Hospital Rate Setting

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1 Hospital Rate Setting Calendar Year 2014 Wisconsin Department of Health Services Division of Health Care Access and Accountability Bureau of Fiscal Management September 6,

2 Agenda 1. Introduction and Welcome 2. Proposed Policy Changes for Rate Year 2014 Hospital Rates 3. Rate Year 2014 Rate Setting Timeline 4. Disproportionate Share Hospital (DSH) Payment Update 5. FY 2014 Hospital Assessment 6. ACA Primary Care Rule Update 7. HMO Contract Discussion 8. Public Comment 9. Next Meeting s Agenda 10. Adjournment 2

3 Proposed Policy Changes for Rate Year 2014 Hospital Rates DHS would like to discuss the following policy issues: 1. Review of hospital budget process. 2. 3M EAPG software improvements. 3. Adjust EAPG Rates to include adjustments for Capital and Graduate Medical Education. 4. Adjust EAPG Rates to include outlier payments. 5. Remove EAPG 5% corridor. 6. Revisit establishment of trimpoint policy. 7. Combine Fee-for-Service and HMO Data for Development of Inpatient and Outpatient Hospital Relative Weights. 8. Move to Provider-Based Billing for Fee-for-Service and HMOs. 3

4 Proposed Policy Changes for Rate Year 2014 Hospital Rates 1. Review of hospital budget process. o o Historical issues impacting stability of inpatient and outpatient hospital rates, as a result of: The decrease in utilization at State Mental Health Centers. The transition of United Members from HMOs to FFS. Cost Savings from Health Care Efficiencies being built into the Hospital Budget. As discussed at the June Meeting, the Hospital Budget was created by looking at State Fiscal Year 2012 data and adjusting for expected changes related to ACA implementation in the upcoming biennium, including: Projected increases to enrollment for Childless Adults. Projected decreases to enrollment for Parents and Caretakers. 4

5 Proposed Policy Changes for Rate Year 2014 Hospital Rates 1. Review of hospital budget process. (continued) o Due to these challenges, DHS is proposing a new methodology for determining the budget for hospital rate setting for Rate Year Will allow DHS to achieve goals for rate setting discussed in June: Predictability; Stability; Timeliness; Transparency and; Focusing on value. Proposed Decision: Move away from the budget established in the MA Base Re- Estimate and update 2014 budget numbers to reflect actual utilization and expenditures from the previous year. 5

6 Proposed Policy Changes for Rate Year 2014 Hospital Rates 1. Review of hospital budget process. (continued) Proposed Methodology for Developing the Hospital Budget a. Base Data: Use Fiscal Year 2013 (July 1, 2012 June 30, 2013) Expenditures, based on Date of Payment. b. Utilization: Use Fiscal Year 2013 actual utilization, based on Date of Payment. c. Trend Adjustment: Calculate and apply an adjustment in order to appropriately account for increases to CAH costs and changes to case mix for acute care hospitals. DHS will create a Dashboard to communicate the Rate Year 2014 hospital budget. To be presented at the October meeting. 6

7 Proposed Policy Changes for Rate Year 2014 Hospital Rates 2. 3M EAPG software improvements. o Continue working with 3M on the EAPG software so that it can accurately reflect reimbursement, including incorporating access payments, P4P withhold, and pricing of lab and therapy claims on the maximum allowable fee schedule. Proposed Decision: Continue to work with 3M to accurately reflect Medicaid reimbursement policies. Aim to allow therapy claims to be billed on the UB beginning January 1, Adjust EAPG Rates to include Adjustments for Capital and Graduate Medical Education (GME). o Current EAPG reimbursement methodology does not include add-on payments for capital or GME. Proposed Decision: Adjust the EAPG Rates to include adjustments for GME, beginning January 1,

8 Proposed Policy Changes for Rate Year 2014 Hospital Rates 4. Adjust EAPG Rates to include outlier payments. o Current EAPG reimbursement methodology does not include additional payments for outliers. Proposed Decision: Continue analyzing data from Hospitals to see if an outlier payment needs to be considered. Bring update to October MARAG Meeting. 5. Remove EAPG 5% corridor. o In Rate Year 2013, a 5% corridor was applied to hospital payments to allow hospitals to manage the transition from a per visit reimbursement methodology to the EAPG reimbursement methodology. Proposed Decision: DHS will remove the EAPG 5% corridor for Rate Year

