1

A View from the HorizonLong Term Care Financial

and Legal Perspectives

Jim Gomez, CEO/PresidentMark Reagan, General Counsel

Hooper, Lundy & Bookman Darryl Nixon, Director of

Reimbursement

2

National Perspectives

2013 Medicare PPS• Market Basket• Sequestration• MedPac Recommendations

Medicaid Changes• Provider Fees• Block Grants• Blended FMAP

3

Other Issues

• Prompt Payment – HR 3587

• AHCA Initiatives– Re-hospitalization– Quality Initiative– Advancing Excellence

• What Happens if Obama Care is Overturned?

4

State Perspectives

• 2012-13 State Budget– 2% Increase Sweep to General Fund – 1% Rake Off to Q& A Program– Compromise

• 10 % Payment Reductions – Collection Status– Repayment– 2011-12 Retro Rate Increase

5

Managed Care Implementation

• Background– Impetus for Change– State Process– Demonstration Model – Covered Benefits– Long Term Care Services and Supports (LTSS)

• Analysis/Impact– Demonstration/CCI Geography/Demographics– Expansion Analysis (Coordinated Care Initiative)

• CAHF Strategy

6

Background

• State Authority (SB 208, 2010):– Demonstration in up to four counties– One two-plan model county & one county organized

health system county.

• California is one of 15 states that received a $1 million contract to design an integrated care demonstration for duals.

• Expansion – Governor’s Coordinated Care Initiative (CCI) 2012-13 Budget Act (Pending)

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Impetus For ChangeDual Eligible Population

• 1.1 million duals - 1/3 live in L.A. County• 2/3 are 65 and older• Roughly 14% of Medi-Cal population

consume 25% of Medi-Cal costs.– < 20% enrolled in Medi-Cal managed care

• $7.6 billion in state Medi-Cal costs ($20 billion with Medicare)

• $3.2 billion in LTC costs = 75% of Medi-Cal total LTC spending

8

State Process• Draft Proposal to CMS submitted • Public stakeholder workgroups launched and active – CAHF is

a participant in all groups. – LTSS Integration– Behavioral health coordination/integration– Beneficiary Notifications, Appeals and Protection– Quality and Evaluation Management– Fiscal and Rate Setting– Provider Outreach – Substance Abuse and Behavioral Health

• MOU development between State DHCS & CMS• Health plan readiness reviews• Contracts• March 2013 enrollment

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Proposed Demonstration Model

• Population– Most full-benefit dual eligibles

• No children under age 18• No PACE, AIDS Health Care Foundation Enrollees

• Enrollment– Passive enrollment with a voluntary opt out– Phased-in throughout 2013

• Financing– Capitated payment models with 3-way contracts

between CMS, CA Department of Health Care Services, and health plans

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Demonstration Covered Benefits

• All Medicare Part C and D Benefits• All Medi-Cal Services currently required in managed

care coverage• Long-term supports and services

– Nursing facilities, – In-Home Supportive Services (IHSS), and – Five home-and community-based waiver services.

• Coordination with mental health and substance use carved-out programs

• Supplemental Benefits: Pending rates, health plans intend to offer dental, vision, transportation and possibly some housing alternatives

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Long Term Care Services and Supports (LTSS)

• All Medi-Cal benefits, including LTSS, would be included in the capitated payment to the health plans.– In Home Supportive Services (IHSS)– Community-Based Adult Services (CBAS)– Multi-purpose Senior Services Program (MSSP) – Nursing facilities – Five home- and community- based services 1915(c) waivers.

• Medi-Cal beneficiaries would need to be enrolled in a Medi-Cal managed care plan to receive any Medi-Cal LTSS

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Analysis

Impact Perspective

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Medi-Cal Managed CareGeographic Managed Care

The Geographic Managed Care (GMC) program model was established to provide medical and dental care for Medi-Cal recipients for a capitated fee. This model is currently available in Sacramento and San Diego counties. The San Diego GMC program operates as “Healthy San Diego.”

