Payers & Providers National Edition May 2011

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Moderator:I’d like to ask you individually what you thinkare the largest administrative issues facing theMedicaid program, either nationally or on the

state level?Kip Piper:Medicaid is, by far, the most complex programin healthcare and the most complex in stategovernment.The day to daychallenges areextraordinary.ACAimplementationimposes amassive rangeof newrequirements.

Those includeMedicaidexpansion.Nationwide,(reform) willbeing between17 million and23 million newenrollees, alladults.DouglasSherlock:I can't comment on the programs themselvesbut the health plans themselves are feeling the

pinch. Administrative expenses PMPM declinedby 5.2% in 2009 versus 1.4% in the prior year,in core expenses. Plus, under ACA 16 millionnew beneciaries will join Medicaid.Anthony Wright:I think it's hard not to focus on the state budgetcrises, and the enormous strain they are puttingon the Medicaid program state-by-state andnationally. It's not just programmatic cuts: it'splacing a huge burden on what are typicallyunderfunded and understaffed stateadministrators to do more with less.

Moderator:Medicaid cares for the poorest and mostchronically ill people in the country, and it isexpected to expand dramatically with theimplementation of the PPACA in the comingyears. Meanwhile, hospitalization costs havebeen rising a steady 7% a year. How do you

think both thefederal and stategovernmentswill be able toaddress thesechallenges?Some plans arestarting up theirown clinics tohelp control

costs. Is this aviable plan?Kip Piper:Those includepayment cuts,new paymentmethods, somebenetreductions,managed careexpansion. Also,

some states are working on larger-scalechanges to Medicaid, including integratedcare for dual eligibles and long-term care

redesign.Anthony Wright:The fact that the recession has increasedMedicaid enrollment, and states are seekingcuts, and then there's an politically/ ideologically-driven attack on the program ontop of that, makes it hard. And that's beforewe get to the need to scale up to thechallenges and opportunities under the ACA.There's one solution in Congress (the Ryanbudget proposal) that is simply to shift these

A Medicaid Interactive RoundtableIndustry Leaders Discuss Present, Future Scenarios

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National Edition

Participants

Anthony Wright, Executive Director, Health

Access, Sacramento, CA

Kip Piper, President, Health Results Group LLC,

Washington, DC

Dougas Sherlock, President, Sherlock & Co.,

Gwynedd, PA

Date of Roundtable: May 6, 2011

Moderator: Ron Shinkman, Publisher, Payers &

Providers

Technical Oversight: David Bronstein, MCOL

Continued on Page 2

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It will be published in theCalendar section, space

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Payers & Providers

cost burdens (increased enrollment, risingmedical costs, etc) to the states through ablock grant. More central to the solution is the

discussion around delivery system reform bothwithin Medicaid and in the health system as awhole.Douglas Sherlock:Some form of vertical integration is certainlyviable. In fact, whenever we nd a payoff tomedical management it is in those products,like Medicaid, that tend to have the mostnarrow panels. To your point, they don't haveto own clinics to achieve costs if the clinicsthey contract with are responsive to cost andquality constraints. Getting back to the costissue, we certainly see legal compliance costsas disproportionate in this product.

Kip Piper:At any given time, a state Medicaid agency is juggling a thousand of more major or routinesystems changes. Add to this, a mix of newfederal policy changes driven byACA.Moderator:Doug: A followup to your response. Theseclinics are providing services most doctorsof ce do not, such as intravenous therapies,which hospitals often bill thousands of dollarsto provide. Is there at the moment a missinglink between primary and tertiary care?Douglas Sherlock:

I don't know that. But what I do know is thatsome integrated delivery health plans seem to,in effect, waive the high costs of (the) ER, evenif care is delivered thereAnthony Wright:In my state of California, we recently have anew Medicaid waiver approved (between theObama Administration and the outgoingSchwarzenegger Administration) that includesvarious efforts to get ready for health reform,both in terms of coverage expansion but alsoin terms of delivery reforms, patient safety, etc.The California waiver has very good elements,as a "bridge to health reform." Most notably is

the ability to have counties begin expandingcoverage using existing medically indigentcare funds matched with federal dollars. Thegood news is all 58 counties have taken upthis option, but the economic issues meansome counties are starting slowly. Still, over400,000 people would get coverage before2014, which is a big deal.Moderator:Anthony also raises a great question. There hasbeen a lot of debate recently about the blockgrant funding proposal oated by the GOP. Is

this a viable proposal? What do you all thinkare its strengths and weaknesses?.Kip Piper:

There are many approaches to "blockgranting." Over a third of Medicaid alreadyoperates under waivers, not the standard Title19 law. The last time block granting of Medicaid was discussed was in 1995-96.That's when the GOP-controlled Congresspassed the Medicaid Transformation Act. Iwas a negotiator and a lead author of the billIt was a more balanced approach. Financiallythe bill was designed to ensure a more even,adequate ow of federal dollars. It also wasdesigned to redistribute funds over time,moving then from the states with high butunsupportable per capita spending to the

poorer, lower spending states. There wheresome protections for benets, populations,but a framework that recognized the widelydifferent populations not in Medicaid and thathey have very different needs. It was build-through discussions with the governors. Alsothe bill was not premised on the old Medicailaw. It wasn't to be built on top. It was areplacement. Much easier that way toenvision what Medicaid should be.Anthony Wright:I think payers and providers should be veryconcerned about proposals in Congress.Especially as the backlash builds against the

changes in Medicare, then Medicaid becomea target. The block grant proposal doesnothing to reduce costs; it only shifts theburden from the federal government to thestates, (which) are ill-equipped to deal with itThe health industry needs to push backagainst this, or face billions of dollars of losses, beyond the human impact.Moderator:It appears that some Medicaid plans maywind up competing on the state healthexchanges in 2014 for commercial enrollees.Do you consider this a good thing, or doesthis raise concerns?

Kip Piper:The requirements for qualied health plans instate exchanges go well beyond traditionalcommercial plan requirements. Not as far aswhat's required of Medicaid health plans, buMedicaid health plans - in general - are bettepositioned to meet the contractual,performance, network, reporting, etc.requirements of exchange plans. Plus, therewill be considerable churning of enrollment

Joplin HospitalDamaged by Tornado

St. John’s Regional Medical Center in Joplin, Mo., was largelydestroyed by a tornado that torethrough the city on Sunday.

The hospital’s windows wereblown out and parts of its facadewere torn off, leaving its steelsuperstructure exposed in severalplaces. The roof was also taken off.A ruined helicopter lay on its side,its rotors broken off, in a parkinglot.

The staff had a few minutes’warning to move patients into

hallways before the storm hit thenine-story building. According tonews reports, the hospital started afull evacuation after it was hit bythe storm. “We are not sure of thesafety of the building,” said CoraScott, spokesperson for St. John’sHealth System in Springfield, Mo.

About 100 patients from the Joplin hospital were taken to St. John’s hospitals in Springfield,about 50 miles away, and otherswere taken to Freeman HealthSystem in Joplin and to otherfacilities.

Nearby structures werecompletely leveled by the storm,

which killed 116 people as of May25. Dentist Matt Sheffer said hisoffice across from the hospital was“totally gone.” The building that hisoffice was in “was not flimsy, hetold the Associated Press. “It was30 years old and two layers of brick. It was very sturdy and wellbuilt.”

Wind from the storm carrieddebris as far as 60 miles. Peoplereported finding medical recordsand X-rays on the ground in thenext county.

Number Of Emergency

Rooms Drop By 30% InPast Decade

The number of hospital emergencyrooms dropped by about 30%nationwide during the last decade,according to a new study in the

Journal of the American MedicalAssociation.

According to the study, thenumber of ERs nationwide stood at1,779 in 2009, compared to 2,446in 1990. Meanwhile, the number of ER visits grew by more than one-third.

Continued on Page 3

In Brief Roundtable (Continued from Page One)

NEWS

Continued on Next Page



Payers & Providers NEWS

In Brief

Those ERs most likely to closewere those serving large numbersof poor patients, were operated byfor-profit chains, were losingmoney or operating in highlycompetitive markets.The study did not provide specificson California ERs, but the state haslost dozens of hospital emergencydepartments over the past decade.

