Medical Loss Ratio Concern in CMS Proposed Medicaid Rule
The much anticipated Medicaid regulation from the Centers for Medicare & Medicaid Services (CMS) has been released, which aims at helping align regulations for managed care plans, creating a dynamic shift in how the Medicaid business will be handled moving forward.
One example of the new change is the proposed implementation of the 85% minimum Medical Loss Ratio (MLR) for the Medicaid program. This is to ensure adequate funds are being spent on coverage for Medicaid members appropriately. MLR thresholds are currently being used by the private health insurance plans, as well as, Medicare Advantage plans for projections of future medical costs and covered services. This could pose a problem for Medicaid Managed Care Organizations (MCOs). While Medicaid MCOs don't have the high sales and marketing costs of individual commercial plans, since sales are handled by the states, compliance costs could be high, making the 85% figure a cause for concern. "Medicaid MCOs will have to be diligent in identifying and documenting costs incurred to improve quality, to drive up their MLRs, said my colleague, Bill MacBain, Senior Vice President of Strategy.
With the soaring number of newly enrolled members joining Medicaid, Avalere estimated that by the end of this year, 73% of Medicaid members will be receiving some type of service through a managed care plan. The regulation aims to look at delivering a structured approach to supporting delivery systems, enhancing health outcomes and most importantly, improving the beneficiary experiences. These new regulations seeks to align CMS' Medicaid regulations to reflect today's changes in delivery systems, increase measures in managing care coordination, and promote quality of care using analytic data to oversee Medicaid managed care.
Additional proposed changes include:
1. Appeals and Grievances — The proposed rule makes a few updates to the appeals and grievances process to align to MA plans. For example, the rule seeks to shorten the time frame that Managed Care Organizations (MCOs) and Prepaid Inpatient Health Plan (PIHPs) have to make a decision about a standard appeal from 45 days to 30 days, same as MA plans. The expedited appeal time frame would be shortened from three days to 72 hours, also same as MA.
2. Beneficiary Protections — Under current regulations, coordination and continuity of care focus on primary and acute medical care. The proposed rules aim to reduce coordination issues beneficiaries with chronic and complex conditions face. The proposed rule also seeks to align enrollment practices between Medicaid fee-for-service (FFS), Medicaid managed care, and Marketplace coverage.
3. Network Adequacy Requirement - The rule would impose new standards to ensure beneficiaries have adequate provider networks and ensure beneficiaries are receiving accurate network information.
4. Medicaid Managed Care Quality Rating System (QRS) — Align with existing MA and Marketplace rating systems. Standardize quality metrics among states and plans.
5. Long-term Care - As expected, the rule also includes a section on managed Medicaid long-term care. The proposed rule could include beneficiary protections, provisions to ensure access to care and enrollee choice and control, and designation of an ombudsman to offer independent oversight.
The proposed rule will be posted in the Federal Register on June 1. The deadline to submit comments is July 27.
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Gorman Health Group is dedicated to assisting Medicaid managed care organizations, as well as states with developing models of care, maximize member engagement. Visit out website to learn how we can help with your Medicaid needs >>
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Stand Tall Amongst Competition: Key to Success in Medicaid is Clear
Health plans diligently strive to be the best and first choice for delivering excellent healthcare services. Many seek accreditation with various organizations such as the National Committee for Quality Assurance (NCQA), the Utilization Review Accreditation Commission (URAC), and, most recently, the Malcolm Baldrige National Quality Award (MBNQA) as confirmation they provide their members with the utmost quality healthcare services.
Currently, the managed healthcare industry widely uses the Healthcare Effectiveness Data and Information Set (HEDIS®) and Consumer Assessment of Healthcare Providers and Systems (CAHPS®) to measure performance. Over 90% of America's health plans use HEDIS, and over 500 health plans use CAHPS, to measure performance and monitor how well consumers are satisfied with the care and service they receive.
