1. Hospital Reimbursement Initiative
Technical Workgroup
03/27/2013

2. Introduction
Welcome
Introduce Packets
Housekeeping
Agenda

3. Agenda Introduction (10 minutes)
A message from the Medicaid Director (10 minutes)
Today’s Landscape (20 minutes)
Principles, Goals, and Outcomes (15 minutes)
Break (10 minutes)
Scope (20 minutes)
What is Success? (15 minutes)
Possible Solutions (50 minutes)
Logistics (10 minutes)
Wrap Up (10 minutes)
Segway to Steve – Now I would like to introduce Steve Fitton, Medicaid Director

4. A Message from the Medicaid Director
Steve Fitton Medicaid Director
This initiative has my support
Something has to change
You are here to help
From the dozens of you that responded to the calls… What doesn’t work, what does work?
This time is different because – watershed with expansion, we need to be efficient and effective
Give this workgroup a chance
Segway to Jason and Brian – IF you are going to make a change it is important to determine where we began. So I am going to turn it over to Jason and Brian to discuss how things work today.

5. Brian Keisling, Jason Jorkasky, Director, Actuarial Division
Today’s Landscape
Brian Keisling,
Director, Actuarial Division
Jason Jorkasky,
Manager, Federal Regulation & Hospital Reimbursement Policy Section
Outline the current rate structure
Segway from Jason and Brian to Dick – If you get one thing out of this you begin to realize we cannot continue on this way. So we will turn it over to Dick to describe what we want to get out of this process.

6. Today’s Landscape Inpatient Operating Rates Inpatient Capital Rates
Outpatient Rates
Pool Payments
Medicaid Access to Care Initiative
Hospital Rate Adjustment
Rural Access Pool
Graduate Medical Education
Outpatient DSH
Regular DSH

7. Inpatient Operating Rates
MS-DRG grouper
Hospital-specific rates for non-CAHs
Statewide rate for CAHs
Outliers
High day
Low day
High cost
Transplants
Transfers
Readmissions
Rebased every three years w/ annual updates between

8. Inpatient Capital Rates
Cost-based reimbursement
Full Medicaid share of capital if…
Sole Community Hospitals with no exceptions
Rural hospitals with 60% occupancy rate
Other hospitals with 75% occupancy rate
MHP capital is prospective rate

9. Rates percentage of Medicare No area wage adjustment
Outpatient Rates
OPPS
Rates percentage of Medicare
No area wage adjustment

10. Medicaid Access to Care Initiative
Supplemental FFS payment pool
Size established as UPL gap
Funded with provider tax
Allocation based on historical FFS rate payments

11. Hospital Rate Adjustment
Supplemental payment pool
Component of MHP and PIHP capitation rates
Funded with provider tax
Technical guidance based on historical MHP and PIHP rate payments

12. Rural Access Pool
Pool to hospitals that serve low-income rural residents
FFS & MHP component
OP and IP up to cost + OB pool
Boilerplate limits hospitals and systems
Reduced FY 2013 MACI by $8.3 M

13. Graduate Medical Education
Supplemental funding pools for teaching hospitals
FFS & MHP components
2 pools
GME Funds – FTEs adjustment for case mix and Medicaid share of days
Primary Care – FTEs adjustment for Medicaid share of outpatient charges
Case mix based on FFS claims

14. Outpatient DSH Supplemental payment pool
50% split between large urban vs. small or rural hospitals
Funded with provider tax
Allocation based on outpatient uncompensated care

15. Regular $45M DSH Supplemental payment pool
Allocated to hospitals with significant indigent volume (IV)
IV thresholds
20%
50%

16. Individual Hospital Payment Limits
FFS payment limits: OP = costs & IP = charges
FFS Payments against limits = operating, capital, GME, MACI, Rural Access Pool
DSH Payment limits: unreimbursed Medicaid and uninsured cost
Payments against limits = FFS and MHP operating, capital, GME, MACI, HRA, Rural Access Pool, payments for uninsured
Overpayments recovered w/ FY 2011 audit

17. Hospital Reimbursement
Category
Amount (in millions)
Percent
FFS & MCO Rates
$1,900.5
52.4%
MACI & HRA
$1,423.7
39.2%
Rural Access
$35.7
1.0%
GME
$162.9
4.5%
Outpatient DSH
$60.0
1.7%
Regular DSH
$45.0
1.2%
Total
$3,627.8
100%

18. Principles, Goals and Outcomes
Dick Miles,
Deputy Director Bureau of Medicaid Policy and Health System Innovation
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

