WIN/WIN NEGOTIATIONS BOTH SIDES FEEL AS IF THEY HAVE

BEEN TREATED FAIRLY WHILE GIVING AND RECEIVING CONCESSION OF EQUAL VALUE

NEGOTIATION STRATEGIES AND TACITCS

SURPRISE NEW, UNEXPECTED INFORMATION PURPOSE - TO DESTABILIZE AND

CREATE PRESSURE COUNTER - KEEP A COOL HEAD AND

EVALUATE THE SITUATION

AGENT OF LIMITED AUTHORITY

UNABLE TO MAKE DECISION OR CONCESSION

PURPOSE - TO BUY TIME AND GET MORE INPUT

SEE THIRD PARTY - BECOME AGENT YOURSELF

ULTIMATUM ACCEPT ONLY ONE OUTCOME PURPOSE - TO FORCE A QUICK

DECISION PROVIDE REAL OPTIONS TO STATED

POSITION

REDUCTION TO THE RIDICULOUS

USE OF MANIPULATIONS OR GIMMICKS TO MAKE SITUATION LOOK DIFFERENT

PURPOSE - TO MAKE POSITION APPEAR TO BE MORE REASONABLE

ANALYZE ALL ITEMS USING THE SAME CRITERIA

POLICY OR PROCEDURE INDICATE POSITION IS ACCEPTED

PRACTICE PURPOSE - TO MAKE A POINT NON-

NEGOTIABLE CHALLENGE STANDARD/GIVE

EXAMPLE

WALKOUT LEAVING NEGOTIATIONS PURPOSE - TO FORCE THE OTHER

PARTY TO ACT WAIT/MAKE A CONCESSION

GOOD GUY/BAD GUY NEGOTIATORS ASSUME OPPOSITE

ROLES PURPOSE - TO GET ADDITIONAL

INFORMATION REVEALED INDICATE AWARENESS OF TACTIC

ITEMIZATION REQUESTING BREAKDOWN OF

COSTS PURPOSE - TO LOWER THE PRICE

ITEM BY ITEM PROVIDE REASONG FOR NO

BREAKDOWN

REFERENCE USE “FEEL/FELT/FOUND”

STATEMENTS PURPOSE - TO PROVIDE THIRD-ARTY

SUPPORT REALISTICALLY APPRAISE THE

REFERENCE

“TRY IT, YOU’LL LIKE IT” PERMIT TRIAL WITHOUT

COMMITMENT PURPOSE - TO DEMONSTRATE

VALUE OF THE PRODUCT ATTEMPT TO ALSO TRY THE

ALTERNATIVES

FLINCHING DRAMATIC, NEGATIVE REACTION TO

OFFER PURPOSE - TO LOWER THE

EXPECTATIONS OF THE OTHER PARTY

REFUSE TO BE INFLUENCED

BUDGET CONSTRAINTS USING EXTERNAL, NON-

NEGOTIABLE LIMIT PURPOSE- TO ESTABLISH

RANGE/FORCE CONCESSIONS CHALLENGE THE LIMITS/CHANGE

THE LOOK OF THE PAYMENTS

DISBELIEF “YOU’VE GOT TO DO BETTER THAN

THAT” TO FORCE A BETTER OFFER “HOW MUCH BETTER”

PLAYING DUMB PRETEND TO HAVE LIMITED

KNOWLEDGE PURPOSE - TO DISARMOTHER

PARTY/GAIN FACTS OFFER ONLY THE INFORMATION

CALLED FOR

MEASURED APPROACH REACHING DECISIONS ITEM BY ITEM PURPOSE - TO REVEAL AGENDA

ITEMS ONE AT A TIME ASK FOR THE ENTIRE AGENDA

QUICK CLOSE ADDING ITEMS WHEN A DECISION IS

CLOSE PURPOSE - TO MAKE AN OFFER

MORE APPEALING/CLOSE ASSESS THE REAL VALUE OF THE

EXTRA ITEM

CHANGING LEVELS APPROACHING A HIGHER OR A

LOWER LEVEL PURPOSE - TO CONTINUE THE

NEGOTIATIONS ENSURE THAT NO ADVANTAGE IS

GAINED BY THE ACTION

REASONS FOR ASKING QUESTIONS

TO GET INFORMATION TO LEAD OR MOLD THINKING

“WHAT IF..?” TO STALL “WHY DO YOU SAY THAT?” TO DETERMINE POSTIONS “IF YOU COULD, WOULD YOU..?”

