Accountable care organizations and clinically integrated networks

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1 Accountable care organizations and clinically integrated networks Chris Lloyd, CEO MHMD Memorial Hermann Physician Network; CEO, Memorial Hermann Accountable Care Organization Bernie Duco, Of Counsel, Norton Rose Fulbright October 28, 2014

2 Speaker Bernie Duco Of Counsel, Norton Rose Fulbright Bernie Duco joined Norton Rose Fulbright's healthcare team in 2014 after serving as Chief Legal Officer with the Memorial Hermann Health System. Bernie led the development of Memorial Hermann's Medicare certified Accountable Care Organization and was the lead legal advisor for MHMD Memorial Hermann's clinically integrated physician group. Prior to joining Memorial Hermann, Bernie served as Senior Vice President and General Counsel for Mercy Health System in St. Louis. Having served for over 20 years as general counsel for large non-profit health systems, Bernie has broad corporate governance, transaction, and litigation management experience. Bernie received his JD from the University of Houston Law Center and his BA from Rice University. He is licensed to practice in Texas and Missouri. 2

3 Speaker Chris Lloyd CEO MHMD Memorial Hermann Physician Network; CEO, Memorial Hermann Accountable Care Organization Christopher Lloyd is the Chief Executive Officer of MHMD, the Physician Network for the Memorial Hermann Health System in Houston, Texas. MHMD includes the largest clinically integrated physician organization in Texas with more than 2,000 participating physicians. He is also Chief Executive Officer of the Memorial Hermann Accountable Care Organization (MHACO). The MHACO is one of the largest in the country and drives improved outcomes and cost measures across the Memorial Hermann care delivery enterprise. It currently functions across the entire payor spectrum, including the Medicare Shared Savings Program (MSSP), commercial and Medicare Advantage populations. Chris has over 25 years of executive experience in acute healthcare settings, including community acute care, academic hospital and physician group management. Prior to assuming his current role in 2009, Chris was the Chief Operations Officer at Memorial Hermann Hospital in the Texas Medical Center. Within the Memorial Hermann System, he has also served as the Chief of Clinical Service Lines, overseeing the major clinical functions across the system. In this role, he spearheaded the strategic planning and implementation of the Mischer Neuroscience Institute in Houston, Texas. Chris also worked for Catholic Healthcare West (CHW), now Dignity Health, serving at St. Joseph s Hospital in both operations and campus development, and led the construction and clinical planning for Barrow Neurological Institute. Prior to CHW, he worked for 11 years at Advocate Healthcare in Chicago, Illinois, running hospital operations and a large multi-specialty physician group. He also has an entrepreneurial spirit, having participated in the initial forming stages of PedMeds.com and as an initial investor and board member. He also functioned as the President and COO before its move to the NASDAQ as a publicly traded company. 3

4 Continuing Education Information We have applied for Minimum Continuing Legal Education (MCLE) with the State Bar of California, Texas and Virginia in the amount of 1.0 hour. We have also applied for 1.0 hour of New York non-transitional MCLE credit, which is appropriate for experienced lawyers only. Newly admitted lawyers will not receive New York MCLE credit. Norton Rose Fulbright will supply a certificate of attendance to all participants that: Participate in the web seminar by phone and via the web Complete our online evaluation that we will send to you by within a day after the event has taken place 4

5 Administrative information Administrative information Today s program will be conducted in a listen-only mode. To ask an online question at any time throughout the program, click on the question mark icon located on the tool bar in the bottom right side of your screen. Everything we say today is opinion. We are not dispensing legal advice, and listening does not establish an attorney-client relationship. This discussion is off the record. You may not quote the speakers without our express written permission. If the press is listening, you may contact us, and we may be able to speak on the record. 5

6 What is a Clinically Integrated Network? A Clinically Integrated Network (CIN) is a collaboration among independent/private practice and employed physicians and a hospital or health system, designed to operate a clinical integration program, which is an active and ongoing program of clinical initiatives to improve the quality and delivery of health care services, leading to greater efficiency in care delivery and cost savings 6

