Prospective Offerors Conference

1
Prospective Offerors Conference

• Arizona Health Care Cost Containment System

February 11, 2008
2
Contracting Process

• Michael Veit
• Contracts Administrator
• Division of Business and Finance

February 11, 2008
3
Contracting Process

• Purpose
• Materials
• Timetable
• Submission deadline March 28, 2008,
• 300 PM
• Website navigation
• Questions/Answers

February 11, 2008
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Contracts To Be Awarded
February 11, 2008
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RFP Milestone Dates
February 11, 2008
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Response Specifications

• Original plus seven copies
• Three copies of Network Development Disk/CD
• Sturdy 3-ring, 3-inch binders
• All pages numbered sequentially

February 11, 2008
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Specifications (cont.)

• 3 pages maximum per submission requirement unless
  otherwise specified in the submission
• 8½ by 11 inch paper
• 1 side of paper 1 page
• Single spaced, typewritten in at least 11 point
  font
• Borders no less than ½ inch

February 11, 2008
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Scoring

• Capitation and Network Development scored by
  Geographic Service Area
• Network Management, Program and Organization will
  receive a statewide score

February 11, 2008
9
AHCCCS Strategic Vision

• Anthony Rodgers
• Director
• Arizona Health Care Cost Containment System

February 11, 2008
10
Managing Health System Transformation in Arizona
1980s-1990s
1960s-1970s
Managed Care

• Prepaid healthcare
• More comprehensive benefits
• More choice and coverage
• Contracted Network
• Focus on cost control
• and preventive care
• Gatekeeper
• Utilization management
• Medical Management

• Fee For Service
• Inpatient focus
• O/P clinic care
• Low Reimbursement
• Poor Access and Quality
• Little oversight
• No organized networks
• Focus on paying claims
• Little Medical Management

February 11, 2008
11
2008 Strategic Issues
The Agencys FiveYear Strategic Plan serves as a
framework for ongoing planning, prioritizing and
budgeting. AHCCCS is addressing four strategic
issues
February 11, 2008
12
STRATEGIC ISSUE 1 HEALTH CARE COSTS
Goal Maintain annual capitation rate increases
at or below 6 (per member per month).
overall national health care expenditures are
expected to grow at an average rate of 7.3 per
year through 2012. Centers for Medicare and
Medicaid
February 11, 2008
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February 11, 2008
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AHCCCS Strategies for Controlling Costs

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

February 11, 2008
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STRATEGIC ISSUE 2 HEALTH CARE QUALITY AND
ACCESS TO CARE
Goal Ensure AHCCCS members have the right care,
in the right place, at the right time, every
time.
Quality driven health care results in fewer
medical complications, better outcomes, and lower
costs
February 11, 2008
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AHCCCS Strategies for Improving Quality and
Access to Care

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

February 11, 2008
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AHCCCS Expectations and Budget Reality

• Health plans are partners in delivery of care to
  Medicaid members members that require special
  attention
• The agency expects health plans to be
  sophisticated enough to show how they self
  monitor and can self improve their operations
  particularly those that support quality
  operational fundamentals, such as
• Timely and accurate claims payment
• User friendly prior authorization system
• Responsiveness to providers and members
• Plans have to be able to achieve and document
  higher clinical performance measures, i.e.
  National HEDIS Measures Comparisons
• Due to size of program at federal and state
  level, Medicaid is seen as a budget buster and
  the target of cost cutting strategies
• Either we control spending and improve outcome
  using our methods and approaches, or they will do
  it for us and chances are
• We wont like it!!

February 11, 2008
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AHCCCS Overview

• Tom Betlach
• Deputy Director

February 11, 2008
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Introduction to AHCCCS
Product Lines
- Acute Care (Medicaid KidsCare)
Funding
- Long Term Care
- Healthcare Group
February 11, 2008
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AHCCCS Organizational Structure
February 11, 2008
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Coverage Events in AHCCCS History

• 1982 - AHCCCS Acute Care Program
• 1988 - SOBRA pregnant women and children under 6
  - ALTCS DD
• 1989 - ALTCS EPD
• 1993 - HealthCare Group expanded
• 1998 - KidsCare begins
• 2001 - Arizona Proposition 204 implemented
• 2003 - KidsCare Parents

February 11, 2008
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100 Federal Poverty Level(2008)
February 11, 2008

23
Eligibility Levels
200
200
200
KidsCare/HIFA Parents Medicaid Proposition 204
Expansion
If the HIFA parent program ends on 6/30/08,
adults with income above Medicaid eligibility
levels will lose coverage for a federally funded
AHCCCS acute care program. While these adults
would become eligible for Medical Expense
Deduction (MED) when their spend-down reached 40
FPL, the state would have a lower federal match
rate. Note This chart excludes income levels
for optional programs like Freedom to Work and
Breast and Cervical Cancer.
24
Percentage of Arizonans on AHCCCS
February 11, 2008
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Who Does AHCCCS Serve?


January 2008
26
Geographic Service AreasAcute Enrollment As of
February 1, 2008

APACHE
COCONINO
(4)
(4)
4,670
15,903
MOHAVE
(4)
37,245
NAVAJO
(4)
YAVAPAI
13,430
(6)
27,860
LA PAZ
(2)
GILA
3,013
MARICOPA
GREENLEE
(8)
(12)
7,978
GREENLEE (14) 914
497,828
PINAL
GRAHAM
YUMA
(8)
(14)
(2)
32,453
6,153
43,387
PIMA
COCHISE
(10)
(14)
151,331
23,233
SANTA
CRUZ
February 11, 2008
(10) 12,919
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Health Plan Enrollment

• Members select a plan prior to being made
  eligible
• Members assigned to a plan on date of eligibility
  determination
• Plans notified one day after assignment
• Members retroactively eligible to first of month
  of application- prior period coverage (PPC)
• Plans responsible for retroactive eligibility
  period

February 11, 2008
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Source of EnrollmentMembers with Choice Only 6
months ending 12/31/07
February 11, 2008
Out of 351,715 members
29
Members Exercising ChoicePercent by Risk
Group (6 months ending 12/31/07)
February 11, 2008
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AHCCCS Member Churn

• On average every month the new membership
  consists of
• 22 with no prior enrollment in the AHCCCS
  program
• 56 re-enrolling in 6 months or less
• 8 re-enrolling in 7 to 12 months
• 14 re-enrolling after 1 year

February 11, 2008
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Total Enrollment January 2000 -2008
Source AHCCCS Eligibility Enrollment Reports
(excludes SLMBs, QI-1s, and HealthCare Group).
February 11, 2008
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AHCCCS Total Funds FY 01-FY 08
February 11, 2008
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AHCCCS Funding Sources
February 11, 2008
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AHCCCS Service Distribution
February 11, 2008
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AHCCCS and CMS

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

February 11, 2008
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AHCCCS and the State Budget Process

• State Budget Process
• Voter Protection
• State Revenue Sources and Trends
• Funding by Agencies and Growth
• FY 2008 and FY 2009 Challenges

February 11, 2008
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State Budget Process

• July - Sept AHCCCS Develops State Budget
  Submittal
• Sept Dec Governors Office and Legislature
  develop Budget Recommendations
• Jan June Legislature and Governor work on
  Budget Development
• July June AHCCCS works on Implementation of
  Budget Issues

February 11, 2008
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Proposition 204 Funding(FY 2002 FY 2007)
Dollars in Thousands
Members 18,900
180,200 (6-Year Avg.)
NOTE Pre-Prop 204 MNMI costs were grown by
maintaining constant population and a 6 medical
inflation factor.
39
General Fund Base Revenue Growth Rate Compared to
AHCCCS Population Growth
February 11, 2008
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AHCCCS Compared to Other Agencies
February 11, 2008
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AHCCCS Finance and Rate Development

• Shelli Silver, Assistant Director, Finance and
  Rate Development
• Kathy Rodham, Finance Manager
• Division of Health Care Management

February 11, 2008
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Compensation - Overview

• Capitation
• Prospective
• Prior Period Coverage
• Premium Tax
• Supplemental Payments
• Delivery
• Reinsurance (self-funded)
• Reconciliations
• PPC
• SSDI-TMC
• Compensation policies detailed in ACOM

February 11, 2008
43
Capitation New

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

February 11, 2008
44
Supplemental Payments New

• Eliminated
• Hospital Supplemental Payment
• rolled into cap rates majority in PPC
• HIV/AIDS Supplement Payment
• rolled into Prospective cap rates

February 11, 2008
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Reinsurance - New

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

February 11, 2008
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Reconciliations New

• Eliminated TWG reconciliation
• PPC reconciliation
• Based on date of service (formerly date of
  payment)
• TWG PPC expenditures rolled into PPC recon
• SSDI-TMC reconciled to 2, based on date of
  service, utilizing encounters

February 11, 2008
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Auto Assignment Algorithm - New

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

February 11, 2008
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Conversion Auto Assignment

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

February 11, 2008
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Conversion Auto Assignment (cont.)

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

February 11, 2008
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Enhanced Auto Assignment

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

February 11, 2008
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Financial Oversight

• AHCCCS monitors Contractors financial
  performance to ensure their ability to perform
  the contract and serve AHCCCS members.
• Quarterly financial statements
• Annual financial audits
• Financial viability ratios
• Operational and Financial Reviews
• Approval authority on equity distributions
• Performance Bond monitoring monthly
• Approval authority on provider and affiliate
  advances and recoupments (in limited
  circumstances)

February 11, 2008
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Data Supplement

• Description of each Section in Bidders Library
• Public data in Bidders Library
• Data containing PHI, and large files, available
  only on CD
• See Data Supplement, Section B for descriptions
  of recent and future program changes and how
  those changes should be considered when reviewing
  historical data

February 11, 2008
53
Capitation Rate Submission

• Web-based tool
• Need User ID and password
• In case of conflict between required hard copy
  and web-based tool submission, hard copy prevails
• Must fax attestation see Section A of Data
  Supplement
• Bid rates for all risk groups, for all GSAs
  desired, except the following that will be set by
  AHCCCS
• Prior Period Coverage (PPC)
• Delivery Supplement
• SOBRA Family Planning
• SSDI-TMC
• State Only Transplants
• Reinsurance Offsets set at 20,000 threshold

February 11, 2008
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AHCCCS Policy, Operations and Contractor
Oversight

• Kate Aurelius
• Assistant Director
• Division of Health Care Management

February 11, 2008
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AHCCCS Partnership Strategy

• The Success of Arizonas Medicaid Program is
  dependent on the success of our
  Contractorstherefore, partnership is vital.
• Set clear and reasonable expectations for
  Contractor performance
• Respect for each other
• Understanding each others challenges
• Feedback/Listening
• Ongoing communication
• Mutual accountability
• Flexibility
• Striving for a long-term relationship

February 11, 2008
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Operational Expectations of Contractors

• Contractor Performance is Managed
• Self-monitor operations and clinical performance,
  using multiple data points (data driven)
• Develop and implement interventions designed to
  improve operational or clinical performance
• Evaluate effectiveness of interventions and
  adjust as necessary to achieve excellence
• Contractor must staff to meet AHCCCS performance
  expectations
• Contractor is a partner in the AHCCCS program
• Recognize that members and providers are valued
  partners in the AHCCCS program
• Administrative subcontractors must be managed
• Eliminate inefficient/burdensome Contractor
  policies/processes
• Sharing of best practices

February 11, 2008
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Contractor Oversight - Ongoing

• AHCCCS monitors Contractors performance to
  ensure Contractor is able to perform under the
  contract via
• On-site Operational and Financial Review (OFR)
• Deliverable review
• Clinical performance measures
• Quality improvement projects
• Provider network monitoring
• Claims payment timeliness and accuracy
• Grievance and appeal monitoring

February 11, 2008
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Contractor Oversight - Focused

• Conducted by DHCM due to
• Non-compliance with any contract requirements
• Litigation or settlement agreement
• Stakeholder complaints
• New program requirements
• Changes in ownership, new Contractor, new GSA,
  new management

February 11, 2008
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Policy Changes

• Including but not limited to
• AHCCCS Contractor Operations Manual
• Member Information Policy
• Provider Network Information Policy
• Network Development and Management Plan Policy
• Appointment Availability and Reporting Policy
• Recoupment Policy
• Provider and Affiliate Advances Policy
• AHCCCS Medical Policy Manual
• Chapter 400
• Chapter 900
• Chapter 1000

February 11, 2008
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Operations - Overview

• Medical Management
• Utilization data analysis and intervention
• Utilization management tools (PA,
  concurrent/retrospective review, chronic illness
  management, case/care coordination)
• Quality Management
• Tracking, trending, intervening as necessary
• Clinical performance measures
• Performance improvement projects
• Credentialing and Peer Review

February 11, 2008
61
Operations - Overview

• EPSDT/MCH
• Ensure receipt of EPSDT services including
  physical, oral, developmental, and behavioral
  health
• Ensure receipt of maternal and postpartum care
• Educate members on the availability of family
  planning services
• Promote preventive health strategies for all age
  groups
• Behavioral Health
• Educate members on how to access behavioral
  health services
• Coordinate care for members in the behavioral
  health system
• Cover some behavioral health services via PCP
  network

February 11, 2008
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Operations - Overview

• Provider Network Development and Management
• Network development considers membership
• Network designed to be accessible and avoid
  unnecessary ED use
• Network design considers geography and physician
  referral patterns
• Network management strategies are provider
  friendly and multi-pronged
• On going improvement and resolution of service
  gaps

February 11, 2008
63
Medical Management - New

• Contractor required to review and provide
  rationale for prior authorization requirements
• Reliable transportation for members with chronic
  health issues
• Processes to actively reduce the no-show rate
• Medical Home

February 11, 2008
64
Quality Management - New

• New performance measures and new minimum
  performance standards
• Limited adoption of HEDIS hybrid methodology
• Potential for sanctions for failure to meet
  minimum performance standards
• Rapid cycle improvement for PMs and PIPs
• Value-based purchasing/pay-for-performance
• Formal training for all staff on quality of care
  identification and referral
• Community involvement
• Challenging member assistance

February 11, 2008
65
EPSDT/MCH - New

• Payment of AzEIP providers for covered services
• Developmental assessments
• Community involvement expectations
• Coordination of care needs for Family Planning
  Extension participants
• Increased coordination with other systems of care
  such as CRS, RBHA, AzEIP

February 11, 2008
66
Behavioral Health - New

• Coordination of AzSH discharges, including
  coverage of same pharmacy and supplies
• Ensuring acute-care needs covered in behavioral
  health placements
• Workgroup participation and quarterly meetings
• Identification, sharing and training PCP network
  regarding behavioral health practice guidelines
  and best practices

February 11, 2008
67
Network New

• Non Emergency Department after hours (including
  weekends) physician coverage required
• Requirement to contract with GME programs,
  restrictions on moving members if contract
  terminates
• Requirement to direct members to GME programs
• Requirement to contract with physicians
  relocating to the state if serving medically
  underserved area and physician can be
  credentialed
• Provider communication via multiple methodologies

February 11, 2008
68
Claims, Encounters, Technology

• Lori Petre
• Data Analysis and Research Manager
• Division of Health Care Management

February 11, 2008
69
What Is An Encounter?

• A record of a medically related service rendered
  by a registered AHCCCS provider to an AHCCCS
  member enrolled with a capitated contractor
  (MCO), which has been adjudicated by the MCO.
• Submitted electronically by MCO to AHCCCS
• Includes capitated services and fee-for-service
  payments

February 11, 2008
70
Encounter Data Uses

• MCO capitation/fee-for-service rate setting
• Reconciliations
• Reinsurance calculation and payment
• HEDIS reporting and clinical performance
  measurements
• Identification of centers of excellence
• Supplemental payments to hospitals
• Medical record audits
• CMS reports
• Fraud and abuse analysis reporting
• General information management
• Decision support and what-if analysis

February 11, 2008
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Encounter Submission Standards

• Encounter files must be submitted to the AHCCCS
  server in appropriate HIPAA compliant formats and
  include HIPAA compliant data such as National
  Provider Identifiers (NPI)
• Each Encounter file must pass validation
  including assessment of appropriate file
  structures, validity of code sets, and financial
  balancing
• Each file must contain a required BBA related
  data attestation
• Each file undergoes translation and syntax checks

February 11, 2008
72
Encounter Processing

• Encounter cycles run twice monthly
• One full cycle
• One limited cycle
• Contractors can submit encounters for processing
  for one or both cycles
• Processing includes claims-type edits
• Results are produced and communicated to the MCOs
  after each cycle
• Detailed Information on encounter processing can
  be found in the Encounter Reporting User Guide
  and in the Encounter Keys newsletter published
  regularly on the AHCCCS Website

February 11, 2008
73
Encounter Data Validation

• CMS requires that AHCCCS collect complete,
  accurate and timely encounter data from MCOs
• AHCCCS data validation studies evaluate the
  completeness, accuracy and timeliness of
  collected encounter data
• AHCCCS also conducts ongoing review of encounter
  submission trends and data quality

February 11, 2008
74
Technological Advancement

• Contractor must have the ability to conduct the
  following functions electronically
• Provide enrollment verification (HIPAA 270/271)
• Allow claims inquiry and response (HIPAA 276/277)
• Accept HIPAA compliant electronic claims (HIPAA
  837)
• Make claim payment via electronic funds transfer
• Accept prior authorization requests (HIPAA 278),
  no later than October 1, 2009
• Participate in AHCCCS E-Health initiatives,
  including E-prescribing

February 11, 2008
75
Technological Advancement

• Contractor must have a website with links to the
  following
• Formulary
• Provider Manual
• Member Handbook
• Provider listing
• When available, Member and Provider Survey
  Results
• Performance Measure Results
• Prior Authorization criteria
• Evidence Based Medicine Guidelines
• Other links as identified in the ACOM Member
  Information and Provider Information Policies

February 11, 2008
76
Claims and Encounters - New

• Claims processing systems are expected to include
  specific clinical and data related editing
• Must participate in a workgroup to develop
  uniform guidelines for standardizing outpatient
  claims requirements for hospitals and
  professional providers
• Must subject Claims Payment/Health Information
  System to required independent audit, to be
  completed within two years of the initiation of
  the contract, or by September 30, 2010
• Must develop and implement internal claims audit
  functions
• Must conduct a self-assessment related to
  hospital claims documentation requirements
• New Staffing Claims Educator

February 11, 2008