Transcript Slide 1

CPAs & ADVISORS
experience perspective //
LEGISLATIVE & REGULATORY UPDATE FOR HOSPITALS & HEALTH SYSTEMS
Andy Williams, Senior Manager
Agenda
Federal Fiscal Year (FFY) 2014 Inpatient
PPS Final Rule (posted 8/2/2013)
CMS Disproportionate Share Hospital
(DSH) Formula
Improving your DSH % through SSI
2014 Outpatient PPS Proposed Rule
(posted 7/19/2013)
Other Regulatory & Legislative Issues
2
Proposed Payment Update
Market Basket Update
2.5%
Productivity Cut
(0.5)
ACA* mandate cut
(0.3)
Documentation & Coding Cut (ATRA) (0.8)
Medical Review Policy Change
(0.2)
Net Change
0.7%
* Patient Protection and Affordable Care Act (ACA) of 2010, HR
3590 & HR 4872
3
IPPS Base Operating Payment
FY 2014 FR Tables 1A-1E
TABLE 1A. NATIONAL ADJUSTED OPERATING
STANDARDIZED AMOUNTS; LABOR/NONLABOR (69.6
PERCENT LABOR SHARE/30.4 PERCENT NONLABOR SHARE
IF WAGE INDEX GREATER THAN 1)
Full Update (1.7 Percent)
NonlaborLabor-related
related
$3,737.71
$1,632.57
Reduced Update (-0.3
Percent)
LaborNonlaborrelated
related
$3,664.21
$1,600.46
TABLE 1B. NATIONAL ADJUSTED OPERATING
STANDARDIZED AMOUNTS, LABOR/NONLABOR (62
PERCENT LABOR SHARE/38 PERCENT NONLABOR SHARE
IF WAGE INDEX LESS THAN OR EQUAL TO 1)
Full Update (1.7 Percent)
NonlaborLabor-related
related
$3,329.57
$2,040.71
4
Reduced Update (-0.3
Percent)
LaborNonlaborrelated
related
$3,264.10
$2,000.57
IPPS Base Operating Payment
National Capital Rate = $429.31
Outlier threshold is $21,748
Cancer & children’s Target Rate update is 2.5%
5
Critical Access Hospital
Revised Conditions of Participation (CoP)
requiring that a CAH must provide acute care
inpatient services
Approximately 13 CAHs nationwide had no
inpatient acute care services
6
ACA Productivity Cuts
Starting 10/1/11, annual Medicare inflation
adjustment is reduced by productivity
adjustment “equal to the 10-year moving
average of changes in annual economy-wide
private nonfarm business multi-factor
productivity”
10/1/11 cut = 1.0% (vs. 3.0% market basket)
10/1/12 cut = 0.7% (vs. 2.6% MB)
10/1/13 cut = 0.5% (vs. 2.5% MB)
7
Other Fixed ACA Cuts
8
4/1/10 = 0.25%
10/1/14 = 0.2%
10/1/10 = 0.25%
10/1/15 = 0.2%
10/1/11 = 0.1%
10/1/16 = 0.75%
10/1/12 = 0.1%
10/1/17 = 0.75%
10/1/13 = 0.3%
10/1/18 = 0.75%
Cumulative Impact of ACA Cuts
Productivity cuts have no sunset date & have
cumulative impact on hospitals
Example, household budget:
Salary, after taxes = $30,000
Salary grows 2% per year
Expenses = $29,000
Expenses grow 3% per year
$1,000 “margin” in Year 1
What happens by Year 10?
