Managed Care Contracting Under ICD-10 Rob Borchert, MBA, CRCE-I – Best Practice Associates Lorrie Borchert, CPC, CRCE-I

1. Maryland AAHAM Education Conference January 17, 2014 Linthicum, MD Managed Care Contracting Under ICD-10 Rob Borchert, MBA, CRCE-I – Best Practice Associates Lorrie Borchert, CPC, CRCE-I – Best Practice Training Institute

2. Learning Objectives • Review of ICD-10 Impacts! • Review of ACA components! (2014 and beyond) • Discussion of various Contract Types! • Discussion of new Exchange Contracts! • How to perform various analyses! • What will payors do? • What should YOU do? @Best Practice Associates

3. ICD Code Difference CM - Clinical Modification PCS- Procedure Coding System @Best Practice Associates

4. Mapping Between Old And New Systems • General equivalence maps (GEMs) between ICD-9-CM and ICD-10-CM/PCS have been developed • GEMs do NOT equal crosswalks • Reimbursement map added to CMS web site in 2009 • Intended for use by payors • Temporary mechanism • Allows claims processing by legacy systems • Allows for data collection for reimbursement changes • Maps should NOT be used for coding medical records @Best Practice Associates

5. Mappings @Best Practice Associates

6. GEMs Mapping @Best Practice Associates

7. CMS GEMS vs. CMS Reimbursement Mappings Source: Deloitte Consulting presentation “Do Not Underestimate ICD-10’s Impact on Population Health Management” at the Forum 10 in Washington, DC 10/15/10 @Best Practice Associates

8. When should GEMS be used? • To convert databases such as: • Payment systems • Payment and coverage edits and policies • Risk adjustment logic • Quality measures • Disease management programs • Utilization/case management systems • Financial modeling • Variety of research applications involving trend data • To translate coded data for comparing data across transition period @Best Practice Associates

9. When should GEMs NOT be used? • When you have access to the medical record? • When you have access to text descriptions or clinical terms describing diagnosis or procedure • When a small number of codes are being converted • GEMs should NOT be used for coding medical records!!!! @Best Practice Associates

10. Sports Medicine Hit by a ball - ICD-9-CM code: E917.0 ICD-10-CM possible code • W21.00 – Struck by hit or thrown ball, unspecified type • W21.01 – Struck by football • W21.02 – Struck by soccer ball • W21.03 – Struck by baseball • W21.04 – Struck by golf ball • W21.05 – Struck by basketball • W21.06 – Struck by volleyball • W21.07 – Struck by softball • W21.09 – Struck by other hit or thrown ball @Best Practice Associates

11. ICD-10-PCS Code Structure ICD-10 PCS Code Structure: Root Operation Qualifier Section Approach Body Part Body System Device @Best Practice Associates

12. ICD-10-PCS Example Interphalangeal fusion of right great toe, percutaneous pin fixation OSGP34Z @Best Practice Associates

13. ICD-10 Impacts @Best Practice Associates

14. Impacts to People Source: AAPC website @Best Practice Associates

15. Impacts to Process • Documentation practices • Productivity and efficiency practices • Contracts and business processes • HIM practices • Practice management processes • Budget • Payment conversions • System logic and edits • Claims edits • Disease & Utilization management @Best Practice Associates

16. Impacts to Process @Best Practice Associates

17. Impacts to Technology • IT system changes • Upgrade software • Modified field lengths • Modified system logic • Update superbills/encounter forms and databases • Data reporting elements • Submitting ICD-9 and ICD-10 codes • Retain access to historical coded data in ICD-9 format @Best Practice Associates

18. Revenue Cycle Impacts Patient Access Services Charge/Coding Integrity Patient Financial Services Business Process/Patient Access Scheduling Charge Capture Entry ClaimsProcessing Pre- Registration Registration Account Resolution Coding Assignment Financial Counseling Pricing PaymentPosting Clinical Clinical Intervention Test Order “Optional” Clinical Doc. IT Applications Scheduling HIS (including CPOE) Claims Clearinghouse HIM PatientAccounting Utilization Management Case Management Patient Accounting Performance Measurement @Best Practice Associates Medium Impact to process and training Large impact to process and training

19. Contract Management and Insurance Verification • Building coverage patterns from TPP contracts • Specific specialty definitions of both CPT and diagnosis (Case Rates) • HIPAA Transaction sets • Educating and Training staff for optimum coverage in identifying both POA and principal reason for admission (medical necessity) • TPP systems monitoring @Best Practice Associates

20. ICD-10 Effect on Payor Reimbursements • Independent analysis of some of the most common reimbursement arrangements identified conversion challenges that may modify some payor and provider reimbursement arrangements, while for others the effect will be minimal. • Solutions to these situations need to be tailored to your specific environment; however, you will want to review the possibilities identified in the analysis outlined in the table below. • In cases such as diagnosis-related group carve outs where codes have a relatively small impact on reimbursement formulas, most payors will likely experience few conversion problems. @Best Practice Associates

21. ICD-10 Impact on Payor Reimbursements @Best Practice Associates

22. ICD-10 Impact on Payor Reimbursements @Best Practice Associates

23. ICD-10 Impact on Payor Reimbursements @Best Practice Associates

24. ICD-10 Impact on Payor Reimbursements Source: Zenner, Patricia. ICD-10 Impact on Provider Reimbursement. Milliman, 2010. Retrieved from http://publications.milliman.com/publications/health-published/pdfs/icd-10-impact-provider.pdf. @Best Practice Associates

25. Examples of I-9 to I-10 Conversions @Best Practice Associates

26. MCC/CC Category Conversion @Best Practice Associates

27. Managed Care Today • Fully examine the rates you have today!!!!! • MSDRG rates • Case Rates for inpatient • APC/APG Rates for outpatient surgery and ancillary support services • Per diem rates for various services • Percent of charge rates for various services • Discount off Medicare rates @Best Practice Associates

28. Managed Care Tomorrow • Insurance Products under ACA: • No ability to deny or limit coverage for pre-existing conditions • No lifetime limits on benefits • No ability to cancel coverage without proof of fraud • Ability of patients to demand reconsideration of health plan decision to deny payment for test or treatment – includes an external appeal process @Best Practice Associates

29. Managed Care Tomorrow • Insurance Products under ACA: • Cost-free preventive services – access to screenings/vaccinations & counseling without deductible or co-insurance • Kids on parent’s plan until reach age of 26 • Must be able to choose your primary care physician – no need for referral to OB/GYN • Use nearest ED without penalty or no requirement to get prior approval and no higher deductible or co-insurance for out-of-network ED visits @Best Practice Associates

30. In God, We Trust, All Others Bring Good Data! @Best Practice Associates

31. @Best Practice Associates

32. Managed Care Tomorrow • What payers will seek from providers under BOTH Affordable Care Act (ACA) and ICD-10: • medical decision making models • capitation models • quality measures and payments • bundling payment • patient-centered medical homes • As a provider, can YOU bring your Quality and Cost factors to the table FIRST? @Best Practice Associates

33. 10 Considerations for Building a Pricing Strategy @Best Practice Associates

34. Medical Decision Making Models • Not all services are created equal • We do too many unnecessary things and don’t do enough of the good stuff • If something costs more, you are less likely to buy • If something costs less, you are more likely to buy • If you have already paid, you feel entitled to it • Patients are interested in what happens to them • The best treatment for a given individual may depend on their own goals and values @Best Practice Associates

35. Value-Based Benefit Design Low Cost – High Value Costs more – Learn more Identify preference sensitive and supply sensitive services for which evidence suggests Coronary revascularization Back surgeries Cross sectional imaging Large joint replacements Center of Clinical Excellence Patient Preference = High Value Should Cost More • Identify high value services that are underused • Screening • Prevention • Evidence based chronic disease management • Prenatal care • Reduce or eliminate cost to access • Offer to payor for increased market share @Best Practice Associates

36. Value-Based Benefit Design No Co-Pay – High Value Center of Clinical Excellence = High Value Surgery for BPH Arthroscopy for OA at knee Knee and hip replacement surgery Hysterectomy for DUB, fibroids Some CT, MRI and PET scans Invasive treatments for angina Endoscopy for GERD • Immunizations • Pregnancy • Hypertension • Asthma • Diabetes • Coronary Heart Disease • Congestive Heart Failure • Depression @Best Practice Associates

37. Capitation Utilization Unit Cost Cost per IP Day Medical Surgical ICU; Intensive Care Cost per Consultant Cost per IP service • Visits/PMPM • Days/1000 • OP Procedures/1000 • Referrals/1000 • Lab/VISIT Capitation = Fixed Payment per Member per Month (PMPM) for Block of Covered Services @Best Practice Associates

38. Shared Decision Making • Provides an incentive to patients to use patient • decision aids that intersect with affected areas • Make entire library of patient decision aids available • to patients and providers Is This Covered? @Best Practice Associates

