1. 11 MHA Update Michigan Patient Accounting Association November 18, 2011 Vickie R. Seal Senior Director Health Finance

2. Pending Auto No-Fault Legislation House bill 4936 would impose lifetime caps on auto injury benefits between $500,000 and $5 million. Mandates government price controls in form of workers comp fee schedules for provider payments. 2

3. Cont., Auto No-Fault As a result of aggressive advocacy efforts, vote delayed on HB 4936 until after Thanksgiving recess. –Legislative session resumes Nov. 29. SB 649 is awaiting action by Senate Committee on Insurance. 3

4. Cont., Auto No-Fault If passed, traumatically injured people would have grossly inadequate coverage for care, rehabilitation and accommodations. Millions of dollars cost-shifted from for-profit insurance companies onto Medicaid and taxpayers Auto insurers NOT required to reduce premiums. 4

5. 55 Medicare Federal Deficit Reduction Physician Fee Schedule Final Rule Home Health Final Rule Outpatient Hospital Final Rule

6. Federal Deficit Reduction Work began in August by Joint Select Committee on Federal Deficit Reduction. Committee charged with finding $1.2 trillion in savings over 10 years. Michigan represented by U.S. Reps Fred Upton and Dave Camp. Committee must make recommendations by Nov. 23, with Congress to vote by Dec. 23. Absent agreement, mandated Medicare FFS 2% across-the-board sequestration takes effect Jan. 1, 2013 – 2021. 6

7. Budget Deficit Options Bad debt payment reductions – all settings Phase down to 25% or eliminate 100% Coding Adjustment Reductions –3.0% in FY 2013 & 2014 (IPPS) Modification of rural special status programs –CAH, SCH and MDH programs eliminated –CAH cost-based payments reduced from 101% to 100% for inpatient, outpatient and swing bed. Graduate Medical Education –Reduce IME reimbursement from 5.5% to 2.2% –Reduce IME reimbursement by 10% –Limit GME reimbursement based on 2010 resident salaries 7

8. Cont., Budget Deficit Options – Post-Acute Care MB Update Freeze No market basket update for 8 years beginning in 2014 IRF - Hospital based and free-standing inpatient rehab facilities SNF – Hospital based skilled nursing facilities LTCH – Free-standing long term acute care hospitals

9. OPPS Final Rule Conversion factor up from $68.88 to $70.02. Net rate change is a 1.7% increase after: ↑ Up 3.0% marketbasket increase ↓ Down 1.0% percentage points – ACA-mandated productivity reduction. ↓ Down 0.1 percentage point ACA-mandated reduction. ↓ Down 0.22 percent budget neutrality adjustment for cancer hospital payment adjustment. 9

10. Cont., OPPS Final Rule CMS adopted its proposal to establish an independent review body to evaluate physician supervision requirements. Expand APC panel to add 2 CAH reps and 2 small rural PPS hospital reps. Panel’s preliminary decisions posted on CMS website with 30 day comment period. 10

11. Cont., OPPS Final Rule CMS will extend non-enforcement of direct supervision requirement through 2012. –CAHs –Small rural with 100 or fewer beds 11

12. Cont., OPPS Final Rule For 2012 payment determinations, hospitals were required to successfully report on 15 quality measures. For 2013 payment determinations, hospitals currently reporting on 23 quality measures. For 2014, hospitals required to report on 26 quality measures. –List available on pages 1138-1140 of display copy of Federal Register. 12

13. Cont., OPPS Final Rule CMS removed 10 procedures from inpatient only list. –See pages 814-815 of display copy of Federal Register. 13

14. Cont., OPPS Final Rule Hold-harmless TOPs paid to rural hospitals with 100 or fewer beds and SCHs will expire Dec 31. Section 508 reclassifications expired Sept 30. 14

15. Cont., Medicare OPPS A 6.2% decrease to the cost outlier threshold, decreasing it from $2,025 to $1,900. –Will result in more cases qualifying for an outlier payment. A 7% increase in the packaging threshold for drugs, biologicals and radiopharmaceuticals from $70 to $75. 15

16. Cont., OPPS Final Rule Final Rule to be published in Nov. 30 Federal Register. Effective Jan. 1, 2012. 16

17. Home Health Final Rule Effective Jan 1, 2012. Payments expected to decrease by approximately 2.4%. ↑ 2.4% MB increase ↓ 3.79% coding adjustment ↓ 1.0 ACA mandated cut 17

18. Cont., Home Health Final Rule Rule allows hospital and post-acute care physicians to satisfy requirement for a face- to-face encounter. CMS will apply the ACA-mandated 3% add- on to the national standardized 60-day episode rate, national per-visit amounts, LUPA add-on amount, and NRS conversion factor for services provided in rural areas. –By law, this adjustment continues through 2015. 18

19. Physician Fee Schedule Absent changes, Medicare physician payments will decrease by approximately 27.4% beginning Jan 1. Rule implements 25% multiple procedure payment reduction to professional component of advanced imaging services. 19

