Do I need Excess Loss Reinsurance? An overview of and strategies for managing PACE risk

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1 Do I need Excess Loss Reinsurance? An overview of and strategies for managing PACE risk

2 Learning Objectives We will explore: The major financial risk factors for PACE Strategies for measuring and managing PACE risk Understanding your risk tolerance: How will your risk tolerance change over time? What is predictable vs. unpredictable risk? How will managing care impact your insurance program? Other considerations: budget, financial strength, parental support, data management capabilities Under capitation, where is your organization s greatest risk for a catastrophic claim? How does the NPA sponsored PACE Insurance program compare to the commercial marketplace? What options do you have in structuring the insurance to meet your needs, i.e. covered services, deductible options? What will be required to file and collect if you have a claim? 2

3 In Summary - PACE is Hard! It is not possible to operate a PACE program without bearing significant risk at many levels There will be no easy months or years leadership and staff will be constantly challenged in caring for this vulnerable population in a shifting health care environment If you ve seen one PACE program, you ve seen one PACE program the snowflake analogy Each organization has its own culture and values Each organization has different participant characteristics Each market (Medicaid/Medicare beneficiaries) has its own set of expectations for care 3

4 Types of Risk in PACE Financial invested capital/working capital, operating losses, insolvency/bankruptcy Medical -hospitalizations, nursing home, utilization mismanagement, tests and procedures Liability general negligence, safety at home determinations, medical malpractice, falls, transportation, incidents, contracted provider negligence Social/Public community reputation as providers and as sponsors/partners 4

5 Financial Risk All risk types eventually circle back to financial risk and the ability of the PACE program to remain solvent and profitable Commonly misperceived risks are numerous random uncontrollable long term/high cost hospitalizations, poor case mix with not enough duals and too many Medicaid-only and ESRD participants, exorbitant rate of permanent placement in SNF, and out-of-control utilization in other key areas such as home care, respite, and specialist care. These are actually symptoms of problems first and foremost. 5

6 True financial risk is commonly linked to ineffective primary care and/or poorly functioning IDTs with lack of proper controls on service delivery and utilization. The best strategies for effectively managing financial risk are to develop and cultivate a strong functioning IDT and prioritize hiring and retaining quality direct care staff. Train your staff over and over! Staff need to be trained and re-trained on care planning, service delivery, and the PACE model of care; they must understand delivering care in a capitated environment. IDTs should be charged solely with focusing on providing the best possible care and quality of life for participants based on service delivery guidelines established and closely monitored by program leadership (Director, Med Director, Center Manager). PACE programs and IDTs should not focus on the individual cost of participant care but rather program utilization across all participants in certain key areas. Not every decision is a full team decision. Financial Risk 6

7 Managing Risk Do s and Don t Do develop and cultivate a high level of critical thinking skills don t fall into the trap of thinking like everyone else 100% of the time Do think and make decisions for the long haul don t panic over short term variances Do utilize the flexibility PACE allows don t be too prescriptive and controlling with your leadership Do heavily invest in and properly train quality staff envision one or two years ahead, not one or two months - don t be afraid to purge staff when necessary Do be proactive in addressing staffing needs based on your program s formula don t wait until staff are overwhelmed 7

8 Managing Risk Do s and Don t Do be firm and direct with participants and caregivers when necessary; Don t be afraid to say NO we can t meet every participant s wants 100% of the time Do know your data (financial, quality, utilization) Don t waste time collecting data you can t or won t use Do initiate focused, timely, limited initiatives don t overburden your staff with overwhelming change or you may get less than desirable results Do seek guidance from respected peers, establish a plan, and stick to it don t seek 100 opinions unless you want to spend time ranking them all 8

9 Overview of PACE Reinsurance Program Background and History of the Program Response to feedback from PACE organizations 5 years ago--commercial market not offering affordable and meaningful coverage Program Development Process Identified key PACE needs for reinsurance protection Selected a broker to solicit a program on a global basis for PACE with individual policies, pricing and program elements Continual monitoring of insurance market/rates and coverage to remain competitive and responsive Current carrier PartnerRe (S&P A+, Best A-excellent) 9

10 Overview of PACE Reinsurance Program Background and history (cont) Program features Flexibility Melds features of a group program while maintaining individualized PACE policies NPA-PACE Insurance Program VS Commerical Reinsurance Market Competitive pricing Deductible Options Lower deductibles available Broad Coverage with flexible terms No internal daily maximums Lower Minimum Premiums Expanded Claim Reporting Period Assistance with Claim reporting Premium Refunds Based Upon Group Experience 3rd consecutive refund - -Avg 11.8% refund for eligible members participants -- experience refund formula is being enhanced by 20% 10

