Preparing for Healthcare Reforms and Parity

1. Preparing for Healthcare Reforms and Parity Brief Business Modeling for Addiction Treatment Providers NIATx ACTION Campaign II Webinar January 12, 2010 Patrick Gauthier Senior Consultant

2. Goals • Review positive developments in the field • Overview of new business opportunities for substance abuse treatment providers –Parity, Reform, Integration, Patient-Centered Medical Homes, etc. • Review fundamentals of Business Modeling • Review Change Acceleration Process

3. Developments in the Field Catalysts for Change • Parity and Reforms • Medical Home Models, Behavioral Medicine and Integration Unique time to take an active role in developing • New markets and consumers • New alliances and partnerships • New managed care and PPO contracting • New Public/Private Partnerships (blending and braiding) • New Models of Care

4. Wellstone-Domenici Mental Health Parity and Addiction Equity Act of 2008

5. Mental Health Parity and Addiction EquityOverview of the Law • Passed October 3rd 2008 – Effective January 1, 2010 • Expected to affect 110 million people • Addresses SMI, SED, and SUD for the first time • Impacts ERISA plans for the first time • Impacts Medicaid Managed Care Plans • Stronger State Laws Protected by HIPAA • Open Comment/RFI Conducted • Treasury, Labor and HHS Providing Leadership and Promulgating Regulations in January or February

6. Overview of the Law • Health plans that provide mental health or addiction treatment benefits must provide the same financial terms, conditions, requirements, and treatment limitations for mental health and addictions as they do in providing “predominant” coverage for medical and surgical conditions • Cost-sharing, deductibles, co-pays, and other forms of co-insurance as well as annual limits and lifetime limits must be equal to “predominant” coverage for “substantially all” of the covered medical and surgical conditions • Limitations on the scope of treatment and treatment frequency and duration cannot be more restrictive than those limiting other medical conditions

7. Overview of the Law • Where allowed for other conditions, out-of-network benefits for mental health and addictions treatment must be provided and must be equal to those provided for other medical and surgical benefits • Plans can continue to engage in healthcare UM, as well as utilization review and other types of assessments, and determine coverage on a case-by-case basis. • Plans are required to provide members, consumers, and providers with their medical necessity criteria and reasons for benefits/coverage or claims denial

8. Overview of the Law • The Act exempts employers with fewer than 50 employees and plans whose total premium costs increase more than two percent in the first year or one percent in any subsequent year, subject to an annual application and review process • Issues Requiring Clarification: • Covered Diagnoses • Covered Providers • Covered Services • Best Practices • “Predominant” and “Substantially All…” • Deductibles and OOP Maximum

9. Parity Impact Third-Party Administrators (TPA) Functional Areas Markets Preferred Provider Organizations (PPO) and Networks UM, UR and Medical Mgmt Claims Processing Care Mgmt / Case Mgmt / Disease Mgmt Self-Insured Employers Financial Underwriting Analysis Reporting Utilization Mgmt Business Process Outsource Compliance / Contracting Provider Network Managed Behavioral Healthcare Organization (MBHO) Call Center / Customer Svc Marketing Health Plans Clinical Areas MCOs, HMOs, EPOs, MSOs, Prepaid Inpatient Health Plans Medicaid Managed Care Plans and SCHIP Primary Care Patient / Consumer Substance Abuse / Addiction Treatment Provider General Hospital / ED Mental Health Providers Professional and Facility Providers Pharmacy / Rx

10. Implementation A “cross-walk” contrasting and comparing existing State laws with the new Federal law is required. Inclusion of SUD, for example, will be new for more than 30 states. (Source: Mental Health America, July 2008) Best = Best parity and comprehensive equity (covers MH and SUD, no exemptions) Good = Good parity coverage (few exceptions or limitations) Limited = Mostly applicable to specific populations such as serious mental illness SMI (listing 7-10 “biologically-based” disorders such as psychosis and bi-polar disorder) and can exclude SUDs. Often exempts employers with 50 or fewer employees Mandate = State-mandated levels of coverage or benefit expressed in terms of financial limits and/or treatment constraints. Mandated coverage is often inconsistent with Parity.