The HEDIS tool measures performance across five dimensions related to care and service: Effectiveness of Care; Access/Availability of Care Member; Experience of Care Member; Utilization and Relative Resource Use; and Health Plan Descriptive Information. There are 81 specific measures for which the plan must collect data in order to be compared with other health plans. A feature of HEDIS is the tool allows for the cross-comparison between health plans to be relatively equal, on an "apples-to-apples" basis. Subsequently, health plans are also encouraged to use Quality Compass, the largest database of comparative health plan performance information to conduct competitor analysis, examine quality improvement, and benchmark plan performance. In turn, it can be an effective tool in developing a more focused quality improvement plan.
While member experience may often correlate to member satisfaction, it is not always so. Member satisfaction can be influenced by a number of factors in and outside the control of the health plan. In turn, members may have similar experiences but different expectations and report having different levels of satisfaction. The CAHPS survey is an initiative of the U.S. Department of Health and Human Services (HHS) for Healthcare Research and Quality and refers to a family of standardized and scientific surveys that ask consumers and members to report on their experiences with certain aspects of care such as: Getting Needed Care; Getting Care Quickly; How Well Doctors Communicate; Customer Service; Claims Processing; Rating Personal Doctor; Rating Specialist; Rating Health Care; and Rating Health Plan. Health plans and providers can use CAHPS questions about specific aspects of care to identify areas of care that are strong as well as those that need improvement. Asking respondents to provide both ratings and reports about their care experiences enables survey users to learn how specific experiences influence general ratings.
Overall, it's important to recognize that health plans are rigorously competing for each and every healthcare dollar. Quality, more than ever, is the key to stand tall amongst the competition.
Source: https://cahps.ahrq.gov/apps/FAQ.aspx?category=82
http://www.ncqa.org/HEDISQualityMeasurement/WhatisHEDIS.aspx
http://hfmanj.org/images/downloads/Presentation/hedis_star_presentation_7.16.14_final.vs_2.pdf
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CMS is poised to release in the coming weeks what stakeholders and advocates are calling an "epic rule" that will completely overhaul the Medicaid managed care marketplace. John Gorman discusses here >>
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The $64,000 Question in Star Ratings
As we wrap up the 2nd quarter, health plan leaders across the country are beginning to ask their Star Leaders the $64,000 question: "Are we on track to achieve a 4-Star Rating this year?"
This is, perhaps, one of the most challenging questions that can be posed to any Star Leader at this point in the year. But with up to 5% of a health plan's revenue driven by Star Ratings, the question is unavoidable, and the answer is vital.Though there is no simple answer to this question for a few more months, this is an opportune time to pause and reflect on 2015 Star Ratings progress against your plan's strategic and tactical strategy to raise ratings.
It is often not easy for Star Leader's to quickly describe the potential impact of the many changes we are awaiting in the 2016 Star Ratings: removal of the predetermined 4-Star thresholds, changes to the specifications for many measures, and removal and addition of yet more measures. Because the window is closed for us to impact our 2016 Star Ratings, we now sit in the uneasy waiting period while the Centers for Medicare & Medicaid Services (CMS) finalizes the 2016 Star Ratings and measures. CMS is also finalizing the 2016 display measures and reaching preliminary conclusions as to which 2016 display measures may be included in the 2017 ratings. These potential new display measures are being impacted by the services we are delivering this year — and in many cases, may not even be on the radar screen of our staff and provider networks.
So what can we do while we wait?
- Evaluate your plan's performance against national benchmarks to begin assessing your relative performance within the industry. Use this information to help set expectations while we await the 2016 ratings.
- Review your 2015 work plan, and current progress against the work plan, to ensure that your 2015 Star Ratings weaknesses are being adequately addressed and you will not repeat tactics that do not work in plan year 2016. Objectively evaluate how effectively customer service, case management, disease management, and pharmacy teams are coordinating care and services for your members by evaluating measurable outcomes.
