1. History of Texas Provider Fee programs

2. Introduction to proposed program in Texas

3. Overview of Government Funding

4. Non Profit Organization

5. Cooperative Endeavor Agreement

6. Legislative Strategy

7. Timeline to Implementation

8. Q&A

Local Provider Participation Funds (LPPF) in Texas Hospitals

OVERVIEW

• Local Provider Participation Funds (LPPF)

• Hospitals in 19 cities & counties in Texas have created a LPPF

• With legislative approval, these jurisdictions agree to impose an assessment on their total net patient revenues, not to exceed 6%

• The jurisdiction or oversight authority determines the assessment amount

• These assessments are matched with federal Medicaid dollars and paid to the hospitals to supplement the below-cost Medicaid payment.

LIST OF LPPF JURISDICTIONS

City of Amarillo Hospital DistrictSenate Bill 2117, 2017

Angelina County - LufkinHouse Bill 2995, 2017

City of BeaumontSenate Bill 1387, 2015

Bell CountyHouse Bill 2913, 2015

Bowie CountySenate Bill 1587, 2015

Brazos CountyHouse Bill 3185, 2015

Cameron CountySenate Bill 1623, 2013

Cherokee CountySenate Bill 1587, 2015

Dallas County Hospital DistrictHouse Bill 4300, 2017

Grayson County - ShermanHouse Bill 2062, 2017

Gregg CountySenate Bill 1587, 2015

Hays CountyHouse Bill 3175, 2015

Hidalgo CountySenate Bill 1623, 2013

McLennan CountyHouse Bill 2809, 2015

Smith County - TylerHouse Bill 2995, 2017

Tarrant County Hospital DistrictSenate Bill 1462, 2017

Tom Green County - San AngeloHouse Bill 3398, 2017

Webb CountySenate Bill 1623, 2013

Williamson County - Georgetown, Round RockHouse Bill 3954, 2017

POLITICAL CONSIDERATIONS

• Increasingly popular with the legislature

• Only 9 of 19 LPPF bills signed by the Governor • 6 by Governor Abbott• 3 by Governor Perry

• The remaining bills were allowed to become law without the governors signature

POLITICAL CONSIDERATIONS

• Important Distinctions

• Not an expansion of Medicaid

• Not authorizing a tax increase

• Fees are NOT passed on to the patients

• ICFs have been subject to a provider assessment since 2001• Non-State Owned ICFs

• Assessment is based on • Gross receipts and Patient days revenues (Maximum of 6%)

• Currently about 715 private and local government ICFs in Texas

• Falls outside the state’s 1115 waiver • ICF services are not carved into managed care

• Funds generated from the assessment has declined over time

• This is due to the # of facilities and individuals being served has declined

• Funds are collected as general revenue

• They are not protected from other uses

• Two bills passed by Legislature 15+ years ago • Both Vetoed by Governor

• Reasoning for veto• “Granny tax” label—cost could be passed to patient

• Philosophy that a provider should not pay a tax if it gets no benefit

• Passed House 97-46

• Voted out of Senate HHS Committee 6-3

• Not brought up for a vote on Senate floor at very end of session

• Hold over of ”granny tax” label

• Confusion surrounding the mechanism to disburse funds back to providers since it cannot be in statute

• Lack of unified industry support, not even just from losers

• Conservative group opposition

• Budget neutrality arguments raised by some hospital consultants very late in session

Proposed Program Overview

The details of this program are subject to change based upon CMS, HHSC, and legislative feedback.

• Licensed by state of Texas

• Enrolled as a Texas Medicaid provider

• Non-public, nonfederal provider• Of emergency ground ambulance services

• Mandatory participation

• Public providers are excluded because they are currently operating under the CPE (Certified Public Expenditure) program under the 1115 waiver• This proposal can include public providers with a minor change to

the definition, at their discretion

• Works just like the CPE program (Certified Public Expenditure)• Fees used to utilize federal matching funds

• Effective for Emergency Ambulance only transports after 9/1/2019

• Fee assessed by HHSC

• 6% of net patient revenue

• Qualifying providers will provide HHSC an annual net revenue report for a specified period as defined by HHSC• Ex: 9/1/2018-8/31/2019

• Qualified ambulance providers will be issued an assessment notice• Within 30 days from the HHSC defined period

• Provider will have 30 days from date of notice to make the payment.

