1. 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

2. 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

3. 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%

4. 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

5. 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

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

7. 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%

8. 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

9. 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

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

11. 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

12. 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

13. 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

14. Payment for Outpatient Detoxification Services
Outpatient detoxification services (OAC )
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

15. 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

16. Thank You 16

17. 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%

18. 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

19. 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