Washington State Health Care Authority

Hospital Payment Systems Redesign Overview

February 26, 2013

Project Overview

Page 2

Key Project Dates

» Target Outpatient EAPG system implementation date: › October 1, 2013

» Target Inpatient APR-DRG system implementation date: › January 1, 2014

» Revised ICD-10 implementation date: › October 1, 2014

Project Overview

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Baseline Model» To evaluate the impact of changing patient classification systems (APR-

DRGs for inpatient and EAPGs for outpatient), Navigant is creating payment simulation models for both inpatient and outpatient › Models will be prepared for discussion purposes only, and may not

necessarily reflect recommendations by HCA or Navigant» “Baseline” models will have the following components:

› APR-DRG v30 and EAPG v3.7› 3M National Weights (scaled for Washington case mix)› Base rates/conversion factors based on statewide standardized

amount with labor portion adjusted for FY 2013 Medicare wage index› Policy adjustors will not yet be incorporated – will occur in later models

Project Overview

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Analytical Claims Datasets» Simulation models will be constructed using SFY 2011 inpatient and

outpatient fee-for-service (FFS) paid claims data› All data originally processed under ProviderOne (no data

converted from legacy MMIS)› Data includes “shadow-priced” allowed amounts under multiple

FFS payment rate scenarios, including “Current SNAF” FFS rates with assessment increases and “Reduced” FFS rates without assessment increases

› Will identify populations paid under FFS in SFY 2011 that have moved to Healthy Options

Project Overview

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Funding Pool» Simulation models will be designed to be budget neutral in aggregate

› New system payment rates will be modeled such that aggregate simulated payments under the new systems are equal to aggregate current system payments

» Funding pools will be based on SFY 2011 Medicaid FFS claims data payments› Separate funding pools will be established for inpatient and outpatient systems;

model will assume no shift in funds between inpatient and outpatient› Model will use shadow-priced allowed amounts under “Current SNAF” FFS rates

which will account for all rate changes since SFY 2011 (allowed amounts under “Reduced” FFS rates are available for use depending on changes to the Safety Net Assessment program)

› Model will use shadow-priced allowed amounts for CPE hospitals instead of RCC-based payments

Project Overview

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Modeling Steps» Inpatient “baseline” model

› Initial draft model complete with placeholders for policy adjusters› Model QC and HCA review to be completed within the next 1-2

weeks» Outpatient baseline model

› Initial draft model in process to be completed by the end of this week

› Model QC and HCA review to be completed in within the next 2-3 weeks

» Baseline model summaries at service line and provider type levels to be made available to WSHA Task Force in advance of next meeting