• HHSC will define period as quarterly, annually, semi annually

• Incorrect reporting could lead to an audit

• Provider could be liable for paying costs of audit/review and any hearing associated with report

• A grossly incorrect or intentionally attempt to defraud could lead to steep penalties

• If a service does not turn in a report, HHSC will estimate a fee

• The department reserves the right to suspend all Medicaid payments

• The Federal Medical Assistance Percentages (FMAPs) are used in determining the amount of Federal matching funds for State expenditures for assistance payments for certain social services, and State medical and medical insurance expenditures.

• FMAP is computed from a formula that takes into account the average per capita income for each State relative to the national average.

• Texas FMAP in 2019

• Multiplier of 2.39

• (2.32 in 2018)

• 42 CFR 433.68 (Permissible healthcare taxes)

• Must be broad based

• Uniformly imposed across jurisdictions

• Doesn’t violate the hold harmless provision

• Hold harmless provision

• If healthcare related assessment fees are less than or equal to 6% of the revenues assessed, then the assessment is permissible

25% Fee is a worst case scenario estimate of fees withheld

• Average Commercial Rate (ACR)

• Net Operating Revenue

• Average Commercial Rate• The average allowed amount by your top 3 commercial/non

governmental payors

• Ex: Blue Cross, Aetna, Cigna, United

• Every qualified provider must have an ACR

• ACR is calculated every 3 years

• Determining your top 3 payors• Top payors are determined by total payment amount for ground

emergency CPT codes• A0427, A0429, A0433 & A0434

• Select the top 3 commercial payors based on payment amount to complete the ACR assessment

• Enter the average Allowable for each payor and CPT Code

• Determine Average Allowable Rate for each Payor• Enter the average allowable for

• Determining % of Transports by CPT Code to weight ACR

• Ex: 1,000 total emergency transports for the top 3 payors

• Determining % of Transports by CPT Code• Input the corresponding % to get a weighted average

• Ensure cell D9 = 100%

• ACR per CPT & Average Commercial Rate (ACR) will be determined automatically based on data input

Reported at the estimated net realizable amounts from patients, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third-party payors.*

*2016 AHA Annual Survey Health Forum, L.L.C., Page 22, 3a. Net patient revenue.

• The self assessment spreadsheet is provided to help project each providers:• Assessment Fee

• Netback/Return on Investment

• Net Operating Revenue

• ACR (Average Commercial Rate)

• Preliminary data has already been populated using available Medicaid Data

• Insert your NPI# into the appropriate cell to bring up preliminary data.

• The prepopulated data is based on publically available Medicaid data. There are several assumptions used to calculate this data, which you can find detailed in the spreadsheet.

• It is recommended that all providers validate and update this data based on their own findings

• Once data is automatically populated based on NPI, all cells highlighted in yellow should be reviewed and updated

• Review of cells to be updated

• Determine the volume of transports by payor• Ground Emergency Transports Only

• Enter the breakdown of transports by payor into the Self Assessment Tool

• Determine the total billed/gross charges for each payor

• Total billed charges = the sum of your usual and customary charge

• Enter the breakdown of total billed charges by payor into the Self Assessment Tool

• The sum of the dollar value your company writes off during the reporting period for payers that have a fee schedule established by federal or state statute or a contractual agreement.

Examples • Medicare• Medicare HMOs• Texas Medicaid• Medicaid Managed Care Organizations• Texas Workers Compensation• Veterans Affairs• Tricare • Contracted Insurance Company

• Determine the total non allowed by payor

• Determine the total non allowed by payor

• Net Revenue will be automatically calculated• Billed Charges – Non Allowed = Net Revenue

• Determine the total payments received by each payor• Only count the payments received by the specific payor indicated

• The sum of monies written off as uncollectible by any payer source during the reporting period that is not a contractual allowance and the ambulance agency attempted to collect from a patient but to no avail.

