Transcript Coverage Institute Proposal

FY 2012 Hospital Rate Setting
Wisconsin Department of Health Services
Division of Health Care Access and Accountability
Bureau of Fiscal Management
March 22, 2011
1
Agenda
1.
2.
3.
4.
5.
6.
7.
8.
3/22/2011
Rate Setting Timeline
Governor Walker’s 2011-2013 Budget Request
FY 2011-2013 Hospital Budget
Policy Issues
FY 2011 Pay-For-Performance Measures for
Acute Care, Children and Rehab Hospitals
FY 2010 Hospital Assessment
FY 2011 Hospital Assessment
Next Meetings Agenda
2
FY 12 Rate Setting Timeline
March 22nd – Kick Off Meeting

Overview of Governor Walker’s MA Budget Provisions
April 20th



Present DRG Weights
Discuss Policy Decisions
Announce FY 2011 Pay-For-Performance Measures
May 31st


Present State Plan
Present Draft Hospital Rates
June 21st


Present Final Hospital Rates
Announce FY 2012-2013 Pay-For-Performance Earn-Back Measures
July 1st – FY 12 Rates Effective
3/22/2011
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Medical Assistance
20011-13 Biennial Budget:
Medical Assistance
Program Parameters
Key Elements of Medicaid Programs
Eligibility

Eligibility requirements are based on income and age; certain programs having disability-related requirements.

The American Recovery and Reinvestment Act of 2009 (ARRA) and the Patient Protection and Affordable Care
Act of 2010 (ACA) impose requirements on the extent to which states can restrict eligibility standards.

Medicaid programs have mandatory eligibility groups for whom the state must provide health care benefits and
optional groups for whom the state may expand coverage.
Benefits

Eligibility determines the benefit plan of members, which in turn determines benefits received.

Benefits are provided through a wide range of individual practitioners, hospitals, nursing homes, managed care
organizations and local governmental entities such as county public health departments and school districts.

Providers must be certified by the Medical Assistance Program.
Payments

State Medicaid rates and benefit plan utilization establish the maximum fee paid to providers for Medicaid covered
benefits.

The federal medical assistance percentage (FMAP) is the portion of the total payment for covered services
supported by federal matching funds.
Efficient Health Care Purchasing
The department continually seeks to reduce MA costs for providing quality health care by promoting cost-effective
services and maximizing the receipt of federal revenue.
3/22/2011
5
Cost Comparison
by Population Type
Cost Comparison for SFY 2010
by Major Enrollment Categories
100%
Aged
90%
Disabled
80%
BC+ Adults
70%
BC+ Children
60%
50%
40%
30%
20%
10%
0%
Enrollment
3/22/2011
Cost
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Medical Assistance
20011-13 Biennial Budget:
Enrollment & Expenditure Trends
Expenditure
History for Medical Assistance
Over the past five years, expenditures for the Medicaid programs have increased
an average of 11 percent per year, growing from $4.4 billion all funds in fiscal
year 2006 to $6.6 billion in fiscal year 2010.
Medicaid and BadgerCare Plus
($ in millions)
General Program Revenue
Federal Revenue
Program Revenue
Segregated Revenue
Change over prior year
3/22/2011
FY06
1,361
2,706
7
360
4,434
FY07
1,766
2,774
9
127
4,676
FY08
1,756
2,906
45
212
4,919
FY09
1,102
3,879
64
876
5,921
FY10
1,286
4,675
67
635
6,663
5%
5%
20%
13%
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The economic recession that began in December 2007 caused a prolonged spike in MA
enrollment for states across the country.
The federal government relieved enrollment pressure by providing higher federal matching
payments (FMAP) through the American Recovery and Reinvestment Act.
The enhanced FMAP is scheduled to end July 1, 2011, leaving states to fund a greater share
of persistently high enrollment.
December 2007 Recession
1,200,000
March 2001 Recession
BadgerCare Plus
Implementation
1,000,000
Unemployment Rate
600,000
Family Coverage
(MA/BadgerCare+)
Medicaid Enrollment
800,000
400,000
200,000
Aged and Disabled
3/22/2011
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
0
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Medical Assistance Shortfall
Actions in Other States
The scheduled reduction of FMAP payments to states has created fiscal problems
nationally and forced states to contemplate severe reductions to medical assistance
programs.

Arizona has proposed suspending Medicaid coverage for 280,000 people.