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Medi-Cal Managed CareTwo Plan Model

Managed Care Two-Plan Model (DHCS) contracts with two managed care plans in 14 California counties.

• Each county offers a local initiative and a commercial plan. – Local initiative plans are operated by a locally developed

comprehensive managed care organization. – Commercial plans are operated by non-governmental

managed health care organizations.• Medi-Cal recipients may enroll in either plan.• Counties participating in the “Two-Plan Model” are

Alameda, Contra Costa, Fresno, Kern, Kings, Los Angeles, Madera, Riverside, San Bernardino, San Francisco, San Joaquin, Santa Clara, Stanislaus and Tulare.

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Medi-Cal Managed Care (COHS)

• A County Organized Health System (COHS) is a local agency created by a county board of supervisors to contract with the Medi-Cal program. Enrolled recipients choose their health care provider from among all COHS providers. Currently 6 COHS serve 14 counties covered by COHS are:

• CalOPTIMA (Orange)• Central California Alliance for Health (Merced,

Monterey, and Santa Cruz).• Health Plan of San Mateo (San Mateo).• Partnership HealthPlan of California (PHC) (Marin,

Mendocino, Napa, Solano, Sonoma, and Yolo).• CenCal Health (San Luis Obispo and Santa Barbara).• Gold Coast Health Plan (Ventura).

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Medi-Cal Managed CareExpansion Counties

The following 28 counties are not currently Covered under Medi-Cal Managed and would be included and phased in under the CCI: Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, El Dorado, Glenn, Humboldt, Imperial, Inyo, Lake, Lassen, Mariposa, Modoc, Mono, Nevada, Placer, Plumas, San Benito, Shasta, Sierra, Siskiyou, Sutter, Tehema, Trinity, Tuolumne, and Yuba.

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Medi-Cal Managed CareCurrent Landscape

California = 58 Counties/121,700 Total Beds• Managed Care = 30 Counties /114,470 Beds

– Geographic Managed Care (GMC) = 2/ 13,300 Beds– Two Plan Model = 14/ 78,170 Beds– County Organized Health System (COHS) = 14/ 23,000

Beds• Non Managed Care = 28 Counties / 7230 Beds• SNF Benefit Counties* = 14 (COHS) /23,000 Beds• Current Non SNF Benefit Beds (FFS) = 98,700 = 81%

* Note – All managed care counties have SNF benefit but only COHS pay for more than 60 days.

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CCI Expansion• The TBL proposes phasing in LTSS integration over a three-

year period. LTSS will become a Medi-Cal benefit covered under every managed care health plan contract and available only through managed care health plans, in Medi-Cal managed care counties.

• Beginning July 1, 2012, CBAS will be the first LTSS to be integrated.

• Beginning no sooner than March 1, 2013, with federal approval, the department will implement LTSS integration and the Duals Demonstration in up to eight counties.

• Beginning no sooner than January 1, 2014, the department may expand provision of LTSS through managed care plans into all remaining counties that currently provide Medi-Cal through managed care.

• Beginning no sooner than January 1, 2015, the department will expand the provision of LTSS through managed care plans into all remaining counties, consistent with the proposal to expand.

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CCI Transition AnalysisFFS to Managed Care

• Impact – Timeline ?–Current Percentage of Beds with

LTSS Benefit 23,000 = 19% (2012)–Initial Phase (Additional beds to

LTSS = 91,470) = 94% (2013 - 14)–Future Phase (Additional beds to

LTSS = 7230) = 100% (2015)

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Demonstration Geography

• Eight (8) Counties proposed in 2013• Current State Authority for Four Counties:

– Los Angeles (370,000)– Orange (71,000)– San Diego (75,000)– San Mateo (15,000)

• Four (4) additional proposed, pending further authority and readiness: Alameda, Santa Clara, San Bernardino, Riverside

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Los Angeles CountyDemographics - Plans

Demographics• Duals Population - 370,000 Duals• Average Monthly Users

– All LTC = 173,800– SNF = 23,100 (SNF Beds=39,200)– IHSS = 129,500

• Health Net and LA Care

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San Diego CountyDemographics - Plans

