Affordable Care ActSection 3133 Medicare DSH

HFMA Education Session # 3February 21, 2013

Presented by:Paul BouganimPrincipal Financial AnalystCedars-Sinai Medical Center

Sec. 3133. Improvement to medicare disproportionate share hospital (DSH) payments.

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Agenda

• New DSH Formulas and Projections

• Wkst S-10 and Charity Care

• CMS National Provider Call, January 8, 2013 – Donna Anglin, 2552PROplus, LLC.

• Legal Update and Data Sources – John R. Hellow, Hooper Lundy & Bookman, Inc.

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DSH Payment Formula Effective FY 2014(Discharges on/after 10/01/13)

Base DSH Payment

• 25% of DSH payment computed under existing law – 42 CFR 412.106

Plus

Add-on Payment - Product of three factors:

• Factor 1 = 75% of national aggregate DSH payments under existing law

• Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)?

• Factor 3 = A hospital specific percentage of national aggregate charity care

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DSH Payment Formula Effective FY 2014(Discharges on/after 10/01/13)

Add-on Payment:

• Factor 2 = A measure of the percentage change in the uninsured population age < 65 since 2013 (FY, CY)?

• 1 minus the % change from 2013 to “most recent period” minus 0.1% in 2014 and minus 0.2% in 2015 through 2019

• Factor 3 = A hospital specific percentage of national aggregate charity care

• Period not specified by Section 3133; left to Secretary to select period

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(-0.2% for FY2015 to FY2019)

Existing 42 CFR 412.106 DSH: 33,278,652 < 06/30/12 Actual trended to 06/30/14Reduced by 75% x 0.25

Base: 8,319,663

FY09 HCRIS ActualPlus: trended to FY14

Factor 1 11,883,775,132 < Aggregate national DSH (full amount)(2,970,943,783) < Aggregate DSH payments reduced to 25% per ACA8,912,831,349 < Difference of would be DSH minus DSH paid at 25%

All Factors determined by the Factor 2 16.0% < Percent of < 65 uninsured in 2013Secretary (CMS) 15.0% < Percent of < 65 uninsured in "Most Recent Period"

6.25% < Percent change93.65% 1 minus percent change in < 65 uninsured from 2013 minus 0.1%

Factor 3 168,162,376 < Hospital specific uncompensated care95,541,778,822 < Aggregate uncompensated care for all DSH hospitals

0.18%

Add-On (Factor 1 x 2 x 3): 14,691,258 FY09 HCRIS Actual Wkst S-10

Total DSH Payment FY 2014 8,319,663 < Base14,691,258 < Add-On23,010,921

Retention % of DSH Payment: 69.15%

Federal Year 2014

Let’s Take a Look…

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Federal Year 2014+5.00% 10.00% 20.00% 50.00% 80.00%

Change/Uninsured Change/Uninsured Change/Uninsured Change/Uninsured Change/Uninsured

Existing 42 CFR 412.106 DSH: 33,278,652 33,278,652 33,278,652 33,278,652 33,278,652 Reduced by 75% x 0.25 0.25 0.25 0.25 0.25

Base: 8,319,663 8,319,663 8,319,663 8,319,663 8,319,663

Plus:

Factor 1 11,883,775,132 11,883,775,132 11,883,775,132 11,883,775,132 11,883,775,132 (2,970,943,783) (2,970,943,783) (2,970,943,783) (2,970,943,783) (2,970,943,783) 8,912,831,349 8,912,831,349 8,912,831,349 8,912,831,349 8,912,831,349

Factor 2 16.0% 16.0% 16.0% 16.0% 16.0%15.2% 14.4% 12.8% 8.0% 3.2%5.00% 10.00% 20.00% 50.00% 80.00%

94.90% 89.90% 79.90% 49.90% 19.90%

Factor 3 168,162,376 168,162,376 168,162,376 168,162,376 168,162,376 95,541,778,822 95,541,778,822 95,541,778,822 95,541,778,822 95,541,778,822

0.18% 0.18% 0.18% 0.18% 0.18%

Add-On: 14,887,351 14,102,980 12,534,239 7,828,017 3,121,794

8,319,663 8,319,663 8,319,663 8,319,663 8,319,663 14,887,351 14,102,980 12,534,239 7,828,017 3,121,794

Total DSH Payment: 23,207,013 22,422,643 20,853,902 16,147,680 11,441,457

Retention % of DSH Payment: 69.74% 67.38% 62.66% 48.52% 34.38%

Huge Impact

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Charity Care and Wkst S-10 – Nothing Ties!

Worksheet S-10

IRS Form 990 Financial Statements

OSHPD Medicare

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Charity Care and Wkst S-10

• Financial Statements• Traditional Charity Care• Unpaid cost of Medicaid*• Unpaid cost of Medicare• Research• Other Community Benefits

• IRS Form 990 (Schedule H)• Traditional Charity Care• Unpaid cost of Medicaid*• Unpaid cost of Medicare• Research• Other Community Benefits

*Including State/Local Government Programs

Consolidated Financials

• Medical Center Only• Excludes GME• Different Community Benefits

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Charity Care and Wkst S-10

• Medicare (2552-10, Wkst S-10)• Traditional Charity Care• Unpaid cost of Medicaid*• Non-Medicare Bad Debts

• OSHPD• Traditional Charity Care• Reported at gross charges

*Including State/Local Government Programs

Likely to be the default

definition of Charity Care

for DSH, maybe…

S-10 Also Used for EHR

Incentive Payments!

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Bonus Slide:

(b) Medicare Share: IP Part A Days + IP Part C Days

÷Total IP Days x [ (Total Charges - Charity Care Charges) ÷ Total Charges ]

(American Recovery and Reinvestment Act)

2,000,000 Base Payment

4,370,000 Discharge Bonus - $200 for each discharge between 1,150 and 23,000

6,370,000$ Eligible EHR Payment Pool

(a) 120,866 Medicare Days

(b) 286,054 Total Patient Days

42.25% Medicare Share

39,052 Medicaid Days (Medi-Cal)

286,054 Total Patient Days

(c) 13.65% Medicaid Share

2,691,506 Medicare Share

869,630 Medicaid Share

3,561,136$ Total Eligible EHR Payment (Subject to Transition %)

(a) Includes HMO and Subprovider (Psych and Rehab) days

(b) Charity Care Reduction from Wkst S-10, Line 20

(c) Medicaid Utilization must exceed 10% to qualify

Medicare/Medicaid Electronic Health Record Payments per ARRA

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Charity Care and Wkst S-10

Overall Facility Cost-to-Charge Ratio, Wkst C, Part I

Gross Medi-Cal and Medi-Cal HMO Charges (Provider Records)

Unpaid Cost of Medicaid

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Charity Care and Wkst S-10

• Gross Charges

• Internal Report of all Accounts with Charity Code Write-Off

• Separated between Accounts w/ Insurance Pmt and w/o Insurance Pmt

• Any payments posted to account are offset

• Charity Write-Off: Formal application and approval for Charity Care

Traditional Charity Care

EHR!

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Charity Care and Wkst S-10

• Non-Medicare Bad Debt

• End Game:

• Unpaid Medicaid: $65,178,384

• Traditional Charity Care: $52,438,879

• Non-Medicare Bad Debt: $51,105,059

$168,722,322

Non-Medicare Bad Debt

Ln 30 for DSH? Charity

+ Bad Debt Only