OHA – Top 10 Issues Impacting Ohio Hospital Economic

Report
Southwest Ohio HFMA May
Institute
May 16, 2014:
Ohio Hospital Economic
Sustainability:
Top Ten 2014 Issues
OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
10. Price Transparency
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May 2014
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10. Price Transparency
• Public/private exchanges will exacerbate trend toward highdeductible plans (i.e., high out-of-pocket expense when
patients seek care)
– Hospital bad debts likely to increase
– Already, between 2007 and 2012:
• Hospital insured but uncompensated inpatient discharges increased by 44%
• Hospital insured but uncompensated outpatient visits increased by 94%
• Patients likely to become more cost-conscious for
elective/ambulatory services
– How do not-for-profit hospitals compete?
• IP, OP, Lab, Diagnostic Radiology
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10. Price Transparency
• OHA Price Transparency Work Plan in 2014:
– Conduct national environmental scan
– Clearly define for membership set of price-sensitive
“shoppable” services
– Monitor state and federal-level political pressure points
– Determine OHA’s current technological/data collection
capabilities to mirror model state association activities
– Objective: The OHA Board endorses an association strategy
in August to address concerns surrounding the transparency
of hospital pricing.
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
9. Medicaid GME Reform/Reductions?
10. Price Transparency
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May 2014
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
8. Continued Hospital/Physician Consolidation
9. Medicaid GME Reform/Reductions?
10. Price Transparency
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May 2014
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8. Continued Hospital/Physician
Consolidation
• In 2001 in Ohio:
– 76 out of 179 (42.5%) hospitals were part of a large health system
• In 2006:
– 88 out of 194 (45.3%) hospitals were part of a large health system
• Today:
– 113 out of 201 (56.2%) hospitals are part of a large health system
– Still strong independent presence, but it is shrinking
– In 2012, Ohio hospitals reported employing 11,139 physicians
(40.5% of active, credentialed medical staff)
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
7.
8.
9.
10.
SFY 2015 Franchise Fee Recalibration
Continued Hospital/Physician Consolidation
Medicaid GME Reform/Reductions?
Price Transparency
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May 2014
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7. SFY 2015 Franchise Fee
Recalibration
TYPE OF PAYMENT CUT
PROPOSED
SFY ’14-’15 IMPACT
ENACTED
SFY ‘14-’15 IMPACT
State Share
Total Impact
State Share
Total Impact
Cuts to Infrastructure
Improvements (Capital)
$20.9
$57.8
$20.9
$57.8
Cuts to Inpatient Base
Payments
$60.9
$168.2
$48.1
$132.9
Cuts to Outpatient Base
Payments
$33.2
$91.7
$0
$0
$115.0
$317.7
$69.0
$190.7
Total Cuts Associated
w/Expansion
NOTES: All figures in millions.
SOURCES: Office of Medical Assistance/Ohio Department of Medicaid
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Millions
7. SFY 2015 Franchise Fee
Recalibration
$1,000
$800
$600
$400
Franchise Fee
MCP Incentive
$200
5% Rate Support
OP UPL
IP UPL
$0
2010
2011
2012
2013
2014
-$200
-$400
-$600
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May 2014
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
6.
7.
8.
9.
10.
Expiration of PCP Medicaid Rate Increase
SFY 2015 Franchise Fee Recalibration
Continued Hospital/Physician Consolidation
Medicaid GME Reform/Reductions?
Price Transparency
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
5.
SIM - Episodes
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5. SIM -Episodic payment
development
• State Innovations Model (SIM) Planning Grant
– Testing grant application in process
– Built on McKinsey & Co. work in Arkansas, Tennessee
• Goal: 80-90% of Ohio pop. in some value-based payment
model within 5 years (PCMH & Episodes)
• Initial Episode selection: Asthma, COPD, Perinatal, PCI,
Hip/Knee Replacements
– Define Principal Accountable Provider (PAP) or “quarterback”
• PAP at-risk based on adjusted cost per episode performance upon
retrospective review
– Gain Sharing
– Risk Sharing
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Discussion outline
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Discussion outline
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5. SIM – Episodes: OHA Board-Approved
Principles
• OHA supports payment reforms to increase value
• Episodic payments must focus on variability in
utilization and quality; exclude other factors
• Providers already beyond episodes should be exempt
• Calculations of cost for episodes must be normalized to
address established variation in payment rates
• Access to care should not be reduced
• Accountable providers should be put at no or minimal
risk for activities outside of their control
• Providers must be able to maintain their ability to
negotiate reimbursement
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5. SIM – Episodes: Latest News
• March 10 meeting with state officials:
– Providers who already have value-based contracts beyond
episodic payments will be able to be excluded from payment side
of program
• Data reporting requirements still likely
– OHT working with commercial plans to help their implementation
• Member feedback
– Technical questions persist with regard to Medicaid
implementation
• At least 18 months before any penalties/incentives
• May 15 meeting with Director McCarthy
– Cost normalization decision point
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May 2014
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
4.