Demographics• Duals Population – 75,000 Duals• Average Monthly Users

– All LTC = 26,600– SNF = 5,100 (SNF Beds = 9,400)– IHSS = 17,000

• Molina, Care 1st, Community Health Group, Health Net

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Orange County Demographics - Plan

Demographics• Duals Population - 71,000 Duals• Average Monthly Users

– All LTC = 21,300

– SNF = 4,100 (SNF Beds = 8,200)

– IHSS = 13,400

• CalOptima

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San Mateo CountyDemographics - Plan

Demographics• Duals Population – 15,000 Duals• Average Monthly Users

– All LTC = 5,000

– SNF = 900 (SNF Beds = 1,970)

– IHSS = 2,300

• Health Plan of San Mateo

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CCI Expansion Riverside County

Demographics• Duals Population – 50,000 Duals• Average Monthly Users

– All LTC = 17,000– SNF = 2,600 (SNF Beds = 4,620)– IHSS = 11,400

• Tentative Plans Inland Empire Health Plan (IEHP), Molina Healthcare

26

CCI ExpansionSan Bernardino County

Demographics• Duals Population – 55,000 Duals• Average Monthly Users

– All LTC = 18,300– SNF = 2,800 (SNF Beds = 5,040)– IHSS = 12,800

• Tentative Plans - Inland Empire Health Plan (IEHP), Molina Healthcare

27

CCI ExpansionSanta Clara County

Demographics• Duals Population – 50,400 Duals• Average Monthly Users

– All LTC = 19,000– SNF = 2,900 (SNF Beds = 5,300)– IHSS = 12,900

• Tentative Plans – Anthem Blue Cross and Santa Clara Family Health Plan

28

CCI ExpansionAlameda County

Demographics• Duals Population – 48,300• Average Monthly Users

– All LTC = 18,600– SNF = 3,100 (SNF Beds = 5,740)– IHSS = 12,500

• Tentative Plans – Alameda Alliance for Health and Anthem Blue Cross

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Provider Issues/Concerns

• Payments• Benefits/Coverage• Passive Enrollment• Network• Discharge/Transfer• Continuity of Care – Lock In• Quality Review• Contractual Disputes• Business Continuity/Disaster Preparedness

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CAHF Strategy

• Member Advisory Group

• Identify Key Protections

• Monitor State’s Expansion

• Conduct Forums and Educate Members

• Develop Resource Guides and Member Tools

• Expand and Strengthen Relationships

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Legal Perspectives

Mark Reagan

Hooper, Lundy and Bookman

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Legal Perspectives

• Managed Care Expansion Implications/Considerations

• 60 Day Rule

• RACs/ZPICs/OIG

• Other Issues

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• Network Formation• Plans will utilize networks

–Built on existing networks»Medicare Part C»Medi-Cal SPD pilot

–“Any Willing Provider” Proposal»Not certain to be adopted»More likely for existing residents»Would not guarantee referrals

Implications of Managed Care Penetration

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• Identification Plans– Primary plans– Subcontracted plans

• Plan focus– Medical groups first– “Ancillary “ providers thereafter/Summer of

2012?– Economic relationships under health plans

• Likely plan relationships with medical groups– Some groups will subcapitate and at risk for

some institutional services– Others will have fee-for-service

arrangements with risk pools

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• Likely plan relationships with skilled nursing facilities

– Primarily fee-for-service– Risk contracting in the future– “ACO-like” strictures down the road”

– Marketing Challenges and Opportunities• Best practices

– Length of stay – Medicare– Outcomes and readmissions

• Quality and referral risks

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• Contractual Issues– Rate proposals for Medicare and Medi-Cal rates to

set the “floor” and description of services• What’s “carved” in?• What’s “carved” out?• How will differences in program coverage be

handled?– Medicare Part A– Medi-Cal– Medicare Part B– Medicare Part D

• Handling of out of network claims

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– Prior Authorizations and Length of Stays• How determined/timelines• Who determines/plan or medical group?• Time to react to plan/medical group

decisions/transfer and discharge

– Timely Payment• Legal requirements• Contractual provisions

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– Care transitions and levels of care• Payment during appeals• Payment across “levels of care”• Contractual precision is very important

– Other issues• Share of cost• Plan policies and procedures• Appeals and dispute resolution

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ZONE PROGRAM INTEGRITY CONTRACTORS (ZPICS):

WHAT DO THEY DO?

