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Me dic aid DSH: Whats in the Pr opose d Rule and What it Me ans for Your Hospital May 28, 2013 National Association of Public Hospitals and Health Systems National Association of Public Hospitals and Health Systems 1 1 Ove r vie w

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SLIDE 1

National Association of Public Hospitals and Health Systems 1 National Association of Public Hospitals and Health Systems 1

Me dic aid DSH: What’s in the Pr

  • pose d Rule and

What it Me ans for Your Hospital May 28, 2013

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SLIDE 2

Ove r vie w

 Histo ry o f Me dic a id DSH Pro g ra m  ACA Me dic a id DSH Cuts  CMS’ Pro po sa l  Ne xt Ste ps fo r NAPH Me mb e rs

National Association of Public Hospitals and Health Systems 2

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SLIDE 3

National Association of Public Hospitals and Health Systems 3

Histor y of the Pr

  • gr

am

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SLIDE 4

Co ng re ss, 1981: Ho spita ls se rving a dispro po rtio na te numb e r o f lo w inc o me pa tie nts— “are o fte n multi-fac e te d he alth c are institutio ns, whic h pro vide many pub lic he alth and so c ial se rvic e s to all re side nts

  • f the ir are a. … T

he Co mmitte e inte nds State s to re c o g nize that fac ilitie s pro viding te ac hing se rvic e s o r o the r spe c ialize d te rtiary c are se rvic e s may have o pe rating c o sts whic h e xc e e d tho se o f a c o mmunity ho spital.”

Or igins of DSH

National Association of Public Hospitals and Health Systems 4

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SLIDE 5

So c ia l Se c urity Ac t, Se c tio n 1902(a )(13): Me dic a id ho spita l ra te s must: “take into ac c o unt … the situatio n

  • f ho spitals whic h se rve a

dispro po rtio nate numb e r o f lo w inc o me patie nts.”

Or igins of DSH

National Association of Public Hospitals and Health Systems 5

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SLIDE 6

Me dic aid DSH Pr

  • gr

am

 Pa yme nts a re sub je c t to two limits:  F

e de ra l suppo rt to sta te s no t to e xc e e d sta te -spe c ific a llo tme nts

 Sta te pa yme nt to ho spita ls no t to

e xc e e d ho spita l-spe c ific DSH c a ps

  • DSH a udit a nd re po rting

re q uire me nt

National Association of Public Hospitals and Health Systems 6

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SLIDE 7

Me dic aid DSH E ligible Hospitals

 Ho spita ls tha t me e t fe de ra l e lig ib ility

re q uire me nts

  • MI

UR a t le a st o ne sta nda rd de via tio n a b o ve me a n

  • L

I UR g re a te r tha n 25 pe rc e nt

 Ho spita ls tha t sta te s de sig na te a s DSH

ho spita ls in sta te pla ns

  • E

.g ., sta te te a c hing ho spita ls, ho spita ls pro viding tra uma o r pe rina ta l se rvic e s

National Association of Public Hospitals and Health Systems 7

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SLIDE 8

National Association of Public Hospitals and Health Systems 8

Me dic aid DSH in the ACA

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SLIDE 9

Me dic aid DSH Re duc tions in the ACA

National Association of Public Hospitals and Health Systems 9

Re duc tio n Ye a r

$500 million 2014 $600 million 2015 $600 million 2016 $1.8 billion 2017 $5 billion 2018 $5.6 billion 2019 $4 billion 2020

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SLIDE 10

What’s in the ACA r e gar ding Me dic aid DSH?

Se c re ta ry is re q uire d to impo se the la rg e st re duc tio ns in Me dic a id DSH a llo tme nts o n sta te s (1) with the lo we st pe rc e nta g e o f uninsure d

individuals o r

(2) tha t do no t ta rg e t the ir pa yme nts o n ho spita ls with hig h vo lume s o f Me dic aid

inpatie nts and ho spita ls tha t ha ve hig h

le ve ls o f unc ompe nsate d c are Sma lle r pe rc e nta g e re duc tio ns fo r low DSH

state s

DSH funds fo lde d into c ove rage e xpansion

waive rs must b e “ta ke n into a c c o unt”

National Association of Public Hospitals and Health Systems 10

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SLIDE 11

What’s Not in the ACA?

