This excerpt taken from the CNC 8-K filed Oct 3, 2005.
Kent Cerneka - Centene Corporation Director, Contracting and Network Development
Good morning. As Debra said, my name is Kent Cerneka. Im the director of contracting and network development here at Centene. And Im going to cover a couple topics to Model One, which has been addressed so far, as well as our processes and controls and standards that we have in place to ensure that completed contracts meet our requirements and can be put into the system effectively and cause claims to pay accurately and timely.
Were going to start with the Model One and were going to try to cover, first of all, what is a Model One? How do we manage it - excuse me - with our physician partners? And then finally, what are the benefits to both the doctors and to Centene and our health plans in the Model One? So, initially, its a standard risk compensation program for primary care physicians. Effectively - its similar to the professional services cap except for the fact that we also share with them on facility or institutional services.
It encourages appropriate use of healthcare. What that means is right services, right place, right time. Examples could [include] making sure that your patients get an annual dental exam. Ultimately, thats going to cause us to spend a lot less money on patients with more significant dental problems down the road. Another example might be I need to obtain an MRI for a particular patient. Well, that MRI might be available for $500 at a hospital or $300 down the road from a freestanding facility. Well, this is the right place. Lets get the MRI at the freestanding facility. Theres no reduction in quality, no reduction in service, less cost.
It encourages management of the ED [emergency] department. Weve talked about this at length. Its come up in Dr. Drozdas presentation as well as Debra Halladays presentation. There [are] opportunities for physicians to reach out to their membership and bring them into the office in lieu of using the ED for routine care. There [are] also opportunities to utilize preventive care to ensure that the services dont occur at the end of the day in the emergency department for more significant problems.
It rewards physicians for achieving specific quality measures. All of our Model One arrangements have quality bonus arrangements in place. The key to this is a) that those quality bonus arrangements be measurable; and b) that they be realistically achievable by the physicians. What youll see in some of our arrangements are, for example, bonuses tied to immunizations rates. Well see bonuses tied to, again, going back to it, annual dental exams. And well see bonuses tied to, for example, appropriate use of the emergency department.
And finally, its an opportunity for our primary care physician partners to be compensated at greater than standard Medicaid fees.
So, how do we manage it? Well, the first thing we do is we provide a tool. Its a large suite of management reports that weve developed over a period of years. We feel like this is something thats very unique to Centene. Its not something that weve seen our competitors be able to produce. And its not something that you can go buy off the shelf. These reports are critical to the success. They provide the physicians with the information that they need to manage the services being provided in this model.
Some examples would be giving them the status of their funds. Where do we stand today? Another example would be who is charging large claims to these funds? Lets make sure that they know which patients have different conditions and what theyre being treated - what theyre being treated for and how theyre being treated. And another example would be our ED frequent flyer reports.
Other management tools, quarterly meetings - we hold quarterly meetings with each of our Model One physician groups. Those quarterly meetings, were going to cover all of those reports, try to identify any things that are actionable in those reports, and then develop action plans around it. Were going to have a clinical component to these meetings, which is going to include the VPMA from the health plan and physicians from the group. Theyre going to look at utilization trends. Theyre going to look at the quality measures. And theyre going to again, identify action plans around those items.
And were also going to have an operational component to the group - to the meeting. And the operational components going to include again, physicians as well as probably administrative staff from the physician group. And its also going to include contracting, provider affairs and operational folks from the health plan. And theyre going to talk more about process issues, operational questions, contractual questions, transactional questions. And again, this is a critical element to successfully managing these relationships.
Im going to move onto Model One benefits. These are benefits to physicians as well as benefits to the health plan. First of all, the physicians can improve the quality and the effectiveness of the care. Weve talked about that throughout this. Its an opportunity for greater reimbursement. Again, if theyre generating surpluses, if theyre earning their quality bonuses, theyre going to walk home with more than a standard Medicaid fee schedule payment rate.
Theres also benefits to Centene, of course. Weve aligned our incentives with the physicians and thats, again, on the basis of quality and cost. The efficiencies and the delivery of healthcare - right place, right service, right time - thats very important to us. And then again, if the physicians are willing to take more of our patients, open up their panels and let more Centene patients in, its going to increase our capacity and allow us to grow.
Heres sort of some status on where we are today with Model One. We are - we currently utilize the Model One in five health plans. We use it in our Buckeye Community Health Plan in Ohio; Managed Health Services in Wisconsin; Managed Health Services in Indiana; Superior in
Texas; and First Guard. Were also rolling it out in Georgia, as a matter of fact, as we do our Georgia development and are getting some very positive reception from some large physician groups.
