These are risky and uncertain times for Risk Adjustment programs. This presentation from Mile High Healthcare Analytics,explores current risk adjustment legislation and important legal cases and how these are impacting health plan operations.

1. RISK ADJUSTMENT 2015 – THE LEGISLATIVE &
POLITICAL CLIMATE
The Risk Adjustment Forum
May 13, 2015
Richard Lieberman
Chief Data Scientist (aka “Mad Scientist”)

2. Today’s Agenda
• Is “My Majority” the same as “Your Majority”
• A framework for understanding King v. Burwell
• What happens if the Supreme Court rules in favor
of the Petitioners?
• Risk adjustment under siege? Well, maybe!
• Health plan responses to risk adjustment
shenanigans

3. Who Is Richard Lieberman?
 In November 2014, founded a new population health enterprise, Mile High Healthcare Analytics
 I have been actively involved in the development of risk adjustment systems for over 20 years
• Johns Hopkins ACG Development Team, 1991-2005
• Designed the risk-adjusted payment system for Maryland Medicaid
• Worked with CMS on development of the Medicare risk adjuster
• Architect of a data warehouse and decision support system that integrated quality measurement
and risk adjustment on the same web-enabled platform
 I combine a unique array of expertise in provider profiling, risk adjustment, quality measurement,
and provider reimbursement strategies

4. Is My Majority Your Majority?

5. A Certain Health Care Vote in the U.S. House of Representatives
220 – 215
(Hint: only one party voted for this bill)

6. A Certain Health Care Vote in the U.S. House of Representatives
220 – 215
Republicans – Democrats
(Hint: only one party voted for this bill)

7. House Vote on the Medicare Modernization Act (P.L. 108-173)
220 – 215
Republicans – Democrats
(Only Republicans Voted for this Bill)

8. Key Provisions of the Medicare Modernization Act
• The Medicare Modernization Act (MMA) produced the
largest overhaul of Medicare in the public health program's
38-year history
• The MMA's most touted feature is the introduction of
an entitlement benefit for prescription drugs, through tax
breaks and subsidies
• Beginning in 2006, a prescription drug benefit called Medicare
Part D was made available. Coverage is available only
through insurance companies and HMOs, and is voluntary
• Part D introduced the concept of risk corridors, which unlike
the ACA MA risk corridors, are permanent, and funded as an
entitlement

9. Key Provisions of the Medicare Modernization Act (cont.)
• With the MMA, new Medicare Advantage plans were established with several
advantages over the previous Medicare + Choice plans:
• Enrollees sign on for a whole year
• Care can be restricted to networks of providers
• Formularies can be used to restrict prescription drug choices
• Prescription coverage can be deferred to the patient or a Medicare Part D prescription plan
• Care other than emergency care can be restricted to a particular region
• Federal reimbursement can be adjusted according to the health risk of the enrollees
• Comprehensive risk adjustment was integrated into the program and began a 4-year phase-in

10. Another Certain Vote in the U.S. House of Representatives
219 – 212
(Hint: Only one party voted for this bill)

11. Another Certain Vote in U.S. House of Representatives
219 – 212
Democrats – Republicans
(Only Democrats Voted for this Bill)

12. House Vote on the Affordable Care Act (P.L. 111-148)
219 – 212
Democrats - Republicans

13. Which Party Voted for a Bill Does Not Matter!
• A law is a law if it is passed by majority
votes of both houses of Congress
(bicameralism) and is signed by the
President (presentment)
• If only one political party is in the majority,
a bill still can become a law
• As long as there is bicameralism and
presentment, then in our constitutional
system, we get a law
• Laws are supposed to be obeyed until
they are changed (by Congress or the
Courts)

14. King v. Burwell, Will the Sky Fall in?

15. Question to be Decided by Supreme Court
• “Whether the Treasury Department
permissibly interprets 26 U.S.C. 36B to
make the Affordable Care Act’s federal
premium tax credits available to eligible
taxpayers through the Exchanges in every
State.”
• This is a case requiring statutory
interpretation. The constitutionality of the
Affordable Care Act is NOT under review!

16. The Seven (Dirty) Words
• “established by the State under section 1311”
• Petitioners argue that these seven words foreclose tax credits on HHS-created
exchanges
• If Congress intended to give States a choice between receiving subsidies for their
residents and not receiving them, why did it hide the choice in a technical section
on the calculation of subsidies?
• “Congress does not alter the fundamental details of a regulatory scheme in vague
terms or ancillary provisions—it does not, one might say, hide elephants in mouse
holes.” Whitman v. Am. Trucking Ass’n, 531 U.S. 457, 468 (2001)

17. The “isms”
• Textualism: The only “law” to interpret is the text of a statute
passed by both houses of Congress and signed by the President
• Purposivism: the letter of the law must yield to legislative “intent”
• Purposivists argue that the statutory text can be augmented by
combing the legislative history for indicia of legislative intent
• Textualists explain that a search for legislative intent violates the
constitutionally prescribed process of bicameralism and presentment
• Hyperliteralism: reading the words of a statute in a vacuum
• Textualism is not hyperliteralism, and textualists do not read the
words of a statute in a vacuum

18. If You Prefer Literalism in Your Law, Then....
• “But there are two clauses in the Constitution which point directly and specifically to the negro race
as a separate class of persons, and show clearly that they were not regarded as a portion of the
people or citizens of the Government then formed.”
• “And these two provisions show conclusively that neither the description of persons therein referred
to nor their descendants were embraced in any of the other provisions of the Constitution, for
certainly these two clauses were not intended to confer on them or their posterity the blessings of
liberty, or any of the personal rights so carefully provided for the citizen.”
• They had for more than a century before been regarded as beings of an inferior order, and
altogether unfit to associate with the white race either in social or political relations, and so far
inferior that they had no rights which the white man was bound to respect, and that the negro might
justly and lawfully be reduced to slavery for his benefit.

19. Statutory Interpretation According to Justice Scalia
• One of the axioms of statutory interpretation, expressed strongly
and repeatedly by the nine Justices, especially Justice Scalia, is
that one looks at the whole statute and its context to review
meaning, rather than adopting a blinkered focus on a few words
• In interpreting a statute, courts must choose a textually permissible
reading that furthers the evident purpose of the law over one that
obstructs the statutory purpose
• As Justice Scalia expressly stated in one of his treatises, the
well-worn canon of construction follows from the facts that:
• Interpretation always depends on context
• Context always includes evident purpose, and
• Evident purpose always includes effectiveness

20. Chevron v. Natural Resources Defense Council
• “Chevron” is a pillar of modern administrative law
• When a court reviews an agency's construction of the statute which it administers,
it is confronted with two questions
• “First, always, is the question whether Congress has directly spoken to the precise
question at issue. If the intent of Congress is clear, that is the end of the matter; for the
court, as well as the agency, must give effect to the unambiguously expressed intent
of Congress”
Source: Chevron U.S.A. Inc. v. NRDC, Inc.,
467 U.S. 837 (1984)
• “If, however, the court determines Congress has not directly addressed the precise question
at issue, the court does not simply impose its own construction on the statute, as would be
necessary in the absence of an administrative interpretation. Rather, if the statute is silent or
ambiguous with respect to the specific issue, the question...is whether the agency's answer
is based on a permissible construction of the Statute.”

21. Chevron v. Natural Resources Defense Counsel
• Even under Chevron’s deferential framework, agencies must operate
“within the bounds of reasonable interpretation.”
• And reasonable statutory interpretation must account for both “the
specific context in which . . . language is used” and “the broader
context of the statute as a whole.” Robinson v. Shell Oil Co., 519 U. S.
337, 341 (1997). A statutory “provision that may seem ambiguous in
isolation is often clarified by the remainder of the statutory scheme . .
.because only one of the permissible meanings produces a
substantive effect that is compatible with the rest of the law.” Thus, an
agency interpretation that is “inconsistent with the design and structure
of the statute as a whole does not merit deference.”

