MANAGED CARE STRATEGIES FOR FINANCING & DELIVERING HIV SERVICES JULIA HIDALGO POSITIVE OUTCOMES, INC. & GEORGE WASHINGTON UNIVERSITY

MANAGED CARE ELEMENTS Combines financing and delivery systems Combines financing and delivery systems Patients are enrolled in a managed care plan with a defined benefits package Patients are enrolled in a managed care plan with a defined benefits package Patients usually select or are assigned a primary care provider (PCP) Patients usually select or are assigned a primary care provider (PCP) PCPs act as gatekeepers who determine access to specialists, hospital care, and other services PCPs act as gatekeepers who determine access to specialists, hospital care, and other services Emphasis on preventing illness and managing disease Emphasis on preventing illness and managing disease Payment is typically paid on a prospective, capitated basis, but fee-for-service payments may be made for some services Payment is typically paid on a prospective, capitated basis, but fee-for-service payments may be made for some services

Some MCO goals... Clearly define patient populations, modify their care seeking behavior, & predict their care use & costs Clearly define patient populations, modify their care seeking behavior, & predict their care use & costs Identify high risk & high cost patients Identify high risk & high cost patients Identify & minimize financial risk Identify & minimize financial risk Maximize profitability Maximize profitability Organize systems of care that achieve these goals Organize systems of care that achieve these goals

ADVERSE SELECTION Attracting members who are sicker than the general population This results in higher than budgeted expenses for the plan This results in higher than budgeted expenses for the plan Managed care plans may avoid enrolling individuals who are sicker than the “average” patient Managed care plans may avoid enrolling individuals who are sicker than the “average” patient Some managed care plans may avoid enrolling HIV-infected individuals because of their relatively high treatment cost Some managed care plans may avoid enrolling HIV-infected individuals because of their relatively high treatment cost

MCO FUNCTIONS MARKETING MARKETING MEMBERSHIP ACCOUNTING MEMBERSHIP ACCOUNTING Group billing, contracts, enrollment, and PCP assignment Group billing, contracts, enrollment, and PCP assignment NETWORK OPERATIONS NETWORK OPERATIONS Provider credentialing and contracts Provider credentialing and contracts MEMBERSHIP SERVICES MEMBERSHIP SERVICES Education and grievances Education and grievances CLAIMS ADMINISTRATION CLAIMS ADMINISTRATION MIS MIS FINANCE FINANCE Budget projections and capitation rates Budget projections and capitation rates UTILIZATION MANAGEMENT & QUALITY ASSURANCE UTILIZATION MANAGEMENT & QUALITY ASSURANCE

MEMBER RIGHTS & RESPONSIBILITIES Enrollment (marketing & assignment) Enrollment (marketing & assignment) Member Handbook & Membership Department Member Handbook & Membership Department Primary care provider (PCP) assignment Primary care provider (PCP) assignment Benefits package Benefits package Availability, accessibility, & continuity Availability, accessibility, & continuity Grievance procedures Grievance procedures Confidentiality & disclosure Confidentiality & disclosure Member satisfaction Member satisfaction Disenrollment Disenrollment

PLAN SELECTION CRITERIA Established provider network Established provider network Geographic coverage Geographic coverage Sufficient capacity & accessible services Sufficient capacity & accessible services Acceptable marketing, enrollment, grievance, & disenrollment procedures Acceptable marketing, enrollment, grievance, & disenrollment procedures Established quality assurance program Established quality assurance program Fiscal solvency Fiscal solvency Established administrative & governance structure Established administrative & governance structure Meets State managed care licensure criteria Meets State managed care licensure criteria

MANAGED CARE CONTRACTING MODELS Staff: Physicians are HMO employees Staff: Physicians are HMO employees Group: Physicians are members of a single or multi-specialty group practice that contracts with the managed care plan Group: Physicians are members of a single or multi-specialty group practice that contracts with the managed care plan IPA: Either the physician contracts directly with the plan or through a physician corporation IPA: Either the physician contracts directly with the plan or through a physician corporation Network: The plan contracts with group practices, IPA-physician corporations, and/or with individual physicians Network: The plan contracts with group practices, IPA-physician corporations, and/or with individual physicians

OTHER MANAGED CARE CONTRACTING MODELS Point of Service (POS): Managed care plan offers members the option to receive services from non-plan providers at a reduced rate of coverage Point of Service (POS): Managed care plan offers members the option to receive services from non-plan providers at a reduced rate of coverage Preferred Provider Organization (PPO): A system that contracts with providers at discounted fees; members may seek care from non-participating providers, but at higher co-pays or deductibles Preferred Provider Organization (PPO): A system that contracts with providers at discounted fees; members may seek care from non-participating providers, but at higher co-pays or deductibles Integrated Service Network (ISN): A collaboration of either PCP (horizontal) or primary, specialty, and inpatient providers (vertical) for managed care purposes Integrated Service Network (ISN): A collaboration of either PCP (horizontal) or primary, specialty, and inpatient providers (vertical) for managed care purposes Physician Hospital Organization (PHO): legal entity between hospital and physicians to contract with plans Physician Hospital Organization (PHO): legal entity between hospital and physicians to contract with plans

