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Steven Herbst

Principal

August 30th, 2017

Managed Care Check Up

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Today’s Agenda

• Market overview

• Where are we in transitions

• CJR and other Medicare model changes

• VBP & DSRIP

• Issues facing providers today

• Operational improvements

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13 13 14 14

21

30 32 32 32 31

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Number of Plans Offering MLTC Coverage

OVER

200%

Note: Merger & Acquisition activity is on the rise

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Membership Enrollment in MLTC Program

21,291 24,519 27,676 38,357

65,811

110,398 119,954 125,097

149,030 157,585

883 991 1,059

1,130

1,365

2,852

7,649 12,608

20,988 24,325

22,174 25,510 28,735

39,487

67,176

113,250

127,603 137,705

170,018

181,910

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

NYC Area Membership Upstate

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MLTC Census, July 2017 MLTC Census, July 2017

Downstate Upstate

Plan Membership Share Plan Membership Share

Aetna Better Health 4,335 2.7% Archcare 51 0.2%

Agewell New York 8,542 5.3% Centers Plan 290 1.2%

Alphacare 4,134 2.6% Elant 854 3.4%

Archcare 2,644 1.7% Elderplan 336 1.3%

Centers Plan 17,243 10.8% Elderwood 140 0.6%

Elderplan 12,247 7.7% Fallon Health Weinberg 573 2.3%

Elderserve 11,248 7.0% Fidelis Care At Home 8,962 35.8%

Extended MLTC 2,660 1.7% Hamaspik Choice 2,034 8.1%

Fidelis Care At Home 10,130 6.3% iCircle Care 1,915 7.6%

Guildnet 10,826 6.8% Kalos Health 1,151 4.6%

Healthfirst (SHP) 13,878 8.7% Prime Health Choice 282 1.1%

Healthplus 4,549 2.8% Senior Network Health 524 2.1%

ICS 6,579 4.1% United Healthcare 1,040 4.2%

Integra 6,500 4.1% VNA Homecare Options 4,914 19.6%

Metroplus 1,609 1.0% VNS Choice 1,188 4.7%

Montefiore HMO 1,380 0.9% WellCare 788 3.1%

NS-LIJ Health Plan 5,693 3.6% Upstate Total 25,042 100.0%

Senior Whole Health 8,561 5.4%

United Healthcare 2,080 1.3%

Village Care 8,328 5.2%

VNS Choice 11,636 7.3%

WellCare 4,999 3.1%

Downstate Total 159,801 100%

Market Update

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FIDA Census, July 2017 MAP Census, July 2017

New York State New York State

Plan Membership Share Plan Membership Share

Aetna Better Health 55 1.2% ElderPlan 1,171 14.6%

Agewell New York 156 3.3% Fidelis 109 1.4%

Centers Plan 22 0.5% Guildnet 636 7.9%

ElderPlan 389 8.3% HealthFirst 4,532 56.5%

ElderServe (RiverSpring) 8 0.2% HealthPlus 2 0.0%

Fidelis 332 7.1% Senior Whole Health 111 1.4%

GuildNet 680 14.5% VNSNY CHOICE 1,459 18.2%

HealthFirst 973 20.8% Total 8,020 100%

ICS 138 2.9%

MetroPlus 191 4.1%

NS-LIJ FIDA 44 0.9%

Senior Whole Health 141 3.0%

Village Care 19 0.4%

VNSNY CHOICE 1,535 32.8%

Total 4,683 100%

Integrated Plans are Growing

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Membership Enrollment in MLTC Program – YoY Growth

3,336 3,225

10,752

27,659

46,104

14,353

10,102

32,313

11,892

15% 13%

37%

70%69%

13%8%

23%7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2009 2010 2011 2012 2013 2014 2015 2016 2017

