AHM 250 Summary

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AHM 250 - MANAGED

HEALTHCARE: AN
INTRODUCTION (Third Edition)
Su!r" Do#u$nt
%or Int$rn!& U'$ On&"
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Table of Contents
The Evolution of Healthcare Delivery and Financing ................................................ 1
Basic Concepts of Managed Healthcare ................................................................. 8
Managed Care Organiations! "lans! and "roducts ................................................ 1#
Managed Healthcare for $pecialty $ervices .......................................................... %8
"rovider Organiations ....................................................................................... &'
Health $yste(s Manage(ent ............................................................................. &8
Medical Manage(ent ) ....................................................................................... '#
Medical Manage(ent )) ...................................................................................... *'
Managed Healthcare Operations ) ...................................................................... #*
Managed Healthcare Operations )) ...................................................................... +#
,egislative and -egulatory )ssues in Managed Healthcare ..................................... ./
Ethical )ssues in Managed Healthcare ................................................................ 111
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The Evolution of Healthcare Delivery and Financing
Reading 1A: The Evolution of Healthcare Delivery and Financing in the United States
Define (anaged care
)dentify the (a0or factors that influenced the evolution of healthcare delivery and
financing in the 1nited $tates
Descri2e the role of the govern(ent in the develop(ent of healthcare delivery and
financing
,ist and descri2e so(e factors that li(it accessi2ility to healthcare
Discuss ho3 the (eaning of 4uality 5as it relates to healthcare6 has changed
Reading 1: asic Conce!ts of enefits" Coverage" and #nsurance
E7plain ho3 traditional inde(nity health insurance 3or8s
,ist so(e characteristics of the fee
9for9service pay(ent syste(
Define antiselection
E7plain ho3 deducti2les and coinsurance are used in traditional inde(nity plans
Descri2e so(e efforts co((only used to co(2at the rising costs of healthcare
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Reading 1A: The Evolution of Healthcare Delivery and Financing in the United States
$anaged Care
$yste( of healthcare financing and delivery or
:arious techni4ues of (anaging the financing and delivery of healthcare or
Different ;ind of organiations that practice (anaged care techni4ues
Acce!ted Definition #ntegration of both the financing and delivery of
healthcare %ithin a syste& that see's to &anage the accessibility "cost and
(uality of that care
Historical Factors
:ariations of Managed care have 2een around fro( the 1.//<s
Earliest e7a(ple of Managed Care Org 1.1/ = )re!aid )hysicians *rou! )ractices
These offered a range of (edical services thru e7clusive physicians in return for a
(onthly pre(iu(.
Blue Cross "lans = 1.%. for hospital rei(2urse(ent
Blue shield "lans = 1.&. for physicians rei(2urse(ent
)ndividual "ractice >ssociations 5)"><s6 3hich contracted 3ith physicians in independent fee9
for9service practices 3ere esta2lished in 1.*' as a co(petitive response to group practice
2ased HMO<s
Statistic 1999 81 million people enrolled in HMOs nearly as many as those in PPOs
and other non HMO plans
Federal H$+ Act of 1,-.
This was designed to reduce healthcare costs by increasing competition in the healthcare
maret and to increase access to healthcare co!erage "or indi!iduals without insurance or
with only limited insurance bene"its
/ 0ey Features
Federal (ualification re(uire&ent
o This act esta2lished a process 2y 3hich HMO<s could o2tain federal
4ualification.
o This 3as optional licensing = 5the state licensing 3as (andatory for all
HMO<s6.
o "lans 3ho elected for this option 3ere re4uired to (eet a series of standards
related to
Mini(u( 2enefit pac8ages
Enroll(ent and pre(iu(s
Financial sta2ility and
?uality >ssurance
Dual Choice )rovisions
o This re4uired that the e(ployers 3ith (ore than %* e(ployees offer a choice
of traditional inde(nity coverage or (anaged care coverage under either a
closed "anel HMO or an open panel HMO.
o Federally 4ualified HMO<s that 3anted to 2e part of this needed to su2(it a
for(al re4uest to the e(ployer
Federal Develo!&ent *rants and 1oans
o This offered funding to support planning and start of ne3 HMO<s and service
area e7pansion for e7isting HMO<s
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o >vaila2le only to federally 4ualified HMO<s
E2e&!tion fro& State 1a%s
o $o(e state la3s restricted the develop(ent of HMO<s
o This act e7e(pted federally 4ualified HMO<s fro( these $tate ,a3s
)ositives
The act did acco&!lish its goals of reducing costs and e2!anding access to
healthcare services3
Federal 4ualification did offer co&!etitive advantage to H$+5s entering the
healthcare &ar'et3
They sort of gave the& a 6sta&! of a!!roval5
Allo%ed the H$+ to !artici!ate in $edicare %ithout !roviding additional
docu&entation
The dual choice !rovision gave the H$+ access to the E&!loyer Seg&ent of
the &ar'et
The Federal grants and loans allo%ed effective co&!etition to the inde&nity
based insurance !lans
7egatives
"artly ha(pered their co(petitive position
o @eeded to satisfy a lot of re4uire(ents on ?uality and Financial $ta2ility
These did @OT apply to )nde(nity 2ased progra(s or @on9?ualified MCOAs
$lo3 i(ple(entation of the la3s
>(end(ents 2et3een 1.+# to 1..#
o These eli(inated and reduced the strict re4uire(ents i(posed on Federally
?ualified HMO<s
o Dual Choice Mandate repealed in 1..*
o >llo3ed greater fle7i2ility in designing and (ar8eting these products and
strengthened their e(phasis on ?uality
#ntroduction of 7e% )roducts and )rogra&s
)referred )rovider +rgani8ations
o $ervices 2y a net3or8 of providers
o ,i(ited services provided 2y a non9net3or8 of providers
o :isit 3ithout a specialist referral
)oint of Service )roducts
o Co(2ination of traditional inde(nity insurance and (anaged care
o Can ta8e 2oth )n or Out of net3or8 providers
o @on @et3or8 providers involve (ore li(ited 2enefits and higher out of poc8et
e7penses
o :isits to net3or8 specialists re4uire "C" approval
)hysician9Hos!ital +rgani8ations
o Coalitions of hospitals and physicians
o :ehicles for contracting 3ith MCO<s
Carve9+uts
o Organiations that contract 3ith MCO<s to provide specific types of services
Mental Health
Chiropractors
Dental
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:ision
"har(acy services thru specialty net3or8s
*overn&ent #nfluence
Financing Medicare, Medicaid, Federal Employee Health Benefits Program (FEHBP) and State
Childrens health Insrance Program (SCHIP)
The government is increasingly turning to managed care as an alternative to traditional fee for
indemnity programs.
Statistic ! Medicare "#$ million people enrolled in %&&&# 'lso %(#% Million Medicaid recipients
enroll in some form of MC)#

Econo&ic Factors
13 #ncreased in Healthcare Costs
a. )nflation
2. )ncreased cost of service for providers and insurers
c. -apidly E7panding Technology = e7pensive procedures
d. )ncreases in Malpractice ,a3suits
i. >3ard a(ounts increased
ii. "ractice Defensive Medicine = unneeded Be7pensive tests
e. Consu(er E7pectations
i. )ncreased health consciousness
ii. Cover at 3hatever cost and Freedo( to visit 3ho they li8e
iii. 1nnecessary Treat(ent =Medically unnecessary procedures = Co((on
cold
f. ,ac8 of )ncentive to Control Costs
i. Traditional fee for service = (ore services (ore payC
ii. "ay(ent occurred after service rendered
:3 Cost Shifting
a. $o(e coverage to people 3ho can<t pay Bcan pay at reduced rates
2. "hysicians and hospitals receive lo3er pay(ents for these services
c. E(ergency roo( treat(ent
d. S!read these unrei&bursed costs to other !aying !atients ; This
"ractice of shifting costs fro( non paying to regular custo(ers is Cost
Shifting
.3 Fraud
a. 1// Billion (ar8et annually
2. 1/D of national Healthcare 2ill
c. E.##.1' per fa(ily e7cess cost 2ecause of Fraud
Technological Factors
)nfor(ation (anage(ent has i(proved significantly
$tatistical analysis has helped i(prove cost and 4uality
"har(acists can 9 Deter(ine eligi2ilityB>dverse reaction to a drugBFor(ulary
co(plianceB "reauthoriation re4uire(entsBCo9pay(ent! deducti2le and coinsurance
re4uire(ents

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Clai(s >uto(ation
o -educed $taffB )ncreased >ccuracyB $hortened Turnaround ti(esBTurning
health plan data into actual infor(ation
)a!er to Electronic ; Costs do%n by :<=
Future A!!lications of technology
o >d(inistrative = E(ployee -ecruit(entBOnline for(ularyBConsulting via e(ail
o Custo(er $ervice = "hysician profilesBCusto(er feed2ac8B-eferral auto(ation
o Clinical >pplications = health and drug infoB disease (g(tB Medical Call
Center
Social Factors
Higher e(phasis on ?uality and access to healthcare has happened
$aturing )o!ulation9 )ncrease in (edian age
o Higher increases foreseen in the ** = #' category
o Higher illnesses = and 2etter (echanis(s to handle these illnesses
Access to Services ; // $illion did not have access in 1,,>
o Most coverage is thru an e(ployer sponsored group plan = as e(ployee or
dependent
o B1T e(ploy(ent status does not guarantee health coverage
o Higher !ro!ortion of sel" employed and pri!ate sector "irms with # $%
employees are uninsured
High Cost
)nverse relationship 2et3een e(ployer sie and pre(iu(s
o "oor Health -is8s
Don<t 4ualify
Could have pree7isting conditions
o 1neven Distri2ution of Medical $ervices
:ery lo3 coverage in rural areas
Hospitals have closed in these areas and in inner city localities these
are disproportionately higher than the rest of the country
De(ographically = coverage is lo3er in $outh Central and $outh
Festern parts 3ith large rural populations
>lso lo3er inco(eBe(ploy(entBracial and ethnic groups percentage
o ?uest for ?uality
E(ployers have 2eco(e (ore discri(inatory on cost
Consu(ers 3ant higher 4uality as the (ost i(portant factor
Ho3 is 4uality (easured
$afetyB"reventive CareB >ccess to pri(ary and specialty
careBcare for chronic illness
@ational Co((ittee for ?uality >ssurance 5@C?>6
o Health "lan E(ployer Data )nfor(ation $et 5HED)$6
>(erican >ccreditation Healthcare Co((ission 51->C6
Goint Co((ission of >ccreditation of healthcare organiations
5GC>HO6
Reading 1: asic Conce!ts of enefits" Coverage" and #nsurance
$tatistic = 1.88 Traditional inde(nity +1D of the (ar8et share of E(ployer $ponsored
group Health "lans
1..# = +'D 3ere (anaged care and %#D 3ere inde(nity plans
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Traditional #nde&nity Coverage or Fee9for9service9 )ay&ent syste&
&ndemni"y means to protect "rom 'pro!ide compensation "or loss or damage( This
reimburses the insured "or amounts paid to co!er medical e)penses
E(ployer is "olicy Holder "ays pre(iu(s can collect partBfull fro( e(ployees
)nsured visits doctor receives treat(ent su2(its a clai( to insurer insurer pays
2enefit to insured or healthcare provider
asic Conce!ts
1. -is8
%. ,oss rate = nu(2er of ti(es a loss occurs in a group
&. 1nder3riting B $election of ris8s = "rocess of identifying and classifying the potential
degree or ris8 represented 2y an insurance applicant
'. >nti9selection = Tendency of higher than average ris8 people to apply for insurance
than 2elo3 average or average ris8 people
*. )ndividual insurance evaluation is :E-H different fro( group evaluation
a. 7eed to !rovide evidence of insurability in individual insurance
i. >ctivities! health history etc
2. Iroup = chec8 if the group (eets the under3riting re4uire(ents
#. Iroup
a. ;ey 4uestion = Can you predict the ,oss rate to a great e7tentJ
2. Can you avoid >nti selection
c3 )rove 6evidence of #nsurability5 if he is a late entrant
d. "rove evidence of insura2ility in case of s&all grou!s
+. Characteristics of a group chec8ed include
a. Iroup $ie
2. Iroups Co(position
i. $teady flo3 in and out of (e(2ers
ii. >ge level of the group
iii. Iender = fe(ales are (ore suscepti2le than (en
c. ,evel of participation
i. @eed a +*D or higher to allo3 other3ise anti9selection danger
d. ,evel of Benefits
i. @ot usually allo3ed to select 2enefits
ii. But no3 Cafeteria plans are allo3ed
e. Occupational Haard
f. Ieographic ,ocation
Features of traditional inde&nity )lans
Deducti2les and Coinsurance
o The *oinsurance is calculated on the balance amount a"ter deductible
"ree7isting Conditions
o Condition for 3hich insured received (edical care & (onths prior to coverage
o Iroups policies say that a condition is @O longer pree7isting if
The insured has not received treat(ent 3ithin the last three (onths
for that condition
The insured has 2een covered under that plan for the last 1% (onths
H)">> li(its this significantly
#nitial Efforts to Control and $anage Care
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Cost $haring
o Coinsurance! Deducti2les and Co9pay(ents
o Higher ris8 for insured if he increased these &= 2ut lo3er pre(iu(s
Changing "lan DesignBCoverage Options
o Use of Coordination of enefits
Consider one plan as pri(ary! other as secondary
"ri(ary "ays the full 2enefit a(ount up to the li(it
$econdary pays the difference 2et3een the a(ount of e7penses and
a(ount paid 2y the pri(ary
@or(ally )nsured can get COM",ETE -E)MB1-$EME@T of all e7penses
= including out of "oc8et e7penses
@o3 a ne3 7on Du!lication of benefits )rovision in the secondary
payers plan will limit the amount paid by the secondary payer to the
di""erence between the Primary payer paid amount and the amount
the secondary payer would ha!e paid i" it was the Primary Plan
)(ple(enting Cost Contain(ent "rogra(s
o Outpatient care
o "read(ission testing
o Outpatient $urgery
o 1tiliation revie3 and case (anage(ent
o %
nd
$urgical Opinion
But carries a high cost of second opinion
-edundant if you have a good utiliation revie3 progra(
"reventive Care and Fellness "rogra(s
o Higher coverage on preventive care = chec8ups! i((uniations !hypertension
screenings ! (a((ogra(s etc
o Fellness progra(s = nutritional counseling ! fitness and e7ercise progra(s
$anaged Care still e&erged des!ite the best efforts of the inde&nity insurers
There had to be a logical lin' created bet%een the financing and delivery? ;
$anaged !rovided this lin'
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asic Conce!ts of $anaged Healthcare
Reading :A: $anaged Care 9 enefits and 7et%or's
Define pri(ary care and descri2e its role in a (anaged care plan
Define copay(ent
Define net3or8 and e7plain its i(portance in a (anaged care plan
Descri2e ho3 (anaged care plans influence and affect availa2ility of healthcare
Reading :: Financing $anaged Care
Discuss ho3 (anaged care plans co(2ine the financing and delivery aspects of
healthcare
Define capitation
E7plain ho3 capitation differs fro( fee9for9service co(pensation
)dentify and descri2e various financing arrange(ents 2et3een (anaged care plans and
physicians and hospitals
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Reading :A: $anaged Care 9 enefits and 7et%or's
$anaged Care and $C+s
Managed Care enco(passes (ore than 0ust cost contain(ent techni4ues.
M*O +ntity that utili,es certain concepts or techni-ues to manage the accessibility. cost
and -uality o" healthcare(
Difficult to define it very clearly = The follo3ing can 2e descri2ed as MCO<s
1. )nde(nity "lans 3ith Managed care Co(ponents
%. ""Os
&. HMOs
'. "O$
*. "hysician Hospital Organiations
#. "hysicians Iroups
+. "hysician "ractice Manage(ent Co(panies
8. 1tiliation revie3 organiations
"lease note that increasing changes in la3s and regulations! Mergers and >c4uisitions has
resulted in the differences 2et3een these plans to co(e do3n rapidly.
0ey )layers
1. "roviders = "hysicians! @urses! Hospitals! ,a2s
%. "ayers = E(ployers! Federal >gencies! )nsurance Fir(s
&. "urchasers = "ay the pre(iu( for the healthcare plan
'. Me(2ers = Enrollees or Custo(ers
enefits
"rovide a co(prehensive set of Benefits = More than )nde(nity
These include "hysician $ervices! Hospitaliation! Fell Child Care! "renatal
Care! "eriodic Health e7a(inations! Eye and Ear E7a(s! )((uniations! Ho(e
@ursing! E(ergency Care! Diagnostic services! Outpatient $ervices! )npatient and
$hort Ter( -eha2 services! "hysical! occupational and $peech Therapy
A lot of these things %ere not covered by inde&nity ; 2ut (anaged care
has found the( to 2e cost effective in the long ter(.
$o(e of these services are offered using a s(all Co9pay(ent.
Other $ervices "rovided 2y MCO<s
i. >ncillary $ervices = ,a2! phar(acy! radiology! physical therapy!
(edical supplies
ii. "ri(ary care = Care 3ithout referral fro( another
iii. $pecialty care = secondary care = care delivered 2y specialists =
outpatient B in patient services provided 2y acute hospitals
$anaged Care have 1+@ER out of !oc'et s!ending than the Traditional
#nde&nity )lans
They place I-E>TE- e(phasis on "reventive Medicine to i(prove efficiency
There are nearly a 1AAA $A7DATED benefits re(uired by la%
,egislation is no3 done 2y 2oth $tate and Federal ,a3
+rgani8ed Syste& of Care
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67et%or'5
Iroups of "hysicians! Hospitals and other (edical care providers that a specific
(anage care plan has contracted to deliver (edical services to (e(2ers
Better 2enefits fro( choosing in9net3or8 providers
Contract also provider the utiliation and 4uality assurance
There is a $H>-ED financial -is8 no3C
,ocation and availa2ility of net3or8 providers
o @u(2er of "hysiciansBhospitals needed
o Ieographical location of (e(2ers
o Co(2ination $ervices = >ncillary and $econdary Care in the sa(e area
)ri&ary Care
This is general (edical care that is provided 3ithout referral fro( another physician
"ri(arily focused on preventive care and the treat(ent of routine in0uriesBillness
Contact "oint "ri(ary Care "hysician 9 Iate8eeper
o First contact 3ith the healthcare syste(
o Could 2e I"! )nternist! "ediatrician! OBBIH@! @urse! "hysicians >ssistant
o >lso called "ersonal Care "hysician! "ersonal Care "rovider
o Manages authoriation of all non e(ergency (edical procedures and referrals
to specialists
o Follo3 up on cases
o Tries to refer people to specialists in the net3or8 itself
o $o(e "lans allo3 t3o "C"<s = 3o(en can select an OBBIH@ and a nor(al
practitioner
o Shift fro& a *ate'ee!er role to 6Coordinator of Care5 role
)rovider Choice
Consu(ers are feeling that their freedo( is restricted
@e3 products 3hich offer lesser restrictions are 2eing introduced
,ots of consu(ers resisted change initially 2ecause of restricted provider choice
But the cost differential started pulling consu(ers to3ards Managed Care
Can control costs 2y
o Iiving Me(2er the )ncentive to select doctors in their net3or8
o @egotiating favora2le rates 3ith these providers
Enhancing Accessibility via the net%or'
There are (any 3ays in 3hich the MCOs can enhance the access to healthcare
1. "re(iu( and Cost $haring >rrange(ents
a. There are lo3er out of poc8ets as co(pared to )nde(nity plans = (a8ing the
access easier
%. E(phasis on "ri(ary Care! "revention and Fellness
a. These are little or no out of poc8et e7penses
2. "re(iu( discounts to e(ployees 3ith Fellness "rogra(s
c. Ireatest incentives to the custo(ers are given if they visit the "C"
d. Till no3 people 3ho did not have access to the "C" tried to go to e(ergency
roo(s to get treated for things 3hich could (ore cost effectively 2e done in a
pri(ary care setting
Utili8ation and 4uality $anage&ent
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/tili,ation Management is a mechanism that in!ol!es managing the use o" medical ser!ices
such that the patient recei!es necessary. appropriate. high -uality care in a cost e""ecti!e
manner
1M consists of the follo3ing 2asic techni4ues
De&and $anage&ent
o $trategies designed to reduce the overall de(and for services 2y providing
infor(ation to the users
Utili8ation Revie%
o Evaluation of the (edical necessity! efficiency and appropriateness of
healthcare services
Case $anage&ent
o Syste& of identifying &e&bers %ith s!ecific healthcare needs and
develo!ing a strategy to &eet these needs and coordinating and
&onitoring the delivery of these services
Disease $anage&ent
o This is a coordinated (ethod of preventive! diagnostic and therapeutic
(easures that focuses on (anage(ent of specific Chronic illnesses or (edical
conditions
4uality $anage&ent
Organi,ation wide process o" measuring and impro!ing the -uality o" healthcare pro!ided(
The "eatures o" this process include
?uality >ssurance progra( oversight and integrity 9 $enior E7ecutive
Credentialing
Me(2ers rights and co(plaints resolution process
Monitoring "hysician practice
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Reading :: Financing $anaged Care
Old $yste( = The provider 3ould 2e re3arded for e7cessive usage of his service. Ho3 does
(anaged care address this issueJ
Sharing of Ris'
Financial ris8 = The actual cost of a plan (e(2er<s care is diff fro( pro0ected cost
This no longer only rests 3ith the healthcare plan alone = shared 2y
e(ployersB(e(2ersBpayers also
#n Fee for Service the cost of (edical care is shared 2y
1. E(ployer = "ays pre(iu(
E(ployee = pays pre(iu(Bdeducti2les and coinsurance
%. Healthcare "ayer
&. "rovider = >ssu(es little or no ris8
The t3o ends of the spectru( = Fee for Service B99999999999999999 Ca!itation
Ca!itation
Method o" paying healthcare ser!ices based on the number o" patients who are co!ered "or
the speci"ic ser!ices o!er a speci"ied period o" time Simple terms Per Person Per
Capita.
Ho% does it %or'C
Critical Metric = The )er !erson !er $onth !ay&ent
$a(e a(ount paid irrespective of a(ount of service
The )rovider has assu(ed a lot of the financial ris'
Highly used in the rei&burse&ent of )C)5s
Capitation increases
1. Focus on prevent
%. Treat(ent of illnesses pro(ptly
&. )(prove the status of health
a. Health screenings
2. )((uniations
c. Follo3 up care
$a'ing Ca!itation )ay&ents
"ay(ents (ade to
)ndividual "C"<s
$pecialty "hysicians
Iroup of "C"s
Multi $pecialty groups of physicians
Hospitals and other "roviders
,arger the population! (ore sta2le is the utiliation rates of that population = (ore relia2le
esti(ation of the revenues to cover the costs.
Typical arrange(ents include
1. *lobal Ca!itation = Total Capitation. This is a pay(ent that covers virtually all of
the (e(2ers inpatient and outpatient e7penses including physicians! hospitals!
specialists and so(e ancillary services
2. )artial Ca!itation = > syste( that (ay include pri(ary care only 5and (ay2e
secondary care 6 2ut no ancillary services
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3. Carve out = > (edical service that is re(oved fro( the scope of service covered 2y
capitation pay(ent and is rei(2ursed as a separate pay(ent
)$)$ !ay&ents are influenced by
1. >ge
%. $e7
&. @u(2er of (e(2ers
'. 1sage
Ca!itation for !hysicians
@eed to identify the services to 2e included in the capitation pay(ent
Typically )reventive Services" +ut!atient care and hos!ital visits.
Other services (ay 2e i&&uni8ations" diagnostics testing and so&e surgical
!rocedures3
There is a 3ritten contract on 3hat is included 2et3een provider and MCO
1,,, ; -D= of all H$+ !lans used ca!itation as pay(ent for physicians
Ca!itation for Hos!itals
Clearly define the scope
Enforce the utiliation standards = through financial 2enefits
More difficult to (anage if the out of net3or8 option e7ists
o 7eed a DUA1 co&!ensation &echanis&
o -educes the Kin9net3or8< Capitation a(ount to pay for the out of net3or8
usage.
Solution 0ecalculate the capitation based on 1 o" member hospital admissions
that month
Hospitals 3hich purchase glo2al capitation (a8es a provision for sto!9loss
insurance to transfer ris' to a third !arty
+ther Financing Arrange&ents
These for( part of the spectru( 2et3een Fee9For9Service and Ca!itation
Discounted Fee9For9Service
o MCO<s see8 a discount fro( the physician<s nor(al fees
o "ay a(t E1+@ the usual. customary and reasonable 2ee 3/*04
o 1C- Fee 3as the fee charged 2y the old inde(nity insurance fir(s
o 1C- fees are deter(ined 2u collecting data on charges for specific conditions
2ased on the Current "rocedural Ter(inology Code
o C"T 3as started 2y the >(erican Medical >ssociation
)t<s a * digit code 3hich identifies the procedures perfor(ed 2y
providers
Fee Schedule
o >lso called Fee >llo3ance ! fee (a7i(u( or capped fee
o MCO deter(ines 3hat it thin8s is an accepta2le fee for a service
o $i(ilar to discounted fee9for9service
o This transfers financial ris8 fro( the MCO to the provider
o The $C+ is 7+T allo%ed to bill the Ebalance billF 9 ie the a(ount a2ove
the (a7 li(it to the (e(2er
Resource9based Relative Galue Scales
o Relative Galue Scales HRGSI or relative value of services
o >ssigns a 3eighted average value to each (edical procedure or service as
defined 2y the C"T code
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o To deter(ine the a(ount the MCO (ust pay to the physician! this is
&ulti!lied by a &oney &ulti!lier
o These (ultipliers are negotiated 2et3een the plan and providers
o #* )R+1E$ %ith straight RGS syste& ; #ncentive &echanis&
Surgery is given &ore %eightage than cognitive services
Disincentive to restrict services provided
o -esource Based -elative :alue $cale = This atte(pts to ta8e into account all
the resources that physicians use in providing care to the patients! including
physical! procedural! educational! (ental and financial
Diagnosis Related *rou!s
o Medicare tried to control costs 2y i(ple(enting a )ros!ective )ay&ent
Syste& H))SI for (edicare rei(2urse(ent hospitals
o )n the conte7t of (edicare! a PPS re"ers to a system o" reimbursement based
on 5iagnosis 0elated 6roups 3506s4
o D-I classifies hundreds of hospital services 2ased on nu(2er of criteria li8e
"ri(ary and secondary diagnosis ! $urgical procedures! >ge! Iender
and "resence of Co(plications
o The provider is paid a fi7ed a(ount 2ased for each D-I
o "ay(ent is (ade on the average e7pected usage of hospital resources in a
given geographical area
o Medicare ""$ = saved costs "roviders receive a fi7ed co(pensation "E-
HO$")T>,)L>T)O@! regardless of costBlength of stay.
o MCO<s have started using this route for rei(2ursing hospitals
Salary
o "ay salaries to physicians
o Based on average earnings and also have perfor(ance 2onuses and incentive
pay(ents
o $o(e level of ris8 sharing
)er Die&s
o )ay a s!ecific negotiated rate !er in!atient Day
o Differs 2ased on service
o :ariation includes a higher per die( charge for the first inpatient day
o There is a 6Sliding scale5 of rei(2urse(ent 3ith the discount increasing
3ith patient volu(e
o For8s 2est in hospitals 3here the utiliation patterns are predicta2le
+ther )rovisions
o 1se of Fithhold
This is a percentage of the provider<s pay(ent that is held 2ac8 during
a plan year3 This is used to offset or pay for any cost overruns for
referral or hospital services. The rest of the (oney is then returned
These are (ost co((only used for capitation and Fee9$chedule
rei(2urse(ents
These values range 2et3een *D and %/D
o -is8 pools for specific services
These could include referral 5specialty care6! hospital and institutional
care and ancillary services
MCO pays
Capitation a(ount to each "C"
>dditional "M"M into a referral pool
"M"M into a hospital pool and
1
Cognizant AHM
"M"M into an ancillary pool
Once these e7penses are (ade! any e7cess funds are paid to
physicians 3ho participate in the pool
1!
Cognizant AHM
$anaged Care +rgani8ations" )lans" and )roducts
Reading .A: The Health $aintenance +rgani8ation HH$+I
)dentify and descri2e the general characteristics of HMOs
Reading .: Ty!es of H$+ $odels
Differentiate 2et3een a closed9panel HMO and an open9panel HMO
Distinguish a(ong the various HMO (odels in ter(s of provider relationships and
co(pensation arrange(ents
Reading .C: ))+s" )+Ss" and $anaged #nde&nity
Descri2e a preferred provider organiation and e7plain ho3 it differs fro( other types of
(anaged care plans
,ist and descri2e t3o characteristics co((on to (ost "O$ products
Descri2e one (a0or difference 2et3een an E"O and a ""O
1"
Cognizant AHM
Reading .A: The Health $aintenance +rgani8ation HH$+I
Health Maintenance Organization is a healthcare system that assumes or shares both
the "inancial riss and the deli!ery riss associated with pro!iding the medical ser!ices to a
!oluntarily enrolled population in a certain area in return "or a "i)ed "ee
These are also referred to as )re!aid *rou! )ractices
Most states re4uire the( to 2e classified as a corporation.
@eed to co(ply 3ith regulations in >,, the states they operate.
May 2e for9profit or not9for9profit type of corporations
ac'ground
"opular in the 1.+/<s 2ecause of federal legislations the HMO act of 1.+& re(oved so(e
2arriers
This act allo3ed the( to 2e Federally Certified and pre9e(pt state la3s in so(e cases
To 2e federally 4ualified the HMO could not
o E7clude pree7isting conditions
o Offer the follo3ing services
Healthcare delivery in a certain geographic area
Basic and $upple(ental healthcare services
:oluntary (e(2ership for the enrolled population
@eeded to offer &andatory Dual Choice )rovisions H2oth inde(nity and Managed
Care options6
This federal route provided (ar8et access to national e(ployers
1..* = federal la3 Eli&inated the dual choice option
The grants have no3 died out and dual choice has 2een eli(inated = lesser
incentives to for( a federally 4ualified HMO
This is still i(portant for Medicare and large e(ployer contracts
HMO<s are heavily regulated to ensure solvency and (e(2er access to 4uality
(edical care
The ,icense they get in each state is called 6Certificate of Authority5
Try and assure 4uality 2y accrediting to national agencies
enefits
$e&bershi!
