Colorado Healthcare Affordability and Sustainability Enterprise Board February 27, 2018
Agenda Welcome • Approve Minutes from December 12, 2017 Meeting • 2017-18 Fees and Payments • ➢ Overview by Nancy Dolson ➢ Board discussion and vote Hospital Quality Incentive Payments (HQIP) • ➢ Introduction and Overview by Chair Shepard Nevel ➢ Presentation by Michael Joseph, Matt Haynes and Nancy Kohler ➢ Board discussion and vote on 2019 framework Open Forum for Public Comments • Adjourn • 2
2017-18 Fees and Payments Nancy Dolson, Special Financing Division Director 3
Overview ➢ CHASE Overview ➢ Fee and Payments Methodologies ➢ Net Reimbursement Overview ➢ Next Steps ➢ DSH Reduction Delay 4
2017-18 CHASE ➢ $896.3 million CHASE fees ▪ Net Patient Revenue limiting fees at 5.75% of estimated NPR ➢ $1.3 billion in hospital supplemental payments including $97.6 million in quality incentive payments ▪ Upper Payment Limit at 96.9% ▪ Disproportionate Share Hospital (DSH) Limit ➢ $368.9 million in net reimbursement 1 1 See note 1 on slide 20 5
2017-18 CHASE Fees and Payments Expenditures Fees Federal Funds Total Funds IP Base Rate Supplemental Payment $228,500,000 $228,500,000 $457,000,000 OP Supplemental Payment $213,800,000 $213,800,000 $427,600,000 Uncompensated Care Supplemental Payment $55,200,000 $55,200,000 $110,500,000 DSH Supplemental Payment $86,300,000 $86,300,000 $172,600,000 HQIP Supplemental Payment $48,800,000 $48,800,000 $97,600,000 Total Supplemental Payment $632,600,000 $632,600,000 $1,265,300,000 Medicaid Parents to 133% of FPL $29,800,000 $280,500,000 $310,300,000 Medicaid Adults without Dependent Children to 133% of FPL $101,800,000 $1,625,200,000 $1,727,000,000 Medicaid Buy-In for Working Adults and Children with Disabilities $33,100,000 $36,800,000 $69,800,000 CHP+ 206% to 250% of FPL $8,600,000 $55,300,000 $64,000,000 Twelve Months Continuous Eligibility for Medicaid Children $31,300,000 $31,300,000 $62,600,000 Non Newly Eligibles $8,600,000 $42,500,000 $51,000,000 Medicaid Expansion $213,200,000 $2,071,700,000 $2,284,900,000 Administration $26,800,000 $49,100,000 $75,900,000 Transfer to General Fund – 25.5-4-402.4 (5)(b)(VII) $15,700,000 *$0 $15,700,000 Total Other Expenditures $42,500,000 $49,100,000 $91,600,000 Cash Fund Reserve $8,000,000 $0 $8,000,000 Grand Total $896,300,000 $2,753,400,000 $3,649,800,000 *Federal funds drawn from the transfer to the General Fund are not shown 6
Return on CHASE Fee $896.3 million generates $2.8 billion in federal funds, a • 212% return on investment Administrative expenditures ($75.9 million) are 2.1% of total • CHASE expenditures ($3.6 billion) Administrative expenditures include the following • ➢ Staff costs, legal services, accounting, etc. ➢ Contracted services, including utilization management and external quality review ➢ IT systems (i.e., eligibility and claims) and staffing for the customer contact center for more than 500,000 covered lives 7
CHASE Fee Inpatient fee assessed on managed care & non-managed care • days ➢ Inpatient fee ▪ Per non-managed care day: $391.15 ▪ Per managed care day: $87.52 Outpatient fee assessed on percentage of total Outpatient • charges ➢ Outpatient fee ▪ Percentage of total charges: 2.0208% 8
Inpatient Base Rate Supplemental Payment Increase rates for inpatient hospital services for Medicaid • members Total Payments: $457.0 million • Inpatient Base Rate Payment = Medicaid rate before add-ons • * inpatient percentage adjustment factor * estimated Medicaid discharges * case mix 9
Outpatient Supplemental Payment Increase rates for outpatient hospital services for Medicaid • members Total Payments: $427.6 million • Outpatient Payment = estimated Medicaid outpatient cost * • outpatient percentage adjustment factor 10
Uncompensated Care Supplemental Payment Reimbursement to hospitals providing services to the • uninsured Total Payments: $110.5 million • ➢ $15.0 million distributed to qualified Essential Access hospitals, based on proportion of beds ➢ $95.5 million distributed to all other qualified Non Essential Access hospitals, based on proportion of uninsured cost 11
DSH Supplemental Payment Reimbursement to hospitals providing services to the • uninsured Total Payments: $172.6 million • Most hospitals capped at 96% of their estimated DSH limit • ➢ A hospital with a CICP Write-Off cost greater than 900% of the average state-wide CICP Write-Off cost has a DSH Supplemental Payment equal to 85.5% of their estimated DSH limit ➢ A respiratory hospital’s DSH Supplemental Payment equals 45% of their estimated DSH limit 12
