Medicare Advantage Reimbursement Issues

Presented by:Jason Johnson

John Garcia

1

DISCUSSION AGENDA

• Brief background on Medicare Advantage (“MA”) � Enrollment Rates And Trends � Regulatory Environment� Introduction To Shadow Billing

• MA Reimbursement Issues� IME/GME/NAH� HITECH� SSI/DSH� DSH and Bad Debt

• Deeper Discussion of Shadow Billing� Reasons For Slippage� Best Practices

2

MA Enrollment Rates and Trends

3

TOTAL MA ENROLLMENT, 1999-2011

4

CURRENT MA ENROLLMENT BY STATE

5

MA ENROLLMENT - SOUTHERN CALIFORNIA

County NameMedicare Eligible

PopulationEnrolled in Medicare

AdvantageMA Penetration

RateLos Angeles 1,126,635 247,877 22.00%

Orange 360,856 111,068 30.78%

Riverside 260,907 91,293  34.99%

San Bernardino 205,716 63,603 30.92%

San Diego 380,760  95,159  24.99%

Ventura 104,619 15,002  14.34%

Note: Effective June 2009, Excluding Kaiser and Other Cost Based Plans

Source: www.cms.hhs.gov

6

TYPES OF MA PLANS

HMO/PPO Private Fee for Service (PFFS)

Special Needs Plans (SNP’s)

Plans must establish networks and sign contracts with providers

Prior to 2011, no network requiredPatients can go to whichever hospital is most convenient“Deeming Process”Required to establish networks by 2011

Restricted to special needs beneficiaries

7

MA ENROLLMENT BY PLAN TYPE2007 - 2011

8

MA ENROLLMENT BY PLAN TYPE2011

9

MA ENROLLMENT BY PLAN TYPE - CA

10

Source: Kaiser Family Foundation, Program on Medicare Policy, Data Spotlight, September 2011* PPO Includes Local and Regional Plan Types. ** Other includes Cost and Special Needs Plan Types

1,730,810 Enrollees in California in 2011

MA ENROLLMENT BY COMPANY

11

COMBINED MA MARKET SHARE OF THE THREE LARGEST FIRMS

12

MA ENROLLMENT BY COMPANY - CA

13

Total CA MA enrollment, 2011 = 1,730,810

Regulatory and Medicare Payments Overview For

Medicare Advantage Beneficiaries

14

CMS SHADOW BILLING GUIDANCE 1998 - 2010

15

July, 1998

CMS Change Request 2476

Balanced Budget Act of 1997

Feb, 2003

CMS Change Request 5647

July, 2007

CMS Transmittal 6329

March, 2009

Change Request 6821

May, 2010

BALANCED BUDGET ACT OF 1997

16

SEC. 4622. PAYMENT TO HOSPITALS OF INDIRECT MEDICAL EDUCATION COSTS FOR MEDICARE+CHOICE ENROLLEES.Section 1886(d) (42 U.S.C. 1395ww(d)) is amended by adding at the end the following: (11) Additional payments for managed care enrollees.-- (A) In general.--For portions of cost reporting periods occurring on or after January 1, 1998, the Secretary shall provide for an additional payment amount for each applicable discharge of any subsection (d) hospital that has an approved medical residency training program.

(B) Applicable discharge.--For purposes of this paragraph, the term 'applicable discharge' means the discharge of any individual who is enrolled under a risk-sharing contract with an eligible organization under section 1876 and who is entitled to benefits under part A or any individual who is enrolled with a Medicare+Choice organization under part C.

SEC. 4624. PAYMENTS TO HOSPITALS FOR DIRECT COSTS OF GRADUATE MEDICAL EDUCATION OF MEDICARE+CHOICE ENROLLEES. Section 1886(h)(3) (42 U.S.C. 1395ww(h)(3)) is amended by adding after subparagraph (C) the following: (D) Payment for managed care enrollees.-- (i) In general.--For portions of cost reporting periods occurring on or after January 1, 1998, the Secretary shall provide for an additional payment amount under this subsection for services furnished to individuals who are enrolled under a risk-sharing contract with an eligible organization under section 1876 and who are entitled to part A or with a Medicare+Choice organization under part C.

