Managed Care Contracting and Value-Based Models with Joe Russell

Joe Russell, Vice President of Network Management and Contracting at Strategic Healthcare shares his invaluable perspective on how community-based providers can thrive despite the dominance of managed care plans and the ever-present issues of fraud, waste, and abuse.

Our conversation uncovers the influence of pivotal regulatory shifts, such as the Affordable Care Act and CMS initiatives, on managed care. We navigate the delicate balance between cost containment and quality care, addressing critical challenges like authorization limits and the impact of timely payments on providers. 

As we look to the horizon, our dialogue transitions into the evolving dynamics of provider-payer relationships, where data-driven quality metrics take center stage. The burgeoning landscape of managed Medicare Advantage plans demands a new level of collaboration between payers and providers, with an emphasis on trust and innovative cost-containment solutions. 

We explore the significance of aligning with metrics like star ratings and rehospitalization rates to enhance opportunities and reimbursement. Value-based care in post-acute settings is poised for growth, and providers must lead the charge by understanding their costs and crafting compelling value propositions for managed care plans. 

Join us as we chart the course for the future of healthcare, where collaboration and strategic partnerships will redefine success.

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Transcript

Managed Care Contracting and Provider Challenges

Speaker 1 0:00

Greetings. I'm Jennifer Kennedy, the lead for Compliance and Quality at CHAP, and welcome to this edition of CHAPcast. In this episode, we're attacking the issue of managed care contracting. We're currently seeing a significant use of value-based approaches to healthcare delivery and payment by CMS and other commercial healthcare plans, and particularly in the Medicaid space, and this approach is used in varying degrees and depth, and a large component of this payment methodology for insurers and providers is the need for unremitting focus on improving quality, access and efficiency. I'm talking with Joe Russell today, who is the Vice President of Network Management and Contracting at Strategic Healthcare healthcare. Joe is bringing a wealth of experience in healthcare policy, community-based care and managed care, and I'm really looking forward into diving into the issues with all the insight that he has. Prior to joining Managed Care Solutions at Strategic Healthcare, joe served as the Executive Director for the Ohio Council for Home Care and Hospice from 2017 to 2023. So welcome, joe. I'm looking forward to our conversation today.

Speaker 2 1:56

Thanks for allowing me to be here, Jennifer.

Speaker 1 1:59

So I have to tell you my view is that managed care has really been creeping into the home care space over the last decade plus, and we know that it is becoming the preferred model, particularly at the state Medicaid level and with the advent of the CMS Hope Assessment Tool in hospice. To me this signals CMS's continued dedication and plan to convert all of their provider types over to this type of a payment model. So I'm thinking providers either need to get on this bus to survive or stay at the bus stop and take their chances of receiving enough business to remain viable. So it is the payment methodology of now and the future can talk to us about outlining the problem that providers face with managed care contracts, because I know they do. I've talked to many of them over my time in hospice and palliative care and how you've seen it change over the last few years.

Speaker 2 3:19

Yeah, you know, obviously there's a lot of things with managed care that can be looked at and people can say, wow, there's a lot of dark clouds in the distance, but just like those dark clouds in a real thunderstorm, once you get into the storm it's actually not as bad as it seems from the outside.

Speaker 2 3:38

I really think that, as you mentioned, the problems that providers are facing haven't really changed over really the last decade.

Speaker 2 3:47

Quite honestly, I remember in my position at the Ohio Council for Home Care and Hospice, we spent a lot of time working with the government, working with payers to try to resolve issues with authorizations, with timely filing, with not being able to get paid on time or paid at all, with not being able to get, you know, paid on time or paid at all.

Speaker 2 4:07

And then, of course, you know where I really got involved was with the utilization of these third-party administrators, where they're really just making profits off the backs of providers by just limiting the number of actual visits that are being provided, regardless of if that's good for the patient or not. So the reason why these things have come so close to the forefront now is because the volume of business and managed care has made it really untenable for most providers to make things work, and so it's a big reason why I also made the shift from my last position to this new position to really help people in the community-based industry to be able to prepare themselves for this new future. Which, by the way, even though I have my concerns with some of these things, I also think there's a lot of money that can be made from community-based providers as it comes to managed care.

Speaker 1 4:59

So, joe, I got to tell you, you know, as a 38-year clinician, all right, I, you know, I and maybe it's you know, maybe I'm not thinking forward enough, but I feel like managed care plans are running healthcare, you know, and clinicians, you know. You did mention not having enough visits authorized. I feel like clinicians aren't driving patient care. Managed care plans are driving patient care. What are your thoughts about that?

