Hooper, Lundy & Bookman, Inc. John R. Hellow

Transcription

1 John R. Hellow Hooper, Lundy and Bookman, P.C. The statements and opinions contained herein represent only the views of John R. Hellow 1 2 1

2 I. Budget Control Act of 2011(BCA) II. American Taxpayer Relief Act (ATRA) of 2012 III. Patient Protection & Accountable Care Act of ( ACA ), enacted arch 23, 2010 IV. Health Care & Education Reconciliation Act of 2010 (HCERA) (ACA fix legislation) V. FY 2014 IPPS Final Rule 3 4 A. arket Basket 1. Latest arket Basket Updates can be found on CS Website at rketbasketdata.asp#topofpage 2. CS rebases the market basket and labor share every four years; Last rebased for FY FY 2014 Final Rule Used an Update of 2.5% 2

3 B. ACA arket Basket Adj. IPPS FYs Fiscal Year arket Basket - Adjustment % % % % % % % % Similar if not identical market basket adjustments apply beginning in FY 2012 and thereafter for long term care hospitals, inpatient rehabilitation facilities, psychiatric hospitals and outpatient hospital services. There is no cut to the overall SNF market basket. 6 J C. Productivity Adjustment 1. Applies Beginning in FY 2012, year moving average of changes in annual nonfarm productivity, as determined by the Secretary, 3. Negative adjustment of 1% for FY 2012 and has been decreasing to.3% in FY 2014, 4. Can result in a market basket increase of less than zero, 5. Payments in a current year may be less than the prior year, and 6. Applies to other provider types. 3

4 7 D D. Documentation and Coding Adjustments 1. Section 7(b)(1)(A) of Pub. L a. ake an adjustment to the average standardized amounts in order to eliminate the full effect of the documentation and coding changes on future payments. b. Does not specify when CS must apply the prospective adjustment, but merely requires CS to make an appropriate adjustment. c. Full Adjustment completed in FY 2013, though phase-in resulted in unrecoverable overpayments in FYs 2010,2011, and Section 7(b)(1)(B) of Pub. L a. Requires CS to make an adjustment in FYs 2010, 2011, and/or 2012 for overpayments maid in FYs 2008 and b. Determined a total recoupment of -5.8 percentage points. Adjustment completed in FY ATRA Imposes an aggregate $11 billion recoupment of asserted coding overpayments in FYs a. Recoupment to take place over 4 years, FYs , b. Secretary has discretion on timing and level of the recoupment over the period as it totals $11 billion. She has chosen a level escalation of 0.8% per year in reductions to achieve the $11 billion. a. edpac indicates hospitals need a 3.25% net increase in IPPS payments for FY 2015, before sequestration. a. edpac projects edicare margins for hospitals of -6% in FFY 2014, rising to -8% with sequestration. 8 D 4. FY 2010 prospective adjustment. (-0.8 adj. proposed for FY 2013, not finalized in FY 2014). What will CS do in FY 2015 in light of the above? 4

5 FY 2015 QD + EHR QD EHR EHR QD - QD EHR arket Basket Rate-of-Increase 2.7% 2.7% 2.7% 2.7% Adjustment for Failure to Quality Data under Section 1886(b)(3)(B)(viii) of the Act Adjustment Failure to be a eaningful EHR User under Section 1886(b)(3)(B)(ix) of the Act Applicable Percentage Increase Applied to Standardized Amount % 2.025% 2.025% 1.35% 9 10 D J 1. Effective October 1, Stays less than two midnights is generally considered appropriate for an outpatient stay 3. Greater than two midnights is generally considered appropriate for an inpatient stay 4. Permanent adjustment made to Standardized Amount 5. Guidance: for-service-payment/acuteinpatientpps/downloads/ip- Certification-and-Order pdf 5

6 FY 2014 Final IPPS Rule Est (CBO) Est (CBO) arket Basket 2.5% 2.7% 3.0% ACA Reductions arket Basket -0.3% -0.2% -0.2% Productivity -0.3% -0.4% -0.6% Subtotal 1.9% 2.2% 2.2% S-DRG DCI Adjustments Prospective Reduction for 2010? NA ATRA Reduction (additive) -0.8% -0.8% -0.8% TWO-IDNIGHT ADJUSTENT -0.2%?? 11 J SEQUESTER -2.0% Continues Continues Net Update -1.1% -0.7% -0.6% 12 D Prior to FY 2014, the cost data from edicare cost reports that were used to calculate the relative weights were grouped into 15 CCRs. Charge compression is most prevalent in CCRs for Supplies and Equipment, Radiology, and Cardiology. Effective for FY 2015, CS expanded to 19 CCRs. The following cost centers have been added to the cost report and CS now considers these in calculating the S-DRGs: Supplies and Equipment = 1 CCR for Low Cost Supplies and 1 CCR for Implantable Devices Radiology = 1 CCR for general Radiology, 1 CCR for RIs, 1 CCR for CT Scans Cardiology = 1 CCR for general Cardiology, 1 CCR for Cardiac Catheterization 6

7 Implementation of ACA 3133 Statute appears as new 42 U.S.C. 1395ww(r) CS adds new 42 C.F.R (f)-(h) effective with discharges on and after 10/1/13 13 J Affected Hospitals o 2440 Hospitals, including Puerto Rico o Excluding aryland and CAHs o Sole Community Hospitals consider all DSH when assessing eligibility for a hospital specific rate Purpose - Reduce traditional DSH payments by 75% and redistribute portion of 75% pool to reflect relative hospital cost of uncompensated care. o $500 million savings in year 1, o 0.4% IPPS Operating Payments Reduction 14 J Payments from pool subject to Three Factors: One Determine pool at 75% of estimated traditional DSH, Two Reduce pool by improvement in insured rates Three Distribute pool based on ratio of an individual hospital s edicaid and SSI days to all DSH hospitals edicaid and SSI days. 7

8 15 Determined by the Office of the Actuary, The aggregate amount of DSH payments that would be made to all hospitals, minus The amount paid on account of subsection 1395ww(r)(1), 25% of empirically justified DSH payments The amount before adjustment in Factor Two and allocation in Factor Three for FFY 2014 is $9.593 billion, 78 F.R. at For FFYs , the pool of funds is multiplied by 1 minus The percentage change in the uninsured under age 65, between 2013 (as determined by Secretary based on arch 2010 estimates from CBO), which was 18 % and The current year uninsured rate (also from CBO, but normalized by CS in a change from the proposed rule),which is 17% inus.1 percent for 2014 and.2 percent for ; For FFY 2014 that formula results in a factor applied to the pool of 94.3%. For FFY 2014 that results in a distributable pool of $9.046 billion. 78 F.R. at

9 B and After the pool of funds is multiplied by 1 minus 1. The percentage change in the uninsured between 2013 (as determined by Secretary and certified by the actuary), and 2. The current year uninsured rate (as determined above), and 3. inus.2 percent for 2018 and thereafter C. Issues With the Calculation FYs CS tied to CBO s 2010 estimate for That estimate was 82% non-elderly uninsured vs. 80% in 2013 est. CBO estimates that coverage expansion in 2014 and 2015 will lag prior estimates by 25% (FY 2014 est %, FY 2015 est %) CS determined to normalize the current CBO projection done on a calendar year basis to reflect the federal fiscal year beginning three months prior to the 2014 CS estimate. 9

10 2. FYs 2018 and thereafter Estimates now include all age groups including 65+ Do not require reliance on CBO data What data sources will CS use to capture this information? 19 Need to insure undocumented aliens are adequately covered in the data. Based on February 2014 CBO Report on the Effects of the Affordable Care Act on Health Insurance Coverage As of FFY Prior Calendar Year onths in FFY Uninsured Percentage per ay 13 and February 2014 CBO 20% 16% 14% 11% Report Calendar Year Beginning in FFY onths in FFY Uninsured Percentage per ay 13 and February 2014 CBO 16% 14% 11% 11% Report Uninsured Percentage for FFY 17% 15% 12% 11% Uninsured Percentage per CBO Report Prior to ACA passage 18% 18% 18% 18% % Reduction in Uninsured -5.56% % % % Additional Adjustment -0.10% -0.20% -0.20% -0.20% % Reduction in Pool -5.66% % % % Estimated Factor % 83.1% 66.5% 60.9% Note: Calculation based on methodology described in the Final 2014 IPPS Regulation 10

11 21 Under FFY 2014 Final Rule distribution of the fund each year is made by establishing a quotient for each DSH eligible hospital that equals Hospital prior period edicaid and SSI days edicaid data from W/S S-2 in the arch 2013 update of the Provider Specific File FY 2011 SSI ratios Total edicaid and SSI days for all DSH eligible hospitals using aggregated same data Secretary has elected to use alternate data that is a better proxy than cost of treating the uninsured from existing W/S S-10 data. B. Application Issues Prior Year Data DSH Eligible 1. Interim payments are calculated per discharge based on three year rolling avg. Discharges applied to fixed predetermined payment for DSH eligible hospitals to derive amount 1. Interim payments reconciled to predetermined payment DSH eligibility will be finally determined based on cost report reconciliation, either keep or lose predetermined amount. But no changes to amount. 11

12 23 24 C. Prior Data Indicates Not DSH Eligible 1. Prior period data indicates not DSH eligible 2. Numerator for payment of uncompensated care still calculated, 3. No interim payments 4. No payments unless current year cost report reconciliation establishes DSH eligibility 5. If DSH eligible, lump sum payment calculated when cost report settled. 12

13 D. New Provider or erged Hospitals 1. Payment follows Provider Number 2. New hospitals are allowed to qualify and receive payment based on current period data, on cost report finalization, no interim payments 3. erged hospitals use only surviving Provider Number hospital data, no merger of multiple DSH hospital data 25 E. Corrections and Appeals 1. Subsection (d) status is subject to correction if information submitted within 60 days of listing in proposed rule 2. No appeals of payment determinations 3. DSH status determined at cost report settlement, no appeals of DSH status for uncompensated care payments

14 Example 1 27 Example

15 29 CS Strong Inclination to use of W/S S-10 data First new W/S S-10s used in FY 2011 and have not been audited per 12/31/2012 HCRIS Data any errors obvious in filed S-10 data that strongly suggests data is unreliable as a basis to determine relative share of uncompensated care costs any hospitals did not report S-10 data at all, about 5% 14% had no total bad debt data, but 90% of that group reported edicare bad debt data Some had a CCR of 1, many had CCRs above.6, a few had more gross charges on S-10 than on C. 2. Definitional problems Uninsured vs. Charity Non means tested uninsured discounts likely not included in charity Charity must be determined during the cost reporting period edicaid and other indigent program non-covered charges must be addressed in charity policy or excluded Non-edicaid gov t indigent care program patients likely should be excluded, but unclear. Bad debt timing - written off or expected to be written off on balances owed by patients delivered during the cost reporting period. Accrual based account for bad debt should govern

16 3. Converting Charges to Costs Problem particularly acute with bad debt Hospitals may be grossing up charges to address copayment shortfalls should a hospital be allowed to claim a cost for a copayment that exceeds the actual copayment obligation? If the answer is yes, how do you standardize how that costs will be measured? G. Hospital Value-Based Purchasing ACA ACA Requirements a. Applies to discharges on and after 10/1/2012; b. Funded through base operating DRG reductions, 1 percent in FY 2013, 1.25 percent in FY 2014, 1.5 percent in FY 2015, 1.75 percent in FY 2016 and 2 percent for FY 2017 and thereafter; c. Incentive measures include ACI, HF, pneumonia, certain surgeries, patient experience of care (i.e., HCAHPS survey), healthcare acquired infections, and spending per beneficiary; d. Incentives distributed by performance score and vary on score; e. Certain hospitals excluded cited for immediate jeopardy, or too few measures or cases; and f. New measure must be posted on Hospital Compare website 1 year prior to implementation. 16

17 33 2. April 29, 2011 Final and FY 2012 Final Rules a Final Rule set measures for 2013, discharges on and after 10/1/2012 and initial measure set for FY 2014 b Final Rule adds total spending per beneficiary efficiency measure to FY 2014 set with to begin measurement. 1) edicare spending per beneficiary will span 3 days prior to and 30 days after discharge c Final Rule adds FY 2015 program two additional outcome measures--an AHRQ Patient Safety Indicators composite measure and CLABSI: Central Line-Associated Blood Stream Infection measure. 3. Final Factors for FY 2014 a) Posted on CS website in August 2013 (Table 16) Payment/AcuteInpatientPPS/FY-2014-IPPS-Final-Rule-Home-Page- Items/FY-2014-IPPS-Final-Rule-CS-1599-F-Tables.html 34 17

18 4. VBP Quality easures for FY 2014 (final), FY2015 (final) and FY 2016 (proposed)

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20 39 H. Hospital Readmissions Reduction Program 1. ACA Provisions a. Fiscal years commencing in and after 10/1/2012; b. Conditions subject to measure are high value or high volume as selected by Secretary; c. Law compares risk adjusted actual and expected readmissions; d. Secretary can exclude planned readmissions and unrelated readmissions e. Adjustment factor is the greater of: (a) 1 minus the ratio of payments for excess aggregate readmissions for a condition to the aggregate payments for total hospital discharges (not expected readmissions for such) admissions, or (b) a floor adjustment of.99 for FY 2013,.98 for 2014, or.97 for FY 2015 and thereafter; f. Applies to base operating DRG. 2. FY 2012 Final Rule - focused on conditions and readmissions for FY 2013, measures and methods to determine readmission rates and public reporting, 1) Conditions heart attack, heart failure and pneumonia 2) No additional modifications for unrelated readmissions or planned readmissions beyond what is in measure specifications CS view is that this is statutory 40 20

21 41 3) Risk Adjustment easures only include diagnosis, age and gender, CS said no to including race and life circumstances 4) inimum number of discharges per condition is 25 5) Performance easurement Period 3 years (for FY 2013, 3 year period of July 1, 2008 to June 30, 2011); Industry wants shorter more current data and CS is reviewing periods between 1 and 3 years. 3. FY 2013 Final Rule focused on payment adjustment a. No distinction between readmissions related and unrelated to prior admissions b. Planned readmissions only from approved list FY 2014 Final Rule a. Implements several changes addressed below, but results in a $227 million reduction in hospital payments for 2014; b. Adds the use of an algorithm to calculate an additional exclusions factor from readmissions the three measured conditions for planned readmissions and received NQF endorsement; c. CS Planned Readmission Algorithm is based on three principles: i. A few specific, limited types of care are always considered planned (OB care, transplant surgery, maintenance chemotherapy, rehabilitation); ii. Otherwise, a planned readmission is defined as a nonacute readmission for a scheduled procedure; and iii. Admissions for acute illness or for complications of care are never planned. d. Provides that an unplanned readmission that occurs after a planned readmission will not be counted in the hospital index figure it the unplanned readmission occurs with 30 days of the original discharge; 21

22 4. FY 2014 Final Rule con t e. Adds measures for COPD and elective total hip or knee arthroplasty beginning for FY 2015 payment adjustment; f. Exempts aryland hospitals from the program for FY 2014; g. Establishes the floor adjustment factor at a 2 % reduction with only 18 hospitals being so severely penalized; and h. Refined the methodology for the calculation of the adjustment factor. 43 Definition of the base operating DRG payment amount: 1) Excludes IE, DSH, outliers, low-volume adjustment, and additional payments made due to status as an SCH, but 2) Includes new technology payments, and will be 3) Adjusted to account for transfer cases 4) (((Labor Share * Wage Index) + (Non Labor Share * COLA) * DRG Weight) + New Technology Add On Payment) * Adjustment Factor 44 22

