MHA Update

1. MHA Update MPAA March 15, 2013 Vickie R. Kunz Senior Director Health Finance 1

2. Payer Issues • Hospitals are reminded that a role of the MHA is to assist you in resolving payer issues. • We can’t resolve what we don’t know to be an issue so please keep us informed. • Contact Marilyn Litka-Klein or Vickie Kunz at the MHA regarding various payer issues.

3. MHA Contact Info • Marilyn Litka-Klein, Vice President, Health Finance • Phone: (517) 703-8603 • Email: mklein@mha.org • Vickie Kunz, Senior Director, Health Finance • Phone: (517) 703-8608 • Email: vkunz@mha.org

4. Recent “Fiscal Cliff “ Bill • American Taxpayer Relief Act of 2012 included several significant Medicare payment cuts for hospitals in conjunction with averting the 27 percent cut to Medicare physician payments and delaying the 2% sequester from Jan.1 until March 1, 2013.

5. Medicare Cuts • IPPS coding adjustment reductions totaling at least 9.7% over a 4-year period, FY 2014 -17. • Projected to reduce IPPS payments to Michigan hospitals by $106 million in FY 2014 and $437 million over the 4-year period. • Takes effect Oct. 1, 2013.

6. 2% Sequester • CMS e-News issued March 8. • Medicare fee-for-service claims with dates of service or dates of discharge on or after April 1 will be subject to a 2% reduction in Medicare payment. • $72 million cut for April 1 – Sept. 30, 2013. • 10-Year Impact: $1.4 billion. • The payment adjustment will be applied to all claims after determining coinsurance, any applicable Medicare secondary payment adjustments. • Impacts IPPS, OPPS, Rehab, Psych, HHA, LTCH, GME, and CAH payments.

7. Low Volume Adjustment • Extended the LVA through FY 2013. • Hospitals must submit request to their MAC/FI by March 22, in order for LV payment adjustment to be retro to Oct. 1, 2012. • See MHA email notification to impacted hospitals March 5.

8. Medicare Dependent Hospital • Extended the Medicare Dependent Hospital program until Oct. 1, 2013. • Expected to increase FY 2013 Medicare FFS payments to Michigan hospitals by $1.2 million. • Retro to Oct. 1, 2012.

9. Outpatient Therapy Services • 2013 collection of claims-based data on patient functional status over an episode of PT, OT and SLP services. • All therapists will be required to report new G-codes and modifiers on the claim form: • initial evaluation, every 10 visits and at discharge. • CMS will adopt testing period thru June 30.

10. RAC Update • See March 4 MHA Monday Report article and registration info for March 26 AHA RacTrac webinar. • Contact RacTrac Help Desk at (888)722-8712 if needed. • Webinar will provide an update on the CMS guidance regarding claims determinations by Administrative Law Judges. • AHA is pursuing clarification from CMS regarding the ALJs making timely and efficient determinations for payment rather than sending cases back to the Qualified Independent Contractors (QICs).

11. Revised Billing Policy – Denied Claims • CMS released two rules proposing to revise its position on rebilling for Medicare inpatient claims denied by Medicare contractors, including RACs. • Hospitals will generally be eligible to bill and receive payment for services re-billed to Medicare Part B for cases where services should have been provided in an outpatient setting.

12. Revised Readmission Adjustment Factors • Beginning in FY 2013, Medicare FFS inpatient payments are adjusted based on hospital performance on Medicare readmissions for heart attack, heart failure and pneumonia. • CMS issued initial factors as part of FY 2013 IPPS final rule with revised factors released in October. • More revised factors released in March. • Factors revised for approximately 40 Michigan hospitals.

13. Medicare Advantage Plans • As of Jan 2013, 30 plans in Michigan, with 515,000 or approximately 30% of Michigan’s 1.7 million Medicare beneficiaries enrolled. • MA enrollment up by 60,000 since Oct. 2012. • 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 Jan. 28 MHA Monday Report for latest info

14. Medicaid Issues

15. Reimbursement Reform Initiative • March 6 MSA correspondence to hospitals formally announcing that they will begin a formal project to review and redesign the Medicaid payment system. • March 7 - invitations sent to technical workgroup. • Target is to hold first meeting by March 29, with future meetings twice per month.

