rate setting for capitated medicaid managed long term supports
TRANSCRIPT
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Rate Setting for Capitated Medicaid Managged Longg Term
Supports and Services (MLTSS) January 9 2013January 9, 2013
Maria Dominiak, FSA, MAAA
The Integrated Care Resource Center is a joint technical assistance initiative of the Centers for Medicare & Medicaid Services’ Medicare-Medicaid Coordination Office and the Center for Medicaid and CHIP Services. Technical assistance is coordinated by Mathematica Policy Research and the Center for Health Care Strategies.
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Rate Setting Methodology OverviewRate Setting Methodology Overview
` Rate Setting Objectives
` Basic MLTSS Rate Setting Approach ` Rate Structure
◦ Financing strategies ◦ Financing strategies ◦ Risk adjustment
` Risk Mitigation Strategies ◦ Risk sharing ◦ Risk pools ◦ Reinsurance
` Pay for Performance/Quality Incentives
` State Examples
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Rate Setting Objectives
` Develop a rate structure that: ◦ Matches payment to the risk of the enrolled population ◦ Meets CMS requirements per 42 CFR 438.6(c) and
actuarial rate setting checklistactuarial rate setting checklist ◦ Promotes policy goals of MLTSS program ◦ Can be administered and operationalized
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t t t t
Rate Setting Objectives Rate Setting Objectives
` CMS Medicaid actuarial soundness requirements
◦ C iCapitatiion rates have bbeen ddevelloped in accorddance withh d i i h generally accepted actuarial principles and practices ◦ Rates are approppriate for the poppulations to be covered pp p
and the services to be furnished under the contract ◦ Rates are developed by actuaries that meet the
qualifications standards established by the American qualifications standards established by the American Academy of Actuaries (AAA) ◦ Rates follow the practice standards established by the
A t i l St d d B d (ASB) Actuarial Standards Board (ASB)
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Basic Rate Setting Approach – O iOverview
Base data and adjustments
Program and policy changes Trend Delivery system
differences
Administration and care
management
Final capitation rates management
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Base Data Base Data ` Detailed claims and eligibility data
` Medicaid-covered services only
` Includes only those services covered by the
capitation rate ` Reflects only those populations eligible to enroll in
the MLTSS programthe MLTSS program
` Modeled to reflect MLTSS payment structure
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Base Data - SourcesBase Data Sources ` Fee-For-Service (FFS) Experience ◦ Best for new MLTSS programs and smaller, voluntary
MLTSS programs ◦ Generally complete comprehensive and high quality ◦ Generally complete, comprehensive and high quality ◦ May not reflect risk of managed care population if MLTSS
program is voluntary
` Encounter Data From Health Plans
◦ Best for more mature and larger MLTSS programs
◦◦ Data quality and completeness vary by health plan Data quality and completeness vary by health plan
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et oact e e b t
Base Data - AdjustmentsBase Data Adjustments
` Completion factors ◦ Lags in provider claim submission ◦ Missing encounter data
` Costs outside of the MMIS system ◦ Pharmacyy rebates ◦ Disproportionate Share Hospital (DSH)/Graduate Medical
Education (GME) payments ` Retroactive eliggibilityy ` Third party liability ` Member cost sharing and patient liability ` Eff t f l t l ti if ll t i Effects of voluntary selection if enrollment is nott
mandatory
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Program and Policy Changes Program and Policy Changes ` Generally reflect one-time changes outside of normal
trendtrend ◦ State fee schedule adjustments◦ Benefit changes◦ Eligibility changesEligibility changes ◦ Federal mandates ◦ State legislative actions
` Historical changges
◦ Differences in benefits, eligibility or fee schedule between the base data and the contract period
` Prospective changes◦ Changes in the program that were not captured in the base
data but will be implemented prior to or during the contract period
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t tt t
`
t t t t t
`
Trend Trend ` Estimates change in service cost over time due to
diff differences iin practiice patterns, techhnollogy, utilization, inflation and cost shifting
` Used to project costs from the base period to the Used to project costs from the base period to the contract period
` Applied to Utilization and Unit Cost separately or
to totall per membber per month (PMPM) costsh (PMPM) ` Generally varies by major category of service ` Excludes changes in program/policy or managedExcludes changes in program/policy or managed
care efficiency adjustments, which are applied separately
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Delivery System Differences Delivery System Differences ` Reflects expected changes in service delivery for the
projected MLTSS program compared to the base data period ◦ Change in mix of Home and Community Based Services
(HCBS) and Nursing Facility (NF) users (HCBS) and Nursing Facility (NF) users ◦ More effective use of personal care/home health services ◦ Reductions in unnecessary hospitalizations and readmissions ◦◦ Reductions in unnecessary emergency room visits Reductions in unnecessary emergency room visits ◦ Increased access to HCBS services
` Adjustments vary depending on whether data source is FFS or Encounter data ◦ Encounter data reflect managed care effects
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Administration and Care MManagement ` Assumed costs/savings should be reasonable,
i t d tt i bl
appropriate and attainable ` Use a flat percentage across all rate categories or
make assumpptions about fixed and variable costs ` Other considerations include: ◦ Start up costs ◦ Care management costsCare management costs ◦ Risk/contingency margin ◦ Profit margin ◦ Investment incomeInvestment income ◦ Premium tax ◦ Other assessments
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of care and
Rate Structure Rate Structure
` Should provide for variations in cost/risk of the popul ti lation covered b d by the managedd care plansth
l ◦ Improves predictability of risk ◦ Reduces opportunities for gaming and adverse selection
