1. 1 Michigan Patient Accounting Association (MPAA) March 13, 2015 Vickie R. Kunz Senior Director, Health Finance Michigan Health & Hospital Association

2. Who is the MHA? 2 Advocacy organization representing all hospitals in Michigan. Activities include: –State advocacy and policy on Medicaid funding and policy issues –Federal advocacy and policy on Medicare and Medicaid issues –MHA Keystone Center – Quality Improvement and Patient Safety Initiatives –BCBSM Contract Administration Process Unique to Michigan

3. 3 Payer Issues The role of the MHA is to assist in resolving systematic payer issues. Individual hospital contracts determine terms and conditions and take precedence. Communicate issues to Marilyn Litka-Klein (mklein@mha.org) or Vickie Kunz (vkunz@mha.org) at the MHA.mklein@mha.orgvkunz@mha.org

4. Examples of MHA Involvement in Other Issues 4 Other activities identified by/for the MHA membership –Maximize federal funding in state Quality Assurance Assessment Program (QAAP) –Medicaid implementation of Critical Access Hospital takeback that included “reject” vs “no-pay”, impact on Medicare reimbursement –Michigan Managed Care Rebid process –Medicaid implementation of MI Health Link (formerly dual eligible project) –HFMA/MPAA/ACMA, etc. outreach –BCBSM DRG validation audits –No-fault insurance payment rates

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7. 2013 AHA Survey Results See MHA Advisory Bulletin included in March 9 weekly mailing for comparisons of utilization and financial data for Michigan and US. –Available to MHA members only Includes ready-to-use Power Point for presentations 7

8. 8 Reform physician SGR, but no funding source Eliminate sequestration, but alternative not identified Reduce bad debt reimbursement Site neutral payment reduction Reduce CAH reimbursement from 101% to 100% Changes to premiums, deductibles, co-pays President’s FY 2016 Budget

9. 2015 Medicare FFS Deductibles and Coinsurance 9 Part A deductible – increasing by $44 from $1,216 to $1,260. –Inpatient hospital, SNF, home health services Coinsurance –$315 for days 61-90 of hospitalization –$630 for lifetime reserve days –$157.50 for days 21-100 of extended care services Part B monthly premium unchanged at $104.90. –Adjusted upward for higher income beneficiaries. Part B deductible unchanged at $147.

10. 10 As of January 2015, 33 plans operating in Michigan, with 582,000 or approximately 32% of Michigan’s 1.8 million Medicare beneficiaries enrolled. − Enrollment up 13,000 since October. − Up to 22 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. − Jan. 26 MHA Monday Report. Medicare Advantage Plans

11. 11 Medicaid

12. 12 579,115 individuals enrolled in Healthy Michigan Plan as of March 9. Every county in Michigan HMP comprises 21- 24% of Medicaid enrollees in most areas Approximately 340,000 individuals obtained coverage on the insurance exchange 87% eligible for subsidies Michigan Progress in Covering the Uninsured

13. 13 Based on HMP enrollment as of 03/09/15

14. 14 Based on HMP enrollment as of 03/09/15

15. 15 Based on HMP enrollment as of 03/09/15

16. 16 Based on HMP enrollment as of 03/09/15

17. 17 Graduate Medical Education (GME) $14.5 million cut Rural Access Pool - $5.8 million cut Timing of these reductions not identified FY 2015 Executive Order Reductions

18. 18 Eliminate state funding for: $163 million GME pool $35 million Rural Access Pool $11 million OB Stabilization Pool Budget assumes hospitals will increase the hospital provider tax to maintain these payments But would require all hospitals to pay tax; with only certain hospitals receiving payments from these pools. Governor’s Proposed FY 2016 Budget

19. 19 Exec budget – “additional revenues to healthcare system from Healthy Michigan more than offset these reductions” Governor’s Proposed FY 2016 Budget

20. 20 Other reductions: $35 million in hospital capital payments Payments based on combined FFS and HMO costs. Proposed by MSA in late 2014; opposition by MHA and hospitals resulted in MSA not implementing for FY 2015. $32 million reduction to HMO lab rates Split between independent labs and hospitals unclear Governor’s Proposed FY 2016 Budget

