1. Medicaid DSH
John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014

2. THA – Who We Are
The Texas Hospital Association is a nonprofit trade association representing Texas hospitals and health systems. In addition to providing a unified voice for health care, THA serves its 500+ members with timely information, data analysis, education on essential operational requirements, networking and leadership opportunities.

3. Serving Texas Hospitals/Health Systems

4. Medicaid DSH - Outline FY2011 FY2012-13 – Waiver DY1 & DY2
FY – DY3 & DY4
FY2016 and Beyond

5. FY2011 DSH (and Before) DSH & UPL – Pre-Waiver
Programs Related to each other
Public Hospitals have incentive to Fund DSH
Fully Funded for Every Year

6. DSH Funding Incentive UPL at Maximum – No Other Funds Available DSH
IGT ~$0.40
Paid $1.00
DSH
Paid ~$0.55

7. Medicaid DSH - Outline FY2011 FY2012-13 – Waiver DY1 & DY2
FY – DY3 & DY4
FY2016 and Beyond

8. FY2012 Financing Transformation
Transformation Waiver
Shifting Landscape
DSH & UC - Closer Connection
Additional PCP Costs Allowed for UC
Result = Alternate Funding Opportunities for Public Hospitals
DSH Audit
Dollars Recouped beginning in Program Year

9. FY2012 - Shifting Landscape
FY2011 UPL $2.8B
FY2012 UC & DSRIP $4.2B
DSH & UC Closely Aligned
Medicaid Shortfall Growing Larger

10. Medicaid Disproportionate Share FY2012
Public Hospitals Agree to Fund $502M of $569 Potential
DSH Dollars Unspent
THA Forms Task Force on DSH

11. THA Task Force Concepts 2012-2013
Medicaid Disproportionate Share Hospital Task Force – 6/1/2012
the money follows the work
shared responsibility for funding the Medicaid DSH program
protection for the most vulnerable classes of hospitals

12. UC and DSRIP Funding= $29B
UC/UPL Transition- $466M

13. Medicaid DSH FY2013 - Issues
FY 2013 Payments – 100% Amounts - $138M GR $323M IGT
New DSH Rule
Lubbock and Odessa drop out of 8 hospital coalition leaving big 6
DSH is Regionalized
Pass 3 Rural Funding Mechanism Developed
GR and IGT are separated
Texas Children’s Lawsuit
Max TPL payment = Cost
DSH 90% (10% Expected)

14. Medicaid DSH - Outline FY2011 FY2012-13 – Waiver DY1 & DY2
FY – DY3 & DY4
FY2016 and Beyond

15. Medicaid Disproportionate Share FY2014
New Rider 86 covers DSH & UC
$300M GR authorized for FY2014 & FY2015
2014 = $160M
2015 = $140M
No General Revenue Funds appropriated after FY2015
Other Budget Riders not written in this manner

16. Medicaid DSH Rider 86
Proportional allocation of supplemental hospital payments among large public, small public, and non-public providers
Mechanisms though which Medicaid payments are made through managed care organizations
Recommended statutory changes and any other legislative direction needed to fully implement the plan

17. Medicaid DSH Rider 86 (cont’d)
Assess the extent to which supplemental payments are needed to cover Medicaid and uninsured/uncompensated care costs
Transition plan from supplemental payments to rates that recognize improvements in quality of patient care, the most appropriate use of care, and patient outcomes
No General Revenue Funds appropriated after FY2015

18. Medicaid DSH Rider 86 (cont’d)
FY 2014 request must show a measurable progress in developing the plan
FY 2015 request should include the final plan
No GR funds may be expended for FY 15 until plan is finalized

19. Medicaid DSH FY2014 2011-Before Transformation Waiver
Non-State Hospital DSH Pool = $1.2B
UPL Payments = $2.8B
Total = $4.0B
2014-After Transformation Waiver
FY2014 UC & DSRIP = $6.2B
FY2014 DSH Non State = $1.3B
Total = $7.5B

20. 2014 DSH – Attributes - 1 State-owned hospitals – No change
2013 – Regional Approach (RHP)
2014 – Hospitals in statewide pools
2013 – Funds for Low Income and Medicaid
2014 – Days added together

21. 2014 DSH – Attributes - 2 2013 - GR funded non RHP areas
2014 – Hospitals share in GR and related FF
2014 – 3 Pools = all GR and FF in Pools 1&2 shared by all (e.g. net DSH proceeds)
Pool 3 = IGT back to IGT hospitals
2013 – Pass 3 Methodology in place
2014 – No change
2013 – 6 Large public hospitals transfer for their region
2014 – Fed Funds on IGT by 6 shared by all

22. 2014 DSH – Attributes - 3 2013 – no provision
2014 – Most other public hospitals IGT ½ of their DSH (Lubbock & Ector IGT for themselves)
2014 – Non-8 public hospitals have their days weighted such that net DSH is equal
2014 – Big 6 = $377 total = $396

23. 2014 UC Attributes - 1 UC funds are divided into seven pools
state-owned hospitals
COTH members (6 large public)
other public hospitals
private hospitals
physician group practices
governmental ambulance
publicly owned dental providers

24. 2014 UC Attributes - 2 Pool amounts are Allocated pro-rata
Allocation basis:
Hospitals - Post DSH Payment unpaid HSL
Other groups – UC Cost

25. 2014 UC Attributes - 3
6 Large transferring hospitals receive “bump” on allocation basis (pre-allocation basis)
UC pre-allocation “bump” equals amount of DSH IGT made for other hospitals

26. $284M added to 6 UC Pool
Net DSH proceeds = $1.344B - $395M IGT = $949M
Big 6 = 23% of $949M net proceeds
Total IGT = $395M * 23% = $93M
$377M – $93M = $284M
$284M = UC bump for big 6

27. 2014 UC Attributes - 4
Special Provision for smaller (Rider 38) hospitals:
The reduction in future years is limited to decreases in UC Pool
E.g. $3.9 billion to 3.1 billion
Reduction is still significant but no greater than this amount
Applies to county < 60k, RRC,SCH,CAH

28. 2014-17 Key Dates Fall 2014 - FY 2014 DSH paid (1/2 paid)
Jan 2015 – 84th TX Leg in session
Spring 2015 – last half of 2014 DSH Paid
June 2015 TX Leg leaves
FY2015 DSH – needs final plan
FY2016 – last year of 5 year waiver
2017 DSH cuts begin

29. Medicaid DSH - Outline FY2011 FY2012-13 – Waiver DY1 & DY2
FY – DY3 & DY4
FY2016 and Beyond

30. Medicaid DSH – Future Years
Composition of 84th Legislature
Federal DSH Allotment
DSH Audit Outcomes
Waiver Extension/Renewal/Replacement
Available UC Funds
CMS Negotiation / Federal Outlook
Medicaid Shortfall ~$3B

31. Medicaid Federal DSH Reductions
Revised Schedule Allotments - April 3, 2014
Year
Total
Reduction
Note – if Texas maintains existing policy then 100% of the reduced allotment will be absorbed by non-state hospitals
2017
TX~20%
1,800,000,000
2018
TX~50%
4,700,000,000
2019
2020
2021
4,800,000,000
2022
5,000,000,000
2023
2024
4,400,000,000

32. Texas Hospital Association
Questions?
John Berta
Texas Hospital Association
512/