“This suggests market forcesplay a larger role in the distributionand availability of care,” ReneeHsia, an assistant professor atUCSF and the lead author of thestudy, told the New York Times.“We can’t expect the market to

allocate critical resources likethese in an equitable way.”

Illinois CON PanelDenies Closure of

Oak Forest Hospital

The Illinois Health Facilities andServices Review Board once againstymied the plans of Cook Countyleaders by denying them permission toclose Oak Forest Hospital.

Cook County Board PresidentToni Preckwinkle had proposedshutting down the underutilized

public hospital and consolidatingservices at Stroger Hospital, whichhas excess capacity, for a savingsof around $40 million. The county,which encompasses Chicago andits suburbs, planned to turn thefacility into an outpatient clinicand hasn’t budgeted anyoperational funds for emergency orinpatient care past June 1. OakForest has 213 beds, of which only31 inpatient beds were occupied inearly May.

The state certicate of need panelrejected the county’s proposal by a4-1 vote. The one “no” vote wassuf cient to derail the county’s plans.

The panel has nine seats, of whichthree are vacant because Gov. PatQuinn has not appointed newmembers. One of the six incumbentsdidn’t show up for the meeting. Thepanel’s rules require a majority of vevotes to take action. Because it didn’tattain that threshold, the measurefailed.

Public employee unions andhealthcare workers had opposed theclosure, and celebrated their victoryby shouting, “Vote Preckwinkle out!”

between Medicaid and exchange plans. Thenthere'll be a high degree of crow-out as a resultof Medicaid expansion and the new state

exchanges. For example, exchange plans mustcontract with "Essential CommunityProviders." (They are) to be dened by CMS, butlikely the community health centers, DSHhospitals, children's hospitals that arecommonly in Medicaid but not oftencommercial networks.Douglas Sherlock:Medicaid plans seem to have two advantages inan exchange. They have practice serving theindividual market and, since people drift on andoff Medicaid rolls, they may develop arelationship with the member that transcendsthe benet plan sponsor.

Anthony Wright:Medicaid is a counter-cyclical program,meaning there's the greatest demand at exactlythe recessionary times when state revenues aredown and states are looking to cut. States havebalanced budget requirements that make it hardto manage a counter-cyclical program. Thefederal government has the ability to decit-spend in recession, as both a safety-net and aneconomic driver. It's a good thing that the ACAshifts more of the nancing responsibility to thefederal government (90%-100% of the cost of newly eligibles), and that's a better direction togo in. We think Medicaid managed care plans

could be viable and important options in theexchange. We have county-run Medicaidmanaged care plans in California, which have apretty good track record in terms of cost andquality...I agree with Doug that many of thefolks in the exchange (just above the povertylevel)are those who may have had a relationshipwith Medicaid managed care plans. And havingthose plans in the exchange allows for thepotential of seamless, continuous coverage andbetter continuity of care.Moderator:California is in the midst of moving its aged anddisabled populations into managed care. This is

expected in some ways to reduce costs, but it isalso putting a cost burden on these particularplans. Do other states have a better template?Douglas Sherlock:Yes, the counter-cyclical piece is signicant.Even with the federal match, states still havehuge incentives to control costs--and they do,sometimes in counter-productive ways, like withlow provider rates. I have heard good thingsabout the PACE like programs which areperhaps analogous. One plan had a socialworker for ever 25 nursing home eligible and

pretty much kept their nursing home use to50% of the norms.Kip Piper:

Ultimately, the dual eligible market is 8million people and nearly a third of trilliondollars in Medicaid and Medicaid spendingThe advantages of continuity are huge. Bothimprove care and frankly to reduceadministrative costs.Anthony Wright:The shift in California of seniors and peoplewith disabilities to managed care reallydepends on its implementation, and we arewatching it carefully. If done right, it wouldgreat to have better coordinated care forseniors and people with disabilities, whotypically have several providers, specialists

etc. On ip side, it could simply serve asanother barrier to care, especially if the plaare not ready to take care of this vulnerablepopulation with special needs.Moderator:One nal question: Where do you envisionthe Medicaid program a decade from now?an ideal world, how would you see itfunction? Would it cover more or fewerpeople than it does currently?Anthony Wright:I would hope that Medicaid continues itsevolution from a welfare-linked program tokey pillar of the health system in its own rig

