Managed Care: Contract Oversight and Monitoring Enrique Marquez Chief Program & Services Officer

Stephanie Muth State Medicaid Director June 20, 2018

Network adequacy is influenced by many factors: • Provider density, • Provider capacity, • Program administrative complexity, and • Payment rates.

These same issues are common to commercial insurance plans and Medicaid programs nationally.

2

Provider Access Landscape

3

Network Adequacy Oversight Approach

Program Operations

• Streamline provider credentialing

• Simplify and expedite provider enrollment

Contract Monitoring and Oversight

• Monitor time, distance, and appointment availability standards

• Review provider directories quarterly

• Enforce contract remedies

Routine and targeted data analytics support activities.

Quality and Program Improvement

• Conduct EQRO studies: Appointment Availability and PCP Referral

• Implement Pay-4-Quality, Performance Improvement Projects, and quality measure standards

• Survey members

Care coordination helps members access the services they need.

Cross-functional approach to monitoring and improving network adequacy.

PCP: Primary Care Physician EQRO: External Quality Review Organization

4

Network Adequacy Standards

Long Term Services and Supports (LTSS) and Pharmacy standards proposed to be implemented in the September 2018 managed care contracts. Metro = county with a pop. of 200,000 or greater, Micro = county with a pop. between 50,000-199,999, Rural = county with a pop. of 49,999 or less.

Distance in Miles Travel Time in Minutes

Provider Type Metro Micro Rural Metro Micro

Rural

Behavioral Health-outpatient 30 30 75 45 45 90

Cardiovascular Disease 20 35 60 30 50 75 ENT (otolaryngology) 30 60 75 45 80 90 General Surgeon 20 35 60 30 50 75 Hospital - Acute Care 30 30 30 45 45 45 Nursing Facility 75 75 75 - - - OB/GYN 30 60 75 45 80 90 Occupational, Physical, or Speech Therapy 30 60 60 45 80 75

Ophthalmologist 20 35 60 30 50 75 Orthopedist 20 35 60 30 50 75 Prenatal 10 20 30 15 30 40 Primary Care Provider 10 20 30 15 30 40 Psychiatrist 30 45 60 45 60 75 Urologist 30 45 60 45 60 75

Distance and Travel Time Standards

“Secret shoppers” call enrolled providers to see how long it takes to get an appointment. Actions • Corrective Action Plans (CAPs) have been imposed on all the

managed care organizations (MCOs) in at least one service area for not meeting appointment availability standards.

• EQRO will repeat the studies over 2018 and 2019. 5

Network Adequacy Appointment Availability Study

Level/Type of Care Time to Treatment

Requirements Urgent Care (child and adult) Within 24 hours

Routine Primary Care (child and adult) Within 14 calendar days Preventive Health Services for New Child Members

No later than 90 calendar days of enrollment

Initial Outpatient Behavioral Health Visits (child and adult)

Within 14 calendar days

Preventive Health Services for Adults Within 90 calendar days

Prenatal Care (not high-risk) Within 14 calendar days

Prenatal Care (high-risk) Within 5 calendar days Prenatal Care (new member in 3rd trimester)

Within 5 calendar days

Oversight Requirements • Quarterly monitoring process using provider

reconciliation files and member eligibility files. No longer using MCO self-reported data.

• MCOs who do not meet 75 percent compliance with standards are issued a CAP.

• In January 2019, this requirement will increase to 90 percent compliance and issuance of both CAPs and liquidated damages (LDs).

• Implemented Provider Directory requirements in the Spring of 2016.

6

Network Adequacy Oversight

Network Adequacy Next Steps

• Ramp up standards and remedies for time, distance, and appointment availability requirements.

• Perform targeted analysis of access to specialty services, including STAR Health psychiatry services and PCP referral study.

• Strengthen linkages between data analytics and program oversight and operations.

• Identify opportunities, in collaboration with stakeholders, to expand alternative service delivery models, such as telemedicine, telehealth, and remote monitoring.

• Promote quality and access through the Pay-for-Quality program, Performance Improvement Projects, and quality measure standards.

• Examine provider directory data issues. • Analyze claims data to identify and address inactive providers that are not delivering services.

• Lead cross-functional workgroup to identify network adequacy issues and solutions.

7

MCO Member Complaints Two Areas of Focus

#1 is resolution

• No wrong point of entry

• HHSC resolution specialist assigned until case is closed

• Resolution timelines in contract requirements

Note: FFS complaint process varies

• Analysis of MCO member complaints to pinpoint trends that indicate: ̵ Operational issues ̵ Needed policy clarifications

• Adding additional resources to strengthen analytics and focus on real time data

#2 is oversight

8

Future Improvements

• Cross-divisional workgroup to standardize and improve on data collection.

• Contract oversight escalation team. Analyze complaints to determine root cause

of issues presented and identify needed actions

• Flexible data portal. Support data visualization Faster extraction of complaints analysis Facilitate strategic oversight of health plans

• Improvements will allow HHSC to use complaints data to identify risks, increase program transparency, and inform areas for improvement.

9

Complaints Trending and Analysis

10

Operational Reviews Current Activities / Next Steps

• HHSC strengthened contract oversight by adding onsite operational reviews of MCOs in September 2017. Team of 20-25 subject matter experts conduct

onsite monitoring of one MCO per month.

• Onsite comprehensive review of MCO performance across a series of critical indicators, including: Claims processing, Prior authorization, Utilization management, and Encounter submissions.

• Continue to refine the process and add modules

Additional staffing resources will support this effort

• Results of operational reviews inform contractual enforcement and training and technical assistance needs.

11

Long-term Services and Supports Utilization Reviews Current Activities / Next Steps • Created by S.B. 348, 83rd Legislature, Regular

Session, 2015. • Provides oversight of STAR+PLUS Home and

Community Based Services (HCBS) program in order to ensure: MCOs are correctly enrolling members in

HCBS through assessment and justification of service need; and

MCOs are providing services according to their assessment of service needs.

• Additional resources allocated to provide

oversight of STAR Kids and STAR Health Medically Dependent Children’s Program (MDCP).

12

MCO Oversight Next Steps

Rider 61(b) Recommendations In July 2018, Deloitte will complete their independent assessment of contract review and oversight for Medicaid and CHIP managed care contracts, including: • Effectiveness and frequency of audits; • Data necessary to evaluate existing contract

requirements and enforcement including penalties; and

• Need for additional training and resources for effective contract management.

Appendix

An Evolving Landscape Rapid Growth of Managed Care Model

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

Fee-For-Service Managed Care

Exceeded 60% of

caseload

92% of caseload

+1.2MM in 10 years

Source: HHSC Financial Services, HHS System Forecasting FY 2017 is incomplete/not yet final

# o

f M

edic

aid

Clie

nts

STAR Kids

STAR Health statewide

STAR expansion (MRSAs) Pharmacy carve in

STAR+Plus inpatient hospital Children’s Dental statewide

14

STAR expansion

STAR STAR+PLUS expansion

STAR+PLUS expansion

STAR+PLUS statewide IDD acute care carve in

NF carve in Mental health services carve in Dual demonstration program

An Evolving Infrastructure Supporting Managed Care

Managed Care Programs

CHIP STAR STAR+PLUS & MMP

STAR Kids

STAR Health Dental

MCO

s pe

r pr

ogra

m

Prod

uct

lines

and

su

ppor

ting

cont

ract

s

Uniform Managed Care contract 21 total contracts, 3 product lines

STAR+PLUS expansion contracts (4)

STAR+PLUS Medicaid Rural Service Area

contracts (4)

CHIP Rural Service Area contracts (2)

Dental Services contracts (2)

STAR Health contract (1)

STAR Kids contracts (10)

MMP contracts (5)

17 18 5 10 1 2

15 Contract numbers are subject to change. Current as of February 2018.

16

Contract formation with clear terms

• Set standards for reported financial data

Principles Timing Templates

• Cap administrative expenses

• Limit profits

Management by specialized expertise

• Reconcile and validate financial data

• Define scope of annual financial audit based on compliance

• Manage other additional financial audits & reviews

Non-compliance discoveries enforced as established in the contract, including liquidated damages or recovery of the Experience Rebate

(i.e. recovery of “excess profit”).

Example: Financial Oversight

Strength in Oversight Starts with Contract Formation

Audits annually & as needed

• Conduct annual audit by two independent contractors for additional data validation

• Conduct supplemental audits or reviews based on other identified issues

17

Financial Oversight Timeline for Managing Compliance

Year start

Q2 FSR

Q3 FSR

Q4 FSR

HHSC validates data

Audit starts

Audit ends

6 – 8 months to conduct

Final Report

HHSC remedies compliance issues for that year.

