Managing in a Managed Care Environment - ?· Managing in a Managed Care Environment Dale Jarvis ...…

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  • 6/11/2012

    1

    Managing in a

    Managed Care

    Environment

    Dale Jarvis, CPA

    dale@djconsult.net

    www.djconsult.net

    www.djconsult.net

    2

  • 6/11/2012

    2

    Context for My Session

    Theres Mac Truck of change coming straight

    at you in 2014

    For some, the near future is going to look like youre

    on a foreign planet

    3

    One Request

    Keep Breathing

    4

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    3

    Agenda Four Chapters The many hats of a County

    Financial Manager (and the three Im asking you to wear today).

    Looking at the numbers: the implications of coverage expansion in 2014 and beyond.

    Deciphering the writing on the wall moving to a true managed care system.

    So, what does a highly functional, county-level, managed behavioral healthcare system look like?

    5

    Chapter 1: The many

    hats of a County

    Financial Manager

    (and the three Im

    asking you to wear

    today)

    6

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    4

    Mental Model for Thinking about the New Role of the County Financial Manager

    The County MH/SU Financial Manager ought to possess five sets of skills, wearing five hats:

    1. Chief Accounting OfficerResponsible for all aspects of the Financial Accounting System (e.g. AP, payroll, GL).

    2. Chief Revenue Cycle OfficerResponsible for the patient Accounting System (e.g. Billing, AR, Collections).

    3. Chief Financial PlannerCoordinating the Planning and Performance Management activities including the Annual Budgeting process and ongoing reporting and monitoring of financial and non-financial metrics.

    4. Chief Risk OfficerIn charge of Government Reporting, Audits, Internal Controls, etc.

    5. Chief Financial AdvisorResponsible for supporting the Board, Management Team and Service Delivery Departments.

    Chief Financial Officer Hats and

    Areas of Responsibility, View 1

    Financial

    Accting

    System Mgmt

    Client

    Accting/Rev

    Cycle Mgmt

    Planning &

    Performance

    Mgmt

    Risk &

    Compliance

    Mgmt

    Executive

    Management

    Chief

    Accounting

    Officer

    Chief

    Revenue Cycle

    Officer

    Chief

    Financial

    Planner

    Chief

    Risk

    Officer

    Chief

    Financial Advisor

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    5

    Chief Financial Officer Hats and

    Areas of Responsibility, View 2

    Chief

    Accounting

    Officer

    Chief

    Revenue

    Cycle

    Officer

    Chief

    Financial

    Planner

    Chief Risk

    Officer

    Chief

    Financial

    Advisor

    A. Financial Accounting System Management

    1 Purchasing/AP Cycle

    2 Cash and Debt Management

    3 Payroll Cycle

    4 Fixed Assets and Inventory

    5 Grant and Contract Management

    6 Cost Allocation Management

    7 General Ledger

    8 Financial Reporting

    B. Client Accounting/Revenue Cycle Management

    1 Intake/Appointment Scheduling

    2 Client Intake/Registration

    3 Visit Data Capture

    4 Payment (time of visit)

    5 Third Party Billing

    6 Client Billing

    7 Payment Entry

    8 Account Follow-up

    9 Account Resolution

    10 System Setup/Maintentance

    11 Usual and Customary Fee Setting

    Chief Financial Officer Hats and

    Areas of Responsibility, View 2

    Chief

    Accounting

    Officer

    Chief

    Revenue

    Cycle

    Officer

    Chief

    Financial

    Planner

    Chief Risk

    Officer

    Chief

    Financial

    Advisor

    C. Planning & Performance Management1 Long Range Planning

    2 Annual Planning and Budgeting

    3 Performance Standard Setting

    4 Reporting System Design and Development

    5 Report Production

    6 Ongoing Monitoring - Performance Data Analysis

    7 Corrective Actions and Process Improvement

    D. Risk and Compliance Management

    1 Government Reporting

    2 Audit Management

    3 Internal Controls Management

    4 Federal Compliance

    5 Insurance Management

    E. Executive Management

    1 Board Support

    2 Management Team Support

    3 Service Delivery Support

    4 Finance Dept staff supervision/oversight

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    6

    Chapter 2: Looking

    at the numbers;

    the implications of

    coverage expansion

    in 2014 and beyond

    11

    A bit of context about the numbers

    We are going to look

    at data from a soon-

    to-be-published CIMH

    Policy Brief about the

    California Health

    Benefits Exchange

    Keep an eye out for an

    in-depth CIMH

    webinar on this topic

    later in June12

    Ignore the typoes typos

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    Tables 1 & 2

    13

    Table 3

    14

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    15

    16

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    Table 4

    17

    18

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    19

    Tables 6 & 7

    20

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    The Punch Line2,000,000 more in the safety net with coverage

