Maximizing Revenue in an Evolving Treatment Center Reimbursement Landscape

2. Treatment Center Reimbursement: Securing Your Revenue Stream Bragg Hemme, Shareholder, Polsinelli, PC Tani Weiner, Shareholder, Polsinelli, PC

3. Common Questions The most common reimbursement questions we get from clients: • How do we maximize revenue and grow in an ever-changing marketplace? • How are others doing it (and, do they have better commercial rates than we do)? • How do we get these payers off our back? • What are the “landmines” and “opportunities”?

4. Answers

5. BH Market Landscape

6. Key Market Drivers • Opioid crisis and an increase in the population in need of treatment • Destigmatization of mental health and substance abuse treatment • Parity Law + Obamacare • Growth in manage care-covered population • Growth in coverage by government payers

7. Growth in Private Payer Coverage • Parity laws = equivalent coverage for BH as medical • ACA (a/k/a ObamaCare) = expanded insured population • Major driver of treatment expansion and affordability • Major driver of investment interest in BH • Good news! • Less good news: new opportunities for fraud and abuse by unethical players

8. Growth in Gov’t Payer Coverage • Medicaid Expansion – many states now providing BH coverage • Primarily outpatient treatment with limited exceptions • IMD exclusion – no SUD treatment 16 beds or over • Medicare – more uniform, but limited, than Medicaid • Primarily outpatient; no residential • Changes at the federal level such as • Block grants • Potential repeal of IMD exclusion • Expanded ability of NPs and PAs to prescribe Suboxone • More good news!

9. Gov’t Pay: more complex than MCOs • Typical coverage rules: • Enrollment and certification requirements • Services “reasonable and necessary” • Services must be supported by documentation in the medical record • POC and physician supervision requirements • Coverage rules for Medicaid will vary by State • Greater level of “compliance” obligations • “Stealth application” via MMC and MA

10. The Less Good News • Dramatic decrease in out-of-network coverage and payment • Increased payer audits and recoupment claims • Increased pressure to go “in network” • Renegotiation of in-network rates and changing payer rules • Increasing burden of regulatory compliance • Changing payment models – in theory

11. OON Reimbursement Changes • Decreased Out-of-Network Reimbursement • Dramatically decreased rates (e.g.: tying UCR to Medicare rates) • Increased denials • Increased delays in authorizations and payment • Increased pre-payment medical record requests • Likely result of increased costs due to Parity law

12. Gov’t Pay: The Less, Less Good News • Lower rates and… • Significantly increased compliance burdens • Enrollment/certification • OIG exclusion screening requirement • Mandatory compliance training • Monitor physician/referral relationships • Powerful government enforcement tools • False Claims Act – “whistleblower liability” • 60-day overpayment rule • Anti-Kickback Statute

13. Audit and Recoupment • BH Programs an easy target for audit departments • Diversity of treatment programming • FL model = Residential? Outpatient? • Subjectivity of “medical necessity” • Lack of history and guidance in documentation • “Payer compliance” a recent phenomenon in BH • Payment flag - leverage to go in-network

14. Audit Prevention & Defense – Best Practices • Audits are burdensome and can delay payment, but some foresight and planning can decrease that burden (a bit) • Complete internal audits of high risk areas • Evaluate audit (internal and external) history • Follow audit trends • Fill in gaps, update education, increase documentation • Differentiate obligations by payer • Coverage rules • In-network vs. out-of-network payer obligations (will not work for gov’t plans) • Differing audit standards (e.g., look-back period, prospective/retrospective)

15. Audit Prevention & Defense – Frequent Targets • Key Areas: • Medical necessity • Lab frequency • Physician certifications • Physician orders • Therapy hours • Differentiating levels of care

16. Audit Prevention & Defense – Lab • Laboratory Testing Elements Frequently Audited • Ordered test matches treatment needs • Frequency of tests • Documentation of indications and test results • Review and use of test results in treatment • Quantitative (definitive) testing • Prior, positive screening test typically needed • Limited to drug class identified • Ownership of Lab can cause greater scrutiny re: utilization

17. Audit Prevention & Defense – Billing and Coding • Billing & Coding Practices • Historical practices may be insufficient • Review payer requirements • Payer requirements vary widely, making across-the-board compliance difficult • Contract language, provider manuals, written policies, billing guidance, communications with plan representative

18. Audit Defense • It can often look worse than it is • Make the best of the documentation you have • Legal levers include: • State law lookback limits (~12-24 months) • ERISA plans - lookback potentially longer • OON = payer out of luck? • State law on release of “pended” claims, U/R

19. Private Pay - Any Willing Provider • Any Willing Provider Laws • Rule: health plans must allow health care providers that meet and agree to a standard set of conditions, including reimbursement rates, must be granted in-network status • Limits health plan ability to implement narrow networks • Laws vary by state. Some states have no AWP requirement

20. Private Pay - Narrow Networks • Payer can control costs by partnering with a small number of providers at significant discount • Opportunity for very high volume • must partner quickly or may be left out • Caution: Payer promises narrow network but delivers broad network  patient volume does not justify discount offered

21. In-Network Contract Negotiation • Step One: Consider your bargaining position • How badly do you need extra volume? • How badly does the payor need you? • Network adequacy • Payor struggling with high out-of-network costs generally What distinguishes you from other providers? • Recognized high quality services • Unique treatment model • Ability to operate under VBC

22. In-Network Contract Negotiation • Step Two: Negotiate reimbursement provisions • Fees • Scope of case rates • Clarity on what is included/excluded (especially Lab and Rx) • Quality incentives • Catch-all rate for everything else? • Prompt payment

23. In-Network Contract Negotiation • Step Three: Negotiate provisions that jeopardize reimbursement • Audit rights and offsets • Lookback period limitations • Medical Necessity determinations (especially re: lab and level of care) • Appeals • Dispute resolution

24. In-Network Contract Negotiation • Step Four: What is left? • Goal: ease administration of the agreement • Timely filing and payment requirements • Prior authorization requirements • Reporting requirements • Enrollment or credentialing efforts • Goal: ensure compliance terms are not overbroad • Facility licensing/accreditation • Flow down provisions

25. Contracting – don’t miss these • Limit payer ability to deny eligibility retrospectively • Objective definition of “Medical Necessity” • Right to add facilities subject to credentialing • Remove “rate ratchet” on sale or acquisition • Amendments require mutual agreement • Operationalize per contract terms to minimize audit

26. Patient Pay • Increase in disposable income; can lead to increase demand by population willing and able to pay • Negotiate terms 1:1 • Consider discount strategy (e.g., self-pay, prompt or pre-pay, “scholarships”) • Consider contractual requirements, if any, if pay pay due to HD plan • Determine under what circumstances insured person can opt to not use insurance • If patient uses insurance, determine what services are not covered and whether center can bill patient

27. Changing Reimbursement Models • Value-Based Payment • Substance abuse treatment is prime target because currently largely unmanaged • Must assume risk to some degree • New area so strategic providers may be able to work to define the VBP • Arrangements with Capitated Providers • Health systems, IPAs, etc. financially responsible for substance abuse treatment • Opportunity to partner