HHFMA Financial Managers Conference. Managed Care Task Force presents. Managed Care Survey Results

Transcription

1 7/9/2014 HHFMA Financial Managers Conference July 13 15, Managed Care Task Force presents Cost & Pricing Tool Managed Care Survey Results Pat Laff, Chair Chris Attaya Paul Giles, Sub Comm. Chair Dawn Michelizzi Managed Care Task Force Increasing penetration of Managed Mdi Medicare/Advantage & Managed dmdi Medicaidid Industry s lack of knowledge of payment methodologies across the country Variance of plans and payment schemes Managing Cash, not Care! Industry s general inconsistency when pricing is determined for negotiation 1

2 7/9/2014 Managed Care Task Force Survey The purpose of the survey was to indentify the methods of payment and coverage variations iti by payor across the country by state The results are to be provided to the membership Eliminate surprises to the provider Identifymost desirable payor(s) for proposals Identify best approaches for negotiation Cost & Pricing Tool The Goal: Provide a methodology and tool to identify the costs of those services to be provided for managed care negotiations Based upon Direct Costs by Discipline and the necessary Directly related costs to calculate a billing rate that reflects the agencies desired gross margin The Direct Costs by Discipline are analyzed and calculated by type of visit, including all OASIS related component costs The necessary Directly related costs are analyzed and calculated by type of activity and effort required, including all OASIS related component costs 2

3 7/9/2014 Cost & Pricing Tool (cont.) Directly Related Cost Components Medical Supplies Telehealth is analyzed to calculate the cost per day per patient using a monitor The Quality staff costs are analyzed to calculate their cost by each OASIS event The Authorization staff costs are analyzed to calculate their cost for each patient, both initial and re authorizations. Gross Margins and Contribution Margin Gross margins reflect the difference between revenue and direct costs (cost of goods sold or COGS) usually presented as a percent of revenue or in financial terms on a per unit (visit) basis Gross Margin (%) = Revenue COGS * 100% Revenue Contribution margin is another term to describe the financial value of in the difference between revenues and variable costs, usually per unit 3

4 7/9/2014 Gross Margins and Contribution Margin (cont.) Contribution margin = Revenue/unit Variable Cost/unit Contribution margin is often used in calculating the break even analysis at the point where the $ from the units sold cover all the fixed costs The model intends to show where the direct and directly related costs arecovered (a point where there will be a contribution to cover overhead) By choosing a targeted gross margin %, one can calculate the price that would need to be charged at that margin Gross Margins and Contribution Margin (cont.) Gross margins are to be determined by each individual provider based upon their marketandand goals Some cost components may not apply (or you may not have available) but the model will still be valid The additional patients and visit volume are to be considered as additional opportunities that do not incur fully loaded costs, but as differential Direct and Directly related costs only! 4

5 7/9/2014 Costing Model Review The Cost & Pricing Tool contains Complete definitions, explanations and instructions Complete cost and pricing analysis for each type of visit by discipline, based upon each individual provider s cost and desired or reasonable margin Pricing ranges for each type of visit by discipline, including minimums Costing Model Review (cont.) Excel Spreadsheet Model Review 5

6 7/9/2014 Completing the Tool Instructions very helpful, read before filling out information. Used financial statements and drove down to details of Program expense Some information may not be easy to break out such as Fringe Benefits, combine lines if information not easy access, then if needed go back and breakout details Started with key indicators for number of visits then went to detailed report for type Admission, evaluation, etc Completing the Tool We went from a mix of Union and non union employee s paid, hourly, salary, and per visit to Union nursing staff paid per visit which reduced our nursing direct cost by $2.73 per visit. Our Cell Phone/Air Card Expense added to cost of visit and reviewed vendors for a savings Worked on calculations before per visit pay and used 6 months of data. After per visit pay used one month of data and 3 months. I would suggest using at least a 6 months of data for flow in PTO if you have salaried or hourly employees for replacement cost of visit. 6

7 7/9/2014 Suggestions for Negotiations Non Profit See what type of grants are available Pennsylvania competitive market Look at referral sources and what kind of payer mix you receive Negotiations Are their co pays or deductibles o Insurance verification upfront need consent to send claims o Can your patients pay, policy to write off and collect (time consuming) Discuss incentive plans above per visit rate o % opening in 48 hours o Readmit rate to hospital o How are authorization received Upfront and Number of visits approved How often clinical update and # of visits approved If contract more than year ask for yearly rate increase Do you have specialty programs (higher per visit rate) o Psych o Wound Care 7

