Michigan Patient Accounting Association (MPAA) January 24, 2014

1. Michigan Patient Accounting Association (MPAA)January 24, 2014 MHA Update Vickie R. Kunz Senior Director, Health Finance Michigan Health & Hospital Association

2. Who is the MHA? • Advocacy organization representing all hospitals in Michigan. • Activities include: • State advocacy on proposed legislation, including Medicaid funding and policy activities • Federal advocacy and policy on Medicare and Medicaid issues • MHA Keystone Center – Quality Improvement and Patient Safety Initiatives • BCBSM Contract Administration Process • Unique to Michigan

3. Payer Issues • The role of the MHA is to assist in resolving systematic payer issues. • Individual hospital contracts determine terms and conditions and take precedence. • Communicate issues to Marilyn Litka-Klein or Vickie Kunz at the MHA.

4. Health Insurance Expansion

5. Health Insurance Exchange • Health Insurance Marketplace/Exchange opened Oct. 1 for enrollment – lasts through March 31 • Launch dominated by technical glitches, website failures; some improvement in recent weeks • Improved speed • Site now permits users to see plans/prices without creating an account • Additional staffing in call center, Web chat feature • But… many still encountering problems and have resorted to paper/phone application

6. Coverage on the Exchange • Single portal of application for 36 states, including Michigan: www.Healthcare.gov • What does coverage look like? • No denial for pre-existing conditions • Insurers must cover a minimum set of services called essential health benefits • Must organize their plan offerings into five levels of patient cost-sharing from least to most protective • No gender- or illness-based rate setting

7. 10 Essential Health Benefits Required • Ambulatory patient services • Emergency services • Hospitalization • Maternity and newborn care • Mental health and substance use disorder services, including behavioral health treatment • Prescription drugs • Rehabilitative and habilitative services and devices • Laboratory services • Preventive and wellness services and chronic disease management • Pediatric services, including oral and vision care.

8. Michigan’s Exchange What does Michigan’s exchange look like? • 13 insurers offering multiple products

9. Michigan’s Exchange • Variety of plans (162), premiums and subsidies • Coverage began as early as Jan. 1, for those enrolled by Dec. 23 • Wide range of prices dependent on age, tobacco use, county, etc. • Less than $140 to more than $1500 before subsidies • Michigan average: about $300 before subsidies

10. Who can receive a subsidy? • Individuals with household income between 100 and 400 percent of the FPL ($11,400 and $45,960) • Between 100 and 133 percent of the FPL: choose the exchange or a Healthy Michigan Medicaid managed care plan • Plans available through Medicaid are likely to be lower cost; co-pays, deductibles and premiums will apply to some higher-income Healthy Michigan Medicaid enrollees

11. Michigan Enrollment – Healthcare.gov • As of Dec. 28: • Approximately 135,000 have submitted applications • 75,511 have selected a marketplace plan • 70% selected a silver plan • 16% selected a bronze plan (much lower % than expected) • 14% selected a gold or platinum plan • 84% are eligible for financial assistance (tax credits) • 25% are age 18 – 24 (slightly higher than 24% nationally) • 55% are female • No info regarding actual health status. • 22,221 assessed for Medicaid/MIChild eligibility • Don’t know how many have actually enrolled or eligible Apr. 1.

12. Impact of High Deductibles • Medical debt is number 1 cause of bankruptcy in US. • 34% of people in higher-deductible plans had difficulty paying medical bills compared with 24% in lower-deductible health plans. • Deductibles for plans on the federal exchange average $3,000 and those for the least expensive bronze-level plans average $5,082. • Lowest out-of-pocket limits on Healthcare.gov plans were $4,350 for individuals on bronze plans and $8,700 for families. • Most Americans have less than $3,000 to cover such out-of-pocket costs. • ACA requires consumers’ portion of expenses to be capped at: • $6,350 for individuals • $12,700 for familiesSource: USA Today, 1/15/14.

