HCPF Delivery System, Payment Reform, and Cost Analysis Alignment - PowerPoint PPT Presentation

HCPF Delivery System, Payment Reform, and Cost Analysis Alignment of public and private payers of Health Care is needed to achieve efficiencies in health care administration and lower costs. John Bartholomew, CFO 1

Colorado Delivery System and Payment Reform: • Current/Future Transformation Initiatives follow core precepts  Provider Accountability: e.g. especially to those with cost-based rates; reasonable overhead costs.  State Accountability: e.g. to not have overly burdensome regulations; transparency of cost based rates  Attaching Service Reimbursement to Performance 3

Who Gets Payments for Services 4 15 FY15-16 data

Provi vider er Accountab ability • Look at:  Providers with cost-based rates or those with rates based on cost  Federally Qualified Health Clinics  Hospitals  Nursing Facilities  What you’re paying for matters!

FQHC R Report ort Car Card

Ho Hospital al A Anal alysis  Payment to Cost Ratio  Hospital Cost/Overhead Variance  Hospital Utilization

What's happening in Colorado's market? Payment to Cost Ratio Payer Type 2009 2015 Overall 1.05 1.08 Medicare 0.78 0.72 Medicaid 0.54 0.75 Insurance 1.55 1.58 CICP/Self Pay/ Other 0.52 1.11 Data is from the Colorado Hospital Association CICP is the Colorado Indigent Care Program 16

Hospital Overhead Costs: A Primer Note: In their Medicare Cost Reports, hospitals detail their expenses using designated cost centers. We devised a process to aggregate and adj ust certain cost centers to be included as “ Overhead.” Not all cost centers are included (e.g., costs not allowed by Medicare are removed), and for hospitals that are part of systems, we allocated some system-level costs to hospital overhead.

The Four States in the Study

Four States: Four Rates of Hospital Overhead Costs

Hospital Overhead Costs by Insurance Rating Region Rat es Vary Widely Across Regions

Hospital Overhead Costs by Insurance Rating Region Rat es Vary Widely Across Regions – and Within Regions 13

Hospital Overhead Costs by Hospitals and Systems Rat es Vary Widely Across S yst ems 14

Hospital Overhead Costs by Hospitals and Systems Rat es Vary Widely Across S yst ems – and Within Systems

Urban and Rural Hospital Overhead Costs Rat es Vary Widely Wit hin Rural and Urban Regions and Wit hin S ize Cat egories

Administrative and Capital Costs: A Breakdown Rat es Vary Widely Across Regions and Wit hin Cat egories 17

Hospital Utilization • DOI S ingle Rating Region study found:  S ignificant variation in utilization across DOI rating regions  S ome cost variation across DOI rating regions • Initial Medicaid data analysis found:  S imilar reimbursement variation across DOI rating regions  Different utilization patterns as compared to commercial insurance 18

Now What? • Continue to better understand what is driving cost and utilization differences across the state between payers  DOI and HCPF is working on this  We need more transparency/ data to truly answer • Arizona Hospital Annual Report  S tatutory requirement to provide information to state Medicaid agency  https:/ / azahcccs.gov/ shared/ Downloads/ Reporting/ ReportOnUncompensatedHospitalCostsAndProfitability.pdf 19