8 HHFMA Financial Managers Conference July 13 15, Managed Care Task Force presents Cost & Pricing Tool Managed Care Survey Results Pat Laff, Chair Chris Attaya Paul Giles, Sub Comm. Chair Dawn Michelizzi Managed Care Task Force Increasing penetration of Managed Mdi Medicare/Advantage & Managed dmdi Medicaidid Industry s lack of knowledge of payment methodologies across the country Variance of plans and payment schemes Managing Cash, not Care! Industry s general inconsistency when pricing is determined for negotiation 1

9 Managed Care Task Force Survey The purpose of the survey was to indentify the methods of payment and coverage variations iti by payor across the country by state The results are to be provided to the membership Eliminate surprises to the provider Identifymost desirable payor(s) for proposals Identify best approaches for negotiation Cost & Pricing Tool The Goal: Provide a methodology and tool to identify the costs of those services to be provided for managed care negotiations Based upon Direct Costs by Discipline and the necessary Directly related costs to calculate a billing rate that reflects the agencies desired gross margin The Direct Costs by Discipline are analyzed and calculated by type of visit, including all OASIS related component costs The necessary Directly related costs are analyzed and calculated by type of activity and effort required, including all OASIS related component costs 2

10 Cost & Pricing Tool (cont.) Directly Related Cost Components Medical Supplies Telehealth is analyzed to calculate the cost per day per patient using a monitor The Quality staff costs are analyzed to calculate their cost by each OASIS event The Authorization staff costs are analyzed to calculate their cost for each patient, both initial and re authorizations. Gross Margins and Contribution Margin Gross margins reflect the difference between revenue and direct costs (cost of goods sold or COGS) usually presented as a percent of revenue or in financial terms on a per unit (visit) basis Gross Margin (%) = Revenue COGS * 100% Revenue Contribution margin is another term to describe the financial value of in the difference between revenues and variable costs, usually per unit 3

11 Gross Margins and Contribution Margin (cont.) Contribution margin = Revenue/unit Variable Cost/unit Contribution margin is often used in calculating the break even analysis at the point where the $ from the units sold cover all the fixed costs The model intends to show where the direct and directly related costs arecovered (a point where there will be a contribution to cover overhead) By choosing a targeted gross margin %, one can calculate the price that would need to be charged at that margin Gross Margins and Contribution Margin (cont.) Gross margins are to be determined by each individual provider based upon their marketandand goals Some cost components may not apply (or you may not have available) but the model will still be valid The additional patients and visit volume are to be considered as additional opportunities that do not incur fully loaded costs, but as differential Direct and Directly related costs only! 4

12 Costing Model Review The Cost & Pricing Tool contains Complete definitions, explanations and instructions Complete cost and pricing analysis for each type of visit by discipline, based upon each individual provider s cost and desired or reasonable margin Pricing ranges for each type of visit by discipline, including minimums Costing Model Review (cont.) Excel Spreadsheet Model Review 5

13 Completing the Tool Instructions very helpful, read before filling out information. Used financial statements and drove down to details of Program expense Some information may not be easy to break out such as Fringe Benefits, combine lines if information not easy access, then if needed go back and breakout details Started with key indicators for number of visits then went to detailed report for type Admission, evaluation, etc Completing the Tool We went from a mix of Union and non union employee s paid, hourly, salary, and per visit to Union nursing staff paid per visit which reduced our nursing direct cost by $2.73 per visit. Our Cell Phone/Air Card Expense added to cost of visit and reviewed vendors for a savings Worked on calculations before per visit pay and used 6 months of data. After per visit pay used one month of data and 3 months. I would suggest using at least a 6 months of data for flow in PTO if you have salaried or hourly employees for replacement cost of visit. 6

