Re-Evaluating Your Managed Care Revenue Improvement Opportunities

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Payer Contracting Strategy and Revenue Improvement

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Re-Evaluating Your Managed Care Revenue Improvement Opportunities

  1. 1. Re-Evaluating Your Managed Care Revenue Improvement Opportunities L E A D E R S H I P  P R O B L E M SO L V I N G  V A L U E C R E A T I O N Connecticut HFMA Chapter Christopher J. Kalkhof, FACHE Director, Healthcare Industry Group Alvarez & Marsal January 26, 2009Copyright 2009. Alvarez & Marsal. All Rights Reserved.
  2. 2. Presentation Agenda Topic Area I. MCO Contracting Trends and Hospital Financial Performance in Connecticut II. Revenue Optimization and Relevant Solutions III. Preparing for MCO Negotiations  Internal Assessment  External Assessment  Developing MCO Contracting Strategy  Developing MCO Strategic Pricing IV. MCO Contract Negotiations V. Integration of MCO Agreements into Revenue Management Operations VI. Wrap-Up: Lessons Learned Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (1)
  3. 3. Presentation Agenda I. MCO Contracting Trends and Hospital Financial Performance in Connecticut II. Revenue Optimization and Relevant Solutions III. Preparing for MCO Negotiations  Internal Assessment  External Assessment  Developing MCO Contracting Strategy  Developing MCO Strategic Pricing IV. MCO Contract Negotiations V. Integration of MCO Agreements into Revenue Management Operations VI. Wrap-Up: Lessons Learned Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (2)
  4. 4. Trends: Managed Care Issues Facing the Provider IndustryI. Strategic Revenue Improvement Opportunities: Game Changers Managed Care is the Dominant Payment and Utilization Management Business Model  Managed Care Organizations (MCOs ) continue product expansion.  MCO merger/acquisition industry consolidation continues.  20+ states are exploring universal MCO coverage initiatives.  Federal/state efforts to “reform” healthcare continue… – In time… these industry changes can lead to over 80% of provider patient care revenues coming from negotiated MCO contracts.  The MCO business model changes service mix and patient volume and represents multi-year contracts.  To account for this market shift, all providers will need to reflect these changes in their strategic financial planning process, service pricing and contract negotiations with MCOs. 1 (1) The current state of the economy has resulted in significant financial and market share losses with the trend expected to continue into 2009. This added financial pressure will impact provider budgets, resulting in more difficult contract negotiations. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (3)
  5. 5. Trends: Managed Care Issues Facing the Provider IndustryI. Strategic Revenue Improvement Opportunities: Game Changers Quality-Efficiency Ratings, Pay-For-Performance and Tiered Provider Networks  MCOs are profiling providers in their current networks.  Providers determined to be more cost-effective/higher quality will be designated as “quality network” providers.  MCO “Tiered Network” products use a core participating provider network of designated “quality network” providers.  Customers will have the choice of buying benefit products which use the full network or the quality rated network.  Quality rated network products will be priced at a significant discount.  Providers not in the quality network products are at risk of losing significant patient volume.  Both full network/product options will incorporate P-4-P criterion. Price sensitive buyers will buy which network? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (4)
  6. 6. Trends: Managed Care Issues Facing the Provider IndustryI. Strategic Revenue Improvement Opportunities: Game Changers Provider Integrated Networks - Clinical Integration Business Model  2007 FTC ruling on Advocate Health can allow physicians and hospitals to collaborate and align economic interests with community benefits… when structured appropriately. – This ruling has lead to a rebirth of the IDS model under a “clinical integration” structure… offering provider networks the opportunity to establish a more level playing field with large MCOs. – CINs will be well positioned for MCO tiered network products.  The most effective provider business models in the market will be those provider networks which… can attract and retain patient lives, operate under P-4-P reimbursement methodologies and which provide cost-effective quality care with demonstrable quality improvement outcomes. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (5)
  7. 7. Trends: Hospital REPORT OF THE COMMISSION ON THE FUTURE OF HOSPITAL CARE IN CONNECTICUT (January 7, 2003) Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues?  Wall Street is more optimistic about the future for hospitals nationally  The Centers for Medicare and Medicaid Services’ financial forecast for hospitals predicts that non-profit hospitals will recover from recent revenue challenges.  Bond investors predict revenue stability for non-profit hospitals  Stability in government payment rates, especially Medicare, is key  Hospitals are finding themselves in better negotiating positions as managed care loosens some tight restrictions  Traditionally government payers have paid below costs and private payers have made up the difference. In 2000… in Connecticut… – Medicare paid for 43.7% of hospital care… 96% of costs. – Medicaid paid for 12.1% of hospital care… 76% of the costs. – Private payers… managed care arrangements, constituted 36.7% of hospital payments... the payment to cost ratio for private payers was 111% for 2001, down from 120% in 1998. – …hospitals with high Medicaid caseloads had lower margins… more likely to be in distress… Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (6)
  8. 8. Trends: Hospital Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (7)
  9. 9. Trends: Hospital Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (8)
  10. 10. Trends: Hospital Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (9)
  11. 11. Trends: Hospital Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (10)
  12. 12. Trends: Hospital Performance in CT?I. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues?  Economic outlook improving or decreasing for 2009 and 2010?  Irrespective of your provider classification… e.g., hospital, physician, nursing home, etc., will you be able to meet your margin needs from: – Medicaid? – Medicare? – Other government programs? – Uninsured? – Managed care plans? What does “managed care” truly represent for CT providers? Their only significant opportunity to improve their net patient revenues and offset underpayments/bad debt from government payers and the uninsured. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (11)
  13. 13. Trends: Provider Performance In CT-Net Revenue OptimizationI. Strategic Revenue Improvement Opportunities: Where Will You Get Increased Revenues?  Increased reimbursement from State Medicaid?  Increased reimbursement from Medicare?  Better collections from the uninsured?  Revenue cycle “transformation?”  Overall organizational performance improvement?  Get paid what is perceived as “better than market” from MCOs? Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (12)
  14. 14. Presentation Agenda I. MCO Contracting Trends and Hospital Financial Performance in Connecticut II. Revenue Optimization and Relevant Solutions III. Preparing for MCO Negotiations  Internal Assessment  External Assessment  Developing MCO Contracting Strategy  Developing MCO Strategic Pricing IV. MCO Contract Negotiations V. Integration of MCO Agreements into Revenue Management Operations VI. Wrap-Up: Lessons Learned Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (13)
  15. 15. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Portfolio Contracting Approach Hospital Payer Mix Portfolio Profit & Loss Analysis: Patient Net Operating Revenue By Major Payer Class % Increase Hospital Gains-Losses by Total # I/P Payer Class Gains & % Full % Billed Total Needed = 5% Payer Class - Financial Payer Class ($500 Million and O/P Losses (Fully Loaded Costs Charges # Days Operating Performance Comments in Annual Net Revenues) Cases D&I Costs) Paid Paid Margin Medicare (1) 85,000 98,000 $ (7,000,000) 97.1% 40.9% 8.18% I/P Gains & O/P Losses Medicaid (1) 46,000 32,000 (14,140,000) 54.4% 25.4% 93.18% I/P and E/D main loss areas Self Pay 35,000 3,100 (8,750,000) 54.9% 26.5% 91.41% E/D & Other O/P main loss areas Workers Comp 2,700 1,560 3,888,000 157.0% 75.6% 0.00% I/P & Other O/P most profitable Other Government 760 900 (609,000) 73.5% 32.7% 42.81% I/P & Other O/P main loss areas Self-Insurance-Hospital 3,500 1,450 700,000 115.5% 50.1% 0.00% I/P main gain, minor BH loss Unspecified Commercial Plan Class Comm.-No Contract 16,200 2,100 3,200,000 141.1% 75.2% 0.00% (i.e., non-contracted insurers) Main losses on E/D, SDS, Selective MCO - HMO/PPO 86,900 60,300 7,500,000 108.6% 47.7% 0.00% High End DRGs MCO - Medicaid 33,000 11,000 (10,600,000) 65.5% 33.2% 76.35% I/P, E/D & SDS main loss areas I/P, E/D & Other O/P main loss areas, MCO - Medicare 1,050 2,050 (600,000) 93.9% 38.8% 33.00% w/one profitable agreement MCO – Behav. Health 2,290 4,450 (3,250,000) 66.3% 44.3% 153.37% I/P & Other O/P main loss areas TOTALS 312,400 216,910 $ (29,661,000) 94.9% 44.1% 15.14% N/A Required Net Revenue Increase to Attain a 5% Overall Net Operating Margin Goal = $75.7 Million Source: Teaching Hospital Contract Manager Application data. Actual data is rounded for illustration purposes. (1) Does not include annual disproportionate share and bad debt charity back-end settlements and non-negotiable payment rates.  MCO rate increases alone will not close the above margin gap. A comprehensive MCO contracting and pricing strategy, linked with other financial and operational performance improvement initiatives, can provide a margin gap solution.  When establishing target MCO pricing, hospitals need to consider their overall payer mix and the profit/loss in each payer category. Additionally, probable government payment trends should be factored into MCO target pricing. If a hospital intends to justify to a MCO that it needs reimbursement in excess of fully loaded costs, then it is important that they be able to explain actual hospital economics to the MCO as part of the negotiating process.  Once the above payer modeling capabilities are developed, a drill down analysis should performed on each MCO/MCO product to determine necessary rate increases. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (14)
  16. 16. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: What “Market” Really Means MCO Reimbursement, Payment Rules and Contract Terms Result In… ??? Illustrative Variable MCO Negotiation Outcomes: Low & High Ranges (1) Provider Commercial Network Rental Medicare Classes Managed Medicaid HMO/POS/PPO PPOs Advantage Physicians 65% - 150% (2) 90% - 200% (2) 70% - 110% (2) 35% - 100% (2) (PCPs & (% of 07’ Medicare) (% of 07’ Medicare) (% of 07’ Medicare) (% of 07’ Medicare) Specialists) Amb Surg 75% - 150% (3) 100% - 250% (3) 70% - 110% (3) 35% - 100% ( 3) (Hospital based (% of 07’ Medicare) (% of 07’ Medicare) (% of 07’ Medicare) (% of 07’ Medicare) & Freestanding) Hospitals (Acute, Rehab 18% - 65% (2, 4) 40% - 85% (2, 4) 72% - 110% (2) 70% - 120% (2) and Behavioral (% of Charges) (% of Charges) (% of Medicare F-F-S) (% of Medicaid F-F-S) Health) Source: A&M analysis and MCO reimbursement negotiations outcome experience. Low ranges are generally for providers who accept MCO “market rates” with little question or negotiation on price. 1) Unless otherwise noted, reimbursement ranges are benchmarked against 2007 Medicare RVRBS reimbursement. Illustrated reimbursement ranges are representative of urban market settings around the country. 2) Provider business model, capacity/demand/size/brand as well as network participation… are upper payment level factors. 3) Significant price variability in a single market between hospital based and freestanding ASCs… business model, capacity/demand/size/brand as well as network participation all factor into the pricing strategy and negotiations outcomes. 4) Weighted average representative illustration on % of charges vs. each inpatient and/or outpatient billed/contracted service area and does not account for CDM price indexing (charges) variances by provider and market. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (15)
  17. 17. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Managed Care Revenue Optimization  Can you improve your net managed care revenues at your organization? – By how much and how quickly?  The rest of today’s discussion will focus on the “where’s” and “how’s” of improving net managed care revenues! Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (16)
  18. 18. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Actions Within Provider Span of Control Process, Revenue People & Are you Drivers Technology optimizing Reimbursement & Strategy & your managed Methodology Preparation care revenue Payment Rules Contracts & Negotiations opportunities? Physician Referrals E-2-E Revenue and Payer Mix Cycle (Applies to all Clinical Quality, Cost Reduction & providers) Outcomes & P-4-P Resource Use Other Revenue Management Factors Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (17)
  19. 19. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars of MCO Revenue Optimization Reimbursement, Payment Rules and Contract Terms  Contracting strategy, pre-negotiation due diligence and negotiations outcome.  Strategic pricing relative to service delivery costs and margin requirements.  Payment rules, reimbursement methodology, risk/P-4-P and contract terms.  MCO contract administrative costs and relative standardization.  P/L analysis and modeling capability by MCO and MCO product.  Business/network model – relative ability to capture and retain patient lives. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (18)
  20. 20. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars of MCO Revenue Optimization Physician Referral Management & MCO Service Mix Mgmt.  Physician high margin/low margin referral mix and MCO service mix/patient volume.  Service line offering and patient loyalty to provider.  Market share growth and competitive positioning strategies.  Delegated credentialing.  Direct contracting.  Business/network model. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (19)
  21. 21. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars of MCO Revenue Optimization E-2-E Revenue Cycle Process Optimization & Management  Process efficiency/effectiveness in registration-care delivery/case management/charge capture-billing-collections processes (i.e., MCO contract integration into operations).  Effective denial management and payment compliance programs.  A/R management and cash collection processes (i.e., cash flow & payment compliance).  Skills, knowledge and abilities of billing/collections/case management/ nursing/HIM staff.  Charge profiles and CDM indexing relative to local market.  Revenue optimization technology tool deployment and operations integration… underlying processes must be effective/efficient.  Relationship management process with key MCOs (i.e., improves net cash collections, reduces denials and error rates). Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (20)
  22. 22. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars of MCO Revenue Optimization Clinical Quality Improvement Integration with Financial Performance and Cost Reduction Initiatives  Financial and clinical dashboard reports and ability to track key organizational, MCO and individual physician performance indicators.  Improve management of care delivery processes and resource consumption at service line level.  Improved quality and outcomes with established evidence based medicine (EBM) clinical care protocols. What do MCOs want to buy from you?  Effective, efficient, accessible, patient-centric, patient safe, high quality, value-driven services! Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (21)
  23. 23. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars MCO Revenues-EBITDA / EBIDA Opportunity Areas Clinical Quality End-To-End Revenue Reimbursement, Physician Referral Improvement Integration Cycle Process Payment Rules and Management and MCO with Financial Optimization and Contract Terms Service Mix Management Performance and Cost Management Reduction Initiatives Strategic A&M E.G., Opportunity Expected Rationale Metrics Areas EBIDA Contracting strategies and negotiations using Rate traditional market driven approaches yield the Increases & 5% - Pre-Post Net lowest rates and redefining cost + approaches Reimb. 50% + Rate Change yield the highest rates. Ineffective revenue (1, 2, 3)) Method. management processes, however, will result in lower than expected rate benefit realization. Business Business models which can attract and retain Model / 5% - Pre-Post Net patient lives have more market leverage with Network 40%+ Rate Change MCOs and are classified by MCOs into a (1, 2, 3) Configuration different reimbursement category. Source: A&M analysis and experience | (1) Rate change upper limits are impacted by MCO product type (e.g., Commercial HMO vs. Medicaid HMO), provider class and provider business model. | (2) Improvement opportunity variability tied to starting performance rates. | (3) Improvement opportunity is work stream specific. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (22)
  24. 24. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars MCO Revenues-EBITDA / EBIDA Opportunity Areas Strategic A&M E.G., Opportunity Expected Rationale Metrics Areas EBIDA Case & Integrating MCO contract performance Physician Procedure benchmarks with a physician marketing Referral & 5% - Volume strategy, can favorably change referral MCO Mix 10% (3) (per service volumes as well as service mix by MCO Management product. area) MCO underpayments are largely driven by interpretive and implementation related Underpay errors relative to the executed compensation, Recovery UM/CM, payment methodologies/rules Underpay 4% - contracts. To ensure minimal Dollars & % underpayments, revenue cycle processes Recoveries 14% (2, 3) Underpay need to align with contractual requirements Rate and payment compliance tools are necessary to track payment compliance and pursue recoveries. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (23)
  25. 25. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars MCO Revenues-EBITDA / EBIDA Opportunity Areas Strategic A&M E.G., Opportunity Expected Rationale Metrics Areas EBIDA Denial, Pre -Post The many payment rules and administrative Downgrade & Billing Denial requirements associated with a MCO contract 5% - Slow Pay Rates, Write- requires a realignment of revenue cycle Process 30%+ (2,3) Offs and Net operational processes and the use of Improve. Days A/R technology tools to minimize denials. Front-Middle- 2% - 6% Managed care revenues can be reduced at Multiple Back (across End-To-End any point in the revenue cycle management Revenue all payer Performance process as it crosses Finance, Patient Care, Cycle classes) Charge Capture and Case Management (2, 3) Metrics areas. Improve. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (24)
  26. 26. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Four Pillars MCO Revenues-EBITDA / EBIDA Opportunity Areas Strategic A&M E.G., Opportunity Expected Rationale Metrics Areas EBIDA MCO variability from a uniform contract Contracting Billing Error language and multiple administrative 5% - Standardi- Rates & FTE requirements, drives up the costs of MCO zation 30% (3) Costs contract administration by as much as 50% over F-F-S billing/collection costs. LOS Mgmt., Operational, Improved quality results in less resource use and lower cost, better patient outcomes and EBM and 5% - Clinical & (2, 3) bed management and also provides a Quality 30% Financial competitive strategic advantage w/MCO Improvement Metrics contracts. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (25)
  27. 27. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Strategic Implications of MCO Agreements  Managed care provider revenue optimization from a provider industry “conventional wisdom” perspective often focuses on… – Strategic pricing/price transparency, “perceived market” reimbursement, A/R acceleration, charge capture, denials management and payment compliance considerations… important considerations, but incomplete.  There is also a corresponding industry entrenched CW belief that… – Efforts should largely focus on what key competitors are paid… MCOs will not significantly modify their reimbursement methodology, payment rules or contract terms… Per year rate increases are limited to a single digits… Providers cannot effectively influence their payer mix… There is little operational impact outside of the revenue cycle/billing process… There is little long-term strategic impact on programs and services.  The CW approach still applies… however, it needs to expand its scope and evolve into a strategic financial planning approach to MCO revenue optimization. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (26)
  28. 28. Revenue Optimization and Relevant SolutionsII. Strategic Revenue Improvement Opportunities: Strategic Implications of MCO Agreements  Consider… if the majority of your patient revenues came from your MCO payment agreements… how would this impact your… – Short-term and long-term strategic planning? “Think – Capital planning? Strategic – Hospital-physician alignment strategies? Opportunity!” – Collaboration or lack thereof with select MCOs? – Business and service development and/or divestiture? – Employee and medical staff recruitment and retention strategies, procedures and policies? – Information technology needs, planning and implementation? – Formation of provider networks… e.g., Physician-Hospital Organizations, acquisitions of physician practices or hospital mergers/acquisitions? All of the above factors should be incorporated into your managed care contracting strategy. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (27)
  29. 29. Presentation Agenda I. MCO Contracting Trends and Hospital Financial Performance in Connecticut II. Revenue Optimization and Relevant Solutions III. Preparing for MCO Negotiations  Internal Assessment  External Assessment  Developing MCO Contracting Strategy  Developing MCO Strategic Pricing IV. MCO Contract Negotiations V. Integration of MCO Agreements into Revenue Management Operations VI. Wrap-Up: Lessons Learned Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (28)
  30. 30. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: A&M’s Three Phase MCO Contracting Approach The MCO contracting process should be integrated with the organization’s strategic financial planning process to allow management to better determine their short-term/long-term financial targets, link financial targets to operational strategies and also align operational plans to financial targets. Develop Managed Care Negotiate Contracts Implement Contracts Contracting Strategy & • Initiate Contracting Strategy/Proposal • Prepare Work Plan to Ensure Accuracy Financial Planning Analyses Process with each MCO (new or prior of Contract Load, P-4-P and Care • Internal Assessment – MCO Contract to contract renewal) Management Program Implementation Performance, Modeling, Current • Collect Data on E-2-E Cash Issues • Integrate Contract into Revenue Cycle, Margin Gap, MCO EBIDA/EBITDA and Include in Negotiations Process HIM, Case Management & Other Ops Opportunity Assessment & Validation (i.e., for a concurrent resolution) • MCO Relationship Management • External Market Assessment – MCO • Counter Proposal Process and Rate • Revenue Recovery and Denial SWOT Analysis, Market Review, Sensitivity Modeling Analyses Management (ongoing process) Product Share, Physician Referrals, • Review and Finalize Contract/Rate Reimbursement Options • Integrate with MCO Portfolio and Amendment Physician Referral Management & • Develop Overall and MCO Specific • If no Acceptable Contract… Prepare Network Development Strategies Contracting/Pricing Strategies, Termination Disruption Analysis, Tactics, Goals and Objectives • Monitor MCO Contract Performance Patient Retention/External • Standardize Contracting Process, Communications Strategy and • Train Staff Pricing/Proposal Templates & Terminate Contract • Implement Outsourced Services (if Negotiations Management Team applicable) Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (29)
  31. 31. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Four Phase MCO Contracting/Revenue Management Process4. Grow: Integrate MCO Revenue 1. Find: Diagnostic EBITDA/EBIDA Strategies with Overall Assessments, Identify and Organization Business Goals, Validate the Revenue Improvement Objectives and Strategies, Find The Opportunities, Develop Contract Physician Referral/Payer Mix Cash Portfolio Management and Management and Clinical Negotiating Strategies Resource Improvement Grow Increase Get The The Cash Cash Cash3. Manage: Integrate MCO 2. Get: Strategy and Tactics Manage Contracts into Revenue The Development/ Implementation, Management and Clinical Cash Execution of Strategic Pricing, Operations as well as Contract Negotiations and Market Marketing Plans Over a Multi- Positioning Initiatives Year Period… and Collect Cash Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (30)
  32. 32. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: MCO Due Diligence - Internal Assessment Managed Care  Review multi-year strategic goals and objectives Contracting  Interview key “managed care” stakeholders Strategy & Analysis  Assess physician and patient satisfaction with MCO(s)  Inventory managed care contracts and rank by Tier Internal Assessment  Compare Hospital contracts for content and balance  Model, Analyze and Rank Contracts: – By MCO Category and Size External Assessment – By Product Segment – By Profitability and revenue leakage in Revenue Cycle Develop MCO  Assess value of different contracting reimbursement Contracting Strategy approaches (e.g. per diems, DRGs, case rates, % of charges and other) Standardize  Conduct Hospital/MCO mix/payment analysis Contracting  Assess internal data accessibility and IT decision Processes & Mgmt. support capabilities  Assess Managed Care Dept./Div. capabilities and needs Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (31)
  33. 33. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L By MCO/MCO Product Teaching Hospital - MCO Annual Profit and Loss Performance Performance (Declining Performance) Gains/ Losses By Total # of I/P Expected Total % Total MCO - Annual Net Total Allocated and O/P Total # Days Total Charges Net Paid Charges Total Gain/Loss % Net Income Revenues of $500 Expenses Cases Revenues Paid Million - All Payors Commercial Managed Care (HMO, POS and PPO) MCO 1 40,000 29,000 $ 195,000,000 $ 94,000,000 $ 88,000,000 48.2% $ 6,000,000 6.38% MCO 2 13,400 8,300 63,000,000 33,000,000 30,000,000 52.4% 3,000,000 9.09% MCO 3 9,100 6,500 46,000,000 23,000,000 24,000,000 50.0% (1,000,000) -4.35% MCO 4 9,200 5,800 40,000,000 21,000,000 20,000,000 52.5% 1,000,000 4.76% MCO 5 8,000 5,600 39,000,000 18,000,000 18,000,000 46.2% - 0.00% MCO 6 5,000 3,600 28,000,000 14,000,000 17,000,000 50.0% (3,000,000) -21.43% MCO 7 - All Other 2,200 1,500 11,000,000 7,000,000 5,500,000 63.6% 1,500,000 21.43% TOTALS 86,900 60,300 $ 422,000,000 $ 210,000,000 $ 202,500,000 49.8% $ 7,500,000 3.57% Managed Medicaid and CHIP MCO 1 24,300 7,100 $ 33,000,000 $ 11,000,000 $ 16,500,000 33.3% $ (5,500,000) -50.00% MCO 8 3,900 1,600 7,000,000 2,200,000 4,000,000 31.4% (1,800,000) -81.82% MCO 3 2,300 1,300 7,000,000 1,500,000 3,200,000 21.4% (1,700,000) -113.33% MCO 9 - All Other 2,500 1,000 3,700,000 900,000 2,500,000 24.3% (1,600,000) -177.78% TOTALS 33,000 11,000 $ 50,700,000 $ 15,600,000 $ 26,200,000 30.8% $ (10,600,000) -67.95% Medicare Advantage (Note: MCO agreements do not typically use the same DSH and Bad Debt methodology used by Medicare) MCO 10 350 550 $ 2,200,000 $ 1,000,000 $ 900,000 45.5% $ 100,000 10.00% MCO 11 500 1,000 7,000,000 2,600,000 3,000,000 37.1% (400,000) -15.38% MCO 12 - All 200 500 3,000,000 900,000 1,200,000 30.0% (300,000) -33.33% Other TOTALS 1,050 2,050 $ 12,200,000 $ 4,500,000 $ 5,100,000 36.9% $ (600,000) -13.33% Managed Care Behavioral Health MCO 13 1,300 2,400 $ 6,000,000 $ 2,500,000 $ 4,500,000 41.7% $ (2,000,000) -80.00% MCO 14 300 650 2,000,000 700,000 1,200,000 35.0% (500,000) -71.43% MCO 15 290 500 1,500,000 550,000 900,000 36.7% (350,000) -63.64% MCO 16 150 350 800,000 300,000 450,000 37.5% (150,000) -50.00% MCO 17 130 300 700,000 350,000 400,000 50.0% (50,000) -14.29% MCO 18 - All 120 250 600,000 200,000 400,000 33.3% (200,000) -100.00% Other TOTALS 2,290 4,450 $ 11,600,000 $ 4,600,000 $ 7,850,000 39.7% $ (3,250,000) -70.65% COMBINED TOTALS 123,240 77,800 $ 496,500,000 $ 234,700,000 $ 241,650,000 47.3% $ (6,950,000) -2.96% Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (32)
  34. 34. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L Performance Wtd. Wtd. Ave. Wtd. % Wtd. % Wtd. Paid Wtd. % Wtd. % Total Billed Actual Average I/P Case Rate Charges Payor Cases Charges Paid NPSR Gain/Loss Cost/ NPSR/ L.O.S. Denial/Slw Increase Charges Charges for 5% Case Paid for B. E. Case Pay Rate to B.Even Margin Medicaid HMO 1 7,396 $28,541,897 $5,522,580 ($4,989,364) $1,421 $747 2.65 32.4% 90.3% 19.3% 36.8% 38.7% Top 5 DRG Admits - DRGs 391-Normal Newborn; 373-Norm Vag Deliv; 371-Norm. C-Section; 91-Simple Pneumonia/Pleurisy Age 0-17 & 98-Bronchitis & Asthma Age 0-17 (46.0% Denial Rate on Top 5 DRGs. Note: Paid newborn data may be erroneous) Contract Overview: Managed Medicaid and CHIP HMO Products w/ 41.4% of Services for Inpatient. Current MHP rate proposal increase of 2.5% on most services, no change on diagnostic radiology; evergreen contract; 90 days written notice for contract termination; rates have only increased by 3.5% since March 2001 ; contract one-sided most hospital rights/due process referenced to provider manual. Comm HMO 2 1,047 $4,761,228 $1,093,809 ($571,019) $1,590 $1,045 3.75 6.1% 52.2% 23.0% 35.0% 36.7% Top 5 DRG Admits - DRGs 391-Normal Newborn; 373-Norm Vag Deliv; 89-Simple Pneumonia/Pleurisy Age>17 W/CC; 371-Norm. C-Section & 243-Medical Back Problems (4.4% Denial Rate on Top 5 DRGs) Contract Overview: Commercial HMO, PPO, POS & Indemnity Products w/ 20.9% of Services for Inpatient; Rate amendment on 10-26-04, no rate increase since; evergreen contract; 180 days written notice for contract termination w/o cause. Contract one-sided most hospital rights/due process referenced to provider manual. Comm HMO 6 3,157 $26,242,276 $9,678,088 $747,767 $2,829 $3,066 7.02 3.2% N/A 36.9% 34.0% 35.7% Top 5 DRG Admits - DRGs 209-major Joint and Limb Reattachment Procedures of Lower Extremities; 127-heart Failure & Shock; 294-Diabetes Age>35; 143-Chest Pain & 182- Esophagitis Gasteroent Disorders Age>17 146.0% Denial Rate on Top 5 DRGs) Contract Overview: Includes Med Adv (9-1-04), HMO (no agreement on file) and HMO 7 (3-1-05) HMO, PPO, POS & Indemnity Products (Medicaid, Medicare & Commercial) w/ 21.7% of Services for Inpatient; evergreen contract; 90 days written notice for contract termination; contract dated and does not represent current United contracting approach of one facilities contract with separate product rate amendments. Medicare A & B F-F-S 5,996 $52,605,598 $17,235,346 ($1,083,324) $3,055 $2,874 4.98 0.7% 6.3% 32.8% 34.8% 36.6% Top 10 DRG Admits - DRGs 127-Heart Failure/Shock; 89-Simple Pneumonia/Pleurisy Age >17; 88-COPD; 182-Esophagitis Gasteroent Disorders Age>17; 416-Septicima Age>17; 294- Diabetes Age>35; 320-Kidney & Urinary Tract Infections Age >17; 174-G.I. Hemorrhage W/CC; 277-Celluitis Age>17 W/CC & 296-Nutritional & Misc. Metabolic Disorders Age>17 (6.0% Denial Rate on Top 10 DRGs on 847 I/P Cases; Wtd. Ave. Cost/Case = $7,108 and Per Day = $1,434, ALOS = 4.96). Provided For Comparison Purposes Only. State Medicaid F-F-S 4,857 $20,982,566 $4,420,839 ($3,281,811) $1,586 $910 2.82 3.7% 74.3% 21.1% 36.7% 38.5% Top 10 DRG Admits - DRGs 391-Normal Newborn; 373-Norm Vag Deliv; 371-Norm. C-Section; 390-Neonate W/Other Sign. Problems; 523-Alcohol/Drug Abuse or Dependence W/Rehab; 383-Other Antepartum Dx W/Medical Comp.; 370-C-Section W/CC; 98-Bronchitis & Asthma Age 0-17; 91-Simple Pneumonia/Pleurisy Age 0-17 & 521-Alcohol/Drug Abuse or Dependence W/CC (1.7% Denial Rate on Top 10 DRGs on 1,310 I/P Cases; Wtd. Ave. Cost/Case = $2,066 ($3,022 excluding DRG 391) and Per Day = $1,013 ($1,305 excluding DRG 391), ALOS = 2.78). Provided For Comparison Purposes Only. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (33)
  35. 35. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L Performance - Key Hospital Performance Indicators Community Hospital - Managed Care Contract: Key Performance Indicator Report - Leadership Group Reporting Period: Plan Name: Health Plan or PPO: Current Month Health Plan or PPO: Year-To-Date (start date xx-xx-xx) Mgd Medicare Mgd Medicare Prior FY Performance Measures HMO/POS PPO Medicaid Advantage Totals HMO/POS PPO Medicaid Advantage Totals Total Growth & Market Indicators Total I/P Cases Total I/P Days Total Births Total E/D Visits Total OBS Cases Total SDS Cases Total Other Cases/Visits Total Cases-All Cases Acute ALOS Acute Case Mix Index % of Admissions Through ED % Admissions: 3 Mile Radius % Admissions: 5 Mile Radius Reimbursement & Profitability Indicators ($$) Total Billed Charges Total Net Paid Revenues Total Direct Costs Total Indirect Costs Total Costs Total Net Gain/Loss Net Operating Margin % Total Cases Denied % Total Cases Downgrade Pay. Total Expected Pay $$ Total Actual Pay $$ Tot. Exp. Pay. vs. Actual Var. $$ Net Days In Accounts Receivable Total A/R $$ Over 90 Days Total $$ in Accounts Rec. % of Charges Paid to Tot. Billed Cost Per I/P Case-Wtd Ave $$ Payment Per I/P Case-Wtd Ave $$ Cost Per I/P Day-Wtd Ave $$ Payment Per I/P Day-Wtd Ave $$ Total Ratio Cost: Charges Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (34)
  36. 36. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L Performance - Key LTC Performance Indicators Individual SNF Facility Operational Performance Dashboard Report - Management Facility Name: Performance Indicators: Current Week Managed Managed Mgd Care Totals/ Wtd. Performance Measures Medicaid Medicare A Private Hospice VA/Other Medicare Medicaid Comm. AveragesVolume: Capacity & Utilization Facility Staffing Total Other Employed Staff FTEs Revenues---Total Licensed Beds Nursing--- Total Overtime FTEs Total Room & Board PPD * RN FTEs Total Temp FTEsTotal Beds Occupied Total Ancillary & Other Revenue PPD Total Contracted FTEs (e.g., MD, PT, OT)Total Reserve Beds * RN FTE Temps Total Revenue/Patient Day (PPD) Total Facility FTEsTotal Adjusted Beds Occupied (less reserve * RN FTE Pool Total EBITAR PPD Total Nursing Payrollbeds) * Total RN FTEs Expenses--- Total Other Employed Staff PayrollTotal Bed Days Total RN Hours/Resident Day Total Room & Board Expense PPD Total Overtime PayrollTotal Census (No. Patients) * LPN FTEs Total Temp Fees/Payroll Total Ancillary & Other Expense PPDTotal Average Patients * LPN FTE Temps Total Contracted Fees (e.g., MD, PT, OT) Total Property Related Expense PPDPayor Mix Distribution % * LPN FTE Pool Total Facility Staffing Payroll/Fees Total Expenses PPD * Total LPN FTEs Total Facility "Wages" as % Op Exp. Total Profit/Loss PPDAverage Occupancy % of Total Total Benefit Expenses Net Days in Accounts ReceivableAdj. Ave. Occupancy (less reserve beds) % Total LPN Hours/Resident Dayof Total Total Ben. Expenses as % of Oper Exp. Total Billed Accounts Receivable ($$) * CNA FTEs Revenues, Expenses & % of A/R Accounts > 90 DaysAdmissions and Discharges * CNA FTE Temps Profitability Total Cash ($$)% of Admissions Hospital Referral * CNA FTE Pool Total Room & Board Days Cash On Hand * Total CNA FTEs Total Ancillary & Other Revenue Accounts Payable ($$)% Admissions: Physician Referral Total CNA Hours/Resident Day Total Net Revenues Days in Accounts Payable% Admissions: Self or Elective TOTAL NURSING FTEs Total Operating Expenses-Routine% Admissions: Other TOTAL NURSING HRS/RESIDENT DAY Total Operating Expenses-AncillaryTotal Admissions Total Nursing Staff (employed) Terminations Total Operating Expenses - Volun. + Involuntary Total Property Related (Depreciation,Total Discharges Amortization, Rent and Interest)Net New Admissions Total Nursing Staff (employed) New Hires Total Expenses Total Profit/Loss Total Nursing Staff Turnover Rate % Cash Flow Margin Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. Total EBITAR (35)
  37. 37. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L Performance - Hospital Per Diem Rates MCO Analyses: Current Med/Surg Rates Vs. F, T, C Rates – Tier 1 HMOs $2,300 $2,069 $2,000 $1,731 $1,700 $1,400 Same Comparative Analyses: SDS, E/R, High Cost Dx $1,400 0 23 1, 18 33 $1, 1 $ $1,100 $1, 0 $1, 2 83 5 $92 13 70 59 $1, 0 $1, 0 $1, 0 $800 Act. M/S Target M/S Commercial HMO Products Floor M/S Ceiling M/S $500 Pl Pl Pl Pl Pl Pl Pl Pl an an an an an an an an A B C E F G H I Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (36)
  38. 38. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO P&L Performance - Hospital Maternity Rates Actual Commercial HMO-POS-PPO Insured - Maternity 200X Rate Comparison Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (37)
  39. 39. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: MCO Historical Service Mix by Product MCO Analysis: HMO A Service Volume Changes Note: While some patient volume increased… it was largely existing patient business moving from better reimbursing MCOs! Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (38)
  40. 40. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO Referral Sources MCO Analyses: HMO A Patient Product Source And Zip Code Analysis Sum of CY XX CASES ADMISSION MH 07093 07047 PMC % DIRECT Grand Through BENCHMARK CLINIC ADMIT ED H N O P S TRANSFER Y Total EMER/R 20701 HMO A INDEMNITY 1 67 91 7 166 54.8% 20741 HMO A MEDICARE 25 34 59 57.6% 20810 HMO A HMO 1 153 147 40 341 43.1% 20942 HMO A PPO 157 141 30 1 329 42.9% Patient Cases By Zip (85.5%)  xxxxx – Comm. 1 – 1,496 (18%)  Patient volume from the MCO through the E/R?  xxxxx – Comm. 2 – 1,338 (16%)  xxxxx – Comm. 3 – 1,305 (16%)  Does your MCO patient volume come from the immediate community or a further distance,  xxxxx – Comm. 4 – 820 (10%) crossing several competitor service areas?  xxxxx – Comm. 5 – 637 (8%)  xxxxx – Comm. 6 – 477 (6%)  Will your medical staff, area employers and  xxxxx – Comm. 7 – 338 (4%) your patients support you?  xxxxx – Comm. 8 – 231 (3%)  Who has the moral high ground?  xxxxx – Comm. 9 – 221 (3%) Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (39)
  41. 41. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: MCO Due Diligence – External Analysis Managed Care  Identify trends in contracting strategies and Contracting reimbursement (regional/national). Strategy & Analysis  Identify threats to Hospital MCO reimbursements. Internal Assessment  Understand MCO medical claim loss ratios.  Understand role of hospital’s medical staff. External Assessment  Understand referring physician hospital service needs. Develop MCO Contracting Strategy  Identify potential opportunities for collaboration with MCOs. Standardize  Understand employer community support and Contracting Processes & Mgmt. views of MCOs vs. your organization. Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. 40