Right now, Model One is most prevalent in two of our larger health plans and thats Superior and Managed Health Services Indiana. In fact, 63% of our members in those health plans are assigned to over 800 primary care physicians under Model One contracts. The HBR, again, in those two health plans for our Model One groups is running 3 to 5% below the HBR for the entire health plan. And bear in mind, thats after weve distributed the surplus and the quality bonus funds to the physicians. So, the physicians are making more and were running a better HBR.
Finally, what does this all mean? I think it means that the Model One, for us, has continued to demonstrate that its an effective tool for us to improve the quality of healthcare. Its an effective tool for the health plans in terms of growth. Its an effective tool for the health plans in terms of physician relationships. And finally, its an opportunity to produce better medical cost experience.
Im going to move to the next topic, not necessarily quite as exciting as Model One, but well go through it. And this is - weve got a contracting process and, at the end of the day, when we create a contract, weve got to be able to pay a claim in the system and we want to pay it accurately. We want to pay it timely. In our contracting process, to ensure that we can do that at the end of the day, we have a series of standards, we have a series of processes and controls and weve got accountability.
For example, in standards, we have a standard language that are produced and put out into the health plan. Its a defined set of language within a contract that meets our medical management and other operational requirements, systems requirements, financial requirements and legal and compliance requirements. We also produce a tool. Its a drafting workbook that gives the contracting team a defined set of contracting alternatives. Those are pre-approved and, in a negotiation, they can move to those alternatives. And again, we already know that all the different disciplines within the organization have said, yes, that still meets our business requirements.
We also have templates or standards around reimbursement methodology and this goes to what Deborah Halladay was talking about earlier. Weve got certain types of methodologies that we want to use and types that we dont want to use. So, we build templates around that. And then, weve got standards around rate levels. As Dr. Drozda said earlier, we want to be Medicaid fee for service equivalent or better. So we built standards around that.
And thats going to take us to the controls. Anytime that we deviate from, for example, the standard language for approved alternatives, it has to go through corporate contracting. And then corporate contracting brings together the different disciplines, medical management, systems, legal and compliance, to ensure that either, a) this is something that we can do we can put this in place, or b) its something that we cant. And so its either going to be approved, rejected or an alternative can be offered.
The same is true for our reimbursement methodology. Any deviation from the standard template for reimbursement has to go to corporate contracting for approval. And again, the role of corporate contracting is to bring together the different disciplines and make sure that were meeting the business requirements of the health plan. In fact, any deviation or any, I should call it a new reimbursement or compensation program for physicians, has to go to corporate contracting and then to legal for review to ensure that its compliant with safe harbors.
And then the reimbursement levels, not just the rate methodology, but are we how are we paying? Are we going outside the standards that weve established, i.e., Medicaid fee-for-service equivalency? Thats going to go through our healthcare economics unit, which is part of the corporate finance department, to ensure that it meets our operating plan for that health plan, that were going to still hit our HBR targets, our medical cost targets, before thats going to be approved.
And then finally, the accountability piece - I jumped ahead there touch on accountability. We have contract managers or sometimes we call them contract implementation managers in our health plans, and theyre responsible for this end-to-end process. At the beginning of the process, the contracting process, theyre going to ensure that the templates are used; if were deviating from the templates that were following the appropriate exception process; and that all documentation is appropriate at the end of the day. So theyve got an end-to-end process from there to the point that that contract is signed.
So at this point weve got a signed contract, its an executed contract and were going to move into the contract setup process. And our contract setup process we also have standards. Those standards are going to include templates that are pre-built and pre-tested for configuration in the system. As long as were following our standard template at the front end, at the contracting end, that template can be just auto-loaded into the system and its ready to go. And, in fact, the vast majority of our providers are on those standard reimbursement methodologies, those standard templates.
Weve also got standards for any deviations. Theres certain documentation and processes that have to occur in order for that deviation to be put into the system because if theres a deviation theres going to have to be unique configurations.
So theres a final quality review. If we see something that we didnt expect, we can go back in and correct the system. If we again pass it through the quality review, weve got a final contract in the system. So again, our accountability goes back to this contract manager who end-to-end, from the beginning of the contract process to the end of the contract setup process, has accountability to make sure that this gets done correctly.
So we believe that weve got the proper set of standards, processes, controls, even technology and accountability to ensure that were going to get the contracts in the system to be able to pay the claims correctly and timely once those contracts are uploaded.
So thank you. And I think Dr. Drozdas going to come back and wrap up for us.