 Ho w sta te s sho uld distrib ute Me dic a id

DSH to ho spita ls within the ir sta te s

 Wha t da ta so urc e will b e use d to

de fine the pe rc e nta g e o f uninsure d individua ls

 Ho w unc o mpe nsa te d c a re (UC) will

b e de fine d

National Association of Public Hospitals and Health Systems 11

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SLIDE 12

National Association of Public Hospitals and Health Systems 12

CMS’ Pr

  • posal
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SLIDE 13

Ove r vie w of CMS’ Pr

  • posal

 Applie s to F

Ys 2014 a nd 2015 o nly

 I

nte nds to re vise me tho do lo g y thro ug h se pa ra te rule ma king fo r c uts in F Y 2016 a nd la te r

 No de ta ils o n time fra me o r pro c e ss fo r

re c o uping a llo tme nt re duc tio n a mo unts

National Association of Public Hospitals and Health Systems 13

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SLIDE 14

CMS’ State d Goals for its Pr

  • pose d Me thodology

 T

  • le sse n the impa c t o n sta te s tha t ha ve

ta rg e te d DSH pa yme nts to ho spita ls tha t ha ve hig h vo lume s o f Me dic a id inpa tie nts a nd to ho spita ls tha t ha ve hig h le ve ls o f UC

 T

  • inc e ntivize sta te s to ta rg e t c urre nt a nd

future DSH pa yme nts to ho spita ls tha t ha ve hig he r vo lume s o f Me dic a id inpa tie nts a nd to ho spita ls tha t ha ve hig he r le ve ls o f UC

National Association of Public Hospitals and Health Systems 14

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SLIDE 15

Ove r vie w of CMS’ Pr

  • posal

 Ste p 1: de te rmine sta te a llo tme nts

witho ut re g a rd to ACA

 Ste p 2: de te rmine a llo tme nt re duc tio n

a mo unt fo r e a c h sta te using DSH he a lth re fo rm me tho do lo g y

 Sta te -spe c ific re duc e d a llo tme nts =

ste p 1 minus ste p 2

National Association of Public Hospitals and Health Systems 15

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SLIDE 16

Pr

  • pose d DSH He alth Re for

m Me thodology

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 16

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 17

T he T hr e e F ac tor s: UPF , HMF , and HUF

 T

he thre e fa c to rs a re g ive n e q ua l we ig ht I .e ., within e a c h g ro up, o ne -third o f the a g g re g a te a llo tme nt re duc tio n a mo unt will b e a llo c a te d a mo ng sta te s using e a c h o f the thre e fa c to rs

 Whe n vie we d a s a who le , the uninsure d

ra te a c c o unts fo r o ne -third a nd ta rg e ting a c c o unts fo r two -thirds o f the to ta l we ig ht

National Association of Public Hospitals and Health Systems 17

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SLIDE 18

T he T hr e e F ac tor s: UPF , HMF , and HUF

UPF

  • b a se d

re d uc tio n a mo unt HMF

  • b a se d

re d uc tio n a mo unt HUF

  • b a se d

re d uc tio n a mo unt

Sta te ’s a llotme nt r e duc tion a mount

National Association of Public Hospitals and Health Systems 18

 E

a c h fa c to r will pro duc e a fa c to r- b a se d a llo tme nt re duc tio n a mo unt fo r a sta te

 T

he sum o f the thre e fa c to r-b a se d a mo unts e q ua ls a sta te ’ s a llo tme nt re duc tio n a mo unt

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SLIDE 19

Ke y T e r ms to Re me mbe r

 L

DF

: lo w-DSH sta te fa c to r

 UPF

: uninsure d pe rc e nta g e fa c to r

 HMF

: hig h vo lume o f Me dic a id inpa tie nts fa c to r

 HUF

: hig h le ve l o f unc o mpe nsa te d c a re fa c to r

 WSF

: wa ive r sta te fa c to r

 MIUR: Me dic a id inpa tie nt utiliza tio n ra te  UC: unc o mpe nsa te d c a re

National Association of Public Hospitals and Health Systems 19

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SLIDE 20

National Association of Public Hospitals and Health Systems 20

DSH He alth Re for m Me thodology in De tail

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SLIDE 21

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

Pr

  • pose d DSH He alth Re for

m Me thodology

Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 21

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 22

T r e atme nt of L

  • w- DSH State s

 Must impo se sma lle r pe rc e nta g e

re duc tio ns o n 17 lo w-DSH sta te s

 Pro po se s to a pply the L

DF to a c c o mplish this ACA re q uire me nt

 E

ffe c tive ly shifts a po rtio n o f the lo w-DSH sta te ’ s pro po rtio na l sha re o f ACA’ s to ta l c uts to the no n-lo w-DSH sta te s

