LEVERAGING PURCHASED/REFERRED CARE (PRC) RATES 2019 Tribal Self-Governance Consultation conference April 1, 2019

Inpatient PRC Rates also known as Medicare-like Rates Section 506 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 requires All Medicare participating hospitals and Critical Access Hospitals must accept the Medicare payment methodology, plus the usual Medicare coinsurance amount, and no more, as payment in full for the following programs: A PRC program of the IHS A PRC program carried out by an Indian Tribe or Tribal organization under the Indian Self- Determination and Education Assistance Act A program funded through a grant or contract by the IHS and operated by an urban Indian organization, under which items and services are purchased for an eligible urban Indian. Hospitals and CAHs may not refuse service to an individual on the basis that the payment is authorized under PRC and IHS funded urban Indian programs 42 CFR 136 Subpart D Indian Health Service / Division of Contract Care

Inpatient PRC Rates Payment Methodologies 1. Prospective payment System (PPS) Inpatient hospital services of acute care hospitals, psychiatric hospitals, rehabilitation hospitals, and long-term care hospitals are paid based on the same PPS systems Medicare uses to pay for similar hospital services under 42 CFR Part 412 – PPS for Inpatient Hospital Services. Outpatient hospital services and Skilled Nursing Facility care is paid based on the PPS systems that Medicare uses to pay for those services. Such payment systems are found in 42 CFR Part 413 and/or Part 419. Indian Health Service / Division of Contract Care

Inpatient PRC Rates Payment Methodologies 2. Reasonable Costs Medicare participating hospitals that are exempt from inpatient PPS and receive reimbursement based on reasonable costs are paid per discharge based on the reasonable cost methods established under 42 CFR Part 413 Critical Access Hospitals, Children’s Hospitals, Cancer Hospitals, and certain other hospitals reimbursed by Medicare under special arrangements EXCEPT – the interim payment rate under 42 CFR Part 413, subpart E constitutes payment in full for authorized charges e)Interim payments after initial reporting period. Interim rates of payment for services provided after the initial reporting period will be established on the basis of the cost report filed for the previous year covering Medicare services. The current rate will be determined - whether on a per diem or percentage of charges basis - using the previous year's costs of covered services and making any appropriate adjustments required to bring, as closely as possible, the current year's rate of interim payment into agreement with current year's costs. This interim rate of payment may be adjusted by the contractor during an accounting period if the provider submits appropriate evidence that its actual costs are or will be significantly higher than the computed rate. Likewise, the contractor may adjust the interim rate of payment if it has evidence that actual costs may fall significantly below the computed rate. Indian Health Service / Division of Contract Care

Inpatient PRC Rates Payment Methodologies 3. Coinsurance PRC programs pay the equivalent of Medicare coinsurance IHS, Tribes and Tribal Organizations pay a providing hospital the full PPS based rate, or the interim reasonable cost rate without reduction for any co- payment, coinsurance, and deductibles that the Medicare program requires patients to contribute. For Medicare Part B services, IHS/PRC pays both the Medicare and beneficiary’s portion of the payment, so that, in either instance, the hospital gets 100% of whatever the Medicare rate is for the service provided NOTE – If the I/T/U has negotiated a payment amount, the I/T/U pays the lesser of the negotiated amount, or the amount determined by the methodologies discussed today Indian Health Service / Division of Contract Care

PRC Rates Payment Coordination of Benefits Payor of Last Resort exception – Tribal Self-Insurance PRC program pays only the portion of the allowed amount not covered by another payer Payment does not exceed the rate calculated by the Payment Methodologies discussed today, or the contracted amount whichever is less Medicaid payment is considered payment in full and PRC makes no other payment Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care PRC Rates for Physicians and Non-Hospital Providers of Supplies and Services 42 CFR 136 Subpart I – Limitation on Charges for Health Care Professional Services and Non-Hospital-Based Care – March 21, 2016 IHS and IHS funded urban Indian programs Tribes or Tribal organizations under the Indian Self-Determination and Education Assistance Act provided they have agreed to opt-in to the PRC rates in their compact or contract (e.g. the funding agreement). Covers payment to all providers and suppliers not covered by 42 CFR 136 Subpart D (inpatient PRC rates) for any care authorized by a PRC program as discussed above. Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care PRC Rates for Physicians and Non-Hospital Providers of Supplies and Services Payment is made using Medicare methodologies, however, I/T/U’s can negotiate higher rates of payment Must meet a reasonable pricing arrangement Most Favored Customer (MFC) rate is another rate that providers charge to other entities like insurance providers MFC is a platform for negotiation It is incumbent on the provider or supplier to provide this rate to PRC staff It is the responsibility of the I/T/U to calculate/estimate payment rates When there is no rate it is calculated at 65% of billed charges The actual payment amount is provider specific Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care PRC Rates for Physicians and Non-Hospital Providers of Supplies and Services Provider that refuses to accept or negotiate a fair and reasonable rate IHS keeps track in a database – Report to your Area PRC Officer IHS will not do business with that provider Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care PRC Rates for Physicians and Non-Hospital Providers of Supplies and Services The opt-in option only applies to Tribal PRC programs Tribes include language in their funding agreement which has the suggested statement below or something similar: “Tribal Health Program agrees to be bound by 42 CFR part 136, subpart I in the administration and provision of PRC services carried out under this Agreement” Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care PRC Rates for Physicians and Non-Hospital Providers of Supplies and Services Purchasing Power The PRC rates purchasing power demonstrates how IHS is able to stretch the same amount of money to cover additional necessary health care services. FY 2017 - $252.9 Million FY 2018 - $610.1 Million FY 2019 - $261.5 Million as of January 31, 2019 TOTAL - $1.1 Billion demonstrates how IHS is able to stretch the same amount of money to cover additional necessary health care services. As such, when IHS announces a particular level of PRC rates discount it is describing the increase in purchasing power that IHS has experienced as a result of the implementation of the PRC rate rules. The PRC Rates Discount amounts are calculated by subtracting the amount paid under the current PRC rate rules from the amount IHS would have had to pay in the absence of the PRC rate rules. These amounts do not reflect an increase in PRC funding, nor an amount of funding that remains unspent; rather, it represents IHS’s successful implementation of PRC rate discount measures under the PRC rate rules, which has allowed IHS to purchase additional care and increase its purchasing power under PRC programs. Indian Health Service / Division of Contract Care

Indian Health Service / Division of Contract Care QUESTIONS Terri Schmidt, Director, Division of Contract Care Terri.Schmidt@ihs.gov 301-443-4973 Indian Health Service / Division of Contract Care