Speaker 2 5:28

Well, it's sort of the inevitable result of how the healthcare industry has developed over time. I mean, it's the age-old problem of healthcare policy being triometrically opposed, meaning the more money, the better quality, typically, the more it costs. But then also you're limiting access, but if you increase access, you're increasing costs. Those three items are really difficult to manage, and I think that has contributed significantly towards this new era. One of the biggest drivers of this era is first caused by the Affordable Care Act. You know, there was an insurance regulatory bill that did a lot of things expanded access to health insurance.

Speaker 2 6:16

Well, that expanded access created a huge demand and a supply issue. So, just like in any commodity market, there's a supply and demand issue here, and then, all of a sudden, the CMS and other policymakers entered this era of hyper cost containment. Well, that's what managed care is all about. It's about cost containment, and so it's no wonder that we're in this period. What we're experiencing now, though, is a realization from everyone that you can't just cut your way towards better health care right. There's got to be a new way to do business, and that's happening in healthcare.

Speaker 1 7:11

You know when I think about this, you know I read I look at the OIG emails they pop into my mailbox and I'm seeing all the enforcement actions you know that relate to fraud and abuse. And you know, do you see managed care having some of those constraints that they do, impacting the issue of fraud and abuse moving forward?

Speaker 2 7:38

Yeah, yeah, well, I think, in the way that the plans do business, that they kind of have their own ways of managing fraud, waste and abuse. I think abuse in my mind and managed care or rather waste, I'm sorry, is probably waste is probably the biggest issue, bigger than fraud. But the plans in my mind aren't specifically focused on fraud. And just to give you an idea of what I'm talking about here, in a lot of states obviously EVV was a big mandate on all states. On the Medicaid side, a lot of the Medicaid managed care programs, medicaid managed care plans are not really. They're using EVV because they have to but they're not necessarily denying claims because of EVV visits en masse and I'm not actually even sure to the extent that the government has kind of seen that visit data. They're just kind of required to do it. You know, I think if they were really that concerned about that issue they would probably be clamping down pretty hard with EVV and I don't see that happening.

Speaker 1 8:49

Yeah Well, I agree with your comments about the waste. I think, definitely when you dole out authorizations for visits, it seems to me that that would control some of the waste issues right. But I also feel like there needs to be a good balance between the knowledge at the managed care plan matching up with the knowledge of the clinician that's requesting the visits for whatever medical reason. So I'm hoping you know, as we move down the line into this managed care area, that that can be a better balance moving forward.

Speaker 1 9:35

Absolutely, totally agree well, rather, providers they're needing to. You know, go into these relationships and do these contracts and you know what are some things that providers need to look at regarding. You know their profile of managed care business.

Speaker 2 9:59

Yeah. So there's a lot here. And actually, when we work with our clients, this is where we start and everybody comes to us and they say we need more money, we need our reimbursements rate higher. But before we can really go and negotiate more reimbursements for our providers, we have to do an assessment of their positioning with their contracts. I mean most providers have. You know, we've got clients with five contracts, we've got clients with 50 contracts. That's a lot to manage for a revenue cycle department and what we often see is providers are misaligned when it comes to their best contracts and it turns out that they're admitting, you know, 60% of all of their patients per month from their worst managed care plan. If they would do that instead from their, from their best contract, they would they would be making a lot more money. So the first thing to do is position yourself, understand and make. There should be congruency between your referral sources, who you're admitting and what your contracts look like. But the other thing that's really important is for people to understand where they, where they live, where they, the space they occupy in this, this ecosystem.

Speaker 2 11:15

Every agency has a unique perspective to offer to these managed care plans. Unfortunately, what we see a lot of times is people will approach them and knock on the door politely and say, hey, can we come in and we want to talk to you about how great we are, and unfortunately that's just not. That's not very effective. But I think it's really important for agencies to understand that they have good relationships with their community partners that they can go to and say, hey, give me a letter of recommendation to this particular plan. I mean, if you've got a community partner that, for example, is doing a heavy referral volume, from Anthem for example, you know Anthem probably doesn't want to lose your agency from their network and so that gives you some leverage.

Speaker 2 11:59

So, understanding where the money is coming from and then understanding how your revenue cycle operation is working and plugging in the holes that exist in it that's another thing that we see is we'll go in and we'll see an agency writing off one hundred to two hundred thousand dollars a year and a lot of that money is just managed care money that they never got paid for, and a lot of that money is just managed care money that they never got paid for.

Speaker 2 12:24

So how can we say we need more money in rates when we've got a lot of money kind of going out of the back end. So understanding you know, the alignment of your contracts, then understanding where you are in the ecosystem and then understanding that your operation has a big influence on how you process those funds. And then the last thing I think is super important is quality, and that means a lot of things to a lot of different people. For us, as strategic health care certainly for me quality isn't a nebulous thing and quality is very much what you make it. There aren't any agencies, single agencies, that are perfect across the board and their quality metrics.

Speaker 1 13:09

No, of course not.