Me(2er M $u2scri2er N dependent
Most of the enroll(ent is through group plans
o Contracting relationship is 3ith the HMO and E(ployer
HMO offers an e(ployer an +)E7 E7R+11$E7T )ER#+D 5usually &/ days6 during
3hich all the e&!loyees are to 2e given auto&atic ad&ission
Federally 4ualified HMO<s and so(e state 4ualified HMO<s (ust accept the ris8 for
pre9e7isting Conditions
)ndividuals are directly contacting the HMO and pic8ing up insurance also
Financing could 2e national 2ut the delivery of healthcare pri(arily local.
)(portant criteria used for selecting and evaluating HMO<s
o >ccess ! Current costBpre(iu(! $atisfaction! Financial strength! -eputation!
Ease of doing 2usiness! Outco(e of care! FellnessB"revention Focus! @C?>
accreditation! physician turnover
Their (ar8et reach stretches right across e(ployees !dependents !individuals !s(all
groups !large groups! (edicare B Medicaid.
1#
Cognizant AHM
Co&!rehensive Care
There is a 2ase standard set of 2enefits given 2y la3
Offer e7tensive preventive care progra(s
o "renatal Care! 3ell 2a2y care! routine e7a(inations! %' helplines! childhood
i((uniations are e7a(ples
o Fellness progra(s and health progra(s
Co(prehensive 2enefits = Co(prehensive care and cost effective and ti(ely
7et%or's
@egotiated Contracts 3ith providers
For( its net3or8 of facilities and physicians
@eed to consider
o >ccess
o Credentialing = 3hat to verify! 3hen to consider recredentialing and peer
revie3s
o Contract relationships
E(ploy or 2uy servicesJ
Co(pensation (echanis(s
)hysicians
This could 2e through direct contract or through independent contract
@eed to contract 3ith sufficient @1MBE- and TH"E of physicians
Based on
o $ie! location! net3or8 ade4uacy! (edical needs of (e(2ers! e(ployer or
purchaser re4uire(ents! provider education! 2oard certification and 3or8
history
@eed to verify his credentials
This is re4uired to = (aintain clinical co(petence! professional Conduct and
practice (anage(ent
@eed to select a "C" fro( the net3or8
o 1sually a internal (edicineBfa(ily practitioner for adults and pediatrician
for children
o $o(e HMO allo3 specific conditions li8e o2stetricians to go out of the
net3or8
o >lso using nurses for "C" function
Hos!itals
$a(e issues of accessBcredentialingBcontract engage(ents are considered
Accreditation by the Joint co&&ittee on healthcare organi8ations
Ancillary Services
These are au7iliary or supple(ental services usually used to support diagnosis and
treat(ent of a patient<s condition and include stuff li8e
,a2s
-adiology
Other diagnostic services
Ho(e health services Bnursing ho(e centers
"hysical Therapy
Occupational Therapy
"har(acies
1$
Cognizant AHM
$urgery Centers
Financing
)re!aid Care
Fi7ed (onthly pre(iu( paid in advance of delivery of (anaged care
This generally covers (ost healthcare services
HMO<s 1$1>,,H don<t i(pose coinsurance or deducti2le re4uire(ents
They 3ill re4uire so(e level of copay(ent
7egotiated )rovider Co&!ensation
1. Fees or discounted Fee schedules
%. -elative :alue $cales
&. Capitation
'. $alary
*. "er Die(
#. Diagnosis -elated Iroups
)hysicians
Typical arrange(ents include salary! capitation! and FF$ co(pensation
Capitation is used for "C"<s
The type of fee arrange(ents that an HMO uses distinguishes the various
HMO (odels
Many HMO<s use the ris8 pool (echanis( to facilitate ris8 sharing and
utiliation (g(t
Hos!itals
HMO<s rei(2urse fees in (any 3ays
Depends on factors li8e
$tate la3s
Mar8et Co(petition
Hospital O3nership of HMO
,evel of "redicta2ility of data
)ncentives li8e
o $ervice Bonuses
o ?uality 2onuses
o -is8 "ools
Disincentives
o E7ceeding utiliation goals
Those providers under D-I<s of capitation (ay negotiate a sto!9loss9!rovision in
their HMO contracts
Costs 2eyond this point 3ill 2e rei(2ursed 2y a different pay(ent syste( li8e
Discounted FF$
Ancillary Service )roviders
-ange fro( discounted Fee for service to capitation
Capitation helps share ris8 3ith the provider and (anage costs
)n -eturn By accepting capitation! the ancillary provider gets a sta2le and large
inco(e flo3
Capitation is good for discrete services li8e diagnostic testing
But Capitation and discounted fees arrange(ents are used ho(e healthcare or
hospice care
Utili8ation $anage&ent
1%
Cognizant AHM
)hysicians
$anaged through ris' !ools" ca!itation and !hysician )ractice guideline
-eferral (anage(ent! copay(ents for office visits and options li8e nurse advice lines
and su2acute clinic for e(ergency care
Hos!itals
)n9patient utiliation revie3! convurrent and retrospective revie3 of ad(issions!
precertification for inpatient hospitaliation! discharge planning and case
(anage(ent
C+$)1#A7CE
o >ll (edicareB(ediclai( 2eneficiaries should co(ply 3ith utiliation
(anage(ent re4uire(ents set forth 2y HCF>
o Other re4uire(ents (ay co(e fro( accreditation agencies and state la3s
4uality $anage&ent
Credentialing B recredentialing and peer revie3 for "C" B$pecialistsB >ccreditation
standards for hospitals and ancillary services providers nad overall plan accreditation
standards
Co(pliance 3ith HCF> is essential for (edicare and Medicaid
E(ployers revie3 a HMO<s accreditation status in its health plan e(ployer data and
infor(ation set 5HED)$6 (easures to evaluate plan 4uality
2&
Cognizant AHM
Reading .: Ty!es of H$+ $odels
Closes )anel and +!en )anel H$+5s
Closed )anel H$+ = "hysicians are either HMO e(ployees or 2elong to a group of
physicians that contract 3ith the HMO. This panel is Kclosed< to other physicians
Closed Access ; "lan (e(2ers are not allo3ed to o2tain (edical services fro( out of the
net3or8 2ut only thru "C".
+!en )anel H$+ = >ny physician 3ho (eets the HMO<s standards of care (ay 2e eligi2le
to contract 3ith the HMO as a provider.
These guys operate fro( their o3n offices and see others patients are 3ell as HMO
(e(2ers. This panel is Kopen< to any physician 3ho is selected 2y the HMO.
+!en Access ; "lan (e(2ers (ay self refer the(selves to a specialist either in or out of
the net3or8 at fullBreduced 2enefit.
0ey differences
Closed )anel H$+5s +!en )anel H$+5s
"roviders are HMO e(ployeesB
contracted to the HMO
"roviders are independent and (ay 2e
selected to 0oin the HMO if they (eet the
criteria
"roviders operate out of HMO facilities or
group practice facilities
"roviders operate out of their o3n offices
"roviders generally see only HMO
(e(2ers
$ee 2oth HMO and non HMO (e(2ers
$elect "C" fro( HMO nB3 $elect a "C" fro( HMO nB3
@eed "C" referral 2ecause the services
are only covered if the specialists are in
the net3or8
Me(2ers in a fe3 cases (ay self refer to
specialists inside or outside the nB3
3ithout going thru "C"
H$+ $odels
)"> Model
$taff Model
Iroup Model
@et3or8 Model
Distinguished by Contractual relationshi!" !rovider rei&burse&ent
Early HMO<s 3ere $taff or group (odel HMO<s
Current trend is to3ards a (i7ed (odel HMO = co(2ination of characteristics of O 1 HMO.
For e.g. to provider geographic coverage to a (ulti state e(ployer! an )"> (odel HMO in
one state (ay contract 3ith a net3or8 (odel HMO in another state.
Or a staff (odel HMO (ay have separate contracts 3ith specialty group
#nde!endent )ractice Association
Most co((ent HMO (odel today
Contract is 3ith one or (ore physicians in independent practice 3ho agree to provide
(edical services to plan (e(2ers
)"> is a separate legal entity esta2lished to give (e(2er physicians a negotiating
vehicle for contracting purposes
21
Cognizant AHM
"hysicians 3ho (eet )"> criteria for participating providers (ay 2e selected to
contract 3ith the )"> 3hich in turn contracts 3ith the HMO
They offer contracts 3ith several parties = )ndividual "C"<s! $pecialists! Multi9
$pecialty Iroups 5 group of physicians 3ith t3o or (ore different specialties6
:ariation is the )"> (odel is a direct contract &odel H$+ = this is also called
direct (odel HMO
o The HMO contracts directly 3ith the individual physicians 3ho provider the
(edical services to the HMO (e(2ers
o There is no #)A or legal entity representing the doctors
Structure
This &ay be a closed !anel or +!en !anel !lan
Closed )anel #)A &odel H$+
o > HMO and Co((unity physicians esta2lish an )"> and recruit other
physicians
o Because the HMO helped esta2lish the )">! the contract 2et3een the )"> and
the HMO is usually an e2clusive contract
o $o(eti(es a hospital helps esta2lish the )">! 3hich contracts 3ith the HMO
to provider clinical services
o Co&&unity based Hos!ital based #)A is usually a closed !anel #)A as
(e(2ers (ust 2e affiliated 3ith a specific HMOBHospital to 2e (e(2ers
Contract
o @ature of physician9patient relationship
o Duties and responsi2ilities to 2e assu(ed 2y physicians! the )"> and HMO
o +!en9!anel #)A = physicians in the service area independently esta2lish the
)">
They are free to contract on a non e7clusive 2asis
>n Open9"anel HMO (ay close its provider panel 3hen it finds that
ade4uate people are on 2oard
o Direct Contract (odel HMO = recruits a 3ide range of s8illsets
"hysicians (ay contract 3ith other MCO<s if they 3ish
This is an open panel HMO 2ecause all physicians 3ho are 4ualify the
criteria can 0oin
Co&!ensation
1sually 2ased on fee9for9service 5FF$6 or through capitation
)"> then co(pensates the (e(2er physicians
Many )">s use capitation 3ith "C"<s and discounted FF$ 2asis B resource 2ased
relative value scale for specialists
Capitation for(s a $)I@)F)C>@T co(ponent of the funds inflo3 to a )">
1se 3ithholds and ris8 pools to share incentives
Direct Contract $odel ; Co(pensate "C"<s through Capitation and specialists
through discounted FF$
H$+ assu&es MO$T of the ris8 associated 3ith providing (edical services to plan
(e(2ers
Features and Co&!arisons
They appeals to 2oth HMO<s and their (e(2ers 2y providing a 3ide range of
physician services
Have access to (edical care at individual physicians offices located throughout the
HMO<s provider net3or8
The co(2ination of choice and private physician practice has given the open panel
)"> HMO (odels a co(petitive edge over staff and group (odel HMO<s
22
Cognizant AHM
>n )"><s participating physicians operate out of their o3n offices so that the HMO
does not have to incur the e7penses associated 3ith 2uying or 2uilding offices
Ca!itation !ay&ents K %ithholds for "C"s and discounted FFS pay(ent for
specialists offer the )"> (odel HMO and the )"> cost control opportunity
Open panel = can have (ulti HMO contacts increasing access
Ho%ever cost control &ight be an issue = difficult to achieve econo(ies of scale
3ith independent offices
Difficult to achieve consistency in (uality and utili8ation &anage&ent
Under the direct control &odel = HMO<s have to recruit(ent physicians directly
Utili8ation &anage&ent and (uality &anage&ent are other ad&inistrative
res!onsibilities of a direct contract (odel H$+
Staff $odel H$+
This is a closed panel "lan = "hysicians are e(ployees of the HMO
Contractual arrange(ents are e7clusive and they need to 2eco(e e(ployees
HMO needs to e(ploy enough specialists and "C"<s to (eet its (e(2ers needs
Structure
Most physicians practice in a(2ulatory care facilities
DefinitionP >n >(2ulatory care facilityB(edical clinic B (edical center is a care center
that provides a 3ide range of healthcare services including
1. "reventive care
%. >cute Care
&. $urgery
'. Outpatient care in a centralied facility
> one stop shop = >ccess to physicians and non physician services
Contract 3ith hospitals and phar(acies to provide non physician services
Co&!ensation
Distinguishing factor is -ei(2urse(ent = Co(pensation is pri(arily $alary
@o3 2egin to offer financial incentives li8e 3ithholds and 2onuses
These are usually tied to (edical e7penses and other controlla2le costs
The ris8 here "-)M>-),H is 3ith the HMO
There are very fe3 FF$ patients seen in this (odel
The HMO can achieve econo(ies of scale! (anage utiliation 2etter and provide
consistent 4uality and evaluation of perfor(ance
Convenience and local access to all facilities in one place is a 2ig dra3
More ti(e Consu(ing to esta2lish and (aintain = huge capital costs
@ot very fast (oving o3ing to capital costs re4uired to (a8e changes
,i(ited provider choice 5for (e(2ers6 and li(ited access 5for providers6
*rou! $odel H$+ 5Iroup practice HMO6
Contracts 3ith a (ulti specialty group of physicians 9 E(ployees of a group practice
Iroup "ractice = CorporationB"artnershipBprofessional associationB legal entity
$hare office space B $upport staffB(edical records and (edical e4uip(ent
Consists of 2oth "C"<s and specialists
$u2 contract non supported services to other doctors
Structure
"hysicians are e(ployees of the group practice in 3hich they 5(ay6 have an e4uity
interest
Ca!tive grou! &odel
23
Cognizant AHM
"hysicians sign (anage(ent services agree(ent 3ith the HMO and the practice
pri(arily focuses on the HMOs (e(2ers
This is usually e7clusive (a8ing it a closed "anel
HMO ta8es care of the (anage(ent servicesBad(in part
HMO (ay also o3n the facilities or e4uip(ent used 2y group practice
#nde!endent *rou! $odel
Esta2lished group practice = usually a (ulti specialty group = contracts 3ith the
HMO
The physicians (ay o3n or sponsor an HMO 2ut (ay also contract 3ith other
HMOs
Open "anel "lans
Co&!ensation
@egotiated Capitation -ate to the group practice
Iroup practice deter(ines the physician salaries and incentives
Could include financial incentives for utiliation (anage(ent
Iroup practice 2ears the ris8 of providing (edical care
This has lo3er startup costs vis9Q9vis a staff (odel
@o need to provider a facilityB @o fi7ed e7penses on physician<s salary
,i(ited 2y geographic location of the group practice
Differing 4uality 2et3een facilities unli8e staff (odels 3ith the >CFs
>ccess (ay 2e li(ited 2y the closed9panel nature of captive group (odel
7et%or' $odel H$+s
Contract 3ith one or (ore group practice of physicians B specialty groups
E7tension of a group (odel
Fide range of services
Can 2e either an Open or Closed "anel
Co&!ensation
Capitation Basis
"hysician groups 2ear (ost of the ris8
Iroup practice co(pensates specialists 3ho the "C"<s refer the (e(2ers to
$hare profits 3hen utiliation is lo3er and can see non9HMO (e(2ers
2
Cognizant AHM
Me(2ers have access to a 2road range of services 5particularly open panel ones6
HMO Model
"hysician
,ocation
Open
Closed
"anel
"hysician
-elationship
"hysician
-ei(2urse(ent
>dvantages
to HMOs
Disadvantages
)"> Model
$eparate
physician
offices
Both
"C"s and specialists
are 2oth
independent
"C"sP Capitation
and Discounted
FF$
$pecialistsP
Discounted FF$
"rovider
Choice and
lo3er
startup costs
,i(ited
1tiliation and
4uality control
@o econo(ies of
scale
$taff >CFs Closed
"C"<s P E(ployees
and $pecialistsP
e(ployees or
independent
"C"sP salaries
$pecialistsP
discounted FF$
1tiliation!
?uality
control!
Econo(ies
of scale
"rovider
restrictions
Capital )ntensive
Iroup
$eparate
Iroup
"ractice
Both
are 2oth
independent
Iroup "racticeP
Capitation
"C"sP $alaries
and )ncentives
$pecialistsP
varied
,o3er
startup
costs!
utiliation
and ?uality
Control
"rovider
restrictions
"otentially
li(ited
geographic
access
@et3or8
$eparate
Iroup
"ractice
Both
are 2oth
independent
Iroup "racticeP
Capitation
"C"sP $alaries
and incentives
$pecialistsP
varied
Broader
range of
services and
(ultiple
locations
:aried utiliation
and 4uality
control
2!
Cognizant AHM

Reading .C: ))+s" )+Ss" and $anaged #nde&nity
)referred )rovider +rgani8ations
Healthcare bene"it arrangement designed to support ser!ices at a discounted cost by
pro!iding incenti!es "or members to use designated healthcare pro!iders 3who contract with
the PPO at a discount4. but which also allows the member to a!ail o" ser!ices out o" the
networ(
2inancial incenti!es "or in7networ usage include lower copayments'coinsurance and
ma)imum limit on out7o"7pocet cost "or in7networ usage
Most ""Os >rrange(ent 2et3een a panel of providers and purchasers
Pre"erred pro!iders agree to specified fee schedules in return for preferred status
and have to co(ply 3ith ?uality and 1tiliation Manage(ent targets
""O sponsors vary "hysician IroupsB HospitalsBBCB$ plansB T"><sB
e(ployersBHMOB)ndependent investorsBGoint :entures
Ho%ever <A= !lus of all ))+ !lans are o%ned by insurance fir&s
$+ST don5t bear any financial ris'
""O (ay 2e a decentralied nB3 of preferred providers 3hich are esta2lished 2y
e(ployers or it could 2e leased fro( so(e other organiation
Or it could 2e ad(inistratively centralied! 3ith not only a "" nB3 2ut also the
capa2ility to (anage ad(inistrative functions and assu(e so(e financial ris8
enefits
Fide range of services including specialty services
o Managed "har(acy! "sychiatric Mental Health! Chiropractic Care! "odiatry!
Case Manage(ent ! 3ellness! vision care! dental care! 3or8ers co(pensation!
dental care! long ter( care
7et%or's
Contract 3ith "C"s! specialistsBdiagnostic facilitiesBhospitalsBancillary services
On average the 1/+. ""O<s contracted 3ith 8'%1 physicians
,ess restrictive on the out of net3or8 usage
Can Gisit s!ecialist %ithout a referral
Financing
Most ""O arrange(ents did not have providers sharing financial ris8
They 3ere paid on a FF$ 2asis and passed on ris8 si(ilar to a traditional inde(nity
plan
$o(e have started including this into their contracts
)R#$ARL FU7CT#+7: @egotiate contracts 2et3een the providers and the
organiations that 2uy the coverage
$ost Co&&on co&!ensation:
o )hysicians: Fee Schedule or Ca!!ed Fee &ethod
8%D of all physicians 3ere paid this 3ay
o Hospitals
*%D 3ere paid on "er Die(
&1D on discounted Charges
#ncentive to Join ))+C #ncreased )atient Golu&e
Utili8ation $anage&ent
)n house revie3 of utiliation
B,E@D H>""E@)@I F)TH HMO$
o 1tiliation Manage(ent 2eing adopted 2y ""O
2"
Cognizant AHM
o $election of "C" in ""O too
4uality $anage&ent
High percentage routinely recredentialed their net3or8 physicians
>lso "hysician "eer -evie3
+ther Ty!es of $anaged Care
S!ecialty ))+s
These 3or8 only in defined areas = physical therapy! dental care! phar(a! la2 services!
chiropractor service! 2ehavioral healthcare
Exclusive Provider Organizations
$i(ilar in structure and ad(inistration to a ""O
Out9of9net3or8 care is not generally covered (a8ing it li8e a HMO
These are developed 2y ""O corporations to co(pete 3ith HMOs
,EI>, )$$1E They are regulated 2y state la3s and @OT 2y state and federal la3s
as is true for HMOs
$o(e states have 2egun to treat E"Os li8e HMOs
)oint of Service )roducts
Fastest gro3ing product
This is a hy2rid product 3hich co(2ines the traditional group insurance 3ith HMOs and
""Os
Point o" Ser!ice product allows the members to choose at the point o" ser!ice on whether to
go within the plans networ or to see medical care out o" the networ( This o""ers a
greater amount o" co!erage within the networ and re-uires members to pay deductibles
and coinsurance "or co!erage out o" the networ
This co(2ines HMO features and out of net3or8 coverage 3ith econo(ic incentives 5
li8e copay(ent instead of coinsurance6
HMO<s generally offer "O$ options
Out9of9net3or8 usage is generally a per person cap and the usage is insured as a
fee9for9service9coverage
Most co((on characteristics
o Freedo( of choice = custo(ie healthcare
o Cost cutting effort and structure of coverage
o "C" is used for (edical services and for referrals 3ithin the nB3
Capitation is used to co(pensate the physician
These are very popular 3ith e(ployers as they act li8e a 2ridge 2et3een traditional
inde(nity plans and the MCO<s
D->FB>C;
o Costlier to ad(inister as co(pared to traditional group health plan
$anaged #nde&nity )lans
These include (anaged care overlays li8e precertification and utiliation revie3
Managed care devices are pri(arily to control costs
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Cognizant AHM
$anaged Healthcare for S!ecialty Services
Reading /A: $anaged Healthcare for S!ecialty Services
E7plain ho3 an MCO (ight carve out the delivery of specialty services
Define specialty HMOs
Descri2e three types of (anaged dental plan
Descri2e the four 2asic strategies that (anaged 2ehavioral health organiations
5MBHOs6 use to (anage the delivery of 2ehavioral healthcare services
,ist four activities that a typical phar(acy 2enefit (anage(ent 5"BM6 plan uses to
(anage phar(aceutical utiliation
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Cognizant AHM
Reading /A: $anaged Healthcare for S!ecialty Services
These are ser!ices that are generally considered outside the standard medical7surgical
ser!ices( They in!ol!e di""erent types o" pro!iders and deli!ery systems than do standard
medical ser!ices
E7a(ples include
"rescription Drugs ! Mental healthBsu2stance a2use ! Dental! :ision !,ong ter( Care!
For8ers Co(pensation ! Chiropractic care! reha2 services! ho(e healthcare! cardiac
surgery! Oncology! Care for "atient 3ith Chronic diseases! diagnostic services li8e
radiology
T3o options for e(ployers and health plans 3rt $pecialty $ervices
Develop and Maintain their o3n progra(s
Carve out the delivery and (anage(ent of these services
Carve out refers to the separation of a (edical service5or group of services6 fro( the
2asic set of 2enefits in so(e 3ay
These (ay 2e through a different co(pensation (echanis( O-
1se of a separate net3or8 or delivery syste(
E.g. >)D$ services (ay 2e carved
Fre( used services: Dental " ehavioral healthcare and )har&a
Carve +uts E&erge
Econo(ies of scale for certain specialties
;ey Characteristics
1. >n easily defined 2enefit
%. Defined "atient "opulation
&. High or rising costs
'. )nappropriate utiliation
Co(prehensive Carve9out 9 Manages all the details including net3or8 (anage(ent B
4uality B utiliation B case (anage(ent B clai(s ad(inistration
"artial Carve9Out = MCO retains the (anage(ent of the selected activities
Co&!rehensive Carve9out: Co&!ensation is usually on a CA)#TAT#+7 AS#S
)artial Carve9out: +n a FFS or Fee9!lus !ercentage of savings basis
1egal Challenges = $o(e state re4uire HMO<s to retain these services
$o(e $tates have provisions for $pecialty HMO<s
Dental Care
)ncreasing 3illingness of Dentists to negotiate 3ith HMOs
)ncreased ad(inBoverhead costsBoversupply of dentists have (oved dentists to this
plan
Managed care products are cheaper than inde(nity products
Three types of plans are
o Dental HMOs! Dental ""O<s and Dental "O$
Dental H$+s
$tarted in 1.*/s 3ith the preventive care 2enefits realied
This is an organiation 3hich provides dental 2enefits to its (e(2ers in e7change for
so(e for( of prepay(ent
@o 2enefits for out of net3or8 services
This is regulated at state level
Has around 18D of the dental insurance (ar8et share
Dental ))+s
&1D (ar8et share in 1...
2%
Cognizant AHM
"rovide through net3or8 of dentists 3ho offer discounted feeds
:isited out of net3or8 you get less 2enefits
Most co(pensated on a Discounted FF$ 2asis
Dental )+S +!tion
This is generally offered in con0unction 3ith a DHMO
The consu(er chooses at the ti(e of appoint(ent 3here they 3ant to go
ehavioral Healthcare
5eals with mental health and chemical dependency
This has gro3n in pro(inence in the last fe3 decades! the cost of delivery has sharply
increased. Manage(ent strategies to tac8le this failed.
)nitially they loo8ed to cost sharing as a (echanis( to (anage costs and also had
2enefit li(its.
Then loo8ed to li(itation on services covered = for certain illnesses! certain services
or certain patient groups
Tried to li(it the >CCE$$ to services = through triage syste(s and 3aiting lists
2ased on priority
Managed Behavioral healthcare organiations e(erged in the 1.8/s
1..+ = 1'.(illion people 3ere enrolled
o $pecialied 8no3ledge
o Better outco(es and proper diagnosis and treat(ent
o Techni4ues used to (anage care include
Alternative treat&ent levels
Offered 2enefit pac8ages that included full coverage
Developed clinically reasona2le care
o >cute care = continuous intensive (onitoring
o "ost acute care = continuous (onitoring in a structured
environ 2ut R >cute Care
o "artial Hospitaliation
o )ntensive outpatient care = e7tensive therapy
o Outpatient Care
Alternative treat&ent settings
>cute is in psychiatric hospitals etc ! for high ris8 patient
"ost >cute = in $8illed @ursing ho(es
"artial Hospitaliation in reha2 centers or half3ay ho(es
Alternative treat&ent &ethods
Drug therapy! psychotherapy and counseling
,icenses Clinical $ocial 3or8ers 5,$CFs6 and Marriage! fa(ily
or child counselors 5MFCCs6
Crisis intervention
Directing )atients to a!!ro!riate Care
Mechanis(s to direct individuals to the (ost appropriate care
""Os and Open access plans = Directly access healthcare services
Most other plans = "C"<s or other gate8eepers
@eed authoriation of pay(ent of services 2efore seeing a specialist H:->I
>ssess(ent could 2e through a "C"! centralied referral or e(ployee assistance
progra(s
)C)s as gate'ee!ers
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o Focal point for all healthcare need
o But "C"<s lac8 the e7perience necessary to diagnose and treat these
pro2le(s.
o "rovide educational progra(s = Clinical "ractice Iuidelines
Centrali8ed Referral Syste&s
o Telephone or in9person referral
o This can provide faster access to 2ehavioral healthcare than a "C"
o More accurate diagnosis and effective treat(ent
o @ot grassroot lin8ed li8e "C" = disruption in care
E&!loyee Assistance )rogra&s
o This the first point of contact for this 8ind of care
o Can help trap the pro2le( early
o ,ac8 of e7pertise is a pro2le(
7e2t *eneration
$tarted significantly using outpatient treat(ent
Clinical practice guidelines
@e3 ideas develop(ent of an alternative treat(ent options! incorporation of
co((unity 2ased resources into healthcare and increased reliance on case
(anage(ent
1A@ ; $ental Health )arity Act 1,,D ; Treat the $ental or behavioral health
benefits +7 )AR %ith )hysical Health services
)har&acy enefits
Fastest gro3ing (ar8et in the 1$
)nappropriate usage of drugs is the reason for %*D of all Medicare ad(issions
> "har(acyB "rescription Benefit Manage(ent "rogra(
o 88.'D of all HMO<s contracted 3ith "BMs
o These screen drug interactions 2y using integrated data2ases 2et3een the
MCO! provider and phar(acy net3or8
Services +ffered
"hysician "rofiling
o Data on physician su2scri2ing patterns and co(paring these actual
prescri2ing patterns to e7pected patterns 3ithin a select drug category
o "eer Co(parison is
Drug utiliation -evie3
o >re the drugs 2eing used safelyBeffectivelyBappropriately
o ?uality (anage(ent = identify pro2le(s related to drug ordering ! dispensing
! ad(inistration and use of drugs
)nappropriate dosage! overuse ! underuse! length of ti(e ! duplication!
side effects and drug interactions
o Monitor patient specific drug pro2le(s through prospective! concurrent and
retrospective revie3. Factors identified include
DrugBdisease conflict! Drug Control )nteractions! Chronic over9
utiliation ! underutiliation! drugBse7 drugBage conflicts and
drugBpregnancy contraindications
For(ulary Manage(ent
o 2ormulary is a listing o" drugs classi"ied by therapeutic category or disease
class that are considered pre"erred therapy "or a gi!en managed care
population and that are used in prescribed medications
o This is developed 2y an independent panel of physicians! phar(acists
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Cognizant AHM
o They can 2e classified as open or closed
Open for(ulary = 2oth preferred and other drugs are covered
Closed For(ulary = only drugs on the preferred list are covered
o These are 8ey tools to get -e2ates fro( the drug (anufacturers
o ;ey features of a good For(ulary include
Cover all outpatient diseased B "ro(ote IenericsB include all (edically
necessary drugsB include the cheapest single source drugsB(ini(ie
e7pensive prescri2ingB (ini(ie (edically unnecessary prescri2ing '
i(prove overall cost effectiveness of therapy
@eed good co((unication of the For(ulary to physicians and to the
phar(acists on the relative 2enefits of drugs etc
T3o types of su2stitution
Ieneric $u2stitution
o Dispensing of a generic e4uivalent
Therapeutic $u2stitution
o Dispensing of a different che(ical entity 3ithin the sa(e
drug class
"rior >uthoriation
o Medical necessity revie3 = certification of (edical necessity prior to the drug
dispensing
Additional Services
Mail order phar(acy progra(s = lo3er cost delivery
@egotiate discounted rates for the sa(e
)har&aceutical cards ; )ssued to plan (e(2ers. These cards (ust 2e presented to the
phar(acist 2efore receiving 2enefits
Electronic processing of clai(s
Card identifies to 3hich plan the patient 2elongs
7e% co!ay&ent structure
1. T3o tier copay(ent structure
a. ,o3er copay for a generic and higher copay for 2randed drug
%. Three tier Copay(ent structure
a. "ay one copay for a generic
2. Higher for 2randed drug included in the plan
c. Highest for 2randed drug not included in the plan
)$ contractual arrange&ent
Fee for service
a. Create a retail chain B offer discount on prescri2ed drugs B perfor( online
clai( ad0udication.