If Medicaid can survive the budgetary andpolitical onslaught of the next few year (it islashed, or the provider network doesn'timplode), there's a light at the end of thetunnel with the ACA.Kip Piper:One of our greatest strengths is using the stas laboratories of reform. But we are in themiddle of a grand political debate, with twovery different visions of role of government heathcare and role of federal government aStates. That may or may not be settled in the2012 election.Douglas Sherlock:

We are paying now, and will be paying in tfuture, for the unwillingness to properlyaccount for expenses, and to make thataccounting as transparent as possible.Accounting is the handmaiden of gooddecision-making. The present value of theunfunded Medicare liability is at least $30trillion. Monopolies of any sort are bad forconsumers. They always drive up costs andlead to declines in quality. If ACA successfufragments healthcare delivery and nancingwill be a good thing.

Roundtable (Continued from Page Two)



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There’s a new PSA test in healthcare. Hopefully

it will prove more reliable than that other one.In conjunction with the unveiling of the long-

awaited accountable care organizationregulation by the Department of Health andHuman Services, the Federal Trade Commission and Department of Justice issued a Joint PolicyStatement setting forth their standards forconducting an expedited (90-day) antitrustreview of applicants for ACO certication.! Theagencies explained that they will evaluateapplicants’ market power based on the ACO’sshare of services in each participant’s PrimaryService Area (PSA) dened as the“lowest number of contiguous postal

zip codes” from which the hospital orphysician draws at least 75% of itspatients for its services. The statementsummarized the antitrust implicationsof ACOs formed by hospitals orphysician groups with large marketshares:

ACOs with high PSA shares may posea higher risk of being anticompetitiveand also may reduce quality, innovation,and choice for both Medicare and commercial patients. High PSA sharesmay reduce the ability of competing ACOs to form, and could allow an ACO to raise

prices charged to commercial health plansabove competitive levels.

The antitrust enforcers were properlyconcerned with the risk that ACOs couldbecome a vehicle for increasing or entrenchingprovider market power.! Studies by academics,health policy experts and state governmentshave documented the impact of providerconcen-tration on insurance premiums.Moreover, a post-reform merger wave may haveincreased the number of hospital and specialtyphysician markets, and many areas are alreadyserved by dominant local providers.! Inasmuchas the success of the ACO concept depends on

its ability to spur delivery system change, theintransigence of monopolistic providerspresents an important issue. It is heartening thatthe extended (and controversial) regulationdrafting process produced a result that willconstrain the growth and exercise of marketpower.

Notably, the policy statement also removedsome uncertainty that may have existed as tothe application of prior antitrust enforcementactions and advisory opinions in the ACO

context. !For example, the statement should

provide some comfort to those organizingphysician networks: ACOs that clear the CMSreview of their integration efforts will almostcertainly be regarded by the FTC and DOJ as“clinically integrated” and hence not subject the strict “per se” legal standard.

Market power, however, remains a majorsticking point in evaluating ACOs. Antitrustacionados may question whether the PSAapproach in the policy statement accuratelyindenties markets or measures the marketpower of providers. As the FTC and DOJ

themselves have found, zip code dagives a highly imperfect measure of

healthcare markets. Moreover, thereare signicant problems in obtaininthe necessary data regarding the totvolume of services in the providers’markets, particularly their servicesprovided to commercial insurers anemployers.! However, it appears thathe agencies will use this measure arough and ready starting point to

identify potentially problematic ACOs athose that raise no competitive problem

An important and heartening aspect othe policy statement is the agencies’

insistence that applicants with large market

shares come forward with justications andproduce data and documents that would assucompetitive concerns. !This should help expethe process. (Though, if past practice withmergers is a guide, the 90-day clock will not srunning until the ACO completes its productioof all required information). The agencies makclear that they will solicit the views of payersand employers before making theirdetermination. Finally the CMS ACO regulatiomakes it clear that high-PSA ACOs will not beapproved unless the FTC or DOJ provides aclearance letter.

