DDES Memo Series 2006-02
ACTION MEMO
February 13, 2006
To: County Departments of Community Programs Directors
County Departments of Developmental Disabilities Services Directors
County Departments of Human Services Directors
County Departments of Social Services Directors
From: Sinikka Santala, Administrator
Division of Disability and Elder Services
RE: EFFECT OF MEDICARE INPATIENT PSYCHIATRIC FACILITY
PROSPECTIVE PAYMENT SYSTEM FOR COUNTIES
Document Summary: The Wisconsin Department of Health and Family
Services issued information regarding reimbursement to counties for
services provided at the state mental health institutes in Numbered Memo
2005-15. The Centers for Medicare and Medicaid Services has changed the
process used to calculate the amount to be reimbursed and the Department
has clarified the changes in this memo.
Introduction: The Centers for Medicare and Medicaid Services
(CMS) has made changes to the process of paying for Medicare Part A
services for patients in mental health institutions. The Division of
Disability and Elder Services (DDES) is sending out this Numbered Memo to
explain the changes made to the system.
Background: Before July 1, 2005, an interim daily rate was
established by CMS for Medicare Part A benefits and paid to the state
mental health institute (provider) for each day the patient was
hospitalized. At the end of the fiscal year, the provider prepared a
report of expenditures, patients served and number of discharges from the
facility (Medicare Cost Report). CMS calculated the Medicare Part A amount
to be paid to the provider for the year's expenditures. This amount was
based on a flat payment for each Medicare Part A discharge recorded by
the provider, regardless of the number of days the patient actually
stayed at the facility or the cost of the services provided. This
final payment calculation was compared to the interim daily rate amounts
paid to the provider. The difference between the final calculation and the
interim daily rate payments was either paid to the provider, or the
provider reimbursed CMS for the Medicare Part A overpayment through a
"settlement" process.
In the meantime, counties were charged the full daily rate of the
facility used for their residents in need of mental health treatment. When
the interim daily rates were paid by Medicare, these amounts were passed
through the state's treasury back to the county responsible for the
patient. The county's net cost was the balance between the institution
full daily rate and the interim daily rate established by CMS. At the end
of the year, when the "settlement" amount was calculated, the
counties were not assessed for any amounts that had to be repaid to
Medicare, nor were they paid any extra funds determined to be due to the
provider. The settlement information from CMS was never identified by
patient, so it was impossible for the state to determine if a particular
county owed funds or should be paid a larger reimbursement.
Federal Changes: On July 1, 2005, CMS implemented the Inpatient
Psychiatric Facility Prospective Payment System (IPF PPS) to pay for
mental health services provided to Medicare Part A eligible patients at
the state institutions. This process incorporates the age of the patient,
the diagnosis related group (DRG) for the mental illness of the patient,
the geographic location of the hospital (urban vs. rural), the wage area
of the hospital, the number of days the patient is hospitalized and any
other health concerns of the patient (co-morbidities) into a formula to
determine the amount they will reimburse the state institution. This
process is being phased in over a four year period. In the first year
(beginning 7/05), one-quarter of the reimbursement will be from the IPF
PPS formula and three-quarters of the reimbursement will be from the flat
rate paid per discharge. This formula changes to 50/50 in the second year
(beginning 7/06) and 75/25 in the third year (beginning 7/07). In the
fourth year (beginning 7/08), the institute will be reimbursed at the full
IPF PPS formula rate.
DDES stated in Numbered Memo 2005-15 that changes in the federal
Medicare payment structure would not affect how the counties would be
billed or reimbursed for use of the state mental health institutes. Now
that the details of the new federal Medicare payment structure over four
years are available, it is appears that this is no longer the case.
During the next four years the actual calculation for payment will be very
complex and depend on a number of factors. These are the major changes we
are aware of that are different from our original assumption in Numbered
Memo 2005-15.
- At the time the Numbered Memo was prepared, the portion of the
payment from CMS for Medicare Part A was expected to be from the
Interim Daily Rate amount. This portion of the payment is actually
from the flat discharge payment. Discharge amounts for the two state
institutions used for this calculation are:
- Mendota Mental Health Institute $15,441.65
- Winnebago Mental Health Institute $14,342.68
- Payments for Medicare Part A will only be made to the provider at
the time of discharge instead of on a daily basis at the end of each
month. This way, the full payment will be made for each Medicare Part
A patient only once. CMS calculates the full payment amount due for
each patient based on days in the hospital and all the related factors
for their specific diagnosis. The Numbered Memo did state there would
be a change in the reimbursement time frames, but did not state what
the changes would be. Our process and timeframes are now clearer: DDES
will continue to bill the counties monthly for the full daily rate for
every day a patient is hospitalized, but will not reimburse the county
any funds until CMS reimburses the institution after discharge. There
is a time lag of approximately 15-30 days due to the billing and
payment cycles between the state and CMS from the date of discharge.
The CMS payment will be reflected on the county board bill during the
month it is received.
The full effect of these changes is dependent on a number of factors
involved for a specific patient and his/her length of stay. We estimate
in most cases during the first year, if a patient stays in the mental
health institute for less than 23 days the county will be reimbursed more
than the amount paid to the state. If a patient stays in the hospital
for more than 23 days, the amount paid to the counties will decrease and
be less than they were paid under the old process. The reimbursement
factors will change over the next four years as the cost base portion is
phased out. At the end of the gradual four year phase out the full payment
will be based entirely on various prospective factors and not on the
actual cost as was previously the case.
If you need further information, or would like to use the calculator
provided by CMS, the website provided to us is: http://www.cms.hhs.gov/
InpatientPsychFacilPPS/01_overview.asp. This website will allow you to
enter all the variables for a patient and calculate the amount to be
reimbursed to you.
CENTRAL OFFICE CONTACT:
Troy Kitzrow, Supervisor Billings and
Collections Unit
Division of Management and Technology
1 West Wilson Street, PO Box 7853
Madison, WI 53707-7853
(608) 261-5984
MEMO WEB SITE: http://www.dhs.wisconsin.gov/partners/local.htm
cc Area Administrators/Area Coordinators
Bureau/Office Directors
County Fiscal Managers
County IM Managers/Supervisors/Lead Workers
County/Tribal Aging Directors
DDES Institute/Center Directors
DD Service Coordinators
Mental Health Coordinators
Program Bureau Directors/Section Chiefs
Substance Abuse Coordinators
Tribal Chairpersons/Human Services Facilitators
Donald Warnke, Bureau of Fiscal Services
Return
to Numbered Memos Index
|
