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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Big Data is costly, distracting, overwhelming and paralyzing if not maximized. System and process interoperability and integration are keys to program alignment, oversight and evaluation . Systems and data should not just integrate; they need to align in order to yield superior, reportable outcomes. Visit our website to learn how GHG can help >>
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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 >>
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 >>
You've Got Mail: National Sample RADV Audit Scores are In
By now you may have received your score from the Centers for Medicare & Medicaid Services (CMS) regarding the national sample for Risk Adjustment Data Validation (RADV) audits.
Wondering how you compare to your peers or competitors and what the implications of your score are?
Factors that should be taken into account regarding your score compared to the national average:
- If you were to extend your score across your entire membership, would you be satisfied with the results?
- What is the impact on your revenue and bid/benefit design?
- Are inaccuracies going to have an impact on HEDIS measures and Medical Trend Management?
- Do you have a long-term strategy to positively affect your results through concurrent reviews and targeted provider education/engagement strategies?
Regardless of what your results are, you need to have a solid action plan in place for improvement and maintenance. Due to the size of the sample, it is not statistically significant enough for your organization to receive the large scale impact this number potentially poses on revenue, medical costs related to beneficiaries, and your organization as a whole.
Mock RADV's and concurrent chart reviews should be a part of your risk adjustment program, and should be coupled with targeted provider education and engagement strategies.
Critical next steps:
- Implement standard operating procedures for internal Mock RADV audit programs
- Leverage analytics to target and profile your provider network for education and engagement
- Implement year-round concurrent reviews to ensure optimal results for revenue capture and avoidance of RADV exposure and potential overpayment recovery requests from CMS.
Gorman Health Group supports our clients in evaluating the efficiency, compliance, and strategic value of risk adjustment programs from start to finish. We have a unique opportunity to collaborate with our clients and design, implement and operationalize year-round processes to ensure risk score accuracy and alignment. Together, we can develop enterprise-wide strategies to manage medical costs and improve clinical quality outcomes.
If you have any questions or would like to hear more about how we can help, please contact me directly at dweinrieb@ghgadvisors.com.
Resources
Gorman Health Group (GHG) announced its new vision for maximizing healthcare analytics and optimizing risk adjustment programs. Read the full press release >>
Gorman Health Group Client Forum Takeaways: Government Programs are Booming, Bar is Rising
We just wrapped our best-ever Gorman Health Group 2015 Client Forum at National Harbor with over 200 of our closest clients and partners. There was both great and tough news, so here's a few takeaways, including a couple stunners:
- For the first time, a prominent Wall Street analyst said he could see a path to 100% Medicare Advantage penetration. Barclay's eminent health care observer, Josh Raskin, stunned our audience with projections of over 29 million Medicare Advantage enrollees by 2023, a penetration rate of over 42%, with the potential to go all the way with Ryan Plan-like legislation now feasible this decade.
- 47 states now hold Section 1915(c) home and community-based services waivers for Medicaid, which will unleash a new flood of dual eligibles into health plans. Special Needs Plans (SNPs) for duals are now on a path to permanent reauthorization, and over 30 states now use D-SNPs to enroll over 1.6 million beneficiaries. That number will more than double in the next 2 years.
- While year 2 of open enrollment for ObamaCare was dramatically improved from its messy launch, problems persist, especially with membership reconciliation and issues related to the interim process to auto-enroll most members staying in their plans. Cleanup of membership discrepancies will likely take another year or even longer.
- Risk Adjustment Data Validation (RADV) audits will become the new normal in Medicare Advantage. 2015 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 and Medicaid Services for unsubstantiated codes submitted for higher payments.
- Maximizing data, strong provider partnerships, documentation and ICD-10 preparedness are keys to audit proofing your Risk Adjustment program.
- The Star Ratings system of performance-based payment is the new cornerstone of competition among health plans. Stars has expanded into more than a dozen state Medicaid programs, and to ObamaCare's issuers as well, and the bar is rising. Technical changes to several measures mandate much higher performance to stay ahead of the curve and avoid falling below 4 Stars, where bonus payments and bid rebates vanish. 2015 will be the first year where plans below 3 Stars are terminated.
- Medicare Advantage plans won several lobbying victories in this year's "Call Letter", the rate and policy announcement for 2016, including an average 1.25% benchmark increase from a cut in the February draft. This signals a new era of influence muscle for the industry, where CMS will increasingly fight out policy changes "below the waterline" in subregulatory guidance and enforcement, where politicians are less likely to intervene.