IME AND GME

• Indirect Medical Education (IME)– Additional payment for a Medicare discharge to reflect

the higher patient care costs of teaching hospitals relative to non-teaching hospitals

• Direct Graduate Medical Education (GME)– Additional payment made to teaching hospitals for the

direct costs of approved graduate medical education programs

17

TIMING OF PAYMENTS

• FI/MAC will verify patient’s Medicare Advantage eligibility in the Medicare Common Working file

• After Medicare Advantage verification, the operating IME payment will be made by Medicare Part A for teaching hospitals only

• GME interim payments will continue to be made in their normal fashion for teaching hospitals

• NAH payments are calculated on the cost report using the data from the PS&R report type 118

18

MA IME/GME SLIPPAGE EXAMPLES

19

Example #1 Example #2 Example #3Small Teaching 

ProgramMedium Teaching 

ProgramLarge Teaching 

Program

IME/GME Per Day 200  600  1,000 

Part A Days 37,622  23,909  46,459 

Current MA Days 12,852  12,857  20,753 

MA Enrollment % 25% 35% 31%

Increase  MA Days 5% 643  643  1,038 

Additional MA IME/GME $128,520  $385,710  $1,037,650 

NAH REIMBURSEMENT

• Nursing and Allied Health Education (NAH)– Additional payment made to teaching hospitals for the

costs of approved nursing and allied health education programs

– NAH payments established in 1999 in the Balanced Budget Refinement Act

– NAH is funded by a reduction made to GME payments

20

SHADOW BILL BASICS

• A shadow bill (no-pay or informational only) is a claim submitted to Medicare Part A for Medicare Advantage beneficiaries

• The shadow bill triggers CMS to issue the IME payment for MA patients

• It also allows CMS to capture the MA days in the SSI ratio

• Condition Codes 04 (and 69 for teaching) must be present on bill

21

SHADOW BILL

22

Source: NORIDIAN Administrative Services LLC

TIMELY FILING DEADLINE

• Part A timely filing rules currently apply to shadow bills

• Until recently, providers had 15-27 months go bill Medicare (until following calendar year)

• Beginning January 1st, 2010, Medicare changed to a 12 month deadline

• Failure to meet the 12 month deadline will result in claims being rejected

23

MMA 2003

24

25

Source: CMS

26

Source: CMS

27

HITECH ACT OVERVIEW

• Health Information Technology For Economic and Clinical Health Act

• Medicare & Medicaid incentive payments for providers designated meaningful users of electronic health records (EHR)

• Payments beginning in 2011, made over a four year payout

• After 2014, penalties may be levied for failure to demonstrate meaningful use of EHR

28

TIMING AND BASIS OF HITECH PAYMENTS

• Paid 4 – 8 weeks after designation of meaningful use of electronic health records

• First initial payment based on the most recently “as submitted” and accepted cost report at the time deemed a meaningful user

• Final payment will be settled on the cost report period in which the provider was deemed a meaningful user

29

EXAMPLES OF DETERMINING CORRECT COST REPORT FOR FIRST HITECH PAYMENT

• 6/30 FY provider attesting in March 2012 � 2011 cost report will have just been submitted by 1/31/2012

� Initial HITECH payment based on 2011 cost report

� 6/30/2011 dates of service: 7/1/10 through 6/30/2011

� Still opportunity to double check 11/17/2010 – 6/30/11

• 12/31 FY provider attesting in March 2013� 2012 cost report not filed until May 2013, after attesting for EHR

� So, initial HITECH payment based on the 2011 cost report

� 12/31/11 dates of service: 1/1/11 through 12/31/2011

� First deadlines to start hitting 1/1/2012

30

HITECH MEDICARE CALCULATION

Initial Amount____________________________________________________________________________________________________________________________________________

Start with $2,000,000 base amount Add [(discharges – 1,149) X $200)]

____________________________________________________________________________________________________________________________________________

Multiplied by Medicare Share____________________________________________________________________________________________________________________________________________

Numerator IP Part A Days + IP Part C Days

____________________________________________________________________________________________________________________________________________

Denominator (Total Charges – Total Charity Charges) / Total Charges Multiplied by Total Acute Days

31

COST REPORT DATA FOR HITECH PAYMENTS

The CMS 2552-96 data elements are as follows:

1) Total Discharges - Worksheet S-3 Part 1, Column 15, Line 122) Inpatient Part A Days - Worksheet S-3 Part 1, Column 4, Line 1 + Lines 6 through 103) Inpatient Part C Days - Worksheet S-3 Part 1, Column 4, Line 24) Total Inpatient Days - Worksheet S-3 Part 1, Column 6, Line 1 + Lines 6 through 105) Total Charges - Worksheet C Part 1, Column 8, Line 1036) Charity Care Charges - Worksheet S-10, Column 1, Line 30

The CMS 2552-10 data elements are as follows:

1) Total Discharges - Worksheet S-3 Part 1, Column 15, Line 142) Inpatient Part A Days - Worksheet S-3 Part 1, Column 6, Line 1 + Lines 8 through 123) Inpatient Part C Days - Worksheet S-3 Part 1, Column 6, Line 24) Total Inpatient Days - Worksheet S-3 Part 1, Column 8, Line 1 + Lines 8 through 125) Total Charges - Worksheet C Part 1, Column 8, Line 2006) Charity Care Charges - Worksheet S-10, Column 3, Line 20