- Review your quality program's year-end evaluation, the Chronic Care Improvement Program (CCIP) and Quality Improvement Project (QIP) data to identify changes which may be required as new information is released by CMS, and consider proactive expansion of quality activities into the areas under consideration by CMS.
- For Special Needs Plans (SNPs), review your Model of Care (MOC) evaluation for improved strategy opportunities related to the measures.
Educate and Activate. There is plenty of time remaining to shore up operations and infrastructure to achieve Stars success. As we continue to await release of the long-anticipated Medicaid managed care proposed rule, we are closely watching to see whether CMS will include value-based payments, new MOCs, and quality-based payment and oversight programs within yet another government health program. These potentially transformational changes in the Medicaid quality management infrastructure, combined with the Quality Rating System (QRS) program currently being beta tested within the Marketplace, continue to reinforce CMS' current and future emphasis on quality.
Our success in quality programs will require us to embrace CMS' expanding vision for healthcare quality and translate that vision to empathetic, outcomes-focused engagement with patients who need, and will be responsive to, help from their care team.
By improving clinical quality performance, we can improve health outcomes and reduce the cost of care. Find out how in our new White Paper now available..
Don't know where to start? Contact me today at jscott@ghgadvisors.com.
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CMS 2015 Spring Conference
Some important points came out of the Centers for Medicare & Medicaid Services' (CMS') Medicare Advantage Prescription Drug (MA-PD) Spring Conference & Webcast; the presentations and videos of the event can be found here in CMS' Event Archives. If you did not have a chance to attend or watch it live, please watch the videos for important changes pertaining to many aspects of the MA-PD program. Speakers addressed Part C and Part D call letter updates, policy and technical changes, Quality Improvement Project (QIP) and Chronic Care Improvement Program (CCIP) lessons learned and best practices, the new network management module, enrollment updates, and fraud, waste, and abuse (FWA).
From the Compliance perspective, we heard the following loud and clear:
- Enrollment in MA-PD is growing with the aging of baby boomers. CMS is taking a proactive stance to improve the program by stressing the need to work together with plans to provide care more efficiently and provide quality.
- Finalized program changes allow CMS to require MA organizations or Part D plan sponsors to hire an independent auditor to validate correction of CMS audit findings. The good news is − some of you are doing this today. Having another set of eyes on your correction efforts provides you with a level of assurance you may not be able to obtain by having internal staff performing validation. Ever hear that phrase, "There are three sides to every story: yours, mine, and the truth?" Getting an independent perspective is so important. While you might not agree with a reviewer's findings, the point is that it will hopefully bring you closer to the truth than validating yourself.
- CMS clarifies when it is appropriate for an MA plan to invoke an extension on organization determination and appeal requests. Based on what we see, most plan sponsors are invoking extension requests in rare circumstances and strive to meet the regulatory timeframes established without extension. Therefore, plan sponsors should be prepared to update procedures to ensure extensions are only taken when appropriate.
- Network adequacy — Not only is CMS requiring that provider directories be updated real time, they are adding network adequacy to program audit protocols (coming late summer or early fall, according to CMS). CMS is also implementing a way for plans to check their network adequacy by submitting their Health Service Delivery (HSD) tables in the Health Plan Management System (HPMS). Previously, this step was only available within HPMS when submitting an application for a new plan or a service area expansion (SAE). Plans could contract with a vendor or obtain software to check their own network adequacy. We anticipate that CMS' network adequacy protocol will require a plan to provide real-time data pertaining to whether or not their contracted providers have open panels. I'm aware of one 5-Star plan that has been doing ongoing network adequacy reviews for a while. Those plans that are used to pulling HSDs only at the time of application or (possibly) bid submission should plan now for the additional steps CMS may require of plans to tell the true story of adequacy. Keep your eyes on this blog for more information from my esteemed colleague, Ellie Martin, on network adequacy.