9
Cumulative Impact of ACA Cuts
Year 1
Year 4
Year 7
Year 10
10
Income
Expenses
Margin
Cumulative
$30,000
31,836
33,785
35,853
$29,000
31,689
34,628
37,838
$1,000
147
(843)
(1,986)
$1,000
2,323
817
(3,961)
Cumulative Impact of ACA Cuts
35
30
25
20
Costs (+3%)
15
Pmts (+2%)
10
5
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
11
Documentation & Coding History
FY 2008 adopted MS-DRGs & was to be budget
neutral per legislation
CMS estimated prospective & cumulative cuts of
4.8% (FY 08 1.2%; FY 09 1.8% & FY10 1.8%)
Congress intervened and mandated in FY 08 a
0.6% and in FY 09 a 0.9% cut and a retroactive
analysis and recoupment by CMS of the impact
CMS’s analysis determined the D&C impact for FY’s
08 & 09 was 5.4% (5.4% - 0.6% in FY08 – 0.9% in
FY09 = 3.9% to recoup); FY 12 was 2.0% and FY 13
1.9% these are cumulative
12
Documentation & Coding History
Because the prospective cut was largely not
implemented until FY 12 and FY 13 Congress
mandated the CMS recoup the overpayments for
FY08 and FY09 claims with interest. Consequently,
CMS implemented a 2.9% cut in FY 12 & FY 13 these are not cumulative meaning they get
reversed in the subsequent year
13
Documentation & Coding
Section 631 of American Taxpayer Relief Act
Because the prospective cut was largely not
implemented until FY 12 and FY 13 Congress
mandated the CMS recoup the overpayments for FY10
through FY12 claims
Requires $11 billion be recovered from hospitals
between 2014 & 2017
CMS estimates 9.3% cut would recover all in 2014
Finalized a 0.8% cut in 2014 (not cumulative)
Estimates .8% cut in 2015-2017 with inflation will
recover the full $11 billion
14
Documentation & Coding
CMS proposes no additional cut to hospitalspecific rates for sole community hospitals (SCH)
& Medicare-dependent hospitals (MDH)
CMS has retroactively analyzed FY 10 data and
originally proposed an additional cumulative cut
of 0.8%; in FFYE 2014 final rule states they
believe it is now really a 0.55% cut but chose
not to implement at this time
More cumulative cuts to come?
More retroactive cuts/recoupments to come?
15
Change in Inpatient Criteria
Current rules: Medicare Benefit Policy Manual,
Chapter 1, Section 10 – “Physicians should use a
24-hour period as a benchmark, i.e., they should
order admission for patients who are expected
to need hospital care for 24 hours or more, and
treat other patients on an outpatient basis. . . .
Admissions of particular patients are not
covered or noncovered solely on the basis of the
length of time the patient actually spends in the
hospital.”
16
Change in Inpatient Criteria
CMS finalizes presumption “that inpatient
admissions are reasonable and necessary for
beneficiaries who require more than 1 Medicare
utilization day (defined by encounters crossing 2
“midnights”) in the hospital receiving medically
necessary services.”
Contractors would disregard 2-midnight
presumption for hospitals “systematically delaying
the provision of care to surpass the 2-midnight
timeframe.”
17
Change in Inpatient Criteria
CMS also finalized “that hospital services
spanning less than 2 midnights should have
been provided on an outpatient basis, unless
there is clear documentation in the medical
record supporting the physician’s order and
expectation that the beneficiary would require
care spanning more than 2 midnights or the
beneficiary is receiving a service or procedure
designated by CMS as inpatient-only.”
