Revenue Cycle in 2016 OHA Update Dec. 11, 2015 Revenue Cycle in 2016 OHA Update December 11, 2015 AAHAM

what’s Up for 2016 Federal Medicare 2016 CY Hospital OPPS Final Rule OHA Update Dec. 11, 2015 what’s Up for 2016 Federal Medicare 2016 CY Hospital OPPS Final Rule Growing Pains for Medicare Hospital P-for-P Programs Value-Based Purchasing Rated Poor by GAO Comprehensive Care Joint Replacement Model Challenged Medicare Medical Review Programs Expanding RAC Contract Re-Bid Vacated; What Now? What About Medicaid RAC? ICD.10 Conversion Follow-up State Ohio Medicaid Hospital Policy and Payment Updates Medicaid EAPG OPPS Medicaid Episodes-of-Care Expanding into Payments Other Medicaid Initiatives AAHAM December 11, 2015 AAHAM

Medicare CY 2016 OPPS Final Rule Big Cut in Annual Update for Lab Services is Controversial Final Rule Out Oct. 30; Effective Jan. 1, 2016 (Mostly!) Usual Mix of Updates to APC Groups & Weights, Inpatient-Only Procedures and Quality Reporting Rule .2% Cut for Alleged Increases Related to “Two-Midnight Rule” Payments is Still in (for Now) – CMS States it Will Comment Later Three Big Updates: “Two-Midnight” Inpatient Admission Policy Hardened QIO (Ohio’s is KePRO Area 4) Takes Over Post-Pay Reviews of Short-Stay Medical Necessity (Site of Service) Started Oct. 1; Some Details Available in Webinar Materials “Significant” Problems to be Referred to Medicare RAC Does Not Affect RAC Reviews of Physician’s Order Reduced Annual Payment Update by 2% to Pay for Unbundled Lab Services Will Cause Negative Update for Most Hospitals in CY 2016 Watch for Advocacy/Legal Action on This AAHAM December 11, 2015

Medicare Pay for Performance Programs OHA Update Dec. 11, 2015 Medicare Pay for Performance Programs The Medicare Update Factor is Under Siege Medicare Hospital Update Factor Productivity Offset Supplemental Reduction Factor Quality Pay-for-Reporting Reduction for Non-Compliance Value-Based Purchasing Pool Carve-Out Meaningful Use Reduction for Non-Compliance Healthcare-Acquired Conditions Penalty Readmissions Penalty Behavioral Offset AAHAM December 11, 2015 AAHAM

Medicare IPPS Update & Payments at Risk Under Pay for Performance Programs AAHAM December 11, 2015

Medicare P-for-P Programs …But What do They Add? Readmissions Reduction Policies Show Promise VBP Shows Little Shift in Hospitals’ Quality Performance that Would Not Have Occurred Without the Program VBP Eligible Hospitals Received <.5% of Applicable Medicare Payments, Compared to 1% to 1.5% Reduction To Annual Inflationary Update Smaller VBP Hospitals Had Larger Negative Effects AAHAM December 11, 2015

Medicare Comprehensive Care Joint Replacement Model Demo in 67 CBSAs – Three in Ohio Start Date: April 1, 2016; Duration: Five Years Applies Only to IPPS Hospitals in Covered CBSAs Not Already in BCPI for Lower-Extremity Joint Replacement Episodes Triggered by Discharge under MS-DRGs 469 & 470 All Part A and B Services Related to the Major Joint Replacement Included in a 90-Day Episode Payments Retroactively Reconciled to a Target Price for the Episode. No Change to Current Billing or Initial Payment Practices Target Price set at Blend of Historical Hospital-Specific Cost and Regional Cost; Regional Component Increases Over Time Expected Spending Discounted by 2% to Reach Performance Period Target Price Hospital's Financial/Quality Outcomes Could Result in Incentives (Year One) or Penalties (Year Two and Beyond) AAHAM December 11, 2015

Medicare Comprehensive Care Joint Replacement Model Industry Reaction is Mixed Should Ease Process for Beneficiaries, Lessen Cost-Sharing Over Time, but… Disconnect Between Cost of Care and Target Price for Care Delivered in Bundle No Price Negotiation – Medicare Sets the Target Price Over-Emphasis on Hospital Role in Bundled Episode Focus is on Medicare Spending; Hospitals Have Limited Control Over Non-Hospital Care Delivered in Episode All Covered Providers’ Services Included in Bundle, but Only Hospital’s Payments Affected Focus is on Penalizing “Over-Spending” Hospitals; No Bonus for Low-Cost - High Quality Performers Limited Ability for Hospitals to Control Medicare Covered & Payable Services; Little Room to Innovate Could Impact Patient Access to Covered Care AAHAM December 11, 2015