7 What are the characteristics of an effective CIN? A properly developed and implemented clinical integration program contains initiatives that provide i. measurable results, such as evaluation and concrete improvement and clinical performance ii. reduction of unnecessary service utilization, and iii. management and support of high-cost and high-risk patients 7

8 8 CIN MSSP ACO

9 The Memorial Hermann Accountable Care Organization Structure, Governance and Performance

10 Overview of MHHS $4.0 billion non-profit healthcare system in Texas 9 Acute Hospitals, 3 Heart & Vascular Institutes Partnership with the University of Texas Health Science Center of Houston 98 Outpatient Sites: Ambulatory Surgery, Imaging, Sports Medicine, Lab The nations busiest Trauma program 10

11 Memorial Hermann Corporate Structure System Quality Corporate Members Children s Finance Physician Council Memorial Hermann Health System Governance Audit Memorial Hermann Foundation HePIC MH Accountable Care Organization MH Medical Group MHMD MH Health Solutions, Inc. MH Community Benefit Corp. MH Information Exchange 11

12 Complexion of the Physician Network MHMD 4000 practicing physicians 1950 CI physicians in MHACO (single signature representation) 300 Advanced Primary Care Practices (PCMH) 250 additional PCPs Evolving High Performance Specialty Physicians (500) 200 are employed (MHMG) University of Texas Physicians 800 physicians CI and ACO affiliates Some UT faculty participate in advanced and high performance practices 12

13 MHMD Compact MHMD agrees to: Maintain primary loyalty to physicians Negotiate well to align incentives Include physicians in work and decision making Provide clear and timely information o o o Membership Criteria, Quality Measure Scoring Accountability / Improvement Process Contract, Financial Performance Provide physicians with information, services, and education to ensure high quality and ease practice burdens Seek feedback from its physicians Maintain confidentiality Communicate, communicate, communicate Make meetings worthwhile and engaging Create leadership training programs 13

14 MHMD Compact Physicians agree to: Practice evidence-based medicine Uphold regulatory, quality, and safety goals Report quality data Meet CI criteria Come to meetings and performance feedback sessions Pay attention to information from MHMD Accept decisions by physicians in MHMD committee settings Be flexible, share ideas Collaborate with colleagues and hospitals Behave as professionals 14

15 MHMD Clinical Programs Committees Physician Governance of Quality and Safety MHMD Board of Directors Clinical Programs Committee H&V DVT/PE JOC Neuro Woman/Child Surgery Medicine Oncology Surgical Home JOC Primary Contract Care Cardiology Neurology Neonatal Pediatric Head CT JOC Anesthesia Critical Care Oncology Imaging Adult PCP CV Surgery Neurosurgery OB/Gyn End of Life Care JOC Bariatrics Emergency Pathology Peds Order Set Editorial Board Informatics Acute Surgery Orthopedics ENT Allergy Ad hoc Hospital Medicine Post Acute Clinical Ethics & Supportive Care Peer Review 15

16 Clinical Programs Committees: Connecting to the System Board & the Hospital Medical Staffs/MECs MH Hospital Board System Quality Committee HOSPITAL MECs MHMD Board of Directors Clinical Programs Committee Katy MEC NE MEC MC MEC NW MEC H&V Neuro Nursing Councils SE MEC SW MEC Woman/ Child Surgery Operating Councils SL MEC TMC MEC Medicine Oncology Executive Liaisons TWL MEC Path/Rad Primary Care Service Lines MH Medical Staffs (MHMD Members) 16

17 CPC delegated authority from the System Quality Committee Up and Over BOARD SYSTEM QUALITY COMMITTEE MHMD Board of Directors Clinical Programs Committee Hospital MECs (11) Med Staff Critical Care Surgery Medicine 17

