Factors Affecting the Development of Medicaid Hospital Payment Policies

Transcription

1 Factors Affecting the Development of Medicaid Hospital Payment Policies Medicaid and CHIP Payment and Access Commission Robert Nelb September 24, Overview Background MACPAC Medicaid hospital payments Methodology Key findings September 24,

2 MACPAC Overview Non-partisan legislative branch agency Provide analyses and advice to Congress and HHS on Medicaid and CHIP policy issues Report annually on March 15 and June 15 Provide technical assistance to Congress Serve as an information resource to the broader health policy community 17 commissioners appointed by GAO Meet 6 8 times per year in public Permanent staff based in DC September 24, Topics in Authorizing Statute Section 1900 of the Social Security Act specifies topics for MACPAC review, including: Payment (including factors affecting spending) Eligibility Enrollment and retention Benefits Quality of care Interaction with the health system generally Interaction with Medicare Other access policies (e.g., enabling services and long-term services and supports) September 24,

3 Annual DSH Report MACPAC must report annually on DSH allotments and their relationship to three factors: changes in the number of uninsured individuals the amount and sources of hospitals uncompensated care costs (broadly defined) hospitals with high levels of uncompensated care that also provide essential community services These data are included in MACPAC s March report to Congress September 24, Prior DSH Findings MACPAC found little meaningful relationship between current DSH allotments and measures meant to identify those hospitals most in need The Commission concluded that DSH payments should be better targeted to the states and hospitals that both: serve a disproportionate share of Medicaid and lowincome patients, and have disproportionate levels of uncompensated care September 24,

4 Hospital Payment Work Plan MACPAC is undertaking an analysis of Medicaid hospital payment policy that broadly considers all types of Medicaid payments to hospitals Analysis focuses on: Payment methods Payment amounts Outcomes related to payments Goal is to ensure that payment policies are consistent with efficiency, economy, quality, and access September 24, Base and Supplemental Payments as a Share of Total Payments to Hospitals, FY 2016 Notes: FY is fiscal year. DSH is disproportionate share hospital. UPL is upper payment limit. DSRIP is delivery system reform incentive payment. GME is graduate medical education. DSRIP and uncompensated care pool payments must be authorized under Section 1115 waivers. Managed care payments to hospitals are estimated based on total managed care spending reported by states. Totals do not sum due to rounding. Source: MACPAC, 2018, analysis of CMS-64 net expenditure data. September 24,

5 Managed Care Hospital Payments MCOs often have the flexibility to pay hospitals using different rates and methods than FFS States cannot make UPL payments for services provided in managed care, but can require MCOs to make directed payments to particular providers The 2016 managed care rule issued specific guidelines for directed payments States must phase-out pass-through payments that do not comply with the new rules September 24, Hospital Payment Interviews September 24,

6 Policy Questions What are the factors that affect the structure and mix of base payments and supplemental payments? How have state financing methods and state payment policy choices affected each other? Why do states target payments to particular types of hospitals, and how do they determine which hospitals to target? How do fee-for-service (FFS) payments policies affect managed care payments to hospitals? What are the drivers and barriers to changing hospital payment methods? How are states planning to change hospital payment policies in the future? September 24, Methodology Structured interviews with agency officials, hospital, and managed care representatives in five states: Arizona Louisiana Michigan Mississippi Virginia States selected to reflect different approaches to payment and financing; focus on those with recent changes to hospital payment policies Also interviewed national experts and staff from the Centers for Medicare & Medicaid Services (CMS) September 24,

