Category Archives: Provider Led Entities

House Bill 403: A Potential Upheaval of Medicaid!

Is this the end of the managed care organizations (MCOs)?

If the Senate’s proposed committee substitute (PCS) to House Bill 403 (HB 403) passes the answer is yes. The Senate’s PCS to House Bill 403 was just favorably reported out of the Senate Health Care Committee on June 15, 2017. The next step for the bill to advance will be approval by the Senate Rules Committee. Click here to watch its progress.

As my readers are well aware, I am not a proponent for the MCOs. I think the MCOs are run by overpaid executives, who pay themselves too high of bonuses, hire charter flights, throw fancy holiday parties, and send themselves and their families on expensive retreats – to the detriment of Medicaid recipients’ services and Medicaid providers’ reimbursement rates. See blog. And blog.

Over the last couple days, my email has been inundated by people abhorred with HB 403 – urging the Senators to retain the original HB 403, instead of the PCS version. As with all legislation, there are good and bad components. I went back and re-read these emails, and I realized multiple authors sat on an MCO Board. Of course MCO Board members will be against HB 403! Instead of hopping up and down “for” or “against” HB 403, I propose a (somewhat) objective review of the proposed legislation in this blog.

While I do not agree with everything found in HB 403, I certainly believe it is a step in the right direction. The MCOs have not been successful. Medically necessary behavioral health care services have been reduced or terminated, quality health care providers have been terminated from catchment areas, and our tax dollars have been misused.

However, I do have concern about how quickly the MCOs would be dissolved and the new PHPs would be put into effect. There is no real transition period, which could provide safety nets to ensure continuity of services. We all remember when NCTracks was implemented in 2013 and MMIS was removed on the same day. There was no overlap – and the results were catastrophic.

The following bullet points are the main issues found in HB 403, as currently written.

  • Effective date – MCOs dissolve immediately (This could be dangerous if not done properly)

Past legislation enacted a transition time to dissolve the MCOs. Session Law 2015-245, as amended by Session Law 2016-121, provided that the MCOs would be dissolved in four years, allowing the State to implement a new system slowly instead of yanking the tablecloth from the table with hopes of the plates, glasses, and silverware not tumbling to the ground.

According to HB 403, “on the date when Medicaid capitated contracts with Prepaid Health Plans (PHPs) begin, as required by S.L. 2015-245, all of the following shall occur:…(2) The LME/MCOs shall be dissolved.”

Session Law 2015-245 states the following timeline: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly
with the LME/MCOs in the same manner as currently utilized.”

HB 403 revises Session Law 2015-245’s timeline by the following: “LME/MCOs shall continue to manage the behavioral health services currently covered for their enrollees under all existing waivers, including the 1915(b) and (c) waivers, for four years after the date capitated PHP contracts begin. During this four-year period, the Division of Health Benefits shall continue to negotiate actuarially sound capitation rates directly with the LME/MCOs in the same manner as currently utilized.

Instead of a 4-year transition period, the day the PHP contracts are effective, the MCOs no longer exist. Poof!! Maybe Edward Bulwer-Lytton was right when he stated, “The pen is mightier than the sword.”

Again, I am not opposed to dissolving the MCOs for behavioral health care; I just want whatever transition to be reasonable and safe for Medicaid recipients and providers.

With the MCOs erased from existence, what system will be put in place? According to HB 403, PHPs shall manage all behavioral health care now managed by MCOs and all the remaining assets (i.e., all those millions sitting in the savings accounts of the MCOs) will be transferred to DHHS in order to fund the contracts with the PHPs and any liabilities of the MCOs. (And what prevents or does not prevent an MCO simply saying, “Well, now we will act as a PHP?”).

What is a PHP? HB 403 defines PHPs as an entity, which may be a commercial plan or provider-led entity with a PHP license from the Department of Insurance and will operate a capitated contract for the delivery of services. “Services covered by PHP:

  1. Physical health services
  2. Prescription drugs
  3. Long-term care services
  4. Behavioral health services

The capitated contracts shall not cover:

  1. Behavioral health
  2. Dentist services
  3. The fabrication of eyeglasses…”

It would appear that dentists will also be managed by PHPs. As currently written, HB 403 also sets no less than three and no more than five contracts between DHHS and the PHPs should be implemented.

Don’t we need a Waiver from the Center for Medicare and Medicaid Services (CMS)?

Yes. We need a Waiver. 42 CFR 410.10(e) states that “[t]he Medicaid agency may not delegate, to other than its own officials, the authority to supervise the plan or to develop or issue policies, rules, and regulations on program matters.” In order to “Waive” this clause, we must get permission from CMS. We had to get permission from CMS when we created the MCO model. The same is true for a new PHP model.

Technically, HB 403 is mandating DHHS to implement a PHP model before we have permission from the federal government. HB 403 does instruct DHHS to submit a demonstration waiver application. Still, there is always concern and hesitancy surrounding implementation of a Medicaid program without the blessing of CMS.

  • The provider network (This is awesome)

HB 403 requires that all contracts between PHPs and DHHS have a clause that requires PHPs to not exclude providers from their networks except for failure to meet objective quality standards or refusal to accept network rates.

  • PHPs use of money (Also good)

Clearly, the General Assembly drafted HB 403 out of anger toward the MCOs. HB 403 implements more supervision over the new entities. It also disallows use of money on alcohol, first-class airfare, charter flights, holiday parties or similar social gatherings, and retreats, which, we all know these are precisely the activities that State Auditor Beth Wood found occurring, at least, at Cardinal. See Audit Report.

HB 403 also mandates that the Office of State Human Resources revise and update the job descriptions for the area directors and set limitations on salaries. No more “$1.2 million in CEO salaries paid without proper authorization.”

  • Provider contracts with the PHPs (No choice is never good)

It appears that HB 403 will not allow providers to choose which PHP to join. DHHS is to create the regions for the PHPs and every county must be assigned to a PHP. Depending on how these PHPs are created, we could be looking at a similar situation that we have now with the MCOs. If the State is going to force you to contract with a PHP to provide Medicaid services, I would want the ability to choose the PHP.

In conclusion, HB 403 will re-shape our entire Medicaid program, if passed. It will abolish the MCO system, apply to almost all Medicaid services (both physical and mental), open the provider network, limit spending on inappropriate items, and assign counties to a PHP.

Boy, what I would give to be a fly on the wall in all the MCO’s boardrooms (during the closed sessions).

BREAKING: House and Senate appear close to a Medicaid deal!!

In our last post on Medicaid reform, we updated you on the recent bill passed by the North Carolina Senate relating to the long-standing thorn in the side of the General Assembly, especially regarding the states’ budget – the Medicaid program. The Senate’s version of Medicaid reform is quite different from what we have previously seen and is a hodge-podge of managed care and a new idea: “provider-led entities.”

In a strong sign that this proposal is a compromise between competing sides that could end up getting passed, both House and Senate leaders are speaking positively on the record to news media about the prospects for a deal. Given how public the issue is and how big it is (an expected $14.2 billion in North Carolina in the coming year), that means they expect to get a deal done soon. The fact that the issue is so tied up with the budget that is overdue to be passed is a further headwind to passing a bill.

Right now, the bill is in a conference committee of negotiators from the House and Senate to work out an agreement, given the differences between the two chambers.

One major issue that the committee needs to look at is whether there will be a whole new state agency: the “Department of Medicaid.” The Senate endorsed that idea last week.

Our prediction: The legislators will chart a cautious course and not erect a whole new agency at the same time they are overhauling the system.

With Wos having (coincidentally?) just stepped down as Secretary of the Department of Health and Human Services, perhaps the lack of a lightning rod for criticism of DHHS will let the air out of the proposal to remove Medicaid from DHHS’s hands.

Stay tuned.

By Robert Shaw

Robert

North Carolina Medicaid Reform Update – Round and Round She Goes

Given how long the Medicaid reform discussions have been going on at the legislature, you may be glazed over by now. Give me the memo when they pass something, right? Fair enough, let’s keep it brief. Where do things stand right now?

Last Wednesday, the Senate staked out its position in the ongoing debate between the House and the McCrory administration.

The Senate’s newest proposal is an unusual mix of different systems and new ideas. Not willing to commit to one model for the whole Medicaid program, the latest version of the bill includes something new called Provider Led Entities, or “PLEs.” PLEs are yet the latest in the alphabet soup of different alternatives to straight fee-for-service billing for Medicare/Medicaid. You’ve all heard of HMOs, PPOs, MCOs, and ACOs. PLEs appear to be similar to ACOs, but perhaps for political reasons the Senate bill sponsors saw the need to call the idea something different.  See Knicole Emanuel’s blog.

In any event, as the name suggests, such organizations would be provider-led and would be operated through a capitated system for managing the costs of the Medicaid program. The Senate bill would result in up to twelve PLEs being awarded contracts on a regional basis.

PLEs are not the only addition to the Medicaid alphabet soup that the Senate is proposing in its version of HB 372. The Senate has also renewed its interest in taking Medicaid out of the hands of the N.C. Department of Health and Human Services entirely and creating a new state agency, the Department of Medicaid (“DOM”).

(One wonders whether the continual interest in creating a new Department of Medicaid independent of the N.C. Department of Health and Human Services had anything to do with embattled DHHS Secretary Wos stepping down recently.)

The Senate also proposes creating a Joint Legislative Oversight Committee on Medicaid (“LOC on Medicaid”).

But creating the DOM and using new PLEs to handle the provision of Medicaid services is not the whole story. Perhaps unwilling to jump entirely into a new delivery system managed by a wholly new state agency, the Senate bill would keep LME/MCOs for mental health services in place for at least another five years. Private contractor MCOs would also operate alongside the PLEs. The North Carolina Medicaid Choice coalition, a group which represents commercial MCOs in connection with the Medicaid reform process, is pleased.

One very interesting item that the Senate has included in its proposed legislation is the following requirement: “Small providers shall have an equal opportunity to participate in the provider networks established by commercial insurers and PLEs, and commercial insurers and PLEs shall apply economic and quality standards equally regardless of provider size or ownership.” You can thank Senator Joel Ford of Mecklenburg County for having sponsored this amendment to the Senate version of House Bill 372.

By pulling the Medicaid reform proposal out of the budget bill, the matter appears headed for further negotiation between the House and the Senate to see if the two can agree this year, unlike last year.

By legislative standards, that counts as forward progress… Here come the legislative discussion committees to hash it out more between the two chambers. We will keep a close eye on the proposals as they continue to evolve.

By Robert Shaw

Lawyer photo

 

Massive Medicaid Metamorphosis: Providers Beware! Be Proactive NOT Reactive!

Medicaid is ever-changing. But every 5 years or so, it seems, that a substantial section of Medicaid is completely revamped. Sometimes to the detriment of many uninformed, un-suspecting providers. For providers, it is imperative to stay above the curve…to foresee the changes in Medicaid, to plan for those changes, and to morph your own practice into one that will persevere despite the changes to come.

We are on the brink of a massive Medicaid metamorphosis.

Medicaid modifications have happened in the past. For example, a substantial shift in Medicaid occurred when DHHS switched from HP Enterprises to Computer Science Corporation (CSC) as its billing vendor. When the NCTracks system went live, the new NCTracks system forced office managers to re-learn how to bill for Medicaid. It was a rough start and many office managers spent countless hours inputting information into NCTracks, only to get erroneous denials and high blood pressure.

Another example of a Medicaid modification was the implementation of the managed care organizations (MCOs) which came on the heels of the new CABHA certification requirements. Only a couple of years after the shellshock of CABHA certification and thousands of providers going out of business because they could not meet the demands of the CABHA standards, behavioral health care providers were again put through the wringer with new standards created and maintained by the MCOs.

Think about it…Ten years ago, we never used the acronym MCO.

Enter [stage left]: A NEW ACRONYM!!

PLE

Don’t you love acronyms? My family has this game called Balderdash. It is one of my favorite games. The object of the game is to have the best fabricated answer. For example, if the category is “Acronym,” the “Dasher” will read the acronym, say, “PLE.” All the players draft their fake renditions of what “PLE” really means.

Plato Learning Environment; or
Panel of Legal Experts; or
Perinatal Lethality.

You get the point. In the game, the players vote on which answers they believe are correct (BTW: All of the above are real definitions for the acronym “PLE” (according to Google).)

In the Medicaid/care world, we play alphabet soup constantly. MCO, DD, SAIOP, DHHS, BWX, MID CPT….Throw out a few letters, and, most likely, you will have said some acronym that means something to someone. See my acronym page for a list of those pertinent to us (and it is ever-growing).

The most recent new acronym to the Medicaid arena here in North Carolina that I have seen is PLE, which is the crux of the new, upcoming massive Medicaid metamorphosis.

