By the Numbers

A monthly compendium of OHA finance and patient financial services policy and paymentalerts

January 2015

Draft 2015 Hospital Franchise Fee Schedule Posted

This month OHA posted a draft, hospital-specific 2015 Hospital Franchise Fee (HFF) assessment schedule. The Ohio Department of Medicaid (ODM) plans to issue new rules governing the rate and collection schedule for the 2015 program soon. Preliminary assessment letters are likely to be sent to hospitals on or about April 6, with 50 percent of the assessment due on or before April 17 and a second 50 percent installment due on or before May 8.

ODM will link the collection of franchise fees with the payment of SFY 2015 Upper Payment Limit (UPL) payments for both inpatient and outpatient hospital services (see article below). 50 percent of each hospital’s UPL payments will be remitted within 7-10 business days of each franchise fee due date.

The 2015 Ohio HFF program includes a $553.7 million assessment on all Ohio hospitals, which will be matched with federal Medicaid dollars to generate a pool of funds to make supplemental Medicaid UPL and Medicaid Managed Care Incentive payments to hospitals, support Medicaid payments for outpatient services to all PPS hospitals and inpatient services to children’s hospitals, and provide general funding support for the state Medicaid program.

…As is Draft 2015 Hospital UPL Payment Schedule

OHA this month also posted preliminaryestimates of supplemental Medicaid Upper Payment Limit (UPL) payments. OHA and the Ohio Department of Medicaid (ODM) have been in negotiations with the Centers for Medicare & Medicaid Services since September, and while these UPL numbers are not final, OHA can reasonably estimate the supplemental payments on a hospital-specific basis. Note that the payment estimates and schedule are still preliminary and subject to change. OHA will update the information as it becomes available.

UPL payments help reduce the shortfalls incurred by hospitals treating Medicaid patients by bringing total Medicaid reimbursement closer to Medicare reimbursement levels. For SFY 2015, ODM will pay out over $581 million in supplemental UPL payments to eligible Ohio hospitals, an 18 percent increase from last year. In the draft schedule this amount is subdivided by three different classes of hospitals defined by CMS for UPL purposes: state-owned, other government-owned and privately-owned hospitals. Children’s hospitals should note that estimates do not reflect payments from the $6 million OhioGeneral Revenue-funded quality improvement program, whichODM will separately remit.

At this point ODM’s best estimate of the timing includes a 50 percent payment of hospital inpatient and outpatient UPL amounts by April 30 and the rest paid by May 22. ODM warns that Hospital Franchise Fee assessments (see previous article) are tentatively due to ODM by April 17 and May 8, and any delays in ODM’s collection of the franchise fees will impact the timing of UPL payments and may result in financial penalties to hospitals that miss collection deadlines. Please plan accordingly.

OHA has also received inquiries about the Medicaid Managed Care Plan (MCP) incentive payment program. The best guidance we can offer hospitals on payments for the remaining portion of SFY 2015 is to divide the payment received in December by six and then multiply the result by seven, as there are seven months of incentive payments remaining in SFY 2015. This applies only if a hospital’s contract status with the Medicaid MCPs has not changed and likely will not change. The latest reporting date under the incentive program was Jan. 15, so the next round of payments for December and January should be due early next month.

IRS/Treasury Final Rule Requirements for Charitable Hospitals
In Late December the Internal Revenue Service and the US Dept. of the Treasury jointly released a long-awaited final rule to guide billing and collection activities at tax-exempt hospitals. The American Hospital Association has a good overview available to its members, as does the HFMA on its website, under the tagline HFMA Summary of IRS 501(r) Final Rule.

Part of a trio of rules that also set standards at tax exempt hospitals for Community Needs Assessments and Financial Assistance Policies (FAP), the latest IRS/DoT rule goes into effect for hospital fiscal (tax) years starting on and after Dec. 29, 2015 and specifies billing and collection practices, timelines in which to respond to patients who qualify for charity or discounted care under a hospital’s FAP, and sanctions for non-compliance. The rules also offer options for establishing limited “Amounts Generally Billed” to covered patients, and outlines requirements for outreach and patient education.

Overall, the latest federal rule does not affect the Ohio requirement for hospitals to provide free care to residents with family incomes under the federal poverty income guidelines under OAC 5160-2-07.17 (see related article in this bulletin), but OHA expects the Ohio rule to fit within covered hospitals’ FAPs. Note that 5160-2-07.17 has its own patient notice requirements, which can be wrapped into, but are not necessarily covered by the federal rules.

Medicaid Potentially Preventable Readmissions Project Underway

The Ohio Department of Medicaid (ODM) is working on a program to measure every hospital’s potentially preventable readmissions (PPR). By way of background, $100 million was targeted in the last biennial budget as a potential cut to hospitals for unnecessary readmissions. OHA ensured this cut was never realized by working with ODM to examine available dataon same-hospital, all-cause readmissions and refutingsome initial assumptions.

