Payer Market Trends Payer Market Trends Contracting ImplicationsContracting Implications

Frederick Memorial Healthcare Frederick Memorial Healthcare SystemSystem

Consumer Directed Health Consumer Directed Health PlansPlans

Consumer stakeholder - Consumer stakeholder - High Deductible, low High Deductible, low premium insurance combined with Tax Advantaged premium insurance combined with Tax Advantaged spending or savings accountspending or savings account

HSA and HRA employer tax advantagesHSA and HRA employer tax advantages– HSA – Operates like IRA, employee and employer HSA – Operates like IRA, employee and employer

can fund, employee vested, portablecan fund, employee vested, portable– HRA – Employer funds as incurred, no vesting, rolls HRA – Employer funds as incurred, no vesting, rolls

overover May include wellness incentivesMay include wellness incentives

– Lower premiums, deductible creditsLower premiums, deductible credits Decision making toolsDecision making tools 25-30% health plans CDHP by 201025-30% health plans CDHP by 2010

?

Consumer Directed Consumer Directed Health PlansHealth Plans

How did we get here?How did we get here?– Insurance Premiums & healthcare cost outpace Insurance Premiums & healthcare cost outpace

increases in incomeincreases in income– Rise in number of employers not offering benefitsRise in number of employers not offering benefits– Institute of Medicine 2001 study identified need Institute of Medicine 2001 study identified need

to redesign payment to encourage change to redesign payment to encourage change 3 Principles – incentives to 3 Principles – incentives to decrease errors and waste, decrease errors and waste,

increase accountabilityincrease accountability through consumer transparency through consumer transparency CDHP attractive to legislators, employers CDHP attractive to legislators, employers

and employeesand employees

CDHP ImplicationsCDHP Implications ConcernsConcerns

– Patients delaying care, will CDHP cause higher Patients delaying care, will CDHP cause higher cost in long term? Impact to Physician cost in long term? Impact to Physician performance ratings.performance ratings.

– HMO risk pool losing healthy populationHMO risk pool losing healthy population– Providers unprepared for increase self pay Providers unprepared for increase self pay

collections collections – Rise in medical credit debtRise in medical credit debt– Transparency of healthplan denials – patient Transparency of healthplan denials – patient

confusionconfusion 3-fold increase in Accounts Receivable3-fold increase in Accounts Receivable

CDHP ImplicationsCDHP Implications IT solutionsIT solutions – –

– Payer branded debit cardPayer branded debit card access to access to FSA/HRA/HSAFSA/HRA/HSA

– Payer acting as creditorPayer acting as creditor pays provider 100%, pays provider 100%, charges patient prime rate interest, UHC charges patient prime rate interest, UHC Exante Bank, AETNA Bank of America, BCBS Exante Bank, AETNA Bank of America, BCBS Blue Healthcare Bank, CIGNA E-pass card Blue Healthcare Bank, CIGNA E-pass card

– Credit card company HSAsCredit card company HSAs (Wachovia, BBT, (Wachovia, BBT, Bank of America, pay provider 100%, interest Bank of America, pay provider 100%, interest rates vary)rates vary)

– Ingenix link to practice mgmt systemIngenix link to practice mgmt system – Future – Future – Real time POS transactionsReal time POS transactions like like

pharmaciespharmacies

Be preparedBe prepared– Financial Counselors Financial Counselors

Pre-visit financial counselingPre-visit financial counseling – staff educated – staff educated regarding contracted rates, cost estimates, multiple regarding contracted rates, cost estimates, multiple payment optionspayment options

Up front collectionUp front collection of copay, deductible and of copay, deductible and coinsurancecoinsurance

Protocols for Protocols for patients with insufficient incomepatients with insufficient income How to respondHow to respond if patient wants discount off if patient wants discount off

contracted rate?contracted rate? Simple measures such as Simple measures such as financial penaltyfinancial penalty for for

nonpayment at time of service, prime rate interestnonpayment at time of service, prime rate interest OIG limitationOIG limitation on accepting < Medicare rate on accepting < Medicare rate Consider available Consider available IT solutionsIT solutions i.e.: Ingenix example i.e.: Ingenix example Update Update Bank merchant servicesBank merchant services Quality and service Quality and service value storyvalue story beyond cost beyond cost

Pay for PerformancePay for Performance MedicareMedicare taking lead taking lead

– Hospitals Hospitals – FY05-07 P4P, Oct 2008 non-payment for – FY05-07 P4P, Oct 2008 non-payment for errors, Present on Admission (lower payment for hospital errors, Present on Admission (lower payment for hospital acquired illness/infection), HCAHPSacquired illness/infection), HCAHPS

– HCAHPSHCAHPS – Patient perspective survey, failure to report – Patient perspective survey, failure to report results in loss of 2% annual payment update in FY08results in loss of 2% annual payment update in FY08

– Physician Quality Reporting InitiativePhysician Quality Reporting Initiative, 74 indicators – , 74 indicators – select min. of 3, report on patients in the category, 1.5% select min. of 3, report on patients in the category, 1.5% bonus bonus