FINANCING & DELIVERY OF SERVICES IN A MEDICAID MANAGED CARE ENVIRONMENT MCO AGENCIES & PROVIDERS SUB- CONTRACT WITH MCOs TO PROVIDE SERVICES, MAY BEAR SOME RISK GRANT- FUNDED AGENCIES BEARING NO RISK PROVIDE WRAP- AROUND SERVICES THROUGH LINKAGE AGREEMENTS COVERED SERVICES CAPITATED, MCO BEARS RISK MEDICAID FFS PROVIDERS OF CARVED-OUT SERVICES Provider Network FFS FFS CAP CAP LA LA

WHAT IS CAPITATION? A reimbursement method for health and associated services in which a provider is paid a fixed amount A reimbursement method for health and associated services in which a provider is paid a fixed amount Payment is usually monthly for each member served Payment is usually monthly for each member served Payment occurs without regard to the actual number or services provided to the member Payment occurs without regard to the actual number or services provided to the member Capitation is a: Capitation is a: Means for payment for expected services Means for payment for expected services Budgeting tool Budgeting tool Management tool Management tool Cost control tool Cost control tool

CAPITATION VERSUS FFS

MONTHLY CAPITATION Utilization x Cost 12 months x number of members = PMPM Utilization = number of units of service for each benefit for number of enrolled members Cost = average cost per unit of service PMPM = per member per month capitation payment

ASSUMPTIONS UNDERLYING CAPITATION RATE SETTING Covered and excluded services are clearly defined Covered and excluded services are clearly defined The average utilization rate per service is known or can be accurately projected The average utilization rate per service is known or can be accurately projected If the average utilization rate varies by population group, their rates are known or can be projected If the average utilization rate varies by population group, their rates are known or can be projected The cost per service is known and is unlikely to vary during the contract period The cost per service is known and is unlikely to vary during the contract period Administrative costs are accurately defined (i.e., there are no hidden costs) and adjustment can made in the PMPM for those costs Administrative costs are accurately defined (i.e., there are no hidden costs) and adjustment can made in the PMPM for those costs Additional revenue (i.e., investments, grant income) may be used to supplement the PMPM Additional revenue (i.e., investments, grant income) may be used to supplement the PMPM Discounts may be taken for “efficiency” Discounts may be taken for “efficiency”

CAPITATION RISK ADJUSTERS Geographic unit (e.g., county) Geographic unit (e.g., county) Medicaid assistance category Medicaid assistance category Age Age Gender Gender Spectrum of HIV disease (i.e., HIV asymptomatic, symptomatic, AIDS) Spectrum of HIV disease (i.e., HIV asymptomatic, symptomatic, AIDS) Other factors (e.g., homelessness)? Other factors (e.g., homelessness)?

OTHER RISK PROTECTION STRATEGIES Reinsurance Reinsurance Stop Loss Stop Loss Establishes an upper limit on annual health care costs for an individual member Establishes an upper limit on annual health care costs for an individual member Aggregate stop loss sets an upper limit for members Aggregate stop loss sets an upper limit for members Managed care plans usually purchase reinsurance Managed care plans usually purchase reinsurance Providers can negotiate stop loss with the plan Providers can negotiate stop loss with the plan Risk Corridors Risk Corridors Establishes a “ceiling” and “floor” of risk Establishes a “ceiling” and “floor” of risk Loss greater than the predetermined amount is reimbursed (e.g., 10% over costs) Loss greater than the predetermined amount is reimbursed (e.g., 10% over costs) Profit greater than the predetermined ceiling is returned to the plan Profit greater than the predetermined ceiling is returned to the plan

UTILIZATION MANAGEMENT Prior or pre-authorization (e.g., expensive or commonly over-used services) Prior or pre-authorization (e.g., expensive or commonly over-used services) Medical necessity, contracted facility, cost-effectiveness Medical necessity, contracted facility, cost-effectiveness Referrals Referrals Part of gate-keeper function of PCP Part of gate-keeper function of PCP Concurrent reviews Concurrent reviews Is the ongoing service too long and can other services be substituted? Is the ongoing service too long and can other services be substituted? Formularies Formularies Open versus closed formularies, generics, cheapest delivery system Open versus closed formularies, generics, cheapest delivery system Claims review Claims review Appropriateness review Appropriateness review Provider selection and profiling Provider selection and profiling

APPROACHES TO MANAGING HIV- INFECTED RECIPIENTS IN US MEDICAID MANAGED CARE SYSTEMS “Mainstream” recipients “Mainstream” recipients Carve-out recipients into fee-for-service Carve-out recipients into fee-for-service Carve-out HIV-related services Carve-out HIV-related services Enhance capitation rates Enhance capitation rates “Mixed” approach based on assistance category or county of residence “Mixed” approach based on assistance category or county of residence

NY HIV SPECIAL NEEDS PLANS (SNPs) AIDS Day Services Planning, Inc. AIDS Day Services Planning, Inc. CommunityCare Partners CommunityCare Partners Fidelis Care New York Fidelis Care New York HealthFirst PHSP, Inc. HealthFirst PHSP, Inc. Health Pact, LLC Health Pact, LLC Healthy Futures Healthy Futures MetroPlus Health Plan MetroPlus Health Plan New York Presbyterian Healthcare System New York Presbyterian Healthcare System

NY MAINSTREAM PLANS VERSUS HIV SNPs

SUMMARY FULL CAPITATION RATES FOR HIV SNP PREMIUM GROUPS Source: Feldman, et.al. Developing a managed care delivery system in New York State for Medicaid recipients with HIV. American Journal of Managed Care. 5(11), , 1999.