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000B

y N

umbe

rs

By

Per

cent

age

YoY Growth # 108 68 71 235 1,487 4,797 4,959 8,380 3,337

YoY Growth % 12% 7% 7% 21% 109% 168% 65% 66% 16%

YoY Growth # 3,228 3,157 10,681 27,454 44,587 9,556 5,143 23,933 8,555

YoY Growth % 15% 13% 39% 72% 68% 9% 4% 19% 6%

Breakdown by area

Upstate

NYC

Area

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Elimination of Direct Marketing

▪ MLTC growth is accelerating at a rate faster than anticipated by DOH

▪ Budget measure to re-introduce nursing home level of care requirement failed

▪ MLTC Plans will now need to cease future marketing activities:

– Marketing materials must continue to be submitted by the Plan to DOH for review

and approval

– Plans may continue to use marketing materials that have previously received DOH

approval, to the extent that approval was given

– The renewal of previously approved marketing arrangements (e.g. billboard, radio,

or television advertising) will be treated as unapproved marketing

– Discovery of unapproved marketing material will result in regulatory action

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Reforms and Their Impact on Managed Care

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IMPACT Act

• Improving Medicare Post-Acute Care Transformation Act of 2014 or IMPACT Act of 2014 (H.R.

4994) is a bill that is intended to change and improve Medicare's post-acute care (PAC) services

and how they are reported

• Drivers for the IMPACT Act:

▪ Absence of interoperable data standards

▪ Escalating costs associated with PAC

▪ $74 Billion or 14.8% of Medicare spending

▪ Addresses quality gaps

• Goals of the IMPACT Act

▪ Improve discharge planning;

▪ Facilitate coordinated care across PAC settings, improves outcomes and overall quality

comparisons; &

▪ Provides a data foundation to develop either a future payment systems to PAC providers

▪ Framework to reduce, by 2%, the update to the market basket percentage for skilled nursing

facilities which do not report assessment and quality data

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IMPACT Act:

Quality Reporting Program (QRP)

• The SNF QRP is a mandatory reporting program

▪ Quality Measure Domains- 5

▪ Resource Use Element Domains- 1

▪ Additional measures being rolled out annually

• Data Reporting Began October 2016

• Requirements avoid 2% reduction off market basket update for calendar year CMS

payment updates includes measures/data required by IMPACT

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Alternative Payment Models

• CMS, through the Innovation Office, has put forth an aggressive agenda of varying

models of alternative payment models for Medicare

• Three models that have direct impact on SNFs include:

▪ Bundled Payments for Care Improvement (BPCI) Initiative

▪ Comprehensive Care for Joint Replacements (CJR)

▪ SNF Value Based Purchasing Program (SNF VBP)

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Skilled Nursing Facility (Medicare)

Value Based Purchasing

• SNFVBP will pay participating skilled nursing facilities for their services based on the quality of

care, not simply quantity of the services provided in a given performance period to people with

Medicare

• Starting October 2018 for FY 2019, CMS will adjust Medicare payments to providers based on

how well they manage hospital readmissions based on performance in this calendar year (CY)

2017 compared to CY 2015.

• Some SNFs will see a payment reduction upwards of two percent for all of their Part A Medicare

payments for an entire fiscal year.

▪ SNFs can partially earn back based on SNF VBP Measure score

– Earn back is between 50 – 70 % of total amount of reductions

– Rank SNFs based on their performance from low to high; lowest ranked 40% will receive less than in

FFS

Source: https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/Other-VBPs/SNF-VBP.html

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CMS: Conditions of Participation

• 1st time in 20 year CMS changed SNF COPs

• Changes to be phased in between November ‘16 – November ’19

• Sections include the following topics:

• Basis and scope

• Definitions

• Resident rights

• Freedom from abuse, neglect, and exploitation

• Admission, transfer, and discharge rights

• Resident assessment

• Comprehensive person-centered care planning

• Quality of life

• Quality of care

• Physician services

• Nursing services

• Behavioral health services

• Pharmacy services

• Laboratory, radiology, and other diagnostic

services

• Dental services

• Food and nutrition services

• Specialized rehabilitative services

• Administration

• Quality assurance and performance

improvement

• Infection control

• Compliance and ethics program

• Physical environment

• Training requirements

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What is NYS DOH Up To?