• Bad Debt Write Offs estimated at approximately 2.4% of billed charges

• For this example $50,000

• This is the sum of the emergency ambulance transports during the reporting period where you have a policy and procedure to forgive debt due to financial hardship. This policy should align with national standards from associations such as the Healthcare Financial Managers Association (HFMA).

• Charity Care write offs estimated at approximately .5% of billed charges

• For this example $10,000

• Enter the calculation from the Average Commercial Rate worksheet• If not available it will be estimated at MCR Non Allowed*80%

• # of transports where the patient has Medicare & Medicaid• If not available it will be estimated at 60% of Medicare transport volume

• For this example it will be 300 transports

• Net Emergency Operating Revenue

• ACR has already been calculated

• Maximum Payment (UPL=Upper Payment Limit)

• Maximum Payment you can receive (UPL = Upper Payment Limit)• Does not guarantee that this is the amount you will receive, only establishes the

maximum

• Average Commercial Rate = Ceiling ($858)

• Medicare/Medicaid Payment = Floor ($408)

• Variance = GAP ($450)

Calculation

• Variance*(# of Medicaid Transports + Dual Eligible Transports) = UPL GAP

6% Fee = Net Operating Revenue * 6%

• Federal Match (FMAP)• 6% Fee * 2.39 (Current FMAP)

• Maximum Match only applies if your federal match is higher than your Maximum Payment (UPL)

• If Maximum Payment is greater than the Assessment Fee you are a WINNER

• Your return will be greater than the 6% fee paid

• Shows the expected profit estimated from this program• Net return of 75% is used to account for potential HHSC, and other

fees from the match

• What happens If the Maximum Payment is less than the 6% fee?

• All providers will be reimbursed their assessment fee + 5%

• Purpose• Establish a governing entity to ensure that the ambulance companies

who participate which provide emergency services to their communities and participate in the STAR Safety Net fund are adequately funded.

• Structured as a 501c3

• Non Lobbying Entity

• Paid Executive Director

• Annual budget

• Association will dissolve if this assessment is eliminated

• Work with HHSC to maximize the benefits of the program to providers

• Provide education on data submission requirements and compliance

• Work with HHSC to identify enhance reimbursement for services provided

• Solely responsible for all costs associated with the development and implementation of the program

• The Executive Director is hired by a majority vote of the Board of Directors.

• The Executive Director shall be the principal executive officer of the Association and shall, in general, supervise and control all of the business and affairs of the Association.

• The Executive Director may be removed with or without cause by a majority vote of the Board of Directors.

• All Directors shall be appointed by either the Texas Ambulance Association or the Texas EMS Alliance, but no two from the same Member.

• 3 from Texas Ambulance Association

• 3 from Texas EMS Alliance

• 1 to be rotated between associations annually

• At all times, at least one Director must be a representative from a Member who is one of the top five (5) contributors of the total funding of the Association

• Budget determined annually

• If budget is overstated, providers will be issued a rebate

• If budget is understated, top 5 providers will offset and be reimbursed in the next calendar year

• Purpose• All entities eligible for the assessment fund would sign an agreement

to facilitate the non-profit entities purpose

• The Non Profit association will calculate the total negative balances from all participating providers

• Winners will provide the additional funds to the Non Profit in order to ensure that all providers have a positive net return from the program

• Participant example• Alpha Ambulance – Pays into association

• Beta Ambulance – Paid by the association

• The Cooperative Endeavor Agreement has a term of 3 years

• The agreement auto renews unless terminated by either party

• If the program ceases to exist the CEA is automatically terminated

• Problem

• Solution

Steven DralleAMR

Vice President of Operations-Texas

Rachel HarracksinghLife Ambulance

President

Asbel MontesAcadian Ambulance

VP of Government Relations & Reimbursement

Dudley WaitCity of Schertz

Executive Director

Marissa MayfieldAllegiance Mobile Health

Billing Director

www.txamb.com www.txemsa.com

www.STARSafetyNet.org

info@STARSafetyNet.org

Visit Website to see scheduled outreach events

• Amarillo

• San Antonio

• Brownsville

• Lubbock

• Austin

• Dallas

• San Angelo

• Houston

• All committee documents and minutes are available via Basecamp. • To be added to the project email: Corey.Chapman@acadian.com