1. Medicare Disproportionate Share Update HFMA January 26, 2008 Presented by: Felicia Viselli President, HealthQuest Consulting, Inc.

2. DSH Formula  Comprised of 2 components  Supplemental Security Income(SSI) Ratio + Medicaid Ratio  Increases in either component increases the total DSH payment

3. SSI Ratio Federal Fiscal YRDifferencesNotes 2007Will include HMO Claims Delayed Release 2006Excludes HMO Claims Under Review Option to use 05 until reissued 2005Re-IssuedDenominator In Error

4. SSI Errors Uncovered  Baystate v.Mutual of Omaha  2003 & 2004 PRRB Hearings Challenged the CMS SSI Ratio was flawed for FYE(S) 1993-1996  PRRB renders Provider favorable decision on March 22, 2006

5. SSI Errors (continued)  SSI systemic errors noted  Omission of inactive or “stale” records (i.e.,SSI records of recipients whose eligibility terminated prior to time when SSA submitted data to CMS e.g. deceased persons)  SSI records were deleted due to space limitations  Omission of “forced Pay” cases (when payment was manual as opposed to automated)  Omission of retroactive cases  Omission of non-cash beneficiaries

6. The Errors continue  Failure to use multiple identifiers to identify SSI recipients  The PRRB further found that the SSI data contained certain historical errors that were within the control of CMS to correct  The Administrator overturned the PRRB’s decision and the provider proceeded to the U.S. District court of Columbia

7. SSI Case Status  On March 31, 2008 the district court held that the Secretary’s decision was arbitrary and capricious and ordered the case remanded to the Secretary for further action  Subsequently, Baystate filed a motion to amend portions of the court’s decision regarding remedy.  On November 8, 2008 the court expressly directed the Secretary to recalculate the SSI ratios for FYE(s) 1993-1996 and pay interest  Subsequently in a joint status report before the court, Baystate requested the court enter final judgment with respect to the Secretary’s final decision (count one) and hold in abeyance counts two and three concerning whether HHS or SSA has to release all of the social security records  On December 8, 2008 the court granted Baystate’s requests

8. Conclusions  The credibility of the CMS supplied SSI% is suspect  In light of the recent court rulings consider the benefits of challenging CMS’ calculation  Preserve your appeal rights by filing protested amounts and protective appeals

9. List of Protested Amounts  SSI ratio cost reporting period versus federal fiscal year  Total SSI days are understated (numerator)  Total Covered days are overstated (Denominator)  Eligible vs. Entitled days

10. Medicare HMO Days & SSI  July 2, 2007 CMS issued Transmittal 1131 Mandates Providers submit “No-Pay” bills for Medicare Advantage Plans  This is CMS’ attempt to capture HMO days in the SSI fraction  Required for FFY 07 (Explains the delay)  Transmittal Implementation Date 1/07/08

11. Medicare HMO DSH Impact  What Impact will the CMS billing requirement have on DSH reimbursement?  It is more advantageous to add days to the Medicaid Fraction than the SSI fraction because the Medicaid Denominator is fixed  The denominator of the SSI fraction increases with the addition of a dual-eligible days  Low Probability that these patients will qualify for SSI

12. Medicaid Fraction  Total days for Medicaid Eligible patients (excluding those with Part A coverage) Divide by  Total Acute PPS days

13. Medicaid Fraction Audit Issues  Medicaid days should be based upon discharge date (OIG report on DSH reimbursement Methodist Hospital report A-04-03-0203)

14. Medicare DSH Audit Issues Audit IssueResolution Population includes beneficiaries with full and restricted benefits. A single sample may result in disproportionate audit disallowances. Separate the population into 4 groups: Non-restricted, Non-restricted “same- day stays”, restricted-OB & restricted- Other Dual Eligible (State System not complete)  Dead People Excluded  Patients w/o only Part B are identified as Part A  Exclude patients internally classified as Part A and/or CWF review  Run Medicare Patients through secondary check (e.g. passport) Same day Stays are heavily scrutinized As potentially non-inpatient Dr.s Formal admission constitutes an inpatient A room charge is not mandatory MAC requests Remittance Advice (RA)No RAs Available Refuse to Provide

15. Audit Issues Continued Audit IssueResolution MAC requests TAR for non-restricted days Refer to HCFA ruling 97-2 (eligible vs. paid) MAC questions Emergent nature of Admit for RAC day Provide proof of payment or TAR