14 Suggestions for Negotiations Non Profit See what type of grants are available Pennsylvania competitive market Look at referral sources and what kind of payer mix you receive Negotiations Are their co pays or deductibles o Insurance verification upfront need consent to send claims o Can your patients pay, policy to write off and collect (time consuming) Discuss incentive plans above per visit rate o % opening in 48 hours o Readmit rate to hospital o How are authorization received Upfront and Number of visits approved How often clinical update and # of visits approved If contract more than year ask for yearly rate increase Do you have specialty programs (higher per visit rate) o Psych o Wound Care HHFMA Medicare Advantage Managed Care Survey Preliminary results Conducted January 7, 2014 June 9, 2014 Total of 202 responses Questions regarding contracts / services for

15 Responses by State State / Territory Response Percent Response Count California 9.9% 20 Missouri 9.9% 20 Indiana 8.4% 17 North Carolina 6.4% 13 Ohio 5.4% 11 Pennsylvania 5.4% 11 Arkansas 4.5% 9 Illinois 45% 4.5% 9 Connecticut 4.0% 8 Texas 4.0% 8 Arizona 3.0% 6 Kentucky 3.0% 6 Maryland 3.0% 6 Responses Please list the Medicare Advantage plans that you contract twith. 202 Please list all the Medicare Advantage plans that you provide care for, but not under a contract

16 What is the estimated number of unduplicated Medicare Advantage home health patients that your company served in 2013? Answer Options < >2000 Response Response Percent Count 39.6% % % % % 7 8.4% 17 What was the estimated volume of visits that you provide to Medicare Advantage patients in 2013? Answer Options Under Over Response Percent Response Count 30.2% % % % % 31 9

17 Describe your company (check all that apply). Answer Options a. Freestanding b. Institution-based (hospital/snf) c. Health system affiliated d. Government-based e. For-profit f. Non-profit Response Response Percent Count 42.6% % % % % % 82 What percentage of your revenue comes from traditional Medicare and Medicare Advantage? Answer Options a. None b. 0-20% c % d % e. Above 60% T raditional Me dicare Medicare Advantage

18 The following questions relate to the top 5, by visit volume, Medicare Advantage plans that you do business with. Please list the top 5 plans. Answer Options Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Response Response Percent Count 100.0% % % % % 91 What is the reimbursement method that the plan uses for home health services? Answer Options Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Episodic Visit Capitated % 48.99% 1.34% 11

19 How are Non Routine Medical Supplies reimbursed? Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 With Episode payment Capitated rate Fixed fee % of charges Plan provides supplies Not reimbursed separately % 3.04% 4.76% 4.76% 10.32% 34.79% If the plan exclusively reimburses with per visit payment, how do those visit rates compare with your Medicare LUPA rate? Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 LUPA Rate > Rate < rates LUPA LUPA % 18.73% 58.64% 12

20 If the plan pays on an episode basis, what is the payment rate? Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Medicar e PPS % > Medicar % < Medicar Lower of PPS or rates e PPS e PPS Charges % 2.58% 8.25% 11.60% Does the plan deduct the 2% Medicare sequestration from the payment amount? Yes No Unknown Plan 1 Plan 2 Plan 3 Plan 4 Plan % 34.38% 19.78% 13

21 Check the box if the plan requires the following traditional Medicare documentation. Plan 1 Plan 2 Plan 3 Plan 4 Plan 5 Physician face- to face Additional therapy documentation documentation % 23.74% Responses by Carrier/Plan Blue Cross / Blue Shield 136 Humana 128 UHC / United 124 Aetna 71 HealthNet 20 Total

22 Carrier BC / BS Humana UHC / United PaymentMethod Visit Payment Comp LUPA Visit Episodic Capitated LUPA >LUPA <LUPA % 42.1% 2.3% 20.0% 17.5% 62.5% % 74.0% 1.6% 36.2% 14.9% 48.9% % 38.0% 0.8% 22.1% 16.9% 61.0% Carrier BC / BS Humana UHC / United Episode Payments Visit Payment Comp LUPA Medicare >Medicare <Medicare Lower of PPS or Charges LUPA >LUPA <LUPA % 3.2% 7.9% 12.7% 20.0% 17.5% 62.5% % 3.1% 9.4% 10.4% 36.2% 14.9% 48.9% % 0.0% 2.1% 12.5% 22.1% 16.9% 61.0% 15

23 Carrier BC / BS Humana UHC / United Sequestration Adj Medicare Documentation YES NO F2F Therapy % 49.0% 46.3% 26.5% % 12.4% 53.9% 23.4% % 51.5% 39.5% 18.5% Acknowledgements THANK YOU 16