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Blog

CMS’s 2024 hospital inpatient regulation proposes to increase payments to hospitals, support safety net hospitals, and modify the NTAP program

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This week, our In Focus section reviews the policy changes proposed by the Centers for Medicare & Medicaid Services’ (CMS) on April 10, 2023, for the Fiscal Year (FY) 2024 Medicare Hospital Inpatient Prospective Payment System (IPPS) and Long-Term Acute Care Hospital (LTCH) Proposed Rule (CMS-1785-P). This year’s IPPS Proposed Rule includes several important policy changes that will alter hospital margins and change administrative procedures, beginning as soon as October 1, 2023.

Key provisions of the FY 2024 Hospital IPPS and LTCH Proposed Rule

For FY 2024, CMS proposes to make modifications to several hospital inpatient payment policies. We highlight six proposed policies that are among the most impactful for Medicare beneficiaries, hospitals and health systems, payors, and manufacturers:

  1. the annual inpatient market basket update,
  2. hospital wage index adjustments,
  3. New Technology Add-on Payment (NTAP) program policy changes,
  4. the agency’s call for input on how to best support Safety Net Hospitals,
  5. graduate medical education payments at rural emergency hospitals, and
  6. changes to many cardiovascular-related MS-DRGs.

Stakeholders will have until June 9, 2023, to submit comments to CMS on the contents of this regulation and request for information

1. Market basket update

Proposed Rule: Overall CMS’s Medicare 2024 Hospital Inpatient Proposed Rule will increase payments to acute care hospitals by an estimated $3.3 billion from 2023 to 2024; however, recent trends in economy-wide inflation may alter this estimate by the time the agency releases the Final Rule version of this regulation in August 2023. The primary driver of the estimated $3.3 billion increase in inpatient payments to hospitals is CMS’s proposed 2.8 percent increase in the annual update to inpatient operating payment rates.

HMA/Moran analysis: CMS’s 2.8 percent increase is largely based on an estimate of the rate of increase in the cost of a standard basket of hospital goods, the hospital market basket. For beneficiaries, increasing payment rates will eventually lead to a higher standard Medicare inpatient deductible and increased beneficiary out-of-pocket costs for many other services. For hospitals and health systems, payors, and manufacturers the proposed payment increase (2.8 percent) falls below economy-wide inflation (5-6 percent in recent months) and hospitals are already saying it is insufficient.[1] For this Proposed Rule, data from the third quarter of 2022 was used to calculate the 2.8 percent increase. Importantly, for the FY 2024 Final Rule, CMS will use data through the first quarter of 2023, which we know to include additional growth in economy-wide inflation. As a result, we anticipate the proposed 2.8 percent increase in payment rates may increase slightly by the time rates are finalized later in the year.

2. Hospital Wage Index Adjustments:

Proposed Rule: CMS proposes two wage index policies for FY 2024. First, CMS proposes to continue temporary policies finalized in the FY 2020 IPPS/LTCH PPS final rule to address wage index disparities affecting low-wage index hospitals, which includes many rural hospitals. Second, CMS proposes to include geographically urban hospitals that choose to reclassify into rural wage index areas in the calculation of state-level rural wage index and the calculation of the state-level wage index floor for urban hospitals (referred to as the rural floor policy).

HMA/Moran analysis: The two wage index policies proposed by CMS for FY 2024 will support rural hospitals. The first policy, to continue the low-wage index policy for an additional year beyond the original 4-year plan will allow hospitals with low wage indexes to boost their wage index and their payment rates across all MS-DRGs. Specifically, hospitals with wage indexes below 0.8615 (the 25th percentile across all hospitals) will automatically receive an increase in their wage index by CMS. This policy will bring additional millions of dollars to individual rural hospitals in FY 2024. The second policy, to include the labor data of geographically urban hospitals that choose to reclassify into rural wage index areas within the calculation of the state-level rural wage index and the state-level rural floor will largely benefit rural hospitals. In recent years several large geographically urban hospitals in several markets have chosen to reclassify into rural wage index areas to benefit their Medicare payments. In the past, CMS has not included the labor costs of these hospitals, which tend to have higher than average labor costs in their calculation of the state rural wage index or the rural floor wage index. In making this change, to include the labor costs of the geographically urban hospitals in these calculations, CMS will very likely increase the state-wide rural wage index. This will have the effect of increasing the wage index of many rural hospitals around the country. The overall impact of both proposed wage index policy changes for FY 2024 will be to increase inpatient payment rates to rural hospitals.

3. New technology add-on payments (NTAP):

Proposed Rule: Citing the increased number of applications over the past several years and noting the need for CMS staff to have time to fully review and analyze the applications, CMS proposes two changes to the NTAP application requirements.  First, CMS proposes to require all applicants to have a complete and active FDA market authorization request in place at the time of NTAP application submission (if not already FDA approved).  In addition, CMS proposes to move the FDA approval deadline from July 1 to May 1, beginning with applications for FY 2025.

HMA/Moran Analysis: CMS’ proposals to change the NTAP application process aim to ameliorate the problem of manufacturers withdrawing applications because they miss the FDA approval deadline. These withdrawals increase CMS’ workload, as the agency reviews some applications multiple times. However, while these proposals provide CMS with more time to review applications, they increase the amount of time some applicants will not receive NTAP payments, depending on the timing of the FDA approval process. The annual NTAP approval cycle and FDA approval deadline create difficulties for manufacturers with products that miss the deadline, which many stakeholders argue creates barriers to access for new technologies. Stakeholders have proposed a variety of potential solutions to these barriers, such as biannual or quarterly NTAP decisions, or extending the conditional approval pathway currently used for certain antibiotic products to all NTAP applications.

 4. Safety Net Hospital Request for Information:

Proposed Rule: CMS is seeking public input on the unique challenges faced by safety-net hospitals and the patients they serve, and potential approaches to help safety-net hospitals meet those challenges.

HMA/Moran Analysis: In the 2024 Proposed Rule CMS poses a variety of questions to the public about how safety net hospitals and their patients can be better supported by the Medicare program, both in terms of payment and infrastructure investment. The agency specifically asks stakeholders their opinion on measures that could be used to define safety net hospitals and potentially make differential or additional payments to safety net hospitals. CMS names the safety net index (SNI) developed by the Medicare Payment Advisory Commission (MedPAC) in recent years and the Area Deprivation Index (ADI) developed by the National Institutes for Health (NIH) as the two leading options for defining and potentially reimbursing safety net hospitals. These two methods have several significant differences, including that the SNI is a hospital-level measure based in-part on the volume of cases at a given hospital associated with Medicare beneficiaries that are fully or partially eligible for Medicaid and the ADI is a geographic measure that correlates local socioeconomic factors with medical disparities. HMA has modeled the SNI for hospital stakeholders in the last year and has identified hospitals that would be potential winners and losers if an SNI approach were implemented by CMS.

5. Graduate Medicare Education Training in Rural Emergency Hospitals:

Proposed Rule: CMS proposed to allow Graduate Medical Education (GME) payments for training Rural Emergency Hospitals. Rural Emergency Hospitals are a new provider type established by the Consolidated Appropriations Act, 2021, to address the growing concern over closures of rural hospitals. If finalized, this proposal would allow hospitals converting to REH status and other hospitals newly designated as REHs to receive Medicare GME payments even though they do not have an inpatient facility.

HMA/Moran analysis: If finalized, the proposed policy to allow REHs to offer GME training and to be paid for GME training will enhance access to care in rural areas and will enable hospitals that convert to REHs to expand their capabilities. CMS’s proposal to allow REHs to receive payment based on 100 percent of the reasonable costs for GME training costs allows REHs to operate training programs and to focus new training programs on rural care and outpatient care. This policy, if finalized, will bring additional revenues to hospitals that decide to convert to REHs (thereby relinquishing their inpatient capacity) and will improve access to care for beneficiaries living in rural areas.

6. MS-DRG weights:

Proposed Rule: To set MS-DRG weights for FY 2024 inpatient cases, CMS proposed to use FY 2022 data, which is consistent with pre-pandemic CMS methods. In previous years, CMS had modified its MS-DRG weight calculation to account for high volumes of COVID cases. However, for FY 2024, CMS has returned to its longstanding method of using a single year of data to set MS-DRG weights. In addition, among the various changes CMS has proposed as a part of the 2024 MS-DRG weight setting process CMS has proposed significant changes to many MS-DRGs in the category for diseases and disorders of the circulatory system (Major Diagnostic Category 5).

HMA/Moran analysis: CMS’s return to using a single year of data without COVID modification will be welcomed by many stakeholders, but particularly for those with an interest in short-stay surgical cases. The modifications CMS proposes to make to the MS-DRGs within Major Diagnostic Category 5, which includes numerous cardiovascular MS-DRGs, are likely to be disruptive for many stakeholders initially but over the long term are likely to make CMS coding more consistent with standard clinical practice and per case resource use. For example, CMS is proposing to consolidate five cardiac defibrillator MS-DRGs into three, consolidate three Thrombolysis MS-DRGs into two, and overhaul the family of stenting MS-DRGs. We anticipate that these changes and other proposed by CMS may result in initial coding confusion for hospitals, but that they will slowly adapt throughout 2024.

HMA and The Moran Company work collaboratively to monitor legislative and regulatory developments in the inpatient hospital space and assess the impact of inpatient policy changes on the hospital sector. HMA’s Medicare experts interpret and model inpatient policy proposals and use these analyses to assist clients in developing their strategic plans and comment on proposed regulations. Moran annually replicates the methodologies CMS uses in setting hospital payments and models alternative payment policies to help support its clients’ comments to the rule. Moran also assists clients with modeling for DRG reassignment requests and to support NTAP applications. Typically, these projects run through the summer, to ensure readiness for October deadlines. Finally, many clients find it useful to model payments for different types of cases under different payment scenarios. For example, a client may be interested in how payments for COVID-19 cases may change after the expiration of the Public Health Emergency, and which hospitals will face the biggest payment cuts. Moran is available to help with these and other payment modeling questions—and works on many of these issues in tandem with HMA’s Medicare experts.

For more information or questions about the policies described below, please contact Zach GaumerAmy BassanoKevin Kirby or Clare Mamerow.

[1] https://www.aha.org/news/headline/2023-04-10-cms-issues-hospital-ipps-proposed-rule-fy-2024

Blog

Integrating behavioral health & general medical care is vital to reach the triple aim

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The integration of behavioral health and medical care has emerged as a crucial method for improving health and reducing the cost of care. Integrated care offers solutions and advancements in healthcare delivery by improving access to behavioral healthcare, including scarce psychiatric resources, reducing stigma, and enhancing behavior change in everyday life.

As an emerging standard of care, policy makers, payers, and leaders are expecting organizations to develop evidence based approaches to team based care that can demonstrate health outcomes and cost savings. HMA can help your organization navigate this important culture change. Our multidisciplinary team includes clinical, finance and payment, and policy experts with hands-on experience in integrated care service delivery.

Our integration experts can help your team with:

Readiness assessment

Evidence based policy, finance, and model design

Technical assistance, training, team based care

Operational changes including billing, HIE, credentialing

Measurement based care metrics and evaluation

Cultural change and leadership

We are working with an array of clients on integration

Health plan integration

State departments & statewide implementation

Integrated delivery systems

Hospital based providers

PCMH & FQHC primary care providers

Accountable care organizations

Certified community behavioral health clinics and other BH providers

Department of corrections

Contact our experts:

Marc Avery headshot

Marc Avery

Principal

Marc Avery, MD, is a board-certified psychiatrist and a recognized leader in person-centered, integrated psychiatric care for high needs and … Read more

Jennifer Hodgson

Principal

Jennifer Hodgson is a licensed marriage and family therapist who maintained a private practice and taught in higher education for … Read more
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Gina Lasky

Managing Director, Behavioral Health

Gina Lasky is a licensed psychologist with expertise in public sector behavioral health system design and programming including integration of … Read more
Blog

Implementation Accelerator: leadership training through application 

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The healthcare industry is constantly evolving and requires a workforce that is responsive and able to lead and adapt to changes. Healthcare professionals are continually asked to incorporate new services, care models, quality measures, and process improvements into daily work. 

While clinical innovations and operational improvements are promising, there is growing recognition of the gap between plans to implement them and actual implementation. 

HMA has extensive leadership, operational, and clinical expertise working directly with health systems, health plans, providers, foundations, community-based organizations, and associations adopt implementation science informed approaches for successful change. 

Drawing on this experience, we developed the HMA Implementation Accelerator, a leadership development framework that utilizes implementation science to address on-the-ground challenges and lead successful implementation efforts. 

The importance of leadership is noted in just about every discussion of implementation. The absence of leadership support is a well-documented barrier, and success is attributed to the presence of leadership support.

– Active Implementation Research Network

HMA Implementation Accelerator

PEOPLE

Leadership development

Build knowledge, skills, and abilities and apply them to implementation

Change agent engagement and development

Identify formal and informal leaders to inform, support and influence engagement

Implementation approach training

Build knowledge and skills critical to successful implementation

PROCESS

Project management

Develop or enhance structures and approach to guide implementation

Continuous improvement and critical feedback

Integrate structures and practices that facilitate continuous improvement, sustain momentum, and highlight critical adaptation

Communication planning

Plan and deploy intentional, pro-active communication strategies to effectively guide and support implementation

Tool development

Identify, develop, and deploy tools that support effective implementation and create efficiencies for implementation teams

Sustainability planning

Pro-actively plan for sustainability from outset

PURPOSE

Executive sponsorship

Engage and activate sponsorships for critical support and resources

Align implementation with mission

Connect implementation efforts to a larger “why” in alignment with mission

What’s included

Conceptual framework to guide implementation process

Strategies to develop effective sponsorship at the executive or senior leadership level to mitigate barriers and resource effort

Leadership skill development at the level of implementation

Processes to enhance effective ownership and commitment at all levels

Prioritization of change initiatives

Clear accountability of actions in implementation

Continuous quality improvement as part of implementation

Sustainability planning from the start

Research shows that successful leadership development occurs when the learning can be directly applied to active work processes, which aligns with how adults learn most effectively.

Through the Implementation Accelerator, we use a combination of interactive training, peer learning, and coaching to support hands-on learning. The integration of leadership development and implementation science provides a robust opportunity to develop and sustain leadership skills and develop an organizational methodology to guide both current and future implementation efforts.

Contact our experts:

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Suzanne Daub

Principal

Suzanne Daub is a leading expert and nationally recognized trainer in integrated healthcare who knows how to help clients design, … Read more
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Marsha Johnson

Managing Principal

Marsha Johnson is a leader in complex care program development, integrated health delivery, curriculum development, and workforce and leadership development. … Read more
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Elizabeth Wolff

Principal

Elizabeth Wolff, MD, MPA is a physician executive who utilizes her expertise in population health, quality improvement, and practice operations to … Read more
Blog

Demonstrating quality, value, and equity in behavioral health

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HMA’s team of over 50 behavioral health experts have direct experience in behavioral health policy, clinical program design and delivery, quality improvement and financing. Our breadth of expertise, including authors of NCQA’s Behavioral Health Quality Framework to Promote Joint Accountability, positions us well to support the design, delivery and payment of high quality behavioral health care.

We help clients demonstrate the value of their behavioral health care through:

Accreditation Readiness

Meet accreditation standards and demonstrate compliance

Analyze and use behavioral health-specific HEDIS, CAHPS/ECHO, HOS, ASAM/CARF to inform QI

Use key data sources to drive performance improvement plans

Use of Behavioral Health Quality Tools

Behavioral health network adequacy and equitable access

Integration of behavioral health, physical health and social needs

Measurement-based care

Patient outcomes

Cohesive Strategy Development

Behavioral health quality strategy planning aligned with organizational mission and vision

Standardized performance metrics

Value-based care and payment incentives

Pragmatic regulatory tools and policies

HMA is positioned to support

State and municipal departments of health and public health

Health plans & Managed Care Organizations

Health systems

Provider organizations

Community-based organizations

Certified community behavioral health clinics

Correctional health

Accreditation Readiness

Meet accreditation standards and demonstrate compliance

Analyze and use behavioral health-specific HEDIS, CAHPS/ECHO, HOS, ASAM/CARF to inform QI

Use key data sources to drive performance improvement plans

Use of Behavioral Health Quality Tools

Behavioral health network adequacy and equitable access

Integration of behavioral health, physical health and social needs

Measurement-based care

Patient outcomes

Cohesive Behavioral Health Quality Strategy Development

Behavioral health quality strategy planning aligned with organizational mission and vision

Standardized performance metrics

Value-based care and payment incentives

Pragmatic regulatory tools and policies

HMA is positioned to support

State and municipal departments of health and public health

Health plans & Managed Care Organizations

Health systems

Provider organizations

Community-based organizations

Certified community behavioral health clinics

Correctional health

Contact our experts:

Rachel Bembas

Principal

Rachel Bembas is a results-driven leader in behavioral health quality and population health analytics who has worked extensively to advance … Read more

Lauren Niles

Principal

Lauren Niles, DrPH, MPH is an experienced and passionate healthcare quality subject matter expert and researcher. She has experience with … Read more

Serene Olin

Principal

Su-chin Serene Olin, PhD, is a child clinical psychologist with over 20 years of translational research and leadership experience integrating … Read more

Debbi Witham

Principal

Debbi Witham is a seasoned executive with experience delivering high quality, mission driven healthcare. During her career, she has focused … Read more
Blog

Empowering clients to advance policies and system redesign for youth and families

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The current youth behavioral health system is under-resourced, underfunded and often not well coordinated. Historic approaches that minimally adapt adult models to children and youth have led to insufficient child and youth specific strategic design of effective systems. Recent investments and policies offer a tremendous opportunity to redesign strategies, payment, and the delivery system to enhance access and achieve better outcomes, equity, and satisfaction of children and families. Health Management Associates (HMA) understand the levers and impacts across the system from state and local policy makers to payers, providers, schools, and communities. Our multidisciplinary teams will partner with you to identify challenges and solutions to advance and sustain the system of care.

What Makes HMA Unique?

HMA’s cross sectoral, multidisciplinary team is comprised of more than 20 dedicated children and youth behavioral health experts with rich backgrounds in government, community-based providers and payers. Our approach includes a deep understanding of policy, clinical, operations and fiscal systems, providing our clients with fundamental tools to design and implement sustainable solutions.

Our expertise spans multiple specialty areas impacted by children’s behavioral health:

Juvenile justice and justice-involved

Child welfare and foster care

Children’s behavioral health – primary care and social services, children with serious behavioral health issues (SMI, including co-occurring issues)

Youth crisis and mobile services, crisis stabilization unit design (CSU) services

School-based wellness centers, community schools

Certified community behavioral health clinics (CCBHCs)

Suicide prevention

State policy and system redesign, evidence-based practices and strategic planning including the intersection of Medicaid and child welfare

Telehealth for children and adolescents

Tech-enabled care

Mental health first aid

Our team is advancing the design, integration, and quality of children’s behavioral health across states and the continuum of care.

Examples of our work include:

Policy and system design for behavioral health services, foster care, and the intersection of Medicaid and child welfare

Maternal and child health programing and 2Gen approaches

Managed Care Organizations (MCO) reviews, strategy ad program design

Health system emergency department boarding and health system and community intervention design

Mobile Crisis Response (MCR) design and implementation

Implementation of school-based wellness centers and building connections to the health system

Services across the healthcare spectrum.

With a deep understanding of current and emerging shifts in care and policy, our behavioral health consultants are well equipped to provide specialized services for a range of clients.

Our Clients

Insights

Bolstering the youth behavioral health system: innovative state policies to address access & parity

This week, our In Focus section highlights an HMA Issue Brief, Bolstering the Youth Behavioral Health System: Innovative State Policies to …

Innovative state policy solutions to enhance the youth behavioral health system

With suicide now the second leading cause of death among children, adolescents, and young adults (aged 15-24 years old) in …

Meet some of our behavioral health experts:

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Uma Ahluwalia

Managing Principal

Uma S. Ahluwalia is a respected healthcare and human services professional with extensive experience leading key growth initiatives in demanding … Read more

Heidi Arthur

Principal

Heidi Arthur has over 20 years of experience in delivery system redesign to promote community-based access to health and human … Read more

Michael Butler

Senior Consultant

During his career, Michael Butler has directed hundreds of program evaluation, organizational development, and technical assistance projects in a wide … Read more
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Gina Lasky

Managing Director, Behavioral Health

Gina Lasky is a licensed psychologist with expertise in public sector behavioral health system design and programming including integration of … Read more
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Caitlin Thomas-Henkel

Principal

Caitlin Thomas-Henkel is a health policy leader with extensive experience working in clinical, government, and non-profit settings. She has collaborated … Read more
Blog

Behavioral health workforce: an ongoing crisis 

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Mental health and substance use treatment organizations struggle to meet the increase in demand for services, due in large part to a national workforce shortage. This challenge has been exacerbated due to the Covid-19 pandemic. Demand for behavioral health organizations’ services has continued to increase. At the same time, organizations are having trouble recruiting and retaining employees, and patient waitlists continue to grow. Competition for behavioral health workforce has only grown with new opportunities in telehealth and the entrance of private equity into the behavioral health market. The safety net providers are the most impacted and often have the least flexibility to address underlying factors leading to the shortages in large part due to regulation and administrative burden and underfunded payment models.   

HMA, in partnership with the National Council for Mental Wellbeing (NatCon), developed a series of issue briefs outlining state policy and provider steps that can help to address the critical shortage.

HMA is also working with NatCon and the College for Behavioral Health Leadership (CBHL) to engage national partners using a collective impact framework to provide backbone support for organizations to work together in a more structured and action-oriented approach and to leverage various implementers (policy, regulatory, payers, providers, educators, etc.) to move recommendations to action.   

Behavioral Health Workforce is a National Crisis: Immediate Policy Actions for States 

View Issue Brief

Actions to Address the National Workforce Shortage and Improve Care

View Issue Brief

Diversity, Equity and Inclusion: Emerging Opportunities for the Behavioral Health Workforce 

View Issue Brief

HMA can help state policy makers and provider organizations with workforce support and problem solving, workforce assessment, strategy and policy design.

Our team of experts includes clinicians with on-the-ground experience as well as previous policy makers. We’ve worked within the certified community behavioral health clinic (CCBHC) model and provide technical assistance to organizations planning for its adoption. We have experience in extending it beyond the demonstration utilizing Medicaid state plan amendments (SPA) or 1115 waivers to enhance the workforce.

HMA capabilities

Identifying effective workforce strategies including training and maximizing of multi-disciplinary teams (e.g., peers, behavioral health providers, nurses, licensed health care providers). 

Policy and system design for behavioral health services and workforce expansion 

Managed Care Organizations (MCO) strategy and program design as well as strategies to enhance the provider network 

Conducting certified community behavioral health clinic (CCBHC) readiness and implementation support. 

Maximizing virtual and technology interventions. 

Convening stakeholders and building partnerships across sectors. 

HMA is positioned to support

State Medicaid agencies 

State and local departments of health, public health, behavioral health, and child welfare 

Health plans & Managed Care Organizations  

Hospitals & health systems  

Provider organizations 

Community-based organizations  

Foundations & advocacy organizations

Certified community behavioral health clinics 

School-based behavioral health

Correctional health & juvenile justice systems 

Contact our experts:

Paul Fleissner

Managing Principal

Working to integrate services across systems and communities, Paul Fleissner is a seasoned executive who has developed programs and policies … Read more

Allie Franklin

Principal

Allie Franklin is a licensed clinical social worker with decades of experience in public, private, and non-profit behavioral health, healthcare, … Read more
Gina Lasky headshot

Gina Lasky

Managing Director, Behavioral Health

Gina Lasky is a licensed psychologist with expertise in public sector behavioral health system design and programming including integration of … Read more
Blog

Creating crisis systems that work

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With the planning and implementation of 988 and mobile crisis teams, as well as co-responder models, state policy makers are working rapidly to advance effective approaches to systemically and effectively address the needs of individuals and families who are experiencing behavioral health crises.

Central to effective implementation is attention to specific community needs. States are working to partner with local communities to build capacity, leverage the knowledge and expertise of local partners, and gain an understanding of how new benefits and system changes fit into existing community frameworks. This local approach is particularly important for rural and frontier communities, and for tailoring models to meet specific priority populations’ needs, while building trust and ensuring crisis services are grounded in equitable access and culturally responsive care.

With more than 25 years of crisis system development, HMA colleagues stand ready to support crisis system community partners in advancing their crisis systems and services.

With our finger on the pulse of the science-backed research and approaches necessary to create integrated and comprehensive systems, we can help identify barriers and explore and implement solutions.

Our HMA crisis system team supports community partners with:

Partnership development

Stakeholder engagement

Crisis system needs assessment – strengths and gaps analysis

Program design and implementation

Crisis service development

Cross-system protocols

Cost modeling and sustainable reimbursement approaches

Distilling and meeting regulations

Contact our experts:

Suzanne Rabideau

Principal

A transformational health and human services leader, Suzanne Rabideau has more than 25 years of experience working with, and inspiring … Read more
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John Volpe

Principal

John Volpe is an experienced senior health official with a demonstrated record of success at the intersection of health, social … Read more
Blog

Crisis and Managed Care 

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Managed Care Organizations (MCOs) are key partners in ensuring members have access to integrated physical and behavioral health care, which includes a robust, coordinated crisis care continuum. MCOs can also manage early intervention and help prevent crises and high-cost utilization through care coordination. 

CRISIS SYSTEM AND SERVICES 

Mental health and substance use distress has increased nationally and has been exacerbated by COVID-19. The Federal government in partnership with States and localities around the country are working to expand access to effective crisis interventions. The creation of the national 988 suicide and crisis hotline combined with new funding and guidance on mobile crisis services are critical to preventing and responding to behavioral health crises.

Health Management Associates (HMA) consultants have deep experience and expertise designing, operating, and overseeing crisis services. This includes a broad portfolio of current projects, working with a range of state and local policymakers, payers, providers, first responders, and communities to implement robust crisis continuums. 

Opportunities for MCOs 

MCOs can play an important role in informing how crisis services meet the needs of their members, and reduce high cost utilization of emergency departments and inpatient care. HMA can help you identify innovative ways to collaborate with States and community-based organizations to drive real access to crisis prevention and intervention services for individuals and families. This work includes building robust crisis continuum networks that include the full array of options, and best practices in crisis response including diversion from and alternatives to expensive emergency department and hospital visits.

This presents an opportunity for MCOs to play a pivotal role in driving better population health outcomes, expanded health equity, improved member experience, and to ultimately reduce the total cost of care.

Our Expertise and Capabilities: 

Evidence-based and leading edge clinical and operational practices

Cross-sector partnerships with law enforcement, emergency service providers and community partners

System change by connecting policy to practice

Defining and measuring key performance indicators and outcomes

Developing sustainable financing models (e.g., rate setting, reimbursement strategies)

Identifying effective workforce strategies including training and maximizing of multi-disciplinary teams (e.g., peers, behavioral health providers, nurses, licensed health care providers)

Maximizing virtual and technology interventions

988 state planning and implementation support

Designing and implementing crisis receiving and stabilization facilities

Conducting certified community behavioral health clinic (CCBHC) readiness and implementation support

Cross-sector crisis collaboration and partnerships, including emergency management services (EMS) and law enforcement

Crisis call hotline and 911 centers collaboration

Individuals with Medicaid and justice system involvement (e.g., 1115 waivers, reentry, and care coordination during transition from jail/prison into the community)

Approaches, programs, and strategies for individuals with complex care needs and high utilizers

Identifying cross-sector technology and information sharing solutions and best practices

Crisis transportation services and financing models, including least restrictive alternatives to law enforcement transport

How HMA can assist MCOs:

Strategic
Planning

Understanding emerging trends and federal and state policies that impact managed care plans, including maximizing funding streams at state and county levels, 1115 justice waivers and school-based mental health, and including key stakeholders in the planning process.

Design and Implementation

Adopting state Medicaid criminal justice reforms (e.g., in reach, care coordination, Medicaid eligibility); engaging local and county stakeholders in building partnerships with health plans; designing and developing requests for proposals (RFPs), procurement support and readiness reviews; and developing utilization management programs and care coordination strategies.

Training
and Support

Assessing benefit design, and developing standards for network development, management, and adequacy; identifying quality, key performance indicators, monitoring and compliance strategies; identification and implementation of evidence-based practices across the age continuum; and developing training standards and oversight. 

HMA Crisis Portfolio Clients:

Health plans

Federal, state & local governments

Health and behavioral health care providers

Hospitals & health systems

Educational settings and academic institutions

Coalitions and advocates

Associations and foundations

Investors

Criminal justice stakeholders and facilities

Law enforcement

Emergency management services (EMS)

Public health departments

Contact our experts:

Caitlin_Thomas-Henkel_Philadelphia headshot

Caitlin Thomas-Henkel

Principal

Caitlin Thomas-Henkel is a health policy leader with extensive experience working in clinical, government, and non-profit settings. She has collaborated … Read more
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John Volpe

Principal

John Volpe is an experienced senior health official with a demonstrated record of success at the intersection of health, social … Read more
Blog

Policy changes in Medicare Advantage and the implications for coding, risk adjustment, and reimbursement

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On Tuesday, April 11, 2023, HMA hosted a Future Frame Conversation covering some of the changes outlined in the recent 2024 Medicare Advantage (MA) Rate Announcement. This cycle signals a new era for MA funding and risk adjustment. The Final Rate Announcement, in particular the new risk adjustment model to be phased in over three years, will spark stakeholders to reevaluate benefit design through the bid cycle and risk adjustment strategies in the future. These refinements will impact both health plan and provider reimbursement. 

During the discussion:

  • Amy Bassano from HMA talked about the CMS strategy for these changes;
  • Tim Murray from Wakely Consulting, an HMA company, discussed how payers should be using data and analytics to evaluate and forecast the impact of CMS changes; and
  • Todd Husty from MARSI, an HMA company, talked about deployment of audit tools to assess documentation, coding practices, and risk adjustment policies.

Click here to view referenced Wakely white papers mentioned in this recording.

Blog

Public health after the emergency ends

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Policy crossroads and the end of the public health emergency due to COVID-19

This is part of a three-part series on significant implications of the end of the Public Health Emergency (PHE). 

The Biden administration has announced that the COVID-19 pandemic Public Health Emergency (PHE) declaration will expire on May 11, 2023. The end of the declaration and other changes in federal policy have significant implications for state Medicaid programs, including the end of a 6.2% increase in the regular federal medical assistance program (FMAP) matching rate for states and continuous enrollment requirements put into place early in the pandemic. This means that an estimated 4-14 million Americans, especially including women and children, will need to engage in state processes for re-certification to continue their Medicaid benefits and states will lose their enhanced matching.

While state have been planning for these changes, collectively referred to as “PHE Unwinding,” the public health implications of these shifts have received little attention. As millions of Americans lose Medicaid benefits, as a result of “PHE Unwinding,” public health departments nationwide are likely to face additional demands and pressures that are also critically important for states to consider. State public health agencies that have spent the last several years responding to the COVID-19 pandemic are now entering a new phase. During the CMS-recommended 12-month period that states have to complete their redeterminations, public health agencies may see increasing numbers of individuals who were previously eligible for Medicaid and other safety net services seeking access to public health programs. Public health officials also may be called on to address the community health impacts of the newly uninsured or those who have lost other benefits, such as enhanced Supplemental Nutrition Assistance Program (SNAP) dollars for food. Addressing challenges may require significant attention of Community Health Workers or other workforces engaged across public health and healthcare and take precedence over other public health priorities. All of this will be happening at a time when public health officials are being called on to re-imagine their infrastructure needs, including reconfiguring and modernizing their data systems.

Public health agencies planning for this immediate future may benefit by taking a systems approach to PHE unwinding and considering a few key variables in their planning—

1.The end of the PHE may rapidly increase demand for public health safety net programs.

Medicaid provides coverage for the sickest and most vulnerable. As redetermination processes leave some without insurance and other benefit programs like SNAP return to pre-pandemic coverage, historically marginalized and medically at-risk populations will be disproportionately impacted. This may result in increased demand for safety net programs usually found in public health departments that serve the under and uninsured, such as the Breast and Cervical Cancer Prevention Program (BCCP) that provides cancer screening for women, and Vaccines for Children (VFC) which provides required immunizations to school-age children who otherwise lack access. Programs such as the Women, Infants and Children (WIC) and perinatal home visiting programs that serve families with limited economic resources may also see increased numbers of eligible families. Health departments can quantify these increases by assessing their populations, estimating increases, and using their existing data to determine which communities and geographic areas are likely to exhibit the greatest needs, and then share this information with policymakers.

2. Unwinding may represent an opportunity to educate legislators and policymakers on the connection between Medicaid utilization and public health programs.

As states see decreases in federal matching for their Medicaid programs, policymakers will look for opportunities to fill gaps in the state share of operating these programs. Public health programs, which are usually run with a combination of state dollars and federal grants, are often looked at as potential sources to fill gaps in Medicaid program costs. Moreover, public health officials may be able to move upstream of these discussions by ensuring that states are maximizing the federal Medicaid match (FMAP) on any public health services that can be billed to Medicaid, including using waivers and state plan amendments to cover services such as maternal home visiting or tobacco cessation under Medicaid, thus stretching grant and state dollars further while covering more individuals. While public health has long discussed the benefits of calculating and sharing the long-term return on investment of public health services, officials may also wish to consider utilizing risk stratification strategies to identify short-term cost savings and cost avoidance to other state programs of the services offered by public health departments. At the local level, health departments are often closely involved in the delivery of services that keep children in school, adults at work, and protect people in hospitals and nursing homes from health care acquired infections. All of these services have immediate benefits to state and local economies.

3. New funding for public health infrastructure, data modernization, and workforce development represents an opportunity to drive collaboration between public health, Medicaid, and other sectors.

As a part of the American Rescue Plan, state public health agencies have received funding from CDC to strengthen their infrastructure to ensure that communities have the people, services, and systems to promote and protect public health. The grants are intended to allow states to focus on increasing the size and diversity of the public health workforce; modernize data systems; and ensure states can demonstrate the foundational capabilities of public health. CDC has affirmed its expectation that states will prioritize collaboration and organizational partnerships as part of these efforts. As state public health agencies use these federal investments to impact programs that reach priority populations and improve health outcomes, several opportunities to reach disadvantaged populations and improve their health outcomes become apparent. For example, public health agencies working collaboratively with state departments of education could lead to partnerships around school-based clinics or workforce training programs, while engaging with the private healthcare and laboratory sectors on data and disease surveillance seems promising. Health departments should start now to in preparation for the flurry of activity that will be sparked in the wake of the PHE. This might involve reaching out to potential partners or organizing town-hall-style” active listening sessions with citizens to meet people where they are and better understand the needs of the community they serve.

HMA and HMA companies will continue to analyze the public health implications of the Medicaid Unwinding and the end of the PHE. We have the depth and breadth of expertise to assist with capacity building, data collection and management, and population health analysis.

If you have questions on how HMA can support your agency before or after the end of the PHE, please contact:

Jean O’Connor, Managing Principal,  [email protected]

Morgan Wilson, Research Associate, [email protected]

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Florida releases Medicaid Managed Care ITN

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This week our In Focus section reviews the Florida Statewide Medicaid Managed Care Program (SMMC) Invitation to Negotiate (ITN), released on April 11, 2023, by the Florida Agency for Health Care Administration (AHCA). SMMC consists of three programs: Managed Medical Assistance (MMA), Long-term Care (LTC), and dental, covering 4.4 million individuals. This ITN is for contracts to provide MMA and LTC.

Under the SMMC program, all enrollees receive their services from a single plan providing managed medical assistance, long-term care, and specialty benefits. (Dental benefits are provided separately.)

AHCA will select plans that will achieve the agency’s goals, including providing healthy birth outcomes for mothers and their infants, improving childhood and adolescent mental health, maximizing home and community-based placement and services, and supporting the HOPE Florida program. HOPE Florida utilizes ‘Hope Navigators’ to help individuals achieve economic self-sufficiency, develop long term-goals, and map out a strategic plan by focusing on community collaboration between the private sector, faith-based community, nonprofits and government entities.

Additionally, with the new contracts, AHCA will implement the following changes:

  • Specialty plans will no longer be awarded separately but must be awarded to a comprehensive or MMA plan.
  • Enrolling voluntary recipients (such as individuals with intellectual or developmental disabilities) into the SMMC program and providing the opportunity for them to opt out
  • AHCA may mandatorily enroll into the MMA program full benefit dual-eligibles who are also in a Medicare Dual Eligible Special Needs Plan (DSNP).

AHCA will invite 10 plans to negotiate for awards as shown below:

Timeline

Proposals are due August 15, 2023, with an anticipated award date of December 11. Contract will run from October 1, 2024, through December 31, 2030. Contracts may not be renewed, but AHCA may extend the term to cover any delays during the transition to a new plan.

Evaluation

Plans can receive a total maximum number of points of 5,950. AHCA will invite top-ranking plans to negotiations to ensure that AHCA can enter into contracts with the minimum required number of plans per region.

Current Market

As of December 2022, Florida served 4.3 million MMA and LTC enrollees, excluding an additional 97,000 Children’s Medical Services enrollees in the Children’s Medical Services Network plan. Centene had the highest market share based on enrollment, at over 40 percent.

Link to ITN

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Medicare Advantage Capitation Rates and Part C and Part D Payment Policies

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This week, our In Focus section reviews the recently announced major policy updates from the Centers for Medicare and Medicaid Services (CMS) that affect the Medicare Advantage (MA) and Part D programs.

First, on January 30, CMS released the final Risk Adjustment Data Validation Final Rule, a highly anticipated and controversial policy that establishes the agency’s approach to auditing MA Organizations’ (MAOs) risk-adjustment payments and collecting overpayments as needed. Second, CMS released the CY 2024 Advance Notice for MA Capitation Rates (Part C) and Part D Payment Policies on February 1, 2023. HMA’s summary of the advance notice is available here.

Most recently, on March 31, 2023, CMS released the CY 2024 Final Rate Notice for Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies, which incorporates CMS’s responses to public comments on the Advance Notice. These changes reflect CMS’ continued efforts to strengthen oversight in the MA program, including improving payment accuracy, and implementation of Part D policies from the Inflation Reduction Act (IRA).