Hospital Utilization Review Programs Decreasing Bang for Increasing Buck Multiple Contractors & Auditors with Differing Rules, Targets, Procedures, Experience & Authority Duplication of Effort; Little Coordination Between Payers Increasing Cost of Compliance Personnel IT Claims Management Conflicting and Proprietary Criteria & Guidelines Misaligned Incentives AAHAM December 11, 2015

Medicare Hospital Medical Review Programs AAHAM December 11, 2015

Medicare RAC Contract Re-Bid OHA Update Dec. 11, 2015 Medicare RAC Contract Re-Bid Medicare RAC Contract Re-bid (Again!) New Regions Drawn to Re-Weigh Claims Volume Existing Region B Subdivided At Least Some Region B States Must Switch Contractors Limited “Old” Contract Activity Expanding (Mostly) Automated Reviews & DRG Validations Effective Through Dec. 31, 2015 (Expect Extension) Details and Review Issues Listed on CGI Webpage DRG Payment Complex Reviews (Over/Underpayments) Code and Unit Overpayments Automated Reviews Drug Unit Overpayments CGI Also Cleaning Up Old ADRs for Records Never Submitted AAHAM December 11, 2015 AAHAM

Medicare rac maps – old vs. new Current (Old Contracts) New Contracts AAHAM December 11, 2015

CMS Rac process Improvements OHA Update Dec. 11, 2015 CMS Rac process Improvements Now Being Phased in Over Contract Extensions (Indicates New SOW) Expanded Discussion Periods Delayed Award of Contingency Fees Additional Program Education and Outreach & (QIO or MAC; Who’s on 1st ?) New Standards for RAC Accuracy & Overturned Denials Faster Review Turnaround Limits on Look-back for Patient Status Reviews ADRs Must be Diversified ADR Limits Adjusted to Provider Compliance Rates (Benchmarks Still Under Discussion) Provider Satisfaction Surveys (New Contractor will Perform) Short-Stay IPPS Policy Still Under Consideration! … and Effects of ALJ Appeals “Buy-out” Still Unclear AAHAM December 11, 2015 AAHAM

What about the medicaid rac?! RFP Out for New Contractor, but no Takers CGI Contract Ended in July, 2014 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 News on Next Steps AAHAM December 11, 2015

ICD.10 No Major Breakdowns Some Hospitals are Reporting Payment Slowdown and an Increasing Number of Glitches Watch out for BWC Self-Insured Employers / TPAs; They are Not Required to be HIPAA Compliant! OHA is Surveying Finance & ABC Committees AAHAM December 11, 2015

Hcap 2016 Ohio 1st State to Reform Medicaid DSH Formula in Response to Medicaid Expansion & Federal DSH Audits 2014 Program Emphasis Shifted From Uncompensated & Charity Care to Medicaid Shortfall & Uncompensated Care OHA Recommended Transition Period Over 2 – 4 Years Why: Usable Medicaid Cost Report Data is Generally Two Years Old (Pre-Medicaid Expansion) Response: Keep $100M in Pot 3A in 2014 as Cushion Transfer $36M of Pot 3A to Pot 2 in 2015 Transfer Half of Remaining Funds in Pot 3A in 2016 Transfer All Remaining Funds to Pot 2 in 2017. Request ODM File Multi-Year Medicaid State Plan Amendment to Avoid Duplicate CMS Reviews. AAHAM December 11, 2015

Hospital Payer Mix FY13-15 AAHAM December 11, 2015

Ohio Hospital Care Assurance Program Hcap timeline – cy/FFY 2015 CMS APPROVES 2014 CHANGES (JUNE but CMS has until 7/30 – 90th day) ODM INITIATES 2014 ASSESSMENTS/PAYMENTS (JULY) ODM FILES 2015 SPA (JUNE/JULY) CMS IGNORES SPA FOR 89 DAYS (OCTOBER) CMS ISSUES RAI (OCTOBER) ODM RESPONDS TO RAI (NOVEMBER) CMS APPROVES 2015 (DECEMBER) ODM INITIATES ASSESSMENTS/PAYMENTS FOR 2015 (JANUARY/FEBRUARY) AAHAM December 11, 2015

Hcap 2015 preliminary model AAHAM December 11, 2015

FEDERAL Medicaid DSH funding Medicare & Medicaid in 2016 Dec. 11, 2015 FEDERAL Medicaid DSH funding FFY Change in Net Gain ($) Change in Net Gain (%) 2014 $0 0.0% 2015 2016 2017 2018 ($74,365,059) -17.7% 2019 ($108,895,256) -25.2% 2020 ($142,375,927) -32.1% 2021 ($175,902,095) -38.6% 2022 ($209,474,896) -44.7% 2023 ($243,095,496) -50.4% 2024 ($276,765,091) -55.8% 2025 ($278,824,088) -54.7% AAHAM December 11, 2015 AAHAM

2016 Medicaid Payment & Policy Updates OHA Update Dec. 11, 2015 2016 Medicaid Payment & Policy Updates HHTLs to End ODM will Simply Release Draft and Final Rules Pre-Certification Suspended Until January 2017 Other Payment Provisions 5% Outpatient Payment Reduction to Non-Childrens Hosps. New Pre-Admission “DRG Window” Changes to Paragraph L Exceptions Medicaid/Medicare Cost Sharing Policy Expanded To Docs NCCI Edits Go Into Effect on Outpatient Claims Jan. 1 Revenue Lines on Individual Outpatient Bills Must be in Date-of-Service and Revenue Code Order New EOB Codes on Permedion Denials Updated Hospital Billing Guidelines Available AAHAM December 11, 2015 AAHAM

Medicaid DSH AuditS FFY 2011 & 2012 ODM Delivered 2011 Final Report to CMS in Dec. 2014. No response Yet 11 Hospitals with Adjusted DSH Limit Below 2011 Payment FFY 2012 Report Due to CMS in December 2015 183 Hospitals Audited – All Had Adjustments of Varying Size 14 Hospitals with Adjusted Hospital-Specific DSH Limit Below 2012 Payment Common Issues Cited by Myers & Stauffer Patient Logs Submitted, but no Corresponding Data on Cost Report Reverse of Above: Cost Report Data, but No Log Logs Not in the Required Format AAHAM December 11, 2015

Medicaid DSH AuditS FFY 2013 Audit Report Due to ODM in June 2016; Due to CMS in December 2016 Desk Reviews Underway, with On-site Reviews Expected February – April 2016 High DSH Payment Proximity of HCAP Payment to DSH Limit Subject to On-Site Audit in Previous Year May Also Include Non-Financial Program Exam New Logs for MyCare Ohio & Medicaid-Eligible, but not ODM-Paid Costs and Payments AAHAM December 11, 2015

Insert Presentation Title Dec. 11, 2015 Medicaid EAPG OPPS Background Enhanced Ambulatory Patient Groups Created by 3M In Use at 13 State Medicaid or Blue Cross Plans Designed for Outpatient Encounters and Services Replaces Ohio Medicaid Outpatient Fee Schedules Groups Services with Similar Cost & Resource Use Applicable to All Ambulatory Settings Same-Day Surgery Outpatient Hospital ED & Clinic Visits Freestanding Outpatient Diagnostic & Treatment Facilities Ohio Implementation Scheduled July 1, 2016 AAHAM December 11, 2015 AAHAM

Insert Presentation Title Dec. 11, 2015 Medicaid EAPG OPPS EAPGs vs. DRGs DRG EAPG Inpatient Admission Discharge Date Defines Code Sets Uses ICD-9-CM or ICD- 10-CM Diagnosis & Procedure Codes Only One DRG per Admission Employs Some Charge Bundling Ambulatory Visit Claim “FROM” Date Defines Code Sets Uses ICD-9-CM or ICD-10- CM Diagnosis Codes & HCPCS/CPT, Procedure Codes Multiple EAPGs May be Assigned per Visit Employs Significant Charge “Packaging,” Consolidation & Discounting AAHAM December 11, 2015 AAHAM