New York State is proposing a 2% across-the-board decrease in Medicaid
funding.

Georgia has proposed dropping dental and vision coverage.

California has proposed cutting Medicaid by $1.7 billion, in part by reducing
provider payments by 10%.

Maryland proposes cutting payments to hospitals by $264 million – on top of
$133 million in hospital cuts over the past three years.
3/22/2011
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The Governor’s plan for Medicaid will reduce expenditures by $500 million in the
next biennium compared to the pre-recession trend. For future years, those
savings continue to grow, totaling $1.2 billion all funds by fiscal year 2017.
Bending the Cost Curve Through Medicaid Reform
$10,000.0
$9,541.0
Projected Expenditures Based on Recent
Pre-Recession Trend
(FY 2002-2008 Average Increase)
All Funds (in millions)
$8,000.0
$8,321.7
$6,809.7
$6,000.0
Projected Expenditures Based on Governor's
Recommendation and growth rate of CPI
(CY 2002-2010 Average CPI Increase)
$4,000.0
$3,531.3
$2,000.0
SFY 2002
SFY 2004
SFY 2006
Expenditures Based on Current Inflationary Trend
3/22/2011
SFY 2008
SFY 2010
SFY 2012
SFY 2014
SFY 2016
Expenditures Based on Governor's Request and Growth at the Rate of CPI
11
Governor Walker’s Medical Assistance
20011-13 Biennial Budget Proposal
For Wisconsin, the FY 2011–2013 MA budget will need an additional $1.26 billion
in GPR over the biennium just to replace lost federal funding.
Combined with cost increases, the Medicaid budget would require an additional
$1.8 billion in additional GPR over the biennium, representing 7% of estimated
FY2011-13 general fund tax revenue.
Medicaid Budget Pressures
2011-13 Biennium
Cost Growth
FMAP
$ in Millions (GPR)
Base Funding
2,500
2,000
1,500
1,000
500
FY11
3/22/2011
FY12
FY13
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Eligibility Reform versus
Eligibility Limits

The Patient Protection and Affordable Care Act (PPACA) allows for
states experiencing a budget deficit to lower eligibility limits and
drop coverage for any non-pregnant, non-disabled adults with
family income above 133% FPL.

This means that beginning on July 1, 2011 the federal government
would allow Wisconsin to eliminate coverage for approximately
70,000 enrollees who meet these parameters -- the cost savings of
dropping their coverage is estimated to be $57 million annually.

PPACA does not allow Wisconsin to make other, less severe,
changes to eligibility in order to avoid eliminating coverage for
thousands of adults. If given the flexibility to adjust eligibility
standards, Wisconsin could retain coverage for these adults.
3/22/2011
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Flexibility to Modify Eligibility
Requirements (cont’d)

In lieu of eliminating coverage for many adults, DHS is preparing a
package of reasonable, targeted eligibility changes to ensure that
program resources are targeted to those most in need who have no
other means to access health care. These include:

Reviewing the standards for state residence;

Revising retroactive eligibility and eligibility grace period policies;
and

Enforcing current policies to improve the accuracy of eligibility
determinations.
3/22/2011
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Flexibility to Modify Eligibility
Requirements

To achieve significant savings in the MA program, Wisconsin needs
authority from the federal government to waive certain federal
maintenance of effort (MOE) requirements contained in PPACA.

PPACA essentially freezes state MA eligibility standards to what
was in effect on March 23, 2010; thus, Wisconsin is prohibited from
using many of the cost containment tools that would otherwise be
available.

DHS is seeking a waiver for the MOE restrictions from the federal
government.

If the federal waiver is not approved by January 1, 2012, DHS will
be forced to eliminate coverage for non-pregnant, non-disabled
adults within family incomes above 133% FPL as of July 1, 2012.
3/22/2011
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Modifying or Eliminating
Optional Benefits

There are mandatory and optional services that all states are
required to or have the option to provide.

Optional benefits include, but are not limited to: prescription drugs,
vision services, dental services & dentures, clinic services,
chiropractic services, therapies, durable medical equipment and
supplies, respiratory care for vent-dependent members and
community-based long-term care services such as personal care.

States have the flexibility to ask the federal government to expand
or reduce the optional benefits they provide, and some states are
eliminating optional benefits in order to reduce their program costs.

