“THE OTHER” IMPACT OF EXPANSION Franklin Smith, CRCE-I Kristina Mori, CRCE-I September 16, 2015

Goals and Objectives 2  Examine the impacts of Medicaid expansion on the financial health of hospital operations  Provide evidence of hospital system participation in population health management  Discuss how Maryland’s Waiver defining market share works against rural facilities managing care  Provide potential solutions to some of the unique waiver issues created by Medicaid expansion

Population Health Initiatives vs MD Waiver Governance  Just what the heck does population health mean  Wide variety of definitions, with accountability serving as the connector  David Kindig and Greg Stoddart started it stating “the health outcome of a group of individuals, including the distribution of such outcomes within the group.”  Definition lacked how to achieve the best results utilizing healthcare institutions 3  Richard Pizzi’s Leadership Groups definition  as an opportunity for health systems, agencies and organizations to work together in order to improve the health outcomes of the communities they serve Source: Society of Hospital Medicine

4 Medicaid Percentage Change States Approving Expansion on the East Coast Source: medicaid-and-chip-enrollment/

5 States Not Participating in Medicaid Expansion on the East Coast Source: medicaid-and-chip-enrollment/

Additional Medicaid Expansion Facts Sources: and 6  8 million Americans enrolled in Medicaid or CHIP since ACA and state sponsored expansion  The net increased of insured is estimated to exceed 6 million when those who lost eligibility are included  The working poor benefited the most, as most of the nation’s poorest were covered previously  Non-expansion states Medicaid enrollment increased by 10% due to the Woodwork Effect  Woodwork Effect are previously eligible subscribers who enrolled as a result of increase awareness

Studies Tracking Enrollment by Coverage Type since ACA Launch 7 Source: obamacarefacts.com Net Increase of 16.9 Million People Covered 22.8 million newly insured lives 5.9 million people lost coverage Total uninsured Americans reduced from 42.7 to 25.8 million Types of Plans Americans Chose 6 million enrolled in Medicaid plans 4.1 million through the Marketplaces 1.2 million signed up through non-marketplace individual plans 1.5 million Americans used other sources (military plans, state specialty plans, etc) 2009 Uninsured rate was 15.7% of US An estimated 24.6 million changed insurance from one source to the next If numbers are to be believed, current uninsured rate as of April 2015 is roughly 8%

Payer Mix has Changed with Medicaid Expansion 8

Maryland’s Payer Mix is No Different than the Country’s Changes 9 Decrease in Self Pay is consistent with the trends around the country for expansion states Overall seems Marylanders have not shown a preference of MCO or straight Medicaid All other payers were basically flat for inpatient services during the periods studied

Maryland’s Payer Mix is No Different than the Country’s Changes 10 Expansion has not impacted the inpatient outpatient split for these periods Carefirst and Managed Care plans lost payer mix to commercial payers based on revenue percentages Using classes with changes greater than 1 point, an additional $135 million ($72.9 IP, $62.4 OP) will need to be protected through RCM operational changes to preserve financial reimbursement

Utilization Patterns Since ACA 11 Source: MHA Financial Condition Reports  Totals based on 9- months ending in March of each year  Many drivers to reduced inpatient days (observation, value reimbursement)  Trend of reduction projected for next 9 month period

Utilization Patterns Since ACA 12 Source: MHA Financial Condition Reports  Totals based on 9- months ending in March of each year  Population health measures not effecting ER use  New patients from Medicaid Expansion using ER due to access barriers

Utilization Patterns Since ACA 13 Source: MHA Financial Condition Reports  Totals based on 9- months ending in March of each year  Hospital examination of regulated vs unregulated settings  Hospitals utilize OP Clinics to manage care versus PCP

