IPPS Final Rule Federal FY14 2 Midnight Rule Potential Impact on Revenue

Observation Cases by Hospital 2 12 Months ended March % of Observation cases have LOS > 48 Hours

Observation Cases by Payor 3

Excess > 48 Hours Observation Charges 4 12 Months ended March 2013

Excess Observation Charges 5

Maryland Revenue Implications For the twelve months ended March 2013 Overall there is minimal revenue impact to the system All PayersMedicare IP ODS to OBV $35,185,521 $13,723,941 OBV to IP$(28,834,429) $(12,201,621) Net Impact $6,351,902 $ 1,522,321 -The Observation Hourly Rate and Rate realignment shifts are driving this impact See Attached for Hospital Specific Impacts 6

Maryland Revenue Implications For the twelve months ended March 2013 All PayersMedicare & Medicare HMO IP ODS Total 108,683 $ 693,902,610 37,707 $ 238,519,082 IP Only Surg Proc (25,560) $ (331,039,175) (8,336) $ (112,485,650) Deaths (2,409) (9,700,212) (1,505) (6,314,830) AMA (3,898) (16,327,029) (1,777) (7,597,462) Trans Out (4,024) (13,257,003) (965) (3,395,373) 72,792 $ 323,579,191 25,124 $ 108,725,767 Re-price at Current OBV Rate $ 358,764,712 $ 122,449,708 Net Increase at Current OBV Rates $ 35,185,521 $ 13,723,941 IP ODS cases that should convert to Observation If these cases stay IP, Hospital is at risk for denials and RAC review Stay as IP ODS 7

Maryland Revenue Implications For the twelve months ended March 2013 OBV Cases that become IP (assumed OBV LOS 36+ hours) All Payers Medicare & Medicare HMO OBV Total 125,427 $ 557,778,273 44,935 $ 211,419,673 LOS less than 36 Hours 94,079 $ 348,337,113 30,828 $ 118,398,100 LOS 36 + Hours 31,348 $ 209,441,159 14,107 $ 93,021,573 Reprice as IP $ 180,606,731 $ 80,819,952 Net Decrease as IP $ (28,834,429) $ (12,201,621) These cases admitted to IP on Day 2 and bill OBV hours from day 1 and IP Day from Day 2 on Part A Bill 8 Will Other Payers adopt the same policy?