Medicaid Ambulatory Payment Reform Implementation and the Impact on

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                                                                                         HPM&B
                                                                                        Judging Dept.
                                             Kathryn Czesnowski
                                                    Student


            HPM&B                2                                Elliott Shaw
          Dept or Program Years in program                           Mentor




      Medicaid Ambulatory Payment Reform Implementation and the
               Impact on Medicaid Advantage Health Plans

                                                  Author (s)
                                             Kathryn Czesnowski


Background: New York State recently identified the Medicaid reimbursement system for hospital
outpatient and inpatient services as outdated and based on base rates from the 1980’s. A New
Ambulatory Payment Group (APGs) methodology is being implemented to increase Medicaid
reimbursement for Emergency Room (ER), ambulatory surgery, and hospital outpatient services
including base rates more in line with current cost structures. WellCare, a Medicaid Managed Care
and Advantage plan has started collecting data to determine the effect on their economic outlook.
Methods: Data collection is limited due to the initial phase of APG implementation. Preliminary data
has manually calculated sample APGs based on the proposed base rates and group weights.
Calculations are then compared to existing Medicaid rates for similar services and compared to the
sample to determine the financial impact of the APG. The sample APG is then compared to rates paid
to contracted hospitals to determine the financial impact APGs will have on existing contracts.
Results: Preliminary data indicates the new methodology will increase reimbursement for outpatient
hospital, ER, and ambulatory surgery services by 40% state wide. Comparison of APGs with internal
contracts found that implementation of APGs will result in a 20-40% increase in reimbursement for
WellCare depending on the hospital.
Conclusion: WellCare is developing renegotiating strategies for key hospitals in order to limit the
financial impact on WellCare from APG reimbursement increases. WellCare has identified key
hospitals were APGs implementation has a large financial impact and has developed renegotiating
strategies to limit the impact.