Speaker 2 13:10

Doesn't exist. So how can we get our quality to a point where the it reflects what the plans are looking for? And if you do those, those things and you really are focused on providing person centered care that has good patient outcomes, you're going to see health plans come to you with open arms and really be willing to open up their pocketbooks.

Speaker 1 13:30

So managed care plans they're looking at like cap scores, they're looking at all those kinds of things to add that to the value proposition of the organization. Is that fair to say?

Speaker 2 13:43

Yeah, yes, Generally speaking. I think that's fair to say.

Speaker 1 13:49

Yeah. So I agree with you. I mean, I think you know quality, you've got compliance, but you know quality seems to me like when you're in this managed care world, it's the front seat driver, right. You have to be able to prove your value even beyond your CAP scores or your other publicly reported measure scores and outcomes. Case in point you have the relationship with the community provider. How do you leverage that to add to your quality profile, if you will profile, if you will so? And I think many organizations don't understand really the full breadth and scope of what quality looks like in the healthcare continuum. So what are your thoughts on that?

Future Trends in Provider- Payer Relationships

Speaker 2 14:41

Yeah, it's a great question and I think it's something that we've talked about as an industry for a long time, but it's starting to really come into focus and, ironically, this expansion of managed care is helping to really come into focus. And, ironically, this expansion of managed care is helping this all come into focus. The way that my perspective on quality is there are obviously better quality agencies than others, but again, it's that snapshot. I prefer to look at quality from the data. And you're a quality provider if the data tells you you're a quality provider and you're not a quality provider if the data says you're not. And what's interesting about that is even in the star ratings, for example which, by the way, the plans love, they get distracted at times by shiny things and you know stars are shiny, are shiny. But it kind of goes to show you, though, I think, with the star ratings and the fact that they like them, even though our industry doesn't necessarily think that that reflects any real quality. The fact of the matter is is that if that's what you're being judged on, then you should be laser focused on trying to get your star rating up. We've had clients that come to us and they're two and a half stars, but they're not actually two and a half stars. They're two and a half stars on paper, but in real life they're three and a half, and so that difference in money can actually, if you're a two and a half star, you're going to be hard pressed to be offered an episodic contract of any kind.

Speaker 2 16:00

Once you get to three stars. That's when the real opportunities really start to come for you, and so that's one example of looking at quality through their lens, not through our lens. The other metrics that they really care about is total cost of care and rehospitalization rate. Honestly, if you have a decent star rating, your rehospitalization rate is decent or even lower compared to your peers, and then your total cost of care is. You're tracking that better than your peers. There's not going to be very many health plans that aren't going to be willing to have some serious conversations with you about. You know how you can get reimbursements higher, and you know it's not uncommon to see managed care contracts that are 100% PDGM and, in some cases, even more than that. So just think of quality as looking at the dashboard of your vehicle and letting those numbers guide you, rather than thinking that you need to be a five-star, or thinking that you need to have no readmissions to the hospital, or anything like that.

Speaker 1 17:04

Yeah, no, that's a good way to frame it, for sure. So, all right, put your crystal ball in front of you, joe. And when you look forward, where do you see the payer and provider relationships going in the future?

Speaker 2 17:20

Well, first of all, Jennifer, I think it's worth mentioning I had to sell my crystal ball because my managed care appeals are not going through well. So you know it's everybody likes to predict where the markets are going. It doesn't matter what business you're in. Health care is no different. Here's what. Here's the way I see it.

Speaker 2 17:42

We've got, you know, 50 percent of the country now electing managed Medicare advantage in Medicare. That those numbers are not likely to go down. I do think they're probably near peak. So I don't think that we're going to continue to see this giant growth in Medicare Advantage. And I say that because I think the government, the federal government, is now starting to get some concerns and you're starting to see those numbers taper off a little bit.

Speaker 2 18:11

And then, another thing that's been pointed out to the federal government is there's nobody out there who's telling consumers about the difference between their Medicare Advantage and traditional Medicare benefit.

Speaker 2 18:21

And that's a big problem. You've got you've got famous football players doing Medicare Advantage commercials in the middle of the day, over and over and over again. But there's nobody out there who's telling people about hey, that might not be a good decision for you, but where I see the future of this. I think there's a couple of things. First of all, I think providers need to approach these things with an open mind and with a partnership mindset. And if you think about this rationally, think of all the people you've ever been friends with in your life. And if you think about this rationally, you know, think of all the people you've ever been friends with in your life. If someone who you haven't spoke to in a while called you up and asked for a favor, if they were a person that wasn't good to you in the past, you're a lot less likely to help them if they were a person that was very helpful to you.

Speaker 1 19:06

Right Right for sure.