13. Average Deductibles • Average deductible for employer-provided plans has increased 54% since 2008. • 2013 average: $1,135 • 2008 average: $735 • Source: USA Today, 1/15/14.

14. The Changing Marketplace • Roughly 6 million additional Americans had health insurance on Jan. 1, as a result of the ACA. • 2 million through Health Insurance Marketplace • 4 million through Medicaid/CHIP • Final dates for enrollment and premium collection vary by state and insurance company. • In some states, enrollments accepted up to Dec. 31, with the final date for premium collection extended to Jan. 15. • Some insurers may accept January enrollments as late as Jan. 31, with benefits retro to Jan. 1. • Insurance companies needing extra time to process the late enrollments, and collect premiums before they can verify coverage.

15. Impact on Hospitals • Some patients put off needed elective care until they could obtain coverage. • Patients may schedule appointments, diagnostics or other procedures without having their insurance cards, ID numbers or documentation of benefits. • Hospitals may not be able to verify coverage and will need to work with patient on appropriate care plans and financial strategies. • Have patients bring a copy of any enrollment confirmation. • Some patients have called their new health plan to obtain group health plan number. • Temporary insurance cards available online for some. • In many cases, insurance coverage will be new and patients may not fully understand their financial obligations and how it is impacted by their benefits and provider network. • For elective services, provide patients with as much information as possible prior to service.

16. Continued, Impact on Hospitals • See AHA Advisory included in Jan. 20 MHA Monday Report. • Hospitals are encouraged to monitor the volume of : • Non-emergency services and procedures • Calls to managed care and PFS departments • Patient complaints or problem escalations • Calls to insurance insurers and their response time • Private pay billings; and • Uncompensated care or charity care • Business offices encouraged to carefully review claims denials. If claims were automatically denied because patient’s enrollment was not fully processed at time service was provided, hospital encouraged to resubmit claim.

17. Healthy Michigan Plan • 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 133% of 2013 FPL • Governor Snyder signed bill into law Sept. 16. • Would take effect 90 days after legislative session ends. • March 14

18. Cont., Healthy Michigan Plan • Waiver approved by CMS Dec. 30. • Enroll Michigan Coalition recently hosted a kick-off webinar. • Plans to initially enroll ABW population in Healthy Michigan. • MDCH goal of enrolling 322,000 individuals in 2014. • Patients, caregivers and others are encouraged to text “InfoMI” to 69866 to receive updates. • Updates available at www.enrollmichigan.com.

19. Healthy Michigan Implementation • Uncertainty surrounding status of individual applications that may be submitted before law takes effect. • In the mean time… • MDCH developing a state-specific Healthy Michigan application • Expansion population will not be penalized for lacking coverage for first three months of 2014 • MHA working with coalition partners on ways to identify/track potential enrollees now

20. Payment Limitation - Uninsured • E-Alert distributed Jan. 15 to CEOs, CFOs, and various other titles • Healthy Michigan Plan includes a provision that hospitals cannot require payment for service of more than 115% of Medicare from certain uninsured individuals beginning March 14. • Law specifies that a hospital participating in the medical assistance program under the act and rending services to an uninsured individual shall accept 115% of Medicare rates as payment in full if their annual income level is up to 250% FPL. • See MHA Advisory Bulletin # 1352, dated Oct. 28, 2013 for guidance on methodology to calculate the effective Medicare payment rate. • that hospitals be prepared to communicate their updated payment policies in the event they receive requests from patients, consumers or local media. • Ensure that hospital employees are prepared to direct all phone, email and in-person inquires to the appropriate individual or department who can respond to requests for payment estimates.

21. Cont., Payment Limitation • MHA recommends: • Hospitals be prepared to communicate their updated payment policies in the event they receive requests from patients, consumers or local media. • hospital employees are prepared to direct all phone, email and in-person inquires to the appropriate individual or department who can respond to requests for payment estimates for the service requested. • Staff may consider answering “no more than Medicare rates plus 15% prior to the specific calculation for each patient. • Preparing hospital staff to answer similar inquires from patients in ER, observation, inpatient and outpatient settings of the hospital. • Updating hospital website contact as necessary to reflect these newly adopted policies.

22. Medicaid Presumptive Eligibility • Presumptive eligibility = immediate access to services, coverage for those services • ACA expands PE privileges for hospitals • CMS banned use of outside entities in future PE determinations • MHA working with AHA to urge the reversal/modification of this ban • MHA working with DCH/DHS on getting state guidance to hospitals as soon as possible • Some hospitals using their staff with outside entities providing oversight.

23. Estimating Hospital Financial Impact of Health Insurance Expansion • Hospital-specific model available for purchase at $5,000. • See MHA Advisory Bulletin # 1350, dated 9/16/13 for link to webinar PPT and recording. • In general, most hospitals believe bad debts will increase as individuals enroll in plans with higher deductibles/copays and as employers implement higher deductible plans.

24. Medicaid

25. Payment Reform • Group Finding Report released Dec. 19. • MSA staff presented their summary of the results to the steering committee on Nov. 15. • MSA staff were requested to complete additional modeling which will be evaluated prior to the next steering committee meeting. • No changes have been recommended at this time. • No definitive timeframe for MSA decision.

26. Rate and Weight Update • Effective Jan. 1: • inpatient DRG and inpatient rehab per diem rates updated. • hospital capital rates. • implementation of MS-DRG Grouper 31.0, implemented by Medicare Oct. 1. • Rates available on MSA website. • HMOs should pay minimum of these rates to non-contracted hospitals.

27. Integrated Care Demonstration Project • Phased-in implementation of pilot project expected to begin July 1, 2014. • Hospitals responsible to negotiate payment parameters in their contracts. • Regional implementation • 4 regions comprised: • 8 SW counties Macomb County • UP Wayne County

28. Integrated Care Project – Cont. • MSA has selected plans to serve as ICOs with plans currently conducting readiness reviews. • Simultaneously, MSA is working to finalize an MOU with CMS to specify the conditions of Michigan’s wavier. • No guarantee of Medicare rates for I/P and O/P services • Ambiguity in rate for SNF payments

29. Integrated Care Project – Cont. • Third Quarterly Public Forum – Jan. 28 – Kalamazoo • Pre-registration not required. • Dial-in option available • See Jan. 20 MHA Monday Report for additional info.

30. Summary of Hospital QAAPs • Available in MHA Advisory Bulletin # 1353 dated 11/25/13. • Provides overview regarding payment allocation for each of the four programs. • MACI/FFS Outpatient Uncomp DSH • HRA/HMO Inpatient Psych HRA • The same tax base is used for all four programs. • Data updated annually for both payments and tax. • Can result in change in hospital net benefit/loss.

31. 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.

32. DSH Audits – Cont. • Final 2010 audit report submitted to CMS by • Dec. 31, with report available on MSA website. • A number of hospitals would have experienced DSH payment recoveries. • All DSH payments must be considered in the calculation: • $45 million regular DSH • $60 million tax-funded OP uncompensated DSH • Indigent Care DSH • Governmental hospital DSH ^.

33. Revised DSH Policy • MSA will use a multiple-step DSH process: • Initial DSH calculation • Interim DSH settlement – 2 years after payment • Final DSH audit-related redistribution – 3 years after payment

34. DSH Calculation • FY 2011 Step 2 - MSA expects to complete by late February 2014, prior to start of audits. • FY 2011 Step 3 - Audits expected to begin March 2014. • MHA will host DSH education session prior to FY 2011 audits. • FY 2012 Step 2 – MSA expects to complete by April 30, 2014.

35. Medicaid Interim Payments • MSA released a final policy to change from bi-monthly to monthly MIP and CIP payments. • This change delayed but took effect Nov. 11, 2013, after CMS approval received. • MIP and CIP payments will be made the second Thursday of each month.

36. Hospital Post Payment Audits Contract • Contract awarded to MPRO for July 1, 2013 – June 30, 2016. • MPRO will use both automated and medical records reviews for audits of FFS claims. • Initial focus will be on one day inpatient hospital stays for certain DRGs to evaluate whether the services provided could have been provided in a different setting.

37. Cont., Hospital Post Payment Audits • MPRO will begin sending record requests soon. • Hospitals notified via US mail. • Correspondence sent to address listed in CHAMPS addressed to ‘Medical Records – Medicaid Liaison’ with a copy to CEO. • Hospital have 30 days to respond. • Check MPRO website. • Contact Janet Howe at MPRO • jhowe@mpro.org

38. BCBSM • BCBSM launching narrow network product for individual policyholders. • Expected to provide affordable options • Two BCBSM health insurance products offered on healthcare.gov. starting Oct. 1, 2014, and effective Jan. 1, 2015. • Policies only cover policyholders who use hospitals and physicians that are part of the designated EPO network. • Policyholders must pay for out-of-network care, except for emergency services.

39. BCBSM - Two Products Available • EPO contract offered by BCBSM covering providers in eight counties: Lenawee, Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and St. Clair. • Blue Care Network – cover providers in seven counties: Livingston, Macomb, Monroe, Oakland, Washtenaw, Wayne and St. Clair.

40. Contract Terms • Must allow audits of utilization, quality and health management programs. • Agree not to request or accept payment for denied services. • Agree to include all employed physicians in the network. • Agree to coordinate benefits. • Agree to allow referrals to other hospitals in network when a service is not available.

41. Medicare

42. Federal Legislation – December 2013 • 24% physician payment cut averted for 3 months. • 6-month extension • Medicare Dependent Hospital (MDH) Program. • Low Volume Hospital Adjustment. • 2-year delay in ACA-mandated Medicaid DSH cuts. • Pushes first year of cuts to FY 2016 (rather than FY 2014) • 1-year extension of Medicaid DSH cuts • Into 2023 • 2-year extension of sequestration cuts • To 2022 and 2023

43. Federal Activity Ongoing • 24% physician cut delayed 3 months • Long-term funding? • Extend sequestration to fund restoration of unemployment benefits • Hospitals remain target for additional cuts

44. Existing Medicare Cuts (10 Year Impact)

45. Additional Medicare Cuts Under Consideration – 10 Year Impact

46. 2014 OPPS Final Rule • Rule effective Jan. 1. • Provides a net 1.9% increase after 2.5% MB update is reduced by the ACA-mandated adjustments and budget neutrality. • Hospitals that fail to successfully participate in the OPQRP are subject to a 2% MB reduction. • Outlier threshold of $2,900, a 43% increase to the 2013 threshold of $2,025. • Statewide impact is an increase of $17 million, or 0.9 percent overall. • Impact will vary by hospital.

47. 2014 APC Weights & Changes • CMS used 2012 hospital FFS claims data to recalibrate APC weights. • Adopted policy changes that will change how hospitals code and be paid for evaluation and management (E/M) clinic visits. • Collapsed the previous five levels of E/M clinic visits into one. • Expanded the categories of items/services that are packaged into APCs for payment rather than separately paid. • Established 29 comprehensive APCs for certain device-dependent services.

48. Impact on Top APCs

49. Other 2014 OPPS Changes • Adoption of four of the five proposed quality measures. • Influenza vaccination for healthcare personnel in the hospital-based outpatient setting. • Endoscopy/polyp surveillance – appropriate follow up for patients with normal findings. • Endoscopy/polyp surveillance – appropriate follow up for patients with a history of adenomatous polyps. • Cataracts – improvement in patient’s visual function within 90 days following surgery. • Continuation of 7.1% payment increase for SCHs. • Adoption of the proposal to end moratorium on enforcing direct supervision policy for outpatient therapeutic services in CAHs and small rural PPS hospitals.

50. Data Collection Delayed • Data collection for 3 new hospital OP and ASC quality measures delayed from Jan. 1 to Apr.1. • Includes data collection for 3 new colonoscopy surveillance and cataract surgery quality measures which impact payment for 2016. • Delay since specifications were not available until Dec. 31.