2. -eceives a clai( ad(inistration fee
-is8 $haring
a. >gree on a target cost per person per (onth
2. )n case of e7ceededBunderun of cost "BM shares the losses Bsavings
Capitation Contracts
a. "rovide all the care for a fi7ed dollar a(ount per (onth
2. These are gaining popularity
c. @ot that popular as can<t pro0ect 3hat the phar(a re4uire(ent 3ill 2e
Move to3ards (ergers and integration 3ith "har(a fir(s
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33
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)rovider +rgani8ations
Reading <A: )rovider +rgani8ations
E7plain 3hat it (eans for providers to integrate
Descri2e so(e of the advantages of provider integration
Discuss so(e of the types and levels of provider integration
Descri2e the general characteristics of several types of provider organiations
3
Cognizant AHM
Reading <A: )rovider +rgani8ations
Fhy integration
>chieve econo(ies of scale
$trengthen their negotiating position 3rt MCO<s and payers
)rovider #ntegration
T3o or (ore previously separate providers co(2ine under co((on
controlBo3nershipB2usiness operations
1. $tructural integration = Co(ing under co((on o3nership or control
%. Operational )ntegration Consolidate previous separate operations
Structural #ntegration
Co&!lete #ntegration = Co((on O3nership >@D control e.g MergerB>c4uisition
$erger = t3o or (ore separate entities are legally 0oined. This could 2e to create a
ne3 corporation! in 3hich case it<s called Consolidation
Ac(uisition ; One organiation 2uys the other
)artial #ntegration
Goint :enture B @ot a separate legal entity
E7ecute contracts and agree to act as one 2ody in 2usiness transaction
+!erational #ntegration
Business )ntegration = Co(2ine one or (ore separate 2usiness function
Clinical )ntegration = Ma8ing a variety of services availa2le fro( one entity

"hysician Only Model
1. )"> 5least integrated6
%. Iroup "ractices 3ithout Falls I"FFB Manage(ent $ervices Org 5M$O6
&. "hysician "ractice Manage(ent 5""M6 co(pany
'. Consolidate Medical Iroup 5MO$T integrated6
"hysician and Hospital Model
1. "HO 5least integrated6
%. )ntegrated Delivery $yste(s 5)D$6 BMedical Foundation 5Most integrated6
> high level of structural integration need not (ean a high level of operational integration.
But in reality usually 2oth go together
Advantages
1. Ireater Operational efficiency and effectiveness
%. E7pertise Building = Helps in 2etter planningB(ar8eting
&. )(prove contracting position 3ith MCOs
'. Iood for MCO<s as it i(proves 4uality and efficiency for their (e(2ers
Disadvantages
1. ,oss of autono(y
)rovider #ntegration $odels
#nde!endent )ractice Associations
$essenger $odel 9 $i(ply 0ust negotiate the agree(ent 3ith MCO and then (a8e its
(e(2ers directly contract. This (odel is used 3ith FF$ or discounted FF$
3!
Cognizant AHM
$C+ Contracts %ith #)A
The )"> then separately contracts 3ith the (e(2er physicians
)"> can li(it its ris8 3hen it uses Capitation as pay(ent 2y 2uying a sto! loss insurance
!rotection3 )f they )"> pays clai(s (ore than a defined Ma7i(u( for the year! the
insurance fir( rei(2urses it
)n case the )"> is seen to assu&e too &uch ris'! then the regulators (ay classify it as an
insurance co(pany
*rou! )ractice %ithout @alls HClinic %ithout @allsI
,egal entity that co(2ines (ultiple independent physician practices under 1 u(2rella
and perfor(s a certain 2usiness operation for the(
Can 2e o3ned 2y (e(2er physiciansBhospitalB 2y a ""M
)hysician )ractice $anage&ent +rgani8ationM $anaged Services +rg
O3ned 2y hospital B )nvestors that provides (anage(ent and ad(in support to
physicians
-elieve physicians of non (edical 2usiness functions
Either provide the functions for a fee or they (a8e the "hysicians lease the assets
S!ecific $S+ is the )hysician )ractice $anage&ent Co&!any 3hich purchases
the physicians practice assets.
>ll assets = not only tangi2le ones
"hysicians could get so(e e4uity in this fir( too
Develop a net3or8 of either "C"<s or specialists
Consolidated $edical *rou!s
Full structural and operational integration
Operates in one or a fe3 facilities and consolidates the operations
>dvantages
1. ,o3er costs
%. >ccess to a large group of physicians
&. Creates an a2ility to (onitor and (anage 4ualityButiliation
#ntegration of )hysicians and Hos!itals
)hysician Hos!ital +rgani8ations ; NG bet%een hos!ital and !hysicians
"ri(ary purpose is contract negotiation 3ith MCOs
Do not (erge operations apart fro( contracting and (ar8eting
Reasons
Better relations B )ncreased Colla2oration B $hared Financial -is8 B Contracting 3ith MCOs B
E(ployer Direct Contracting B Enhancing ?uality
Co((unity Contracts 3ith this = "hysician Hospital Co((unity Org
T3o types
1. Open "HO >vaila2le to all the hospitals eligi2le (edical staff
2. Closed "HO ,i(its the nu(2er of specialists 2y type of specialty
a. $pecialist "HO Only one type of specialty
Co(pensation = Discounted Fees and Capitation 5"C"s6 and DF$$ 5$pecialists6
#ntegrated Delivery Syste&
Operationally integrated = (ay2e not structurally
E(ploy(ent (odel )D$ = the )D$ controls the different providers
3"
Cognizant AHM
$edical Foundation
@ot9for9profit Entity that purchases and (anages physicians practices
@eed to provide significant 2enefit to the co((unity
1sed to create an )D$ in states 3here )D$s cannot 2e 2usiness corporations
"rovider Organiations that Bear )nsurance -is8
)D$s B )"> B "HO B CMIsB choose to 2ear financial ris8 = called AT R#S0
They need to 2e a2le to have e7pertise in the core insurance functions li8e actuarial B
under3riting B clai(s B 4uality etc
May need a HMO or insurance co(pany license
These entities can contract directly 3ith e(ployers or Medicare
The B>,>@CED B1DIET >CT 51..+6 gives rights to organiations 3ho (eet 2asic
standards to contract directly 3ith healthcare
o These organiations are 8no3n as "rovider $ponsored Organiations
3#
Cognizant AHM
Health Syste&s $anage&ent
Reading DA: Health )lan Structure and $anage&ent
Descri2e the (ost i(portant functions of a (anaged care organiation<s 2oard of
directors
)dentify a (anaged care organiation<s 8ey (anage(ent positions and their functions
)dentify the co((on (edical (anage(ent co((ittees and descri2e the co((ittees<
general functions
Reading D: 7et%or' Structure and $anage&ent
Descri2e so(e of the factors co((only evaluated in a (ar8et analysis for net3or8
(anage(ent
,ist the types of providers typically included in a MCO<s net3or8
,ist and e7plain so(e of the factors that influence the nu(2er of providers included in
an MCO<s net3or8
Define credentialing and e7plain 3hy it is i(portant
,ist so(e co((on clauses and provisions in provider contracts
3$
Cognizant AHM
Reading DA: Health )lan Structure and $anage&ent
Structure of $C+s
Most of the( are Corporations 9 Can 2e party to a legal action
$C+5s &ay be under a ta2able not9for9!rofit for&" ta2 e2e&!t not for !rofit and a
for !rofit for&
This 3ill affect on ta7es! effects on regulation! capital raising considerations
Traditionally = HMOs and BCB$ = 8ot7"or7pro"it
BCB$ = do not 4ualify for ta7 e7e(ption
>dv and Disadv = @ot for "rofit
"lus Ta7 e7e(ption fro( federal B state property B state inco(e ta7es
Minus
a. >dhere to nu(erous restrictions li8e
Operate only for ta7 e7e(pt purposes
"rovide only incidental 2enefits to private individuals
@ot engage in lo22ying and political activities
2. Careful in transactions 3ith ta7a2le entities
7ot for !rofit have 1i&ited ability to raise ca!ital
>dvantages and Diadv = For "rofit MCOs
Minus "ay ta7es
"lus Can raise capital
Co&!onents of organi8ation and organi8ational structure
oard of Directors
-evie3 the activities and finances of the fir(
Mini(u( nu(2er of directors is specified 2y the organiation charter and the
insurance regulations
)nside and outside directors e7ist
@ot9for9profit fir(s have a restriction on nu(2er of inside directors
0ey Res!onsibilities
o Authori8ation of &aJor financial transactions ; $KA and ca!ital
o A!!oint&ent" evaluation of senior &anage&ent including CE+
o )artici!ating in Cor!orate Strategic )lanning
o A!!roval of +rgani8ational o!erational !oliciesM!rocedures
o +versight of the 4uality )lan
o Fiduciary res!onsibility = >ct in the 2est interests of organiation
0ey $anage&ent )ositions
CEO ! Mar8eting Directors! Finance Director ! Director of Operations !C)O ! Medical
Director 51tiliation! ?uality issues and Operational issues6 !@et3or8 Manage(ent
Director
Corporate Co(pliance Director ;
a. Mandated 2y H)">> to have a Chief "rivacy Officer and Chief $ecurity Officer
2. -oles
i. )(ple(ent 3ritten standards and procedures
ii. >ssigning upper level personnel to oversee co(pliance
iii. Co((unicate $tandards to all e(ployees
iv. Enforce standards through disciplinary (easures
v. Esta2lish and enforce confidentiality and security rules
3%
Cognizant AHM
Co&&ittees
Standing Co&&ittee = ,ong ter( advisory on financial! co(pliance! 4uality (anage(ent!
1tiliation Manage(ent! strategic planning and Co(pensation
Ad Hoc Co&&ittee = Convened to address a specific issue
$o(e Co((on Co((ittees include
1. E7ecutive Co((ittee = Organiational policyB ,OB B E(ploy(ent "olicy
%. $trategic "lanning Co((ittee9 Direct the MCO strategic directionBgoals
&. Co(pensation Co((ittee
'. Finance Co((ittee
*. @o(inating Co((ittee = no(inations of co(pany offices
Other Co((ittees include
1. E7ecutive ?uality )(prove(ent Co((ittee = ?uality B >ccreditation etc
%. ?uality (anage(ent Co((ittee = 4uality assess(entBi(prove(ent activities
a. )dentifies issues to 2e (onitored
2. Evaluates the results of 4uality studies to identify opportunities
c. Develop B Oversee B Monitor 4uality i(prove(ent action plans
d. Oversee >ccreditation efforts
&. Medical >dvisory Co((ittee = policies in clinical (g(t B contracts B co(pensation
'. Credentialing Co((ittee = policies Brevie3 Brecredentialing
*. 1tiliation Mg(t 9 revie3 the 1M progra(
#. "har(acy and Therapeutics Co((ittee = For(ulary and -egulatory revie3s
+. "eer -evie3 Co((ittee9 revie3 4uestiona2le Bpro2le(atic healthcare services
delivery
8. >ppeals -evie3 Co((ittee = Medical (anage(ent or coverage deter(ination
.. Corporate Co(pliance Co((ittee
&
Cognizant AHM
Reading D: 7et%or' Structure and $anage&ent
Managing of provider net3or8s is one of the Critical Tas8s in the MCO process
Designing a )rovider 7et%or'
$ar'et Analysis
%# $ar'et $aturity = deter(ine the level of (anaged care activity in a (ar8et
a. Ho3 receptive are consu(ers = less receptive 3ould prefer ""O 3hile (ore
receptive 3ould prefer HMOs
2. Ho3 (uch co(petition e7ists in the area
c. Ho3 receptive are providers
2. )rovider Co&&unity
a. @u(2er of physicians and locations
2. Details on hospital 2edsB phar(acies B other ancillary services
c. >ccessi2ility of providers
d. 1tiliation patterns and average costs for specified services
e. "C"<s and their lin8ages 3ith other specialists = difficult to 2rea8
f. >ssociations 3ithin the e7isting co((unity
3. Co&!etitive Analysis
a. "rovider "anel $ies B "re(iu( ,evels B cost Contain(ent $trategies
2. "hysicians to (e(2ers ratio in e7isting net3or8 of co(petitors
c. ,evels of provider satisfaction or dissatisfaction 3ith other plans
4. Econo&ic Conditions
a. $ie of the e(ployers in the (ar8et = large adopt MCO easier
'. Iro3ing econo(y Trigger gro3th in Houng population and (edical
co((unity 3ill co(e in B :ice :ersa for declining econo(y
5. Characteristic of the Service Area
a. )s this an ur2anBruralBsu2ur2an areaJ -ural areas have fe3er hospitals
2. 1r2an areas have higher proportion of specialists and facilities = More choice
2ut also (ore costB4ualityBsatisfaction levels
6. )o!ulation Characteristics
a. >geB)nco(eBEthnic 2ac8ground
7. Health )lan Characteristics
a. @u(2er S Types of products offered 2y MCO B geographic scopeB(ar8et focus
B particular population it serves
2. 1se diff providers for diff plans 5nestedBcusto(iedBsu2 net3or8s6
8. Current and )ro!osed Regulatory re(uire&ents
a. ,a3s address @et3or8 ade4uacy B "atient >ccess to (edical services B?uality
of careB (andated 2enefitsB "roviders right to contract
b( 9de-uacy +)tent to which a networ o""ers the appropriate types and
numbers o" pro!iders in the appropriate geographic distribution according to
the needs o" the plans members
9. *uidelines fro& Accrediting Agencies
a. These include @C?> B >(erican >ccreditation Healthcare Co((ission
2. Goint Co((ission on >ccreditation of Healthcare Organiations GC>HO
H$+ Act 1,-.
Federally 4ualified HMO<s should
1. "rovide geographic accessi2ility to pri(ary care and (ost specialty providers 3ith
Kreasona2le pro(ptness< and K3ithin generally accepted nor(s for (eeting pro0ected
enroll(ent needs<
%. %'B+ access to e(ergency services
1
Cognizant AHM
&. Detailed description of service areasBprovider locations
Federal E&!loyee Health enefits )rogra& HFEH)I
-e4uires health plans offering services to federal e(ployees and their dependents to
provide
1. )((ediate access to e(ergency services
%. 1rgent >ppoint(ents 3ithin %' hours
&. -outine appoint(ents once a (onth
'. >verage office 3aiting ti(e of R &/ (inutes
7A#C $anaged Care )lan 7et%or' Ade(uacy $odel Act
>dopted in 1..#! this act offers guidelines for states to use in (easuring net3or8 ade4uacy.
)ncludes $tandards for
1. "rovider Enrollee -atios
%. Ieographic >ccessi2ility
&. >ppoint(ent Faiting Ti(es
'. Hours of Operation
*. :olu(e of TechnologyB$pecialty services availa2le
Any @illing )rovider 1a%s
1( This re-uires health plans to allow pro!ider who is willing to accept the terms and
conditions o" the plan to contract with the plans networ
%. Can include econo(ic criteria. This is regulated 2y state la3 and so(eti(e applies
to only ""O<s and not to HMO<s
$andated enefits 1a%s
-e4uire MCO<s to
1. )nclude specific 2enefits in the plans design = HospiceB (aternityBchiropractic
%. )nclude $pecified providers or provider classes 5Behavioral6
&. >ccess to specified provider classes 3Bo "C" approval 5OBBIH@B"ediatric6
Deter&ining the structure Co&!osition and Si8e of net%or'

7et%or' Structure
Can operate as a closed panel 5MCO facilities6 B Open "anel 5O3n facilities6
7et%or' Co&!osition
1. "C"s = Ieneral practitioners B fa(ily practitioners B internists B pediatricians Bnurse
practitionersBphysician assistants 5last % under physician guidance6
%. $pecialists
&. Hospitalists = "C"s don<t have ti(e to follo3 up inpatient care B These physicians
coordinate diagnosticB treat(ent services T hospitals
'. Healthcare Facilities
*. >ncillary $ervice "roviders = DiagnosticBtherapeutic careBla2sBradiologyB physical
therapyBphar(a B ho(e healthcare
7et%or' Si8e
1. >ppropriate nu(2er of practitioners = This is 2ased on
a. "lan characteristics = (ore closely (anaged fe3er providers
i. MCO re4uires less than ""O or "O$
ii. ,arge plans have fe3er providers per 1/// (e(2ers
iii. Based also on geographical spread
2. "rovider >ccess
i. $taffing ratio = nu(2er of providers to the nu(2er of enrollees
ii. Drive ti(e = Ti(e to drive to "C"9 1* (in ur2an B &/ (in rural
iii. Ieographical >vaila2ility = nu(2er of "C"s 3ithin a radius
iv. "opulation Characteristics = De(ographic characteristics
2
Cognizant AHM
v. "urchaser and Consu(er preferences = ?uality ! >ccess and Cost
5chec8 3hich is (ost i(p6 B ,arge "C" panel
vi. "lan Ioals = Cost = ?uality Tradeoff B $u2divide the panels 2ased on
4ualityButiliation and cost effectiveness and incentivise consu(ers
%. >ppropriate @u(2er of Hospitals and Other Facilities
a. >ccessi2ility! Cost and use of resources! service capacity and types.
-eputation 3ithin service area! accreditation status ! level of participation
Adding )roviders to the 7et%or'
Recruiting )roviders
)nfor(ation sources include Hospitals already in the net3or8 B "rovider Directories of
Co(petitors B ,ocal (edical societies B "lan purchasers and (e(2ers
Selecting )roviders
First stage is application for( 3ith standard 4uestions = education B 3or8e7 Baffiliations etc
Credentialing
)nfor(ation presented is revie3ed and verified in order to deter(ine
1. The current clinical co(petence of the provider and
%. Fit into the pre9esta2lished criteria for participation
This Credentialing !rocess is i&!ortant
1. E(ployers 3ant to offer their (e(2ers high 4uality providers
%. Ensures certain aspect of their 4uality progra(
&. Mini(ie the lia2ility and other legal ris8s = have good historic record
'. >ccrediting 2odies re4uire it 2efore the accredit the MCO
@ho )erfor&s CredentialingC
1. :aries fro( plan to plan
%. $o(e have Credentialing co((ittees B depart(ents
&. Others assign to specific person
. E7ternal Entities called Credentialing Gerification +rgani8ation
*. "ractitioners on co((ittee for revie3Btechnical inputsB peer<s perspective
Ho% does the )rocess @or'C
1. Fhen the provider su2(its the application N supporting docu(entation
%. -evie3 and verification of the docu(entation
&. Chec8 to see if additional docu(entation is re4uired
'. Onsite inspection of providers offices
@hat standards &ust be &etC
1. Have their o3n guidelines for credentialing
%. Fritten guidelines 3hich access the a2ility to deliver care
a. ,icensure B Training B e7perience BDisclosure of any Health issues B
>ppropriate Docu(entation to 2e verified
3. 7eed a !ri&ary source verification = "rocess of validating the credentialing
fro( the organiation that originally conferred it
'. $election is 2ased on needs B 4ualifications B fair and e4uita2le
<3 )9)C9- Standard 9A&erican Accreditation Healthcare Co&&issionM URAC
#. -evie3 any adverse clai(s B (alpractice suits B sanctions
#. 7ational )ractitioner Data an' 9 This is a data2ase (aintained 2y the federal
govern(ent that lists info on (alpractice clai(s B disciplinary action
a. Maintained 2y the DHH$ = $tarted in 1../
2. $crutiny of areas of practitioner licensure B (e(2ership B (alpractice historyB
record of clinical privileges
3
Cognizant AHM
c. Meant to provide a support to the e7isting state credentialingBlicensing 2oards
d3 Ty!es of 4ueries
i. Mandatory = need to 4uery every t3o years on practitioner privileges
ii. :oluntary = any other general 4ueries
Recredentialing
1. This is done every %9& years = for changes in licensure B sanctions B certificationsB
co(petence B health status
%. )ncorporates 4uality (anage(ent and utiliation results
&. @C?> data for recredentialing includes
a. C- ..1 Me(2er co(plaints ! C- ..% )nfor(ation fro( 4uality i(prove(ent
activities ! C- ..& Me(2er satisfaction
Contracting
Co&&on )rovisions
1. 1se the !rovider &anual as a reference in the contract
a. This docu(ent contains the providers rights and responsi2ilities
:3 )rovisions for )rovider Res!onsibilities
a. "rovider $ervices
2. >d(inistrative "olicies = Follo3 the MCOs policies
c. Credentialing and -e9Credentialing
d. "articipation in 1tiliation and ?uality (anage(ent progra(s
e. Maintenance and su2(ission of (edical records for all (e(2ers
f3 7o alance billing and Hold Har&less )rovisions
i. -e4uires "rovider to accept the a(ount the plan pays as pay(ent in
full and not 2ill plan (e(2ers apart fro( 5copyBcoinsuBdeducti2les6
ii. Hold har(less = For2ids providers fro( see8ing co(pensation fro(
patients if payer fails to co(pensate providers cos of insolvency etc
.3 )rovisions for )ayer Res!onsibilities
a. "ay(ent = ho3 3ill he co(pensate
2. -is8 sharing and )ncentive "rogra(s
c. Ti(ely "ay(ent = Ma7 ti(e period is specified
d. Eligi2ility infor(ation = 3ill provide %+/ and %+1 infor(ation to the provider
/3 Ter&ination )rovision
a( Termination without cause lie 9: day period
b( Termination with cause i" one o" the users did "ollow contract pro!isions
c( *ure pro!ision 3;:79: days4 during which the breach an be recti"ied
d( +)treme situations may re-uire immediate termination o" contract
e( 5ue Process clause contest'appeal the termination
<3 Tone of Contract
a. )nfluences the nature of the 2usiness relationship
7et%or' $aintenance and )rovider Services
+rientation
1. "ara(eters of the MCO plan
%. Training in 1- B 4uality Bauthoriation syste(s
&. Fritten (anual of policies and procedures
'. Co((unication 2et3een MCO S net3or8 = updatesB 2ulletins B guidelines B clai(s
infor(ation
)eer Revie%
Evaluation of perfor(ance 2y other providers
)rovider Services

Cognizant AHM
"ayer staff responsi2le for (aintaining co((unications 3ith providers
!
Cognizant AHM
$edical $anage&ent #
Reading -A: asics of Utili8ation $anage&ent
Define (edical (anage(ent and identify its co(ponent parts
Descri2e the strategies MCO<s can use to (anage (e(2er de(and for healthcare
services
)dentify the 8inds of cases for 3hich case (anage(ent is typically used
Define disease (anage(ent
Reading -: Utili8ation Revie% and Authori8ation Syste&s
E7plain the purpose of utiliation revie3
Define authoriation and e7plain the criteria MCO<s use to deter(ine 3hether 2enefits
are paya2le
Descri2e the types of services that re4uire utiliation revie3 and authoriation
)dentify the three types of utiliation revie3
Descri2e the utiliation revie3 process
Discuss so(e of the techni4ues MCOs use to (anage utiliation revie3 and authoriation
processes
"
Cognizant AHM
Reading -A: asics of Utili8ation $anage&ent
System that M*Os and their pro!iders use to achie!e and maintain both high -uality and
cost e""ecti!eness is defined as $edical $anage&ent
Three ;ey >reas e7ist
1tiliation Manage(ent = use of (edical services B regulation B planning
Clinical "ractice Manage(ent = develop(entBi(ple(entation of delivery techni4ues
?uality Manage(ent = process of (easuring and i(proving ?O$
Utili8ation $anage&ent Function
>ffects all co(ponents of healthcare delivery = pri(aryBspecialtyBinpatientBphar(aBancillary
>pplication depends on nature of patient population
)reventive Care
+/D of healthcare costs co(e fro( preventive diseases B in0uries
Center for Disease Control S "revention = 1%D of all hospitaliations 3ere avoida2le
-educe need for diagnostic B therapeutic B inpatient care
@eed to assess individual health ris8s and ensure targeted care
Health Ris' Assess&ent HHRAI
o "rocess 2y 3hich an MCO uses infor(ation a2out a plan (e(2ers health
status B personal and fa(ily health history B health related 2ehaviors B to
predict the li8elihood of a specific illness or disease
o $ources = "roviders B health plan records B H-> surveys
o 1se data analysis soft3are to seg(ent the different categories
"reventive Care )nitiatives
o Mostly received fro( "C"s
o )nclude stuff li8e )((uniation progra(s
o Health "ro(otion "rogra(s 53ellness progra(s = 3hich educate on lifestyle
choices B (aternity (anage(ent B pre natal care6
o $creening "rogra(s = chec8 if a health condition is present = 2lood
pressureBcholesterol chec8s etc
Self Care )rogra&s
Co(ple(ent physician services
Teach ho3 do educate (e(2ers on distinguishing between ma<or and minor
illnesses and ho3 to e""ecti!ely treat minor problems
1se techni4ues li8e (e(2ers ne3sletters B ho3 to perfor( screenings
Decision Su!!ort )rogra&s
@eed to 8no3 3hat is relevant = Decision support progra(s provide educational
(aterial and advice fro( physicians
Tele!hone Triage !rogra&s
o 1sually give inputs for cough B ear pain B s8in pro2le(s B chest pain B fever
Bheadache B sore throat
o 1rgent case 9 @otify the e(ergency services B Other cases schedule physician
appoint(ents
o $taffed 2y nurses or nurse practitioners
o Clinical staff in triage use decision support tools
$hared decision (a8ing progra(s
o "rovide patients 3ith in9depth info a2out diseasesBproceduresBtreat(ent and
encourage the( to participate in healthcare decisions
#
Cognizant AHM
o $ources = "hysicians B printed (aterials B personal or group counseling B
internetB support groups B interactive co(puter progra(s
Utili8ation Revie%
/0 re"ers to the e!aluation o" the medical necessity' appropriateness' cost e""ecti!eness o"
the healthcare ser!ices gi!en to a patient
Can do it in9house or contract 3ith /tili,ation 0e!iew Organi,ations
Case $anage&ent
"rocess of identifying plan (e(2ers 3ith special healthcare needs and developing a
coordinated effort for (onitoring care B needs
)(prove B sta2ilie a plan (e(2ers overall health status 2y preventing co(plications
Opti(ie use of healthcare resources
)(prove (e(2er co(pliance 3ith provider reco((endations for care
)(prove coordination and continuity of care
E(ployed 3ith high ris8 B high cost cases
o High 0is case is one that in!ol!es comple) ' catastrophic illness or in<ury that
re-uires e)tensi!e medical inter!ention or treatment plans
o High *ost *ase one that re-uires a large "inancial e)penditure or
human'technology resource commitment
o *hronic *ase persists "or long periods o" time or patients li"e
"ossi2le Conditions for Case Mg(t include >)D$! $tro8e! Burns! Cancer ! @eonatal
Co(plications ! 2rain in0uries! congenital defects
)dentified 2y 1- process! referrals fro( providersB e(ployers B payers
* Basic steps are Case )dentification B >ssess(ent B "lanning B )(ple(entation and
(onitoring B Evaluation
Factors to deter(ine health status
o Medical condition or diagnosis
o Treat(ent 2eing received
o 1se of prescription drugs
o ,evel of resource utiliation
o Cost of care
o ,ength and fre4uency of hospital visits
o Financial B social B psychosocial factors
)f selected the candidate is assigned a Case $anager 5nurse . physicians B social 3or8er
or any other healthcare professional6 These people should 2e fa(iliar 3ith
o Benefit plans and ho3 2enefits are paid to providers
o ,egal B regulatory B ethical issues related to case (anage(ent
o 1tiliation revie3 processes and techni4ues
o >vaila2ility of co((unity resources and support
o -ole of coordinating care and in educating patients and fa(ily (e(2ers
o Evaluation of the overall effectiveness of the case (anage(ent
Final a!!roval of decisions RESTS @#TH THE )HLS#C#A7
Disease $anage&ent
5isease state management is a coordinated system o" pre!enti!e. diagnostic and
therapeutic measures intended to pro!ide cost e""ecti!e -uality healthcare "or patients who
ha!e ris o" chronic illnesses or medical condition( 2ocuses on comprehensi!e care o!er a
e)tended period o" time rather than indi!idual episodes or medical care
Driving force High level of spending on chronic diseases
$
Cognizant AHM
"roactive engage(ent helps "har(a fir(s have proved this = This 3as in sharp
contrast to the (ore traditional practice of addressing acute episodes as and 3hen
they occurred
Conditions 3hich (a8e a disease (anage(ent appropriate
o High rate of varia2ility in patterns of treat(ent
o High rate of preventa2le co(plications = that results in use of costly services
o $ho3 lo3 rates of patient co(pliance 3ith reco((ended treat(ent
o Can 2e (anaged on an outpatient 2asis using non surgical approaches
o >re Chronic in nature
o ,i8ely to result in high costs over ti(e
Differences fro( Traditional
o Focuses on (anaging a population of patients and not individual patients
o Highly coordinated and integrate delivery across providersBsites
o >pply T?M and continuous 4uality i(prove(ent (ethods
Tools = ' specific tools are used
o Disease Modeling = life cycle B interventions
o Custo(ied clinical guidelines
o Clinical practice processes
o Measure(ent and i(prove(ent syste(s
"har(a )ndustry
o Treat(ent Iuidelines
o "rovider Education and Co(pliance
o "atient education and co(pliance
o "har(acotherapeutic outco(es research
Disease Manage(ent and Managed Care
o )ntegration into (anaged care 3ith the help of "har(a fir(s
o ST#11 a 7E@ a!!roach and its effects on outco&es and cost
effectiveness has not been yet established
o This is usually set up as a voluntary outreach and support progra( plan
Clinical )ractice *uidelines
This is a /M and -uality management mechanism designed to aid pro!iders in maing the
most appropriate course o" treatment "or a speci"ic clinical case
The ultimate goal o" clinical practice guidelines is to achie!e the best clinical result in the
most cost e""ecti!e manner

%
Cognizant AHM
Reading -: Utili8ation Revie% and Authori8ation Syste&s
Utili8ation Revie%
Manage the overall cost effectiveness of healthcare services
Managing the costs of paying healthcare 2enefits
)nfor(ation collected includes
o "atient )nfor(ation = De(ographic B eligi2ility B "lan type
o "rovider )nfor(ation = "C" B referring "roviderB )n9"atient facility
o $ervice )nfor(ation = -eferral serviceB date of service B diagnosis
codesBtreat(ent codes B hospital ad(ission and discharge date etc
Reasons for conducting UR
Reduce Unnecessary )ractice Gariations
o Caused due to rei(2urse(ent (ethods B population (or2idity B lac8 of
scientific evidence and current (edical practice infor(ation
o :ariance 3ill re(ain = @eed to ho3ever reduce Unnecessary variance
$a'e a!!ro!riate authori8ation decisions
o uthorization is a health plans system o" appro!ing payment o" bene"its "or
ser!ices that satis"y the plans re-uirement "or co!erage
o Usually )ayers !ay only if
Service is covered under the benefit !lan
Considered &edically necessary and a!!ro!riate = These are
services or supplies as provided 2y physician or other healthcare
provider to identify and treat a (e(2ers illness or in0ury 3hich are
Consistent 3ith the sy(pto(sBdiagnosisBtreat(ent
)n >ccordance 3ith the standards of good (edical practice
@ot soles for convenience reasons
Furnished in the least intensive type of care re4uired
>uthoriation could 2egin fro( the "C"
)(prove the 4uality of "atient Care
o 1se of physician 2ased decision (a8ing syste(s
"hysicians have training B e7perience to deter(ine appropriateness
They are fa(iliar 3ith a 3ide range of treat(ent options
)(prove the Cost effectiveness of patient care
o Iood (etrics include Hospitaliations B (e(2erByear ! hospital 2ed daysB
ad(ission ! hospital 2ed daysB ad(ission ! specialists encounter per (e(2er!