EAPGs vs. ODM Fee Schedules Medicaid EAPG OPPS EAPGs vs. ODM Fee Schedules FEE ScheduleS EAPG Uses ICD.9.CM or ICD.10.CM Diagnosis Codes & HCPCS/CPT Procedure Codes 11 Fee Schedule Groupings (Facility Fees, Surgical & Other Procedures, and Diagnostic Tests) Multiple Fee Schedule Payments Likely Per Visit Employs CCI Edits, but Little Charge Bundling/Packaging Permits Exception Payments for High Cost Pharmacy, Medical Supply & Device Costs, and for Outpatient Observation Uses ICD.9.CM or ICD.10.CM Diagnosis Codes & HCPCS/CPT Procedure Codes 564 EAPGs in Five Major Categories (Significant, Ancillary & Incidental Procedures, Medical Visit and Drugs) Multiple EAPGs Possible per Visit No CCI Edits in 3M Model, but Employs Significant Charge Packaging, Consolidation & Discounting No Exception Payments AAHAM December 11, 2015

ODM OPPS Policy Decisions Completed Medicaid EAPG OPPS ODM OPPS Policy Decisions Completed Applies to ALL Hospitals Most of 3M OPPS Architecture Adopted Ohio-Specific EAPG Weights Determined Full Packaging, Consolidation & Discounting Applied Six Month Transition to Full Packaging for “Paragraph L” Fee Schedule Exceptions, and to Payments for Outpatient Observation and Dental Services Transition Period from Fee Schedules to OPPS for up to Three Years Included Stop Loss/Stop Gain Transitional Corridor Likely AAHAM December 11, 2015

OPPS Policy Decisions Yet to be Made Medicaid EAPG OPPS OPPS Policy Decisions Yet to be Made Hospital Peer Groups Will be Used in Both OPPS and Rebased IPPS OHA Recommending Five In-State Peer Groups (Childrens, Teaching, Urban Non-Childrens Non-Teaching, CAH, and Non-CAH Rural) ODM Still Testing Other Options, Mainly Involved with how to Categorize Teaching & Children’s Groups Base Rates to be Determined Once Peer Groups are Identified Application of Fiscal Impact Targets Comes Next Final Piece Involves Length of Transition & Gain/Loss Corridors AAHAM December 11, 2015

Demonstration Model Basics Episodes Of Care Demonstration Model Basics Part of State Improvement Model (Also Includes Patient-Centered Medical Homes) State’s Goal: 80-90% of Ohio’s Population in Some Value-Based Payment Model Within Five Years EoC Payment Methodology Phase-in 2016 Pegged as Performance Year; Risk/Gain-Sharing to Start in 2017. Commercials Will Adopt ODM Methodology with Separate Metrics Principal Accountable Providers (PaPs) Must Meet Quality Metrics to Receive Gain-Sharing Medicaid Managed Care Plans Will use ODM Metrics AAHAM December 11, 2015

Episode-based payments AAHAM December 11, 2015

Episode-based Payments AAHAM December 11, 2015

Episode-based Payments AAHAM December 11, 2015

Episode-based Payments AAHAM December 11, 2015

Episode-based Payments AAHAM December 11, 2015

OHT/ODM Outline Encouraging Program Specifics Episodes Of Care OHT/ODM Outline Encouraging Program Specifics Medicaid Gain/Risk Sharing Performance Period Starts 1/1/16, but Payments Will not be Affected Until 1/1/17 Commercial Payers will Independently Determine Metrics 2017 Payments will be Budget Neutral, Assuming No Change to PAP “Curve” ODM will set Cost & Quality Thresholds for FFS and all Medicaid Managed Care Plans Wave One Performance Metrics will Limit Risk Sharing to 10%, Again, Assumning no Change to Behavior Gain-Sharing PAP’s Must Meet Quality Metrics Metrics will be Identified Quality Metrics will be Set at Top Quartile, but 2017 Thresholds will be set to Allow 75 Percent of Providers to Potentailly Share Gain. Metric Thresholds will “Ramp up” to Top Quartile by 2021kigvg AAHAM December 11, 2015

Potentially preventable Medicaid readmissions OHA Update Dec. 11, 2015 Potentially preventable Medicaid readmissions 3M Product Used to Calculate PPR Rates Includes All Hospitals Within 30-Day Period Compares Actual PPR Rate to Expected Rate State Average at 9.2%: State’s goal: 1% Annual; Decrease 2015 - Reporting Only; Released in Feb. & July Includes Hospital Data 2010 – 2014; MCP Data 2013 - 2014 Payments Tied to Results in 2016 (?) AAHAM December 11, 2015 AAHAM

Charles Cataline Vice President, Health Economics & Policy charles.cataline@ohiohospitals.org