Advancement in Analytics
It's all about the numbers! As the Centers for Medicare & Medicaid Services (CMS) tries to quantify more and more aspects of government-sponsored healthcare, metrics are a critical component.
Metrics are needed to measure quality programs, returns on investment in patient care, redistribution of staffing and financial resources, as well as benchmarking.
The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is a perfect example of how CMS is pushing this financial focus. The past few years of shared savings models for Fee-for-Service members have evolved into very strict timelines and formulas that will directly impact the financial performance of providers in addition to the intended impact on improving member experience and quality of care.
As providers and health plans now have to walk this tightrope of real and projected results with multiple stakeholders (regulators, health plans, providers, members, and third parties), the necessity of analytics and good internal reporting are now of utmost importance.
The best tool to manage these priorities and resources is to have a solid reporting mechanism. Whether you are a start-up or an existing organization, the need for an integrated data repository cannot be ignored. Multiple vendors can help with specialized needs like population health or customized provider scorecards, but the sources have to be integrated. For a provider, this means to coordinate efforts with vendors and multiple health plans or payers. For a health plan, this means to coordinate efforts with vendors and payers as well as from within the health plan organization. Once the data is normalized and complete, reports and dashboards can be built, but keeping an eye on the whole organization is critical to recognize trends as they occur. The "whack a mole" analogy is appropriate — if you focus on one area, you might see improvement, but another area could suffer. You have to look at all areas.
We understand systems must be integrated to help identify actionable strategies. A gap analysis might be needed to assess organizational issues, procedures for reviewing the data to identify problems and their solutions, as well as timing — once a year budget variance reports will not be sufficient. Deep dives into specific problem areas are also critical — making sure you are looking for outliers (regardless of overall performance). Even if the organization does not change, the providers and members and regulations will change. This is a constant effort.
Recognizing the industry will spend nearly $600 billion on healthcare technology by 2020, we have built external, strategic partnerships, facilitated the development of internal solutions, and staffed a team of industry leaders to address this market trend in analytics. Our niche division cannot only connect Gorman Health Group clients with the solutions that are the best fit for their organization, the Healthcare Analytics team can ensure the governance of exiting systems and the investments in new technology are both implemented and optimized.
Let us help you keep your eye on the numbers and find solutions that will bring a return to satisfy all stakeholders.
Resources
On June 7, 2016, Daniel Weinrieb, Gorman Health Group's (GHG's) Senior Vice President of Healthcare Analytics & Risk Adjustment Solutions and colleagues, David Sayen, Senior Vice President of Client Relations and Melissa Smith, Senior Consultant, recapped the details of the MACRA proposal and how these changes will affect providers, health plans, the care delivery system, and patients. Download the webinar recording here >>
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The Path to Value: The MACRA Quality Payment Program
To quote Yogi Berra, "If you come to a fork in the road, take it." Great, but exactly which fork do I take when faced with multiple options? That is the question many provider-led organizations are asking today.
On April 27, 2016, the Centers for Medicare & Medicaid Services (CMS) unveiled key provisions of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a bipartisan legislation that replaced the Sustainable Growth Rate (SGR) formula with a new approach to paying clinicians for the value and quality of care they provide. The proposed rule would implement these changes through a unified framework called the Quality Payment Program (QPP), which includes two paths.
To the left, we have the Merit-Based Incentive Payment System (MIPS), and to the right, Advanced Alternative Payment Models (APMs). So what is a doctor or medical group to do at these crossroads?
The MIPS path leads to a world where a percentage of Fee-for-Service (FFS) Medicare payments are at risk based on performance in quality measures in four areas: Quality, Use of Information Technology, Clinical Practice Improvement, and Cost. Measurement would begin in 2017, and the rubber hits the road in 2019. By 2022, the portion of reimbursement at risk will be at 9% and could go beyond that. "MIPS is going to be the "new norm" for providers," said David Sayen, Senior Vice President of Client Relations at Gorman Health Group. "There will be no more hand wringing about draconian cuts to physician payments and, per Kerry Weems' clever quip, no regularly scheduled annual hostage taking."
However, it is important to keep in mind this is a zero sum game. To pay off the winners, there have to be losers, and nobody wants to be a loser. So we head to the other fork, which appears to have sunny skies and bluebirds just over the first hill. First, there is a hill. Moreover, for those providers who are starting to round the corner and take their initial steps into value-based risk sharing arrangements, it is never too early to start thinking about the right path for you and your organization.