19. Principles, Goals and Outcomes
Guiding Principles
State Goals
Key Concepts
Acknowledge varying interests
Obstacles
Approach
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

20. Guiding Principles More predictability Less volatility Efficiency
Cost effectiveness
More simplicity
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

21. State Goals Manageable system
Ability to respond to business needs of providers
Flexibility to adapt to program and policy changes
Access to hospital services for Medicaid beneficiaries
Quality services
Desirable health outcomes
Adequate funding
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

22. Fairness Equity Success Key Concepts Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

23. Acknowledge Varying Interests
Urban hospitals
Rural hospitals
Teaching hospitals
Non-teaching hospitals
Critical access hospitals
Large hospitals
Small hospitals
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

24. Competing systems resources Federal approval
Obstacles
Varying interests
Competing systems resources
Federal approval
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

25. Define and measure success Reasonable expectations
Approach
Define and measure success
Reasonable expectations
Give process a chance
Suggested Points of Interest:
Simplicity, Savings, Improve Access, Save Money
Segway to Break- Ask the audience, “How do you measure success?” This question will get them thinking. “And remember as we discussed, you will define success. Let’s take a 10 minute break.”

26. Break Time

27. Scope Anything is on the table
Input to come from the group, not the state
Recognition of obstacles previously addressed
Competition for system resources,
Federal approval,
State policy requirements
Project structure
Recommendation and decision process,
Role of Technical Workgroup,
Makeup and Role of Steering Committee,
Constrained time frame
Phased Implementation?
Suggested Points of Interest:
How will we make this happen? What, Where, When, Who and How?
What constraints do we have to live with? (Enhancement dollars, ICD10, etc.)
Talk about the Guiding Principles on the back of the name tents: (More predictability, Less Volatility, Efficiency, Cost Effectiveness, Simplicity),
How do decisions get made?
What is the role of the Technical Workgroup? Steering Committee?
Segway to netlogx – Now let’s define success.

28. What is Success? Define Success Discussion
How will we measure success?
Define Key Terms
Suggested Points of Interest:
Measure and define success, define other terms as they are presented during the meeting

29. “What would you like to get out of this process?”
Possible Solutions
“What would you like to get out of this process?”
“What can you do to make this process better?”
Extract possible solutions from the participants. Ask, “What I would like to get out of this process?” “What can I do to make this process better?”

30. Break Time

31. Possible Solutions Big Ideas
What problem is this idea/solution trying to solve?
What is the proposed solution?
What are the barriers to success of the idea/solution?
Big Ideas sheet that asks, “What problem is this option trying to solve?” and “Barriers to success”

32. Logistics Future meetings Remote access Possible subgroups
April 11th – Already Scheduled
May 10th 1-4
May 22nd 1-4
June 17th 9-12
July 16th 1-4
Remote access
Possible subgroups
Future meetings, remote access, possible subgroups,

33. Wrap Up What did we accomplish today? Agreements
Additional Information?
Discuss what we accomplished today and what we propose for the next meeting.
What information will be provided by the state?

34. Technical Workgroup Participants
Micheal Brunner
Allegiance Health
Fred Kagarise MidMichigan Health
Mike Tomkovich Trinity Health
Scott Flowerday Beaumont Health System
Steve Leach Munson Healthcare
Michael Klett University of Michigan Health System
Kristi Belmore Bronson
David Fiero Oaklawn Hospital
Marilyn Litka-Klein Michigan Health & Hospital Association
Jerry Rivet Covenant Medical Center, Inc.
Bob Plaskey Oakwood
Vickie Kunz Michigan Health & Hospital Association
Debra Hanson Dickinson County Memorial Hospital
Connie Downs Pennock Health Services
Tom Marks Health Management Associates
Carol Bailey Detroit Medical Center
Terry Lutz Scheurer Hospital
Cheryl Bupp Health Management Associates
Mark McIntosh Henry Ford Health System
Craig Clarady Sparrow Health System
Farah Hanley State Budget Office
Tom Crystal Hurley Medical Center
Cathy Sinning Spectrum Health
Erin Black Department of Community Health
Anna Perosky McLaren Health Care
Dave Buckley St. John Providence Health System

35. State Participants Dick Miles milesr6@michigan.gov Brian Keisling
Jason Jorkasky
Paul Abid
Ben Ayres
Bobby Becsey
Sherri Gensterblum
Steve Ireland
Craig Castagnasso

36. netlogx Participants Nick Taylor ntaylor@netlogx.com Dave Luter
Melanie Hobbs
Sara Jordan
Tina Smith

37. Questions ?