Hospitals object to HealthChoice payment cut

Posted on: 5/30/18

Complaints were aired by hospital executives and by the OHA at a public hearing May 25 on a proposed payment method change for HealthChoice, the state and education employees’ group health insurance plan. Effective Jan. 1, 2019, HealthChoice will consider some secondary surgical procedures “bundled,” or included in the payment for the primary surgical procedure, rather than paid separately.

The claims affected by this change are those with multiple procedure codes, when at least one of the claim’s procedure codes is assigned the status indicator of “J1” by the Centers for Medicare & Medicaid Services (CMS). HealthChoice payment rates for outpatient hospital surgical procedures are set at a percentage over Medicare’s standard payment rates for these services. Medicare does not pay extra amounts for additional procedures when the claim includes a J1 procedure. (See “HealthChoice to reduce some outpatient payments,” May 16, 2018 Hotline.)

Frank Wilson, administrator of the Employees Group Insurance Division (EGID), said the state will save about $14 million annually through this payment method change. He said the agency is currently overpaying for claims that include a J1 procedure. Before the hearing, EGID sent each hospital an estimate of the annual impact of this change based on the hospital’s past HealthChoice claims.
 
In the hearing, hospitals told EGID that the new payment calculation will be difficult and potentially expensive for hospitals to model. They objected to the short notice provided before the hearing. Wilson said EGID will implement the change at the beginning of 2019. By formalizing the change now, actuarial projections for 2019 premium rates can include the resulting savings.

EGID’s presentation on the proposal can be found on their updated notice page, available here. A transcript of the hearing (including the presentation) will be posted on this page around two weeks after the hearing.  (Rick Snyder)