HFMA 2012 Insurance & Reimbursement Update March 22, 2012

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HFMA 2012 Insurance & Reimbursement Update

March 22, 2012

Marilyn Litka-KleinVice President, Health FinanceMichigan Health & Hospital Association

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Agenda

• Reimbursement Update– Medicare– Medicaid

• General Finance• Retro

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Federal Reform – Delivery System

•Hospital marketbasket reduced FY 2010 for ten years ($7 billion in Michigan)

•Value-based purchasing•FY 2013: devotes 1% of total hospital payments devoted to hospital performance; grows to 2% for 2017 and beyond; budget neutral

•Bundled payment•FY 2013: national, voluntary, 5-year pilot program focused on 10 conditions

•Accountable Care Organizations•FY 2012: allows hospitals, in cooperation with physicians, to form ACOs; resulting savings may be shared with providers

•Rehospitalization •FY 2013: financial penalties for rehospitalizations above “expected” norm for 30-day window (CAHs excluded)

What’s at Stake Under VBP?

• Program is self-funded by hospital “contribution”• Contribution based on Medicare FFS payment*

– 1.0% reduction in FY 2013– Reduction increased by 0.25% each year– 2.0% reduction for FY 2017 and beyond

• VBP performance determines P4P amount• Budget-neutral

– Redistributive– Best performers win, others break even or lose– VBP payments are netted against contributions

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* Payment reductions exclude IME, DSH low-volume hospitals and outliers

National Benchmarks– Highest achievement levels

– Average performance score for the top 10% of all hospitals

National Thresholds– Minimum achievement levels

– Median performance score for all hospitals Established from baseline period data Vary by measure:

VBP National Performance Standards – FFY 2013

Measure Benchmark Threshold

AMI-7a - Fibrinolytic Therapy Received Within 30 Minutes of Hospital Arrival

92% 65%

SCIP-Inf-1 - Prophylactic Antibiotic Received Within One Hour Prior to Surgical Incision

100% 97%

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VBP Domains

FFY 2013 Program FFY 2014 Program

Domain Measure Count

Domain Weight

Measure Count

DomainWeight

Process of Care 12 70% 13 45%

HCAHPS(Patient Experience of Care)

1 (using 8

HCAHPS dimensions)

30%1 (using 8

HCAHPS dimensions)

30%

Outcomes(Mortality, HACs, AHRQ)

N/A N/A 3 25%

Efficiency N/A N/A N/A N/A

Other TBD N/A N/A N/A N/A

Totals 13 (2 domains)

100% 17 (3 domains)

100%

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Recent Medicare Reports & Information

• Outpatient final rule, effective 1/1/12

• Detail impact by category of payment, soon

• Medicare Revenue Forecast Analysis (2012 – 2021)

– Lower annual rate updates than projected marketbasket

– Payment reductions resulting from policies for readmissions that exceed a calculated threshold

– Hospital-acquired conditions and quality-based payment changes through a value-based purchasing program

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• Medicare Spending per Beneficiary– ACA requires use of efficiency measures in FFY 2014 or

thereafter– Must include total Part A and Part B spending per beneficiary

Must include Medicare spending per beneficiary

– Must include Medicare spending per beneficiary adjusted for age, sex, race, severity, and other factors as determined by the Secretary

– CMS is also considering measures of hospital internal efficiency

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Anticipated Efficiency Measure – FFY 2015

Anticipated Efficiency Measure

Inpatient Stay

Pre-op lab work

Dr. Visit

Three (3) Days Prior:

Dr. visit

ED Visit

Rehab

Thirty (30) Days Post:

Dr. visit

Dr. visit

One Episode

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Concerns with Proposed Efficiency Measure

• Does proposal satisfy ACA mandate for a measure of “spending per beneficiary?”

• Holds hospitals accountable for all providers’ practice patterns

• Should consider future IOM report and proposal for Medicare bundling demonstrations

• Methodology cannot be replicated– No-one can check/audit CMS’ calculations– Industry does not have access to the data

• CMS’ methodology may not adequately adjust for patient severity

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ACA Readmission Payment Policy

• Effective October 1, 2012• Three condition areas to start:

– Heart failure, heart attack, pneumonia care

• Expansion by October 2014:– COPD, CABG, PTCA, other vascular procedures

• May eventually apply to all-payer, all-conditions, all-cause readmissions

• Observed-to-expected ratios based on statistical analysis and national benchmarks

• Payment penalties for O/E ratios greater than 1

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The Medicare Standard Analytic Files (SAFs)

