Prospective Offerors Conference Arizona Health Care Cost
Containment System February 11, 2008
Slide 2
Contracting Process Michael Veit Contracts Administrator
Division of Business and Finance February 11, 2008
Slide 3
Contracting Process Purpose Materials Timetable Submission
deadline March 28, 2008, 3:00 PM Website navigation
Questions/Answers February 11, 2008
Slide 4
Contracts To Be Awarded February 11, 2008 GSA #County or
CountiesNumber of Awards 2Yuma, La PazMaximum of 2 4Apache,
Coconino, Mohave and NavajoMaximum of 2 6YavapaiMaximum of 2 8Gila,
PinalMaximum of 2 10Pima, Santa Cruz* *2 of the 5 successful
bidders will be awarded Santa Cruz Maximum of 5 12MaricopaMaximum
of 6 14Graham, Greenlee, CochiseMaximum of 2
Slide 5
RFP Milestone Dates February 11, 2008 ACTIVITYDATE RFP
IssuedFebruary 1, 2008 Prospective Offerors Conference and
Technical Assistance Session February 11, 2008 - AM Information
Technology (IT) PMMIS Technical Interface Meeting February 11, 2008
- PM Technical Assistance and RFP Questions DueFebruary 15, 2008
RFP Amendment and Formal Response to Questions on or about February
29, 2008 Second Set of Technical Assistance and RFP Questions Due
March 7, 2008 Second RFP Amendment Issued and Formal Response to
Second Set of Questions on or about March 14, 2008 Proposals Due by
3:00 P.M.March 28, 2008 Contracts Awarded on or aboutMay 1, 2008
Readiness Reviews BeginJuly 1, 2008 New Contracts EffectiveOctober
1, 2008
Slide 6
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
Slide 7
Specifications (cont.) 3 pages maximum per submission
requirement unless otherwise specified in the submission 8 by 11
inch paper 1 side of paper = 1 page Single spaced, typewritten in
at least 11 point font Borders no less than inch February 11,
2008
Slide 8
Scoring Capitation and Network Development scored by Geographic
Service Area Network Management, Program and Organization will
receive a statewide score February 11, 2008
Slide 9
AHCCCS Strategic Vision Anthony Rodgers Director Arizona Health
Care Cost Containment System February 11, 2008
Slide 10
ManagedCareManagedCare 1980s-1990s Prepaid healthcare Prepaid
healthcare More comprehensive benefits More choice and coverage
Contracted Network Contracted Network Focus on cost control Focus
on cost control and preventive care Gatekeeper Utilization
management Medical Management Integrated Health2000+ Patient Care
CenteredPatient Care Centered Personalized Health Care Productive
and informed interactions between Patient and Provider Cost and
Quality Transparency Accessible/Affordable Choices Aligned
Incentives for wellness Multiple integrated network and community
resourcesMultiple integrated network and community resources
Aligned cost management processesAligned cost management processes
Rapid deployment of new knowledge and best practices in quality
careRapid deployment of new knowledge and best practices in quality
care Patient and provider interactionPatient and provider
interaction Information focus Aligned care management E-health
capable Fee For Service Fee For Service Inpatient focus O/P clinic
care Low Reimbursement Poor Access and Quality Little oversight No
organized networks No organized networks Focus on paying claims
Focus on paying claims Little Medical Management Little Medical
Management Fee for Service 1960s-1970s Managing Health System
Transformation in Arizona February 11, 2008
Slide 11
2008 Strategic Issues Strategic Issue #1Health Care Costs
Strategic Issue #2Health Care Quality Strategic Issue #3The
Uninsured Strategic Issue #4Organizational Capacity The Agencys
FiveYear Strategic Plan serves as a framework for ongoing planning,
prioritizing and budgeting. AHCCCS is addressing four strategic
issues: February 11, 2008
Slide 12
STRATEGIC ISSUE #1: HEALTH CARE COSTS 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 Goal:
Maintain annual capitation rate increases at or below 6% (per
member per month). February 11, 2008
Slide 13
Note: Projected General Fund revenues are based on a ten-year
average of annual increases February 11, 2008
Slide 14
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
Slide 15
STRATEGIC ISSUE #2: HEALTH CARE QUALITY AND ACCESS TO CARE
Quality driven health care results in fewer medical complications,
better outcomes, and lower costs Goal: Ensure AHCCCS members have
the right care, in the right place, at the right time, every time.