` Required to be actuarially sound ` Should generally reflect variations by ◦ AgeAge ◦ Gender ◦ Geography ◦ Medicare statusMedicare status ◦ Diagnosis ◦ Degree of frailty (Nursing Home Level of Care) ◦ Setting of care (Institutionalized and Community)Setting (Institutionalized Community)
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Rate Structure - Financing St iStrategies ` Blended HCBS/NF rate ◦ Pay a single blended rate for those members who meet
that state’s nursing home level of care criteria regardless of setting x Blend generally reflects current institutional vs. community
mix, but can be adjusted each year to encourage more community care
P id t fi i l i ti t b i◦ Provides a strong financial incentive to serve members in the community rather than in an institution ◦ Mix of members can be difficult to predict
C S ◦ Plans may target HCBS members over institutionalized members ◦ Arizona and Tennessee use this approach
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tRate Structure – Financing St iStrategies ` Separate NF and HCBS rates- modified blended
approachh
◦ Pay separate rate cells based on setting but limit the availability of the NF rate cell to encourage the use of HCBS over NF ◦ Encourages transition of institutionalized members to the
community, but incentives may not be as strong as blended rate ◦ Reduces risk of under/overpayment ◦ Sepparate rates mayy encouragge pplans to targget pparticular
beneficiaries over others (e.g., nursing home residents or HCBS) ◦ Massachusetts and Minnesota use this approachpp
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Rate Structure – Risk Adjustment Rate Structure Risk Adjustment ` Pay using a sophisticated classification algorithm based on a
member’s functional, cognitive and behavioral needs and member s functional, cognitive and behavioral needs and medical condition ◦ Requires screening questionnaire and/or medical record review for
individual enrollees ` More accurately predicts risk of the enrolled populationMore accurately predicts risk of the enrolled population ` Provides more equitable payments between health plans with
strong financial incentive to provide care in the most cost effective setting
` Minimizes selection bias ` No national model exists. Sophisticated data modeling is
required to develop model and refine over time
`̀ Data intensive requires collection of electronic assessment Data intensive - requires collection of electronic assessment information that can be linked to paid claims or encounter data
` New York and Wisconsin use this approach
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Risk Mitigation Strategies – Risk Sh iSharing ` Risk sharing
◦◦ State retains full or partial responsibility for cost above the State retains full or partial responsibility for cost above the aggregate capitation payments that exceed a predetermined corridor ◦ Provides both upside and downside protections x Protects the health plan from excess losses and protects the state
from excessive overpayments◦ Often used in initial years of program, or at time of significant
program change when risk is less predictableprogram change when risk is less predictable ◦ Can be burdensome for state to administer ◦ Important to include detailed specifications in the contract to
avoid misunderstandings k i i l f
enrollees as it expands its MLTSS program from voluntary to mandatory
◦ NNew YYork is currentlly usiing a riiskk shharing moddel for new
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Risk Mitigation Strategies – Risk P lPools ` Risk pools ◦ Include a withhold through which the health plans
contribute to a pool in exchange for coverage against additional risk uncertaintyadditional risk uncertainty ◦ Used to cover unanticipated costs for low frequency, high
risk, high cost individuals B d t t l t th t t◦ Budget neutral to the state ◦ NM used risk pool to retroactively adjust HCBS/NF mix
percentages assumed in blended rate in initial years of MLTSS program
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Risk Mitigation Strategies -R iReinsurance ` Reinsurance ◦ Protects health plan from high cost, low frequency claims
incurred by an individual beneficiary ◦ Plans can seek private reinsurance (often very
expensive) or state can act as the reinsurer
◦ Does not protect plans from overall adverse experience ◦ Generallyy tar ggeted to certain higgh cost conditions or
services ◦ Arizona provides reinsurance for transplants, members
receivingg certain biotech dru ggs,, members with Von Willebrand’s disease, Gaucher’s disease, or hemophilia and certain high cost behavioral health members
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Pay for Performance/Quality I iIncentives ` Provides additional opportunities to encourage health
l t t li l d hi lit t tplans to meet policy goals and achieve quality targets ` Funded either as additional incentive payments (up to
5% of the capp rate )) or as a withhold ` Need to be specific, actionable and measurable and
defined upfront ` Texas performance targets include:Texas performance targets include: ◦ Rate of nursing facility admissions for enrolled members ◦ Percent of members who return to community following a
nursing home admissionnursing home admission ◦ Percent of members using personal assistance or respite
services who self-direct these services
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Other Incentives Other Incentives ` Money Follows the Person (MFP) incentives◦◦ MFP provides grants and enhanced federal match to support MFP provides grants and enhanced federal match to support
community transitions◦ Tennessee pays an incentive payment to health plans out of
MFP funds for members who are discharged from a long term i f ili h i d h i inursing facility stay to the community and another incentive
payment after the same member has remained in the community for one year ◦ Tennessee also allows plans to provide a oneTennessee also allows plans to provide a one-time $2,000 time $2,000
allowance to members transitioning from the nursing facility to the community to cover transition expenses
` Auto assignment algorithm◦ Texas plans to favor health plans that perform better on certain
performance measures through improved placement in its auto assignment algorithm for its MLTSS program, STAR+PLUS
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State Examples State Examples
` Arizona
` Massachusetts
` New York
` Tennessee 22
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