The Affordability Review — “Reading the Tea Leaves"
The fall season is a good reality check — back to school, cooler weather, end of summer, and …. Budgeting/financial forecasting. Forecasting is like predicting the future — you have to know how to read the tea leaves and see the efficiencies and interdependencies of your current performance to have a better idea of future performance and challenges.
Regardless of lines of business and marketplaces, companies need to manage to an acceptable loss ratio. Government regulations use this metric across different products and populations. Medicare Advantage demands at least 85% medical loss ratio (MLR), and many Medicaid plans and special needs populations require at least 90% MLR. Administrative costs are constantly squeezed, and risk adjustment is an ongoing process that is sometimes hard to quantify relative to the amount and timing of the additional revenue.
So the process of going through an affordability review is like a readiness audit. It is better to be proactive and look for opportunities before it is too late. An affordability review consists of several steps. An initial onsite visit, including interviews with management across the key departments of medical management, networks, pharmacy, claims, finance, risk adjustment, and marketing, can set the foundation for an in-depth review of internal financial and operating reports. An objective review of claims trends, based on cost and utilization drivers across members, providers, and services, can result in improved financial and operational performance. With collaboration among subject matter experts, initiatives with financial targets and action plans can be developed and monitored.
Even with new products and demonstrations, reports and a monitoring process should be in place on day one. Many Centers for Medicare & Medicaid Services (CMS) demonstrations only last for three years, so waiting for claims data and trends minimizes your window for mitigation.
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Gorman Health Group has subject matter experts in operations and analytics to provide assistance with this process and help cultivate a corporate awareness and discipline toward financial outcomes that deserve a spot with quality and compliance. It is everyone's responsibility. Contact us to learn more >>
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Best Practices and Common Conditions of Audit Preparation
As we wait for the 2014 Part C and Part D Program Annual Audit and Enforcement Report to be released, we contemplate the activity that our client partners have experienced during CMS audits, in remediation of identified conditions, and preparation for future activities.
This year started a new audit cycle. It has also been a year filled with plan sponsor confusion and frustration over published audit protocol that did not appear to be fully vetted before release to the industry. We received a number of clarifying questions regarding the protocol instructions and data layouts before CMS' summer Oversight and Enforcement conference, and we continue to advise clients — whether they are undergoing a CMS audit or not — to reach out to CMS for clarification in writing. Protocol aside, there is much you can do to perfect the things you have control over — when you can't change the data of the past. With that, and using CMS nomenclature, I bring you some best practices and common conditions of audit preparation that we have garnered over the years.
Best Practices
- Audit participants know their self-identified and disclosed data very well.
- All documentation is perfectly organized when presenting tracers in easily accessible folders, reachable by one click.
- Information Technology and Support staff tests telephone and web connectivity in every conference room. Contact names of multiple IT staff are posted in each webinar room, with one professional outside the conference door at all times.
- Debrief meetings occur every evening with the full plan audit team and CEO. CEO also kept well informed during the day throughout the audit.
- Audit participants are honest and forthcoming with reviewers.
Common Conditions
- Organization is not audit-ready in light of annual protocol release.
- Organization is not fully prepared in light of best practices/common conditions memos to demonstrate thorough evaluation of same.
- Tasks completed but documentation is not in place to substantiate it.
- Webinar participants designate drivers and speakers ahead of time, but do not designate note-takers, runners, or a master of the mute button.
- Organization does not leverage opportunities to outreach to Compliance or CMS for clarification of guidance.
If you have been holding your breath patiently waiting for an audit notice, don't worry, there's still time. The best practices above help your audit run smoothly, efficiently, and help demonstrate a connectedness of a well-oiled machine of a Compliance Department. These folks are generally the ones tasked with the housekeeping and logistics of planning, as well as documentation uploads, leadership summaries and let's not forget their day-to-day work.
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The Centers for Medicare & Medicaid Services (CMS) audit practices have radically changed in recent years. Now with only days to prepare for CMS audits, organizations must become proactive in creating a culture of compliance. From a gap analysis to a comprehensive, deep-diving Part C and D audit, our team can help you minimize your compliance risk and maximize your time and resources. Visit our website to learn more >>
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Medicare at 50: Past, Present & Future
Since its inception on July 30,1965, millions of elderly and disabled Americans have been able to obtain medical care through Medicare. Before Medicare, almost half of all Americans 65 and older had no health insurance. Today that number has dropped to a staggering 2 percent.
The accomplishments for Medicare have been noteworthy.
These include increased access to health insurance coverage and healthcare, decreased disparities in access by race leading to desegregation of hospital staff and facilities, as well as payment and delivery system reforms such as prospective payment, capitation, and shared savings — all of which have been adopted by private payers. Karen Davis from Johns Hopkins and former President of the Commonwealth Fund noted the success of Medicare's insurance Marketplace which offers beneficiaries a choice of traditional Medicare and Medicare Advantage plans with a 4-5 Star program that is driving plans and enrollment to higher quality. Medicare spending per capita has grown more slowly than overall health spending per capita and is currently at historically low rates.
The challenges are many.
Disjointed coverage (Parts A, B, D) is confusing to beneficiaries and results in high administrative costs and overpayments. Out-of-pocket costs for premiums, cost-sharing, and uncovered services remain high, and Medicare has no out-of-pocket maximum. Medicare does not cover long-term care services or home- and community-based services. Provider payment still remains largely fee-for-service, resulting in incentives for volume and provider not patient-centered care.
The Future
The future involves many different directions. The first is moving from an acute care model to a program that can effectively care for beneficiaries with complex chronic conditions. Provider payment reform needs to move to value-based payment that rewards efficiency and quality. The focus needs to shift to patient-centered care rather than provider-centric care. Care coordination and team care needs to be a focus. Program fragmentation and high out-of-pocket costs, particularly for high service users, needs to be addressed.
As Charles Darwin pointed out, evolution isn't about being the biggest or the smartest, but the most adaptable. Government programs have become the biggest opportunity for payers. Rates will be positive especially in Medicare Advantage, but the compliance environment will be brutal throughout the rest of the Obama administration. Star Ratings and the member experience are now driving the market — 30 plus states are now using some form of Star Ratings for performance-based payment, many states have adopted quality ratings for Medicaid managed care plans, but there is no national standard….yet, and the Health Insurance Marketplace will begin publishing quality ratings in 2016.
What have we learned?
John Gorman, Founder and Executive Chairman at Gorman Health Group, recently provided lessons learned in the 19 years we have partnered with health plans operating in Medicare, Medicaid and now the Health Insurance Marketplaces. He discusses the current industry environment and what's important moving forward. Read more >>
About 81M will be enrolled in Medicare by 2030. Is your organization prepared?
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Gorman Health Group evaluates the design and delivery of high quality collaborative care while achieving compliance and improving revenue cycle management. Our multidisciplinary team of experts will assess the alignment of your products, your current network and your market to translate your business strategies into practical, efficient and rigorous work processes with the highest degree of compliance and accountability. Visit our website to learn more >>
GHG can evaluate your Star Ratings approach, and identify tactics you can begin implementing immediately, to integrate initiatives, eliminate redundancies, and build an enterprise-wide Star management structure. We can help you identify clinical, operational, and networking opportunities to increase your score for 2016 and beyond. Contact us to learn more >>
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2016 Marketing Guidelines: Evolve or Pay
There were several significant changes released in the 2016 Medicare Advantage & Part D Medicare Marketing Guidelines (MMGs), all of which communicate the same consistent message from the Centers for Medicare & Medicaid Services (CMS), the focus is on the beneficiary.
Possibly one of the more surprising trends was that with the focus on improving the beneficiary experience, CMS has actually also provided significant leeway in the way that Organizations are permitted to fulfill the requirements. However, with the leeway provided, CMS reminds us that "If CMS finds the Plan/Part D Sponsor failed to comply with applicable rules and guidance, CMS may take compliance action, including intermediate sanctions and civil money penalties." In other words, "Evolve or Pay".
In our recent webinar, Nilsa Lennig, GHG's Vice President of Sales & Marketing Services and I, discussed the new guidelines and what is required of plans to do moving forward.
Below are the top three revisions released in the 2016 MMGs that we believe will have the most significant impact on Organizations:
1. CMS revises current guidance to allow Organizations the option of providing the pharmacy/provider directory to new or renewing enrollees OR a separate notice to alert enrollees where they can find the pharmacy/provider directory online and how they can request a hard copy. In addition, in keeping with the information released in the 2016 Call Letter, CMS includes language requiring Organizations to contact providers monthly to obtain updates to provider information. Once updates from providers are received, Organizations must update the online provider directories in real time.
