Managed LTC in Wisconsin Procurement, Contracting and Rate Setting http://www.dhs.wisconsin.gov/LTCare/INDEX.HTM
Choices for people with long-term care needs Family Care Managed LTC Fee-For-Service managed long-term care LTC system Card Card Services Services only Family Care Partnership/PACE IRIS Medicaid & Medicare Self– Medicaid only Directed Long-Term Care Long-Term Care and Services Acute & Primary Care waiver
Choices in Family Care Expansion ADRC provides information and enrollment counseling that is the “key” to informed consumer choice ADRC
Wisconsin LTC Model • Managed LTC is built on philosophy and values of community based care • All current managed care organizations are public and non profit agencies • Target groups include frail elders, adults with physical and developmental disabilities • Person ‐ centered, outcome based care management
Procurement • Legacy HCBS system – LTS provided by 72 counties • Planning grants made to planning consortia – groups of counties and their chosen partners • Request for proposal (RFP) process initiated when planning consortia ready • Proposals accepted from public, non ‐ profit and for ‐ profit entities • Proposal evaluation takes into account proposers’ ability to manage home and community based care • http://www.dhs.wisconsin.gov/ManagedLTC/
Contracting • Proposers that are successful in the RFP process can attempt to be certified: – Capacity and readiness to provide the benefit 1) Interdisciplinary Care Management Team 2) Adequate network of providers 3) Systems capability – Permitted by OCI as financially ready to accept risk • DHS contracts only with certified MCOs • Contract meets Medicaid managed care regs and DHS performance expectations – fidelity to the person ‐ centered outcome based model • http://www.dhs.wisconsin.gov/LTCare/StateFedReqs /FC ‐ RC ‐ CMO ‐ Contracts.htm#cmo
Medicaid Managed Care: Overview Managed Care is designed to better align financial incentives with desired outcomes, such as: Increased access to and quality of care • • Increased cost efficiency of care Incentives to: Payment for FFS ‐ Perform more services Service Rendered ‐ Perform Higher cost services Incentives to: ‐ Reduce spending Managed Payment for Healthcare ‐ Increase preventive services Care Management ‐ Manage chronic conditions ‐ Improve long ‐ term health costs 8
Medicaid Managed Care: Actuarial Soundness Rates that are Actuarially Sound are rates that allow for contracting with sufficient numbers of providers to ensure access to care and allow MCOs to remain financially sound throughout the contract period without earning excess or unreasonable profits While there are no definitive criteria for determining actuarial soundness for Medicaid managed care programs, CMS has issued a checklist that provides guidance on how the rates are developed 9
Medicaid Managed Care: Rate Setting Process Setting capitation rates is a Collect data and establish baseline collaborative process between the historical costs State, the contracted actuary, and Calculate various policy and data participating MCOs adjustments The certifying Actuary is Trend and IBNR adjustments responsible for a number of actuarial calculations ultimately Calculate risk adjustments used for setting rates Establish final Managed Care Equivalent (MCE) rates State determines final Capitation rates and contracts with health plans 10
Medicaid Managed Care: Rate Setting Process Sources for baseline data include: Collect data and establish baseline • MCO Encounter data historical costs • FFS data Calculate various policy and data • Eligibility records adjustments • Capitation payment records Baseline data may include Trend and IBNR adjustments experience extending over a 1 to 3 ‐ year period. Calculate risk adjustments • An appropriate data period depends on the size and accuracy of Establish final Managed Care underlying data and on program Equivalent (MCE) rates stability State determines final Capitation rates and contracts with health plans 11
Medicaid Managed Care: Rate Setting Process The historical data are adjusted to Collect data and establish baseline reflect changes in payment rates, historical costs covered services, and any other Calculate various policy and data anticipated programmatic and adjustments policy changes Trend and IBNR adjustments The State provides a list of adjustments and detailed Calculate risk adjustments information for each adjustment Establish final Managed Care Equivalent (MCE) rates State determines final Capitation rates and contracts with health plans 12
Medicaid Managed Care: Rate Setting Process Incurred But Not Reported factors Collect data and establish baseline are applied to “complete” claims historical costs • IBNR factors are calculated using Calculate various policy and data actuarially accepted meth ods adjustments Trend rates are applied to reflect changes in payment levels and Trend and IBNR adjustments utilization between the data and contract period Calculate risk adjustments • Considerations for trend rates include: Establish final Managed Care – Encounter/FFS experience Equivalent (MCE) rates – Industry experience State determines final Capitation – Budgeted provider increases rates and contracts with health plans – Known policy changes that may affect utilization patterns – Actuarial judgment 13
Medicaid Managed Care: Rate Setting Process Rates are set by rate cell, or Collect data and establish baseline groupings of age, gender, historical costs eligibility, and geographic regions Calculate various policy and data adjustments When appropriate, an adjustment for health status is calculated Trend and IBNR adjustments Calculate risk adjustments Establish final Managed Care Equivalent (MCE) rates State determines final Capitation rates and contracts with health plans 14
Medicaid Managed Care: Rate Setting Process Managed Care Equivalent rates Collect data and establish baseline are set by applying all historical costs adjustments to the baseline data Calculate various policy and data adjustments An MCE is the certifying actuary’s best estimate for an Actuarially Trend and IBNR adjustments Sound rate • Rates within a defined range around Calculate risk adjustments the MCE can also be considered Actuarially Sound. Establish final Managed Care Equivalent (MCE) rates State determines final Capitation rates and contracts with health plans 15
Other Rate Adjustments Expansion phase ‐ in (Family Care only): • The intent of this adjustment is to recognize what, if any, significant cost variation exists between an expansion population's fee ‐ for ‐ service costs and the estimated costs implied using the regression models • The expectation is that the MCOs will continue their efforts to better manage care • Further adjustments could be made based on an evaluation of the MCO’s business plans 16
Medicaid Managed Care: Rate Setting Process Based on the Actuarially Sound Collect data and establish baseline rates, the State ultimately selects historical costs a capitation rate while recognizing Calculate various policy and data budget and policy constraints adjustments PwC certifies the final capitation Trend and IBNR adjustments rates as Actuarially Sound and produces a comprehensive rate Calculate risk adjustments report detailing the rate setting process Establish final Managed Care Equivalent (MCE) rates Finally, CMS must approve the State determines final Capitation final capitation rates as well as rates and contracts with health plans the contracts between the State and participating MCOs 17
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