IN THIS ISSUE

Murtha Testifies before Senate Appropriations Subcommittee

Pat Murtha

Last week, Pat Murtha, president and CEO of the St. Joseph Health System in Tawas City, presented testimony to the Senate Appropriations Subcommittee on the Department of Community Health Budget. The committee, which is chaired by Sen. Tony Stamas (R-Midland), heard Murtha describe how the combination of significant Medicaid recipient growth and reimbursement erosion puts extraordinary pressure on Michigan's hospitals and threatens continued access to care. Murtha also explained that a recent Michigan State University study found that, until Michigan can achieve reasonably full employment, cutting Medicaid as a way to balance the state budget contributes to higher unemployment.

Subcommittee deliberation on the Michigan Department of Community Health (MDCH) budget is expected to continue into early June before moving to the full Senate Appropriations Committee. House Appropriations Subcommittee action on the MDCH budget continues on a parallel track, with the intent to report its version of the budget to the full House Appropriations Committee in early June. Legislative leaders expect the MDCH budget to be finalized in a conference committee during the summer.

On a related note, state officials and private economists will hold the spring revenue estimating conference Thursday. The conference identifies final revenue projections that the governor and legislature will incorporate into state department budgets for the coming fiscal year. Members with questions should contact Brian Peters at the MHA.

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Act by June 1 to Retain QAAP Funding for Medicaid

Mandated limits on Medicaid payments may result in some hospitals opting to forego part of the quality assurance assessment program (QAAP) funds they would otherwise receive. If these facilities notify the state by June 1 that they elect to receive lower QAAP payments, the funding they choose to forfeit will be distributed to other Michigan hospitals.

In late April, the Medical Services Administration (MSA) issued a letter to hospitals indicating their hospital-specific payment and tax amounts for both the Fiscal Year 2004 Phase II and the FY 2005 QAAP. As reported in recent MHA correspondence, it is crucial that hospitals review that data and determine whether the preliminary payment amounts will result in exceeding the mandated charge and cost limits for FYs 2004 and 2005. For inpatient services, federal regulations mandate that a hospital's Medicaid fee-for-service payments, including capital, graduate medical education and QAAP payments, cannot exceed Medicaid charges. For outpatient services, state law mandates that Medicaid fee-for-service payments, including graduate medical education and QAAP payments, cannot exceed the Medicaid cost. Since the MSA data was prepared using 2002 and 2003 data, hospitals must recalculate their individual limits using actual FY 2004 and FY 2005 cost reports or current projections. Upon final settlement, the 2004 and 2005 hospital cost reports, not the figures prepared by the MSA, will be used for determining whether Medicaid payments exceed the charge or cost limits. Current hospital data may result in significantly different limits than the MSA's calculations. To assist hospitals in reviewing their data, the MHA provided a sample Excel file for illustrative purposes.

Hospitals that determine the QAAP payments will result in exceeding the limits may elect to receive a lower QAAP payment amount by notifying the state prior to June 1. Any funds returned to the state by this date will be redistributed to the remaining eligible hospitals. Upon final settlement of FYs 2004 and 2005 Medicaid cost reports, the MSA will recover any payments in excess of the limits. At that time, the excess payments will revert to the state's general fund and will not be redistributed to other hospitals.

The schedule below summarizes when the MSA currently anticipates issuing QAAP payments, mailing tax bills, and requiring payment of the taxes. Members with questions should contact Vickie Seal at the MHA.

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Mapping our Future Focus of MHA Annual Meeting

As we acknowledge the present social and political realities in the state of health care, face current challenges and evaluate recent progress, it's time to chart the future course of health care in Michigan. This map must reflect a commitment to protecting access to affordable and safe health care for every state resident, and it must plot the passageway to a healthier state. Generously supported by its corporate sponsor, the MHA Service Corporation, this year's MHA Annual Membership Meeting recognizes today's challenges while providing members with a better sense of direction and new tools for forging a path to better health and more effective health care.

Keynote speaker Karen Hughes, newly appointed undersecretary of state for Public Diplomacy and former counselor to President George W. Bush, will discuss "The CEOs of Leadership," and Jeffrey Selberg, president & CEO of Exempla Healthcare in Denver, will focus on "The Role of Senior Leaders in Creating a Culture of Passion for Patient Safety." Quint Studer, founder of the Studer Group, will focus on "Building a Culture of Excellence" that must be the backdrop of health care's future.

Members are encouraged to take advantage of the myriad professional and recreational offerings, with a special focus on the Links Fore Health golf tournament. The tournament's proceeds will go directly to the MHA Health Foundation's community health improvement fund. This offering sold out last year and members are encouraged to register early. Participants can create their own foursomes or register individually and be assigned to a group of four. Members with questions should contact Marlene Hulteen at the MHA.