Transfers & deaths could still qualify as inpatients if
stay is less than 2 days
18
Change in Inpatient Criteria
CMS published a document called “Hospital
Inpatient Admission Order and Certification”
Outlines the physician documentation
requirements for certification of inpatient status
and the 2 midnight rule
http://www.cms.gov/Medicare/Medicare-Fee-forServicePayment/AcuteInpatientPPS/Downloads/IPCertification-and-Order-09-05-13.pdf
19
Change in Inpatient Criteria
CMS actuary estimates
400,000 encounters would shift from outpatient to
inpatient
360,000 encounters would shift from inpatient to
outpatient
Net additional expenditures of $220 million
CMS finalized 0.2% cut to inpatient payment
rates to pay for added expenditures under
discretionary authority
20
MS-DRG Weight Calculation
Rebased MS-DRG Weights using 2010 data and
moving from 15 cost centers to 19 – new cost
centers are:
Implantable devices
Cardiac catheterization
MRI
CT scan
Inpatient impact is budget neutral overall, but
CMS estimates rural hospitals will see 0.5% cut
on average
21
Wage Index Historical & Final
Urban Area
Akron, OH
Canton-Massillon, OH
Cincinnati-Middletown, OH-KY-IN
Cleveland-Elyria-Mentor, OH
Columbus, OH
Parkersburg-Marietta-Vienna, WV-OH
Wheeling, WV-OH
Youngstown-Warren-Boardman, OH-PA
Rural Ohio
22
FFY2014
0.8438
0.8494
0.9264
0.9202
0.9714
0.8411
0.8411
0.8411
0.8411
FFY2013
0.8606
0.8623
0.9319
0.8996
0.9691
0.8458
0.8458
0.8458
0.8458
Wage Index Issues
Proposing not to implement 2010 census changes until FFY
2015
Changes can be accessed at:
http://www.whitehouse.gov/sites/default/files/omb/bullet
ins/2013/b-13-01.pdf
List 2 shows all metropolitan areas & counties
List 6 shows metropolitan areas by state
Evaluate your area now to see if changes may impact
payments: SCH status, wage index, etc.
Even if your county didn’t change, see if nearby counties did
23
Wage Index Issues
Occupational mix survey for calendar year 2013
will be due July 1, 2014
Finalized to increase labor-share of DRG
payment from 68.8% to 69.6% for areas with
wage index > 1.0
Labor share remains 62% if wage index < 1.0
Continuing rural floor budget neutrality policy,
spreading impact across all states rather than
within states
Selected impacts on next slide
24
Rural Floor Winners & Losers
Winners
Losers
Massachusetts +5.6%
DE, IL, NY
-0.6%
Connecticut
+4.9%
13 States & DC
-0.5%
Alaska
+3.3%
14 States
-0.4%
Nevada
+1.6%
7 States
-0.3%
California
+0.9%
New Hampshire +0.8%
25
Rhode Island
+0.5%
New Jersey
+0.4%
IME & GME
IME multiplier unchanged at 1.35 – by law
Teaching hospital cannot count a resident training
at a CAH for either IME or GME
CAHs can now be reimbursed for cost of residents
directly
L&D days as inpatient days in the Medicare
utilization calculation, effective for cost reporting
period beginning on or after 10/1/2013
26
Quality Initiatives
Tables 15 & 16 available at:
http://www.cms.gov/Medicare/Medicare-Feefor-Service-Payment/AcuteInpatientPPS/FY2014-IPPS-Proposed-Rule-Home-Page.html
Value-Based Purchasing
Readmissions Reduction
Hospital-Acquired Conditions
27
Value-Based Purchasing
Starting 10/1/12, 1% of Medicare inpatient
reimbursement is withheld for a value-based
purchasing pool
Increases 0.25% annually to 2% by 10/1/16
Earned back with favorable quality outcomes,
based on achieving certain performance levels
or improving performance
Withhold based on federal base rate, not
hospital-specific rate “add-on”, DSH, etc.
28
Value-Based Purchasing
17 measures to be reported in FY 2014
Added three measures for FY 2015
Adding three measures for FY 2016
Dropping three measures for FY 2016
29
Value-Based Purchasing Scoring
FFY 2013
FFY 2014
FFY 2015
FFY 2016*
Process
70%
45%
20%
10%
10%
HCAHPS
30%
30%
30%
25%
25%
25%
30%
40%
25%
20%
25%
25%
Outcomes
Efficiency
Safety
Total
15%
100%
*Proposed, subject to change
30
FFY 2017*
100%
100%
100%
100%
Readmissions Reduction
Effective 10/1/12, up to 1% of inpatient
reimbursement withheld from hospitals with
higher than expected readmission rates
Effective 10/1/13, up to 2% withheld
Effective 10/1/14 & thereafter, up to 3%
withheld
CMS determines “expected” risk-adjusted
readmission rates for each hospital
Withhold based on federal base rate, not
hospital-specific rate “add-on”, DSH, etc.
