2016 Indiana HFMA Spring Institute Supplemental Payments: Hot Topic for Hospitals and Nursing Facilities
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1 2016 Indiana HFMA Spring Institute Supplemental Payments: Hot Topic for Hospitals and Nursing Facilities Leah Mannweiler, Esq. Meghan Linvill McNab, CPA, Esq. 1
2 SUPPLEMENTAL PAYMENTS HISTORY 2
3 Supplemental Payments and the UPL Upper Payment Limit ( UPL ) for inpatient services provided by Hospitals, NFs, and ICFs/IID. 42 CFR UPL is a reasonable estimate of the amount Medicare will pay for the same or similar service. Supplemental Payments are generally paid as the difference between the UPL and the amount Medicaid has already paid for the services. In addition to regular Medicaid reimbursement 3
4 Supplemental Payments Consist of two (2) portions: 1. Non-Federal Share: Generally paid through an intergovernmental transfer of funds (IGT) by the NSGO entity or via provider tax States can fund up to 60% of non-federal share of Medicaid payments with non-state governmental monies 2. Federal Share: paid by federal government Indiana FY2016 FMAP: 66.6% 4
5 UPL 3 UPL categories State-owned governmental facilities Private facilities Non-state governmental facilities 5
6 UPL - NSG To be considered a NSGO NF and Eligible for NSGO NF UPL: 1. NF must be able to make an IGT payment to the State (either directly or indirectly through a governmental owner or operator or other arrangement); Public entity 2. The governance structure of the NF must demonstrate governmental involvement; and 3. A non-state governmental entity must retain ultimate liability for the NF it operates. Change of Ownership NSGO entity is Operator and Licensee 6
7 INDIANA S NSGO NF SUPPLEMENTAL PAYMENT PROGRAM 7
8 Indiana NSGO NF Supplemental Payment Program Began in 2001 Revisions to HHC Statute and County Hospital Governing Board Statute Authorized under Indiana Medicaid State Plan Originally Proportionate Share Pool Revised in 2012 to Facility-Specific Basis 8
9 Indiana NSGO NF Supplemental Payment Program Meet Federal requirements for NSGO NF, by: IGT: NSGO entity, such as county hospital, becomes owner/operator of NF and makes IGT Governance: County hospital governs the NF, as owner/operator Ultimate Liability: County Hospital becomes licensee and operator of NF through a CHOW License and provider agreements reflect County Hospital, with limited exceptions Management Checklist to Myers & Stauffer 9
10 Indiana NSGO NF Supplemental Payment Program Agreements that support County Hospital Owner/Operator Status and Ultimate Liability: Lease Agreement Intangible Property License Agreement Management Agreement Other 10
11 Amount of Supplemental Payment Participating NSGO NF receives a supplemental payment in an amount equal to the difference between the Medicaid rate and approximate Medicare equivalent rate. 11
12 Growth of Indiana s Program As of January 2016, 413 of the 475 Indiana Medicaid Certified Nursing Facilities are participating. Participating Indiana County Hospitals, include: Adams Columbus Daviess Dearborn Decatur Floyd Good Samaritan Greene Hancock Hendricks Henry HHC Jackson Jasper Johnson Logansport Major Perry Pulaski Putnam Riverview Rush Witham Woodlawn 12
13 Growth of Indiana s Program County Hospitals acquiring NFs from other Hospitals already in the Program M&S SFY 2015 NSGNF Payment Amounts Total UPL Distribution, Net of Provider IGT for all participating facilities: $278,253,248 (based on 428 NFs) PER MD DAY: $
14 Recent Changes to Indiana s Program Funds Flow Requirements 6/2/15: OMPP notified NSGO NFs that M&S would be conducting additional compliance review procedures to ensure compliance with Supplemental Payment agreements. 9/3/15: Memo from OMPP setting forth Supplemental Payment Use Requirements. 10/16/15: OMPP amended 9/3/15 memo, based on comments/questions. 1/7/15: M&S responded to IHCA s four questions regarding the Requirements. 1/12/15: M&S issued a FAQ responding to 17 questions from various sources. 14
15 Recent Changes to Indiana s Program Funds Flow Requirements Key Requirements: Supplemental Payments deposited into operating account(s) accessible to NSGO NF for allowable operating expenses until end of FY in which payment received. NF must: Have access to 100% of the supplemental payment funds (even the portion related to the IGT); Be the owner of each operating account; Have signatory authority of the account; and Be ultimately responsible for the maintenance of operating accounts. Non-operating expenses: non-patient care related capital expenditures, dividend distributions, loans, bonus payments, transfers to mgmt companies or other parties other than mgmt fees for operation of NF, or other non-operating purposes. Supplemental Payment Funds can t be used for intangible royalty fees Issue of allowable under the rate setting regulations NO IGT Recycling during FY. 15