5.
Presumptive Eligibility
SIM - Episodes
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4. Presumptive Eligibility (PE)
• Gives patients immediate, temporary
Medicaid coverage if they are presumed to be
eligible
• Coverage lasts until 1) person completes
successful Medicaid application or 2) until the
last day of the month following the month
they became presumptively eligible
• Portal on ODM Web site
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
3.
4.
5.
Budget Cuts/Next Budget/Governor’s Race
Presumptive Eligibility
SIM - Episodes
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3. Budget Cuts/Next Budget
TYPE OF PAYMENT
CUT
SFY 2012-13
IMPACT
SFY 2014-15
IMPACT
TOTAL SFY 2012-15
IMPACT
State Share
Total Impact
State Share
Total
Impact
State Share
Total Impact
Complex Cases (Outliers)
$45.3
$125.6
$61.8
$170.8
$107.1
$296.4
Infrastructure
Improvements (Capital)
$45.4
$126.1
$93.8
$259.0
$139.2
$385.1
$48.1
$132.9
$48.1
$132.9
$0.3
$0.7
$0.4
$1.0
$37.3
$103.0
$37.3
$103.0
Inpatient Base Payments
Hospital Acquired
Conditions
$0.1
$0.3
Readmission Penalties
Outpatient Surgeries,
Chemotherapy & Other
High-Cost Drugs/Supplies
$23.6
$65.4
$62.0
$171.3
$85.6
$236.7
Reductions in Payment for
Dually Eligibles
$21.2
$58.8
$33.9
$93.7
$55.1
$152.5
$4.3
$12.0
$4.3
$12.0
$341.5
$943.4
$477.1
$1,319.6
Reductions to Cost-Based
Reimbursed Providers
Total Cuts to Hospitals
$135.6
$376.2
SW Ohio HFMA
NOTES: All figures in millions.
May 2014
SOURCES: Office of Medical Assistance/Ohio Department of Medicaid & OHA Analysis
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3. Budget Cuts/Next Budget
• Joint Medicaid Oversight Committee (JMOC)
– New committee formed in wake of expansion
– Charged with maintaining Medicaid spending at or below
healthcare market basket
– Chaired by Sen. David Burke (R-Marysville)
• Continued downward pressure on healthcare provider
reimbursement
• Medicaid expansion authorized – Oct. 2013
– OHA spent hundreds of thousands of dollars on issue
– Failed to change one vote
– But must be legislated in SFY 2016-17 state budget
• State must pay 5% of expansion cost beginning with FFY 2017
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
2.
3.
4.
5.
HCAP Reform
Budget Cuts/Next Budget/Governor’s Race
Presumptive Eligibility
SIM - Episodes
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May 2014
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2. HCAP Reform: Why Reform
HCAP in 2014?
• HCAP distribution uses most recent Medicaid cost report data as
proxy for hospitals’ current uncompensated care + Medicaid loss
burden
– 2012 CY used to distribute 2014 payments (pre- vs. post-expansion)
• Current model distributes over 60% based on uninsured
population most likely to become Medicaid-eligible
• Federal DSH Auditors retrospectively review payments vs. actual
OBRA Cap/DSH Limit for Federal Fiscal Year payments
– Beginning with 2011 HCAP, auditors can force
recoupments/redistributions of prior payments
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2. HCAP Reform:
OHA Board Directives for 2014
• Increase fairness & equity through reforms that
narrow the gap between peer group net misery
indexes;
• Minimize risk of provider overpayments
identified in federal DSH audits;
• Allow flexibility and reevaluation on annual
basis;
• Be in accordance with other OHA HCAP
principles.