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MHA Submits Comments Regarding 1115 Waiver

The MHA recently submitted its comments to the Medical Services Administration (MSA) regarding the section 1115 demonstration waiver request that is necessary to implement several changes proposed by the fiscal year (FY) 2006 Medicaid budget. These proposed modifications include:

• Elimination of three-month retroactive eligibility. Instead, enrollees would be eligible from the first day of the month of application. Although the initial state estimates reflected a $28 million decrease in hospital payments, hospital representatives noted that the financial impact is likely much higher. This would also reduce Medicare disproportionate share payments.
• Elimination of compliance with actuarial soundness requirement for HMO rates for FY 2006. This would enable the state to suspend the Centers for Medicare & Medicaid Services (CMS) requirement of paying actuarially sound rates to its contracted managed care plans.
• Freeze of enrollment for the nonmandatory 19- and 20-year-old population. This would not remove any eligible beneficiaries, but would gradually phase out coverage of this optional group over two years.
• Limited benefits for the nonmandatory adult caretaker population and 19- and 20-year-olds, currently encompassing approximately 57,000 beneficiaries. These changes include an annual inpatient stay limit of 20 days, a $10 co-payment for emergency department services, a limit of four prescriptions per month, and elimination of coverage for speech pathology, occupational therapy, physical therapy and chiropractic services.

The MHA is opposed to these changes, which will have a negative impact on both providers and beneficiaries. The MSA is accepting comments on the draft waiver via e-mail until Wednesday. The agency anticipates submitting the waiver to the CMS on June 1 for an Oct. 1, 2005, effective date. Members with questions should contact Marilyn Litka-Klein at the MHA.

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Members in the News

Douglas Welday	Mark F. Johnson, FACHE	W. Anthony Greer, MD, MBA

In April, Douglas Welday was named executive vice president and chief financial officer of Oakwood Healthcare Inc., Dearborn. Welday has worked with the health system for 15 years and has served as chief operating officer of Oakwood Hospital & Medical Center since July 2003. He is a certified public accountant and received a bachelor's degree in accounting from Michigan State University and a master's degree in business administration from the University of Michigan.

Mark F. Johnson, FACHE, was appointed vice president of operations for St. John Detroit Riverview Hospital effective Feb. 21. With 25 years of experience in operations and performance improvement, Johnson was most recently vice president of clinical services at Brockton Hospital, an acute-care teaching hospital in Massachusetts. He earned a master's degree in business administration at the University of Tennessee at Chattanooga and is retired from the U.S. Navy Reserves as a commander in the Medical Service Corps.

W. Anthony Greer, MD, MBA, was appointed vice president of medical affairs at St. John Detroit Riverview Hospital effective March 1. Greer comes to Michigan after serving as vice president of medical affairs and medical director at Cayuga Medical Center in Ithaca, NY. He received his medical degree from Loyola-Stritch Medical School in Illinois, completed an ophthalmology residency at Howard University Hospital in Washington, DC, and earned a master's of business administration degree in technology management from the University of Phoenix.

Bostford General Hospital, Farmington Hills, recently won the 2005 Central Service Department of the Year award from the Michigan Society for Healthcare Central Service Professionals. To be considered for the award, Botsford was required to submit documentation about its central sterile processing department, which prepares instrument trays and "case carts" for Botsford's operating rooms, labor and delivery, cardiac catheterization lab, and nursing units. The department also cleans and sterilizes the medical instruments for the hospital and the health system's 11 clinics.

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MHA 2005 Guide to Michigan's Nonprofit Hospitals Available

This week, copies of the MHA 2005 Guide to Michigan's Nonprofit Hospitals — Key Issues, Progress and Ongoing Challenges are being distributed to MHA-member chief executive officers, public and government relations directors, community benefit project managers and others. The MHA will also share the guide with state legislators, Gov. Granholm, key staff in state departments and regulatory agencies, statewide media, members of Michigan's congressional delegation, and the business community.

This year's guide is not only an essential resource for state officials, but also serves as a staple educational tool for MHA members to use with community, business and civic leaders. It details the responsibilities and contributions of Michigan hospitals, the challenges of improving access and quality care, and major issues impacting the present and future of health care in Michigan.

Special to this year's guide is a detailed look at the Michigan Medicaid program and the latest data on the economic impact of health care in Michigan, which will be officially released as a full report in early June. The guide is accessible online and additional copies are available by using the order form located inside the back cover of the guide. For more information, contact Kevin Downey at the MHA.

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Monthly Financial Survey Training Session Scheduled

Last week, the MHA hosted live virtual classroom (LVC) sessions to provide additional training on the Monthly Financial Survey (MFS), a powerful tool offered free-of-charge to MHA-member hospitals for providing valuable benchmarking of key financial and utilization data. An additional LVC session is available May 25 from 2 to 4 p.m. for currently participating hospitals and those that are considering participation in the MFS. This session will provide an overview of recent system enhancements, including review of a new feature that automatically graphs hospital data on 12 indicators.