21. 21 Budget proposal is unacceptable FY 2016 budget also includes Health Insurance Claims Assessment (HICA) tax increase from 0.75 to 1.3%. Failure to pass would increase the budget shortfall by an additional $180 million GF. Rural pool payments provide much needed payments to maintain services in rural areas. OB payments key to maintaining OB access in rural areas. Key Talking Points 2016 Budget

22. 22 GME funding supports direct patient care, it is not medical school tuition. Residency is 3-5 years. Absent adequate funding, hospitals may curtail their training programs, reducing pool for future physicians. This at the same time that Michigan has expanded its medical schools and enrollment Over 900,000 newly ensured individuals need access to primary care services. Key Talking Points – cont.

23. 23 FY 2016 budget includes $95 million deposit to Budget Stabilization fund. Federal government has signaled end of Medicaid Managed Care Use Tax. Healthy Michigan Plan requires GF contribution beginning in FY 2017. Future State Budget Concerns

24. 24 Workgroups from both departments continue to meet. New department will have 50,000 employees An executive budget revision to reflect the combination is expected by April 10. The two departments are expected to be combined in the final FY 2016 budget. MDCH/MDHS Merger

25. 25 ACA provided funding to pay Medicare rates for certain primary care physician services in calendar 2013 and 2014. Federal funding expired Dec. 31, 2014. MSA final policy 14-61 released Dec. 1, 2014. http://www.michigan.gov/documents/mdch/MSA- 14-61_475382_7.pdf. http://www.michigan.gov/documents/mdch/MSA- 14-61_475382_7.pdf FY 2015 Medicaid budget will pay these services at mid-point of Medicare and Medicaid rates. Compared to 2014, rates will decrease but not to Medicaid levels. Primary Care Physician Rates

26. Integrated care demonstration project for individuals dually-eligible for Medicare and Medicaid. Integrated care organizations are in the process of contracting with hospitals in the four demo regions. Nine plans in Macomb and Wayne counties, two in 8 Southwest counties, one plan in UP. Hospitals in these regions are responsible for negotiating contracts with the Integrated Care Organizations. 26 MI Health Link

27. Phase I - Opt-in enrollment began Feb. 1, in Southwest Michigan (Region 4) and the Upper Peninsula (Region 1), with services beginning no earlier than March 1. Passive enrollment effective May 1. Phase II - Opt-in enrollment beginning in April, in Macomb (Region 9) and Wayne (Region 7) Counties, with services no earlier than May 1. Passive enrollment takes effect July 1. Statewide implementation won’t occur until after the demonstration project ends on Dec. 31, 2018. Payments to non-contracted hospitals should be Medicare rates including IME, GME, DSH. 27 Continued, MI Health Link

28. March 17 – Wayne County (Region 1) 10 – 11:30 a.m. March 31 – Macomb County (Region 9) – 2 to 3:30 p.m. Register at http://www.michigan.gov/mdch/0,1607,7- 132-2945_5100-127606--,00.html.http://www.michigan.gov/mdch/0,1607,7- 132-2945_5100-127606--,00.html Registration should be completed prior to the day of the webinar to guarantee participation. More info regarding MI Health Link at: http://michigan.gov/mdch/0,4612,7-132- 2945_64077---,00.html. http://michigan.gov/mdch/0,4612,7-132- 2945_64077---,00.html 28 Upcoming Webinars - MI Health Link

29. MSA Final Policy # 1459-DRG Jan. 1, 2015: –DRG and Rehab per diem rate update –Update DRG Grouper from Version 31.0 to Version 32.0 –Mandates birth weight reporting, needed for APR-DRGs –Prospective capital rate; developed using FFS data only Key change from proposed policy which would have used both FFS and HMO data Oct. 1, 2015: –APR-DRG implementation –Statewide rate implementation, with appropriate hospital adjustors 29

