Passing the white-glove test with flying colors
Surviving the on-site review from HCFA
One of the most demanding and critical stages of the provider-sponsored organization (PSO) application process is a detailed on-site review of the organization's various administrative, financial, medical, and membership procedures and infrastructure to ensure each meets HCFA guidelines and approval.
"Under current review guidelines, there are approximately 150 different standards governing PSO operations that providers will be expected to meet," notes John Gorman, president of Managed Care Compliance Solutions, a Washington, DC, health care consulting firm.
Key areas of concern to HCFA during these on-site inspections include:
1. Accounting. Of the 150 various federal PSO operating standards, about 49 relate to membership accounting, says Gorman. This means HCFA inspectors will be taking a close look to ensure each potential PSO has a strong command over membership data, specifically demographics and the reporting of key membership information.
"The intense focus on this area is due to the integral role membership accounting performs in a PSO," says Gorman. "A relatively simple problem in membership accounting can affect almost every other aspect of the PSO."
The details can derail you
For example, during enrollment each member will be assigned a certain status, based upon numerous health-related criteria, that determines their Medicare payment rate. If that status is incorrect, it will affect the financial performance of the organization. Or, if the Medicare claims number is incorrect, it will create problems for the claims department. Even something as simple as the wrong address for a member can disrupt the entire appeals and grievance process, along with many other PSO operations.
2. Administration and management. A key point to remember in this area is that HCFA will want to see at least one dedicated Medicare coordinator on staff whose primary responsibility is to ensure that the product works effectively and efficiently. This person also should have profit-and-loss responsibility and report to a senior executive.
"What HCFA does not want to see is the same person overseeing both the commercial and Medicare areas of business," stresses Gorman.
3. Utilization management. Basically, HCFA will give the PSO a lot of latitude regarding how it monitors and measures the effectiveness of its medical treatment.
"The key word is effective," says Gorman. "Effectiveness is basically a subjective determination of the HCFA reviewers; essentially, it can be anything they want it to be."
For example, if a medical director comes off as being too brash, HCFA has been known to question the organization's commitment to utilization management and flunk it on this part of the inspection, say experts.
Some procedures and systems HCFA says are part of an effective UR system include a management information system capable of producing timely and accurate reports on encounters, trends in complaints, and the outcome of appeals by members who complain to an outside review board.
"HCFA uses these trends as a barometer of how aggressive the PSO's utilization review procedures are," says Gorman. "If there are a high number of overturned appeals, it may indicate that the utilization review staff is somewhat overzealous."
4. Quality assurance/quality improvement. This is a No. 1 concern for HCFA. In all likelihood, reporting of outcomes measures will be a future Medicare risk requirement. HCFA wants to see that the PSO's Medicare plan reflects a systematic, state-of-the-art process that's well-organized and capable of producing efficient and effective medical results.
5. Health services delivery. This area addresses a number of topics, including: the provider network; accessibility and continuity of care; how primary care physicians and specialists share medical records; and standards in place for monitoring medical records. As a general rule concerning the provider network, a PSO should strive to include at least 25% of the providers in the market, Gorman recommends.
Does network have adequate resources?
Although a PSO may receive approval from HCFA for a Medicare contract with only 10% of physicians, this product isn't likely to sell, Gorman says. "Remember, PSOs are selling Medicare beneficiaries a network. The more inclusive the network is, the more likely it will sell."
Furthermore, the network should represent the full continuum of care. Particularly, keep in mind the benefit design plan, to ensure there are adequate resources to provide those benefits. For example, if free eyeglasses are part of the benefit package, there should be a number of optometrists in the network to address this need.
6. Marketing. The key factor in this area is to show that the PSO will offer the product to everyone eligible within the given market. Also, the PSO should provide adequate information so the beneficiary can make an informed choice.
7. Medicare operations. In this area, HCFA addresses membership applications and enrollment. Generally, in all operational functions - as is the case here - there is a 95% standard of accuracy. Therefore, in processing all applications, disenrollment forms, and letters, if the PSO exceeds a 5% margin of error, HCFA can label it as noncompliant.
"This is an incredibly tough standard. Achieving this level of performance will be labor-intensive, systems-dependent, and very complex, resulting in large labor costs," notes Wendy Krasner, a partner in the Washington, DC, office of McDermott, Will and Emery.
8. Claims processing. This is another function where HCFA requires 95% accuracy. Claims processing can be very complicated with respect to Medicare risk. The ability to promptly classify payments and claims are two critical areas where detailed protocols need to be in place.
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