Medi-Cal Updates Amber Ott California Hospital Association Agenda Medi-Cal APR-DRG Updates Quality Assurance Fee (QAF) Program Current QAF Law (SB239) Prop 52 Medicaid Managed Care Final Rules QAF 5 Development 2 Medi-Cal APR-DRG Updates 1
Medi-Cal APR-DRG Updates Changes from SFY 16/17 to 17/18 Outlier Policy Changes High-Side Tier 1 Threshold Increased from $46,800 to $60,000, Payment Percent Decreased from 60% to 50% High Side Tier 2 Eliminated Low-Side Tier 1 Threshold Increased from $46,800 to $60,000, Payment Percent Decreased from 60% to 50% 4 Medi-Cal APR-DRG Updates (cont.) Changes from SFY 16/17 to 17/18 FY 2015 Cost Reports for cost-to-charge ratios Pediatric Policy Adjuster Increased from 1.25 to 1.45 APR-DRG Version 34 used for relative weights and national average length of stay benchmarks 5 Medi-Cal APR-DRG Updates (cont.) Year 4 Values (SFY 2016 17) Year 5 Values (SFY 2017 18) DRG Grouper DRG version APR DRG V.33 APR DRG V.34 DRG relative weights APR DRG V.33 national HSRV weights APR DRG V.34 national HSRV weights National average length of stay benchmarks (used in calculating transfer adjustments) APR DRG V.33 (arithmetic, untrimmed) APR DRG V.34 (arithmetic, untrimmed) Outlier Policy Factors Hospital specific cost to charge ratios (CCR) FYE 2014 cost report FYE 2015 cost report $0 $46,800: no outlier payment $0 $60,000: no outlier payment High side (provider loss) tiers and marginal cost $46,801 to $150,800: MCost = 0.60 >60,000; MCost = 0.50 percentages >$150,800: MCost = 0.80 No tier 2 outlier Low side (provider gain) tiers and marginal cost $0 $46,800: no outlier reduction $0 $60,000: no outlier reduction percentages >$46,800: MCost = 0.60 >$60,000: MCost = 0.50 Other Payment Policies Policy adjustor neonate at designated NICU 1.75 (No change) 1.75 (No change) Policy adjustor neonate at other NICU 1.25 (No change) 1.25 (No change) Policy adjustor obstetric 1.06 (No change) 1.06 (No change) Policy adjustor pediatric miscellaneous, pediatric resp 1.25 (No change) 1.45 Pediatric age cutoff <21 (No change) <21 (No change) Discharge status values for the transfer 02, 05, 63, 65, 66, 82, 85, 91, 93, and 02, 05, 63, 65, 66, 82, 85, 91, 93, and 94 (No adjustment 94 (No change) change) 6 2
Medi-Cal APR-DRG Updates (cont.) DRG Outlier Payment Reconciliation Beginning with SFY 2016/17 Retrospective look-back on hospitals costto-charge ratios (CCR) Department of Health Care Services (DHCS) will audit hospital CCRs and re-price APR- DRG claims to determine new outlier payments 7 Medi-Cal APR-DRG Updates (cont.) Unresolved Billing Issues Appealed claims drop to paper claims, causing claims with more than 22 lines to process incorrectly Share of cost issues with mom and baby claims If invalid revenue codes are billed, the entire claim is denied 8 Medi-Cal APR-DRG Updates (cont.) Looking Ahead V.35 of Mapper Released Re-evaluate Policy Adjusters Detailed study of rehab per diem More focus on quality and outcomes, likely potentially preventable readmissions 9 3
Current QAF Law (SB 239) Current QAF Law (SB 239) SB 239 signed Oct. 8, 2013 Established QAF Program for 1/1/14 and beyond Prohibits the state from enacting cuts to hospitals Medi-Cal payments while a QAF is in place QAF must be the maximum size allowed under federal law 100% QAF managed care payments must be spent on hospital services 11 Current QAF Law (SB 239) (cont.) SB 239 signed Oct. 8, 2013 Allows up to 24% of the net benefit as a contribution to the state General Fund for children s health coverage Creates program periods : o 1/1/14 12/31/16 o 1/1/17 6/30/19 o Future programs no more than three years Had a sunset date of Jan. 1, 2018 12 4
Prop 52 Prop 52 Amendment to the California Constitution passed by a vote of the people in November 2016 Removed the January 2018 sunset date in the QAF statute thereby making the QAF program permanent Established rules for how the law can be changed Requires two-thirds vote of the legislature Provisions that further the purpose of the QAF to obtain or maintain federal approval Federal approval of the QAF is still required 14 Medicaid Managed Care Final Rules 5
Medicaid Managed Care Final Rules May 2016 Comprehensive Medicaid Managed Care Final Rule Defines pass-through payments as any amount required by the State to be added to the contracted payment rates, and considered in calculating the actuarially sound capitation rate, between the Managed Care Organizations (MCO) and hospitals The QAF managed care payments are considered pass-through payments 16 Medicaid Managed Care May 2016 Comprehensive Medicaid Managed Care Final Rule Pass-through payments permitted, but must be phased out over 10-years beginning with contracts starting on or after July 1, 2017 Maximum pass-through payments for each year equal to a percentage of a base amount; starts at 100% and decreases by 10% each year Base amount is similar to an upper payment limit: Medicare Allowable Medi-Cal Actual 17 Medicaid Managed Care May 2016 Comprehensive Medicaid Managed Care Final Rule Must transition to a permitted payment method: Adoption of a minimum or maximum fee schedule for particular services Value-based purchasing models such as P4P or bundled payments Participation in a multi-payer delivery system reform or performance improvement initiative Provide a uniform increase for providers of particular services 18 6
