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Prospective Offerors Conference

Prospective Offerors Conference. Arizona Health Care Cost Containment System. February 11, 2008. Contracting Process. Michael Veit Contracts Administrator Division of Business and Finance. February 11, 2008. Contracting Process. Purpose Materials Timetable

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Prospective Offerors Conference

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  1. Prospective Offerors Conference Arizona Health Care Cost Containment System February 11, 2008

  2. Contracting Process Michael Veit Contracts Administrator Division of Business and Finance February 11, 2008

  3. Contracting Process • Purpose • Materials • Timetable • Submission deadline March 28, 2008, 3:00 PM • Website navigation • Questions/Answers February 11, 2008

  4. Contracts To Be Awarded February 11, 2008

  5. RFP Milestone Dates February 11, 2008

  6. Response Specifications • Original plus seven copies • Three copies of Network Development Disk/CD • Sturdy 3-ring, 3-inch binders • All pages numbered sequentially February 11, 2008

  7. Specifications (cont.) • 3 pages maximum per submission requirement unless otherwise specified in the submission • 8½ by 11 inch paper • 1 side of paper = 1 page • Single spaced, typewritten in at least 11 point font • Borders no less than ½ inch February 11, 2008

  8. Scoring • Capitation and Network Development scored by Geographic Service Area • Network Management, Program and Organization will receive a statewide score February 11, 2008

  9. AHCCCS Strategic Vision Anthony Rodgers Director Arizona Health Care Cost Containment System February 11, 2008

  10. 2000+ Fee for Service Integrated Health • Patient Care Centered • Personalized Health Care • Productive and informed interactions between Patient and Provider • Cost and Quality Transparency • Accessible/Affordable Choices • Aligned Incentives for wellness • Multiple integrated network and community resources • Aligned cost management processes • Rapid deployment of new knowledge and best practices in quality care • Patient and provider interaction • Information focus • Aligned care management • E-health capable Managing Health System Transformation in Arizona 1960’s-1970’s 1980’s-1990’s Managed Care • Prepaid healthcare • More comprehensive benefits • More choice and coverage • Contracted Network • Focus on cost control • and preventive care • Gatekeeper • Utilization management • Medical Management • Fee For Service • Inpatient focus • O/P clinic care • Low Reimbursement • Poor Access and Quality • Little oversight • No organized networks • Focus on paying claims • Little Medical Management February 11, 2008

  11. 2008 Strategic Issues The Agency’s Five–Year Strategic Plan serves as a framework for ongoing planning, prioritizing and budgeting. AHCCCS is addressing four strategic issues: February 11, 2008

  12. STRATEGIC ISSUE #1: HEALTH CARE COSTS Goal: Maintain annual capitation rate increases at or below 6%(per member per month). “…overall national health care expenditures are expected to grow at an average rate of 7.3% per year through 2012.” Centers for Medicare and Medicaid February 11, 2008

  13. Note: Projected General Fund revenues are based on a ten-year average of annual increases February 11, 2008

  14. AHCCCS Strategies for Controlling Costs • Continue efforts toward more equitable and manageable provider rate structures and payment methodology • Maintain membership management practices that ensure members are enrolled in the most appropriate AHCCCS programs • Maximize use of non-state funding sources (e.g. Grants) • Use Executive Utilization Management reports for ongoing health plan comparison and benchmarking • Continue to explore cost-effective purchasing options for key Medicaid services February 11, 2008

  15. STRATEGIC ISSUE #2: HEALTH CARE QUALITY AND ACCESS TO CARE Goal: Ensure AHCCCS members have the right care, in the right place, at the right time, every time. “Quality driven health care results in fewer medical complications, better outcomes, and lower costs” February 11, 2008

  16. AHCCCS Strategies for Improving Quality and Access to Care • Improve incentives to promote health plan quality outcomes • Promote evidence based treatment guidelines and best practices • Conduct satisfaction surveys of members • Developing a web-based information exchange that allows providers access to diagnosis, treatment, and other information that supports care coordination • Improve members’ understanding of how to access needed medical care • Promoting cultural competence throughout the healthcare delivery system • Evaluate the networks of contracted health plans to determine their adequacy in meeting the needs of members February 11, 2008

  17. AHCCCS Expectations and Budget Reality • Health plans are partners in delivery of care to Medicaid members; members that require special attention • The agency expects health plans to be sophisticated enough to show how they self monitor and can self improve their operations; particularly those that support quality operational fundamentals, such as: • Timely and accurate claims payment • User friendly prior authorization system • Responsiveness to providers and members • Plans have to be able to achieve and document higher clinical performance measures, i.e. National HEDIS Measures Comparisons • Due to size of program at federal and state level, Medicaid is seen as a budget buster and the target of cost cutting strategies • Either we control spending and improve outcome using our methods and approaches, or they will do it for us and chances are …… • We won’t like it!! February 11, 2008

  18. AHCCCS Overview Tom Betlach Deputy Director February 11, 2008

  19. Federal • AHCCCS Administration • State Acute Health Plans • • LTC Program Contractors • County • State Agencies • Policy Ø DHS • Eligibility (Special Populations) · · Behavioral Health & CRS Eligibility • Private Ø DES • Contract for Care • Monitor Care and Financial Viability • Information Services • Fee-For-Service • Budget and Claims Processing Ø Native Americans • Legal Ø Ø Non-Qualified Persons Premiums Grants • Intergovernmental Relations Introduction to AHCCCS Product Lines Funding -Acute Care (Medicaid & KidsCare) - Long Term Care - Healthcare Group February 11, 2008

  20. Division of Fee For Service Management (DFSM) Office of Intergovern- mental Relations (OIR) Division of Health Care Management (DHCM) Office of the Director (OOD) Information Service Division (ISD) Division of Business and Finance (DBF) Division of Member Services (DMS) Office of Administrative Legal Services (OALS) AHCCCS Organizational Structure February 11, 2008

  21. Coverage Events in AHCCCS History 1982 - AHCCCS Acute Care Program 1988 - SOBRA pregnant women and children under 6 - ALTCS DD 1989 - ALTCS EPD 1993 - HealthCare Group expanded 1998 - KidsCare begins 2001 - Arizona Proposition 204 implemented 2003 - KidsCare Parents February 11, 2008

  22. 100% Federal Poverty Level(2008) February 11, 2008

  23. Eligibility Levels 200% 200% 200% KidsCare/HIFA Parents Medicaid Proposition 204 Expansion If the HIFA parent program ends on 6/30/08, adults with income above Medicaid eligibility levels will lose coverage for a federally funded AHCCCS acute care program. While these adults would become eligible for Medical Expense Deduction (MED) when their spend-down reached 40% FPL, the state would have a lower federal match rate. Note – This chart excludes income levels for optional programs like Freedom to Work and Breast and Cervical Cancer.

  24. Percentage of Arizonans on AHCCCS February 11, 2008

  25. Who Does AHCCCS Serve?* * January 2008

  26. Health Plan Enrollment GSA Number 2 46,400 4 71,248 6 27,860 8 40,431 10 164,250 12 497,828 14 30,300 Total Health Plan Enrollment = 878,317 Geographic Service AreasAcute Enrollment As of February 1, 2008 APACHE COCONINO (4) (4) 4,670 15,903 MOHAVE (4) 37,245 NAVAJO (4) YAVAPAI 13,430 (6) 27,860 LA PAZ (2) GILA 3,013 MARICOPA GREENLEE (8) (12) 7,978 GREENLEE (14) 914 497,828 PINAL GRAHAM YUMA (8) (14) (2) 32,453 6,153 43,387 PIMA COCHISE (10) (14) 151,331 23,233 SANTA CRUZ February 11, 2008 (10) 12,919

  27. Health Plan Enrollment • Members select a plan prior to being made eligible • Members assigned to a plan on date of eligibility determination • Plans notified one day after assignment • Members retroactively eligible to first of month of application- prior period coverage (PPC) • Plans responsible for retroactive eligibility period February 11, 2008

  28. Source of EnrollmentMembers with Choice Only6 months ending 12/31/07 February 11, 2008 Out of 351,715 members

  29. Members Exercising ChoicePercent by Risk Group (6 months ending 12/31/07) February 11, 2008

  30. AHCCCS Member “Churn” • On average every month the “new” membership consists of • 22% with no prior enrollment in the AHCCCS program • 56% re-enrolling in 6 months or less • 8% re-enrolling in 7 to 12 months • 14% re-enrolling after 1 year February 11, 2008

  31. Source: AHCCCS Eligibility & Enrollment Reports (excludes SLMBs, QI-1s, and HealthCare Group). Total Enrollment January 2000 -2008 February 11, 2008

  32. AHCCCS Total Funds FY 01-FY 08 February 11, 2008

  33. AHCCCS Funding Sources February 11, 2008

  34. AHCCCS Service Distribution February 11, 2008

  35. AHCCCS and CMS • Arizona has been operating under an 1115 Demonstration Waiver for the past 25 years • Arizona is in the second year of the current 1115 Waiver which currently expires on September 30, 2011 • Waiver requires State to Operate a Budget Neutral Demonstration for the entire program – $40 billion over 5 years • 1115 Waiver from CMS provides flexibility • Authority to mandate managed care for all populations (exceptions are Native Americans and FES) • Waiver from Administrative requirements like Drug Rebate program and UPL • Ability to have greater flexibility with Long Term Care February 11, 2008

  36. AHCCCS and the State Budget Process • State Budget Process • Voter Protection • State Revenue Sources and Trends • Funding by Agencies and Growth • FY 2008 and FY 2009 Challenges February 11, 2008

  37. State Budget Process • July - Sept – AHCCCS Develops State Budget Submittal • Sept – Dec – Governor’s Office and Legislature develop Budget Recommendations • Jan – June – Legislature and Governor work on Budget Development • July – June – AHCCCS works on Implementation of Budget Issues February 11, 2008

  38. Proposition 204 Funding(FY 2002 – FY 2007) Dollars in Thousands Members: 18,900 180,200 (6-Year Avg.) NOTE: Pre-Prop 204 MNMI costs were grown by maintaining constant population and a 6% medical inflation factor.

  39. General Fund Base Revenue Growth Rate Compared to AHCCCS Population Growth February 11, 2008

  40. AHCCCS Compared to Other Agencies February 11, 2008

  41. AHCCCS Finance and Rate Development Shelli Silver, Assistant Director, Finance and Rate Development Kathy Rodham, Finance Manager Division of Health Care Management February 11, 2008

  42. Compensation - Overview • Capitation • Prospective • Prior Period Coverage • Premium Tax • Supplemental Payments • Delivery • Reinsurance (self-funded) • Reconciliations • PPC • SSDI-TMC • Compensation policies detailed in ACOM February 11, 2008

  43. Capitation – New • Risk Adjustment • Prospective risk adjustment based on demographic data, member diagnosis and pharmacy data • National Model • Expect to apply to CYE 09 cap rates effective on or after April 1, 2009 (using phase-in provision) • State-Only Transplants (Options 1 & 2) • Different benefit package for each Option • Administrative cap rate only February 11, 2008

  44. Supplemental Payments – New • Eliminated: • Hospital Supplemental Payment • rolled into cap rates – majority in PPC • HIV/AIDS Supplement Payment • rolled into Prospective cap rates February 11, 2008

  45. Reinsurance - New • Inpatient • Eliminated unique TWG threshold • All thresholds will be raised $5,000 annually • Same-day admit/discharge claims excluded • Catastrophic • Contractor is responsible for coverage of biotech drugs except when used by a CRS member (with certain conditions) • Only drugs covered under Reinsurance • Transplants • Invoices/Claims and encounters required for payment • State-Only Transplants (Options 1 & 2) • Reinsurance coverage paid 100% (with limitations and SOC) February 11, 2008

  46. Reconciliations – New • Eliminated TWG reconciliation • PPC reconciliation • Based on date of service (formerly date of payment) • TWG PPC expenditures rolled into PPC recon • SSDI-TMC – reconciled to 2%, based on date of service, utilizing encounters February 11, 2008

  47. Auto Assignment Algorithm - New • Unique formula will be used prior to start of CYE 09 if there are any Exiting Contractors • Conversion Group: Conversion Auto-Assignment • Unique formula may be used for part of CYE 09 • Post Conversion Group: Enhanced Auto-Assignment • Following application of above, formula for 1st year based on: • Awarded capitation rate (50%) • Program component score (50%) • Formula for subsequent years based on: • Awarded capitation rate (50%) • Clinical performance measure results February 11, 2008

  48. Conversion Auto Assignment • Members enrolled in any Exiting Contractor make up the “Conversion Group” (CG) • CG members will be auto-assigned only to new & small Contractors: • New: new to the Acute Program or new to the GSA • Small: based on enrollment as of May 1, 2008 February 11, 2008

  49. Conversion Auto Assignment (cont.) • Enough CG members to bring new & small Contractors to thresholds? • If yes, then once all at threshold, Conversion AA ends and 1st yr AA model implemented for rest of CG • If no, bring all new & small Contractors as equal as possible, and implement Enhanced AA effective October 1, 2008, for at least 3 months • In Rural GSA, as equal as possible for new and/or small • CG members provided two opportunities to choose a different Contractor after notification of conversion auto-assignment – no limitations on choice February 11, 2008

  50. Enhanced Auto Assignment • New/Continuing Contractors still below the thresholds on September 1, 2008 will receive members under the enhanced auto-assign algorithm beginning October 1, 2008 • Enhanced Algorithm for minimum three months, maximum six months • Contractors not qualifying for enhanced algorithm will not receive auto-assigned members during the three to six month period • After enhanced algorithm period ends, algorithm will be based on 50/50 awarded capitation rate and program component score – all Contractors included February 11, 2008

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