John Bomher Illinois Hospital Association October 20, 2011
Understand Illinois Environment What are the State budget pressures and how will they affect Medicaid? What is the expectation relative to the Medicaid payment cycle? What is being considered regarding hospital Medicaid payment system reform? What Medicaid care coordination strategies are being proposed? State Tax Exemption developments
Budget Pressures federal, state & local Jobs, Jobs, Jobs 2012 Elections
Successful Spring Session Defeated proposed 6% rate cut Alternatives to rate cuts No Rate-setting authority Approp. cut by $428m = 120 day payment cycle HFS $1.4-1.7b FY12 shortfall Veto Cuts Hospital Appropriation by $276m Rate protections within assessment statute Extends payment cycle 35 days = 160 days
Restore the Medicaid reduction veto October 25 27, November 8 10 Majority vote in House & Senate needed Restore budget that was agreed to; not an increase State revenues on target with budget assumptions Administration may seek authority to adjust rates Restoration complicated by Governor s threat to close SOHs, layoff 1900 workers Politically, it s all about jobs, jobs, jobs
Illinois hospitals employ 250,000+ workers Since 2008, Illinois lost 342,000 jobs Since 2008,Healthcare has added 38,700 jobs Healthcare will add 29% of all new jobs IL Health Care Employment by Year 20.00% Cumulative % Change 15.00% 10.00% 5.00% 0.00% -5.00% -10.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 Health Care Hospitals Total Employment Year Source: Bureau of Economic Analysis
Hospitals = Good Partners With State Hospitals = JOBS, JOBS, JOBS Smart Savings Strategies; not rate cuts General Assembly = Key Player
Advocacy toolkit Meetings with legislative leaders and other key legislators Hospital Engagement: Key to Success Trustees, employees, volunteers, Docs Local officials & civic leaders Local media
FY 11 Medicaid claims paid down to maximize enhanced federal match Assessment accelerated July 1 Cash Crunch means limited GRF payments Comptroller s spending plan $100m/month July and August $300m/month September thru December Hospitals receive 30 percent of these monies
Expedited status for providers limited Change in policy Eligibility review Monitor payment cycle through A/R survey Incorrect billing puts you farther back in the queue
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Announced in March Affects both inpatient and outpatient systems Inpatient will shift to APR-DRGs Outpatient will move to EAPGs HFS desire motivated by Overreliance on fixed payments 42 percent when you include the assessment program otherwise less than 10 percent DRG system not sustainable given outdated grouper and move to ICD 10 Funding doesn t incentivize quality care in most appropriate setting
HFS created technical advisory group (TAG) IHA has created parallel membership process Mirror HFS / Navigant modeling Compare FY09 actual payments to FY09 payments under proposed system Tremendous amount of analytical work HFS targeting legislation Spring 2012 Implementation January 2013??
Focus has been on inpatient Conceptual Design Initial models will use national weights, Medicare wage index, and IME factors Other adjustments like GME and capital to be developed Illinois specific weights Being built based on cost reports information, mapping of revenue codes, supplemental information Methodology for Rehab, Psych, LTAC, CAHs uncertain
Optional adjustment factor Basis could relate to percent of cost paid, performance, Medicaid safety net, spending adjustment to allow for shift to outpatient, other Cost outlier Medicare s marginal cost factor Aggregate spending to be budget neutral with FY2011
Definition of cost Shift funding from inpatient to outpatient Extent to which Assessment funds should follow the patient Reasonable transition period and mechanisms How to encourage value & quality VBP, Readmissions, HACs, Care Coordination Statutory protections
HIE / EHR Collaboration System Design / Incentives FFS Structure and Rates
Medicaid Clients and Expenditures by Client Type, as Share of Total (FY 2009) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 6.9% 9.9% 24.6% 58.6% Number of Enrollees 20.4% 31.3% 20.1% 28.2% Share of Cost Children Non-Disabled Adults Adults with Disabilities Seniors 25
2015 50% of Medicaid in care coordination ABD HMO pilot program in collar counties 2 health plans covering 34,000 lives ½ in Aetna, ½ in Centene More than 40 hospitals in each plan Enhanced PCCM program MAC Care Coordination Subcommittee Incentives tied to care coordination Some portion of payments at risk HFS innovation efforts
Innovation Project October 13 th Kickoff (in person and on-line) Input from provider community Request for proposals January, 2012 Awards: Summer, 2012 MCO process will parallel provider process with RFP released Summer, 2012 IHA Care Coordination TF
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Has no capital, capital stock or shareholders Derives its funds mainly from private and public charity or from rendering services consistent with charitable purpose Dispenses charity to all who need and apply Does not provide gain or profit in private sense Places no obstacles in way of those who need charity
Governor Letter Conversations with DOR, OAG, Governor IHA Task Forces/Member Groups Toolkit and www.protectillinoishealthcare.org Member assistance/education Legislative Solutions Standards Sales Tax Tax Mitigation
Be a voice in your community Legislators Local leaders Public/neighbors Media
Economic Message: It s All About Jobs
Medicaid Steve Perlin/Jo Ann Spoor sperlin@ihastaff.org or 630-276-5623 jspoor@ihastaff.org or 217-541-1187 Medicare Tom Jendro tjendro@ihastaff.org or 630-276-5516 Insurance Bill McAndrew bmcandrew@ihastaff.org or 217-541-1179 Tax Exemption/Charity/Community Benefits Sandy Kraiss skraiss@ihastaff.org or 630-276-5522
Illinois Hospital Association www.ihatoday.org John Bomher jbomher@ihastaff.org or 630-276-5470