SAMPLE HOSPITAL HITECH ANALYSIS5% INCREASE TO MA DAYS

Estimated Payment Showing CR Reported Days Estimated Payment Adding 5% MA Days

INITIAL AMOUNT INITIAL AMOUNT

Base Amount $2,000,000 Base Amount $2,000,000

Total Discharges 20,580 Total Discharges 20,580

Total Initial Amount $5,886,200 Total Initial Amount $5,886,200

MEDICARE SHARE MEDICARE SHARE

Part A Days 24,201 Part A Days 24,201MA Days 7,502 MA Days 7,877

Total Acute Days 81,002  Total Acute Days 81,002 

Total Charity Charges 53,767,139  Total Charity Charges 53,767,139 

Total Charges 115,219,088  Total Charges 115,219,088 Non‐Charity Charge Ratio 53% Charity Charge Ratio 53%

Medicare Share Calc 73.38% Medicare Share Calc 74.25%

TRANSITION FACTOR TRANSITION FACTORYear Factor Year Factor1 1 1 12 0.75 2 0.753 0.5 3 0.54 0.25 4 0.25

Calculated Payment ‐ Year 1 $4,319,450 Calculated Payment ‐ Year 1 $4,370,556Calculated Payment ‐ Year 2 $3,239,587 Calculated Payment ‐ Year 2 $3,277,917Calculated Payment ‐ Year 3 $2,159,725 Calculated Payment ‐ Year 3 $2,185,278Calculated Payment ‐ Year 4 $1,079,862 Calculated Payment ‐ Year 4 $1,092,639

$10,798,624 $10,926,390

RecoveryYear 1 $51,106Year 2 $38,330Year 3 $25,553Year 4 $12,777Total  $127,766

SAMPLE HOSPITAL HITECH ANALYSIS20% INCREASE TO MA DAYS

RecoveryYear 1 $204,426Year 2 $153,319Year 3 $102,213Year 4 $51,106Total  $511,064

Estimated Payment Showing CR Reported Days Estimated Payment Adding 20% MA Days

INITIAL AMOUNT INITIAL AMOUNT

Base Amount $2,000,000 Base Amount $2,000,000

Total Discharges 20,580 Total Discharges 20,580

Total Initial Amount $5,886,200 Total Initial Amount $5,886,200

MEDICARE SHARE MEDICARE SHARE

Part A Days 24,201 Part A Days 24,201MA Days 7,502 MA Days 9,002

Total Acute Days 81,002  Total Acute Days 81,002 

Total Charity Charges 53,767,139  Total Charity Charges 53,767,139 Total Charges 115,219,088  Total Charges 115,,219,088 Non‐Charity Charge Ratio 53% Charity Charge Ratio 53%

Medicare Share Calc 73.38% Medicare Share Calc 76.86%

TRANSITION FACTOR TRANSITION FACTORYear Factor Year Factor1 1 1 12 0.75 2 0.753 0.5 3 0.54 0.25 4 0.25

Calculated Payment ‐ Year 1 $4,319,450 Calculated Payment ‐ Year 1 $4,523,875Calculated Payment ‐ Year 2 $3,239,587 Calculated Payment ‐ Year 2 $3,392,906Calculated Payment ‐ Year 3 $2,159,725 Calculated Payment ‐ Year 3 $2,261,938Calculated Payment ‐ Year 4 $1,079,862 Calculated Payment ‐ Year 4 $1,130,969

$10,789,624 $11,309,688

Shadow Billing – Challenges

35

REGISTRATION

• Incomplete and/or inaccurate information

• Medicare HICN is key

• SSN is not always enough

• Medicare Advantage Plans – Who are they?

• ER admits

• Complex and confusing to patients

• Example – Medicare v. Medicare Advantage Card

• Changing benefits mid-stream

36

MISSING MEDICARE HIC NUMBERS

37

MAC OPEN FORUM -MEDICARE HIC NUMBER QUESTION

Provider’s question to their FI/MAC during a teleconference:

– Question 15: MA plans tell their members not to use their Medicare cards but to use the MA plan identification card. This presents a problem when the provider has to submit an information claim to Medicare, but has no prior history on the patient and therefore no Medicare number to put on the MA information claim. The provider then has to expend its resourcesto try to get this Medicare Health Insurance Claim (HIC) number.This is a burden on providers.

– Answer 15: We will bring this to the attention of CMS to see if this message can be shared with the MA plans.