House Bill 372’s short title is “Medicaid Modernization” and has passed in the House.

On June 25, 2015, the Senate passed the House Bill on its first read!

I waited to blog about HB 327 until the Senate had an initial reaction to it. If you recall, the Senate and House has been on contradictory sides when it comes to Medicaid reform. However, it appears that HB 327 may have some traction.

House Bill 372 defines PLE as “[a]ny of the following:

a. A provider.
b. An entity with the primary purpose of owning or operating one or more providers.
c. A business entity in which providers hold a controlling ownership interest.”

Over the last couple years, the Senate and the House have stood divided over whether Medicaid should be managed by ACOs (House) or MCOs (Senate). It appears from the definition of a PLE, that a PLE could be a much simpler version of an ACO, which has had my vote since day 1. The whole concept of an ACO is a provider-run entity in which the providers make the decisions instead of utilization reviews, which have little to no contact with the patients, and, sometimes little health care experience, especially on the provider side.

From my cursory review of the proposed PLEs, it seems that a PLE would mimic an ACO, except, and, further federal research is needed, without some of the highly-regulated mandates that the federal government requires for MCOs (it will still be highly-regulated).

Is this just a question of semantics?  Is this just a question of changing its name?

“What’s in a name? that which we call a rose, By any other name would smell as sweet.” Romeo and Juliet, Act II, Scene II.

Let’s look again at the definition of a PLE, according to Version 3 of House Bill 372.

a. A provider.
b. An entity with the primary purpose of owning or operating one or more providers.
c. A business entity in which providers hold a controlling ownership interest.”

A provider?

Any provider? Does that provider need to ask to become a PLE or is it automatic? Does being a PLE give enhanced benefits other than being just a provider?

The answer is that all providers are not PLEs and providers will need to undertake significant legal and administrative steps to become a PLE.

“PLEs shall implement full-risk capitated health plans to manage and coordinate the care for enough program aid categories to cover at least ninety percent (90%) of Medicaid recipients to be phased in over five years from the date this act becomes law.”

What is “full risk?”

“Full risk” is not defined in HB 372, although, I believe that the definition is self-evident.

Capitation payment is defined by reference to 42 CFR 438.2:

“Capitation payment means a payment the State agency makes periodically to a contractor on behalf of each beneficiary enrolled under a contract for the provision of medical services under the State plan. The State agency makes the payment regardless of whether the particular beneficiary receives services during the period covered by the payment.”

Interestingly, this definition for “capitation payment” is found in the same section of the Code of Federal Regulations (CFR) as all the managed care regulations. Part 438 of the CFR applies to managed care.

We have managed care organizations in our state now managing the behavioral health care aspect of Medicaid. Will the same provisions apply to MCOs…to ACOs…to PLEs?

A rose by any other name…

What else does House Bill 372 purport to do?

• Within 12 months, the Department shall request a waiver from CMS to implement the components of this act.
• Within 24 months, the Department will issue an RFP for provider-led entities to bid on contracts required under this act.
• Within 5 years, 90% of all Medicaid services must be provided from a PLE, except those services managed by the MCOs , dental services, pharmaceutical products and dispensing fees. The Department may implement a pilot within 3 years.

As a provider, if you want to continue to serve the Medicaid population, then you may want to insert your company or agency into the creation of the PLEs, whether you sell, merge, acquire, or create a conglomerate.

It is my prediction that those providers who are reactive, instead of proactive, will lose business, consumers, and, potentially, a lot of cash. It is my “predictive recommendation” [as you are aware, we do not have an attorney/client relationship, so no recommendation of mine is tailored for you] that those providers who proactively seek mergers, acquisitions, and/or business agreements with other providers to morph into PLEs will be more successful, both financially and in serving their consumers better.

What you need to know about the future PLEs:

  • Must cover at least 30,000 recipients
  • Must provide all health benefits and administrative services, including physical, long-term services and supports, and other medical services generally considered physical care
  • Must meet solvency requirements
  • Must provide for appeal processes
  • Will cover 100% of the NC counties

The PLEs will, effectively, absorb the Medicaid dollars for recipients across the entire state and provide care for all physical health needs of Medicaid recipients.

In this environment, providers need to be proactive, not reactive!

If House Bill 327 passes into law, our next Medicaid metamorphosis will be monumental!  And the state will issue an RFP for providers within 2 years!