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Managed Care Contracts: Medicare and

Medicaid Considerations for ProvidersReimbursement and Delegation Challenges, Key Provisions and Anticipating

Areas of Dispute

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WEDNESDAY, MARCH 20, 2019

Presenting a live 90-minute webinar with interactive Q&A

Clifford E. Barnes, Member, Epstein Becker & Green, Washington, D.C. & New York

Christian Puff, Attorney, Hall Render Killian Heath & Lyman, Dallas

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Managed Care Contracts: Medicare and Medicaid Considerations

for Providers

Reimbursement and Delegation Challenges, Key Provisions and Anticipating Areas of Dispute

March 20, 2019

Clifford E. Barnes, Esq.

Agenda

1. Medicaid Managed Care Contracting – Current Legal Trends

i. Medicaid – Clifford E. Barnesii. Medicare – Christian K. Puff

2. Medicaid Managed Care Contracting – Notable Terms

3. Medicaid Managed Care Contracting– Key Negotiating Strategies

Medicaid Managed Care Contracting –Current Legal Trends

Total Medicaid Managed Care Enrollment

YearTotal Medicaid

1Managed Care

Enrollment

Percentage of State Medicaid

Enrollment

1998 12,600,000 41%

2008 33,427,582 70.9%

2009 36,202,281 71.7%

2010 39,020,325 71.5%

2011 42,384,539 74.2%

2013 45,923,272 73.5%

2014 55,458,685 77%

2015 62,372,408 80.1%

2016 65,005,748 81.1%

1. Total Medicaid enrollment in any type of Managed Care represents an unduplicated count of beneficiaries enrolled in any Medicaid managed care program, including comprehensive MCO, limited benefit MCO and DCCMs.

Source: Henry J. Kaiser Family Foundation Total Medicaid Managed Care Enrollment.

How Does Medicaid Managed Care Work

▪ Medicaid Managed Care provides for the delivery of Medicaid health benefits and additional services through contracted arrangements between state Medicaid agencies and managed care organizations (MCOs) that accept a set per member per month capitation payment for these services.

▪ Each state is given flexibility to set its own eligibility requirements. Therefore each state evaluates its applicants independently from each other state. Any one desiring to transfer coverage from one state to another must re-apply for Medicaid in the new state.

Medicaid Expansion

States Expanding Medicaid to Date

(including Washington, DC)

States Not Currently Expanding Medicaid

2014-2016

Federal Government Covered 100% of Cost of Medicaid Expansion in 2014, 2015, 2016

2020 – beyond

Federal Government covers 90% of cost of Medicaid Expansion

Federal Government and Medicaid Expansion

CMS Final Rule - Effective 7/5/16

▪ First, update of Medicaid and CHIP Managed Care regulations since 2002.

▪ Since 2008, the predominate form of service delivery in Medicaid is Medicaid Managed Care.

▪ As of 2010, many states have expanded managed care in Medicaid to enroll new populations including:

• seniors;

• persons with disabilities who need long-term services and supports; and

• individuals in Medicaid expansion covering childless adults.

Source: Centers for Medicare & Medicaid Services, Medicaid and CHIP Managed Care Final Rule (CMS-2390-F), Overview of the Final Rule

Key Goals

▪ To support State efforts to advance delivery system reform and improve the quality of care

▪ To strengthen the beneficiary experience of care and key beneficiary protections

▪ To strengthen program integrity by improving accountability and transparency

▪ To align key Medicaid and CHIP managed care requirements with other health coverage programs

Source: Centers for Medicare & Medicaid Services, Medicaid and CHIP Managed Care Final Rule (CMS 2390-F) Strengthening States’ Delivery System Reform Efforts (Apr. 25, 2016)

Key Goal: Delivery System Reform

▪ To support state and federal delivery system reforms, the final rule:

• Provides flexibility for states to have value-based purchasing models, delivery system reform initiatives, or provider reimbursement requirements in the managed care contract

• Strengthens existing quality improvement approaches with respect to managed care plans

Key Goal: Delivery System Reform

▪ Clarifies state payment-related tools for managed care plan performance

• Establishes requirements for withhold arrangements

• Retains requirements for incentive arrangements

▪ Acknowledges that states may require managed care plans to engage in value-based purchasing initiatives

▪ Permits states to set min/max network provider reimbursement levels for network providers that provide a particular service

▪ Transition period for pass-through payments to hospitals, physicians and nursing facilities

Effect of CMS Final Rule on States

▪ States have enhanced their ability to hold MCOs accountable for performance metrics through increasing emphasis in pay-for-performance (P4P) programs.

▪ State regulators are defining metrics that measure the quality, efficiency and value of health care provided to a population as incentives for care providers to optimally care for patients

▪ States utilize a range of ways to incentivize MCO performance. Some of the ways include upside incentives such as bonus payments to MCOs that achieve prescribed quality thresholds.

Effect of CMS Final Rule on States

▪ Some of the ways include downside incentives such as withholds and penalties wherein portions of payment to the MCOs are withheld allowing MCOs to recover payment only upon achievement of quality thresholds

State Pay-for-Performance Incentive Types

Incentive type Description

Upside Bonus payments States offer bonuses to MCOs achieving certain quality benchmarksBonuses typically range from 0% to 5% of revenue

Downside Withhold States withhold a portion of capitation payment on an annual or monthly basis and allow MCOs to recover payment only upon achievement of quality benchmarksStates typically withhold between 1% and 10% of capitation payment

Downside Penalties States charge fines or place sanctions on plans that fail to meet certain quality standards

Upside and downside Auto-assignment preference States preferentially place members who do not actively select a plan into plans with high quality scores

Shared incentive pools States withhold a portion of payment and pool the withheld funds from all MCOs to create an incentive pool MCOs can earn money from the incentivepool based on performanceStates typically withhold from 0% to 5% of revenue per plan

Differential reimbursement States increase or decrease capitation payments based on plan performance

Source: Toward the Stick (From the Carrot): The Evolution of Medicaid MCO Pay-for performance Programs. By Todd Clark, Joan Kim, Neil Menzies. L.E.K. Consulting’s Healthcare Service Practice

Case Study – District of Columbia Health Care Finance

▪ DC Department of Health Care Finance implemented a P4P program beginning October 2016

▪ As a result, MCOs have been required to meet performance goals to achieve their full capitated payment rate

▪ Incentives include

• 2% withhold to each MCO capitation payment.

• To receive the withhold, MCOs are required to reduce the incidence of following three patient outcomes

o Potentially preventable admission (PPA)

o Low-acuity non-emergent (LANE) visits

o 30 day hospital readmissions for all causes.

Case Study – Ohio Department of Medicaid

▪ Ohio Department of Medicaid began a P4P program beginning in 2012

▪ Ohio calculates and pays a bonus amount for each participating MCO based upon the percentile scores (relative to national benchmarks) across seven HEDIS measures including:

• Timeliness of prenatal care• Postpartum care• Controlling high blood pressure for patients with hypertension• Seven day follow-up after mental illness admission• Adolescent well-care visits• Appropriate treatment for children with upper respiratory

infections• Comprehensive diabetes care

Implications for Providers Contracting with Medicaid Managed Care Plans

▪ We are in an era when MCOs are incentivized to produce quality results

▪ Success in this performance based environment for MCOs requires contracting with providers on a performance basis

▪ Providers that understand the MCO environment can co-create an environment of enhanced compensation based upon agreed upon metrics

Medicare Managed Care Contracting –

Current Legal Trends

Medicare Managed Care Legal Trends

• Why is the industry feeling the pressure to change?o Because of the population of aging baby boomers,

people are enrolling in Medicare at a faster pace than

ever before

o Healthcare costs expected to rise to $5.7 Trillion by

2026, up from $3.5 Trillion in 2017, which represented

nearly 18% of America's GDP

o Deductibles went from accounting for less than 25% of

cost-sharing payments in 2005 to almost 50% in 2015

Medicare Managed Care Legal Trends

• How do the payors plan to address the problem in the

rise of costs?o Not rocket science…payors are addressing rising costs

by attempting to create strategies to lower costs (e.g.

not paying for ED visits for non-emergent care; closed

and/or narrow formularies; HDHPs)

o We'll explore in more depth in the next several slides

Medicaid Managed Care Contracting – Notable Terms

Medicaid Managed Care Contract Terms

▪ Provider Manual Updates

• Typically 30 days from date of notification

▪ Compensation

• Conditions of compensation

o Health Care Acquired Conditions

o Never events

• Medical Home enhancements• Integrated Services enhancements• Care Coordination• Timeframe for adjustments or appeal of a payment (know your

system)

▪ Medical Necessity

1. Pre-authorization

2. Documentation

3. Practice guideline

4. Treatment Plans – behavioral or physical health

▪ Penalties, fines, sanctions assessed against Plans

▪ Orientation to Plan for provider staff/effective liaison

▪ Termination

• Explusion, suspension debarment or otherwise excluded from Medicaid

▪ Physician Incentive Plan

• 42 CFR 422.208 – 438.6

• Substantial risk is an issue = 25% or more

▪ Because payments are in part federal funds, applicability of federal laws including False Claims Act (31 U.S.C.§3729 et. seq) and Anti-kickback Statute (42 U.S.C.§1320a – 76b(b))

• Submission of false claims/statements

• Misrepresentation

▪ State Monitoring of MCO operations 42 C.F.R. 438.66

• State shall have procedure in effect for monitoring MCOoperations (typically in provider contract)

• Payment for Providers

▪ Provider agrees to timely access to care and member services

Current Contracting Trends

Medicare Contracting Trends

• Value Based Contractingo Payors' goal: align incentives to reach the best

outcomes▪ Increased outcomes = lower cost over the long term

▪ Utilizing data to pinpoint where the issues are, what to

attack, and how to better integrate between providers

• Value Based Contractingo Providers' take:

▪ The pace of this type of contracting is slowed by

provider's unwillingness to take on downside risk

▪ Payors' are reluctance to push provider systems into it

before they're ready, otherwise, it’s unlikely it will work▪ Provider Systems need an aligned group of participating

providers

▪ That starts with a strong definition of alignment, and buy

in from all of them

• A Shift from IP to OP, Wearables and Telemedicine o Delivery of care is moving out of the acute care setting

and into the OP setting

o Allows patients to been seen in an appropriate level of

care setting, and is being driven by bundled payment

arrangements, which increase the utilization of

wearables (such as devices that alert treating providers

of issues when necessary), will further lower costs by

using telemedicine, rather than incurring more pricey

acute care face-to-face physician and facility costs

• Consumer Driven Cost and Quality Transparencyo In the world of HDHPs, consumers are becoming more

price conscious than ever before

o According to a study conducted by HealthFirst

Financial, Millennials have said they are likely to more

likely to switch providers if offered more favorable

financing options

• Payor/Provider Partnershipso Healthcare has turned into a hybrid world

▪ Provider owned health plans

▪ Co-branded products

▪ MSSP

▪ ACOs and medical-home products

▪ Narrow networks build around single provider

organizations

Medicare Contracting Trends• Payor/Provider Partnerships

o Bundled payments for specific episodes of care or one

of the BPCI (Bundled Payments for Care

Improvement) programs, including the BPCI

Advanced for 32 Clinical Episodes ▪ BPCI Advanced, according to CMS "aims to align

incentives among participating health care providers for

reducing expenditures and improving quality of care for

Medicare beneficiaries" and qualifies as an Advanced

Alternative Payment Model ("APM") under the CMS

Quality Payment Program

Medicare Contracting Trends• Payor/Provider Partnerships

o Mergers and Acquisitions▪ Cigna/ESI

▪ Aetna/CVS Caremark

o Why?

▪ Data is king

Medicaid Managed Care Contracting – Key Negotiating Strategies

Negotiation Strategies and Practical Tips for Medicaid Contracting

▪ Information is power – How is an MCO incentivized by state?

• Is there a withhold?

• What are the quality metrics that impact MCO payments?

• What value based services are of interest to MCO?

• Opportunity for Pilot programs (funding)

o Telemedicine

o Case management

Negotiation Strategies and Practical Tips for Medicaid Contracting

▪ Dispute Resolution

• Develop a dispute resolution process to resolve disputes in a cost effective manner

• Informal dispute resolution

• Arbitration-timeframe, cost sharing, in state an area of provider services

▪ For solo practitioners or small practice physicians

• Sharing attorney among providers (not to joint negotiate but for knowledge)

▪ Contract Renewal

• Evergreen provisions

Questions???

Clifford E. Barnes, Esq.Member of the Firmcbarnes@ebglaw.com202-861-1856

For more information contact:

#48076931

Key Negotiating Strategies

Practical Tips for Providers in Negotiating

Medicare Agreements

• Provide Quality Data (figuratively and literally) showing

significant delivery system reforms and reduced cost through:

o Care Coordination – improve care coordination, which

should ultimately reduce both the acute and post-acute care

o Holistic Treatment – remove silos to the extent possible,

focusing on the whole person, including behavioral health

and community needs

Medicare Agreements

• Become and/or show the payor that you can become part

of a Community Based Network ("CBO") which

combines access to the right level of care at the right time

and place with social services support, as well as

enhancing care management and utilization review

capabilities while leveraging evidence-based clinical

practices and strong data analytics

Medicare Agreements

• Be Preparedo Without sufficient data, it is nearly impossible to know

when it's time to move from FFS into a risk and/or

value based arrangement

o If the healthcare system is already participating in

MSSPs, ACOs and/or BCPIs or BCPI Advanced, the

system can utilize that as a segue into more up and

downside risk arrangements

Medicare Agreements

• Compensationo Percentage of Medicare

o Provider Type Matters

• So How Can we Get Paid More Money?o Give them what they want

o Prove You're Worth It Through Strong:▪ FDR and Delegated Oversight

▪ FWA Understanding and Training

▪ Care-Coordination Starting With PARE Providers

Medicare Agreements

• FDRs and Delegation Oversighto Know who your FDRs are and train them

o Make sure they are meeting goals and complying with the

rules:o Delegated Oversight Committee

o Hold the regularly

o Capture data for each

o Create Corrective Action Plans (“CAP”s)

o Include Quality Metrics

Medicare Agreements

• Fraud Waste and Abuse (“FWA”)o Ensure you are steering clear of FWA issues by having a

strong Compliance Program that aligns with the Payors’

o Utilize CMS website to build a program with the 7

Elements of compliance▪ Written Policies, Procedures and Standards of Conduct

▪ Compliance Officer, Committee and Oversight

▪ Effective Training and Education

▪ Effective Lines of Communication

▪ Well-Publicized Disciplinary Standards

▪ Effective Systems for Routine Monitoring and Auditing

▪ Procedures for Prompt Response to Compliance Issues

Medicare Agreements

• PARE Providerso Pathologists, Anesthesiologists, Radiologists,

Emergency Department (“PARE” Providers)

o Encourage and/or insist via an RFP that these

providers are participating in your contracted Medicare

Advantage Plans▪ Be careful though…this is not always popular and

requires significant provider buy-in

This presentation is solely for educational purposes and the matters presented herein do not constitute legal advice with respect to your particular situation.

Christian K. PuffHall Render Killian Heath & Lyman214.615.2012cpuff@hallrender.comTwitter @cpuffattorney

Please visit the Hall Render Blog at http://blogs.hallrender.com for more information on topics related to health care law.

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