referrals per "C" per 1// encounters
@u(2er of 2ed days per 1/// (e(2ers 5nor(alied for the year6
U> B 5B B &#*6 V B 5CB 1///6
o > = Iross 2ed days per ti(e unit
o B = Days per ti(e unit
o C = @u(2er of "lan (e(2ers
Services that Re(uire Utili8ation Revie% for Authori8ation
Fra(e3or8 to evaluate 1-
>ccess re4uire(ents
Fre4uency of 1tiliation
Cost per procedure
Total Cost
,evel of )nappropriate utiliation
Cost of -evie3
Access re(uire&ents
!&
Cognizant AHM
o "C" B direct access for OBBIH@ or pediatric B der(atologyB D:
o $erious Chronic conditions allo3ed direct access
o Co(pli(entary and alternative (edicine 5C>M6
Fre(uency of Utili8ation
o Don<t target very routine services
o @eed authoriation for co(ple7 procedures
Cost !er !rocedure
o High cost or high ris8 procedures and treat(ent
Total Cost
o Cost of service W Fre4uency of use
1evel of #na!!ro!riate utili8ation
o Higher the denial rate= (ore li8ely is the service 3ill re4uire 1-Bauthoriation
Cost of Revie%
o Balance Cost of revie3 vis9Q9vis 2enefit received
Ty!es of UR
13 )ros!ective Revie%
-evie3 and possi2le authoriation of proposed treat(ent plans for a patient
2efore the treat(ent is i(ple(ented
This is a preferred option
>cco(plished through precertification or prior authoriation re4uires plan
(e(2ers to notify the plan in advance for a particular treat(ent
Helps evaluate reasons for re4uest B deter(ine (ost appropriate course of
treat(ent B intervene to alter the care
Tools include
o 1tiliation Iuidelines = accepted approach to care for co((on pro2le(s
o $ite >ppropriateness listings = (ost appropriate settings for procedures
o E7perience Based Criteria = 2ased on (edical directors B provider
e7perience X for procedures 3hich are not perfor(ed Bdocu(ented 3ell
o 1ength of Stay *uidelines = >verage length of stay 2ased on a patients
diagnosis! severity of patients condition and types of services
=ength o" stay number o" days 32rom admission to day o"
discharge that a plan member spends in hospital ' other "acility
Mechanis(s to li(it ,O$ include
o "read(ission testing = tests 2efore inpatient ad(ission
o Discharge "lanning = deter(ine 3hat activities (ust occur 2efore patient
is ready for discharge and conduct the( efficiently. * 8ey activities
Fhat treat(ent and procedures have 2een prescri2ed
Deter(ine other services re4uired prior to ad(ission
Esta2lish length of stay
Deter(ine 3here patient goes after hospitaliation
Deter(ine 3hat e4uip(entB services 3ill 2e needed after discharge
:3 Concurrent Revie%
Treat&ent is in !rogress O A!!lies to services that continue over a !eriod
of ti&e
!se" to e#aluate outpatient courses o$ care % che&otherap' (
ra"iotherap'( ph'sical therap' ( ho&e healthcare an" counseling or )n
Patient care
Coordinated by the UR nurse 3ho services as a liaison 2et3een physicians B
hospital staff B health plans (edical (anage(ent and 1- staff
o *athering infor&ation about a &e&bers !rogress
!1
Cognizant AHM
o Trac'ing the total length and Cost of Care
o Continuing Discharge )lanning
"lan can intervene in the (iddle to help direct course of care
Alternative Care Settings and 1evels of Care
"ri(ary purpose is to deter(ine the proper setting for patient care. $o(e are
o E&ergency De!art&ents
These are essential to the i((ediate diagnosis and treat(ent of
critical illnessB severe in0uries
To avoid lia2ility for pay(ents ! so(e plans re4uire the
authoriation of payers 3ithin %' hours of ad(ittance
"lans conduct retrospective revie3 of clai(s for e(ergency
services to deter(ine the necessity Bappropriateness of care
*e"eral +&ergenc' Me"ical ,reat&ent an" cti#e -a.our ct
/986 says hospitals that receive MedicareBMedicaid grants are
re4uired to screen B sta2ilie all patients 3ho co(e to their
e(ergency depts.
Further so(e states prohi2it precertification re4uire(ents for
e(ergency services
E)rudent 1ay!erson StandardF of the alanced udget Act of
1..+ also li(its precertification and retrospective revie3 in (a8ing
coverage decisions. >ccording to this standard
9 condition is considered to be an emergency i" a prudent
layperson 3person who has a!erage nowledge o" health
and medicine4 could reasonably e)pect the absence o"
medical attention to put the indi!iduals health in <eopardy
%# states have adopted this standard
o Urgent Care Centers
"ro2le(s that are not life threatening 2ut that re4uire i((ediate
attention. The cost of care is higher than that in a "C"<s office 2ut
lo3er than hospital ED
o +bservation Care Units
Designed to address the i((ediate care needs of patients 3ho
re4uire continuous (onitoring 2ut not e(ergencyBacute care
o Sub Acute Care Facilities
>ddresses continuing care needs of patients 3ho don<t need
hospitals 2ut can<t 2e treated fro( ho(e
o Ste! do%n Units
Fard or section of 3ard in a hospital that is devoted to delivering
su2 acute care to patients follo3ing acute care
>lternative to su2 acute care facilities
)nter(ediate = Critical Care units and -egular @ursing 1nits
o Ho&e Healthcare
@eed inter(ittent rather than %' hour care
1sually used 2y Medicare patients
>lso seen younger people recovering fro( acute episodes
$ervices )nclude
Basic nursing care ! Found care ! "har(a care ! respiratory
care! reha2 services! nutrition care ! social 3or8 assistance!
provision for dura2le (edical e4uip(ent
o Hos!ice Care
!2
Cognizant AHM
$et of specialied healthcare services that provide support to
ter(inally ill patients and their fa(ilies
$ervices address (edical B nutritional B social Bpsychological and
spiritual needs
$edicare S!ecifies that these benefits co&e to !atients %ho
have a life e2!ectancy of D &onths or less
.3 Retros!ective Revie%
This occurs after the treat(ent is co(pleted
Evaluation of (edical necessity is 2ased on clai(s data and (edical records
Find Coding Errors = procedures don<t (atch diagnosis
U!coding = )nvolved using a procedure code (ore co(ple7 than actual code
Unbundling ; $eparating a procedure into parts
Utili8ation Revie% )rocess
Data Collection
o "rospective revie3 = does he satisfy criteria
o Concurrent revie% ; Docu&ent !atients !rogress
o -etrospective revie3 = address utiliation of servicesB patient outco(esB costs
Data Trans(ittal
o Manual trans(ittal 9 Manual B "aper Based
>dvantage = High degree of physician acceptanceX can 2e co(pleted
at their o3n convenience
o Telephone Trans(ittal
-e4uires providers to call a central nu(2er and relay authoriation via
):- over the fone
Faster B less cu(2erso(e B less la2or intensive
"lans li8e fone trans(ittal as its (ore accurateBco(pleteBerror free
o Electronic Trans(ittal
Faster B less la2or B less ErrorB O $crutiny and stringent regulations
Data Evaluation
o Evaluation of @on Clinical >spects of Coverage
o Evaluation of (edical necessity and appropriateness of proposed care
o Ad&inistrative Revie%
Co(pare the proposed (edical care 3ith applica2le provisions in the
purchaser contract to deter(ine coverage
)f its not satisfied = the clai( is denied
o $edical Revie%
)n case the a2ove is satisfied = there is an evaluation of the (edical
necessity and appropriateness
@urses can approve authoriation re4uests
"hysicians can approve and authoriation of pay(ents
)n case there is a dispute on any issue = the authoriation is delayed.
This then beco&es a )E7DED Authori8ation
$anaging the Utili8ation Revie% )rocess
$o(e (ore tools to (anage the utiliation process
Single Gisit Authori8ation 9 "C"s su2(it separate re4uests for each visit to the
specialist
!3
Cognizant AHM
1i&ited Gisit Authori8ation ; "lan (e(2ers (a8e a specified nu(2er of visits
2efore approval is re4uired again
)rohibition of Secondary Referrals 9 $pecialists cannot (a8e a referral 3ithout
plan authoriation.
E7ceptions to these rules could 2e (ade for che(otherapy and radiation therapy!
(ental health and su2stance a2use therapy
>uthoriation can 2e e7tended to (anage co(ple7 cases
$edical $anage&ent ##
Reading >A: 4uality Assess&ent and #&!rove&ent
)dentify the t3o types of 4uality delivered 2y MCOs
Descri2e the (ethods MCOs use to assess the 4uality of ad(inistrative and healthcare
services
Descri2e the advantages and disadvantages of using structure (easures! process
(easures! and outco(es (easures to evaluate healthcare 4uality
Discuss three tools MCO<s co((only use to i(prove perfor(ance and 4uality
Reading >: 4uality Standards" Accreditation" and )erfor&ance $easures
)dentify the (a0or agencies that provide accreditation for healthcare organiations
E7plain the role of 4uality standards in the accreditation process
Descri2e the (ost i(portant sources and types of perfor(ance (easures
!
Cognizant AHM
Reading >A: 4uality Assess&ent and #&!rove&ent
T3o ;ey areas = ?uality assess(ent activities and 4uality i(prove(ents activities
@hat is 4ualityC
?uality in a (anaged care conte7t refers to an MCO<s success in providing healthcare and
other services in such a 3ay that plan (e(2ers needs and e7pectations are (et.
?uality delivered 2y an MCO can 2e divided into t3o 8ey areas
Service 4uality = MCO<s success in (eeting non clinical custo(er needs and
e7pectations. Fill include details li8e
o ho3 long a (e(2er had to 3ait to see a doctor
o ho3 friendly office staff are
o ho3 3ell the MCO<s (e(2ers e7plain the details of coverage
Healthcare (uality is >the degree to which health ser!ices "or indi!iduals and
populations in crease the lielihood o" desired health outcomes and are consistent
with current pro"essional nowledge?
)f a plan (e(2er goes to a provider the healthcare 4uality refers to the (anner in
3hich the physicians treats the (e(2ers condition
#&!ortance of 4uality
Consu(ers consider it to 2e an i(portant factor in deciding 3hich health plans to offer
$ource of co(petitive advantage that helps organiations co(pete successfully
#&!ortance of 4uality for )atient Safety ;
o This enhances patient safety and decreases (edical errors
o Medical error occurs when a planned treatment or procedure is deli!ered
incorrectly or when a wrong treatment or procedure is deli!ered
o $edical errors are caused $+RE by brea'do%n in the Healthcare
syste& rather than !rovider errors
o 9d!erse +!ent Harm a patient su""ers that is caused by "actors other than
the patients underlying condition % 8eed to see i" the ad!erse e!ent was
random or i" it was caused by medical errors or de"iciencies
@hat are the factors that contribute to &edical Errors
o Faulty or #nade(uate Co&&unication
)hysician5s hand%riting is ac8no3ledged as the leading cause of
(edical error
)llegi2le prescription can lead to i(proper dispensing of (edications
)llegi2le orders can lead to inappropriate procedures and course of
treat(ent
o #nconsistent 4uality +versight
Every state has different licensing re4uire(ents for healthcare
professionals. >ccreditation progra(s are also 3idespread
:ery little overlap e7ists to pro(ote unifor( 4uality oversight
o 1ac' of Co&!liance %ith internal and e2ternal re!orting re(uire&ents
Most healthcare organiations have internal syste(s for reporting
adverse drug interactions and (inor (edical errors
9ny disciplinary action that limits physicians clinical pri!ileges "or @ A:
days M/ST be reported to the 8ational Practitioner 5ata Ban
.*D of the adverse drug reactions go unreported
o 1ac' of Gerification )rocedures
!!
Cognizant AHM
Treat(ents 2ased on individual<s analysis of results! 3ithout secondary
verification. :ery high error rates are caused 2y this
)OM report to Bill Clinton = @o3 they re4uired a nation3ide (andatory syste( of
collectingB analying and reporting infor(ation on Medical Errors
Other Mechanis(s to Co(2at this include
o $edical Error Re!orting Syste&s that allo3 healthcare providers and
facilities to analye co((on errors and identify error causing processes in
healthcare delivery
o $edical Alert syste&s that apply preprogra((ed online criteria to identify
test results that fall outside accepta2le ranges
o Drug Chec'ing syste&s that lin' !hysician and !har&acy order entry
infor&ation syste&s and auto(atically alert physicians and phar(acists of
possi2le drug interactions or allergic reactions to prescri2ed drugs
o Electronic $edical Record syste&s that allo3 providers and health plans to
trac8 and analye clinical data and provide re(inders for needed services
Assessing 4uality in an $C+
Difficult to define 3hat 4uality is and 2ased on that definition deter(ine 3hether an
MCO is delivering that 4uality
"erfor(ance Manage(ent can help an MCO deter(ine ho3 3ell it is doing in (eeting
(e(2er<s needs
Cuality is in the eyes o" the customer &ts the patients opinion which matters more
than the physicians or M*Os opinion
4uality $easures
o Structure $easures ; -elate to the nature! 4uantity and 4uality of resources
that an MCO has availa2le for (e(2er service and patient care
o )rocess $easures ; Methods and "rocedures an MCO and its providers use
to furnish services and care
o +utco&e $easures ; Iauge the e7tent to 3hich services succeed in
i(proving or (aintaining satisfaction and patient health
o Most measures till now ha!e been structure and process measures
o >ll three (easures are interdependent = structure and process are i(portant
2ecause the lead or are 2elieved to lead to 2etter outco(es = 2ut outco(e is
the end result
o The Most useful outco(e (easures are those that can 2e related to specific
processes or structures
Assessing Service 4uality
o "rovider $ervice 4uality issues include
Ease 3hich (e(2ers can get through to a clinicians office 2y fone
,ength of ti(e patients (ust 3ait for an appoint(ent
,ength of ti(e patients (ust 3ait in office to 2e seen 2y a provider
>ttitude! Co(petence and efficiency of office staff
Clinicians Bedside Manner = friendlyB listener B e7planations
o >d(inistrative $ervice ?uality
"hone 3ait ti(es 3hen calling MCO
>ttitude! Co(petence and efficiency of (e(2er services staff
>ccuracy and ti(eliness of clai(s pay(ent and provider
rei(2urse(ents
$peed 3ith 3hich (e(2er services representatives can retrieve
needed infor(ation fro( the MCO<s )$
>vaila2ility of educational (aterial for (e(2ers
!"
Cognizant AHM
o 1se structural = 5noP of service reps! processing capa2ilities ! nu(2er of
"C"<s6 ! !rocess lin'ed 5length of stay! accuracy ! efficiency6 or outco&e
&easures 5Me(2er satisfaction! co(pliant resolution6
Assessing Healthcare 4uality
o This can 2e evaluated using structural !process and outco(e (easures
o Structural $easures
@u(2er of "C"<s in the net3or8 !
D of providers 3ho are 2oard certified
Education! training and e7perience of "lan providers
@u(2er of providers accepting ne3 patients
@u(2er and distri2ution of specialists in the plans service area
Ieographic dispersal of providers
"hysicians turnover in the plan
Hospitals included in the plans net3or8
@u(2er of hospital 2eds availa2le
"hysical conditions of hospitals and other facilities
E(ergency roo( access
>vaila2ility of (e(2er education progra(s
Credentialing
$ain advantage ; Easy to identify and re!ort M intuitively lin'ed
to (uality of care
o )rocess $easures
$o(e loo8 at illness prevention (easures and others loo8 at ho3 the
"roviders treat sic8 patients
)reventive care statistics are the $+ST !o!ular &easures used
during (uality assess&ent ; statistics are easy to (easure and
understand and they fit 3ell 3ith the e(phasis on prevention
D of children receiving i((uniation
percentage of adults receiving regular chec8ups
percentage of (e(2ers receiving screening e7a(s li8e
(a((ogra(s! pap s(ears or cholesterol screening
D of (e(2ers receiving advice on s(o8ing cessation
#&!ortant factor ; a!!ro!riateness of the care delivered
#na!!ro!riate care can be divided into
Overuse of care = anti2iotics to treat viral infections etc
1nderuse of care = provider fails to provide care that 3ould
i(prove the patients health e.g. Beta 2loc8ers not ad(inistered
to patients follo3ing a heart attac8
Misuse of Care = 3rong treat(ent is provided for patients
illness or correct treat(ent is delivered incorrectly
Standards of Care are diagnostic and treat(ent processes that a
clinician should follo3 for a certain type of patientBillnessBclinical
circu(stance
)ublished by >(erican Medical >ssociation 5>M>6 ! >(erican
>cade(y of "ediatrics 5>>"6 etc
Advantages Easy to identify " &easure and re!ort
1ead to i&!roved health outco&es in so&e cases
But Y no lin8 2et3een process and i(proved outco(e has 2een
defined for (any process
o +utco&e $easures
& 8ey activities = *linical Status. 2unctional Status. Patient Perception
!#
Cognizant AHM
Clinical Status ; -elates to 2iological health outco(es e.g. cancer
treat(ents are 0udged using * year survival rates B change in tu(or
rates. Other e7a(ples could include
@oP of hospital ad(issions for certain condition
>verage length of hospital stay 2y type of in0uryBillness
@oP of patients contracting infection in hospital
$urvival rate of people 3ho received angioplasty
)ncidence of certain conditions that co((only afflict long ter(
dia2etes patients = foot ulcers ! 2lindness
Occurrence of lo3 2irth 3eight infants or pre(ature 2irths
Functional Status ; Functional status relates to patients a2ility to
perfor( activities of daily living
)atient )erce!tion ; Ho3 the patient feels
o Advantage of outco&e >2ility to de(onstrate i(proved clinical and
functional status over ti(e
o Outcomes are e""ecti!e measures o" M*O or pro!ider per"ormance only i" they
can be lined to structures or processes and only i" they are sensiti!e to
modi"ications in those structures or processes by the M*O or pro!ider
o Disadvantages
@ot feasi2le in all situations li8e long treat(ent plans
Other disadvantages &nconsistency o" source data . need to pro!ider
ris ad<ustment. di""iculty D cost o" obtaining outcomes data. problems
with incenti!es
@eed to ad0ust outco(es to account for ris8 = The response to
treat(ent depends on factors that independent of the 4uality of care
provided 9 Ris' adJust&ent or Case ;$i2 AdJust&ent is the
statistical ad0ust(ent of outco(e (easures to account for these
factors
Evaluation of perfor(ance of providers is very difficult = in case
outco(es are (ade pu2lic and used to 0udge providers = so(e (ight
2e reluctant to treat the sic8est patients
Collecting and Analy8ing 4uality Assess&ent Data
o Financial Data
Descri2e the costs of physical ! technological and hu(an resources
needed to provide ad(inistrative and healthcare services to plan
(e(2ers.
o Clinical Data
This includes 2oth disease specific data and data related to general
health and functional status.
"rovide in depth overvie3 of outco(es associated 3ith a particular
healthcare process and structure
"atient records B clai(s and encounter for(s B are pri(ary sources
Tools used include = $F9&# and H$?9&. 5health status 4uestionnaire6
o Custo(er $atisfaction Data
Ho3 do (e(2ers B providers B purchasers vie3 the delivered servicesJ
Telephone or e(ail surveys
Fidely used Consu(er >ssess(ent of Health "lans 5C>H"$6 developed
2y the >gency for Healthcare -esearch and ?uality 5>H-?6
Re!orting 4uality Assess&ent #nfor&ation
!$
Cognizant AHM
o "erfor(ance reports serve t3o pri(ary purposes = internally ! they help
MCO<s i(prove the 4uality of the healthcare and service plan (e(2ers
receive 2y identifying the plans strengths and 3ea8nesses
o E7ternally perfor(ance reports address accounta2ility to the health plans
custo(ers and to outside agencies
4uality #&!rove&ents
Ha!ha8ard ChangeM Rando& Change ; unplannedB uncontrolled S produces
unpredicta2le results e.g. E7plosion of healthcare costs resulting fro( unli(ited
utiliation
Reactive Change ; Controlled = 2ut leads to positiveBnegativeBunintended results
)lanned Change ; Deli2erate! controlled! colla2orative and proactive
7eed to do the follo%ing to &a'e changes effective
)lanned ; )dentify 3here i(prove(ent B define desired outco(esB define
2arriers or roots causes for pro2le(s B decide 3hat actions are (ost li8ely to
achieve the desired outco(es
Co&&unicated ; "rocess of Trans(itting infor(ation and results
up3ardBdo3n3ard Bhoriontally through the organiation and out3ard to its
e7ternal custo(ers
#&!le&ented ; )(ple(entation of 4uality i(prove(ent initiatives turns
intention into action 2y providing a (ethod for responsi2le parties to
co(plete assigned tas8s in a specific ti(efra(e
Docu&ented ; >ccrediting organiations and regulatory 2odies re4uire
MCO<s to provide docu(entation of three (a0or co(ponents of 4uality
i(prove(ent = !erfor&ance assess&ent " !rogra& !lanning and
!rogra& evaluation
Evaluated ; "rovides a (easure of ho3 3ell the MCO<s i(prove(ent plans
achieved stated goals 2y co(paring perfor(ance 2efore and after changes
Strategies and Tools for #&!roving 4uality
ench&ar'ing
Most effective (echanis( = ;ey Tas8s include
)dentifying 2est practices and 2est outco(es for a specific process
E(ulating the 2est practices to e4ual or surpass the 2est outco(e
Best practices = are the latest treat(ent (odalities and accepted 2y providers
are the (ost effective and efficacious approach to (edical care
Clinical )ractice *uidelines
"rovide consistent delivered services that 3ill i(prove plan (e(2ers health
Gointly developed inhouse plus planBprovider co((ittees or fro( outside
sources such as @ational Iuideline Clearinghouse 5@IC6 ! a Goint :enture of
>M>! >H-? and the >(erican >ssociation of Health "lans 5>>H"6
)rovider )rofiling
)nvolves collecting and analying infor(ation a2out the practice patterns of
individual providers
1ses credentialing and recredentialing to deter(ine ho3 3ell a provider
(eets MCO standards
)dentifies those providers 3ho practices vary fro( the nor( either 2ecause of
1sage of (edical resources higher Blo3er than nor(al
1se of resources in a (anner noticea2ly different fro( other providers
)eer Revie%
!%
Cognizant AHM
$yste( in 3hich the appropriateness of healthcare services delivered 2y a
(e(2er are evaluated 2y a panel of (edical professionals
This can focus on a single e!isode of care or on the entire !rogra& of care
-esults are used to
"rovide Measures of overall 4uality
)dentify opportunities for i(prove(ent in provider perfor(ance
$erve as a general learning tool for (e(2ers of the panel
)eer revie% is RE4U#RED for services !rovided by $edicare and
$edicaid Reci!ients
)eer revie% !artici!ation is voluntary for services !rovided to
co&&ercial !lan &e&bers
Reading >: 4uality Standards" Accreditation" and )erfor&ance $easures
$tandards are defined 2y the )nstitute of Medicine as Z9uthoritati!e Statements o"
Minimum le!els o" acceptable per"ormance or results e)cellent le!els o" per"ormance or
results and the range o" acceptable per"ormance or results?
For the( to represent valid (easures of 4uality and perfor(ance = They have to satisfy
three re4uire(ents =
They (ust relate to the conditions that are i(portant to the planB (e(2ers
$tandards (ust focus on structures! processes or outco(es that can 2e influenced
through 4uality i(prove(ent initiatives
$tandards should address situations that are controlla2le 2y the organiation
)nternal standards are developed 2y the MCO and 2ased on their historic perfor(ance levels
E7ternal $tandards are 2ased on outside infor(ation such as pu2lishing industry 3ide
averages or 2est practices. MCO<s use internal standards to (easure the 4uality of
ad&inistrative services and E2ternal Standards to evaluate healthcare services3
Accreditation
This is an e!aluati!e process in which a healthcare organi,ation undergoes an e)amination
o" its operating procedures to determine i" they meet designated criteria as de"ined by the
accrediting body and to ensure that they meet a speci"ied le!el o" -uality
1se a co(2ination of docu(ent revie3! onsite revie3! intervie3s! (edical record
revie3 and evaluation of (e(2er services syste(s.
E7ternal accreditation is 2eco(ing (ore and (ore i(portant as states and
purchasers are re4uiring fir(s to undergo so(e 8ind of revie3 process.
E(ployers use this to deter(ine if the plan (eets standards for 4uality care = serves
as a sta(p of approval
Accrediting +rgani8ations
Noint Co&&ission on Accreditation of Healthcare +rgani8ations
o Develo!ed in 1,<1
o Evaluates and accredits nearly 1%/// hospitals and ho(e care agencies and
+/// 2ehavioral !long ter( care ! a(2ulatory care and clinical la2 facilities
o Hospitals receiving Medicare B Medicaid Funds M1$T 2e GC>HO accredited
o GC>HO also accredits MCOs and healthcare @et3or8s
o Accreditation )rocess
Co(plete Onsite $urveys conducted every three years
Organiations central office and any non GC>HO accredited net3or8
"&
Cognizant AHM
>ll high ris8 services provided 2y the organiation and a sa(ple of the
lo3 ris8 services
> sa(ple of practitioners offices and records
o 4uality Standards
GC>HO focuses its revie3 of health plan delivery syste( and proc on
-ights B -esponsi2ilities and ethics
Continuu( of care
Education and Co((unication
Health "ro(otion and Disease prevention
,eadership
Manage(ent of Hu(an -esources
Manage(ent of )nfor(ation
)(proving net3or8 perfor(ance
o +n Nan :AA1 NCAHI introduced ne% standards on )ain $anage&ent and
)atient Safety
o Accreditation decisions ; There are si7 types of decisions reached
Accreditation %ithout Ty!e # reco&&endation7 De(onstrate
satisfactory perfor(ance in all GC>HO perfor(ance areas
Accreditation %ith Ty!e # reco&&endation >3arded to
organiations that fail to satisfy GC>HO standards in one or more
per"ormance areas( 8eed to resol!e it in a de"ined time"rame
)rovisional Accreditation = *omply with a subset o" E*9HO
standards based on a preliminary onsite e!aluation( This remains
e""ecti!e till the whole sur!ey is done( That must be done within ;
months o" this pro!isional decision
Conditional Accreditation ; >3arded to organiations that
2ail to demonstrate compliance in multiple per"ormance areas.
but are considered capable o" achie!ing compliance within a
speci"ied period o" time
Persistently unable or unwilling to comply with E*9HO stds
2ail to comply with one or more accreditation re-uirements
)reli&inary Denial of Accreditation ; >3arded 3hen the GC>HO
deter(ines that denial or accreditation is 0ustified 2ut decision is
su20ect to revie3
Accreditation Denial 9 >3arded 3hen GC>HO deter(ines that denial
of accreditation is 0ustified and all appeal processes are e7hausted
o Can also place organiations on an accreditation %atch 3hen an i(portant
event occurs and the root cause analysis and corrective action have not 2een
done correctly. This holds till GC>HO dee(s that it 2e re(oved
7ational Co&&ittee for 4uality Assurance
o This accredits MCOs! Managed care Behavioral Organiations! Credentials
verification organiations 5C:Os6 ! ""Os ! disease (anage(ent organiations
and physicians organiations
o More than half of the nations MCOs are accredited 2y the(
o Accreditation )rocess ; T3o parts
Onsite survey of ad(inistrative and healthcare services
Offsite evaluation of audited results of selected effectiveness of care
and consu(er satisfaction (easures included in @C?> Health Plan
+mployer 5ata and &n"ormation Set 3H+5&S4
"1
Cognizant AHM
Consu&er satisfaction 9 @C?> uses a C>H"$ = %./H survey = this is
a co(2ination of the original HED)$ (e(2er satisfaction survey S
C>H"$ survey developed 2y the Agency for Healthcare Research
and 4uality HAHR4I
The Core C>H"$ survey 4uestionnaire are ad(inistered separately to
Medicare B Medicaid and Co((ercial populations
O8S&T+ re!iew is at least one e!ery three years
H+5&S results are e!aluated annually
o ?uality $tandards During onsite revie3 ! the follo3ing stds are (easured
"rogra( structure
"rogra( Operations
"hysician Contract -e4uire(ents
>vaila2ility of "ractitioners
>ccessi2ility of $ervices
Me(2er $atisfaction
>ssistance for people 3ith Chronic health conditions
Clinical practice Iuidelines
Continuity and Coordination of Care
Clinical Measure(ent activities
)ntervention and follo3 up of Clinical )ssues
Effectiveness of the ?uality i(prove(ent progra(
Delegation of ?) activity
o -evie3s processes for revie3ing and authoriing (edical care! 4uality of
provider net3or8s! (e(2ers rights and responsi2ilities! preventive health
activities and (edical records.
o >lso address Consu(er protection issues related to internal and e7ternal
syste(s for revie3ing and evaluating (edical appeals
o >lso coordination of access to 2ehavioral healthcare.
o Accreditation Decisions
-esults are organied into * categories
>ccess and service
?ualified "roviders
$taying Healthy
Ietting 2etter
,iving 3ith illness
The scores are tallied and used to arrive at a accreditation decision
8 Categories e7ist
E7cellent = e7ceed or (eet re4uire(entsB HED)$ top results
Co((enda2le = (eet or e7ceed re4uire(ents
>ccredited = (eet (ost 2asic re4uire(ents
"rovisional = (eets so(e re4uire(ents 2ut not all
Denied = does not (eet re4uire(ents
$uspended = @C?> has 3ithdra3n accreditation till it conducts
revie3 and corrective action ta8en
1nder -evie3 = initial decision (ade = 2ut this is 2eing
re!iewed under re-uest o" the plan
@C?> discretionary revie3 = @C?> re!iews in order to assess
the appropriateness o" its decision
-<= %eightage Co&!liance %ith 7C4A :<= 9 HED#S results
7ational Health )lan Re!ort Card ; Health accreditation status
"2
Cognizant AHM
A&erican Accreditation Healthcare Co&&ission HURACI
o The follo3ing organiational and co(ponent accreditation progra(
Health "lans! Health @et3or8s ! Health Call Centers ! Case
Manage(ent Organiations! Credentials verification organiation!
health provider organiation! health utiliation (anage(ent! For8ers
Co(pensation net3or8! utiliation (anage(ent for 3or8ers
co(pensation and e7ternal revie3
o Accreditation )rocess
Des8top revie3 of docu(entation of plan policies and procedures
Onsite visit to verify the accuracy of docu(entation and plans
co(pliance 3ith accreditation
o 4uality Standards
?M $tructure! Organiation and $taffing
@ature and $cope of the ?M progra(
$yste(s for addressing Co(plaints! corrective action and disciplinary
action
o T3o types of standards = SHA11 and SH+U1D
Shall address essential issues and define (ini(u( levels of
accepta2le 4uality
Should standards identify desira2le levels of 4uality
Should gets changed to Shall over a !eriod of ti&e
1->C Does 7+T include perfor(ance data as part of the accreditation
process. Ho3ever they do re4uire health plans to engage in 4uality
i(prove(ent initiatives
o Accreditation Decisions
7eed to 1AA= satisfy Shall standards and DA= Should
Re&ains effective for . years
)erfor&ance $easures
This is a (ualitative &easure of (uality of care !rovided by a health !lan or !rovider
that consu&ers" !ayers" regulators and others can use to co&!are !lans or
!roviders
Foundation of Accountability HFACCTI
This is created and governed 2y a coalition of consu(er organiations! corporate and
govern(ent healthcare purchasers
$upports a nu(2er of initiatives intended to i(prove healthcare 4uality and help
consu(ers (a8e healthcare decisions 2ased on ?uality
The infor(ation collected is classified into the follo3ing areas
o The Basics = delivery of good care including accessBs8ills BCo((unication
Bcoordination Bfollo3 up
o $taying Healthy = avoid illness etc
o Ietting 2etter = sic8 ppl getting 2etter
o ,iving 3ith illness = people 3ith chronic B ongoing illnesses reduce sy(pto(s!
avoid co(plications and (a7i(ie 4uality of life
o Changing @eeds = caring for people 3hen their need changes dra(atically
o They Don5t collect M &easure !erfor&ance ; Just guidelines
HED#S
>d(inistered 2y @C?> = "erfor(ance Measure(ent Tool designed to help healthcare
purchasers and consu(ers co(pare the 4uality offered 2y different MCOs
"3
Cognizant AHM
$pecified HED)$ effectiveness of care (easures are used as part of @C?><s
accreditation progra( for MCOs
There are - 'ey do&ains for HED#S
o Effectiveness of Care = 1# reporting (easures li8e )((uniation statusB
screening progra(s etc
o >ccessB>vaila2ility of Care = * reporting (easures = prenatal and postpartu(
care B pediatrics B dental visits
o $atisfaction E7perienced 3ith Care = (e(2er satisfaction
o Health "lan $ta2ility = practitioner turnover B total (e(2ership
o 1se of $ervices = 3ell child visitsB cesarean section rate
o )nfor(ed Health Care Choices = (anage(ent of (enopause
o Health "lan Descriptive infor(ation = physician 2oard certification
1pdated annually to enhance 4uality evaluation
HED)$ %/// added (easures for chronic conditions B ongoing treat(ent progra(s
for (enopause B cholesterol (anage(ent and B" (onitoring
+RLP
GC>HO initiative = incorporates the outco(e and other perfor(ance (easures into
the accreditation process.
