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John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014 Medicaid DSH.

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Presentation on theme: "John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014 Medicaid DSH."— Presentation transcript:

1 John Berta Senior Director, Policy Analysis Texas Hospital Association June 19, 2014 Medicaid DSH

2 THA – Who We Are  The Texas Hospital Association is a nonprofit trade association representing Texas hospitals and health systems. In addition to providing a unified voice for health care, THA serves its 500+ members with timely information, data analysis, education on essential operational requirements, networking and leadership opportunities. 2

3 Serving Texas Hospitals/Health Systems 3

4 Medicaid DSH - Outline I. FY2011 II. FY2012-13 – Waiver DY1 & DY2 III. FY2014-15 – DY3 & DY4 IV. FY2016 and Beyond 4

5 FY2011 DSH (and Before)  DSH & UPL – Pre-Waiver  Programs Related to each other  Public Hospitals have incentive to Fund DSH  Fully Funded for Every Year 5

6 DSH Funding Incentive  UPL at Maximum – No Other Funds Available  IGT ~$0.40  Paid $1.00  DSH  IGT ~$0.40  Paid~$0.55 6

7 Medicaid DSH - Outline I. FY2011 II. FY2012-13 – Waiver DY1 & DY2 III. FY2014-15 – DY3 & DY4 IV. FY2016 and Beyond 7

8 FY2012 Financing Transformation  Transformation Waiver –Shifting Landscape –DSH & UC - Closer Connection –Additional PCP Costs Allowed for UC – Result = Alternate Funding Opportunities for Public Hospitals  DSH Audit –Dollars Recouped beginning in Program Year 2011 8

9 FY2012 - Shifting Landscape  FY2011 UPL $2.8B  FY2012 UC & DSRIP $4.2B  DSH & UC Closely Aligned  Medicaid Shortfall Growing Larger 9

10 Medicaid Disproportionate Share FY2012 10  Public Hospitals Agree to Fund $502M of $569 Potential  DSH Dollars Unspent  THA Forms Task Force on DSH

11 THA Task Force Concepts 2012-2013  Medicaid Disproportionate Share Hospital Task Force – 6/1/2012 –the money follows the work –shared responsibility for funding the Medicaid DSH program –protection for the most vulnerable classes of hospitals 11

12 UC and DSRIP Funding= $29B 12 UC/UPL Transition- $466M

13 Medicaid DSH FY2013 - Issues  FY 2013 Payments – 100% Amounts - $138M GR $323M IGT  New DSH Rule –Lubbock and Odessa drop out of 8 hospital coalition leaving big 6 –DSH is Regionalized –Pass 3 Rural Funding Mechanism Developed –GR and IGT are separated –Texas Children’s Lawsuit  Max TPL payment = Cost  DSH paid @ 90% (10% Expected) 13

14 Medicaid DSH - Outline I. FY2011 II. FY2012-13 – Waiver DY1 & DY2 III. FY2014-15 – DY3 & DY4 IV. FY2016 and Beyond 14

15 Medicaid Disproportionate Share FY2014  New Rider 86 covers DSH & UC  $300M GR authorized for FY2014 & FY2015 –2014 = $160M –2015 = $140M  No General Revenue Funds appropriated after FY2015  Other Budget Riders not written in this manner 15

16 Medicaid DSH Rider 86  Proportional allocation of supplemental hospital payments among large public, small public, and non-public providers  Mechanisms though which Medicaid payments are made through managed care organizations  Recommended statutory changes and any other legislative direction needed to fully implement the plan 16

17 Medicaid DSH Rider 86 (cont’d)  Assess the extent to which supplemental payments are needed to cover Medicaid and uninsured/uncompensated care costs  Transition plan from supplemental payments to rates that recognize improvements in quality of patient care, the most appropriate use of care, and patient outcomes  No General Revenue Funds appropriated after FY2015 17

18 Medicaid DSH Rider 86 (cont’d)  FY 2014 request must show a measurable progress in developing the plan  FY 2015 request should include the final plan  No GR funds may be expended for FY 15 until plan is finalized 18

19 Medicaid DSH FY2014 2011-Before Transformation Waiver  Non-State Hospital DSH Pool = $1.2B  UPL Payments = $2.8B  Total = $4.0B 2014-After Transformation Waiver  FY2014 UC & DSRIP = $6.2B  FY2014 DSH Non State = $1.3B  Total = $7.5B 19

20 2014 DSH – Attributes - 1  State-owned hospitals – No change  2013 – Regional Approach (RHP)  2014 – Hospitals in statewide pools  2013 – Funds for Low Income and Medicaid  2014 – Days added together 20

21 2014 DSH – Attributes - 2  2013 - GR funded non RHP areas  2014 – Hospitals share in GR and related FF  2014 – 3 Pools = all GR and FF in Pools 1&2 shared by all (e.g. net DSH proceeds)  2014 - Pool 3 = IGT back to IGT hospitals  2013 – Pass 3 Methodology in place  2014 – No change  2013 – 6 Large public hospitals transfer for their region  2014 – Fed Funds on IGT by 6 shared by all 21

22 2014 DSH – Attributes - 3  2013 – no provision  2014 – Most other public hospitals IGT ½ of their DSH (Lubbock & Ector IGT for themselves)  2014 – Non-8 public hospitals have their days weighted such that net DSH is equal  2014 – Big 6 = $377 total = $396 22

23 2014 UC Attributes - 1  UC funds are divided into seven pools – state-owned hospitals –COTH members (6 large public) –other public hospitals –private hospitals –physician group practices –governmental ambulance –publicly owned dental providers 23

24 2014 UC Attributes - 2  Pool amounts are Allocated pro-rata  Allocation basis: –Hospitals - Post DSH Payment unpaid HSL –Other groups – UC Cost 24

25 2014 UC Attributes - 3  6 Large transferring hospitals receive “bump” on allocation basis (pre-allocation basis)  UC pre-allocation “bump” equals amount of DSH IGT made for other hospitals 25

26 $284M added to 6 UC Pool  Net DSH proceeds = $1.344B - $395M IGT = $949M  Big 6 = 23% of $949M net proceeds  Total IGT = $395M * 23% = $93M  $377M – $93M = $284M  $284M = UC bump for big 6 26

27 2014 UC Attributes - 4  Special Provision for smaller (Rider 38) hospitals: –The reduction in future years is limited to decreases in UC Pool –E.g. $3.9 billion to 3.1 billion –Reduction is still significant but no greater than this amount –Applies to county < 60k, RRC,SCH,CAH 27

28 2014-17 Key Dates  Fall 2014 - FY 2014 DSH paid (1/2 paid)  Jan 2015 – 84 th TX Leg in session  Spring 2015 – last half of 2014 DSH Paid  June 2015 TX Leg leaves  FY2015 DSH – needs final plan  FY2016 – last year of 5 year waiver  2017 DSH cuts begin 28

29 Medicaid DSH - Outline I. FY2011 II. FY2012-13 – Waiver DY1 & DY2 III. FY2014-15 – DY3 & DY4 IV. FY2016 and Beyond 29

30 Medicaid DSH – Future Years  Composition of 84 th Legislature  Federal DSH Allotment  DSH Audit Outcomes  Waiver Extension/Renewal/Replacement –Available UC Funds –CMS Negotiation / Federal Outlook  Medicaid Shortfall ~$3B 30

31 Medicaid Federal DSH Reductions Revised Schedule Allotments - April 3, 2014 Year Total Reduction Note – if Texas maintains existing policy then 100% of the reduced allotment will be absorbed by non-state hospitals 2017 TX~20%1,800,000,000 2018 TX~50% 4,700,000,000 2019 4,700,000,000 2020 4,700,000,000 2021 4,800,000,000 2022 5,000,000,000 2023 5,000,000,000 2024 4,400,000,000 31

32 Questions? John Berta Texas Hospital Association 512/465-1556 jberta@tha.org 32


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