30. MSA Short Stay Rate Workgroup efforts continue to develop a short stay rate for payment of short stay cases for Medicaid FFS and HMO. Short stay rate would apply to specific diagnosis codes for non-surgical cases. Established short stay rate would be paid to hospitals regardless of hospital determination of inpatient or observation status. If patient meets criteria for inpatient admission, patient days should be counted for Medicare DSH purposes. Target implementation July 1, 2015. Would apply to Medicaid FFS and non-contracted HMO cases. 30

31. Medicaid Outpatient Payment Rate Effective Jan. 1, 2015, Medicaid pays 52.3 percent of Medicare OPPS and ASC rates. –excluding an area wage adjustor –down from 2014 rate of 53.4 percent Annual change is necessary to maintain budget neutrality for Medicaid outpatient payments. 31

32. Upcoming DSH Activity 2015 FY 2012 Step 3 (DSH audits) began in early February, with data due to Myers and Stauffer March 27. FY 2011 payment recoveries expected to occur by March 31. FY 2013 Step 2 expected to occur in next few months. FY 2015 Step 1 targeted for July. Will provide hospitals with projected FY 2015 payment amounts for all DSH pools. 2016 FY 2014 Step 2 expected to occur in early 2016. FY 2013 Step 3 (DSH audits) 32

33. HMO Rebid Process Modified service areas from current 10 regions to Gov. Snyder’s 10 prosperity regions. HMOs submitting proposals must provide Medicaid coverage for all counties within a region. –Key change from current process HMOs for Northern Lower Michigan must bid for both Regions 2 and 3, with separate bids for these regions not considered. Consistent HMOs will reduce current coverage variation among beneficiaries and lessen the administrative burden on providers to manage different requirements based on an enrollee’s county of residence. 33

34. Continued, HMO Rebid Process Request for Proposal (RFP) to be released after May 1, 2015. Contract awards to be announced in Nov. 1, 2015. New contracts will be effective Jan. 1, 2016 for five years with three one-year extensions available. Separate carve-out for pharmacy. $8 billion annually in payments from the state. 34

35. MI Child Effective Oct. 1, 2015 - MI Child will be folded into regular Medicaid under the HMO rebid. 35

36. 36 Results based on 28 hospitals that submitted data to the MHA Monthly Financial Survey (MFS) for period – January - December 2014 versus same months 2013: Medicare – Days in A/R increased from 36 to 39 days. Medicaid – Days increased from 38 to 39 days. BCBSM – Days in A/R were unchanged at 39 days. Overall – Days in A/R were unchanged at 47 days. Days in Accounts Receivable

37. 37 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 (MFS) provides free benchmarking of financial and utilization statistics. MHA Resources

38. 38 Vickie Kunz Senior Director, Health Finance Michigan Health & Hospital Association 110 West Michigan Avenue, Suite 1200 Lansing, MI 48933 Phone: (517) 703-8608 email: vkunz@mha.org ???Questions???

39. General Medicare Quality-Based Program Themes Increased financial exposure each year (max exposure shown below) 39 HAC = Hospital Acquired Condition (HAC) Reduction Program; RRP = Readmission Reduction Program; VBP = Value Based Purchasing Program

40. Estimated Michigan Financial Impact - FY 2015 Medicare Quality – Based Programs 40 Value-based purchasing (VBP) program – 43 hospitals lose $6.4 million; 54 hospitals remain whole or earn $4 million more than the amount they pay. –Contribution is 1.5% in FY 2015; increasing to 1.75% and then 2% in FY 2017 and beyond. Readmissions reduction program (RRP) – 71 hospitals subject to $22 million payment penalty. Hospital-Acquired Conditions (HAC) reduction program – 21 hospitals are subject to the 1 percent payment penalty, resulting in a $15 million payment reduction. –FY 2015 is year one for this program Hospital-specific reports distributed Jan. 13 reflecting the estimated financial impact of these ACA-mandated programs.

41. Medicaid Newborn Claim Requirements Dates of service Oct. 1, 2014 and after Type of admission/visit Birth weight C-section/inductions related to gestational age Applies to both FFS & HMO claims Informational edits now, but will be required Jan. 1, 2015 –Claims without data for 2015 dates of services will be rejected 41