31
Readmissions Reduction
Currently based on readmissions for heart
attack, heart failure & pneumonia
For FFY 2015, CMS proposes adding
Acute exacerbation of cardiopulmonary disease
Elective total hip or total knee arthroplasty
CMS also proposes to broaden the exclusion for
planned readmissions & to exclude unplanned
readmissions that follow planned readmissions
2,225 hospitals (out of 3,359) get cut something
32
Hospital-Acquired Conditions
Effective 10/1/14, 1% of inpatient
reimbursement withheld annually from
hospitals in bottom 25% of hospitals based on
level of hospital-acquired conditions
CMS proposes two alternative sets of measures
using AHRQ Patient Safety Indicators, as well as
CDC infection measures
Initial reporting period proposed to be July 1,
2011 through June 30, 2013
33
CMS DSH Formula
34
New DSH Formula
CMS has surprised most with their computation
for the new DSH payments
Creates big winners and losers
But is it compliant with the Affordable Care Act
and legislative intent?
Significant errors exist in data, many hospitals
show no Medicaid days but are large DSH
hospitals
35
New DSH Formula
The Affordable Care Act set forth a new DSH
formula beginning in FY2014
25% of DSH payment continues to be based on
current methodology
Remaining 75% is based on product of 3 factors
25% of
DSH
Payment
36
75% of
DSH
Change in
Uninsured
Care Costs
Total New
DSH
Payment
New DSH Formula
Final rule confirms reduction in DSH payments
to many hospitals
Worksheet S-10 from the cost report will not be
used in FFY 14 to gather data, could be used in
future years
Only subsection(d) hospitals, those who qualify
for DSH, will qualify for the “add-on” payment
under the new method
37
New DSH Formula
FY2014 Proposed Rule throws a curve ball
Medicaid & Medicare SSI days used as a proxy
for Uncompensated Care Costs
SSI Enrollment remains a driving force for future
DSH payments
25% of
DSH
Payment
38
75% of
DSH
Change in
Uninsured
Care Costs
Total New
DSH
Payment
New DSH Formula
• Why did CMS ignore cost of uninsured?
Varying definitions of uncompensated care
Lack of clarity on days definition
Lack of consistent reporting & data is unaudited
(CMS-2552-10 Form S-10)
Confusing S-10 instructions, e.g., reporting bad
debt and charity in year of service rather than year
of write-off
39
New DSH Formula
Two payments will be calculated for a DSH
hospital
The traditional DSH payments will continue to
be computed but only paid at 25% (called the
empirically justified Medicare DSH payment)
A second payment will be based on three
factors & is referred to as the “uncompensated
care payment”
40
New DSH Formula
Three factors:
Factor 1 – Difference between 100% of DSH payment
that would have been paid out if the law had not
been changed & the 25% that will be paid out –
estimated for the proposed rule at $9.25 billion; Final
rule $9.58 billion
Factor 2 – For FFY2014, 1 minus the % change in
uninsured individuals from 2013 – proposed to use
88.8% based on CBO’s estimate; Final rule revised
this to 94.3%
41
New DSH Formula
Factor 3 – Proportion of uncompensated care for
hospital compared to all hospitals who receive DSH,
using Medicaid days & SSI days
Factor 3 is based on each hospital’s share of total
uncompensated care costs across all PPS hospitals
that received DSH payments
So the numerator is all PPS hospitals, but
denominator is just DSH hospitals
42
New DSH Formula
FY 2014 IPPS Final Rule: Implementation of Section 3133 of the Affordable Care Act- Medicare DSH- Supplemental Data
PROV
200001
200008
200009
200018
200019
200020
200021
200024
200025
200031
200033
200034
200037
200039
200040
200052
200063
43
Medicaid
FFY 2014 Name
Proposed Rule:
Days
ST JOSEPH HOSPITAL
MERCY HOSPITAL
MAINE MEDICAL CENTER
AROOSTOOK MEDICAL CENTER,THE
SOUTHERN MAINE MEDICAL CENTER
YORK HOSPITAL
MID COAST HOSPITAL
CENTRAL MAINE MEDICAL CENTER
PARKVIEW ADVENTIST MEDICAL CENTER
CARY MEDICAL CENTER
EASTERN MAINE MEDICAL CENTER
ST MARYS REGIONAL MEDICAL CENTER
FRANKLIN MEMORIAL HOSPITAL
MAINE GENERAL MEDICAL CENTER
HENRIETTA D GOODALL HOSPITAL
NORTHERN MAINE MEDICAL CENTER
PENOBSCOT BAY MEDICAL CENTER
2192
6369
34598
1891
3053
1340
3487
8263
198
1073
25059
7791
2013
10654
1280
2017
2655
SSI Days
1097
1106
2966
436
657
160
563
1513
233
536
3646
842
288
2458
312
357
851
Insured
Low
Income
Days
3289
7475
37564
2327
3710
1500
4050
9776
431
1609
28705
8633
2301
13112
1592
2374
3506
Factor 3
0.009032%
0.020528%
0.103160%
0.006390%
0.010189%
0.004119%
0.011122%
0.026847%
0.001184%
0.004419%
0.078831%
0.023708%
0.006319%
0.036009%
0.004372%
0.006520%
0.009628%
Total
Uncompensated
Care Payment
Amount
$815,918.20
$1,854,359.54
$9,318,683.86
$577,270.19
$920,357.71
N/A
$1,004,703.16
$2,425,179.79
N/A
$399,152.44
$7,120,988.72
$2,141,630.23
N/A
$3,252,757.50
$394,935.17
N/A
N/A
Estimated Per
Claim Amount
$347.00
$671.71
$899.86
$511.76
$375.04
N/A
$519.32
$616.10
N/A
$404.55
$897.30
$1,175.86
$489.00
$741.96
$353.04
$867.35
$474.06
Projected
to Receive
Claims DSH for FY
Average
2014
2351 Y
2761 Y
10356 Y
1128 Y
2454 Y
N/A N
1935 Y
3936 Y
N/A N
987 Y
7936 Y
1821 Y
1167 SCH
4384 Y
1119 Y
679 SCH
1835 SCH
New DSH Formula
Example FFY 2014 Proposed Rule: 2014 Estimated Payment
FY 2011 DSH Payment
$5,000,000.00
25% Historical DSH
$1,250,000.00
Factor 1: (Constant)
$9,579,000,000
Factor 2: (Constant)
94.3%
Factor 3: (From CMS Table)
44
.0345624%
Uncompensated Care Payment
$3,122,000.00
Estimated Total FY 2014 DSH Payment
$4,372,000.00
Reimbursement Comparison
($628,000.00)
New DSH Formula
Data table on CMS website should be reviewed
by all hospitals – notify CMS if data is in error
CMS is using as-filed 2012 cost reports; this is
problematic because of the Medicare Part C
issue
Worksheet S-10 could be used in the future so it
is important to complete it accurately
Proposed formula will punish states that do not
expand Medicaid if methodology is used in the
future
45
New DSH Formula
The uncompensated care component of the payment will
be paid on an interim basis, not per discharge; Final rule
change this to a per discharge amount
A final settlement of the empirically justified &
uncompensated care payments will be made on the cost
report
DSH scrubs will continue to be important for hospitals not
only for the original computation (which now pays at
25%) but also for computing the uncompensated care
payment which uses the same days
46
New DSH Formula
BKD has developed a calculator at:
http://www.bkd.com/industries/healthcare/hospitals/dsh-reimbursementdatabase.htm
47
How to improve your DSH ratio?
