an operational vision for care delivery reform in alabama
DESCRIPTION
An Operational Vision for Care Delivery Reform in Alabama. Moving from extremely limited managed care to a fully capitated Medicaid model … in a couple of years!. Defining the Problem – Alabama Medicaid Needed Reform. 1. - PowerPoint PPT PresentationTRANSCRIPT
An Operational Vision for Care Delivery Reform in Alabama
Moving from extremely limited managed care to a fully capitated Medicaid model … in a couple of years!
2Defining the Problem – Alabama Medicaid Needed Reform
3
Medicaid Financing: The state lacks a long term sustainable funding model. Current financing builds perverse incentives by
basing program funding on utilization and costs.
Provider Reimbursement: The current model does not pay based on value and incentivizes utilization.
Care Delivery: The care delivery system is fragmented, with minimal incentives and infrastructure to coordinate care
across providers.
4
2
1Costs: Health costs – and the portion of the state budget
dedicated to Medicaid – continue to rise rapidly.
3Collaborative Approach
1. Medicaid Agency director resigned and replaced with politically savvy and well-liked public health officer.
2. Governor convened commission to explore various reform options and develop framework for reform.
3. State leaders were careful to include all provider types, business and consumers on commission.
4. Commission presented findings to governor, findings that formed the basis for initial legislation.
5. Legislation wasn’t perfect, but structured to keep all parties in the boat and allow for community-led managed care.
4Initial member thoughts …
5What are RCOs?
6Overview of RCOsRegional Care Organizations
Summary Risk-bearing “regional care organizations” that manage the full continuum of health care services under a single capitated rate
Population All Medicaid beneficiaries, excluding dual eligibles, those in long term care facilities or utilizing home and community-based waiver services, and the developmentally disabled
Benefits Provide and coordinate primary, acute, behavioral, and post-acute care services
Financing Capitation (transition period would include FFS) with care management payments
Geographic RCOs in all regions with capacity to organize and accept risk
Infrastructure RCOs to build or contract for infrastructure, such as claims processing, network development, member services, provider relations, etc. Providers are expected to leverage statewide HIE to share clinical information
7
Nursing Homes Pharmaceuticals Physicians ClinicsHospitals
Capitated Rate
Behavioral
Health
Citizen’s
Beneficiary
Health Care Providers Consumers Employers
Other Community
Stakeholders
Regional Care Organizations
Other Services
RCO Case Manager
Services
Member Services
Provider Relations
Data Analytics
Care Management
Utilization Review
Transition Protocols
AdvisoryGoverning Board
Regional Care Organization
Provider Payments
Quality Programs
Clinical Integration
8Reform Principles
1. The RCO must be able to implement effective care interventions to reduce utilization and improve outcomes.
2. RCOs must have fiscal integrity and provide the state fiscal certainty.
3. The RCO must be beneficiary-centric and community led.
9The RCO Must be Beneficiary-Centric
Patient
Primary Care Physician & Care
Coordinator
AcuteSub-
Acute
Data portals
Specialist
• Tailored Care Planning
• Coordination of Care
• Improved Access
• Improved Communication
• Aggregated Clinical Information
• Event Notification
• Alerts & Reminders
• Chronic Disease Management Tools
RCO
Care Management Team
RCOs should implement medical and health homes to coordinate care for beneficiaries.
Behavioral Health
10RCOs must bend cost curve and provide fiscal certainty
Savings
1. Alabama must bend the cost curve in order to leverage 1115 dollars.
$
11RCOs must have Lean Administrative Costs
Alabama’s administrative costs (and total spending per beneficiary) are already lower than the national average. In order to preserve
provider payment rates, administrative costs must stay in the range of 5-7%. In order to achieve this goal, RCOs will need to limit
certain administrative expenses and eliminate others entirely.
Source: Sherlock Company, “MEDICAID PLANS’ ADMINISTRATIVE COSTS SURGE IN 2011,” Sept 2012. http://www.sherlockco.com/docs/navigator/Revised%20Late%20September%202012%20Navigator.pdf
Average National Medicaid Administrative Costs2011
XSales and Marketing •Rating and Underwriting•Product Development / Market Research•Sales•Commissions (external)•Advertising and Promotion
12RCO Implementation Timeline
CY 2016CY 2013 CY 2015CY 2014
October 1, 2013
•Medicaid Agency establishes RCO regions
October 1, 2014
•RCOs establish governing board and structure, approval of which may result in “probationary certification”
April 1, 2015
•RCOs must demonstrate ability to establish an adequate provider network
October 1, 2015
•RCOs must demonstrate they meet solvency and financial requirements
October 1, 2016
•RCOs must demonstrate they are capable of providing services pursuant to a risk contract•RCOs must be in all regions of the State
The following dates are “not later than.” The Medicaid Agency is permitted to certify RCOs prior to the dates identified below.
13Operationalizing the RCOs
14
Appointment Authority
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Risk-Bearing Participant
Primary Care Physician
Primary Care Physician
Primary Care Physician
(FQHC)
Optometrist
Pharmacist
Chair CAC
CAC Member (AL Arise or Disabilities Leadership Coal. of AL)
Employer
AL Optometric Association
AL Pharmacy Association
Per Committee Rules
Elected by Committee
Nominated by Chamber of Commerce
APHCA & Al Ch. NMA
Board Composition
15
Issue
Governance
Corporate Structure
Board/Committee Requirements
RCO Finance
Payment from the State
Reserve Requirements
Reinsurance
Capitalization
Supplemental payments to hospitals including GME and other teaching supplements, DSH, and access payments
Key Decision Points
16
Issue
Benefit Management
Interface with long term care including eligible enrollees, transitions, and covered benefits
Interface with behavioral health, including covered benefits, implementation timing, and network requirements
Pharmacy approach
Provider Networks & Contracting
Network Adequacy
Out of state provider payment/contracting
Tertiary/quaternary service payment/contracting
Decision Points (continued)
17
18Question for Hospitals: To Assume Risk or Not?
Open Questions:
•What kinds of payment methodologies will be considered risk bearing for purposes of RCO Board membership?
•Who should set the minimum amount of cash, capital, or other assets required to be considered risk-bearing – RCOs or the state?
•What requirements should providers be required to meet if they choose to contract with the RCO to treat Medicaid beneficiaries even if they are not reimbursed?
Definition of Risk Bearing:
A participant bears risk by:
•Contributing cash, capital, or other assets to the RCO,
•Contracting with the RCO to treat Medicaid beneficiaries at a capitated rate per beneficiary,
•Contracting with the RCO to treat Medicaid beneficiaries even if the RCO does not reimburse the participant.
19
Implications
•In instances where a single entity is the only risk-bearing participant, that entity may hold a majority of the Board seats – providing those who are most at risk the most control
•Hospitals that choose not to invest capital into the RCO may be considered risk-bearing if they accept a risk-based contract from the RCO
•No single member of the Board has veto authority, which more fairly distributes power amongst Board members
•To achieve diversity requirements, RCOs must coordinate across all appointing bodies, which may delay filling seats on the Board
•RCOs governance structure may be less nimble since the executive committees powers are limited by the statute
Changes in Governance Requirements - Implications
20The Legislation Included a Rate Development Methodology
• The rate development methodology:
• Required the state to set a minimum reimbursement rate for providers, which would be the prevailing Medicaid fee-for-service payment schedule unless the RCO and provider have a separate contract
• Incorporated the minimum reimbursement rates into the actuarially sound rate development methodology for each RCO
Implications
•RCO’s capitation rates will be adjusted based on the FFS rates
•RCOs cannot mandate alternative payment methodologies with providers but may negotiate them
•Risk-based contracts are one way for hospitals to be defined as a risk-bearing participants & be eligible for certain Board seats
•Hospitals will be guaranteed, at least initially, the current Medicaid FFS rates. The amount of those rate may change as the Agency implements APR-DRGs
21
The Medicaid Agency was required to establish procedures for addressing contract grievances of providers. The appeals processes would include:
The Legislation Added a Provider Appeals Process…
RCO Review Board
Providers may seek redress with a panel composed of an RCO representative, a similar type of provider, and a representative of the Citizen’s Advisory Board.