• All Medicare Part A and Part B claims for beneficiaries residing in the Hospital Referral Cluster (HRC)

• Separate data files for inpatient (includes acute and post-acute inpatient), hospital outpatient, physicians, SNFs, Home Health, and DME

• Unique beneficiary keys (encrypted)• Millions of records• Over 1,000 data fields per record

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Building Episodes

• Load data file and create links and indexes • Identify all claims, across files, with the same

beneficiary• Determine episode timeframe• Determine and apply exclusions – patient and

claim level• Identify readmissions• Flag episode components• Sum payment fields within and across files

14Expect to devote significant programming and computing resources

Hospitals Need to Turn This:

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Into This:

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Episode DRG Description

Episode IDEpisode Total

PaymentFile Type Provider/Service Type

Provider Location

Admit/ Treatment

DateLOS

Age Sex County State

65 Chronic Obstructive Pulmonary Disease

1004158871 64 Female Suffolk New York $10,340 Initial Admit PPS 330078 4/1/2009 2

Physician Inpatient Radiology 4/2/2009

Physician Inpatient General Medicine 4/3/2009

DME Non-Inpatient 4/13/2009

FQHC 4/14/2009

Physician Non-Inpatient General Medicine 4/17/2009

Physician Non-Inpatient Cardiology 4/23/2009


Physician Non-Inpatient Radiology 4/23/2009



Physician Non-Inpatient Medical Supplies 4/23/2009

Readmission PPS 330023 4/23/2009 1

Physician Inpatient Cardiology 4/24/2009

FQHC 4/27/2009

FQHC 5/4/2009











Physician Non-Inpatient Endocrinology 6/28/2009

Physician Non-Inpatient Emergency medicine 6/28/2009


Hospital OPD 6/28/2009

Patient DemographicsEpisode DRG

Identify DRGs of Interest

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$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

0 20 40 60 80 100 120 140 160 180 200

Tota

l Pay

me

nts

Coefficient of Variation

Total Payments vs Coefficient of Variation by Core DRG

“Sweet Spot”

Revised SSI Ratios Available

• Used in Medicare DSH payment calculation.

• Revised FY 2006 -2009 ratios available on CMS website: http://www.cms.gov/AcuteInpatientPPS/05_dsh.asp.

• Includes dual eligible exhausted and Medicare advantage patient days in the Medicare fraction.

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http://www.cms.gov/AcuteInpatientPPS/05_dsh.asp

Michigan MAC Transition

• Transition from fiscal intermediary National Government Services (NGS) for Pt A and Wisconsin Physician Services (WPS) as Pt B carrier.

• Late January 2012 - Award protest by unsuccessful bidders – GAO decision confirming WPS as MAC.

• No further information has been released regarding the transition.

• MAC will perform Medicare FFS claims processing, enrollment, education, provider audits.

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Medicare Reports & Information

• Proposed Rules (IPPS, OPPS, SNF, IRF, IPF, HHA)• Final Rules (IPPS, OPPS, SNF, IRF, IPF, HHA)• Hospital Acquired Condition (HAC) Reports • Quarterly Value Based Purchasing (VBP)

– Quality Indicators– QI Trends– 30-day mortality rates (updated annually by CMS)– 30-day readmission rates (updated annually by CMS)– HCAHPS

• Recovery Audit Contractor (RAC) Reports– 1-day stays– Transfers to SNF

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Projected Impact - FY 2012 Medicare Rules

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IPPS Final

OPPS Prop

Rehab Final

Psych Final

LTCH Final

HH Prop

SNF Final

Projected TOTAL

Net Rate Update

Marketbasket Update 134 42 5.4 5 4.2 2.7 193

ACA Productivity Adj -45 -18 -2 -0.4 -1.6 -1.1 -68

Other ACA Mandated Adj -4.5 -1.5 -0.2 -0.2 -6

Coding Adj -92 -5.5 -98

Cancer Hospital/BN Adj -11 -11

Updated Wage Index/508 Expiration

-119 -33 -1.8 -0.9 -1.7 -1.1 -158

Other 55 16.5 0.7 0.4 0 72

Statewide -73 -5 2.1 4.1 0.7 -5 ? -76

(in millions)

Michigan Medicare Inpatient Margin

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Michigan Medicare Outpatient Margin

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Proposed Rule - Reporting of Medicare Overpayments

• Mid-February, CMS released a proposed rule regarding self-identified overpayments.

