Welcome to TIM Talks: Business Acumen

“Engaging Managed Care Organizations”

June 21st, 2016
Engaging 

Managed Care 

Organizations

Timothy P. McNeill, RN, MPH
Understanding the MCO Landscape

Steps to Contracting with MCOs

 Summary of the Process

Q & A

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Managed Care and the Community Based 

Organization (CBO)

• Is it possible for CBOs to contract with Managed Care 

Organizations?

– YES

• Can CBOs provide value to MCOs?

– YES

• Have any CBOs been successful in contracting with 

MCOs

– YES
What is an MCO?

• The acronym MCO stands for Managed Care 

Organization

• The term MCO is used collectively to describe a company 

that will implement a series of managed care techniques 

to provide cost containment and improved health 

outcomes for a designated population 

• The MCO is paid on a per member per month (PMPM) 

basis

– All of the healthcare expenses for the population have to be 

covered by the PMPM payments

– Cannot deny services if deemed Medically Necessary

– The MCO takes financial risk for the population
Types of MCOs 

• Medicare Advantage Plans

• Medicare Special Needs Plans (SNPs)

– D-SNP

– C-SNP

– I-SNP

• Duals Demonstration MCOs

• Medicaid Managed Care

• Managed Long-Term Services and Supports
Risks DRIVE the MCO

• It is CRITICAL that you determine the risks to the MCO

• Risks will drive the decision making for the MCO

– What are their risks?

– What population presents the most risk?

– Their ability to manage these risks

– Your access to the population that presents the most risk

– Your ability to mitigate risks for the MCO
MCO Attempts to Shift Risks

• Value-Based Payment Models are designed to shift the 

risk to the provider

• When a provider shares in the risk, they are financially 

motivated to improve outcomes and reduce costs

• Many large Payers are embracing VBP contract models 

and there will be growth in this area

• Recent mandates from CMS require alignment of 

payment incentives between Medicare and Medicaid 

programs
Example of Understanding Risk

• Managed Long-Term Services and Support Plan serving a 

dual that still has their Medicare benefits in place

• Will a care transition intervention address the point of 

pain of the MLTSS MCO

– Common Third Party (CTP) focused on reducing 30-day 

readmissions

– CTP focused on limiting a Skilled Nursing Facility (SNF) 

placement and transitioning a beneficiary to the community as 

soon as possible (preferably before day 20)

• Goal: Avoid or limit a Long Term Care (LTC) facility 

placement

• Aligned with Medicare VBP incentives
Dual Demonstration risk

• A Dual that has opted into a Dual Demonstration now has 

their Medicare and Medicaid services managed by an 

MCO

• A Dual that has opted out of a Dual Demonstration 

maintains their Original Medicare benefits but likely still 

has their Medicaid benefits covered by a MCO
Step 1 in MCO negotiations

• Know your customer prior to beginning negotiations

– What is the population served by the MCO? 

– What is the current enrollment of beneficiaries in your market?

– What is your access to the target population?

– What is the history of the MCO serving this population?

– What are the regulatory changes that may be impacting the 

payer?

– What is your relationship to the healthcare providers that serve 

the bulk of the target population?
Medicare Advantage Risks

• Medicare Advantage Plans must cover all Medicare Part 

A and Part B services

• All MA plans must meet the 85% MLR requirement

• All MA plans must maintain a Star rating of 2 or higher 

or risk having their contract terminated

– Part B mandated services

• Diabetes Self Management Training (DSMT) 

• Health Behavior Assessment Intervention (HBAI)

• Transitional Care Management (TCM)

• Chronic Care Management (CCM)
Where to Find Data on the MCO

• Publicly traded MCOs are required by the Securities and 

Exchange Commission (SEC) to provide an annual 

Prospectus 

– Provides plans for growth

– Details target markets/populations and reports the MCO’s strategy 

for growth

• CMS / State Division of Medicaid

– Enrollment data 

– STAR Ratings

– Medical Loss Ratio reports

– Contracts

• NCQA

– HEDIS Measures
Step 2: Understand MCO Quality Ratings

• MCOs must adhere to defined quality metrics. 

• Research how the MCO fared in their performance on 

defined quality metrics.

• Review how the MCO fared on quality metrics as 

compared to their competitors in the market
Step 3: Define Potential Points of Pain for the 

MCO

• You must understand the issues that are negatively 

impacting the MCO

– Research the required quality metrics

– How did the MCO fare in the most recent reporting of 

quality metrics?

– Is the MCO required to adhere to the Medical Loss Ratio 

requirements?
Step 4: Understand the Role of the Medical Loss 

Ratio

• The Affordable Care Act mandates that commercial and 

Medicare Advantage plans adhere to Medical Loss Ratio 

requirements

– Determine how the MCO faired on meeting the MLR 

requirement

– Review past spending patterns of the MCO

– Review past MLR spending history for MCO competitors
Step 5: Establish Your Value Proposition

• Your research of the potential point of pain for the MCO 

should help define your value proposition

– VP should define how your service will help the MCO 

address their Point of Pain.

– VP should be something that you have strength and 

capacity to perform for the target population.

– You should be prepared to express how you will capture 

and report data for the item that brings value.
Step 6: Establish a set of Data Points and a 

Quality Improvement Plan

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• Managed Care is heavily data dependent.

• You must be prepared to capture and report clinical and nonclinical outcomes

• Data management and reporting helps to solidify the ROI for 

your services

• Data reporting should conform to the needs of the customer
Step 7: Define Your Return on Investment

• Define the Return on Investment (ROI) for your 

services

– ROI must provide value that is greater than the cost of 

the service

– ROI is not only measured in terms of cost savings

– A service that improves quality and outcomes can 

provide a “Return” to the MCO, even if it does not 

provide immediate cost savings
Step 8: Develop your Customer Engagement 

Strategy

• Now that you have thoroughly researched your potential 

customer, you have to be prepared to engage the customer:

– Develop a 2 minute ”Elevator Speech”

– Develop a longer presentation and PowerPoint defining your 

organization and planned services

– Determine if you have any contacts or direct relationships 

with key stakeholders at the MCO

– Discuss your interest in contracting with key stakeholders 

prior to making your approach
Key Point: Know Your Market

• Medicare Population

• Those at-risk for Institutional Care

• Target services to those impacted by change

• Define how your services will lead to cost reduction and 

improved health outcomes

• Drive value and continually document the ROI that you 

provide
Summary of Additional Things to Consider

• Volume vs Quality

– Can I serve the target population as a single organization or will 

I be stronger as a network of CBOs

– If we are presenting a network, can we assure consistency of 

services across the target area

• Meaningful Use and Data Reporting

– Do I have IT systems that can interface with MCOs and 

providers

• Clinical and Financial metrics

– How will I measure success

– Do I have both clinical and non-clinical success measures
Summary of Additional Things to Consider (Cont.)

• Alignment of MLTSS and Medicare VBP models

– Some States are now requiring MCOs to establish Medicaid and 

MLTSS Value-Based Payment models that align with Medicare 

VBP

– This will require greater adoption of the following contract 

types:

• Bundled Payment

• ACOs

• The possibility exists for LTSS ACO Networks that align 

with Medicare ACOs and Bundled Payment Programs
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