Healthcare Financial Management Association Northeast Ohio Chapter 2012 Gerry Haggerty

1. Healthcare Financial Management Association Northeast Ohio Chapter 2012 Gerry Haggerty Annual Leadership Institute OHA Update Charles Cataline Senior Director, Health Policy Ohio Hospital Association charlesc@ohanet.org www.ohanet.org NE Ohio HFMA

2. Agenda • Federal Budget Update • Ohio 2012/2013 Mid-Biennium Budget Review • Medicaid • 2013 Managed Care RFA & Preliminary Selection • Medicaid Hospital PPS DRG Update • Medicaid RAC • Proposed Dually Eligible Integrated Delivery System • Other Medicaid & Uncompensated Care • Medicare • 2013 IHPPS Proposed Rule Out • MAC Conversion Update • BWC • Other NE Ohio HFMA

3. Federal Budget Update Perfect Storm? • On Jan. 1, 2013 • Bush-era Tax Cuts Expire • Payroll Tax Cuts Expire • SGR Fix Expires • Sequesters Begin • Raise Debt Ceiling • To be Dealt With Post-election • “Lame Duck” Congress • What if SCOTUS overturns PPACA? NE Ohio HFMA

4. Anticipated Federal Health Care Proposals for FFY 2013 • Medicare • Increase Premiums, Deductibles, Co-pays & Surcharges • Reduce Bad Debt • Reform & Reduce Post Acute Care Payments • Reduce IME • Prior Auth for High Cost Diagnostic Imaging • Medicaid • Reduce Provider Tax Limits • Reform/Reduce FMAP • Reduce DSH • Increase Drug Rebate Initiatives • Match DME Payments to Medicare Bid Rates NE Ohio HFMA

5. Ohio Mid-Biennium Budget Review • NOT about new spending • Focused on policy changes • Increased efficiency • Reduced bureaucracy NE Ohio HFMA

6. Ohio Mid-Biennium Budget Review Types of MBR Initiatives • Quality Incentives for Hospitals • Local Government Shared Services • Agency Duplication • Regulatory Rules Challenges/Opportunities • State Spending Under Budget Projections • Medicaid Caseload is on Target • $325 million in Medicaid Under-Spending • Why and What to do With it NE Ohio HFMA

7. Ohio Mid-Biennium Budget Review • What’s Being Advocated in MBR? • Medicaid Rainy Day Fund • Franchise Fee Relief for Hospitals • Reduce Nursing Home and Other Facility and Provider Budget Cuts • Address Short Term Payment Backlog Related to MITS Implementation • Other ? NE Ohio HFMA

8. Ohio Mid-Biennium Budget Review • Hospital Items in House-Passed Version • Hospital Quality Factors • New APR-DRG for Medicaid Managed Care • Health Information Exchange • Elimination of the Public Health Council • Creation of the State Board of Emergency Medical and Transportation Services • Clinical Research Facility Certificate • Pediatric Hemophilia, CF and Cancer Patients Enrolled in Medicaid Managed Care NE Ohio HFMA

9. Medicaid Managed Care RFA • Released Jan. 11, 2012 • Applications Due March 19 • Preliminary Selections Made April 6 • Contracts Effective Jan. 1, 2013 • Implementation to be Rolled Out Over 1st Quarter 2013 • Combines Contracts for CFC and Much of ABD Population • CFC = 1.6 M Enrollees; ABD (currently) = 125,000 Enrollees • Eight Managed Care Plan (MCP) Regions Down to Three • At Least 50,000 Insured Lives per Contract (?) • Five Statewide, "Experienced” MCPs Preliminarily Selected • “Operational” MCPs (as of March 19) Had an Advantage • Five Appeals Underway NE Ohio HFMA

10. Current MCP Regional Boundaries NE Ohio HFMA

11. New MCP Regional Boundaries NE Ohio HFMA

12. Medicaid Managed Care RFA • Focus of Reorganized System • Network Strength • Must be Licensed Ohio HIC • High Value Health Care • Expect “Value-Based Purchasing” Arrangements • Alignment With Catalyst for Payment Reform (http://www.catalyzepaymentreform.org) • High Quality Outcomes • HEDIS Clinical Measures & Compliance Audit Required • Increased Competition & Enrollee Choice • Less Administrative Burden % Espense on State • Local Administration is Important • Leadership Positions and Member Call Centers Must be in Ohio • Provider Outreach Centers: Not so Much! NE Ohio HFMA