• Report and return overpayments within 60 days after the date the overpayment was identified or date any corresponding cost report is due.

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Reporting of Overpayments – Cont.

• CMS examples:

– Duplicate payments by FI

– Payment for non-covered services

– Payments exceeding the allowable amount for a covered service

– Payer primary responsibility

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Issues Identified to Date

• Would errors by claims processors be attributed to hospitals?

• Cost report reopening extended from 3 years to 10 years to correspond with proposed time frame for returning overpayments.

• MHA reviewing proposed rule and will provide draft comments prior to 4/16 deadline.

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Medicare Advantage Plans

• As of January 2012, 29 plans in Michigan, with 415,000 or approximately 24% of Michigan’s 1.7 million Medicare beneficiaries enrolled– Up to 19 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 transactions• Many MA have instituted “RAC-like” utilization programs• Matrix of MA plans by county available at MHA website –

updated quarterly, with MHA Monday Report article– See Feb. 6 Monday Report for latest info

Other Items on Horizon

• Federal pension and health benefits $275M in 2010, up from $176 M in 2000– 2/3 Pension, 1/3 Medical Benefits

• These retirement programs have $5.7 Trillion unfunded liability, Social Security is $6.5 Trillion

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Auto No Fault

• Discussions continue with governor’s office and insurance industry

• MHA opposes implementation of lifetime limits on total benefits

• MHA opposes potential move to fee screen reimbursement

– worker’s comp has been discussed

• No guarantee for reduced auto insurance premiums

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Michigan Politics

• Government Budget – desire for quick adoption

– House & Senate, and their leadership, do not always follow party direction

• All Mi House members up for re-election - 62 R, 46 D

• US House 14 seats, currently 9 R, 6 D

– MI leadership with Camp & Upton

• Supreme Court

• Why is this important?30

Michigan Politics – Cont.

• Insurance industry & “public” desired changes to no-fault

– But no promise of lower auto insurance premiums

• Medicaid consumes too much of budget

– But hospital tax funds majority of hospital payments

• Concern that GME residents leave state after training

– Failed to recognize source of future doctors

– Failed to recognize care provided to Michigan residents

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Legislators Responds to Constituents

• E-mail letters/analyses

• MHA is your voice in Lansing and D.C.

• But, legislators prefer to respond to constituents

• Only contact from MHA – “Is this really what my constituents want?”

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FY 2013 Budget

• Executive budget recommendations released by Governor Snyder Feb 9

• Recent testimony – House Appropriations Subcommittee

• Deliberations began this week in Senate

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FY 2013 Medicaid Budget

• Funds current enrollment

• Additional $17 million cut to GME, increasing the total cut to $32 million from FY 2011

• Elimination of $29.5 million Rural/SCH pool

• Concurrent work by House & Senate

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Statewide DRG Rate

• Hospital workgroup provided input July 2011

• February 11 MSA provided a concept paper regarding the move to a statewide DRG rate with adjustments for teaching, outliers and wage index

• MHA and hospitals to provide additional input

• Earliest implementation Jan 1, 2013

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DSH Audits

• Beginning with audits of FY 2011 DSH payments, hospitals subject to DSH recoveries if DSH payments exceeded actual DSH room

• DSH concept paper reviewed would update state calculation with more recent CR

• Hospitals desire to review MSA date before DSH payments made

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Integrated Care – Dual Eligibles

• Michigan is one of 15 states

• Approximately 200,000 individuals

• $8 billion total, split 50/50 Medicare/Medicaid

• MDCH Draft plan released 3/5, comments due 4/4

• March 12 Monday Report article, March 19 Advisory Bulletin

• Public forums 3/29 Detroit

• Michigan split into 3 geographic regions

• Implementation July 2013 – June 2014

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MDCH Draft Plan Released

• Draft plan includes two contracts which would coordinate beneficiary care:

– Existing prepaid inpatient health plans (PIHPs) for behavioral health services.

– Integrated care organization (ICOs) for physical health services.

• Michigan split into 3 geographic regions.

• Implementation July 2013 – June 2014.

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Draft Plan - Issues

• No guarantee of Medicare payment rates.• Separate contracts with the PIHP & the ICO are

proposed– both required to “coordinate” care, with neither

ultimately responsible for care of the individual.• Reporting and payments for Medicare bad debts, DSH

and 340 (b) drug pricing unresolved.• ICOs would negotiate innovative reimbursement

arrangements with providers.• No clear direction provided on utilization management,

including inpatient versus observation status.

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HMOs & Observation

• Some HMOs have issued policy change that stays less than 24 hours for patients meeting inpatient criteria will be paid as observation

• Recent MHA meeting with MAHP to review this issue

• Future meetings with MSA

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Medicaid Interim Payments

• MSA evaluating the continuation of interim payments (MIP) based on recommendation from a recent Michigan auditor general report.

• MSA will convene a smaller workgroup to obtain input and will complete its review by September.

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Bridges / Eligibility Issues

• MHA Feb. 28 letter to Steve Fitton focused on:

– Delays in Medicaid eligibility resulting in significant increases in hospital A/R

– Resumption of Bridges Workgroup Meetings

– Ability of hospital contractors to have outstation DHS workers

• Meeting at MDCH & MDHS early April

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Bridges Issues - Cont.

• Directors of MDCH and MDHS meeting with MHA leadership in early April.

• Please email me if your hospital is experiencing significant delays in Medicaid eligibility due to Bridges issues.

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44Source: 2010 American Hospital Association Annual Survey of Hospitals

45Source: 2010 American Hospital Association Annual Survey of Hospitals

Five Largest Plans by Enrollment in Michigan

Health Plan Enrollment Market Share (%)

BCBSM 4,500,000 59

Priority Health 500,000 7

Health Alliance Plan of MI 480,000 6

AETNA Health Inc. 340,000 4

Health Plan of Michigan 210,000 3

Source: AIS’s Directory of Health Plans: 2010Methodology: Market share = % of total medical enrollment reported in MI

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Health Plans by Enrollment

Medicare

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Enrollment

Fee-for-service 1,670,000

29 Medicare Advantage Plans in Michigan (showing 10 largest below)

408,000

BCBSM 190,000

Priority Health 57,000

Blue Care Network 43,000

Humana 40,000

Health Alliance Plan 39,000

Health Plus of MI 15,000

United Healthcare 8,000

Molina Healthcare 7,500

Alliance 3,800

Paramount Care of MI 1,500

*Enrollment as of Nov. 2011

Medicaid

Enrollment

Fee-for-service 714,000

Health Plan of MI 283,000

United Healthcare 239,000

Molina Healthcare 209,000

McLaren Health Plan 76,000

Midwest Health Plan 73,000

Health Plus of MI 68,000

Priority Health 64,000

Total Health Care 52,000

OmniCare Health Plan 47,000

CareSource MI 34,000

UP Health Plan 29,000

BlueCaid of MI 19,000

PHP of Mid-Michigan 18,000 49

*Enrollment as of Sept. 2011

MHA Keystone Center Michigan Collaboratives

Collaborative Participating Hospitals

Keystone: ICU - 2003 77

Keystone: Hospital-Associated Infection - 2007 120

Keystone: Surgery - 2007 104

Keystone: Obstetrics - 2009 60

Keystone: Gift of Life - 2004 76

Keystone: Emergency Department - 2010 66

MI STA*AR (Rehospitalization Project) - 2009 27

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The World is Watching

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CLABSI Rate Per 1,000 Central Line Days

VAP Rate Per 1,000 Ventilator Days

Keystone ICU Outcomes

Keystone: Obstetrics

• Interventions

– Pitocin protocol

– 39 week induction

– Second stage labor management

– CUSP

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% Elective Inductions < 39 wksn = 20,574

•Change of 14.99% to 5.68% (Jan/Feb to Oct/Nov) Significant (p = .008) Percent change -62.1%

•Change of 20.07% to 6.35% (Jan/Feb to Oct/Nov) Significant (p = .003) Percent change -69.23%

•% Elective Cesarean Births < 39 wksn =5,131

Apgar Scores <7 at 5 min

Change of 1.07% to 0.51% (170 of 26, 758 babies)Percent change -51.4% (Jan/Feb to Oct/Nov)

•

OB Pilot Results

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Urinary Tract Infection Prevention

Hospital Number of Patients no longer at Risk

Estimated Savings

Dickinson County Healthcare System

90 $90,866

Marquette General Health System

173 $174,199

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One simple intervention, no special equipment, fewer patients at risk …

Future Role of MHA

“Convener Role”56

State HospitalAssociation:Facilitation /Collaboration

HospitalsGoverning Boards / Staff

Patients & Communities

HospitalsGoverning Boards / Staff

Patients & Communities

Legislators/GovernmentLegislators/Government

Payers/InsurersPayers/InsurersEmployersEmployers

CliniciansClinicians

Quality

Patient Safety

State Hospital Association Role

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5858

Unity Bond Slide

Sell your message

• Great excel analysis, but not flexible for alternatives

• Capture info for memo/PowerPoint

– Reduce rework, add value for financial analyst in original “design” phase

• Only one chance to make good impression “noise” on page, too technical, use white space