CMS' upcoming MA-PD Audit & Enforcement Conference & Webcast is taking place on June 16. Prioritize this event in your schedule, and attend either in person or via webinar.
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The Imminent Medicaid Mega-Reg is Gonna be "Epic"
For the last several weeks health policy nerds have been anxiously awaiting the release of the long-awaited Medicaid managed care proposed rule, the first from the Centers for Medicare and Medicaid Services (CMS) in 13 years. We're coming to call it the "mega-reg" here. Friday at the Congressional advisory MACPAC meeting, Commissioners were widely quoting the term "epic" used by Jeff Myers, CEO of Medicaid Health Plans of America, in a recent National Journal article.
Medicaid has exploded since the last regulations in 2002, and enrollment is up 12 million just since January 2014. Current guidance doesn't address long term care services and supports and managed long-term care, a major impetus for program reform at the state level. The proposed rule has been in final HHS/Office of Management and Budget clearance for the last couple weeks, and its release is imminent.
MACPAC's debates Friday focused on potential changes to Medicaid payment to managed care plans that might be included in the proposed rule, which the commission has been discussing for over a year:
- Minimum Loss Ratio (MLR) — The MLR is a percentage which represents the revenue used for patient care compared to administrative expenses or profit. MLRs are allowed but not required in Medicaid managed care and currently 27 out of 39 states with Medicaid risk contracts use some MLR standard. CMS could align Medicaid managed care policy with Medicare and commercial policy by requiring a specified MLR: a national standard such as the 85% used in Medicare Advantage program, or a requirement that states impose a MLR standard. The proposed rule could also specify what costs should be included similar to the definitions adopted by NAIC and incorporated in federal rules.
- Supplemental Payments and Actuarial Soundness — States may make supplemental payments to some providers up to the upper payment limit. Current rules do not allow states to include these payments in MCO capitation rates or require MCOs to pass them through to providers. The proposed rule could change actuarial soundness rules to let states preserve existing funding mechanisms which usually rely on waivers to level the playing field for managed care plans and their providers.
- Mid-year Changes — There is no current process to allow MCOs to recertify their rates mid-year to account for federal policy changes such as high insurance fees or coverage or new expensive drugs and services. CMS could require states to resubmit actuarial certifications to take significant mid-year changes into account, or allow states to prospectively certify a range of rates, or retrospectively reconcile payments when the actual cost impact is known.
- Risk Mitigation — Current rules allow states to implement risk corridors, stop-loss or reinsurance. CMS could require states to establish risk mitigation for new populations such as the childless adult expansion group, or for benefits where there is a significant risk or enhanced match.
- Transparency — Medicaid health plans want transparency of state practices to develop capitation rates. CMS could require states to share data and assumptions and allow plans to comment during federal review.
- Baseline/Encounter Data — CMS could impose additional standards in addition to "appropriate data." CMS could impose additional requirements on the quality and timeliness of data and specify consistent definitions for encounter data to allow comparisons across states.
- New Models of Care — CMS could encourage value based payment, payment reforms such as safety net ACOs of other shared savings models or other innovative MCO delivery and payment models.
Beyond payment issues in the mega-reg, the Commissioners discussed:
- Long Term Care -- CMS could include requirements for long term care services and supports covered by managed care plans which are not currently included in the 2002 regulations. The proposed rules could include beneficiary protections, provisions to ensure access to care and enrollee choice and control, and designation of an ombudsman to offer independent oversight.
- Provider Networks -- the mega-reg will very likely include requirements for adequate provider networks and directories similar to recent requirements for Medicare Advantage and Qualified Health plans. Strengthened requirements for appeals and grievances may also be included. The proposed rule may also include enhanced quality data and reporting. It's expected all these provisions would be designed to streamline expectations of Medicare Advantage, Medicaid, and ObamaCare.
We'll have scads of analysis of the Medicaid proposed rule as soon as it hits the street. It's gonna be huge.
