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May 15,
2006
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Michigan Health & Hospital Association 6215 West St. Joseph Highway Lansing, MI 48917 (517) 323-3443 Fax: (517) 323-0946 |
IN THIS ISSUE Policy Panel
Discusses Legislation
Policy Panel Discusses Legislation
The MHA Legislative Policy Panel recently met to discuss and vote on several legislative initiatives impacting Michigan hospitals. The committee discussed House Bill 5740, proposed legislation that would amend a section of the Michigan Insurance Code to prohibit health care providers from purchasing insurance coverage from an unauthorized insurer. Currently, many hospitals use ineligible, unauthorized insurers for medical liability coverage and for nonemployed physicians to purchase reasonably priced coverage. The panel recommended opposing the legislation due to the added administrative burden it would put on providers to replace existing coverage and the cost it would add for medical liability insurance, projected to be 10 percent to 12 percent annually. The group considered House Bill 5389, which would require Michigan to create a single point-of-entry (SPE) system for long-term-care services in every county. Proponents contend that an SPE system would provide consumers with information and referral to all long-term-care options, services and support systems. However, opponents are concerned that an SPE system would create an additional layer of bureaucracy and that no funding source has yet been identified for its projected $61 million cost. The panel voted to support a two-year pilot program on an SPE system for long-term-care services, recommending that the state use appropriate due diligence in identifying a funding source and developing objective criteria to evaluate the program's success before it is implemented statewide. Finally, the panel urged that the MHA oppose House Bill 5389 and advised that it be held in abeyance until the pilot program is completed and evaluated. The panel also received updates on proposed rules governing implementation of a statewide trauma care system and the American Hospital Association's new policy statement on hospital pricing transparency. Additionally, the fiscal year 2007 state budget was discussed. For more information, contact Brian Peters at the MHA. Significant Revisions Proposed for FY 2007 DRGs The CMS's revised process for FY 2007 includes changing from a charge-based to cost-based methodology. The most significant effect of the CMS proposal would be a payment shift from surgical DRGs to medical DRGs. Under the proposal, the average weight for medical DRGs would increase by 6.0 percent, with weights for 86 percent of medical DRGs increasing. Surgical DRGs would experience a 5.7 percent average weight decrease, with weights for 42 percent of surgical DRGs declining. The largest decreases would be for cardiac-related surgical cases, where the average DRG weight would decrease by 16 percent. In addition, for FY 2008, the CMS proposes to implement refined DRGs based on severity-of-illness classifications, which will also result in a redistribution of hospital inpatient payments. It is crucial that hospitals analyze the impact of the proposed DRG weights based on their operations. To assist hospitals in their analysis, the MHA recently distributed a hospital-specific impact analysis to CEOs and CFOs that included the estimated impact the DRG changes will have on the hospital's CMI. An Excel file that compares the proposed FY 2007 DRG weights to the current FY 2006 weights is available. The MHA also urges hospitals to submit comments to the CMS regarding the proposed rule by the June 12 due date, with a copy to the MHA. Members with questions should contact Vickie Seal at the MHA. Grassroots Advocacy in High Gear
Last week, hundreds of hospital leaders, health care providers and volunteers from across Michigan visited Lansing for the MHA's Health Care Advocacy Day. At this annual event, participants learned how to be more effective grassroots advocates and about the significance of being involved in the legislative and political process. Additionally, attendees met with state lawmakers to stress the importance of protecting vital Medicaid funding for Michigan hospitals and the patients they serve. On a related note, the MHA Council on Small or Rural Hospitals, in conjunction with the Michigan Rural Health Association and the Legislative Rural Health Caucus, met last week with state lawmakers to discuss the concerns and challenges of rural health care delivery. Members with questions should contact Lori Latham at the MHA. CMS Proposes Hospital Discharge Notice Revisions
Comments on the proposed policy are due June 5, and MHA comments will be available for review shortly. For further information, contact Marilyn Litka-Klein at the MHA. MSA Clarifies Financial Impact of Medicaid OPPS Implementation
In response to issues identified at the ambulatory patient classification work group meeting held earlier this month, the Medical Services Administration (MSA) has provided updates on its plans to implement an outpatient prospective payment system (OPPS) for payment of Medicaid outpatient claims. The new system will replace the existing fee-based payment system, effective Oct. 1, 2006. Under the proposed policy, the Medicaid APC system would mirror the Medicare APC system, with modifications for certain services. However, for consistency with the current Medicaid outpatient payment system, the proposed policy does not include a wage index adjuster. As a result of requests from some hospitals for a wage index adjuster, the MSA released a financial impact analysis that reflects estimated APC payments for each hospital, both with and without an adjuster. The MSA also clarified that, under the proposed policy, it would initially pay 58 percent of