Major DSH Changes Under PPACA

Transcription

1 Affordable Care Act Changes to Medicare DSH: Now That CMS s Proposal Is Here, What Does it Say? Dennis Barry Mark Polston Gregory Etzel 1 Major DSH Changes Under PPACA Section 3133 of the Patient Protection and Affordable Care Act (PPACA), as amended by and 1104 of the Health Care and Education Reconciliation Act splits the Medicare DSH payment into two components: Empirically justified Medicare DSH payment 25% of historical amount Uncompensated care payment Designed as part of a give and take for hospitals Reduced DSH funding in exchange for the increased numbers of insured patients driven by other provisions of PPACA 2

2 Hospitals Affected PPACA changes affects all subsection (d) hospitals Includes Puerto Rico subsection (d) hospitals, and hospitals participating in bundled payments initiative Excludes Maryland hospitals operating under section 1814(b) waiver Special rules proposed for sole community hospitals uncompensated care payments would not be used to determine whether SCH is paid based on federal rate or hospital specific amount 3 Empirically Justified Medicare DSH Payment This represents the portion of DSH that qualified hospitals have traditionally received Reduces the DSH amount calculated to 25% of the amount that would otherwise be made under the statute Calculation methodology would be the same Continuation of current DSH program at one-fourth the amount 4

3 Empirically Justified Medicare DSH Payment Intermediaries will adjust interim payments to 25% of DSH that would otherwise be paid Cost report changes to reflect the appropriate DSH amount at settlement No operational changes for these payments 5 Empirically Justified Medicare DSH Payment Statutory and regulatory issues relating to the DSH payment (e.g., Part C Days, Dual Eligible Days) remain the same Ability to seek review of CMS policies remains intact Potential echo effect on uncompensated care payment 6

4 Uncompensated Care Payments The product of 3 factors: (1) Estimate of the 75% of DSH that otherwise would have been paid (2) The estimate of the reduction in uninsured individuals under 65 compared to FY2013 (3) Each hospital s estimate of uncompensated care costs relative to the sum of all hospitals estimated uncompensated care costs 7 Uncompensated Care Payments Qualification Limited only to hospitals that qualify for empirically justified Medicare DSH Payments Must be a Medicare DSH Hospital to receive the payments Interim eligibility determinations based on DSH estimates CMS estimates 2,349 hospitals will be eligible in FY 2014 list will be updated in Final Rule data source: Dec update of the Provider Specific File Cost report reconciliation of eligibility hospitals could potentially lose or gain eligibility at settlement 8

5 FACTOR 1 Section 1886(r)(2)(A): The difference between (i) the aggregate amount of payments that would be made to subsection (d) hospitals under subsection (d)(5)(f) if subsection (r) did not apply for such fiscal year (as estimated by the Secretary) i.e., the total amount that would have been paid out in DSH payments but for PPACA and (ii) the aggregate amount of payments that are made to hospitals under paragraph (1) of subsection (r) for such fiscal year (as so estimated) i.e., the 25% of DSH that is still paid 9 FACTOR 1 Both amounts used to calculate Factor 1 are estimates of DSH payments NOT actual payments Estimates made prior to each year for which the provision applies No reconciliation Based on the most recently available projections for FY2014 and each subsequent year as calculated by the Office of the Actuary These estimates are based on the most recently filed cost reports with Medicare DSH payment information Potential for baked-in policy errors 10

6 FACTOR 1 The Numbers for FY2014 Office of the Actuary estimate for FY $ billion This is total estimated DSH payment without application of PPACA changes 25% of aggregate DSH = $3.084 billion FY2014 Factor 1 = $ billion No update to this amount based on actual DSH payment experience for FY FACTOR 2 Section 1886(r)(2)(B)(i) For FY , a factor equal to 1 minus the percentage change in the percent of individuals under the age of 65 who are uninsured, as determined by comparing (1) the percent of individuals uninsured in 2013 And (2) the percent of individuals uninsured in the most recent period for which data is available This amount is reduced by 0.1 percentage points for FY2014 and 0.2 percentage points for FY

7 Factor 2 Estimate of 2013 uninsured Based on the most recent estimates available from the Director of the CBO before a vote in either House on the Health Care and Education Reconciliation Act of 2010 CMS identified a March 20, 2010 CBO letter doc11379/amendreconprop.pdf Two estimates: Insured share of the nonelderly population including all residents (82 percent) Estimate proposed for use by CMS Insured share of the nonelderly population excluding unauthorized immigrants (83 percent) 13 Factor 2 Comparison estimate of uninsured for most recent period CMS proposing to use CBO estimates for this amount Consistent data source CBO s February 5, 2013 Budget and Economic Outlook Using the same insured share of the nonelderly population including all residents for FY2014 (84 percent) 14

8 Factor 2 FY2014 Factor 2 The Numbers: Percent of individuals without insurance for FY % (i.e., the inverse of the 82 % insured statistic from CBO) Percent of individuals without insurance for FY %.001 reduction Factor 2 = [( )/0.18] = = Factor 3 Section 1886(r)(2)(C): A factor equal to the percent, for each subsection (d) hospital, that represents the quotient of (i) the amount of uncompensated care for such hospital for a period selected by the Secretary (as estimated by the Secretary, based on appropriate data and (ii) the aggregate amount of uncompensated care for all section (d) hospitals that receive a payment under this subsection 16

9 Factor 3 Estimating the amount of uncompensated care Key issue Multiple proposals considered Worksheet S-10 may be the data collection tool of the future Relative newness raised concerns regarding consistency and completeness of hospital reporting for current uncompensated care estimates Proxy method proposed for FY2014 instead 17 Factor 3: Future Reliance on Worksheet S-10? CMS considered, but did not propose: to define uncompensated care as cost of charity care the cost of care for patients that meet hospitals individual criteria net any partial payment received from the patient bad debt non-medicare (patient financially able but unwilling to pay) non-reimbursed Medicare bad debt but not Medicaid shortfall to use line 23 of S-10 to identify charity costs; and to use line 29 of S-10 to identify cost of bad debt 18

10 Uncompensated Care Proxy Use of a proxy for FY2014 Data on utilization for insured low income patients can be a reasonable proxy for the treatment costs of uninsured patients. Low income patient utilization data currently available through the SSI Ratio and Medicaid Fraction of the empirically justified DSH payment 19 Uncompensated Care Proxy FY2014 Proxy: Inpatient days of Medicaid patients plus Inpatient days of Medicare-SSI patients A combination of the numerators of the current DSH fraction Utilization used as a substitute for input costs with no case mix adjustment 20

11 Uncompensated Care Proxy Estimated based on each hospital s (and aggregate hospitals ) most recently available data For FY2014: FY2010/2011 cost reports for Medicaid days FY2011 SSI ratios for Medicare-SSI days No reconciliation to actual for Factor 3 determination proposed CMS has invited comments as to whether to include Factor 3 within the reconciliation process 21 Limitations on Review Section 1886(r)(3) There shall be no administrative or judicial review under section 1869, section 1878, or otherwise of the following: (A) Any estimate of the Secretary for purposes of determining the factors described in paragraph (2) [i.e., Factors 1-3]. (B) Any period selected by the Secretary for such purposes. 22

12 Limitations on Review Enhanced importance of the rulemaking comment period Concerns based on the litigious history of the DSH adjustment CMS policy changes over the years have created significant impact on DSH payment amounts e.g., Definition of what constitutes a patient who is eligible for Medicaid or entitled to Part A Historically corrected through litigation No check on the agency s power to establish nearly ¾ of the current DSH payment 23 Other Issues Raised by PPACA Implementation Future reliance on Worksheet S-10 Data Special attention to issues associated with reporting Impact on Medicare Advantage payments 24

13 S-10 Reporting Issues for care delivered during this cost reporting period for the entire facility --see lines 26 & 27 which refers to entire hospital complex coinsurance and deductibles are included on line 20 and then reduced by cost to charge ratio enter payments received or expected with respect to amounts on line 20 bad debts for services furnished during period 25 MA Plans--Treatment of Uncompensated Care Payments Payment is based on contract language--cms will maintain neutrality on whether the uncompensated care payment is part of DSH 26

14 If MA Contract Includes Payment for DSH Is the uncompensated care payment a DSH payment Section 3133 of ACA is titled Improvement to Medicare Disproportionate (DSH) Payments CMS s regulation including uncompensated care payments is part of DSH regulation Only DSH qualified hospitals can receive these payments 27 Practical Problem with MA Payments DSH uncompensated care payments will not be included in the Pricer, but will instead make a biweekly payment do not vary with volume of claims or case mix Plans pay Medicare rates based on software populated with data from the Medicare pricer Most MA plans do not routinely make payments on other than a claims basis 28

15 Relevance of Inclusion or Exclusion from the Pricer MA contracts do not usually expressly refer to the Pricer even if that is the source of the Medicare rate information The sequester also is not in the Pricer, and some providers have argued that is one reason that MA plans may not avail themselves of the 2% sequester reduction DSH uncompensated care issue and sequester issue are not identical, but to the extent that the Pricer is relevant, neither the sequester nor the DSH uncompensated care payment is in the Pricer 29 Questions 30