13. Medicaid Managed Care RFA • Care Coordination is Much Bigger Deal, Especially as it Relates to “High Risk” Enrollees • Multiple Chronic Conditions • Severe Illness • Special Needs • Care Management Emphasis on • High Risk Enrollee Identification Strategy • Comprehensive Health Assessments • Effective Communication & Interaction with Patient/Enrollee • Use of Community Support Systems • Development of Care Management Tracking Systems • In 2013 “Incentive Payments” to MCPs Based on “Clinical Performance” Measures • Expect Provider Reimbursement Tied to Performance Measures NE Ohio HFMA

14. Medicaid Managed Care RFA OHA Finance Committee Comments & Concerns • Extension of MCP Agreements/Contracts • Provider Protections if Existing, Unselected Plan Underperforms • ODI Oversight • MCP Program Administration • Keep Watch on Plan Performance, Provider Relations, Adequate Support • Force Plans With PPS to Use Same DRG Grouper, Codes and Edits as FFS • MCP Application & Scoring • Guarantee Adequate Panel Coverage; Where are Contracts with New Plans?! • Watch Links with Incentive Payment Programs • Open Enrollment, Enrollee Assignment & Program Rollout • What will Happen With 2012 Open Enrollment?! • Include Hospital Services History to Assign Enrollees Who Don’t Choose • Plan for Problems! • Incentive Payment Programs • Don’t Allow Untested, Plan Specific Programs; Stay With National Standards • Match FFS Where Applicable • Share Rewards NE Ohio HFMA

15. Medicaid PPS DRG Update • Expect 3M APR-DRG • Scheduled Adoption 1/1/13 (?) • Initial Concern About Conflict with ICD.10 Conversion • DRG Re-basing & Re-Weighting on Updated Cost Data • FFS Claims & Managed care Claims (Provided by Plans) with Discharge Dates Between 10/1/08 & 9/30/10 • Medicaid Cost Reports Within Same Date Span • Adjusted by “Global Insight” Market Basket Inflation Index • Budget Neutral Statewide, but Could Involve Payment Shifts Between Peer Groups, Specific Hospitals and Major DRGs • ODJFS Wants to Avoid any “Shock to the System” • Add-ons Under Consideration Include High Cost, Capital, IME/DME & Quality Incentive Payments • Other Modifications Could Include Transfers, Readmissions, Preventable Conditions, Transplants & Out-of-State Providers NE Ohio HFMA

16. Proposed Ohio Dually Eligible Integrated Delivery System • Ohio Proposal at CMS; No Response Yet • Utilizes a “Payment Structure That Blends Medicare and Medicaid Funding” • Approx. 196,000 Medicare-Medicaid Enrollees in Ohio Currently Receiving Benefits Primarily Through FFS • Approx. 122,500 Included in the Demonstration Program NE Ohio HFMA

17. Proposed Ohio Dually Eligible Integrated Delivery System • Target Population • Full-Benefit Dual Eligible Enrollees Excluding: • Those Eligible for the Medicare Savings Program • Dual Eligibles with Intellectual and Developmental Disabilities Served Through an IDD 1915(c) HCBS Waiver or an ICF-IDD. • Those Not Under Waiver can Opt In • Dual Eligibles Enrolled in PACE • Dual Eligibles under 18 • Duals With Severe or Persistent Mental Illness will be Included, Assuming the State Creates Medicaid Behavioral Health Homes • The Target Implementation Date is October 2012. • Individuals with SPMI in the Demonstration do not Have to Change Providers for Behavioral Health Services. NE Ohio HFMA

18. Proposed Ohio Dually Eligible Integrated Delivery System • Model Design • Two Competing Health Plans in each of Seven Regions Chosen for the Demonstration (Not the Entire State) • Enrollees can Choose Between the Two Health Plans in Their Region • All Regions Have at Least 3 Medicare Advantage Plans Currently Serving Medicare Beneficiaries • The Demonstration will Auto-Enroll the Eligible Population With an Option to opt out for Medicare-Covered Benefits • If They opt out for Medicare They Will Still be Enrolled in Medicaid Managed Care • Enrollees Will Have the Option of Switching Plans Twice a Year and can opt out of Medicare at any Time • Enrollment is Scheduled to Begin on Jan. 1, 2013 NE Ohio HFMA

