Managed Care Financial Reporting Richard Stebbins Director Financial
Managed Care: Financial Reporting Richard Stebbins, Director Financial Reporting Medicaid CHIP Division April 29, 2016
Managed Care Business Model • Full risk capitation • Actuarially sound capitation rates • Defined accounting principles • HHSC-designed reporting • Quarterly reporting • Data validation and reconciliation • Compare to encounters • Compare to subcontracts 2
Managed Care Business Model • Audited financials • Annual Agreed-Upon-Procedures (“AUPs”) • Risk Assessments • Performance Audits • HHSC-OIG oversight • CMS oversight • HHS-OIG oversight • Excess profit recovery • Experience Rebate • Admin Cap 3
Managed Care Business Model • HHSC Resources applied to Financial Oversight • Director and 9 financial professionals • Reconciliation team lead and 4 analysts (5) • Audit lead (1) • Encounter and special projects team (2) • Finance manager – contract development (1) 4
Managed Care Business Model • Other Resources applied to Financial Oversight • HHSC Actuarial Analysis group • Chief Actuary and 5 professionals • External Independent Actuaries – Rudd and Wisdom • External Quality Review Organization (EQRO) • Institute for Child Health Policy • Data Certification 5
Managed Care Business Model • Public resources • HHSC web site • Part 1 of all Financial Statistical Reports (FSRs) • Liquidated Damages • Contracts • Uniform Managed Care Contract • Uniform Managed Care Manual • Cost Principles • Financial reporting templates • Actuarial Reports (rate-setting documentation) • Open Records process – complete FSRs 6
Managed Care Business Model • Financial Summary Reports (FSRs) • Income Statement • Multi-tab Excel template • Submitted quarterly • Annual submission on Dec 31 st for State Fiscal Year ending 9/30 (90 day FSR). • Additional submission on August 31 (334 day FSR) – accounts for claims run out 7
Managed Care Business Model • Experience Rebate • Recovers portion of profits greater than 3% of revenue based on a tiered structure: Profits MCO Share HHSC Share ≤ 3% 100% 0% > 3% and ≤ 5% 80% 20% > 5% and ≤ 7% 60% 40% > 7% and ≤ 9% 40% 60% > 9% and ≤ 12% 20% 80% > 12% 0% 100% 8
Managed Care Business Model • Current state of Managed Care • Model is maturing since most regions, benefits and populations have been or will be carved-in • Allowable administrative expenses are capped • Quality Improvement costs (new CMS rule) will be allowable as Medical expense (remove from admin) 9
Managed Care Business Model • Challenges • Affiliate agreements • Vertical integration • MCO consolidation • Cigna merger, Amerigroup merger…more? • Evolution of new payment models • Value-based purchasing • Pay for Quality • ACO model • Innovative payment model – shared savings 10
Managed Care Business Model Sample FSR – part 1 Sample FSR – part 5 Incurred Months: HHSC Managed Care contract costs 1 Member Months 2 Average Monthly Member Months 3 4 5 6 7 8 9 10 11 12 13 14 Revenues: Medical Premiums Delivery Supplemental Payments Pharmacy Premiums Investment Income Health Insurance Providers Fee Reimbursement Other Revenue Total Gross Revenues Health Insurance Providers Fee & Related Costs Health Insurance Providers Fee (NAIP) Premium Taxes Maintenance Taxes Net Revenues Medical Expenses: Fee-For-Service Capitated Services Patient Centered Medical Home Services Net Reinsurance cost IBNR Accrual - Medical Total Medical 20 Expenses Prescription Expenses (excluding PBM 21 Admin) 22 Total Medical and Prescription Expenses 15 16 17 18 19 HHSC Managed Care contract costs 1 Physician Services: Primary Care 2 Physician Services: Specialist Physician Services: Deliveries - Prof. 3 Component 4 Non-Physician Professional Services 5 Emergency Room Services 6 Outpatient Facility Services 7 Inpatient Facility Svcs: Medical/Surgical Inpatient Facility Svcs: Deliveries - Facility 8 Component 9 Behavioral Health Services 10 Vision Services 11 Miscellaneous Other 12 Patient Centered Medical Home Services 13 Reinsurance Premiums 14 Reinsurance Recoveries 15 Incurred But Not Reported (IBNR) 16 Incentives or Network Risk Retention 17 Total Medical Expenses 23 Administrative Expenses 24 Total Expenses 25 Net Income Before Taxes 11
Managed Care Business Model Sample FSR – Administrative Expenses HHSC Managed Care contract costs 1 Salaries, wages, and benefits (excl. bonuses) 2 Bonuses Rent, Lease, or Mortgage Payment for Office 3 Space 4 Utilities (if not incl. in rent), excl. Phone/Telecom 5 Phone / Telecom / Cell phones / T 1 / Broadband 6 Equipment Lease or Rent, excl. Phone/Telecom Computer hardware/Software purch. , 7 uncapitalized Furniture, Fixtures, and other Equipment 8 Purchased, uncapitalized 9 Maintenance, Repairs, Custodial, and Security 10 Supplies, Postage, Freight, Printing Legal & Prof. Services, incl. External Audit, Tax, 11 Consulting 12 Travel Expenses 13 Marketing, PR, and Outreach (excl. Salaries) Taxes (excl. income taxes & premium taxes) & 14 Licensing 15 Insurance 16 Depreciation & Amortization 17 Other Adminstrative Expenses 18 Subtotal (specified in-house services) Outsourced services (Non-Capitated 19 Arrangements) 20 Outsourced services (Capitated Arrangements) 21 PBM Admin Fees - Fees based on $PMPM PBM Admin Fees - Fees based on transaction 22 volume 23 PBM Fees - Other 24 Corporate Allocations 25 Total Administrative Expenses 12
Managed Care Business Model • Important Links • Uniform Managed Care Manual http: //www. hhsc. state. tx. us/medicaid/managed-care/umcm/ • Medicaid Home Page http: //www. hhsc. state. tx. us/medicaid/index. shtml • Medicaid/CHIP Contracts Page http: //www. hhsc. state. tx. us/medicaid/managed-care/forms. shtml • Rate Setting Page http: //www. hhsc. state. tx. us/rad/managed-care/index. shtml 13
Managed Care Business Model Questions? 14
Managed Care Business Model Thanks for your attention Rich Stebbins, Director – Financial Reporting HHSC –Medicaid/CHIP Division 15
- Slides: 15