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September 2014 Healthcare Financial Management Association (HFMA) Western Michigan Chapter Grand Rapids Great Lakes Chapter Traverse City


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Title: September 2014 Healthcare Financial Management Association (HFMA) Western Michigan Chapter Grand Rapids Great Lakes Chapter Traverse City

September 2014 Healthcare Financial
Management Association (HFMA)Western Michigan
Chapter Grand RapidsGreat Lakes Chapter
Traverse City
Vickie R. Kunz Senior Director, Health
Finance Michigan Health Hospital Association
Who is the MHA?
  • 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

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
    ( or Vickie Kunz (
    at the MHA.

Examples of MHA Involvement in Other Issues
  • Other activities identified by/for the MHA
  • 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

CMS RAC Appeals Settlement Proposal
  • Administrative Law Judge (ALJ) appeals back log
    CMS proposes 68 of funds due if hospital
    withdraws all pending appeals.
  • Hospitals must submit request for settlement by
    Oct. 31, 2014.
  • CMS to provide payment 60 days after CMS
  • No timeframe for CMS to accept
  • PPS hospitals and CAHs are eligible- Rehab and
    Psych Hospitals are not eligible.
  • See Sept. 15 MHA Monday Report Article which
    includes a link to CMS Sept. 9 presentation.

CMS ALJ Settlement Proposal cont.
  • These claims would not be counted for Medicare
    GME and other cost report reimbursement purposes.
  • Many hospitals that have appealed to the ALJ have
    had positive outcomes, therefore diminishing the
    value of this proposal.
  • Due to the significant backlog at the ALJ, it may
    be years before a hospital receives a positive
    decision and its payment under the current
    appeals process.
  • Hospitals are encouraged to carefully evaluate
    whether to request settlement.

IPPS 2015 Final Rule
Uncompensated Care Pool
-1.40 Billion
2 Midnight Rule Short-Stay Payment Policy
  • No changes adopted for two-midnight policy
    finalized in FY 2014 IPPS rule.
  • CMS will continue seeking input on short stay
    payment methodology.
  • No consensus in comments received

Reporting of Hospital Charges
  • ACA provision requires hospitals to make public a
    list of standard charges for items/services,
    including a list of charges for services by
  • No deadline for compliance but sets expectation
    that hospitals should update the information at
    least annually, or more often as appropriate.
  • CMS states that hospitals should either make
    public a list of their standard charges or their
    policies for allowing the public to view a list
    of charges in response to an inquiry.
  • Can use charge master

IME and GME  
  • Finalized proposal to pay the Medicare Advantage
    IME add-on amount to SCHs paid at the
    hospital-specific rate.
  • IME adjustment factor remains at 1.35.

FY 2015 CBSAs
  • CMS finalized use of the 2010 census data which
    results in status changes for hospitals located
    in five Michigan counties
  • Ionia Changes from Grand Rapids/Wyoming CBSA to
  • Newaygo Changes from Grand Rapids/Wyoming CBSA
    to Rural
  • Midland From Rural to Midland CBSA
  • Montcalm From Rural to Grand Rapids/Wyoming
  • Ottawa From Holland/Grand Haven CBSA to Grand
    Rapids/Wyoming CBSA.

Wage Index Development
  • CMS accelerated the timeline for developing the
    Medicare wage index starting with the FY 2016
  • Request for changes to hospital wage and
    occupational mix data are due to WPS/NGS Oct. 6.
  • Changes for FY 2017 AWI due in early September
  • Feb. 13, 2015 CMS to release revised FY 2016
    wage and OM public use files.
  • March 2 Deadline for hospital requests to
    correct CMS/MAC processing errors.
  • April 15 Deadline for hospital appeals

Occupational Mix Survey
  • Survey identical to 2010 but collected calendar
    year 2013.
  • Due to WPS or NGS July 1, 2014.
  • Will be used to adjust FY 2016, 2017, and 2018
  • Preliminary PUF released mid-July.
  • Non-responding hospitals are encouraged to
    complete and submit survey now before annual
    data scrub period ends Oct. 6.

PRRB Appeals
  • As a result of comments received, CMS did not
    finalize its proposal to eliminate the current
    requirement that a hospital either claim
    reimbursement on its cost report for a specific
    item or self disallow and file its CR under
  • CMS will likely address these provisions in
    future rulemaking.