    +

    300,000 400,000 more seeking MH/SU service

    +

    Up to $500,000,000 or more of additional MH/SU revenue

    +

    6,000 8,000 more clinicians needed to meet the demand

    =

    A description of a system on the brink of major change

    21

    Chapter 3: Deciphering

    the writing on the wall;

    moving to a true

    managed care

    system

    22

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    The Tasks Before Us

    1. Ensure that Enrollees have Access to Care

    2. Ensure that the Highest Quality Service Possible is Being Provided

    3. Ensure that the Right Amount of the Right Types of Services are Being Provided

    4. Ensure that Services are Cost Effective

    5. Managed the Financial Risk

    Build the Provider Network

    Create a High Performing Clinical Design Supported by a High Performing Network

    Develop a Care Management Capability with a Robust Level of Care System

    Develop Appropriate Payment Models

    Demand/Capacity Revenue/Expense Modeling & Risk Management Plan

    23

    Managed Care Company

    Management Functions

    Network

    Development

    & Management

    Claims

    Processing

    Utilization

    Management

    Member

    Services

    Accounting &

    Financial Mgmt Administration

    Information

    Systems

    Quality

    Management

    BasicInfrastructure

    Access &

    Triage

    CareManagement

    Community

    Affairs

    24

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    13

    In Other Words Many California Counties are

    going to have to up their

    game to become full blown

    Medicaid Behavioral Health

    Plans (e.g. true managed

    care organizations)

    With greater distinction

    between the roles of:

    Medicaid Health Plan

    Service Provider

    An build a more robust

    provider network and

    managed care infrastructure

    25

    AndThe Payment Models

    are Going to Change Fee for Service is going to be

    replaced by models that move from paying for volume to paying for value

    This means you, as a payor, will be contracting with your network providers with:

    Modified Fee for Service

    Case Rates

    Sub-Capitation

    As soon as the regulatory structure catches up to support this 26

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    14

    Chapter 4: So, what does a

    highly functional, county-level,

    managed behavioral healthcare

    organization look like?

    27

    Chapter 4 Topics

    Clinical/Financial Design Process

    Network Development Process

    Understanding Risk & Payment Models

    Risk Management Planning

    Mini-Tutorial: How to Set Case Rates

    28

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    Clinical/Financial Design

    Clinical

    Planning

    Utilization

    Planning

    Cost

    Planning

    Financial

    Modeling

    1. What is the populationwe are serving?

    2. How many people willneed service next year?

    3. What kind of service willthey need?

    4. How much of eachservice will they need?

    5. What staff will we need toprovide the service?

    6. How much will theservice cost?

    7. How much revenue willbe generated?

    8. What will we do if thingsstart going south?

    29

    1. What is the population we are serving?

    Solano Flight SimulatorInput Screen: Population and Client Projections

    Solano Population FY 1997 Growth Jun-1999 Mix

    Child & Adolescent 97,744 1.0% 98,721 26.4%

    Adults 245,847 1.0% 248,305 66.4%

    Older Adults 26,909 1.0% 27,178 7.3%

    370,500 374,205 100.0%

    Total MediCal Eligibles FY 1997 Growth Jun-1999

    Child & Adolescent 17,360 1.0% 17,534

    Adults 20,789 1.0% 20,997

    Older Adults 5,251 1.0% 5,304

    43,400 43,834

    Kaiser MediCal Eligibles FY 1997 Growth Jun-1999

    Child & Adolescent 3,600 0.0% 3,600

    Adults 4,311 0.0% 4,311

    Older Adults 1,089 0.0% 1,089

    9,000 9,000

    Non-MediCal Population FY 1997 Jun-1999

    Child & Adolescent 80,384 81,188

    Adults 225,058 227,309

    Older Adults 21,658 21,875

    327,100 330,371

    30

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    16

    2. How many

    people will

    need service

    next year?