39. Product Pricing on the Health Benefit Exchange • New population – individual and small group plans • Little to no experience regarding the populations • Some states will have only 1 plan on the exchange, • others, like Colorado, may have as many as 800 plans • with 17 carriers participating • Some plans may be trying to acquire market share • by offering very low cost plans (less than $200/month • for basic benefits) • May be some new entrants into the health insurance • market in your state @Best Practice Associates

40. Key Aspects of Quality Measures and Payments • Share patient information across the continuum of care and across the network of providers – while maintaining confidentiality; • Capture and compute accurate costs of care; • Track clinical outcome data in relationship to services provided; • Assure longitudinal collection and storage of patient information; • Support the use of clinical protocols and guidelines to improve quality and contain costs. @Best Practice Associates

41. Bundled Payment Models • Model One: Retrospective Acute Care Hospital Stay ONLY • Model Two: Retrospective Acute Care Hospital Stay PLUS Post-Acute Care (end either 30, 60, or 90 days post; can select up to 48 clinical condition episodes) @Best Practice Associates

42. Bundled Payment Models • Model Three: Retrospective Post-Acute Care Only (end either 30, 60, or 90 days post; can select up to 48 clinical condition episodes) • Model Four: Acute Care Hospital Stay Only (hospital, physicians, and others) @Best Practice Associates

43. Bundled Payment Models Flexibility • Under models where there are choices of episodes of care to be bundled, organizations can choose which episodes they wish to bundle • Will take data, time, and benefit to get providers to sign up for Models 2 to 4 • Some health plans are bundling now – such as vaginal deliveries @Best Practice Associates

44. Typical Errors in Contract Modeling • Overall systems integration – lack of consolidated database to share payor information experiences for such as “case rates”, etc. • Chargemaster increases – tracking and tying into contract renewals due to independent Managed Care system and/or lack of communication between Finance and Managed Care/PFS • Costs of managed care portfolio – Service Line, Product Mix, etc. • Inpatient versus outpatient services • Resource utilization within Service Line • Resource utilization within Case Rate @Best Practice Associates

45. Typical Errors in Contract Modeling • Changes in payor administrative policies or procedures • Coding policy changed that may vary by payor • Bundling of CPT codes • Claim edit programs • Changes in claim payment time frames • Changes in precertification policies • Typically vary by payor • Legislative changes impacting product mix – shifting of traditional government programs into managed care models @Best Practice Associates

46. Typical Errors in Contract Modeling • Unresolved payor denials • Timeliness of receiving denials • Time and cost to review and challenge by type • Denial percentage factors into ongoing negotiations • Payor operational inefficiencies • Inability to credential/load and update physician info • Auditing process; internal and external • Underpayments, refunds and offsets • Shift in payor mix cannibalization – new payors entering market due to ACA Exchanges @Best Practice Associates

47. Patient-centered Medical Homes “A model of primary care that is patient-centered, comprehensive, team-based, coordinated, accessible, and focused on quality and safety” According to the American College of Physicians, “the most effective way to realign payment incentives to support the PCMH model involves incorporating three different components: • a “bundled” monthly care coordination payment for medical professional work occurring outside of face-to-face patient visits; • a visit-based fee-for-service component; and • a performance-based component to reward the provision of efficient, high-quality services” @Best Practice Associates

48. Managed Care Contracts • “Evergreens”: review cancellation/termination language and consider ending by September 30, 2014 for NEW contract under ICD-10 • Beware of amendments: payors will ‘slip’ in amendments regarding the “implementation of ICD-10” without full details of their readiness and/or changes in their systems, edits, medical necessity changes, payment protocols @Best Practice Associates

49. Language to Question! • “in preparation for the implementation of ICD-10, we will process claims as usual and accept the submitted codes. The reimbursement for the year 2014 -2015 will be budget neutral, reflecting no impact on XXXXX hospital” • Similar language but with a twist – “…although our processing protocols may have changed due to ICD-10, reimbursement will be budget neutral for 2014 – 2015” • YOUR ANALYSIS MAY SHOW DIFFERENT REIMBURSEMENT BENEFITS! @Best Practice Associates

50. Language to Add to a Contract • With the discontinuation of ICD- 9 as of September 30, 2014, the auditing of historical claims will not involve any claims with initial DOS over three (3) years old from review request date • As of October 1, 2017, no claims with ICD-9 codes will be available for audit. Any open claims with ICD-9 codes must be resolved by January 1, 2018. @Best Practice Associates