1. Indiana Medicaid Update
HIP 2.0 Financing, Hospital Assessment Fee (HAF), and Other Updates
January 26, 2018 IH 1

2. SUMMARY OF TOPICS Basics of the HAF & legal authority for fees
Who is assessed or exempt
Basis of the fee and fee rates
What do HAF and HIP fees pay fund?
History of HAF payment factors
History of total fees
HIP 2.0 Funding summary
HIP 2.0 Waiver

3. BASICS OF THE HAF
The HAF program is currently two separate programs grouped together
The Hospital Assessment Fee (HAF) pays for increased Traditional & Managed Care Medicaid reimbursement
HIP 2.0 is a separate program with the Medicaid expansion population legislated through the ACA
Populations are very different and fees are used for different purposes
Both programs are administered together in a similar manner
HIP Fees are paid directly to the FSSA through their AR
HAF Fees are paid two ways through State estimates:
Payments on FFS remits are withheld each month (varies by claims levels)
Remaining fee is paid by hospitals each month to DXC (same monthly payment for full SFY)

4. HAF VS HIP FEES HAF Fees Fund…
Difference between Medicaid fee schedule and “Medicare” for Traditional & Managed Care population (FFS, HHW, HCC)
IP, OP, Psych and Distinct Part Rehab
Medicaid DSH
HIP Fees Fund…
Expansion population
Medical expenses
Limited administrative costs
Increases to physician payments to 75% of Medicare

5. LEGAL AUTHORITY
HAF exists in the Indiana Code as enacted by the General Assembly
The Medicaid State Plan governs the HAF factors along with DSH eligibility and payment order
Changes must be submitted by the end of the first quarter of the SFY to be effective for a SFY
There is a waiver from CMS that allows Indiana to make exceptions to fees so that they do not have to be “broad-based” and/or uniform
Changes in exemptions or fee rates require changes to the waiver and must meet statistical tests that prove the fee is not redistributive
Changes to any of the above can create long delays

6. WHO IS ASSESSED OR EXEMPT
Facilities within the class that are assessed:
Acute care hospitals
Freestanding psychiatric hospitals
Facilities exempt from the fee:
Long-term care hospitals
Freestanding rehabilitation hospitals
Hospitals owned by the state or federal government
Freestanding psychiatric hospitals with greater than 40% of admissions having a primary diagnosis of chemical dependency
Freestanding psychiatric hospitals with greater with > 90% of admissions comprised of individuals 55 or older having a primary diagnosis of Alzheimer’s disease or certain neurologic disorders related to trauma or aging

7. Basis of the Fee
Fees are based on the total patient days and outpatient charges from cost reports on file at end of February for each upcoming fee year
SFYs were based on reports on file Feb. 2017
This data is the basis of a hospital’s fees for a two-year period, but the amount assessed will change based on total program expenditures

8. Basis of the Fee
Fees assessed on total days (not Medicaid days) capped at 6% of net statewide inpatient revenue
Days are net of out-of-state and swing bed days
“Day is a day”; cannot be manipulated like other statistics
Outpatient fee assessed for amount over 6% of net statewide inpatient revenue
Outpatient fee based on OP-equivalent patient days
Excludes same days as above
Historical OP portion of total fees:
Between 14%-21% of total fees for SFY 2012 – 2014
0% in SFY 2015 and SFY 2016
Projected to be 6.9% for SFY 2017 and 21% for SFY 2018

9. “Rate” of the Fee Three “tiers”
Most hospitals pay on 100% of days (net of OOS and swing bed day exclusions)
75% of days for acute care DSH hospitals, including municipal hospitals that qualify under the MIUR/LIUR thresholds
50% of days for (1) acute LIUR hospitals who were also LIURS in SFY 2010; (2) and all DSH-eligible hospitals with OOS Medicaid days more than 25% of total Medicaid days

10. APPLYING PAYMENT FACTORS
Fee-for-service (FFS), Hoosier Healthwise (HHW), Hoosier Care Connect (HCC) and HIP claims should be reimbursed in similar manner
Payment from Anthem, MDWise, MHS, and Caresource, should be consistent between MCEs
HAF Factors applied at the claim level
Monthly lump sum checks from MCEs ended for 12/31/16 services
All add-on factors applied at claims level
Laboratory services are still exempt from HAF outpatient factor – paid at fee schedule less 3%

11. HISTORY OF HAF PAYMENT FACTORS* *
* Effective Rate IP 2.3, OP 2.5 for calendar year gg

12. HISTORY OF TOTAL FEES $133M** $730M $770M $753M $64M** $626M $677M
** HIP 2.0 fees

13. INPATIENT VS OUTPATIENT FEES
$597M

14. How Fees and factors are related

15. HIP 2.0 FUNDING
Per Term Sheet, no HAF funding used until SFY for HIP 2.0 program (started July 1, 2016).
Hospitals’ obligation to fund these expenses ceases immediately if the waiver is terminated for any reason.

16. Enhanced Match is Critical for HIP 2.0
Indiana’s current FMAP is 68%
Under House repeal and replace (AHCA)
In 2020 and beyond, new enrollees, including those who drop out and re-enroll, would be matched at the lower, regular state Medicaid matching rate
Based on historical data, CBO projected that fewer than 1/3 of those in HIP 2.0 at end of 2019 would be continuously covered two years later
CBO also projected that after just five years, only 5% of current HIP enrollees would be matched at 90%
Under Senate BCRA
Steps down enhanced rate to 85% in 2021, 80% in 2022, and 75% in 2023 for all enrollees
Regular state match in 2024 and beyond

17. HIP 2.0 Fees and Payments – SFY 2016
Hospital Reimbursement only (excludes physicians, other)
Only includes Expansion population and HPE
$828.3M
HIP Fees
HIP Projected Revenue

18. HIP 2.0 Fees and Payments – SFY 2017
Hospital Reimbursement only (excludes physicians, other)
Only includes Expansion population and HPE
$828.3M
$867.6M
HIP Fees
HIP Projected Revenue
$63.9M

19. HAF Fees and Projected Payments – SFY 2016
All fees are IP
Payments include enhanced FFS (factors) and MCE lump sums
$1,346.9M
$867.6M
$828.3M
$610.1M
HAF Fees
HAF Projected Payments

20. HAF Fees and Projected Payments – SFY 2017
Fees assessed on IP and OP
Payments include enhanced FFS (factors) and MCE lump sums through 12/31/16
Starting 1/1/17 MCE pay at enhanced rate at claims level
SFY 2017 has not yet been reconciled for final fees
$1,394.4M
$867.6M
$828.3M
$626.4M
HAF Fees
HAF Projected Payments

21. FEDERAL POLICY ISSUES
HAF expires in state law June 30, 2019, however, the federal approval is open-ended
Most recent renewal was for two years
External threats, like legal challenges from net contributors

22. FEDERAL POLICY ISSUES
Possible federal limitations, such as reducing 6% limit on provider fee programs
Federal DSH reductions under ACA
Push in Congress to cancel scheduled cuts of $2B in FY 2018 and $3B in FY 2019
Under current schedule, cuts would increase to $8B nationally by FY 2024
Note: Reduced DSH allotment for Indiana would mean lower aggregate fees

23. HIP 2.0 WAIVER CHANGES
MCE’s to offer member incentives consistent with the commercial market
Increases from $10-$25 to as much as $200
Incentives must occur in four priority areas such as tobacco cessation and chronic disease management
Expansion of tobacco cessation benefit with POWER account contribution changes
Identified tobacco users in 2nd year of enrollment will see contribution increases to 3% from 2%
Administrative simplifications
Tiered POWER account structure rather than 2% requirement
HIP Link will be terminated
Expanded access to substance abuse treatment and MRO reimbursement

24. Gateway to Work Program (“work requirements”)
HIP 2.0 WAIVER CHANGES
Gateway to Work Program (“work requirements”)
Targeted at able-bodied adults enrolled in HIP 2.0
Excludes following populations:
Pregnant mothers
Medically frail
Over 60 years old
Those with a certified temporary illness
Adults with pre-K children
Enrolled in substance abuse treatment
Full-time and part-time students
Other populations

25. Gateway to Work Program (“work requirements”)
HIP 2.0 WAIVER CHANGES
Gateway to Work Program (“work requirements”)
Qualifying activities include:
Job seeking
Formal education or vocational training
Community service
Home schooling
Care giving and other activities
Required hours phase up from zero in first 6 months of enrollment up to 20 hours per week after 18 months
Requirements measured upon annual renewal
6-month “lock-out” would not apply to disenrolled under Gateway to Work
Individuals able to rejoin after 1 month of resuming/beginning qualifying actives

26. Current IHA Points of Emphasis
STATE POLICY ISSUES
Current IHA Points of Emphasis
Working with FSSA to resolve broad system denials & additional claim submission issues
Established IHA Managed Care Task Force under Council on Finance
OP Fee Schedule variations
Prior authorization legislation (HB 1143 & SB 210)
Provider credentialing and CVO (HB 1007)

27. THANK YOU AND QUESTIONS?
Brian Tabor, President Indiana Hospital Association
Michael Alessandrini, Director
Blue & Co., LLC