    Solano Flight SimulatorInput Screen: Population and Client Projections

    Child & Adolescent Cases FY 1997 CY 1997 Growth Jun-1999 Mix

    MediCal 1,264 740 0.0% 1,264 80.6%

    Medicare & Insurance 5 2 5.0% 5 0.3%

    Indigent 285 276 5.0% 299 19.1%

    1,554 1,018 0.9% 1,569 100.0%

    Adult Cases FY 1997 CY 1997 Growth Jun-1999 Mix

    MediCal 2,817 2,100 -25.0% 2,113 58.8%

    Medicare & Insurance 292 52 0.0% 292 8.1%

    Indigent 763 1,189 56.0% 1,190 33.1%

    3,872 3,341 -7.2% 3,595 100.0%

    Older Adult Cases FY 1997 CY 1997 Growth Jun-1999 Mix

    MediCal 167 147 10.0% 184 77.3%

    Medicare & Insurance 16 8 10.0% 18 7.4%

    Indigent 33 41 10.0% 36 15.3%

    216 196 10.0% 238 100.0%

    Cases - All Ages FY 1997 CY 1997 Jun-1999 Mix

    MediCal 4,248 2,987 3,560 65.9%

    Medicare & Insurance 313 62 315 5.8%

    Indigent 1,081 1,506 1,526 28.3%

    5,642 4,555 5,401 100.0%

    MediCal Penetration FY 1997 CY 1997 Jun-1999

    Child & Adolescent 7.3% 4.3% 7.2%

    Adults 13.6% 10.1% 10.1%

    Older Adults 3.2% 2.8% 3.5%

    9.8% 6.9% 8.1%

    Overall Penetration FY 1997 CY 1997 Jun-1999

    Child & Adolescent 1.6% 1.0% 1.6%

    Adults 1.6% 1.4% 1.4%

    Older Adults 0.8% 0.7% 0.9%

    1.5% 1.2% 1.4%

    31

    How Many People

    Snoh Skagit San Juan Island Whatcom Total

    1. Total PopulationChildren (0-17) 171,939 27,621 2,742 18,322 42,234 262,858

    Transition Age (18-20) 25,611 4,574 338 2,807 11,351 44,681

    Adults (21-59) 371,198 56,703 8,256 39,651 99,253 575,061

    Older Adults (60+) 87,053 22,002 4,163 15,220 28,962 157,400

    Total 655,801 110,900 15,499 76,000 181,800 1,040,000

    2. Target Population (0-17: < 250%, 18+:

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    17

    3. What kind of service will they need?

    Solano Flight SimulatorInput Screen:

    Service Modality

    Unit

    Hrs

    per Std

    Hr

    Individual/Family Tx/Rehab Hr 1.0

    Group Tx (2:1) Hr 2.0

    Group Tx (4:1) Hr 4.0

    Group Tx/Rehab Hr 6.0

    Dual Dx Support Groups Hr 6.0

    Psych Eval & Consultation Hr 1.0

    Medication Mgmt/Prescribing Hr 1.0

    Intensive Home/Comm Based Svcs Hr 1.0

    Part Hosp/Daily Support Hr 3.0

    Day Treatment Hr 10.0

    Day Treatment/Child Hr 6.0

    Rehab Clubhouse Hr 12.0

    Vocational Hr 1.0

    School Based Consults Hr 1.0

    Care Coordination Hr 1.0

    Targeted Case Management Hr 1.0

    Interdisciplinary Consults Hr 0.5

    Solano Flight SimulatorInput Screen: Inpatient and Residential Demand

    Jun-1999

    Adult Child Older Adult Total

    Acute InpatientAdmissions 250 53 11 314

    Projected Days 2,525 594 94 3,212

    IMDsAdmissions 84 - 13 97

    Projected Days 10,164 - 1,573 11,737

    Crisis ResidentialAdmissions 115 24 - 139

    Projected Days 2,211 336 - 2,547

    Adult ResidentialAdmissions - - - -

    Projected Days - - - -

    Child Intensive Res.Admissions - 18 - 18

    Projected Days - 1,800 - 1,800

    33

    4. How much of each service will clients need?

    Solano Flight SimulatorInput Screen: Tx Pkgs - Direct Time Only

    Adult Mental Health Services

    Service Modality

    Unit

    Hrs

    per Std

    Hr

    Ad

    ult

    Lev

    el 1

    a

    Ad

    ult

    Lev

    el 1

    b

    Ad

    ult

    Lev

    el 2

    a

    Ad

    ult

    Lev

    el 2

    b

    Ad

    ult

    Lev

    el 3

    a

    Ad

    ult

    Lev

    el 3

    b

    Ex

    cep

    tio

    n t

    o

    LO

    C

    Ad

    ult

    Lev

    el 4

    Individual/Family Tx/Rehab Hr 1.0 4.0 2.0 4.0 25.0 40.0 - - 6.0

    Group Tx (4:1) Hr 4.0 - 28.0 8.0 80.0 - - -

    Group Tx/Rehab Hr 6.0 - 24.0 50.0 - - -

    Dual Dx Support Groups Hr 6.0 - 24.0 20.0 10.0 80.0 - - -

    Psych Eval & Consultation Hr 1.0 0.2 1.0 1.0 1.0 2.0 - - 2.0

    Medication Mgmt/Prescribing Hr 1.0 0.4 4.0 6.0 6.0 7.0 - - 12.0

    Part Hosp/Daily Support Hr 3.0 - - - 30.0 60.0 - - -

    Vocational Hr 1.0 - 2.0 2.0 4.0 6.0 - - -

    Care Coordination Hr 1.0 1.0 1.0 2.0 6.0 - - 6.0

    Targeted Case Management Hr 1.0 - 2.0 6.0 6.0 12.0 - - 12.0

    Interdisciplinary Consults Hr 0.5 - - 6.0 6.0 8.0 - - 6.0

    Total Hours (Non-Standardized) 4.6 36.0 74.0 122.0 351.0 0.0 0.0 44.0

    Total Hours (Standardized) 4.6 16.0 42.3 73.7 150.7 0.0 0.0 50

    Median Standard Service Hours of Range 10.0 25.0 115.5 115.5 290.5 290.5 0.0 50.0

    Range of Standard Service Hours - Low End 0 0 51 51 181 181 401 45

    Range of Standard Service Hours - High End 20 50 180 180 400 400 9999 250

    34

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    18

    How Much Service More and more systems are using the LOCUS to develop Level

    of Care Systems.

    It is a national tool developed by the American Association of Community Psychiatrists to guide assessment, level of care placement decisions, continued stay criteria, and quality monitoring.

    It also allows system planners to understand how many low, medium and high need clients are in the system.

    LOCUS Score

    indicates Level of

    Care

    Subscale used to

    finalize Level of

    Care

    Services planned from

    those listed for the Level

    of Care, based on the

    expected amount of care

    Services delivered based on plan of

    care

    LOCUS used to reassess at

    annual review, or

    if there is a

    question about

    Level of Care

    Services adjusted, based on Level of Care,

    including step up or step

    down, discharge and

    aftercare plan

    Aggregate data used to assess system wide issues, gaps, under or over service,

    workload, program needs, etc.

    35

    Locus Analysis Example

    How many people at each level?

    How much service provided expected versus actual?

    36

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    19

    Locus Score Analysis

    37

    How Much Service

    Multnomah County: Adult System of Care Projections

    Jan-Dec 2006 - Oregon Health Plan Enrollees

    Screening &

    Triage Only Basic Services

    Recovery Mainten-

    ance

    Low Intensity

    Community

    Based

    Services

    Locus Level N/A Locus 0 Locus 1 Locus 2

    Locus ScoreAvailable to

    all Clients< 10 10 to 13 14 to 16

    Clients & Case Mix

    Case Mix 7.2% 19.9% 21.4% 8.8%

    Clients Served 479 1,331 1,433 590

    Average Length of Stay and Treatment Slots

    ALOS 1 3 6 8

    Slots 40 333 717 393

    Units of ServiceAvg. Units/Case 1 4 10 15

    Unit of Measure Std Hr Std Hr Std Hr Std Hr

    Completion Rate 70% 70% 70% 70%

    Paid Units/Case 0.70 2.80 7.00 10.50

    Services 335 3,727 10,031 6,195

    Category IV: General Outpatient Mental Health

    Services

    38

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    20

    How Much ServiceMultnomah County: Adult System of Care Projections

    Jan-Dec 2006 - Oregon Health Plan Enrollees

    Category I:

    ACT

    Category II:

    DBT

    Assertive

    Community

    Treatment

    Dialectical

    Behavioral

    Therapy

    Screening &

    Triage Only

    Low Intensity

    Community

    Based

    Services

    High Intensity

    Community

    Based

    Services

    Medically

    Monitored Non-

    Residential

    Services

    Locus Level Locus 4 Locus 4 N/A Locus 2 Locus 3 Locus 4

    Locus Score20+

    generally 3 to

    4 on all scale

    20+

    generally 3 to

    4 on all scale

    Available to

    all Clients14 to 16 17 to 19 20+

    Clients & Case Mix

    Case Mix 3.0% 0.4% 4.3% 5.6% 16.6% 12.8%

    Clients Served 200 26 286 373 1,113 855

    Average Length of Stay and Treatment Slots (the number of persons who will be served at one time)

    ALOS 12 12 1 8 11 12

    Slots 200 26 24 249 1,020 855

    Units of Service

    Avg. Units/Case 100 72 1 15 32 72

    Unit of Measure Std Hr Std Hr Std Hr Std Hr Std Hr Std Hr

    Completion Rate 95% 95% 70% 70% 70% 70%

    Paid Units/Case 95.00 68.40 0.70 10.50 22.00 50.40

    Services 19,000 1,778 200 3,917 24,486 43,092

    Category III: Services for Severely Mentally Ill

    39

    How Much Service

    This slide projects substance abuse service need for the mid-sized California County.

    Solano County Substance Abuse Fiscal and Utilization Model

    Service and Cost Projections

    High Scenario 9.0% penetration

    Complete Partial* Total

    Average Number of 40% 60% Service

    Svc. Units Users Units Svc Units Svc Units

    Entry Services

    Detox 5 934 1,868 1,401 3,269

    Extended Stabilization 5 234 467 350 817

    Pre Treatment 5 584 1,168 876 2,043

    Subtotal 1,751 3,503 2,627 6,130

    Ongoing Services

    Intensive OP/day habilitation 14 304 1,700 1,275 2,975

    OP Level1 27 883 9,533 7,150 16,683

    OP Level 2 131 1,027 53,840 40,380 94,219

    OP Level 3 340 - - - -

    Subtotal 1,910 63,373 47,530 110,902

    Residential 1 28 117 1,308 981 2,288

    Residental 2 178 117 8,313 6,235 14,548

    Residential 3 365 - - - -

    Residential 1a 90 234 8,407 6,305 14,712

    Subtotal 467 18,028 13,521 31,548

    Total Ongoing Clients 2,377

    Average Intensive OP/day habitation days/client 9.8

    Average OP hours/client 58.1

    Average Residential days/client 67.6

    40

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    21

    5. What

    staff will

    we need

    to

    provide

    the

    service?