23 45 J I. HAC Reduction Program Payment Adjustment ACA Discharges on and after 10/1/2014 hospitals in top quartile of risk adjusted HAC measure receive only 99% of total PPS payments; 2. Public disclosure of HACs in such hospitals; 3. FY 2013 Rule: a. Eliminates 17 measures, including 16 claims based measure and 8 of original HAC measures for FY 2015 payment determinations b. Continuation into 2015 of suspension of data collection for 4 measures that were suspended commencing in 2014, c. 59 measures will be used for 2015, including hospital wide readmissions, 46 23

24 HAC Reduction Program, cont d 5. Summary of Proposed easures for FY HAC Reduction Program, cont d 6. Time period to collect data for FY 2015 HAC Score a. 24 month period from July 1, 2011 to June 30, 2013 for AHQR measures a. Calendar years 2012 and 2013 for CDC HAI measures 48 24

25 HAC Reduction Program, cont d 49 Changes Affecting edicare Payments to Acute Care Hospitals, cont d 50 D J. Hospital Wage Index ACA 3137 and Revisions to CBSAs a. OB bulletin 2. Criteria used to determine geographic reclassifications must revert to the criteria that were in effect as of September 30, 2008, until 1 year after wage index reform report submitted by HHS; a. Geographic Reclass window closed before more lenient criteria restored b. CS should reopen window only for newly qualified 3. Effective for discharges occurring on or after October 1, 2010, the wage index for hospitals located in frontier states shall not be lower than 1; and 4. Budget Neutrality calculated on national basis. 25

26 Wage Index Changes, cont d Pension Costs FY 2012 Final Rule a. Wage Index Purposes 1) ust be funded 2) Contributions reported on cash basis 3) Use three year average for wage index in 2013 and beyond 4) Industry view is this favors underfunded plans vs overfunded plans b. Cost-Finding Purposes a. Same as above but not three year averaged, but b. Limited to 150% of consecutive 3-year average in 5 most recent c. Exception process for unusual situations on the 150% limit Wage Index Changes, cont d 6. Expiration of Imputed Rural Floor CS extends for FY 2014 in Response to Comments 52 26

27 L. Temporary Improvements. 1. Extended through 9/30/2012, ACA Extended through 9/30/2013, American Taxpayer Relief Act 605, 3. Extended through 3/31/2014, Pathway to SGR Reform Act of 2013, Pub. L , sections 1105 and J. FY 2014 Operating Outlier Threshold 1. CS proposed $24,150, representing a 10.6% increase from FY Industry proposed $22,063 a. CS underestimated prior year underpayment b. CS not correctly measuring CCR rate of change c. CS including HO days, and improper charges (e.g., clotting factor d. CS misinterpreted the impact that the new DSH/UCP formula should have on outlier payments 3. CS settled on $21,748, and did make methodological changes consistent with comments on the measurement of the CCR rate of change and the impact of the DSH/UCP change. 27

28 FY 2013 Operating Outlier Threshold, cont d 55 J 56 Chapter 3 of the Claims Processing anual Available on CS website at Guidance/Guidance/anuals/Downloads/clm104c0 3.pdf Outlines Guidelines for edicare Contractors and Providers for Outlier Reconciliation for IPPS, IRF PPS, IPF PPS, LTCH PPS and OPPS 28

29 57 D 1. FY2012 Rule Clarifies Under Arrangement for Routine Services 2. Routine Services cannot be provided under arrangement, only diagnostic or therapeutic services a. If provided in the hospital, they are considered to be provided by the hospital and subject to hospital quality controls b. If provided outside the hospital they are under arrangement and prohibited; c. If provided in another hospital the patient must be discharged to the other hospital 3. FY 2013 Final Rule delays implementation to cost reporting periods beginning in FY