TO MAKE A STATEMENT “ISN’T THAT WHAT WE BOTH WANT TO

ACHIEVE?”

GOOD NEGOTATING QUESTIONS

WHAT DO YOU HAVE IN MIND? DO I KNOW EVERYTHING I SHOULD

ABOUT THIS? WHAT WOULD IT TAK TO..? WHAT ELSE? WHAT IF I COULD..?

YOU’VE TOLD ME WHAT YOU WANT.

WHAT DO YOU NEED? WHAT’S IN IT FOR ME? WHERE WILL YOU COMPROMICE? COULD YOU REPEAT THAT OFFER?

ALTERNATIVE WHEN ASKED A QUESTION

WHY DO YOU ASK THAT? BEFORE I ANSWER THAT, TELL ME… WHAT I HEAR YOU SAYING IS… WHAT EXACTLY DO YOU MEAN? REMAIN SILENT - WHEN THE OTER

PARTY BECOMES UNCOMFORTABLE, HE OR SHE WILL BEGIN TALKING AGAIN.

Managed Care

Health Maintenance Organizations - HMOs

Staff Model Group Practice Model Network Model IPA Model Direct Contracting Model Provider Sponsored Organization

STAFF MODEL

Closed Panel MDs As Employees Greater Degree of Control Over

Practice Patterns Convenience of One-Stop Shopping More Costly to Develop and Implement Limited Choice of Participating

Physicians

STAFF MODEL (con’t)

Productivity Problems Examples

– FHP

– KAISER

GROUP MODEL

Multispecialty Physician Group Captive Group Independent Group Greater Degree of Control of Physicians Lower Capital Needs Than Staff Model

Group Model (con’t)

Limited Choice of Physicians Marketing Difficulties Lack of Accessibility Examples

– MacGregor

– University Medical Group

– Kelsey

Network Model

Contracts With More Than One Group Practice

Either Closed or Open Panel Plans Overcomes Marketing Disadvantage More Limited Physician Panel Than IPA

or Direct Contracting Model

IPA MODEL

Hospital Based IPA Model All Inclusive Capitation Requires Less Capital Broad Choice of Participating

Physicians Creates an Organization Forum for

Physicians to Negotiate with HMOs

IPA MODEL (con’t)

More Difficult Utilization Management Examples

– North American Medical Management

– FPA

– Heritage

DIRECT CONTRACTING

Requires Less Capital Broad Choice of Participating

Physicians Does Not Create an Organization

Forum for Physicians to Negotiate HMO Assumes Additional Financial

Risk Relative to IPA

DIRECT CONTRACTING

More Difficult to Recruit Physicians Utilization Management More Difficulty

Preferred Provider Organization

Select Provider Panel Negotiated Payment Rates Rapid Payment Terms Utilization Management Consumer Choice

OPEN ACCESS HMO

30 States Currently Have Specialty Capitation Impact On Utilization Consumer Choice Texas - OB/GYN

EXCLUSIVE PROVIDER ORGANIZATION

Limited Choice Gatekeeper ERISA Regulated

POINT OF SERVICE PLAN

PCP Capitation Withholds Gatekeeper Limited Out of Network Coverage

INDEMNITY COVERAGE

High Deductibles High CoInsurance 65 -84 % Steerage of Patients MSAs

SELF INSURED PLANS

ERISA Exemption Administrative Service Organization

ASO Third Party Administrator TPA

SPECIALTY HMOs

Mental Health/Chemical Dependence Dental TCH HMO

MANAGED CARE OVERLAYS TO INDEMNITY

Utilization Management Specialty Utilization Management Catastrophic Case Management Worker’s Compensation Utilization

Management

PRIMARY CARE NETWORK

BEDS COVEREDLIVES

PCPs

200 110,000 55

400 220,000 110

600 330,000 165

1,000 550,000 275

RISK CONTRACTING

A basis for all insurance Aligns responsibility and accountability A way of sharing risks across a

population rather than individual by individual

The cap rate is a function of both the predicted frequency and predicted unit cost of services

Risk Contracting (con’t)

Providers risk $$ loss if costs are higher than predicted and stand to make $$ if costs are lower than predicted

The higher the volume of patients the better the chance of predictable expenses and average spread of risk

PCP requires at least 150 enrollees and global capitation requires at least 10,000

CAPITATION

A fixed amount is paid to the provider each month for the care of a specified number of patients. If actual costs exceed the total sum, no additional Moines are paid. If actual costs are less than the total sum paid, the provider keeps the surplus Moines.

Capitation requires a specific population

CAPITATION

When a provider or group of providers is capitated for care, all patients are required to use that provider or group. No coverage is provided if patients go out of the network.

PREMUIM SPLIT

HMO

– Marketing

– Employer Billing

– Eligibility

– Out of Area Coverage

– Transplant/AIDS Pool

PREMIUM SPLIT (con’t)

IPA or Physician Group

– All physicians services, inpatient and outpatient

– Outpatient diagnostic services and treatment

PREMIUM SPLIT (con’t)

Hospital

– All inpatient hospital services

– Home Health

– Ambulatory Surgery

– Skilled Nursing Facility

– Durable Medical Equipment

– ER facility fees

ACTUARIAL CONCEPTS

Premium rate is set by first calculating the “medical expense” components

1. Assumptions are made of the expected utilization of specific areas of care

2. Average rate per each service is determined.

3. After multiplying the above 2 factors, the copayment amount is then adjusted

ACTURIAL CONCEPTS

4. This equals the net PMPM amount in the premium for the specific area of care

The full premium equals the total medical expense plus and administrative “load”.

A specified area or service, I.e., PCP services, can be separated out to develop a capitation figure.

PCP Capitation

Service Frequency Cost PMPMO. V. 3.015 $38.2 7.88O.S. 0.039 $119.02 0.39Imm .364 $19.48 0.59IP V 0.107 $81.15 0.72Lab 1.145 $21.64 2.06Base Med $13.31

PCP Capitation

Base Medical Cost $13.31

$15 Office Visit CoPay 3.77

Primary Care Cap $ 9.54

GATEKEEPERS

PCPs: FP,GP,IM,PED, GYN Eye Care - Optometrist Worker’s Comp - Physiatrist Dental Care - General Dentists MH/CD - MSWs

CAPITATION DON’T

Don’t enter into capitation contracts without getting advice from experienced managers

Don’t accept a cap rate unless you know you can live with it

Don’t enter a capiation contract unless you are committed and able to monitor the utilization and have confidence in sub-contractors.

CAPITATION DON’TS

Don’t accept risk for costs you or the group cannot control such as tertiary care or new technologies

Don’t tolerate an adversarial relationship with the payor.

CHALLENGES TO PROVIDERS

Competitive costs Capability to accept/manage risk Creation of a balanced delivery system Lower administrative costs Information Management Negotiation Skills

KEYS TO CAPITATION ANALYSIS

1. What services are covered under the capitation rate?

2. Are there limits to the risk?

– Reinsurance- specific, aggregate

– Low enrollment guarantee

KEYS (con’t)

3. What utilization and cost targets were utilized in building the capitation rate? Are these comparable to your experience?

4. How does the capitation compare to fee-for-service charges?

5. What are the underwriting or UM guidelines?

KEYS (con’t)

6. What are the incentives for effective performance?

7. Is the payment structure to providers appropriate to live within the capitation?

CONTACT CAPITATION

Customer based fixed payment for services over a specified time period.– Referral based: count the number of

unique patients in a given time period PERIOD.

– Diagnosis/Point based: referral based but modified by acuity, severity..Points or weights assigned to specific diagnosis

– Other: case rates, DRG’s, ASC rates

TYPICAL CAPITATIONMONTHLY PREMIUM $120

Inpatient Hospital $34 Outpatient Hospital $14 Specialty Care $28 Primary Care $12 Other Medical $15 Administrative/Profit$17

PHYSICIAN CAPITATION

Provide or arrange for medical services 24 hours a day

Patient management & Consultations Hospital & Nursing home visits Pediatric and adult immunizations Initial child care/well care Outpatient diagnostic services

PHYSICIAN CAPITATION

Office surgery In area urgent and emergent care Anesthesia Health education Telephone consultation Physical, speech & occupational

therapy

HOSPITAL CAPITATION

Hospital facility costs Skilled nursing services Home Health Surgery facility costs Prosthetics/durable medical equipment Ambulance Chemo/radiation therapy & agents

OTHER MEDICAL POOL

Prescription drugs Vision services Dental services Mental Health & substance abuse

services Out-of area emergency & urgent care Kidney dialysis

OTHER MEDICAL POOL

Transplants Expenses above stop/loss levels

ADMINISTRATIVE POOL

Marketing Membership maintenance/servicing Claims administration Provider servicing UR/QA management Finance/Reporting/Systems

Management Retention

RESOURCES NEEDS CHANGE

Drop inpatient days to 200 - 225 commercial, 1,100- 1,200 for Medicare

Reduce Specialist Referrals by 25% Reduce average length of stay to 2.9

days Increase physician visits by 15% Employ weekend social workers to

expedite discharge

RESOURCE CHANGES

PCPs stay in office and see patients - stop hospital work- employ physician extenders

Employ full-time physicians on-site at hospital to manage all enrollee care - Medical Intensivist

Employ mental health “gatekeepers” to reduce psychiatric admissions

RESOURCE CHANGES

Conduct physician house calls to avoid inpatient stays

Reduce ER non-emergency visits, telephone triage, fast track ER, telemedicine

Chronic disease management -- Asthma, CHF, Diabetes

Improve access to care

Models of Integration

Physician Hospital Organization Management Service Organization Group Practice Without Walls Integrated Provider Medical Foundation

Physician Hospital Organization

A legal entity owned by both a hospital and a group of physicians. Its primary purpose is obtaining payor contracts.

PHO

Payor requirements of the PHO

– Strong PCP base

– Strong utilization management

– Inclusion of only select specialists with a track record of efficient, quality care

PHO

Determinations to make before setting up a PHO

– What are we selling?

– To whom are we selling?

– What is the likelihood we will sell enough to survive?

PHO Advantages

Serves as an excellent first stage model Requires less capital investment May create a vehicle for global

capitation

PHO Disadvantages

Less integration than a Medical Foundation or Integrated Medical Group

Since it is not fully integrated, creates antitrust risk

Potential for working inefficiency with super majority requirement

PHO Physician Strategies

PHO Risk

– Willing to take risk

– Not willing to take risk PHO Capabilities

– Contract a subset

– Grant power of attorney

PHO Physician Strategies

Market to self insured employers Market to managed care Market to other networks Physicians only take risk Both physicians and hospital take risk Develop an IPA subset of PHO

IPA

Multi-specialty Single Specialty Specialty

– Workers Comp

– Ethnic

– Other

IPA

Ownership– Physicians– Management Company– Physicians and third party (hospitals,

management company, venture capitalist) Funding

– Physicians Only– Physicians and third party

MSOs

Provided by hospitals Provided by third party payors Provided by other outside entities Provided by the physician group itself

MSO Purposes

To fund the IPA To use as PR tool for physicians

recruitment To act as precursor to group practice

without walls To reduce the administrative cost for

the group

Group Practice Without Walls

A formal legal organization that bills under one provider number (75% of revenue through a common billing number) and provides certain core administrative and management services to physicians who maintain separate individual offices

GPWW

Purpose Allow independent physicians access to benefits of group practice without full integration.

Ownership Independent physicians ownership

GPWW

Focus of activity– Geographic dispersed physician network– Provide for adequate physician

compensation and retirement benefits– Reduce physician cost of business– Use as base for accomplishing medical

staff development goals– Ownership of some ancillary services

GPWW

Functions

– Managed Care Contracting

– Joint Ventures

– Physician Support Services

– Group Practice Development

– Practice Management

– Ancillary Services

GPWW

Structure– Owned by participating physicians and can

be organized as a professional medical corporation or as a medical partnership. It is operated for profit. Legal requirements:• Incorporation• Stock structure and bylaws• Legal arrangement between the GPWW

and physicians joining the group

GPWW

Legal Issues

– Common Billing

– Merging of practice not purchase of assets

– Retirement Plan Sec. 414 IRS Code

GPWW

Types

– United - The new group practice owns and manages the hard assets of the practice along with all business operations. Physicians are employees and shareholders in the newly formed group practice.

GPWW

Administrative– Physicians retain their assets and

ownership in their practices, but pay monthly dues for core group of services provided by and administrative services office. These services include group purchasing, collections, billings, payroll, and personnel.

GPWW

Advantages– Greater autonomy to physicians– Less capital investment required of

physicians– Potential cost savings through economies

of scale– Physicians able to retain certain benefits of

multi-specialty group practice

GPWW

Advantages– Provides vehicle of succession for various

medical practices within the GPWW– Physicians maintain their individual

locations and facilities– Good transitional form between individual

practice and fully integrated group practice– Provides opportunity for revenue

enhancement

GPWW

Disadvantages

– May raise issues under Sec 414 of IRS Code

– Practices remain compartmentalized

Antitrust issues

MANAGED CARE

UTMB

FALL 2002

RESOURCE PLANNING

The acquisition and allocation of:– Fixed Capital– Equipment Capital– Human Capital– Operating Capital

THE SHIFTING OF ATTENTION From the hospital to:

– Ambulatory Care– Skilled Nursing Facilities– Home Health– Physician Office

FINANCIAL PLANNING

STRATEGIC PLANNING

The process of setting long-term objectives for the future

Focus on the budget as it’s main planning tool, management-oriented cost accounting

KEY MANAGEMENT SKILLS

Organizational Skills Delegating Skills Recruitment and Training of

Professional Health Workers

HEALTHCARE REFORM

Drivers of Federal Health Policy– Federal Budget– The Public Debt– Medicare Trust Fund– State Budgets– Business Profits and Growth– The Public Perception of Change

MEDICARE PAYMENT POLICIES Fragmented at-risk payment methods Medicare-managed care contracting

policies

FEE FOR SERVICE TO CAPITATION 1970 - Cost Limits 1980 - HMO and CMP

– Risk Contracting– Hospital DRGs– Small Skilled Nursing Facility PPS

1990s

RBRVS Fee Schedule CABG Package Pricing Contract Skilled Nursing Facility PPS Home Health Agency PPS Ambulatory Surgery Center PPS

2002

Open Access Four Tiered Pricing of Drugs Medicare Select Managed Care Reform Prompt Pay Limited Risk

MEDICAID MANAGED CARE PAYMENT POLICIES

1970s

Limits on Cost-Based Fee for Service

1980s

Freedom of choice waivers Home and community-based services Boren Amendment Rate-setting Flexibility Arizona Medicaid Demonstration

1990s

Prescription drug rebate program Medicaid managed care waivers

expedited Primary Care Case Management

Models - PCCM TennCare STAR PLUS

2002

Oversight review of Medicaid managed care

Purchase co-ops demonstration risk pools

Elimination of TennCare

CAPITATION RATES

PRIMARY CARE

GROUP 10.50 - 12.30 IPA 10.80 - 15.03 HOSP 8.61 - 14.02 PHO 11.90 - 14.94

PRIMARY CARE

MEDICARE 13.06 - 26.00 MEDICAID 13.44 - 28.00

PROFESSIONAL

MEDICARE 138.12 - 171.32

COMMERCIAL 29.06 - 55.84

MENTAL HEALTH

COMMERCIAL .77 - 3.80

SPECIALTY COMMERCIAL

ALLERGY .19 - 1.37 ANESTHESIOLOGY 1.75 - 3.45 CARDIOLOGY .66 - 1.28 CARDILOGY INVASIVE .11 - .38 NONINVASIVE CARDIO .60 - 1.27 DERMATOLOGY .26 - .92 ER .43 -.70

SPECIALTY COMMERCIAL

ENDOCRINOLOGY .05 - .26 GI .28 - .99 GENERAL SURGERY 1.10 - 2.03 HOME HEALTH .53 - 2.12 INFECTIOUS DISEASE .02 - .09 LAB .36 - 1.13 NEPHROLOGY .04 - .23

SPECIALTY COMMERCIAL

NEUROLOGY .20 - .45 NEUROSURGERY .31 - .71 OB/GYN 2.77 - 5.28 ONCOLOGY .17 - 2.69 OPHTHLMOLOGY .32 - 1.42 ORTHOPEDICS .68 - 2.09 OTOLARYNGOLOGY .63 - 1.65

SPECIALTY COMMERCIAL

PATHOLOGY .24 - 2.24 PEDIATRICS 4.38 - 16.50 PHARMACY 8.87 - 18.50 PODIATRY .21 - .33 PULMONOLOGY .16 - .41 RHEUMATOLOGY .08 - .15 UROLOGY .32 - .72

SPECIALTY MEDICARE

ALLERGY .05 - .38 ANESTHESIOLOGY 4.01 - 5.50 CARDIOLOGY 5.00 - 8.18 CARDIOLOGY INVASIVE 2.09 - 3.06 NONINVASIVE CARDIO 6.04 - 9.10 DERMATOLOGY 1.50 - 4.22 ENDOCRINOLOGY .19 - .28

SPECIALTY MEDICARE

GI .74 - 2.80 GENERAL SURGERY 3.94 - 8.66 HOME HEALTH 12.61 - 28.06 LAB .48 - 2.15 NEPHROLOGY .62 - .99 NEUROLOGY .81 - 1.51 NEUROSURGERY .80 - 1.46

SPECIALTY MEDICARE

OB/GYN .85 -2.16 ONCOLOGY 3.19 -5.92 OPHTHALMOLOGY 5.00 - 9.70 ORTHOPEDICS 3.10 - 7.60 OTHOLARYNGOLOGY .72 - 1.64 PHARMACY 18.88 - 60 PHYSICAL MEDICINE .53 - .85

SPECIALTY MEDICARE

PODIATRY .40 - 1.41 PULMONOLOGY 1.10 -

1.40 RHEUMATOLOGY .36 - .56 UROLOGY 1.85 -

3.69

ANECDOTES COMMERCIAL

CHIROPRACTIC .07 AMBULANCE .25 NEONATOLOGY .18 ORAL SURGERY .22 GLOBAL MEDICAID 130.78

DAYS PER 1,000

COMMERCIAL 142 - 349 MEDICARE 800 - 1811

ADMITS PER 1,000

COMMERCIAL 50 - 160 MEDICARE 202 - 355

LOS

COMMERCIAL 2.30 - 4.50 MEDICARE 4.10 - 7.00

STOP LOSS

MD $10,000 - 75,000 HOSPITAL PER CASE $22,000 - 100,000 AGGREGATE $30,000 - 200,000 PREMIUMS

– MD .52 - 2.41– HOSPITAL 1.00 - 2.37

Finance

Financial Statement

Revenue– Premium Revenue– Other Revenue

Operating Expenses– Medical Expenses– Administrative Expenses

Retention

Premium Revenue

Primary Source of Revenue Generally 95% of Revenue Effective for a 12 month period