16. Cont., Medicaid Reform • MSA guiding principles: • More predictability • Less volatility • Efficiency • Cost Effectiveness • Simplicity

17. Examine Reimbursement for These Areas • Statewide Med/Surg Rate with Appropriate Adjustments • Outlier Reimbursement • Inpatient Capital • OPPS • Pool Payments

18. MSA Timeline • March – May Technical workgroup • April – June MSA staff modeling. • May – June Technical workgroup recommendations to steering committee. • June MSA staff completes software/systems request changes and draft SPAs.

19. Cont., MSA Timeline • July – Dec. MSA promulgates policy and completes final calculations. • Aug. – Dec. CMS approvals • Jan. 1, 2014 MSA begins phased implementation.

20. Medicaid Expansion • ACA allows states to voluntarily expand Medicaid to uninsured adults. • Gov. Snyder proposes to expand Medicaid to cover individuals up to 138% of federal poverty level effective Jan. 1, 2014. • State legislature must appropriate the federal funds when omnibus budget appropriation is passed later this spring.

21. Cont., Medicaid Expansion • Expected to cover about 450,000 low-income adults who are currently uninsured but fail to meet current eligibility requirements. • Who would qualify? • Individuals that are at least 19 years old. • Those that are single, working with annual earnings up to $15,856 or in a family of four with earnings up to $32,499. • Based on 138% of 2013 FPL

22. MHA Expansion Resources • MHA supports expansion and urges member hospitals to use resources to educate legislators, members of the community, etc. • Saves Money, Saves Lives • Many tools available at: www.expandmedicaid.com.

23. Health Insurance Exchange • Letter recently submitted to state Senate urging lawmakers to support appropriating the $30 million federal grant funding available to establish a federal-state health insurance exchange. • Letter submitted on behalf of the business community and collectively represents more than 100,000 employers across Michigan.

24. FY 2010 DSH Audits • Hospitals should sign and submit an FTP form to Myers and Stauffer today if they haven’t already done so. • Hospital surveys expected to be available March 29, with hospitals to have until April 30, to complete and submit to Myers and Stauffer. • Preliminary report due to MSA Sept. 30. • Final report due to CMS Dec. 31.

25. Health Care Advocacy Day • 8 a.m. to 1 p.m. on April 17 in Lansing. • MHA • Michigan Association of Healthcare Advocates • Michigan Healthcare Volunteer Resource Professionals • Registration available on MHA website by March 15.

26. BCBSM Mutualization • As reported in the March 11 MHA Monday Report, the state Senate unanimously approved SBs 61 and 62 which would allow BCBSM to become a nonprofit mutual disability insurer. • These bills bring regulatory reform and set up a health and wellness fund to which BCBSM will contribute $1.6 billion over 18 years. • Legislation is necessary to help BCBSM transition as the ACA is implemented. • Gov. Snyder is expected to sign these bills into law.

27. BCBSM Fee Screens • Certain outpatient services currently paid as a percentage of charges will be converted to fee-based payments effective Oct. 1, in accordance with the BCBSM PHA. • Change affects emergency, observation, treat room, dialysis, general therapeutic, diabetes education, cardiac rehab, pulmonary rehab, clinic, urgent care, ambulance.

28. Cont., BCBSM Fee Screens • Fee screen payments available on Web-DENIS by HCPCS. • BSBSM intends to implement the change in a budget-neutral manner for first year of implementation.

29. Days in A/R • Based on 33 hospitals participating in MHA Monthly Financial Survey (MFS) • Jan – Dec 2012 versus 2011 • Medicare – down from 31 to 30 days • Medicaid - down from 45 to 40 days • BCBSM – down from 35 to 31 days • Overall – down fro 46 to 45 days

30. 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 dconklin@mha.org 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. 30

31. ???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: vkunz@mha.org 31