This focuses on +UTC+$E ; the actual results of care
"articipating healthcare organiations collect fro( at least # (easures
GC>HO plans to identify standard core perfor(ance (easures for O-H[
Additional Sources of 4uality Standards" )erfor&ance $easures and Data
4uality Co&!ass
@C?> offers this 9 > national data2ase of perfor(ance and accreditation infor(ation
su2(itted voluntarily 2y (anage care organiations nation3ide
This dra3s perfor(ance (easures fro( HED)$
>lthough its voluntary = co(panies are finding it useful to co(pete effectively
Agency for Healthcare Research and 4uality HAgency for Healthcare )olicy and
ResearchI
"ri(ary -esearch ar( of the 1$ Depart(ent of Health and Hu(an $ervices
One i(itative is C>H"$
>H-?s Co(puteried @eeds Oriented ?uality Measure(ent Evaluation $yste( 5CO@?1E$T6
4uality #&!rove&ent Syste& for $anaged Care
"art of the Balanced Budget >ct of 1..+ = Healthcare Financing >d(inistration $ervice
?uality )(prove(ent $yste( for Managed Care ?)$MC to (onitor 4uality i(prove(ent
efforts of Medicare B Mediclai(
These standards are to be &et to be $edicare Contractors
"
Cognizant AHM
$anaged Healthcare +!erations #
Reading ,A: Healthcare $ar'eting for $C+s
,ist the ele(ents of the (ar8eting (i7 and descri2e their role in the (ar8eting process
,ist several for(s of (ar8eting research that MCOs use to o2tain infor(ation a2out their
custo(ers
E7plain the (a0or o20ectives of 2enefit design
Descri2e the (ar8et seg(ents that co(prise the non9group (ar8et
E7plain the i(pact of state regulations on (ar8eting to the Medicaid population
E7plain the differences 2et3een s(all groups and large groups that affect (ar8eting
efforts directed to each of those seg(ents
E7plain 3hich pro(otion tools and for(s of distri2ution are used (ost fre4uently in the
non9group and group (ar8ets
Reading ,: Under%riting" Rating" and Financing
Define under3riting and e7plain the differences 2et3een ne3 2usiness under3riting and
rene3al under3riting
)dentify and descri2e the characteristics of typical rating (ethods used 2y MCOs in
setting pre(iu(s
)dentify and define 8ey accounting and financial reporting ter(s for MCOs
E7plain the differences 2et3een fully funded and self9funded health plans
"!
Cognizant AHM
Reading ,A: Healthcare $ar'eting for $C+s
$ar'eting Ter&s
$ar'eting ; Z"rocess of "lanning S e7ecuting the conception! pricing! pro(otion and
distri2ution of ideas! goods! and services to create e7changes that satisfy individual and
organiation o20ectivesA
Other 8ey ter(s to 8no3 > (ar8et! Mar8eting -esearch! Mar8et $eg(entation !
"ositioning! "roduct ! 2randing ! product line! pro(otion ! advertising! personal selling !
tele(ar8eting! sales pro(otion! pu2licity! press release
9n e)change occurs when one party gi!es something o" !alue to the other party "or
something o" !alue in return(
/ )5s of &ar'eting ; )roduct" )rice" )ro&otion and )lace HDistributionI
"roduct 9 Benefits that MCO designs 5through research etc6
"rice = "re(iu( you charge
"ro(otion = Co((unicate this to the users
"lace = $ales reps B e(ployers
0ey (uestions
Ho3 should the product 2e positioned relative to the other products in (ar8etJ
Fhat pro(otional tools 3ill 2e the (ost effective for co((unicatingJ
Ho3 3ill MCO respond to co(petitor<s products and service offeringsJ
Fhich distri2ution channel (e(2ers 3ill 2e (ost effective for selling this productJ
Custo&ers Role in $ar'eting Decisions
Custo(ers could 2e individuals B e(ployers B govern(ent B association B 2ro8er B e(ployee
2enefits consultant B in net3or8 or out of net3or8 provider
Fhat do e(ployers and e(ployees 3ant in a health planJ
>re (e(2ers needs 2eing satisfied 2y their MCO<sJ
Do physicians and hospitals need additional support or continuing education to help
the( provide 2etter 4uality servicesJ
>re our products 2eing offered at a co(petitive priceJ
Ho3 can 3e satisfy our custo(ers de(ands for 4uality care and service in a cost
controlled Environ(entJ
$ar'eting Research for $C+s
Critical issue = Mar8ets are local and not national
Different areas have different needs for different healthcare facilities
Techni4ues used include 3ritten Bfone surveys ! one9on9one intervie3s ! focused
group discussions
Focused group )ntervie3 9 unstructured infor(al session in 3hich si7 to ten people
participate led 2y a (oderator 3ho guides the group
E7a(ples of adv esta2lish(ent of ""O<s B toll free lines
)roduct
1se 2randing to distinguish products
@eed to develop high 4uality products that (eet consu(er<s needs
Develo!&ent and enefit Design
""
Cognizant AHM
Benefit Design and "ricing are t3o i(portant processes.
enefit Design is used to deter(ine 3hich level of 2enefits 3ill 2e offered to its (e(2ers!
the degree to 3hich (e(2ers 3ill 2e e7pected to share the costs of such 2enefits and ho3
the (e(2ers can access (edical care through the health plan
Definitions 3ill include
Healthcare services covered 2y the plan and the 1- for those services
>ny e7clusion or li(itations that 3ill apply
-e4uire(ents on deducti2les or copay(ents
Decide on prescription 2enefit! level of 2enefit! for( of 2enefit
Decide on :ision B Dental and other ancillary 2enefits
Decide on the net3or8 providers 3ho 3ill support you B credentialing
Deter(ine 3hich services (ay 2e o2tained 2y (e(2ers to 2e covered 2y the plan
Deter(ine the roles and responsi2ilities of a coordinator of care or "C" in the plan
Decide 3hich 2enefits 3ill 2e carved out and delivered to specialty services
$atisfy applica2le regulatory re4uire(ents
@eed to decide the level of 2enefits to include in the "lan. HMO<s typically 3ill have (ore
2enefits included 3hile ""Os are (ore fle7i2le
$econdly! can e7clude e7peri(ental procedures and cos(etic procedures fro( this set
,astly deter(ine 3hich cost sharing features to include
Copay(ents = differential rates for different levels
Coordination of care = "C" appoint(ent B nature of self referral
Deducti2les and coinsurance
Coordination of Benefits
Out of "oc8et Ma7i(u(s = dollar li(its set 2y MCO<s on 3hat you (ight have to pay
out of poc8et for the services
>nnual and ,ifeti(e Ma7i(u( 2enefits
"enalty provisions = decreased 2enefits for not co(plying 3ith the plan e.g.
ad(ission to hospital 3ithout notifying the plan
#nnovations in benefit design
"C" B "O$ 3ere innovations
"C" no3 is a Kcoordinator of care< = enlarged role and responsi2ility
Diversification of product offering out of )nitial scope = Custo(er 3ant one stop shop
Challenge to provide (ar8eting support for a diverse product line
)rice
Discussed in section ,
)ro&otion
)nfor( the consu(ers a2out the product and price
"ersuade the( to 2uy it and re(ind the( the 2enefits of choosing our organiation
Differentiate on 2asis of ?uality B Custo(er $ervice B Cost B Convenience B >ccessi2ility of
healthcare services B "reventive (edicine or health pro(otion services
/ tools used Advertising" !ersonal selling" sales !ro&otion and !ublicity
Distribution
* 8ey categories for selling = #nternal Sales force" agents" bro'ers" e&!loyee benefit
consultants and direct &ar'eting
"#
Cognizant AHM
#nternal Sales Force
$ales (anager directs the roles of 2ro8ers and agents. $ales person and sales
support staff are e(ployees of the fir(.
Organiation of $ales force
o ,ines of products li8e HMOs! ""Os! "O$ etc
o Mar8et seg(ents = sales to groups or non group (ar8ets
o Iroup $ie = ,arge ! s(all
o "opulation $erved = Medicare B Medicaid B 3or8ers co(pensation
o Ieography = (etropolitan area B rural area
Agents
This is a person who is authori,ed by the M*O to act on behal" o" the insurer to negotiate.
sell and ser!ice managed care contracts(
Ca!tive agents represent only the MCO 3hile #nde!endent agents can represent anyone.
They are co(pensated in the for( of Co((ission.
ro'ers
Salesman who has obtained a license to sell and ser!ice contracts o" multiple health plans
or insurers and who is ordinarily considered to be an agent o" the buyer. not the health plan
or insurer
These 2ro8er services groups co(prise of % to 1/// agents and are co(pensated (ostly on
co((ission 2asis.

E&!loyee enefit Consultants
This is a specialist who is hired by a group buyer to pro!ide ad!ice on which plan to
purchase This guy evaluates the proposed 2enefits plans and reco((ends the 2est choice
to his clients. Factors including accreditation etc are also considered.
The consultant is paid a fee 2y the client. He offers in so(e sense a (ore o20ective
0udg(ent on the various plans
Direct $ar'eting
1se one or (ore (edia to elicit an i((ediate and (easura2le action fro( a client or
prospect. 1se tools li8e direct (ail! ne3spaper! television.
Data2ase Mar8eting = Creation of a DB record of infor(ation a2out each custo(er or
custo(er prospect that is used to narro3 the focus of the organiations direct (ar8eting
effort.
Seg&entation and )ositioning for Healthcare $ar'ets
Mar8et seg(entation is the process of dividing the (ar8et into s(aller (ore (anagea2le
seg(ents. To! level seg&entation is generally grou! vis9Q9vis non grou!3 +thers
include *eogra!hic" )roduct" De&ogra!hic and Distribution Channel3
7on *rou! $ar'et
Three 'ey classifications ; #ndividual &ar'et" senior &ar'et and the $edicaid
$ar'et
#ndividual $ar'et
o Co(posed of custo(ers not eligi2le for Medicare or Medicaid 3ho are covered
under an individual contract for health coverage. These are su2 divided into
For&er Custo&ers grou! = Iuys 3ho retained individual coverage
after changing 0o2s. This contract is called a non group contract
Regular #ndividual $ar'et Custo&ers ;$tudents B self e(ployed
o Channels used for this (ar8et are direct (ail Btele(ar8eting B advertising
"$
Cognizant AHM
o Sales !ersonnel = >gents and )nternal $ales force
o MCOs health screen (e(2ers to prevent anti9selection
o &ndi!idual maret consumers not meeting eligibility re-uirements alone are
o"ten eligible to enroll through their a""iliation with a pro"essional association
such as the *hamber o" *ommerce
The Senior $ar'et
o The seg(entation is generally 2ased on age.
o The HCF> protects the consu(ers interests 2y enforcing regulations that
affect the (ar8eting of (anaged healthcare products to seniors.
o H*29 must appro!e 9== mareting materials including membership and
enrollment materials used by M*Os to maret managed care products to the
medicare population(
o Other regulations include prohibition o" 5oor7to7door selling.
misrepresentation. discriminatory mareting methods. and use o" misleading
mareting material or practice(
o $edicare $anaged Care 7ational $ar'eting *uideline = Ensure unifor(
interpretation and to provide 2eneficiaries 3ith accurate S clearer infor(ation
o Basically the senior (ar8et can choose fro(
Traditional #nde&nity Coverage under $edicare ;
Medicare "art > 9 provides hospital insurance and
Medicare "art B 9Covers cost of physicians professional services
Can purchase a Medicare $upple(ent to cover the Iaps in this
$ED#*A) )olicies = cover out of poc8et e7penses B routine
services li8e physical e7a(ination B prescription drugs B glasses
$anaged Care Coverage under $edicareR Choice
Chose fro( a variety of plans HMOs B "O$ B""Os B Co(petitive
Medical "lans and private FF$ plans.
*o!er 9T =+9ST Medicare 9 D B 9 But can offer other pac8ages
Significant benefit is eli&ination of !a!er%or'" Coverage
of services not covered by $edicare" generally acce!t all
a!!licants Hirres!ective of !ree2isting conditionsI
o Distribution: )nfor(al discussions! direct (ail! television! ne3spaper!
tele(ar8eting
o Sales tea&P )nternal sales force
$edicaid $ar'et
o NG bet%een Federal and States 3hich targets hospitalB(edical e7pense
coverage for the lo3 inco(e aged and disa2led citiens. Some states re-uire
these people to <oin a managed care plan(
o +!!ortunity that is te&!ered %ith strict regulations
o -e4uiring preapproval of all for(s of 3ritten and ver2al co((unication
2et3een MCO and Medicaid recipient
o "reauthoriation of (ar8eting (aterials ! progra(s! 2rochures! flyers etc
o "rohi2iting givea3ays or sales pro(otion ite(s
o "rohi2iting door to door or telephonic solicitation
o Distribution: #nfor&al discussions M direct &ail M TG advertising
"%
Cognizant AHM
o Sales Tea&: Some states re-uire &ndependent enrollment broer ' Bene"its
counselor should manage enrollment( Other states MCOs can engage
independent 2ro8ers B agents B internal sales force
*rou! $ar'et
The 0ey grou!s include
E(ployer E(ployee Iroups = private B pu2lic B federal govt
Multi9e(ployer groups = trade associations B la2or unions B
>ffinity Iroups = "rofessional associations B 2usiness associations B fraternal orgs
De2tor9Creditor Iroups = people 3ho have 2orro3ed funds fro( a 2an8 etc
S&all *rou! $ar'et
Classified as %9.. (e(2ers
Ienerally see8 2asic healthcare products 3ith cost (g(t features
"rice is the (ost critical decision for s(all 2usinesses = lo3est priceBlongest period
3ith a % to & year rate loc8 guarantee
This seg(ent tends to s3itch fre4uently
Heavy reliance on the sales representative = agentB 2ro8er
$tarted 0oining e&!loyee !urchasing alliances B Health insurance purchasing
Coops B "urchasing "ools B E(ployer "urchasing Coalitions B "urchasing Coalitions
Offered through the local cha(2er of co((erce or s(all 2usiness dev association
Distribution:
o )ersonal Selling is the &ost effective &ethod ; specifically tele(ar8eting
has proved to 2e the (ost effective
o Direct Mail is also another tool
Sales Tea&
o Agent is &ost i&!ortant
o ,ocal Cha(2er of Co((erce = discounted rates for all (e(2ers
1arge *rou! $ar'et
$ie O %*/ 5or *// or 1///6 Me(2ers
These plans (ay 2e self funded = e(ployer 2ears the financial ris8
T%o 'ey &ar'ets
o ,arge ,ocal groups = (anufacturing B (unicipal B state govts
o @ational >ccounts = ,arge group accounts that have e(ployees in (ore than
one geographic area
1sually use e(ployee 2enefit consultant
Fant unifor(ity in priceB product B service
$ee8 cost (anage(ent strategies
#&!ortant factorsP ?uality BDiverse product range B access B service B high 4uality
provider net3or8sB e(ployee satisfaction B accreditation B self funding capa2ility
E2!ectations ; Custo(ied products B high levels of service B continued
enhance(ents B proof of value B Ability to re!ort utili8ation data
Distribution:
o )ersonal selling is the &ost effective tool
o Dual or &ulti level ; need to co&&unicate to e&!loyees and e&!loyers
E(ployer = target CFO B CEO B E(ployee 2enefit consultant
$o(eti(es as8 for -F"s to (ultiple fir(s
o E(ployees = Iroup (eetings B Health fairs B pro(otional info B internet
$ales tea(
o )nternal sales force B E(ployee 2enefit consultants
#&
Cognizant AHM
#nter&ediate *rou! $ar'et
@ot too large not too s(all
Cost and price sensitive 2ut (ay fully fund their coverage and offer e(ployees only
one type of plan
@egotiate lo3er pre(iu(s as relatively sta2le clai(s e7perience
,i(ited influence on Benefit design
Reading ,: Under%riting" Rating" and Financing
Under%riting
The process o" identi"ying and classi"ying the ris represented by an indi!idual or group is
called underwriting(
Those individuals 3ho have a greater than li8ely ris8 of loss are li8ely to ta8e up insurance =
this tendency is 8no3n as Anti9Selection or Adverse Selection
Under%riters 0ey Tas' ; 9naly,e each indi!idual or group applying "or insurance in order
to identi"y the characteristics that contribute to ris. measure the amount o" ris and
determine i" this is acceptable(
0ey tas's
>ssess(ent of typical incidence of illness B in0ury a(ong individuals of sa(e ageBse7
Consider the effect of ris8s specific to the individual such as occupationBhealth status
Under%riting $anual = docu(ent that provides 2ac8ground infor(ation a2out
various under3riting i(pair(ents and suggests the appropriate action to ta8e if such
i(pair(ents e7ist
o Under%riting i&!air&ents increase an individuals ris8 a2ove nor(al level
o >verage ris8 of loss is typically called standard ris'
o ,o3er than average ris8 is called )referred Ris'
o Higher than average ris8 is called substandard or unacce!table ris's
Iroup evaluation = Focus on the group as a 3hole
o -eason for groups e7istence
o $ie of Iroup
o Flo3 on ne3 (e(2ers in and out of the group
o $ta2ility of the group
o @u(2er of eligi2le (e(2ers 3ho 3ill participate in the plan
o Fay in 3hich 2enefit levels 3ill 2e deter(ined
o >ctivities of the group
Does the group represent a good ris8 as a 3hole J
$o(e states MCOs conduct (edical under3riting for s(all groups = give out health
4uestionnaires su2(itted 2y all proposed plan (e(2ers. Based on the results the
MCO (ay reco((end the follo3ing
o Faiting "eriods = period of ti(e during 3hich the insured groups (edical
e7penses are not covered
o "ree7isting conditions = li(it or e7clude coverage for conditions that arose
2efore coverage date
o Benefit e7clusions = coverage for specific health conditions not allo3ed
Critical 2alance 2et3een very strict and very lenient under3riting
Co((on under3riting re4uire(ent include
o Min participation re4uire(ents = (in D of total e(p 3ho should ta8e part
o Benefit li(itations 9 a lifeti(e (a7 of 2ed days B dollar a(t for a condition
o Benefit deducti2le
o Coinsurance
o Enroll(ent restrictions = allo3 (e(2ers only in certain ti(e 3indo3s
o Health state(ents = su2(itted 2y (e(2ers 3hen they 0oin
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Cognizant AHM
7e% usiness Under%riting
First issues coverage to a group = the rating structure is used as a 2asis for negotiation.
Charges these e7act pre(iu( rates only if the group satisfies the ris8 assu(ptions
The rate is ad0usted 2ased on the follo3ing infor(ation
>ge and gender distri2ution
,evel of participation in the health plan
Benefits offered
Occupational haards co((on to the group
Iroup $ie
History of persistency 3ith the carrier
"revious clai(s e7perience 3here per(itted 2y state la3
Rene%al Under%riting
-evie3 all the selection factors that 3ere considered 3hen the contract 3as issued
Co(pare the group<s utiliation rates to those the MCO predicted
-eevaluation of t3o factors = Iroups E7perience and level of participation in plan
*rou! e2!erience ; Cost of providing care to the group during the period
Degree of e&!loyee !artici!ation to avoid antiselection
@eed to trac8 utili8ation " de&ogra!hic factors" cost !er &e&ber
1egal Re(uire&ents
$o(e states prohi2it MCO fro( charging (ore than 2ase rate listed for specified
productsBplans li8e HMOs.
o First ploy = decline coverage to any group 3ith (ore than average ris8
o $o(e states deny the a2ove right to the fir(
o Then need to price the increased ris8 into the 2ase rates of HMO
Federally 4ualified HMO<s cant (edically under3rite any group = incl s(all groups
@on federally 4ualified HMOs are su20ect to state la3s and can do this
o Ho3ever they also are restricted in under3riting Medicare ris8
Rating
This is the process o" calculating the appropriate premium to charge purchasers. gi!en the
degree o" ris represented by the indi!idual or group. the e)pected cost o" ser!ices. and the
e)pected maretability and competiti!eness o" the plan(
The pro"essionals who per"orm the mathematical analysis "or setting up insurance premium
rates are called actuaries
Rating $ethods
Managed care uses a variety of rating (ethods to develop pre(iu(s
Co&&unity Rating
o This is a rating method which sets the premiums "or "inancing medical care
according to the health plans e)pected costs o" pro!iding medical bene"its to
the community as a whole and not any sub group
o Both lo3 ris8 and high ris8 are factored and the ris8 is spread
o @ot used for large groups 5e7cept 3hen specified 2y state la36
o This rate is generally used to calculate a reference rate
o $o(e state and federal initiatives have &andated this for s&all grou!s
o Standard Co&&unity ratingM )ure Co&&unity Rating
Consider O@,H co((unity 3ide data and esta2lishes sa(e financial
perfor(ance goals for all ris8 classes
@o ad0ust(ent for age B gender B industry B e7perience
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Cognizant AHM
Can vary rates 3ithin a plan 2y dividing (e(2ers into tiers based on
number o" indi!iduals co!ered. Can have upto four or five tiers.
E.g. Tier 1 = e(ployee only tier % = e(ployee N one dependent
o Co&&unity rating by class HCRCI 9 @)>C in 1..1 adopted a S&all *rou!
$odel Act that allo3ed health plans to use a (odified for( of co((unity
rating to under3rite s(all groups
Divided into . rating classes 2ased on de(ographic factors B industry
characteristics B e7perience
The average !re&iu& in any class could 7+T be &ore than
1:A= of the average !re&iu& in any other class
o A 1,,< a&end&ent eli(inated the class rating rules and re4uired plans to
use the AdJusted Co&&unity rating 5>C-6 B Modified Co((unity -ating.
The health plan divided the (e(2ers into classes Bgroups
2ased on geography B fa(ily B age etc and charges all
(e(2ers of the sa(e class or group the sa(e pre(iu(
The "lan cannot consider e7perience in developing these rates
This la3 did not repeal the state la3s = they can still allo3
rating 2ased on e7perience factors
$anual Rating M oo' rates
o This is a rating (ethod in 3hich the health plan uses the plans average
e7perience 3ith all groups to calculate the pre(iu( for the group
E2!erience Rating
o This is a (ethod under 3hich the past record is analyed and used to
calculate pre(iu( partly Bco(pletely 2ased on the groups e7perience
o ,o3er pre(iu( for lo3er utiliation and vice versa
o 1se at least t3o years of e7perience to calculate these rates
o Most e7perience rated fir(s have 1AAA !lus &e&bers
o T3o types
)ros!ective E2!erience Rating = "ast e7perience to esti(ate the
groups e7pected e7perience. "re(iu(s calculated on this e7pected
e7perience. Health plan a2sor2s gainsB losses for variance fro( this
1% (onths is a typical prospective e7perience rating period for pri(ary
care B shorter rating periods happen for specialty services
Retros!ective E2!erience Rating 9 loo8s 2ac8 at end of the rating
period and evaluate gainsBlosses and pass this onto the group.
Federally (ualified H$+s cannot use this rating &ethod
o )ooling ; Co(2ining a nu(2er of s(all groups and evaluating the
e7perience of the large group. ,o3er pre(iu(s achieved
lended Rating
o @ot very e7tensive clai(s e7perience.
o "artly on (anual rates and partly on e7perience
o *redibility 2actor measures the statistical predictability o" groups e)perience
o ,arge groups have (ore credi2le e7periences than s(all groups
o Blended rate M e7perience group rate W credi2ility factor N (anual rate W 519
credi2ility factor6
1egal Re(uire&ents
>(end(ents to the HMO act 1.+& per(itted federally 4ualified HMO<s to use the
co((unity rating! C-C or >C- 2ut not retrospective e7perience rating.
Federally (ualified H$+5s need a!!roval for ACR can5t charge S 11A= of the rate
%ith !ure co&&unity rating3
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Cognizant AHM
Other states force co((unity rating for individuals and s(all groups. HFC> re4uires all
health plans to assu(e Medicare ris8 using >C-.
To o2tain federal contracts for the Federal E(ployee Health 2enefit progra( = an MCO can<t
charge the govern(ent (ore than it charges other groups of si(ilar sie.
7#AC S&all *rou! Act 9 Rate S!read = The difference 2et3een the highest and lo3est
rates that a health plan charges is to a ratio of :: 1
Financing
File an annual state(ent 3ith @>)C for each state they do 2usiness in.
$o(e critical finance ter(s
1. )nco(e state(ent
%. -evenues
&. E7penses = ad(in N stop loss pre(iu(s N rei(2urse(ent costs N utiliation costs
'. >ssets = value of all ite(s co(pany o3ns
!. ,ia2ilities = all de2ts and o2ligations of a co(pany. Most significant are the
reserves 5esti(ates of (oney that an insurer needs to pay future 2usiness
o2ligations6. These include &ncurred but not 0eported 3&B804 *laims(
#. Capital
+. $urplus M assets = lia2ilities
8. Forecasting = "redicting an MCO<s inco(ing and outgoing cash flo3s = "ri(arily
revenues and e7penses and predicting the value of its assets! lia2ilities and capital.
.. Budgeting = process that includes creating a financial plan of action that an
organiation 2elieves 3ill help it achieve its goals given the forecast
Concerned 3ith statutory solvency a2ility to (aintain at least its (ini(u( a(ount
of capital and surplus specified 2y state insurance regulators
@)>C re4uires at least E1 (illion.
HMO Model act re4uires = specified D of annual pre(iu(s and e7pected e7penses
:ariance >nalysis = difference 2et3een 2udgeted and actual inco(e and e7penses
)lan Funding
Method that an e(ployer or plan purchaser uses to pay (edical 2enefit costs.
Health plan (ay 2e financed or funded in a variety of 3ays = Fully funded plans and
self funded plans
Fully funded )lans
MCO 2ears full financial responsi2ility of guaranteeing clai( pay(ents paying for all
incurred covered 2enefits and ad(inistering the health plan = this is the traditional
%ay
Self Funded )lans
o E(ployer or group $ponsor is financially responsi2le
o May 2e partially or fully funded
o E-)$> = these plans are e7e(pt fro( specific state insurance regulations
o Mechanis( = the (oney is deposited in a Funding Gehicle3 Co(pany only
pays for incurred healthcare costs.
o )n case of catastrophic (edical clai(s = the e(ployer 3ill not have funds.
