MLR: FOLLOW THE DOLLAR - Gorman Health Group...such as quality reporting, effective case management,...

MEDICAL LOSS RATIO (MLR): FOLLOW THE DOLLAR

STEPHANIE HILL SENIOR CONSULTANT

Copyright © 2015, Gorman Health Group, LLC

Government Programs Leading enterprise of national consulting services and software solutions for payers and providers.

Our Mission

Our mission, as the industry’s most active professional services consultancy and provider of technology-based solutions, is to empower health plans and providers to deliver higher quality care to beneficiaries at lower costs, while serving as valued, trusted partners to government health agencies.

Washington, DC

Headquartered in Washington, DC with more than 200 staff and contractors nationwide with over 2,000 combined years of Government Programs experience.

Leadership

Deep payer and provider knowledge coupled with Centers for Medicare & Medicaid Services (CMS) regulatory expertise.

Privately Owned

Founded in 1996

Gorman Health Group is the leading solutions and consulting firm for government-sponsored health programs.

WHO IS GORMAN HEALTH GROUP?

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Our clients have one-stop access to expert advice, guidance, and support, in every strategic and operational area for government-sponsored programs, across seven verticals.

CLINICAL Changing how you approach Medical Management, Quality and Stars

PROVIDER INNOVATIONS Supporting network design and medical cost control implementation

OPERATIONS Bringing excellence to every aspect of your implementation from enrollment to claims payment

COMPLIANCE Offering guidance and support in every strategic and operational area to ensure alignment with CMS

PHARMACY Leading experts in Part D, PBM, formulary and pharmacy programs

HEALTHCARE ANALYTICS & RISK ADJUSTMENT SOLUTIONS Implementing cross-functional risk adjustment programs for medical trend management and quality improvement

STRATEGY & GROWTH Leading experts in Marketing, Sales and Strategy development that create short and long-term profitable growth

BROAD SERVICES

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Dedicated to assisting Medicaid Managed Care Organizations achieve strategic, operational and quality goals across five verticals.

CLINICAL Blending medical and pharmacy to improve care coordination, outreach and utilization management to meet the complex needs of your membership.

STRATEGIC POSITIONING Analyzing and evaluating organizational adaptability, and readiness for change in new policy and population management environments.

QUALITY PROGRAM OVERSIGHT Guidance and support to achieve the results your members and regulators expect while attaining compliance with State and Federal rules.

FINANCIAL ALIGNMENT Providing health economic solutions for the needs of the Medicaid population including long-term care, behavioral health, and chronic condition management.

OPERATIONS Creative solutions to maximize cost effectiveness, and deliver lasting results from eligibility to provider contract management, and claims.

MEDICAID SERVICES

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• Realize the potential to increase premium payment

• Understand MLR and the impact upon healthcare insurance issuers to provide quality care

• Understand the maximum benefit potential of providing healthcare quality activities to a dual-eligible patient population

OBJECTIVES

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• Medical Loss Ratio: The proportion of premium dollars spent on medical care and healthcare quality improvement rather than on administrative costs and profits

WHAT IS MLR?

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• Section 2718 of the Public Health Service Act (PHS Act) generally requires health insurance issuers to submit an annual MLR report to the Department of Health and Human Services (HHS).

• MLR is calculated through a formula established by HHS. This ratio is calculated as the sum of healthcare claims costs and amounts spent on quality improvement activities divided by premium revenue, excluding taxes and regulatory fees and after accounting for the premium stabilization programs (risk adjustment, reinsurance, and risk corridors).

WHO MONITORS MLR?

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• Section 2718 of the PHS Act also requires health insurance issuers to provide rebates of premium if they do not achieve specified MLRs

WHY IS MLR IMPORTANT?

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• The activity must be designed to achieve one or more of the following: o To improve health outcomes through the implementation of activities

such as quality reporting, effective case management, care coordination, chronic disease management, and medication and care compliance initiatives, including through the use of the medical homes model as defined for purposes of Section 3602 of the Patient Protection and Affordable Care Act (ACA), for treatment or services under the plan or coverage.

o To prevent hospital readmissions through a comprehensive program for hospital discharge that includes patient-centered education and counseling, comprehensive discharge planning, and post-discharge reinforcement by an appropriate healthcare professional.

WHAT HEALTHCARE ACTIVITIES ARE ALLOWED UNDER MLR?

Health Care Quality Improvement According to CMS (42 CFR 422.2430)

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• To improve patient safety and reduce medical errors through the appropriate use of best clinical practices, evidence-based medicine, and health information technology under the plan or coverage.

• To promote health and wellness.

WHAT HEALTHCARE ACTIVITIES ARE ALLOWED UNDER MLR? (CONTINUED)


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• To enhance the use of healthcare data to improve quality, transparency, and outcomes and support meaningful use of health information technology (HIT). Such activities, such as HIT expenses, are required to accomplish the activities that improve healthcare quality and that are designed for use by health plans, healthcare providers, or enrollees for the electronic creation, maintenance, access, or exchange of health information, and are consistent with meaningful use requirements, and which may in whole or in part improve quality of care, or provide the technological infrastructure to enhance current quality improving activities or make new quality improvement initiatives possible.



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AND: • The activity must be designed for all of the following:

o To improve health quality. o To increase the likelihood of desired health outcomes in ways that are

capable of being objectively measured and of producing verifiable results and achievements.

o To be directed toward individual enrollees or incurred for the benefit of specified segments of enrollees or provide health improvements to the population beyond those enrolled in coverage as long as no additional costs are incurred due to the non-enrollees.



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• To be grounded in evidence-based medicine, widely accepted best clinical practice, or criteria issued by recognized professional medical associations, accreditation bodies, government agencies, or other nationally recognized healthcare quality organizations.



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• Expenditures and activities that must not be included in quality improving activities (AND, THUS NOT ALLOWED IN THE MLR CALCULATION) include, but are not limited to, the following: o Those that are designed primarily to control or contain costs. o The pro rata share of expenses that are for lines of business or products

other than those being reported, including but not limited to, those that are for or benefit self-funded plans.

o Those which otherwise meet the definitions for quality improving activities but which were paid for with grant money or other funding separate from premium revenue.

EXCLUSIONS WHAT HEALTHCARE ACTIVITIES ARE NOT ALLOWED UNDER MLR?

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• Those activities that can be billed or allocated by a provider for care delivery and that are reimbursed as clinical services.

• Establishing or maintaining a claims adjudication system, including costs directly related to upgrades in HIT that are designed primarily or solely to improve claims payment capabilities or to meet regulatory requirements for processing claims, including ICD-10 implementation costs in excess of 0.3% of total revenue under this part, and maintenance of ICD-10 code sets adopted in accordance with the Health Insurance Portability and Accountability Act (HIPAA), 42 U.S.C. 1320d-2, as amended.

• That portion of the activities of healthcare professional hotlines that does not meet the definition of activities that improve health quality.

EXCLUSIONS (CONTINUED) WHAT HEALTHCARE ACTIVITIES ARE NOT ALLOWED UNDER MLR?

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• All retrospective and concurrent utilization review.

• Fraud prevention activities. • The cost of developing and

executing provider contracts and fees associated with establishing or managing a provider network, including fees paid to a vendor for the same reason.

• Provider credentialing.

• Marketing expenses. • Costs associated with

calculating and administering individual enrollee or employee incentives.

• That portion of prospective utilization review that does not meet the definition of activities that improve health quality.

• Any function or activity not expressly permitted by CMS under this part.

EXCLUSIONS (CONTINUED) WHAT HEALTHCARE ACTIVITIES ARE NOT ALLOWED UNDER MLR?

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• Healthcare quality activities such as Utilization Management, Case Management, and Disease Management fit the criteria described. A. Utilization Management, as defined by the Institute of Medicine, is “a

set of techniques used by or on behalf of purchasers of healthcare benefits to manage healthcare costs by influencing patient care decision-making through case-by-case assessments of the appropriateness of care prior to provision.

B. Case Management – The American Case Management Association defines case management as: “a collaborative process of assessment, planning, facilitation, care coordination, evaluation, and advocacy for options and services to meet an individual’s and family’s comprehensive health needs through communication and available resources to promote quality, cost-effective outcomes.”

HOW CAN INSURERS MEET THE CRITERIA AND IMPROVE THEIR MLR?

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C. Disease Management: The Care Continuum Alliance (formerly the Disease Management Association of America) describes Disease Management as a proactive, accountable, patient-centric population model designed to develop and engage informed and activated patients over time to address illness and long-term health. o By incorporating these healthcare quality activities into their healthcare

delivery system, insurers can improve their MLR by allocating dollars toward provision of these activities to benefit their patients.

HOW CAN INSURERS MEET THE CRITERIA AND IMPROVE THEIR MLR?

(CONTINUED)

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• HHS will conduct selected reviews of reports submitted to determine that MLRs were accurately calculated and reported.

• The healthcare insurer must be able to show that qualified quality improvement activities were included in the MLR calculation.

• According to HHS: “Quality improvement consists of systematic and continuous actions that lead to measurable improvement in healthcare services and the health status of targeted patient groups… Focusing on existing data in a disciplined and methodical way allows an organization to evaluate its current system, identify opportunities for improvement and monitor performance over time.”

THE ONGOING QUEST TO FOLLOW THE DOLLAR INTERNAL ONGOING MONITORING

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• Conducting and documenting internal ongoing monitoring of collected healthcare data will assist the healthcare insurer in showing that quality improvement activities were conducted and eligible for inclusion in the calculation of MLR expenses.

THE ONGOING QUEST TO FOLLOW THE DOLLAR INTERNAL ONGOING MONITORING

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• PREMIUM STABILIZATION o The ACA calls for implementation of Premium Stabilization Programs to

provide payments to health insurance issuers that cover higher risk populations and to more evenly spread the financial risk borne by issuers.

o On an ongoing basis, this risk adjustment program is intended to provide increased payments to health insurance issuers that attract higher risk populations, such as those with chronic conditions, and reduce the incentives for issuers to avoid higher risk beneficiaries. Funds are transferred from issuers with lower risk beneficiaries to issuers with higher risk beneficiaries.

THE ONGOING QUEST TO FOLLOW THE DOLLAR

How Can Health Insurance Issuers Receive Maximum Premium Payments?

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• Dual-eligible beneficiaries tend to be seniors and non-elderly people with disabilities and are generally economically disadvantaged and have worse health status than other Medicare beneficiaries (higher risk patients).

ENTER THE DUAL-ELIGIBLE BENEFICIARIES

Who Are Dual-Eligible Beneficiaries?

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• Dual-eligible beneficiaries tend to use more healthcare services and account for a disproportionate share of Medicare spending.

• A major driver for higher spending among dual-eligible beneficiaries is their higher use of services, particularly inpatient hospitalizations. Services often tend to be uncoordinated, with little communication between healthcare providers.

• In addition: There is a complex division between Medicare and Medicaid of responsibility for healthcare services for the dual-eligible beneficiaries.

COMPLEXITIES OF DUAL-ELIGIBLE PATIENT MANAGEMENT

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• Within broad national guidelines established by federal statutes, regulations, and policies, each state: o Establishes its own eligibility

standards; o Determines the type, amount,

duration, and scope of services; o Sets the rate of payment for

services; and o Administers its own program.

COMPLEXITIES OF DUAL-ELIGIBLE PATIENT MANAGEMENT (CONTINUED)

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• A contract between HHS, acting by and through CMS, the state, and the healthcare insurer to establish a care delivery model in order to provide dual-eligible beneficiaries with a more coordinated, person-centered care experience.

• MLR provisions in 3-way contracts: o The target MLR is specified in the 3-way contract along with the formula

for calculation. o The penalty for not achieving the target MLR is also specified in the

contract, usually with refunded amounts to be forwarded to HHS and CMS respectively for redistribution back to the Medicaid and Medicare programs. Recovered amounts may be obtained through either payments made by the healthcare insurer or an offset to future payments due to the healthcare insurer.

TRENDS TOWARD INCORPORATING A PLAN TO FOLLOW THE DOLLAR

3-Way Contracts

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• If the healthcare insurer elects to enter into the 3-way contract, it must accept responsibility for the care of the highly complex dual-eligible beneficiaries. Although there is an expected increase in dollar payment received for assuming this care, there is also a penalty that may be incurred if the healthcare insurer does not spend the payment dollar in the appropriate manner.

• Therefore, it is incumbent upon the healthcare insurer to implement healthcare quality activities for the dual-eligible beneficiaries as much as possible in order to achieve the MLR and retain their dollars.

THE MLR PROVISION IN THE 3-WAY CONTRACT IS THE INCENTIVE FOR HHS, CMS, AND THE

HEALTHCARE INSURER TO FOLLOW THE DOLLAR!

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• HHS, CMS, and states are monitoring how much of the healthcare dollar payment they make to the healthcare insurer is being spent on providing direct quality patient care through implementation of MLR.

• If healthcare insurers fail to meet the target MLR, HHS, CMS, and the states will seek to retrieve dollars paid to the healthcare insurer.

• Many aspects of utilization management, along with case management, disease management, and other health care activities, can be included as direct patient care techniques to provide quality care to patients; especially those patients who require more complex, coordinated care such as dual-eligible beneficiaries.

• Since MLR “follows the dollar,” the heathcare insurer can achieve the target MLR by using the expenses for implementation of quality healthcare initiatives as an “offset” to healthcare dollar payment expenditures.

SUMMARY

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QUESTIONS??

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Gorman Health Group, LLC (GHG) is a leading consulting and software solutions firm specializing in government health programs, including Medicare managed care, Medicaid and Health Insurance Exchange opportunities. For nearly 20 years, our unparalleled teams of subject-matter experts, former health plan executives and seasoned health care regulators have been providing strategic, operational, financial, and clinical services to the industry, across a full spectrum of business needs. Further, our software solutions have continued to place efficient and compliant operations within our client’s reach. GHG offers software to solve problems not addressed by enterprise systems. Our Valencia™ software reconciles the capitation payment of more than six million Medicare beneficiaries and continues to support customers participating in the Health Insurance Exchanges. Nearly 3,000 compliance professionals use the Online Monitoring Tool™ (OMT), our complete Medicare Advantage and Part D compliance toolkit, while more than 45,000 brokers and sales agents are certified and credentialed using Sales Sentinel™. In addition, hundreds of health care professionals are trained each year using Gorman University™ training courses.

We are your partner in government-sponsored health programs

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STEPHANIE HILL, RN, JD SENIOR CONSULTANT

210-396-6398

[email protected]

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MLR: FOLLOW THE DOLLAR - Gorman Health Group...such as quality reporting, effective case management,...

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