Projected Needs of PCPs for MD according to Robert Graham Center 14

MD Hospital Financial Condition Report 9 Months Ending Look 15 Source: Maryland Hospital Association 12/31/12 -12/31/13 Operating revenue increased 1% Operating profit increased by $33.7 million Operating margins increased by 0.4% Non-operating income increased by $85.6 million Total profit increased by $119.3 Hospitals loss $44.5 less than previous period 03/31/13 – 03/31/14 Operating revenue increased 1.8% Operating profit increased by $79.4 Operating margins increased by 0.7% Non-operating income decreased by $13.0 million Total profit increased by $66.4 Hospitals loss $62.5 million less than previous period 03/31/14 – 03/31/15 Operating revenue increased 5% Operating profit increased by $163.0 million Operating margins increased by 1.3% Non-operating income decreased by $335 million Total profit decreased by $172 million Hospitals loss $98.8 million more than the previous period

Population Health Initiatives Relationship with MD Waiver 16 ER Utilization ER is available 24 hours a day 7 days a week, no appointment necessary Limited primary care physicians to meet patient demand schedule out for months Patient demand and habits established as certain populace depend on ER for treatment of all healthcare needs timely Utilization of Medical Observation Creative art of defining observation status by payer versus clinically established MD Provider behavior post charge per case methodology Financial interruption in clinical processes confusing patient population Outplacement to Appropriate Level of Care ER Triage limited to “Fast Track” processes in regulated space 3 day inpatient stay requirement of Medicare for SNF coverage interrupted by Observation processes Coordination of care decisions conflict with state methods of measuring market share

ER Utilization ER is available 24 hours a day 7 days a week, no appointment necessary Limited primary care physicians to meet patient demand schedule out for months Patient demand and habits established as certain populace depend on ER for treatment of all healthcare needs timely Utilization of Medical Observation Creative art of defining observation status by payer versus clinically established MD Provider behavior post charge per case methodology Financial interruption in clinical processes confusing patient population Outplacemen t to Appropriate Level of Care ER Triage limited to “Fast Track” processes in regulated space 3 day inpatient stay requirement of Medicare for SNF coverage interrupted by Observation processes Coordination of care decisions conflict with state methods of measuring market share Population Health Initiatives Relationship with MD Waiver 17 ER Utilization ER is available 24 hours a day 7 days a week, no appointment necessary Limited primary care physicians to meet patient demand schedule out for months Patient demand and habits established as certain populace depend on ER for treatment of all healthcare needs timely

ER Utilization ER is available 24 hours a day 7 days a week, no appointment necessary Limited primary care physicians to meet patient demand schedule out for months Patient demand and habits established as certain populace depend on ER for treatment of all healthcare needs timely Utilization of Medical Observation Creative art of defining observation status by payer versus clinically established MD Provider behavior post charge per case methodology Financial interruption in clinical processes confusing patient population Outplacemen t to Appropriate Level of Care ER Triage limited to “Fast Track” processes in regulated space 3 day inpatient stay requirement of Medicare for SNF coverage interrupted by Observation processes Coordination of care decisions conflict with state methods of measuring market share Population Health Initiatives Relationship with MD Waiver 18 Utilization of Medical Observation Creative art of defining observation status by payer versus clinically established MD Provider behavior post charge per case methodology Financial interruption in clinical processes confusing patient population

ER Utilization ER is available 24 hours a day 7 days a week, no appointment necessary Limited primary care physicians to meet patient demand schedule out for months Patient demand and habits established as certain populace depend on ER for treatment of all healthcare needs timely Utilization of Medical Observation Creative art of defining observation status by payer versus clinically established MD Provider behavior post charge per case methodology Financial interruption in clinical processes confusing patient population Outplacemen t to Appropriate Level of Care ER Triage limited to “Fast Track” processes in regulated space 3 day inpatient stay requirement of Medicare for SNF coverage interrupted by Observation processes Coordination of care decisions conflict with state methods of measuring market share Population Health Initiatives Relationship with MD Waiver 19 Outplacement to Appropriate Level of Care ER Triage limited to “Fast Track” processes in regulated space 3 day inpatient stay requirement of Medicare for SNF coverage interrupted by Observation processes Coordination of care decisions conflict with state methods of measuring market share

