Medicare+Choice: What does the future hold? HCCA’s 2000 Compliance Institute Wendy L. Krasner September 26, 2000 McDermott Will & Emery Washington, DC

2 Medicare+Choice Overview –Key regulatory developments –Key compliance issues –What next?

3 Regulatory Developments Final M+C rules (Fed. Reg. 6/29/00) Revised marketing guidelines Revised contract for 2001 Revised OPL #77 regarding provider contracts (updated 7/14/00) New QISMC (Quality Improvement System for Managed Care) expected shortly

4 M+C Final Rules: Important Dates Publication date:June 29 Effective date:July 29 Comment due date:August 28 Comments authorized on: –BBRA of 1999 provisions

5 Rules to Implement BBRA 1999 Phase-in of risk adjustment methodology Incentives to offer M+C plans in areas without plans Reduction of 5-year ban upon non-renewal to 2-years New exception if during six months after non-renewal notice, legislative or regulatory change results in increased reimbursement

6 Significant Issues for Plans Burdens reduced: –Mandatory reporting deleted –Certification language improved –NODMAR (Notice of discharge and Medicare appeal rights) –Encounter data added to definition of clean claim (applies to non-participating as well) –Value Added Items and Services allowed

7 Significant Issues for Plans Burdens increased: –Post-stabilization and emergency coverage –Scope of appeal rights –No relief on pre-emption –Applicability to 2001 ?

8 Significant Issues for Providers Revised provider contract requirements Ability of M+COs to use providers out of area In-network providers can participate in POS Provider marketing restrictions eased Heads up that NODMAR obligation to be placed on providers

9 M+C Compliance Update Compliance plans mandatory under M+C OIG active in area OIG Voluntary Compliance Guidance (11/15/99) Recent Humana settlement on institutionalized beneficiaries Fundamental tension is OIG views M+C as if it were cost-based

10 M+C Compliance Update Recent OIG Corporate Integrity Agreements on M+C –Distribution of policies –Review procedures Performance engagement Compliance engagement

11 M+C Compliance Update Performance engagement –Enrollment data –Encounter data –ACR data –Claims processing –Selective marketing –Disenrollment

12 M+C Compliance Update Factors influencing findings of knowledge –Is compliance plan in place and adhered to? –Actual or constructive notice to M+CO –Clarity of rule –Magnitude of false claim –Past remedial efforts of M+CO –Did M+CO contact agency about rule at issue?

13 M+C Compliance Update Recent M+C issues –OIG report on high administrative overhead –OIG report regarding findings on non- compliance with National Marketing Guide –Payment for deceased beneficiaries –Medicare appeals overturn rates –Hospice care payment reconciliations –ACR audit issue

14 M+C Compliance Update Ongoing M+C issues –Encounter data Part B certifications –Dual eligibles –PIP rules –Privacy –PBM arrangements

15 Future of M+C Significant non-renewals at end of 2000 For-profits facing investor doubts about reliability of government as business partner Concerns with overwhelming regulatory burdens Compliance considerations Provider non-cooperation

16 Future of M+C Remaining relief basically financial –More funding –Repeal or modify risk adjustors Congress needs to act Prospects of Medicare pharmacy benefit complicate picture Alternatives may be revisited –Medicare Select –Cost contracts Skeptical of major renaissance in near term