Hospital Rate and Reimbursement Reform

Background

State leaders wanted to reform their inpatient hospital reimbursement system by rebasing rates and adopting the All Patient Refined Diagnosis Related Groups (APR-DRGs) method for reimbursing hospitals under the Medicaid program. Additional state revenue was needed in order to fund this modernization of the reimbursement system. Under contract with the state, Sellers Dorsey worked to design, seek federal approval for, and implement a statewide hospital assessment to fund the transition and usher in rate and reimbursement reform.

The Collaboration

Working with the state, advocates and other key stakeholders, Sellers Dorsey:

  • Modeled the assessment to maximize the benefit to the providers and the state;
  • Participated in discussions with the hospital association to reach agreement on the assessment model and transition to APR-DRGs;
  • Assisted in drafting the state legislation, public notices, state plan amendments, waiver requests, managed care contract amendments, briefing documents, and answers to CMS questions for the assessment and implementation of APR-DRGs;
  • Provided technical input on the development of the APR-DRG reimbursement system and supporting policy changes;
  • Coordinated the implementation of the assessment with the transition to the APR-DRG reimbursement system;
  • Participated in discussions with CMS to secure approval, including designing a mechanism to use assessment revenue to fund increased managed care payments to hospitals;
  • Worked with the state and the hospital association to implement the initiative; and
  • Designed a process to monitor revenues and expenditures associated with the assessment to ensure the program operated within budgetary limits.

The Results

The state obtained CMS approval for the assessment, providing the necessary revenue to fund the modernization of the state’s inpatient hospital reimbursement system. The statewide assessment continues to generate approximately $500 million in new federal Medicaid funds annually.