1. 1 MHA CFO Member Forum Changes in the Financial Landscape December 11, 2015 Laura Appel, Senior Vice President, Strategic Initiatives Marilyn Litka-Klein, Vice President, Health Finance Peter Schonfeld, Senior Vice President Policy & Data Services

2. Auto No-fault Insurance—SB 248 Reduces provider payment to 150% of Medicare Replaces existing catastrophic insurance with unregulated, unfunded mechanism Creates anti-fraud authority in state government Places limits on family-provided attendant care

3. MHA Response to SB 248 Four weeks of statewide TV ads Facebook video ads: 1.1+ million views AdBudget People Reached Views Cost per View Meet Katie$17,750903,115682,860$0.03 New Line of Work $5,000250,500201,840$0.02 Pull the Plug$5,000430,385267,715$0.02

4. AUTO NO-FAULT INSURANCE—SB 248 Auto No-fault Insurance—SB 248 Post-Thanksgiving: Speaker proposes narrow reform pkg Minimal cost containment Unfunded catastrophic benefit Rejected in House Republican caucus Next steps unclear

5. AUTO NO-FAULT INSURANCE—SB 248 D-Insurance – Senate Bill 288 Mayor Duggan’s plan to reduce Detroit auto insurance premiums Reduces injury benefit to $250,000/accident for “critical care” services $25,000 for post-acute services No catastrophic benefit Allows for closed provider network Applies to any community with 35% or greater rate of uninsured drivers

6. MHA Letter of Opposition Reduce cost of care; not size of benefit Address overuse, fraud Bring frequency and severity in line with outstate claims D-Insurance – Senate Bill 288

7. Medicaid Budget 7

8. FY ‘03-‘15 Net QAAP Benefit to Hospitals 8 FFS $74 $121 $165 $198 $212 $264 $306 $311 $331 $293 $406 $470 HMO $101 $214 $360 $378 $400 $375 $440 $536 $770 Psych $19 $26 $24 DSH $41 $29 $44 $38 $27 $43 $33 $78

9. State Departments – Gross Appropriations 9

10. FY 2017 Legislative Perspective No interest in new revenue (taxes) - House elections 2016 Little interest in taking funds from another department to support DHHS, which already receives 46% of state budget Anticipated uncompensated care reduction statewide For some hospitals/systems new records for financial performance FY 2016 budget includes $4.4 billion in funding (state, federal and provider taxes) dedicated to hospital payments 10

11. FY 2017 Medicaid Budget Threats/Challenges First year general fund match for HMP = $125m (Medicaid for Mental Health/DOC saves $215m annually) Disallowance of use tax (9 months)= $200m HICA sunset 12/31/17= $100m Road funding shortfall, legislative target= $700m Decrease in Michigan’s base Federal matching funds each.01% = $10m GF = $50m Total =$1.2 billion 11

12. 12 Healthy Michigan Plan Enrollment 573,091 As of 10/05/2015.

13. Healthy Michigan Plan QAAP Impact 13 Estimated Impact* FYs 2014/2015FY 2016 MACI (Pending CMS approval) $400 million$250 million HRA$400 million$360 million TOTAL$1.4 billion * excludes Medicaid rate payments

14. 14 Second HMP Waiver Submitted CMS reviewing public comments. Focus is to coverage options and requirements for 100,000 individuals 100-133% FPL, who have had HMP coverage for 48 cumulative months. Beneficiaries would need to purchase private insurance through federally-facilitated marketplace or remain in HMP with increased cost-sharing. If CMS approval not received by Dec. 31, HMP will end on April 30, 2016. State officials cautiously optimistic

15. Managed Care Update 15 Request for Proposal (RFP) released May 8. List of bidders is available October – final award decisions Mid-October – contracts issued New contracts will be effective Jan. 1, 2016 for five years with three one-year extensions available. Service areas will be Gov. Snyder’s 10 prosperity regions.

16. 16 Laura Appel Phone: 517-703-8600 lappel@mha.org Contact