• MRT → DSRIP → VBP

• Achieving Financial Growth Control

• Mandatory Managed Care

• SNF Transition to Managed Care

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Delivery System Reform Incentive Payment

• DSRIP is the main conduit NYS is using to implement Medicaid reforms laid out by the MRT

Waiver Amendment

• The purpose of DSRIP is to fundamentally restructure the Medicaid health care delivery system▪ Primary goal of reducing avoidable hospital use by 25% over 5 years

• Upwards of $6.4 billion dollars have been made available as payouts to providers based upon

achieving pre-determined outcomes and transformation measures▪ DSRIP funds are based on performance linked to achievement of project milestones and paid out directly

to providers

• Promotes community-level collaborations and focuses on system reform

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DSRIP & SNFs

• Direct impact of DSRIP initiatives have yet to be experienced by SNFs

• System-wide focus on a net 25% reduction in avoidable hospital use

• SNFs should expect to experience either one of two possible outcomes:

▪ Option one- a corresponding decrease in short-term admissions, as driven by a drop

off in net hospitalizations for the provider’s region

▪ Option two- a potential increase in referrals and direct admissions, bypassing a

hospitalization, as alternative treatment sites in support of the effort to reduce

avoidable hospitalizations

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Value Based Payment (VBP)

Medicaid Payment Reform

• Aligns payment incentives with population health management

• Rewards value over volume

• Reinvests in the delivery system

• Improves margins for providers who deliver high-value services and

• Decreases overall Medicaid dollars spent on administrative services

Source: NYS DOH VBP Roadmap, June ‘15

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Payment Reform

• An effective delivery system transformation will only take root when the

payment system is transformed as well

• Fee For Service incentivizes volume over value, such as paying for

inputs rather than outcomes

▪ e.g., a readmission is rewarded more than a successful transition to

home care

• The current payment system does not adequately incentivize

prevention, coordination or integration

• By waiver Year 5, all MCOs must employ non-fee-for-service payment

systems that reward value over volume for at least 80% of their

provider payments

Source: NYS DOH VBP Roadmap, June ‘15

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Payment Model Concepts

Full Risk- Level 3

Assumes full financial responsibility for the profit and the potential loss in serving members

Ris

k

Reward

Gain Sharing- Level 1Assumes some financial responsibility for the profit and none for the potential loss in serving members

Partial Risk- Level 2Assumes some financial responsibility for the profit and the potential loss in serving members

Performance Bonuses- Level 0Conditional income, paid out only if certain operational, quality or financial measures are met

Fee-for-ServiceConventional reimbursement for every service provided

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• Goal of ≥80%90% of total MCO-provider payments (in terms of total dollars) to be captured in

Level 1 VBPs at end of Demonstration Year 5

• 35% of total managed care payments (full capitation plans only) tied to Level 2 or higher for Level

2 (risk-bearing VBP arrangements), the State excludes partial capitation plans such as MLTC

plans from this minimum target

Level 0 VBP Level 1 VBP Level 2 VBP

Level 3 VBP(Only feasible after experience with

Level 2; requires mature PPS)

FFS with bonus

and/or withhold based

on quality scores

FFS with upside-only shared

savings available when

outcome scores are

sufficient

(for PCMH/APC, FFs may

be complemented with

PMPM subsidy)

FFS with risk-sharing (upside

available when outcome scores

are sufficient)

Prospective capitation PMPM or

Bundle (with outcome-based

component)

Levels of Value-Based Payments

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MLTC and VBP

• Level 1 for MLTC will be a Pay For Performance (P4P) program

▪ MLTC Level 1 is Level 0 in the VBP Roadmap

▪ MLTC plans and providers can establish quality targets and earn financial incentives

for reaching or exceeding targets

▪ Plans must convert provider contracts to Level 1 by December 31, 2017

• A key feature of MLTC Level 1 VBP is potentially avoidable hospital use

▪ Contracts should include the potentially avoidable hospitalizations measure

▪ P4P VBP measures are drawn from the MLTC Quality Incentive

• MLTC Plans and Providers can engage in Level 2 or 3 VBP agreements

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Potentially Avoidable Hospitalizations

• Potentially avoidable hospitalizations are inpatient hospitalization that might have been

avoided if proper outpatient care was received in a timely manner, including:

▪ Anemia

▪ Congestive Heart Failure

▪ Electrolyte imbalance

▪ Respiratory infection

▪ Sepsis

▪ Urinary Tract infection

• DOH based this measure on CMS’ Nursing Home Value Based Purchasing

Demonstration

• Will rely on SPARCS data

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Quality Measures

Measure

Measure Source/

Steward

Current Use

Recommendation Measure Theme

Percentage of members who did not have an

emergency room visit in the last 90 days

UAS–NY/New York

StateP4P Critical Prevention

Percentage of members who did not have falls

resulting in medical intervention in the last 90 days

UAS–NY/New York

StateP4P Critical Prevention

Percentage of members who did not experience

uncontrolled pain

UAS–NY/New York

StateP4P Quality of Life

Percentage of members who were not lonely and

not distressed

UAS–NY/New York

StateP4P Quality of Life

Percentage of members who received an influenza

vaccination in the last year

UAS–NY/New York

StateP4P Critical Prevention

Percentage of members who remained stable or

demonstrated improvement in pain intensity

UAS–NY/New York

StateP4P

Functional

Improvement

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Quality Measures

Measure

Measure Source/

Steward

Current Use

Recommendation Measure Theme

Percentage of members who remained stable or

demonstrated improvement in Nursing Facility

Level of Care (NFLOC) score

UAS–NY/New York

StateP4P

Functional

Improvement

Percentage of members who remained stable or

demonstrated improvement in urinary continence

UAS–NY/New York

StateP4P

Functional

Improvement

Percentage of members who remained stable or

demonstrated improvement in shortness of breath

UAS–NY/New York

StateP4P

Functional

Improvement

Potentially Avoidable Hospitalizations (PAH) for a

primary diagnosis of heart failure, respiratory

infection, electrolyte imbalance, sepsis, anemia, or

urinary tract infection

UAS–NY/New York

State & SPARCSP4P Critical Prevention

Managed Care: Issues of the Day

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Managed Care Operational Issues

• Growing Accounts Receivables

• Decreasing lengths of stay

• Downward pressure on rates and authorized levels of care

• Increasingly competitive network participation

• Rates and reimbursement nuances

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Implementation and Management Strategies

Financial

ReadinessOperational

Readiness

Managed Care

Strategy

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Financial Readiness

Financial

ReadinessOperational

Readiness

Managed Care

Strategy

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Understand Your Costs

• Review cost structure

▪ Where can you be more efficient without reducing quality?

▪ Where can you invest to improve outcomes and quality?

▪ Who can you partner with to solve problems and achieve

savings (e.g., shared services across providers?)

• Do you have a managed care billing process?

▪ What is your average managed care billed to collected time

frame?

• Know your claims and accounts receivable processes

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Cost Accounting

• Be prepared to negotiate for services you perform

on a more granular level

▪ For instance, could you propose a variable fee

based on an individual’s needs?

• Can you develop an activity based costing model?

• Be prepared to “price out” services

• MCOs will pay differently by each of their product

lines

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Billing

• Claim submission timeframes

▪ Varies by contract or Line of Business

▪ Varies by payer

• Claims submission processes

▪ Software/EMR

▪ Electronic

▪ Paper

• Claims follow up

▪ Staffing implications

▪ Claims often need to be “worked”

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Common Causes of Claim Denials

• Claim missing required information

• Claim billed with invalid information, e.g.:

▪ Incorrect Member ID#

▪ Incorrect Provider NPI or TIN#

▪ Invalid Rev Codes/Diagnosis Codes

• Member not eligible for date of service

billed

• Wrong revenue code

• No prior authorization not obtained

• Untimely filing

• Duplicate claim

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Operational Readiness

Financial

ReadinessOperational

Readiness

Managed Care

Strategy

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Operational Readiness Assessment

• Admissions & Eligibility

• Case Management

• Record Management Plan/Information Systems

• Quality Assurance

• Marketing

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Admissions

• Every patient/member prior to receiving service must receive a form of an

authorization

▪ Some Plans allow for “deemed” authorized or “retrospective” authorizations

• Collection of complete referral information is key

▪ Insurance coverage

▪ Clinical admission criteria

• Primary and secondary insurance coverage must be verified by admissions staff,

billing staff

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Authorization

• All services take place within the context of an authorization process

▪ Plans may have slightly different requirements

▪ Certain services will require pre-authorization, while others services may involve new criteria around minimum and maximums

• Services must be essential, as opposed to merely beneficial

• Medical necessity principles related to cost-containment and outcomes will be applied to non-medical services

• Managed care concepts such as “the most appropriate and cost-efficient care in the appropriate setting” are being applied to a greater degree

• Be prepared to vigorously manage your ongoing authorizations

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Know Your Data

• Systems and data

▪ Electronic health records

▪ Internal reporting capacity

▪ Ability to share data with managed care companies

• Assess your data for accuracy

• Monitor your data on an ongoing basis

• Contracts & payments are increasingly linked to performance

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Quality & Outcomes

• Know your quality ratings

• What quality metrics can you develop internally?

• Know your programs and services that set you apart

▪ What can you demonstrate?

▪ What new products can you launch?

▪ What don’t you do well?

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Quality & Payment Reform

• CMS & NYS DOH initiatives both heavily rely on quality to drive reform measures

• The nature of quality data and outcomes is both objective and subjective

• CMS & NYS DOH both issue quality scores to SNFs that are or will be foundations for

payment reforms

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• Continue to offer the highest quality care

▪ Excellent customer service

▪ Capitalize on reputations

▪ Outcomes and performance

• Pursue operational excellence:

▪ Pursue efficiencies in operations

▪ Right-size programs

▪ Pursue niche programs

• Optimize facility/program assets to create

higher-performing operations

▪ Ambiance/environment important to

consumers and their families

• Focus on concepts such as scalability and

lean operating models

Marketing & Brand Diversification

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Managed Care Strategy

Financial

ReadinessOperational

Readiness

Managed Care

Strategy

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Develop Your Managed Care Strategy

What’s your

value

proposition?

Review your

current

Managed

Care

contracts

Identify who

do you want

to partner

with

How many

contracts do

you want to

sign?

Are you

equipped to

take risk?

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Contracting Strategies

• Contracting Approaches

▪ Individual

▪ Group

▪ IPA

• Approach to Plans

▪ What’s your value proposition? What do you excel at?

▪ Why are you a good partner for a managed care plan?

• Evaluate the DSRIP PPS networks you’ve joined

▪ Identify your peers that are participating in the same PPS

▪ Do your services/expertise overlap?

▪ Engage your PPS to identify their VBP strategy

▪ Will you engage in direct MCO contracts or work through your PPS?

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Contracting Strategies

• Specify payment terms

▪ Identify all elements of rates that should be expressly articulated

▪ Take nothing for granted

• Develop acceptable payment options

▪ What, if any, alternative reimbursement models work?

• Develop payment for quality outcomes

• Research how quality measures are used today with MCOs

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• Plans maintain

“Provider Relations”

departments

• Providers need to

identify a point

person to manage

their Plan

relationships

• Participation with a

Plan’s provider

network is

increasingly

competitive

Managed Care Plan Relations

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Key Takeaways

1Understand

your financial

weaknesses

and areas of

opportunity2

Identify

operational

needs to

accommodate a

managed care

operating model3 Build a managed

care strategy

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?Steven Herbst e-mail: sherbst@loebandtroper.com

Tel: (212) 697-3000

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