19. Proposed Ohio Dually Eligible Integrated Delivery System • Payment System • Medicare and Medicaid will Contribute to the Blended Payments in a Manner that Expected Aggregate Savings are Proportionately Shared Between the two Programs • The Blended Capitation Payment Structure is Expected to Provide Plans the Flexibility to Utilize the Most Appropriate Cost Effective Service for the Enrollee, Eliminating Incentives to Shift Costs Between Medicare and Medicaid • Reimbursement will Include Pay-for-Performance Incentives • OHA’s Concerns • Very Aggressive Schedule! • Can MCPs Really Integrate and Manage this Array of Providers, Agencies and Services? • How Would This Affect Existing UPL Programs • Is it Right to Limit Enrollees Freedom of Choice? NE Ohio HFMA

20. Other Medicaid & Uncompensated Care • Medicaid Cost Report UC Data Expansion • Required by Feds; ODJFS Does Not Control Myers & Stauffer • Three New Schedules Required in SFY 2011; UC Data Broken into CR Revenue Areas • 2012 Expansion to Managed Care A Big Problem • Additional SFY 2011 Data Due When M&S Audits in 2013? • Expect Additional Changes and Expanded Data Requirements • Hospital Charge Audits From Permedion Underway • Still Waiting on IRS Charge Guidelines for Uninsured • OHA Finance Committee Considering Expanded HCAP-Related Free Care Eligibility Timelines NE Ohio HFMA

21. Medicare FFY 2013 IHPPS Posted 4/24/12; Published 5/11/12; Comments due 6/25/12 • Inflationary Update: Net is 2.3% (0.3% for non-reporters) • MB = 3.0% • Coding adjustment = 0.2% • 2008 & 2009 = (1.9%); 2010 = (0.8%) • 2.9% restored from FFY 2012 Temporary Coding Cut • ACA Adjustments = (0.9%) • Productivity (0.8%) & Statutory (0.1%) • Other adjustments: • VBP = (1.0%) • Readmits = (0.3%) is CMS estimate • Rural demo = (0.001%) • Final guess: 0.9% is CMS estimate [+$966 M in New Spending] • Capital rate = $424.42 ($421.42 current) NE Ohio HFMA

22. Medicare FFY 2013 IHPPS • Outlier Threshold = $27,425 (Currently $22,385) • CMS Estimates a 6% Outlier Payout in FFY ’12 • Wage Index • Using data from FY ‘09 • New Occupational Mix Adjustment Applied • Based on Survey Data Submitted on 7/1/11 • Massachusetts Rural Floor Effect • 5.5% Increase for those hospitals • What Effect “Sante Fe Group?!” • Frontier floor continues for 3 states • Imputed floor continues for New Jersey • 770 hospitals have a reclassification • MGCRB reclassification applications for FFY ’14 Due 9/4/12 NE Ohio HFMA

23. Medicare FFY 2013 IHPPS • Readmissions Policy (Per ACA) • Effective 10-1-12 • Three Measures for FFY ‘13 • AMI (ICD-9 codes 410-410.91) • Heart Failure (ICD-9 codes 402-404, plus 428) • Pneumonia (ICD-9 codes 480-88) • Three Years of Data Ending 6-30-11 • Applies to SCHs and MDHs • Base Operating Rate Only (i.e., no DSH or IME) • Any Hospital Worse Than Average Will Take a Hit • Only About 34% of All Hospitals Will Avoid an Adjustment • Cap is 1% for FFY ‘13 (About 14% Will Experience Max Cut) • Hospitals Will Know Their Fates by June 20 • 30-day Appeal Period NE Ohio HFMA

24. Medicare FFY 2013 IHPPS • IME/DME • IME Multiplier Unchanged at 1.35 • Claims for MA Enrollees Must Comply With Timely Filing Regs • Include Labor / Delivery Beds in Bed Count • Effective with CRPs on & After Oct. 1, 2012 • “Five Year Window” for New Programs • Effective for New Programs Only on Oct. 1, 2012 • DSH • Time Limit Rules (for “Zero” Bills) Apply to This Adjustment Too • Bed count • Include labor / delivery beds • Consistent with IME • Effective with CRPs on & after Oct. 1, 2012 NE Ohio HFMA

25. Medicare FFY 2013 IHPPS • Miscellany • Minor Housekeeping to MS-DRGs • HACs • Adding One new Code (999.32) to VCAI HAC • Adding a Condition • CIED procedures • Latrogenic Pneuothorox with Venous Cath • No New Tech Add-ons • Quality Reporting for ASCs • Six for FFY ’14 NE Ohio HFMA