Pre-registration is required for those interested in participating in the upcoming training session on the MFS and its capabilities. Members with questions on the training should contact Cassandra Dowling at the MHA. General questions regarding the MFS should be directed to either Laura Schmidt or Vickie Seal at the MHA.

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Review New Hospital Wage Data by June 10

The Centers for Medicare & Medicaid Services (CMS) recently released the May 2005 hospital wage index and occupational mix data that will be used in determining the Medicare wage index for the fiscal year 2006 inpatient prospective payment system, which will take effect Oct. 1, 2005. Included in the new release of data are revised Tables 2 and 4J to correct technical errors contained in the hospital wage data tables initially released. It is crucial that hospitals review their data for accuracy, since both the CMS and the fiscal intermediary must be notified of any errors no later than June 10. At this time, a hospital can request only corrections to processing errors that were made by the CMS or fiscal intermediary during the processing of final data. To assist hospitals in review of their data, the MHA anticipates a hospital-specific mailing to chief financial officers by May 20.

In addition, the CMS has posted a notation in the DRG weight table to indicate which diagnosis-related groups are subject to special payment rules under the post-acute transfer policy. The DRG weight table, without the notations, was initially included as Table 5 in the proposed rule. The MHA encourages members to periodically check the CMS Web site, since the CMS is expected to make additional corrections in the near future.

The MHA will provide additional information regarding the proposed rule within the next few weeks. Members with questions should contact Vickie Seal at the MHA.

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Availability of National Provider Identifier Announced

The Centers for Medicare & Medicaid Services (CMS) has announced the availability of the National Provider Identifier (NPI) for use in standard electronic health care transactions. The Health Insurance Portability and Accountability Act of 1996 (HIPAA) requires most entities covered under the act to use the NPI for electronic transactions. The NPI final rule, published on Jan. 23, 2004, requires health care providers such as physicians, hospitals, nursing homes, pharmacies and pharmacists to obtain NPIs, including those using a billing agency to prepare transactions.

Current health care provider identifiers will be replaced by NPIs for standard electronic transactions. Although Medicare, Medicaid, clearinghouses and most health plans will be required to accept and use NPIs by May 23, 2007, heath care providers should not use the NPI until health plans issue instructions on their acceptance of the NPI in standard electronic transactions. There are three ways to apply for an NPI.

1. Starting May 23, 2005, apply through the Web-based application.

2. Complete a paper application and send it to Fox Systems Inc., the contractor chosen by the CMS as the "NPI Enumerator" to assign the NPI. The Enumerator will be prepared to accept paper applications starting July 1, 2005.

3. Beginning this fall, organizations may also submit applications in an electronic file on behalf of other health care providers. For example, hospitals that employ physicians or pharmacists will be allowed to submit applications for those employees.

The MHA recommends that providers complete an assessment of their employees and facilities requiring NPIs and clarify any questions with the Enumerator before submitting an application. Questions regarding the NPI can be directed to the Enumerator at (800) 465-3203 or Jim Lee at the MHA.

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MHA Government Relations Retreat Scheduled

The 2005 MHA Government Relations Retreat will be held Aug. 3 through Aug. 5 at Bay Harbor Resort & Marina in Northern Michigan. This retreat is designed for individuals who coordinate political or grassroots advocacy activities in MHA-member hospitals, and attendees will receive an overview on state and federal health care issues. Invited speakers include Rick Pollack, executive vice president, advocacy and public policy, American Hospital Association; Congressman Dave Camp (R-Midland, District 4); Paul Reinhart, state Medicaid director, Michigan Department of Community Health; and state Rep. Ed Gaffney (R-Grosse Pointe Farms), chair, House Health Policy Committee.

Conference attendees will be responsible for all travel, lodging and recreation-related expenses. The MHA will provide on-site meals and cover conference-related expenses. The deadline to register for this conference is July 8. Members with questions should contact Lori Latham at the MHA.

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OHSP Calls for Safest Summer on Record

Last year, the combined efforts of Michigan's law enforcement agencies, governmental entities, businesses, associations and others resulted in Michigan reaching its 90 percent goal for use of safety belts. This summer, the Michigan Office of Highway Safety Planning (OHSP) has announced plans to continue these efforts to prevent traffic deaths and serious injuries during times when increased travel puts more Michigan residents at risk.

The goal of the OHSP is to achieve this through increased safety belt and drunken driving enforcement across the state all summer. The OHSP hopes to reduce traffic deaths by 13 people, an average of one person every week of the summer. While traffic fatalities increased nationally in 2004, Michigan experienced a nearly 10 percent drop in traffic deaths because of similar prevention efforts.

Many tools to assist in these efforts are available at no cost to participants and members are encouraged to get involved. More information on the Safest Summer on Record is available on the OHSP Web site or by contacting Alicia Sledge, occupant protection program coordinator at the OHSP, at (517) 333-5321.

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• The PHA Reimbursement Committee will meet Wednesday. For more information, contact Marilyn Litka-Klein at the MHA..

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