Hot Reimbursement Topics Rural Area Hospitals May 3, 2018 Rick Reid Director, Provider Payment Analytics Michael Felczak Director, Provider Payment Analytics
RICHARD S. REID, MPA, FHFMA, CPA, Director, Provider Payment Analytics As Director of Provider Payment Analytics, Rick s expertise covers a wide range of strategic initiatives centered on the complexities of reimbursement and payment for all provider types; including specialization in ensuring rural health providers are optimizing their opportunities. Having worked within numerous health systems and hospitals nationwide in a variety of roles in finance departments, including multiple years as a CFO, Rick has developed a strong understanding of both present and future reimbursement and payment issues and proactively develops strategies to ensure providers are optimizing their opportunities. MICHAEL J. FELCZAK, JR, MSA DIRECTOR, PROVIDER PAYMENT ANALYTICS From his work in senior financial leadership roles with numerous large health systems and at a National Cancer Institute, Michael has an extensive knowledge of the accounting, budgeting, reimbursement and revenue cycle functions. In addition, his public accounting experience gives him a strong knowledge of accounting related issues which face the Healthcare industry today. Over the years, Michael has developed an in depth knowledge of Medicare and Medicaid cost reporting and the significant impacts of these documents on the financial success of the organization. Michael s expertise covers a wide range of strategic initiatives centered around the complexities of payment for all provider types and cost report preparation to optimize the varied uses of the cost report. 2
Agenda Rural Health Pain Points Critical Access Hospital CAH PPS Providers Medicare Medicaid Blue Cross Physician Services Rural Health Clinics, Provider Based Clinics Optional (Method II) Billing, HPSA Managed Care Contracting Resources 3
Rural Health Reimbursement Pain Points Rate Increases not keeping pace with cost Medicare Medicaid Commercial Payors Pressures on costs continued Little left to cut in efficient providers Cutting too much often causes unforeseen challenges Risk with impact to volumes, safety and quality Low Margins create capital funding constraints Efficiencies an issue without adequate volumes Aging in of Baby Boomers Causing deterioration of payor mix Medicaid Expansion continues to get pressure for funding Recent movement towards work requirements for continued coverage Soon to affect Michigan? Fee for value vs. volume 4
Rural Health Reimbursement Pain Points Continued Shift to Patient Responsibility Willingness and ability to pay not that of a Commercial Insurer How to mitigate Hospitals continue to have to be strategic in growth and market share Where to expand services and where to contract Have to stay competitive May not make sense to render all services Departmental Margin Analysis will support position Are you adding in adequate levels of assigned overhead Staffing of scarce resources a challenge Retention an issue as well Smaller Providers in large systems not receiving same attention as Flagship provider location System limitations create data access issues New systems are expensive and burdensome to implement 5
Critical Access Hospitals CAH Background Designation created by the Balanced Budget Act in 1997 Requires approval by Centers for Medicare and Medicaid Services (CMS) Reduce financial vulnerability Improve access to healthcare Rural populations older, poorer and sicker 6
Critical Access Hospitals CAH Requirements CAH must have 25 or fewer acute care inpatient beds Located more than 35 miles from another hospital 15 miles from another hospital in mountainous terrain or areas with only secondary roads (unless met State necessary provider exception prior to 01/01/06) Average length of stay of 96 hours or less for acute care patients (swing bed have no length of stay limit) Must Have Relationship with another Hospital to Transfer Patients to. Must provide 24/7 emergency care services 7
Critical Access Hospitals CAH Services provided: 24/7 ER Care Trauma Center Operating Room OB Swing Beds Skilled Nursing Facility Ancillary Lab, X ray, Sleep Lab Therapy IV, Respiratory, Physical, Occupational, Speech Physician Services Clinics Rental Space Specialists Neuro, Urology, Podiatry, Oncology, Allergy, Cardiology, etc. Anything that any hospital can provide As long as the LOS is under 96 hours and Meets the Community Need 8
9
8 Special Medicare Rules and Advantages CAH 1. Cost Reimbursed at 101% 2. Can provide Swing Bed Services 3. Eligible for 340B Pharmacy Benefits 4. Excluded from Provider Based Restrictions 5. Full Cost Reimbursement for RHC Services 6. Physician Opportunities i. RCE Limits A 8 2 ii. Method II billing iii. HPSA Designation 7. More Flexible Staffing Requirements 8. Additional Capital Funding Resources and Options Available 10
Past Legislation Impact CAH Balanced Budget Act (BBA) of 1997 Balanced Budget Refinement Act (BBRA) of 1999 Medicare, Medicaid, SCHIP Benefits Improvement and Protection Act (BIPA) of 2000 Medicare Prescription Drug, Improvement, and Modernization Act (MMA) of 2003 Medicare Improvements to the Patients and Providers Act (MIPPA) of 2008 American Recovery and Reinvestment Act Affordable Care Act 11
Michigan CAHs Medicaid Applies similarly as PPS Hospitals (Slide 18) Indigent Volume vs. S 10 totals Tracking and Reporting of S 10 and IVA still important 12