February 11, 2008
Slide 16
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
Slide 17
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
Slide 18
AHCCCS Overview Tom Betlach Deputy Director February 11,
2008
Slide 19
Introduction to AHCCCS AHCCCS Administration Product Lines -
Acute Care (Medicaid & KidsCare) - Long Term Care - Healthcare
Group Acute Health Plans LTC Program Contractors State Agencies DHS
Behavioral Health & CRS DES Eligibility Fee-For-Service Native
Americans Non-Qualified Persons Policy Eligibility (Special
Populations) Monitor Care and Financial Viability Information
Services Budget and Claims Processing Legal Intergovernmental
Relations Contract for Care Funding Federal State County Private
Premiums Grants February 11, 2008
Slide 20
AHCCCS Organizational Structure Division of Health Care
Management (DHCM) Division of Fee For Service Management (DFSM)
Office of Intergovern- mental Relations (OIR) Division of Member
Services (DMS) Division of Business and Finance (DBF) Information
Service Division (ISD) Office of the Director (OOD) Office of
Administrative Legal Services (OALS) February 11, 2008
Slide 21
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
Slide 22
100% Federal Poverty Level (2008) February 11, 2008
Slide 23
Eligibility Levels 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. KidsCare/HIFA Parents Medicaid Proposition 204 Expansion
200%
Slide 24
Percentage of Arizonans on AHCCCS February 11, 2008
Slide 25
Who Does AHCCCS Serve?* * January 2008 * January 2008
Slide 26
Geographic Service Areas Acute Enrollment As of February 1,
2008 Total Health Plan Enrollment = 878,317 71,248 27,860 46,400
497,828 164,250 40,431 30,300 Health Plan Enrollment GSA Number 4 6
2 12 10 8 14 COCONINO (4) 15,903 NAVAJO (4) 13,430 APACHE (4) 4,670
MOHAVE (4) 37,245 LA PAZ (2) 3,013 YUMA (2) 43,387 MARICOPA (12)
497,828 PINAL (8) 32,453 GRAHAM (14) 6,153 GILA (8) 7,978 PIMA (10)
151,331 COCHISE (14) 23,233 YAVAPAI (6) 27,860 GREENLEE SANTA CRUZ
(10) 12,919 GREENLEE (14) 914 February 11, 2008
Slide 27
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
Slide 28
Source of Enrollment Members with Choice Only 6 months ending
12/31/07 Out of 351,715 members February 11, 2008
Slide 29
Members Exercising Choice Percent by Risk Group (6 months
ending 12/31/07) February 11, 2008
Slide 30
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
Slide 31
Source: AHCCCS Eligibility & Enrollment Reports (excludes
SLMBs, QI-1s, and HealthCare Group). Total Enrollment January 2000
-2008 February 11, 2008
Slide 32
AHCCCS Total Funds FY 01-FY 08 February 11, 2008
Slide 33
AHCCCS Funding Sources February 11, 2008
Slide 34
AHCCCS Service Distribution February 11, 2008
Slide 35
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
Slide 36
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
Slide 37
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
Slide 38
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.
Slide 39
General Fund Base Revenue Growth Rate Compared to AHCCCS
Population Growth February 11, 2008
Slide 40
AHCCCS Compared to Other Agencies February 11, 2008
Slide 41
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
Slide 42
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
Slide 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
Slide 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
Slide 45
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
Slide 46
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
Slide 47
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 1 st
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
Slide 48
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
Slide 49
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 1 st 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
Slide 50
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
Slide 51
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
Slide 52
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
Slide 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
Slide 54
AHCCCS Policy, Operations and Contractor Oversight Kate
Aurelius Assistant Director Division of Health Care Management
February 11, 2008
Slide 55
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
Slide 56
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
Slide 57
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
Slide 58
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
Slide 59
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
Slide 60
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
Slide 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
Slide 62
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
Slide 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
Slide 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
Slide 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
Slide 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
Slide 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
Slide 68
Claims, Encounters, Technology Lori Petre Data Analysis and
Research Manager Division of Health Care Management February 11,
2008
Slide 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
Slide 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
Slide 71
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
Slide 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
Slide 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
Slide 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
Slide 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
Slide 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