Below are highlights of some of the key provisions of the CY 2024 Final Rate Notice and significant changes CMS made from the Advance Notice to the Final Rate Notice.

Risk Adjustment: The Final Rate Notice details the updated risk adjustment model using restructured condition categories based on ICD-10 codes, newer data, and clinical adjustments made to ensure the conditions are stable predictors of costs in the model. Specifically, diagnoses data will come from 2018 rather than 2014 and expenditure data will come from 2019 rather than 2015 to reflect changes in costs. These updates should more accurately reflect the cost of caring for beneficiaries and make payments less susceptible to discretionary coding that can lead to excess payments to MA plans.

Also, CMS changed course from its initial proposal in the Advance Notice to implement the above risk adjustment model changes fully in 2024, and instead decided to phase in these changes over three years. The updated risk adjustment policy will be phased in over three years for organizations other than PACE. As a part of the agency’s phase-in plan, 67 percent of the CY 2024 risk adjustment will come from the risk scores measured under the 2020 adjustments and 33 percent will come from the 2024 adjustments. In CY 2025, 67 percent of the risk adjustment will come from the 2024 adjustment. In 2026, 100 percent of the risk adjustment will come from the 2024 adjustment. For PACE organizations in CY 2024, CMS will continue to use the 2017 risk adjustment model and associated frailty factors to calculate risk scores.

Effective Growth Rate: The effective growth rate identified within the Final Rate Notice for CY 2024 is 2.28%, up from 2.09% in the Advance Notice. The Effective Growth Rate is largely driven by growth in Medicare Fee-for-Service expenditures. CMS will phase in a technical adjustment to remove MA-related indirect medical education and direct graduate education costs from the historical and projected expenditures.  The technical adjustment to the Effective Growth Rate will be phased in over three years, where 33 percent of the adjustment will apply in CY 2024, 67 percent in CY 2025, and 100 percent in CY 2026.

Payment rate impact in MA: CMS expects that average payments to MAOs will increase by 3.32 percent in CY 2024 because of the finalized rate announcement, which is higher than the 1.03 percent increase outlined in the Advance Notice. This will result in an estimated $13.8 billion increase in MA payments for CY 2024.

Medicare Part D: The changes from the Inflation Reduction Act to the Part D drug benefit will be implemented as described in the Advance Notice. The changes for CY 2024 include:

  • Elimination of cost sharing for covered Part D drugs for beneficiaries in the catastrophic phase of coverage.
  • Increased income limits from 135 percent of the federal poverty limit (FPL) to 150 percent of the FPL for the low-income subsidy program (LIS) under Part D for the full LIS benefit with a $0 deductible.
  • Continuation of the policy to not apply the deductible for any Part D covered insulin product. Also, in the initial coverage phase and the coverage gap phase, cost sharing must not exceed the applicable copayment amount, which for CY 2024 is $35 for a month’s supply of each covered insulin product.
  • Continuation of the policy not to apply the deductible to any adult vaccine recommended by the Advisory Committee on Immunization Practices (ACIP). Also, the statute requires these vaccines to be exempt from any co-insurance or other cost sharing, including cost sharing for vaccine administration and dispensing fees for such products, when administered in accordance with ACIP’s recommendation, for beneficiaries in the initial coverage and coverage gap phases.
  • Base beneficiary premium (BBP) growth will be held to no more than 6 percent by statute. The BBP for Part D in 2024 will be the lesser of the BBP for 2023 increased by 6 percent or the amount that would otherwise apply under the original methodology if the IRA were not enacted.

Star Ratings: Medicare Advantage star ratings for CY 2024 will include 30 measures with 12 included in the 2024 categorical adjustment index (CAI) values. By contrast, Part D star ratings for CY 2024 will include 12 measures with 5 of those measures included in the 2024 CAI values. The CAI for the 2024 Star Ratings is expected to be issued later in 2023. The CAI was introduced in 2017 as an interim analytical adjustment to address the average within-contract disparity in performance among beneficiaries who receive a low-income subsidy, are dual eligible, and/or are disabled.

The Final Rate Notice also includes three criteria for determining if Part C and D organizations are eligible for the “extreme and uncontrollable circumstances” adjustment to their Star Ratings. To be eligible, an organization must be in a 1) service area that is within the “emergency area” during the “emergency period,” 2) service area that is within a geographic area designated in a major disaster declaration under the Stafford Act and the Secretary exercised authority under the Act based on the same triggering events, and 3) a certain minimum percentage (25 or 60 percent) of beneficiaries must reside in the Federal Emergency Management Agency (FEMA) designated Individual Assistance area at the time of the extreme and uncontrollable circumstance. If an organization meets the criteria outlined and meets the 25 percent minimum, then they will receive the higher of their measure-level rating from the current and prior Star Ratings years for purposes of calculating the 2024 Star Ratings. For organizations meeting the 60 percent minimum and the other criteria, they are excluded from the measure-level cut point calculations for non-CAHPS measures, and the performance summary and variance thresholds.

Upcoming LinkedIn Live: Join HMA for our Future Frame Conversation on Policy Changes in Medicare Advantage and the Implications for Coding, Risk Adjustment, and Reimbursement.  Tuesday April 11, 2023, at 12 p.m. E.T. Click here to register.

If you have questions about the contents of CMS’s MA final notice and how it will affect MA plans, providers, and patients, contact Julie Faulhaber ([email protected]), Amy Bassano ([email protected]), or Andrea Maresca ([email protected]).