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Gorman Health Group is dedicated to assisting managed care organizations, as well as states with developing models of care, maximize member engagement. Visit out website to learn how we can help with you Medicaid needs >>
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You're Doing it Wrong in Care Management
An important paper recently released in the American Journal of Managed Care shattered the notion that care management can save money on high utilizers. The article reviewed recent studies of the effectiveness of health plan care management programs and found that, while many studies show significant savings, more rigorous studies concluded that savings were "limited or nonexistent." Mind. Blown.
We're all familiar with the "80/20 rule" of the commercial health insurance market: 20% of members account for 80% of expenditures. In government programs, Medicaid, Medicare, and now ObamaCare, it's the "5/60" rule: 5% of members account for 60% of spending. The AJMC article showed that across all payers in 2012, it's "5/50". 95% of the population accounted for just half of health spending, while the other half of spending was towards care for 5% of the population. The 5% of people needing to spend the most on health care spend an average of around $43,000 annually; people in the top 1% have average spending of almost $98,000. At the other end of the spectrum, the 50% of the population with the lowest spending accounted for less than 3% of all total health spending; the average spending for this group was $234.
The article then explored multiple studies on effectiveness of care management, concluding it's mostly pointless. It gave several reasons for why this might occur:
- Many high-utilizers only stay in this category for a short period of time. Conditions causing them to need intensive care may resolve quickly, reducing costs, but a study lacking a control group may inappropriately attribute this savings to the care management program.
- High utilizers suffer from a wide range of conditions and require a wide range of interventions, making it difficult for care management programs to tailor teams meeting each patient's needs.
- Providers working with a care management team may better identify conditions that were previously going untreated, leading to better outcomes, but also higher costs for additional services and therapies.
The author concluded that "for care management programs focusing on high-utilizing patients, it is crucial to select patients with long-term utilization patterns that are driven by the factors most conducive to change. Given the very limited direct evidence suggesting how to accomplish this, care management programs are best served by being kept small and focused on the highest-need patients, who may not necessarily be current high utilizers."
This finding calls for a rethinking across our industry about care management. For one thing, most health plans in our 19 years' experience are still doing 1990s-style managed care: preauthorizations, referrals, concurrent review -- what we refer to as "make work" medical management. It's look busy, high head-count work that does little to improve quality or reduce unnecessary spending.
Many GHG clients have been working with us to modernize this approach into data-driven care coordination "pods" providing a holistic model of care focused on high utilizers and those about to become them. This study means we need to recommit to data analytics identifying and directing the work of care managers toward those beneficiaries with long-term needs that can be impacted. This means greater emphasis on preventable episodes of care, and on end-of-life care preferences, advance directives and care plans. If you take the top 5% of the membership that is incurring the most cost and provide complex care management, including a higher level of home care, hospital diversion, medication therapy management, nutrition counseling, and wound care, plans and their provider organizations will see a reduction in avoidable medical expenses.
Savings can also be realized if that membership is appropriately placed in the right plan with the right network. Care Management might not be the answer but applicable coverage is a strategy. That's where plan and benefit design is so important. Innovative plans are working with specialists to design products that reflect risk and chronic conditions of their members. Our work with a prominent dialysis and kidney care provider is a perfect example: design a benefit and align a network that is tailored to patients with varying levels of chronic kidney disease, preventing disease progression and/or avoidable costs traditionally seen if CKD is not managed along the disease state continuum. Progressive conditions like CKD, Alzheimer's, and many cancers lend themselves well to "smart management" that spans clinical staff and benefit design alike.
The one thing you know about government beneficiaries is that if they're not sick today, they're gonna be. The game has always been finding the ones who need extraordinary care before they need it, and ensuring they get it in the right place, at the right time, from the right provider. That hasn't changed. This study underscores the point. "Make work" care management must give way to "make it work".