An 18-20 month audit process post-year end.

FSR = Financial Statistical Report

Year end 1

Q1 FSR

Year end 2

12 months for claims to run out

Fin

al b

ooks

clo

se

Init

ial bo

oks

clos

e

18

Administrative Expenses

Capped by program

Profit

Contract Financial Structure Safeguards to Ensure Fiscal Responsibility

Net income MCOs keep

profit to <3%

Experience Rebate

If profit is HHSC recovers 3% < 5% 20% 5% < 7% 40% 7% < 9% 60% 9% < 12% 80% 12% or greater 100%

Excessive profit

Major components are caps on administrative expenses, conversions to income, and rebates on

excessive profit.

Expenses in excess of admin cap

Provider Relations

Call Center Functioning

Complaints/ Appeals

19

Operations Oversight Tools HHSC and External Auditors

HHSC onsite biennial operational reviews

Claims Processing

Critical indicator focus

Prior Authorization

Process

Website Critical

Elements

Utilization Management

Encounter Data

Targeted area(s) may vary. Examples include:

3rd party biennial performance audits (or more frequently as determined by risk)

Can inform the focus of the 3rd party audit or the need for an incremental one.

Two areas of focus

MCO self-reported data

Operational processes

+ Additional modules under development

- MCO Hotlines - Complaints and Appeals

- Claims processing

- Subcontractor monitoring (including PBMs)

Like financial oversight, operations has multiple monitoring perspectives.

20

Services Oversight Tool Utilization Reviews

Utilization Reviews (UR) are conducted by nurses and overseen by the Office of the Medical Director.

To ensure MCOs are correctly enrolling members in HCBS through assessment and justification of service need To ensure MCOs are providing services according to their assessment of service needs

1

2

Overall purpose

MCO on-site visit

UR components

Records request

Desk reviews

Client home visits

Complaint referrals

Reporting of results

Findings inform Needed policy and

contract clarifications

MCO consultation or training topics

Internal process improvements

Necessary MCO remedies

Ongoing training, consultation, and technical assistance to MCOs

HCBS = Home and Community Based Services

21

S t a g e 1

S t a g e 2

S t a g e 3

S t a g e 4

S t a g e 5

Plans of Action

Corrective Action Plan (CAP)

Liquidated Damages (LDs)

Suspension of Default Enrollment

Contract Termination

$

Multiple stages to address non-compliance discovered via oversight and monitoring.

Increased levels of impact for MCOs.

Remedy issued is contingent on type of non-compliance and not necessarily sequential.

Addressing Non-Compliance Graduated Remedy Process

S t a g e 1

S t a g e 2

S t a g e 3

S t a g e 4

S t a g e 5

Plans of Action

Corrective Action Plan (CAP)

Liquidated Damages (LDs)

Suspension of Default Enrollment

Contract Termination

Financial Impacts

S t a g e 1

S t a g e 2

S t a g e 3

S t a g e 4

S t a g e 5

Plans of Action

Corrective Action Plan (CAP)

Liquidated Damages (LDs)

Suspension of Default Enrollment

Contract Termination

22

2016 Q1-Q3 2017

Q1-Q3 LDs*: $27.4MM

2015

LDs: $2.4MM

2014

LDs: $2.1MM

2013 2012 2011 2009 2010

LDs: $5.2MM

LDs: $2.9MM

LDs: $1.6MM LDs:

$1.1MM LDs:

$900K

Liquidated damages (LDs) increasing with ongoing strengthening of oversight practices.

Financial Impact Stage Liquidated Damages Issued

*Q3 2017 LD dollar amount of $17.7MM is not final. All dollars are based on state fiscal year. All numbers are rounded.

LDs: $4.9MM

23

Utilization Review Liquidated Damages Matrix

Managed Care Utilization Review Liquidated Damages (per day) Matrix

Risk of Harm Impact Tiers

Covered Service Administrative Service

Isolated Systemic Isolated Systemic

4 - significant harm $ 5,000 $ 7,500 $ 3,000 $ 5,000

3 - actual harm $ 3,500 $ 5,000 $ 1,750 $ 3,500 2 - no actual harm, imminent risk for more than minimal harm to member

$ 1,500 $ 2,500 $ 750 $ 1,500

1 - no actual harm, imminent risk for minimal harm to member

$ 500 $ 1,000 $ 250 $ 500