National Association of Public Hospitals and Health Systems 22

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SLIDE 23

How the L

  • w- DSH State F

ac tor Wor ks

 Applic a tio n o f the L

DF pro duc e s a n a g g re g a te a llo tme nt re duc tio n a mo unt fo r the lo w-DSH g ro up a nd the no n-lo w- DSH g ro up

 F

ro m this po int fo rwa rd, the two g ro ups o f sta te s a re ke pt se pa ra te , with sta te s in e a c h g ro up a b so rb ing a po rtio n o f tha t g ro up’ s a g g re g a te a llo tme nt re duc tio n a mo unt

National Association of Public Hospitals and Health Systems 23

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SLIDE 24

Applic ation of the T hr e e F ac tor s

 Within e a c h g ro up, o ne -third o f the

a g g re g a te a llo tme nt re duc tio n a mo unt will b e a llo c a te d a mo ng sta te s using e a c h o f the thre e fa c to rs (UPF , HMF *, a nd HUF *) *WSF

  • nly c o me s into pla y fo r c e rta in

q ua lifying sta te s

National Association of Public Hospitals and Health Systems 24

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SLIDE 25

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

Uninsur e d Pe r c e ntage F ac tor

Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 25

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 26

How the Uninsur e d Pe r c e ntage F ac tor Wor ks

 I

mpo se s la rg e r pe rc e nta g e re duc tio ns

  • n sta te s with the lo we st uninsure d

ra te s

 Use s mo st re c e ntly a va ila b le 1-ye a r

e stima te s fro m ACS

 I

nc lude s undo c ume nte d immig ra nts

National Association of Public Hospitals and Health Systems 26

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SLIDE 27

How the Uninsur e d Pe r c e ntage F ac tor Wor ks

National Association of Public Hospitals and Health Systems 27

Numb e r o f uninsure d in sta te T

  • ta l sta te po pula tio n

Sta te -spe c ific uninsure d va lue = Sta te -spe c ific uninsure d va lue Sum o f a ll sta te uninsure d va lue s in g ro up Sta te -spe c ific uninsure d a llo c a tio n c o mpo ne nt = Sta te ’ s unre duc e d a llo tme nt Sum o f a ll unre duc e d a llo tme nts in g ro up = Allo tme nt-b a se d we ig hting

Uninsur e d Alloc ation Compone nt x Allotme nt- base d we ighting = UPF

F e we r uninsure d = hig he r UPF = g re a te r the sha re o f 1/ 3 o f re duc tio n

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SLIDE 28

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

High Volume of Me dic aid Inpatie nts F ac tor

Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 28

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 29

How the High Volume of Me dic aid Inpatie nts F ac tor Wor ks

 I

mpo se s la rg e r pe rc e nta g e re duc tio ns

  • n sta te s tha t do no t ta rg e t pa yme nts

to ho spita ls with the hig he st vo lume s

  • f Me dic a id inpa tie nts

 Ho spita ls with MI

UR a t le a st o ne sta nda rd de via tio n a b o ve the sta te me a n a re hig h Me dic a id vo lume ho spita ls

National Association of Public Hospitals and Health Systems 29

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SLIDE 30

How the High Volume of Me dic aid Inpatie nts F ac tor Wor ks

National Association of Public Hospitals and Health Systems 30

HMF

= Sta te ’ s DSH pa yme nts to no n-hig h Me dic a id vo lume ho spita ls Sum o f DSH pa yme nts to no n-hig h Me dic a id vo lume ho spita ls fo r a ll sta te s in g ro up L e ss ta rg e te d = hig he r HMF = g re a te r sha re o f 1/ 3 o f re duc tio n

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SLIDE 31

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

High L e ve l of Unc ompe nsate d Car e F ac tor

Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 31

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 32

How the High L e ve l of Unc ompe nsate d Car e F ac tor Wor ks

 I

mpo se s la rg e r pe rc e nta g e re duc tio ns o n sta te tha t do no t ta rg e t DSH pa yme nts a t ho spita ls with the hig he st le ve l o f UC

