1. 11 MHA Update MPAA January 18, 2013 Vickie R. Kunz Senior Director Health Finance

2. “Fiscal Cliff” Options In late November, MHA distributed hospital-specific reports that reflected the impacts of various options under consideration. 2

3. Cuts Considered – Nov 2012 3

4. Recent “Fiscal Cliff “ Bill American Taxpayer Relief Act of 2012 included several significant Medicare payment cuts for hospitals in conjunction with averting the 27 percent cut to Medicare physician payments and delaying the 2% sequester for two months. 4

5. Medicare Cuts IPPS coding adjustment reductions totaling at least 9.7% over a 4-year period, FY 2014 -17. Projected to reduce IPPS payments to Michigan hospitals by $106 million in FY 2014 and $437 million over the 4-year period. Takes effect Oct. 1, 2013. 5

6. Continued, Medicare Cuts 58% reduction in Medicare APC payment rate for APC 0127 (Stereotactic Radiosurgery) from about $7,900 to $3,300 based on the payment rate for APC 0067 (Linear Accelerator based sterotactic radiosurgery). Takes effect April 1, 2013. Expected to reduce Michigan APC payments by $400,000 in FY 2013 and $5.6 Million over the next 10 years. 6

7. Cont., Medicare Provisions Increased the statute of limitations for Medicare overpayment recoveries from 3 to 5 years. Implements a therapy multiple procedure payment reduction which will reduce payment for subsequent therapies when provided on the same day. 7

8. Cont., Medicare Provisions Extends the outpatient therapy services per beneficiary cap of $1,880 and the exceptions process through Dec. 31, 2013. –Continues to apply to services provided in hospital outpatient departments. 8

9. Cont., Medicare Provisions Extended the less restrictive low-volume payment adjustment criteria authorized by the ACA until Dec. 31, 2013. –Expected to increase Medicare FFS payments by $10.7 million in FY 2013. –Retroactive to Oct. 1, 2012. –Unclear whether hospitals have to request this adjustment as in past years. 9

10. Cont., Medicare Provisions Extended the Medicare Dependent Hospital program until Oct. 1, 2013. –Expected to increase FY 2013 Medicare FFS payments to Michigan hospitals by $1.2 million. –Retro to Oct. 1, 2012. 10

11. Cont., Medicare Provisions 2% sequestration expected to cut payments to Michigan hospitals by $110 million from March 1 – Sept. 30, 2013, or almost $1.4 billion over the next 10 years, if implemented. –Includes hospital-based services Rehab, Psych, Home Health, LTCH, etc. 11

12. American Taxpayer Relief Act Hospital-specific reports distributed Jan. 10, to CEOs/CFOs/Directors of Reimbursement/Government Relations. Concern remains that additional cuts will occur during debt ceiling increase negotiations in Washington DC. –Will the 2% sequestration be changed? 12

13. Michigan Statewide Impact 13

14. Federal Advocacy Efforts MHA will participate in Feb 13 AHA Advocacy Day in Washington DC. MHA coordinating Michigan hospital advocacy day Feb 26. 14

15. ACA Impact - DSH Payments Beginning Oct 1, 2013, 75% of hospital- specific Medicare DSH payments will be based on total Medicare DSH payments adjusted to account for the estimated decrease in the number of uninsured patients, with hospital allocations based on their portion of total uncompensated care provided by all DSH hospitals. No further DSH policies available until FY 2014 IPPS rule is released in April 2013. 15

16. Outpatient Therapy Services 2013 collection of claims-based data on patient functional status over an episode of PT, OT and SLP services. All therapists will be required to report new G-codes and modifiers on the claim form: – initial evaluation, every 10 visits and at discharge. –CMS will adopt testing period thru June 30. 16

17. CRNAs Beginning Jan. 1, CRNAs may directly bill and be reimbursed by Medicare for services determined by the state to be within their scope of practice, including chronic pain management services. 17

18. Imaging Services MPPR 25% multiple procedure payment reduction to the technical component of diagnostic cardiovascular services. 20% MPPR to the technical component of diagnostic ophthalmology services provided by the same physician (or group practice) to the same patient on the same day. May impact hospital payments for technical component for services performed. 18

19. 19 Medicare Advantage Plans As of Oct 2012, 30 plans in Michigan, with 455,000 or approximately 26% of Michigan’s 1.7 million Medicare beneficiaries enrolled. –Up to 20 plans in some counties. Review MA payment rate for all plans. CAH entitled to Medicare cost reimbursement. Each MA plan may determine own utilization model and is not required to maintain electronic transactions. Many MA have instituted “RAC-like” utilization programs. Matrix of MA plans by county available at MHA website – updated quarterly, with MHA Monday Report article. –See Oct 29 MHA Monday Report for latest info