At this time, DHS is not pursuing the elimination of any optional
services.
3/22/2011
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Reductions in
Provider Reimbursement

MA reimburses providers through rates set in the department’s
maximum fee schedules depending on the services provided.

A number of states have imposed either targeted rate cuts for
specific provider types or broad across-the-board reduction applied
to many if not all provider types.

Another option is better alignment of Wisconsin’s rates to the rates
paid through the federal Medicare program.
3/22/2011
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Realigning Provider Incentives to
Achieve Better Outcomes

The department will review reimbursement policies to better realign
provider incentives with improving care outcomes.

The goal of this effort will be to ensure the appropriate care is
provided in the appropriate setting at the appropriate time.
3/22/2011
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Aligning Coverage with Other
Private Payers’ Policies
Reducing the Crowd-Out of Other Health Insurance:



MA has traditionally been the payor of last resort. However, recent
program expansions have loosened these requirements, allowing
individuals to choose between coverage through MA over coverage
available through other options.
For BC+, this will mean that young adults eligible for coverage on
their parents policies will need to sign up for that coverage. All
Funds Savings Estimate: FY 12: $3.25 million FY 13: $3.26 million
For SeniorCare, it will require seniors eligible for Medicare Part D to
participate in that program in order to be eligible for SeniorCare.
The Program will still be available to interested seniors and can
provide wrap-around benefits to augment coverage available under
their Part D plans. All Funds Savings Estimate: FY 12: $18.3 million
FY 13: $36.6 million
3/22/2011
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Improving Care Coordination

The department can achieve both fiscal savings and improved
quality of care through the increased use of care coordination.

The department will develop models of service delivery, including
health homes, to more effectively manage the care of recipients.

The department will also implement systems to coordinate care
across Medicaid and Medicare for individuals eligible for both
programs.
3/22/2011
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Changes in Family Care
Enrollment

Family Care began as a 5-county pilot program in 2000 that
began to rapidly expand beginning in the 2007-09 biennium.

At the end of the 2009-11 biennium, Family Care will be available
in 57 of Wisconsin’s 72 counties, covering 79% of the state’s
adult population.

Amidst this broad expansion there has been no adequate review
of the effectiveness of the program in meeting the care needs of
the clients and providing services in a cost effective manner.

The non-partisan Legislative Audit Bureau is now conducting just
such a comprehensive review. Until that review is complete the
department will defer all further expansion of the program.
3/22/2011
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Administration of
Medical Assistance

Determining eligibility and providing on-going case maintenance
for Wisconsin’s income maintenance (IM) programs varies by
county and eligibility group. Levels of performance and customer
service vary from county to county.

The Governor proposes consolidating these functions, creating a
state-administered IM service delivery model, consolidating all
administrative functions and using state-workers for oversight
and public worker mandated functions. Goal is to make
administration more cost effective and work with community
partners for outreach and better customer service.

These changes will improve the accuracy and timeliness of
eligibility determinations, while reducing the total IM and
decreasing the number of income maintenance staff.
3/22/2011
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Health Care Efficiency Measures

DHS will need to implement a wide array of health care efficiency
measures during the next biennium to contain costs while
maintaining and improving quality.

To identify and develop these efficiency measures, DHS will seek
input from providers and advocates.

These measures will include a review of everything from improving
administrative processing procedures to the provision of medical
services and ways to strengthen efforts to reduce recipient and
provider fraud and abuse.
3/22/2011
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MA Biennial Base Reestimate
General Purpose Revenue Funding
DHS September Request:
$0.5 billion
With Changes to Request:
$1.8 billion
Increased Caseload
Decreased FMAP Assumption
Froze Hospital Assessment
Deleted Rate Reform 3.0
DOA Governor’s Request:
`
3/22/2011
$1.3 billion
Eligibility and Efficiency Reforms and/or Reductions
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Governor Walker’s 2011-2013
Hospital Budget Request
*Final budget numbers will be based on the
budget which is subject to legislative changes
3/22/2011
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2011-2013 Hospital Budget
Fee For Service
Total Hospital Budget
3/22/2011
FY 2011
FY 2012
$727,950,287
$696,120,268
FY 2013
$667,895,311
Variance
As a %
-4%
27
Hospital Budget Components
3/22/2011
1.
Caseload Assumption
2.
Intensity Assumption
3.
Assessment Payments
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Hospital Caseload Assumptions
(Annualized Percent Change)
Badger Care Plus Kids
Badger Care Plus Adults
Pregnant Women
Aged Population
Disabled Population
3/22/2011
9/15/2010
DHS Req.
-6.0%
-9.0%
-2.0%
-2.0%
-1.6%
3/1/2011
DOA
FY 12: 0% FY 13: -1%
FY 12: -4.5 % FY 13: -3%
1.0%
-2.0%
-1.6%
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Hospital Intensity
Assumptions
Hospital Rate Intensity
9/15/2010
DHS
2%
3/1/2011
DOA
0%

The Governor’s Budget Request changed the Hospital
Intensity from 2% to 0% with an additional 1% withheld.