Overview Value-Based Purchasing Program
  • Mandated by ACA starting in FY 2013, funded by 1
    withhold from all IPPS hospital payments,
    increasing by 0.25 to 2 in FY 2017 and future
  • Hospitals can earn more or less than their
    contribution amount or break even.
  • Nationally, this program is budget-neutral
    however, it will redistribute approximately 1.4
    billion in IPPS payments in FY 2015.
  • Michigan VBP incentive payments estimated to be
    700,000 lower than VBP program contribution

Value-Based Purchasing Program
Hospital Contribution 1.25 1.5 1.75 2
Domain Scoring FY 2014 (VBP Year 2) FY 2015 (VBP Year 3) FY 2016 (VBP Year 4) Finalized FY 2017 (Year 5)
Clinical Processes 45 percent 20 percent 10 percent 5 percent
Clinical Outcomes 25 percent 30 percent 40 percent 25 percent
Patient Experience 30 percent 30 percent 25 percent 25 percent
Efficiency/Cost Reduction N/A 20 percent 25 percent 25 percent
Safety N/A N/A N/A 20 percent
General VBP Program Trends
  • Continuously evolving program
  • Addition of new domains/measures over time
  • National Quality Strategy (NQS)-based domains
    beginning FY 2017
  • Measure complexity
  • Hospital Eligibility

Readmissions Reduction Program Overview
  • First payment adjustment was applied Oct. 1, 2012
    (FY 2013)
  • At risk Hospital-specific IPPS payment penalty
    of up to
  • 1 in FY 2013
  • 2 in FY 2014
  • 3 in FY 2015 and subsequent program years
  • Hospitals remain whole or lose and CMS gains
  • Payment adjusted for hospitals with excess
    readmissions rates (risk-adjusted hospital rates
    higher than risk-adjusted U.S. average)

FY Federal Fiscal Year
Hospital Readmissions Reduction Program
  • Five readmission conditions for FY 2015 up from
    three conditions for FY 2013 and FY 2014
  • Acute Myocardial Infarction (AMI)
  • Heart Failure (HF)
  • Pneumonia (PN)
  • New for FY 2015
  • Chronic Obstructive Pulmonary Disease (COPD)
  • Elective Total Hip Arthroplasty (THA) and Total
    Knee Arthroplasty (TKA)
  • CMS will calculate the FY 2015 excess
    readmissions ratios and the payment adjustment
    based on data from the 3-year time period of July
    1, 2010 to June 30, 2013.

Hospital Readmission Reduction Program Cont.
  • Payment adjustment factor will increase from 2
    to 3 in
  • FY 2015 as mandated.
  • Nationally, program is expected to reduce IPPS
    payments by 424 million in FY 2015, up from 227
    million in FY 2014.
  • Michigan impact estimated at 22 million
    reduction in FY 2015.
  • No changes for FY 2016 program
  • Based on same 5 conditions as FY 2015
  • Addition of one condition area to FY 2017
  • 30 Day All-Cause Unplanned Readmission Following
    Coronary Artery Bypass Graft (CABG)
  • Currently in NQF review for endorsement
  • Same general measure methodology as other program
  • Future program expansion is possible and likely

HAC Reduction Program Overview
  • First payment adjustment will be applied during
    FY 2015
  • At risk 1 payment penalty applied to Medicare
    IPPS payment
  • National impact 369 million cut in FY 2015.
  • Michigan impact 14 million cut in FY 2015.
  • Hospitals remain whole or receive payment
  • Payment adjusted for hospitals with total HAC
    score in top quartile (worst performing quartile)
  • Rules adopted for FY 2015 measures adopted
  • FY 2017

General Program Themes
  • Increased financial exposure each year (max
    exposure shown below)