- Appeals and grievances and pharmacy benefit management vendor performance remain the #1, 2 and 3 regulatory infractions in Medicare Advantage, 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:
Join John Gorman, GHG's Founder & Executive Chairman, as well as Bill MacBain, GHG's Senior Vice President of Strategy on April 14 as they provide a hard-hitting analysis of critical areas addressed and finalized in the document from 1-2pm ET. Register now >>
GHG's Senior Vice President, Healthcare Analytics & Risk Adjustment Solutions, Dan Weinrieb, recaps the Risk Adjustment rulings in the Final Call Letter and provides keys to success in an article on the GHG blog. Read more here >>
Risk Adjustment Recap & Keys to Success
The 2016 Final Call Letter released on Monday, April 6, confirmed proposed rulings highlighting the following categories:
- End the Blend; For payment year 2016, CMS will only use the 2014 HCC Risk Adjustment Model.
- Coding Pattern Adjustment; CMS has increased the adjustment factor for MA coding pattern differences by 0.25 percent, the lowest amount possible under the statute. As such, the updated adjustment factor for 2016 is 5.41 percent.
- Encounter Data as a Source for 2014; CMS will apply the 90/10 rule until they implement "risk adjustment using Medicare Advantage diagnostic, cost, and use data," meaning until they have recalibrated the model using MA encounter data.
- ICD-10; CMS will not accept or process ICD-9 codes for risk adjustment for services with dates of service beginning October 1, 2015.
- RXHCC Model; The model has been updated to reflect the 2016 benefit structure, updates to the data years used to calibrate the model, and clinical updates to the diagnoses included in some prescription drug hierarchical condition categories.
- In-Home Assessment; Adopt a core set of components and best practices for In-Home Assessments, Track subsequently provided care: In CY 2015, CMS will track and analyze care provision following in-home visits.
These are the facts. Gorman Health Group is focused on providing you the tools in order to succeed and implement an enterprise-wide risk adjustment model. Based on The Centers for Medicare & Medicaid Services (CMS), collaborative partnerships between health plans and providers will ensure optimum performance outcomes for revenue, medical management and quality. Is your organization currently assessing, enhancing and managing the following critical success factors.
Leverage and integrate data and processes
- Is MRA included in your Medical Management and Quality Improvement Strategies? AND Pharmacy!
- Do your systems talk to each other: Interoperability and Integration
- Show me your spreadsheet!
Partner with your partners: Quality over Quantity
- Convene with your vendors and coordinate efforts
- Ensure compliance, patient-centered care and reduce provider abrasion
- Use Provider Incentives wisely
Targeted, Meaningful, Valuable, Actionable Provider Engagement and Education
- Deliver results: Good and Bad
- What is your strategy to engage specialists?
- Support Practice Transformation Models through incentives
Evaluate your current infrastructure to support Clinical Documentation
- More than just Coding- Population Health Management
For health plans: Make sure you are prepared for ICD-10, studies show that your providers don't think you are
- Have you modeled the impact to your Risk Score?
- Are you prepared for DENIALS?
In-Home Assessments: Bring the PCP's back into the fold
- Target based on complexity and patient care needs, not a money grab
- Care Coordination and medical management is key- align with quality
Shift your chart review and storage strategy
- Retrospective chart reviews…transition to concurrent chart reviews, not a last stich effort
- Do you have a Clinical Documentation Improvement (CDI) strategy?
- Use targeting strategies for patient and provider engagement, not just code collection
Benefit Design and New Member Onboarding
- Pilot new strategies to gather comprehensive patient data from the beginning
- Engage providers for preventive services off the bat
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Reenergized After RISE…Now What?
It's the Wednesday after a jam-packed RISE conference, focused on "Best Practices and Actionable Tools for Improving Risk Adjustment and Achieving Exceptional Quality Performance."
I am sure I speak for most of my colleagues that attended the Summit when I say, "I'm reenergized, but what should I do first?" The large group sessions and the breakout meetings delivered valuable insights into why the Centers for Medicare & Medicaid Services (CMS) keeps moving the target for both health plans and providers. As usual, the presentations were top notch.
This year, a sea of risk adjustment vendors lined the conference room, each with a solution that touted superior performance in maximizing revenue by applying innovative technology, provider/member engagement strategies, and robust analytics. Bright lights, big graphics, dashboards that actually closed the Healthcare Effectiveness Data and Information Set (HEDIS®) gap for the colonoscopy measure??? So many options, all impressive in their own right, but where do you go from here?
