1 Medicaid Advisory Group Meeting October 20, 2010 Department of Health Services Division of Health Care Access and Accountability 1

2 Agenda 1. FY 2011 Deficit & DSH Claiming Budget Overview Hospital Budget 4. Rate Reform FY 2011 State Plan Amendments and RAIs Pay-For-Performance 7. Hospital Assessment Update 8. Critical Access Hospital Assessment 9. CAH Cost Settlements 10. Data Requests 11. Transitioning MAG to Public Meetings 2

Deficit LFB Projection: $148 Million less $ 20 Million Senior Care less $ 44 Million Cap Timing Adjustment $ 84 Million 3

DSH Claiming Opportunity With the support of the hospital community, DHS has the ability to make retroactive supplemental DSH payments through an increase in the provider assessment.  DHS has CMS approval to make additional FFY 2009 supplemental payments to private acute care hospitals, subject to the availability of state funding.  DSH payments would be distributed based upon a hospital’s uncompensated care costs in relation to total uncompensated care costs for all private acute care hospitals.  For FFY 2009, WI had a DSH Allotment of $156 million with remaining available DSH funding of $88 million.  In order to draw down the additional DSH funding, DHS would require to increase the assessment by $54 million.  This would result in a Net Benefit of $34 million to hospitals.  $19 million would go towards solving the FY 11 deficit. 4

Budget Overview  A substantial deficit is projected in the state budget for the biennium. This deficit will place significant pressure on all state programs to obtain savings and cost containment.  $2.5-$3.2 billion over the biennium 5

Hospital Budget 6

77 Rate Reform 3.0 Rate reform 3.0 was included as part of the Department’s FY11-13 budget request : ●Assumes $300 million GPR savings over the biennium ●The Department will pursue the same process as in rate reform 1.0 and 2.0. ●First stakeholder meeting on October 20, 2010 ●Specific direction was given to explore an all provider assessment ●In addition, will work to develop statutory language for next Governor’s budget submission

8 Context for Rate Reform Affordable Care Act Maintenance of Eligibility Requirements Mandatory covered service requirements Governor’s priorities: Promote Access and Improve Quality Guiding principles

9 Guiding Principles Identify savings to reach targeted reduction levels Look for both short-term solutions and long-term systemic changes Ensure that no one provider group is singled out for rate reductions Ensure access to care for MA patients Align payments with value rather than volume Build on previous MA quality improvement efforts including managed care P4P initiative Implement care management/coordination strategies Focus on high-intensity services Cost containment now about “continuous improvement”

State Plan Amendments ●Inpatient and Outpatient State Plan Amendments (SPAs) were submitted on September 30, 2010 and are currently under review by CMS. 10

11 Changes Made to SPAs 1. Appeals Policy Limit 5 Year Look Back For Cost Report –Use of Unaudited Cost Reports When Certain Criteria Met. 2. Terminate Critical Access Hospital Settlements 3. Align Rehab Rates to Psych Per Diem Calculations 4. Move EACH Payments under the UPL 5. Reform DSH Methodology to Pay DSH As a Lump Sum Payment 6. Revise Rural Hospital Payment Adjustment to Eliminate Reference to Wisconsin Historical Wage Index Calculation. 7. Wage Index Policy – Recommend In State and Out of State Index 8. Changed UPL Methodology to Medicare Cost Based Methodology. 11

12 Proposed 2011 Pay-For-Performance Measures ●Keep Five Checkpoint Measures used in 2010 ●Move from Pay-For-Reporting to Pay-For- Performance for: 1.Surgical Care Improvement and Clot Prevention Medication Given 2.Perinatal Measures ●Remove Readmission Report Requirement and use $500,000 to pay for performance on perinatal measures. 12

13 Request for Additional Information (RAI) on SPAs CMS sent RAIs on SPAs related to 2010 Pay- for-Performance Measures and 10% Critical Access Rate Cut (implemented from Jan-June 2010) DHS responded to request on Sept. 17 th CMS has until Dec. 17 th to approve or deny changes. 13

14 FY 2010 Pay-For-Performance Update DHS is currently working with WHA to finalize 2010 CheckPoint Information for FY 2010 Pay-For-Performance Measures. Payments will be made by December.

15 FY 2010 Hospital Assessment Update (1) – Actual payments reflect claims paid as of October 15, 2010 with Dates of Service between July 1, 2009 – June 30, HMO payments through April (2) – Inpatient Projections include only Acute Care Hospitals (3) – Outpatient Projections include Acute Care, Psychiatric and LTC Hospitals (4) –This is a preliminary projection of payments. Final results may vary. *This amount reflects payments that still need to be made to the Hospitals during the reconciliation for FY 10 Classification Actual Payments to Date (1) Total Projected Payments Payment Variance As a % Inpatient FFS (2) $126,913,820$132,558,856($5,645,036)-4.26% Outpatient FFS (3) $68,379,484$82,007,587($13,628,103)-16.62% Managed Care$356,139,537$383,999,997($27,860,460)-7.26% Total Access Payments$551,432,840$598,566,440($47,133,600)*-7.87%

16 FY 2011 Critical Access Hospital Assessment Update The first quarter of assessment was collected by September 30, HMO have paid out payments for July- September. October HMO payments should be received by November 1 st. FFS Access Payments started in September. A retro-active claims adjustment is being completed for claims from July 1 st -September.

17 Critical Access Hospital Cost Settlements DHS completed 2005 CAH Cost Settlements in September CAH Settlements were sent to hospitals in late September will be settled by the end of SFY 11. Contact: Randy McElhose (608)

18 Data Requests DHS has modified the format of the paid claims information provided to Hospitals. Information provided will be raw data. An FAQ will accompany the extract to help facilities use the extract to address needs. Two week turn-around should be expected. DSH Funding: Paid Claim Extract will provide Yes/No/Perhaps indicator as to whether member is eligible for T-19. If Members with “Perhaps” result are critical to meet DSH required percentage, DHS will conduct further research to definitively determine Yes or No. DHS is in process of upgrading our data repository hardware to import FPL info and give a definitive Yes or No for T-19 eligible. Expect functionality to be available February 2011.

19 Medicaid Advisory Group Newly Enforced CMS Guideline requires that public process must include one of the following: Hold one or more public hearings, at which the proposed rates, methodologies, and justifications are described and made available to the public, and time is provided during which comments can be received. Hold one or more additional public hearings, at which the final rates, methodologies, and justifications are described and made available to the public. Use a commission or similar process, where meetings are open to members of the public, in the development of proposed and final rates, methodologies, and justifications. Include notice of the intent to submit a state plan amendment in newspapers of general circulation, and provide a mechanism for members of the public to receive a copy of the proposed and final rates, methodologies, and justifications underlying the amendment, and an opportunity, which shall not be less than 30 days prior to the proposed effective date, to comment on the proposed rates, methodologies, and justifications. Include any other similar process for public input that would afford an interested party a reasonable opportunity to learn about the proposed changes. 19

20 Medicaid Advisory Group (cont.) To comply with this requirement the department will transition the MAG to a Department Advisory Group and hold public meetings. Meetings will still be held at WHA. 20

21 Future Considerations Start Discussing 2012 Rate Setting Process Next Meeting: February at WHA

22 COMMENTS AND/OR QUESTIONS?? 22