The Emergency Room Conundrum and Other MCO

Payment GamesWhat Can Providers Do?

Carole ChristianRoz Cordini

July 25, 2013

Medicaid Managed Care Ky.November, 2011550,000 Medicaid patients were transitioned from a fee-for-service model with a primary care case management component to “risk-based” managed care

Medicaid Managed Care Ky.Region 3Has operated under a separate CMS waiver as a risk-based managed care arrangement since 1995 (Passport Health Plan)Waiver expired 12/31/12

Implementation Timeline

CMS Approval 9/8/12

Bids Due

Assignment to Plans

CMS Approval 9/8/12

Bids Due

Initially, Kentucky Spirit had the highest assignmentdue to its lower overall capitation rates

As of July 9, 2012, following the switching period, Coventry saw the highest enrollment

Incentives were offered by Plans to entice enrollmentInitially, Coventry didn’t charge co-pays

Provider Networks

CMS Approval 9/8/12

Bids Due

As of June, 2012, 73% of the state’s hospitals had contracted with all three Plans;25% of the state’s hospitals had contracted with two Plans; and2% of the state’s hospitals had contracted with just one Plan

Few PCPs and fewer specialists have contracted with all three Plans, creating access issues

Capitation Rates

CMS Approval 9/8/12

Bids Due

Kentucky’s Department of Medicaid Services pays each Plan a per-member-per-month capitation rate

The MCOs then pay providers negotiated rates

Rates paid to MCOs were established byeach Plan developing its own rate based upon experience in other states;Price Waterhouse Cooper independently offering a range of rates they believed adequate to meet the managed care goals of the state; each Plan’s negotiations with the state

Capitation RatesRegion 1 (Initial)

CMS Approval 9/8/12

Bids Due

Capitation Rates

CMS Approval 9/8/12

Bids Due

Did the Plans underbid their contracts with the state?short-term losses leading to long-term gains with the expanded Medicaid provisions of the ACA?receipt of incomplete state data?rates determined before contracting with providers was completed?

MLRs in the first 2 quarters following implementation:

Capitation Rates

CMS Approval 9/8/12

Bids Due

Initial contracts called for risk-adjustment

State implemented risk-adjustment on 4/15/12 resulting in increased rates for Coventry and WellCare and a decrease in rates for Kentucky Spirit

January 2013 – State gave Wellcare and Coventry a 7% rate increase in exchange for a release of claims

MCO Dashboard11/1/11 – 10/31/12

(From State records)

CMS Approval 9/8/12

Bids Due

Coventry KY Spirit

Membership $2,867,553 $1,891,417

Capitation $962,343,013 $593,782,404

Capitation per Member

$335.60 $313.94

Standard Measure Threshold

Claims Payment

Paid Claims Report 58 $867,293,367 $260,811,280

Suspended Claims Report 58

$1,528,001,683 $294,583,431

% Suspended 63.79% 53.04%

Paid per Member $302.45 $137.89

Paid Loss Ratio 90.12% 43.92%

Report 60 90% paid in 30 Days 99.6% 98.1%

Report 60 99% Paid in 90 Days 100% 99%

MCO Dashboard11/1/11 – 10/31/12

(From State records)

CMS Approval 9/8/12

Bids Due

Coventry KY Spirit

Standard Measure Threshold

PIAs ReportNo Rx

Requested 231,652 242,532

Denied 18,868 4,765

% Denied 8.14% 1.96%

COB Cost Savings Report

MCO Paid Amount $23,545,794 $960,813

COB Amount $89,957,189 $10,492,548

COB/Member $31.37 $5.55

% of Claims Paid 10.37% 4.02%

Medicaid Cost Avoidance

Denied Amount $21,844,775 $3,390,966

Ky MCO Laws907 KAR 17:005 – 17:030

as of 5/14/13

Emergency CarePost-stabilization servicesUrgent Care

Enrollee Non-liability for Payment

Utilization ManagementPrior Authorization Medically Necessary

Prompt Payment of Claims

Grievance Procedures

Emergency Care42 U.S.C. 1396u-2(b)(2)(B)

Emergency services care is assuredeach state contract with an MCO must assure that coverage is provided for emergency services without regard to prior authorization or the emergency care provider’s contractual relationship with the organization or manager, and to comply with federal guidelines established related to coordination of post-stabilization care section

What are emergency services?covered inpatient and outpatient services furnished by a provider that is qualified to furnish such services under this subchapter, and are needed to evaluate or stabilize an emergency medical condition

Emergency Care42 U.S.C. 1396u-2(b)(2)(B)

What is an emergency medical condition?

A medical condition manifesting itself by acute symptoms of sufficient severity (including severe pain) such that a prudent layperson, who possesses an average knowledge of health and medicine, could reasonably expect the absence of immediate medical attention to result in—

placing the health of the individual (or, with respect to a pregnant woman, the health of the woman or her unborn child) in serious jeopardy, serious impairment to bodily functions, or serious dysfunction of any bodily organ or part.

Emergency CareFederal Law

Where can an MCO Enrollee Receive Emergency Care?

At a health care facility most suitable for the type of injury, illness or condition, whether or not the facility is in the MCO network – 907 KAR 17:015(2)(6).

Whether in or out of network, emergency services is a covered service – 907 KAR 17:020(2)(5)(c).

Emergency Care Provided by an Out of Network Provider

MCO must cover out-of-network servicesProvider must accept regular Medicaid rate

- 42 U.S.C. 1396u-2(b)(2)(B).

Emergency Care

MCOs cannot define an emergency medical condition on the basis of a list of symptoms or diagnoses

MCOs cannot refuse to pay for emergency services because a provider didn’t seek authorization within 10 days following the service

The treating provider determines whether a patient is stabilized and ready for either transfer or discharge

MCO must accept this determination and accept responsibility for coverage and payment

-42 CFR 438.114

Emergency CarePost-stabilization Services

covered services related to an emergency medical conditionprovided to an enrollee

after they are stabilized in order to maintain that stabilized condition orprovided to improve or resolve the enrollee’s condition

Payment for Post-stabilization ServicesThe MCO Is financially responsible for post-stabilization care services

both in and out of networkeven if not pre-approved if—

The MCO organization does not respond to a request for pre-approval within 1 hour; The MCO organization cannot be contacted; or The MCO organization representative and the treating physician cannot reach an agreement concerning the enrollee's care and a plan physician is not available for consultation.

Urgent CareCare for a condition not likely to cause death or lasting harm but for which treatment should not wait for a normally scheduled appointment – 907 KAR 17:005

Access Standardwithin 48 hours of request – 907 KAR 17:015

Urgently needed services means covered services that are not emergency services, provided when an enrollee is

temporarily absent from the MCOs service area or, in the service or continuation area but the organization's provider network is temporarily unavailable or inaccessible (under unusual and extraordinary circumstances) andas a result of an unforeseen illness, injury, or condition; and it was not reasonable given the circumstances to obtain the services through the organization offering MCO Plan

– 42 CFR 422.113

Utilization Management907 KAR 17:025

Review, monitor and evaluate the appropriateness and medical necessity of care and services

Have a written UM Plan

Identify and describe mechanisms used todetect the under or over utilization of services andact after identifying under or over utilization of services

Adopt nationally-recognized standards of care and written criteria

Only a physician with clinical expertise in treating an enrollee’s condition or disease is authorized to deny a service in an amount, duration or scope that is less than requested by the enrollee or his physician

Medically Necessary907 KAR 3:130

Based on an individualized assessment of the recipient’s medical needs;

Reasonable and required to identify, diagnose, treat, correct, cure, palliate, or prevent a disease, illness, injury, disability, or other medical condition, including pregnancy;

Appropriate in terms of the service, amount, scope, and duration based on generally-accepted standards of good medical practice;

Provided for medical reasons rather than primarily for the convenience of the individual, the individual's caregiver, or the health care provider, or for cosmetic reasons;

Provided in the most appropriate location, with regard to generally-accepted standards of good medical practice, where the service may, for practical purposes, be safely and effectively provided;

Needed, if used in reference to an emergency medical service, using the prudent layperson standard

Clinically Appropriate 907 KAR 3:130

Pursuant to the nationally-recognized clinical criteria known as Interqual developed by McKesson Health Solutions

Service Authorization907 KAR 17:025

The MCO identifies what constitutes medical necessity and establishes P&P including a timeframe for making authorization decisionsMust make an authorization decision

as expeditiously as the enrollee’s health condition requires, andwithin 2 business days following a request for service

Timeframe can be extendedBy the enrollee or their provider, orBy the MCO if

they justify to DMS, upon request, a need for additional information and how the extension is in the enrollee’s best interestNo more than an additional 14 days