When I attended these events on behalf of my health plan, I would bring a box of pens and a few notebooks, head back home, and try and piece it all together. Without fail, something would get lost in translation, or my presentation back to the executive team on my takeaways left us all wondering how we're going to prioritize these initiatives, generate buy-in from across the company, and put these strategies to work.
Hearing and sharing best practices with clinicians, analysts, and other thought leaders in the risk adjustment space always proves to be informative, practical, and actionable. There always just seems to be one thing missing - your co-workers and executives weren't there to hear how important ALL of this is, and decisions continue to be made in a silo, and programs are perpetually designed with a one-dimensional approach to risk, quality, and medical trend management.
Being the only consultant at the conference who wasn't aligned with a vendor, I was able to take a very agnostic approach to the entire event. I couldn't help but notice that more providers were in attendance, voicing their concerns about managing data, navigating the complexities for Hierarchical Condition Category (HCC) coding, and still trying to deliver quality care to their patients. I listened to the health plan representatives discuss the challenges of selecting the right vendor partners, making the decision to bring these risk adjustment business functions back in-house, and integrating people, processes, and data across their entire enterprise.
Now that I am back home, and before I head back out to work with clients on their risk adjustment strategies, I wanted to take this time to stress the importance of being thoughtful about which vendors you select, which strategies you choose to pilot, and which operational processes you decide to uproot.
Just remember a few things:
- Trust that what you are doing now is most likely on the right track - it just might need a little face-lift, especially when the final Call Letter is announced.
- Technology enables an organization to launch and manage interventions that support corporate priorities. Making these investments without a solid plan to leverage the tools and analytics will only set you up for disappointment. More often than not, creating the playbook falls on your "To Do List.
- Be confident that you know the basics, and taking your programs to the next level shouldn't rest on your shoulders alone - we heard loud and clear that this needs to be a cross-departmental, integrated approach in order to really move the needle.
If you can read the above takeaways and feel confident that you and your organization are on the right path, GREAT- please continue to share your best practices with your industry colleagues.
On the other hand, if you are on information overload and not quite sure how or where to begin, know that Gorman Health Group and our team of healthcare analytics and risk adjustment experts have a proven track record of helping our health plan and provider clients assess, prioritize, and design initiatives that make sense for you and the communities in which you serve.
If you have any questions or would like to hear more about how we can help, please contact me directly at dweinrieb@ghgadvisors.com.
Resources
Whether you rely on multiple vendors or a largely internal team, 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 >>
Don't miss Dan's presentation next week at the Gorman Health Group 2015 titled "Risk Adjustment: Cracking the Code" where he will provide key takeaways from the final Call Letter and future implications, discuss vendor selection, management and oversight, as well as Provider Network strategies and the value of collaboration. Not yet registered for the event? No problem, register here today!
Money Grab: CMS to Rerun Risk Scores, Implement Plan for Overpayment Recovery
Do you know your level of exposure for overpayment recovery from CMS?
On March 3, 2015, Cheri Rice, CMS' Director of Medicare Plan Payment Group, released a memo notifying all Medicare Advantage Organizations, PACE Organizations, and certain Demonstrations of its intent to rerun risk scores during the calendar year 2015. If you read this memo and muttered, "uh oh" under your breath, you might be thinking that your plan/organization owes CMS some money, and soon. If you haven't read this memo, "uh oh" would be an understatement.
The memo was brief and a bit vague, but the impact to health plans and providers could not be clearer. CMS will be rerunning risk score data and the corresponding payments made to plans dating back to 2008 Dates of Service (DOS), payment year 2009. Additionally, the memo anticipates that plans will clean up their data by submitting deletes. This could raise the specter of false claims if a plan fails to submit deletes when they knew, or should have known, of unsubstantiated risk adjustment submissions. This could get ugly, and fast.
The table below was included in the memo and outlines the DOS and payment years that CMS intends to rerun, assess, and then start collecting:
Do you know if your plan is at risk for receiving a letter from CMS requesting "money back?"
Better yet, do you find yourself asking the following questions?
- What is your level of exposure and how much money might you owe CMS depending on their findings?
- Do you know how many risk-adjustable diagnoses will be swept away when CMS reruns the data, and do you have the ability and infrastructure to conduct that analysis?
