April Recap of DHLF Activities

Following is a summary of the issues the DHLF has been focusing on since our last monthly recap.  This newsletter, as well as additional information and resources related to Forum activities, is available on our website – www. cadhlf.org.
DP/NF Medi-Cal Rate Reduction 
There currently are several avenues at work to oppose the 2011 reduction to hospital-based distinct-part nursing facilities (DP/NFs). The plaintiffs in the federal court case (that initially resulted in an injunction that was overturned upon appeal) have requested an en banc review (a review by the entire court; not just the justices that provided the decision).  If the en banc request is not approved (or if the decision isn’t favorable), a request will be made to the U.S. Supreme Court to hear this appeal (not all cases appealed to the US Supreme Court are heard, however).  DHCS is prohibited from implementing the reductions until the en banc matter is decided, which could go well beyond the planned June 2013 implementation.  
AB 900 (Alejo) and SB 640 (Lara) have been introduced in the Legislature to unravel the Medi-Cal reductions for all providers (physicians, pharmacists, DP/NFs, etc.; AB 900 was recently amended to include all providers).  Additionally, AB 646 (Nielsen) was recently amended to exempt all DP/NFs from the reductions.  The DHLF is supporting all three of the above bills as is CHA. 
In conjunction with the above, CHA is conducting a public relations campaign which includes paid and earned media, targeting efforts in some legislative districts. A kick-off to this campaign was a press conference held on April 10 (focusing on AB 900) which was attended by some affected hospitals and Forum staff.  There was another press event held on April 24 that focused on SB 640.  
As we reported to you on April 24, the Forum (based on member direction) is preparing to file for an injunction and/or temporary restraining order (and ultimately a trial) in state court challenging these reductions.  We have worked with attorneys to prepare letters to send to affected hospitals requesting a commitment to participate in the case by mid-June.  The letters explain the current status of the rate reductions and why a state action may be the next possible approach.  If there is either a favorable federal legal or state legislative resolution, then the case will not proceed.  The above-described package will be sent to hospitals with a DP/NF within the next couple of weeks.
 DP/NF Supplemental Program for Public Hospitals 
There is a supplemental program that allows public DP/NFs to claim any unreimbursed costs through a certified public expenditure (CPE) federal match program.  The effect of the supplemental is to cut the reductions – both retroactive and prospective — in half for all public hospitals through the receipt of federal funds.  Forum staff has been working with DHCS to ensure hospitals have the necessary tools to take advantage of this program when/if the reductions occur. 
Inpatient PPS Proposed Rule 
On April 26, 2013, CMS issued the proposed FY 2014 IPPS rules, effective October 1, 2013. As expected, CMS included the proposed rules governing the changes to Medicare disproportionate share hospital (DSH) payments, as required by Section 3133 of the Affordable Care Act (ACA).  A summary of the implication on Medicare DSH payments is attached and was sent to member hospitals on May 6.  
The proposed rule addressing Medicaid DSH payments (and reductions to states’ DSH allotments as required by the ACA) is expected shortly.  A summary of the expected impact on states and eligible hospitals will be provided once an analysis is complete. 
The DHLF is working with the CHA DSH Task Force to prepare comments on both proposed rules (comments are due this summer) with copies to be provided to member hospitals once drafted.  
Sequestration: Medicare FFS Payment Reductions 
CMS notified providers in March regarding the effect of sequestration on Medicare fee-for-service (FFS) payments. According to the notice, in general Medicare FFS claims with dates-of-service or dates-of-discharge on or after April 1, 2013, will incur a 2 percent payment reduction, applied to all claims after determining coinsurance, any applicable deductible, and any applicable Medicare secondary payment adjustments. The notice directed any questions regarding reimbursement to the provider’s Medicare claims administration contractor.  A link to the notice is below: 
Activities Related to District Hospitals’ Transition to CPEs/Obtaining New Federal Waiver Funding 
Current Status
There continues to be no movement on this issue as DHCS is still awaiting approval (from the Centers for Medicare and Medicaid Services – CMS) on all components of transition for district/municipal hospitals to using CPEs.  District/municipal hospitals have continued to receive Medi-Cal inpatient reimbursement for fee-for-service on an interim basis consistent with their prior payment methodologies, with the exception of the AB 113 program, the intergovernmental transfer program for acute inpatient services (see more below). 
Delivery System Reform Incentive Payments (DSRIP)
Concerns related to the timing of the DSRIP program (based on approval delays) and challenges of small hospitals meeting patient safety milestones have been communicated by the Forum to DHCS for them to communicate to CMS as part of the approval process.  
Uncompensated Care
In addition to the waiver funding available to district/municipal hospitals via the DSRIP, there also is federal funding available for care provided to the uninsured.  These funds will be accessed using CPEs and the CPEs likely will be reported quarterly.  
Next Steps
The CPE transition/waiver funding was planned for implementation on July 1, 2012.  Originally, DHCS believed there would be CMS approval prior to now and they would have been able to reprocess claims with dates of service back to July 1. In addition, DHCS had hoped that waiver funding (the uncompensated care and DSRIP) distribution to hospitals was already underway by now. 
Due to the CMS delays in approval, Forum staff has discussed reimplementation of the AB 113 program (IGT program for fee-for-service inpatient) with DHCS.  DHCS may be willing to consider this option, but it will be done in the context of further discussions with CMS regarding the overall transition.  Forum staff will continue to work with DHCS and ensure this opportunity is not lost if the transition to CPEs cannot be implemented in a manner that will allow it to be applicable to the 2012-2013 fiscal year.  Additional information will be included in the 2013-14 state budget “May Revise” which will be released on May 14.  Staff will review the information in the May Revise and provide a summary to members soon after the release. 
Private hospitals still are slated to move to a DRG-based system for Medi-Cal fee-for-service inpatient services on July 1, 2013.  This transition for private hospitals will not impact district/municipal hospitals unless federal approvals are not obtained for the CPE transition.  CHA has introduced SB 645 (Nielsen) to delay implementation of DRGs by one year, but all indications are the state plans to move forward as planned on July 1, 2013. 
Medi-Cal Managed Care Expansion in Rural Areas
Beginning October 2013, Medi-Cal managed care will be expanded into rural areas that are now fee-for-service (FFS) only.  The expansion of managed care includes the following rural FFS counties: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Imperial, Inyo, Lake, Lassen, Mariposa, Modoc, Mono, Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou, Sutter, Tehama, Trinity Tuolumne and Yuba.  CMS approval has not yet been obtained on this expansion, which may further delay implementation (implementation was originally planned for July 1, 2013).  
Medi-Cal Managed Care Intergovernmental Transfers (IGTs)
As we reported to you in April, the DHLF has been working with DHCS on the Medi-Cal managed care “rate range” IGT.   
When Medi-Cal managed care rates are actuarially determined, there is a range.  DHCS pays the plans at the low end of the range and public facilities (district, municipal, county and UC hospitals) can use IGTs to improve the rates to the high end of the range, the difference of which (with the federal match less the administrative fee) can then be passed along to the transferring entity. 
There is an opportunity currently for the 11/12 year (except in County Organized Health Systems – those rates are final).  Contact your local health plan and let them know that you would like to participate in the rate range IGT.  This is done via a negotiation with the plan (with little or no state oversight).  In areas with more than one public hospital, it is possible that one public entity could use all the available room, precluding participation by other public entities.  However, due to some of the transitions (notably the seniors and persons with disabilities transitioning into Medi-Cal managed care), there should be room in the 11/12 rates that are above the 10/11 rates.  We hope this increased room will allow for additional facilities to participate. 
It is important to contact the plan soon as the program is being finalized next month.  In the COHS counties, work will begin in January for the 12/13 rates.  Regardless of participation in 11/12, district hospitals should contact the plans and let them know of their interest in this program in subsequent years. 
Hospital Provider Fee
The CHA Board of Directors has approved the next 2-year hospital provider fee (calendar years 2014-15) and CHA staff reports work will get underway on modeling, etc. within the next few weeks. DHLF staff will be working closely with CHA and other hospital constituencies on the model and other details.  The components of the fee will be outlined in SB 239 (Hernandez) once completely developed.  The funding via direct grants that district/municipal hospitals receive via the hospital provider fee is critical, especially in this time of reductions.  The importance of this fee to district/municipal hospitals was outlined in a recent letter (attached) to CHA president, Duane Dauner. 
DHLF Calendar
Upcoming DHLF Board Events:

  • July 10/July 11 – DHLF Board Meeting and tour of 2 district hospitals, Carlsbad
  • November 13 – DHLF Board Meeting, Sacramento

DHLF Staff Activities
In addition to several ongoing informal meetings, DHLF staff has recently attended or is planning to attend: 
Health & Human Services – Health Care Reform Stakeholder Group
DHCS Medi-Cal Managed Care Expansion to Rural Areas Stakeholder Group
CHA Disproportionate Share Hospital (DSH) Task Force addressing both Medicare and Medi-Cal DSH reductions
ACHD Annual Meeting 
Please let us know if you’d like additional information or have input on any of these items. 
2013 Legislation
An updated legislative report is attached.  Please let staff know if you have any questions on bills included.  Currently our highest legislative priorities are the Medi-Cal provider rate reduction bills.