1. HFMA Spring Conference MHA Finance / Policy Update May 26, 2016
Jason Jorkasky, senior director, Policy
Vickie Kunz, senior director, Health Finance 1

2. About MHA Established in 1919; Nonprofit (501c6)
Approximately 100 employees
Locations: Okemos (HQ and MHASC); Downtown Lansing (CAC)
Primary Membership: hospitals / health systems
Governance: 23-member Board; committee input structure

3. MHA Advocacy: What We Stand For
Fair and adequate Medicaid and Medicare funding
Health coverage for all, paid for by all
Voluntary Improvements in patient safety and quality
A strong Certificate of Need (CON) program
Preservation of Michigan’s Medical Liability reforms

4. CMS Medicaid & CHIP Managed Care Final Rule
Key provisions include:
Establishment of a medical loss ratio standard
Requirements for determining actuarially sound rates
Flexibility for institutes for mental disease funding for up to 15 days
Quality requirements for states
Quality rating system, state managed care quality strategy, external quality reviews

5. Continued, CMS Medicaid & CHIP Managed Care Final Rule
Emphasis on value-based purchasing models for provider reimbursement
Pay-for-performance
Bundled payments models
Other models that recognize outcomes rather than volume of services
Eventual elimination of contractually-required pass-through payments
Timeframes vary by provision

6. CMS Overall Hospital Quality Star Ratings
5-star rating system
Composite score based on over 60 measures from inpatient and outpatient quality reporting programs
Process, outcomes, patient experience, and efficiency
Does not replace individual measures on hospital compare
Timeline
Initial: April 21
Now: No sooner than July

7. State Innovation Model (SIM)
State awarded $70 M grant to develop and test healthcare delivery & payment models
IHI Triple Aim:
Improving patient experience of care
Improving health of the population
Reducing per capita cost of care
Multi-payer
5 pilot regions
Genesee County
Jackson County
Muskegon County
Northern Region
Livingston & Washtenaw counties

8. Community Health Innovation Regions (CHIRs)
Continued, SIM
Community Health Innovation Regions (CHIRs)
Entity to coordinate and organize community efforts linking healthcare and other social services
Areas of focus
ED utilization
Chronic condition management
At-risk pregnancies

9. Continued, SIM Focus of SIM Coordinating care Transition planning
Data interoperability
Integrating behavioral and physical health
Shift reimbursement to value- or outcome-based models

10. Medicare Access to Care Reform Act (MACRA)
Repeals Medicare physician SGR methodology
Establishes two value-based physician quality programs beginning in 2019 for Medicare FFS
Default Merit-based Incentive Payment System (MIPS) or
Advanced alternative payment models (APMs)
Applies to physicians, PAs, NPs, CRNAs

11. Continued, MACRA Concerns regarding APM qualification
MIPS – performance-based composite score
Provides positive or negative adjustments (up to 4% in 2019 increasing to 9% in 2022)
Advanced APMs - bonus payment incentives
Limited APMs qualify
CMS accepting comments until June 27 (
MHA draft comments available prior to due date
Concerns regarding APM qualification

13. FY 2017 Medicaid Budget – MHA Board Priorities
Protect existing funding
No cuts to Medicaid rates
GME, OB stabilization fund, small/rural pool ($93m GF)
Protect against excessive retention as state obligation for HMP increases
($105m is $12m increase from FY 2016)
Renew Healthy Michigan Plan funding

14. Approved March 3 by U.S. Department of Health and Human Services
Flint Waiver Approved
Approved March 3 by U.S. Department of Health and Human Services 
Expand Medicaid coverage to certain populations in Flint who used water system starting April 2014
Cover an additional 15,000 children and pregnant women (Annual income of 400% FPL)
30,000 current Medicaid beneficiaries would be eligible for expanded services
Annual income of $97,200 for family of four for FPL

15. Healthy Michigan Plan Enrollment
614,973
As of 04/25/2016.

16. Coverage Snapshot: Medicaid Expansion
More than 1 million Michiganians uninsured in 2013
Where do we stand today?*
322,000 enrollment goal for 2014
615,000 total eligible
Exceeded enrollment goal by 293,000
Covered by:

17. Healthy Michigan Plan QAAP Impact
Estimated Impact*
FYs 2014/2015
FY 2016
MACI
$400 million
$250 million
HRA
$360 million
TOTAL
$1.4 billion
* excludes Medicaid rate payments

18. Medicaid DSH Payments FY 2013 Step 2 DSH process
Impacts payments from both $45M regular DSH pool and tax-funded outpatient uncompensated care DSH pool
Transaction date not yet known
FY 2016 Step 1 process in June/July, with payments distributed in September
FY 2014 Step 2 DSH process late summer
FY 2011 & FY 2012 Step 3 payment adjustments based on audit expected mid to late summer

19. Hospital DSH Limit
DSH limit = Cost of treating Medicaid and Uninsured Patients Less Payments
All Medicaid payments, both FFS and MCO, are counted for hospital DSH limit purposes
Rate payments
Gross MACI, HRA, Psych HRA
Capital
DSH
GME
Rural Access Pool
OB Stabilization Pool

20. Medicare CJR Bundled Payments Model
Effective April 1, 2016, CMS implemented the first mandatory bundled payments model in 67 MSAs, including Flint and Saginaw
Runs for almost 5 years, until Dec. 31, 2020
Triggered by discharge assigned to MS-DRGs and 470, Major Joint Replacement
Potential impact to other hospitals due to inclusion of all post-acute services for 90 days post discharge
$ impact to CJR hospitals beginning Jan. 1, 2017

21. Impact of FY 2017 IPPS Proposed Rule

22. Impact of Medicare Quality-Based Programs
Value-based purchasing program – Hospital contribution increases from 1.75% to 2%
Hospitals can remain whole; or earn < or >
Readmissions reduction program – Hospitals with excess readmissions are subject to payment reduction of up to 3% based on readmissions for six select medical conditions
CABG added to list of medical conditions
Hospitals remain whole or lose to CMS
No other changes proposed

23. Continued, Impact of Medicare Quality-Based Programs
Hospital Acquired Conditions reduction program – Hospitals remain at risk for 1% payment reduction depending on HAC score on two domains relative to hospitals nationally
Top quartile of hospitals subject to penalty
Hospitals remain whole or lose to CMS
Score of 7.0 or > resulted in FY 2015 penalty
Dropped to 6.75 for FY 2016
Estimated at 6.45 for FY 2017

24. FY 2016 Estimated Michigan Financial Impact — Medicare Quality-based Programs
VBP program – Net impact is a payment loss of $1.3 million
Contribution is 1.75% in FY 2016; increasing to 2% in FY 2017 and future years
35 hospitals lost $5.9 million
52 hospitals remained whole or earned $4.6 million more than they paid
RRP – 69 hospitals subject to $20 million payment penalty
HAC reduction program – 24 hospitals subject to the 1% payment penalty, resulting in a $13 million payment reduction
One-page summary report distributed Jan. 12 reflecting the estimated financial impact of these ACA-mandated programs

25. General Program Themes
Increased financial exposure each year (max exposure shown below)
HAC = Hospital Acquired Condition (HAC) Reduction Program
RRP = Readmission Reduction Program
VBP = Value-based Purchasing Program

26. Medicare Outpatient Observation Notice (MOON)
Aug. 6, 2015 – Congress enacted the Notice of Observation Treatment and Implication for Care Eligibility (NOTICE) Act which requires PPS and critical access hospitals to provide written notification to both Medicare FFS and MA patients who receive observation services for more than 24 hours, effective Aug. 6, 2016
CMS proposes to require use of a new CMS-developed standardized notice, the MOON
Impact on co-pays/deductibles
Administrative burden for hospitals

27. Continued, MOON
For both Medicare FFS and MA patients, notice and verbal explanation must be provided to all individuals entitled to Medicare benefits that have received outpatient observation services for more than 24 hours, beginning at the clock time documented in the patient’s medical record
Provision of the MOON must be no later than 36 hours after the start of observation services; and must be furnished sooner if the patient is transferred, discharged or admitted to inpatient within that timeframe