Then he utilies $top ,oss )nsurance to cover the ris8.
o #ndividual Sto! 1oss CoverageM$pecified stop loss coverage = provides
2enefits for clai(s on an individual that e7ceed a stated a(ount in a period
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Cognizant AHM
o Aggregate Sto! 1oss coverage = provides 2enefits 3hen total clai(s
e7ceed certain a(ount in a specified period
o Ad&inistrative functions
Do it the(selves
$elf pay = e(ployer ad(inisters the plan 2y hiring staffB syste(s
T"> = no financial ris8
Ad&inistrative Services +nly ; fi2ed fee !er e&!loyee
#!
Cognizant AHM
$anaged Healthcare +!erations ##
Reading 1AA: #nfor&ation $anage&ent
Descri2e the 8inds of infor(ation and infor(ation syste(s capa2ilities needed 2y
(anaged care organiations
Discuss so(e of the pri(ary challenges for (anaging data and infor(ation
Discuss the use of the follo3ing infor(ation technologies in (anaged care
environ(entsP
( Electronic co((erce
( Electronic data interchange
( Decision support syste(s
( Data 3arehouses
( Electronic (edical records
( Health infor(ation net3or8s
Reading 1A: Clai&s Ad&inistration for $anaged Care
Define encounter
Descri2e so(e of the 8ey positions in a clai(s ad(inistration depart(ent
E7plain the steps follo3ed to process a (anaged care clai(
Descri2e so(e types of infor(ation an auto(ated clai(s data2ase needs to contain
Reading 1AC: $e&ber Services
Descri2e four types of (e(2er services activities co((only conducted 2y MCOs
Descri2e several 3ays in 3hich MCO<s use technology to facilitate the delivery of
(e(2er services
E7plain ho3 MCO arrange(ents for providing (e(2er services vary fro( co(pany to
co(pany
Descri2e the considerations for (anaging accessi2ility! people! processes! technology!
and perfor(ance for (e(2er services
#"
Cognizant AHM
Reading 1AA: #nfor&ation $anage&ent
#nfor&ation Technology 7eeds
&n"ormation Management is a combination o" systems. processes and technology that an
M*O uses to pro!ider the *ompanys &n"ormation users with the &n"ormation they need to
carry out their <ob responsibilities
Typical infor(ation used 3ill include
Description of 2enefits structures for the products
Me(2er eligi2ility rosters
Current infor(ation a2out provider net3or8s
-ei(2urse(ent arrange(ents 3ith participating providers
)nfor(ation to support authoriation processes
-eports on 1tiliation and ?uality Manage(ent "rogra(s
Me(2er satisfaction surveys
Clai(s processing B 2illing and pay(ent infor(ation
"erfor(ance (easures of various depart(ents
Financial infor(ation for accounting and reporting purposes
7eeds for #nfor&ation Syste& Ca!abilities
9n in"ormation system is an interacti!e combination o" people. computer hardware and
so"tware. communication de!ices. and procedures designed to pro!ide a continuous "low o"
in"ormation to the people who need it
@eed to assist people in the day to day operations and need to support analysis and
accu(ulated data and infor(ation and report the results of this analysis
Other specialied syste(s include
13 Credentialing Syste& ; )lan $anagers need to revie% docu&entation of the
healthcare !rofessionals and institutional !roviders
a3 1icensure" Certifications" evidence of &al!ractice insurance" history etc
b3 7eed to trac' the credentialing infor&ation and regularly u!date it
2. Contract Manage(ent Can 2e very co(ple7 3esp with *apitation4
a. )f costs are not calculated properly! the are li8ely to lose (oney in 2idding for
future contracts
2. @eed to have access to accurate lists of covered individuals
c. MCOs need to reconcile capitation pay(ents and (anage ris8 pools
d. @eed to chec8 the eligi2ility status very carefully
e3 Contract $anage&ent Syste& ; incor!orates &e&bershi! data and
!rovider rei&burse&ent data and analy8es transaction according to
contract rules
f. $yste(s have support of decision (a8ing! (odeling and forecasting! cost
reporting an contract Co(pliance Trac8ing
&. 1tiliation Manage(ent $oft3are
a. @eed to (anage authoriation transactions and utiliation
2. "re9esta2lished Iuidelines deter(ine authoriation and pay(ent
c. Can auto(ate this process and (onitor the actual costs of care
d. @eed syste(s to (anage access! utiliation and 4uality of care under care
(anage(ent or disease Manage(ent progra(s
'. ?uality Manage(ent
a. "ositive outco(es of treat(ent or lo3er incidence of illness are valued 2y
(e(2ers
2. @eed to store! analye and report large a(ounts of clinically significant data
over ti(e to support develop(ent of 4uality indicators! outco(e (easures
and clinical protocols and guidelines
*. "rovider "rofiling
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Cognizant AHM
a. This helps detect underBover utiliation and inappropriate utiliation of
(edical resources
#. Enterprise $cheduling
a. @eed to control usage of resources li8e M-) and surgery
2. Enterprise $cheduling $yste( per(its users 3ithin an enterprise to function
as a single organiation in arranging access to facilities B resources
+. Clai(s "rocessing
a. @eed a vast a(ount of data accu(ulated
2. 1sed 2y all seg(ents of the co(pany
8. Mar8eting
a. @eed to co((unicate infor(ation to purchasers and (e(2ers
.. Me(2er $ervices = FastBConvenient access to infor(ation! transaction processing
and other types of services for (e(2ers
Challenges
1. MCO needs to (anage large volu(es of internal and e7ternal data
%. @eed to (anage different types of data = clinicalBregulatorsBlegal B4ualityB
&. @eed to ac4uire co(plete! accurate and consistent data = different codesets etc
'. Data that is readily availa2le and easy to collect (ay not 2e the (ost relevant =
(ay need to (odify the data through additional analytic tools
*. @eed to (anage different data for(ats = fro( providers and plans B diff data2ases
B paper transactions B
#. @eed to produce (any different reports at different fre4uencies = for(atB length B
type of infor(ation B level of detail all can vary
+. ,a3s 3hich are stringent on the usage of e9"H) and protecting it

#nfor&ation Technology
This refers to the 3ide range of electronic devices and tools used to ac4uire! record! store!
transfer or transfor( data or infor(ation. Devices and tools used include
1. Electronic Co((erce
%. Electronic Data )nterchange
&. Decision $upport $yste(s D$$s
'. Data Farehouses
*. Electronic Medical -ecords 5EM-s6
#. Health )nfor(ation @et3or8s 5H)@s6
Electronic Co&&erce
M*Os use o" *omputer 8etwors as a means to per"orm Business Transactions and
to "acilitate the deli!ery o" healthcare and 8on *linical Ser!ices to M*O members
1se it to co((unicate 3ithin the Health plan and 3ith plan (e(2ersBpurchasers B
providers B regulators B accrediting 2odies B and potential (e(2ers and purchasers
E9Co((erce helps e7pand docu(ent access
,ong ter( cost savings = )ncreased speed B access to infor(ation
Most of the traffic is via the internet
1se of 3e2sites = )nfor(ational "urposes and Transactional "urposes
#nfor&ational = Mar8eting B E7plaining "lan 2enefits B ,ifestyle B -eporting infoB
Eligi2ility infor(ation ! Clinical "ractice Manage(ent and For(ularies
Transactional = Changing (e(2ers infor(ation B changing "C" B "rescriptionsB
$tatus of Clai(s B "rocessing authoriation re4uests B update eligi2ility B pay(ent
E9Health = 1sed to refer to concept of and strategies for providing health related
infor(ation! products and services online
Advantages of the #nternet
o Forld3ide use
#$
Cognizant AHM
o Iro3ing usage a(ong the general population
o Cooperative oversight and ready availa2ility = no one do(inates the net
o )nteropera2le Co((unication
o ,o3 Cost
o Direct access to current and potential consu(ers
)otential Disadvantages of #nternet Usage
o Concerns a2out $ecurity = need to have secure enterprises
o 1se secure internet and intranets
o E7tranets are used to connect providers B (e(2ers B regulatory 2odies
o Types of securities e(ployed include
Fire3alls = unauthoried access to internal net3or8
>nti virus progra(s
Encryption
Digital $ignature
Electronic Data #nterchange
*omputer to *omputer trans"er o" data between organi,ations using a data "ormat agreed
upon by sending and recei!ing parties( &n"ormation is routed through networ systems and
"ollows standards and procedures that allow output "rom one system to be processed
directly as input to other systems
Organiation 3ho do 2usiness using ED) are called Trading "artners
ED) is used for
1. Trans(ission of clai(s and encounter reports fro( providers to health plan
2. Trans(ission of data fro( Clai(s data2ase Medical (anage(ent depart(ents
&. Trans(ission of data a(ong different MCO depart(ents or geographic locations
'. E7change of data 2et3een MCO and regulatory 2ody or accrediting agency
*. Trans(ission of (e(2er eligi2ility data fro( an MCO to its providers
#. E7change of infor(ation 2et3een an MCO and its providers regarding re4uests for
authoriations of services and referrals
Advantages of ED#
o $peed of data Transfer and )(proved Data )ntegrity
o Eli(ination of unnecessary paper3or8 = Cost saving in ad(inistrative costs
=argest cost o" claims processing is labor 5ata entry and
e)amination "unctions
o -eduction in processing ti(e = increased productivity
o )(proved Business Methods = Focus on i(proving the details of repetitive
transactions and to upgrade the internal procedures
Technology re(uire&ents for ED#
o )nternet serves as the co((unication lin8
o $tandardied Data for(at is essential
o $et of synta7 B Ira((ar that for(s part of the 2asis of standard usage
o @eed an industry agree(ent on standards = e7a(ples include
A7S# = :oluntary national standards organiation = creates a
consensus 2ased process 2y 3hich fair and e4uita2le standards can 2e
developed. This serves as a legit(ier of standards
ASC P1: ; A7S#5s Accredited Standards Co&&ittee P1: 3as
created in 1.+. to develop the ED) standards. [1% operates 3ith
co((ittees and su2groups. )nsurance $u2co((ittee ca(e in 1.8.
A&erican Health #nfor&ation $anage&ent Association = Focuses
on ED# standards for e2change of clinical data
#%
Cognizant AHM
>(erican College of -adiology and @ational Electronic Manufacturers
>ssociation = >C-9@EM> [ray i(aging standards D)COM &
H1- ; Health 1evel - 9 $cope is infor(ation e7changes a(ong
co(puter application syste(s. H,+ developers are 3or8ing 3ith [1%
standard developers and 3ith the A&erican Society for Testing and
$aterials to coordinate interchange of Clinical Health Data
A&erican Dental Association ; -eporting standardsBIuidelines B for
the dental syste(
Co&!uter ased )atient Records #nstitute ; CP0) % These
standards are related to the Co(puteriation of Medical -ecords
Decision Su!!ort Syste&s
This uses data2ases and decision (odels to enhance the decision (a8ing process for
MCO e7ecutives B (anagersB clinical staff and providers
1se = )dentify the (ost effective (edical intervention! provider profiling and trac8ing
of provider rei(2urse(ent
E7pert $yste( = 8no3ledge 2ased co(puter syste( = "urposeP "rovide e7pert
consultation to infor(ation users for solving specialied and co(ple7 pro2le(s =
)ri&arily used in Clai&s Ad&inistration but also used in &edical &anage&ent
decisions
)n case of providers! the focus is on supplying the providers 3ith infor(ation they
need at the ti(e clinical decisions are (ade = one e.g. is e(2edding clinical decision
support criteria into decision support soft3are
This helps develop treat(ent guidelines 2ased on specific diagnosis of pro2le(s!
3arnings of drug interactions.
Facilitators = not replace(entC
Data @arehouses
,egacy syste(s = need for function B high cost of replacing
$earching fro( (ultiple unlin8ed DBs is ti(e consu(ing
9 data warehouse is a speci"ic database containing data "rom a !ariety o" sources
that are lined by a common sub<ect
This data is integrated and presented in a non repetitive standard for(at
Data can 2e fro( 2oth internal and e7ternal sources = and can 2e 4ueried fro( a
single interface
9 consistent "ormat "or data helps them compare data across di""erent types o" M*O
products and against other M*Os
Advantages and disadvantages
o )ros
$i(plify the process of e7tracting useful infor(ation
-elieves the individual DBs fro( having to store large a(ounts of
redundant data not needed for daily operations
Help detect trends or relationships 2et3een data that is not
i((ediately o2vious
o ut
:ery Costly and Co(ple7 to i(ple(ent
Ti(e consu(ing and re4uires technological e7pertise and cash
The -O) (ight not 2e realied very 4uic8ly
Electronic $edical Records M Co&!uter ased )atient Record
Co(puteried record of a patient<s clinical! de(ographic and ad(inistrative data
$&
Cognizant AHM
)nclude Medical History! Current and past (edications! diagnoses of illness! test
results and current treat(ent status
Could also include Digital )(ages! M-) i(ages! [ -ays etc
+rgani8ed along #ndividual )atients and not !roviders
EM- soft3are can 2e designed to >lert a provider to possi2le drug interactions in
case of patient receiving (ultiple (edications
Health #nfor&ation 7et%or's
This 3ould 2e (ore efficient if it is transferred across the entire net3or8 of providers
Health #nfor&ation 7et%or' is a co(puter net3or8 that provides access to a
data2ase of (edical infor(ation = "roprietary to the Organiation
Co&&unity Health #nfor&ation = CH#7 = it<s used 2y several organiations
Health Data 7et%or' HD7 = lin8s to the data 3arehouse that stores very large
a(ounts of data that reside in the (edical records of an entire provider net3or8
>ccess to this using a secured e7tranet B distri2uted data2ase
Most H)@s are internet 2ased rather than 2uilt on proprietary co(puter net3or8s
Advantages and Disadvantages of H#7s
o These have the potential to increase the 4uality of Medical Care
o MCO revie3s clai(s! can (atch diagnosis treat(ent codesB verify
authoriation! and record utiliation infor(ation
o Allo%s $ulti!le !rofessionals at different locations to access a &e&ber
chart si&ultaneously
0ey enefits
o )(proved Care and $ervice to Me(2ers = Ti(ely cost effective
o ,o3er Costs of )nfor(ation ad(inistration 9
o )(proved outco(es (easure(ent = E7tract trendsB develop guidelines
o Better Measure(ent of provider perfor(ance
o )ncreased efficiency and accuracy of infor(ation a2out healthcare services
rendered to (e(2ers
o -educed E7posure to lia2ility for poor care
o )(proved a2ility to (eet reporting re4uire(ents
Disadvantage
o $ignificant costs and ris8s including
Cost of e4uip(ent
Cost of planning ! installing and (aintaining net3or8 and soft3are
E7tre(e technical co(ple7ity of achieving the relia2ility and speed
,a2our costs for training providers and their staff
,ac8 of standardiation of the EM-s
-esistance to change a(ong the providers
$ecurity issues concerning privacy ! protection of the MCO<s
proprietary infor(ation and e7ternal interference 3ith MCOs syste(s
+utsourcing #nfor&ation $anage&ent
Hiring e7ternal vendors to perfor( specified functions li8e data and infor(ation
(anage(ent activities
$1
Cognizant AHM
Reading 1A: Clai&s Ad&inistration for $anaged Care
Clai( is an ite(ied state(ent of healthcare services and their costs provided 2y
physician<s organiations and other providers.
Clai(s are su2(itted to the insurer or (anaged care plan 2y the (e(2er B provider.
Clai&s in $anaged Care
*laim "orm is the application for pay(ent of 2enefits to the health plan
The nature of clai( function varies 3ith the type of plan and co(pensation
arrange(ents that the plan has (ade 3ith its providers.
""O 3ould 2e li8e a traditional 2illing approach! 3hile HMO Capitation 3ould si(ply
re4uire the HMO to state the services provided
An Encounter is a healthcare visit of any ty!e 2y an enrollee to a provider of
healthcare services. H$+5s receive an encounter re!ort supplies (anage(ent
infor(ation a2out the services provided each ti(e the patient visits a provider = and
these could 2e considered as surrogates for insurance clai(s.
These can 2e used to trac8 utiliation of services
Clai&s Ad&inistration
This is the process of receiving! revie3ing! ad0udicating and processing clai(s
This is the )ri&ary infor(ation source for the MCO for co(pensation! utiliation! financial!
provider! (ar8eting! infor(ation (anage(ent! (edical (anage(ent! provider relations!
contracting etc
Clai&s Ad&inistration De!art&ent
Ienerally a Director B :" as a head
Oversees entire clai(s function fro( planning and (anage(ent perspective
Clai&s $anager 9 Oversees the day to day running of the clai(s depart(ent!
including staffing functions and (anaging the people and syste(s
Clai&s Su!ervisors ; Oversee the 3or8 of several clai(s e7a(iners = support their
staff and esta2lish efficient clai(s handling procedures. Further! they (ay handle
difficult and large a(ount clai(s and (a8e 3or8 assign(ents for clai(s e7a(iners
Clai&s E2a&iners M Analysts consider all the infor(ation pertinent to a clai( and
(a8e a decision a2out the MCOs pay(ent of the clai(. ;ey responsi2ilities include
o >nalying clai(s to deter(ine the type of coverage held
o >ssessing (edical infor(ation
o -e4uesting additional infor(ation needed to deter(ine 2enefits
o Deter(ining the person or entity to pay
o Calculating paya2le 2enefits
o E7plaining clai(s denials! pay(ents and contract provisions
Other posts include Clai( revie3ers! 4uality control revie3ers! clai(s ad0udicators!
nurse or utiliation revie3ers! cler8s and ad(in support function
Functions (ight 2e organied on
o ,ines of Business = ""O! HMO! "O$ ! E"O
o Clai( function = COB etc
o Type of Clai( = Hospital ! physician! outpatient surgery
o Client Irouping = MCO<s 3ith large clients
o Origination of the clai( = in net3or8 or out of net3or8
Clai& Decision )rocess
;ey steps
1. Fas the (e(2er eligi2le to receive coverage under the plan at the ti(e of serviceJ
$2
Cognizant AHM
%. Fas the provider in the net3or8 of the planJ
&. Fas treat(ent provided (edically appropriate and necessaryJ
'. Fas a preauthoriation or referral given for the service or treat(entJ
*. )s the service covered under the planJ
#. Fhat 2enefits are paya2leJ
+. Does the (e(2er have other health insurance coverageJ
Gerifying $e&bers Status
-outine step = happens auto(atically as it is electronically (aintained
Gerify )rovider Status
Most plans give higher level 2enefits in the net3or8 than outside
Deter&ining A!!ro!riateness of treat&ent !rovided
They deter(ine this 2y developing edits into the clai(s decision processing syste(.
+"its are criteria that i" unmet will prompt "urther in!estigation o" a claim These in
e""ect F&*F O/T claims "or "urther re!iew(
This (ay 2e triggered if
o Missing or conflicting infor(ation
o )llogical responses or codes contained on the clai( for(
o Treat(ents or procedures not covered 2y the health plan.
o :erification of (e(2er eligi2ility
o "rior authoriation re4uests
o >ppropriateness of (edical care.
These are progra((ed into the clai(s processing syste(
Gerifying Authori8ation
Could 2e issues li8e pre9ad(ission testing 2efore surgery or referral to specialist 2y "C"
Gerifying that the Service is covered by the )lan
Gerifying that the Service %as actually !rovided
The Clai(ant supplies on the clai( for( (uch of the info to verify this
The standard ter(s used for this are Diagnostic and Treat&ent Codes3 These are
brie". speci"ic description o" each diagnosis or treatment and a number used to
identi"y each diagnosis and treatment.
These include )CD .9CM 5diagnostic codes6 and C"T 5Treat(ent Codes6
Can e7plain conflicts 2et3een diagnostic codes and treat(ent codes
The standardied clai(s for(s are
o 1B 9.% re4uires hospitals to follo3 specific 2illing and ite(iation procedures
o HCF> 1*// = "roviders to 2ill professional feeds to HMOs! insurers etc
o $uper2ill = this lists the specific procedures or (edical services provided 2y a
physician. )t has chec8 2o7es
Deter&ining the A&ount of benefits to )ay
The factors considered include co(pensation arrange(ents! authoriation re4uire(ents!
any copay(ent or coinsurance re4uire(ents! Coordination of Benefits
Auto&ation of Clai&s )rocess
1sed to verify (e(2er eligi2ility and provider status
More sophisticated plans get clai(s through ED)
Data that is potentially re4uired includes
$3
Cognizant AHM
1. Me(2er data = age B se7B "C" B dependents
%. "redeter(ined Fee $chedules for service types
&. "rovider )nfor(ation profiles that contain infor(ation on the provider 3ho
participate in the plan! type of co(pensation arrange(ent ! presence of any ris8
pooling arrange(ents! any special discount that applies to provider fees! and
restrictions on the type of service provided
'. >uthoriation re4uire(ents and utiliation infor(ation
*. 1se of coordinator of care function 51se of a provider such as "C"6
Still collect in"ormation about he medical condition that prompted an encounter to analy,e
utili,ation and pro!ider practice patterns( This data is used as a basis "or ne)t years
capitation payment
@o3adays 3e use a co(2ination of discounted FF$ and capitation
#nvestigation of Clai&s
This is the process of o2taining infor(ation necessary to deter(ine the appropriate
a(ount to pay on a given clai(. The (a0ority of clai(s do not re4uire investigation
E7tent of investigation depends on = e7act type of clai(! infor(ation needed to
(a8e an appropriate decision and the difficulty encountered in o2taining infor(ation
$ources of info = attending physicians! la2s! Medical directors and (e(2ers
7#AC Unfair Clai&s Settle&ent )ractice Act = $pecifies standards for the
investigation and handling of clai(s. > practice is considered i(proper if
o Co((itted Flagrantly and in conscious disregard of the >ct
o Co((itted so fre4uently that a general 2usiness practice to engage in that
type of conduct is indicated
8eed to obtain a !alid authori,ation "rom the member to obtain the claims
in!estigation data "rom !arious sources and certain in!estigation techni-ues may be
prohibited by "ederal or state statutes and regulations( Giolations o" such laws and
regulations sub<ect the M*O to liability "or payment o" legal damages
Clai&s Ad&inistration as a Custo&er Service Function
)nfor(ation resource for the rest of the fir( and is vital custo(er service role
First contact point apart fro( enroll(ent
"ro(pt processing (a8es a lasting i(pression on a custo(er
$
Cognizant AHM
Reading 1AC: $e&ber Services
Member ser!ices is a broad range o" acti!ities that an M*O and its employees undertae to
support the deli!ery o" the promised bene"its to members and to eep members satis"ied
with the company(
There are t3o 8ey seg(ents
)n2ound (e(2er contacts = (e(2er initiated re4uests for infor(ation! transactions!
service and assistance 3ith pro2le(s
Out2ound (e(2er contacts initiated 2y the MCO
Ty!e of $e&ber Service Activities
$e&ber Education
@eed to understand their roles and responsi2ilities
@eed infor(ation that 3ould help (anage S i(prove their health
Education is in the areas of 2enefits! cost sharing responsi2ilities! health plan
authoriation syste(s BEFO-E they need the services is a good 3ay to reduce
(e(2er confusion a2out access and pay(ent
-educe the incidence of disputes and clai(s
"reventive care (easures are proactively pitched = $e&ber +UTREACH !rogra&s
o Focus on the ad(inistrative infor(ation a2out the plan
o Health related infor(ation or 2oth
Typically the follo3ing infor(ation is provided to all plan (e(2ers
o Description of services covered and e7cluded for diff types of care
o -esponsi2ilities in the care delivery process = copayB deducti2le B referrals B
authoriation
o Differences 2et3een in net3or8 and out of net3or8 2enefits
o $ervices re4uiring authoriation of pay(ent and guidelines for the sa(e
o "reventive care B screenings B disease (anage(ent B triage services details
o Health related infor(ation of interest to the general population
o Options for resolving co(plaints and appealing to health plan decisions
>nother (echanis( is identification of groups of (e(2ers 3ith co((on
characteristics 5se7 B age B ethic 2ac8ground6 and sending the( health related info
Co&&unication channel
o Mass (ailing of letters and Health plan ne3sletters
o )nternet e(ail
o Fe2sites = F>?s ! directions ! general 3ellness and prevention infor(ation
@eed to custo(ie the educational infor(ation 2ased on target audience
Assistance %ith 4uestions" Transactions and other Service Re(uests
Four 8ey areas
Ad&inistrative #ssues ; so&e e3g3
o )dentity card out of date
o "lease send (e ne3 provider directory
o "C" (oved out of an area
o Mailing address for clai(J
Coverage #ssues
o Fhat type of 2enefit do ) have for so and soJ
o Does the plan pay for prescriptions fro( out9of9net3or8 providersJ
Health )lan )rogra&s
$!
Cognizant AHM
o Fho do ) call if ) a( not sure a2t the care ) needJ
o Fhat are the preventive care and 3ellness progra(sJ
Access #ssues
o Ho3 do you get authoriation for so9and9soJ
o Do you need a referral for so and soJ
Telephone is the preferred co((unication channel = need a toll free line
1se Co&!uter M Tele!hony #ntegration ; CT# ; a technology that unites a
co(puter syste( 3ith the telephone. T3o co((on applications include
o Auto&atic Call distributor ACD ;
Device that ans3ers calls 3ith recorded (essages and routes to the
appropriate depart(ent
1ser 8eys in the info for identification etc
This prevents receiving a 2usy signal = and e7pedite the connection
o #nteractive voice res!onse H#GRI = )s an auto(ated syste( that ans3ers
calls 3ith recorded or synthesied
$elf service for a certain set of transactions
Can s3itch to an operator in case not satisfied
)a!er &ail is a substantial !art of MCOs in2ound and out2ound contacts
$C+s use letters to send u!dates to its (e(2ers
>lso used to deliver i(portant notifications! and handle pay(ent updates! address
changes! clai(s processing and EOB
Fa2 is another co((on co((unication tool
Co&bine #GR R FAP to create a fa29on9de&and syste& e.g.
o Description of health plan! 2enefits and ho3 it 3or8s
o For(s for filing for clai(s or filling prescriptions
o Descriptions of co((on in0uries and their treat(ent options
@ebsites are used to ena2le changes to profile etc
E&ail = $o(e transactions are restricted for security and privacy
Co&!laint $anage&ent
Co&!laints about the )lan
o -udeness! pay(ent authoriation! "C" selection
Co&!laints about )roviders
o ,ate appoint(ents! non returning of calls! 3aiting ti(es! staff! service levels
1nresolved co(plaints (ove to appeals = 8ill it early
@eed a Co(plaint -esolution "rocess 5C-"6
@eed to address infor(al co(plaints as 3ell as for(al appeals
E(ployer $ponsored health plans (ust provide avenues for appeal
o Other3ise they 2reach the E-)$> = E(ployee retire(ent inco(e security act
State la%s for CR) re(uire&ents include
o )nfor( all (e(2ers a2out the C-"
o Trac8 and report co(plaints
o Co(ply 3ith specific ti(efra(es 3hen responding to co(plaints
o "rovide an option for independent e7ternal revie3 of co(plaints 3hen internal
revie3s are e7hausted
The A!!eal )rocess
o > dispute is revie3ed and resolved 2y a party other than the person 3ho
(ade the initial decision or perfor(ed the service that lead to the co(plaint
o There are at least t3o levels of appeals
1evel +ne A!!eal to the Medical Director or other officer of the MCO
to revie3 the original decision and any additional supporting
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Cognizant AHM
infor(ation su2(itted 2y the co(plaining (e(2er. Decision
co((unicated to all (e(2ers
1evel T%o A!!eal ; ,evel T3o appeals are handled 2y an appeals
co((ittee 3hich consists of people fro( various areas including
utiliation revie3! (e(2er services! health plan operations and legal
affairs and physicians 5in case a (edical opinion is re4uired6 and fro(
plan (e(2ers
o Have a (a7i(u( ti(e fra(e for conducting the in4uiry
o Arbitration a!!eals to govern(ent agencies or independent e7ternal revie3
are often availa2le to the (e(2er
This is the process of parties to a dispute su2(it their dispute to an
i(partial third party for final 2inding decision
o Co((ercial health plan (e(2ers appeal = insurance dept for a state
o Federal E&!loyees (ay appeal to the +ffice of )ersonnel $anage&ent
o HCFA hears a!!eals regarding $edicare )lans and State De!art&ents
handle $edicaid a!!eals
)ndependent E7ternal -evie3 = Conducted 2y a third party that is not affiliated to the
health plan or provider = These are called independent revie3 organiations 5)-Os6
Considers all info a2t the dispute and (ay see8 additional info fro( the planB
(e(2erB provider
Either &ediate the !rocess of a!!eal +R !rovide a decision %hich is binding
$e&ber Satisfaction $easure&ent and Re!orting
On Details li8e
o $atisfaction 3ith the "lan as a 3hole
o Their access to healthcare services
o ?uality of the (edical care received fro( providers
o ?uality of non clinical services received fro( the plan and its providers
o "lans ad(inistration
The results are 2ench(ar8ed 3ith the co(pany B industry B e7ternal stds
T3o "ri(ary Fay of (easuring it
$e&ber Satisfaction Surveys
"ara(eters li8e
o $atisfaction 3ith the authoriation processes for hospital ad(ission
o $atisfaction 3ith care fro( hospital staff
o >spects of e7perience that can 2e i(proved
& i(p purposes
o >ssess(ent of (e(2ers satisfaction 3ith various aspects of a health plan
o Method for collecting data to assess 4uality and identify opportunities
o Facilitates relationship 2uilding 3ith plan and (e(2er
$urvey the general (e(2er population also = lo3 utiliers cross su2sidie the higher
ones = so need to ta8e care of the( so they don<t leaveC
C>H"$ = Most popular = Consu(er >ssess(ent of Health "lans
o ?uestionnaires! directions for intervie3s and reporting results
Co&!laint $onitoring
Me(2er<s co(plaints as opportunities for i(prove(ent
Encourage (e(2ers to give positive and negative feed2ac8
Categorie! report and (onitor or co(plaints 2y type
Helps i(prove the 4uality and service delivery
)dentification ! investigation and resolution of serious or recurring pro2le(s
$#
Cognizant AHM
$ethods of Delivering $e&ber Services
$o(e 9 dedicated (e(2er services! others source personnel fro( diff depart(ents
Plans with de"ined networs. authori,ation systems and a !ariety o" programs to
manage -uality and utili,ation have se!arate &e&ber services depart(ent
2ecause the receive a high volu(e of in4uiries and services re4uests fro( (e(2ers
Fe3er (e(2er services li8e ""Os generally have these handled through other
depart(ents
$o(e have specialied (e(2er services for different products or particular accounts
>n MCO can divide its (e(2er services into grou!s s!eciali8ed in different &eans
of co&&unication li8e telephone! e(ail ! fa7! correspondence! 3e2sites or
*rou!s s!ecified in ter&s of Function = Clai(s or >uthoriation
$anaging $e&ber Services
@eed to display attri2utes li8e
1. Co(petence
%. $trong Co((unication $8ills
&. "rofessional De(eanor
'. E(pathy = understand the (e(2ers e(otional condition
@eed to (anage the follo3ing aspects of (e(2er services
Accessibility ; 3hat co((unication channelsJ Hours of operationJ $taffing ,evelsJ
o Me(2ers and purchaser E7pectationsJ Co(petitor ,evels of accessi2ilityJ
o Most Me(2er services are availa2le only during 2usiness hours
o $o(e plans e7tend these services for phone and fa7es 2eyond these hours
and on 3ee8ends
o Off hours provide li(ited services through ):- or 3e2sites
o $taffing levels 3ill deter(ine the 3ait ti(e B these are affected 2y the service
reps responsi2ilities! nature of the plan! availa2ility of self service options!
