Reimbursement Reform May 3, 2012 Presented by Patrick Gauthier Director, AHP Healthcare Solutions

1. Reimbursement Reform May 3, 2012 Presented by Patrick Gauthier Director, AHP Healthcare Solutions

2. Objectives • Recognize the importance of learning the current-state of reimbursement before making a commitment to new methods and models • Commit to conducting a cost analysis • Consider ideal partners and affiliations in order to achieve critical mass and economies of scale • Dedicate executive and billing operations time to learning about innovations in reimbursement

3. Current State of Reimbursement • Grants and contracts based on serving specific populations with specific services • Fee-for-service • Limited capitation in SUD treatment • Cash collections

4. Current Challenges • Manual billing/forms • UB-04 (formerly UB-92 - Uniform Billing institutional services) • CMS-1500 (formerly HCFA-1500 - National Uniform Claim Committee (NUCC) professional and supplier services) • Revenue and billing codes • Reimbursement/fee schedules • Covered providers and services • Utilization review and denials

5. Billing Codes • HCPCS(Healthcare Common Procedure Coding System) • UB-04 Revenue Codes • CPT Codes (Current Procedural Terminology) • ICD-9(International Classification of Disease (ICD-10 New Deadline 10/01/2014)) • HIPAA 5010 Electronic Data Interchange (EDI) Standard Transaction Code Sets • Accredited Standards Cmte (ASC) X12 Version 5010 • Enforcement will begin June 1, 2012 • 837 Health Care Claims • 835 Payment Advice • 270/271 Health Care Benefit Inquiry and Response • 276/277 Claim Status Request and Response • 278 Health Care Services Request for Review

6. Type your answer to the following questions in the chat box • Which of the billing codes we just reviewed are we currently using in our organization? • Which of the billing codes are completely new to you, that you are hearing about for the first time?

7. Current Approach to Fee/Reimbursement Schedules • Usual, Customary and Reasonable (UCR) • Diagnosis Related Grouping (DRG) • Resource-based Relative Value Scale (RBRVS)

8. Current Spate of Issues • Emergency room and hospital services • Court-ordered services • SUD services provided by FQHCs, MH and PC • Cost of Rx • Financial strength of providers to assume risk • Managing costs down via aggressive utilization management • Benefit design • Inadequate access to claims experience • Access to providers • Role of prevention

9. Cost of Services • It is fundamentally difficult and dangerous to engage in contracting for services under current and in any new reimbursement methodologies if you do not know with some precision what your services cost. • If you do not know what your services cost, commit now to learning how to conduct a cost analysis or hire an expert to do it for you.

10. Type your answer to the following questions in the chat box • Have you done a cost analysis of your services? Yes or No • If so, which of your services produces the highest profit margin/surplus? • If you haven’t conducted a cost analysis, why not?

11. Future State of Financing for SUD Providers • Administrative services including enrollment, benefit management, provider network management, claims processing and call center • Clinical services including screening, disease and case management • Ancillary services like transportation and child care

12. Future State of Financing • Fee for Service • Full-risk capitation • Soft-risk and risk corridors/targets • Performance-based contracting • Incentives and Withholds • Shared savings programs like Accountable Care Organizations (ACOs) and Coordinated Care Organizations (CCOs) • Global reimbursement/payment

13. Capitation • Defined eligible population • Defined geography • Defined services and providers • Defined benefit and policy • Prevalence data • Historical claims experience to determine rates of utilization, patterns and estimated financial risk over defined period of time • Pre-paid on monthly basis per capita

14. Pay-for-Performance • Includes withholds, incentives, shared savings and value-based purchasing programs • Bonuses paid for outcomes, access, quality, cost control, patient experience, population health, etc. • Withholds involve shared risk

15. Case/Episode Rate • Macro-management • Less focus on UR and more emphasis on treatment planning and population health • Decrease demands on and for UR, billing, claims processing, appeals • Shared risk • Consider: • Service levels • Time span covered • Conditions covered • Budget for each

16. Global Payment • Holds providers financially accountable, to a greater or lesser degree, for the total cost of care provided to the patient population assigned to them • Focus on chronic conditions • Pay for outcomes • Leverage collaborative care models and integrated electronic health records systems • Promote consolidation of providers and bundling of services and episodes • Speak to need for critical mass and large-scale population health management efforts

17. Global Payment • Builds upon lessons learned during capitation era of the 80’s and 90’s • Aligns payment and quality incentives • Risk Adjustment, Stratification (tiered populations) and Reinsurance resolve the old problems associated with avoidance of sicker members • Leverage Patient Registries, Outreach and Patient-Centered Medical Homes • Deploying in ACOs

18. Organizing the Delivery System • PPO • POS • HMO • IPA • ASO • ACO and CCO • Hybrids • In-network/out-of-network • Out of County, out of State

19. Outcomes • HEDIS (Health Plan Employer Data and Information Set *behavioral health measures*) • NQF (National Quality Forum *behavioral health measures*) • ECHO (experience of care and health outcomes) • CAHPS (consumer assessment of health plans survey) • Tools (process, screening, assessment and outcomes measures like the SF-36, ASI, GAIN, AUDIT, etc.)

20. Type your answer to the following questions in the chat box • Other than State and Federal contracts, do you belong to any other network of providers? Do not include associations and advocacy groups. • Which outcomes measures are you collecting and reporting?

21. Communicating Expectations to the Provider Community: Expect More… • Emphasis on mission-critical IT infrastructure, certified systems, and Meaningful Use • Aggressive contracting with commercial payers and discounts • Managed care and utilization review • Medication assisted treatment (MAT) • ACOs and Patient-Centered Medical Home (health home) models (integration and consolidation) • Care Coordination and Medical Case Mgmt • Standardization of practice guidelines, tools, and outcomes measures

22. More… • Complex coding (ICD-10) and electronic billing (HIPAA 5010) • Demand for data and reporting • Competition • Integration and consolidation • Merger & acquisition • Need for network-based business models

23. Complexity and Variation: multiple payer systems, enforcing disparate code-sets and applying different business rules with varying approaches to reimbursement Changing business and regulatory environments Increased competition and medicalization Demand for integration and consolidation Selecting and implementing IT Access to sufficient subject matter expertise Access to capital What Problems Should We be Solving?

24. Next Steps Assign responsibility for reimbursement reform Become a learning organization Develop friendships, affiliations, partnerships and begin thinking about new business models Engage your Board of Directors Develop a financial plan as a function of an updated business and strategic plan Assess liquid reserves Determine what you’re prepared to do now and what you’d like to do in 1-3 years Establish clear goals

25. Brief Report-Out from the Audience What two or three ideas from the presentation appeal to you? Which one of these ideas would you like to work on implementing? Who would need to be on board? What would bring them on board? What other barriers to you foresee? How might you address those barriers?

26. Join us next month Thursday, June 7 Get another piece of the financial puzzle…

27. Contact Patrick Gauthier pgauthier@ahpnet.com 888-898-3280 x.802 www.ahpnet.com www.ahphealthcaresolutions.com