J. Brandon Durbin 2950-50th Street 909-18th St. Lubbock, Texas 79413 Plano, Texas 806-791-1591 469-361-0120 Fax 806-791-3974 brandon@dhcg.com brandon@durbinco.com

Topics Medicaid & State programs Medicare issues and legislative update Medicare Group Appeals

M N A I Y R U O L E S H G T P C J D B W F Z V K

E I A M D C Waiver Issues Medicaid DSH Nursing Facility MPA (UPL) NAIP Renewal Deferral UCC Issues Medicaid DSH Nursing Facility MPA (UPL) NAIP Payment reforms (VBP, etc)

M N A I Y R U O L E S H G T P C J D B W F Z V K

Waiver Renewal – DSRIP CMS Rural Providers Streamline this process Prototype projects for regions More realistic valuations Rural Providers Minimum allocations Meaningful RURAL projects in the prototypes

Waiver Renewal – UCC CMS does not like UCC Florida is a case study for our renewal CMS back at the table for Florida CMS is pushing “expansion”, but this is DOA Issues are not realistic Even with expansion we would have significant UCC, so we must renew UCC Florida is getting renewal of their UCC (LIP)

Waiver Renewal - UCC Alternatives Rural Providers have close to cost on traditional, and if the riders pass there is very little UCC for Medicaid. Its all about the uninsured. Alternatives such as a provider assessment, provider taxes, local provider fees will not provide funds for rural providers, as this just increases the Medicaid payments.

Funding Mechanics The deferral was caused by CMS letter to State Medicaid Directors TX position - Cannot legislate or rule make by memo or letter Established this method at the inception of the waiver Will it Continue The lawyers feel that Texas is legal, and that the use of a memo to change federal law is not applicable. A state wide provider tax is DOA

M N A I Y R U O L E S H G T P C J D B W F Z V K

Funding Time Frames last of 2014 UC IGT due June 5th. Their will be a commitment date before May 6th – 15th UC paid June 30, 2015 Rural hospitals are not considered “Transferring” Even though you IGT.

Speeding up the process for 2015 Request participation in May 2015 for 2015 Tools in June 2015 Increasing the prepopulated data including cost reports should help, as long as there are not too many errors.

Local Provider Fees Local provider fee through the County South Texas did in 2013 – Funded $160M in UCC 2015 bills – Waco, Temple, Beaumont, Bryan/College Station, Texarkana, Longview, possible for Tyler. Will fund $476M in UCC if all bills enacted $316M is new to program This will cause more stress on the system Some markets will be disrupted RHP 1 & 16 will have the greatest impact

Haircuts In 2013 this was 21.6% for those with fully funding IGT. In 2014 (DY3), with no other changes other than the base decreasing this would be 31.6% The win last year was to exempt Rider 38 hospitals from most of the cuts, projected haircut as follows: DY3 9.4% DY4 14.2% DY5 20.5%

Rider 38 Hospitals Hospitals in counties less than 60,000 in 2010 Sole Community Hospitals Rural Referral Hospitals Critical Access Hospitals

Other Haircuts Other Haircuts are very difficult to estimate, with the new pool system. Based on PY commitment levels, this is about 15%, but estimates are up to 25% With LPPF, this would increase about an additional 10% in DY4, plus the overall reduction in the UCC pool. The Private programs will have the most impact. Possible rolling back in 2015 about 15% of all community benefits.

M N A I Y R U O L E S H G T P C J D B W F Z V K

S D H DSH 2015 application date is the same as the UC tool – May 2015 for requesting the tool. DSH 2014 IGT date May 4th, 2015 Payment date is May 29th, 2015 Everything is pending the IGT. Two are resisting an IGT, but other 6 have committed to take their share How could a District forego $20M+ net for principle?

S D H DSH rules are already published Still issues with the transferring IGT. State GR for future years is (pick one) Nonexistent Iffy Reduced Certain There is a better way to handle this

S D H If we look at the effect of GR on the DSH program , the GR has about $300M net impact. Rural is about $12-13M benefit The Outpatient and inpatient Rider is about $80M. The impact of $300M in GR for a supplemental MCO payment is $700M+ Rates are better than DSH GR

S D H Rural DSH issues IGT will be on 50% of the amount, due to State GR in 2014 Future amounts will be based on 100% IGT, due to no State GR. Pass 3 will play a small part in future years ($30M) in total funding, with about half going to non rural public hospitals. Will help on the UCC haircuts

S D H Will need to revise DSH estimates if Rider on Outpatient passes The rider will decrease UCC cost & DSH capacity Reducing haircut You will get more overall money, but much of it will come in the way of claim payments