Suggestions and Potential Responses to Issues Identified 20 ER Utilization Acknowledge that the public needs must be met until PCPs are fully involved in managing community care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Continue to build physician practices to meet patient care demands per locality Utilization of Medical Observation Develop a clinical definition of observation via Congress Create modifiers to identify short stays for specific diagnosis codes or DRGS Eliminate observation status all together, utilizing a step down inpatient DRG for stays requiring limited hospital resources Outplacement to Appropriate Level of Care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Allow clinical reviews for patients needing SNF care that have not met the 3 day Medicare requirement. Reward hospital systems that manage the care of their population by expanding delivery systems with expertise from other provider networks

ER Utilization Acknowledge that the public needs must be met until PCPs are fully involved in managing community care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Continue to build physician practices to meet patient care demands per locality Utilization of Medical Observation Develop a clinical definition of observation via Congress Create modifiers to identify short stays for specific diagnosis codes or DRGS Eliminate observation status all together, utilizing a step down inpatient DRG for stays requiring limited hospital resources Outplacemen t to Appropriate Level of Care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Allow clinical reviews for patients needing SNF care that have not met the 3 day Medicare requirement. Reward hospital systems that manage the care of their population by expanding delivery systems with expertise from other provider networks Suggestions and Potential Responses to Issues Identified 21 ER Utilization Acknowledge that the public needs must be met until PCPs are fully involved in managing community care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Continue to build physician practices to meet patient care demands per locality

ER Utilization Acknowledge that the public needs must be met until PCPs are fully involved in managing community care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Continue to build physician practices to meet patient care demands per locality Utilization of Medical Observation Develop a clinical definition of observation via Congress Create modifiers to identify short stays for specific diagnosis codes or DRGS Eliminate observation status all together, utilizing a step down inpatient DRG for stays requiring limited hospital resources Outplacemen t to Appropriate Level of Care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Allow clinical reviews for patients needing SNF care that have not met the 3 day Medicare requirement. Reward hospital systems that manage the care of their population by expanding delivery systems with expertise from other provider networks Suggestions and Potential Responses to Issues Identified 22 Utilization of Medical Observation Develop a clinical definition of observation via Congress Create modifiers to identify short stays for specific diagnosis codes or DRGS Eliminate observation status all together, utilizing a step down inpatient DRG for stays requiring limited hospital resources

ER Utilization Acknowledge that the public needs must be met until PCPs are fully involved in managing community care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Continue to build physician practices to meet patient care demands per locality Utilization of Medical Observation Develop a clinical definition of observation via Congress Create modifiers to identify short stays for specific diagnosis codes or DRGS Eliminate observation status all together, utilizing a step down inpatient DRG for stays requiring limited hospital resources Outplacemen t to Appropriate Level of Care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Allow clinical reviews for patients needing SNF care that have not met the 3 day Medicare requirement. Reward hospital systems that manage the care of their population by expanding delivery systems with expertise from other provider networks Suggestions and Potential Responses to Issues Identified 23 Outplacement to Appropriate Level of Care Develop a step reimbursement for ER Utilization for non-emergency care delivered in regulated space Allow clinical reviews for patients needing SNF care that have not met the 3 day Medicare requirement. Reward hospital systems that manage the care of their population by expanding delivery systems with expertise from other provider networks

Conclusions  Financial and clinical integration is crucial to seamless population management  Medicaid expansion and the ACA has had an impact on the financial conditions of the state’s healthcare system  Maryland hospitals and their advocates must continue to innovate and tinker with waiver rules to accommodate for provider services  ICD-10 and tighter payer coverage edits will require connectivity to HIE services to query and communicate with providers  Strong partnerships with physician and ancillary healthcare providers to meet patient needs through a coordinated effort to maximize return on invested dollars. 24

Adversity is wont to reveal genius, prosperity to hide it.Horace 25 Questions

Contact information Mr. Franklin Smith, Jr., Director, Patient Financial Services Calvert Memorial Hospital Phone Website: Ms. Kristina Mori Manager, Patient Accounting Calvert Memorial Hospital Phone Website: