Slide 1

Prospective Offerors Conference Arizona Health Care Cost Containment System February 11, 2008

Slide 2

Contracting Process Michael Veit Contracts Administrator Division of Business and Finance February 11, 2008

Slide 3

Contracting Process Purpose Materials Timetable Submission deadline March 28, 2008, 3:00 PM Website navigation Questions/Answers February 11, 2008

Slide 4

Contracts To Be Awarded February 11, 2008 GSA #County or CountiesNumber of Awards 2Yuma, La PazMaximum of 2 4Apache, Coconino, Mohave and NavajoMaximum of 2 6YavapaiMaximum of 2 8Gila, PinalMaximum of 2 10Pima, Santa Cruz* *2 of the 5 successful bidders will be awarded Santa Cruz Maximum of 5 12MaricopaMaximum of 6 14Graham, Greenlee, CochiseMaximum of 2

Slide 5

RFP Milestone Dates February 11, 2008 ACTIVITYDATE RFP IssuedFebruary 1, 2008 Prospective Offerors Conference and Technical Assistance Session February 11, 2008 - AM Information Technology (IT) PMMIS Technical Interface Meeting February 11, 2008 - PM Technical Assistance and RFP Questions DueFebruary 15, 2008 RFP Amendment and Formal Response to Questions on or about February 29, 2008 Second Set of Technical Assistance and RFP Questions Due March 7, 2008 Second RFP Amendment Issued and Formal Response to Second Set of Questions on or about March 14, 2008 Proposals Due by 3:00 P.M.March 28, 2008 Contracts Awarded on or aboutMay 1, 2008 Readiness Reviews BeginJuly 1, 2008 New Contracts EffectiveOctober 1, 2008

Slide 6

Response Specifications Original plus seven copies Three copies of Network Development Disk/CD Sturdy 3-ring, 3-inch binders All pages numbered sequentially February 11, 2008

Slide 7

Specifications (cont.) 3 pages maximum per submission requirement unless otherwise specified in the submission 8 by 11 inch paper 1 side of paper = 1 page Single spaced, typewritten in at least 11 point font Borders no less than inch February 11, 2008

Slide 8

Scoring Capitation and Network Development scored by Geographic Service Area Network Management, Program and Organization will receive a statewide score February 11, 2008

Slide 9

AHCCCS Strategic Vision Anthony Rodgers Director Arizona Health Care Cost Containment System February 11, 2008

Slide 10

ManagedCareManagedCare 1980s-1990s Prepaid healthcare Prepaid healthcare More comprehensive benefits More choice and coverage Contracted Network Contracted Network Focus on cost control Focus on cost control and preventive care Gatekeeper Utilization management Medical Management Integrated Health2000+ Patient Care CenteredPatient Care Centered Personalized Health Care Productive and informed interactions between Patient and Provider Cost and Quality Transparency Accessible/Affordable Choices Aligned Incentives for wellness Multiple integrated network and community resourcesMultiple integrated network and community resources Aligned cost management processesAligned cost management processes Rapid deployment of new knowledge and best practices in quality careRapid deployment of new knowledge and best practices in quality care Patient and provider interactionPatient and provider interaction Information focus Aligned care management E-health capable Fee For Service Fee For Service Inpatient focus O/P clinic care Low Reimbursement Poor Access and Quality Little oversight No organized networks No organized networks Focus on paying claims Focus on paying claims Little Medical Management Little Medical Management Fee for Service 1960s-1970s Managing Health System Transformation in Arizona February 11, 2008

Slide 11

2008 Strategic Issues Strategic Issue #1Health Care Costs Strategic Issue #2Health Care Quality Strategic Issue #3The Uninsured Strategic Issue #4Organizational Capacity The Agencys FiveYear Strategic Plan serves as a framework for ongoing planning, prioritizing and budgeting. AHCCCS is addressing four strategic issues: February 11, 2008

Slide 12

STRATEGIC ISSUE #1: HEALTH CARE COSTS overall national health care expenditures are expected to grow at an average rate of 7.3% per year through 2012. Centers for Medicare and Medicaid Goal: Maintain annual capitation rate increases at or below 6% (per member per month). February 11, 2008

Slide 13

Note: Projected General Fund revenues are based on a ten-year average of annual increases February 11, 2008

Slide 14

AHCCCS Strategies for Controlling Costs Continue efforts toward more equitable and manageable provider rate structures and payment methodology Maintain membership management practices that ensure members are enrolled in the most appropriate AHCCCS programs Maximize use of non-state funding sources (e.g. Grants) Use Executive Utilization Management reports for ongoing health plan comparison and benchmarking Continue to explore cost-effective purchasing options for key Medicaid services February 11, 2008

Slide 15

STRATEGIC ISSUE #2: HEALTH CARE QUALITY AND ACCESS TO CARE Quality driven health care results in fewer medical complications, better outcomes, and lower costs Goal: Ensure AHCCCS members have the right care, in the right place, at the right time, every time. February 11, 2008

Slide 16

AHCCCS Strategies for Improving Quality and Access to Care Improve incentives to promote health plan quality outcomes Promote evidence based treatment guidelines and best practices Conduct satisfaction surveys of members Developing a web-based information exchange that allows providers access to diagnosis, treatment, and other information that supports care coordination Improve members understanding of how to access needed medical care Promoting cultural competence throughout the healthcare delivery system Evaluate the networks of contracted health plans to determine their adequacy in meeting the needs of members February 11, 2008

Slide 17

AHCCCS Expectations and Budget Reality Health plans are partners in delivery of care to Medicaid members; members that require special attention The agency expects health plans to be sophisticated enough to show how they self monitor and can self improve their operations; particularly those that support quality operational fundamentals, such as: Timely and accurate claims payment User friendly prior authorization system Responsiveness to providers and members Plans have to be able to achieve and document higher clinical performance measures, i.e. National HEDIS Measures Comparisons Due to size of program at federal and state level, Medicaid is seen as a budget buster and the target of cost cutting strategies Either we control spending and improve outcome using our methods and approaches, or they will do it for us and chances are We wont like it!! February 11, 2008

Slide 18

AHCCCS Overview Tom Betlach Deputy Director February 11, 2008

Slide 19

Introduction to AHCCCS AHCCCS Administration Product Lines - Acute Care (Medicaid & KidsCare) - Long Term Care - Healthcare Group Acute Health Plans LTC Program Contractors State Agencies DHS Behavioral Health & CRS DES Eligibility Fee-For-Service Native Americans Non-Qualified Persons Policy Eligibility (Special Populations) Monitor Care and Financial Viability Information Services Budget and Claims Processing Legal Intergovernmental Relations Contract for Care Funding Federal State County Private Premiums Grants February 11, 2008

Slide 20

AHCCCS Organizational Structure Division of Health Care Management (DHCM) Division of Fee For Service Management (DFSM) Office of Intergovern- mental Relations (OIR) Division of Member Services (DMS) Division of Business and Finance (DBF) Information Service Division (ISD) Office of the Director (OOD) Office of Administrative Legal Services (OALS) February 11, 2008

Slide 21

Coverage Events in AHCCCS History 1982 - AHCCCS Acute Care Program 1988 - SOBRA pregnant women and children under 6 - ALTCS DD 1989 - ALTCS EPD 1993 - HealthCare Group expanded 1998 - KidsCare begins 2001 - Arizona Proposition 204 implemented 2003 - KidsCare Parents February 11, 2008

Slide 22

100% Federal Poverty Level (2008) February 11, 2008

Slide 23

Eligibility Levels If the HIFA parent program ends on 6/30/08, adults with income above Medicaid eligibility levels will lose coverage for a federally funded AHCCCS acute care program. While these adults would become eligible for Medical Expense Deduction (MED) when their spend-down reached 40% FPL, the state would have a lower federal match rate. Note This chart excludes income levels for optional programs like Freedom to Work and Breast and Cervical Cancer. KidsCare/HIFA Parents Medicaid Proposition 204 Expansion 200%

Slide 24

Percentage of Arizonans on AHCCCS February 11, 2008

Slide 25

Who Does AHCCCS Serve?* * January 2008 * January 2008

Slide 26

Geographic Service Areas Acute Enrollment As of February 1, 2008 Total Health Plan Enrollment = 878,317 71,248 27,860 46,400 497,828 164,250 40,431 30,300 Health Plan Enrollment GSA Number 4 6 2 12 10 8 14 COCONINO (4) 15,903 NAVAJO (4) 13,430 APACHE (4) 4,670 MOHAVE (4) 37,245 LA PAZ (2) 3,013 YUMA (2) 43,387 MARICOPA (12) 497,828 PINAL (8) 32,453 GRAHAM (14) 6,153 GILA (8) 7,978 PIMA (10) 151,331 COCHISE (14) 23,233 YAVAPAI (6) 27,860 GREENLEE SANTA CRUZ (10) 12,919 GREENLEE (14) 914 February 11, 2008

Slide 27

Health Plan Enrollment Members select a plan prior to being made eligible Members assigned to a plan on date of eligibility determination Plans notified one day after assignment Members retroactively eligible to first of month of application- prior period coverage (PPC) Plans responsible for retroactive eligibility period February 11, 2008

Slide 28

Source of Enrollment Members with Choice Only 6 months ending 12/31/07 Out of 351,715 members February 11, 2008

Slide 29

Members Exercising Choice Percent by Risk Group (6 months ending 12/31/07) February 11, 2008

Slide 30

AHCCCS Member Churn On average every month the new membership consists of 22% with no prior enrollment in the AHCCCS program 56% re-enrolling in 6 months or less 8% re-enrolling in 7 to 12 months 14% re-enrolling after 1 year February 11, 2008

Slide 31

Source: AHCCCS Eligibility & Enrollment Reports (excludes SLMBs, QI-1s, and HealthCare Group). Total Enrollment January 2000 -2008 February 11, 2008

Slide 32

AHCCCS Total Funds FY 01-FY 08 February 11, 2008

Slide 33

AHCCCS Funding Sources February 11, 2008

Slide 34

AHCCCS Service Distribution February 11, 2008

Slide 35

AHCCCS and CMS Arizona has been operating under an 1115 Demonstration Waiver for the past 25 years Arizona is in the second year of the current 1115 Waiver which currently expires on September 30, 2011 Waiver requires State to Operate a Budget Neutral Demonstration for the entire program $40 billion over 5 years 1115 Waiver from CMS provides flexibility Authority to mandate managed care for all populations (exceptions are Native Americans and FES) Waiver from Administrative requirements like Drug Rebate program and UPL Ability to have greater flexibility with Long Term Care February 11, 2008

Slide 36

AHCCCS and the State Budget Process State Budget Process Voter Protection State Revenue Sources and Trends Funding by Agencies and Growth FY 2008 and FY 2009 Challenges February 11, 2008

Slide 37

State Budget Process July - Sept AHCCCS Develops State Budget Submittal Sept Dec Governors Office and Legislature develop Budget Recommendations Jan June Legislature and Governor work on Budget Development July June AHCCCS works on Implementation of Budget Issues February 11, 2008

Slide 38

Proposition 204 Funding (FY 2002 FY 2007) Dollars in Thousands Members: 18,900 180,200 (6-Year Avg.) NOTE: Pre-Prop 204 MNMI costs were grown by maintaining constant population and a 6% medical inflation factor.

Slide 39

General Fund Base Revenue Growth Rate Compared to AHCCCS Population Growth February 11, 2008

Slide 40

AHCCCS Compared to Other Agencies February 11, 2008

Slide 41

AHCCCS Finance and Rate Development Shelli Silver, Assistant Director, Finance and Rate Development Kathy Rodham, Finance Manager Division of Health Care Management February 11, 2008

Slide 42

Compensation - Overview Capitation Prospective Prior Period Coverage Premium Tax Supplemental Payments Delivery Reinsurance (self-funded) Reconciliations PPC SSDI-TMC Compensation policies detailed in ACOM February 11, 2008

Slide 43

Capitation New Risk Adjustment Prospective risk adjustment based on demographic data, member diagnosis and pharmacy data National Model Expect to apply to CYE 09 cap rates effective on or after April 1, 2009 (using phase-in provision) State-Only Transplants (Options 1 & 2) Different benefit package for each Option Administrative cap rate only February 11, 2008

Slide 44

Supplemental Payments New Eliminated: Hospital Supplemental Payment rolled into cap rates majority in PPC HIV/AIDS Supplement Payment rolled into Prospective cap rates February 11, 2008

Slide 45

Reinsurance - New Inpatient Eliminated unique TWG threshold All thresholds will be raised $5,000 annually Same-day admit/discharge claims excluded Catastrophic Contractor is responsible for coverage of biotech drugs except when used by a CRS member (with certain conditions) Only drugs covered under Reinsurance Transplants Invoices/Claims and encounters required for payment State-Only Transplants (Options 1 & 2) Reinsurance coverage paid 100% (with limitations and SOC) February 11, 2008

Slide 46

Reconciliations New Eliminated TWG reconciliation PPC reconciliation Based on date of service (formerly date of payment) TWG PPC expenditures rolled into PPC recon SSDI-TMC reconciled to 2%, based on date of service, utilizing encounters February 11, 2008

Slide 47

Auto Assignment Algorithm - New Unique formula will be used prior to start of CYE 09 if there are any Exiting Contractors Conversion Group: Conversion Auto-Assignment Unique formula may be used for part of CYE 09 Post Conversion Group: Enhanced Auto-Assignment Following application of above, formula for 1 st year based on: Awarded capitation rate (50%) Program component score (50%) Formula for subsequent years based on: Awarded capitation rate (50%) Clinical performance measure results February 11, 2008

Slide 48

Conversion Auto Assignment Members enrolled in any Exiting Contractor make up the Conversion Group (CG) CG members will be auto-assigned only to new & small Contractors: New: new to the Acute Program or new to the GSA Small: based on enrollment as of May 1, 2008 February 11, 2008

Slide 49

Conversion Auto Assignment (cont.) Enough CG members to bring new & small Contractors to thresholds? If yes, then once all at threshold, Conversion AA ends and 1 st yr AA model implemented for rest of CG If no, bring all new & small Contractors as equal as possible, and implement Enhanced AA effective October 1, 2008, for at least 3 months In Rural GSA, as equal as possible for new and/or small CG members provided two opportunities to choose a different Contractor after notification of conversion auto-assignment no limitations on choice February 11, 2008

Slide 50

Enhanced Auto Assignment New/Continuing Contractors still below the thresholds on September 1, 2008 will receive members under the enhanced auto-assign algorithm beginning October 1, 2008 Enhanced Algorithm for minimum three months, maximum six months Contractors not qualifying for enhanced algorithm will not receive auto-assigned members during the three to six month period After enhanced algorithm period ends, algorithm will be based on 50/50 awarded capitation rate and program component score all Contractors included February 11, 2008

Slide 51

Financial Oversight AHCCCS monitors Contractors financial performance to ensure their ability to perform the contract and serve AHCCCS members. Quarterly financial statements Annual financial audits Financial viability ratios Operational and Financial Reviews Approval authority on equity distributions Performance Bond monitoring monthly Approval authority on provider and affiliate advances and recoupments (in limited circumstances) February 11, 2008

Slide 52

Data Supplement Description of each Section in Bidders Library Public data in Bidders Library Data containing PHI, and large files, available only on CD See Data Supplement, Section B for descriptions of recent and future program changes and how those changes should be considered when reviewing historical data February 11, 2008

Slide 53

Capitation Rate Submission Web-based tool Need User ID and password In case of conflict between required hard copy and web-based tool submission, hard copy prevails Must fax attestation see Section A of Data Supplement Bid rates for all risk groups, for all GSAs desired, except the following that will be set by AHCCCS: Prior Period Coverage (PPC) Delivery Supplement SOBRA Family Planning SSDI-TMC State Only Transplants Reinsurance Offsets set at $20,000 threshold February 11, 2008

Slide 54

AHCCCS Policy, Operations and Contractor Oversight Kate Aurelius Assistant Director Division of Health Care Management February 11, 2008

Slide 55

AHCCCS Partnership Strategy The Success of Arizonas Medicaid Program is dependent on the success of our Contractorstherefore, partnership is vital. Set clear and reasonable expectations for Contractor performance Respect for each other Understanding each others challenges Feedback/Listening Ongoing communication Mutual accountability Flexibility Striving for a long-term relationship February 11, 2008

Slide 56

Operational Expectations of Contractors Contractor Performance is Managed Self-monitor operations and clinical performance, using multiple data points (data driven) Develop and implement interventions designed to improve operational or clinical performance Evaluate effectiveness of interventions and adjust as necessary to achieve excellence Contractor must staff to meet AHCCCS performance expectations Contractor is a partner in the AHCCCS program Recognize that members and providers are valued partners in the AHCCCS program Administrative subcontractors must be managed Eliminate inefficient/burdensome Contractor policies/processes Sharing of best practices February 11, 2008

Slide 57

Contractor Oversight - Ongoing AHCCCS monitors Contractors performance to ensure Contractor is able to perform under the contract via: On-site Operational and Financial Review (OFR) Deliverable review Clinical performance measures Quality improvement projects Provider network monitoring Claims payment timeliness and accuracy Grievance and appeal monitoring February 11, 2008

Slide 58

Contractor Oversight - Focused Conducted by DHCM due to: Non-compliance with any contract requirements Litigation or settlement agreement Stakeholder complaints New program requirements Changes in ownership, new Contractor, new GSA, new management February 11, 2008

Slide 59

Policy Changes Including but not limited to: AHCCCS Contractor Operations Manual: Member Information Policy Provider Network Information Policy Network Development and Management Plan Policy Appointment Availability and Reporting Policy Recoupment Policy Provider and Affiliate Advances Policy AHCCCS Medical Policy Manual Chapter 400 Chapter 900 Chapter 1000 February 11, 2008

Slide 60

Operations - Overview Medical Management Utilization data analysis and intervention Utilization management tools (PA, concurrent/retrospective review, chronic illness management, case/care coordination) Quality Management Tracking, trending, intervening as necessary Clinical performance measures Performance improvement projects Credentialing and Peer Review February 11, 2008

Slide 61

Operations - Overview EPSDT/MCH Ensure receipt of EPSDT services including physical, oral, developmental, and behavioral health Ensure receipt of maternal and postpartum care Educate members on the availability of family planning services Promote preventive health strategies for all age groups Behavioral Health Educate members on how to access behavioral health services Coordinate care for members in the behavioral health system Cover some behavioral health services via PCP network February 11, 2008

Slide 62

Operations - Overview Provider Network Development and Management Network development considers membership Network designed to be accessible and avoid unnecessary ED use Network design considers geography and physician referral patterns Network management strategies are provider friendly and multi-pronged On going improvement and resolution of service gaps February 11, 2008

Slide 63

Medical Management - New Contractor required to review and provide rationale for prior authorization requirements Reliable transportation for members with chronic health issues Processes to actively reduce the no-show rate Medical Home February 11, 2008

Slide 64

Quality Management - New New performance measures and new minimum performance standards Limited adoption of HEDIS hybrid methodology Potential for sanctions for failure to meet minimum performance standards Rapid cycle improvement for PMs and PIPs Value-based purchasing/pay-for-performance Formal training for all staff on quality of care identification and referral Community involvement Challenging member assistance February 11, 2008

Slide 65

EPSDT/MCH - New Payment of AzEIP providers for covered services Developmental assessments Community involvement expectations Coordination of care needs for Family Planning Extension participants Increased coordination with other systems of care such as CRS, RBHA, AzEIP February 11, 2008

Slide 66

Behavioral Health - New Coordination of AzSH discharges, including coverage of same pharmacy and supplies Ensuring acute-care needs covered in behavioral health placements Workgroup participation and quarterly meetings Identification, sharing and training PCP network regarding behavioral health practice guidelines and best practices February 11, 2008

Slide 67

Network New Non Emergency Department after hours (including weekends) physician coverage required Requirement to contract with GME programs, restrictions on moving members if contract terminates Requirement to direct members to GME programs Requirement to contract with physicians relocating to the state if serving medically underserved area and physician can be credentialed Provider communication via multiple methodologies February 11, 2008

Slide 68

Claims, Encounters, Technology Lori Petre Data Analysis and Research Manager Division of Health Care Management February 11, 2008

Slide 69

What Is An Encounter? A record of a medically related service rendered by a registered AHCCCS provider to an AHCCCS member enrolled with a capitated contractor (MCO), which has been adjudicated by the MCO. Submitted electronically by MCO to AHCCCS Includes capitated services and fee-for-service payments February 11, 2008

Slide 70

Encounter Data Uses MCO capitation/fee-for-service rate setting Reconciliations Reinsurance calculation and payment HEDIS reporting and clinical performance measurements Identification of centers of excellence Supplemental payments to hospitals Medical record audits CMS reports Fraud and abuse analysis & reporting General information management Decision support and what-if analysis February 11, 2008

Slide 71

Encounter Submission Standards Encounter files must be submitted to the AHCCCS server in appropriate HIPAA compliant formats and include HIPAA compliant data such as National Provider Identifiers (NPI) Each Encounter file must pass validation including assessment of appropriate file structures, validity of code sets, and financial balancing Each file must contain a required BBA related data attestation Each file undergoes translation and syntax checks February 11, 2008

Slide 72

Encounter Processing Encounter cycles run twice monthly: One full cycle One limited cycle Contractors can submit encounters for processing for one or both cycles Processing includes claims-type edits Results are produced and communicated to the MCOs after each cycle Detailed Information on encounter processing can be found in the Encounter Reporting User Guide and in the Encounter Keys newsletter published regularly on the AHCCCS Website February 11, 2008

Slide 73

Encounter Data Validation CMS requires that AHCCCS collect complete, accurate and timely encounter data from MCOs AHCCCS data validation studies evaluate the completeness, accuracy and timeliness of collected encounter data AHCCCS also conducts ongoing review of encounter submission trends and data quality February 11, 2008

Slide 74

Technological Advancement Contractor must have the ability to conduct the following functions electronically: Provide enrollment verification (HIPAA 270/271) Allow claims inquiry and response (HIPAA 276/277) Accept HIPAA compliant electronic claims (HIPAA 837) Make claim payment via electronic funds transfer Accept prior authorization requests (HIPAA 278), no later than October 1, 2009 Participate in AHCCCS E-Health initiatives, including E-prescribing February 11, 2008

Slide 75

Technological Advancement Contractor must have a website with links to the following: Formulary Provider Manual Member Handbook Provider listing When available, Member and Provider Survey Results Performance Measure Results Prior Authorization criteria Evidence Based Medicine Guidelines Other links as identified in the ACOM Member Information and Provider Information Policies February 11, 2008

Slide 76

Claims and Encounters - New Claims processing systems are expected to include specific clinical and data related editing Must participate in a workgroup to develop uniform guidelines for standardizing outpatient claims requirements for hospitals and professional providers Must subject Claims Payment/Health Information System to required independent audit, to be completed within two years of the initiation of the contract, or by September 30, 2010 Must develop and implement internal claims audit functions Must conduct a self-assessment related to hospital claims documentation requirements New Staffing: Claims Educator February 11, 2008