• ZPICs are responsible for preventing, detecting and deterring Medicare fraud. – Different from the Medical Review program

which is primarily concerned with preventing and identifying errors

– ZPICs request medical records and conduct medical review to evaluate the identified potential fraud

– ZPICs may also refer to the OIG and DOJ for further investigation

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RECOVERY AUDIT CONTRACTORS

• Who is the RAC?• Region D: HealthDataInsights, Inc.

oWorking in AK, AZ, CA, IA, KS, MO, MT, ND, NE, NV, OR, SD, UT, WA, WY, Guam, American Samoa and Northern Marianas

ohttp://racinfo.healthdatainsights.com/home.aspx

• What is the RAC?– Now called a Recovery Auditor (”RA”)– Contingency Fee Contractors– Overpayments made by Medicare

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WHAT’S COMING?• Unannounced audits of SNFs by ZPICs• Claims for Ultra-High RUGs

• 8 to 10 individuals• Voluminous document request • Interviews of employees behind-closed-doors

• Record requests by RAC on “medical necessity”– Limitations on records requests– 45-day Turnaround

• Preparation– Self-audit– Employee rights and responsibilities for ZPIC audits– Review therapy contracts

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RECENT DEVELOPMENTS OF SIGNIFICANCE

• Region B RAC “test claims” of “ ultra high” therapy scores– CMS must approve audit issues before

the RACs may pursue them– RACs may audit a limited number of “test

claims” in order to seek CMS approval of proposed issues

4343

RECENT DEVELOPMENTS OF SIGNIFICANCE (cont.)

– Region B RAC began to submit record requests for "test claims" associated with the issue of ultra-high therapy scores for Part A SNF charges. • Tied to recent OIG report criticizing the

handling of Part A charges by SNFs and CMS rulemaking on Part A payments for FY 2013.

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• ZPIC audits on Part A claims with an emphasis on ultra-high therapy scores.

– Storming through Florida and elsewhere

– ZPIC audits on Part A claims with an emphasis on ultra-high therapy scores.

– OIG/DOJ investigations in this area, false claims cases expected

RECENT DEVELOPMENTS OF SIGNIFICANCE

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60-DAY RULE

• ACA Requires ID and reimbursement of overpayment within 60 days

– If not done, overpayment becomes “obligation” for false claims purposes

– CMS issued proposed rule in February 2012 (NPRM)

o 10-year “look back”o Investigation must be expeditiouso Other elements and implications

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• NPRM applies only to Medicare Part A/B providers and suppliers (together “providers” unless otherwise noted)

• Overpayment retained after deadline under NPRM creates an “obligation” for purposes of the federal FCA

• Providers still potentially liable under other laws even with timely report/repayment– Federal FCA– Civil Monetary Penalty Law

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• A person “identifies” an overpayment if the person has actual knowledge of the existence of the overpayment or acts in reckless disregard or deliberate ignorance of the overpayment

• Oddly, statute defines, but does not use, “knowing” and “knowingly”

• CMS believes FCA’s “deliberate ignorance or reckless disregard” standard encourages self-directed compliance– May impact future rulemaking around

compliance programs

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OVERPAYMENT EXAMPLES

• Medicare payments for non-covered services• Medicare payments in excess of the allowable

amount for an identified covered service• Errors and non-reimbursable expenditures in

cost reports• Duplicate payments• Receipt of Medicare payment when another

payor had the primary responsibility for payment

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WHAT DOES “IDENTIFIED” MEAN TO CMS?

