The Autumn Institute A Dual Chapter Event OHA Update

1. The Autumn InstituteA Dual Chapter Event OHA Update Charles Cataline Vice President, Health Economics and Policy Ohio Hospital Association charlesc@ohanet.org September 25, 2014

2. Agenda • Federal • Medicare FFY 2015 IPPS Final Rule • Medicare CY 2015 OPPS Calls for More Bundling and Packaging • Medicare RAC Contract Re-bid Gets Weirder; Where is Medicaid? • OHA Working with ODM on Medicare DSH Data • State • Update on Medicaid/Ohio Exchange Enrollment Targets • Medicaid APR-DRG Transition: Year II Yields Unexpected Results; What’s Left? • BWC 2015 Hospital Payment Targets • Other Finance / PFS • 2011 Medicaid DSH Audit is Done, 2012 Kicks in • Medicaid Episodic Payment Plan Moving Forward • SAFE Program Audits Possible Next Year • Hospital Price & Quality Transparency Still an Issue HFMA Central & NW Ohio Chapters

3. Medicare 2015 IPPS • Market Basket Inflationary Update = 2.9% • Market Basket Adjustment (ACA) = (0.2%) • Productivity Adjustment (ACA) = (0.5%) • Documentation and Coding Effect (ATRA) = (0.8%) • MS-DRG Budget Neutrality Adjustment = (0.3%) Total (With no Other Program-Based Adjustments) = 1.1% • VBP, Readmissions & HAC Reductions also Applied • 2% Sequestration Still in Effect • Larger Than Expected Medicare DSH Cuts • Increase in Outlier Threshold (From $21,748 to $24,758) • Penalty for Providers That Aren’t EHR “Meaningful Users” Overall (CMS) = Program Expenditures Reduced $756 M • Wage Index Revisions Due to Revised Census Tracts • Short-stay Payment Policy on Hold (for now!) HFMA Central & NW Ohio Chapters

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5. Medicare 2015 OPPS (Proposed) No Major Changes • Proposed MB Rate increase of 2.1 percent • Expanded Packaging/Composite APCs • 28 Comprehensive APCs for Device-Dependent APCs • Conditional Packaging of all Ancillaries With Geometric Mean Cost of $100 or Less • Prosthetic Supplies Deemed to be Part of APC • Physician Certification Only for Long Inpatient Stays • Does not Eliminate Need for Proper Physician Order • Services Furnished in Off-campus Provider-Based Departments Must be Identified on Line-Item Basis HFMA Central & NW Ohio Chapters

6. Medicare RAC RAC Contract Rebid Still on Hold New Regions Drawn to Re-Weigh Claims Volume Existing Region B Subdivided – at the Very Least Some States in Region B Must Switch Contractors CMS “Paused” Medicare RAC Activity Until New Contracts are in Place Feb. 21 – Last Day a RAC can Issue Post-Payment ADR Feb. 28 – Last Day a MAC can Issue ADR for RAC Pre-Pay Review June 1 – Last Day a RAC Can Send Denied Claims to MAC for Recovery BUT… CMS Has Now Reopened Existing Contracts to a Limited (?) Number of (Mostly) Automated Reviews. No Short-stay Reviews No Details and/or Effective Dates Out as Yet - Stay Tuned!!

7. Medicare RAC Maps – Old Vs. New Proposed Current

8. Other Medicare RAC Process “Improvements” In the Interim, CMS Continues to “Refine” RAC Program • Medicare RAC Program Administrative Improvements • Expanded Services Eligible for Inpatient “Part B” Re-Bills • New Offer to Buy Out Outstanding Claims Under Appeal • @ 68% of “net paid amount” • Not all Providers or Claims Eligible are Eligible • Formal Agreement and MAC Review of Claims Required • Two-Midnight Rule • Proposals for IPPS “Short-Stay” Claims Payment What’s in it For CMS? • Fewer Appeals at ALJ • Settle Lawsuits, or at Least Lessen Possibility of Congressional Action But is it Enough? HFMA Central & NW Ohio Chapters

9. CMS: Five Medicare RAC Program Improvements HFMA Central & NW Ohio Chapters

10. What’s Up With The Medicaid RAC?! • ODM/CGI Contract Ended in July • ODM Assumed Responsibility for Outstanding Reviews, Recoveries and Appeals • ODM Will Internally Correct Claims Recovered in Error • ODM will Complete any Reviews of ADRs/Medical Records Sent to CGI Before Contract Ended • ODM Will Manage Any Requested Appeal CGI did not Complete • Interest on New Recoveries Will Only Accrue to Original Overpayment Notification or Appeal Request • No Date Released for any of the Above! HFMA Central & NW Ohio Chapters