11 Under capitation, where is your organization s greatest risk for a catastrophic claim? 11

12 Overview of PACE Reinsurance Program Reinsurance by any other name... Excess loss Stop loss Provider excess Insurance 12

13 Overview of PACE Reinsurance Program What is the Coverage? Financial Protection mitigate the impact of member expenses Random uncontrollable high cost member expenses Typically catastrophic to the PACE organization Negative impact on financial performance or organization solvency. Coverage Managed Care Excess of Loss Insurance with respect to capitated Eligible Services provided to Covered Persons under the terms of the Covered Plans to be provided to the Company. 13

14 Overview of PACE Reinsurance Program Top 50 claims (plan paid--before deductible) There are random large claims. 14

15 Overview of PACE Reinsurance Program Key Features To Consider in Structuring your coverage: Covered Persons: All PACE eligible members Claims Basis: Incurred within the Policy Period and Paid within the Policy Period or up to 12 months thereafter. Deductible: Applies per member Covered member expenses incurred during the policy year not necessarily your budget period 15

16 Overview of PACE Reinsurance Program Key Features To Consider in Structuring your coverage: Covered Services-- Most often selected by PACE organizations All Covered Expenses per Medicare Evidence of Coverage, or Hospital Inpatient Acute & Sub Acute, LTACH, or Hospital Inpatient Acute & Sub Acute, LTACH, Extended Care Services--Sub-Acute Care Facility Services/Extended Care Facility Services/Skilled Nursing Facility Services/Rehabilitation Facility Services/Home Health Services, Long Term Acute Care Facility Services/Hospice Facility Services 16

17 Overview of PACE Reinsurance Program What is catastrophic? Selecting a deductible If you mapped all member expenses (sample) 17

18 Overview of PACE Reinsurance Program Reviewing High Cost Member Cases Selecting covered services Sample claim costs by member 18

19 Overview of PACE Reinsurance Program Other Features: $2,000,000 annual maximum benefit per member Premium= Paid Monthly PMPM rate x actual monthly enrollment Claims Basis: All Eligible Services: the lesser of the amount Paid, billed charges or Medicare Allowable (for inpatient and long term acute care only) Exclusions: capitated arrangements and services that are not eligible under the Covered Plan. Services not covered Sub capitated plans 19

20 Overview of PACE Reinsurance Program Claims: Must track data for reporting by member Line Item Detail + Evidence of enrollment Member Unique ID # Last Name, First Name Date of Birth Claim # First Date of Service Last Date of Service Admit Date (Hospital or other Institutional Claims) Discharge Date (Hospital or other Institutional Claims) Number of units (other than Hospital) Contract or Network Provider (Yes or No) Place of Service CMS Standard Code (11=Office, 21+Inpatient Hospital ) Provider Name ICD9 Code ICD9 Diagnostic Description DRG Code if Applicable Procedure Code-CPT, Revenue, HCPCS, Procedure Code Modifier (as needed) Billed Amount Paid Amount Date Paid or Otherwise Transacted Transplant Contract Rate and Access Fees (Required for Transplant Claims) Notification reporting requirements at 50% of the deductible Renewal claim history is not claim reporting! 20

21 Overview of PACE Reinsurance Program Considerations: Covered Services only purchase for services and costs that you can track by member! REPORT CLAIMS! Premiums are developed based on loss history you provide whether you submit claims or not!! 21

22 PACE Program Experience/Perspective Risk tolerance Ability to fund a large claim At risk for all services Hospital/LTAC Deductible--re-evaluate every year At some point you will have a large claim 22

23 Lessons learned Buy the right insurance Data is important Be able to track allowable costs Know your risks 23

24 Frequently Asked Questions Handouts 24

25 Panel Discussion 25

26 References Protect Your Practice With Stop Loss Insurance Maxwell Locke & Ritter Chapter nine: Stop-loss insurance American Medical Association 26

27 Presenters Name: Tom Muszynski Title: Care Resources Executive Director Phone: Name: Sharon Cirspinski Title: Senior Vice President of Aon Health Care Practice Managed Care Phone: Name: John Tucker Title: Manager of Geriatric Consulting Services at Palmetto Health Phone: Name: Shawn Bloom Title: President and CEO of National PACE Association Phone: