RISK ADJUSTMENT 2015 – THE LEGISLATIVE & POLITICAL CLIMATE

The Risk Adjustment ForumMay 13, 2015

Richard Lieberman

Chief Data Scientist (aka “Mad Scientist”)

Today’s Agenda

• Is “My Majority” the same as “Your Majority”

• A framework for understanding King v. Burwell

• What happens if the Supreme Court rules in favor

of the Petitioners?

• Risk adjustment under siege? Well, maybe!

• Health plan responses to risk adjustment

shenanigans

Who Is Richard Lieberman?

In November 2014, founded a new population health enterprise, Mile High Healthcare Analytics

I have been actively involved in the development of risk adjustment systems for over 20 years

• Johns Hopkins ACG Development Team, 1991-2005

• Designed the risk-adjusted payment system for Maryland Medicaid

• Worked with CMS on development of the Medicare risk adjuster

• Architect of a data warehouse and decision support system that integrated quality measurement

and risk adjustment on the same web-enabled platform

I combine a unique array of expertise in provider profiling, risk adjustment, quality measurement,

and provider reimbursement strategies

Is My Majority Your Majority?

A Certain Health Care Vote in the U.S. House of Representatives

220 – 215

(Hint: only one party voted for this bill)

A Certain Health Care Vote in the U.S. House of Representatives

220 – 215Republicans – Democrats

(Hint: only one party voted for this bill)

House Vote on the Medicare Modernization Act (P.L. 108-173)

220 – 215Republicans – Democrats

(Only Republicans Voted for this Bill)

Key Provisions of the Medicare Modernization Act

• The Medicare Modernization Act (MMA) produced the

largest overhaul of Medicare in the public health program's

38-year history

• The MMA's most touted feature is the introduction of

an entitlement benefit for prescription drugs, through tax

breaks and subsidies

• Beginning in 2006, a prescription drug benefit called Medicare

Part D was made available. Coverage is available only

through insurance companies and HMOs, and is voluntary

• Part D introduced the concept of risk corridors, which unlike

the ACA MA risk corridors, are permanent, and funded as an

entitlement

Key Provisions of the Medicare Modernization Act (cont.)

• With the MMA, new Medicare Advantage plans were established with several

advantages over the previous Medicare + Choice plans:

• Enrollees sign on for a whole year

• Care can be restricted to networks of providers

• Formularies can be used to restrict prescription drug choices

• Prescription coverage can be deferred to the patient or a Medicare Part D prescription plan

• Care other than emergency care can be restricted to a particular region

• Federal reimbursement can be adjusted according to the health risk of the enrollees

• Comprehensive risk adjustment was integrated into the program and began a 4-year phase-in

Another Certain Vote in the U.S. House of Representatives

219 – 212

(Hint: Only one party voted for this bill)

Another Certain Vote in U.S. House of Representatives

219 – 212Democrats – Republicans

(Only Democrats Voted for this Bill)

House Vote on the Affordable Care Act (P.L. 111-148)

219 – 212Democrats - Republicans

Which Party Voted for a Bill Does Not Matter!

• A law is a law if it is passed by majority

votes of both houses of Congress

(bicameralism) and is signed by the

President (presentment)

• If only one political party is in the majority,

a bill still can become a law

• As long as there is bicameralism and

presentment, then in our constitutional

system, we get a law

• Laws are supposed to be obeyed until

they are changed (by Congress or the

Courts)

King v. Burwell, Will the Sky Fall in?

Question to be Decided by Supreme Court

• “Whether the Treasury Department

permissibly interprets 26 U.S.C. 36B to

make the Affordable Care Act’s federal

premium tax credits available to eligible

taxpayers through the Exchanges in every

State.”

• This is a case requiring statutory

interpretation. The constitutionality of the

Affordable Care Act is NOT under review!

The Seven (Dirty) Words

• “established by the State under section 1311”

• Petitioners argue that these seven words foreclose tax credits on HHS-created

exchanges

• If Congress intended to give States a choice between receiving subsidies for their

residents and not receiving them, why did it hide the choice in a technical section

on the calculation of subsidies?

• “Congress does not alter the fundamental details of a regulatory scheme in vague

terms or ancillary provisions—it does not, one might say, hide elephants in mouse

holes.” Whitman v. Am. Trucking Ass’n, 531 U.S. 457, 468 (2001)

The “isms”

• Textualism: The only “law” to interpret is the text of a statute

passed by both houses of Congress and signed by the President

• Purposivism: the letter of the law must yield to legislative “intent”

• Purposivists argue that the statutory text can be augmented by

combing the legislative history for indicia of legislative intent

• Textualists explain that a search for legislative intent violates the

constitutionally prescribed process of bicameralism and presentment

• Hyperliteralism: reading the words of a statute in a vacuum

• Textualism is not hyperliteralism, and textualists do not read the

words of a statute in a vacuum

If You Prefer Literalism in Your Law, Then....

• “But there are two clauses in the Constitution which point directly and specifically to the negro race

as a separate class of persons, and show clearly that they were not regarded as a portion of the

people or citizens of the Government then formed.”

• “And these two provisions show conclusively that neither the description of persons therein referred

to nor their descendants were embraced in any of the other provisions of the Constitution, for

certainly these two clauses were not intended to confer on them or their posterity the blessings of

liberty, or any of the personal rights so carefully provided for the citizen.”

• They had for more than a century before been regarded as beings of an inferior order, and

altogether unfit to associate with the white race either in social or political relations, and so far

inferior that they had no rights which the white man was bound to respect, and that the negro might

justly and lawfully be reduced to slavery for his benefit.

Statutory Interpretation According to Justice Scalia

• One of the axioms of statutory interpretation, expressed strongly

and repeatedly by the nine Justices, especially Justice Scalia, is

that one looks at the whole statute and its context to review

meaning, rather than adopting a blinkered focus on a few words

• In interpreting a statute, courts must choose a textually permissible

reading that furthers the evident purpose of the law over one that

obstructs the statutory purpose

• As Justice Scalia expressly stated in one of his treatises, the

well-worn canon of construction follows from the facts that:

• Interpretation always depends on context

• Context always includes evident purpose, and

• Evident purpose always includes effectiveness

Chevron v. Natural Resources Defense Council• “Chevron” is a pillar of modern administrative law

• When a court reviews an agency's construction of the statute which it administers,

it is confronted with two questions

• “First, always, is the question whether Congress has directly spoken to the precise

question at issue. If the intent of Congress is clear, that is the end of the matter; for the

court, as well as the agency, must give effect to the unambiguously expressed intent

of Congress”

Source: Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 (1984)

• “If, however, the court determines Congress has not directly addressed the precise question

at issue, the court does not simply impose its own construction on the statute, as would be

necessary in the absence of an administrative interpretation. Rather, if the statute is silent or

ambiguous with respect to the specific issue, the question...is whether the agency's answer

is based on a permissible construction of the Statute.”

Chevron v. Natural Resources Defense Counsel

• Even under Chevron’s deferential framework, agencies must operate

“within the bounds of reasonable interpretation.”

• And reasonable statutory interpretation must account for both “the

specific context in which . . . language is used” and “the broader

context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U. S.

337, 341 (1997). A statutory “provision that may seem ambiguous in

isolation is often clarified by the remainder of the statutory scheme . .

.because only one of the permissible meanings produces a

substantive effect that is compatible with the rest of the law.” Thus, an

agency interpretation that is “inconsistent with the design and structure

of the statute as a whole does not merit deference.”

If Chevron is the Law, Then Isn’t the Case Decided?

• Both the Chief Justice and Justice Kennedy expressed

concerns about the limits of “Chevron Deference”

• Roberts asked at oral argument, “If you’re right — if you’re

right about Chevron, that would indicate that a subsequent

administration could change that interpretation?”

• Justice Kennedy expressed concern that an ambiguous

portion of the statute gave the IRS tremendous power to

distribute billions of dollars of subsidies without an explicit

authorization from Congress

Utility Air Regulatory Group vs. EPA (134 S. Ct. 2427, 2442 (2014))

• Justice Scalia said, “it is a fundamental canon of statutory construction that the

words of a statute must be read in their context and with a view to their place in the

overall statutory scheme.’” FDA v. Brown & Williamson Tobacco Corp., 529 U. S.

120, 133 (2000).

• “Reasonable statutory interpretation must account for both ‘the specific context in

which . . . language is used’ and ‘the broader context of the statute as a whole.’”

• Example: “The sun may be a star, but ‘starry sky’ does not refer to a bright summer day”

• After all, true respect for Congress requires giving effect to the statute Congress

enacted, not just isolated words divorced from their context

Should Unelected Judges Make Decisions for the People?

• Excerpts from Article III of the Constitution:

• The judicial Power of the United States, shall be vested in one supreme Court, and in

such inferior Courts as the Congress may from time to time ordain and establish...The

judicial Power shall extend to all Cases, in Law and Equity, arising under this

Constitution, the Laws of the United States, and Treaties made, or which shall be

made, under their Authority

So, What Is Going to Happen?

• The Court may uphold the agency’s (the IRS) interpretation of the statute

• Courts have a duty to construe statues, not isolated provisions” (Graham County Soil

& Water Conservation Dist. v. United States, 559 U.S. 280, 290 (2010))

• The constitutional-doubt and constitutional-validity canons require judges to read statutes

in a way that would avoid rendering them unconstitutional or that would raise serious

questions about their constitutionality: “Every reasonable construction must be resorted to

in order to save a statute from unconstitutionality.” Hooper v. California, 155 U.S. 648, 657

(1895)

Or, the Court will Agree with the Petitioners

• If they rule in favor of King, in all likelihood they will rule narrowly

• Perhaps the Chevron Deference doctrine gets limited– this could have a significant

impact on future administrative law cases

• The severability doctrine provides that, “whenever an act of Congress contains

unobjectionable provisions separable from those found to be unconstitutional, it is

the duty of this court to so declare, and to maintain the act in so far as it is valid.”

Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987)

If the Court Rules for the Petitioners

Who Would be Affected Should Subsidies Go Away?

• Subsidies in states with their own exchanges could continue (e.g., CA, NY, CO, etc.)

• Subsidy recipients are not the poorest people, who get help through the expansion

of Medicaid

• Most recipients of subsidies are low-income and middle-income workers

• Over 80 percent , are the workers themselves; The rest are families of workers.

• Over 60 percent of recipients are white

• Over 60 percent of recipients live in the South

• They’re also a voting population

What Happens Next?

• Chief Justice Roberts said, “It is not our job to protect the

people from the consequences of their political choices.”

• All Congress has to do is legislate a few additional

words!

• President Obama may take the position, “you broke it,

you fix it!”

• Republicans claim they will use a favorable decision to

get a repeal and replace of the ACA

ObamaCare

Offers subsidies to

purchase insurance and to

offset some copays for low-

and moderate income

Americans (up to 400

percent of the Federal

Poverty Limit (FPL)

Offers refundable tax credits for

low- and moderate income

Americans (up to 300 percent of

FPL; plus anyone who works for

an employer with less than 100

lives, or anyone else who doesn’t

have an offer of insurance. In the

form of an age-adjusted,

advanceable, refundable tax

credit

ObamaCare

Offers subsidies to

purchase insurance and

to offset some copays

for low- and moderate

income Americans (up to

400 percent of the

Federal Poverty Limit

(FPL)

Republican Alternative

ObamaCare

Individual and employer

mandate to purchase

health insurance or pay

a modest fine (aka “tax”)

Repeal individual and employer mandates

but assess a “penalty” on anyone who tries

to buy insurance after open enrollment. In

the case of individuals who have a health

tax credit, but who fail to choose a plan,

states would be allowed to utilize default

enrollment…would be given the authority

to designate insurance plans…to which

individuals could be randomly assigned

ObamaCare

Individual and employer

mandate to purchase health

insurance or pay a modest

fine (aka “tax”)

Republican Alternative

ObamaCare

Dependent coverage up

to age 26

Dependent coverage up

to age 26

ObamaCare

Dependent coverage up

to age 26

Republican Alternative

ObamaCare

Guaranteed issue and

renewability

No one can be denied

coverage based on a pre-

existing condition…new

“continuous coverage”

protection…individuals

moving from one health plan

to another…could not be

medically unwritten and

denied a plan based on a

preexisting condition if they

were continuously enrolled

in a health plan

ObamaCare

Guaranteed issue and

renewability

Republican Alternative

ObamaCare

“Cadillac tax” applies a

40% tax to employee

health coverage at

$10,200 for an individual

and $27,500 for a family

Our proposal caps the

tax exclusion for

employee’s health

coverage at $12,000 for

an individual and

$30,000 for a family.