    Solano Flight SimulatorInput Screen: Adult Clinician Staffing Projections

    Staffing Mix by Modality

    MD

    RN

    Ph

    D

    Lic

    en

    sed

    No

    n-

    Lic

    en

    sed

    Co

    nsu

    mer

    MH

    Co

    un

    s

    OT

    /RT

    /FN

    P

    Oth

    er

    Oth

    er

    Oth

    er

    To

    tal

    Individual/Family Tx/Rehab - 10% - 70% 10% 10% - - - - 100%

    Group Tx (2:1) - 10% - 75% 15% - - - - - 100%

    Group Tx (4:1) - 10% - 75% 15% - - - - - 100%

    Group Tx/Rehab - - - 50% 20% 30% - - - - 100%

    Dual Dx Support Groups - - - 50% 15% 35% - - - - 100%

    Psych Eval & Consultation 90% - - - - - 10% - - - 100%

    Medication Mgmt/Prescribing 65.0% 20% - - - - 15% - - - 100%

    Intensive Home/Comm Based Svcs - 40% - 20% 30% 10% - - - - 100%

    Part Hosp/Daily Support 5% 30% - 35% 15% 15% - - - - 100%

    Day Treatment - - - 30% 30% 40% - - - - 100%

    Vocational - - - 30% 55% - 15% - - - 100%

    School Based Consults - - - 90% 10% - - - - - 100%

    Care Coordination 15% 15% - 50% 10% 10% - - - - 100%

    Targeted Case Management - 10% - 30% 30% 30% - - - - 100%

    Interdisciplinary Consults 15% 15% 5% 50% 10% 5% - - - - 100%

    Clinician Productivity

    Jun-1999 75% 75% 75% 75% 75% 75% 75% 75% 75% 75%

    Work Hours per Year 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800

    Outpatient FTE Demand vs. Capacity Jun-1999

    FTE Demand 7.41 6.34 0.30 26.07 8.35 6.89 1.72 - - - 57.07

    Current County FTE Capacity 8.55 7.00 1.76 12.60 25.34 - 1.00 - - - 56.26

    Shift in County FTEs (0.89) (0.44) (1.45) 0.68 (5.81) 7.13 0.78 - - 0.00

    Change in County FTEs - - -

    Contractor FTEs - - - 13.70 - - - - - - 13.70

    Subtotal 7.66 6.56 0.31 26.98 19.53 7.13 1.78 - - - 69.96

    Added "Overflow" Network FTEs - - - - - - - - - - -

    Excess FTEs 0.26 0.22 0.01 0.91 11.18 0.24 0.06 - - - 12.89

    41

    Topic 2: Network Development ProcessStep 1: Design Process resulting in Demand Projections

    Step 2: RFP soliciting Capacity for specific services

    Step 3: Score RPF Responses and match Capacity with Demand (Note: If insufficient capacity, develop Plan to build capacity over time)

    Step 4: Announce Agency Contracts and Caps by Service Area; if non-"winning" providers, identify as potential "overflow capacity"

    Step 5: Develop Provider Manual with detailed rules; develop Utilization and Utilization Management Systems; develop client Transition Plan

    Step 6: Agency Contracting including Performance Measures

    Step 7: Extensive Provider Training

    Step 8: Begin operating under new system

    Step 9: Intensive Concurrent Review of Outpatient Level of Care assignments, checking inter-rate reliability, scoring each agency

    Step 10: Provide re-training as needed to agencies not meeting standards

    Steps 11: Re-evaluate inter-rate reliability

    Step 12: Develop and monitor corrective action plans, as needed

    Step 13: If continued problems, no new authorizations; if continued problems, cancel contract

    42

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    22

    Clinical/Financial Design

    Clinical

    Planning

    Utilization

    Planning

    Cost

    Planning

    Financial

    Modeling

    1. What is the populationwe are serving?

    2. How many people willneed service next year?

    3. What kind of service willthey need?

    4. How much of eachservice will they need?

    5. What staff will we need toprovide the service?

    6. How much will theservice cost?

    7. How much revenue willbe generated?

    8. What will we do if thingsstart going south?

    43

    Management Flight Simulator

    We cant compute cost in a managed care environment until we determine the payment models we will use (next topic)

    We cant compute risk held by the county and the network providers until we determine the payment models we will use (next topic)

    This isnt the Short-Doyle/Drug Medi-Cal Fee for Service environment that weve been living in for the last several decades

    ConsumersService Mix

    Units of Service

    Service StaffProductivity Hours

    Available Hours

    Direct Staff Costs

    Other DirectOverhead

    Risk Reserve

    Enrollees

    ConsumersService Units

    Capitation/Case/FFS Rates

    Demand Capacity Revenue Expense

    44

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    23

    Update the Model Frequently

    Model Update

    Model Update afterall current

    consumers have

    been assessed

    System in

    Balance?

    Initial Modeling

    Demand/CapacityRevenue/Expense

    based on budgets &

    historical data

    Yes

    No

    Quarterly Updates

    Quarterly Updates tothe model as the

    year unfolds

    Next Year's Budget

    Revise how moneyis programmed to

    better follow

    consumers

    Proceed with

    Caution

    45

    Topic 3: Understanding Risk & Payment Models

    (for some, the next section is going to look like Im on a foreign planet)

    46

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    47

    Understanding Risk & Payment Models

    There are multiple levels of financial risk

    The other side of financial risk is reward

    The payment mechanism is the method by which risk is transferred from payer to provider

    The Managed Care Risk Triangle

    and Payment MechanismsManaged Care Risk/Reward Triangle

    How do the risk types correlate

    If I bear risk how can I lose money? to managed care funding types?

