Southwest Ohio HFMA May Institute May 16, 2014:

Southwest Ohio HFMA May InstituteMay 16, 2014: Ohio Hospital Economic Sustainability: Top Ten 2014 Issues

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 10. Price Transparency SW Ohio HFMA

10. Price Transparency • Public/private exchanges will exacerbate trend toward high-deductible plans (i.e., high out-of-pocket expense when patients seek care) • Hospital bad debts likely to increase • Already, between 2007 and 2012: • Hospital insured but uncompensated inpatient discharges increased by 44% • Hospital insured but uncompensated outpatient visits increased by 94% • Patients likely to become more cost-conscious for elective/ambulatory services • How do not-for-profit hospitals compete? • IP, OP, Lab, Diagnostic Radiology SW Ohio HFMA

10. Price Transparency • OHA Price Transparency Work Plan in 2014: • Conduct national environmental scan • Clearly define for membership set of price-sensitive “shoppable” services • Monitor state and federal-level political pressure points • Determine OHA’s current technological/data collection capabilities to mirror model state association activities • Objective: The OHA Board endorses an association strategy in August to address concerns surrounding the transparency of hospital pricing. SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 9. Medicaid GME Reform/Reductions? 10. Price Transparency SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 8. Continued Hospital/Physician Consolidation 9. Medicaid GME Reform/Reductions? 10. Price Transparency SW Ohio HFMA

8. Continued Hospital/Physician Consolidation • In 2001 in Ohio: • 76 out of 179 (42.5%) hospitals were part of a large health system • In 2006: • 88 out of 194 (45.3%) hospitals were part of a large health system • Today: • 113 out of 201 (56.2%) hospitals are part of a large health system • Still strong independent presence, but it is shrinking • In 2012, Ohio hospitals reported employing 11,139 physicians (40.5% of active, credentialed medical staff) SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 7. SFY 2015 Franchise Fee Recalibration 8. Continued Hospital/Physician Consolidation 9. Medicaid GME Reform/Reductions? 10. Price Transparency SW Ohio HFMA

7. SFY 2015 Franchise Fee Recalibration NOTES: All figures in millions. SOURCES: Office of Medical Assistance/Ohio Department of Medicaid SW Ohio HFMA

7. SFY 2015 Franchise Fee Recalibration SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 6. Expiration of PCP Medicaid Rate Increase 7. SFY 2015 Franchise Fee Recalibration 8. Continued Hospital/Physician Consolidation 9. Medicaid GME Reform/Reductions? 10. Price Transparency SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 5. SIM - Episodes SW Ohio HFMA

5. SIM -Episodic payment development • State Innovations Model (SIM) Planning Grant • Testing grant application in process • Built on McKinsey & Co. work in Arkansas, Tennessee • Goal: 80-90% of Ohio pop. in some value-based payment model within 5 years (PCMH & Episodes) • Initial Episode selection: Asthma, COPD, Perinatal, PCI, Hip/Knee Replacements • Define Principal Accountable Provider (PAP) or “quarterback” • PAP at-risk based on adjusted cost per episode performance upon retrospective review • Gain Sharing • Risk Sharing SW Ohio HFMA

Discussion outline SW Ohio HFMA

5. SIM – Episodes: OHA Board-Approved Principles • OHA supports payment reforms to increase value • Episodic payments must focus on variability in utilization and quality; exclude other factors • Providers already beyond episodes should be exempt • Calculations of cost for episodes must be normalized to address established variation in payment rates • Access to care should not be reduced • Accountable providers should be put at no or minimal risk for activities outside of their control • Providers must be able to maintain their ability to negotiate reimbursement SW Ohio HFMA

5. SIM – Episodes: Latest News • March 10 meeting with state officials: • Providers who already have value-based contracts beyond episodic payments will be able to be excluded from payment side of program • Data reporting requirements still likely • OHT working with commercial plans to help their implementation • Member feedback • Technical questions persist with regard to Medicaid implementation • At least 18 months before any penalties/incentives • May 15 meeting with Director McCarthy • Cost normalization decision point SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 4. Presumptive Eligibility 5. SIM - Episodes SW Ohio HFMA

4. Presumptive Eligibility (PE) • Gives patients immediate, temporary Medicaid coverage if they are presumed to be eligible • Coverage lasts until 1) person completes successful Medicaid application or 2) until the last day of the month following the month they became presumptively eligible • Portal on ODM Web site SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 3. Budget Cuts/Next Budget/Governor’s Race 4. Presumptive Eligibility 5. SIM - Episodes SW Ohio HFMA

3. Budget Cuts/Next Budget SW Ohio HFMA NOTES: All figures in millions. SOURCES: Office of Medical Assistance/Ohio Department of Medicaid & OHA Analysis

3. Budget Cuts/Next Budget • Joint Medicaid Oversight Committee (JMOC) • New committee formed in wake of expansion • Charged with maintaining Medicaid spending at or below healthcare market basket • Chaired by Sen. David Burke (R-Marysville) • Continued downward pressure on healthcare provider reimbursement • Medicaid expansion authorized – Oct. 2013 • OHA spent hundreds of thousands of dollars on issue • Failed to change one vote • But must be legislated in SFY 2016-17 state budget • State must pay 5% of expansion cost beginning with FFY 2017 SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 2. HCAP Reform 3. Budget Cuts/Next Budget/Governor’s Race 4. Presumptive Eligibility 5. SIM - Episodes SW Ohio HFMA

2. HCAP Reform: Why Reform HCAP in 2014? • HCAP distribution uses most recent Medicaid cost report data as proxy for hospitals’ current uncompensated care + Medicaid loss burden • 2012 CY used to distribute 2014 payments (pre- vs. post-expansion) • Current model distributes over 60% based on uninsured population most likely to become Medicaid-eligible • Federal DSH Auditors retrospectively review payments vs. actual OBRA Cap/DSH Limit for Federal Fiscal Year payments • Beginning with 2011 HCAP, auditors can force recoupments/redistributions of prior payments SW Ohio HFMA

2. HCAP Reform: OHA Board Directives for 2014 • Increase fairness & equity through reforms that narrow the gap between peer group net misery indexes; • Minimize risk of provider overpayments identified in federal DSH audits; • Allow flexibility and reevaluation on annual basis; • Be in accordance with other OHA HCAP principles. SW Ohio HFMA

2. HCAP Reform: OHA Finance Committee Action (March 13, 2014): To recommend the OHA Board of Trustees endorse a FFY 2014 Hospital Care Assurance Program (HCAP) based on Hybrid Distribution Model 5, with a presumed 50% Medicaid enrollment take-up. SW Ohio HFMA

2. HCAP Reform: “Hybrid” HCAP Model 5 - Overview • Include “residual” Pot 3A as a transition tool • $100M vs $353M in 2013 • Narrow ranges of misery both within and between peer groups by: • Allocating resources to CAH/Rural/High DSH/Children’s • Ensure appropriateness of CAH pool distribution • In 2013, CAHs received over 10% of rural pool • Maintain “OBRA” pot as largest funding source • Try to increase payments to CAH/Rural/Adult DSH/Children’s without taking too much from Teaching or Others SW Ohio HFMA

2. HCAP Reform SW Ohio HFMA

OHA – Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 1. ACA/Obamacare Implementation – Medicaid Expansion & Exchange Roll-Out 2. HCAP Reform 3. Budget Cuts/Next Budget/Governor’s Race 4. Presumptive Eligibility 5. SIM - Episodes SW Ohio HFMA

1. Expansion of Coverage Under Medicaid (Ohio, as of April 30, 2014) • 184,671newly-eligible have enrolled • Actuaries estimate 275,000will sign up for coverage by June 2014 • About 117,000 Medicaid applications filed with federal exchange still being processed by state county offices • 124,195 previously eligible also have enrolled. SW Ohio HFMA

1. Health Insurance Marketplace • 154,668 Ohioans have selected private plans as of April 19. For Ohio, tier selection has been: • Bronze = 25% • Silver = 60% • Gold = 12% • Platinum = 2% • Catastrophic = 2% • 85% of Ohioans that purchased qualified for financial assistance SW Ohio HFMA

OHA – Not Quite Top 10 Issues Impacting Ohio Hospital Economic Sustainability in 2014 Private exchanges development ACA 2nd year premium increases Medicaid – telemedicine reimbursement Wage index changes MyCare Ohio – duals Narrowing networks – commercial & public Republicans take Senate? SW Ohio HFMA

Questions?Contact Info:Ryan BilesSenior Vice President, Health Economics & PolicyOhio Hospital Associationryanb@ohanet.org(614)221-7614 SW Ohio HFMA

Southwest Ohio HFMA May Institute May 16, 2014: