The Formulary Season
It's the formulary season, and you should be in the home stretch for your Health Plan Management System (HPMS) submission. What's on the formulary and what changes were made to the formulary are among the top reasons why members either enroll in or disenroll from a health plan. Manufacturer price increases over the past two years and the number of high-cost specialty drugs released to market make formulary decisions and utilization increasingly difficult and significant to the health plan's bottom line. With an average generic medication utilization rate of 80-85%, there is limited movement to improve. Some thoughts to consider:
Custom vs. Template
Offering a custom formulary targeted to treat a subset of enrollees with a chronic condition seems to be the wave of the future through value-based insurance design. Counterarguments center around a probable increased cost for the Pharmacy Benefit Manager (PBM) administering a custom formulary as well as increased compliance risks for the maintenance and updating of a custom formulary.
Cost-Sharing
Monthly member out-of-pocket cost-sharing for commonly used formulary brand and generic drugs varies widely across Part D plans; for five of the ten top brands, monthly costs can vary as much as $100. Medications (including the specialty tier) with the highest cost share are generally non-formulary brand medications. Non-formulary specialty medications are sometimes ten times higher if they are non-formulary.
Utilization Management
The number of prior authorization (PA) edits approved through the coverage determination request process should be assessed by the plan. If over 90% of the requests are approved, is it really cost effective for the plan (especially if coverage determinations are delegated to the PBM) to continue to utilize the edit? That expense may be better utilized in performing retrospective reviews to ensure medications are being used for approved indications.
Coverage Gap
For 2017, members are responsible for 40% of the cost of brand name drugs and 51% of the cost of generic drugs in the coverage gap. Plans should determine the potential medical costs (emergency room, physician visits, hospitalizations) of members not taking their chronic medications or only taking a subset that they can afford in this coverage gap period. Providing additional gap coverage for medications makes sense in some benefit/risk scenarios.
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The rapid changes to Part D regulations make the tracking and implementation of these CMS requirements exceptionally difficult — to say nothing of actually managing to them. Gorman Health Group's broad array of services can assist you in post-audit remediation, implementation of best practices, PBM contracting and implementation, interim staffing, clinical process re-engineering, Star Ratings improvement, and claims and PDE assessment and adjustments. Visit our website to learn more >>
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Why Do We Make Simple Things So Difficult?
Time and time again, we encounter "the coolest workarounds" ever invented within the government programs space. Said a different way, we encounter staff who are stuck inventing ways to accomplish the regulatory burden upon their shoulders when they don't have the right processes and tools to efficiently do their job. The manual effort and workarounds almost get the job done but ultimately leave the plan short of their end goal. This phenomenon is not just seen in one operational area but is commonly experienced across multiple disciplines within the health plan.
In some cases, we are stuck with the workarounds forever. There is no good system, and there will never be one that eliminates some of these workarounds. The regulatory web is too tangled for good processes and tools to solve for it.
However, in other areas, we have solutions that will eliminate these workarounds and hundreds of hours of wasted manual effort to do some of the simplest things. One example of this is seen with some of the Part C & D Reporting requirements. We have heard horror stories of multiple team members working multiple weeks on nothing but agent/broker reporting requirements. Why? It's not because they want to but because they don't have the right solutions to eliminate the wasted effort. Without the right solution, the process of assembling these requirements in Quarter 1 of each year involves multiple files from multiple systems, which is never an easy task regardless of the department and data.
The Annual Election Period (AEP) is coming, and plans are making their decisions now in preparing agents for AEP. Have you considered the following questions?
• Is your Part C & D reporting for agents/brokers automated?
• Do you have a system that tells you when your agents are ready to sell?
• Are you using automated processes and tools to onboard your agents, or are you using spreadsheets and man-hours?
• How do you verify whether your Marketplace agents have met training and license requirements?
If you answered "no" or currently can not provide an answer to the above questions, Sentinel is the right solution for your organization.
Our clients who utilize the Onboarding and Oversight modules within Sentinel tend to take a vacation while other plans are doing their annual workarounds. Sentinel combines the ready-to-sell program steps, agent oversight allegation tracking, and enrollment information to produce Part C & D reporting requirements that are ready with a few simple clicks.
Workarounds versus vacation—you choose.
Resources:
Sales Sentinel™ is a flexible, module-based software solution with the ability to onboard agents, provide training, manage ongoing oversight activities and pay commissions. Read more >>
Join us on Thursday, May 26, from 1-2 pm ET, for an in-depth webinar analysis of the key changes finalized in the new Medicaid regulation, how these changes will affect states and managed care plans, as well as how to adapt. Register Now >>
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Tag, You're It…RADV Selection Has Begun
The data submissions have been completed, and the Risk Adjustment Data Validation (RADV) selection process has begun. Are you prepared for what the RADV has in store for you? In April 2016, the U.S. Government Accountability Office (GAO) released a report titled, "Fundamental Improvements Needed in CMS's Effort to Recover Substantial Amounts of Improper Payments." This report is quite telling about the improvements needed to strengthen payment recoveries during a RADV audit. John Gorman highlighted in a previous blog, "[the Centers for Medicare & Medicaid Services] CMS is on pace for its most aggressive enforcement year ever." So if you are one of the lucky plans that has an Affordable Care Act (ACA) plan and a Medicare Advantage (MA) plan selected for the RADV audit, my hat's off to you because you are about to experience not one but two risk adjustment audits this year.
For those plans selected for the RADV audit, now is the time to grab your RADV readiness plan off the shelf, dust it off, and put it into action. With a very short time frame allotted for health plans to request, review, and submit the appropriate documentation to support a Hierarchical Condition Category (HCC), there is no time to waste. There are five important pieces needed to survive a RADV audit:
- Accountability — It is important all employees involved in the RADV audit know who the person is within the company who is accountable for ensuring the RADV audit is conducted appropriately within the time frame allotted.
- Communication — All departments need to talk consistently during the audit process because of the short time frame to deliver the best supporting documentation available.
- Validation Review — Chart reviews should be conducted and documented in accordance with your health plan's Coding Guidelines and Compliance RADV Policy.
- Dispute and Appeal — Know when and how to dispute or appeal a finding from CMS.
- Lessons Learned — When it's all said and done, most importantly, learn from your mistakes and make strides to improve to prepare for the next audit.
If your health plan was fortunate enough not to be selected, congratulations to you for dodging the RADV selection process this year. Try not to get too comfortable with not having to participate in the RADV audit. CMS' goal is to have all MA plans subject to an annual RADV audit, comprehensive or condition-specific. It will take time to get to this point, but be aware a yearly RADV audit is right around the corner for MA plans.
There is no need to sweat over being selected for a RADV or the potential change to an annual all health plan participation audit. Reason being, everything you are being audited on is information that was submitted by the health plan to CMS. You can't necessarily plan for all of the unknowns or anomalies that occur during the audit, but you can certainly plan for the knowns. Health plans have the ability to ensure data quality and integrity with the risk adjustment operations that are in place prior to the data submissions to CMS. With all of the recent press and discussions about MA overpayments, health plans need to be assessing their risk adjustment internal controls. These are the primary categories for which health plans should be ensuring the right policies and processes are in place:
- Risk Adjustment Oversight — Various departments within a health plan should be providing oversight on the data submissions and operations of risk adjustment.
- Provider Engagement — Strong physician partnerships and collaboration are needed to build a long-term strategy around HCC validations.
- Risk Adjustment Interventions — Health plans need to have clear guidelines on acceptable supplemental diagnosis information obtained through interventions.
- Vendor Management — The vendors with whom health plans contract are an extension of the company. No matter how much you utilize a vendor to run your risk adjustment operations, they are not accountable to CMS during a RADV audit.
- RADV — Have a readiness plan in place and be ready to go upon being selected for the audit.
Health plans should be conducting operations as if an annual audit will occur, regardless of whether the plan is selected. There is no time like the present to ensure your health plan's risk adjustment operations are in order.
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GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS expectations in both compliance and health care outcomes. Visit our website to learn more >>
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An Important Component of MACRA: Quality Measures Development Plan
The Centers for Medicare & Medicaid Services (CMS) recently released a proposed regulation that will implement the payment incentives through the Merit-Based Incentive Payment System (MIPS) and Alternative Payment Models (APMs) as required by the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). An important component of these new incentives is the Quality Measure Development Plan (MDP), which CMS finalized and posted this week. The purpose of the MDP is to create a strategic framework for the future of quality measure development to support MIPS and advanced APMs.
Under MIPS, clinicians will see a payment adjustment beginning in 2019 based on their performance score across four performance categories: quality, resource use, clinical practice improvement activities, and advancing the use of information technology. Under advanced APMs, payments must be tied to quality measures comparable to those quality measures used under MIPS. These quality measures will be developed by CMS by November 1, 2016, as required by MACRA, and CMS will utilize this new MDP to guide the development and implementation of these new measures. CMS currently has an ongoing solicitation to stakeholders to assist in finalizing the initial set of measures.
CMS will also incorporate the seven core measure sets recently released by the Core Quality Measures Collaborative, a partnership between America's Health Insurance Plans (AHIP), CMS, and other industry groups. The plan notes its focus on coordinating with federal agencies and other stakeholders in order to lessen the duplication of efforts within the industry and promote person-centered healthcare.
The MDP notes current known measurement and performance gaps and solutions to close these gaps through new quality measures. For the first measure set, the MDP posted the initial priorities for measure development in six quality domains: clinical care, safety, care coordination, patient and caregiver experience, population health and prevention, and affordable care. CMS will update the MDP as they identify new gaps in measurement and performance in order to develop additional quality measures annually.
In reviewing the recent MACRA legislation for potential changes, and putting together comments to CMS, organizations should also carefully review the new Quality MDP in order to ensure their comments are incorporated into the release of the first set of measures by November 1, 2016.
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CMS recently released the proposed rule that sets forth the replacement for the Sustainable Growth Rate (SGR) formula and creates the new payment system based on value rather than volume. Daniel Weinrieb, GHG's Senior Vice President of Healthcare Analytics & Risk Adjustment Solutions, along with our team of experts will provide a detailed analysis as well as industry recommendations. Stay tuned!
50/50 Just Won't Cut It — You Have to Commit 100%. The Top 5 Components for Successful, Compliant, Committed Operations
If you weren't able to make it to the Gorman Health Group 2016 Forum this year, you missed a dynamic time. More than just relevant topics, it included engaged participants who added a wealth of depth to our discussions. The topic garnering a lot of audience participation was "Can Operational Efficiencies and Compliance Co-Exist?" The struggle to align the two is real and takes constant, diligent effort, but the success it can create is priceless.
I told a story about a recent vacation involving a shark swimming in the surf. At one point it started swimming towards a father and son. Those of us on the pier were yelling to warn the man to leave the water, but he couldn't hear us. It wasn't until the people on the beach carried the message to the man that they got out of the water. Oftentimes we rely on the Compliance Department to carry the weight of maintaining compliance, but like the people on the pier, that message only goes so far. To be effective and make a real change, the message has to be embraced by everyone in order to make a real difference.
Here are the five critical points to ensure operations entwines compliance in its core:
- Don't Ignore the Human Factor — Our employees are the most critical factors in our department's productivity and compliance. Make sure our employees are well trained on not only the technical components of the job but on the critical compliance requirements as well. Employee engagement, like member engagement, is critical to success. Our employees want to do a good job, but sometimes they don't fully understand all that success entails.
- Know the "Why" behind an Action — What vision have you imparted to your staff? Are they just keying in applications, or are they setting up and welcoming members into your plan? Do your employees think compliance is an obstacle to be circumvented or a process to be embraced? Making that transition occurs by showing the "why" behind the action. How does what they do, both individually and as a department, impact our members? What is the logic behind why the Centers for Medicare & Medicaid Services (CMS) requires that activity? What they do is important, and making sure they understand all the reasons why makes your vision their vision.
- Have the Right Tools — Manual work-arounds and systems that have been duct taped to manage Medicare Advantage and Part D cause most of us the greatest headaches and compliance failures. There is no magic wand to resolve this—it takes diligence, documentation, and prioritization on a continual basis to raise up the next critical system needing to be resolved. Have your list of things needing to be fixed, the additional costs associated with the status quo, and the member impact ready and on the enhancement list.
- Provide Measurable Results of Success and Failure — Have a highly-visible way to measure individual and team success and failure. Successes should be celebrated. Share the successes and bring the feedback to your team. Failures should be evaluated—it isn't about the "who did it" but about the "why it happened." Everyone should be focused on mitigation. One of the items the audience discussed is ensuring you eliminate a culture of fear so staff is engaged in reporting non-compliance so it can be addressed. When non-compliance is identified, embrace it and thank those who raised the issue. Let them know how this positively impacted the department, company, and members.
- Manage Up — Sometimes we in management are the biggest barriers to compliant operations. We look at the production numbers and don't focus on the compliance measurements. We only give senior management what they ask for—it is our job to make sure the critical metrics and measurements go up to senior management. They often don't know the right questions to ask or measurements to review, and it is our job to bring this forward—it protects the company and our members.
We all have a part to play to ensure efficient, compliant operations are in place for our members. It takes 100% commitment to make sure the vision is carried forward. At Gorman Health Group, we know how important it is to link compliance and productivity. We are available to join with you to ensure that vision is firmly established in your organization. Please contact me directly at jbillman@ghgadvisors.com.
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At Gorman Health Group, we maintain the country's largest staff of senior operations consultants. Our team assists dozens of health plans every year in scrubbing their member data and can 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 >>
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3 Key Aspects from State of Compliance
They say people fear public speaking more than death. I can tell you from public speaking experience, it is far preferable than death (though if you could bring me back like the red witch did Jon Snow, that could be one heck of a ride). Having an audience of friendly faces is also a huge help when presenting. Today, I share highlights from a recent speaking engagement on the state of compliance. For the sake of time, I boiled it down to three key sections: audits, readiness initiatives, and compliance reviews.
- We are bearing witness to CMS' continual changes to Program Audit layouts and processes. We know more clarifications are to come, and it is our role to keep our clients armed with the most up-to-date knowledge based on our individual experiences and interactions. We shared some common conditions as seen by Gorman Health Group as well as some ideas for addressing low-hanging fruit. For example, audit prep goes a long way with putting your best foot forward when presenting data. This is where penny-wise, pound foolish comes in. If you do not invest the time now to prepare, you could pay for it in the long run. Another recommendation is to evaluate member letters for comprehension. If you have a member advisory panel, show them some denial rationales and get real feedback. If they don't know their next step to getting their drug or service reviewed again, it's a problem. I raise this because, in my experience, this has been an issue for over a decade.
- There are a number of non-audit activities CMS so kindly makes available to the industry, and they come in the form of readiness assessments, reviews, and checklists. CMS may evaluate applicants new to the market for their preparedness to determine how far along they are in supporting all those Part C and Part D attestations submitted with an application. Under the financial alignment initiative, a readiness review is performed on each and every Medicare-Medicaid Plan that comes to market. Finally, all Sponsors are on the receiving end of CMS' annual readiness checklist. CMS gives you the tools; we are always enlightened when we see what folks do with them.
- Finally, we focused on compliance review results of issuers in the Federally-Facilitated Marketplace. CMS shared these findings via report, and the results were not kind. Policies, agent training, notice errors, and contract issues plagued the results. And with the good faith policy ending at the close of 2015, this means civil money penalties can be leveraged this year, and past performance will be taken into account.
It's a struggle to boil down valuable industry insight for a presentation, since I risk leaving no time for audience questions, and it's even harder to pare down a blog post. Luckily, I can take questions at any time. I won't close with Game of Thrones' most popular Stark family tagline but instead with a sentiment from Ser Davos: "Loyal service means telling hard truths." We share our perspective of those hard truths in the service of our clients, who in turn are in the service of beneficiaries, the people who matter most. Email me at rpennypacker@ghgadvisors.com.
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Takeaways from the Gorman Health Group 2016 Client Forum
The Gorman Health Group 2016 Forum concluded last week with over 200 of our closest clients and partners. There was great news and rough news, so here are a few takeaways:
- The playing field of government programs continues to expand rapidly, with improving revenue outlook across the board:
- We're sticking by our projections of over 29 million Medicare Advantage (MA) enrollees by 2023, driven by more positive rate trends and a plan-friendly baby boomer tsunami underway.
- Six to eight more states expand Medicaid — once President Obama leaves office.
- Significant enrollment gains for dual eligibles as home and community-based services (HCBS) waivers and managed long-term services and supports (MLTSS) initiatives become the new normal. We expect dual eligible special needs plan (D-SNP) enrollment to double and exceed 4 million by 2019.
- Rising ObamaCare enrollment, albeit slowing and below projections, as more difficult-to-reach populations remain outside coverage.
- During the Forum, United announced its departures from most ObamaCare Marketplaces. We characterized the news as a nothingburger in terms of enrollment or market impact but huge symbolically and politically. We expect another two to three messy years sorting out the pricing and finances of the Marketplace business, with membership reconciliation and cleanup of membership discrepancies front of mind for issuers.
- Risk Adjustment Data Validation (RADV) audits will begin to be conducted in MA — 2016-2018 will be the first time we see plans prosecuted under the False Claims Act and hundreds of millions clawed back by the Centers for Medicare & Medicaid Services (CMS) for unsubstantiated codes submitted for higher payments.
- Clinical and pharmacy data integration and strong provider partnerships around person-centered care were clear priorities in medical management, Star Ratings improvement, and Pharmacy Benefit Manager (PBM) oversight.
- The Star Ratings system of performance-based payment drives the payer and provider markets. This year will be the first year where plans below 3 stars are terminated. It's also when another 180+ MA plans will be scored for the first time, diluting ratings for existing plans, especially those at 4+ stars and denying many their bonuses and rebates in what promises to be an ugly "October Surprise."
- The turbulent Presidential elections will likely be won by Hillary Clinton, promising continued gridlock with a likely weakened and more polarized Congress. This means CMS will increasingly fight out policy changes "below the waterline" in subregulatory guidance and enforcement, where politicians are less likely to intervene. That means more surprises for plans not paying attention.
- Appeals and grievances and pharmacy benefit management vendor performance remain the #1, 2, and 3 regulatory infractions in MA and integration of long-term care and supports and services the leading challenge facing Medicaid health plans.
- CMS is on pace for its most aggressive enforcement year ever, with over a dozen actions taken against plans this year already.
As we've said since the passage of the Affordable Care Act, we are now in the Golden Age of government-sponsored health programs, and the opportunities and challenges that come with this shift have never been greater. Our clients went home with a clear grasp of both, and we are thrilled so many joined us this year.
Resources
Our distinguished team of experts collaborated to provide our interpretation of this announcement and the key features that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Download our full Summary & Analysis of the Final Rate Announcement & Final Call Letter >>
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CMS Largely Holds Firm on Most Proposed MA Payment & Policy Changes for 2017
On April 4th, the Centers for Medicare & Medicaid Services (CMS) issued the Final Notice of Methodological Changes for Calendar Year (CY) 2017 for Medicare Advantage (MA) Capitation Rates, Part C and Part D Payment Policies, and 2017 Call Letter. This is the final notice of changes in rates of payment and overall policy.
CMS finalized most of its proposals from the Advance Notice and Call Letter, however did make some notable changes:
- Rates and Trend: The final trend is 3.12% inclusive of underlying trend and prior period adjustments. The underlying trend was slightly higher than estimated while the correction to the prior period was lower than expected (0.14%), so in the end, the trend nets out close to the original estimate. CMS estimates a 0.85% increase of all-in rates.
- Normalization Factor: CMS notes a technical error which affected the proposed normalization factors in the Draft Call Letter. The normalization factor was updated from 0.993 to 0.998.
- Encounter Data: CMS will increase the use of encounter data-based risk scores to 25% in 2017, instead of 50% as proposed in the Draft Call Letter.
- Employer Group Waiver Plans (EGWP): CMS is finalizing its new policy for calculating EGWP county payment rates, with two modifications. First, CMS will blend individual market plan bids and EGWP bids from 2016 for 2017, in order to allow for a two year transition period. Second, CMS will use prior payment year information to calculate base payment amounts in order to release the final EGWP payment rates in the Rate Announcement instead of August as previously expected. It is also important to note that while the methodology waives the bidding requirements, MA EGWPs must still submit plan benefit package and formulary in accordance to the 2017 Final Call Letter.
- Star Reduction Policy: As noted in a March HPMS memo, CMS is suspending the reduction of the overall and summary Star Ratings of contracts that are under sanction, while CMS re-evaluates the impact of sanctions, audits, and CMPs on the Star Ratings. CMS plans to describe the new proposals in Fall 2016.
- Low rated plans to be terminated: Although CMS will continue with termination of plans falling below 3 stars, CMS announced it may ‘stay' a termination, including notification of beneficiaries, if the organization holding the poorly-rated contract is prepared to consolidate that contract into a higher rated contract during the bid cycle for the upcoming plan year.
The following major proposals were finalized as proposed:
- Risk Model for Dual Eligibles: Although the proposed methodology will be implemented, data will be updated, so the original estimated rate impact by category may change. Despite the new rate impact, organizations should still expect increase in payments for non-institutional full-duals and reduced payments for all other categories. CMS estimates a net impact on rates of -0.6%.
- Stars dual Interim Adjustment: CMS is moving forward with its proposal to apply the Categorical Adjustment Index factor to overall, Part C Summary and Part D Summary Ratings as an interim solution to account for the Star Ratings impact of dual-eligible and disabled beneficiaries.
- Opioid Overutilization: CMS is finalizing its proposal to combat opioid overutilization by implementing new edits to prevent overutilization at the Point of Sale (POS). CMS expects sponsors to implement either a soft edit or hard edit, or use both as originally proposed in the draft Call Letter, and work toward at minimum a hard edit in 2018.
Compliance Updates:
- CMS again reminds Part D sponsors that it is stepping up enforcement actions on coverage disputes and complaints, the leading noncompliance issue for plans.
- Plans failing financial audits conducted on one-third audits will now also be subject to sanctions and civil money penalties
- CMS is ramping up audits and enforcement actions in network adequacy, provider directory accuracy, and medication therapy management programs.
These are just the major highlights of from CMS' Final Notice and Call Letter. Stay tuned for Gorman Health Group's (GHG's) industry experts summary and analysis of the final changes for 2017, coming out shortly. questions about the summary? Contact us to start a dialogue.
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New Webinar! Join us TODAY from 1-2 pm ET for a hard-hitting analysis of the final rulings in the 2017 MA rate announcement and final Call Letter. We will outline the critical areas that will have the greatest impact on the industry, emphasizing core business functions in Risk Adjustment, Provider Network, Quality, Compliance, Pharmacy, and Data Integrity. Register Now >>
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To Everything There Is a Season: Marketing Materials
There is a season for every activity within your organization: one for bids, one for applications, one for data validation. We are soon to come upon marketing material season, when a flurry of activity usually gets underway in Marketing Communications and Compliance Departments nationwide. Here are three reasons to ramp up:
- Now more than ever, we have seen a growing trend towards high-quality service and retention. How does this affect marketing materials? In our estimation, submitting the bare minimum, core materials is no longer good enough if an organization wants to be leader of the pack. Sponsors are getting creative with benefits, maintaining robust networks, doing their best to keep premiums low — and while those factors are key in member retention, so is service. If an organization wants to work on maintaining relationships (through retention) rather than establishing only (through the sale), we expect to see additional, more personalized materials coming through Compliance Departments. While each piece may not require CMS submission, all member- and beneficiary-facing materials must be reviewed by Compliance.
- CMS clarified in their draft guidance that while designations of "approved" or "accepted" do not have an expiration date, the status remains valid so long as the material is still compliant with the most current version of the marketing material guidelines. Therefore, if this was not occurring in the past, organizations should be reconciling their past approved and accepted materials to ensure they are still compliant. We anticipate a flurry of questions to roll into Compliance Departments about whether or not an update needs to be submitted (because, remember, some changes do not require resubmission!)
- The reach of the Duals Demonstration continues to stretch across the nation, and with that comes a significant amount of required coordination. This also includes the review of materials. Timing is everything, and unless one agency (CMS or the state) chooses to defer to the other for the review and approval of materials, an additional party is added to the process. This should certainly light a fire under every business owner responsible for updating their materials. The sooner the process begins, the better it will be for the review, printing, and distribution processes.
Compliance might feel the pinch this year of business owners asking for more assistance and guidance in the wake of sub-regulatory changes. Consider that beneficiaries, too, are asking health plans to be something more than a claims processor. We find in all aspects of a successful organization, the bare minimum is not enough. Therefore, instead waiting until someone starts asking for more, think about proactive ways you can deliver more before they even ask.
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Let's face it: the marketing staff is at a disadvantage with the shortened period between bid submission and the start of the annual enrollment period. We can develop or review your sales collateral and creative by product type to help ensure your high-impact messaging is both targeted and compliant. Visit our website to learn more >>
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Is the Honeymoon Over? Issuers Begin Receiving Direct Payment from the FFM System of Record
Although the financial hit may have been delayed a few months, it is still inevitable. Issuers will be moving from the driver's seat when it comes to being paid for their members within the Federally-Facilitated Marketplace (FFM). Beginning in April 2016, FFM Issuers will feel the financial impact of being out of synch with the Marketplace for the first time.
Since the launch of the Marketplace, Issuers have been invoicing the FFM directly at a plan level versus a policy level (subscriber) in order to be paid Advanced Premium Tax Credits (APTCs), Cost Sharing Reductions (CSRs), and User Fee (UF) charges. Now, the Centers for Medicare & Medicaid Services (CMS) will make monthly payments directly to Issuers based on effectuated enrollees within the federal system, not the Issuer system. By shifting the direction of Issuer payment and the data source that derives the payment calculation, Issuers are in store for a turbulent and unpredictable ride if not prepared.
As planned in 2016, CMS sent payment files directly to Issuers representing the FFM-calculated payment. While on the surface it appeared the implementation moved into motion, there was a catch—all FFM Issuers, whether or not they were deemed "ready" to receive payment files (in the form of a Preliminary Payment Report (PPR) and HIX 820) directly from CMS, were still being paid from the Issuer's system of record for the first three months of the year. This delay was established as a transitional step for Issuers to become comfortable with the new payment files and allowed more time for all Issuers to be certified. As we approach the April payment month, CMS has offered another temporary adjustment for three additional months in cases where the FFM calculation and the Issuer's calculation is greater than a 25% variance. In these cases, CMS will cap the difference between the FFM and the Issuer by applying a manual adjustment to bring the variance to the 25% mark. After June, all temporary transitions cease, and Issuers will be paid based on the FFM system of record.
With CMS building transitions and seeing variances with Issuer data at 10%, 25%, or greater, this should be an indication there is a looming payment issue at hand. To oversimplify, if an Issuer is out of synch with the FFM for the month of January, and a January adjustment doesn't occur in subsequent payment months and compounds as discrepancies age and member updates occur month over month, the payment dilemma is exponentially hitting the bottom line of your organization in real dollars. Your organization's operational health impacts payment. The sooner you prepare for this reality, the better.
Top Strategies for Preparing for the Future:
- Move back to the driver's seat and understand your discrepancy rate. This includes:
- Subscribers not found on the FFM's system but on Issuer's system per month
- Subscribers not found on the Issuer's system but on the FFM's system per month
- APTC differences per month
- CSR differences per month
- Total Premium differences per month to aid UF calculation errors
- Measuring a discrepancy rate should summarize not only discrepant subscribers but also discrepant member months. For example, the Issuer and FFM may be in synch the first three coverage months but not equal the remaining nine months of the coverage year such as FFM 1/1/2016 - 12/31/2016 versus Issuer 1/1/2016 - 3/31/2016. This logic applies to all discrepancies whether related to a coverage period discrepancy or the data elements within a coverage period, such as an APTC overpayment. All scenarios are financially impacting to the Issuer.
- Based on the above, calculate the financial impact of those very discrepancies. In other words, if resolved, the prospective HIX 820 will pay $A and adjust $B retrospectively.
- Understand passive reconciliation may have carried you this far but is futile for the future. Only you can influence the predictability of your monthly payment. Being reactive to the HIX 820 will be a major disadvantage for your organization. Would you allow another party to dip into your checking account and wait until your monthly statement to view deposits and debits? Understand transactional data can be predictive.
Issuers Must Focus on Key Operational Processes:
- Process all incoming 834 transactions (in all forms) and resolve all errors.
- Submit timely IC834s and resolve/resubmit all errors.
- Submit timely and accurate membership snapshots to CMS each month for reconciling purposes.
- Update your enrollment system, as needed.
- Audit the FFM RCNO file to ensure the FFM is taking action on their updates as well.
- Most importantly, calculate an Expected Total Payment each month and continue to submit your Issuer plan-level calculation to CMS for as long as they will accept it.
There has been an abundant amount of discussion surrounding the source of truth regarding Marketplace enrollment data. Building processes around enrollment transactions with essential checks and balances continues to be an important part of this landscape. Roadmap initiatives are underway with more emphasis on Marketplace compliance audits. It goes without saying—you never want CMS to identify you are being paid for non-members or not being paid for members consuming the benefit. With all the aches and pains that come with launching a government business, your organization must control the processes it can and have an audit trail for FFM defects impacting your payment as well. Documentation, substantiation, and a paper trail are all key components for audit readiness.
Resources
To learn more about the Gorman Health Group reconciliation solution, Valencia™, and how it supports Enrollment and Payment Reconciliation for Issuers, please contact ghg@ghgadvisors.com or Diane Fischer at dfischer@ghgadvisors.com.
Gorman Health Grouop's Valencia™ creates the workflows organizations like yours need for critical operational functions. With Valencia™, you'll always know where your membership and premium-related data is out of sync, thus eliminating missed revenue and inappropriate claims payments. Contact us today to set up a demo >>
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