    Costs per unit of service are higher 1.

    than the payment rates. Cost

    Risk

    Individuals require more units of service Discounted

    for the condition for which they are being 2. Utilization Fee for

    treated than was originally estimated. Risk - Individual Service

    The mix of consumers is weighted Case Rate

    towards a higher severity level than 3. Utilization

    was originally estimated. Risk - Case Mix

    The number of individuals using

    services is greater than was 4. Penetration

    originally estimated. Risk

    The population grows Capitation

    without additional 5. Population (PMPM)*

    capitation payments.** Risk **

    48

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    49

    Payment Mechanisms

    Discounted Fee for Service: Payment for all authorized services from a defined fee schedule, minus a per visit co-payment

    Stratified Case Rate: Payment of a flat fee per patient for a predefined episode at a specific level of care, regardless of how much time and money is spent

    Blended Case Rate: Payment of a single flat fee per patient for a predefined episode regardless of how much time and money is spent

    Capitation: Payment of a fixed fee per enrollee (per member per month) to provide all medically necessary services to the covered population

    Types of Risk (Example)

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    Topic 4: Two-Part Risk Management PlanPart I: Risk Management System Design and Development

    Step 1:Develop a clinical design and corresponding utilization management model that matches the enrollee population, provider network and staffing capacity.

    Step 2:Project penetration, utilization, and cost by service area and modality group, updating the Utilization/Financial Model.

    Step 3:Identify potential problems that could occur that would result in higher utilization/cost than projected. Develop a set of strategies to use, should these problems occur.

    Step 4:Identify priority service enhancement projects, should excess funds accumulate.

    Step 5:Develop a Data Tracking and Forecasting Model to monitor authorizations and claims, including an IBNR projection tool and authorization completion estimate algorithm.

    51

    Two-Part Risk Management PlanPart II: Risk Management System Operation

    Step 6: Monitor revenue, clients, authorizations, claims, and other

    expenses on a weekly and monthly basis.

    Step 7: Update the Data Tracking and Forecasting Model with

    information from above, projecting revenues and expenses through

    year-end.

    Step 8: If reality is unfolding as expected, continue monitoring. If

    revenues or costs are trending in the wrong direction, go back to Steps

    4 and/or 5.

    Step 9: Potential for losses: Analyze the contributing factors, match with

    the risk management strategies, and kick in the best strategy.

    Step 10: Potential for excesses: Analyze the contributing factors and

    determine if under-service is occurring in a way that requires corrective

    action. If yes, work with the appropriate parties to complete a

    corrective action plan. If no, consider pursuing service enhancement

    projects.52

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    Payment Model Decision-MakingUse the following 3 Step Process to determine how you will pay

    providers in the network:

    1. Determine Your Potential Payor Sources and Reimbursement Methods

    Capitation

    Case Rate

    Fee for Service

    2. Determine Desired Risk Delegation to Providers

    Penetration risk (use subcapitation)

    Case mix risk (use typical case rates)

    Individual utilization risk (use stratified case rates)

    Cost Risk (use fee for service with withholds and/or grant funding)

    3. Select provider reimbursement method(s)

    53

    Sample Reimbursement Model(Network Infrastructure)

    Walk-In Center

    Access CenterMobile Crisis

    Unit

    InpatientServices

    Prevention &Early

    Intervention

    Programs

    Psycho-educational

    Services

    Brief Treatment

    ServicesRehab Services

    ResidentialServices

    Cost Risk - Grant Funded with Performance Withhold

    Individual Utilization Risk - Case Rate with Risk Corridor

    Cost Risk - Fee for Service with Utilization Withhold

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    Topic 5: How to set Case Rate or Capitation Rates

    55

    For More Information

    56

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    For More Information

    57

    Finishing with a Familiar Slide Many California Counties are

    going to have to up their

    game to become full blown

    Medicaid Behavioral Health

    Plans (e.g. true managed

    care organizations)

    With greater distinction

    between the roles of:

    Medicaid Health Plan

    Service Provider

    An build a more robust

    provider network and

    managed care infrastructure

    58

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