The 1% withheld will be available for Hospitals to Earnback by performing well on several Pay-for-Performance
Measures.
3/22/2011
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Intensity Pay-For-Performance
Earnback Provision
Hospitals will be able to earn back 1% of the intensity
2012 and 2013.
Source to Measure Data: FY 2009-2011 Medicaid Claims Data
The department is currently reviewing the data and Medicare
Performance Measures to determine which measures will be chosen.
There may be different measures for different types of hospitals.
Hospitals will be given a chance to review data for completeness.
3/22/2011
31
Hospital P4P Earn-Back Provision
Performance Data

Historical Medicaid Claims Data
Possible Performance Measures
1.
2.
3.
4.
Hospital Readmissions within 30 Days
Appropriate ER Usage
Maternity Indicators (Discharge Follow-up)
Mental Health Indicators
Hold-Back Amount

3/22/2011
1% of Hospital Rates will be available to win back
under this provision.
32
Medicare Part A Cutback



The Governor’s Budget assumes the Medicaid
Program will begin to cutback on Medicare Part A
claims.
This proposal will limit what Medicaid pays Hospitals
for Medicare Part A Coinsurance.
The All Funds cost savings in the Governor’s Budget
Request :
FY 2012
$15.2 million
3/22/2011
FY 2013
$21.6 million
33
Health Care Efficiency Measures

DHS will need to implement a wide array of health care efficiency
measures during the next biennium to contain costs while
maintaining and improving quality.

To identify and develop these efficiency measures, DHS will
seek input from providers and advocates.

These measures will include a review of everything from improving
administrative processing procedures to the provision of medical
services and ways to strengthen efforts to reduce recipient and
provider fraud and abuse.
3/22/2011
34
FY 2011-2013 Hospital
Assessment Budget Assumptions
Hospital Tax
Hospital Access Payments
9/15/2010
DHS
$476 million
$772 million
3/1/2011
DOA
$414 million
$672 million

The Governor’s Budget Request holds the Hospital
Assessment Amounts steady at the FY 2011 levels.

The tax percentage will likely decrease for FY 12 and
FY 13.
3/22/2011
35
2012 Policy Issues
3/22/2011
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FY 2012 Policy Issues





3/22/2011
Modify Current Trim Points.
Review how budget is set for Critical Access
Hospitals vs. Acute Care Hospitals.
Move to Ambulatory Payment Classification for
Outpatient Rates starting 1/1/2012.
Pay Labs on Max Fee Schedule.
Other Ideas?
37
2011 Pay-for Performance
3/22/2011
38
FY 2011 Pay-For-Performance Measures
for Acute Care, Children’s and Rehab
Hospitals




For FY 2011, $5,000,000 has been allocated
for Pay-For-Performance Measures
Payment will be based on CheckPoint Data
DHS will work with WHA to determine
appropriate measures.
The methodology will focus on Performance
rather than Reporting.
3/22/2011
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Hospital Assessment
3/22/2011
40
FY 2010 Hospital Assessment




The department submitted the FY 2010
Hospital Assessment Report to the
Legislature in January.
The department shut off access payments for
2010 claims on February 11, 2011.
Report is available as handout.
If you have any questions regarding the
report, please contact Krista Willing by email
at [email protected] or (608) 266-2469.
3/22/2011
41
FY 2011 Hospital Assessment


The department will provide a projection of
the FY 2011 Hospital Assessment at the April
Rate Setting Meeting.
At least partial HMO Payments will be made
for both May and June this year.
3/22/2011
42
Next Meeting Agenda




Present DRG Weights
Discuss Policy Decisions
Announce FY 2011 Pay-For-Performance
Measures
FY 2011 Hospital Assessment Update
April 20th 9:00am-12:00pm
1 West Wilson Street
CR 751
3/22/2011
43