Accountable Care Organizations and Provider Integration Under Health Care Reform. Sarah Swank

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1 Accountable Care Organizations and Provider Integration Under Health Care Reform Sarah Swank February 26, 2014

2 Overview Affordable Care Act and ACOs Trends in Integration Role of Compliance ACO Formation and Operation Lessons Learned Transferring Skills 2

3 Programs and Goals Affordable Care Act ACOs CMS Innovation Center Bundled Payments Insurance Exchanges Fraud and Abuse and Waste Three Aims Better care for individuals Better care for populations Lower growth of expenses 3

4 Trends in Integration You have to know where we have been to know where we are going... Consolidation and movement in the market Focus on primary care as gatekeepers We do not want to make the same mistakes we made in the past 4

5 Trends in Integration What is different this time around? Increased focus on quality The need for IT solution Shifting of care settings away from the hospital to lower cost settings Focus on primary but now also on specialists Both private and public payors Care coordination and population health 5

6 Common Themes Opportunities Improved outcomes Cost efficiency Patient satisfaction Market advantage Affiliation rather than consolidation Potential Pitfalls Connectivity issues Fraud and abuse issues Reimbursement Remedial measures and credentialing HIPAA privacy and security 6

7 What is an ACO? Accountable Care Organization (ACO) Participate in Medicare ACO participants 5,000 beneficiaries Tax identification number (TIN) Legal entity and governance Shared savings/losses Quality measures Application and CMS Agreement 7

8 THEY will intersect 8

9 Key ACO Deadlines for 2013 Applications posted on CMS website June 2013 NOIs accepted May 1, May 31, 2013 CMS User ID forms accepted May 3, June 10, 2013 Applications accepted July 1, July 31, 2013 Application approval or denial decision Fall 2013 Reconsideration review deadline Fall

10 Agreements ACO enters into short agreement with CMS ACO can enter into a Data Use Agreement (DUA) with CMS if it elects for beneficiary identifiable information ACO formation documents ACO Participant Agreement Other contracts 10

11 Agreement with CMS CMS will not change: Eligibility requirements Calculation of sharing rate Beneficiary rates Everything else up for grabs Quality included Supplement application Termination Great news - no 25% withholding ACO terminates with 60-day notice CMS may terminate Mutual termination Corrective action plans 11

12 Changes During Agreement Removal of the bad apples/outliers Credentialing and remedial Quality vs. Peer review Immunity protection if structured properly? 12

13 Trajectory of Program Growth April MSSP ACOs 5 in Advance Payment Program October ACOs 15 in Advance Payment Program January ACOs 15 in Advance Payment Program January ACOs CMS Innovation Center 32 ACOs in Pioneer ACO model when it began 13

14 Lesson 1: Start Early ACO participation agreements must be in place prior to submitting an application Other contracts may be needed, such as: Non-ACO participants IT Population management Investors Management Other goods and services Voluntary 3 year program Time, thought and resources should be given to this strategic and operational initiative 14

15 Eligible Participants Professionals in a group practice Network of individual practices Partnership or JV between hospitals and professionals Hospital employing professionals Critical Access Hospitals Federal Qualified Health Centers Rural Health Center 15

16 Lesson 2: Who is In and Who is Out Definition of ACO participant drives governance Focus on physicians and/or hospitals in partnership or employment with physicians Hospitals not required but often included to assist in payment of infrastructure costs Should you include everyone? ACOs can include investors 16

17 Governance ACO participants must have at least 75 percent control of the governing body ACO will remain provider-driven Medicare beneficiaries served by the ACO and representatives of entities that are not enrolled in Medicare constitute remaining 25 percent Health plans Investment companies Others 17

18 Legal Entity Form of legal entity look to state law Corporation Partnership Limited liability company Foundation 18

19 Legal Entity Tax Identification Numbers (TINs) Collected for all ACO participants ACO required to report to CMS ACO participants TINs and the NPIs of ACO providers/suppliers ACO participant TIN upon which beneficiary assignment is based is exclusive to one ACO New vs. existing entity Requirement for an independent governing body in either case ACO formed by two or more entities must form a new entity 19

20 Lesson 3: ACOs Are Not Like the Others ACO rules are a game changer for corporate and transactional principals. For example: Governance Tax exemption Conflict of interest At the same time, remember your transaction basics: Legal entity often is LLC, but look to state law for choices Super majority powers Voting rights, composition and quorum Corporate practice of medicine may dictate structure 20

