1. It’s Cool to be Schooled OHA Update Charles Cataline Vice President, Health Economics and Policy Ohio Hospital Association charlesc@ohanet.org September 12, 2014

2. Agenda Federal o Medicare FFY 2015 IPPS Final Rule Out o Medicare CY 2015 OPPS Calls for More Bundling and Packaging o Medicare RAC Contract Re-bid Gets Weirder; Where is Medicaid? State o Update on Medicaid/Ohio Exchange Enrollment Targets o Medicaid APR-DRG Transition: Year II Yields Unexpected Results; What’s Left? o BWC 2015 Hospital Payment Targets Other Finance / PFS o 2011 Medicaid DSH Audit is Done, 2012 Kicks in o Medicaid Episodic Payment Plan Gaining Speed o SAFE Program Audits Possible Next Year o Hospital Price & Quality Transparency Still an Issue Sept. 12, 2014AAHAM 2

3. Medicare 2015 IPPS Market Basket Inflationary Update = 2.9% –Market Basket Adjustment (ACA) = (0.2%) –Productivity Adjustment (ACA) = (0.5%) –Documentation and Coding Effect (ATRA) = (0.8%) –MS-DRG Budget Neutrality Adjustment = (0.3%) –Total (With no Other Program-Based Adjustments) = 1.1% VBP, Readmissions & HAC Reductions also Applied 2% Sequestration Still in Effect Larger Than Expected Medicare DSH Cuts Increase in Outlier Threshold (From $21,748 to $24,758) Wage Index Revisions Due to Revised Census Tracts Short-stay Payment Policy on Hold (for now!) Penalty for Providers That Aren’t EHR “Meaningful Users” Overall (CMS) = Program Expenditures Reduced $756 M 3 AAHAMSept. 12, 2014

4. 4 AAHAMSept. 12, 2014

5. Medicare 2015 OPPS (Proposed) No Major Changes Proposed MB Rate increase of 2.1 percent Expanded Packaging/Composite APCs –28 Comprehensive APCs for Device-Dependent APCs –Conditional Packaging of all Ancillaries With Geometric Mean Cost of $100 or Less –Prosthetic Supplies Deemed to be Part of APC Physician Certification Only for Long Inpatient Stays –Does not Eliminate Need for Proper Physician Order Services Furnished in Off-campus Provider-Based Departments Must be Identified on Line-Item Basis 5 AAHAMSept. 12, 2014

6. Medicare RAC RAC Contract Rebid Still on Hold New Regions Drawn to Re-Weigh Claims Volume Existing Region B Subdivided – at the Very Least Some States in Region B Must Switch Contractors CMS “Paused” Medicare RAC Activity Until New Contracts are in Place Feb. 21 – Last Day a RAC can Issue Post-Payment ADR Feb. 28 – Last Day a MAC can Issue ADR for RAC Pre-Pay Review June 1 – Last Day a RAC Can Send Denied Claims to MAC for Recovery BUT… CMS Has Now Reopened Existing Contracts to a Limited (?) Number of (Mostly) Automated Reviews. No Short-stay Reviews No Details and/or Effective Dates Out as Yet - Stay Tuned!!

7. Medicare RAC Maps – Old Vs. New Proposed Current

8. Other Medicare RAC Process “Improvements” In the Interim, CMS Continues to “Refine” RAC Program Medicare RAC Program Administrative Improvements Expanded Services Eligible for Inpatient “Part B” Re-Bills New Offer to Buy Out Outstanding Claims Under Appeal @ 68% of “net paid amount” Not all Providers and Claims Eligible are Eligible Formal Agreement and MAC Review of Claims Required Two-Midnight Rule Proposals for IPPS “Short-Stay” Claims Payment What’s in it For CMS? Fewer Appeals at ALJ Settle Lawsuits, or at Least Lessen Possibility of Congressional Action But is it Enough? 8 AAHAMSept. 12, 2014

9. CMS: Five Medicare RAC Program Improvements 9 AAHAMSept. 12, 2014

10. What’s Up With The Medicaid RAC?! ODM/CGI Contract Ended in July 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 Date Released for any of the Above! 10 AAHAMSept. 12, 2014

11. State Update: Medicaid Expansion Background Started Jan 1. 2014 Electronic and Expedited Application Software available at “benefits.ohio.gov” Linked to Federal Data Hub No CPJFS Visit Required Utilize MAGI Standards No Documentation Required Presumptive Eligibility Now Statewide 85/85 Quality Standards yet to be enforced OHA “Intake” Tool Kit Available at http://ohiohospitals.org/Policy-Advocacy/Finance- Policy/Medicaid/Medicaid-Enrollment-Toolkit.aspx http://ohiohospitals.org/Policy-Advocacy/Finance- Policy/Medicaid/Medicaid-Enrollment-Toolkit.aspx Sept. 12, 2014AAHAM 11