HAC Hospital Acquired Condition (HAC) Reduction
Program RRP Readmission Reduction Program
VBP Value Based Purchasing Program
IPPS 2015 Final Rule Summary
System Component Change
Update Factor 1.1 net rate increase (net of all rate adjustments) after budget neutrality for hospitals that meet meaningful use (MU) and IQRP requirements.
Wage Index Redefined CBSAs based on 2010 census besides direct wage index implications, may impact other programs or special designations. Impacts 5 Michigan counties
Value Based Purchasing (VBP) Program 1.5 rate reduction with chance to earn back amount withheld or more increasing by 0.25 annually to 2 in FY 2017 and after.
Readmissions Keep pace with national average or subject to up to 3 reduction for FY 2015
Hospital Acquired Conditions (HAC) Hospitals in top quartile (the worst performing) will be penalized 1 - Reduction applies to operating payments and add-ons (DSH, IME, etc)
IME/GME Changes in new hospital established programs and how rural hospitals are paid for new programs.
DSH 25 of traditional formula calculation remaining 75 pooled for all DSH hospitals, reduced by uninsured reduction factor and then redistributed to hospitals as uncompensated care (UCC) pool based on low income patient days . No major changes from FY 2014 final rule but UCC pool 1.4 billion less than in FY 2014.
Low-Volume Adjustment Loosened criteria through March 31, 2015
MDH (Medicare Dependent Hospital) Extended through March 31, 2015
LTCH 1.1 rate increase
Medicare Payment Challenges
  • Absent Congressional action, 2 sequestration
    across-the-board cut continues through FY 2024.
  • Reduction to annual MB update if hospital fails
    to comply with IQRP and MU program requirements.
  • Readmissions Reduction Program Hospitals at
    risk for up to 3 in FY 2015.
  • Value Based Purchasing Program 1.5 payment
    withhold, hospitals can earn back that amount,
    earn more or earn less.
  • withhold increases to 2 for FY 2017 and beyond
  • Hospital Acquired Condition (HAC) reduction
    program 1 reduction to nearly 25 of hospitals
  • Begins in FY 2015

FY 2015 Budget
  • New 11 million OB Stabilization Pool Funded by
    GF and Federal .
  • Maintained GME Funding
  • Restored 4.3 million
  • Continued Rural Access Pool - 35.6 million
    Funded by GF and Federal .
  • New tax-funded 85 Million DSH Pool
  • 70 Million to be distributed to Large/Urban
  • 15 Million to be distributed to Small/Rural
  • More aligned with hospital provider tax paid to
    support these payments.

Hospital Reimbursement Reform Initiative
  • 2013 meetings with hospitals, MSA steering
    committee finalizing areas to implement
  • Representatives include small, medium, and large
    hospitals and CAHs
  • Several ideas discussed
  • statewide inpatient rate with hospital adjustors,
  • APR-DRG for inpatient
  • Increase in outpatient payments financed with
    reduced inpatient rates
  • Medicaid OPPS rates are 53 of Medicare OPPS
  • DSH methodology changes
  • HRA methodology changes
  • GME methodology changes

FY 2011 DSH Audits
  • Early-to-Mid October, Myers and Stauffer expected
    to distribute hospital-specific worksheets.
  • Hospitals will have 2 weeks to notify MS of
  • Sept. 30 draft report due to MSA.
  • Dec. 31 final report due to CMS.

FY 2014 2015 DSH Payments
  • FY 2014 Step 1 review occurred in early August,
    with hospitals having until Aug. 20 to return DSH
    feedback form to MSA.
  • FY 2014 DSH payments distributed mid-to-late
  • FY 2015 DSH eligibility form released early
    September. Hospitals must complete and return to
    the MSA by Oct. 2 in order to be eligible for FY
    2015 DSH payments.
  • Failure to do so will result in hospital being
    deemed ineligible for DSH payments

Newborn Claim Requirements
  • Dates of service Oct. 1, 2014 and after
  • Type of admission/visit
  • Birth weight
  • C-section/inductions related to gestational age
  • Both FFS HMO claims
  • Informational edits, but will be required
    effective Jan. 1, 2015.

Healthy Michigan Plan
  • Enrollment as of Sept. 16 was 385,000
  • Statewide 53 million in HRA payments
  • No QAAP tax associated with these payments
  • All counties have achieved enrollment
  • Additional appropriation required for FY 2015 as
    enrollment has exceeded budget
  • Despite 100 federal funding, there may be some
    resistance in the legislature to pass the
    additional funding bill

Continued, Healthy Michigan Plan
  • CMS confirmed that HMP inpatient days should be
    included for Medicare DSH calculations.
  • HRA payments (April Aug.) approx. 53 million
  • No QAAP tax associated with these payments.
  • Hospital registration staff encouraged to use
    CHAMPS to determine which patients are HMP versus
    regular Medicaid.
  • Can use 270/271 batch transactions
  • Hospitals required to report both FFS and HMO HMP
    data separately on MMF.