20. Cont., Physician Fee Schedule Implements 3-day window payment provisions which will pay physicians at lower facility rate for services provided in physicians office owned and operated by hospital and provided within 3 days of hospital admission. 20

21. Mandatory Medicare Delivery System Reform

22. 22 Medicare Advantage Plans As of October 2011, 29 plans in Michigan, with 412,000 or approximately 24% of Michigan’s 1.7 million Medicare beneficiaries enrolled. –Up to 19 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 Nov. 7 Monday Report for latest info

23. Michigan MAC Transition Transition from fiscal intermediary National Government Services (NGS) for Part A and Wisconsin Physician Services (WPS) as Part B carrier to WPS as Medicare Administrative Contractor. WPS will perform Medicare FFS claims processing, enrollment, education, provider audits Workload will transition over next 6 to 9 months. 23

24. 24 Medicaid Issues

25. 5010 Testing Providers must submit all claims using the X12 version 5010. Providers who do not convert by Jan. 1, 2012, will have their claims rejected. Hospitals and/or their billing agents are strongly encouraged to conduct business-to-business testing. –As of August, few hospitals have participated in testing. 25

26. Cont., 5010 Testing Link to MSA policy: http://www.michigan.gov/documents/mdch/M SA_10-54_339330_7.pdf http://www.michigan.gov/documents/mdch/M SA_10-54_339330_7.pdf Link to MSA website dedicated to 5010: http://www.michigan.gov/mdch/0,1607,7-132- 2945_42542_42543_42546_42552_42696- 256754--,00.html http://www.michigan.gov/mdch/0,1607,7-132- 2945_42542_42543_42546_42552_42696- 256754--,00.html 26

27. FY 2012 Budget $14.7 million cut to graduate medical education (GME) payments. –100% of cut will be applied to FFS GME. GME proposed policy released Oct. 28, with comments due Nov. 29. No cuts to provider rates. Tax-funded Outpatient Uncompensated Care DSH pool reduced from $60 million to $50.4 million. HRA pool increased by $50 million. 27

28. 28 $29.5 Million Budget Appropriation Included in FY 2012 budget appropriation. Rural and sole community hospitals. Payment to individual hospital or system limited to 5 percent of pool ( $1,477,000). MSA has not finalized allocation methodology.

29. Health Insurance Claims Assessment Act FY 2012 budget includes a 1% assessment on all health insurance claims (excluding Medicare) effective Jan. 1, 2012. Estimated to generate $400 million, which would be matched with $800 million in federal funds. –replaces state revenue from HMO use tax, which is expected to be disallowed by the CMS. Few details available to date. 29

30. Medicaid Rate Rebasing Implemented July 1, 2011. MSA included HMO encounter data for developing rates and MS-DRG relative weights and develop statewide rate for critical access hospitals. MSA continued historical reimbursement policy regarding limited base price, truncated mean and incentive calculations. 30

31. Cont. Medicaid Rates MSA will revise rates effective Jan. 1 to incorporate updated wage and cost data. Move to Grouper 29.0, consistent with Medicare. Proposed policy released Oct. 28, with comments due Nov. 29. 31

32. Federally-Mandated DSH Audits Beginning with state FY 2011 (audit in 2014),hospitals will be subject to DSH payment recoveries by the state if Medicaid DSH payments to the hospital were in excess of the hospital’s DSH using 2011 actual data. Hospital DSH payment recoveries of FY 2011 DSH payments that exceed actual 2011 cost. Hospitals encouraged to review their MSA-calculated DSH-ceiling info. –Send request to Brian Keisling at MSA. (keislingb@michigan.gov) 32

33. Integrated Care – Dual Eligibles Michigan is one of 15 states Approximately 211,000 individuals, up from 199,000 in 2008. $8 billion total –$4 billion Medicaid –$4 billion Medicare 4 workgroup meetings to be held Nov./Dec. 2011. –First meeting held Nov. 9. MDCH reiterated its goal to design a model that would simplify coverage for these beneficiaries. MDCH intends to submit a proposal to CMS by April 1 regarding its plan to improve care for these individuals. 33

34. BSBSM Annual Updates Inpatient rates updated 2.6 percent effective for fiscal years after Jan. 1, 2012. Capital rates increased 1.36 percent. Outpatient surgery rates updated 1.95 percent effective July 1, 2011. 34

35. 35 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.

36. Medicare Reports & Information Proposed Rules (IPPS, OPPS, SNF, IRF, IPF, HHA) Final Rules (IPPS, OPPS, SNF, IRF, IPF, HHA) Hospital Acquired Condition (HAC) Reports Quarterly Value Based Purchasing (VBP) –Quality Indicators –QI Trends –30-day mortality rates (updated annually by CMS) –30-day readmission rates (updated annually by CMS) –HCAHPS Recovery Audit Contractor (RAC) Reports –1-day stays –Transfers to SNF 36

37. 37 ???Questions??? Vickie Seal, 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: vseal@mha.org