Getting from Here to
There
Eleven Steps to a ProviderSponsored Health Plan
July 31, 2013
Today’s discussion
>
Goals:
• How do I become a health plan?
• Practical tactical steps
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Today’s Speaker
Agenda
• Why Provider-Sponsored Plans
• 11 Steps
• Q&A
>
Speaker
•
•
•
•
37 year managed care executive
With Valence since 2004
Currently VP of Medicaid Operations
Previously
o COO of Major Provider Plan with
60,000 lives
o Hospital Administrator
Joe Cecil
VP Of Medicaid Operations,
Valence Health
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Take a Step Back – Why Provider-Sponsored Plans?
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History and What’s Different Now
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Financial Imperatives:
• Continued Medicaid FFS
deterioration
• Medicare FFS rates below
Medicaid’s by 2020
• Employers less willing to accept
cost shifting
• FFS penalizes high-value providers
• Already insuring employees
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Prevalence and Performance
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The Fit With Value-Based Care
Why Should Providers Play?
• Waste: 30-40% of all medical expense
is waste.1
• Quality: 50% of medical care is
substandard.2 Provider sponsored
plans more efficient and effective.5
• Preventative Disease: 75% of total
medical costs are for preventable
conditions.3
• Administrative Cost: 31 cents out of
every health care dollar goes to
administrative cost, not medical care
to people.4
Source: 1) Institute of Medicine reports. 2)New England Journal of Medicine 3) CDC 4) Richard Clarke, Wall Street Journal 5) Commonwealth Fund.
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Health Plan Fit for Provider-Sponsored Organizations
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Mission
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Community value
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Profit motives
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Brand identification
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Payer pitfalls
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11 Steps to Provider-Sponsored Plans
Assessment / Business Case
2. New Organization Formation
3. Plan Design
4. Provider Network Recruitment and Relations
5. Medical Management
6. Operations
7. Financial Planning and Reporting
8. Technology Systems
9. Regulatory Compliance / Community Relations
10. Expertise and Staff
11. Health Plan Sales / Broker Relations
1.
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Assessment and Business Case
Identify the potential network size and
types of providers
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What other providers would be participating
in the plan? How strong is our primary care
base?
>
Will independent payers still be willing to
work with the organization? If not, can the
organization function without those
contracts?
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With which patients or in which
geographical regions does the provider
hold a competitive edge over other
systems?
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How will the region’s consumers and
employers respond to a provider-sponsored
plan?
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Is there legislation that makes it difficult for
provider-sponsored plans? Is there
legislation that is supportive?
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Does the provider organization have the
cash on hand and a bond rating high
enough to allow it to set aside the
necessary reserves?
Assess local payer reaction
Identify the organization’s market
position and local competition
Gauge community receptiveness
Regulatory environment
Costs and financial position
6
Cost Analysis: Illustrative Example
Startup
Implementation Costs
Ongoing Financials
Staff (comp, facility)
$4,500,000
Legal/Consulting
$1,000,000
Other
Total
Risk Based Capital
Total Initial Required
Capital
PMPM
$500,000
$500,000
$6,500,000
$15,300,000
Total Premium
$150.00 $180,000,000
Medical Costs
Operations
Admin/Medical
Management
Premium Tax
$132.08 $158,500,000
$4.17
$5,000,000
Profit
$21,800,000
Annual 1
$8.50
$3.00
$10,200,000
$3,600,000
$2.25
$2,700,000
Payback period
1
2.4 years
Assumes 100,000 members
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New Organization Formation
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Mission / Vision
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Legal Creation – what type of organization?
• What type of MCO – HMO, PPO, EPO, etc
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Governance – internal, community, hybrid
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Arm’s Length Rule
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Plan Design
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Which business lines (Medicare, Medicaid, Commercial,
Employees)
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Benefit levels
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Targeted members
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Reinsurance / stop loss
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Coverage specifics
• Clinical coverage
• Administrative philosophy
• Limits
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Provider Recruitment and Relations
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Provider network is required to submit for a
Certificate of Authority to the Department of
Insurance
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Map your network by type, location and
specialty.
•
What is owned? What is contracted? Who are friends
and allies?
•
What is missing from your network?
•
Who is in the marketplace that would contract for
missing services?
>
Map community providers by type, location
and specialty
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Create contract templates – need legal
assistance
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Hire seasoned Provider Relations
Representatives
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Obtain provider commitments on signed
contracts
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Credentialing processes
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Provider Recruitment and Relations - #2
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What do you need in order to get
providers to sign?
• Without a product line, it may be
difficult to get signatures from
providers outside the system
• Provider Manual – they want to
know the rules and they want to
know that you know what you’re
doing
• Committee Structure – credibility
means physician involvement –
inside and outside your sponsoring
entity
• Authorization and Referral Rules –
outside might differ from inside
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Medical Management
Medical Director
> Medical Management Policy
>
Utilization
Management
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•
•
•
Utilization Management
Case Management
Disease Management
Population Management –
gaps in care
• Provider Profiling
MIS – best if integrated with
administrative systems
> HEDIS and quality of care
reporting
> Pre-certification requirements
Case
Management
Clinical
Policy
Care
Management
>
Quality
Management
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Operations
MIS
> Claims Processing
>
• Claims analysts
• Audit and recovery
• Claims system configuration – rules for
payment
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Member Customer Services
• Information
• Complaints
• Fulfillment
Provider Customer Services
> Provider Relations
> Network Management and Contracting
>
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Financial Planning and Reporting
Financial analysis
> Cash-on-hand requirements
> Reserves
> Reinsurance/stop loss
> Audits
> Ongoing reporting
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• Basic Analysis
o Service Utilization
o Claim Lag Reporting
o IBNR – Incurred But Not Received
o Medical Loss Reporting
o Provider Profiling
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Technology and Systems
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Claims Processing
• EDI
• EFT and 835
Customer Service
> Care Management
> Data Warehouse
> Portals
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• Authorizations
• Provider query for eligibility and claims
• Population management
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Regulatory Compliance and Community Relations
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State filing
• National Association of Insurance
Commissioners (NAIC)
• State Department of Insurance
• Purchasers
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Dealing with CMS or State
Medicaid Commissions
• Lots of reporting
• Micro-management
• Sometimes not timely or clear
with what they want
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Community Relations
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Marketing
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Expertise and Staff
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Executive team
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Training
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Recruitment
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Use domain experts not
repurposed high performers
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Perform internally or
outsource?
There is no need to reinvent the
wheel.
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Expertise and Staff – What makes sense to outsource? An art
not a science
Function
Partner
FTE Estimates
Customer Services
X
1:7,500 members
Invoice Management – Group/Broker
X
1:30,000 members
Utilization Management – moderate pre-cert program
X
1:5,000 members
Case & Disease Management – Complex Case Mngt
X
1:3,500 members
Claims Management – adjudication, audit, recovery, mail
X
1:3,000 members
Eligibility Management
X
1:20,000 members
Data Integration – Trading partners
X
1:30,000 members
Finance and Accounting
Plan
X
Analytics and Reporting
1:20,000 members
X
1:30,000 members
Provider Relations and Network Management
X
1:800 provider groups
Compliance
X
1:30,000 members
Marketing
X
Depends on model
Community Relations
X
@ 1:25,000 members
Quality Management
X
1:20,000 members
Staffing ratios are an estimate. Largely depends on programs.
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Go to Market Execution
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Marketing
• Consumer
• Employer
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Direct Sales
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Exchange
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Broker Network
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Premium Billing
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Summary
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No provider-sponsored plan is cookie cutter, but parts of other’s
experiences can be reused
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Get the mission and objectives right
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Know the market and the providers in the market
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Choose partners with integrity and experience if you need help
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Don’t be afraid to outsource, but maintain control over your core
functions of network, quality and branding
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There’s no time like the present
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Questions?
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Joe Cecil, VP of Medicaid Operations, Valence Health
• Information@ValenceHealth.com
• www.valencehealth.com
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