The operational implications that come along with the changes around network updates and provider directories are huge. While Organizations will have to work through the specifics of these new processes, the cost savings of not having to automatically send printed directories is a clear win for the industry.
2. CMS modifies current guidance to require submission of all agent/broker websites that mention specific products. While this change may be operationally burdensome, we actually view this as a positive. Clearly, this is a revision that has to do with risk areas that have been identified in the industry - anyone who has overseen or reviewed agent/broker websites can attest to that! With the CMS requirement in black and white, we believe that CMS has actually made it easier for Organizations to oversee agent/broker websites in order to ensure Compliance.
3. CMS now specifically states that submission and approval of mobile applications (app) for marketing to prospective enrollees is required. From our perspective, this revision indicates again that CMS has become aware of an area of industry risk. In order to implement this requirement it will be important that Organizations get ahead of this trend and a) ensure that agent/broker/FMO contract language is strong related to which delegates are permitted to develop an app to market plan products and b) ensure that there is a process in place around internal compliance review and submission to CMS of mobile applications.
Conclusions?
- CMS continues method of applying Compliance Actions, as well as Civil Money Penalties
- CMS Continues to have a laser focus on beneficiary protections
- CMS has provided significant flexibility to fulfill certain key requirements — take advantage!
If you have questions or need clarifications regarding any of the information listed above, contact us here and a team member will bee in contact with you shortly.
Resources
Read our recent case study regarding a mid-sized managed care health plan who struggled with appeals, grievances, and Complaint Tracking Module cases (CTMs) to see what their challenges were and how they overcame them. Download now >>
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MLTSS: Key to Caring for Duals
We all want to do it: Provide the best healthcare services for our members. For our vulnerable population, this can be complicated, if not near impossible to achieve, given the current healthcare issues at hand.
About 9.6 million people in the United States are covered by both Medicare and Medicaid, including low-income seniors and younger people with disabilities, according to the Kaiser Family Foundation (kff.org). Kindred Healthcare's "Making Sense of Healthcare Reform: Dual Eligible" points out, as baby-boomers reach their 65th birthdays, an estimated 10,000 individuals become eligible for Medicare-covered services each day. Couple this fact with the expansion of Medicaid eligibility in many states, the result is a much larger dual-eligible population in the near future. These dual-eligible beneficiaries are almost, by definition, a high-needs population often demonstrating to be the poorest and sickest beneficiaries of both programs. Consequently, they account for a disproportionate share of spending in both programs and, according to the Medicare Payment Advisory Commission (MedPAC), dual-eligible beneficiaries cost Medicare about 60 percent more than non-dual eligibles.
Medicare and Medicaid were never operationally designed to work as a single health plan (and it shows). Kindred Healthcare explains further in their article there are coverage and payment policies offered by 50 separate and unique Medicaid policies. Simplified, Medicaid pays for almost all long-term care (LTC) services, while Medicare covers more acute care such as emergency department visits. Dual eligibles are constantly bouncing back and forth between the two government-funded programs; Medicare pays for an operation and Medicaid for long-term recovery.
It's complex, inflexible, and silo-infested.
Health plans need to identify ways to better manage escalating costs and make payment reform a fundamental requirement in both improving quality and containing costs. The answer is multi-faceted.
Move from Volume to Value: According to an article in governing.gov, the volume-driven Fee-for-Service (FFS) payment system for the Managed Long Term Services and Supports (MLTSS) of the aging and disabled LTC populations is focused on volume. The volume-driven FFS payment system can be replaced with pay-for-performance and care management initiatives including performance-based contracting, shared risk, and capitated payments to providers and managed care organizations (MCOs). Success of these initiatives is dependent on the plan's ability to track and analyze the outcomes. Focusing on outcomes can transition staff perspective, actions, and care plan goals to be more person-centered.
Improve Access to Home- and Community- Based Care: Tennessee implemented a pilot based on a decade-long study published in Health Affairs in 2009 which found states with established home- and community-based programs were able to reduce their overall Medicaid LTC spending by nearly 8 percent. Acting on the results of this study, Tennessee lawmakers introduced a new program called CHOICES in 2010, which was a way to help seniors on Medicaid receive home- and community-based care instead of living in nursing homes. Programs like CHOICES are estimated by the Bowles-Simpson presidential commission of fiscal reform to possibly produce savings up to $12 billion by 2020. Nursing homes, as a default option for aging and disabled beneficiaries, will quickly prove unaffordable in the long run not to mention negatively impact satisfaction ratings. After all, AARP conducted a study of individuals over the age of 50 and found more than 80 percent prefer aging in their own home than in an institution.
Provide Feedback to CMS: September 14, 2015, is the deadline to provide the Centers for Medicare & Medicaid Services (CMS) comments regarding their newly released rule, Reform of Requirements for Long-Term Care (LTC) Facilities. This proposed rule would revise the requirements LTC facilities must meet to participate in the Medicare and Medicaid programs. An emphasis has been made on theory and practice of service delivery and safety in order to achieve broad-based improvements both in the quality of healthcare furnished through federal programs, and in patient safety, while at the same time reducing procedural responsibilities on providers. New sections address facility responsibilities for protecting resident rights and enhancing quality of life; requirements for comprehensive person-centered care planning; changes relating to behavioral health service and laboratory, radiology, and other diagnostic services; requirements for Quality Assurance and Performance Improvement (QAPI) and Compliance and Ethics Programs; and staff training requirements. CMS estimates costs to comply per facility over a span of two years will be about $40,685.
Care Coordinate Effectively: In John Gorman's blog, "You're Doing it Wrong in Care Management" issued May 18, 2015, he explained how modernizing your approach in care management into data-driven care coordination "pods" can help you better manage your high utilizers and those about to become them. By "doing it right in case management," you can both contain costs and improve quality.
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GHG can help your transform a total change in the delivery, payment, and care coordination efforts necessary to provide positive outcomes for a very challenging patient population. We can help you learn what works best in coordinating quality-driven care for dual-eligible beneficiaries — and what approaches would be unsustainable. Contact us to get started today>>
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EHR Incentive Programs: Improving Access to Care
The 2014 Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs were developed to provide financial incentives to eligible professionals, eligible hospitals, and Critical Access Hospitals (CAHs) to achieve meaningful use of certified EHR technology with the goal of improving patient care. The programs worked to prompt healthcare providers to adopt, implement, upgrade, or demonstrate meaningful use of certified EHR technology. In her May 18, 2015, article in RevCycleIntelligence, Jacqueline DiChiara reported by the end of 2014, EHR incentive payments reached over $28 billion with eligible hospitals receiving more than $17 billion, Medicare and Medicaid-eligible professionals collectively receiving nearly $10 billion. However, there are some changes with the EHR Technology Incentive Program that may affect your revenue—and not in a good way.
In the amended American Recovery and Reinvestment Act of 2009 (ARRA), Congress included provisions in the Medicare and Medicaid EHR Technology Incentive Program for CAHs, as well as eligible professionals and hospitals, who did not successfully demonstrate meaningful use of Certified EHR Technology to experience a negative payment adjustment to their reimbursement. Effective January 1, 2016, payment adjustments will be applied for those Medicare-eligible professionals not meeting the criteria for meaningful use in the Medicare EHR Incentive Program. For eligible hospitals, payment adjustments were applied as of October 1, 2014. Interestingly, DiChiara notes over 28,000 eligible professionals reported a 2% decrease in their 2015 Medicare payments for not meeting the standards related to Electronic Prescribing (eRx) and the Medicare EHR Incentive Program. CAHs unable to demonstrate meaningful use for the applicable reporting period of fiscal year (FY) 2015 will have a decrease in their reimbursement, from 101% of its reasonable costs to 100.66%, according to CMS.gov. For 2016, the percent of reasonable costs reimbursement decreases to 100.33% and then down again to 100% for 2017 and for each year thereafter, well into years 2020 and beyond.
CAHs were created to preserve access to primary and emergency care services in isolated rural areas by improving the financial conditions of CAHs and, subsequently, preventing some closures. Choices Magazine article, "Performance of the Critical Access Hospital Program: Lessons Learned for Future Rural Hospital Effectiveness in a Changing Health Policy Landscape," highlighted the CAH program grew rapidly from 41 hospitals in 1999 to 1,055 hospitals in 2005 and to 1,327 CAHs in 2011 because of the 1983 Medicare switch from cost-based reimbursement to the Prospective Payment System (PPS). CAHs now face possible Medicare cuts. Hopefully, the following information from CMS.gov can help CAHs effectively avoid EHR Incentive Program payment adjustments and ensure their financial longevity as Medicare and Medicaid providers.
- Hardship: A CAH may, on a case-by-case basis, be exempted from this adjustment if the CAH can demonstrate, on an annual basis, becoming a meaningful user of EHR technology would result in a significant hardship. However, in no case will a CAH be granted an exemption for more than five years.
- July 1, 2015: 2016 Eligible Professional (EP) Medicare EHR Incentive Program Hardship Exception Application Deadline
- CAHs can apply for hardship exceptions in the following categories:
- Infrastructure — CAHs must demonstrate they are in an area without sufficient internet access or face insurmountable barriers to obtaining infrastructure (e.g., lack of broadband).
- New CAHs — CAHs with new Centers for Medicare & Medicaid Services (CMS) Certification Numbers (CCNs) not having had time to become meaningful users can apply for a limited exception to payment adjustments. The hardship exception is limited to one full year after the CAH accepts its first patient.
- Unforeseen Circumstances — Examples may include a natural disaster or other unforeseeable barrier.
- Meaningful Use: In order to avoid the payment adjustments, CAHs must demonstrate meaningful use within the full federal fiscal year that is the same as the payment adjustment year. The adjustment would then apply based upon the cost reporting period beginning in the payment adjustment year (that is, FY 2015 and thereafter). Thus, if a CAH is not a meaningful user for FY 2015 and thereafter, the adjustment would then be applied to the CAH's reasonable costs incurred in a cost reporting period beginning in that affected fiscal year.
- An eligible hospital or CAH demonstrates meaningful use by successfully attesting through either the CMS Medicare EHR Incentive Programs Attestation System (https://ehrincentives.cms.gov/) or through its state's attestation system.
- CAHs are required to submit their attestations for meaningful use by November 30th of the following fiscal year. For example, if a CAH is attesting it was a meaningful EHR user for FY 2015, the attestation must be submitted no later than November 30, 2015, in order to avoid payment adjustments.
- Eligible hospitals and CAHs participating in meaningful use for the first time this year may attest to a 90-day reporting period for FY 2015. CMS is allowing eligible hospitals and CAHs participating in meaningful use for the first time the ability to attest. The hospitals must first register in the CMS Registration and Attestation System at: https://ehrincentives.cms.gov/hitech/login.action. Once the registration is active, the hospital should contact Elizabeth Holland at elizabeth.holland@cms.hhs.gov and provide the hospital name, CCN, and contact person information.
- Call CMS Information Center: Ask questions, get more information. Dial 888-734-6433 then dial 1 for the EHR Information Center.
At the Intersection of Exhausted and Impossible
Today, most employees and employers in all organizations struggle to do more with less…not just health plans.
Information flow and the necessity to respond quickly to change have totally transformed existing jobs in the last ten years. There is little opportunity to spend days considering the implications of data and information received. The necessity of implementing new programs to meet the Centers for Medicare & Medicaid Services (CMS) requirements strains the resources of health plan organizations and departments even further and may contribute to lapses in compliance and, therefore, regulatory risk. A daily to-do list for the Part D team routinely includes:
- Rejected claims review
- Formulary maintenance
- Adjudication issues resolution
- Intra-departmental calls to assist with resolution of grievances and Complaints Tracking Module cases (CTMs)
- Transition fill and notice monitoring
- B versus D medication resolutions
- Intra-departmental and other organization meetings
- Compliance communications and directives
- Personnel issue resolution
- Clinical pharmacy activities
- Part D Star Ratings monitoring and report reviews
- Case management activities
- CMS-required reporting
- Enrollment and eligibility issue resolution
- Prescription drug event (PDE) reconciliation
- AND the never diminishing email inbox
The list goes on and on. A thorough review of all department functions either utilizing internal human resource assistance or external experts can provide recommendations for the right size staffing, resource delineation, and recommendations for new products or tools for the Pharmacy/Part D Department. The review should include the following questions: What is the right mix of pharmacists, pharmacy technicians, and business analysts? How many hours or full-time employee (FTE) segments should be dedicated to the various tasks? Will additional training and refining of work processes help to alleviate some of the burden? Is there a software solution that will streamline some of the manual processes currently in place?
With the insufficient amount of true subject matter experts in the industry, we know recruiting is difficult and time consuming. If interim staffing is what you need, Gorman Health Group (GHG) can enhance your team with our own, providing knowledgeable, effective assistance and an eye for detail from processors and analysts with decades of experience. Our pharmacy consultants come fully trained and prepared to provide short-term or long-term support and create a business case for additional resources, training, and tools. We offer strategic and operational leadership experts when, and where you need it.
Interested in more information? Contact us today.
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Our Part D services are designed with your staff in mind, ensuring that with a mix of counsel and DIY tools your staff will have access to actionable information — faster. Don't chase data points. Spend your time on the things that will impact your audit results when a CMS audit comes — and it always does. Visit our website to learn more >>
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Quality Ratings: No National Standard for MCOs…Yet
A recent article noted five major changes in new Medicaid Managed Care rules, one pertaining to a quality ratings system. Many states have quality ratings for managed care plans, but currently there is no national standard. Medicare has a five-star system evaluating private plans, and private plans offered through the Affordable Care Act's (ACA's) Health Insurance Marketplace will begin publishing quality ratings in 2016. Ratings for Medicaid managed care plans would look similar to the Marketplace plan ratings.
"CMS' rationale was to more closely align the ratings system for managed care plans with [exchange plans], because a lot of those plans in the Marketplace are also Medicaid managed care providers," said Lisa Shugarman, a consultant at Health Management Associates.
The Marketplace plans will begin testing a ratings system this year including three broad categories (clinical quality, patient satisfaction, and plan management/affordability) that would also be a part of the managed care ratings. The Marketplace plans' ratings system will also have dozens of sub-categories — the specifics of which will be determined by state officials and health experts. It has taken about three to five years for the Marketplace plans to have their ratings system up and running and would likely be the same time frame for managed care, according to Matt Roan, another consultant at Health Management Associates.
States would have the option to include additional measures, but the process for doing that isn't clear yet, and many managed care organizations (MCOs) are wary of too much variation between state quality reporting systems. They will be pushing CMS to ensure a high level of standardization to ease compliance.
Non-profit Medicaid plans support quality ratings, but they also think the rule should apply to traditional, state-run Medicaid and other arrangements, such as Accountable Care Organizations (ACOs).
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Gorman Health Group can help your organization implement successful quality initiatives, from both the quality and operations perspectives, to improve scoring and control costs while continuing to serve the rapidly expanding Medicaid and dual-eligible populations. Visit our website to learn more >>
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Obamacare Reinsurance and Risk Adjustment, Year One.
The much-anticipated "Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014 Benefit Year" has been released by the Centers for Medicare & Medicaid Services (CMS). A staggering 99.7% of Issuers were able to successfully submit data. The remaining 0.3% either did not set up an EDGE server or submitted data CMS could not use for risk adjustment calculations. Considering the aggressive timeline Issuers were given, this completion percentage is quite remarkable. Those who failed to submit compliant risk adjustment data were slapped with a non-compliance fee, which was distributed to other Issuers in the state.
CMS also announced plans would receive full payment under the reinsurance program. The reinsurance coinsurance rate has been increased from the provisionally announced 80% to 100% since the funds collected by CMS exceeded the requests for reinsurance payments. The information provided in this report further confirms risk adjustment will be an integral part of an Issuer's financial standing. It demonstrates risk adjustment payment transfers equate to anywhere between 2% of the total premium for merged plans to 21% of the total premium for catastrophic plans. So overall, from the highest view point, the processes for risk adjustment and reinsurance have shown to be a success. That perspective does not necessarily stand true when looking at the Issuers at a more granular level.
Yes, 99.7% of Issuers were able to successfully meet the submission requirements and get their data onto the server. That does not mean the data were complete and accurate to truly reflect the risk of the company. It just means, out of the 758 issuers eligible to participate in the risk adjustment payment transfer, 99.7% of them were able to send some sort of data to the server in the format CMS required and, therefore, were able to avoid receiving the default non-compliance charge. Issuers' completion percentages increased with each submission that got closer and closer to the April 30, 2015, deadline. The increase may not have been because Issuers were correcting errors; rather, it was CMS relaxing edits, allowing more data to be accepted onto the EDGE server. It would not have been beneficial for neither the Issuers nor CMS to have low completion percentages.
