1. FY 2005 Indigent Care Trust Fund Disproportionate Share Hospital Program Presented to House Appropriations Health Subcommittee June 23, 2005

2. Presented to House Appropriations Health Subcommittee Overview What is DSH? Administration of DSH Hospital Eligibility Hospital Specific DSH Limits Allocation Methodology FY 2005

3. June 23, 2005 Presented to House Appropriations Health Subcommittee What is DSH? DSH = Disproportionate Hospital Federal Funds available annually to help compensate hospitals with a disproportionate share of uncompensated care from Medicaid and uninsured patients In Georgia, federal funds matched by intergovernmental transfers made by public hospitals – no state appropriations involved

4. June 23, 2005 Presented to House Appropriations Health Subcommittee Administration of DSH Information Needed Amount of Federal DSH funds available List of Hospitals Eligible for DSH Hospital-Specific DSH Limits Rural or Urban Designation for Hospitals Public or private status of hospital

5. June 23, 2005 Presented to House Appropriations Health Subcommittee Administration of DSH (cont) Indigent Care Trust Fund Advisory Committee Membership comprised of both rural and urban hospitals as well as public and private hospitals Makes recommendations to DCH regarding the administration of the DSH program Meets at least annually or more often as needed Membership appointed by the Commissioner

6. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital Eligibility for DSH Participation Federal Criteria (MUST MEET BOTH) Ability to provide obstetric services to Medicaid members Medicaid inpatient utilization rate of at least 1 percent

7. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital Eligibility for DSH Participation State Criteria (MUST MEET AT LEAST ONE) Medicaid inpatient hospital utilization exceeds certain level Low-income inpatient utilization rate exceeds 25 percent of revenue Total Medicaid charges exceed 15 percent of revenue Non-state hospital with the largest number of Medicaid admissions in its MSA.

8. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital Eligibility for DSH Participation State Criteria (continued) (MUST MEET AT LEAST ONE) Children’s hospital Designated regional perinatal center Medicare rural referral center/Medicare DSH provider Board of Regents teaching hospital Small, rural, public hospital with Medicaid inpatient utilization of at least 1 percent

9. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital-Specific DSH Limits DSH Limit equal to Medicaid and Uninsured uncompensated care – DCH uses historical cost data compared to cash collections to determine what hospital care was not paid for by any other payers – Data is reported on the annual Hospital Financial Survey – Data inflated to approximate today’s uncompensated care

10. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital-Specific DSH Limits Hospital Financial Surveys subject to state audit: DCH contracts with Georgia Department of Audits for audits All surveys subject to desk reviews On-site reviews for – Hospitals with the largest DSH limits – Hospitals with unusual changes in data

11. June 23, 2005 Presented to House Appropriations Health Subcommittee DSH Allocation Methodology Policies No hospital receives more than their hospital- specific DSH limit Intergovernmental transfers from public facilities are used to match federal DSH funds and make DSH payments – For large private or urban private hospitals, the allocation is capped at 50% of the hospital specific DSH limit

12. June 23, 2005 Presented to House Appropriations Health Subcommittee DSH Allocation Methodology Policies The Department calculates an initial and secondary DSH allocation based on available funds. – In the initial allocation, small, rural hospitals receive 100% of their hospital-specific DSH limits. – The secondary allocation distributes the rest of the available DSH funds to all other, eligible hospitals.

13. June 23, 2005 Presented to House Appropriations Health Subcommittee FY 2005 Fund Availability and Hospital Eligibility Timeline – Changes in Data Used for Hospital Specific DSH Limits – Interim Payments – Expanded On-Site Reviews of Data Application of Stop Loss and Stop Gain Next Steps

14. June 23, 2005 Presented to House Appropriations Health Subcommittee FY2005 DSH Summary FY 2004FY 2005 Available DSH Funding$424,724,498$419,237,251 Number of Eligible Hospitals* 96107 Number of Hospitals Newly Eligible in FY 2005 13 Number of Hospitals Ineligible in FY 2005 that participated in FY 2004 2 * Met criteria to participate; does not necessarily guarantee their DSH limit was greater than zero

15. June 23, 2005 Presented to House Appropriations Health Subcommittee FY 2005 Timeline August 2004 – Annual Indigent Care Trust Fund Committee Meeting November 2004 - Department releases Individual DSH Limits and Allocation December 2004 – Hospitals express concerns about impact of data used in allocation – Data sources – Integrity of self-reporting and the quality of the review process

16. June 23, 2005 Presented to House Appropriations Health Subcommittee Data for Hospital-Specific DSH Limits As compared to prior years, FY 2005 DSH Limit calculations a little different: Based on 2003 data (CMS required) CY 2003 ICTF Advisory Committee Recommendations applied

17. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital-Specific DSH Limits Medicaid Loss Calculation FY 2004 Medicaid Claims- Based Data Data from Cost Reports available in 2002 Estimated Accrued Payments FY 2005 Hospital reported data Data from 2003 Hospital Financial Survey Cash Payments

18. June 23, 2005 Presented to House Appropriations Health Subcommittee Hospital-Specific DSH Limits Uninsured Loss Calculation FY 2004 Hospital reported data Data from 2001 Hospital Financial Survey Estimated Accrued Payments FY 2005 Hospital reported data Data from 2003 Hospital Financial Survey Cash Payments

19. June 23, 2005 Presented to House Appropriations Health Subcommittee FY 2005 Timeline (cont.) January 2005 – DCH Agrees to Further Review Data; Makes Interim Payments to Support Cash Flow for Hospitals Based on 75% of preliminary FY 2005 allocation 15% Stop Loss and Stop Gain applied based on FY 2004 allocations No more than 90% of FY 2005 allocations were made for hospitals subject to Stop Loss provision

20. June 23, 2005 Presented to House Appropriations Health Subcommittee FY 2005 Timeline (cont.) February 2005 – ICTF Advisory Committee meets to advise DCH of policy areas that need clarification for on-site reviews EXAMPLES: – Consideration of pharmacy and physician services – Advanced Payment Impact on Cash Collections

21. June 23, 2005 Presented to House Appropriations Health Subcommittee Expanded On-Site Reviews February – May 2005 – Additional on-site reviews of data conducted by GDOAA Expanded on-site reviews for: Hospitals with more than 25% change in their FY 2005 DSH allocations when compared to FY 2004 Safety Net Hospitals Newly Eligible for DSH in FY 2005 More than 85 hospitals subject to on-site reviews.

22. June 23, 2005 Presented to House Appropriations Health Subcommittee Expanded On-Site Reviews Data problems identified – Lacked detailed, patient-level data – Data not delineated between services covered by DSH vs. other programs. Time limitations prevented GDOAA from accepting some re-created data reports supporting the HFS DCH used data proxies to validate the reasonableness of self reported data when GDOAA could not validate during on-site reviews

23. June 23, 2005 Presented to House Appropriations Health Subcommittee Outcome of Extended On-Site Reviews BeforeAfter Aggregate DSH Limits FY 2004$751,566,897 FY 2005$866,775,780$772,074,927 Number of Hospitals with DSH Limits (of 107 eligible) 10298 Number of Hospitals With Increases in DSH Limits 36 Number of Hospitals With Reductions in DSH Limits 66 Number with No Change5

24. June 23, 2005 Presented to House Appropriations Health Subcommittee June DSH Allocations -Initial- Based on Extended Reviews FY 2005 Number of Hospitals with Increases in Payments vs. FY 2004 58 Number of Hospitals with Decreases in Payments vs. FY 2004 49 Number of Hospitals with DSH Limit Equal to Zero 9 Average Increase72% Average Decrease51%

25. June 23, 2005 Presented to House Appropriations Health Subcommittee Why Such Swings in Payments? Update to newer data reflects growth in uncompensated care Implementation of ICTF Advisory Committee recommendations for data sources Smaller pool of funds to distribute More hospitals participating Change in hospital business practices

26. June 23, 2005 Presented to House Appropriations Health Subcommittee Final Allocations Final Allocation includes a Stop Loss and Stop Gain and a protection for “negative” balances 7% Stop Loss applied to FY 2004 hospital- specific DSH limits 14% Stop Gain applied to FY 2004 hospital- specific DSH limits Eight facilities held harmless where their interim payments exceeded their final DSH allocation

27. June 23, 2005 Presented to House Appropriations Health Subcommittee Impact of Stop Loss/Stop Gain FY 2005 No SLSGWith SLSG Aggregate DSH Limits$772,074,927$796,066,992 Number of Hospitals Subject to Stop Gain38 Number of Hospitals Subject to Stop Loss46 Number of Hospitals With No Impact10 Number of Hospitals Where No SLSG Could Be Applied Due to New Eligibility 13

28. June 23, 2005 Presented to House Appropriations Health Subcommittee Final DSH Allocations FY 2005 No SLSGWith SLSG Number of Hospitals with Increases in Payments vs. FY 2004 58 Number of Hospitals with Decreases in Payments vs. FY 2004 49 Average Increase72%9% Average Decrease51%10%

29. June 23, 2005 Presented to House Appropriations Health Subcommittee Next Steps Hospitals Provide Notice of Intent to Transfer Intergovernmental Funds by Friday, June 24 If all transfers received on June 27, payments made by June 28 If all transfers not received, remaining FY 2005 funding rolled forward to distribute in FY 2006 – NO PAYMENTS MADE IN JUNE For FY 2006, seek hospital consensus, through an expanded ICTF Advisory Committee, on data collection and DSH fund allocation methodologies