- Inclusion of unpaid Medicaid days
- Inclusion of non-acute services
- Inclusion of dual-eligible days
- Lack of supporting documentation
- Other errors
Category: Medi-Cal – Calif
From: Modern Healthcare; 6/4/16
Medicaid expansion in California, by many accounts, has been a success. The number of uninsured fell to just 11% of the population as of 2014, down from 16% the year before, one of the biggest drops in the country. More than a third of the state’s residents now have Medicaid.
Providers are seeing the impact of that expanded coverage—and it’s not all positive. The program, known as Medi-Cal, is one of the lowest paying in the country relative to Medicare rates. And providers are still operating under recession-era cuts that have not been dialed back even as the state has returned to a surplus.
Consumer advocates, meanwhile, are pushing the state to expand Medicaid rosters even further by extending Medi-Cal benefits to unauthorized immigrants. One bill pending in the state Legislature, SB 1418, would offer health benefits to low-income residents regardless of immigration status.
In its third-quarter earnings report last month, Health showed some of the first signs that higher Medicaid volume is not translating into higher earnings. At a time when many hospitals are seeing decreases in admissions, Dignity reported a 1.5% increase in patient volume, or 3.8% higher when adjusted for outpatient activity.
But the costs of caring for these patients grew faster, leading to an operating loss of $41.7 million on $3.2 billion in revenue for the quarter ended March 31. Its operating margin fell to negative 1.3% from a positive margin of 1.3% during the same period last year.
“When you’re treating lots and lots of Medicaid and less commercial, that’s a swing that goes right to the numbers,” said Martin Arrick, an analyst at Standard & Poor’s.
In response, Dignity has launched initiatives to bring its costs in line with revenue, including a marketing campaign for commercially insured patients.
Yet the impact on the state’s health systems has been uneven. For providers such as Sacramento-based Sutter Health, one of the state’s largest systems, the amount of revenue coming from Medi-Cal has been stable or decreasing relative to other insurers.
“The role of the state is a bit less important,” Arrick said. “On balance, Sutter is a little bit more immune.”
Dignity has long had a higher share of revenue coming from Medicaid than other providers. “That’s a function of their markets; that’s a function of their mission,” said Daniel Steingart, an analyst at Moody’s Investors Service.
Providers with a large share of Medicaid volume will be most exposed to swings in reimbursement, he noted. But across the country, Medicaid expansion has been overall a net positive.
The increase in patients enrolled in Medicaid, he said, “hasn’t really come at the expense of commercial insurance. A lot of that shift came out of self-pay.” Self-pay generally refers to patients with no insurance.
Legislation extending Medi-Cal to unauthorized immigrants in the U.S. is likely to get support, but may run into roadblocks once it reaches the desk of Gov. Jerry Brown.
Brown trimmed the state budget in May while projecting lower tax revenue and an “inevitable” recession.
“It’s basically a budget issue and that’s what’s being negotiated right now,” said Joel Diringer, a San Luis Obispo, Calif.-based health policy consultant at Diringer and Associates.
The state Assembly joined the state Senate last week in voting for a companion bill, SB 10, which would authorize California to apply for a waiver to allow undocumented immigrants to buy insurance from Covered California, the state exchange, with their own funds.
SB 10 is cost-neutral to the state, but only 36% of undocumented residents would be able to take advantage of the measure—most of that population, estimated at 2.5 million, would qualify for Medicaid.
Even without opening the program to immigrants, the number of Medi-Cal enrollees is expected to reach 14.1 million people during fiscal 2017, nearly double the 7.9 million beneficiaries in fiscal 2013.
Still, a Modern Healthcare analysis of health system earnings reports for 2014 found no difference in operating margins for providers in Medicaid expansion and non-expansion states. Revenue, however, grew faster in the pro-expansion group.
From: Medi-Cal DHCS
The Department of Health Care Services (DHCS) has identified a claims processing issue causing the 1.06 obstetric policy adjustor not to be applied to all diagnosis-related group (DRG) obstetric claims, effective with admissions on or after July 1, 2015. DHCS and the Fiscal Intermediary, Xerox State Healthcare, LLC, are working to resolve this issue.
Affected DRG providers should continue to submit their initial claims. Providers do not need to submit an Appeal Form or Claims Inquiry Form (CIF) because affected claims will be reprocessed via an Erroneous Payment Correction (EPC). Providers are encouraged to check the Medi-Cal website regularly for updates regarding this issue.
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