1. www.shstrategists.com The KanCare Program: Medicaid Managed Care and Local Health Departments Kansas Association of Local Health Departments January 20, 2012 Martie Ross mross@shstrategists.com mross@shstrategists.com 913.327.5152

2. The KanCare Solution On November 8, Governor Brownback announced his plan to reform Kansas Medicaid program Move nearly all Medicaid beneficiaries to managed care State to contract with three Managed Care Organizations (MCO) to operate the program

3. MCO Selection Response to State RFP Applicants must submit technical proposal by January 31; cost proposal due February 22 State to select three MCOs sometimes this spring Selected MCOs must have provider network in place by October KanCare takes effect January 1, 2013

4. Requirements for MCOs Statewide coverage; all populations Maintain current reimbursement levels Maintain current level of services and beneficiary protections

5. Person-Centered Care Coordination Population-specific and statewide outcomes measures will be integral to the contracts and will be paired with meaningful financial incentives RFP requires MCO to demonstrate care coordination capabilities RFP requires MCO to create of health homes, with an initial focus on individuals with a mental illness, diabetes, or both

6. Home and Community-Based Services Kansas currently has the sixth highest percentage of seniors living in nursing homes in the country KanCare forces transition away from institutional care and toward services that can be provided in individuals’ homes and communities Outcome measures will include lessening reliance on institutional care

7. Consumer Voice Administration will form advisory group of persons with disabilities, seniors, advocates, providers, and other interested Kansans to provide ongoing counsel on implementation of KanCare. Additionally, managed care organizations will be required to: Create member advisory committee to receive regular feedback Include stakeholders on the required Quality Assessment and Performance Improvement Committee Have member advocates to assist other members who have complaints or grievances

8. Pay for Performance: P4P Program identifies operational measures in the first contract year, and 15 quality of care measures in years 2 and 3, tied to incentives State withholds 3 to 5 percent of total capitation payments until certain quality thresholds are met Quality thresholds increase each year to encourage continuous quality improvement. Measures chosen for P4P program will allow the State to place new emphasis on key areas

9. Savings State expects to achieve $853 million (state and federal) over five years through outcomes-focused, person-centered care coordination model 5-year Total SavingsFY13FY14FY15FY 16FY 17 All Funds29,060,260113,513,129198,041,997235,439,877277,004,864853,060,127 SGF12,522,06648,912,80785,336,296101,451,043119,361,396367,583,609

10. Now What? Letters of Intent Individual contracts with MCOs Joint contracting Advantages Risks

11. Antitrust Law Regulates Market Power Single entity or group has ability to control prices or exclude competition In a defined area For a specific product or service

12. Forms of Market Power In a single entity Monopoly (seller) or Monopsony (buyer) In collaboration with competitors Joint ventures Collaborations Associations Agreements – Written and Unwritten

13. Two Basic Antitrust Questions If you have market power, what can you do to your competition? If you don’t have market power, what can you do with your competition?

14. YesNO Do you have market power? What can you do to your competitors? What can you do with your competitors? Rule #1 Rule #2 Rule #3 Rule #4

15. Rule #1 The exercise of market power to exclude competitors – actual or potential – is illegal. U.S. and Texas v. United Regional Health Care System (February 2011) U.S. and Michigan v. Blue Cross Blue shield of Michigan (October 2010)

16. Rule #2 Agreements with competitors to exercise market power are illegal. Let’s agree to demand an increase in reimbursement rates. Let’s agree to share cost information so we can avoid undercutting each other. Let’s agree not to compete in these areas. Let’s agree not to deal with any business that works with that new clinic.

17. Rule #3 Sharing survey information with competitors is permitted if not likely to produce market power. Safety zone requirements: 1.Independent 3rd party collects information. 2.Current fee information is provided only to purchasers. 3.Fee information shared with providers is more than 3 months old. 4.At least 5 data sources for each category. 5.Information is aggregated.

18. Multiprovider Networks Ventures among providers that jointly market services to health plans and other purchasers Such ventures may contract to provide services at jointly determined prices if: 1.Providers are financially or clinically integrated 2.Venture structured to produce significant efficiencies that benefit consumers 3.Joint pricing reasonably necessary to realize efficiencies

19. Financial Integration Participants share “substantial” financial risk in providing all services that are jointly priced through network Reliable indicator that participants are motivated to achieve significant efficiencies

20. Clinical Integration Practice protocols and performance benchmarks Effective operating procedures Membership requirements

21. Practice Protocols and Performance Benchmarks Evidence-based practice guidelines Case and disease management procedures Standards for use and maintenance of a computerized clinical information system Quality and cost benchmarks for evaluating participant performance Standards for measuring member performance on benchmarks

22. Effective Operating Procedures Introduction, explanation, and periodic review of practice guidelines Training in use of technology Peer review of provider performance and adherence to practice requirements Review of provider aggregate performance under quality and cost benchmarks Enforcement of individual and overall compliance with program requirements

23. Membership Requirements Refer patients to other network participants when appropriate Share information on all services rendered to network patients Follow care management procedures and protocols Adhere to established educational and disciplinary requirements Serve on committees, such as quality assurance and medical management Invest capital to establish and maintain infrastructure and capability to achieve quality and cost improvements

24. Rule #4 Collaborations are viewed with suspicion. Key questions: 1.Will the arrangement produce market power for the participants? 2.Is the arrangement structured and likely to produce increased efficiencies? 3.Do the efficiencies outweigh any decrease in competition?

25. www.shstrategists.com Martie Ross mross@shstrategists.com (913) 327-5152 mross@shstrategists.com Join the conversation at www.shstrategists.com/blog/