21 Governance Issues Shared governance 75% control by ACO participants Involvement of ACO Participants Meaningful representation by ACO beneficiaries without a conflict of interest 21

22 Governance ACO must maintain a separate, identifiable governing body with authority to execute the functions of the ACO as required under the ACA and the Final Rule Defined process to promote evidencedbased medicine and patient engagement Report on quality, cost measures and coordinating care 22

23 Governance Governing bodies must have the following characteristics: Oversight Transparency Fiduciary Duty Conflict of Interest Policy Composition and Control 23

24 Lesson 4: Focus on Governance Sooner than Later Start with governance Ownership does not have to tie to governance rights Put thought into your Medicare Beneficiary You can use existing structures but governance is a good reason to start clean with a new entity Prepare for the first meeting of the governing body after your start date Set up a structure you can grow into 24

25 Leadership Manager Accountable executive Reports to governing body Removal by governing body Demonstrated ability to influence or direct clinical practice to improve efficiency processes and outcomes Medical Director Board certified, senior level Licensed in one state in which ACO operates Physically present at one ACO site Can be part time Compliance Officer Reports to governing body Not the attorney Oversees compliance plan 25

26 Leadership and Management Managed by officer or other similar party whose appointment and removal are under the control of the ACO s governing body Clinical oversight must be managed by a director who is a physician and one of its ACO providers/suppliers and meets the other regulatory requirements CMS may consider an innovative ACO with a management structure not meeting the regulatory requirements 26

27 The Role of Compliance Compliance officer a required position for an ACO Reports directly to governing body Can be a lawyer but not the lawyer May be a current compliance officer Responsible for compliance plan (or program) Certification requirements by leadership 27

28 Lesson 5: You have Chosen Wisely Leadership is key to an ACO s success and ACOs will need the attention of the leadership selected Leadership is often contributed or paid by contractual arrangement Must include a compliance officer that is not the attorney and a compliance plan Stepping away from cookie cutter approach is okay, but you need a plan that will be detailed in the application Rarely find employees in early adopter ACO, but some are moving in that direction 28

29 Patient Attribution Beneficiary Assignment Method Prospective with retrospective reconciliation Two step process Preliminary list at start of performance period Beneficiaries identified quarterly Assignment determined annually 29

30 Lesson 6: Freedom of Choice Applies Remember that freedom of choice is required Beneficiaries can come in and out of the ACO, so make sure you have well over the 5,000 beneficiaries Look to see if other ACOs are in your market Easiest reason to be terminated from the program not enough beneficiaries Look to primary care services 30

31 Sharing Savings Tracks Two Tracks (participants choose): Track 1: ACOs achieving a specified minimum savings rate can share in up to 50 percent of savings based on quality performance, and there is no downside risk for the full three-year agreement period Track 2: ACOs that achieve a specified minimum savings rate can share in up to 60 percent of savings, but this model includes downside risk. ACOs not meeting the minimum savings rate will share in losses (not exceeding 60 percent) 31

32 Sharing Savings Tracks 32

33 Selecting a Track NOW: Pick a track and either no down side risk or risk in later years of the agreement FUTURE: After three year agreement, ACOs likely to be required to go at risk 33

34 Lesson 7: Are You A Gamblin ACO? ACOs often select Track 1 with no downside risk Withholding no longer part of the MSSP, but can be a method for financial security Other options include reinsurance, which must be listed in the application Crunch the numbers Are you ready to take risk? Either way, consider including some risk provisions in your formation documents and ACO Participation Agreement, since the program or your strategic plan may change in future Other option to ensure skin in the game includes paying up front to be in the ACO 34

35 Quality Quality Assurance Program Committee not required Still physician led Include method in application Must meet the Quality Performance Standards to be eligible for shared savings program Must completely and accurately report data on all program measures Possible sanctions or termination for failure to comply 35

36 Quality Year 1: pay-for-reporting Complete and accurate data reporting on all program measures Year 2: mix 8 measures pay-for-reporting 25 measures pay-for-performance Year 3+: pay-for-performance Except: health status/functional status module from survey results 36

37 Quality Subsequent Years: pay-for-performance Based on ACO s performance across quality measures as compared to established benchmarks ACOs with better quality scores obtain higher shared savings payments Similar to other pay-for-performance programs 37