11. State Update: Medicaid Expansion • Background • Started Jan 1. 2014 • Electronic and Expedited Application Software available at “benefits.ohio.gov” • Linked to Federal Data Hub • No CPJFS Visit Required • Utilize MAGI Standards • No Documentation Required • Presumptive Eligibility Now Statewide • 85/85 Quality Standards yet to be enforced • OHA “Intake” Tool Kit Available at http://ohiohospitals.org/Policy-Advocacy/Finance-Policy/Medicaid/Medicaid-Enrollment-Toolkit.aspx HFMA Central & NW Ohio Chapters

12. Medicaid Expansion Numbers 1,117,407 Applied for Medicaid Through benefits.ohio.gov • 822,807 (74%) Have Been Resolved • 592,390 Individuals Enrolled in Medicaid • 230,417 Determined to be Ineligible Expansion Population Totals • 338,707 have enrolled • ODM Estimated 175,000 Would Sign up by June 2014 • Actuaries Estimate 563,000 Ohioans are Newly Eligible, and 366,000 Would Sign up for Coverage by June 2015 (93% of estimate) • This Includes 26,000 who Received Medicaid Coverage Through Metro Health Waiver HFMA Central & NW Ohio Chapters

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15. Health Insurance Marketplace 154,668 Ohioans Have Selected Plans on the Exchange as of May 30. 85% of Them Received Financial Assistance. HFMA Central & NW Ohio Chapters

16. Medicaid APR-DRG Conversion Background • Year-Long Process to Determine Relative Weights, Base Rates & Payment Policies • OHA Goal: Fairness and Equity Across Hospitals • ODM Added Approx. $84 M / Year in FFY 2014 Inpatient Payments for In-state Hospitals • Helped Rural Hospitals by Repurposing Funds From Out-of-State Hospitals ($24 M / Year) • Has Three-Year Transition with Risk Corridors For Urban Hospitals to Ensure Stability and Minimize Winners & Losers • Preserves Most Medicaid IPPS Reimbursement Policies and Payment Logic For Now. HFMA Central & NW Ohio Chapters

17. Medicaid APR-DRG Conversion IPPS Policy Shifts for SFY 2014 and Beyond • CMS Grouper 15 to 3M APR-DRG; New Grouper Starts Each Year with Discharges 10/1 and After • Newly Calibrated Relative Weights • New Base Rates & Three-Year Transition Includes Stop Loss/Stop Gain Applied to Urban Peer Groups • Outliers Policy Changed to Mirror Medicare • Medical Education Payments Held Harmless in SFY 2014 But It’s Not Over ‘till It’s Over • Stop Loss/Gain Threshold in Out Years of Three-Year Transition Causing Lots of Unforeseen Changes in SFY 2015 • ODM Proposing Revised SFY 2015 Base Rates for Transition Stop Loss/Gain Hospitals - Effective 10/1/14 • Additional Discussion Still to Come About Peer Groupings, Next DRG Re-base & Re-Calibration, Medical Education Payments, HAC, Other? HFMA Central & NW Ohio Chapters

18. 2015 BWC • OHA Recommends BWC Stay With Medicare IPPS/OPPS Methodology • Adopt Published Rates in Medicare’s FFY 2015 Proposed Rule; Includes a General Update of 2.1% • Eliminate the 1.008% Adjustment Factor to Offset the Medicare Coding and Documentation Adjustment • Refine the BWC Payment Adjustment Factors (PAF) to Include Separate Factors Based on Each Hospital’s Medicare Urban or Rural Classification • BWC Fee Schedule Analysis Revealed Disparity of Payment-to-Cost Ratio at Major Teaching, Urban, Government & 400-499 Bed Hospital • Bottom Line: as Medicare Moves so Does BWC (Down!) HFMA Central & NW Ohio Chapters

19. 2015 BWC • BWC Proposing to Refine the Current Payment Adjustment Factors (PAF) at the Urban and Rural Levels • OHA Finance Committee to Review and Respond HFMA Central & NW Ohio Chapters

20. Etc… Etc… • 2015 HCAP Moving Add’l $$ to OBRA Pot • Medicaid Episodic Payment Plan Gaining Speed • OHA Finance Committee Considering Responses • SAFE Program Audits Possible Next Year • FFY 2011 Medicaid DSH Program (HCAP) Audit Results are Out. • Not Too Many Surprises (Except for OB Requirement) • FFY 2012 Audit Will Start Later This Month • Expect Additional Scrutiny on Hospital Price and Quality Transparency • Still Waiting on CMS/HHS Final Rule for HFMA Central & NW Ohio Chapters

21. State Innovation Models – Episodic Payments HFMA Central & NW Ohio Chapters

22. Questions / Comments? HFMA Central & NW Ohio Chapters