12. Medicaid Expansion Numbers 1,117,407 Applied for Medicaid Through benefits.ohio.gov 822,807 (74%) Have Been Resolved 592,390 Individuals Enrolled in Medicaid 230,417 Determined to be Ineligible Expansion Population Totals –338,707 have enrolled –ODM Estimated 175,000 Would Sign up by June 2014 –Actuaries Estimate 563,000 Ohioans are Newly Eligible, and 366,000 Would Sign up for Coverage by June 2015 (93% of estimate) This Includes 26,000 who Received Medicaid Coverage Through Metro Health Waiver 12 AAHAMSept. 12, 2014

13. July 2014 13

14. July 2014 14

15. Health Insurance Marketplace 154,668 Ohioans Have Selected Plans on the Exchange as of May 30. 85% of Them Received Financial Assistance. 15 AAHAMSept. 12, 2014 AgeOhio Percent age National Percent age >189%7% 18-258%11% 26-3415%17% 35-4415%17% 45-5421%22% 55-6431%25% >650% LevelOhio Percentag e National Percentage Bronze25%17% Silver60%69% 1.Gold12%9% Platinum2%4% Catastrophic2%

16. Medicaid APR-DRG Conversion Background Year-Long Process to Determine Relative Weights, Base Rates & Payment Policies OHA Goal: Fairness and Equity Across Hospitals ODM Added Approx. $84 M / Year in FFY 2014 Inpatient Payments for In-state Hospitals Helped Rural Hospitals by Repurposing Funds From Out-of-State Hospitals ($24 M / Year) Has Three-Year Transition with Risk Corridors For Urban Hospitals to Ensure Stability and Minimize Winners & Losers Preserves Most Medicaid IPPS Reimbursement Policies and Payment Logic For Now. Sept. 12, 2014 AAHAM 16

17. Medicaid APR-DRG Conversion IPPS Policy Shifts for SFY 2014 and Beyond CMS Grouper 15 to 3M APR-DRG; New Grouper Starts Each Year with Discharges 10/1 and After Newly Calibrated Relative Weights New Base Rates & Three-Year Transition Includes Stop Loss/Stop Gain Applied to Urban Peer Groups Outliers Policy Changed to Mirror Medicare Medical Education Payments Held Harmless in SFY 2014 But It’s Not Over ‘till It’s Over Stop Loss/Gain Threshold in Out Years of Three-Year Transition Causing Lots of Unforeseen Changes in SFY 2015 ODM Proposing Revised SFY 2015 Base Rates for Transition Stop Loss/Gain Hospitals - Effective 10/1/14 Additional Discussion Still to Come About Peer Groupings, Next DRG Re-base & Re-Calibration, Medical Education Payments, HAC, Other? Sept. 12, 2014 AAHAM 17

18. 2015 BWC OHA Recommends BWC Stay With Medicare IPPS/OPPS Methodology Adopt Published Rates in Medicare’s FFY 2015 Proposed Rule; Includes a General Update of 2.1% Eliminate the 1.008% Adjustment Factor to Offset the Medicare Coding and Documentation Adjustment Refine the BWC Payment Adjustment Factors (PAF) to Include Separate Factors Based on Each Hospital’s Medicare Urban or Rural Classification BWC Fee Schedule Analysis Revealed Disparity of Payment-to-Cost Ratio at Major Teaching, Urban, Government & 400-499 Bed Hospitals 18 AAHAMSept. 12, 2014

19. 2015 BWC BWC Proposing to Refine the Current Payment Adjustment Factors (PAF) at the Urban and Rural Levels OHA Finance Committee to Review and Respond 19 AAHAMSept. 12, 2014

20. Etc… Medicaid Episodic Payment Plan Gaining Speed OHA Finance Committee Considering Responses SAFE Program Audits Possible Next Year FFY 2011 Medicaid DSH Program (HCAP) Audit Results are Out. Not Too Many Surprises (Except for OB Requirement) FFY 2012 Audit Will Start Later This Month Expect Additional Scrutiny on Hospital Price and Quality Transparency Still Waiting on CMS/HHS Final Rule for 20 AAHAMSept. 12, 2014

21. State Innovation Models – Episodic Payments 21 AAHAMSept. 12, 2014

22. Questions / Comments? Sept. 12, 2014AAHAM 22