- What is the impact of the overpayment recovery effort on my provider contracts, relationships, and reimbursement?
- How will this effort impact my medical management, quality, and affordability strategies?
- Is this on my radar for our ICD-10 preparedness plan?
Gorman Health Group's team of experts can help your organization answer these questions and assess the impact to your plan, your providers, and your budget.
Unsure where to start? Contact me directly at dweinrieb@ghgadvisors.com.
Resources
Gorman Health Group's Summary and Analysis of the 2016 Draft Call Letter and the Medicare Advantage (MA) Advance Notice is now available. Download it today >>
Gorman Health Group provides expert insight into state and federal regulations surrounding risk adjustment, as well as enterprise-wide strategies to address quality, trend, and risk revenue across all product lines. Learn more >>
Registration for the Gorman Health Group 2015 Forum is now open! Attendees can expect timely, actionable advice on the trends shaping health care from notable speakers, including Barclay's analyst, Joshua Raskin, and regulatory guidance directly from Jennifer Smith, a Director in the Medicare Parts C and D Enforcement Group at the Centers for Medicare & Medicaid Services (CMS). Register your team for The Gorman Health Group 2015 Forum today!
Industry Ducks Bullets in 2016 Medicare Advantage Rate Proposal
Friday, February 20th after close of business, the Centers for Medicare and Medicaid Services (CMS), released its 2016 Advance Notice of Medicare Advantage Payment, known affectionately as "the call letter."
This one was the most anticipated in years, and the industry unexpectedly ducks bullets in it, in risk adjustment, Star Ratings, and elsewhere. It's got a few unicorn farts in it, and a couple puffs of Chanel No. 5 as well.
The lack of any shockers is the bigger positive for the industry, a turning point really. CMS is saying it won't settle its scores with payers through policy, but through enforcement, where the facts are often too tough for politicians to stick their necks out.
Last fall's surprise positive announcement that MA benchmarks were tracking to increase 2.02% next year started this year's dance. Now comes the draft call letter, and on April 6, the final, all of which will be different as CMS winds through its process and the full fury of industry lobbying is brought to bear. It's worth noting that this year a first-time majority of 53 Senators signed the annual "don't hurt Medicare Advantage (MA)" letter to CMS, vs. only 40 last year. The increased Congressional pressure and the fact that MA now represents one out of three beneficiaries is driving this call letter.
By our calculations, the 0.95% reduction in MA benchmarks claimed by CMS is really negative 1.76% all-in. This is the unicorn fart. The final number quoted by CMS, 1.1% positive, is in part because CMS is taking credit for a 2.0% improvement in risk scores as plans continue to improve their risk adjustment management skills. Kinda cheeky. Our read on the underlying trend is +1.53%, frankly, better than we anticipated.
On risk adjustment, anticipation was that CMS would take a lethal shot at prospective in-home evaluations, a tough fee-for-service normalization factor, and an increase in the coding intensity adjustment, but NONE of those happened.
On home visits, despite a hailstorm of bad press and advocacy group investigations, CMS isn't even dealing anymore, just laying out "best practices" and saying "we're watching you." The regulators laid out 8 criteria that would make the prospective evaluation more like a risk assessment conducted by a Special Needs Plan, including:
- Evaluation performed by a physician or qualified non-physician practitioner
- Includes all components of the wellness visit including health risk assessment
- Medication review and reconciliation
- Scheduling appointments and referrals with appropriate providers and community resources
- Environmental scan of the home for safety risks and need for adaptive equipment
- Verifies that the information obtained during the assessment is furnished to appropriate plan staff and providers
- Provides enrollees with a summary of the information collected
- Enrolls the beneficiary in disease management or care management programs.
Taking these steps and embedding risk adjustment management inside a health plan's Medical Management department would effectively audit-proof the company from the dreaded data validation audits expected to intensify this year.
Another shocker: CMS did the absolute bare-minimum on the coding intensity adjustment, and then heaved up a dangerous proposal to recalculate it starting in 2017. If implemented, CMS would cut payments to all MA plans by enough so that total payments would be no greater than under the pre-HCC, pre-PIP-DCG, pre-2000 AAPCC demographic model. This would make risk adjustment a zero sum game, in which individual plans could win or lose, but in which CMS would never pay out more than under the old AAPCC model. That would settle the score on home visits once and for all, and indelibly damage risk adjustment as a healthcare financing innovation.