Michigan CAHs Blue Cross Typically classified as Peer Group 5 Hospitals Rebased tri annually by Blue Cross Consider operational changes since last rebasing Is your hospital optimizing its payments 2019 will be a rebasing year off of 2018 s financials Rebasing model review is critical Opportunity for enhanced rates if hospital is seeing declining volumes Timeliness an important factor Monitoring of charges important Annual attestation required 13
Education and Communication Management and the Board need to Understand the Cost Reporting Implications of Their Decisions. Reimbursement is Directly Tied to the Cost Report. Every decision that is made may impact reimbursement Need to model impact Consider more than just Medicare Turnover of C suite, board, managers/directors Communication is very important between the Finance Staff and the Clinical and Operations Staff. Every decision that is made impacts reimbursement. It is important to model the effects and consider more than just Medicare. 14
CAH must consider cost report Implications: Strategic Planning Budget Process Contracting with other payers Purchase of building and equipment Leasing Arrangements Staffing Physician Contracts New Services/Cessation of Services Provider Based Entities 15
Rural Health Reimbursement PPS Facilities Areas of Focus Medicare Medicare Cost Report Strategy not only for Cost Reimbursed (i.e. Critical Access Hospitals) Medicaid Clinics Special Payment Provisions Rate Setting implications Still has relevance Uncertainty of future Medicare changes Monitoring of performance Volumes Are you losing money on Medicare IP vs OP How to mitigate Modeling of impacts 16
Rural Health Reimbursement PPS Facilities Areas of Focus Medicare S 10 for development of Uncompensated Care funding levels Year two of three year phase in 2019 IPPS Proposed Rule $1.5B increase in UC funding to $8.25B Medicare Bad Debts Medicare Regulations Special Payment Provisions low volume providers Revised language for realized volume decreases Inclusion of Protested Items in file cost report Meaningful User Avoid payment penalties 17
Rural Health Reimbursement PPS Facilities Areas of Focus Medicaid Settled annually to filed cost report Revised for FFS paid claims files Utilized to determine Upper Payment Limits (UPLs) IP Capped at charges OP Capped at calculated cost Utilized to determine hospitals share of Supplemental Payments Utilized to determine hospital tax levels Indigent Volume vs S 10 totals Supplemental Payment Levels Is your hospital optimizing it s share Monitoring and reconciliation of HMO clearings Uncompensated Care slowly growing Days of substantial financial improvement may be fully realized 18
Rural Health Reimbursement PPS Facilities Areas of Focus Blue Cross Blue Cross Rate Setting LOU or PHA Update Factors below realized increases in cost Fee Screens flat Uncompensated Care Costs increasing with burden shifting to patient Full Cost Model utilized to set payment levels Uncompensated Care Efficiency component of Pay for Performance (P4P) Historical tri annual rebasing Transforming Contracting and Reimbursement Vouchered vs Settled Payment validation still a highly important area Psych and Rehab payment levels Physician Organization payment incentives 19
Rural Health Reimbursement Rural Health Clinics Are You located in an Eligible Rural Area? https://ruralhealthinfo.org/am i rural Types Free Standing Reimbursement limit Provider Productivity Floor Provider Based 75% Criteria Applies No Reimbursement limit, if attached to a less than 50 Bed Hospital Provider Productivity Floor Applies Management Make sure that the Clinic Management gets allocated to the Clinic(s) Managed Care Contracting Medicare Other 20
21
22
23
Rural Health Reimbursement Clinics Clinics and Physician Rural Health Clinics Bed Management Plans Provider Based Clinics Enhanced payment provisions a thing of the past for new Clinics However, 340B is still a benefit Revenue Cycle needs to be a focus Payment testing for validation of correct payment levels Out of State Patients Especially important in border counties and high tourism areas 24
Health System Issues Rural Areas call for a different strategy than an urban strategy Home Office Cost Reporting All related services should be allocated What is not Significant to the system is Significant to a CAH or an RHC Make sure that the allocation methods make sense Model allocation methodologies Consider future years in analysis 25
Other Considerations Medicare Managed Care Contracts Different strategy than in an Urban Setting Negotiate the Special Reimbursement Rules into these Contracts Even though the facility is small the coverage area may be quite large. Don t underestimate this and don t give it away. Out of State Medicaid Patients Out of State Cost Reporting Out of State Supplemental Payments 26
Resources Rural Health Information Hub https://www.ruralhealthinfo.org National Rural Health Resource Center https://www.ruralcenter.org National Association of Rural Health Clinics https://narhc.org Medicare Learning Network http://go.cms.gov/mlngeninfo Flex Monitoring Team http://www.flexmonitoring.org National Rural Health Association https://www.ruralhealthweb.org 27
QUESTIONS? Richard Reid, MPA, FHFMA, CPA 810.853.6167 rreid@therybargroup.com Michael J. Felczak, Jr, MSA 810.853.6165 mfelczak@therybargroup.com The Rybar Group is an independent member of the BDO Alliance USA, a nationwide association of independently owned local and regional accounting, consulting and service firms with similar client goals. 28
Providing Innovative Financial and Operational Solutions to the Healthcare Industry www.therybargroup.com Info@therybargroup.com 810.853.6182 Revenue Cycle Physician Services Reimbursement & Payment Exceptional Service Regulatory Support Data Integrity & Compliance THE RYBAR DIFFERENCE Experience. Expertise. Exceeding Expectations. 29