HI 225 Ch05 pp ts.ab202017

1. © 2018 American Health Information Management Association© 2018 American Health Information Management Association
Principles of Healthcare Reimbursement
Sixth Edition
Anne B. Casto, RHIA, CCS

2. © 2018 American Health Information Management Association
Chapter 5
Managed Care Plans
• Learning Objectives
– Define the term managed care
– Explain the origins of managed care
– Describe the characteristics of managed care in terms of quality and
cost-effectiveness
– Describe the common care management tools used in managed care
– Explain the accreditation processes and performance improvement
initiatives used in managed care
– Explain the cost controls used in managed care
– Discuss contract management and carve-outs
– Describe the types of managed care plans along a continuum of control
– Describe the use of managed care in states’ Medicaid programs,
Children’s Health Insurance Program and Medicare
– Discuss the types of integrated delivery systems
2

3. © 2018 American Health Information Management Association
Managed Care Plans
• Goal:
provide
affordable,
high-quality
healthcare
3
Manage access, cost,
quality of healthcare
Financial
Clinical
Administrative

4. © 2018 American Health Information Management Association
Origins of Managed Care
1906 Western
Clinic
Services =
$0.50/mo
1929 First
Blue Cross
plan
1930s Kaiser
Construction
Co. healthcare
plan for
workers
1973 HMO Act
4

5. © 2018 American Health Information Management Association
Characteristics of MCOs
Selection of
Providers
• Quality; senior clinical staff
• Credentialing and periodic recredentialing
Population
• Healthcare services across the continuum of care
• Preventive care; Health and wellness management
Care
Management
• Coordination of care by primary care provider
• Disease management
Quality
• Accreditation
• Performance improvement
5
High Quality Care

6. © 2018 American Health Information Management Association
Characteristics of MCOs
6
Cost-effective Care
Service
Management
• Medical necessity and utilization management
• Gatekeeper; prior approval; opinions
• Case management; prescription management
Reimbursement
• Prospective Reimbursement Methodologies
• Capitation
• Bundled payment, global payment, episode payment
Financial
Incentives
• Providers meet fiscal targets
• Members must use in-network providers

7. © 2018 American Health Information Management Association
Care Management Tools
Primary Care
Physician
Gatekeeper
Referrals to specialists
Disease
Management
Prevent exacerbations of
chronic diseases
CHF, CAD, Asthma
Improve health and quality
of life
Reduce hospitals
admissions
Decrease hospital and total
healthcare costs
Evidence-based
Clinical
Guidelines
Guide clinical decision
making
Standardize optimal care for
all patients and to deliver
comprehensive, coordinated
care across multiple
providers
7

8. © 2018 American Health Information Management Association
Service Management Tools
Medical Necessity
Healthcare services and supplies
that are proved or acknowledged to
be effective in the diagnosis,
treatment, cure or relief of a health
condition, illness, injury, disease or
its symptoms and to be consistent
with the community’s accepted
standard of care.
Only those services, procedures
and patient care are provided that
are warranted by the patient’s
condition
Utilization Management
Program that evaluates the
healthcare facility’s efficiency in
providing necessary care to
patients in the most effective
manner.
Utilization Review
• Should this healthcare service
occur?
• If so, then what setting is the
most efficient in terms of delivery
and cost?
Prevent overutilization, or the
unnecessary consumption of
healthcare services or the
consumption of unnecessarily
expensive services
8

9. © 2018 American Health Information Management Association
Utilization Review
1. Clinical Review
– Licensed healthcare professional
– Reviews against established criteria
2. Peer Clinical Review
– Peer clinician qualified to render clinical opinion
3. Appeals consideration
– Qualified, expert clinician in same specialty
– Not involved in the initial decision
9
Intensity of Service, Severity
of Illness and Discharge
Screens (ISD)
Appropriateness Evaluation
Protocol (AEP)
Making Care Appropriate to
Patients (MCAP)

10. © 2018 American Health Information Management Association
Service Management Tools
Gatekeeper
• PCP determines
whether referrals
are warranted
• Medical specialists
• Sites for diagnostic
or therapeutic
procedures
• Hospitals or other
healthcare facilities
Prior Approval
• Preauthorization,
precertification
• Healthcare policy
delineates which
healthcare services
require prior
approval
Opinions
• Second and third
opinions
• Prevent
unnecessary tests,
treatments,
medical devices or
surgical
procedures
• Obtained from
experts within the
healthcare plan
10

11. © 2018 American Health Information Management Association
Service Management Tools
Case Management
• Coordinates complex
and high cost cases
• Coordinates multiple
provides at multiple
site over time
• Workers’ compensation
• Severe head injury
Prescription
Management
• Formulary
• Pharmacy benefit
managers (PBMs)
administer a healthcare
plan prescription drug
benefits
11

12. © 2018 American Health Information Management Association
Prospective Reimbursement
• Two main methodologies:
– Capitation
• Per member per month
– Global payment
• Network of providers receive one fixed amount.
• Single payment is divided among all providers
12

13. © 2018 American Health Information Management Association
Financial Incentives
Providers
Referrals
Inpatient days
Productivity (# visits per day)
Positive – receive bonuses for
meeting targets
Negative – percentage reduction of
salary when target is not met
Members
Cost sharing
Higher coinsurance or copayment
when members use out-of-network
providers
Higher copayment for ED visit then
urgent care
13

14. © 2018 American Health Information Management Association
Types of MCOs
HMO
Health
Maintenance
Organization
• Variation of freedom: closed and open
panels
• 4 models: Staff, Group Practice,
Network, Independent Practice
PPO
Preferred
Provider
Organization
• Tend to be virtual and decentralized
• Influence members to use in-network by
higher cost sharing provisions for out-
of-network
• Use discounted fee schedule instead of
capitation
14

15. © 2018 American Health Information Management Association
Types of MCOs
POS
Point of
Service
• Members choose how to receive
services at the time they need them
• Aka: Open ended HMOs
PSO
Provider
Sponsored
Organization
• Physicians who practice in a regional or
community hospital organize the plan
15

16. © 2018 American Health Information Management Association
Types of MCOs
Exclusive
Provider
Organization
• Sponsored by self-insured employers or
associations
• Combination of characteristics of HMO
(gatekeeper) and PPO (discounted fee
schedule)
16

17. © 2018 American Health Information Management Association
Managed Care in Government
Sponsored Programs
Medicaid – MC penetration is
70.5%
CHIP
Medicare Advantage – MC
penetration is 32.4%
17

18. © 2018 American Health Information Management Association
Integrated Delivery Systems
• Collaborative integration of healthcare
providers
– Network of organizations that directly provides or
arranges to provide a coordinated continuum of
services to a defined population and is able and
willing to be held accountable for the costs,
quality and outcomes of care and the health
status of the population serviced.
• Financial agreements or contracts form the
legal entity
18

19. © 2018 American Health Information Management Association
Types of Integration
• Process integration (aka, clinical
integration)
– Coordination of direct patient care activities
• Functional integration
– Integration of the functions that support the
delivery of direct patient care
• Financial management
• Information systems
• Human resources
19

20. © 2018 American Health Information Management Association
Types of Integrated Delivery
Systems
IDS
Group
without Walls
Physician
Hospital
Organization
Management
Service
Organization
Medical
Foundation
Integrated
Provider
Organization
20

21. © 2018 American Health Information Management Association
Consolidation
• Acquisitions and mergers
– Horizontal consolidation
• Hospitals merge with other hospitals
– Vertical consolidation
• Hospitals merge with other types of healthcare
providers, such as home health agencies, nursing
homes, physician practices or rehabilitation
facilities
21

22. © 2018 American Health Information Management Association
Consolidation
• Purpose
– Increase economies of scale
– Gain negotiating leverage
– Increase diversity of business lines
– Improve quality and reduce cost through
standardization of care
22