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Five Critical Steps to Enhance Revenue & Maximize Growth Potential
Everybody's talking about revenue management and maximizing growth opportunities for health plans, but no one has laid out the steps for successful outcomes…until now. Gorman Health Group (GHG) is giving you our recipe for enhancing your premium revenue and maximizing your growth potential in the following five-step plan:
Step 1. Targeted Population/Demographics
Different populations have different needs. Understand the makeup of your membership and their healthcare needs, their provider preferences, and understand what they want to experience when interacting with your health plan. Is your health plan designed to meet the needs of your targeted population?
Step 2. Optimizing Revenue and Performance-Based Payments
Revenue management is best performed at the member level. Each member should be viewed as an investment needing optimizing. Revenues for members are based upon bids or other established "base" amounts. These base payments need to be optimized for each member. Optimizing member-level revenue begins with an effective member onboarding and retention program, whereby the following factors can be assigned to each member:
- Health Risk Assessment (HRA) to identify potential Hierarchical Condition Categories (HCCs)
- Medical management needs
- Member-level attributes included in Star Ratings measures denominator (e.g., diabetes, rheumatoid arthritis, high-risk medications, etc.)
- Special payment status for Medicaid, end-stage renal disease (ESRD), hospice, long-term institutional, and other health insurance (OHI)
- Continuous vigilance for status changes that could impact payments (e.g., actively monitoring claims for indications of circumstances warranting special payment statuses)
Focus on keeping members by enhancing the member experience through the entire organization. Member retention is the new "selling."
Step 3. Delivery System and Care Management Approach towards 85% Medical Loss Ratio (MLR)
It is imperative that health plans aggressively manage their medical costs as the most expensive component of healthcare operations. Employing the following programs can significantly impact MLR:
- Effective medical management
- Effective provider and network management
- Effective pharmacy management
- Effective Pharmacy Benefit Manager (PBM) contracting/re-contracting
- Effective claims processing and claims payment rules (Medicare vs. Commercial vs. Medicaid)
- Effective durable medical equipment (DME) management
- Effective hospice and end-of-life care
- Effective fraud, waste, and abuse (FWA) detection and prevention programs
- Effective payment responsibility/Coordination of Benefits (COB) processing
- Effective capitation leakage/correction processes
Health plans must spend at least 85% of premium dollars on healthcare. Effectively managing MLR to below 85% of premium revenue enables a health plan to offer more attractive benefits, lower cost-sharing, offer best-in-class providers, and reward top delivery system performers.
Step 4. Optimized Cost of Operations, Selling, and Administration
A well-run health plan should target cost of operations, selling, and administrative costs to a level at or below 10% of premium revenue. This involves knowing your operational strengths and weaknesses and outsourcing the appropriate functions to experts. This involves making brutally honest assessments of internal capabilities and a willingness to make tough decisions. It is often best to have these "no sacred cows" assessments performed by external experts having an independent viewpoint. In addition to the health plan core operational areas of Membership Accounting, Member Services, Claims Processing, and Appeals and Grievances, health plans must perform critical assessments to ensure:
- Effective financial management
- Effective benefit and premium design
- Effective sales and marketing
- Effective information technology
- Effective project management
The goal is to operate as efficiently and effectively as possible at a performance level that earns maximum quality bonus payments.
Step 5. Profit Margins for Reinvestment in Growth
That leaves a profit margin of 5% of premium revenue. This provides opportunity for strategic investments in:
- More staff and training
- Best practice processes (member onboarding, healthcare concierge, member/patient experience)
- Updated systems and analytics
These investments are key to serving your existing membership with best-in-class performance — all intended to place your organization heads and shoulders above your competitors. In the current competitive environment, growth means attracting members from other health plans. There will be winners and losers.
Winning!
GHG is comprised of some of our industries most experienced and proficient health plan subject matter experts. Our consultants can help your organization with a "whole house" assessment or targeted assessments, and we can help you fix the problems we identify. Contact us today to get started.
