Transcript Managing More “Managing” in Managed Care

MANAGING MORE “MANAGING”
IN MANAGED CARE
Texas Health Law Conference
October 10, 2011
Denise W. Glass, Fulbright & Jaworski L.L.P.
Penny Hobbs, McGinnis, Lochridge & Kilgore LLP
Backdrop for More Management
Spiraling Health Care Costs Created a
Need For Managed Care
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1960-1989 Health Care Expenditures Doubled 5%-11%
of GDP
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Unfettered Provision of Services – Overutilization
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Over $819.9 Billion in 1992
$942.5 Billion in 1993
No Direct or Indirect Limits on Access to Care
Defensive Medicine
Unlimited payments to providers:
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Retrospective fee-for-service by third party payors;
Encouraged health care spending by providing incentive to
deliver excessive services;
No consideration for propriety of treatment.
Advent of Managed Care
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Provision of appropriate level of services
Employer and consumer education
Choice of benefit plans—employer chooses
Care managers
Quality of care measures
Development of data
Risk contracting
Proliferation of provider contracting
Increasingly complicated claims payment system
Not successful in controlling costs
Recession Hits
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Greater numbers of uninsureds
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Patients choosing to delay treatments
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Not a fun time for anyone in the healthcare industrythe pie just got smaller
Responses for Managing Care
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Something old, something new – industry responses
to crisis
 PPACA
 Medicare
response
 Medicaid response
 Employers response
 Health plans response
 Provider response
PPACA
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Medical Loss Ratio requirements
 Limits
ability of health plans to increase premiums and
remain competitive
 Have to focus on costs of care
 Creates opportunities for providers to obtain
reimbursement for health quality improvement activities
 Increases
revenues for establishing programs for patients
 45 C.F.R. 158.150-151.
PPACA
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What to look for
 How
are results measured
 Does it constitute a delegation agreement under the
Insurance Code
 How are responsibilities allocated
PPACA
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Increased emphasis on repayment of overpayments
– now a false claim if not repaid within 60 days of
detection
 Greater
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necessity for compliance programs
Essentially eliminates physician-owned hospitals
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resulted in a lot of changes within specialty
medical practices
 Competition amongst hospitals to attract owners of
previous hospitals
Medicare Response
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Encouraging greater use of managed care
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for solvency, state law requirements are
preempted
 Creates opportunities for contracting
 Risk
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shifting
Refusing to pay for “never events” to reduce
medical errors and associated costs
 Opportunity
for hospitals to develop policies and
procedures
 Are cause and effect aligned here?
Medicare Response
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Programs to pay for performance
Pilot program for physicians
 Expansion under PPACA
 Star Rating program for MA plans
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Bundled payments
Require electronic payments to speed up
reimbursement
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Justifies the expenditures on electronic filing
Push for EMR and exchanges
Increase emphasis on fraud detection
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Greater need for compliance
Medicaid and Other State Responses
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Greater emphasis on managed care
 Renewed
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network contracting activities
Refusal to pay for “never events’ in Medicaid and
by state mandate
Grappling with effect of out-of-network strategies
on members
 Texas
Insurance Code Chapter 1467 Out-of-Network
Claims Dispute Resolution
 California approach
Employer Responses
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Control costs through wellness programs and other
incentives
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State and federal requirements
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Shifting costs to employees and dependents
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Texas Insurance Code Sec. 541.056
28 Texas Administrative Code Subchapter MM
Effect on collection of patient responsibility at time of
service but beware of laws requiring repayment of
deposits
Reduce benefits if possible
Constrained by insurance mandates
 Look to limited networks of providers willing to assume risk
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Texas Insurance Code 1460 Standards for physician rankings
Health Plan Response
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Greater emphasis on evidence-based medicine
Respond to demands of employers for
 changes
in benefit designs
 High performance provider networks
 Utilization review
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Resurgence of risk contracts
Distinguish themselves based on added value
Provider Responses
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Provide patients with chronic disease management
programs
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Use out-of-network strategies
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Forms the basis for health quality improvement payments
Beware of Texas Insurance Code Chapters 1456 and 1467
for facility based physicians
Concierge medicine
Greater emphasis on EMRs and electronic means to
reduce medical errors
Greater emphasis on compliance
Ways Health Plans are Attempting
to Manage Costs
Ensuring Participation by HospitalBased Providers
In furtherance of the goal to protect Member interests, an
additional required condition has been added for continued
participation in all ***** Programs, effective as of August 1, 2011.
This condition requires that all Hospital Based Physicians and
Key Specialists who provide Related Services participate in the
Plan’s PPO Network, effective on and after January 1, 2012,
except as prohibited or limited by applicable law. Unless so
prohibited or limited, Hospital’s continued participation as a
****** Center is contingent on its compliance with this required
condition.
Unless prohibited by applicable law, Hospital further agrees that
while Hospital is designated as a ****** Center under this
Agreement, if any Member receives Related Services at Hospital
from a Hospital Based Physician or Key Specialist who is not
participating in the Plan’s PPO network, then Hospital shall hold
the Member, all ****** Plans, ******, and, if applicable, the
Member’s group health plan, harmless from all amounts in
excess of the in-network rate for similar eligible services
rendered under that Member’s benefit plan, less any applicable
cost-sharing amount based on the in-network contracted rate,
except to the extent of a Hospital Based Physician or Key
Specialist whose payment terms are mandated by applicable law.
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Makes hospitals
responsible and
liable for ensuring
that hospital-based
providers are
participating
providers
Requirements under
new Texas network
adequacy rules
regarding hospitalbased physicians
Referrals to Participating Providers
Provider shall, when medically appropriate, refer and
transfer Members to Participating Providers except in cases
of emergency or when specific expertise is not available
within the provider panel as determined by *****’s medical
director in consultation with Provider and *****’s medical
director approves the referral or transfer to a nonParticipating Provider or unless Provider has obtained a
written acknowledgement from the Member, prior to the
provision of the service, indicating that (1) the Member was
advised that no coverage, or only out-of-network coverage
would be available from Plan and (2) the Member agreed
to be financially responsible for additional costs related to
such service. When referral or transfer of a Member to a
non-Participating Provider is necessary, Provider shall
coordinate such referrals or transfers with ***** ‘s medical
director or medical management department, except in
cases of emergency as defined in the applicable Health
Benefit Plan. However, failure to comply with the ***** ’s or
the applicable Health Benefit Plan’s approvals,
certifications, authorizations and other requirements
could result in a denial or reduction of payment to
Provider or in a denial or reduction of the Member’s
benefits.”
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Limit usage of out-of-network
providers by requiring that referrals
be made to participating providers
 Availability of in-network
providers
 Independent medical judgment
New 28 TAC §3.3703(a)(23):
contracts may require the referring
provider to disclose, as applicable,
that the physician, provider, or
facility to whom the patient is being
referred is not a participating
provider.
 Provision permitted by rules, but
not required by rules
 Does not apply to contracts with
institutional providers
 May not limit access to nonpreferred providers
Timely Notification of Admissions
The terms of your agreement with us 
requires that you provide us with timely
notification of patient admissions.
It’s crucial that you notify us of an
admission within one business day. 
Beginning May 15, 2011, late notification
of an admission will result in a denial of
payment for the portion of the stay
before we were notified. A failure to
notify us of the stay at all (or until after
discharge) will result in the denial of the
entire hospital stay. This denial is not
based on medical necessity. Like other
denials of this type, you cannot bill the
patient for these denied services.
Differentiate from precertification
requirements.
Emergency admissions
where payor not
identified
Soft Steerage
The goal of the program is to educate individuals
undergoing an MRI, CT, or PET scan about their
options for geographically convenient and costeffective facilities as they and their doctors choose
where to have the scans done.
After a health care professional contacts ***** for
precertification of coverage for an MRI, CT, or PET
scan, a specially trained representative may contact
the individual by phone and provide information
about
conveniently
located,
credentialed
participating facilities (hospitals or free-standing
facilities) and offer appointment options. *****
representatives can also provide cost comparison
information, so that the individual is aware of the
financial impact of the choice of facility.
*****can assist individuals in scheduling an
appointment at their facility of choice and
complete the referral for the services that have
been authorized for coverage.
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Cost vs. quality
Address contractually
 EXAMPLE: ***** retains the
right to contract with any
hospital, physician or other health
care provider for the delivery of
health care services under its
health plans. Notwithstanding
the foregoing, ***** will not
direct or influence Members to
use any particular Participating
Provider who provides the same
Covered Services as Provider or
refuse to provide preauthorization or payment for
certain Covered Services
because such services are to be
provided by Provider.
Non-Payment for Adverse Events,
Hospital-Acquired Infections
The purpose of this letter is to
notify you of an amendment to your
contract, which will result in *****
no longer providing reimbursement
for certain preventable medical
errors.
The attached amendment
references *****’s policy for the
Centers for Medicare & Medicaid
Services (CMS) Preventable
Conditions and National Quality
Forum Never Events. *****’s policy
applies the same guidelines for
both Medicare and commercial
plans.
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Distinguishing between errors
caused by physician and those
caused by hospital staff or
within the control of hospital
staff
Trend is toward greater nexus
between quality and
reimbursement
Final Texas network adequacy
rules deleted requirement in
proposed rules to include
average surgical site infection
rate of each preferred
provider hospital
Limits on Chargemaster Increases
For Covered Services reimbursed on a discount off
billed charge basis, ***** agree that Provider will
notify ***** of changes to its hospital chargemaster
which results in a net increase exceeding ___% in the
aggregate annually for such hospital within thirty (30)
days of such changes becoming effective.
The percentage of reimbursement shall be adjusted to
be revenue neutral for the amount of the charge
based change in excess of ___% in that given
calendar year.
No more frequently than annually, ***** shall have the
right, upon at least fourteen days advance written notice
to Provider, during regular business hours and at its sole
cost and expense, to audit those hospital’s records
relating to hospital’s charges for the sole purpose of
assuring compliance with this provision.
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Is increase per service
or total charges?
Notice only vs. Notice
+ Right to lower rates
 Ability
to review or
mutually agree?
Use of External Auditors
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Commercial payors using RAC-like audit contractors to
conduct reviews for overpayments
Assess basis for alleged overpayment:
Coding errors
 Billing errors
 Medical necessity determinations
 Miscalculation of rates/stop-loss
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Determine contractual rights & limitations
If overpayment identified:
What are appeal rights?
 Can payor automatically recoup or offset?
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EPO Plans/Limits on Out-of-Network
Coverage
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Texas HB 1772--effective 9/1/2011; applies only to plans
issued or renewed after 1/1/2012
Creates exclusive provider benefit plan (EPO) under PPO
Act, allowing exclusion of benefits for some or all services
(other than emergency services) if provided by nonpreferred provider.
EPO not required to compensate a non-preferred provider
for services rendered for nonemergency care.
Informal draft rules released by TDI on 9/8/2011; comment
period ended 9/23/2011
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Requires insurers to obtain certificate of network compliance
from TDI
EPO/provider contracting requirements similar to those for PPOs
Physician-Only Benefit Plans
Step One
Modify plan language for Cost Plus
reimbursement methodology
Remove hospital PPO component
Add physician only PPO network
Step Two
Audit ALL in-patient and out-patient facility
claims applying the Cost Plus methodology
Step Three--Protect the Plan Sponsor
Audit firm assumes fiduciary status and
responsibility for legal defense of Plan.
Audit firm handles all claim appeals on behalf of
employer
Step Four --Protect the Plan Member
Protect member from balance billing
Protect member from credit collections
Provide the member legal resources, at no cost, to
protect against any provider balance billing
efforts.
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Patients access physicians as “innetwork”, but hospital facilities and
surgery centers as out-of-network
Facility reimbursement calculated
on cost-plus basis (“Allowable
Claim Limit”)
If facility elects to appeal amounts
received, 1) facility waives any
right to recover the denied
expenses from the patient; 2) the
patient cannot be held responsible
for any amounts in excess of the
“Allowable Claim Limit”