BCBSM DRG Validation
  • Consultant found BCBSM erred in removing codes
    for BMI and cerebral edema
  • Other audit areas for improvement
  • Sept. 24 education session, webinar available
  • 2014 audits will be reviewed for compliance with
    consultant findings
  • MHA advocated for retroactive adjustment
  • BCBSM has not finalized retroactive policy

Nov. 4 Voters Will Decide.
  • U.S. Senate (1 seat, open)
  • U.S. House of Representatives (14 seats, 4 open)
  • Governor
  • Attorney General
  • Secretary of State
  • State Supreme Court (2R incumbents, 1 open seat)
  • State Senate (38 seats, 10 open seats)
  • State House of Representatives (110 seats, 41
    open seats)

Michigan Loses Seniority
  • U.S. Senate
  • Sen. Carl Levin (35 yrs)
  • U.S. House of Representatives
  • Rep. John Dingell (59 yrs)
  • Rep. Dave Camp (23 yrs)
  • Rep. Mike Rogers (13 yrs)
  • Rep. Gary Peters (5 yrs)
  • Rep. Kerry Bentivolio (2 yrs)
  • Total experience seniority lost 137 years

General Election 2014 - State Legislature
  • Senate 38 seats
  • 10 open seats
  • First election since 2011 redistricting
  • Majority Leader Randy Richardville is term
  • House of Representatives 110 seats
  • 41 open seats
  • 70 lawmakers will have no more than 2 years of
    legislative experience
  • Speaker of the House Jase Bolger is term limited

Legislative Issues to Watch Federal Level
Likelihood That Congress Will Consider Key
Legislation Before Elections In Lame-Duck Session In 114th Congress
Budget and Appropriations Appropriators are unlikely to finish funding bills before the new fiscal year in October, but will probably pass a continuing resolution, pushing broader budget negotiations into a lame-duck session and beyond
Debt Ceiling The federal debt ceiling is currently suspended through March 15, 2015 the 113th Congress is unlikely to propose any hike or extension, but the 114th Congress is certain to consider the issue
Export-Import Bank The banks charter expires on Sept. 30th, but Congress could reauthorize the institution through a bill in the lame-duck session
Tax Extenders Expired and expiring tax provisions may not see action before the midterms, but after the elections, Congress could consider a larger taxation bill
Affordable Care Act If Republicans win the Senate, they are certain to vote to repeal the ACA if Dems hold the chamber, Congress could pass legislation to address the laws perceived deficiencies
Immigration Reform The Senate immigration bill is almost certainly dead, but Congress could move limited immigration legislation in a lame-duck session, or more likely in a new Congress
  • Analysis
  • The fact that both parties hope to be in a
    stronger negotiating position post-elections may
    mean that Republicans and Democrats wait until
    2015 to act on major legislation, gambling on a
    more favorable composition of the other chamber

Election 2014 Call to Action
  • Meet your candidates for state House and Senate,
    and candidates for Congress
  • Use MHA election tools available on the MHA
    election web page
  • http//
  • Election Materials (table tent, posters,
  • Election Snapshot
  • Candidate Listing
  • Redistricting Information
  • Non-partisan sources

Dates to Remember
  • Last day to register for general election Oct.
  • General election Nov. 4

Objective Useful Information
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
  • MHA Monday Report electronic publication issued
  • Request password if you dont have one.
  • Email Donna Conklin at 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 for other resources.
  • Monthly Financial Survey (MFS) provides free
    benchmarking of financial and utilization

Vickie Kunz Senior Director, Health
Finance Michigan Health Hospital
Association 110 West Michigan Avenue, Suite
1200 Lansing, MI 48933 Phone (517)
703-8608 email
DRG Operating Rate 2015 Final Rule
  • Labor and Non-Labor Related Standard Rates

  Full Update Full Update
  Labor Related Non-Labor Related
Hospitals with a Wage Index Greater than 1 (69.6 Labor Share/30.4 Non-Labor Share) 3,780.13 1,651.09
Hospitals with a Wage Index Equal to or Less than 1 (62 Labor Share/38 Non-Labor Share) 3,367.36  2,063.86
Rate Update with Meaningful Use and Inpatient
Quality Reporting
  • Incentives ending for many penalties starting up
  • Connects IQR and MU Programs to update factor for
    PPS hospitals
  • Creates 4 update scenarios going forward
  • MU exposure increases over 3 years beginning
    2015 IQR holds constant (MU 25 50 75
    IQR 25)
  • CAHs cost-based payment reduced exposure
    increases over 3 years beginning 2015 (-0.33
    -0.66 -1.0)

FY 2015 Hospital submitted quality data and is a meaningful EHR user Hospital submitted quality data and is NOT a meaningful EHR user Hospital did NOT submit quality data and is a meaningful EHR user Hospital did NOT submit quality data and is NOT a meaningful EHR user
Market Basket Rate-of-Increase 2.9 2.9 2.9 2.9
Adjustment for Failure to Submit Quality Data under Section 1886(b)(3)(B)(viii) of the Act 0.0 0.0 -0.725 -0.725
Adjustment for Failure to be a Meaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act 0.0 -0.725 0.0 -0.725
MFP Adjustment under Section 1886(b)(3)(B)(xi) of the Act -0.5 -0.5 -0.5 -0.5
Statutory Adjustment under Section 1886(b)(3)(B)(xii) of the Act -0.2 -0.2 -0.2 -0.2
Proposed Applicable Percentage Increase Applied to Standardized Amount 2.2 1.475 1.475 0.75
Cost Outlier Threshold Capital Rates
  • Final FY 2014 threshold 21,748
  • Final FY 2015 threshold 24,758
  • Represents a 13.8 percent increase in the cost
    outlier threshold, resulting in fewer cases being
    eligible for outlier payments.
  • Threshold is adjusted annually based on CMS
    projections for total outlier payments so that
    total outliers payments approximate 5.1 percent
    of total IPPS payments.
  • Final FY 2015 federal capital rate of 434.26, up
    from the current 429.31
  • 1.15 percent increase

  • ? See Table 5 in final rule for file containing

 MS-DRG Total Number of Discharges Final 2014 Weight Final 2015 Weight Percentage Change
470 Major Joint Replacement W/O MCC 435,351 2.1463 2.1137 -1.52
871 Septicemia W/O MV 96 Hrs W MCC 395,147 1.8527 1.8072 -2.46
392 Esophagitis W/O MCC 197,891 0.7395 0.7388 -0.09
292 Heart Failure Shock W CC 196,728 0.9938 0.9824 -1.15
291 Heart Failure Shock W MCC 193,972 1.5031 1.5097 0.44
194 Pneumonia W CC 179,988 0.9771 0.9688 -0.85
690 Kidney and Urinary Infection W/O MCC 173,875 0.7693 0.7794 1.31
683 Renal Failure W CC 153,012 0.9655 0.9512 -1.48
190 COPD W MCC 151,963 1.1708 1.1743 0.30
193 Simple Pneumonia Pleurisy W MCC 145,156 1.4550 1.4491 -0.41
DSH Payments
CMS is required by the ACA to reduce hospital
DSH payments based on the expectation that there
will be a decreased number of uninsured
individuals. Based on the 2014 final rule and
2015 final rule ? Hospitals will receive 25 of
the DSH amount calculated under the
traditional formula. ? The remaining 75 reduced
to reflect the impact of insurance expansion
under the ACA and redistributed to hospitals as a
new and separate uncompensated care (UCC) payment
based on each hospitals UCC ratio relative to
the total for all DSH-eligible hospitals.
Continued, DSH Payments
  • Distributing the uncompensated care (UCC) payment
  • Use low-income patient days as proxy
  • Medicaid days Medicare SSI days (based on
    2011/12 data)
  • Numerators of traditional DSH calculation
  • CMS cites unreliable data on Worksheet S-10 as
    hospitals are not consistent in reporting bad
    debt and charity care in terms of hospitals
    costs ( of charges) vs. payment from government
    or other payors.
  • Calculate uncompensated care payment factor
  • Hospital's low-income patient days relative to
    all DSH hospital low-income patient days

Continued, DSH Payments
  • Review the cost report split between the
    traditional methodology and the revised
  • Ensure the hospital is continuing to identify
    additional Medicaid eligible days.
  • Review the data reflected on S-10 for accuracy as
    this will likely be used in the future for
    distribution of the 75 pool.
  • In the final rule, CMS stated its commitment to
    making the necessary revisions and S-10
  • Prepare the DSH worksheets for all PPS hospitals
    for each year even if hospital has not qualified
  • Review the calculation for 340B Drug Program

Two-Midnight Policy
  • Finalized in FY 2014 IPPS rule.
  • Under the two-midnight rule, CMS will generally
    consider hospital admissions spanning two
    midnights as appropriate for payment under the
  • Hospital stays or less than two midnights will be
    generally be considered outpatient cases,
    regardless of clinical severity.
  • CMS reiterates that there may be rare and unusual
    circumstances not yet identified that justify IP
    admission and payment absent an expectation of
    care spanning two midnights. CMS continues to
    encourage comments at SuggestedExceptions_at_cms.hhs.
    gov, with Suggested Exceptions to the
    Two-Midnight Benchmark in the subject line.

FY 2015 Quality Payment Adjustment Factors
  • VBP Program Proxy factors on CMS Table 16 are
    unreliable since they are based on FY 2014
    program performance and fail to take into account
    the new measures, domains, and domain weighting
  • Readmissions Reduction Program CMS proxy
    factors on Table 15A are believed to be pretty
    solid since based on data for all measures and
    from correct time
  • HAC Reduction program CMS did not release
    updated penalty flags but Table 17 from IPPS
    proposed rule is believed to be fairly reliable.
  • CMS to release final tables for all adjustments
    by Oct. 1.

Final Rule Tables
  • Table 1A-1E Operating Capital Rates
  • Tables 2-4 CBSA Delineations Wage Index
  • Table 5 MS-DRG Weights
  • Table 14 List of Hospitals with lt1,600 Medicare
    Discharges (used for Low Volume
  • Table 15A Readmission Factors
  • Table 16A VBP Program Proxy Factors
  • Table 17 Hospital-level HAC Reduction Program
  • Table 18 Medicare DSH Uncompensated Care
    Payment Factor

OPPS 2015 Proposed Rule
OPPS Comment Topics
  • Tracking services provided in off-campus
    provider-based departments.
  • Comprehensive APCs
  • Packaging proposals for Ancillary Services,
    Prosthetic Supplies and Add-on Code APCs
  • The reduction in partial hospitalization program
  • Modification of process for accepting new and
    revised CPT codes.
  • Hospital OQRP changes
  • Final rule expected by Nov. 1 effective Jan. 1,

Michigan Health Link (Dual Eligibles)
  • Phased-in implementation of pilot project
    expected to begin January 1, 2015.
  • Hospitals responsible to negotiate payment
    parameters in their contracts.
  • Nine plans in Macomb/Wayne, two in 8 SW counties,
    one in UP
  • No guarantee of Medicare rates for I/P O/P
  • Ambiguity in rate for SNF payments

Revised DSH Policy
  • Based on its final policy released October 2012,
    MSA adopted a multiple-step DSH process beginning
    with FY 2011 DSH payments
  • Step 1 Initial DSH calculation
  • Step 2 Interim DSH settlement 2 years after
  • Step 3 Final DSH audit-related redistribution
    3 years after payment

DSH Payments and Audits
  • Beginning with FY 2011 DSH payments
  • payments will be recalculated and redistributed
    using actual hospital data during Step 2. (Key
    change from past)
  • hospitals subject to DSH payment recoveries if
    audits indicate DSH payments exceeded their
    actual DSH limits.
  • Audit reports available on MSAs website for FY
    2010 and prior years.
  • FY 2011 draft report due to MSA by Sept. 30.

DSH Audits Cont.
  • All Medicaid DSH payments must be considered
    included in the calculation including
  • 45 million regular DSH pool
  • 60 million tax funded OP Uncomp DSH pool
  • Gross-payments not net
  • Indigent Care Agreement (ICA) DSH
  • Governmental hospital DSH

Summary of Hospital QAAP
  • Available in MHA Advisory Bulletin 1353 dated
  • Provides overview regarding payment allocation
    for each of the four programs.
  • Medicaid Access to Care Initiative (MACI) - FFS
  • Hospital Rate Adjustment (HRA) - HMO
  • Outpatient Uncompensated Care DSH
  • Inpatient Psych HRA
  • The same tax base is used for all four programs.
  • Data updated annually for both payments and tax.
  • Can result in change in hospital net

ICD-10 Business-to-Business Testing
  • Despite implementation delay to Oct. 1, 2015,
    MDCH testing efforts continue.
  • MHA strongly encourages hospitals to test ICD-10
    claims processing with all payers.
  • MDCH offering ICD-10 compliant B2B testing for
    providers pursuing CMS Level II compliance.
  • Providers should test ICD-10 claims and inquiry
    transactions using the CHAMPS B2B system.
  • Work with clearinghouses or billing agents
  • Submit claims using Michigans Single Sign-on
    (SSO) process

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Medicare Advantage Plans
  • As of July 2014, 30 plans in Michigan, with
    564,000 or approximately 31 of Michigans 1.8
    million Medicare beneficiaries enrolled.
  • Up to 21 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
  • Many MA have instituted RAC-like utilization
  • Matrix of MA plans by county available at MHA
    website updated quarterly, with MHA Monday
    Report article.
  • Aug. 11 MHA Monday Report.