Government Sends Stark Reminders that Insurers' Biggest Customer is Still the Regulator
Since we opened our doors 19 years ago, we've preached to health insurers to think of the government as your business partner. This week, we got several reminders that insurers' biggest customers -- Medicare, Medicaid, and ObamaCare -- are still the regulator. As business conditions improve for health plans across these business lines, government expectations are rising, and scores are about to get settled, as they always are in the second term of a Democratic administration.
We see it in enforcement activity from the Centers for Medicare & Medicaid Services (CMS). We see it in a steadily-rising bar of Star Ratings and other performance measures for health plans for all three programs, the basis of looming contract terminations. And now the White House jumps in with an aggressive schedule of risk adjustment data audits, openly seeking repayments and dropping "f" bombs: fraud, that is.
They named a great film after a moment like this: "There Will Be Blood."
You can't argue with the numbers: 2015 remains the most punitive year in Medicare Advantage history. Look at the trend:
CMS is also being much more aggressive this year with data-driven oversight and enforcement. Communications to health plans who are "outliers" in various performance measures, especially in member communications and consumer protections, began recently. A pattern we are seeing play out is CMS chasing down all clients of noncompliant pharmacy benefit managers; where poor Part D performance is seen in one plan, the agency then begins auditing that vendor's other customers, assuming they'll get the same findings.
We know that Star Ratings and expanding reporting requirements in Medicare Advantage and Part D mean the bar is rising and establishes data-driven thresholds against which health plans can be penalized and terminated beginning in 2016. CMS announced sweeping new reporting requirements for both programs this week, which inevitably get picked up in Medicaid and ObamaCare rules in following years.
And now the White House is piling on. In Washington, we talk a lot about "setting the terms of debate." Our industry has lost the debate on risk adjustment coding and has allowed anti-managed care advocates to define payers' inaccurate diagnostic coding as fraud. A just-disclosed February 2015 letter from President Obama's Budget Director to Health Secretary Sylvia Matthews Burwell stated, "While some progress has been made on this front, we believe a more aggressive strategy can be implemented to reduce the level of improper payments we are currently seeing...we must continue to explore new and innovative ways to address the problem and attack this challenge with every tool at our disposal...the government estimate of $12.2 billion in these mistakes for fiscal year 2014 remains a concern." He extended his mandate beyond Medicare Advantage to over $3 billion in questionable payments from Medicaid. This means a spike in data validation audits for payers across both programs with the threat of improper payment clawbacks and even prosecution under the False Claims Act.
There has never been a more Golden Age of opportunity for health insurers in government programs. But the threats are escalating as well, and as my politics professor told me, "99% of political wounds are self-inflicted." Plans caught up in this dragnet will have gotten plenty of warnings.
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The Part C and Part D Reporting Requirements and Supporting Regulations were posted in the PRA Listing on August 24th for review and 30-day comment. Since we are still in this window, this is a great opportunity for Compliance and Operations to review these together. Click here to review the Part C highlights that merit your attention in a blog posted by Regan Pennypacker, Senior Vice President of Compliance Solutions at Gorman Health Group (GHG).
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The Affordability Review — “Reading the Tea Leaves"
The fall season is a good reality check — back to school, cooler weather, end of summer, and …. Budgeting/financial forecasting. Forecasting is like predicting the future — you have to know how to read the tea leaves and see the efficiencies and interdependencies of your current performance to have a better idea of future performance and challenges.
Regardless of lines of business and marketplaces, companies need to manage to an acceptable loss ratio. Government regulations use this metric across different products and populations. Medicare Advantage demands at least 85% medical loss ratio (MLR), and many Medicaid plans and special needs populations require at least 90% MLR. Administrative costs are constantly squeezed, and risk adjustment is an ongoing process that is sometimes hard to quantify relative to the amount and timing of the additional revenue.