2 significant components of the DSH calculation
Medicaid days
DSH “scrubbing”
SSI
SSI enrollment
48
SSI Overview
• Federal ‘safety net’ program to assist low income
individuals who are:
– Age 65 or older
– Blind
– Disabled
• 2013 SSI Maximum monthly payment
– Single $710
– Married $1066
– Amount varies in some states
49
SSI Requirements
• Similar to many State Medicaid requirements
• Maximum income after deductions
$2235 Single ; $3303 Married
Resources
$2000 Single ; $3000 Married
Excludes Home, Car, etc.
50
Community Benefit
• January 2012
7.9 million individuals received SSI payments
Monthly Payments averaged $497
Additional Benefit for Medicare beneficiaries
Medicare Savings Program
Pays Part B premiums
Medicare prescription drug coverage
Not available in all states
51
Community Benefit
Source: 2012 Annual Report of the SSI program
52
Hospital Benefit: DSH Payments
• Add-on to hospital’s DRG payment
• Designed to compensate hospitals for higher
cost of treating low-income patients
• Over $10 Billion of DSH payments in 2012
• Based on Hospital’s Inpatient Medicaid Ratio
and Medicare/SSI Ratio
• More Medicaid + More SSI = More
53
Current DSH Payment Fraction
SSI
recipients
/ Medicare
Days
Includes
Medicare
patients eligible
for Medicaid &
SSI Recipients
54
Medicaid
Days /
Total Days
%
• To impact DSH payments, SSI individuals must
be entitled to Medicare Part A
• In December 2011, 1.2 Million Aged
individuals received SSI payments
SSI problems
SSI enrollment has been stagnant over the last
decade
Hospital SSI Ratios have been sporadic
Declines in Hospital Ratios have been attributed
to poor matching process by CMS and inclusion
of Medicare Part C days
55
SSI problems
Total Medicare Beneficiaries: 49 Million
Total Aged SSI enrollees: 1.2 Million
2.39% Ratio
Source: The Kaiser Family Foundation
56
SSI Trending – Aged Population
Source: 2012 Annual Report of the SSI program
57
SSI Opportunity
Problem stems to Hospitals taking over the
social worker function
Medicare SSI eligible population are not being
enrolled in SSI
Everyone has missed the elephant in the room!
58
Typical Collection Cycle
Medicaid
Payment
59
Self Pay
Patient
Apply for
Medicaid
and/or Charity
Patient Has
Insurance
Insurance
Pays Claim
Charity Write
Off or Bad
Debt
Deductible or
Coinsurance
Paid by
Patient
SSI Opportunity
Incentive for Hospital personnel and Medicaid
eligibility vendors for payment at the claim level
Hospitals are not directing patients to apply for
SSI regardless of Financial Class
Medicare beneficiaries rarely filtered to
Financial Counselors
60
SSI Enrollment – Front Door
Enrolled in
Medicare at
SSA
Screened for
SSI eligibility
Enrolled in SSI
• 32 states have agreements with Federal Social
Security Administration (SSA) to enroll SSI recipients
into Medicaid
61
SSI Enrollment – Back Door
Enrolled in
Medicare at
SSA
Screened for
SSI eligibility
Enrolled in SSI
Enrolled in
Medicaid
Hospital or
Long-Term
Care provider
62
SSI Enrollment – Front Door
Application
for SSI
Medicaid Office
Application
for
Medicaid
• Remaining states require a separate application as
Medicaid eligibility % is more restrictive than SSI
63
SSI Enrollment – Back Door
Application
for SSI
Medicaid
Office
Application
for Medicaid
Hospital or
Long-Term
Care Provider
64
SSI Enrollment Problem
Lack of understanding by providers and “Back
Door” enrollment into Medicaid
Spend down of assets and qualifies for SSI after
Medicare enrollment
Lack of education at local DPW offices
Patients fail to follow through with necessary
information
65
Opportunities for Improvement
Retrospective SSI Approach
Request historical SSI detail from CMS
Effective February 1, 2013 Data Use Agreement no
longer necessary
But still email request to
[email protected]
Appeal NPRs for Allina, Exhausted Part A Days,
Matching Process, inconsistencies, etc.