the Medicare-approved payment amount (assuming a wage adjuster of 1.0), with the payment percentage reviewed quarterly to ensure statewide budget neutrality. Although the MSA intends to implement the OPPS on a budget-neutral basis statewide, the hospital-specific impact may vary depending upon the mix of services provided. Based on the MSA analysis, the impact of the OPPS will range from an increase of approximately 40 percent for some hospitals to decreases of 25 percent for others. The MSA clarified that, as part of the APC implementation, it intends to follow Medicare's repetitive billing guidelines for services such as dialysis, physical therapy, occupational therapy, respiratory therapy, speech pathology and cardiac rehabilitation. The MSA also clarified that the APC implementation will be date-of-service specific and that only claims with dates of service on and after Oct. 1, 2006, should be billed using the APC format. Hospitals would be required to use the current fee-for-service billing requirements for claims with dates of service prior to Oct. 1, 2006. The current one-year billing limitation will continue to apply, resulting in all outpatient claims for dates of service prior to Oct. 1, 2006, needing to be submitted by Sept. 30, 2007. The MSA intends to give providers an additional 90 days, or until Jan. 1, 2008, to make any claim adjustments for services provided before the Oct. 1, 2006, OPPS implementation. After Jan. 1, 2008, the MSA will no longer accept outpatient claims billing for services provided prior to Oct. 1, 2006. Hospitals are encouraged to review the projected impact analysis prepared by the MSA, analyze its financial impact on their operations, and provide questions and comments to the MSA as soon as possible. The MHA will draft comments for submission to the MSA prior to the May 25 due date and will make them available to members. Members with questions should contact Vickie Seal at the MHA. MHA 2006-2007 Guide to Michigan's Nonprofit Hospitals Available
Copies of the MHA 2006-2007 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. The 2006-2007 guide has expanded to nearly twice the size of last year's to include more advocacy and statistical information. Another difference will be a revised release date for future annual versions of this guide, changing from the spring to the fall. In addition, the latest data on the aggregate economic impact of health care in Michigan is included in this publication and 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. June 1 Is Deadline for Completion of Occupational Mix Survey Michigan Hospitals Receive Top Environmental Award Borgess Medical Center won the award for increasing recycled waste as a portion of total waste from 11 percent in 2004 to 30 percent in 2005. Borgess also replaced all mercury-containing equipment with nonmercury-containing devices. Bronson Methodist Hospital, four-time Environmental Leadership Award winner, received its 2006 award by maintaining an exceptional 25 percent recycling rate and by reducing its regulated medical waste, even with significant growth in outpatient and inpatient areas. Bronson has also expanded recycling to include all fluorescent light bulbs and plastics. Foote Health System won its second consecutive award for actions such as mandatory computer-based waste minimization training for all staff and implementing the practice of using old linens as rags, which has eliminated 1,620 pounds of waste annually. Sparrow Health System, also a second-year winner, was recognized for requiring contractors to recycle demolition waste that diverted 442 tons from landfills, saving the hospital more than $22,000. Sparrow also donated medical equipment to Michigan State University, the American Red Cross and other nonprofit organizations. The University of Michigan Hospitals and Health Centers received its fourth Environmental Leadership Award for strengthening its environmentally preferable purchasing program to include recycled content-containing and environmentally preferable carpets, wall coverings, paper and wastebaskets. Its chemical tracking system also identifies opportunities to further reduce hazardous waste. These Michigan hospitals continue to increase recycling opportunities, distribute surplus medical equipment to smaller county hospitals and abroad, donate computers to schools and other nonprofit organizations, improve the overall care of patients, and attempt to keep health care costs down. H2E established a national movement for environment sustainability in health care. A nonprofit organization, H2E works to prevent excess hospital pollution and waste, recognizes the sector's best performers, and provides resources to help health care providers move toward environmentally sound health care. In this spirit, donating unneeded business or personal computers ensure that working computers stay out of landfills, and in the hands of those who need them. Questions should be directed to John Gohlke at the Michigan Department of Environmental Quality at (517) 241-1320. Learn to Comply with Criminal History Check, Fingerprinting Law
The Board of Trustees of Ingham Regional Medical Center, Lansing, has announced its May 4 decision to name Robert Wright as its new president and chief executive officer, effective today. Wright is replacing Dennis Litos, who resigned last month to become president and CEO of Doctors Medical Center, Modesto, CA. Wright has served as president and CEO of Bay Regional Medical Center, Bay City, since November 1998, following nearly three years as its chief financial officer. Alice Gerard, MSN, will take the reins at Bay Regional as interim president and CEO. Gerard has served at the facility since 1978 and has been its vice president of patient care services since 1999. Both Bay Regional and Ingham Regional are subsidiaries of McLaren Health Care, based in Flint.