Medicaid Managed Care May 2016 Comprehensive Medicaid Managed Care Final Rule Provide a uniform increase for providers of particular services Payments can only be made to network providers Imposes several obligations on network providers, including credentialing Rates determined prospectively and paid on adjudicated claims 19 Medicaid Managed Care January 2017 Medicaid Managed Care Pass- Through Payment Final Rule Prohibits any new or increased pass-through payments, effective July 1, 2017 Imposes a cap on future pass-through payments equal to the aggregate pass-through payment amount submitted to CMS as of June 5, 2016 In CA, our annual pass-through cap would be based on 2014 QAF managed care payments since our 2015 rates weren t submitted until June 12, 2016 20 Medicaid Managed Care Estimated 2017/18 QAF Medi Cal Managed Care Payment Limit $4 Billion Total $2 billion paid through new methodology using a fixed add on per diem $2 billion paid through traditional pass through methodology 21 7
Medicaid Managed Care Potential Solution for Complying with Final Rules MCOs receive monthly QAF capitation payments and would make fixed add-on payments on adjudicated claims The fixed add-on per diem would be calculated to achieve a spending goal of $2 billion Estimate 2 million inpatient days in 2017-18 $1,000 add-on per day ($2 billion/2 million days) Utilization Risk Corridor (URC) required to account for over/under utilization 22 Medicaid Managed Care Potential Solution for Complying with Final Rules MCOs with less utilization than expected will pay into the URC MCOs with greater utilization than expected will draw from the URC Pass-through payment bucket will provide reserve in case the URC has a negative balance Excess funds in the URC at the end of the year will carry over to the next year 23 QAF 5 Development 8
QAF 5 Development Base Year Most recent data available for calculating fees and payments is from 2013 due to the Medi-Cal Utilization Report (MUR) 2014 is not a reliable base year due to Affordable Care Act (ACA) implementation; some hospitals would have a partial year of pre-aca data due to fiscal year end Directed payments made on current claims, so draft model provides a rough estimate using data from the 2015 OSHPD annual financial disclosure report 25 QAF 5 Development (cont.) Fee Assessment (status quo) Four-Tier Tax Structure Medi-Cal Days (FFS and Managed Care) Fee-For-Service Managed Care Health Plan Owned Hospital Managed Care Rural hospitals exempt from paying fee Long-term care, free-standing psychiatric, public, specialty and new hospitals excluded 26 QAF 5 Development (cont.) Fee-For-Service Payments (status quo) Supplemental FFS payments for inpatient, outpatient, high acuity, trauma, transplant, psych, and subacute Transplant payments calculated using transplant days from OSHPD 2013 patient discharge file All other payments calculated using 2013 Medi-Cal paid claims files provided by DHCS Quarterly payments directly from DHCS 27 9
QAF 5 Development (cont.) Managed Care Payments 1/1/17 6/30/17 (status quo) supplemental pass-through payments for inpatient and outpatient Inpatient payments calculated using MUR days Outpatient payments calculated using OSHPD visits from the annual financial disclosure report (excludes clinic visits) 28 QAF 5 Development (cont.) Managed Care Payments 7/1/17 6/30/19 subject to new final rules, must begin transition to directed payments Approximately half of the QAF managed care funds must be paid on current adjudicated claims using a fixed daily add-on payment Remaining half of funds can still be passedthrough to hospitals using historic static data Pass-through payments made for inpatient days, outpatient visits and carved-out service (transplants, specialty mental health, California Children s Services) 29 QAF 5 Development (cont.) Timeline DHCS submitted state plan amendment (SPA) to CMS on March 30 FFS rates for 1/1/17 6/30/17 Tax Structure for 1/1/17 6/30/19 Typical CMS review and approval time is 6 9 months from submission of SPA DHCS plans to submit managed care rates for 1/1/17 6/30/17 and FFS rates for 7/1/17 6/30/18 in coming months 30 10
QAF 5 Development (cont.) Timeline DHCS will submit new proposed managed care methodology to CMS in coming weeks to begin discussions DHCS plans to submit managed care rates for 7/1/17 6/30/18 in Q4 of this calendar year Retroactive reconciliation required for SFY 17/18 add-on payments Prospective submission of managed care rates beginning with SFY 18/19 31 QAF 5 Development (cont.) Legislation Legislation will likely be required this year to ensure our QAF program is compliant with Federal requirements (SB 608) Specify grant amounts for public hospitals Transition managed care pass-through payments to directed payments Incorporate URC concept Potentially others 32 Updates on QAF4 11
QAF 4 Timeline Program Period 1/1/14 12/31/16 May 9 DHCS submitted managed care rates for 7/1/15 6/30/16 to CMS November DHCS expects 7/1/15 6/30/16 managed care rates approved January DHCS plans to make supplemental FFS payment June DHCS will submit managed care rates for 7/1/16 12/31/16 to CMS December DHCS expects 7/1/16 12/31/16 managed care rates approved 34 QAF 4 Timeline (cont.) Program Period 1/1/14 12/31/16 UPL Validation 100% FFS FMAP Claiming Excess fees 35 Questions? 12
Thank you Amber Ott Vice President, Strategic Financing Initiatives California Hospital Association (916) 552-7669 aott@calhospital.org 13