M N A I Y R U O L E S H G T P C J D B W F Z V K

H N U L P HHSC has changed the name to Minimum Payment Amount Program(MPAP) New program goes through the Managed Care Organizations (MCO’s) Closed program for now, but needs to be looked at for beyond 2016 Need to rewrite the rules for the future

H U L N P Future program will have an emphasis on quality programs Probably HHSC proscriptive projects and managed by MCO’s Also need to solve some funding problems MCO’s have identified many issues and are willing to help fix them

H U L N P IGT’s were based on data from 2013-14 through April of 2014 Due to reductions in nursing home admissions, the MCO’s will probably make a profit on this process, which is one of the issues the MCO’s seem willing to mitigate IGT funding requirements and timing on MPAP payments are disruptive to cash flows

H N U L P The overall NH census has been reducing about 1-3% per year in most regions, before managed care. The managed care companies want to decrease utilization and have case workers actively working to reduce census

Minimum Payment Amount Scenario in a Declining Census Model (Impacts Nursing Facility MPAP Payments but does not impact MCO Rate Enhancements for MPAP) Census in 2014 Annual Estimated MPA IGT @.4195 Actual Census Actual Payment Variance A 50 2,190,000 918,705 - B 70 3,066,000 1,286,187 68 2,978,400 (87,600) C 60 2,628,000 1,102,446 62 2,715,600 87,600 D 90 3,942,000 1,653,669 87 3,810,600 (131,400) E 40 1,752,000 734,964 37 1,620,600 85 3,723,000 1,561,799 84 3,679,200 (43,800) 395 17,301,000 7,257,770 388 16,994,400 (306,600)

H U L N P So what happens to that $306,6oo in the example? That becomes MCO profit. The real number when extrapolated and without the MCO’s reducing any census is about $9M that will not be realized based on these assumptions. If they are successful in reduction of residents that number grows…

H N U L P We have met with TORCH, Kevin Reed, Kevin Nolting and Billy Millwee (who represents the MCO’s) The MCO’s are agreeable to a solution where they will distribute the profit, as long as MCO can mitigate any losses. If MCO has risk for losses, the whole process may have bigger issues

Census in 2014 Annual Estimated MPA IGT @.4195 Actual Census Actual Payment Correct IGT Variance A 50 2,190,000 918,705 - B 70 3,066,000 1,286,187 68 2,978,400 1,249,439 (36,748) C 60 2,628,000 1,102,446 62 2,715,600 1,139,194 36,748 D 90 3,942,000 1,653,669 87 3,810,600 1,598,547 (55,122) E 40 1,752,000 734,964 37 1,620,600 679,842 85 3,723,000 1,561,799 84 3,679,200 1,543,424 (18,374) 395 17,301,000 7,257,770 388 16,994,400 7,129,151 (128,619)

H N U L P Also need to solve a fairness of IGT issue. The IGT is based on historical data and this may require an adjustment to align with actual data. Program would be jointly administrated by TORCH and TAHP (MCO Association) Cost should be minimal, and should more than be covered by profits from MCO profit distribution.

H N U L P MCO’s are also willing to make a prospective supplemental payment, to assist in the cash flow. Pay enough additional money on a quarterly basis to solve cash flow issues All public providers need to participate This is very similar to other programs in other states using MCO arrangements

E I A M D C New Program – NAIP Network Access Improvement Program Mini DSRIP program –less bureaucracy Year by Year program – Not long term projects We are working on a few projects School TeleMed TeleNICU™ through Dallas Children's More to come on this in the coming months

E I A M D C Rates & Value Based Purchasing VBP is the buzzword for payment reform Non Emergent ED was a bad one, that hopefully TORCH can get eliminated Very difficult to use VBP where the hospital has no real control over the care. It is continuing and will grow to make up most of your payment programs EAPG are still being pushed for the MCO. We need the rural rider on outpatient!!!

Telehealth This has boomed in the last few years Urban to rural is a traditional focus Needs sustainability, not just referral based Possible new programs TeleNICU Schools Nursing Homes TeleED and after hours clinics– Lots of potential savings.

Medicare Issues EHR payments and missing MCO data No Shadow bill = No payment CAH Swing Bed Utilization requires MCO for advantage plans be included in total. Will dilute SB reimbursement Make sure advantage is paying swing bed rates Low Volume Group Appeal We have one based on using actual utilization, not two year old data Average is $100K per provider

Medicare Legislation - Pending Extension of Low-Volume Hospital Adjustment Extension of Medicare Dependent Hospitals program Extension of Therapy Cap Exceptions Process Enforcement delay of Two-Midnight Policy Medicare Ambulance Add-on Payments – Extends the add-on payment for ground ambulance services, including in super rural areas Medicare Home Health Rural 3% Add-On

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