For those providers who have taken a few steps or even large strides down the value-based fork and have a good understanding of their quality/cost compared metrics, have tightened their belts, and have a good understanding of contracting and negotiating risk sharing arrangements with payers, to get over the hill, you have to get onboard the APM train. Through future rulemaking, CMS will determine which APMs are acceptable as alternatives to MIPS and will be looking for models that have risk components as equally robust as MIPS.
We now know the Medicare Shared Savings Program (MSSP) Tracks 2 and 3 have been identified as APMs and would be exempt from MIPS payment adjustments. Additionally, they would qualify for a 5% Medicare Part B incentive payment. To qualify for incentives, clinicians would have to receive enough of their payments or see enough of their patients through Advanced APMs. Currently, only 5% of the 433 MSSP Accountable Care Organizations (ACOs) are participating in Tracks 2 and 3. However, the other 95% are gaining the experience they need to make actionable decisions on which fork their organization needs to move towards to prepare for the changes.
For organizations interested in taking the step towards forming a Medicare ACO, and potentially having the opportunity to participate in the QPP as an MSSP Track 2 or 3 via the Advanced APMs, the time for action is now. Your MSSP Notice of Intent to Apply is due May 31, 2016. Gorman Health Group (GHG) is available to help you understand the current MSSP requirements and your organization's readiness level. With the proposed changes to resetting the benchmark to incorporate factors based on regional FFS expenditures to establishing and updating the ACO's rebased historical benchmark, including an adjustment to the benchmark based on regional spending that is phased in over several agreement periods, GHG can assist in identifying health cost trends that vary in communities by using regional spending growth trends. As your organization makes the cultural shift towards a value-based model and establishment of essential ACO functions, we can assist in identifying priorities and goals for each functional area and developing a plan that is actionable, from the first step in applying to be an MSSP through implementation.
MSSP applications are due no later than July 29, 2016, at 5:00 p.m. EST. Please feel free to reach out to GHG for assistance in navigating the application. Alternatively, if you are a provider organization that would like to talk through key questions to ask prior to entering into a risk contract, we can help there, too.
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We've assisted scores of organizations through every step of the application process, from gathering the right data, completing the application, submitting, and responding to follow-up questions. Don't let the application process get in the way of your day-to-day operations. Contact us today to ensure a smooth, compliant process >>
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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.
Resources
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 >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
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.
Resources
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
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!
Where is Healthcare Now? The Long March to Value-Based Care.
"Why won't the Centers for Medicare & Medicaid Services (CMS) let health plans gather some health information at the point of sale?
How is CMS going to use the data they are collecting?
What is CMS going to do when the first round of Accountable Care Organizations (ACOs) comes to an end?"
At the Gorman Health Group 2016 Forum in Fort Worth, these and other questions were on the minds of our clients. It can be challenging to guess what the agency will do going forward in an election year when the water is choppy. But that forecast is a critical factor in your planning.
In "The March to Value-Based Payment," I described something that is a long march indeed. The Republican-driven Medicare Modernization Act of 2003 ushered in the attenuation of payments to hospitals, first for quality reporting and soon after for quality results. Then, the Affordable Care Act driven by the Democratic Obama Administration doubled down on this "good government" approach. The program was extended to more provider types, outcomes and efficiency were added to the measures, and we began to see downside risk associated with less-than-average performance.
Under the provisions of the 2015 Medicare Access and CHIP Reauthorization Act (MACRA), physicians and other practitioners will face a Hobson's choice: live with a more aggressive risk-based adjustment to payments or join forces with an alternative delivery model, like an Accountable Care Organization (ACO), that is taking risk. The goal moving forward is to render unto Caesar what is Caesar's: the government is willing to bear the risk associated with each patient's demographic characteristics and health history. They will render unto providers the risks of inefficiency and poor performance. This could encourage more doctors to choose alternative payment models like ACOs or to affiliate with Medicare plans. Are you ready?
Resources
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 >>
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 >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
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 >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
CMS Addresses Risk Adjustment Methodology
It was great to see so many people attend the HHS-Operated Risk Adjustment Methodology Meeting in person last week at the Centers for Medicare & Medicaid Services (CMS) headquarters in Baltimore, MD. My blog from the end of March, which can be accessed here, addressed many key points from the HHS-Operated Risk Adjustment Methodology white paper CMS published on March 24, 2016, in preparation for the March 31, 2016, meeting. The intent of the meeting was to discuss the white paper and for CMS to receive initial feedback from the public regarding it. As stated by CMS, "Today is the beginning of the discussion, not the end."