Speaker 2 19:08

So when you go to the managed care plans and put your hand out and stomp your foot on the floor and say give me more money because you're not paying me enough to cover my costs, but you don't even know what your costs are, that's a big problem. So I really challenge providers to look at themselves in the mirror and say what part can I play? And then having that partnership mindset of approaching the plans and saying, hey, I want to help you better contain costs with your post-acute population. Here's, here's what I can offer you. You'd be very, very surprised, but because the cost of health care is continuing to go up. You know there's plenty of data that supports that this country is getting older and sicker, not the other way around.

Speaker 2 19:50

So this is this is a trend in care that's likely to continue. So what's going to continue to happen is this hyper era of cost containment is going to continue to become more and more sophisticated. So the next, the next real big wave in my mind is going to be VBC in post acute care. Um wave in my mind is going to be a VBC in post-acute care. Now if you, when you read the media, uh, vbc seems like it's all the rage, right, but truth of the matter is is that a lot of Medicare Advantage plans are not offering post-acute providers any type of um shared savings agreements and, in some cases, not even episodic agreements. Um, and that's because they don't know our industry well, they don't trust our industry well, and so we've got to lead that effort. We've got to show them what we're capable of. And in this new VBC era, what this is likely going to look like is you're going to have you know, the payment models are going to change and so what you're likely going to have is some sort of episodic, what the plan's called bundled rate. So you're going to get like a PDDM style bundle of money and then the amount that you receive is actually going to be tied back directly to all of your quality markers. So you'll get more money if you're a higher star rating. You'll get more money if you have a lower re-hospitalization rate. You'll get more money if your total cost of care is better. And then, layered on top of that bundled payment is going to be some VBR metrics population health, different metrics that are aimed at getting those individuals in a more stable position.

Speaker 2 21:24

That's going to be the future, and providers that can position themselves to be able to provide care in that way, the amount of money that they can make is astronomical.

Speaker 2 21:32

I mean, there's so much waste happening because of things like poor transitions of care and things of that nature in post-acute care that we're talking hundreds of millions of dollars that can be split amongst the provider groups that are contributing to this. That's the future. That's the future. And so what providers need to be doing is they need to be making key investments in areas that are going to be around collecting and presenting and improving their quality metrics. So that obviously requires some technical capabilities and then having this partnership mentality and a growth mindset where they're setting goals internally and they're pushing towards those metrics and I know that the world doesn't seem very sunny today when it comes to managed care. But I promise you, for those providers that that do these things there's there's going to be a lot of money to be made. So I think there should be a lot of optimism about the opportunities that present themselves out there and I really hope that providers providers can work together to get there.

Speaker 1 22:42

So what's one thing that someone who's listening to this podcast show could do as soon as they leave the podcast?

Speaker 2 22:50

as it relates to our discussion today, yeah, well, obviously I would love to connect with you, so check me out on LinkedIn. I'm happy to answer any more specific questions that are unique to your agency, if you have them. Of course, our firm, strategic Healthcare, is really looking to help out post-acute providers more and more, so if you've got questions, I can love to help you. I think that the first thing that providers can do is just go back to your agency and have a conversation about what your business strategy is and how managed care impacts that, because that's really where this entire conversation has to start is how do we want managed care, whether it's Medicaid or Medicare Advantage or commercial insurance? How do we want that portfolio within our book of business, our payer mix, to support our, to support our agency?

Speaker 2 23:47

For some agencies, they're going to get out of it completely. For some agencies, they're going to double down, triple down and only do Medicare Advantage business. You know it's totally up to you, but whatever that is, everybody within your organization really needs to be on the same page about what that strategy looks like. And then, once you have the strategy, then you can take the necessary next step of reviewing all your contracts and trying to get yourself in a winning position and then finally, like I said, just thinking about the future and getting yourself ready for this exciting era of VBC and, hopefully, exciting era of VBC, and hopefully you know you start breaking it in, all right.

Speaker 1 24:33

Well, this has been a great conversation. You've made managed care contracting a little less scary for me. But here's what I think. I think I need to retire before VBC hits hospice. I need to be out on a beach somewhere before that happens.

Speaker 2 24:45

Well, again thanks, Jennifer. I really appreciate it. But there's so much opportunity when it comes to managed care and hospice and I didn't think that initially when this first started. But if you can go to your local hospital partners and say, hey, can we take your hospice eligible patients off your hands, they're going to love that. So there's even some opportunity in hospice, but it's obviously a different animal.

Speaker 1 25:09

Absolutely Different conversation, joe for sure.

Speaker 2 25:11

Absolutely. Maybe it's the next podcast. We'll see. There you go.

Speaker 1 25:15

Well, I want to thank you for joining today and, you know, sort of leveling the playing field as it relates to how it works in managed care, contracting and some things that providers need to pay attention to. So thanks again for joining. Thank you, and to all of you out there listening, thanks for taking time out of your day to listen to the podcast For me and the entire CHAP staff. Keep your quality needle moving forward, stay safe and well and thanks for all you do. Thank you.