11. Implementation • Significant Issues: • Potential Impact of Reform • 15-25 million uninsured moving into Medicaid • More people finding affordable coverage in Health Insurance Exchange • People required by IRS to carry coverage • Elimination of Pre-Existing Condition Clauses enable SUD sufferers to find new coverage • Parity Regulations are Late • Treating the SMI, SED and Chronically Mentally Ill in a private sector system – usually the domain of the public system • 63% of MH and 76% of SUD treatment paid for by public sector • What becomes of community-based “wrap-around” recovery support services • How will private sector handle chronic illness models of care • Workforce Issue: Shortages of child psychiatrists, primary care physicians, mental health and substance abuse treatment providers

12. Implementation • Significant Issues • Crucial need to educate consumers, families and providers • Prevalence of Primary Care Physician involvement and need for integration/bi-directional co-location • Role of Pharma • SUD treatment/coverage expansion – role of providers (types) • Prospects for Population Management • Potential for Population/Cost Shifting • Need to address Special Populations • “Meshing, Blending and Braiding” Systems of Care

13. Impact on Your Market? • Most consumers likely to see expanded coverage • However… • Employers, health plans and consumers should be educated regarding provider type, service levels and best practices • Providers should expect more emphasis on managed care • Private sector portion of overall SUD treatment expenditures likely to rise from their current low of 17%

14. Impact on Your Market • Consumers employed/covered by large, self-insured employers will see expanded coverage (85 million) • Employers tend to: • Understand full burden of SUD better than health plans • Comply with ADA • Comply with DOT / SAP • Use an EAP for assessment and referral • Use Third-Party Administrators for health plan and claims processing • Use Preferred Provider Organizations for networks

15. Impact on Your Market • Health Plans will expand utilization management (UM) and other managed care efforts • Health plans often “carve-out” MH/SUD benefits to Managed Behavioral Health Organizations (MBHO) who – in turn - develop their own provider networks • Medicaid managed care plans will be impacted in much the same way though on a case-by-case basis (see your State’s Medicaid rules concerning SUD) • The point is…if you are not currently contracting with MCOs, HMOs or MBHOs, you might begin the process

16. Opportunities • Educate local employers – provide “brown bag” workshops, screenings and training for HR and unions • Visit local health plans – they need you • Adopt electronic health records (EHR) systems and join health information exchange (HIE) initiatives • Open lines of communication and cooperation • Commit to person-centered systems of care • Participate in Medical Home models

17. Opportunities • Ally with EAPs and Impaired Professionals Programs to provide SUD screening, assessment, treatment and training • Join PPO networks • Lead or participate in early screening and engagement initiatives • Ally with integrated systems of care, hospitals and integrate with MH where possible and appropriate • Measure Outcomes and share the results with payers, partners as well as consumers

18. Impact on Your Market • The cat’s out of the bag – employers, health plans, primary care, hospitals and mental health providers have a stake in this too • Understand that stake • By positioning and partnering effectively, you can build market share (depending upon how all of our assumptions play themselves out)

19. Transform • Consider what you’re willing to “trade-off” • Support peer-to-peer consumer programs • Support self-directed recovery programs • Provide family & children’s services • Integrate with MH and primary care • Serve as the “Health Home” while clients are engaged • Adopt HIT-enabled decision support • Consider eHealth and Telemedicine • Partner and create purchasing coalitions for services like HIT and billing

20. Transform • Get Lean – commit to workflow/process and quality improvement. Eliminate waste and variation in your operations. • Develop your own Report Card and share it • Offer payers episode “case rates” that bundle wrap-around services • Embrace pay-for-performance • Develop capacity for new culturally-relevant, age and gender specific programs in appropriate settings and market them • Take lead in adopting best practices and let payers know • Support standardized credentialing and accreditation efforts • Develop career ladders within and across organizations

21. Business Model Implications

22. Quick Self-Assessment • Did your organization experience positive growth in 2009? • Do you expect/want to grow in 2010? • What have been your barriers to growth?

23. Business Modeling Basics • Not a business case • Not a business plan • A simplified model or “map of the territory” allowing you to model change and consider implications prior to making change real • Easy strategic planning approach that covers the fundamentals • Actionable – forms the basis for work/action/project and/or implementation plans

24. Business Modeling Basics • Four dimensions: • Customer Value (Proposition, Assumptions, Validation, and Achievements) • Financial Formula • Key Resource Inventory • Key Processes Business Modeling is precursor to change. You’ll need a Change Process that addresses Change Management

25. Business Modeling: Customer Value Proposition • Market segmentation - Targeting the customer – Who is your customer? Who could be your customer? • Developing products and services for specific markets based on Core Competencies – What are your core competencies? Not an easy question! • Marketing based on the consumer’s needs. Bearing in mind that allies, partners and payers are also your customers, what do they need? How do they define value?