and (e(2ers 3illingness to use these options
o 9 broad scope o" responsibilities. a comple) bene"it structure and complicated
authori,ation re-uirements can increase the sta""ing needs
o Effective use of telephones and co(puter technology can reduce staffing
needs
o Average Staff to &e&ber ratio is 1:<AAA
)ersonnel %ho have contact %ith &e&bers
o @eed to have an aptitude and attitude for providing services
o @eed (onths of training 2efore they are put in strea(
o @eed to educate the( on = Co(pany productsBproceduresBco(puter and
phone syste(sB general principles of custo(er service B sensitivity trainingB
active listening B pro2le( solving B dispute resolution B handling angry
custo(ers
o $u20ected to high stress and a 2urn out = need to create incentives
)rocesses for Delivery
o @eed to support the (e(2er service reps 3ith strong 3or8flo3 processes ;
This could include
Fulfilling re4uests for provider directories
EOB for different types of services
Changing a (e(2ers "C"
>ssisting in getting authoriations for pay(ents
)nvestigating clai(s
Felco(e calls to ne3 (e(2ers
$$
Cognizant AHM
Handling Co(plaints
Su!!orting Technology
o CT) helps i(prove productivity
o Technology is e7pensive in the short ter(
)erfor&ance of services
o This addresses the 4uality and cost effectiveness of services
o $atisfaction surveys and co(plaint reports
o ;ey statistics include
Turnaround ti(e
First contact resolution 9 D of transactions co(pleted in the initial
point of contact
Error rate = accuracy of infor(ation given and transaction proc
Fait ti(e = length of ti(e on average (e(2ers stay on hold
Call a2andon(ent rate = ho3 (any (e(2ers hang up 2efore receiving
assistance
o There is so(eti(es listening in on calls
o Measures of Cost Effectiveness Typically focus on productivity of the tea(
Ti(e per call
>(ount per each custo(er contact
>(ount on ad(in duties = li8e docu(enting B follo3 upBresearch
o $et $ervice ,evels = 2ased on industry Bco(pany 2ench(ar8s
o Try to use First Contact -esolution at the cost of 3ait ti(e to i(prove service
levels and solve the pro2le( first up
$%
Cognizant AHM
1egislative and Regulatory #ssues in $anaged Healthcare
Reading 11A: Federal 1a%s and Regulations
)dentify and descri2e federal la3s and regulations that apply to MCOs
E7plain the role that federal la3s and regulations play in protecting consu(ers
and (aintaining a level playing field in the (ar8etplace
Reading 11: State 1a%s and Regulations
Co(pare the 8ey co(ponents of state regulations for HMOs and other MCOs
Descri2e the (a0or functions that MCOs perfor( that are su20ect to state
regulation
Reading 11C: *overn&ent9S!onsored )rogra&s
Descri2e the role of the federal govern(ent as purchaser of (anaged healthcare
2enefits for the elderly 5Medicare6! those 3ith lo3 inco(e 5Medicaid6! federal
e(ployees and dependents 5Federal E(ployee Health Benefits "rogra(
UFEHB"V6! and inactive and retired (ilitary personnel 5T-)C>-E6
Discuss the application of (anaged care principles to 3or8ers< co(pensation
%&
Cognizant AHM
Reading 11A: Federal 1a%s and Regulations
*eneral usiness 1egislation
There are a lot of general la3s 3hich affect the structure and operation of MCOs = These
include Federal >ntitrust ,a3s! e(ployee 2enefits legislation and financial services
legislation
,egislative >ct Fho (ust
Co(ply
"rotected Class Effect of ,egislation on Healthcare
>ge
Discri(ination
in E(ploy(ent
>ct 5>DE>6
E(ployers 3ith
O %/
e(ployees
E(ployers aged
over '/
>ll active e(ployees irrespective of age
(ust 2e eligi2le for the sa(e healthcare
coverage and cannot 2e re4uired to pay
(ore than the younger guys
Title :)) of the
Civil -ights >ct
E(ployers O
1* e(ployees
engaged in
interstate
co((erce
>ll e(ployees
This "rohi2its discri(ination 2ased on
race! color! religion! se7 or national
origin. @eed to 2e sure that their
policies don<t i(pact one protected
class. Pregnancy 5iscrimination 9ct 5an
amendment to this act6 re4uires health
plans to provide coverage during
child2irth and related (edical conditions
on the sa(e 2asis as they provide
coverage for other (edical conditions
Fa(ily and
Medical ,eave
>ct FM,>
E(ployers that
have O */
E(ployees
BirthBadoption
or provide care
to seriously ill
fa(ily
(e(2ers B
the(selves
Can ta8e upto 1% 3ee8s of unpaid leave
in a 1% (onth period. E(ployers need
to (aintain the coverage of group
health insurance during this period
Anti Trust 1egislation
The federal govern(ent protects the 2usiness environ(ent through antitrust legislation.
These la3s are designed to protect co((erce fro( unla3ful restraint of trade! price
discri(ination! price fi7ing! reduced co(petition and (onopolies.
Three (ost i(portant acts are
Sher&an Antitrust Act H1>,AI
+stablishes as the national policy the concept o" a competiti!e mareting system This
prohibits the companies "rom
Monopoliing any part of trade or co((erce
Engage in contracts! co(2inations and conspiracies in restraint of trade
>pplies to all co(panies engaged in interstate co((erce and foreign co((erce
Clayton Act H1,1/I
This act for2ids actions that lead to (onopolies. These include
Charging different prices for different purchasers of sa(e product 3ithout 0ustification
Iiving distri2utors rights to sell a product only if he agrees not to sell a co(petitor product
The act applies to insurance co(panies to the e7tent that the state la3s do not regulate it
Federal Trade Co&&ission Act H1,1/I
Esta2lishes the FTC and gave it po3er to enforce the Clayton >ct. ;ey functions include
-egulation of unfair co(petition and deceptive 2usiness practices! also to pursue violators
%1
Cognizant AHM
of the Sherman 9ntitrust 9ct
$cCarran Ferguson Act 1,/< placed the primary responsibility "or regulating health
insurance companies and HMOs on the State
The state la3s apply so(eti(es over these national la3s in so(e cases. But they need to
co(ply 3ith provisions of the $her(an >ntitrust >ct relating to 2oycott! coercion and
inti(idation.
The "ollowing areas would warrant !iolation o" the antitrust agreement
1. )rice fi2ing = t3o or (ore co(petitors on the prices or fees to 2e charged9
for e.g. they can<t cooperatively agree to accepting O@,H capitation
pay(ents
2. Hori8ontal *rou! oycott = t3o co(petitors agree not to do 2usiness
3ith another co(petitor or purchaser
3. Tying arrange&ents = Conditions on the sale of one product on the other
. Hori8ontal Division of $ar'ets = t3o co(panies decide to divide areas
!. Use of E2clusive )rovider Contracts ; )n (ost cases it is legal for MCO
to contract only 3ith selected providers. The regulation only restricts this i"
it creates a restraint on trade( The M*O cant prohibit its pro!ider "rom
contracting with any other M*O( MCOs can prevent anti trust clai(s 2y
esta2lishing alternatives to e7clusive contracts 2y dealing 3ith )">s or "HOs
Ethics in )atient Referrals Act 1,>, ; Star's 1a%s
These guard against anti trust activities in the healthcare (ar8et
This prohibits physicians "rom re"erring patients to a la2BradiologyB
diagnosticB ho(e healthB phar(a B therapy services in which he has a
"inancial interest
$o(e e7ceptions have 2een 2ought in for rural providers! HMOs and group
practices.
Healthcare 4uality #&!rove&ent Act
+)empts Hospitals. group practices and HMOS "rom antitrust pro!isions
applying to credentialing and peer re!iew as long as these entitlements
adhere to due process standards that are outlined by the H*C&9
>n MCO 3ho declines to retain a physician (ust provide due notice of the
sa(e and also infor( the @ational "ractitioner Data Ban8 of its decision
Other la3s cover the MCO<s Medicare and Mediclai( contracts
E&!loyee enefit 1egislation
E&!loyee Retire&ent #nco&e Security Act
This is a broad reaching law that establishes the rights o" pension plan participants.
standards "or in!estment o" pension plan assets. and re-uirements "or the disclosure o" plan
pro!isions and "unding. This applies to all e&!loyer s!onsored !ension !lans and to all
benefit !lans that !rovide healthcare services3
0ey facts
Strict re!orting rights to all e&!loyers and !lan fiduciaries Hpersons
3ho have discretionary authority over other peoples (oney6
Re(uire&ent to distribute su&&ary !lan descriptions and file reports 3ith
the depart(ent of la2or and )-$
$ost S#*7#F#CA7T feature ; )ree&!tion )rovision ; )t ta8es precedence
%2
Cognizant AHM
over state la3s that regulate e(ployee 3elfare 2enefit plans
o The pree(ption provision leaves to the state the authority to regulate
insurance! 2an8ing and securities
For e.g. = $tate la3s apply to group plan if it is insured 2ut not
to self funded group plans
$elf funded plans are e7e(pt fro( paying pre(iu( ta7es T
state level 5$tate inco(e ta7es leveled on insurer<s pre(iu(
inco(e6
This encourages large e(ployers to create their o3n insurance
li8e (echanis( on a self funded 2asis
E(ployees 3ho legally challenge authoriation of pay(ent decisions (ust file
their case at a federal level and E-)$> governs this
This is *++D for $C+5s as ER#SA li&its the da&ages that can be
a%arded in la%suits to the cost of non authori8ed treat&ent3 @o
punitive da(ages are allo3ed to 2e clai(ed
There is a call for proposals to re(ove this pree(ption privilege
Consolidated +&nibus udget Reconciliation Act of 1,>D
This deals 3ith the continuu( of healthcare coverage on ter(ination of
e(ploy(ent
The original HMO act contained these provisions = 2ut they 3ere only 2eing
applied 2y HMOs = a need to change this caused the la3 to 2e passed in 1.8#
*OB09 re-uires each group health plan to allow employees and certain
dependents to continue their group co!erage "or a stated period o" time
"ollowing a -uali"ying e!ent that causes the loss o" group health co!erage(
These could include
o -educed 3or8ing hours
o Divorce or death of a covered e(ployee
o Ter(ination of e(ploy(ent
A!!lies to fir&s %ith S :A e&!loyees
>fter the 4ualifying event has occurred there is a specified ti(efra(e in 3hich
the (e(2er (ust apply for continuation of group 2enefits
This must be identical to the 2enefits received 2y the (e(2ers of the group
plan
>llo3ed to continue coverage for U)T+ 1> $+7THS
$pouse and Dependents are covered U)T+ .D $onths follo3ing an
e(ployees death or divorce
Dependent child 3ho ceases to 2e eligi2le can continue for 1"TO &# (onths
Follo3ing the last (onth of eligi2ility under COB-> = the e(ployees have a
right to convert to individual health plan &2 they dont ha!e any other
co!erage
The "lan ad(inistrator (ay add the ad(in fee of %D to the cost of plan
Financial Services $oderni8ation Act of 1,,, ; *ra&& 1each liley Act
This allo3ed the Convergence of the various co(ponents of the Financial
$ervices industry = 2an8s! securities fir(s and insurance co(panies
MCO<s are considered part of the financial services industry
This act loo8s at
o Ho3 financial services industry 3ill 2e structured in the future
o Ho3 the financial services industry 3ill 2e regulated and supervised
o The rights of custo(ers to protect the privacy of financial infor(ation
%3
Cognizant AHM
and re(edies for violations of the privacy provisions
Title : of the BI,B >ct
o Disclose their privacy policies regarding the sharing of non pu2lic
personal infor(ation 3ith 2oth affiliates and third parties
o @otify custo(ers of any sharing of non pu2lic personal infor(ation
3ith non affiliated third parties
o "rovide custo(ers 3ith an option to Kopt out< of non pu2lic sharing of
personal infor(ation su20ect to certain regulations
@)>C has co(e out 3ith a Pri!acy o" *onsumer 2inancial and Health
&n"ormation 0egulation to govern the activities of healthcare organiations
and insurers
Healthcare 1egislation
H$+ Act of 1,-.
)nstru(ental in defining the structure and operations of HMOs and paved the
3ay for HMO<s to enter the healthcare (ar8et
-e4uire(ents 3ere esta2lished to 2eco(e federally 4ualified = they include
o enefits = need to offer a co(prehensive 2enefits pac8age 3hich
includes inpatient and outpatient services! unli(ited ho(e healthcare
2enefits! outpatient 2ehavioral healthcare these services are
delivera2le only through $taff or Iroup Models! )">s or direct practice
arrange(ents
o Enroll&ent ; @eed to enroll individuals eligi2le for group coverage
3ithout regard to health status
o Financing ; @eed to 2e financially sound and protect against
insolvency
o 4uality Assurance ; Esta2lish ongoing 4uality assurance progra( in
line 3th HCF>
.AA H$+s &eet these re(uire&ents even though it is o!tional
H#)AA 1,,D
Outlines the re-uirements that employer sponsored group insurance plans. insurance
companies and M*Os must satis"y in order to pro!ide health insurance co!erage in the
indi!idual and group marets
T3o (ain categories
Title 1 provisions are designed to increase the continuity of coverage
o These are not !ree&!tive of state la3s= they only apply 3hen the
state la3s do not cover this topic or are not very co(prehensive
Title : calls for ad&inistrative si&!lification
Title 1
These are divided into group and individual health coverage
#ndividual Coverage )rovisions
o Iuarantees the availa2ility of coverage for individuals 3ho (eet
specified 4ualifications
o Speci"ies that all -uali"ied indi!iduals who apply "or insurance "rom a
pri!ate insurer must be issued a policy automatically without a medical
e)amination and without regard to pree)isting conditions
o $o(eone 4ualifies for this is he has in the last 18 (onths group
coverage 2ut is no3 ineligi2le for either group coverage or MedicareB
Medicaid
%
Cognizant AHM
o )f he loses 0o2 and ne3 0o2 does not give coverage = he 4ualifies for
individual coverage
*rou! Coverage )rovisions
o ,i(itations on the use of pree7isting conditions
Pree)isting condition treatment'diagnosis should ha!e been
recei!ed ; months prior to enrollment date
The period for 3hich a pree7isting condition is e7clude should
not e7ceed 1% (onths after enroll(ent date 518 (onths for
late enrollees6
@eed to reduce the length of pree7isting condition 2ased on the
creditable coverage received uner previous group plans! or
2enefit progra(s fro( the sate and federal govern(ent.
The Credita2le coverage is credited only if the period 3as not
follo3ed 2y a 2rea8 in coverage of #& days or (ore.
Faiting period under e(ployee sponsored plan does not
constitute a 2rea8 in coverage
"regnancy cannot 2e treat(ent as a pree7isting condition
*ant impose pree)isting conditions on a newborn child '
adopted child # 18 i" the child is co!ered within A: days o"
birth'adoption
o *uaranteed availability of coverage for s&all grou!s
$(all groups are defined as : to <A e&!loyees ; cant
e)clude employees or employee dependents based on health
status
o *uaranteed Rene%ability of coverage for all grou!s
@eed to rene3 group policies for all 2ig and s(all groups
-ene3 individual policies also = they can 2e (odified only if the
3hole class of policies is 2eing (odified and C>@@OT 2e on the
2asis of health status
o S!ecial enroll&ent
@eed to allo3 e(ployees 3ho declined health coverage initially
2ut e7perienced a 4ualifying event to accept group coverage
ant any ti(e
)n cases li8e child 2irth = coverage o2tained can 2e retroactive
Modifications to this
o $ental Health )arity Act ; $H)A of 1,,D
"rohi2its group health plans fro( applying (ore restrictive
annual or lifeti(e li(its on coverage for (ental illness than for
physical illness
DOE$ @OT re4uire health plans to offer Mental health = 2ut
i(poses restrictions on those 3ho do
o 7e%borns and $other )rotection Act H7$H)A I 1,,D
Iroup health plans or insurers cannot (andate that hospital
stays follo3ing child 2irth 2e less than '8 hours for nor(al
deliveries or .# hours for cesarean 2irth
Does not re4uire group plans and insurers to offer (aternity
hospitaliation 2enefits = instead it i(poses re4uire(ents on
those plans that do offer these 2enefits
o @o&en5s Health and Cancer Rights Act 1,,> = Health plans
offering (edical and surgical 2enefits for (astecto(y to provide
reconstructive surgery follo3ing (astecto(y
%!
Cognizant AHM
Title ## ;Ad&inistrative Si&!lification
ED) $tandards! "rivacy and $ecurity -egulations
Clearinghouse = "u2licB"rivate Entity 3hich converts provider data into
correct for(at for each health plan and coverts health plan data into provider
for(at
Billing services! repricing co(panies! co((unity health M)$ and value added
net3or8s are considered to 2e healthcare clearinghouses
,arge health plans O E* (illion 3ill have %' (onths to co(ply 3hile s(all
health plans get &# (onths to co(ply
"enalties could range fro( E1// per violation to E%*/!/// and i(prison(ent
for upto 1/ years for violating privacy standards
Electronic Trans&ission and Codesets
The Data covered includes
1. Health clai(s or encounter data
%. Health "lan eligi2ility in4uiries and responses
&. "rovider referrals and authoriations
'. Clai(s status in4uiries and responses
*. Health plan enroll(ent and disenroll(ent re4uests
#. Clai( "ay(ent and re(ittance
+. Health "lan pre(iu( pay(ent
8. Coordination of Benefits )nfor(ation
>t the (o(ent )CD.9CM (ust 2e used along 3ith C"T9'
)rivacy and Security
@eed an individual<s 3ritten consent to use e9"H) for treat(ent! pay(ent or
health operations
Ienerally prohi2it trans(ission of identifia2le e9phi for purposes other than
(edical treat(ent! pay(ent or healthcare operations 3ithout the patients
3ritten authoriation
>llo3 patients to access (edical records and re4uest a(end(ents or
corrections for inco(plete (edical infor(ation
>llo3 patients to re4uest restrictions 2e placed on the accessi2ility and use of
"H)
-e4uire entities that re4uest! use! or disclose protected health infor(ation to
li(it the(selves to the (ini(u( a(ount of infor(ation necessary
$ecurity $tandards are (eant to 2e scala2le = irrespective of sie and scope
of fir(
%"
Cognizant AHM
Reading 11: State 1a%s and Regulations
;ey entities are the state Depart(ent of Health! $tate depart(ent of insurance and the
@)>C = the for(er loo8s at healthcare delivery and 4uality issues 3hile the latter loo8s at
financial issues in regulation
State Regulation of H$+s
Before the HMO act of 1.+&! (anaged care la3s 3ere designed to regulate insurance
co(panies or hospitals
7#AC ; Health $aintenance +rgani8ation $odel Act ; H$+ $odel Act
This regulates HMO operations in t3o critical areas = financial responsi2ility and healthcare
delivery. These are addressed through licensing re4uire(ents and financial standards. )t
addresses healthcare delivery 2y esta2lishing re4uire(ents related to net3or8 ade4uacy!
4uality assurance and grievance procedures. This also loo8s at filing and reporting
re4uire(ents to HMOs
Financial Res!onsibility Re(uire&ents
@eed to o2tain a Certificate of >uthority 5CO>6 fro( the state
"rovides proof that the organiation has (et the licensing re4uire(ents and
de(onstrated that it is dependa2le! fiscally sound and a2le to (eet 4uality
standards
Have financial standards on = net 3orth! financial reporting! li4uidity!
accounting and invest(ent practices
CO> re4uires E1.* Million of net 3orth.
)nsolvency occurs 3hen an organiations assets are not enough to cover its
o2ligations
MCO is insolvent if it can<t pay its current and future o2ligations
)n case the HMO is insolvent =the @>)C co((issioner 3ill intervene and
o Monitor a corrective plan developed 2y the HMO
o -educe the volu(e of ne3 2usiness they accept
o Ta8e steps to reduce their E7penses
o "rohi2it fro( 3riting ne3 2usiness for a specified period of ti(e
)n case these are inade4uate = they 3ill allo3 the co((issioner to ta8e over
the (anage(ent of the HMO
o Ad&inistrative su!ervision involves placing the HMO operations
under the direction and control of the state co((issioner of insurance
or a person appointed 2y hi(
o Receivershi! ; the state co((issioner 53ith directive fro( the court6
ta8es control of and ad(inisters the assets and lia2ilities of the HMO
o #n case these don5t %or' ; the organiation is li4uidated and all the
2usiness and assets are transferred to other carriers
Healthcare Delivery Re(uire&ents
Three 8ey aspects are focused on
o @et3or8 ade4uacy
o ?uality >ssurance
$tate(ent of HMO<s goals and o20ectives
Docu(entation for all ?> activities
$yste( of periodically reporting progra( results to HMOs
sta8eholders
o Irievance procedures
Re!orting Re(uire&ents
$atisfy a variety of filing and reporting re4uire(ents 9 e.g. su2(itting copies
%#
Cognizant AHM
of proposed providerB group contract for(s! evidence of coverage for(s and
pre(iu( (ethodology as part of the CO> process
>ll these progra(s are e7a(ined and revie3ed every & years
1a%s *overning )referred )rovider Arrange&ents
PP9 7 This is a contract between a healthcare insurer and pro!ider or group o"
pro!iders who agree to pro!ide ser!ices to persons co!ered under the
contract
""Os and E"Os are e7a(ples of health plans 3ho are using this arrange(ent
,a3s vary according to the state in 3hich the contracting plan operates and
structure of the plan
For e.g. HMOs offering a "O$ product and ""Os 2oth provide enhanced
net3or8 2enefits = 2ut are su20ected to different regulatory re4uire(ents
o HMO is lin8ed to $tate HMO la3s
o ""O are regulated 2y state insurance la3s
o HMO 2y state HMO la3s and E"Os 2y state insurance la3s
Differences 2et3een these la3s could include = pre(iu(s difference! covered
services! 2enefit levels and nature of funding
To 2ring so(e unifor(ity! the @>)C proposed a "referred "rovider
>rrange(ents Model >ct = ""> Model >ct. This re4uires "">s to
o Clearly identify any differences in 2enefits levels for services of
preferred providers and non preferred providers
o Esta2lish the a(ount and (anner of pay(ents to preferred providers
o )nclude the (echanis( for (ini(iing of the cost of the healthcare
plan
o "rovide plan (e(2ers 3ith reasona2le access to covered services
o >lso = need to give ade4uate 2enefits to coverage outside this net3or8
o @ot (any states have si(ilar to this la3 = 2ut have so(e legislation
on ""Os
1a%s Regulating other Ty!es of $C+s
)ncreasingly HMOs are 2eing allo3ed to offer "O$ options
)t can 2e offered directly in so(e states 3hile other states it can 2e offered
3ith an #nde&nity @ra!around )olicy ; out of plan product offered
through an agree(ent 3ith an insurance co(pany
This is a regulatory challenge = "O$ products have features of regular HMOs
and inde(nity insurance and can 2e su20ect to sate HMO la3s O- state
insurance la3s
There are also certain functions regulated 2y la3s
Utili8ation revie% 1a%s
Entities that perfor( utiliation revie3 are called 1tiliation -evie3
Organiations 51-Os6 = They can 2e in house depart(ents of the MCOs or
they can 2e e7ternal entities. 1tiliation -evie3 is generally su20ected
regulation if the reco((endations affect an MCO decision to cover a specific
service
/0Os laws !ary but most states re-uire them to be licensed and to obtain
certi"ication. the personnel o" a /0O must satis"y certain criteria related to
education. training and e)perience
@eed to (eet accessi2ility standards of (edical infor(ation
7A#C a!!roved a Utili8ation Revie% $odel Act in 1,,D ; All UR+s &ust
o )(ple(ent a 3ritten utiliation revie3 progra( = sources B revie3
criteria B and appeals process and report annually on the progra(
%$
Cognizant AHM
o 1se and (a8e pu2licly availa2le upon re4uest ! docu(ented clinical
revie3 criteria
o 1se 4ualified health professionals including clinical peers 3here
appropriate ! to ad(inister the progra(
o @ot tie revie3er co(pensation to the nu(2er of adverse
deter(inations
o Esta2lish 3ritten procedures for adverse deter(inations and appeals
o Cover e(ergency services necessary to screen and sta2ilie a covered
person! 3ithout preauthoriation! i" >a prudent layperson? would
belie!e an emergency e)ists( Health carriers would also be re-uired to
pay non contracting pro!iders "or such ser!ices i" a prudent layperson
belie!es that using a contracting pro!ider would result in delays that
would worsen the emergency or i" a "ederal state or local law re-uires
the use o" a speci"ic pro!ider
Third )arty Ad&inistrator 1a%s
"rovide ad(inistrative services to MCOs! e(ployers! or other plan sponsors
$o(e of these services include under3riting and clai(s and so these T"><s
are su20ect to state regulation
The i&!ortant act here is 7A#C Third )arty Ad&inistrator $odel Act
#n order to act as a T)A
o O2tain a certificate of authority for( the state insurance depart(ent
designating the organiation as a T">
o Maintain as a 2usiness record for each client organiation! a 3ritten
agree(ent descri2ing the duties the T"> 3ill perfor(! the
co(pensation it 3ill receive! and the standards that pertain to the
2usiness the T"> is in
M*O is still responsible "or the premium rates. bene"its. underwriting criteria
and claim payment procedures "or ensuring that its plan is administered
properly
The T)A serves as fiduciary
TP9 Model 9ct speci"ies the mandatory suspension or re!ocation o" a TP9s
*O9 i"
o The T"> in financially unsound
o 1sing practices that are har(ful to the insured persons or the pu2lic
o Failed to pay any 0udg(ent rendered against it 3ithin #/ days of
0udg(ent
The $tate insurance depart(ent has discretionary authority to suspend or
revo8e a T"><s CO> if the T"> has
o :iolated $tate )nsurance ,a3s
o -efused to 2e e7a(ined or to produce its records for e7a(ination
o -efused 3ithout 0ust cause ! to pay clai(s or perfor( $ervices under
its agree(ent
o Been placed under suspension or revocation in another state
Health )lan Accountability 1a%s
@>)C (odels include
Health Care )rofessional Credentialing Gerification $odel Act
$pecifies re4uire(ents MCOs (ust satisfy in order to ensure that the net3or8
providers (eet (ini(u( standards of professional 4ualification. These
re4uire(ents include the follo3ing
o Gerification of the credentials of all contracted healthcare
%%
Cognizant AHM
professionals in accordance %ith %ritten !rocedures that (ust 2e
disclosed upon 3ritten re4uest to any applying healthcare professional
o "roviders should 2e given an option to revie% and correct any
infor&ation su2(itted for verification
o Collection of a &ini&u& set of credentialing infor&ation 2y either
pri(ary or secondary verification.
o -ecredentialing (ust 2e done every . years
o Esta2lish(ent of a process for providers to use to revie% and correct
credentialing infor(ation
4uality Assess&ent and #&!rove&ent
By 1..8 = %+ states introduced 2ills to create or e7pand 4uality standards for
MCOs
These la3s have 2een patterned after the @>)C<s ?uality >ssess(ent and
)(prove(ent Model >ct 3hich re4uires MCO<s to esta2lish and report their
syste(s for assessing the 4uality of care and services that they provide. They
are re4uired to
o Establish an a!!ro!riate syste& for assessing the (uality of care
that they provide for each type of net3or8
o Re!ort to licensing authorities any !roble&s that 3ould offer
grounds for ter(ination of a providers license
o File a %ritten descri!tion of (uality assess&ent !rogra&s 3ith
state Co((ission for insurance
o Describe (uality !rogra&s to consu&ers through (ar8eting and
education (aterials
o Meet specified data confidentiality re(uire&ents
o Closed )lans
Those MCO plans 3hich the (e(2er is re4uired to use the
participating providers under the ter(s of the Managed care
plan
Closed plans need to develop treat(ent protocols! practice
guidelines and other 4uality i(prove(ent strategies and to
report annually the i(pact of these strategies
7#AC 7et%or' Ade(uacy and Accessibility $odel Act
>ll (anaged care plans 3ould 2e re4uired to
$eet s!ecified ade(uacy and accessibility standards
Hold covered !ersons har&less against !rovider collections and provider
continued coverage for unco&!leted treat&ent in the event of plan
insolvency
Develop standards to use in selection of providers
Adhere to s!ecified disclosure re(uire&ents = including DA day %ritten
notice to !roviders 2efore ter(inating a contract = 6%ithout clause5 and 1<
day notice to !atients of !rovider contract ter&ination
File %ritten access !lans and sa&!le contract for&s 3ith the $tate
Co((issioner of )nsurance
8ot induce pro!ider to deli!er medically necessary care. pre!ent pro!ider
"rom discussing treatment options with patient or penali,e pro!iders "or
whistleblower acti!ates against the plan
@eed to i(ple(ent this 3ithin 1> &onths of the effective date of the act
7A#C Health Carrier *rievance )rocedure $odel Act
Fritten procedure for handling all su2scri2er grievances
1&&
Cognizant AHM
)nternal 1
st
level grievance revie3
%
nd
level revie3 in 3hich the covered persons are allo3ed to revie3 the
relevant infor(ation and (a8e a representation
)rivacy of Financial Healthcare #nfor&ation 7ov 1.
th
:AAA
I,B act calls for state regulators to enact la3s to regulate insurance activities
and govern the use of e9"H).