66
Opportunities for Improvement
Prospective SSI Approach
Step #1: Train business office, social workers and
Medicaid enrollment firms to increase applications
Medicare Patients requesting charity should be
instructed/assisted with applying for SSI
Benefit to hospitals will be delayed due to
differences in “retro-active” enrollment between
Medicaid and SSI
67
Opportunities for Improvement
Prospective SSI Approach
Primarily touches patients when present to the
hospital
Attempt to locate SSI eligible individuals earlier in
healthcare continuum such as primary care
locations or through community outreach
68
Opportunities for improvement
To evaluate the opportunity for improvement,
compare your Medicare dual eligible days
compared to your SSI days
Keep in mind that there will be other SSI days
for the disabled and blind
Some dual eligible enrollees that qualify for
Medicaid that will not qualify for SSI, (Medical
spend down) however this is not the majority of
dual eligible enrollees
Re-calculate your DSH payment % with the dual
eligible days included
69
Opportunities for improvement
70
Opportunities for improvement
Assuming 8000 Dual Eligible Days:
Nearly $1 Million DSH benefit, as well as exceeding 340B Threshold
71
OPPS Proposed Rule FFY2014
Market basket update 1.8% (2.5% - .04
Productivity Cut -.03% ACA Adjustment)
Proposing to “package” 7 new categories
included in payment for a primary service
No provisions for the physician SGR fix
Application of therapy caps to CAHs
Collapsing E&M codes from 5 levels of visits to 1
ER & Provider based clinics
Does not apply to RHCs
72
Changes to E&M Levels
73
Other Regulatory & legislative issues
74
Medicaid DSH Cuts
ACA requires federal DSH payments to states be
cut as coverage expands; cuts =
Federal FY 2014 - $500 million
Federal FY 2015 - $600 million
Federal FY 2016 - $600 million
Federal FY 2017 - $1.8 billion
Federal FY 2018 - $5 billion
Federal FY 2019 - $5.6 billion
Federal FY 2020 - $4 billion
75
Medicaid DSH Cuts
CMS methodology to cut individual states must
consider 5 factors:
Smaller reduction on “low DSH States”
Larger reduction on states with lowest % of
uninsured using most recent data
Larger reduction on states that don’t target DSH to
hospitals with high Medicaid utilization
Larger reduction on states that don’t target DSH to
hospitals with high uncompensated care
Consider whether state’s DSH allotment included in
BN calculation for expansion at 7/31/09
76
Medicaid DSH Cuts
CMS published proposed rule 5/15/13
Comments due 7/12/13
Proposed methodology cuts 1.2% ($6.2 million)
from 17 low DSH states: AK, AZ, DE, HI, ID, IA,
MN, MT, NE, NM, ND, OK, OR, SD, UT, WI, WY –
range of 0.5% to 2.3%
Remaining states have range of 1.9% to 7.1%,
average cut of 4.4%
77
Medicaid DSH Cuts
CMS acknowledges states that expand Medicaid
may have lower share of uninsured in the
future, & thus more Medicaid DSH cuts
“Given the statutory reductions in the funding for
Medicaid DSH in the Affordable Care Act, we
intend to account for the different circumstances
among states in the formula in future rulemaking.”