28. Continued, MOON
Notice must be signed by patient or representative acknowledging that notice was provided
If patient or rep refuses to sign, the notification must be signed by the staff member who presented the written notification, including name, title and certification statement that the notification was presented, as well as the time/date it was presented
The MOON must be provided to Medicare beneficiary, regardless of whether the services provided are payable under Medicare

29. Webinar - FY 2017 IPPS Proposed Rule
MHA is co-hosting a webinar with Region 6 HFMA Chapters at Noon on June 7
See May 16 Monday Report for registration info
Multiple staff are encouraged to participate from a single location to minimize phone lines needed

30. IPPS Comments
MHA distributed hospital-specific impact analysis to PPS hospitals Wednesday, May 18
Notify MHA regarding issues/comments/concerns
Phase-in of worksheet S-10 uncompensated care data
change in HAC scoring methodology
ATRA-mandated 1.2% coding adjustment
lack of socioeconomic adjustment for Readmissions Reduction Program
Timing of MOON implementation
Addition of new quality measures

31. Continued, IPPS Proposed Rule
MHA will make its draft comments available via MHA Monday Report prior to due date
Hospitals encouraged to submit comments to CMS
Comments due to CMS June 17
Submit electronically
CMS is expected to release a final rule by Aug. 1, for the Oct. 1, 2016 effective date
MOON effective Aug. 6, 2016

32. MHA Monthly Financial Survey (MFS)
Provides free benchmarking of hospital financial and utilization results
Some Michigan hospitals have participated since 1999
Approximately 500 hospitals in 14 states participate nationally
Full participation endorsed by MHA board at its February 2016 meeting
Response to Senator Shirkey request
Replay of webinar available via the April 4 MHA Monday Report

33. Benefits of hospital use:
Continued, MFS
Benefits of hospital use:
Timely data for Michigan and national benchmarking of hospital financial and utilization results
Useful to hospital administration for budgeting, marketing, and internal management
Hospitals can obtain reports for any time period for which they’ve submitted data
Ability to review volume and other trends at other hospitals in Michigan and US
Peer group benchmarking to specific hospitals
Requires minimum of five hospitals

34. Other comparisons to results for the Great Lakes States
2014 AHA Survey Results
Annually, the MHA provides comparisons of Michigan and US utilization and financial statistics based on annual survey results
Other comparisons to results for the Great Lakes States
(IL, IN, OH, PA, WI)
See MHA Advisory Bulletin # 1378 included in March 14 weekly mailing
Includes PPT for ready-to-go presentations and Excel template which allows hospital to input its data for a comparisons to Michigan and US

35. Michigan Patient Volumes (2005-2014)

36. Michigan, Great Lakes and United States

37. Michigan, Great Lakes and United States

38. Michigan Hospital Margins (2005-2014)

39. United States Hospital Margins (2005-2014)

40. Michigan Cost Per Equivalent Admission

41. Michigan and United States

42. Michigan and United States

43. MHA Resources
Monday Report is available FREE to anyone and is distributed via each Monday morning
Go to website and select “Newsroom”, then Monday Report
MHA Monday Report – electronic publication issued weekly
Request password if you don’t have one
Donna Conklin at to obtain MHA member ID number
Advisory Bulletins – Extensive communications available only to MHA members, as needed (Require password to obtain from website)
Hospital specific mailings as needed for various impact analyses, etc.
Periodic member forums
See mha.org for other resources
Monthly Financial Survey (MFS) provides free benchmarking of financial and utilization statistics

44. Senior Director, Health Finance Senior Director, Policy
???Questions???
Please contact:
Vickie Kunz
MHA
Senior Director, Health Finance
Phone: (517)
Jason Jorkasky
Senior Director, Policy
Phone: (517)

45. Policy Team Peter Schonfeld Marilyn Litka-Klein Vickie Kunz
Jason Jorkasky
Nathanael Wynia
Robert
Wood
Amanda Seaman