2018 Hospital Outpatient Reimbursement Proposal to the Ohio Hospital Association Freddie L. Johnson, JD, MPA Chief Medical Services & Compliance Division November 2, 2017 Updated 11/29/2017 to reflect CMS final outpatient rule. 1

Guiding Principle Ensure access to high-quality medical care, By establishing an appropriate benefit plan and terms of service; With a competitive fee schedule which enhances medical provider networks. Right treatment Right time Right provider\place

2018 Outpatient Reimbursement Goals Maintain a simplified reimbursement methodology Maintain injured worker access to quality care Remain current with the Medicare Outpatient prospective payment methodology Maintain statewide reimbursement to cost benchmark of 114%

2018 Recommendations Adopt Medicare 2018 final rule including but not limited to: Update to the previously adopted joint replacement procedures Modify BWC payment adjustment factor (PAF) to reflect the statewide reimbursement to cost benchmark of 114% Children's Hospital Factor 266.4% Non-Children's Factor 144.7% Recommend addition of six procedures from the inpatient only list to be performed in the outpatient setting Adopt Section 603 of the Bipartisan Budget Act of 2015 for reimbursement of off-campus hospital departments Adopt reimbursement methodology for outpatient detoxification services

Hospital Outpatient Reimbursement Formula Medicare Base + PAF = BWC Payment BWC Goal is to pay hospital at 114% of cost Hospital Cost = $100 Reimbursement Calculation Results = $114

BWC Reimbursement Formula Visualization BWC Goal is to pay hospital at 114% of cost 114% PAF = 1.63

2018 Projected Payment to Cost Establishing 2018 PAF Key considerations Hospital costs Medicare methodology changes BWC established goal of 114% statewide average Hospital Type 2017 PAF 2017 Payment to Cost Proposed 2018 PAF 2018 Projected Payment to Cost Children 266.9% 114.2% 266.4% 114% Non-Children 152.9% 119.6% 144.7%

Proposed 2018 Arthroplasty Program Expansion Initially implemented May 1, 2016 ASCs have additional certification criteria Adopted two procedures in 2017 CMS adopted one procedure of the two BWC added for 2018 Six additional codes recommended for 2018

Proposed 2018 Arthroplasty Program Expansion Procedures Reconstruction of shoulder joint, partial hip replacement, total hip arthroplasty, revision of knee joint, and reconstruction of ankle joint Increase injured worker access to care

Proposed 2018 Arthroplasty Program Expansion CPT Description Rate Year Adopted 27130 Total hip replacement 2017 27447 Total knee replacement

Proposed 2018 Arthroplasty Program Expansion CPT Description 2018 Medicare Base Rate 23472 Total shoulder replacement $10,122.22 27125 Partial hip replacement 27132 Previous hip surgery converted to total hip replacement 27445 Total knee replacement 27702 Total ankle replacement 27703 Revision of total ankle replacement

Section 603 Provider-Based Departments Provision goal - equalize payments between: Free-standing physician office setting, and Off-campus provider based departments No longer pay hospitals OPPS rates for non-grandfathered outpatient departments Beginning January 1, 2017 For 2018, non-grandfathered departments paid at 40% of OPPS rates

Section 603 Provider-Based Departments For 2018, BWC is to adopt this provision Projected 2018 impact is a .01% payment variance to Ohio hospitals BWC to require mandatory submission of modifiers PO (excepted service provided at an –off campus, outpatient, provider-based department of a hospital) and PN (non-excepted service provided at an –off campus, outpatient, provider-based department of a hospital) – 60% reduction

Payment for Outpatient Detoxification Services Outpatient detoxification services (OAC 4123-6-21.7) Allows payment of inpatient and outpatient detoxification services without a claim allowance over an 18 month period Per diem = all inclusive rate Appendix table to outpatient rule establishes local level codes for per diem structured programs and services BWC Local Code Description 2018 BWC Rate Z0430 Detox program assessment $192.48 Z0450 Partial hospitalization detox all inclusive per diem $427.40 Z0460 Intensive outpt detox all inclusive per diem $273.80

2018 Impacts Projected financial impact 2018 payments of $119 million Continue to meet 114% reimbursement to cost goal for Ohio hospitals Maintain injured worker access to quality care

Thank You 16

Impact of Fee Schedule Changes on Actual Costs: 2008-2017 Total Medical Reimbursement for Outpatient Fee Schedule $177 $179 $169 $159 $162 $147 $131 $130 $119 $0 $50 $100 $150 $200 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Millions -32.6% Total Active Claims with Paid Outpatient Fee Schedule Services 188 156 120 100 99 97 93 88 84 80 - 20 40 60 140 160 180 200 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Thousands -57.7%

Impact of Fee Schedule Changes on Actual Costs: 2008-2017 Total Average Cost per Claim for Outpatient Fee Schedule $937.01 $1,145.43 $1,400.25 $1,594.47 $1,631.27 $1,507.93 $1,405.90 $1,485.97 $1,555.17 $$1,491.23 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Contributors Rate changes for specific services Consolidation and restructuring of ambulatory payment classifications CMS shift of status indicators for enhanced packaging Injury mix

Impact of Fee Schedule Changes on Actual Costs: 2008-2017 Total Average Medical Reimbursement for Outpatient Fee Schedule $937.01 $1,145.43 $1,400.25 $1,594.47 $1,631.27 $1,507.93 $1,405.90 $1,485.97 $1,555.17 $$1,491.23 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 % Change of Average Medical Cost for Outpatient Fee Schedule 22.2% 13.9% 2.3% - 7.6% 6.8% 5.7% 4.7% 4.1% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017