78
Sequestration
Required by Budget Control Act of 2011, after
Congress & White House failed to agree on
deficit reduction measures
2% cut in all Medicare payments, effective for
services on or after April 1, 2013
Includes Medicare EHR incentive payments
Based on net Medicare payment, not counting
deductible/coinsurance
Theoretically reinstated in 2022
79
Impact of Sequestration
25
20
15
Costs
Pmts
10
5
0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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American Taxpayer Relief Act of 2012
Requires $11 billion documentation & coding
adjustment starting 10/1/13
Extended low-volume payment add-on through
September 30, 2013, for hospitals with fewer
than 1,600 Medicare discharges
Extended Medicare-dependent hospital
program through September 30, 2013
CMS automatically reinstated MDHs with no
change in status
Special rules for MDHs that had reverted to urban
or SCH status
81
Other Rural Hospital Extenders
Medicare outpatient cost-based lab program
expired June 30, 2012
Medicare outpatient hold harmless program
expired December 31, 2012
December 2012 CMS report (required by February
2012 legislation) implied hospitals earning hold
harmless may be inefficient
CMS notes they’ve changed from geometric
median to mean costs for outpatient rates; this $3
million may “decrease the need” for $104 million
in hold harmless payments
82
Deficit Reduction Talks
Debate continues, with debt extension rapidly
approaching
Additional cuts are possible, such as
Reducing ability of states to fund Medicaid
programs with provider taxes
Additional Medicare documentation & coding cuts
Cutting payments for provider-based clinics
Cutting payments for Medicare bad debts
83
HHS Proposed Budget FFY2014
Proposed by POTUS on 4/10/2013
Cuts would be in lieu of sequester
Impacts almost all areas of healthcare
84
HHS Proposed Budget FFY2014
Cut bad debt reimbursement to 25%
3-year phase-down starting in 2014
CAHs
Cut reimbursement to 100% of costs (from 101%)
Prohibit designation if within 10 miles of another hospital
Rebase Medicaid DSH in 2023
Delay Medicaid DSH cuts to 2015, but increase cuts in 2016 &
2017
85
HHS Proposed Budget FFY2014
Post acute care
Cut bad debt reimbursement to 25% for SNFs
Cut SNF payments up to 3%
Mandate PAC bundling
Reinstate 75% rule for rehab facilities starting in 2014
Cut update factors for all providers by 1.1% for each year from 2014-2024
Home health co-pays $100 per episode starting in 2017
Physicians
No specific SGR fix
Narrow stark law exception for in-office ancillary services starting in 2015
Cut lab fee schedule by 1.75% for each year from 2016-2024
Require prior authorization of advanced imaging
Other
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OIG Report on CAHs
Nearly 2/3 of CAHs would not meet the location
requirements if required to re-enroll
Distance and mileage requirements
35 - mile distance
15 - mile distance
No distance requirement
Located in a rural area or treatment as rural
Could impact SCH’s status
87
Meaningful Use Attestation
We are seeing several MACs take different
approaches on what is allowable for CAHs cost
CAHs with centralized IT system that are
allocated from a home office cost report will
most likely be more scrutinized
Audits from the federal and state level are
starting to occur
88
TRICARE Inpatient Payments
TRICARE statute requires payments to hospitals
to follow Medicare rules “to the extent
practicable”
TRICARE uses DRG system for most hospitals
Historically paid SCHs as follows:
Network hospitals: payment was billed charges
less a negotiated discount
Non-network hospitals: payment is billed charges
89
TRICARE Inpatient Payments
7/5/11 issued a proposed rule would transition
SCH rates down to DRG rates with small add-on
8/8/13 issued final rule will pay SCHs the
greater of the following:
DRG reimbursement for all TRICARE discharges
SCH’s specific CCR multiplied by the hospital’s
billed charges
Changes become effective 10/7/13; but there is
a transition plan
90
Questions & Comments
91
THANK YOU
FOR MORE INFORMATION // For a complete list of our
offices and subsidiaries, visit bkd.com or contact:
Andy Williams//Senior Manager
[email protected] // 417.865.8701
92 // experience perspective