HQIP Supplemental Payment Reimbursement to hospitals providing services that improve • health care outcomes Total Payments: $97.6 million • Quality measures and payment methodology approval • concluded by the CHASE Board on August 22, 2017 HQIP Payment = % of normalized eligible points * Medicaid • Adjusted Discharges * dollars per-adjusted discharge point 13
Net Reimbursement Net Reimbursement 1,2 decrease due to: • ➢ Reduction in expansion federal matching percent from 95% to 94% in January 2018 ➢ Increase in Medicaid and CHP+ caseload ➢ Reduction in standard federal medical assistance percentage (FMAP) from 50.02% to 50.00% in October 2017 Item 2016-17 2 2017-18 Difference Fee (cash funds) $782,311,197 $896,346,622 $114,035,425 Supplemental Payments (total funds) $1,166,009,269 $1,265,286,602 $99,277,333 Net Reimbursement 1 $383,698,072 $368,939,980 $(14,758,092) 1 See note 1 on slide 20 2 See note 2 on slide 20 14
Net Reimbursement Variance in Fee Year over Row 1 Additional funds from increased fees $114,035,425 Year 2 Row 2 Expansion expenditure increase due to FMAP reduction $41,490,131 Row 3 Expansion expenditure increase due to caseload $13,394,421 Row 4 Funds expended due to administration expenditure increase $4,278,879 Row 5 Cash funds reserved $5,000,125 Row 6 Funds expended due to standard FMAP reduction $233,203 Row 7 Total increase in funds $64,396,759 Sum Row 2 through Row 6 Row 8 Funds available for Supplemental Payments (cash fund) $49,638,666 Row 7 – Row 1 Row 9 Funds available for Supplemental Payments (total fund) $99,277,332 Row 8 * 2 Row 10 Net Reimbursement 1 $(14,758,092) Row 9 – Row 1 1 See note 1 on slide 20 2 See note 2 on slide 20 15
Payment to Cost Ratio 16
Next Steps CHASE fees and supplemental payments have been at interim • levels since October 2017 Following CHASE Board approval, we will • ➢ Seek federal approval from CMS ➢ Present rules to Medical Services Board ➢ Reconcile between the final model and the interim model in Summer 2018 ➢ Notify hospitals and host webinar 17
Delay in DSH Reduction • DSH Reductions have been delayed until 2020 ➢ Colorado reduced FFY 2017-18 allotment: $172.6 million ➢ Unreduced: $208 million, difference of $35 million • Bipartisan Budget Act of 2018 (H.R. 1892) signed into law by the President on February 9, 2018 ➢ Section 53101 lays out the amendments for DSH reductions 18
Delay in DSH Reduction Proposed process • ➢ Two year timely filing ▪ Up to September 2020 to draw down full FFY 2017-18 DSH allotment ➢ Draw down additional DSH dollars in upcoming models ➢ Direct to hospitals with lower percentage of DSH limit 19
Footnotes 1 Net reimbursement reflects direct supplemental payments • paid to hospitals minus total CHASE fees and does not include revenue received by hospitals via claims paid for expansion populations 2 2016-17 fee and payment data. Despite being separate fees • and separate programs, information for the October 1, 2016 to June 30, 2017 time period under CHCAA and the July 1, 2017 to September 30, 2017 time period under CHASE are reported in aggregate for the sake of meaningful comparison 20
Board discussion and vote • 2017-18 CHASE fees and payments 21
Hospital Quality Incentive Payments (HQIP) Michael Joseph, Public Consulting Group Matt Haynes, Department of Health Care Policy and Financing 22
Quality Measure Process to Date Conducted an environmental scan of measures used in other • hospital quality programs to identify best practices and review measure alignment Worked with internal staff to identify potential priority areas for the • Department and assess alignment with other programs Developed a proposed measure framework and presented • framework to subcommittee Working with the subcommittee to review measures that would fit • in the framework Monitoring the work of the MAP Rural Health Workgroup which is • in the process of developing a core set of rural relevant measures for consideration in future iterations of the measure set 23
Key Considerations in Developing Framework and Selecting Measures Shift towards measures that align with other programs including • ACC Phase II Focus on groups of measures rather than individual measures • Increase the proportion of outcome measures • Incentivize adherence to guidelines and best practices • Include areas not currently addressed by this program, e.g. social • determinates of health, opioids Consider the challenges rural hospitals may face in reporting • measures 24
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