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GHG Operational Performance Group includes some of our industries most experienced and proficient claims subject matter experts. Our consultants can help your organization implement best practices in claims cost containment. Contact us today to get started >>
When it comes to financial reconciliation and overall membership data management, you must protect against leakage. Need help staying ahead of the CMS reconciliation process? GHG will access your member premium revenue, accounts receivable and CMS revenue reconciliation. Visit our website to learn more >>
19 Lessons from 19 Years
Nineteen years ago this week, I left the Health Care Financing Administration (HCFA), now the Centers for Medicare & Medicaid Services (CMS) and the Office of Managed Care, to launch what would become Gorman Health Group. Time has flown, the company has grown, and my backside sewn with hard lessons about our industry and government health programs. Here are 19 lessons I've learned in those 19 years.
- What Medicare Advantage and Part D do, Medicaid and the commercial market, including the ObamaCare Exchanges, follow 3-5 years later.
- Every CMS staffer I've ever known is well-intentioned, many are downright brilliant, and all want to be good business partners to health plans. Their shortcoming is lack of business experience and how stuff works in the real world. There is a huge difference between policy/guidance and operations. That's where we come in.
- If government health programs were an easy business, we'd be out of business.
- Inspect what you expect. Or, as Reagan said, "Trust but verify."
- Star Ratings, like risk adjustment before it, is the biggest and most consistent experiment in performance-based payment on the planet, a total game-changer and the new fulcrum of competition. You don't excel at Stars by working on them off the side of your desk.
- Fish where the fishes is.
- Pick your vendors and partners like you pick your fruit.
- Capitation with performance-based payment is the only real hope for long-term viability of entitlement programs.
- Being a doctor is the worst job ever. Right after community hospital CEO and President of the United States.
- High-performing health plans are good at everything, especially those functions that are member- and/or provider-facing. It's about culture and execution.
- Health plans' days are numbered if they can't consistently provide value to CMS, their customer, and to providers, their partners. That value is about two things: making data actionable and moving money to contributors when quality and results improve.
- It's easier to increase revenue than it is to cut costs.
- Pharmacy benefit managers are a health plan's most important partner. They are also the ultimate B2B companies and most are struggling in the transition to B2C and true government accountability for results.
- Big data and high-tech is all the rage -- and all noise, unless it's actionable. What works is low-tech: clogs on the street; a house call; a medication consult.
- Doctors of the future are in multispecialty practice and leaders of a team of nurses, aides, social workers, and pharmacists. They are quarterbacks, not gods. They diagnose, and everybody else treats.
- So much of the future is about retail pharmacy. In short time, they will make more providing services than filling bottles.
- Ninety percent of the evil and waste in the system occurs at the tip of a doctor's pen.
- We are all going to retire thanks to government programs. Demographics is destiny.
- Five percent of members account for 60 percent of your spend. Put the love and focus on them, and you can pretty much leave everyone else alone.
It's been an incredible ride these last two decades, and especially the last five as health reform blossoms. We look forward to continuing the journey, older, wiser, and bigger. Stay tuned.
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Next Generation Accountable Care Organization
With the NextGen model, the Centers for Medicare & Medicaid Services (CMS) is attempting to respond to some of the criticisms of the first two Medicare ACO models: the Pioneer demonstration program and the Medicare Shared Savings Program (MSSP) authorized under the Affordable Care Act (ACA). CMS says that the NextGen model represents:
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A new opportunity in accountable care:
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More predictable financial targets;
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Greater opportunities to coordinate care;
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High-quality standards consistent with other Medicare programs and models
The Model seeks to test how strong financial incentives for ACOs can improve health outcomes and reduce growth in expenditures for Original Medicare fee-for-service (FFS) beneficiaries.
There will be two rounds of applications. Deadlines are listed below:
The NextGen model is a demonstration program that will run from 2016 through 2020.
Interested in this opportunity, but unsure if its right for your organization?GHG can support your organization with a variety of services from an initial ACO operational readiness assessment, including financial modeling, benchmark & trends, assistance with preparing your application, to implementation and on-going support. Contact us today >>
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Claims Leakage and the Path to Avoidance
All managed care organizations must operate a high-performing Claims Management. With strict medical loss ratios (MLR) as required by healthcare reform, timeliness provisions, payment accuracy, and constant regulatory requirement changes, covering operating costs pose significant challenges. Cost containment whereby eliminating excess, leakage and waste must be top priority.
The environment is rapidly changing. It doesn't mean that healthcare will be less complex—indeed, probably the opposite. These changes must be properly evaluated, managed and monitored with a focus on cost control. Claims spend is the main expense for many organizations. As customer expectations, competition and regulatory burdens crunch margins, eradicating claims leakage is critical. Throughput and efficiency are key performance data measurements. Organizations need processes and systems that minimize costs while delivering a high-quality claims experience. Rather, operational silos, as well as ineffective and disparate systems across multiple products lines cause many issues.
What is Claims Leakage?
Claims Leakage is defined as the difference between the actual claim payment made and the amount that would have been paid if more practical claim payment controls had been in place.
Claims is a key driver to a couple of very critical components of your revenue. Everyone is aware of claims as it relates to MLR, but equally important is how the claims data impacts revenue in the forms of HEDIS measures and Star Ratings (year to year composite score). As a component of MLR on the costs side — this drives benefit design; if your medical costs are lower than 85% you need additional benefits. HCC (hierarchal conditions categories) are assigned risk adjustment factors — missing claims information (leaking) could result in diminished Risk adjustment scores — same thing as with HEDIS and Stars — missing claims information means less performance in Stars measure and HEDIS.
Leakage equals wrong payment that went out the door. Bottom line, it can cause you money and rework.
Examples of leakage include:
- Inappropriate benefit design, including member cost sharing
- Inaccurate provider pricing and reimbursement methodologies design and updates
- Missing claims and encounter data
- General configuration issues: Edit rules, duplicate check, NCCI (national correct coding initiatives) and auto-denial/pay rules
- Minimal data scrubbing: The number 1 and 2 causes of claims leakage is inaccurate membership information and inaccurate provider information.
- Lack or poorly designed MUEs (medical unlikely edits), coding and mapping issues, including CPT, modifier guidelines, HCPCS, ICD-9/ICD-10, and all UB04 institutional coding
- Upcoding — billing for higher level of services while lower level services were
- Claims submitted by bogus providers
- Pharmacy claims: Appropriate payment allocation of Medicare drug coverage: Part D versus Part A or Part B payments
How does it stop?
The path to avoidance and some best practices are as follows:
- Develop a strategy in enhancing claims quality control and oversight activities.
- Implement quality control auditing through pre-payment auditing reviews.
- Develop and generate focused exception reports of where the leakage dollars are
- Invest in strong post-pay detection technology to achieve cost avoidance savings.
- Develop and implement automated and sophisticated algorithms:
- Scale
- Claims Check and Edits
- Focus on the 5% of the financial leakage
Execution of these best practices and automating each procedural step of the claims cycle results in accurate claims resolution. Monitoring operational performance helps continuously track and trend claims inputs and outputs.
Proven Strategies to Plug the Leaks
Optimize your organization's operational performance, requiring coordination across people, processes and systems. Align and take a holistic integrated view, end-to-end, when monitoring operations.
Leaks don't occur because we plan them. They happen because we fail to plan to address them.
Resources
GHG Operational Performance Group includes some of our industries most experienced and proficient claims subject matter experts. Our consultants can help your organization implement best practices in claims cost containment. Contact us today to get started >>
When it comes to financial reconciliation and overall membership data management, you must protect against leakage. Need help staying ahead of the CMS reconciliation process? GHG will access your member premium revenue, accounts receivable and CMS revenue reconciliation. Visit our website to learn more >>