MANAGED CARE

CHAPTER 3 LECTURE NOTES Part 2

NETWORK MANAGEMENT AND REIMBURSEMENT

I. HOSPITALS AND AMBULATORY FACILITIES

A. Reimbursement Methods – there are many reimbursement methods available when contracting with hospitals. In deciding which method to use, management must have the internal ability to manage these financial terms in their information systems and maintenance will be affected to some degree by the types of health plans that the hospital or ambulatory facility chooses to contract with.

 Types of Facilities and Contracting Situations

Hospitals  Community-based Single Acute Care Hospitals  Multihospital Systems  For-Profit Hospitals  Specialized Hospitals  Physician-Owned Single-Specialty Hospitals  Government Hospitals  Subacute Care  Hospice

Ambulatory Surgical Centers and Other Ambulatory Facilities  Aka: ASCs  Dialysis Units  Birthing Centers  Endoscopy Suites  Radiation Oncology Centers  Retail Health Clinics  Urgent Care Centers

II. Credentialing of Hospitals and Ambulatory Facilities  Facilities meeting applicable state licensure and accreditation

standards, as well as participation with Medicare and Medicaid.  Payers do not credential Hospitals and Ambulatory Facilities the

same way that they credential physicians

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 Individual states typically carry out inspections and initial evaluations of new facilities, after which they accept accreditation by recognized facility accreditation organizations

o JCAHO o AAAHC o CHAP o HFAP o DNV o ACHC

 In some cases, a health plan will establish further criteria that are applicable to certain types of care such are:

o Minimum # cardiac bypass operations performed each year

o % patients who achieve the defined outcomes following obesity surgery

o Staffing ratios of nurses and physicians for an intensive care unit

o Center of Excellence

III. Integrated Delivery Systems (IDS) A. Types of IDSs Independent and Hospital-Employed Physicians Management Services Organizations (MSOs) Patient Centered Medical Homes Accountable Care Organizations (ACOs)  A term coined by the MedPAC, adopted by CMS, and

incorporated into the ACA  Similar to a Patient-Centered Medical Home (PCMH) in that it

focuses on patients with significant chronic conditions and high costs

 May different types of provider organizations may be eligible for designation as ACOs. But can be structured like an IDS

 CMS (Centers for Medicare and Medicaid Services) requires ACOs to meet other standards in governance, management, etc.

 Must also have 5000 traditional Medicare beneficiaries “assigned” to it by CMS

 ACOs contract with CMS for the traditional FFS Medicare Program and are subject to a specific payment model called “shared savings”

B. Vertical Integration The future of the healthcare sector in the U.S.??

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IV. Ancillary Services  Broadly divided into diagnostics and therapeutic services

o Examples:  Diagnostic: Lab, X-ray, CT scan, MRI, EKG  Therapeutic: Home Care, Rehab (Physical,

Occupational, and/or Speech therapies), cardiac, etc .  Can be provided by free-standing facilities although can also be

provided by hospitals  Ancillary services are typically elective and non-urgent  Pharmacy Services are a special form of ancillary service  Contracting for Ancillary Services

V. Network Maintenance  An important function for any payer

o Recruitment and credentialing of new providers o Recredentialing o Measurement and management of the performance of the

network o Resolution of claims or other problems o Visits to each provider at least once or twice a year o Management of providers who are performing poorly, either

financially or clinically o 2-way communication b/n network providers and health plan

VI. Conclusion  An MCO’s network of providers is its vehicle for providing health care

to its members at an affordable cost.  The composition of the network is directly dependent on the type of

benefits plans being administered and has a direct bearing on the MCO’s ability to manage the cost and quality of the care provided.

 Contractual terms between the providers and the MCO are a hallmark of managed care.

 The maintenance of a network requires just as much work as does the original creation of the network.

 Reimbursement of providers is an integral part of the overall management of utilization and quality of clinical services

 Managing quality and utilization effectively is essential for achieving positive results; reimbursement schemes alone will never be enough.

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