ObamaCare

“Cadillac tax” applies a

40% tax to employee

health coverage at

$10,200 for an individual

and $27,500 for a family

Republican Alternative

ObamaCare

Insurance companies

are banned from

charging older

Americans more than

three times what they

charge younger

individuals

Insurance companies

are banned from

charging older

Americans more than

five times what they

charge younger

individuals

ObamaCare

Insurance companies

are banned from

charging older

Americans more than

three times what they

charge younger

individuals

Republican Alternative

ACA vs. ObamaCare

United States v. SCAN

• This case originally had nothing to do with Medicare-Advantage risk adjustment

• Allegations of risk adjustment “fraud” were subsequently added in a fishing expedition

against every California MA Plan and at least one IPA

• In United States of America, et. al. v. SCAN Health Plan, et. al. (Case 2:09-cv-05013-JFW-

JEM), every allegation about risk adjustment fraud has been dismissed by the court.

• “For all the foregoing reasons, HealthCare Partners’ Motion to Dismiss, Aetna’s Motion to

Dismiss, WellPoint’s Motion to Dismiss, and the UnitedHealth Defendants and Health Net’s

Motion to Dismiss are GRANTED, and Swoben’s third and ninth claims for relief for violation

of the False Claims Act are DISMISSED…” (see, Case 2:09-cv-05013-JFW-JEM Document

133 Filed 07/30/13).

• Moreover, a request to amend the complaint (for the 4th time), was denied by the trial judge

(citing the “futility doctrine” established by the 9th Circuit)

United States of America ex rel. Olivia Graves, v. Plaza Medical Centers Corp., Humana, Inc. and Michael Cavanaugh

• Filed in the U.S. District Court for the Southern District of

Florida, Case No. 1:10-cv-23382

• Allegation: “Submitting False Claims in Violation of the

False Claims Act, 31 USC Section 3729(a)(1)(A), Against

All Defendants”

• This litigation has been set in for a trial on the merits

beginning in December 2015

• The parties must engage in mandatory mediation to be

completed by October 2015

“Choice Morsels” from U.S. v. Plaza Medical Centers Complaint

• In or about April, 2010 a former patient of Dr. Graves, who was now being

cared for by Dr. Cavanaugh, asked to be seen by Dr. Graves. During that

examination Dr. Graves noticed that Dr. Cavanaugh had listed several

diagnostic codes for the patient that did not apply, and had submitted

claims to Humana and Medicare with the false diagnoses that increased

the reimbursement by CMS to Humana. When Dr. Graves brought this to

Dr. Cavanaugh's attention, he told her that he "did not give a sh*t."

• Dr. Graves became concerned that Dr. Cavanaugh was improperly submitting false claims to

Medicare regarding other patients. Thus, Dr. Graves started reviewing other patients‘ charts and

found that Dr. Cavanaugh had similarly inflated the diagnostic codes for those patients as well and

had billed Medicare, through Humana, for the false diagnoses.

What Should MA Plans Do?

• Many of the alleged whistleblower lawsuits will be bogus. But not all of them!

• Get Your Head Out of ”the Sand”

• Providers need real training on optimal clinical documentation

• Not coding! Documentation!

• Providers need oversight

• Just because the contract transfers risk, doesn’t mean it transfers responsibility

• Risk adjustment is hard and has lots of nuances

• Medicaid and exchange risk adjustment are not just like Medicare!

In-Home Assessments

• CMS has decided that trying to disallow diagnosis

codes from HRAs that were not subsequently “treated”

represented a “third rail” (not worth stepping on!)

• Beginning in the 2016, CMS has adopted a,

“guidelines and surveillance” strategy that strongly

encourages MA Plans to change their in-home

assessment process

• And “Big Brother” will be watching!

The Guidelines and Surveillance Strategy

• EDPS will now see the light of day!

• By linking the diagnosis code flags from RAPS to the

treatment documented in EDPS, CMS can test for

the linkage between in-home assessment diagnoses

and subsequent treatment

• Hence, the guidelines should be taken seriously,

because the writing is on the wall

New Components of Health Risk Assessments

• All components of the annual wellness visit, including a health

risk assessment

• Medication review and reconciliation

• Scheduling appointments with appropriate providers and

making referrals and/or connections for the enrollee to

appropriate community resources

• Conducting an environmental scan of the enrollee’s home for

safety risks, and need for adaptive equipment

New Components of Health Risk Assessments (cont.)

• A process to verify that follow-up care is provided

• A process to verify that information obtained during the assessment is

provided to the appropriate plan provider(s)

• Provision to the enrollee of a summary of the information, including diagnoses,

medications, scheduled follow-up appointments, plan for care coordination,

and contact information for appropriate community resources; and

• Enrollment of assessed enrollees into disease management/case

management programs

Additional Sources of Potential Oversight

• While not specifically part of the current CMS audit

guidelines, these new HRA requirements can be evaluated

as a component of vendor oversight

• The OIG will now have requirements to build a work plan

item around

• Part C RACs, which still looming could have a field day

with these requirements

Responses to New In-Home Assessment Requirements

• These new requirements will require a substantial change in

how Plans approach in-home assessments

• HRA instruments used by vendors and plans will have to

undergo significant revision

• Just transferring the responsibility for risk score optimization to

vendors will no longer work

• Vendors can take on more of the burden, but many of these

requirements must be done directly by the plan

In-Home Assessments Begin Well Before the Clinician Arrives

• Refocus the member outreach/appointment scheduling process to be a key

component of the member targeting process.

• Integrate key instruments into the outreach—Patient Activation Measure, PHQ-9,

and/or SF-36

• The telephone outreach is part of the assessment, not just a vehicle to get member’s

to agree to a home visit

In Conclusion

http://www.newyorker.com/humor/borowitz-report/scientists-earth-endangered-by-new-strain-of-fact-resistant-humans?mbid=nl_05.12.15_borowitz&cndid=30165894&mbid=nl_05.12.15_borowitz&CNDID=30165894&spMailingID=7735628&spUserID=NjUwODI2NDQxOTES1&spJobID=681275456&spReportId=NjgxMjc1NDU2S0

Mile High Healthcare Analytics Can Assist You…

• With Medicare-Advantage bidding season in full swing, do you have accurate risk

scores to produce the optimal bid?

• We design, transform, and load data into data warehouses

• Redesign of the HRA process and oversight of the process

• The Quality Rating System (QRS) beta test puts significant data requirements in front

of overworked issuers. The QRS measures pose significant complexities, particularly

around continuous enrollment requirements

• Do you have the data management acumen to maximize Star ratings?

Free Webinar Series

• Mile High Healthcare Analytics is committed to our free webinar series. We will

continue to present key risk adjustment and performance improvement topics to

health plans and provider groups on a monthly basis throughout the year.

• In the month of May, we will present two webinars:

• May 19th: A collaboration between MHHA and Oracle Health Insurance

• May 28th: “Predicting and Reducing Emergency Room Utilization and Preventable

Readmissions” (a collaborative presentation by Mile High Healthcare Analytics and NextHealth Technologies)

• For more information about our free webinar series or to register, please go to:

http://www.healthcareanalytics.expert/news-and-events/free-webinar-series/

Oracle Health Insurance Webcast

Richard Lieberman will be the primary

presenter:

“The Changing World of Value Based

Payments”

Tuesday May 19, 2015

1p.m. Eastern (10 a.m. Pacific)

Registration page:

http://www.fiercehealthpayer.com/offer/oracl

e_may2015?source=oracle

THANK YOU FOR JOINING US!!

Our website continues to evolve:

www.healthcareanalytics.expert

CONTACT INFORMATION

Richard Lieberman

rlieberman@healthcareanalytics.expert

720-446-7785 (voice)

www.healthcareanalytics.expert