At the March 31 meeting, the presentations and discussions throughout the day were engaging and welcoming to new ideas coming from participants. It was a forum that allowed for open dialogue and questions, which is exactly what the Health and Human Services (HHS) risk adjustment process needs at this point. CMS answered questions submitted from in-person and remote participants. All questions and answers from the session will be posted on REGTAP in the coming weeks. The questions asked spanned the spectrum from how CMS is going to ensure issuers cannot game the system to algorithm calculation adjustments. It was an insightful and interactive discussion between all participants. Donald Trump was even brought into the discussion at one point throughout the Q&A session.
The stabilization of the commercial market without the use of the underwriting process has been quite the struggle. CMS addressed the 2014 transfer payments that occurred and reconfirmed, as they did in the white paper, the risk adjustment process, inclusive of calculation and transfer payments, worked as it was intended. From this point forward, CMS is focused on ensuring the methodology utilized increasingly gets smarter each year. Pretty much, the age-old idiom "practice makes perfect" stands true. CMS is using the data available to refine and "practice" new modeling methodologies to ensure a "perfect" process is in place to stabilize the commercial market. There were some fantastic modeling methodologies discussed. The discussion around creating two different risk adjustment models, one for the individual market and one for the small group market, was one of the best options proposed. It became very evident from the 2014 results that the small group market thought process about purchasing health insurance is different than the individual market, and thus requires certain adjustments. For instance, the contract periods for a small group do not follow the same January 1 - December 31 time period as the individual market. Because of this different modeling, methodologies may need to be applied to account for the shorter time period. A lot of health plans conducted "early renewal" in 2013 for their small groups. In turn, the small group market experienced having risk-adjusted members the last quarter of 2014, which is not a good representation of the experience. The year 2015 will provide more accurate results in which to give a better perspective of the market.
The option to have the commercial market function on a prospective risk adjustment model is not a viable option due to the timing lag. It would inadvertently make the market less stable than it is now. The concurrent model currently used is the best option. The data utilized to create the normalization factors and coefficients will continue to get smarter as the years progress.
There is overwhelming support to include prescription drugs into the analytics and calculation for risk adjustment. Just as much support as this topic is receiving, there is also just as much concern, and rightfully so. It's logical to have prescription drugs included in the risk adjustment model, but in reality, what does that really mean? It means, for certain prescription drugs, CMS will be able to relate that drug to a chronic condition, and, thus, that chronic condition Hierarchical Condition Category (HCC) factor can then be included into the plan-level risk score (PLRS) calculation. Again, makes complete sense. It's a way to "close a gap" so many health plans strive to do on daily basis. Now think about the operational adjustments and questions that need answered in order for something like this to work:
- What chronic conditions are going to be included?
- Is there a clear definition for prescription drugs?
- How will the HHS Risk Adjustment Data Validation (H-RADV) audit have to change to account for prescription drug validations?
With further research and analysis, this is a process that, I believe, will come in time. CMS has already planted the seed they would start to introduce prescription drugs into the risk adjustment calculation slowly, starting with a relatively small drug class focusing on adults only. CMS has not begun looking at the child and infant risk adjustment models to understand the impact.
Risk adjustment is a hot topic in the industry. It's an extremely complex process with a lot of hidden nuances that need to be taken into consideration. Those in the healthcare industry today get to experience the great paradigm shift that has occurred. We are living and breathing it every day. Whether you are a health plan, Pharmacy Benefit Manager (PBM), physician, certified professional coder, or even a member, you are impacting the process of transforming the healthcare operations of the past to pave the way for a better healthcare experience in the future. It's an exciting time in healthcare, and I, for one, am grateful to be able to assist clients through this difficult transformation of establishing operational processes embedded with risk adjustment best practices.
Resources:
GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS and/or HHS expectations in both compliance and health care outcomes. Contact us today to learn more >>
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. Register now >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
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.
Resources
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 >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>
Risk Adjustment Methodology: Reviewing Proposed and Current Model Improvements
On Thursday, March 24, 2016, the Centers for Medicare & Medicaid Services (CMS) released a white paper regarding the risk adjustment methodology. There has been a lot of criticism and discussion about the U.S. Department of Health & Human Services (HHS) risk adjustment program working appropriately. As indicated in the 2017 Notice of Benefit and Payment Parameters (NBPP), the white paper addresses the comments HHS has received regarding the risk adjustment methodology and serves as the basis for discussion for the Thursday, March 31, 2016, meeting. This document provides the story of the evolution of the HHS risk adjustment program, including a summary of historical information on how the HHS risk adjustment program was developed, changes made to the model thus far, and further discussions and considerations for enhancements in the future.
The risk adjustment model is intended to work with the fair rating rules under the Affordable Care Act (ACA). These rules are in place to reimburse issuers that have riskier, costlier enrollees by issuers that carry lower risk, regardless of any other factors, such as being a new issuer or narrow network plan. To enhance the existing stabilization program, modifications have been applied to recalibrate the model for the 2017 benefit year. The white paper just released highlights the areas needing further refinement, such as methodology for inclusion of prescription drugs, partial year enrollments, and future year recalibrations.
History: When the HHS risk adjustment program was being developed, the primary goal in mind was to "compensate health insurance plans for differences in enrollee health mix." The intent was to allow differences in premium for plan design and benefits but not allow premium differences for any health conditions the prospective member may currently have. When developing how this goal would be accomplished, three specific areas were addressed:
- New Population — During development, data was not available to analyze since this was uncharted territory. The risk adjustment program needed to include members enrolled into a plan that adhered to the ACA regulations, regardless of whether the member purchased the plan through the Marketplace or directly from the issuer. In lieu of not having specific data to utilize, HHS used a commercial dataset consisting of 2010 Truven MarketScan® Commercial Claims and Encounter data.
- Market Factors — This introduced the different plan actuarial values in comparison to a standard benefit level. This is an extremely complex portion of the risk adjustment methodology. HHS encountered challenges defining "how to preserve premium differences that reflect differences in generosity of plan coverage."
- Balanced Transfers — Since issuers were no longer allowed to adjust premiums for enrollees based on health status, the risk adjustment transfer payment is the part of the risk adjustment program that will make the issuer whole from a financial perspective.
There are apparent similarities between the CMS and HHS risk adjustment programs. One of the outstanding questions during development was considering which disease classification grouping would be utilized for the commercial market. It was decided to use the CMS-Hierarchical Condition Category (HCC) grouping utilized for Medicare risk adjustment as the basis to develop a diagnosis clinical classification for commercial. The CMS-HCC grouping consists of 201 HCCs compared to the HHS-HCC grouping that has 264 HCCs. Only a subset of the 264 HCCs is utilized for risk adjustment. These HHCs are classified as "payment HHS-HCCs" since these are the categories that carry a factor weight to be part of the plan liability risk average score (PLRS) calculation. Many HCCs that are part of the Medicare model were split in the commercial model to better predict costs within disease groups, such as those in the metabolic, blood, psychiatric, andDepartment o injury hierarchies.
Model Improvements: There have been improvements to the risk adjustment payment model since the 2014 HHS risk adjustment process was finalized. Each year the commercial risk adjustment program has been enacted has brought enhancements, subtle at most, to improve the accuracy of the program.
- Payment Year 2015 — Primary goal was to maintain stability. Utilized the same factors for cost-sharing reductions (CSR) plan variation in the corresponding Medicaid alternative plan variations.
- Payment Year 2016 — First year the risk adjustment model was recalibrated. In order to maintain stability and avoid using a small sample size, an approach was utilized to average coefficients using separately solved models of 2011, 2012, and 2013 MarketScan® data for 2016 benefit year risk adjustment. This was also the year in which HHS addressed two issues surrounding the classification and reporting for infants. The first issue surrounded infants, classified as age 0 who did not have any birth codes, an issue primarily driven by bundled mother/baby claims. The second issue addressed was for six transplant status HCC coefficients utilized in the child risk adjustment model.
- Payment Year 2017 — Second year the risk adjustment model was recalibrated. A similar blended approach was utilized in the same manor that it was for the 2016 Payment Year. The dataset was updated to include the three most recent years of MarketScan® data; 2012, 2013, and 2014. For this year, preventive services are included in the simulation process of calculating the plan liability. The 2017 NBPP requested comments regarding further discussion topics that will be addressed at the Thursday, March 31, 2016, CMS meeting.
Proposed Model Improvements: CMS is hearing the concerns coming from the health plans and is actively engaging them for comments in regards to issues. This interaction allows for an avenue of different perspectives to enhance the risk adjustment program with solutions that will further advance the model. There is no specific avenue HHS is taking in regards to the below improvements at this time. Rather, they are gathering all of the feedback they have received thus far and opening it up for discussion to determine the next best step to take.
- Partial Year Enrollment — Health plans are concerned about the adverse effect partial year enrollments is having on their risk adjustment payment transfer outcome. The industry is seeing enrollees with 6 months or less enrollment with high Medical Loss Ratio (MLR). This type of membership "flip flop" has been a concern of health plans since the onset of the ACA. This is where an individual elects an ACA plan on a temporary basis to only handle a current condition and not to maintain health insurance coverage long-term. In turn, health plans experience high claims cost, minimal revenue, and subpar balance to the risk they are carrying for these individuals. With the commercial demographic, the majority of conditions are considered acute as opposed to chronic conditions. This statement is the exact opposite of what you would see in the Medicare space.
- Proposed Drug Modeling — The use of pharmacy claims is an important analytical element used to validate a member's diagnosis and to proactively research for potential undocumented chronic conditions. HHS is talking about introducing a hybrid risk adjustment model that would use prescription drug utilization as risk indicators for the HHS-HCC model. The framework and operational impact to maintain a model like this is up for discussion but certainly is a step in the right direction.
- Use of a Concurrent Model — There is discussion around if utilizing a prospective model, rather than a concurrent model, will be more beneficial for the HHS risk adjustment program. A concurrent model predicts costs within the current year. This type of model tends to address more acute costs, whereas a prospective model allows greater time to review prior encounters to better predict the future costs. This allows a greater time lag for encounters to be analyzed and submitted, allowing time to capture more advanced acute and chronic conditions.
CMS clarifies the program is functioning as it was intended to, with which I would agree. The operational complexities, concurrent model, and mediocre data management practices established by health plans is leading to incomplete data submissions and, therefore, inaccurately reflecting the risk of the organization. The established model and demographic understanding will evolve over time by utilizing more accurate data to stabilize the factors used in the calculation when it becomes available. Until then, it is important for health plans to work on what they can directly impact by refining the risk adjustment processes they have in place, establish analytics and reporting practices, and ensure a thorough extraction process is conducted for the EDGE server submission inclusive of controls, pre-validation checks, and error resolution processes.
Resources
GHG can help you streamline the execution of your risk adjustment approach, and build a roadmap to ensure you're keeping pace with CMS and/or HHS expectations in both compliance and health care outcomes. Contact us today to learn more >>
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas. During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth. The hotel room block expires on April 4 so register now to reserve your seat!
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Four Easy Ways to Lose Revenue
Times are busy. We are all doing more with less these days. Sometimes we don't put processes in place to make sure functions continue when our focus is elsewhere. Here are four easy ways you could be losing revenue:
- Member Experience and Claims Payment: Not storing all diagnostic codes for your provider and facility claims. Similar to working edits, if you have not reviewed your claims system to determine if it is accepting all diagnostic codes that come in on an electronic provider or facility claim, you don't know if you are capturing everything you need. If your system is dropping diagnostic codes, you could be dropping appropriate reimbursement for impacted members. John Gorman, Founder and Executive Chairman at Gorman Health Group (GHG), recently commented on the importance of the member experience in a new article stating, "Now more than ever, it's clear to us health plans and their stakeholders will thrive or die based on the member experience they provide."
- Reconciliation: Not working Prescription Drug Events (PDEs), enrollment edits, or risk adjustment and encounter data claims and enrollment edits. Payments for Part C and Part D are based on information from the services members receive. If you don't have a good process in place to ensure all edits are resolved, you are more than likely leaving money on the table.
- Hospice and Claims: Not having a tie between your claims system and hospice determinations. Hospice services are a carve-out for Medicare Advantage (MA). Typically, hospice providers don't bill for hospice-related services. Other providers may bill you for Medicare-covered non-hospice-related services. If your system is paying for those services, you are paying too much.
- Medicare Secondary Payer (MSP): Not managing your MSP members. MSP impacts both premium received and the payment of claims. If you don't have processes in place to validate each MSP designated member, and either correct discrepancies with the Coordination of Benefits Contractor (COBC) or set up your system to pay secondary, that mismatch is costing your plan money.
In busy times, it can be difficult to monitor everything. Establishing procedures and controls in order to manage these processes without interruption is critical to the success of your organization. Our multi-disciplinary team of consultants knows how to set up the right controls to keep your department running in an efficient, productive, and compliant manner.
For actionable advice and best practices, join us at our annual Gorman Health Group 2016 Forum, April 19-20, at the Worthington Renaissance Fort Worth Hotel in Fort Worth, Texas.
During this year's information-packed two days, our elite team of experts, operators, clients, and partners will help you figure out what matters and what doesn't. We will share proven tactics to cut costs, increase member satisfaction, and manage and drive sustainable growth.
Specifically, attendees can expect from my presentation practical strategies for combining productivity and compliance in your Operations Department while gaining real-world examples of the holistic management of compliant Operations departments.
The preferred room rate expires on Monday, March 28, 2016. Register now >>
Resources
If you haven't had the chance to review all of the sessions we have slotted for the Gorman Health Group 2016 Forum, download the conference brochure >>
Stay connected to industry news and gain perspective on how to navigate the latest issues through GHG's weekly newsletter. Subscribe >>