Other Revenue

PPO Access Fees COB Recoverable Reinsurance Recoverable Interest Income

Medical Expenses

Paid Claims IBNR – Incurred But Not Reported

IBNR Factors

Significant changes in enrollment Unusual or large claims Changes in pricing or product design Seasonal utilization or reporting patterns Claim processing backlog Major changes to the provider network or

reimbursement methods

Administrative Expenses

Finance Sales Underwriting Member Services Provider Services

Underwriting

Underwriting Considers

Health Status Ability to pay premium Other coverage Historical Persistency

Health Status

Physical Examinations Individual Medical Questionnaires Employer disclosure listing major health

conditions Medical cost experience No Health Status Information – Medicare

and Medicaid

Ability to Pay

Credit History

Other Coverage

Coordination of Benefits

Historical Persistency

Frequent changes of carriers

Base Rate Development

Population Covered Services Cost-Sharing Provisions Provider Reimbursement arrangements Demographics Geographical Area Occupation/Industry

Base Rate Development [con’t]

Health Status Degree of Health care management Coverage effective date Out-of-Network Usage Use of pre-existing condition clauses Underwriting Practices Claims administration practices

Common Operational Problems

Undercapitalization

New Plans require $10,000,000 in working capital

Existing plans– Sustained operating losses– Acquisitions

Unrealistic Projections

Overestimates of enrollment Underprojecting medical expenses

Pricing

Predatory Pricing or Low Balling Overpricing

– Panic response to previous low-balling– Excessive overhead– Failure to control utilization properly– Adverse selection

Uncontrolled Growth

Rapid growth– Acquisition– No competitor

Results– Rapid expansions in delivery system– Service erosion– Insufficient claims reserves

Uncontrolled Growth

Results– Saturation of delivery system– Inadequate reserves

Failure to Manage a Reduction in Growth Failure to grow Failure to manage the consequences of a

flattened or negative growth

Other Issues

Failure to use underwriting Adverse Selection Improper Incurred Bur Not Reported

Calculations and Accrual Methods Failure to Reconcile Accounts Receivable Overextended Management

Other Issues

Failure of Management to Produce or Understand Reports

Failure to Track Correctly Medical Costs and Utilization

Systems Inability to Manage the Business Failure to Educate and Reeducate Providers Failure to Deal with Difficult or

Noncompliant Providers

Base Rate Development [don’t]

Distribution Method Other variables impacting medical costs

Using Data in Medical Management Data Characteristics

– Integrity– Consistency– Same meaning from provider to provider– Validity– Meaningfulness– Adequate Sample Size

LEVELS

Health Center, IPA, Provider Organization, or Geographically Related Center

Individual Physician Service or Vendor Type Employer Group

HOSPITAL UTILIZATION REPORTS Daily Log Monthly Summary

OUTPATIENT UTILIZATION

PCP Encounter rates Preventive Care Lab Utilization Radiology Utilization per visit Prescriptions Referral Utilization Out-of-Network

OUTPATIENT [CON’T]

Ambulatory procedures Ancillary care

– PT– Podiatry– Eye Care– Oral Surgery– Other

PROVIDER PROFILING

Collection, collation, and analysis of data to develop provider-specific profiles.

Initial focus - inpatient care Recent shift to outpatient care

Episodes of Care

Difficulty in determining who has responsibility.

Adjusting for Severity and Case Mix Severity of Illness Indicators Statistical Manipulation

– Trimming

Comparing the Results of Profiling Plan Average Results IPA, POD, or IDS Specialty or peer group Peer group adjusted for age, sex and case

mix/severity of illness Budget Feedback

Disease Management

Success factors– Implementation – Speed to market– Management Tools – Reports, Provider Profiles– Staff – Adequate staffing ratios for

nonphysician practitioners– Organizational integration – Roles and

processes defined

Disease Management [con’t]

Marketing and Sales – Regional and National distribution

Targeting Tools – Optimal use of data Stratification Tools – Customized

interventions for optimal outcomes Guideline Validity – High quality of

evidence

Disease Management [con’t]

Member Behavior Change – Method based on behavior change models including learning style,interventions targeted and tailored maintenance strategy

Physician Behavior changed based on research