– Data available to patients on CMS web siteData available to patients on CMS web site– Medicare progressionMedicare progression - pay to report, pay to perform, - pay to report, pay to perform,

non-payment for errors and poor performancenon-payment for errors and poor performance

Health plan P4P programsHealth plan P4P programsin Frederick Countyin Frederick County

Payer Tools Payer Tools – – Efficiency – ETGsETGs and Marketbasket System Ingenix comparison to evidence based evidence based

guidelinesguidelines for 25 conditions Bridges to Excellence - NCQA, HEDISNCQA, HEDIS Credentials - ABIM certificationcertification Hospital comparison tools: LeapfrogLeapfrog, #

patients treated, complications, mortality, LOS, AHRQ, JCAHOJCAHO, CMSCMS, costcost data

Commercial Payer Commercial Payer P4PP4P

Bridges to Bridges to ExcellenceExcellence

www.bridgestowww.bridgestoexcellence.orgexcellence.org

National employer/provider coalitionNational employer/provider coalition– Institute of Medicine 2001 studyInstitute of Medicine 2001 study decrease errors decrease errors

and waste, increase accountability by increasing and waste, increase accountability by increasing transparency to consumertransparency to consumer

– BTE standards for BTE standards for outpatient performanceoutpatient performance– NCQANCQA – Diabetes, Stroke and Physician Practice – Diabetes, Stroke and Physician Practice

Connections – monitoring & management systems, Connections – monitoring & management systems, standing orders, evidence based treatment. standing orders, evidence based treatment.

– BTE employers paid $4.7 millionBTE employers paid $4.7 million to 1600 providers to 1600 providers since 2006since 2006

– Carefirst Carefirst reimburses MDs cost of NCQAreimburses MDs cost of NCQA, United , United 20% discount 20% discount

Frederick Payer P4P IncentivesFrederick Payer P4P Incentives – –

– CIGNACIGNA financial financial– UnitedUnited administrative administrative– AETNAAETNA financial and deselection financial and deselection– CarefirstCarefirst new program in 2008 new program in 2008– All refer to BTE/NCQA for future programsAll refer to BTE/NCQA for future programs

– Renegotiation impactRenegotiation impact

P4P & CDHP AlignmentP4P & CDHP Alignment

CDHP members have financial CDHP members have financial incentives to review P4P informationincentives to review P4P information

Be awareBe aware – practice rating and peer – practice rating and peer ratingrating

LeverageLeverage strong performance strong performance

Contracting ChallengesContracting Challenges

Consumer Directed Health Plans – Consumer Directed Health Plans – – Capitation – monitor utilization and volume of patientsCapitation – monitor utilization and volume of patients– Risk for collection – should belong to health plan Risk for collection – should belong to health plan – Cost of billing administrationCost of billing administration– Differential rates by productDifferential rates by product– Watch for contracts that disallow up front collectionWatch for contracts that disallow up front collection

Pay for Performance – Pay for Performance – – Payer must pay 100% of contracted fee schedulePayer must pay 100% of contracted fee schedule– Require disclosure of impact of your rating, product Require disclosure of impact of your rating, product

deselectiondeselection– Payment for record copiesPayment for record copies– Leverage good performanceLeverage good performance

Legislative WatchLegislative Watch Medicare physician rate reductionMedicare physician rate reduction Study Maryland Payer Market – MD Study Maryland Payer Market – MD

25%ile of states for reimbursement25%ile of states for reimbursement CDHP – force payers to be creditorCDHP – force payers to be creditor CDHP - prompt pay protections goneCDHP - prompt pay protections gone P4P costs – IT and other expensesP4P costs – IT and other expenses Network adequacy standards - Network adequacy standards -

MedicaidMedicaid Non-par payment rate formula and Non-par payment rate formula and

acceptance of non-par assignmentacceptance of non-par assignment Act - Educate your Delegation!Act - Educate your Delegation!

More informationMore information Pay for Performance – Pay for Performance –

www.hhs.gov/valuedriven/www.hhs.gov/valuedriven/www.hospitalcompare.hhs.govwww.hospitalcompare.hhs.govwww.leapfroggroup.orgwww.leapfroggroup.orgwww.bridgestoexcellence.orgwww.bridgestoexcellence.orgwww.ncqa.orgwww.ncqa.org,, programs, physician recognitionprograms, physician recognitionwww.unitedhealthcareonline.comwww.unitedhealthcareonline.com, clinical , clinical

resources, performance measurementresources, performance measurementwww.aetna.comwww.aetna.com, doing business with AETNA, , doing business with AETNA,

healthcare transparencyhealthcare transparency

Contracting ResourcesContracting Resources AMA AMA www.ama-assn.org/www.ama-assn.org/ MedChi MedChi www.medchi.orgwww.medchi.org MGMA MGMA www.mgmamd.org/www.mgmamd.org/ HFMA HFMA www.hfma.org/www.hfma.org/ HCPro HCPro www.hcpro.com/www.hcpro.com/ Physicians Practice Pearls newsletter, Physicians Practice Pearls newsletter,

www.physicianspractice.com/www.physicianspractice.com/ FMH – FMH – Jennifer Teeter, 240-566-3337,Jennifer Teeter, 240-566-3337,

jteeter@fmh.orgjteeter@fmh.org