• Provider receives an anonymous compliance hotline complaint about a potential overpayment and fails to make a reasonable inquiry into the complaint

• Provider or supplier reviews billing or payment records and learns that it incorrectly coded certain services, resulting in increased reimbursement

• Provider or supplier learns that a patient death occurred prior to the service date on a claim that has been submitted for payment

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NPRM EXAMPLES OF “IDENTIFIED”

• Provider or supplier learns that services were provided by an unlicensed or excluded individual on its behalf

• A provider of services or supplier performs an internal audit and discovers that overpayments exist

• A provider of services or supplier is informed by a government agency of an audit that discovered a potential overpayment, and the provider or supplier fails to make a reasonable inquiry– Duty to make reasonable inquiry– “All deliberate speed”

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CHALLENGES FOR PROVIDERS – “IDENTIFIED”

• NPRM definition of “identified” does not address complex overpayment situations– Wholly silent about how provider cannot quantify

overpayment within 60 days (even with reasonable diligence)

• NPRM does not specify how strong the evidence needs to be to trigger a provider’s “obligation to make a reasonable inquiry”

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RELATIONSHIPS WITH OTHER DISCLOSURES

• Receipt of acknowledgment from CMS of SRDP submission suspends obligation to return– Does not constitute “report” for

purposes of 60-day rule

• CMS seeking comment on how to avoid duplicate reporting under SRDP

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• Upon acknowledgement of receipt of submission, duty to return suspended

• Notice to OIG through OIG SDP also constitutes notice to appropriate parties for purposes of the NPRM– Timeliness requirements still apply – no

additional delay

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• No clear basis for distinguishing between SRDP and OIG SDP– Self-disclosure under SRDP would suspend

provider’s obligation to return, but not to report, an overpayment

– Self-disclosure under OIG SDP would suspend both a provider’s obligation to return and to report an overpayment

– No legal or policy basis for distinguishing between these two processes

– NPRM would subject providers to duplicative and unnecessary reporting requirements in cases where a provider self-discloses an overpayment to CMS under the SRDP

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REFUND PROCESS• Requires reporting of information

specified in the regulation– Description of the corrective action plan to

ensure the error does not occur again– The timeframe and the total amount of

refund for the period during which the problem existed that caused the refund

– If a statistical sample was used to determine the overpayment amount, a description of the statistically valid methodology used to determine the overpayment

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• Use of “existing refund process” requires further guidance from CMS– Existing voluntary refund forms may not

incorporate all of the NPRM’s mandated elements for a report

– E.g., Palmetto’s current overpayment refund form for Region IX does not provide for at least four of the fields the Proposed Rule mandates:

• TIN• How error was discovered• Description of corrective action plan• If a statistical sample used, description of the

statistically valid methodology used to determine the overpayment

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INABILITY TO REPAY THE OVERPAYMENT

• Use Extended Repayment Schedule (formerly “Extended Repayment Plan”)– Publication 100-06, Chapter 4 Financial

Management Manual• ERS requests will not be automatically

granted• Significant documentation of financial

hardship required• A bit of a straw man viz. quantification

problems?

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POSSIBLE 10-YEAR “LOOKBACK”• NPRM provides that overpayment must

be reported and returned if a person identifies the overpayment “within 10 years of the date the overpayment was received”– CMS chose 10-year lookback because this

is the outer limit of the federal FCA statute of limitations and will “further our interest in ensuring that overpayments are timely returned to the Medicare Trust Funds.”

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• Existing Medicare claims reopening regulations– 4-year lookback where no evidence of “fraud

or similar fault”– No express limit where evidence of fraud or

similar fault” does exist– Provider already subject to up to 10-year

lookback period under FCA

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CHALLENGES FOR PROVIDERS UNDER THE NPRM

• No sound basis to expand lookback period to 10 years• Inappropriately links even simple payment errors with

the FCA liability standard– 10-year FCA limit intended to address intentional

fraud– What if FCA settlement based on 6 years?– Mere retention of overpayment past 60-day

deadline, without more, does not give rise to FCA liability

• What about identifying and offsetting underpayments?

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Closing Q&A