Not unlike the inexact science of medical

diagnosis, the antitrust agencies are making dwith the tools they have.

How Much Market Power For ACOs?Regulators Want a Balance For Healthy Competition

Op-ed submissions of up to 600 words are

welcomed. Please e-mail proposals to

[email protected], or call (877

248-2360, ext. 3.

Thomas Greaney teaches healthcare antitrust

law at St. Louis University.

By

Thomas

Greaney



Payers & Providers MARKETPLACE/EMPLOYMENT

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Physician licensed by the State of California, with board certication in primary care or medical subspecialty.Have ve (5) years of Medical Director experience in a managed care setting, such as a HMO or IPA/Medical Group.Medical oversight and physician liaison in the areas of: Utilization review, credentialing, quality improvement, peer review, casemanagement, and disease management.

Works under the direction of the CMO to ensure the delivery of high quality and ef cient care for all members. Provide AdministrativeManagement of patient care with specic responsibility to provide direction and assistance in achieving optimal medical performancein an ef cient manner. To participate and lead in the review of all inpatient admissions. Direct and review all inpatient utilizationactivity at hospitals by interfacing with the clinicians and UR nurses. Oversee the review process of prior authorization (medical andpharmacy) requests in a timely manner. All denials must be individually reviewed and signed by the Medical Director or physicianreviewer.

HEALTH PLAN MEDICAL DIRECTOR (Phoenix)Leads efforts to guide and support the provision of medical care to members by developing, implementing and interpreting medicalpolicies and procedures. Provides medical guidance and interpretation for UM issues including prior authorization, concurrentreview, claims review, discharge planning..

Provides medical guidance and interpretation for QM department issues including quality of care issues, credentialing and grievanceand appeals process. Ensures sound company operations by identifying short-term and long-range issues to be addressed; providing

information and medical recommendations pertinent to deliberations; presenting options and recommending courses of action,especially where medical and legal considerations are involved. Ensures provider network meets strategic goals. Acts as liaison withprovider groups for all medical practice matters. Complies with Federal, State and local legal requirements by studying existing andnew legislation; anticipating future legislation, and enforcing adherence to State and Federal regulatory requirements. Maintains thestability and reputation of the company by complying with accreditation requirements.

Acts as the clinical representative for the State (AHCCCS) and Federal (CMS) regulators.. Degree in Medicine (MD or DO).Licensed physician able to practice medicine in the state of Arizona. Demonstrated competency as a practicing physician. Priorexperience in utilization and quality management, preferably at the managed care level. Advanced Business degree preferred.Previous management experience . Excellent verbal and written communication skills.

HEALTH PLAN MEDICAL DIRECTOR (Fort Lauderdale)The Medical Director is responsible for the appropriateness and quality of medical care delivered to members The Medical Directorshall develop processes for medical reviews for coverage determinations for medical services and participate in the grievance andappeals process. The Medical Director shall provide guidance to health plan quality improvement, utilization management, as well ascontinuous measuring, monitoring and improvement of the health delivery system for plan members. The Medical Director shall co-chair the Florida Quality Management Committee and be a clinical member of all committees that report into the Managed CareExecutive Committee and all other committees that report Board of Directors. Professionally represent Florida managed care ininternal and external correspondence including governmental representatives, healthcare providers, community leaders and others.Medical Degree either MD or DO. Preferred Masters in Public Health (MPH) and/or Masters in Business Administration (MBA) and/orMasters in Health Administration (MHA). Board Certied in Primary Area of Medicine, Family Practice, Internal Medicine, PediatricsMinimum of 5 years clinical medical experience post residency training. Minimum of three years experience in a managed careenvironment. Practicing physician interested in transitioning to managed care position.

Please Contact:Executive Search & Placement

Sonia Varian at 818.707.7118, or [email protected]


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Payers & Providers National Edition May 2011

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