16 Recent Changes to Indiana s Program Funds Flow Requirements Source of Requirements: At the Program s inception, OMPP and CMS agreed that the supplemental payments would not be made to a general (non-nf) operating account of the hospital, and that the payments would be used to pay the operating expenses of that NF. Also agreed that supplemental payments would not be transferred to general account until year end, Current IGT/Supplemental Payment Agreement requires payment to be deposited into operating accounts of each NSGO s NF, and retained in those accounts for purpose of paying the NF s operating expenses, until the close of the NSGO NF s current fiscal year. OMPP/M&S expanded upon these underlying requirements in the additional requirements What Happens if a County Hospital/NSGO NF doesn t comply? Terminated from NSGO NF Program? Recoup prior supplemental payments paid during non-compliant period? Key Takeaway Talk with your accountant and lawyer to make sure your agreements and practices comply with the requirements. 16
17 Recent Changes to Indiana s Program 5-8 Year Plan In 2015, FSSA approached trade associations with goal of rebalancing LTSS spending to achieve 55% institutional/45% HCBS balance by FFY Trade Associations are working with FSSA to set forth a proposal to help FSSA accomplish this goal. Proposal is likely to include various moving pieces, such as: Postponing moving LTSS into managed care Adding a quality component to the NSGO NF Supplemental Payment Program Nursing Facility Closure Incentive Bed moratorium Etc. 17
18 OTHER STATES NSGO NF SUPPLEMENTAL PAYMENT PROGRAM 18
19 Other States Texas (moving into managed care) Utah Georgia Louisiana (pending) Virginia (moving into managed care) 19
20 FUTURE OF SUPPLEMENTAL PAYMENT PROGRAMS 20
21 Movement to Managed Care Many States are moving LTSS into managed care. Supplemental payment programs can continue within managed care programs. More hoops to jump through. 21
22 Proposed Medicaid Managed Care Rule 80 Fed. Reg (June 1, 2015) Seeks to revise current language regarding payments made outside the capitated rate and directed payments, by adding ways that a state may set parameters on how expenditures under the contract are made by the MCO, such as through value-based purchasing, performance improvement initiatives, and minimum fee schedules or uniform fee increases. 22
23 Proposed Medicaid Managed Care Rule Adds requirements for States that elect to Direct Payments: 1. Based on the utilization and delivery of services; 2. Directs expenditures equally, and using the same terms of performance, for all public and private providers providing the service under the contract; 3. Expects to advance at least one of the goals and objectives in the comprehensive quality strategy proposed in ; 4. Evaluation plan that measures the degree to which the arrangement advances at least one of the goals and objectives in the comprehensive quality strategy; 5. Does not condition provider participation on IGTs; 6. Not renewed automatically; 7. Make participation in the initiative available, using the same terms of performance, to all public and private providers providing services under the contract related to the reform or improvement initiative; and 8. Common set of performance measures across all of the payers and providers. 23
24 Proposed Medicaid Managed Care Rule If finalized, as proposed, would allow Supplemental Payments to continue under Medicaid Managed Care, but would require additional assurances and elements not currently incorporated into many states programs. Substantial number of comments received from stakeholders and interested parties. CMS has to review and consider all the comments received, which has delayed finalization. Expected to be finalized by Summer
25 Future Supplemental Payment Rule In 2015, OMB published notification that CMS would be releasing a separate proposed rule regarding supplemental payments: 1. Require all supplemental payments be distributed proportional to the volume or cost of services delivered or be tied to meeting performance benchmarks; 2. Place a time limit on all supplemental payments; and 3. Require States to report additional details regarding supplemental payments when submitting claims of State Medicaid expenditures for Federal financial participation to provide a consistent and comprehensive data source by which the benefit or the value added to the Medicaid program can be assessed. Rule delayed a year, but expected in Summer
26 THANK YOU! Leah Mannweiler, Esq. Partner One Indiana Square Indianapolis, Indiana Meghan Linvill McNab, CPA, Esq. Associate One Indiana Square Indianapolis, Indiana
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