Objective 1 - Provider Reimbursement Methods

Question 1

Reasons why a health plan wants to contract with providers (aka contracting goals)

Answer 1

1. Obtain favorable pricing (less than full billed amounts)
2. Obtain payment terms that result in an underwriting gain
3. Get the provider to agree to provide services to the plan’s members
4. Obtain contractual agreement for several clauses, many of which are required by the states and Medicare. The provider agrees to:
   a. Submit claims directly to the plan, not the member
   b. Not balance bill the member for any amount above the agreed-upon payment terms
   c. Hold harmless the member (not bill for any amounts owed by the plan)
   d. Cooperate with the plan’s utilization management program
   e. Cooperate with the plan’s quality management program
   f. Give the plan the right to audit clinical and billing data for care provided to plan members
   g. Not discriminate (and other similar requirements)

Question 2

Reasons why a provider wants to contract with the plan (aka contracting goals)

Answer 2

1. Obtain favorable pricing when in a strong negotiating position
2. Ensure that it will not be excluded from the network of a large payer
3. Receive direct payment from the plan, thereby avoiding the need to collect from the patient
4. Receive timely payment (usually 30 days or less)
5. Have plan members directed or steered to it
6. Not lose business (or medical staff) as a payer steers members to others who are contracted providers
7. Receive defined rights around disputing claims and payments

Question 3

Capabilities of a well-functioning contract management system

Answer 3

1. Identify network gaps or where provider recruiting is most needed
2. Track recruiting efforts, provide reminders, and generate recruiting reports
3. Generate new contract blanks and new contracts with information filled in
4. Store copies of different versions of any provider’s contract
5. Track and report contract changes for each provider
6. Track and manage permissions and sign-offs on contracts
7. Store images of signed documents and convert imaged documents into machine-readable formats
8. Support an entirely paperless contracting process
9. Provide early notification or reminders for upcoming actions such as recredentialing or renegotiations
10. Direct electronic feed of required demographic information to other internal functions
11. Direct electronic feed of market-facing systems such as internet physician searches
12. Be searchable on multiple attributes
13. Analyze the potential impact of changes in contract terms

Question 4

Types of physicians and other professional providers

Answer 4

1. Primary care physicians (PCPs; specialize in family practice, internal medicine, or pediatrics) and specialty care physicians (SCPs) - for traditional HMOs, the distinction between PCP and SCP is very important because the PCP acts as a gatekeeper and must authorize any visits to a specialist
2. Hospital-based physicians - specialties include radiology, anesthesiology, pathology, emergency medicine, and hospitalist. These physicians often have exclusive rights at a hospital, so they are reluctant to contract for anything less than full charges
3. Nonphysician or mid-level practitioners that provide primary care - the most common are physician assistants and nurse practitioners. These are a great asset in managed care because they deliver excellent primary care, tend to spend more time with patients, and are well accepted by most members
4. Mental health providers (see separate list)
5. Other types of professionals - podiatrists, dentists, orthodontists, optometrists, chiropractors, physical therapists, occupational therapists, nutritionists, acupuncturists, audiologists, respiratory therapists, and home health care providers

Question 5

Types of mental health providers

Answer 5

1. Psychiatrist - a physician who specializes in mental health and is able to prescribe drugs
2. Psychologist - has a doctoral degree in psychology and two years of supervised professional experience
3. Clinical social worker - a counselor with a master’s degree in social work
4. Licensed professional counselor - has a master’s degree in psychology, counseling, or a related field
5. Certified alcohol and drug abuse counselor - has specific clinical training in alcohol and drug abuse and provides individual and group counseling
6. Psychiatric nurse practitioner or nurse psychotherapist - a registered nurse practitioner with special training in psychiatric and mental health nursing
7. Marital and family therapist - a counselor with a master’s degree and special training in marital and family therapy

Question 6

Contracting considerations for different types of physician groups

Answer 6

1. Individual physicians - advantage is the direct relationship with the physician. Disadvantage is the effort to maintain the relationship is large for just one physician
2. Medical groups - advantage is the same contracting effort yields a higher number of physicians. Disadvantage is that if the relationship is terminated then there is greater disruption in patient care.
3. Independent practice associations (IPAs):
   a. Advantages: a large number of providers come along with the contract, the IPA may accept more financial risk, and some IPAs perform network management, credentialing, and medical management
   b. Disadvantages: the IPA can hold a considerable portion of the delivery system hostage to negotiations, and the plan’s ability to select and deselect individual physicians is limited
4. Faculty practice plans (medical groups that are organized around teaching programs)
   a. Advantages: these programs provide highly-specialized care and they add prestige tot he plan by virtue of their reputation for quality care
   b. Challenges include: tend to be less cost effective in their practice styles, and they are not set up for case management, so care is not well coordinated
5. Physicians in integrated delivery systems (IDSs) - there are two types:
   a. Hospital systems that affiliate with private physicians
   b. Hospital systems that employ physicians - these often have substantial negotiating leverage
6. Patient-centered medical homes - these coordinate all care for a group of patients
   7 Specialty management companies - these focus on managing very specialized services using physicians (e.g., single-specialty case management of neonatal care)

Question 7

Elements of a typical physician credentialing application

Answer 7

1. Demographics, licenses, and other identifiers (such as national provider identifier)
2. Education, training, and specialties
3. Practice details - such as services provided and office hours
4. Billing and remittance information
5. Hospital admitting privileges
6. Professional liability insurance
7. Work history and references
8. Disclosure questions - such as suspension from government programs or felony convictions
9. Images of supporting documents - such as a state license certificate

Question 8

Types of health care facilities

Answer 8

1. Community-based single acute care hospitals
2. Multihospital systems (MHSs) - consolidation has led to most hospitals being part of an MHS, which gives them negotiating leverage
3. For-profit national hospital companies - because these hospitals are owned by national companies, they have much less local autonomy
4. Specialized hospitals - these provide care to only a certain type of patient (e.g., children’s hospitals and psychiatric hospitals)
5. Physician-owned single-specialty hospitals - these restrict themselves to elective procedures within a single specialty, so they are not equipped to handle emergencies and sever conditions
6. Accountable care organizations - these coordinate care for designated Medicare FFS beneficiaris and participate in a shared savings program
7. Government hospitals - may be county-run, state-run, or federal
8. Subacute care (skilled or intermediate nursing facilities) - these are well suited for prolonged convalescence or recovery cases. The cost for a bed day is much less than in an acute-care hospital.
9. Ambulatory surgical centers (ASCs) and procedure centers - are typically equipped to handle only routine cases
10. Hospice - a broad term referring to health care services provided at the end of life, which may be at an inpatient facility, ambulatory facility, or no facility
11. Retail health clinics - small clinics associated with a retail store (such as Target or Walgreens). Provide basic primary care services, such as immunizations and preventive screenings.
12. Urgent care centers - a hybrid of low-level emergency department and a PCP practice
13. Other types of ambulatory facilities - includes centers for birthing, community health, diagnostic imaging, occupational health, pain management, and women’s health

Question 9

Types of ancillary services

Answer 9

1. Diagnostic
   a. Laboratory
   b. Imaging (such as x-rays and MRIs)
   c. Electrocardiography
   d. Cardiac testing
2. Therapeutic
   a. Cardiac rehabilitation
   b. Noncardiac rehabilitation
   c. Physical therapy
   d. Occupational therapy
   e. Speech therapy
   f. Other long-term therapeutic services
3. Pharmacy
4. Ambulance and medical transportation services

Question 10

Credentialing of hospitals and ambulatory facilities

Answer 10

1. Payers depend on state licensure agencies and accrediting organization to ensure that a facility meets required standards
2. Hospital accreditation is almost carried out by the Joint Commission
3. Ambulatory facilities may be accredited by the Accreditation Association for Ambulatory Health Care
4. Nonphysician professionals (such as nurses) employed by a facility are credentialed by that facility
5. A hospital meeting the appropriate criteria for a defined set of procedures would be considered a “center of excellence,” and the health plan would selectively refer those types of care to it

Question 11

Non-risk-based physician payment methodologies

Answer 11

Fee-for-service
1. Straight charges - physicians are paid full billed charges
2. Usual, customary, or reasonable (UCR) - physicians are paid up to the prevailing fee, which comes from percentiles of physician charges and varies by geography and specialty
3. Percentage discount on billed charges
4. Fee schedule - a list of the maximum amount the health plan will pay for each type of procedure. The plan pays the lesser for this amount and the physician’s charges.
5. Relative value scale (RVS) - each CPT code has a relative value associated with it called a relative value unit (RVU). The physician payment equals the RVU times a multiplier.
6. Resource-based relative value scale (RBRVS) - each CPT code has 3 RVUs and the multiplier is applied to the sum of the 3. The RVUs reflect the difficulty of providing the procedure, the practice cost, and the cost of medical malpractice insurance
7. Percent of Medicare RBRVS
8. Special fee schedule or RVS multiplier - large medical groups and health systems have been able to demand larger fees, which are commonly determined through a larger RVS multiplier
9. Facility fee add-on - when a hospital runs the clinics or offices used by physicians, it commonly adds on a separate fee that is paid to the facility
10. Electronic (or online) visits - some payers are now paying physicians for providing care via secure e-mail or similar applications
Case rates or global fees - a single payment that encompasses all professional services delivered in an episode (such as all costs related to a normal pregnancy). may be subject to additional outlier fees (based on a discount off charges) if significant complications occur

Question 12

Risk-based physician payment methodologies

Answer 12

1. Capitation - prepayment for services on a PMPM basis. The provider is paid the same amount every month for every member regardless of whether that person receives no services or very extensive services.
   a. Primary care physicians (PCPs) - see separate list of considerations
   b. Specialty care physicians (SCPs) - payments may be adjusted for age, sex, product type, and severity, but these adjustments aren’t needed as much as for PCPs because SCPs see a larger panel of members, which results in greater credibility of their results
2. Withholds - a percentage of the primary care capitation that is withheld every month and used to pay for cost overruns in referral or institutional services. The remainder after overruns are paid is returned to the PCPs.
3. Physician risk pools
   a. Classes of risk pools include referral ( or specialty care), hospital or facility care, and ancillary services
   b. The plan sets aside money in these separate pools and payments for those services are made from the pools. At year end, any surplus in one pool is first used to offset excess expenses in the other pools and the remaining funds are paid to the physicians.
4. Risk-based FFS
   a. FFS PCP withholds - these work the same as PCP capitation withholds
   b. Mandatory fee reductions - a unilateral reduction in fees in reaction to serious cost overruns
   c. Budgeted FFS - the plan budgets a maximum amount of money that may be spent in each specialty category. As costs in a given category approach the budgeted amount, the withhold amount for just that specialty is increased and its fees may be reduced

Question 13

Considerations when capitating PCPs

Answer 13

1. Capitation is typically used only by HMOs because only HMOs can use a PCP gatekeeper system, where members are locked in to their selected PCP
2. To be able to determine an appropriate capitation, the plan must first define all the services that are expected to be covered by the capitation payment. Careve-outs should only be used for services that are not subject to discretionary utilization (e.g., diagnostic imaging should not be carved out).
3. The capitation rate for a given service equals the net cost per service (after copays) multiplied by the expected utilization PMPM
4. Capitation payments sometimes vary by the following:
   a. Age and gender of the enrolled members
   b. Acuity levels or case mix adjustment - this is not common because of the cost and system difficulty in making this adjustment
   c. Other factors - such as geography and practice type
5. Behavioral shift - members may alter their use of medical services in response to economic incentives or barriers, so capitation payments should account for this

Question 14

Categories of risk accepted by capitated physicians

Answer 14

1. Financial risk - refers to actual income placed at risk. Common forms are withholds and capitated pools for non-primary care services.
2. Service risk - refers to the physician receiving a fixed payment and then having to provide a higher volume of services than expected. The physician could potentially become too busy and lose the ability to sell services to someone else for additional income.

Question 15

Approaches for paying capitations to SCPs

Answer 15

1. Direct capitation to individual physicians or specialty groups
2. Capitation to a company that specializes in specific types of care, such as cancer or cardiac care. The payment will cover all services related to the condition, so it must account for costs from inpatient, outpatient, physician, pharmaceutical, etc.
3. Contact capitation
   a. A budgeted PMPM capitated pool of money is set up for each major specialty
   b. The plan tracks member contacts made by each SCP during the tracking period
   c. At the end of the period, the pool of money is paid out proportionally based on member contacts

Question 16

Pros and cons of capitation

Answer 16

Advantages for the HMO
1. Gives the provider an incentive to reduce medical expenses and utilization
2. Eliminates incentive to overutilize and aligns the provider’s incentives with those of the HMO
3. Costs are more easily predicted by the health plan
4. Is easier and less costly to administer than FFS
Advantages for the provider
1. Provides good cash flow: money comes in at a predictable rate and as prepayment
2. For physicians who are effective at managing costs, profit margins can exceed those found in FFS
Disadvantages
1. There is no immediate reward when the provider performs a service (as there is with FFS), since payment has already been received
2. A physician’s success is subject to a significant amount of luck, especially if the physician has relatively few capitated patients
3. Capitation incentivizes a physician to withhold care

Question 17

Ways to modify the amount paid for a hospital case

Answer 17

1. Carve-outs
   a. Hospitals want to carve out expensive surgical implants or drugs, in which case the hospital passes the cost through to the plan. But this removes any incentive for the hospital to negotiate prices on these items.
   b. Payers want to limit the number of carve-outs
2. Credits - manufacturers provide a refund (credit) to the facility if an implantable device fails or must be removed. Facilities must rebate Medicare for these credits, and payers should secure this same arrangement.
3. Outliers - these are extra payments if a patient’s costs exceed certain thresholds. Payment is typically the original payment plus discounted charges once the outlier threshold is crossed.

Question 18

Types of payment for hospital services

Answer 18

1. Charges (IP & OP)
   a. Straight charges (full charges with no discount)
   b. Straight discount on charges - the hospital submits its claim in full and the plan discounts it by the agreed-to percentage
   c. Sliding scale discount on charges - the percentage discount is based on the volume of admissions and outpatient procedures
2. Per diems - a single charge for a day in the hospital, regardless of actual charges or costs (IP)
   a. Flat per diems - a single per diem rate is applied to any type of inpatient day
   b. Service-specific per diems - separate per diems are applied based on service type, such as medical-surgical, obstetrics, intensive care, and rehabilitation
   c. Per diem differential by day in hospital - because hospitalizations are more expensive on the first day (e.g., due to surgical and operating suite costs), a higher per diem is applied for the first day
   d. Sliding scale per diems - the per diem is based on the volume of admissions
3. Diagnosis-related groups (DRGs) and Medicare-severity DRGs (MS-DRGs) (IP)
   a. Straight DRGs - a flat per-discharge payment that varies based on diagnoses and procedures
   b. MS-DRGs - like DRGs, except payments are adjusted to reflect severity of illness and complications during an admission
4. Percent of Medicare - some commercial payers negotiate rates based on a percentage of what Medicare would pay. Cases where there are no Medicare rates (e.g., neonatal care) must be defined and terms agreed upon.
5. Facility-only case rates - a flat payment to a facility (IP or OP) for a defined service (e.g., OB, transplants)
6. Capitation - paying the hospital on a PMPM basis to cover all institutional costs for a defined population of members. Payment may vary by age, sex, and severity. (IP & OP)
7. Percent of revenue - the hospital is paid a percentage of the premium revenue, subjecting it to bearing the full insurance risk.
8. Ambulatory patient groups and ambulatory patient classifications - used for ambulatory facility services (OP)

Question 19

Payment approaches that make a combined payment to hospitals and physicians

Answer 19

1. Global capitation - payment is made to a single entity for all medical services. This entity accepts the single capitation and manages all care
2. Bundled payment, package pricing, and global payment - these terms refer to a single fee covering all facility and professional services related to a particular episode of care
3. Shared savings - a non-capitation methodology in which cost savings compared to a targeted cost are shared between the payer and a provider organization

Question 20

Pay for performance (P4P) payment

Answer 20

1. Payment may be through adjustments to payment rates or through bonus payments
2. Payment is based on levels of compliance with the program’s measures, not a percentage of cost savings
3. As a % of total payments, incentives are usually between 0.4% to 4% for hospitals and 5% to 10% for physicians
4. Bonus payments can be funded through:
   a. HMOs can create a bonus pool (similar to a risk pool)
   b. Employers with ASO contracts would need to budget for bonuses as a separate item
   c. Payers can hold back a % of increase in payment schedules and set it aside for the bonus program
5. Bonus payments count as legitimate medical claim costs

Question 21

Models of payment under the ACA

Answer 21

1. The following payment approaches are part of the ACA:
   a. No payment for never events
   b. Payment reductions for hospitals with higher than average avoidable readmissions
   c. Bundled payment pilot
   d. Shared savings for ACOs
   e. Value-based payments for ACOs and patient-centered medical homes
   f. Value-based payment modifier to the physician fee schedule
2. ACA created the Center for Medicare and Medicaid Innovations to test different payment methodologies in Medicare and Medicaid

Question 22

Types of payment for ancillary services

Answer 22

1. Discounted FFS or a fee schedule - common for many routine diagnostic services
2. Flat rates or case rates - the ancillary provider is paid a fixed single payment regardless of the number of visits or resources used. For therapeutic providers, case rates can be tiered depending on the complexity of the case.
3. Capitation - common for plans with limits on out-of-network benefits and with acceptable access to ancillary services providers
   Note: Physician-owned ancillary services lead to increased utilization and should be addressed separately

Question 23

Principles to follow for changing physician practice behaviors

Answer 23

1. Relationships matter - physicians acting as medical managers should get to know their practicing peers, and should approach conversations as a respectful colleague (not as a punishing authority)
2. Let the data speak for itself - performance data should be analyzed to see if variations from expected are the result of a sicker population or different demographics. If variations cannot be explained, then a conversation can be set up with the physician.
3. Peers are a powerful influencer of physician practice patters - physicians are more likely to change their behavior if they can discuss potential changes with a peer.
4. Peer leaders must understand and communicate the big picture - the medical manager must be able to speak to the organization’s intent, answering questions as to why physicians are being managed

Question 24

Tools for changing physician behavior

Answer 24

1. Ongoing communications
   a. Electronic or paper communications - these have the worst penetration rates
   b. Group meetings - these give everyone a chance to understand one another better, to voice concerns, and to get questions answered
   c. Social networking - helps physicians get to know the organization and its personality by increasing the number of brief contacts
2. Data - the challenge is not getting information, but knowing which information can be translated into useful knowledge. Data provided to physicians must be checked and rechecked for accuracy
3. Mission clarity - a widespread understanding of what the organization is trying to accomplish is extremely valuable in changing behavior

Question 25

Programmatic approaches to changing physician behavior

Answer 25

1. Financial incentives
2. Formal continuing medical education through seminars, conferences, and home-study. But studies have found little evidence that traditional continuing education changed physician behavior.
3. Data and feedback - the following factors are likely to play a role in whether feedback will be effective:
   a. Goal alignment - physicians must have a reason to change
   b. Clean data - feedback must be credible
   c. Knowledge - feedback must be consistent and usable
   d. Timeliness - feedback need to be closely related to what a physician is doing at the time
   e. Reinforced - feedback must be regular in order to sustain changed behavior
   f. Extrinsic motivation - feedback linked to economic performance is more likely to produce changes
4. Practice guidelines and clinical protocols - using evidence-based guidelines is most effective when:
   a. Efforts are focused on one or two new guidelines at a time
   b. Guidelines are focused on conditions that occur frequently and for which there is a lot of practice variation
   c. Implementation of guidelines is accompanied by regular feedback
   d. Financial rewards are used
5. Small group programs - there is strong evidence of positive changes resulting from educating physicians in interactive small groups

Question 26

Stepwise approach for changing behavior in individual providers

Answer 26

1. Collegial discussion of cases and utilization patterns in a nonthreatening way
2. Persuading the provider to act in ways he or she may not initially choose
3. Firm direction (only if the first 2 steps don’t work) - reminding the physician of his or her commitment to cooperate with organizational policies and procedures
4. Discipline and sanctions (only when all other approaches have failed) - formal sanctioning may occur for the following reasons:
   a. Poor-quality care - this is a serious charge and has a very negative impact on a physician, so the plan must comply with due process requirements
   b. Failing to cooperate with plan policies and procedures - in this case, the organization may terminate the contract “for cause”
   c. Utilization does not match the organization’s managed care philosophy - the contract can be terminated without cause when adequate notice is given

Question 27

Sources of data for provider profiling

Answer 27

1. Lab test results
2. Biometric information
3. Feeds from electronic health records
4. Patient satisfaction measures
5. Operational information on vendor programs
6. Claims system data is the major source. Before it can be used, it must be standardized and stored in a data warehouse.

Question 28

Data to include in a data warehouse for provider profiling purposes

Answer 28

Provider profiling is the identification, collection, collation, and analysis of data to develop a characterization of the provider’s performance

1. Unique patient identifier
2. Diagnostic information (e.g., ICD-10 codes)
3. Procedural information (e.g., CPT and HCPCS codes)
4. Level of service information
5. Paid and allowed dollar amounts from services ordered by the physician or health care facility
6. Unique provider identifier

Question 29

Principles for designing provider profiling reports

Answer 29

1. Identify high-volume and costly clinical areas to profile
2. Involve appropriate internal and external customers (including providers) in developing and implementing the profile
3. Compare results with published performance (external vs. internal norms)
4. Report performance using a uniform clinical data set
5. When possible, employ an external data source for independent verification of the provider’s data
6. Consider onsite verification of data from the provider’s information system
7. Present comparative performance using clinically-relevant risk stratification
8. Require statistical significance for comparisons and establish thresholds for minimum sample size
9. Adjust performance measurements for severity

Question 30

Uses of provider profiling

Answer 30

1. Payer-provider collaboration initiatives where a plan physician visits with provider groups to present their data, explain how they compare to their peers, and discuss options for performance improvement
2. Payers use profiling data to determine which provider groups to exempt from prior authorization requirements
3. Profiling data is used to equip pay-for-performance programs with metrics used for bonus calculations
4. Profiling data can be used to set up preferred provider tiers in a PPO
   e. This data could also be used as the basis for patient-centered medical homes and accountable care organizations

Question 31

Users of provider profiles

Answer 31

1. Health plans - for example, provider relations and medical directors
2. Consumers - effective dissemination of profiles to members is still under development
3. Employers - most are more interested in cost control than quality, so approaches should integrate cost control with quality
4. Providers - most are interested in change if methods to measure performance are well grounded in scientific evidence or professional consensus

Question 32

Desired characteristics of provider profiles

Answer 32

1. Accurately identify the provider - is not easy to do when members use multiple providers. Also consider whether to profile at the physician level (which has credibility issues) or at the clinic or group level
2. Accurately identify the provider’s specialty - can be difficult because many specialists provide a lot of primary care. So consider a specialist’s mix of routine and complex cases.
3. Help to improve the process and outcome of care
4. Have a firm basis in scientific literature and professional consensus
5. Meet certain statistical thresholds of validity and reliability:
   a. Validity - the extent to which the data actually means what you think it means
   b. Reliability - the extent to which data is consistent and means the same thing from provider to provider
6. Compare the provider to a norm - can compare to total health plan average results, results from peers (such as all network physicians or those of the same specialty), or budgeted amounts
7. Cost the minimum amount possible to produce
8. Respect patient confidentiality and obtain patient consent when necessary

Question 33

Future trends that will affect pharmacy program management

Answer 33

1. The patent loss of approximately $90 billion of brand name drugs, resulting in low-cost trends
2. A simultaneous increase in the number of specialty drugs approved by the FDA
3. Due to the high cost of specialty drugs, health plans will integrate some portion of their medical and pharmacy management
4. By 2019, the number of beneficiaries in Medicare and Medicaid will grow by 30%
5. Due to the ACA and CMS policy, there will be several initiatives to measure and promote practice patterns and risk-sharing contracts that improve outcomes and quality of care
6. New technologies will support accountable care organizations and patient-centered medical homes
7. Health plans and pharmacy benefit managers (PBMs) will likely implement greater restrictions on their formularies

Question 34

Definition and services typically offered by PBMs

Answer 34

Definition of PBM - companies that specialize in developing and managing prescription drug benefits for a variety of private and public plan sponsors

1. Claims processing and management reports
2. Community retail pharmacy provider network
3. Home delivery (mail service) prescriptions
4. Specialty pharmacy distribution services
5. Drug formulary development and management
6. Pharmaceutical manufacturer contracting
7. Customized pharmacy benefit design development and administration
8. Clinical pharmacy programs, such as drug utilization review (DUR) and medication therapy management (MTM)
9. Other customized services requested by plan sponsors

Question 35

Categories of drugs that are typically excluded on prescription drug plans

Answer 35

1. Experimental or investigational drugs (not approved by the FDA)
2. FDA-approved drugs when prescribed for unapproved indications (“off-label” use)
3. Drugs used for cosmetic purposes or specific purposes such as smoking cessation or infertility
4. Over-the-counter drug other than insulin

Question 36

Definition and types of drug formularies

Answer 36

Definition of a drug formulary - a continuously-updated list of covered drugs and access rules (such as a tier structure and dispensing limitations). It should be supported by current evidence-based medicine and the judgment of physicians, pharmacists, and other experts.

1. Open formulary - generally covers most drugs (exceptions may include cosmetic or over-the-counter drugs)
2. Closed formulary - does not cover as many drugs. Drugs not included in the formulary are not eligible for payment except by an approved medical exception

Question 37

Definition and types of drug utilization review programs

Answer 37

Definition of DUR - identify and correct inappropriate or unsafe drug utilization or patterns and identify opportunities for cost reduction

1. Prospective - can identify and resolve problems before the medication is dispensed. It serves as an excellent member-teaching opportunity for pharmacists.
2. Concurrent - performed at the point-of-prescribing. Pharmacists are provided clinical and benefit design edits that provide an alert for potential clinical conflicts to evaluate before the product is dispensed.
3. Retrospective - performed after the prescription is dispensed. It could include a review of high-cost outliers.

Question 38

Formulary guidelines for Part D plans

Answer 38

1. There are 146 therapeutic categories that must be included
2. If a generic is available, it must be included
3. If the pharmacy dispenses a brand name drug, it must inform the patient of any differential between the price of the brand and the lowest-priced generic of that drug
4. Preferred drug rebates must go to the payer to decrease the cost of the program
5. At least 2 drugs must be included in each “key drug type” category
6. The formulary must include prior authorizations, step therapy, generic drug requirements, and preferred brand name drugs
7. Substantially all drugs in the following classes must be included: antidepressants, antipsychotics, anticonvulsants, anticancer, immunosuppressants, and HIV/AIDS medications

Question 39

Services provided by medication therapy management (MTM) programs

Answer 39

1. Performing or obtaining necessary assessments of the patient’s health status
2. Formulating a medication treatment plan
3. Selecting, initiating, modifying or administering medication therapy
4. Monitoring and evaluating the patient’s response to therapy
5. Performing a comprehensive medication review to identify, resolve, and prevent medication-related problems
6. Documenting the care delivered and communicating essential information to the patient’s other primary care providers
7. Providing verbal education and training designed to enhance patient understanding
8. Providing information, support services, and resources to enhance patient adherence
9. Coordinating and integrating MTM services with other health care services

Question 40

Metrics for measuring financial performance of pharmacy programs

Answer 40

1. Various cost parameters (e.g., program expenses, billed and paid claims, and copayments)
2. Prescription utilization and trends
3. Administrative and claims processing fees
4. Prescription discount or rebate
5. Generic dispensing and conversion rates and missed generic substitution opportunities
6. Drug formulary conformance rate
7. Patient satisfaction and member complaints related to the pharmacy program
8. Number of drug formulary prior authorization exception requests and approvals
9. HEDIS measures related to pharmacy
10. Drug utilization review exception reports

Question 41

Key success factors of an accountable care organization

Answer 41

1. Ability to identify the population to manage
2. Ability to understand and manage cost
3. Ability to manage quality
4. Ability to integrate care

Question 42

Key success factors of a patient-centered medical home

Answer 42

1. Improved quality of care
2. Improved status of comorbid conditions
3. Increased satisfaction of patients
4. Reduction of avoidable comorbid hospitalizations
5. Reduction of acute occurrences
6. Reduction of inpatient admissions
7. Reduction of LTC admissions

Question 43

Types of services delivered by behavioral health care networks

Answer 43

1. Inpatient services - the highest level of skilled services. Involves 24-hour medical and nursing care in a psychiatric facility, a general hospital, or a detoxification unit in a hospital.
2. Residential treatment - services rendered in a 24-hour facility offering therapeutic services for patients with severe mental or substance-related disorders
3. Partial hospitalization - provides structured mental health or substance abuse therapeutic services for at least 4 hours per day and at least 3 days per week
4. Intensive outpatient program - provides structured therapeutic services for at least 2 hours per day and at least 3 days per week
5. Outpatient treatment - includes individual, family, or group treatment rendered by a licensed professional
6. Employment assistance programs (EAPs) - EAP professionals deliver short-term, problem-focused outpatient services for employees and their families

Question 44

Types of behavioral health care services delivered by public sector networks

Answer 44

1. Supervised living - includes community-based residential detoxification programs and rehabilitation in halfway or quarter-way houses
2. Programs for assertive community treatment - multidisciplinary teams deliver services directly in the community to people who demonstrate chronic symptoms and a pattern of relapsing
3. Peer support - consumers who have recovered work under the supervision of a behavioral health provider that assists patients in building confidence and in improving life skills
4. Continuous treatment teams - multidisciplinary teams provide a range of services in an effort to prevent a child from needing to be removed from the home and placed in a more restrictive level of care
5. Community case management - workers coordinate care ans social services delivered within the community

Question 45

Utilization management strategies to reduce inpatient behavioral health care costs

Answer 45

1. Addressing psychosocial causes of admissions in order to get early treatment and avert the need for admission
2. Increasing ambulatory follow up to help prevent unnecessary readmissions
3. Reducing readmissions through intensive interventions for at-risk patients
4. Measuring and tracking clinical performance with a focus on outcomes and efficiency
5. Reducing relapse through effective aftercare planning and use of community and social supports
6. Coordinating services among multiple agencies and providers
7. Emphasizing the quality of services provided through supervision, analysis of complaints, satisfaction surveys, and staff training

Question 46

Delivery mechanisms for telemental health services

Answer 46

1. Hub-and-spoke networks - these link large tertiary centers with outlying clinics
2. Health provider-home connections - these link providers with single-line phone-video systems for interactive consults
3. Web-based e-health patient service sites - these provide direct consumer outreach and services over the internet

Question 47

Challenges related to delivering telehealth care

Answer 47

1. Technology infrastructure - the technologies available are constantly expanding
2. Cost - the capital investment required for telehealth infrastructure can be prohibitive for some organizations and communities
3. State licensing and regulation - professionals who use telemedicine technology across state lines must apply for a separate license in each state
4. Payment - a number of payers have recently started covering telehealth and “web visits” for their members

Question 48

Institute of Medicine definition of quality care

Answer 48

Definition - the degree to which health services increase the likelihood of desired health outcomes and are consistent with current professional knowledge
Aims for high-quality care:
1. Safe - avoiding injuries to patients
2. Effective - providing services based on scientific knowledge to all who could benefit, and refraining from providing services to those not likely to benefit
3. Patient-centered - providing care that is respectful of and responsive to individual patient preferences, needs, and values
4. Timely - reducing waits and sometimes harmful delays
5. Efficient - reducing waste, including waste of equipment, supplies, ideas, and energy
6. Equitable - providing care that does not vary in quality because of personal characteristics

Question 49

Data sources for behavioral health care performance metrics

Answer 49

1. Administrative data - includes claims, eligibility information, and various coding sets
2. Treatment records - contain detailed clinical information
3. Survey data - from providers and consumers
4. Access data - from reviews of provider appointment availability
5. Clinical assessments - involve consumer self-report and provider and caretaker observations
6. Utilization management data - include requests for care, nonauthorizations, and appeals
7. Risk management data - include adverse events from medication errors
8. Predictive modeling data - derived from utilization data and population risk adjustment formulas

Question 50

Intensive care management (ICM)

Answer 50

1. ICM care managers work directly with members over the telephone to develop personalized treatment plans, and then coordinate care delivery with the members and their behavioral health providers.
2. ICM candidates are typically identified by either claims data, notification of an inpatient admission, or by care managers from the behavioral health care entity or health plan.

Question 51

Accreditation of MBHOs

Answer 51

1. Major accreditation organizations are the Joint Commission, NCQA, and URAC
2. Standards are continuously revised, requiring MBHOs to modify procedures and measurement processes
3. Accreditation is voluntary, and is meant to provide external validation of the company’s quality program

Question 52

Reasons why employers should focus on the quality of health care

Answer 52

1. There are numerous errors in the delivery of health care services
2. There is substantial evidence of extensive overuse and underuse of various health care services
3. Lack of attention to quality of care can have negative consequences in relationships with employees, providers, and others in the community
4. Poor quality of care erodes the value of health care purchases

Question 53

Components of quality care

Answer 53

1. Appropriateness - given the current state of the are in medicine
2. Excellence - in the execution of care
3. Patient satisfaction

Question 54

Considerations in assessing physician quality

Answer 54

1. Assess the physician’s training, experience, and professional certifications
2. Review the physician’s history of malpractice claims
3. For physicians performing specialty procedures, consider advanced training received, experience with the procedure, complication and mortality rates, and success rates
4. The NCQA has developed some programs to recognize high-quality physicians
5. For physicians in managed care plans, review performance report cards provided by the MCO
6. Review ratings provided by patients, which are published on various websites
7. Review Physician Quality Reporting Initiative data from CMS
8. Schedule an office visit for evaluating the physician’s communication skills

Question 55

Considerations in assessing hospital quality

Answer 55

1. The hospital should have the appropriate accreditations (from the state, CMS, and the Joint Commission)
2. Consider the results for the Joint Commission on-site surveys
3. American Hospital Association information (on hospital facilities, personnel, and services)
4. Consider whether the hospital is a major teaching hospital (these have lower mortality rates for certain conditions)
5. Review hospital quality ratings provided by The Leapfrog Group and HealthGrades
6. Review government data sources on hospital performance
7. For specific procedures or conditions of interest, consider questioning the hospital directly regarding the volume of admissions, complication and mortality rates, and success rates

Question 56

Considerations in assessing MCO quality

Answer 56

1. Accreditation by the NCQA - based on a site visit, a review of the MCO’s quality-related processes, and the MCO’s HEDIS measures, the MCO will be categorized into one of the following: excellent, commendable, accredited, provisional, and denied.
2. Information may be available from the state department of public health, or the state department of insurance
3. Review the MCO’s credentialing criteria, quality assurance plan, and preventive care programs
4. Consider performing a site visit

Question 57

Provider approaches for improving quality (aka supply management)

Answer 57

1. Promote continuous quality improvement plans
2. Large employers can use quality care data to selectively contract with providers
3. Use bundled payments to encourage providers to be more efficient and reduce errors
4. Provide feedback on hospital and medical staff performance
5. Contract with accountable care organizations
6. Use performance incentives (“pay-for-performance” programs)

Question 58

Consumer approaches for improving quality (aka demand management)

Answer 58

1. Design cost sharing that encourages avoidance of unnecessary care
2. Provide preventive services
3. Use shared decision-making programs to get the consumer involved
4. Disseminate information about provider quality
5. Offer telephonic nurse counseling services
6. Offer telephonic disease management programs
7. Encourage the use of reliable Internet sources (such as the US Dept of Health & Human Services)

Question 59

Key risks and opportunities for ACOs

Answer 59

1. Shared savings - savings and losses will be based on benchmarks specific to the enrollment of each ACO. Shared savings requires both financial and quality performance.
2. Risks
   a. CMS will not provide comprehensive data to ACOs.
   b. For ACOs already operating with high efficiency, feasibility of meeting target reductions is concerning.
3. Opportunities
   a. ACOs whose providers have been inefficient will have easier targets.
   b. Potential ACOs should assess the financial risk of becoming an ACO based on data and actuarial models.

Question 60

Uses of bundled payments

Answer 60

Bundled payments can help align financial and quality of care incentives. They have been used for the following purposes:

1. By providers to attract more business
2. By providers to engage physicians (especially surgeons)
3. By providers to gain the cooperation of physicians to reduce hospital cost
4. By payers to reduce payments
5. By payers to encourage patients to use lower-cost or higher-quality providers

Question 61

Considerations in contracting for bundled payments

Answer 61

1. Defining the episode - what is the trigger date and when does the case end? Which services are included?
2. Evaluating catastrophic risk - need to do an outlier risk analysis that includes a classical stop loss analysis
3. Financial stability for low case loads - random fluctuation may be greater for provider groups with low case loads
4. Determining provider allocation of funds - the allocation should consider financial incentives for physicians to encourage them to promote more cost-effective care
5. Distinguishing case severity - could limit risk by removing higher-severity patients from the bundled payment approach
6. Quality outcome requirements - minimum quality thresholds may be needed to ensure quality is not compromised as providers reduce services
7. Administrative complexity of supporting the contract
8. Risk-sharing alternatives - contracts that share financial risk between the provider and payer may be more viable than pure bundled payments
9. Potential for increased utilization - contracts for individual providers should not give them incentives to increase utilization to get a larger share of the bundled rate

Question 62

Uses of quality and efficiency measurements

Answer 62

1. Professional standards
2. Government oversight
3. Professional accreditation
4. Quality improvement
5. Network development
6. Pay-for-performance programs
7. Public reporting
8. Consumer health education
9. Financial management
10. Purchaser decision making

Question 63

Challenges in measuring quality

Answer 63

1. Large, decentralized, and complex US health care system

2. Different approaches to measurement by providers and payers

Question 64

Quality reporting for stakeholders

Answer 64

1. Stakeholders include: National Committee for Quality Assurance (NCQA) and National Quality Forum (NQF), CMS, state programs, insurance carriers, providers, and international programs
2. Hospital quality - hospital rankings, price information, discharge data, state studies on specific conditions, reporting on readmissions and hospital-acquired infections
3. Outpatient and physician quality - metrics in ACO, bundled payment, and primary care support initiatives; Stars program for Medicare Advantage bonus payments; state results for specific illnesses and treatments;

Question 65

Definition of accountable care organizations (ACOs)

Answer 65

1. ACOs are a new category of health care provider created by the ACA as part of the Medicare shared savings program
2. Definition - a legal entity composed of certified Medicare providers or suppliers. These providers and suppliers work together to coordinate care for a defined population of Medicare FFS beneficiaries, and they have control over the ACO’s decision-making processes.
3. ACOs that meet specified quality performance standards are eligible to receive payments for shared savings if they can reduce spending growth below target amounts
4. Medicare beneficiaries will be assigned to ACOs based on where they received certain primary care and preventive services in the most recent 12 months

Question 66

Eligibility requirements for ACOs to participate in the Medicare Shared Savings Program

Answer 66

1. Must be an eligible type of provider (see separate list)
2. Must be capable of receiving and distributing shared savings, repaying shared losses, ensuring all providers comply with program requirements, and performing other required functions
3. The governing body must be composed primarily (at least 75% of participating providers and must also include Medicare beneficiaries served by the ACO
4. Leadership and management criteria include:
   a. Clinical oversight must be done by a senior-level medical director who is a board-certified physician
   b. Providers must make a meaningful financial or human investment to the clinical integration program
5. Must exhibit a strong patient-centeredness element (see separate list)
6. Must have a sufficient number of beneficiaries (at least 5,000) and primary care providers
7. Must have a compliance plan, a lead compliance official, and mechanisms for identifying compliance problems

Question 67

Providers eligible to participate in an ACO

Answer 67

1. Professionals in group practice arrangements
2. Networks of individual practices
3. Joint venture arrangements between hospitals and professionals
4. Hospitals employing professionals
5. Critical access hospitals that are paid by Medicare in a way that supports the collection of data needed to assign patients to providers
6. Rural health clinics
7. Federally qualified health clinics

Question 68

Ways ACOs must demonstrate patient-centeredness

Answer 68

1. A beneficiary care experience survey
2. Patient involvement in ACO governance by representation in the governing body
3. A process for evaluating the health needs of the population
4. Systems in place to identify high-risk individuals and develop individualized care plans for targeted populations
5. A mechanism in place for the coordination of care
6. A process in place for communicating clinical knowledge to beneficiaries in an understandable way
7. A process to allow beneficiaries to access their medical records
8. Processes for measuring clinical or service performance and using these results to improve care and services

Question 69

Quality measures and methodology for measuring ACO performance

Answer 69

1. ACOs that are sharing in only savings (the one-sided risk model) will be able to share in up to 50% of their shared savings, depending on how well they exceed minimum quality performance standards (this is limited to the first 3-yr contract term). For ACOs that also share in the losses (the two-sided risk model), the percentage is 60%.
2. In the first year of the program, CMS will require ACOs to report on 33 measures, and ACOs will be eligible for shared savings if they report accurately on 100% of the measures
3. The measures are grouped into 4 domains: patient and caregiver experience, care coordination and patient safety, preventive health, and at-risk populations
4. Data sources for these measures are survey instruments, claims, electronic health record incentive program data, and the Group Practice Reporting Option data collection tool
5. In years 2 and 3 of the program, 25 and 32 of the measures will be based on actual performance, with the remainder just for reporting (as in year 1).
6. Public reporting will be required in order to hold ACO providers accountable for high-value care.

Question 70

Shared savings payment methodology

Answer 70

1. A baseline expenditure estimate will be developed based on spending data from beneficiaries that would have been assigned to the ACO in the most recent 3-yr period. To generate savings, ACOs must reduce spending below their benchmark amounts
2. Payments through indirect medical education adjustments, disproportionate share adjustments, and incentive payments outside Medicare Part A and Part B payment systems will be excluded from calculations
3. A minimum savings rate (MSR) ensures payments are based on true savings below the benchmark rather than random fluctuations.
   a. The MSR for one-sided risk model varies from 3.9% for an ACO with 5,000 beneficiaries to 2% for an ACO with 60,000 beneficiaries.
   b. The MSR for the two-sided risk model is 2%, and the minimum loss rate will also be 2%.
4. Final shared savings rates are determined as follows:
   a. In each of the 4 domains, points earned are divided by the points possible to determine a domain percentage
   b. A straight average of the 4 domain percentages is calculated
   c. Shared savings rate is this average times 50% (one-sided model) or 60% (two-sided model)
5. The shared loss percentage for ACOs in the two-sided model is 1 minus the shared savings rate
6. Savings are capped at 10% (one-sided) and 15% (two-sided) of the benchmark. Losses are capped at 5% in year 1, 7.5% in year 2, and 10% in year 3.