22. If Chevron is the Law, Then Isn’t the Case Decided?
• Both the Chief Justice and Justice Kennedy expressed
concerns about the limits of “Chevron Deference”
• Roberts asked at oral argument, “If you’re right — if you’re
right about Chevron, that would indicate that a subsequent
administration could change that interpretation?”
• Justice Kennedy expressed concern that an ambiguous
portion of the statute gave the IRS tremendous power to
distribute billions of dollars of subsidies without an explicit
authorization from Congress

23. Utility Air Regulatory Group vs. EPA (134 S. Ct. 2427, 2442 (2014))
• Justice Scalia said, “it is a fundamental canon of statutory construction that the
words of a statute must be read in their context and with a view to their place in the
overall statutory scheme.’” FDA v. Brown & Williamson Tobacco Corp., 529 U. S.
120, 133 (2000).
• “Reasonable statutory interpretation must account for both ‘the specific context in
which . . . language is used’ and ‘the broader context of the statute as a whole.’”
• Example: “The sun may be a star, but ‘starry sky’ does not refer to a bright summer day”
• After all, true respect for Congress requires giving effect to the statute Congress
enacted, not just isolated words divorced from their context

24. Should Unelected Judges Make Decisions for the People?
• Excerpts from Article III of the Constitution:
• The judicial Power of the United States, shall be vested in one supreme Court, and in
such inferior Courts as the Congress may from time to time ordain and establish...The
judicial Power shall extend to all Cases, in Law and Equity, arising under this
Constitution, the Laws of the United States, and Treaties made, or which shall be
made, under their Authority

25. So, What Is Going to Happen?
• The Court may uphold the agency’s (the IRS) interpretation of the statute
• Courts have a duty to construe statues, not isolated provisions” (Graham County Soil
& Water Conservation Dist. v. United States, 559 U.S. 280, 290 (2010))
• The constitutional-doubt and constitutional-validity canons require judges to read statutes
in a way that would avoid rendering them unconstitutional or that would raise serious
questions about their constitutionality: “Every reasonable construction must be resorted to
in order to save a statute from unconstitutionality.” Hooper v. California, 155 U.S. 648, 657
(1895)

26. Or, the Court will Agree with the Petitioners
• If they rule in favor of King, in all likelihood they will rule narrowly
• Perhaps the Chevron Deference doctrine gets limited– this could have a significant
impact on future administrative law cases
• The severability doctrine provides that, “whenever an act of Congress contains
unobjectionable provisions separable from those found to be unconstitutional, it is
the duty of this court to so declare, and to maintain the act in so far as it is valid.”
Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987)

27. If the Court Rules for the Petitioners

28. Who Would be Affected Should Subsidies Go Away?
• Subsidies in states with their own exchanges could continue (e.g., CA, NY, CO, etc.)
• Subsidy recipients are not the poorest people, who get help through the expansion
of Medicaid
• Most recipients of subsidies are low-income and middle-income workers
• Over 80 percent , are the workers themselves; The rest are families of workers.
• Over 60 percent of recipients are white
• Over 60 percent of recipients live in the South
• They’re also a voting population

29. What Happens Next?
• Chief Justice Roberts said, “It is not our job to protect the
people from the consequences of their political choices.”
• All Congress has to do is legislate a few additional
words!
• President Obama may take the position, “you broke it,
you fix it!”
• Republicans claim they will use a favorable decision to
get a repeal and replace of the ACA

30. ObamaCare
Offers subsidies to
purchase insurance and to
offset some copays for low-
and moderate income
Americans (up to 400
percent of the Federal
Poverty Limit (FPL)

31. Offers refundable tax credits for
low- and moderate income
Americans (up to 300 percent of
FPL; plus anyone who works for
an employer with less than 100
lives, or anyone else who doesn’t
have an offer of insurance. In the
form of an age-adjusted,
advanceable, refundable tax
credit
ObamaCare
Offers subsidies to
purchase insurance and
to offset some copays
for low- and moderate
income Americans (up to
400 percent of the
Federal Poverty Limit
(FPL)
Republican Alternative

32. ObamaCare
Individual and employer
mandate to purchase
health insurance or pay
a modest fine (aka “tax”)

33. Repeal individual and employer mandates
but assess a “penalty” on anyone who tries
to buy insurance after open enrollment. In
the case of individuals who have a health
tax credit, but who fail to choose a plan,
states would be allowed to utilize default
enrollment…would be given the authority
to designate insurance plans…to which
individuals could be randomly assigned
ObamaCare
Individual and employer
mandate to purchase health
insurance or pay a modest
fine (aka “tax”)
Republican Alternative

34. ObamaCare
Dependent coverage up
to age 26

35. Dependent coverage up
to age 26
ObamaCare
Dependent coverage up
to age 26
Republican Alternative

36. ObamaCare
Guaranteed issue and
renewability

37. No one can be denied
coverage based on a pre-
existing condition…new
“continuous coverage”
protection…individuals
moving from one health plan
to another…could not be
medically unwritten and
denied a plan based on a
preexisting condition if they
were continuously enrolled
in a health plan
ObamaCare
Guaranteed issue and
renewability
Republican Alternative

38. ObamaCare
“Cadillac tax” applies a
40% tax to employee
health coverage at
$10,200 for an individual
and $27,500 for a family

39. Our proposal caps the
tax exclusion for
employee’s health
coverage at $12,000 for
an individual and
$30,000 for a family.
ObamaCare
“Cadillac tax” applies a
40% tax to employee
health coverage at
$10,200 for an individual
and $27,500 for a family
Republican Alternative

40. ObamaCare
Insurance companies
are banned from
charging older
Americans more than
three times what they
charge younger
individuals

41. Insurance companies
are banned from
charging older
Americans more than
five times what they
charge younger
individuals
ObamaCare
Insurance companies
are banned from
charging older
Americans more than
three times what they
charge younger
individuals
Republican Alternative

42. ACA vs. ObamaCare

45. United States v. SCAN
• This case originally had nothing to do with Medicare-Advantage risk adjustment
• Allegations of risk adjustment “fraud” were subsequently added in a fishing expedition
against every California MA Plan and at least one IPA
• In United States of America, et. al. v. SCAN Health Plan, et. al. (Case 2:09-cv-05013-JFW-
JEM), every allegation about risk adjustment fraud has been dismissed by the court.
• “For all the foregoing reasons, HealthCare Partners’ Motion to Dismiss, Aetna’s Motion to
Dismiss, WellPoint’s Motion to Dismiss, and the UnitedHealth Defendants and Health Net’s
Motion to Dismiss are GRANTED, and Swoben’s third and ninth claims for relief for violation
of the False Claims Act are DISMISSED…” (see, Case 2:09-cv-05013-JFW-JEM Document
133 Filed 07/30/13).
• Moreover, a request to amend the complaint (for the 4th time), was denied by the trial judge
(citing the “futility doctrine” established by the 9th Circuit)

47. United States of America ex rel. Olivia Graves, v. Plaza Medical
Centers Corp., Humana, Inc. and Michael Cavanaugh
• Filed in the U.S. District Court for the Southern District of
Florida, Case No. 1:10-cv-23382
• Allegation: “Submitting False Claims in Violation of the
False Claims Act, 31 USC Section 3729(a)(1)(A), Against
All Defendants”
• This litigation has been set in for a trial on the merits
beginning in December 2015
• The parties must engage in mandatory mediation to be
completed by October 2015

48. “Choice Morsels” from U.S. v. Plaza Medical Centers Complaint
• In or about April, 2010 a former patient of Dr. Graves, who was now being
cared for by Dr. Cavanaugh, asked to be seen by Dr. Graves. During that
examination Dr. Graves noticed that Dr. Cavanaugh had listed several
diagnostic codes for the patient that did not apply, and had submitted
claims to Humana and Medicare with the false diagnoses that increased
the reimbursement by CMS to Humana. When Dr. Graves brought this to
Dr. Cavanaugh's attention, he told her that he "did not give a sh*t."
• Dr. Graves became concerned that Dr. Cavanaugh was improperly submitting false claims to
Medicare regarding other patients. Thus, Dr. Graves started reviewing other patients‘ charts and
found that Dr. Cavanaugh had similarly inflated the diagnostic codes for those patients as well and
had billed Medicare, through Humana, for the false diagnoses.

49. What Should MA Plans Do?
• Many of the alleged whistleblower lawsuits will be bogus. But not all of them!
• Get Your Head Out of ”the Sand”
• Providers need real training on optimal clinical documentation
• Not coding! Documentation!
• Providers need oversight
• Just because the contract transfers risk, doesn’t mean it transfers responsibility
• Risk adjustment is hard and has lots of nuances
• Medicaid and exchange risk adjustment are not just like Medicare!

50. In-Home Assessments
• CMS has decided that trying to disallow diagnosis
codes from HRAs that were not subsequently “treated”
represented a “third rail” (not worth stepping on!)
• Beginning in the 2016, CMS has adopted a,
“guidelines and surveillance” strategy that strongly
encourages MA Plans to change their in-home
assessment process
• And “Big Brother” will be watching!

51. The Guidelines and Surveillance Strategy
• EDPS will now see the light of day!
• By linking the diagnosis code flags from RAPS to the
treatment documented in EDPS, CMS can test for
the linkage between in-home assessment diagnoses
and subsequent treatment
• Hence, the guidelines should be taken seriously,
because the writing is on the wall

52. New Components of Health Risk Assessments
• All components of the annual wellness visit, including a health
risk assessment
• Medication review and reconciliation
• Scheduling appointments with appropriate providers and
making referrals and/or connections for the enrollee to
appropriate community resources
• Conducting an environmental scan of the enrollee’s home for
safety risks, and need for adaptive equipment

53. New Components of Health Risk Assessments (cont.)
• A process to verify that follow-up care is provided
• A process to verify that information obtained during the assessment is
provided to the appropriate plan provider(s)
• Provision to the enrollee of a summary of the information, including diagnoses,
medications, scheduled follow-up appointments, plan for care coordination,
and contact information for appropriate community resources; and
• Enrollment of assessed enrollees into disease management/case
management programs

54. Additional Sources of Potential Oversight
• While not specifically part of the current CMS audit
guidelines, these new HRA requirements can be evaluated
as a component of vendor oversight
• The OIG will now have requirements to build a work plan
item around
• Part C RACs, which still looming could have a field day
with these requirements

55. Responses to New In-Home Assessment Requirements
• These new requirements will require a substantial change in
how Plans approach in-home assessments
• HRA instruments used by vendors and plans will have to
undergo significant revision
• Just transferring the responsibility for risk score optimization to
vendors will no longer work
• Vendors can take on more of the burden, but many of these
requirements must be done directly by the plan

56. In-Home Assessments Begin Well Before the Clinician Arrives
• Refocus the member outreach/appointment scheduling process to be a key
component of the member targeting process.
• Integrate key instruments into the outreach—Patient Activation Measure, PHQ-9,
and/or SF-36
• The telephone outreach is part of the assessment, not just a vehicle to get member’s
to agree to a home visit

57. In Conclusion

58. http://www.newyorker.com/humor/borowitz-
report/scientists-earth-endangered-by-new-strain-of-fact-
resistant-
humans?mbid=nl_05.12.15_borowitz&cndid=30165894&
mbid=nl_05.12.15_borowitz&CNDID=30165894&spMailin
gID=7735628&spUserID=NjUwODI2NDQxOTES1&spJobID
=681275456&spReportId=NjgxMjc1NDU2S0

59. Mile High Healthcare Analytics Can Assist You…
• With Medicare-Advantage bidding season in full swing, do you have accurate risk
scores to produce the optimal bid?
• We design, transform, and load data into data warehouses
• Redesign of the HRA process and oversight of the process
• The Quality Rating System (QRS) beta test puts significant data requirements in front
of overworked issuers. The QRS measures pose significant complexities, particularly
around continuous enrollment requirements
• Do you have the data management acumen to maximize Star ratings?

60. Free Webinar Series
• Mile High Healthcare Analytics is committed to our free webinar series. We will
continue to present key risk adjustment and performance improvement topics to
health plans and provider groups on a monthly basis throughout the year.
• In the month of May, we will present two webinars:
• May 19th: A collaboration between MHHA and Oracle Health Insurance
• May 28th: “Predicting and Reducing Emergency Room Utilization and Preventable
Readmissions” (a collaborative presentation by Mile High Healthcare Analytics and
NextHealth Technologies)
• For more information about our free webinar series or to register, please go to:
http://www.healthcareanalytics.expert/news-and-events/free-webinar-series/

61. Oracle Health Insurance Webcast
Richard Lieberman will be the primary
presenter:
“The Changing World of Value Based
Payments”
Tuesday May 19, 2015
1p.m. Eastern (10 a.m. Pacific)
Registration page:
http://www.fiercehealthpayer.com/offer/oracl
e_may2015?source=oracle

62. THANK YOU FOR JOINING US!!
Our website continues to evolve:
www.healthcareanalytics.expert

63. CONTACT INFORMATION
Richard Lieberman
rlieberman@healthcareanalytics.expert
720-446-7785 (voice)
www.healthcareanalytics.expert