 De fine s UC to inc lude b o th Me dic a id

sho rtfa lls a nd uninsure d UC c o sts

 Hospitals ≥ average UC level for the state

a re hig h UC ho spita ls

National Association of Public Hospitals and Health Systems 32

UC le ve l = Me dic a id Co sts + Uninsure d Co sts Unc o mpe nsa te d DSH-E lig ib le Co sts

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SLIDE 33

How the High L e ve l of Unc ompe nsate d Car e F ac tor Wor ks

National Association of Public Hospitals and Health Systems 33

HUF

= Sta te ’ s DSH pa yme nts to no n-hig h UC ho spita ls Sum o f DSH pa yme nts to no n-hig h UC ho spita ls fo r a ll sta te s in g ro up L e ss ta rg e te d = hig he r HUF = g re a te r sha re o f 1/ 3 o f re duc tio n

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SLIDE 34

Me dic aid and Uninsur e d Costs

  • v. T
  • tal Costs

Ho spita l A

 T

  • ta l c o sts $20m

 DSH e lig ib le c o sts $11m  UC Co sts $5m

UC le ve l=($5m/ $11m)=45% Ho spita l B

 T

  • ta l Co sts $50m

 DSH e lig ib le c o sts $2m  UC c o sts $1m

UC le ve l=($1m/ $2m)= 50%

National Association of Public Hospitals and Health Systems 34

Me a n UC le ve l fo r sta te : 50%

Hig h UC ho spital No t hig h UC ho spital

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SLIDE 35

L

  • w- DSH Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

Waive r State F ac tor

Non- L

  • w- DSH

Sta te

Uninsure d Pe rc e nta g e F a c to r Hig h Vo lume o f Me dic a id Inpa tie nts F a c to r Hig h L e ve l o f Unc o mpe nsa te d Ca re F a c to r

Allotme nt Re duc tion Amount

National Association of Public Hospitals and Health Systems 35

Wa ive r Sta te F a c to r Wa ive r Sta te F a c to r

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SLIDE 36

How the Waive r State F ac tor Wor ks

 Applie s to a llo tme nt tha t wa s inc lude d in

the b udg e t ne utra lity c a lc ula tio n fo r a se c tio n 1115 c o ve ra g e e xpa nsio n wa ive r a ppro ve d a s o f July 31, 2009

 Qua lifying po rtio n o f a llo tme nt e xc lude d

fro m HMF a nd HUF

 Po rtio n no t use d fo r c o ve ra g e e xpa nsio n

will b e inc lude d in HMF a nd HUF b a se d o n a ve ra g e HMF a nd HUF fo r g ro up

National Association of Public Hospitals and Health Systems 36

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SLIDE 37

How the Waive r State F ac tor Wor ks

 Whic h sta te s?

Sta te s pre limina rily ide ntifie d b y CMS: DC, Ma ine , Ma ss., Wisc o nsin

 Ho w will CMS ide ntify po rtio n no t use d fo r

c o ve ra g e e xpa nsio n?

 Wha t a b o ut c o ve ra g e e xpa nsio n wa ive rs

a ppro ve d a fte r July 31, 2009? I nc lude d in HMF a nd HUF b a se d o n a ve ra g e HMF a nd HUF fo r the g ro up

National Association of Public Hospitals and Health Systems 37

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SLIDE 38

L inge r ing Issue s

 Ho w sta te -le ve l a llo tme nt re duc tio ns

will impa c t pa yme nts to individua l ho spita ls

 Ho w CMS will imple me nt the

a llo tme nt re duc tio ns

 Ho w CMS’ pro po sa l tre a ts DSH

pa yme nts to I MDs

 Ho w CMS pla ns to re c o up re duc tio n

a mo unt a s a n o ve rpa yme nt

National Association of Public Hospitals and Health Systems 38

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SLIDE 39

National Association of Public Hospitals and Health Systems 39

Ne xt Ste ps for Me mbe r s

 Sha re insig ht o n pro po sa l a nd

a lte rna tive s with NAPH

 Atte nd a nnua l c o nfe re nc e se ssio n o n

June 20

 Co mme nts due to CMS o n July 12

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SLIDE 40

Que stions?

 Xia o yi Hua ng

Assista nt Vic e Pre side nt fo r Po lic y (202) 585-0127

xhua ng @ na ph.o rg  Sa ra h Mutinsky

De puty Ge ne ra l Co unse l (202) 567-6202

smutinsky@ e yma nla w.c o m

National Association of Public Hospitals and Health Systems 40