9 Proposed Policy Changes for Rate Year 2014 Hospital Rates 6. Revisit establishment of trimpoint policy. o o Standardize trim points across the State regardless of bed size for specialty and acute facilities. Ensure that the increase to the trimpoint amount consistent with the increase in charges. Proposed Decision: DHS will continue maintain two trimpoints based on bed size for specialty and acute facilities. DHS will adjust trimpoint amounts accordingly to ensure that outlier payments are no more than 30% of the total projected payments. 9

10 Proposed Policy Changes for Rate Year 2014 Hospital Rates 7. Combine Fee-for-Service (FFS) and HMO Data for Development of Inpatient and Outpatient Hospital Relative Weights. o Current process for developing inpatient and outpatient relative weights utilizes only FFS data. o HMOs are in process of transitioning to format. Proposed Decision: Due to the transition to the HMO 837 format, further modeling is necessary prior to combined FFS and HMO data. 10

11 Proposed Policy Changes for Rate Year 2014 Hospital Rates 8. Move to Provider-Based Billing for Fee-for-Service and HMOs. o Currently, DHS does not recognize hospital-based clinics outside the four walls of the hospital for Medicaid outpatient hospital reimbursement. Proposed Decision: Continue to analyze the effects this would have on hospital reimbursement as a whole. 11

12 July 1, 2013 Rate Year 2014 Hospital Rate Setting Timeline o RY 2014 Hospital/CAH Access Payment Amounts were updated effective for DOS on or after 7/1/2013. Adjustments are being run to add access payments to claims that were paid before they were added to our system. January 1, 2014 o New Inpatient DRG Weights and Rates will be set for fee-forservice and HMO claims for DOS on or after 1/1/2014. o Outpatient EAPG Weights and Rates will be set for fee-for-service claims for DOS on or after 1/1/2014 (5% Corridor will be removed). o Per Visit Outpatient Rates will be set for HMOs for DOS on or after 1/1/

13 July 1, 2014 Rate Year 2014 Hospital Rate Setting Timeline o RY 2015 Hospital/CAH Access Payment Amounts will be updated effective for DOS on or after 7/1/2014. October 1, 2014 o New Inpatient DRG Weights and Rates will be set for fee-forservice and HMO claims for DOS on or after 10/1/2014. o Outpatient EAPG Weights and Rates will be set for fee-for-service claims for DOS on or after 10/1/2014. January 1, 2015 o EAPG Weights and Rates from 10/1/2014 effective for HMOs on 1/1/

14 Disproportionate Share Hospital Payments The Budget provides $73.5M ($30.0M GPR) over the biennium for additional disproportionate share payments to hospitals. o DHS is modeling the payments by hospital and will release the model shortly. The data source for the model will be updated to use the FY 2012 Hospital Fiscal Survey. o Payments will be made on a quarterly basis through cash-transactions to hospitals. The first payment will be made in January and will contain payments for July-December. o DHS will submit a State Plan Amendment to CMS on September 30 th. 14

15 Disproportionate Share Hospital Payments DHS will continue to make current $100,000 DSH Payment to Hospitals (to be divided by the number of hospitals that qualify) under current DSH Methodology. 15

16 FY 2014 Hospital Assessment (See Handouts) 16

17 ACA Primary Care Rate Increase Attestation for providers opened 4/16/13. The State Plan Amendment has been approved by CMS. DHS expects to make the payments related to this initiative in late o Payments will be retroactive to 1/1/13. Note: HMOs will only be required to pay the Medicare rate regardless of the HMO hospital contracted rate. 17

18 HMO Contract Discussion DHS has received comments regarding the Medicaid HMO program. These comments fall into the following categories: o State HMO contract changes for Calendar Year o Reducing administrative and clinical complexity. o Status of pilot programs. o HMO enrollment issues. o Provider/HMO interactions and aligning incentives. If there are other comments, please send to DHS. 18

19 Request for Public Comment 19

20 Next Meeting s Agenda Next Meeting Final CY 2014 Policy Decisions DRG/EAPG Weights An will be sent out regarding the date and time of the meeting. 20

21 Questions Curtis Cunningham, Director Division of Health Care Access and Accountability Bureau of Fiscal Management Phone: (608) Krista Willing, Deputy Director Division of Health Care Access and Accountability Bureau of Fiscal Management Phone: (608) All Questions can be sent by to: 21

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