Transcript Managed Care * Managing the Risks

Managed Care – Managing the
Risks
Trevor Weyland
Gallagher Healthcare Practice
2014 GDP
17.5%
Health spending
Other spending
82.5%
CMS projects that health spending will reach
19.6% of GDP in 2024
Cost
Fraud
Waste
Unnecessary utilization
ACCOUNTABILITY
Insurers
Providers
INCENTIVES
from fee for service to outcomes
COVERAGE
authorized for medical
necessity, rather than
physician preference
SPENDING
caps by Independent
Payment Advisory Board,
MedPAC, MACPAC, etc.
Provider reimbursement
Traditional fee-for-service
Landscape increasingly allows for shared risk
between payers and providers
Reimbursement continues its shift toward:
Capitation
Bundled services
Contracting incentives
ACA environment
Medicare Shared Services Program and Pioneer
Program
CMS Bundled Payment for Care Improvement Initiative
ACOs can choose varying levels of accountability and
financial risk.
ACOs in the CMS program will take on higher levels of
financial risk and reward in an effort to move more feefor-service Medicare payments into alternative payment
models.
Medicare provider payments
50%
Alternative
models
2018
Private markets
Capitation agreements for physicians and hospitals
Shared savings and shared risk agreements
Global risk
Bundled and episodic payments
Integration
M&A
More HMO-like
Health plans
Providers are taking on new roles in the delivery of
care
+ Vertical integration
+ New associations
+ New contracting strategies
Value-based contracting strategies to
+ increase quality
+ reduce medical costs
+ improve patient outcomes
+ share risk as well as responsibility for controlling
medical cost trend
Changing basis for remuneration
Risk/compensation continuum
Fee-for-service
Performance-based contracting
Bundled/episodic payment
Shared savings
Shared risk
Capitation
Capitation and performance based
contracting
New roles produce
New risks
New relationships
New risk management solutions
Looks a lot like managed care
+ Control costs
+ Improve quality
+ Improve population health
+ Increase preventive services
Managed care characteristics
Network
Selective
contracting
with providers
Medical Home
Primary care
gatekeeping
function
Prior Authorization/
Pre‐certification
Oversight of
specialty
visits/elective
procedures
Managed care characteristics
Benefits
Package
Defined set of
covered
services
Formulary
Rationalized
and/or tiered
pharmaceutical
list
Utilization Review/
Management
Managing
in‐patient
admission and
length of stay
New risks
New services/responsibilities risk
Transaction risk
Financial risk
New services/responsibilities risk
Provider as
if payer
Provider is
a plan
Provider contracts
jointly with plan
Which means you have members, or a global contact
with another plan
Which produces managed care risk
New services/responsibilities risk
For providers there is managed care risk through:
+ Establishing networks
+ Peer review / credentialing
+ Provider selection
+ Utilization review
New services/responsibilities risk
For providers there is managed care risk through:
+ Claim services
+ Advertising, marketing, selling, enrollment for
healthcare plans
+ Reviewing the quality of others’ medical care
+ Developing/implementing clinical guidelines for
others
New services/responsibilities risk
For providers there is managed care risk through:
+ Vicarious liability for the medical services of others
+ Expanded data systems and records
+ Administration/management of health plans
+ Owning a plan
Managed Care Errors & Omissions
Insurance
Third party claims alleging:
+ act, error or omission in the performance or failure to
perform Managed Care Professional Services
+ failure to maintain the confidentiality of private information
+ vicarious liability for others’
+ managed care services
+ failure to keep information confidential
+ medical services
Single plaintiff claims and class action claims
Transaction Risk
M&A
Antitrust
Reps & warranties
Anti competition
Unfair business practices
Transaction Risk
D&O
Antitrust
M&A
Anticompetition
Unfair
business
practices
Managed
Care E&O
Transaction Risk
D&O
Antitrust
M&A
Anticompetition
Unfair
business
practices
Reps &
Warranties
Managed
Care E&O
Transaction Risk
D&O
Antitrust
M&A
Anticompetition
Unfair
business
practices
Reps &
Warranties
Managed
Care E&O
Privacy
Cyber
Financial risk
+ pricing the risk
+ managing the clinical risk outcomes (utilization of
aggregate costs)
+ catastrophic risk of high-end claim encounters
Financial risk
Financial interest
More than the
provision of care
Clinical interest
Which is an issue in individual cases, and in the aggregate
Provider is the insurer
Variation in costs
Payer
Provider
Actuarial resources
Limited resources
Underwriting resources
Small pool of patients
Accounting resources
Greater variation in
average cost per patient
Financial resources
Large pool of insureds
Cost of care more likely
to exceed resources
Vulnerable to single
patient large loss
Provider stop loss insurance
Protection against catastrophic
loss for single claim
Limits the providers' financial
responsibility to specific limits per
patient annually
Provider:
+ participates fully in the shared
savings potential
+ reduces risk of individual
patient health care costs
exceed pre-agreed limits.
$
Stop
loss
Single claim
New risks
New services/responsibilities risk
Transaction risk
Financial risk
Thank you
Trevor Weyland
Gallagher Healthcare Practice