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May 2014
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2. HCAP Reform: OHA Finance
Committee Action (March 13, 2014):
To recommend the OHA Board of Trustees
endorse a FFY 2014 Hospital Care
Assurance Program (HCAP) based on
Hybrid Distribution Model 5, with a
presumed 50% Medicaid enrollment takeup.
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May 2014
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2. HCAP Reform: “Hybrid” HCAP
Model 5 - Overview
• Include “residual” Pot 3A as a transition tool
– $100M vs $353M in 2013
• Narrow ranges of misery both within and between peer
groups by:
– Allocating resources to CAH/Rural/High DSH/Children’s
– Ensure appropriateness of CAH pool distribution
• In 2013, CAHs received over 10% of rural pool
• Maintain “OBRA” pot as largest funding source
• Try to increase payments to CAH/Rural/Adult DSH/Children’s
without taking too much from Teaching or Others
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May 2014
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2. HCAP Reform
Funding Pot
High DSH (1)
2013
Model
$45.4
2014 OHA
Finance Ctte
Hybrid Model 5
$71.1
Medicaid Cost (2)
$117.9
-
-
$357.9
UCC Below FPL (3A)
$353.2
$100.0
UCC Above FPL (3B)
$30.3
-
CAH Pot (4A)
$7.5
$20.2
Rural Pot (4B)
$15.9
$31.8
Children’s Pot (6)
$7.7
$11.7
OBRA Pot
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2. HCAP Reform
Peer Group Name
Number of
Hybrid Model 5
Hospitals in Peer
2013 Net
Net Misery Index
Group
Misery Index @50% Take-up
Adult DSH
9
4.63%
2.36%
Critical Access
34
7.67%
4.80%
Children's
7
5.46%
3.64%
LTACH
21
-0.90%
0.25%
Other
62
4.89%
3.77%
Rehab
7
0.06%
1.75%
Rural
30
7.42%
5.41%
Teaching
31
3.71%
2.50%
Statewide
201
4.69%
3.14%
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May 2014
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2. HCAP Reform
Peer Group Name
Number of
Hospitals in
Peer Group
Hybrid
Overall Proj.
2013 HCAP Model 5 Net Change in
Net Gain
Gain
Net Misery
Adult DSH
9
$133.8
$110.2
($103.1)
Critical Access
34
$17.0
$34.7
($23.9)
Children's
7
$42.0
$61.5
($41.7)
LTACH
21
($3.1)
($3.2)
$4.3
Other
62
$53.0
$45.7
($70.1)
Rehab
7
($0.6)
($0.7)
$2.1
Rural
30
$34.5
$62.9
($45.0)
Teaching
31
$90.1
$62.2
($126.7)
Statewide
201
$366.7
$373.2
($403.9)
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May 2014
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OHA – Top 10 Issues Impacting Ohio
Hospital Economic Sustainability in
2014
1.
2.
3.
4.
5.
ACA/Obamacare Implementation – Medicaid
Expansion & Exchange Roll-Out
HCAP Reform
Budget Cuts/Next Budget/Governor’s Race
Presumptive Eligibility
SIM - Episodes
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May 2014
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1. Expansion of Coverage Under
Medicaid (Ohio, as of April 30, 2014)
• 184,671 newly-eligible have enrolled
• Actuaries estimate 275,000 will sign up for
coverage by June 2014
• About 117,000 Medicaid applications filed
with federal exchange still being processed by
state county offices
• 124,195 previously eligible also have enrolled.
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May 2014
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1. Health Insurance Marketplace
• 154,668 Ohioans have selected private plans as
of April 19. For Ohio, tier selection has been:
– Bronze = 25%
– Silver = 60%
– Gold = 12%
– Platinum = 2%
– Catastrophic = 2%
• 85% of Ohioans that purchased qualified for
financial assistance
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May 2014
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OHA – Not Quite Top 10 Issues
Impacting Ohio Hospital Economic
Sustainability in 2014
Private exchanges development
ACA 2nd year premium increases
Medicaid – telemedicine reimbursement
Wage index changes
MyCare Ohio – duals
Narrowing networks – commercial & public
Republicans take Senate?
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May 2014
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Questions?
Contact Info:
Ryan Biles
Senior Vice President, Health Economics & Policy
Ohio Hospital Association
[email protected]
(614)221-7614
SW Ohio HFMA
May 2014
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