So the process of going through an affordability review is like a readiness audit. It is better to be proactive and look for opportunities before it is too late. An affordability review consists of several steps. An initial onsite visit, including interviews with management across the key departments of medical management, networks, pharmacy, claims, finance, risk adjustment, and marketing, can set the foundation for an in-depth review of internal financial and operating reports. An objective review of claims trends, based on cost and utilization drivers across members, providers, and services, can result in improved financial and operational performance. With collaboration among subject matter experts, initiatives with financial targets and action plans can be developed and monitored.
Even with new products and demonstrations, reports and a monitoring process should be in place on day one. Many Centers for Medicare & Medicaid Services (CMS) demonstrations only last for three years, so waiting for claims data and trends minimizes your window for mitigation.
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Gorman Health Group has subject matter experts in operations and analytics to provide assistance with this process and help cultivate a corporate awareness and discipline toward financial outcomes that deserve a spot with quality and compliance. It is everyone's responsibility. Contact us to learn more >>
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MLTSS: Key to Caring for Duals
We all want to do it: Provide the best healthcare services for our members. For our vulnerable population, this can be complicated, if not near impossible to achieve, given the current healthcare issues at hand.
About 9.6 million people in the United States are covered by both Medicare and Medicaid, including low-income seniors and younger people with disabilities, according to the Kaiser Family Foundation (kff.org). Kindred Healthcare's "Making Sense of Healthcare Reform: Dual Eligible" points out, as baby-boomers reach their 65th birthdays, an estimated 10,000 individuals become eligible for Medicare-covered services each day. Couple this fact with the expansion of Medicaid eligibility in many states, the result is a much larger dual-eligible population in the near future. These dual-eligible beneficiaries are almost, by definition, a high-needs population often demonstrating to be the poorest and sickest beneficiaries of both programs. Consequently, they account for a disproportionate share of spending in both programs and, according to the Medicare Payment Advisory Commission (MedPAC), dual-eligible beneficiaries cost Medicare about 60 percent more than non-dual eligibles.
Medicare and Medicaid were never operationally designed to work as a single health plan (and it shows). Kindred Healthcare explains further in their article there are coverage and payment policies offered by 50 separate and unique Medicaid policies. Simplified, Medicaid pays for almost all long-term care (LTC) services, while Medicare covers more acute care such as emergency department visits. Dual eligibles are constantly bouncing back and forth between the two government-funded programs; Medicare pays for an operation and Medicaid for long-term recovery.
It's complex, inflexible, and silo-infested.
Health plans need to identify ways to better manage escalating costs and make payment reform a fundamental requirement in both improving quality and containing costs. The answer is multi-faceted.
Move from Volume to Value: According to an article in governing.gov, the volume-driven Fee-for-Service (FFS) payment system for the Managed Long Term Services and Supports (MLTSS) of the aging and disabled LTC populations is focused on volume. The volume-driven FFS payment system can be replaced with pay-for-performance and care management initiatives including performance-based contracting, shared risk, and capitated payments to providers and managed care organizations (MCOs). Success of these initiatives is dependent on the plan's ability to track and analyze the outcomes. Focusing on outcomes can transition staff perspective, actions, and care plan goals to be more person-centered.
Improve Access to Home- and Community- Based Care: Tennessee implemented a pilot based on a decade-long study published in Health Affairs in 2009 which found states with established home- and community-based programs were able to reduce their overall Medicaid LTC spending by nearly 8 percent. Acting on the results of this study, Tennessee lawmakers introduced a new program called CHOICES in 2010, which was a way to help seniors on Medicaid receive home- and community-based care instead of living in nursing homes. Programs like CHOICES are estimated by the Bowles-Simpson presidential commission of fiscal reform to possibly produce savings up to $12 billion by 2020. Nursing homes, as a default option for aging and disabled beneficiaries, will quickly prove unaffordable in the long run not to mention negatively impact satisfaction ratings. After all, AARP conducted a study of individuals over the age of 50 and found more than 80 percent prefer aging in their own home than in an institution.
Provide Feedback to CMS: September 14, 2015, is the deadline to provide the Centers for Medicare & Medicaid Services (CMS) comments regarding their newly released rule, Reform of Requirements for Long-Term Care (LTC) Facilities. This proposed rule would revise the requirements LTC facilities must meet to participate in the Medicare and Medicaid programs. An emphasis has been made on theory and practice of service delivery and safety in order to achieve broad-based improvements both in the quality of healthcare furnished through federal programs, and in patient safety, while at the same time reducing procedural responsibilities on providers. New sections address facility responsibilities for protecting resident rights and enhancing quality of life; requirements for comprehensive person-centered care planning; changes relating to behavioral health service and laboratory, radiology, and other diagnostic services; requirements for Quality Assurance and Performance Improvement (QAPI) and Compliance and Ethics Programs; and staff training requirements. CMS estimates costs to comply per facility over a span of two years will be about $40,685.
Care Coordinate Effectively: In John Gorman's blog, "You're Doing it Wrong in Care Management" issued May 18, 2015, he explained how modernizing your approach in care management into data-driven care coordination "pods" can help you better manage your high utilizers and those about to become them. By "doing it right in case management," you can both contain costs and improve quality.
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GHG can help your transform a total change in the delivery, payment, and care coordination efforts necessary to provide positive outcomes for a very challenging patient population. We can help you learn what works best in coordinating quality-driven care for dual-eligible beneficiaries — and what approaches would be unsustainable. Contact us to get started today>>
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Obamacare Reinsurance and Risk Adjustment, Year One.
The much-anticipated "Summary Report on Transitional Reinsurance Payments and Permanent Risk Adjustment Transfers for the 2014 Benefit Year" has been released by the Centers for Medicare & Medicaid Services (CMS). A staggering 99.7% of Issuers were able to successfully submit data. The remaining 0.3% either did not set up an EDGE server or submitted data CMS could not use for risk adjustment calculations. Considering the aggressive timeline Issuers were given, this completion percentage is quite remarkable. Those who failed to submit compliant risk adjustment data were slapped with a non-compliance fee, which was distributed to other Issuers in the state.
CMS also announced plans would receive full payment under the reinsurance program. The reinsurance coinsurance rate has been increased from the provisionally announced 80% to 100% since the funds collected by CMS exceeded the requests for reinsurance payments. The information provided in this report further confirms risk adjustment will be an integral part of an Issuer's financial standing. It demonstrates risk adjustment payment transfers equate to anywhere between 2% of the total premium for merged plans to 21% of the total premium for catastrophic plans. So overall, from the highest view point, the processes for risk adjustment and reinsurance have shown to be a success. That perspective does not necessarily stand true when looking at the Issuers at a more granular level.
Yes, 99.7% of Issuers were able to successfully meet the submission requirements and get their data onto the server. That does not mean the data were complete and accurate to truly reflect the risk of the company. It just means, out of the 758 issuers eligible to participate in the risk adjustment payment transfer, 99.7% of them were able to send some sort of data to the server in the format CMS required and, therefore, were able to avoid receiving the default non-compliance charge. Issuers' completion percentages increased with each submission that got closer and closer to the April 30, 2015, deadline. The increase may not have been because Issuers were correcting errors; rather, it was CMS relaxing edits, allowing more data to be accepted onto the EDGE server. It would not have been beneficial for neither the Issuers nor CMS to have low completion percentages.
The commercial risk adjustment model is a zero-sum approach, meaning it collects funds from lower-risk Issuers then redistributes those funds to higher-risk Issuers. In order to determine how one company compares against another, state averages are calculated. An average is calculated for the monthly premium, risk score, rating area, and actuarial value for each risk pool category. These averages are then used in combination with the Issuers' actual calculations to determine the amount an Issuer is required to pay or will be receiving for risk adjustment. In looking at the Issuer-specific information, you're able to see the "winners" and "losers" for each state.
When evaluating how your company compared against internal projections and against your competitors in the market, here are a few things to consider:
- Approximately 20%-30% of your commercial individual and small group population will have a diagnosis correlating to a Hierarchical Condition Category (HCC) risk adjustment category. A missing diagnosis code for commercial risk adjustment could be the difference between receiving a payment or making a payment. What is your company's end-to-end reconciliation process for member and claims EDGE server data submission?
- There were unique claims circumstances CMS wanted handled a specific way, such as bundled claims and interim claims. These types of claims typically carry a lot of diagnosis information and claim cost. Were these claims handled appropriately to ensure demographic and diagnosis information was fully captured?
- Commercial risk adjustment is not just a process but rather a company strategy needing to be embedded throughout various departments in the organization. Is the strategy for your organization clear and understood by the areas involved in knowing how they impact risk adjustment?
It seems like it has taken forever for the 2014 risk adjustment payment transfer and reinsurance payment information to be released. Whether your results were stellar or not, don't get too hung up on the actual payments. What's done is done. Spend the time evaluating the full 2014 end-to-end process. What went well? What needs to improve? Act quickly and set your plan in place to impact your 2015 results—April 30, 2016, will be here before you know it. And invest wisely in people and systems to avoid subsidizing your competition due to inadequate or incomplete diagnosis data.
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The Reality of the 2014 Commercial Risk Adjustment Payment Transfer: Forecasted vs. Actual
The signing of the Affordable Care Act (ACA) into law threw health insurers into a whirlwind of changes. The guaranteed issue law made it so no enrollee in the individual or small group commercial market would be denied coverage due to their health status. In addition, the rate for all members now had to stay the same for all enrollees, with fluctuations only allowed for a few factors such as tobacco status. That key process, known as underwriting, could no longer serve as the method to evaluate risk and either deny coverage or set the enrollee's premium accordingly. With that shift came the introduction of risk adjustment, reinsurance, and risk corridor ("3 Rs") into the commercial market.
When the implementation of the ACA regulations were in process, a lot of plans took the "here and now" approach―meaning, they primarily focused on what the immediate pressing issue was, not contemplating what the downstream impact could possibly be. Project dollars were being spent on over-engineering enrollment processes and developing automated tools that, in the end, were not as useful as anticipated. It's human nature to want to tackle obstacles right in front of you, but when implementing ACA changes and introducing a new sales channel, like the Marketplace, a holistic approach needs to be taken. Developing a solid risk adjustment strategy was not part of the upfront planning for a lot of health insurers―it was a new process with a lot of grey area and unknown requirements.
So here we are now in the final stages of the first full year operating under the ACA. All health insurers are fully aware of the immense amount of work it takes to submit data to the EDGE server. With this data, CMS can calculate reinsurance dollars owed to health plans and calculate risk scores to support the risk adjustment process. They are also learning just because you can submit data to the EDGE server does not mean the overall risk for the company is reflected accurately. As each day passes, more information is becoming known about the transfer of risk adjustment payments. A limited number of health plans are being assigned a default risk score and are not eligible to receive reinsurance dollars due to not submitting adequate data to the EDGE server. In speaking with plans across the country throughout the evolution of the commercial risk adjustment operational process, the majority of health insurers were very optimistic they would be receiving risk adjustment transfer dollars, many of which will soon face the harsh reality that the forecasted risk adjustment receivable anticipated has turned into a payable.
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HRADV: What you don't know could cost you millions. Read the full article >>
Quick Hits for September Sweeps
Unfortunately, Risk Adjustment does not have the luxury of taking the summer off. As CMS continues to stress the criticality of submitting complete, timely and accurate data to support plan payments related to Risk Adjustment, health plans must have year-round processes in place to ensure compliance as well as accurate payment from the government.
As premiums continue to be reduced, health plans and capitated medical groups must have strategies in place to ensure an accurate Risk Adjustment Factor (RAF) score, meaning you must not only recapture your members' persistent conditions, but find new clinical conditions as they appear. Sounds easy? Not quite. As we've seen the processes, programs and requirements are daunting and difficult to juggle. Our advice: leverage existing analytics and data to drive efforts for Risk Adjustment and the looming September deadline.
Items to focus on:
- Specialists/Providers- What is your strategy to engage specialists? Collaborative partnerships between health plans and providers will ensure optimum performance outcomes for revenue, medical management, and quality. Assess the root cause and go right to the source. By following the initial diagnosis, you will be able to prioritize your outreach by disease prevalence.
- Pharmacy- Mine your pharmacy data. If this data reveals prescriptions for medications specifically prescribed to treat risk adjustable diagnoses and the patients are consistently filling medication — yet there hasn't been a diagnosis submitted through a claim- a new variable for prioritizing provider or member outreach has been created. Try looking at your patients that meet the criteria for Medication Therapy Management (MTM). Not only is MTM a strong tool for managing costs, improving outcomes, and positively impacting your Star Ratings, the program can support your efforts to prioritize initiatives for Risk Adjustment.
- Clinical Quality and HEDIS- Partner and coordinate with your Healthcare Effectiveness and Data Information Set (HEDIS) teams. Leverage the information and clinical data retrieved and reported for HEDIS measures to identify members with risk adjustable diagnoses. If your plan uses a HEDIS vendor, make sure that you are reviewing their most recent audited HEDIS reports. If a claim or claims do not exist, but patients have been pulled into HEDIS measures through chart reviews, create a chase list to reconcile that data and then assign the most appropriate patient and provider intervention.
- Manpower — Are you lacking the technology to aggregate and create your target and suspecting lists? If interim staffing is what you need, Gorman Health Group (GHG) can enhance your team with our own, providing knowledgeable, effective assistance and an eye for detail from processors and analysts with decades of experience.
- In- Home Assessments — Adopt a core set of components and best practices for In-Home Assessments, prioritization and timing of these assessments is key. Track subsequently provided care: In CY 2015, The Centers for Medicare & Medicaid Services (CMS) will track and analyze care provision following in-home visits. If you are mining your data and notice a beneficiary has not been to the doctor in some time, take initiative and facilitate an in-home assessment. These encounters can also be leveraged to close HEDIS gaps and close the care coordination loop, avoiding ER visits or unnecessary trips to Urgent Care facilities.
- Vendors - Convene with your vendor partners to coordinate strategies. Include the Case Management team, Utilization Management team, and Provider Network team in your strategy discussions. All departments need to be working together to understand what visits are coming up in your provider network and why — who better than the teams who are on the front lines? Whether you rely on multiple vendors or a largely internal team, we can help you streamline the execution of your risk adjustment approach, and maximize your analytic strategy to ensure you're keeping pace with CMS expectations in both compliance and healthcare outcomes.
It's all about prioritizing. Mining the data to leverage the analytics you already have is a good way to start.
Get it right the first time. Managing the operations of your risk adjustment function is no easy task. The integrity of your data impacts virtually every other department in your organization - especially Finance, Quality, and Care Management. It's important to examine the data and submit it correctly the first time to guard against data inaccuracies, errors as well as to allow for appropriate reimbursement.
GHG supports our clients in evaluating the efficiency, compliance, and strategic value of their risk adjustment programs from start to finish, and helps ensure the procedures for capturing, processing, and submitting risk adjustment data to CMS are accurate, timely, and complete.
Whatever your organization decides to do, your strategy should be targeted, prioritized, and have a clear call to action. You have time and options. Contact us today to discuss them.
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Gorman Health Group (GHG) announced its new vision for maximizing healthcare analytics and optimizing risk adjustment programs. Read the full press release >>
Takeaways from Accountable Physician Groups' Annual Summit
Twice a year I get the honor of speaking to the California Association of Physician Groups' (CAPG) annual summit and DC policy meeting. CAPG represents accountable, capitated physician groups, and now has members in 39 states. They're always among my favorite speeches given how sophisticated the audiences are. Here's a few takeaways from my talk last week on "The Future of Government Programs":
- Forevermore, physician group revenues and earnings will be dominated by Medicare Advantage, Medicaid and dual eligible health plans, and the ObamaCare plans, most likely in that order.
- Everything that Medicare Advantage (MA) does, the Medicaid, ObamaCare, and commercial markets follow 3-5 years later. Nobody knows this better than the CAPG members from CA, which the rest of the nation lags. Want to still be attending CAPG meetings in 2020? Master Star Ratings and risk adjustment. They'll apply to all lines of business if they don't already, and they are the keys to survival already in MA.
- Value-based contracting is in its infancy but will soon define all health plan contracts with physician groups. Fee-for-service is dead. Performance-based capitation is the only future. To master it a physician group needs a range of capabilities, including eligibility verification, interoperability, actionable clinical intelligence in real time, standardized care processes, and chronic care management, across all business lines.
- Most Accountable Care Organizations (ACOs), especially the 424 in Medicare, will not see a return on their investment. They will have spent millions to participate in these experiments and around 80% won't see a payoff. 2016 and 2017, when Medicare Advantage benchmark rates turn into a tailwind, present the perfect opportunity for ACOs to "move up the food chain" to become health plans.
- Dual eligibles are the biggest opportunity of our lifetimes, and there is no question that Special Needs Plans designed to serve them can be profitable. SNPs are a principal mechanism for states to shift long-term care risk into the private sector, and will be a central product for ACOs converting into Medicare Advantage. But they require a range of capabilities most physician groups lack today, such as enabling and social services that duals must have from their insurer.
- In all government programs, the "5/60 Rule" governs. 5% of members often account for 60% of costs. Any physician group that aspires to bear risk must be able to identify and intervene with their 5 percenters or they won't be risk-bearing for long.
- The biggest vulnerabilities for MA plans are consumer protections like appeals and grievances and complaint management, and who they have selected as their pharmacy benefit manager (PBM). Most PBMs are frankly terrible at Medicare Part D administration, and Star Ratings now count far more in Part D than in Medicare Advantage to a health plan's overall score. Physician groups typically have little or no experience with either PBMs or consumer protections.
- Retail pharmacies and the home are the most underutilized sources of care to government programs beneficiaries. Any successful physician group evolution will involve better integration of both sites for the chronically ill.
- Most at-risk physician groups are directly involved in coding and reporting for risk adjustment. Federal agencies are paying unprecedented attention to upcoding in Medicare Advantage with an eye to hundreds of millions of dollars in clawbacks and recoveries. The emphasis at physician groups involved in risk adjustment must move from chart reviews and claims extracts to more holistic member evaluations, and from a culture of "what can we get?" to "how do we stay out of trouble?"
Evolution is a messy business. Nowhere is that more the case than in physician groups evolving from fee-for-service to value-based contracting and becoming insurance companies. If it was an easy business, we'd be out of business.
Resources
Don't miss Gorman Health Group's Chief Consulting Officer, with colleagues Jane Scott, Senior Vice President of Clinical Innovations and Regan Pennypacker, Vice President of Compliance Solutions, as they discuss your member experience and the factors that influence success and failure, as well as prominent compliance and service issues plaguing the industry. Register now >>
From ACO-type incentives to bundled payments and contract capitation, to full professional and global capitation — where the potential is promising, we can help design and implement these arrangements. Let's get started. Contact us today.
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HRADV: What you don't know could cost you millions
Now that the 2014 EDGE server submission is complete, it will soon be time to audit a large sample of the data. Are you ready?
HRADV is the Commercial Risk Adjustment Data Validation that will be conducted annually on the data submitted to the EDGE server. This audit is similar in nature to the Medicare Risk Adjustment Data Validation (RADV) with a few exceptions. You do not get selected for the HRADV; rather, it is an annual requirement that the auditing process is conducted on at least 200 members. An error percentage will be assigned for health status and demographic information that does not have appropriate supporting documentation. This error percentage amount will be deducted from the prospective years' risk adjustment payment, or a payable will be due to The Department of Health and Human Services (HHS).
I have heard many health plans say, "There are no financial implications to the 2014 and 2015 HRADV errors" and "These are the learning curve years." While both statements are true, the fact of the matter is, these years DO count. You could be leaving millions of dollars behind for these years, not only for risk adjustment but for reinsurance as well. You are also at risk of being fined a significant error penalty after the "learning curve" years. Now is the time to ensure you have all of the necessary processes in place. Here are a few questions to ask yourself about the risk adjustment operations at your company:
- Are your providers familiar with the tremendous impact the transition from ICD-9 to ICD-10 has on risk adjustment, reinsurance, Stars, and the Healthcare Effectiveness Data and Information Set (HEDIS®)?
- Do you have the right staffing in place to support end-to-end risk adjustment successfully?
- Did you successfully submit complete and accurate 2014 data to the EDGE server?
There are many areas inside and outside of the company where membership and claims data may be compromised. This information is being sent through many different systems which increases the probability for information to unknowingly be altered. Here are some tips to prevent submitting incorrect or incomplete data to the EDGE server:
- Ensure you have a solid provider contract and education program in place.
- Align a risk adjustment staffing model appropriate for your organization.
- Develop ongoing data review and reconciliations with various departments throughout the company to create data integrity.
- Be prepared for the HRADV and appeals process.
HRADV and appeals is the final step in the risk adjustment process. More information will be released from HHS regarding the specifics around the audit for 2014. Be prepared and ensure you have selected your Initial Validation Auditor (IVA).
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MLR: Don't Miss Your Target
As the ink dries on 2016 bids for Medicare Advantage (MA) plans, one important question remains…What to do with summer vacation? Drinks by the pool or a family trip to Disney?
Reality check!
The long hours spent on the bid submission included many spreadsheets with financial projections of loss ratios, per member per month (PMPM) trends, along with cost and utilization drivers. These projections required endless discussions on how to improve contracting and cost strategies as well as benefit designs and medical management programs. Executive assumptions were made to create a rosy picture that would result in an acceptable bid and optimistic market share!
However, the real agenda this summer is to take a hard look at those assumptions based on current trends for membership and utilization. An in-depth financial assessment of your medical and pharmacy claims over the most recent 24 months is an important step toward achieving financial success in the Medicare world.
Waiting two years for the Centers for Medicare & Medicaid Services (CMS) to respond to risk adjustment strategies and quality measures may be too late to ensure financial performance. Let Gorman Health Group (GHG) review your medical and pharmacy drivers across the operations. Our financial and subject matter expertise can help you determine long- and short-term strategies to maintain the required medical loss ratio (MLR) of 85% and build the operational infrastructure to support the bid proactively.
While CMS audits are time-consuming and threaten fines and lost productivity, the threat of missing your MLR target is just as real. If you underpriced your bid to get market share, the excess claims will bleed your bottom line. The MLR regulations require MA and Part D Plan Sponsors to spend at least 85% of combined Medicare contract revenue on clinical services, prescription drugs, quality improvement activities, and direct benefits to beneficiaries in the form of reduced Part B premiums. Plan Sponsors who fail to meet the 85% threshold must remit payment to CMS for the product of:
- The total revenue under the contract for the contract year, and
- The difference between 0.85 and the contract's MLR.
So an MLR including medical, pharmacy, and quality costs of 83% means returning 2% of the revenue back to CMS. It also means justifying the quality improvement activities.
The margins are thin as is the tolerance by CMS to balance quality and financial performance. If organizations are unable to meet the minimum MLR for three consecutive years, they will also be subject to enrollment sanctions and, for failure over five consecutive years, contract termination.
An assessment now will pay back in performance and visibility across the operations.
Unsure where to start? Contact us here.
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MLR requirements pose new challenges for payers. Gorman Health Group can help your organization interpret the drivers of MLR, and the tactical and strategic decisions a health plan should consider in managing to an MLR that is "just right." Contact us today >>
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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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