Medicaid Agency
If the provider or RCO is dissatisfied with the redress, either may request a review by the Medicaid Agency. The agency must issues its decision, in writing, regarding the
dispute within 10 days.Contract Dispute Committee
If the provider or RCO is dissatisfied with the decision of the Medicaid Agency, either may request a review, within 30 days of the agency’s decision, by way of the Contract Dispute Committee. The Committee will be required to issue a written ruling no more
than 20 days after the dispute is submitted. Circuit Court
If provider or RCO is dissatisfied with the decision of the Contract Dispute Committee, they may file an appeal in the Montgomery County Circuit Court within 30 days of the
decision.
1
2
3
4
22Transition to New Delivery Model – 1115 waiver
23 Section 1115 Medicaid Waivers Refresher
Section 1115
“Research & Demonstration Waiver”
New Money Delivery System Reforms
States can use savings generated from delivery system
reforms to make new money available to providers, e.g.,
payments for new populations, new services, or to offset state-
only expenditures.
Savings are often generated through:
• Transitioning to managed care or other care management models
• Redirecting DSH payments
• Modifying benefits/cost sharing
Waivers allow states to test new delivery system
reforms, such:•Mandating managed care
•Testing shared savings models
•Covering new populations
•Offering alternative benefit packages
•Creating innovative financing models to expand coverage to low-income
•Rationalizing payment schemes
24Overview of Alabama’s Waiver
RCOs are responsible for full scope of Medicaid benefits, including primary, acute, behavioral, maternal, pharmacy and post-acute services EXCEPT dental and long term care
Benefits
Nearly all Medicaid populations will be enrolled in RCOs, with the exception of duals and individuals eligible for long term care services
Beneficiaries
• Risk bearing, provider-based RCOs
• Medical home and health homes
• Care coordination, including improved coordination of physical and behavioral health
Delivery System
25
Development of Quality Measures
26
• Measures should be designed for RCOs, not providers within RCO
• Measures should be well-defined, easy to collect and important to measure
• Measures may need to be tweaked based on population of RCO and should measure things over which RCO has the ability to affect outcome
• Initial measures should be used to establish baseline with performance measured later after gaining benchmark data
• Performance should be measured on achievement, along with improvement
Guiding Principles for RCO Quality Measures
AlaHA initiated discussion of guiding principles to try and bring focus to the discussions:
27Financial Implications
© Treo Solutions, LLC 2013Proprietary and Confidential
Regional analysis - Population Breakout by Region - 2012
Membership % by Aid Category, CY 2012
*Excludes QMB, SLMB members included previously
28
© Treo Solutions, LLC 2013Proprietary and Confidential
Total Cost of Care per Enrollee Statewide Trend
Spending per RCO eligible member has decreased by 3%– This is appears to be due to an increase in eligible members for 2012• 27% of which were Non-Users in 2012
29
© Treo Solutions, LLC 2013Proprietary and Confidential
Statewide Spend per Enrollee by Service Type
Professional, ER and RX spend per member are trending down while Inpatient and Outpatient spend per enrollee are increasing
Non Risk Adjusted Spend by Service Category, CY 2010,2011, 2012
30
Proprietary and ConfidentialPage 31
© Treo Solutions 2014
Preventable ED Visits
Data Source: ALAHA, 2012/01 – 2012/12
Technical notes:
Complex and Simple Chronic Members
Patient Segment Members Preventable
