Parker Dennison - Author Post

Goodbye UR, Hello “Quality Improvement”

With the interim final rule (MLRFinalInterimRule 11-22-2010) defining allowable costs to meet the health plan medical loss ratio (MLR) requirements under healthcare reform published on December 1, 2010, the federal Department of Health and Human Services (HHS) has given the managed care industry a significant incentive to evolve their utilization management practices.  Under the Rule, health plans can include the costs of quality improvement activities as a medical expense toward the MLR, but not the costs of retrospective and concurrent utilization reviews.

Some health plans will no doubt attempt to re-label and slightly modify UR activities and argue that it is quality improvement but the most plans will likely shift focus to more pro-active care management, and clinical consultation for protocol outliers.  This will also be consistent with the growing focus on evidence-informed and evidence-based practices.

Now is the time for providers to start the process of revamping their own utilization review processes to focus on quality improvement rather than utilization controls or singular cost containment.

IL 1915(c) MH Waiver Development Progresses

The Illinois Department of Human Services/Division of Mental Health, in conjunction with the Department of Healthcare and Family Services held its second Stakeholder’s Forum on October 27,2010 to review their progress on the development of a Medicaid 1915(c) mental health waiver.  Upon approval by CMS, Illinois’ 1915(c) waiver will be one of the few nationwide that is targeted towards supporting those with serious mental illnesses who currently reside in nursing facilities or who meet that level of need.  Parker Dennison & Associates is assisting the state in the development of the waiver and public documents related to the development process may be found at IL 1915(c) Waiver.

Getting Ready for Healthcare Reform

As a healthcare professional, you would have to be living under a rock not to have heard about “bending the cost curve” as an integral part of healthcare reform.  But have you thought about what that might mean in your state, in your organization?

Anything that reduces the cost to deliver a unit of service, the total number of units required to treat an illness successfully, or the amount of other, more expensive services will bend the cost curve.  There has been much early attention on changes to reimbursement structures to change the production driven incentives that currently exist in fee-for-service models.  Hopefully, the reform legislation will create a fertile environment for demonstration projects that will find viable alternatives to the current reimbursement structures.

But any reimbursement model will still include benefits for provider cost efficiencies in delivering services.  Low cost providers will have competitive advantages for years to come, and will be able to have the financial margins to invest in technologies or creative delivery system ventures that position the organization for long-term success.  Low unit costs are also imperative to surviving the current environment of state budget crises and the near term future prior to the arrival of more thoughtful reimbursement mechanisms.

One of the most important aspects of managing costs is to ensure staff are producing reasonable levels of billable units—achieving targeted productivity levels.  Managing productivity is one of the most challenging aspects of provider operations.  As a manager, as soon as you take your eye off the ball, productivity is likely to fall.  And it falls much faster than it rises!

Consider the following example—For an organization with 55 FTEs who deliver services at an average rate of $100/hour, a 1% productivity improvement will yield nearly $100,000 in additional revenues (FFS billing), or reduce the staff needed to produce the same volume of services by 0.5 FTEs (capped reimbursement).  If this organization had been operating at breakeven, a 1% productivity improvement yields a 2% reduction in costs per hour.  You just can’t afford to ignore productivity as a healthcare provider.

We can all hope that there will be additional future revenue streams that reward clinical effectiveness as well as cost effectiveness.  In the meantime, those providers who manage staff productivity effectively are going to be in the best position to be successful in both the short and long term.

Stayed tuned for future entries on provider cost effectiveness and productivity.  Comments with proven strategies to improve staff productivity are invited!

IL Consent Decree Approved

On September 30, 2010 the consent decree representing agreement to offer community living arrangements to over 4300 individuals with mental illnesses currently residing in Illinois institutes for mental disease (IMDs) was approved. Over 5 years, Illinois will offer transition to permanent supported housing or similar community settings for the class members. A draft implementation plan must be completed within 135 days while the final implementation plan must be agreed to by all parties in no more than 90 days. A similar case (Colbert v Quinn) applying to a broader population of individuals residing in nursing facilities is working its way through the settlement process.

NCCBH Receives HHS Primary Integration Grant

HHS Awards $26.2 Million in Grants to Expand Primary Care Services for Individuals with Behavioral Health Disorders: On September 24, HHS awarded $26.2 million in grants to improve primary care services for individuals with behavioral health disorders. To integrate primary care intobehavioral health services, HHS awarded four-year grants of up to $2 million to 43 community behavioral health agencies. The remaining $5.3 million went to the National Council for Community Behavioral Healthcare (NCCBH) to establish a national resource center to foster the integration of primary and behavioral health care services at the community level. Financed jointly by the U.S. Substance Abuse and Mental Health Services Administration (SAMHSA) and the U.S. Health Resources Services Administration, the center will offer training and technical assistance to community-based behavioral health programs and develop models of integrated care.

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