38

BILLING

• Medicare HICN required for billing

• Options for tracking down missing HICN

• Medicare Common Working File (CWF)

• Patient

• Medicare Advantage plans

• Proper Condition Codes required

• 04 & 69 for teaching; 04 only for non-teaching

• Tracking status of claim through payment

• Many accounting systems do not create an IME receivable

• Lack resources to follow up on 100% of rejected claims

39

REIMBURSEMENT

• HITECH, IME and GME

• Accuracy of PS&R Report Type 118

• For non-teaching, discharges prior to 7/1/2010 not included

• Timing of claims submitted

• Are claims submitted soon enough to capture on cost report?

• One year timely filing window too broad to rely on

40

Best Practices For Shadow Billing

41

REGISTRATION

• Training, Training, Training

• Demonstrate financial impact of missing HICN

• Create “hit list” of active Medicare Advantage plans for guidance

• Require HICN before admission for any plans on “hit list”

• Create dialogue with billing department re: challenges

• Provide tools for HICN verification

• Master Patient Index reference

• CWF

• Build incentive plan for registration staff

42

BILLING

• Automate• Configure system to generate and submit claims automatically

• Automatically add condition codes

• Track• Create IME receivable in patient accounting system

• Frequently review RTP claims for timely adjustments

• Manual – reconcile to Medicare Advantage remits

• Support• Medicare Common Working File (CWF)

• Master Patient Index reference

43

REIMBURSEMENT

• Reconcile to PS&R Report Type 118

• Request that MAC use an updated PS&R for NPR

• Encourage billing department to bill claims quickly• Do not wait for primary plan to pay

• Utilization

•Part C DRG to Part A DRG ratio v. Part C GME to Part A GME (historical)

• Enrollment

•Medicare Advantage county penetration rates

44

Shadow Billing Implications on SSI and DSH

45

SSI DATA ANALYSIS

• Will the inclusion of MA days in the SSI calculation dilute the SSI percentages used for DSH calculation?

Source: CMS Medpar data

46

SSI %

THE SSI BATTLE STILL ON

• CMS still in the process of “reviewing” SSI %’s for FFY 2006 onward

• Northeast Hospital Corp. v. Sebelius (No. 10-5163)• Challenged inclusion of Medicare Advantage days in SSI• Court agreed for period prior to 2004• Post-2004, Court ruled in favor of CMS

• Continue to appeal the SSI calculations by filing protest DSH amounts on cost report

47

Medicare Advantage Bad Debt and DSH

48

MA BAD DEBT

• Medicare Advantage plans pay virtually nothing for Bad Debt but cover 23% of all Medicare beneficiaries

• Why not?• Payment was not negotiated in contracts• Hospitals are not asking to be paid for out of network and

Medicare Advantage PFFS patients

• Will Medicare Advantage Plans Pay?• CMS says they can if they want to but they don’t have to

49

RESEARCH THE TERMS AND CONDITIONS FOR EACH MEDICARE ADVANTAGE PLAN

This Plan Will Pay This Plan Won’t Pay

This Plan pays according to,

“Original Medicare”

This Plan is another maybe

Pacificare/Secure Horizons

Aetna Blue Medicare Humana

T&C are almost identical to CMS’polices on Bad

Debt

T&C specifically mentioned that

Aetna will not year-end cost settle

with providers, nor will they pay Bad

Debt

T&C reimburses deemed providers the amount they

would have received under

Original Medicare

T&C says that settlement for

certain payment methodologies is

available upon request.

50

MEDICARE DSH SETTLEMENTS FOR MEDICARE ADVANTAGE PLANS

• There is no cost report settlement process for Medicare Advantage plans like there is for FFS Medicare

• Provider Specific file and Pricer are not updated retroactively– Payment by Medicare Advantage plans is first and

final based on what PSF data is in the Pricer

• CMS says it balances out in the end

51

MEDICARE ADVANTAGE DSH IMPACT

• Our internal study indicates that over a four year period DSH payments increased by $3 Billion for some providers and decreased by $1 Billion for others between the “As Submitted” and Settled cost reports– Doesn’t seem to “even out”

• Will Medicare Advantage plans pay for DSH settlements? Maybe…

52

ACTION ITEM FOR PROVIDERS

• Research Terms and Conditions of Medicare Advantage plans to submit requests for cost settlement of Bad Debt and DSH for MA patients

53

The material and information presented is for educational purposes only and should not be considered accounting, financial, operational, business planning, investment, tax or other professional advice. Before making any material changes or decisions that may impact your business, please consult with a qualified advisory firm. Furthermore, HPS shall not be responsible for any loss sustained by any individual or business that relies on the information contained in this presentation.

Copyright © 2011 Healthcare Payment Specialists, LLC All rights reserved.

Questions

54