38 Quality ACO must meet set quality performance measures before it can share in any savings that are realized 33 measures in four main domains Sliding scale for quality, but must meet cost savings to be eligible for payments 38

39 Lesson 8: Don t Just Go with the Flow Quality can change throughout the program, but not each performance year New focus on high quality and population management You may want to select or incentivize other quality measures Meaningful use of EHR double counted quality measure not a requirement, but likely need one Quality committee not required, but still physician led 39

40 Data Collecting, Sharing & Reporting Data reporting to CMS Financial data Quality data (including patient/caregiver experience) Data from CMS De-identified data Identifiable beneficiary data Data sharing among ACO Participants Quality driven based on incentives Now setting their own clinical protocols and measures 40

41 Data Sharing Data Sharing-Opt Out Option ACOs must notify beneficiaries that their claims data may be shared with the ACO Beneficiary must be able to opt out of such sharing Does not affect patient s participation in the ACO or CMS s use of data to evaluate quality measures or cost 41

42 Lesson 9: Data is King New additions to Eligible Participants Federal Qualified Health Centers Rural Health Centers Need additional documentation during application process Previous concerns related to data reporting, but some safety net providers established reporting best practices 42

43 Lesson 9: Data is King Focus on your own IT solutions Health information exchanges (the other HIE) On the same or similar platform Work out connectivity issues ahead of time Who is going to pay? Platforms to slice and dice the data Real time decision making 43

44 Lesson 9: Data is King, BUT HIPAA RULES Beneficiary opt out may affect data received HIPAA applies ACOs are likely business associates of ACO participants, rather than covered entities themselves If set up as a physician group or health system that is billing Medicare could be a covered entity The HIPAA rules changed and they affect your ACO Downstream contractors as business associates Breach reporting 44

45 Do You Need an EHR to Have an ACO? Proposed rule required physicians to meet current meaningful use standards Now a quality standard Double counted: 4 points rather than 2 Meaningful use standard Counted under Care Coordination/Patient Safety domain CMS may reconsider requirement of certified EHR technology, once providers gain more experience Strongly encouraged 45

46 Federal Agencies and Laws Antitrust CMS/OIG - Fraud and Abuse Physician self referral law ( Stark ) Anti-kickback statute ( AKS ) Civil Monetary Penalty provisions ( CMP ) relating to hospital payments to physicians to reduce savings ( gainsharing ) and the prohibition of inducements to beneficiaries Tax exempt issues 46

47 Lesson 10: Remember You Have Several Agencies To Navigate CMS ACO Final Rule establishes program requirements CMS and OIG Fraud and abuse interim final rule 5 waivers Waivers apply to the MSSP and ACOs participating in it No waiver, even for MSSP participants, for analogous state fraud and abuse laws FTC and DOJ Antitrust statement movement onto the commercial market IRS Tax exempt hospital and health care organization notice 5 factor test but many still look to FMV for comfort 47

48 CMS Innovation Center Established under the Affordable Care Act Test innovative payment and service delivery models to reduce program expenditures, while preserving or enhancing the quality of care Programs, grants and they even take suggestions Physician led with a growing staff Started off with $10 Billion in funding for FYs

49 CMS Innovation Center Pioneer ACO Program Advanced Payment Initiative Bundled Payments Comprehensive Primary Care Health Care Innovation Challenge Independence at Home Demonstration Note: No double dipping (in certain cases) 49

50 Transferring the ACO Experience Commercial Payors Patient Center Medical Home (PCMH) State Programs Regulation of Provider Risk 50

51 Commercial Payors ACOs Incentives for good quality At risk relationships, including capitation 51

52 Commercial Payors Some start with the MSSP ACO Program and move into commercial while others start with commercial Skill set can be transferred Number crunching for cost savings Population management and quality assurance Leverage existing resources Shifting care settings Movement toward point of care solutions 52

53 Commerical Payors Fraud and abuse issues related to risk sharing, whether in the form of: Incentives and bonuses Capitation and taking on risk State insurance laws Risk sharing laws Managed care contracting requirements Driven by data Look at HIPAA provisions although often allowed for health care operations and payment of the covered entity Look for data provisions and who owns the data 53

54 We Are At a Cross Road 54

55 Questions Sarah E. Swank Principal, Ober Kaler Washington, DC

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