20. 20 Medicaid Issues

21. Medicaid Redesign MSA announced that they will begin a formal project to review and redesign the Medicaid payment system. MSA may consider inpatient and outpatient, capital, MACI, HRA, GME and DSH payments. 21

22. FY 2014 Budget Gov. Snyder’s executive budget proposal expected February 7. 22

23. CSHCS Beneficiaries HMO enrollment for children dually eligible for Title V and XIX. Change effective Oct. 1, with enrollment staggered through March. Medicaid FFS hospital payments for this population of 20,000 children are approximately $135 million annually. –MSA shifted $103 million from FY 2012 MACI to HRA to reflect this impact. 23

24. Medicaid Rates Updated Updated hospital DRG and capital rates effective Jan. 1. –Available on MDCH website. MS-DRG relative weights also updated effective Jan. 1. Medicaid OPPS payment factor reduced to 54.3 % of Medicare rates, excluding an area wage adjustor. 24

25. Cont., Medicaid Rates Also effective Jan. 1, Medicaid changed from paying claims based on rates and DRG weights in effect on date of admission to paying based on date of discharge. –Consistent with Medicare and other payers 25

26. Post Stabilization Proposal MSA proposed policy captures much of same intent as Dec. 2009 L-Letter. In its November comments, the MHA recommended that the MSA add: “An authorization for inpatient admission may not be subsequently reversed based upon the length of time the patient is hospitalized.” Patient status and the need for inpatient services as determined by a physician should be the determinant for inpatient payments rather than the length of time the patient remains an inpatient. 26

27. Cont., Post Stabilization The MHA believes the policy should apply to non-contracted hospitals that have signed the hospital access agreement (HAA). The MHA believes the policy should not apply to hospitals that have not signed the HAA. See Nov. 19 and Jan. 14 MHA Monday Report articles and comment letters. 27

28. MIP & CIP MSA will change from biweekly payments to monthly payments. Proposed policy expected in next few months with implementation about 6 months later. 28

29. Integration of Dual Eligibles Tentative agreement between MDCH and CMS announced on Dec. 21. Regional vs statewide implementation. Request for proposal for ICOs expected to be issued in mid/late February. ICOs to be selected by July, with a Jan 2014 target for active enrollment. 29

30. Health Care Advocacy Day 8 a.m. to 1 p.m. on April 17 in Lansing. MHA Michigan Association of Healthcare Advocates Michigan Healthcare Volunteer Resource Professionals Registration available on MHA website by March 15. 30

31. BCBSM Mutualization In late December, Gov. Snyder vetoed legislation to transition BCBSM to a nonprofit mutual disability company regulated under the state insurance code. –Governor’s decision was influenced by provisions added to the bills that would have changed how the insurance market administers coverage for abortion services. Legislation expected to be re-introduced by the 97 th legislature. 31

32. BCBSM Fee Screens Certain outpatient services currently paid as a percentage of charges will be converted to fee-based payments effective April 1, in accordance with the BCBSM PHA. Change affects emergency, observation, treat room, dialysis, general therapeutic, diabetes education, cardiac rehab, pulmonary rehab, clinic, urgent care, ambulance. 32

33. Cont., BCBSM Fee Screens Fee screen payments available on Web-DENIS by HCPCS. BSBSM intends to implement the change in a budget-neutral manner for first year of implementation. 33

34. BSBSM MA Outpatient claims for dates of service on and after Jan 1, 2013, will be paid at 2012 rates until new rates installed. 2013 rates expected to be installed around Jan 23. 2013 claims to be reprocessed. New vendor and claims processing system. Hospitals will receive payments once per week instead of twice. 34

35. Days in A/R Based on 39 hospitals participating in MHA Monthly Financial Survey (MFS) Jan – Oct 2012 versus 2011 Medicare – down from 34 to 33 days Medicaid - down from 51 to 50 days BCBSM – up from 34 to 35 days Overall – unchanged at 47 days 35

36. 36 MHA Resources Monday Report is available FREE to anyone and is distributed via email each Monday morning. –Go to website and select “Newsroom”, then Monday Report MHA Monday Report – electronic publication issued weekly Request password if you don’t have one. –Email Donna Conklin at dconklin@mha.org to obtain MHA member ID number Advisory Bulletins – Extensive communications available only to MHA members, as needed. (Require password to obtain from website). Hospital specific mailings as needed for various impact analyses, etc. Periodic member forums See mha.org for other resources. Monthly Financial Survey provides free benchmarking of financial and utilization statistics.

37. 37 ???Questions??? Vickie Kunz, Senior Director, Health Finance Michigan Health & Hospital Association 110 West Michigan Avenue, Suite 1200 Lansing, MI 48933 Phone: (517) 703-8608 Fax: (517) 703-8637 email: vkunz@mha.org