Now, ODM is using a 3M product to examine all-hospital, clinically-related readmissions, which identifies a readmission as clinically related to a prior admissionif there was a reasonable expectation that the readmission could have been prevented by one or more of the following:

  • Provision of quality care in the initial hospitalization.
  • Adequate discharge planning.
  • Adequate post-discharge follow up.
  • Improved coordination between inpatient and outpatient Health Care Teams.

The proposed PPR program does notassume that all readmissions are preventable.

ODM will identify an acceptable statewide readmissions benchmark and post hospital specific, risk-adjusted hospital report cards to its MITS portal later this year, but no payment incentives will be tied to the PPR in 2015. Effective Jan. 1, 2016, ODM is proposing an adjustment to each Medicaid managed care plan’s capitation rates that will reflect each plan’s most recent PPR rates against benchmarks. How that capitation rate adjustment will connect with hospitals’ contracted payment rates is still unclear.

ODM has convened a stakeholder group that includes OHA staff and representatives of the OHA Finance and Admitting, Billing and Collections Committees and we will report again as PPR negotiations proceed.

ODM Also Planning New Medicaid OPPS for January 2016
The Ohio Department of Medicaid (ODM) this month unveiled a proposed Medicaid hospital outpatient prospective payment system (OPPS), currently scheduled for implementation in January 2016. Created by 3M and modeled on an expanded Medicare OPPS, the 3M Enhanced Ambulatory Patient Classification systemincludes “EAPGs” for non-Medicare aged patients and takes into account both a patient’s diagnosis and any procedures performed during anoutpatient encounter.

The EAPG project is still in the planning stages and much of its effect on Medicaid payments is unclear. ODM is planning an aggressive schedule of meetings with OHA and its Medicaid Managed Care Plans and OHA staff will be accompanied by representatives of the ABC and Finance Committees to help with the negotiations on coverage and payment guidelines.
2015 Federal Poverty Income Guidelines Released
The U.S. Department of Health & Human Services (HHS) has releasedthe federal poverty income guidelines for 2015. The guidelines are widely used to judge eligibility for state and federal programs that support low-income and uninsured individuals, and generally go into effect on the date of publication in the Federal Register. For Ohio’s Hospital Care Assurance Program (HCAP)-related hospital free care program, base family income under the new guidelines for services and admissions on and after Jan 22.

CGS Outlines Medicare Audit Contacts for 2015
CGS Administrators, the regional Medicare Administrative Contractor (MAC) this month posted a hospital-specific contact list of auditors and supervisors. CGS organized the list in response to complaints from OHA and the Cleveland-based Center for Health Affairs that many hospitals are not aware of their ability to escalate requests for assistance with Medicare Cost Report desk reviews to audit supervisors, or whom to contact. The CGS list includes email addresses and telephone numbers. CGS notes thatthe contacts should stay current through September 2015, butdue to staffing and regulatory environment the list is subject to change.

ODM to Edit for Attending Physician Enrollment on Medicaid Bills
With the release of Medicaid Handbook Transmittal Letter No. 3334-15-03, the Ohio Department of Medicaid (ODM) will start editing hospital and physician bills to ensure attending physicians are enrolled in the Medicaid program. In line with federal requirements and effective with admission and service dates on and after Jan. 12, 2015, ODM will return any hospital or doctor bill that has an attending physician reported in UB92 FL 56 (National Provider Identifier – Billing Provider), or CMS 1500 Items 33, 33A & 33B (Billing Provider Info and Ph#), who is not enrolled in Ohio Medicaid.

ODM created an expedited enrollment process for physicians who need an Ohio Medicaid provider number solely to meet the ORP requirement, but do not themselves intend to submit bills for payment. It isavailable on the ODM Provider Enrollment Webpage.

AHA Issues Case Study Report on Hospital Discharge Planning Tools

Hospital discharge planning tools should incorporate the judgment of clinicians and be administratively feasible, according to a new American Hospital Association report highlighting lessons learned from five hospitals and health systems that developed innovative tools aimed at improving patient care transitions. The five tools support decision making related to when a general acute-care hospital patient should be discharged, whether a patient will need post-acute care, and what types of post-acute care may be most suitable.

While their primary objectives vary, the tools have three cross-cutting themes: appropriate post-acute care placement; readmission reduction; and management of patient transitions from acute to post-acute care settings. Each of the tools was designed to align with the culture of the organization and providers using it, with a focus on reducing the burden on administrative staff and clinicians.

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OHA’s Health Economics and Policy staff

Ryan Biles, Senior Vice President,

Charles Cataline, Vice President

Berna Bell, Director,

Alyson DeAngelo, Director,

Daniel Vielhaber, Analyst,

Valerie Adams, Executive Assistant,

155 East Broad Street, Suite 301 Columbus, Ohio 43215-3620 614.221.7614 614.221.4771 fax