7 Payments as a Share of Total Medicaid Payments to Hospitals in Study States, FY 2016 Type of payment Arizona Louisian a Michigan Mississippi Virgini a FFS base 19% 7% 10% 15% 26% Managed care base 63% 34% 40% 40% 52% Subtotal base 82% 41% 50% 56% 78% DSH 5% 41% 7% 13% 9% UPL 4% 3% 13% 0% 0% GME 8% 2% 3% 0% 13% Managed care supplemental 1% 12% 27% 31% 0% Subtotal 18% 59% 50% 45% 22% Notes: FY is fiscal year. FFS is fee-for-service. DSH is disproportionate share hospital. UPL is upper payment limit. GME is graduate supplemental medical education. Managed care supplemental payments include directed payments and passthrough payments. Arizona, Louisiana, and Virginia have made or are planning to make policy changes that will affect the distribution of base and supplemental payments in future years. Totals do not sum due to rounding Source: HMA and MACPAC analysis of FY 2016 financial management reports submitted by the states to CMS, schedules prepared by the state s Medicaid agency, and other publicly available information. September 24, Payments as a Share of Total Medicaid Payments to Hospitals in Study States, FY 2016 Type of payment Arizona Louisian a Michigan Mississippi Virgini a FFS base 19% 7% 10% 15% 26% Managed care base 63% 34% 40% 40% 52% Subtotal base 82% 41% 50% 56% 78% DSH 5% 41% 7% 13% 9% UPL 4% 3% 13% 0% 0% GME 8% 2% 3% 0% 13% Managed care supplemental 1% 12% 27% 31% 0% Subtotal 18% 59% 50% 45% 22% Notes: FY is fiscal year. FFS is fee-for-service. DSH is disproportionate share hospital. UPL is upper payment limit. GME is graduate supplemental medical education. Managed care supplemental payments include directed payments and passthrough payments. Arizona, Louisiana, and Virginia have made or are planning to make policy changes that will affect the distribution of base and supplemental payments in future years. Totals do not sum due to rounding Source: HMA and MACPAC analysis of FY 2016 financial management reports submitted by the states to CMS, schedules prepared by the state s Medicaid agency, and other publicly available information. September 24,

8 Payments as a Share of Total Medicaid Payments to Hospitals in Study States, FY 2016 Type of payment Arizona Louisian a Michigan Mississippi Virgini a FFS base 19% 7% 10% 15% 26% Managed care base 63% 34% 40% 40% 52% Subtotal base 82% 41% 50% 56% 78% DSH 5% 41% 7% 13% 9% UPL 4% 3% 13% 0% 0% GME 8% 2% 3% 0% 13% Managed care supplemental 1% 12% 27% 31% 0% Subtotal 18% 59% 50% 45% 22% Notes: FY is fiscal year. FFS is fee-for-service. DSH is disproportionate share hospital. UPL is upper payment limit. GME is graduate supplemental medical education. Managed care supplemental payments include directed payments and passthrough payments. Arizona, Louisiana, and Virginia have made or are planning to make policy changes that will affect the distribution of base and supplemental payments in future years. Totals do not sum due to rounding Source: HMA and MACPAC analysis of FY 2016 financial management reports submitted by the states to CMS, schedules prepared by the state s Medicaid agency, and other publicly available information. September 13, Payments as a Share of Total Medicaid Payments to Hospitals in Study States, FY 2016 Type of payment Arizona Louisian a Michigan Mississippi Virgini a FFS base 19% 7% 10% 15% 26% Managed care base 63% 34% 40% 40% 52% Subtotal base 82% 41% 50% 56% 78% DSH 5% 41% 7% 13% 9% UPL 4% 3% 13% 0% 0% GME 8% 2% 3% 0% 13% Managed care supplemental 1% 12% 27% 31% 0% Subtotal 18% 59% 50% 45% 22% Notes: FY is fiscal year. FFS is fee-for-service. DSH is disproportionate share hospital. UPL is upper payment limit. GME is graduate supplemental medical education. Managed care supplemental payments include directed payments and passthrough payments. Arizona, Louisiana, and Virginia have made or are planning to make policy changes that will affect the distribution of base and supplemental payments in future years. Totals do not sum due to rounding Source: HMA and MACPAC analysis of FY 2016 financial management reports submitted by the states to CMS, schedules prepared by the state s Medicaid agency, and other publicly available information. September 13,

9 Payments as a Share of Total Medicaid Payments to Hospitals in Study States, FY 2016 Type of payment Arizona Louisian a Michigan Mississippi Virgini a FFS base 19% 7% 10% 15% 26% Managed care base 63% 34% 40% 40% 52% Subtotal base 82% 41% 50% 56% 78% DSH 5% 41% 7% 13% 9% UPL 4% 3% 13% 0% 0% GME 8% 2% 3% 0% 13% Managed care supplemental 1% 12% 27% 31% 0% Subtotal 18% 59% 50% 45% 22% Notes: FY is fiscal year. FFS is fee-for-service. DSH is disproportionate share hospital. UPL is upper payment limit. GME is graduate supplemental medical education. Managed care supplemental payments include directed payments and passthrough payments. Arizona, Louisiana, and Virginia have made or are planning to make policy changes that will affect the distribution of base and supplemental payments in future years. Totals do not sum due to rounding Source: HMA and MACPAC analysis of FY 2016 financial management reports submitted by the states to CMS, schedules prepared by the state s Medicaid agency, and other publicly available information. September 13, Key Findings The availability of financing for the non-federal share of Medicaid payments has affected states use of base and supplemental payments The use of Medicaid managed care has not substantially affected Medicaid payments to hospitals The adoption of prospective payment systems and value-based payment models is slow September 24,

10 Overall Mix of Base and Supplemental Payments September 24, Supplemental Payments and Sources of Non-Federal Share In study states, we observed a common narrative that explained the growth of supplemental payments States reported challenges increasing base rates with state general funds States have increased the use of provider-based financing When using provider financing, states and providers preferred supplemental payments rather than increases in base payments September 24,

11 Effects of Medicaid Expansion on Payment Methods Medicaid expansion decisions affected states use of provider financing and supplemental payments in study states Virginia is adding a new provider assessment to finance expansion and new supplemental payments Provider assessments in some expansion states will increase as the federal matching rate declines in the future September 24, Effects of DSH Reductions Louisiana is planning to convert DSH payments for Medicaid shortfall into base payment rate increases Other study states are not currently planning to make changes in response to DSH reductions September 24,

12 Payment Adequacy Widespread perception that Medicaid hospital payments are low Study states do not routinely measure payment adequacy States and CMS have different views about whether to assess adequacy based on gross or net payments Study states did not report widespread concerns about access to hospital care for Medicaid enrollees September 24, Managed Care Payments September 24,

13 Managed Care Base Payments In study states, MCOs used FFS methods and rates for most base payments to hospitals because: Capitation rates were initially developed based on FFS rates Some states required the use of FFS rates as a rate floor for non-contracted providers Developing different payment models was too complex September 24, Managed Care Directed Payments All study states made or were planning to make directed payments to hospitals States were able to convert prior pass-through payments to directed payments that comply with the new rules The total payment amounts did not change Some changes in the distribution of payments among hospitals States were uncertain about how directed payments may change in the future September 24,

14 Base Payment Methods September 24, Prospective Payment Systems Three of our study states recently converted their inpatient payment methods from per diem to DRGs Adoption has been slow due to: Resistance from hospitals Operational and administrative costs involved in making changes September 24,

15 Policy Adjustments States using common DRG methods applied different adjustments to support particular types of hospitals or services Rural hospitals Hospitals that serve a high share of Medicaid patients Neonatal/ obstetric services Behavioral health Unlike supplemental payments, policy adjustments did not appear to be related to the source of non-federal share September 24, Value-Based Payments Value-based payment models for hospital services were used sparingly in the states we studied Barriers to adopting value-based payments include: Low base payments relative to hospital costs make hospitals reluctant to put Medicaid payments at risk Lack of agreement on the measures to use and hospitals ability to influence these measures Administrative challenges associated with establishing and managing value-based payments Some states plan are adding value-based payment targets for managed care plans September 24,

16 Future MACPAC Work September 24, Analyses Underway Findings provide context for ongoing work on hospital payment work plan In year ahead, MACPAC will focus on: DSH UPL compliance September 24,

17 Context for DSH work Congress appears unlikely to further delay DSH allotment reductions A recent court ruling changed the DSH definition of Medicaid shortfall, which could result in a redistribution of funding within states September 24, DSH Policy Options Changes to the schedule of allotment reductions Changes to the distribution of allotments among states Policies to promote better targeting of DSH payments within states September 24,

18 UPL Oversight Concerns States are required to demonstrate compliance with UPL requirements annually When we reviewed state UPL demonstrations, we found that many payments were missing Actual payments appear to have exceeded the UPL in several states September 24, UPL Policy Options Monitor actual UPL supplemental payment spending relative to the UPL gap calculated by states Review compliance with UPL requirements retrospectively using actual payment data Calculate the UPL based on current Medicare payment methods September 24,

19 Ways to Provide Feedback and Input on MACPAC Work September 24, Providing Feedback, Input Attend meetings Access meeting presentations and transcripts online ( Provide public comment on specific issues in person at meetings or in writing Share data, experiences, concerns Request in-person meeting with MACPAC staff September 24,

20 Additional Resources Homepage for MACPAC work on provider payment State Medicaid payment policies for inpatient hospital services (August 2018) Medicaid base and supplemental payments to hospitals (June 2018) Annual analysis of DSH allotments to states (March 2018) September 24, Factors Affecting the Development of Medicaid Hospital Payment Policies Medicaid and CHIP Payment and Access Commission Robert Nelb September 24,