OP PPV Visits
Preventable OP PPV Paid (In
Millions)
Non User
63,087 - $ 0.0
Healthy
248,039 76,655 $ 13.7
At Risk
76,146 37,134 $ 13.6
Stable
62,876 52,114 $ 10.5
Simple Chronic
97,640 71,502 $ 25.9
Complex Chronic
102,147
61,326 $ 38.3
Critical
13,555 9,453 $ 13.0
Total
663,490
308,184 $ 115.0
Primary Chronic Condition Members PPV Visits PPV Paid (In Millions)
Diabetes 33,326 18,432 $ 10.2Asthma 31,305 31,282 $ 8.8Mental Health 30,749 22,517 $ 7.7COPD 11,768 8,299 $ 4.8Congestive Heart Failure 8,770 4,603 $ 3.7Hypertension 12,312 4,913 $ 1.9SA and Alcoholism 4,028 3,905 $ 1.4Chronic Renal Failure 4,914 1,335 $ 1.3
Coronary Artery Disease 1,618 1,346 $ 1.2Alzheimer's and Dementia 5,360 2,350 $ 1.1Cerebrovascular Disease 3,130 1,108 $ 0.9
Other Chronic Conditions 52,507 32,738 $ 21.3
Total 199,787 132,828 $ 64.2
Technical notes: • Numbers in the table represent members attributed to each Patient
Segment
Proprietary and ConfidentialPage 32
© Treo Solutions 2014
Preventable Inpatient Initial Admissions
Data Source: ALAHA, 2012/01 – 2012/12
Technical notes:
Complex and Simple Chronic Members
Patient Segment MembersPreventable
IP PPA Admits
Preventable IP PPA Paid (In
Millions)
Non User 63,087
- $ 0.0
Healthy 248,039
418 $ 1.3
At Risk 76,146
907 $ 3.0
Stable 62,876
1,325 $ 4.8
Simple Chronic 97,640
6,102 $ 20.2Complex Chronic 102,147
13,902 $ 49.0
Critical 13,555
4,900 $ 20.5
Total 663,490
27,554 $ 98.8
Primary Chronic Condition Members PPA Admits PPA Paid (In Millions)
Diabetes 33,326 3,794 $ 12.2
Congestive Heart Failure 8,770 3,237 $ 10.6
COPD 11,768 2,124 $ 6.7
Chronic Renal Failure 4,914 1,443 $ 5.0
Asthma 31,305 1,277 $ 4.6
Mental Health 30,749 673 $ 2.3
Alzheimer's and Dementia 5,360 341 $ 1.2
Cerebrovascular Disease 3,130 328 $ 1.1
SA and Alcoholism 4,028 294 $ 1.1
Coronary Artery Disease 1,618 317 $ 1.0
Other Chronic Conditions 64,819 6,176 $ 23.4
Total 199,787 20,004 $ 69.2
Proprietary and ConfidentialPage 33
© Treo Solutions 2014
Preventable Inpatient Readmissions
Data Source: ALAHA, 2012/01 – 2012/12
Technical notes:
Complex and Simple Chronic Members
Patient Segment Members
Preventable IP PPR Admits
Preventable IP PPR Paid (In
Millions)
Non User 63,087
- $ 0.0
Healthy
248,039
16 $ 0.1
At Risk 76,146
207 $ 0.8
Stable 62,876
32 $ 0.1
Simple Chronic 97,640
358 $ 2.1
Complex Chronic
102,147
2,109 $ 12.0
Critical 13,555
723 $ 4.3
Total
663,490
3,445 $ 19.4
Primary Chronic Condition Members PPA Admits PPA Paid (In Millions)
Mental Health 30,749 363 $ 2.6
Diabetes 33,326 493 $ 2.2
Chronic Renal Failure 4,914 204 $ 1.7
Congestive Heart Failure 8,770 353 $ 1.7
COPD 11,768 252 $ 1.1
Alzheimer's and Dementia 5,360 60 $ 0.4
Other Chronic Conditions 104,900 742 $ 4.5
Total 199,787 2,467 $ 14.1
Proprietary and ConfidentialPage 34
© Treo Solutions 2014
ALAHA Benchmark Comparison
Technical notes: •Age group 3-18 used for comparison•Total bar height represents % difference from Treo’s Medicaid Benchmark •Results are risk adjusted for the illness burden of ALAHA’s population
Data Source: ALAHA, 2012/01 – 2012/12;Treo Medicaid Benchmark 2012/01-2012/12
ALAHA utilization compared to Treo Medicaid Benchmark
% D
iffer
ence
from
Ben
chm
ark
35Association Lessons Learned
• Member communications is critical, even if it’s just restating the questions with no immediate answers.
• Critical for leaders to be inclusive
• While having a hospital tax is not ideal, it has definitely provided a seat at the table.
• Constant evolution of learning for association staff and members that requires expert advice.
• A per-diem payment system doesn’t result in good coding
• Governance is first and foremost.
36In the end …
It’s about better population health … not heads in beds!