The commercial risk adjustment model is a zero-sum approach, meaning it collects funds from lower-risk Issuers then redistributes those funds to higher-risk Issuers. In order to determine how one company compares against another, state averages are calculated. An average is calculated for the monthly premium, risk score, rating area, and actuarial value for each risk pool category. These averages are then used in combination with the Issuers' actual calculations to determine the amount an Issuer is required to pay or will be receiving for risk adjustment. In looking at the Issuer-specific information, you're able to see the "winners" and "losers" for each state.
When evaluating how your company compared against internal projections and against your competitors in the market, here are a few things to consider:
- Approximately 20%-30% of your commercial individual and small group population will have a diagnosis correlating to a Hierarchical Condition Category (HCC) risk adjustment category. A missing diagnosis code for commercial risk adjustment could be the difference between receiving a payment or making a payment. What is your company's end-to-end reconciliation process for member and claims EDGE server data submission?
- There were unique claims circumstances CMS wanted handled a specific way, such as bundled claims and interim claims. These types of claims typically carry a lot of diagnosis information and claim cost. Were these claims handled appropriately to ensure demographic and diagnosis information was fully captured?
- Commercial risk adjustment is not just a process but rather a company strategy needing to be embedded throughout various departments in the organization. Is the strategy for your organization clear and understood by the areas involved in knowing how they impact risk adjustment?
It seems like it has taken forever for the 2014 risk adjustment payment transfer and reinsurance payment information to be released. Whether your results were stellar or not, don't get too hung up on the actual payments. What's done is done. Spend the time evaluating the full 2014 end-to-end process. What went well? What needs to improve? Act quickly and set your plan in place to impact your 2015 results—April 30, 2016, will be here before you know it. And invest wisely in people and systems to avoid subsidizing your competition due to inadequate or incomplete diagnosis data.
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The Reality of the 2014 Commercial Risk Adjustment Payment Transfer: Forecasted vs. Actual
The signing of the Affordable Care Act (ACA) into law threw health insurers into a whirlwind of changes. The guaranteed issue law made it so no enrollee in the individual or small group commercial market would be denied coverage due to their health status. In addition, the rate for all members now had to stay the same for all enrollees, with fluctuations only allowed for a few factors such as tobacco status. That key process, known as underwriting, could no longer serve as the method to evaluate risk and either deny coverage or set the enrollee's premium accordingly. With that shift came the introduction of risk adjustment, reinsurance, and risk corridor ("3 Rs") into the commercial market.
When the implementation of the ACA regulations were in process, a lot of plans took the "here and now" approach―meaning, they primarily focused on what the immediate pressing issue was, not contemplating what the downstream impact could possibly be. Project dollars were being spent on over-engineering enrollment processes and developing automated tools that, in the end, were not as useful as anticipated. It's human nature to want to tackle obstacles right in front of you, but when implementing ACA changes and introducing a new sales channel, like the Marketplace, a holistic approach needs to be taken. Developing a solid risk adjustment strategy was not part of the upfront planning for a lot of health insurers―it was a new process with a lot of grey area and unknown requirements.
So here we are now in the final stages of the first full year operating under the ACA. All health insurers are fully aware of the immense amount of work it takes to submit data to the EDGE server. With this data, CMS can calculate reinsurance dollars owed to health plans and calculate risk scores to support the risk adjustment process. They are also learning just because you can submit data to the EDGE server does not mean the overall risk for the company is reflected accurately. As each day passes, more information is becoming known about the transfer of risk adjustment payments. A limited number of health plans are being assigned a default risk score and are not eligible to receive reinsurance dollars due to not submitting adequate data to the EDGE server. In speaking with plans across the country throughout the evolution of the commercial risk adjustment operational process, the majority of health insurers were very optimistic they would be receiving risk adjustment transfer dollars, many of which will soon face the harsh reality that the forecasted risk adjustment receivable anticipated has turned into a payable.
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HRADV: What you don't know could cost you millions. Read the full article >>