Denials907 KAR 17:025

Written notice to the enrollee (and provider) within 2 business days of the request

Must includeAction the MCO intends to takeReason for the actionRight to file an appealRight to request a state fair hearingProcedure for filing an appeal and requesting a state fair hearingRight to have benefits continue pending resolution of the appeal, how to request benefits be continued and the circumstance under which the enrollee may be required to pay the costs of these services

Triage Payments

KY Spirit

May 2012 Letter to Providers Payment for ED services will be made for “claims coded with a diagnosis that represents a disease or condition that is recognized as a medical emergency” Others will receive a $50 triage fee

Later CorrespondenceLetter? What letter?“We pay according to the ‘prudent layperson’ standard”

Triage PaymentsCoventry

Less Obvious Requires submission of documentation for ER claims with non-emergent diagnosis codesClinical staff will review the submitted clinical support for proper ACEP E&M coding

WellcareClaims not satisfying the “prudent layperson” standard will be paid at a $50 triage rate

Cabinet – “the MCOs’ policies satisfy the ‘prudent layperson’ standard”

Algorithms?????

Other Payment Games We Have Heard Of . . .

90% or 65% of Medicaid rates for OON providersChurning Claims

paying, then recouping, then paying at a different rate multiple timesChanging codes, adding modifiers and denying claims based on changed codesDenying services for lack of pre-authorization, even where obtainedDenying line items of claims that have to be re-submitted due to non-paymentReferral to agents or subsidiaries handling particular types of claimsClaiming right to year-end settlement of outpatient costs without contract rightDenying all cross-over claims, or paying as Medicaid wouldAdjusting velocity of payments based on MCOs public report filings

This list is not exhaustive and includes only those that have been identified to date and reported to the speakers

Other Concerns

CMS Approval 9/8/12

Bids Due

Reimbursement DelaysAdministrative barriersLate claims paymentIncrease in suspended claims

Prior AuthorizationSlow, burdensome process

fax or snail mailquantity of information requested - complete records

Unclear authorization criteriaSame criteria, but applied differently or inconsistentlyDecisions based upon more information than known to the admitting providerDenials without clear indication of what criteria failed

Inconsistent Coding Standards

Other Concernscont’d

CMS Approval 9/8/12

Bids Due

Interim RatesFQHC’s and RHC’s reimbursed on a prospective rateCAH’s reimbursed on a cost-basis

Rates not regularly reconciled by the statedelays in reimbursement adjustments resulting in cash flow problemsState began issuing monthly checks based on estimated claims data from the previous yearNo plan to reconcile claims based on actual claims data

Naveos Preliminary Findings$3.1MTwo Hospitals, Two Payors

Improper assignment of DRG values & paymentUse of Medicare version 29 grouper to assign DRG, then crosswalking to version 24 with translation table, can produce different DRGInaccurate base rate after 2012 revisionImproper use of the High Volume Per Diem add-on payment

Improper calculation of outlier payment Outdated CCR ratio Incorrect threshold Improper calculation for carved out charges

Improper lab fee schedule when paying for hospital base lab services

Use of outdated fee scheduleUse of a non-hospital lab fee schedule

Naveos Preliminary Findings$3.1MTwo Hospitals, Two Payors

Use of lower of payor-specific fee schedule or CCR for select non-lab proceduresUse of lower of CCR or lab fee schedule when paying designated lab serviceImproper retro-eligibility denialImproper bundling of multiple procedure codes into a single, unpaid bundled codeUse of payer specific fee schedules in lieu of CCR for lab procedures outside of designated rangeUse of improper CCR when paying outpatient claimsExclusion of procedure codes from claims payment process (missing Hospital codes from payer adjudication)

What Can Providers Do?

Dispute Resolution

Appeal

State Fair

Hearing

Grievance

Grievances

Grievance: An expression of dissatisfaction about a matter

Enrollee must file a grievance within 30 days from the date of the event causing satisfaction

MCO must acknowledge receipt of the grievance within 5 days and provide an expected date of resolution

Investigation and resolution within 30 calendar days of the date the grievance was received by the MCO

MCO AppealsEnrollee has 30 calendar days from the date of receiving a notice of adverse action from an MCO to file an appeal

MCO must provide written acknowledgement of receipt of appeal within 5 working days of receipt of the appeal along with an expected date of resolution

MCO must resolve the appeal within 30 calendar days from the date the initial appeal was received by the MCO

MCO can extend the resolution timeframe by 14 calendar days if either the enrollee requests it, orthe MCO requests it for need of additional info, andthe extension is in the enrollee’s best interest

MCO must continue benefits to the enrollee, if the enrollee requested continuation, until

the appeal is withdrawn by the enrollee;14 days have passed since the date of the resolution letter if the resolution was against the enrollee and no state fair hearing was requested or taken other further action; ora state fair hearing decision adverse to the enrollee was issued

State Fair HearingOnly available after the enrollee exhausts the MCO’s internal appeal process

Must be postmarked within 45 days from the date of the MCO adverse action letter issued at the end of the appeal process

Pursuant to KRS Ch. 13B

Judges are attorneys in the Administrative Hearings Branch

Must have a Kentucky lawyer

Medicaid Appeals Medicaid Appeals

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2011 2012

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Medicaid Appeals 2012 MCO Appeals

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IP Psych Hospital Stay EPSDT Disposable Medical Supplies Orthodontic Pharmacy Lock-in

2013 Administrative Hearings Branch AppealsPursuant to 907 KAR 1:563

Administrative Hearings Branch MCO Appeals (1/1/13 - 5/31/13)

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Coventry Cares Wellcare Kentucky Spirit Passport

MCO

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Coventry Cares Wellcare Kentucky Spirit Passport

Prompt Pay Remedy- Court or Administrative?

Judicial DoctrineExhaustion of Administrative Remedies Required First

BUTIs there an administrative remedy?

KRS 446.070 – Person injured by violation of a statute may sue for damages

Insurance statute says insurer cannot require appeal where claim not paid at contract rate

Amounts owing are often legal issues beyond agency expertise

Judicial decision pending in ARH v. KY Spirit

Prompt Payment of Claims907 KAR 17:030

Clean claim means one that can be processed without obtaining additional information from the provider of the service or from a third partyIt does not include a claim from a provider who is under investigation for fraud or abuse, or a claim under review for medical necessity

90 percent of all clean claims must be paid within 30 days of the date of receipt99 percent of all clean claims must be paid within 90 days of the date of receiptAll other claims must be paid within 12 months of the date of receipt, except

42 CFR 447.45

Plus interest if late

HB 52013 Session

Made the Department of Insurance (DOI) the enforcer of the prompt pay laws related to MCOs

Any provider to be able to file a complaint with the DOI

What Can be Done?

Wait for Governor Beshear’s Plan to complete

Negotiate your contracts to address these issues

File a complaint with the Department of Insurance

File an appeal

Collect evidence for a lawsuit

Governor Beshear’s PlanPrompt pay disputes to be reviewed by Ky. Dept. of Insurance

all responsibility for governmental review of provider complaints relating to prompt payment of medical claims has moved from DMS to DOI

MCOs to meet with every hospital in state to reconcile accounts receivable

Each of the three statewide MCOs – Wellcare, Coventry, and Kentucky Spirit – has agreed to meet individually with every hospital in Kentucky with which they contract to review and reconcile all outstanding accounts. This effort will begin immediately and continue until every hospital’s accounts receivable has been reconciled. All MCOs have also agreed to meet with any other provider upon request.

Targeted audit of each statewide MCO by Ky. Dept. of Insurance the audits will seek out whether systemic changes are needed to address areas such as claim or complaint handling, prior authorization practices, or emergency medical service payments. MCOs will pay for the examinations, and reports are expected to be complete no later than August 15.

Education forums on best practices/ER ImprovementsFace to face meetings between the DOI, providers and the MCOs

File a Complaint with the DOI

File a Complaint with the DOI

Contract Strategies

More Leverage Than You Think

MCO Contracts with StatesRequires MCOs to pay “90%” or “no less than 90%” of Medicaid rates for OON services (Emergency – 100%)State strategy to force providers into contracts, but gives MCOs unfair leverageWorse, KY Spirit ultimately reduced OON payments to 65% in December 2012; state has not intervened

March 2013 – Judge Forester ruled that the contract term between State and Coventry related to OON payment was not binding on ARH

Coventry owes ARH its “reasonable value of services” quantum meruit

Appalachian Regional Healthcare, et al. v. Coventry Health and Life Insurance Company, No. 5:12-CV-114-KSF, U.S. District Ct., Eastern District of Kentucky (3/28/13).

What is “Reasonable Value?”

TBD in a future hearing

Could beCommercial ratesActual cost plus marginActual costMedicaid ratesSomething else

Possible suit if you have been OON

Beware Accord and Satisfactionor the remittance advice that purports to settle as payment in full

Other Contract IssuesPrior Authorization

But authorization services only available M-F during normal business hoursConsider a provision where authorization is automatic if provider does not hear back from MCO within “X” days

Medical NecessityBased on whose patient assessment?

consider a provision that it is based upon the treating provider’s assessment of the patient (or limited to facts known) at the time services were ordered

ArbitrationDo you have to exhaust internal procedures first?What is the deadline for filing for arbitration? Is it reasonable?Effect on breach of contract claimsConsider a provision clarifying that any internal grievance process is in addition to any other rights provider may have under state or federal law, or the arbitration provisions in the agreement

Other Contract IssuesProvider Manual and Policies

Agreements frequently refer to other documents, have you read them?Consider provision that states the agreement rules when there is a conflict between the twoOpportunity to terminate if provider manual revised and you don’t agree

Prompt PaymentDoes the Agreement language match state law requirements?Consider a provision allowing immediate termination if the MCO doesn’t pay clean claims in the designated timeframeProvisions for PCLs, reconciliation

Rate Changesconsider a provision requiring advance notice of rate changes and requirement that provider agree to rate or is permitted to immediately terminate if an agreement is not reachedIf contract rates tied to Medicaid, include a provision to adjust rates retroactively if you win Medicaid rate appeal

Other Contract Issues Provisions Upon Termination

Transition coverage of patientsProvider’s right to notify patients, publicRequirement for Plan to notify MembersAgreement that Termination is cause for Members to move

Consider timing of open enrollment so MCO can’t “bait and switch”

Ongoing Disputes

Kentucky Spirit’s Exit

Bids Due

Outstanding Amounts Owed By KY Spirit

$25M Bond

State has counterclaims

Centene, parent corporation, is big enough to satisfy claims

Possible exceptions to general rule against “piercing the corporate veil”

Class Action lawsuit?

Could Cabinet be held liable for a shortfall?

ARH v. Coventry April 2013

Coventry notifies ARH of termination of LOA claimed Cabinet created crisis by not enforcing network adequacy rules with KY Spirit, forcing movement of high-risk Members, and errors in data bookCoventry VP says it will not contract with ARH or authorize OON services “until we can get the Commonwealth to do the right thing”

ARH sues Coventry and Statealleging violation of state and federal laws regarding network adequacy and prompt pay laws; breach of contract; unfair trade practices and tortious interference; and bad faith

ARH v. Coventry June 2012

Judge Forester enters injunction against Coventry’s termination of contract through the end of open enrollment

20136th Circuit Court of Appeals dismisses Coventry’s appealCourt rules for ARH on OON payment ratesKDMC added as a plaintiffCMS added as a defendant on theory that it violated federal law in approving the state planAfter paltry initial FOIA response, CMS has now produced 9,000 pages of documents

Inpatient Medicaid Rate DisputesKRS 205.560(2)

Payments for hospital care, nursing-home care, and drugs or other medical, ophthalmic, podiatric, and dental supplies shall be on bases which relate the amount of the payment to the cost of providing the services or supplies

River Valley Behavioral Health v. Commonwealth of Kentucky Cabinet for Health and Family Services, et al., No. 09-CI-0797, Franklin Circuit Ct (5/30/12)

DMS rate methodology in violation of KRS 205.560 where rate did not “relate” to actual costs

Rates based on previous year’s allowable costs and did not take into consideration changed circumstances, resulting in an inadequate per diem rate

This decision follows a similar 2004 case involving Northkey Community Care

Inpatient Medicaid Rate DisputesMay 31, 2013

Cabinet denied relief to 58 hospitals who had overdue dispute resolution proceedings dating back to 2007 inpatient rates

Cabinet also filed a lawsuit in Fayette Circuit Court seeking declaration that it does not have to pay on bases that relate to cost

All 58 hospitals united in filing an appeal from their denials in Franklin Circuit Court and motion to dismiss or transfer the Fayette case

Franklin Circuit Court is wise to the Cabinet’s shenanigansadvised counsel that it will follow the River Valley and Northkey cases

Successful appeals could mean better MCO rates

Questions?

Carole Christian502-562-7588cchristian@wyattfirm.com

Roz Cordini502-562-7307rcordini@wyattfirm.com