  42. 42. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current Admissions by Physician by MCO Product INSURANCE NUMBER OF % of TOT DR # DOCTORS NAME PLAN PLAN DESCRIPTION COMPANY ADMISSIONS ADM xx Doctor High Admitter AA YY HP A POS 7 0.044% xx Doctor High Admitter AA YY HP A Medicare Advantage 1 0.006% xx Doctor High Admitter AA YY HP A HMO 6 0.038% xx Doctor High Admitter AA YY HP A PPO 1 0.006% xx Doctor High Admitter AA YY HP B 1 0.006% xx Doctor High Admitter AA YY HP C 7 0.044% xx xx Doctor Doctor High High Admitter Admitter AA AA YY HP D YY HP E Med Adv 1 2 0.006% 0.013% Admissions by xx Doctor High Admitter AA YY HP E Managed Medicaid 26 0.164% xx Doctor High Admitter AA YY CHAR CARE 55 0.346% Physician/MCO Product xx Doctor High Admitter AA YY HP F PPO 1 0.006% xx Doctor High Admitter AA YY HP F POS 2 0.013% xx xx Doctor Doctor High High Admitter Admitter AA AA YY HP G HMO YY HP G PPO 15 1 0.094% 0.006% Knowing which medical xx Doctor High Admitter AA YY HP H Managed Medicaid 1 0.006% xx xx Doctor Doctor High High Admitter Admitter AA AA YY HP H Med Adv YY HP H POS 2 2 0.013% 0.013% staff members are the xx Doctor High Admitter AA YY HP I Indemnity 14 0.088% xx xx Doctor Doctor High High Admitter Admitter AA AA YY HP I Medicare Advantage YY HP I HMO 9 15 0.057% 0.094% highest admitters by xx Doctor High Admitter AA YY HP I PPO 20 0.126% xx Doctor High Admitter AA YY HP I Self Funded ASO 2 0.013% particular MCO and xx Doctor High Admitter AA YY HP I Managed Medicaid 11 0.069% xx xx Doctor Doctor High High Admitter Admitter AA AA YY HP J Self Funded ASO YY HP J PPO 6 8 0.038% 0.050% MCO product, factors xx Doctor High Admitter AA YY HP K Union Trust 1 0.006% xx xx Doctor Doctor High High Admitter Admitter AA AA YY MEDICAID FFS YY MEDICARE FFS 52 135 0.327% 0.849% into your overall xx Doctor High Admitter AA YY MEDICARE FFS 10 0.063% xx xx Doctor Doctor High High Admitter Admitter AA AA YY MEDICARE FFS YY HP L Union Trust 28 2 0.176% 0.013% strategy formulation for xx Doctor High Admitter AA YY HP M Commercial Insurer 1 0.006% xx Doctor High Admitter AA YY HP N Managed Medicaid 2 0.013% MCO negotiations. xx Doctor High Admitter AA YY HP O HMO 3 0.019% xx Doctor High Admitter AA YY HP O FEHBP 8 0.050% xx Doctor High Admitter AA YY HP O PPO 5 0.031% xx Doctor High Admitter AA YY HP P PPO 1 0.006% xx Doctor High Admitter AA YY HP Q Commercial Insurer 2 0.013% xx Doctor High Admitter AA YY HP R Self Funded ASO 1 0.006% xx Doctor High Admitter AA YY HP R HMO 4 0.025% xx Doctor High Admitter AA YY HP R POS 3 0.019% xx Doctor High Admitter AA YY HP R PPO 2 0.013% xx Doctor High Admitter AA YY US POSTAL SERVICE 2 0.013% 478 3.01% Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (41)
  43. 43. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Baseline Determination of Medical Staff Alignment with MCOs To develop a physician referral and payer mix strategy, requires that you understand which MCOs your medical staff participates with, the pros and cons of each MCO from their perspective; and their MCO contract pre-auth and referral rules! Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (42)
  44. 44. Preparing for MCO NegotiationsIII. Strategic Revenue Improvement Opportunities: Current MCO Market Share by MCO Product NYC Enrollments Commercial Commercial Commercial Direct Healthy Medicare Child Managed Family YE 06 Grand NYS Sept 07 By Health Plan HMO POS PPO Pay New York Advantage Health Plus Medicaid Health Plus NYC Totals Update Aetna Health Inc. 98,855 27,056 0 0 4,001 8,471 0 0 0 138,383 151,483 Affinity Health Plan Illustration 0of MCO By Product Enrollments –11,753 105,282 Market 0 0 0 0 0 12/06 NYC 42,929 159,964 208,601 AmeriChoice (United HC)(NYC 12/06 YE Data, No Data 0on Non-Health Plan Managed Care or Rental PPOs)113,731 0 0 0 0 1,160 1,333 95,417 15,821 113,914 AmeriGroup (Care Plus) 0 0 0 0 0 0 17,903 78,628 28,579 125,110 115,347 Atlantis Health Plan 0 9,350 0 42 1,698 0 0 0 0 11,090 15,720 Blue Choice (Excellus) 7 3 0 0 0 0 0 0 0 10 479,476 BSNENY 0 8 432 0 0 0 0 0 0 440 53,581 CDPHP 0 0 0 0 1 0 0 0 0 1 250,898 CenterCare (Fidelis) 0 0 0 0 0 0 4,105 55,619 9,951 69,675 0 CIGNA 17,484 29,578 0 1,408 1,787 0 0 0 0 50,257 17,938 Community Blue (HealthNow) 4 11 231 0 0 0 0 0 0 246 172,611 Community Choice 0 0 0 0 0 0 350 3,299 1,938 5,587 15,474 Community Premier Plus 0 0 0 0 0 0 3,061 65,484 8,506 77,051 29 Empire HealthChoice 100,913 19,734 0 8,148 10,711 25,080 25,989 0 0 190,575 561,747 Fidelis Care New York 0 0 0 0 0 0 7,181 80,431 42,772 130,384 286,356 GHI HMO (GHI-HIP) 3,215 13 0 13 649 5,918 1,058 9,291 6,443 26,600 59,058 Health Net 98,966 Which MCOs are active in your market 0 494 0 0 193 6,509 0 0 106,162 140,155 Health Plus 0 HealthFirst PHSP, Inc 106 area? How many lives do 0they really 0 0 0 0 0 0 0 0 0 28,847 18,718 187,257 244,141 44,050 69,148 260,154 332,113 895,099 415,657 HIP of New York (GHI-HIP) Managed Health Inc. 332,760 0 offer access0 to if you participate? 165,891 40,818 0 6,623 0 43,980 1,761 541 90,160 0 7,216 0 2,377 50,751 4 739,960 2,922 895,099 20,518 MDNY Healthcare Inc. 0 0 0 0 2 0 0 0 0 2 20,518 MetroPlus 1,608 0 0 0 0 0 18,395 190,920 37,257 248,180 272,676 MVP 53 21 0 0 0 0 0 0 0 74 251,389 Neighborhood Health Providers 0 0 0 0 0 0 8,165 75,427 16,438 100,030 90,055 NewYork Presbyterian CHP 0 0 0 0 0 0 3,492 46,565 11,308 61,365 103,185 Oxford Health Plan 84,838 191,246 0 0 5,993 68,680 0 0 0 350,757 410,532 UnitedHealthCare 6,673 39,439 0 0 0 4,845 610 31,806 25,413 108,786 102,983 Univera HealthCare (Excellus) 10 0 0 0 2 4 0 0 0 16 134,890 Upstate HMO (Excellus) 7 0 0 0 1 0 0 0 0 8 381,186 WellCare of New York 0 0 0 0 0 8,744 7,616 48,962 29,095 94,417 111,278 Total Enrollments 646,644 330,715 7,286 53,591 23,339 211,100 154,039 1,381,515 397,474 3,205,703 6,387,369 Copyright 2009. Alvarez & Marsal Holdings, LLC. All Rights Reserved. (43)

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