The @>)C = has "rivacy of Consu(er Health and Financial )nfor(ation
-egulation
-ules governing the use and disclosure of health infor(ation are included in
Article G of the regulation
o Fhen authoriation is re4uired for disclosure of non pu2lic "H)
o -e4uire(ents for a valid authoriation
o Conditions under 3hich authoriation re4uests and authoriation for(s
(ust 2e delivered to custo(ers
This regulation 3ould apply to all licensees of state insurance depart(ent!
including MCOs
$C+s and other licensees that co&!ly %ith the *1 act are e2e&!t
fro( the provisions of the Article G of the regulation
The regulation does not su!ercede any e2isting regulation on privacy S
health
+nly 7evada has ado!ted this yet
Reading 11C: *overn&ent9S!onsored )rogra&s
Federal "rogra(s have encouraged innovation
Iovern(ent is a very 2ig "ayer tooC
Esta2lished $tandards for Medicare "roviders! federally 4ualified HMOs and health
plans for federal e(ployees
>t the (o(ent (ost 2eneficiaries receive care through FF$ = 2ut this is changing
HFCA H!art of DHHSI ad&inisters $edicare and $edicaid
Medicare = Federal and Medicaid = Federal and $tate "artnership
$edicare
Federal !rogra& established under Title PG## of the Social Security Act of 1,D< to
provide hospital e7pense and (edical e7pense insurance to elderly and disa2led persons
Benefits are availa2le to
Persons @ ;% and eligible "or social security or railroad retirement bene"its
Persons with -uali"ying disabilities 3regardless o" age4
Persons with end7stage renal disease 3+S054 or their dependents
HCF> has delegated the clai(s processing and related tas8s to third parties.
These &
rd
parties are called 6inter&ediaries5 under Medicare )art A and 6Carriers5 under
Medicare )art and are usually insurance co(panies
)rogra& co&!onents
$edicare )art A
This provides 2asic hospital insurance that covers
1. Cost of in patient services
%. Confine(ent in nursing facilities B e7tended care facilities
&. Ho(e care services
'. Hospice Care
>nyone 3ho satisfies Medicare eligi2ility is auto(atically enrolled here
Funding ; "ri(arily co(es fro( a "ayroll ta7 i(posed on e(ployers and 3or8ers N
fro( social security ta7es
1&1
Cognizant AHM
@o pre(iu( is paid for "art >
@eed to !ay an Annual Deductible for )npatient Care
Coinsurance for in!atient and s'illed nursing care
These re4uire(ents are revie3ed annually
$edicare )art
Covers
o Cost of !hysicians professional services = in hospitals B physicians offices B
e7tended care facilities B nursing ho(es B insured ho(es
o >(2ulance services
o Medical $upplies and e4uip(ent
o Hospital outpatient services
o Diagnostic tests
o Other services necessary for diagnosis or treat(ent of illnesses
Goluntary )rogra& ; need to enroll for the service
$ost eligible !eo!le do enroll
Funding co(es "ri(arily fro( enrollee !re&iu&s and co!ay&ents
"ays (onthly pre(iu( deducted fro( $ocial security 2enefits
>lso annual deducti2le and coinsurance
)ay :A= of all incurred costs = Medicare pays other 8/D
Additional funding ; general ta2 revenues
o These !ay D<= of the costs not covered 2y pre(iu(s N copays
$edicareR Choice
The Balanced Budget >ct 1..+ created a &
rd
co(ponent
This addresses ho% the covered services are delivered to enrollees and increases
the nu(2er and type of organiations allo3ed to participate in Medicare
Successor to the $edicare Ris' !rogra&
#nitially $edicare available only on FFS ; $edicareR Changes this to
o Coordinated Care )lans ; CC)s ; HMOs 53ithB3ithout "O$6 ! ""Os and
"rovider sponsored organiations
o )rivate FFS ; !lans ; Coverage !rovided by !rivate insurers
o $edicare $edical Savings Account )lans ; High deducti2le catastrophic
insurance policy and a ta7 preferred (edical savings account M$>
"urchase a catastrophic healthcare policy 3ith a high deducti2le and
out of poc8et plan not (ore than TDAAA annually
HCFA deposits the difference 2et3een the specified Medicare pay(ent
and policy pre(iu( into the 2eneficiary M$>
Beneficiaries can use the M$> funds to pay the catastrophic policies
re4uired deducti2le and out of poc8et e7penses
9"ter the bene"iciary has paid deductible and out o" pocet e)penses
out o" the MS9 "unds the Medicare co!ered ser!ices are paid 1::1
7o ne% enrollees to $SA !lan ; #s sus!ended as of Nan 1
st
:AA.
All $edicare R !lans should cover !art and !art b benefits
These plans have federal e2e&!tion fro( state &andated benefits K !rovider
re(uire&ents
$edicare Su!!le&ents
Deducti2les and Coinsurance costs e7ist
FF$ Medicare does not pay for prescription drugs! glasses! hearing aids! routine
physical e7a(inations and 2asic dental services
To cover this Kgap< 2et3een the FF$ Medicare and actual cost
@ot necessary for MedicareN Choices 9 they are COM"-EHE@$):E 2enefits pac8ages
1&2
Cognizant AHM
T3o choices
$ediga! )olicies = individual (edical e7pense policies sold 2y state licensed private
insurance co(panies
o These are developed 2y the @>)C and are 1A standard !olicies A ; N
o enefits vary by !lan" but not by state or insurer
o Costs can vary
o Coverage 9 Offer 2alanced policies that include the follo3ing
Coverage for Medicare > and Medicare B coinsurance
Coverage for &#* hospital days after Medicare 2enefits end
Coverage for the 1
st
three pints of 2lood used every year
o )lan A ; $i(plest and coverage increases in co(ple7ity 3ith alpha2et
o )lan N ; >ll 2enefits including prescription drugs and preventive care
C+RA ; Access to $edicare SE1ECT ; Medicare Supplement that can be used in
a PPO to supplement Medicare B co!erage but 5oes not apply to Medicare 9 bene"its
$edicare and $anaged Care
)ntroduced cos of the Ta7 E4uity and Fiscal -esponsi2ility >ct TEF-> 1.8%
MCOs enter into contracts 3ith Medicare to provide "art > andBor "art B coverage at
a cost 2asis or ris8 2asis
Cost contracts
o Monthly pay(ents fro( govern(ent for covered services = these 2ased on
reasona2le cost of delivering the services! 2ut could 2e ad0usted to reflect
actual costs
o The MCO accepted @O ris8 and allo3ed 2eneficiaries to use any provider
o Enrollees 3ere re4uired to pay a large part of healthcare e7pense through
pre(iu(s and deducti2les
o Could Contract for +nly )art or for both !art A and )art
+nly )art ; Healthcare )re!ay&ent )lans HHC))sI
Ris' Contracts
o Monthly pay(ents fro( HCF> "M"M
o >vaila2le to federally (ualified H$+s and health plans and heath plans
classified as Co&!etitive $edical )lans
The a2ove is a federal designation 3hich e2e&!ts $C+s fro&
needing federal (ualification as a H$+ 2efore entering $edicare
The alanced udget Act re!laced all TEFRA R#S0 contracts in 1,,, by
$edicareR Choice Contracts ; all contracts 3ere phased out 2y %//%
$edicareR is the &ost !o!ular choice no%
Service Re(uire&ents established by the A
Enroll&ent and Disenroll&ent !rocedures
o Option to enroll and disenroll fro( MedicareN Choice CC"s each (onth
o This 3as phased out fro( 1
st
Guly %//% = to an annual period
o &" you "ail to mae a choice de"ault is traditional 22S Medicare
1tiliation of $ervices
o Higher incidence = and chronic illnesses
o %9& ti(es the care of a nor(al co((ercial (e(2er
o @eed 2etter 1M B co((unications B )$ and personnel
Benefits "ac8ages = BB> (andates that
o >ccess to %' hr e(ergency services
o Coverage for unforeseen non e(ergency services outside plan service area
1&3
Cognizant AHM
o Coverage for renal dialysis treat(ent outside service area
o E7tended coverage of preventive 2enefits = including annual prostate cancer
screenings to (ales O */ and older (a((ogra(s B pelvic e7a(s and pap
s(ears = with Part B deductibles wai!ed
o Out "atient self Manage(ent training services S e4uip for dia2etic patients
o Coverage for 2one density e7a(s for high ris8 people
o :accine outreach progra( for seniors
Total Care Manage(ent >pproach includes
o )revention and Early detection of disease = identify potential conditionsB
pro(ote effective chronic illness careB delay disa2ility
o Coordinated )atient Care = **Ps place primary care at the center o" the
deli!ery system and "ocus on managing patients care at all le!els
o Alternatives to in!atient hos!itali8ation for acute and chronic needs =
use case (anage(ent and disease (anage(ent progra(s = ho(e health B
step do3n units B co((unity 2ased services
o Coverage for services not available under )art A and )art
4uality Assess&ent and #&!rove&ent
4uality Revie% ; @eed to do this periodically as part of the Healthcare Cuality
&mpro!ement Program. This is initiated 2y HCF> to i(prove 4uality of care
o 9gree to a -uality re!iew and impro!ement organi,ation called Peer 0e#ie1
Organization "or each Medicare Plan they operate
o )eer Revie% +rgani8ation )R+ is a organiation or physican group that iis
paid 2y the federal govt to revie3 the serices of other practitioners and
(onitor the 4uality of care to Medicare patients
o This re!iew could be wai!ed i" a plan has e)cellent -uality record and
complies with MedicareH *hoice re-uirements
o Plans are deemed to ha!e met these re-uirements i" they are accredited by
an organi,ation that meets H*29 standards
)erfor&ance $anage&ent
o ?uality assess(ent progra(s = CC"s should report results to HCF> on HED)$
(easures that apply to a Medicare "opulation
o )ncludes = Flu vaccinations! (a((ography screenings! dia2etes retinal
screenings! s(o8ing cessation progra(s
o >lso su2(it C>H"$ data to HCF>
o HCF> 9 Health of Seniors Survey to (easure patients functional status
o HCF> has developed a Health )lan $anage&ent Syste& = a data2ase of
infor(ation on Medicare "art > and "art B recipients 3ho are enrolled in CC"s
o Fent into effect in 1..8
4uality #&!rove&ent
o 1..# HCF> esta2lished the Cuality &mpro!ement System "or Managed *are
3C&SM*4 to strengthen MCO<s efforts to protect and impro!e the satis"action
o" Medicare and Medicaid enrollees
o -e4uires CC"s to follo3 series of 4uality standards and guidelines
Operate a 4uality assess(ent and perfor(ance i(prove(ent progra(
that achieves de(onstra2le results
Collect perfor(ance data using standard (easures of health 4uality
Co(ply 3ith ad(in structures and operational re4uire(ents for 4uality
of care
o HMOs PPOs PSOs are e)pected to satis"y this
1&
Cognizant AHM
o MS9 and P22S ha!e to meet a subset o" these standards
o PPOs are re-uired to meet only those standards which apply to P22S and non
networ MS9s
Ca(e into effect in 1,,,
$edicaid
Title P#P of the Social Security Act of 1,D< ; $edicaid
Eoint State and 2ederal Program that pro!ides hospital e)pense and medical e)pense
co!erage to low income population and certain aged and disabled indi!iduals
The guidelines have 2een esta2lished through HCF> = and partial funding for the
states is provided and (ini(u( eligi2ility standards and provider participation and
rei(2urse(ent
)rogra& Funding
Federal Funding is 2ased on "er capita inco(e in each state
"ay(ents range fro( a &ini&u& of <A= of total $edicaid costs to >.= of total
costs = 3ith poorer states receiving a higher percentage of funding
)ndividual states contri2ute additional funds and deter(ine the rei(2urse(ents for
individual providers and health plans
Eligibility Re(uire&ents
Irafted into the state Felfare "rogra( and Eligi2ility 3as 2ased on (onthly inco(e
and financial resources
)ndividuals 3ho received Medicaid 2enefits 2ecause of their 3elfare status and 3ere
classified as Categoricall' 2ee"' )n"i#i"uals ; These include
o Children and lo3 inco(e adults 3ho 4ualify for 9id to 2amilies with
5ependent *hildren 3925*4 2enefits
o ,o3 inco(e aged B 2lind B disa2led individuals 3ho 4ualified for supple(ental
security inco(e 2enefits
Me"icall' nee"' )n"i#i"uals are those people 3ho (eet the financial
re4uire(ents of categorically needy individuals 2ut 3hose monthly income e)ceeds
speci"ied ma)imums
$tates could provide coverage for people 3hose inco(es are upto 1//D of the
federal poverty level or 3ho spent e7cess inco(e on (edical care to reach the
threshold
Dual Eligibles 9 Those elderly people who -uali"y "or Medicare co!erage also
8ew plan which partially replaces 9259 7 called Temporary 9ssistance "or 8eedy 2amilies
T982
enefits
Fairly co(prehensive = Federally Mandated Benefits include =
"hysican Hospital services
,a2 services
Ho(e healthcare visits
,ong ter( custodial care
Others include
o "renatal Care
o :accines for children
o Fa(ily "lanning services and supplies
o @ursing Mid3ife
1&!
Cognizant AHM
o "ediatric and fa(ily nurses
o -ural Health Clinic $ervices
o Federally 4ualified Health center 5F?HC6 services
o >(2ulatory services of a F?HC that 3ould 2e availa2le in other settings
States can increase bene"its to co!er dental '!ision ' prescription drugs
$edicaid is the SEC+7DARL !ayer of benefits
$edicaid and $anaged Care
)re A contract to three types of organiations
o MCOs and health insuring organiations ! "repaid Health "lans! and "ri(ary
Care Case (anager progra(s
o H#+ is an organiation that contracts 3ith state Medicaid agency as a fiscal
inter(ediary = does not provide services directly
o )ri&ary Care Case $anager = "C" 3ho contracts 3ith the state to provide
case (anage(ent services = receive a case (anage(ent fee plus a
rei(2urse(ent for (edical services on FF$ 2asis
)ost A = )ncluded "rovider $ponsored organiations
$ost used !lan ty!e = Co(prehensive MCO
$o(e states (a8e (anaged care enroll(ent Mandatory through 3aivers provided under
$ection 1.1*526 and $ection 111* 526 Faivers = EFreedo& of ChoiceF %aivers allo3ed
states to (anage Medicaid recipients access to providers 2y assigning recipients to a
"ri(ary care Case Manager. The Ioals 3as to reduce e(ergency depart(ent use! increase
preventive care and i(prove overall effectiveness 2y fostering a close physician patient
relationship 2et3een "C" and Medicaid "atients.
Section 111< %aivers allo3 the state to offer (ore co(prehensive services to
specified categories of Medicaid recipients through de(onstration pro0ects
BB> = no need for (andatory enroll(ent of Medicaid recipients in (anaged care
progra(s = @o need to su2(it for(al applications for section 1.1*526 and section
111* 3aivers
E7isting 3aivers and de(onstration pro0ects that started as a result of $ection 111*
Faivers are still an integral part of Medicaid (anaged care
)n place of 3aivers = states that 3ish to (andate (anaged care enroll(ent (ust
give Medicaid recipients a choice of enroll(ent options.
Enroll(ent in non rural areas given a choice of at least % (anaged care plans.
Enroll(ent in rural areas (ust 2e given a choice of at least 1 "CCM MCOs and "CCMs
that contract 3ith Medicaid to provide healthcare services to Medicaid recipients
(ust satisfy BB> (andated contractual and 4uality re4uire(ents
Contractual Re(uire&ents BB> i(poses contractual re4uire(ents on organiations
Eligibility
o BB> grants states the authority to provide Medicaid coverage to individuals in
e7pansion populations
o E7pansion populations include individuals 3ho do not (eet categorically
needy or (edically need criteria = this could include
Children eligi2le for (edical 2enefits under the $tate Children<s Health
)nsurance "rogra( 5$CH)"6
)ndividuals 3ho do not satisfy federally eligi2ility criteria and do not
4ualify for federal funding = can provide out of state funds
Elderly individuals eligi2le for long ter( care under "rogra(s of >ll
)nclusive Care for Elderly = 5">CE6
1&"
Cognizant AHM
)nitially set up for Medicare 2eneficiaries 2ut no3 its scope is
e7tended to Medicaid eligi2le enrollees
&ndi!iduals are not re-uired to be enrolled in Medicare to
recei!e these bene"its
>ccess to services
o >de4uacy of @et3or8 B hours of operation B location B referral to providers B
no discri(ination against enrollees 2ased on health status
o @eed significant outreach to connect to "C" rather than e(ergency roo(s for
pri(ary care
o "CCM B availa2ility of e7tended "ri(ary care hours! e7panded out patient
hospital facilities ! transportation arrange(ents to "C" operations! are so(e
(ethods used to reduce over9utiliation
o Other things include child care! early detection of diseases
Benefits
o Uni(ue features ; )rovision of early and !eriodic screening" diagnostic
and treat&ent services for children under :1
Early and periodic screening! diagnostic and treat(ent 5E"$DT6
services cover vision hearing ! dental services
-ei(2urse(ent for "roviders
o >ccept Medicaid pay(ent as pay(ent in full
o @o(inal out of poc8et e7penses
o @o copay for e(ergency services and pregnant 3o(en! children R 18!
hospitals or nursing ho(e patients! or categorically needy HMO enrollees
Mar8eting "ractices
o Direct and individual = co((unity service agencies
o )ndependent third parties enroll plan (e(2ers
o @eed state approval for distri2uting (ar8eting infor(ation
o 7o Door to door or tele!honic solicitation
?uality >ssess(ent and )(prove(ent
o ?)$MC fro( Medicare >pplies here also
o This is not (andatory for Medicaid MCOs = depends on state la3s
o Can accept accrediting 2y private agencies
)rogra&s for All inclusive Care for the Elderly H)ACEI
Irants 3aivers of certain Medicare and Medicaid re4uire(ents to a li(ited nu(2er
of pu2lic and non profit co((unity 2ased organiations providing integrated care to
the elderly.
o Co(prehensive long ter( and acute care to individuals O ** years and
nursing certifia2le 2ased on the patients care and needs
o @o li(its on the a(ount !duration! scope of service and re4uires no
deducti2les! coinsurance! copay(ent or other cost sharing features
o %'7+ >ccess
o BB9 granted this permanent program status and an optional "or Medicaid
State Children5s Health #nsurance )rogra&
BB> esta2lished the state children<s health insurance progra(
o 5esigned to pro!ide health assistance to uninsured. low income children
either through separate programs or through e)panded eligibility under state
Medicaid programs
)f the state has separate progra(
1&#
Cognizant AHM
o ench&ar' Coverage
E4uivalent to standard BCB$ ""O under the federal e(ployee health
2enefits progra(
> health 2enefit plan that is offered and generally availa2le to state
e(ployees or
HMO plan 3ith he largest co((ercial enroll(ent in the state
o ench&ar' E(uivalent Coverage
>ggregate actuarial value at least e4uivalent to one of the 2ench(ar8
pac8ages and (ust include 2asic services li8e in patient and out
patient services! la2s ! 7rays! 3ell 2a2y and 3ell child care! including
i((uniations
o E7isting Co(prehensive $tate 2ased Coverage
-ange of 2enefits funded and ad(inistered 2y the state
o $ecretary approved coverage
>ny coverage tat the secretary of the DHH$ approves
@o favouring of richer 8ids
@o pree7isting conditions e7clusions
$tates need to file a $tate Child Health plan 3ith the $ecretary of H$$ =
Funding is 2ased on the total nu(2er of uninsured lo3 inco(e children in the state
and geographic cost factors
$CH)" availa2le to children 3ho (eet
o 1nder 1. years old
o @ot currently eligi2le for Medicaid or other insurance
o -esides in a fa(ily 3ith inco(e 2elo3 the %//D of the federal poverty level
or */D points a2ove the states esta2lished eligi2ility li(its
Federal E&!loyee Health enefits )rogra&
:oluntary health insurance progra( for federal e(ployees! retirees! and their
dependents
>d(inistered 2y the Office of "ersonnel Manage(ent
Choice of FF$ or MCO to 1/ (illion people
1* FF$ health insurance plans and &*/ MCOs participating in this
1argest e&!loyer s!onsored grou! healthcare !lan in the US
@eed to (eet federal and state licensing agree(ents
$atisfy O"M re4uire(ents on access of care! 2enefit design and patient safety
$o(e provisions
o Federal re4uire(ents on (aternity under @e32orns and Mothers health
protection act
o "regnancy is not a pree7isting
o Mental health parity act
o Meet Fo(ens health and Cancer -ights >ct
o Develop patient safety initiatives
Tricare
$ilitary Health Syste& ; Forld3ide healthcare syste( operated 2y the 1$ DoD
)ntegrates the service delivery of healthcare services for active duty personnel!
retirees and fa(ilies of the sa(e
>ctive personnel get treated through = Military Treat(ent Facilities = >r(y! @avy!
>irForce! Coast Iuard Operate = E7ist in 11 T-)C>-E regions in 1$ and & overseas
T-)C>-E 3as called CH>M"1$
o )ntegrates the Military and Co((ercial net3or8s
Managed 2y T-)C>-E Manage(ent >ctivity 5TM>6
1&$
Cognizant AHM
Coverage
o Most inpatient and outpatient services! physicians and hospital charges!
(edical supplies and e4uip(ent and (ental health services
Three "lans
o T-)C>-E $tandard = FF$ = use authoried providers or non net3or8 providers
Deducti2le and Coinsurance
Out of poc8et under this are higher than other options
o T-)C>-E E7tra = -educed FF$ plan si(ilar to the net3or8 part of ""O
Deducti2les and coinsurance
)n net3or8 costs are lo3er than out of net3or8
Out of poc8ets lo3er than T-)C>-E standard
@o need to enroll to participate in T-)C>-E e7tra
o T-)C>-E "ri(e 9 enroll(ent 2ased MCO to provide care using a "ri(ary care
Manager = si(ilar to "C" =
@o out of poc8et for (ilitary doctors
$ervices fro( civilian providers have copay(ents
o >ctive Duty personnel are auto(atically in T-)C>-E pri(e = 3hile their
dependents and eligi2le retirees are covered under T-)C>-E pri(e only if
they enroll
o -etirees and fa(ily need to pay enroll(ent fees
$anaged Care Features
"reventive Care ! self care and decision support progra(s
1tiliation Manage(ent
o -evie3
o Discharge planning
o DiseaseBcondition (anage(ent
o De(and Manage(ent
Case Manage(ent = broad spectrum case management 7 needs of groups along the
entire healthcare continuu(
BCM includes
o "opulation 2ased case (anage(ent
o Disease Manage(ent approach
o Care Coordination
o )ndividual Case Manage(entP
>ppeals and Irievances
?uality )nitiatives
>ccreditation and "erfor(ance (easures
@or'er5s Co&!ensation
$tate (andated progra( that provides healthcare 2enefits for costs and lost 3ages
to 4ualified e(ployees and dependents in case the e(ployee is in0ured
Every state has this and '+ states re4uire that e(ployers offer this
E(ployers purchase 3or8ers co(pensation insurance
#t is &andated that coverage be !rovided for all e&!loyees including !art
ti&e %or'ers
@o deducti2les and Coinsurance =
Do not specify a life ti(e (a7i(u( 2enefit for (edical costs
Can<t li(it provider choice for 3or8 related ail(ents
O@,H BE@EF)T$ for 3or8 related in0uries
E&!loyers are 7+T allo%ed to deny liability if they are not at fault
)n e7change for this = need e(ployees to co(ply 3ith = E2clusive Re&edy
Doctrine = they can<t sue e(ployers for additional a(ounts
1&%
Cognizant AHM
Additional enefits ; For8ers Co(pensation )nde(nity Benefits = for loss of pay
$anage @or'ers Co&!ensation
:/ hour Coverage = E(ployers group health plan! disa2ility plan and 3or8ers
co(pensation progra( are (erged and integrated 5or coordinated6 depending on a
states regulation into a single Health 2enefit plan that covers e(ployees %' hrsBday
>dvantage P This helps in coordination of clai(s processing
DisadvantageP >d(inistrative cost of coordinating separate plans is often handled 2y
different depart(ents = need to 3or8 3ith e(ployers 2enefits depart(ent and ris8
(anage(ent depart(ent
11&
Cognizant AHM
Ethical #ssues in $anaged Healthcare
Reading 1:A: #ntroduction to Ethics in $anaged Healthcare
Define ethics and e7plain the difference 2et3een ethics and la3s
Descri2e so(e 3ays that MCOs can foster an ethical corporate culture
Reading 1:: Ethical #ssues in $anaged Healthcare
E7plain the "atient Bill of -ights
Discuss so(e of the ethical issues MCOs are currently confronting
111
Cognizant AHM
Reading 1:A: #ntroduction to Ethics in $anaged Healthcare
+thics are not the same as laws 7 Both 0e"lect the !alues o" the *ommunity but laws are
en"orceable while ethics are not
Hippocratic Oath = "atient a2ove all else
< 0ey )rinci!les
1. >utono(y = The patients should 2e a2le to (a8e decisions on their lives
%. @on9Maleficence = MCO<s can<t har( their patients
&. Beneficence = "ro(ote the good of the (e(2ers as a group
'. GusticeBE4uity = Fairly distri2ute the 2enefits and 2urdens a(ong (e(2ers
*. "ro(ise ;eepingBTruth telling = 2e truthfulC
Further :irtue
Creating an Ethical Cor!orate Culture
1. Better co((unication 2et3een entities
%. Honor codes
&. Educating (e(2ers on the syste(
'. Educating e(ployeeBproviders and (e(2ers a2out the issues
*. "olicies or procedures 3hich provide guidance 3hen confronted 3ith ethical
issues
#. Culture 3here ethical considerations are integrated into decision (a8ing
+. The contracted organiation (ust have si(ilar syste(s in place
8. Ma8e a for(alied (ethod for (anaging ethical conflit = ethics tas8 force or
2ioethics consultant
Reading 1:: Ethical #ssues in $anaged Healthcare
1. "atients Bill of rights
a. )nfor(ation ! choice ! access ! participation ! respect and non
discri(ination! confidentiality ! co(plaints ! responsi2ilities
%. * issues to ta8e care of
a. -esource >llocation = fairBe4uita2le
2. Financial )ncentives to providers
c. Clinician "atient -elationship
d. Confidentiality
e. E(ployee trust
112
Cognizant AHM
;ey Concepts Tested in $a(ple Test
Case $i2ed AdJust&ent or Ris' AdJust&ent = $tatistical ad0ust(ent of the
outco(e 2ased on factors li8e patient<s age and seriousness of patient
condition
Adverse Event
Cost Shifting
Receivershi! = state co((issioner ta8es control of assets and lia2ilities =
pri(ary goal is to reha2ilitate the organiation
C+A = @eed proof that MCO has (et the state licensing re4uire(ents!
specified 4uality standards and also financial standards on net 3orth! capital!
li4uidity and accounting standards = initial net 3orth of 1.* (illion Dollars
HMOs needs to 2e licensed in each state it does 2usiness in and MO$T HMOs
are su20ect to state ena2ling statutes and re4uire(ents of the state
depart(ent
"ooling = Irouping a large noP of s(all groups9 E7perience rate and offering
lo3er pre(iu(s to all s(all groups
NCAH+ = e!aluate central o""ice and non E*9H4 accredited networs. all high
ris ser!ices pro!ided and a sample o" the practitioners o""ices and records
Hospitals recei!ing Medicare 2unds must be E*9HO accredited
E*9HO places organi,ations on a accreditation watch when a sentinel e!ent
occurs and root cause analysis and corrective action have not 2een co(pleted
in ti(e
@HCRA ; does 7+T re(uire !lans to have &astecto&y benefits 2ut does
re4uire (edical and surgical 2enefits for (astecto(y to provide coverage for
reconstructive surgery follo3ing (astecto(y
HC4#A = e7e(pts hospitals! group practices and HMOs fro( certain antitrust
provisions as they apply to credentialing and peer revie3 so long as these
entities adhere to due process standards that are outlined in the HC?)>
7$H)A = /> hrs &in for child birth and ,D hours &in for cesarean =
Does not re4uire group plans to have (aternity 2enefits 2ut regulates those
3hich do
Therapeutic = different che(ical entity and sa(e class = needs physician
approval
*eneric = sa(e che(ical co(position 9 no physician approval
*1 = Disclose privacy policies B notify custo(ers if info is shared B opt out
provision
I,B = Financial infor(ation = 89&* amendment Health &n"ormation also
H)">> = pree7isting condition cannot 2e e7cluded fro( coverage 1% (onths
after enroll(ent = 18 (onths for late enrollees
The CRED#TA1E coverage reduces this pree7isting condition li(it and can
(a8e it ero = if he has stayed for a year
H$+ Act 9 @et3or8 ade4uacy B ?uality >ssurance B Irievance "rocedures
)rocess = Methods and "rocedures that an MCO uses to Furnish Care
Structure 9 Measures of healthcare perfor(ance that relates to the nature!
4uality and 4uantity of resources that an MCO has
+utco&e 9 E7tent to 3hich the MCO succeeds in i(proving or (aintaining
satisfaction and patient health
8on 5uplication o" Bene"its Pro!ision
T)A = Iet CO> fro( the state insurance depart(ent and not federal
Federal 4ualified H$+s cannot use 0etrospecti!e 0ating
199% 89&* Small 6roup 9ct 9mendment +liminated class rating rules and
re4uired plans to use >C- for s(all groups
)ure K Std Co&&unity rating are the same thing = O@,H IEOI->"H)C
113
Cognizant AHM
D>T>
$essenger $odel #)A
$edicaid )CC$ )rogra&s are e)empt "rom H*29s Cuality &mpro!ement
System "or Managed *are Standards
#nde&nity @ra!around +!tion = Out of plan product that a health plan
offers through an agree(ent 3ith an insurance co(pany = )n so(e states
HMOs can offer "O$ O@,H as an inde(nity 3raparound option
11

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