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Networking – What it Means to You

• Counterparts at other hospital associations

• Competitive nationally for Medicare

• Learn, improve from sharing good/bad

• Same benefits of HFMA – but it takes a personal connection

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RETRO Section

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MHA Information Evolution

• MHA Monday Report mailed to CEO

• MHA Electronic copy to CEO, available to staff with “authorization”

• MHA MR available to members with electronic contact

• Electronic delivery of analysis to; CEO, CFO, Reimbursement Director, CMO, Quality, Utilization, Government Relations

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Rising Costs

Employee contributions at $1,274, up from $1,186 in 2000 and $1,055 in 1996

CALPERS institutes $5/$15/$30 co-pymts for generic/approved/other Rx

Source:NYT 52501

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Health Insurance Premiums

• Employees at small firms with deductibles > $1,000

– 2011 50%, 2006 16%

• At large firms

– 2011 22%, 2006 6%

• Premiums paid by workers have risen 131% from 2001 to 2011 for family plans

Source: Kaiser Family Foundation

Survey 9/27/11 Release

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Options

• Hospitals are the largest employers in Michigan

– Any efforts to improve health will have ripple effect to families and eventually other industries

• Consider impact of food services on employees, patients and visitors

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Operating Room: Operational Improvements

• Most efficient ORs start on time 76%

• Average OR starts on time – 27%

• Improving start time can:

– Improve revenue

– Reduce cost

– Improve patient satisfaction

– Improve physician satisfaction

Source: HFMA Executive Roundtable

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Health Care Expenses

• University of Michigan employees initiatives

– Focus on Diabetes - free or low-cost drugs and testing to 2,000 participants

– Focus on Medicine – use of generics and pill splitting

• Target adults with 9 or more current Rx

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The Young & Uninsured

• From 2000-2003, the number of uninsured Americans under 65 increased by 5.1 million to 45 million

• About 60% of uninsured adults from 2000-2003 were between the ages of 19 and 34.

• By not paying into the insurance pool, this group is depriving the system of much needed funds.

• From 2000-2003, the number of 19-34 year olds with employer-sponsored health coverage fell by 6 million, the sharpest decline among non-elderly adults.

• Some reasons for the lack of benefits in this group:

– More adults are self-employed or working at smaller firms

– More adults are opting for temporary or part time work.

• Source: Star Tribune, 3/13/05

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Uninsured

• Solidly middle-class people are the fastest growing categories

• One-third of uninsured, 17 million, have family incomes of $40,000 or more

• Two-thirds have at least one full-time worker

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Uninsured Real Estate

• 50 year old real estate agent, earning $60,000 annually

• Current cancer survivor – individual coverage $27,000 annually, $5,000 annual deductible

• 28% of 1.3 million realtors are uninsured

Vital Signs

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Monthly Benefit Amount

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The Big 3

• GM, Ford, Chrysler

– Shrinking workforce, increased health care coverage is threatening their financial viability and market competitiveness

• Medicare, Medicaid and Blue Cross

– Inadequate reimbursement rates, coupled with rising health care needs threaten the financial viability of hospitals

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The Big 3 - Cont

• Improve eating habits, increased activity levels, adding water to diet for all individuals will improve health status of nation and reduce pressures on payors, employers and providers

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What Can You Do?

Apple

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• Ownership of IPod, Iphone, Ipad (and how many different versions)

• What are they? Phone manufacture?

– Tablet innovator? Music sales? Booksellers

• Devices for others to make money

• Generate jobs in U.S.

– But criticism for their outsourcing

• $100 B cash, $33 B after tax profit

8 Categories of Waste

• Overproduction

• Waiting

• Excess motion

• Transport

• Over processing

• Unnecessary inventory

• Defects/errors/re-works

• Under utilized people

Source: HFMA

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QUESTIONS?

Marilyn Litka-Klein | Vice President, Health Finance

Michigan Health & Hospital Association

Capitol Advocacy Center

110 West Michigan Avenue, Ste. 1200 | Lansing, MI 48933

[email protected]

517-703-8603

HFMA 2012 Insurance & Reimbursement Update March 22, 2012

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Transcript of HFMA 2012 Insurance & Reimbursement Update March 22, 2012