26. Business Modeling: Customer Value Proposition • Our target customer is/should be… • The problem we assume we are solving for them is… • Our service offering includes… • We validate our assumptions by… • Our sources for additional R&D include… • Our competition includes… • Our market position is best described as… • Our “differentiators” include…

27. Business Modeling:Financial Formula • Revenue model shows revenue coming from what new sources? • What are our fixed costs? Variable costs? • What is our profit margin model? • What is our ROI model? • What is our “sales cycle” time? The time between courting a new referral source and the admission of a new client as a result. Can it be improved?

28. Business Modeling:Key Resource Inventory • Who are our key people? • What are our key technology and system supports? • What are our strongest tools? • What is our most valuable information? • What are our strongest marketing and promotion channels? • What are our best prospects for partnership and alliance? • How do we handle our branding?

29. Business Modeling:Key Processes • What are the core business processes that exist and those you will need to develop? • What unique business processes (“special sauce”) you enjoy now and those you would need to innovate? • Business rules affecting your business model and those affected by it? • Existing and required Key Performance Indicators? • Existing and required Standards (credentials, accreditation, etc.)?

30. Key Questions • Has this business model been tried before and was it successful? • How – operationally - will you implement the change required of your business model without disrupting current business? • Do you have adequate human resources and expertise? • Is there enough political will to carry out your growth goals? • Do you have the financial resources to grow or do you need to find a partner or investors?

31. Segments and Services • A Market Segment is a specific “universe” of prospective clients who share common characteristics. • Examples: • Single State Agency • Pregnant Women and Women with Children as a function of the SATBG • Male Criminal Justice clients 18-25 • Drug Court clients • Adult Women

32. Opportunity Matrix • Identify where you are strongest in terms of: • Revenue share (%) • Share of profits • Market position, strengths and opportunities including qualifications, skills, subject matter expertise and capacity to grow • Strongest value proposition consistent with vision and mission as well as values • Market maturity • Brand equity or reputation • References • Political/legislative opportunities • Economic opportunities • Social opportunities • Technological opportunities Where is the competition strongest?

33. Models of Care • What is a model of care? • A set of objectives and core principles for practice • A description of how care is delivered consistent with your mission • A description of the care giver and the consumer or client • A description of the health care delivery system

34. Models of Care Model of Care

35. Assessing Models of Care • Assess = review, evaluate, enhance • Assumptions concerning new models of care: • Evidence based • Based on provider and client needs • Outcomes are measured • Considerate of safety and well-being • Multi-disciplinary • Optimal utilization of healthcare resources • Optimize access and equity • Culturally-relevant

36. Models of Care • Model of care development and evaluation is entrenched in a desire to improve patient and organizational outcomes. • Relentless pursuit for more efficient service delivery and improved patient outcomes • Crucial elements in changing models of health care delivery include: • planning, • development, • implementation, • evaluation • and sustaining the change

37. Changing Models of Care • Modifications to models of care involve control of changes in the following: • Documentation and charting • Level of staff / certification of staff performing services • Process in place to ensure that clients get to a qualified provider and that a covered service is performed • Information systems edits • Information systems workflow support for billing processes • Determination of medical necessity • Having appropriate treatment protocols in place • Outcome reporting

38. Models of Care – process change • Graphical design of improved workflow • Identifying and capturing business rules • Alignment of business, data and technology architecture • Creating efficiency and value through reductions in redundancies, manual processes, decisions, and transitions between personnel • Improving the customer experience • Quality and performance management and reporting

39. Business Process

40. Change Acceleration Process

41. GE’s Change Acceleration Process

42. Creating Conditions for Success Project Definition Statement – 15 words or less…the Elevator Speech Define what is “in scope” AND what is “out of scope” SCOPE: • Timing • Organizations involved • Processes involved • Levels involved GOALS: • Results / Target for Project • Measurements of success ROLES: • Who should be on Project Team? • What are their Roles?

43. Analyzing Resistance Identify and Rank the following: Name Reason Rank • Stakeholder Causes • Technical Causes • Political Causes • Cultural Causes • Economic Causes

44. Other Factors to Consider

45. Questions and Contact Patrick Gauthier, Senior Consultant AHP Behavioral Health Consulting 888-898-3280 ext. 802 pgauthier@ahpnet.com