Sparrow Health System, Lansing, has named Andrea R. Price as its executive vice president and chief operating officer. Price was formerly executive vice president and COO at Hurley Medical Center, Flint, and served as its interim president and CEO from June 2001 through February 2002. She has also been a member of the executive management team at Children's National Medical Center, Washington, DC. Price earned a Master of Health Administration degree with a concentration in financial management from Tulane University and a Bachelor of Arts in psychology from the University of Michigan. Final Rule Released to Update LTCH PPS The Centers for Medicare & Medicaid Services (CMS) recently released a final rule to update the Medicare prospective payment system (PPS) for long-term, acute-care hospitals (LTCHs) for discharges occurring on and after July 1, 2006. The CMS did not incorporate several improvements recommended by the American Hospital Association, the MHA, hospitals and other organizations. Consistent with the proposed rule, the final rule provides no marketbasket update and will maintain the federal rate at the current $38,086.04. Other highlights of the final rule are shown below.
While the CMS estimates that LTCH payments will decrease by approximately 3.7 percent, hospitals believe the onerous provisions of these changes to LTCH reimbursement will result in increased LOS at acute-care hospitals. Members with questions regarding the final rule should contact Vickie Seal at the MHA. CMS Releases Proposed Inpatient Rehabilitation Facility PPS Last week, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule to update the inpatient rehabilitation facility (IRF) prospective payment system (PPS) for discharges beginning Oct. 1, 2006. The proposed rule includes the following:
Although the proposed rule maintains the labor-related share at the current 75.720 percent, the CMS indicates that it intends to update the labor-related share in the final rule based on more recent data. Currently, for an IRF to be paid based on IRF PPS rates rather than the lower inpatient PPS rates, a minimum of 60 percent of IRF admissions must meet one of 13 qualifying medical conditions, with the minimum threshold increasing to 75 percent over the next several years. The proposed rule incorporates a provision of the Deficit Reduction Act of 2005 that maintains the minimum compliance percentage at its current 60 percent for an additional 12 months. As a result, for cost reporting periods beginning on or after July 1, 2005, and before July 1, 2007, the compliance threshold will be 60 percent, rather than increasing to 65 percent on July 1, 2006. For cost reporting periods that begin July 1, 2008, and after, IRFs will be required to comply with the full 75 percent compliance threshold, which is 12 months later than initially planned for the transition. The MHA will provide additional information to members within the next few weeks. Members with questions regarding the proposed rule should contact Vickie Seal at the MHA. Date Extended for Implementation of Revised Medicaid Forms In a process that began last fall, the Medical Services Administration (MSA) continues to use input from hospitals to make revisions to the FD-622 report to hospitals for Medicaid inpatient fee-for-service paid claims. The MSA will implement the revised FD-622 report format when the current Medicaid 1232 proprietary remittance advice is discontinued and replaced with the 835 health care claim payment advice that complies with the Health Insurance Portability and Accountability Act (HIPAA). As a result of hospital requests, the MSA recently announced it will extend the discontinuation date of the current Medicaid 1232 proprietary remittance advice. Previously set for July 1, 2006, no future date for its discontinuation has yet been specified. Last month, the MSA distributed hospital-specific drafts of a revised FD-622 report, along with each hospital's current version of the report. The MHA and the MSA encourage hospitals to review the new FD-622 report format to ensure it contains the information needed to process paid claims and to contact the MSA Provider Inquiry at (800) 292-2550 with questions or comments. In preparation for the transition to the 835 remittance advice, the MSA encourages all providers to sign up to receive the new form and review it. Hospitals should contact the MSA regarding any problems they experience. The MSA intends to work with providers to make necessary modifications to the 835 and to allow 90 days for providers to test the 835 within their own systems. Members with questions should contact Vickie Seal at the MHA. Making Data Collection and Analysis Easier and Better
Back by popular demand, the MHA Health Foundation and the MHA Service Corporation Core Options™ team are hosting the workshop Making Data Work for You! The program will introduce a simple approach to using statistics as a framework for expanding improvement efforts through simple, efficient data collection. This workshop will give attendees numerous methods and tools to improve data processes and will provide a free Excel macro that will make performing statistical functions easier (please bring a laptop for the Excel tutorial). Past attendees have said "the examples were real and very easy to understand" and "specific, useful tools that I can use immediately." Making Data Work for You! is scheduled for June 15 in East Lansing. A brochure and online registration are available by visiting the MHA Web site. Contact Sara Donohue at the MHA for more information.
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The
panel recommended that the MHA become a member of Common Good,
a broad-based coalition that supports the development of health
courts to address medical liability
litigation. Under the group's proposal, claims would first be filed with a
health court review board that would be responsible for investigating
them. This administrative
body could determine that there was a clear indication of wrongdoing by the
provider and order immediate compensation, or conversely, that
the injury was not the
result of medical malpractice and dismiss the claim. When the board could not
make a determination, the claim would be referred to a state court. 
On
April 12, the Centers for Medicare & Medicaid Services (CMS) issued a
proposed rule to update the Medicare inpatient prospective payment system for
fiscal year (FY) 2007, which included a major overhaul in the calculation of
diagnosis-related-group (DRG) weights that will result in a significant redistribution
of Medicare inpatient hospital payments. While the DRG
weight changes are expected to result in a 0.5 percent decrease in the Michigan
statewide case mix index
(CMI), the impact on individual hospitals will vary significantly. Using Medicare
claims data from the 2005 Medicare Provider Analysis and Review (MedPAR) file,
the hospital CMIs are projected to change between a decrease of approximately
11 percent to an increase of 10 percent, depending upon the specific mix of services
provided at each hospital.
Last
month, the Centers for Medicare & Medicaid Services (CMS)
issued a proposed policy to revise hospitals' responsibility
for providing patients with 
As
previously 
Recently,
five Michigan hospitals were honored nationally among hospitals,
health care providers, and health systems by Hospitals for a
Healthy Environment (H2E)
for high-quality environmental performance. The annual H2E award ceremony,
held in Seattle, featured the presentation of 14 Environmental
Leadership Awards.
The Michigan honorees are Borgess Medical Center, Kalamazoo; Bronson
Methodist Hospital, Kalamazoo; Foote Health
System, Jackson; Sparrow Health System, Lansing;
and the University of Michigan Hospitals and Health Centers, Ann Arbor. Receiving
more than a third of the Environmental Leadership Awards illustrates Michigan's
commitment to the highest standards in environmentally friendly health care. 
Michigan
health care providers are required by a new law to conduct criminal
background checks prior to employing, independently contracting with, or granting
clinical privileges to any individual who regularly has direct access to or
provides direct services to patients or residents in the health
care facility. Because
many questions exist about the policy, documentation process and exemptions,
the MHA Health Foundation is hosting the Webinar Compliance with the New
Criminal History Check and Fingerprinting Law, scheduled from 10:30 a.m.
- noon June 7. The Webinar will outline the scope of the new statute,
explain the criminal history
check law and facilities it affects, give details on who must be checked, and
describe the conditional employment and conditions of continued employment
laws. More 