A final surprise: CMS acknowledges it has a problem on Star Ratings for health plans serving dual eligibles and the low-income. The agency is cutting the weight of several Stars measures where vulnerable members score poorly, by a whopping 50% in 2016. This buys time for CMS and several plans overweight with low-income members and highly exposed to Stars underperformance to conduct additional research and take steps against what is driving the correlation.
It was, in the end, a surprisingly favorable call letter for health plans and other stakeholders, particularly capitated provider organizations. But we're still a long way from the Final Notice on April 6. How plans should react:
- First, write comment letters. Deadline is March 6 at 5 pm EST.
- The proposal to cap total MA payments at the same level as would have been paid under the pre-2000 demographic-only risk adjustment system is dangerous. Plans need to point out how the Congress, in the 1997 Balanced Budget Act, mandated a health-based risk adjustment system because the demographic adjustments were inadequate. We are not aware of any authority in that, or any other law, to allow CMS to set a cap on total MA payments.
- Take the guidance on home risk assessments seriously, and implement CMS' suggestions before they become mandates. Plans must hard-wire their risk adjustment program into their care management program, so they are actively managing the risks they identify.
- Don't rely on averages: the impact of CMS rates and other changes will vary from county to county, market by market. Let us help you examine the impact on your service area.
- Continued rate pressure means plans have to continue to get better and better at the key components of their business: risk adjustment, care management, Stars, and enrollment data reconciliation.
- Focus on the Stars metrics with the greatest weights, especially the intermediate outcomes measures and the plan-wide quality improvement measures. Determine if the reweighting of seven metrics will have a positive or negative impact on your plan, and react to offset any negative effects, by emphasizing other metrics where there is room for improvement.
It's going to be an interesting 45 days to the Final Notice, but one thing is sure in this call letter: CMS is conceding that Medicare Advantage has gone mainstream, and that its support in Congress can no longer be tangled with. CMS is showing its preference to impact industry behavior through its boot rather than its pen.
Resources
Join John Gorman, GHG Executive Chairman, and colleague, Bill MacBain, GHG's Senior Vice President of Strategy and former health plan CFO, as they provide a hard-hitting analysis of critical areas addressed in the document, including a look at the various components that make up the trend factor, a proposed change to how risk scores are determined, health risk assessments, and Star Rating measures on March 3, 2015. Register Now >>
Registration for the Gorman Health Group 2015 Forum is now open! Attendees can expect timely, actionable advice on the trends shaping health care from notable speakers, including Barclay's analyst, Joshua Raskin, and regulatory guidance directly from Jennifer Smith, a Director in the Medicare Parts C and D Enforcement Group at the Centers for Medicare & Medicaid Services (CMS). Register your team for The Gorman Health Group 2015 Forum today!
Risk Adjustment Data Validation (RADV) Audits Just Got Real
Last night the second-largest Medicare Advantage plan in the country, Humana, filed an SEC document detailing a US Department of Justice investigation into the company's risk adjustment coding and data collection practices. The investigation is an extension of a 2010 physician-led whistleblower action under the False Claims Act. The company has over 3.2 million Medicare Advantage members.
For years CMS has struggled to define the process and methodology it would use to pursue payment recoveries from Medicare Advantage plans which were overpaid under risk adjustment. In 2012 it finalized its process and launched its first round of RADV audits, on a parallel track with those being conducted by the Office of Inspector General at the Department of Health and Human Services.
The Justice Department's involvement in the Humana audit would appear to indicate the review is in the advanced stages and has been underway for some time. The methodology assures an extrapolated repayment to the Federal government for unsubstantiated codes submitted for risk adjustment. That this action also comes in connection with the False Claims Act and a qui tam whistleblower action could signal serious trouble for the insurance giant.
RADV just got real.
Resources
GHG can support your risk adjustment from start to finish when it comes to preparing for your RADV audit and prepare a readiness plan. We're standing by to support you in comprehensive audit coordination, limited audit oversight and targeted engagement services. Visit our website to learn more >>
Registration for the Gorman Health Group 2015 Forum is now open! Attendees can expect timely, actionable advice on the trends shaping health care from notable speakers, including Barclay's analyst, Joshua Raskin, and regulatory guidance directly from Jennifer Smith, a Director in the Medicare Parts C and D Enforcement Group at the Centers for Medicare & Medicaid Services (CMS). Register your team for The Gorman Health Group 2015 Forum today!