26. Medicare FFY 2013 IHPPS • Quality Reporting • Reducing Total Measures • Eliminating 17 of them • Adding 3 • New Total = 59 • New (or Returning) Reporters • Must Submit Application by 12/31 Proceeding • Example: file by 12/31/12 for FFY ‘15 • Cancer hospitals • 5 measures: • CLABSI • CAUTI • 3 cancer process • Effective for FFY ’14 NE Ohio HFMA

27. Medicare FFY 2013 IHPPS • Value-Based Purchasing • Several Measures Suspended for FFY ‘14 • Including the Spending-per-Beneficiary, for one Year • Definition of “Base Operating Payments” • Excludes Outliers, DSH, IME & LV Adjustment • But Does Include the New-Tech Add-on • 1% Cut to Base Operating Payments in FFY ‘13 • CMS Will Estimate Reduction for Each Hospital in Advance • Qualifying for Adjustment Payment is Explained • Appeals Process Created • 30 Days From Posting of Report • To “Review and Correct” NE Ohio HFMA

28. Medicare FFY 2013 IHPPS • LTAC PPS Update • MB is 3.0% • PPACA adjustment • (0.8%) for productivity & (0.1%) per statute • Coding adjustment • (1.3%) for this year, starting on 12-28 • More to come in future years • Standardized amount is $40,507.48 (Current = $40,222.05) • Quality reporting • Adding Five Measures for FFY ’16 (In Addition to Three Adopted Last Year for FFY ’14 • Labor-Related share = 63.217% (Current = 70.199%) • Outlier Threshold = $15,728 (Current= $17,931) • Proposed One-Year Delay to 25% Rule NE Ohio HFMA

29. Other Medicare • Therapy Caps Applied to Outpatient Hospital Services • Applied to Medicare Payments Including Deductible & Coinsurance • Oct. 1, 2012 through 12/31/12 – All 2012 PT, OT & SPT Services are Included • MM7785 & Transmittal 2457 COPAM Ohio

30. Medicare MAC Conversion • ABC Committee Working with CGS on Several Fronts • Steep MAC Learning Curve, • CMS Now Much More Actively Involved • CGS Action Plan Developed to Address Hospitals Concerns • Provider Call Center Problems • Inadequate Outreach & Education • Medical Review, Probe & Pre-Pay Reviews • Varied Claims Processing Issues • CGS Website Under Expansion & Improving Weekly • Medicare RAC/MAC Coordination Problems Persist • Use CGI Site if Possible to Track Letter Number Details • Demand Letters Still a Problem, too! NE Ohio HFMA

31. Bureau of Workers’ Compensation • Outpatient Medicare-based PPS Still in Transition • 198% Medicare 1/1/11 – 3/31/12 (Childrens = 253% / CAH Exempt) • 181% Medicare 4/1/12 – 3/31/13 • 166% Medicare After • 2012 Medicare OPPS Pricer Factors in Place Until 3/31/13 • Medicare v. BWC PPS Chart Available at http://www.ohanet.org/Issue/BWC • CY 2012 Inpatient PPS Effective 2/1/12 • 2012 Medicare IHPPS GROUPER In Place Until 1/31/13 • ASCs Updated April 1 with 2012 Medicare Rates • Professional Fee Schedules Updated Jan. 1 • Generally One Year Behind CMS NE Ohio HFMA

32. BWC Provider Progressive Compliance Process (OAC 4123-6-02.7) NO Ongoing * 2nd Written Notice Are there Are there st * 1 Level Written * Correction plan and 2 or more Is a Notice 2 violations or unsatisfactory plan submitted ? 30 day implementation Is it 3 Same / 5 Provider Monitoring Is it under subsequent Violation YES Different violations Paragraph C violations of * Notation in file for 12 YES * Implement 12 Committed In 6 months ? months YES 1st level YES NO ? Month Monitoring ? violation Implement new 12 * ? Month monitoring NO NO NO YES Decertification Process – 45 to 90+ days NE Ohio HFMA Has Written Notification of violations and Written Notification of violations and Has there been Mitigating provider received 1 or more 1st level Factors 2 previous written NO Decertification Process** Decertification Process YES YES violations in ( A )( 5 ) ? notices? 3 years? NO NO YES Begin Decertification Process **If Decertified provider can reapply for certification after 2 years. Anytime Earliest 2 months – Latest 31 months

33. Healthcare Financial Managers Association Southwest Ohio ChapterAnnual May Institute Wrap-Up, Other Items & Questions NE Ohio HFMA