HQ Building Significantly Damaged; Staff
Displaced
• On Friday, Aug. 10, the MHA headquarters building
sustained a major structural event that resulted in a
partial roof collapse and flooding of the premises.
Fortunately, no one was injured in the incident. As
the damage has made the headquarters building
inaccessible, MHA staff whose offices are in the
headquarters building have been displaced and
are working remotely as efforts are under way to
relocate them.
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MHA Resources
• Monday Report is available FREE to anyone and is distributed
via email each Monday morning.
– Go to website and select “Newsroom”, then Monday Report
• MHA Monday Report – electronic publication issued weekly
• Request password if you don’t have one.
– Email Donna Conklin at [email protected] to obtain MHA
member ID number
• Advisory Bulletins – Extensive communications available only to
MHA members, as needed. (Require password to obtain from
website).
• Hospital specific mailings as needed for various impact
analyses, etc.
• Periodic member forums
• See mha.org for other resources.
• Monthly Financial Survey provides free benchmarking of
financial and utilization statistics.
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???Questions???
Vickie Kunz, Senior Director, Health Finance
Michigan Health & Hospital Association
110 West Michigan Avenue, Suite 1200
Lansing, MI 48933
Phone: (517) 703-8608
Fax: (517) 703-8637
email: [email protected]
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Standardized Operating Amounts
For Hospitals with an Area Wage Index
Greater Than 1.0
(68.8 Percent Labor Share / 31.2 Percent Non-Labor Share)
Full Update
LaborRelated
NonlaborRelated
Reduced Update
LaborRelated
$3,679.95 $1,668.81 $3,607.65
NonlaborRelated
$1,636.02
58
Standardized Operating Amounts, cont’d.
For Hospitals with an Area Wage Index
Less Than or Equal to 1.0
(62.0 Percent Labor Share / 38.0 Percent Non-Labor Share)
Full Update
LaborRelated
NonlaborRelated
Reduced Update
LaborRelated
NonlaborRelated
$3,316.23 $2,032.53 $3,251.08 $1,992.59
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Capital Payment Update
• Proposed federal capital rate of $425.49, a 1.0
percent increase from the current rate of $421.42.
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IPPS FY2013
Insert DataGen Rule Summary Slide here – see pg 15
61
Inpatient Rehab Facilities (IRF)
• Update notice released July 30.
• FY 2013 IRF standard rate $14,343
– Up from $14,076
• Net 1.9% marketbasket increase after
↑Plus 2.6 percent marketbasket update
↓Minus 0.7 percentage point
productivity adjustment
↓Minus 0.1 percentage point ACA62
mandated adjustment
Other Changes - IRFs
• LIP, Teaching and Rural
– CMS maintained the current formula for all
of these adjustments.
• Outlier payments targeted at 3% of total
IRF PPS payments.
• 1.8% decrease in outlier threshold from
$10,660 to $10,466.
• FY 2014 – first year for payment
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implications of IRF QRP.
Medicare IRF 2013
Insert DataGen Rule Summary Slide here – see pg 15
64
Cont., IRF Update Notice
• MHA distributed facility-specific impact
reports Aug. 20 to CEOs/CFOs and
Directors of Reimbursement.
65
Inpatient Psych Facility (IPF)
• Net 2% marketbasket increase after:
↑ Plus 2.7 percent marketbasket update
↓Minus 0.7 percentage point productivity adjustment
↓Minus 0.1 percentage point ACA-mandated
adjustment
66
Other Changes - IPF
• Decrease in labor share from 70.317%
to 69.981%.
• Continuation of facility adjustments for
ED, teaching and rural.
• Continuation of patient adjustments for
age, comorbidities, MS-DRGs.
• 58% increase in outlier threshold from
$7,340 to $11,600.
– IPF outlier pool target is 2%.
67
IPF FY2013
Inpatient Psychiatric Facility Rates
68
Skilled Nursing Facility Update
• Update released Aug. 2.
• Net 1.8% increase in per diem rates
after 2.5% MB update is reduced for 0.7
percentage point ACA-mandated
productivity adjustment.
• Continuation of AIDs adjustment –
128%.
• Decrease in labor share from 68.693%
69
to 68.383%.
Continued, SNF
• Maintain current RUGS-IV
• CMS raised concern over binding
arbitration agreements and stated they
will monitor this issue closely and take
action consistent with current rules and
guidelines.
– Under these agreements, patients
relinquish their right to sue the nursing
home through the judicial process.
70
LTCH Final Rule
• Current FY 2012 rate: $40,222.05
• Due to phase-in of budget neutrality cut of 3.75%,
two standard payment rates proposed for FY 2013
– $40,915.95 for Oct 1 – Dec 28 Discharges
– $40,397.96 for Dec 29 – Sept 30 Discharges
• “25% Rule” - CMS adopted its proposal with some
modification to extend the existing moratoria for one
year.
• Modified proposal to account for LTCHs with cost
reporting periods beginning between July 1 and Oct.
1, 2012.
– MHA will distribute impact analysis in next few weeks.
71
Continued, LTCH Final Rule
• CMS adopted an LTCH-specific
marketbasket value beginning with FY
2013.
• Net 1.8% marketbasket increase after:
↑ Plus 2.6 percent marketbasket increase
↓Minus 0.7 percentage point productivity adjustment
↓Minus 0.1 percentage point ACA-mandated adjustment
72
Continued, LTCH
• LTCHs will use the pre-rural floor and
pre-reclassified hospital wage index.
• CMS reduced the labor-related share of
the LTCH standard rate from 70.199%
to 63.096%.
– Will increase payments to LTCHs with a
wage index less than 1.0 and decrease
payments to those with a wage index
higher than 1.0.
73
Continued, LTCHs
• No major changes to the MS-LTC-DRG
weights.
– No new MS-DRGs or deletions
• For LTCH PPS payments, CMS targets
paying 8% of total payments as outlier
payments.
• 14% decrease in outlier threshold from
$17,931 to $15,408.
– Target: 8% Outlier Pool for LTCHPPS
74
LTCHQR Program
• Beginning with FY 2014 payments,
LTCHs must submit data on 3 quality
measures being collected in FY 2012 or
be subject to 2 percentage point
penalty.
• Changes for FY 2015 & 2016 payments:
– No expansion from current 3 measures for
FY 2015.
– Add 2 new measures for FY 2016.
75