18 Memorial Hermann Regional Medical Home Structure Hospitals - 1 (TWL) ASC - 4 FSER - 1 North Region 91 PCPs 47 APCP (36 MHMD, 11 MHMG/Phytex, 0 UT) 0 APP 44 CI PCPs (inc UT) 229 Specialists 9 MHMG/Phytex 220 CI Specialists (inc UT) MHDL PSC - 3 OPID - 3 SMR - 6 Hospitals - 1 (NE) ASC - 2 CCC - 1 Northeast Region 33 PCPs 20 APCP (15 MHMD, 4 MHMG/Phytex, 1 UT) 0 APP 13 CI PCPs (inc UT) 73 Specialists 4 MHMG/Phytex 69 CI Specialists (inc UT) MHDL PSC - 1 OPID - 3 SMR - 2 West Region Hospitals - 3 (KT, KT Rehab, MC) ASC - 4 OPID - 8 MHDL PSC - 6 SMR PCPs 64 APCP (48 MHMD, 15 MHMG/Phytex, 1 UT) 2 APP (2 MHMD, 0 MHMG/Phytex) 97 CI PCPs (inc UT) 283 Specialists 15 MHMG/Phytex 268 CI Specialists (inc UT) Southwest Region Hospitals - 2 (SL & SW) ASC - 4 MHDL PSC - 6 OPID - 5 SMR 8 (add l 1 pending) 174 PCPs 73 APCP (34 MHMD, 33 MHMG/Phytex, 6 UT) 4 APP (0 MHMD, 4 MHMG/Phytex) 97 CI PCPs (inc UT) 277 Specialists 38 MHMG/Phytex 239 CI Specialists (inc UT) Counts as of 7/22/2014 Physician counts do not include physician extenders *Includes UT Pediatricians, some specialty Pediatricians, and some IM and FP s with a secondary subspecialty Central Region Hospitals - 4 (CMHH, TMC, TIRR, NW) ASC - 3 OPID - 7 MHDL PSC - 6 SMR PCPs 51 APCP (11 MHMD, 7 MHMG/Phytex, 33 UT) 9 APP (5 MHMD, 4 MHMG/Phytex) 144 CI PCPs (inc UT) 757 Specialists 21 MHMG/Phytex 736 CI Specialists (inc UT) Hospitals - 1 (SE) ASC 2 MHDL PSC 3 Southeast Region OPID - 6 SMR 8 97 PCPs 38 APCP (15 MHMD, 16 MHMG/Phytex, 7 UT) 0 APP 59 CI PCPs (inc UT) 141 Specialists 7 MHMG/Phytex 134 CI Specialists (inc UT) 18 1 Additional SMR in Nederland 3 Additional MDs in Bay City: 1 MHMG PCP, 1 MHMG Specialist, 1 CI Specialist.

19 Memorial Hermann Health Insurance Quality Metrics Data / Metrics / Care Management 32 % 3.4 % 11 % 17 % 11 % 7.1 % 4.0 % 0% BASELINE ALOS ER/1000 CT/1000 OPS/ day Readmit Asthma Meds Cervical CA Breast CA Colorectal CA Diab HbA1c CAD LDL-C Generic Rx Admits/1000 Diab LDL-C Diab Neph 7day post D/C 12 %.9% 12 % 5.6 % 2.6 % 43 % 63 % %

20 Adult ICU Central Line Associated Blood Stream Infections (CLABSI) 12 System Adult ICU CLABSI Do No Harm Central Line Associated Blood Stream Infections February CLABSI rates not available due to ISD technical difficulties CLABSI Rate per 1K Line Days Qtr 1 Qtr 2 Generated: 4/2/2012 7:45:37 AM Source file date: 3/23/2012 UCL = 9.42 Mean = 5.53 LCL = 1.64 UCL = 5.79 Mean = 3.04 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 LCL = 0.29 Qtr 4 Qtr 1 Qtr 2 Qtr 3 UCL = 5.13 Mean = 2.52 Reporting Months UCL = 3.86 Mean = 2.12 LCL = 0.38 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 UCL = 2.97 UCL = 2.55 Mean = 1.17 Mean = 1.46 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr produced by System Quality and Patient Saf 20

21 Zero Central Line Blood Stream Infections: Evidence Based Protocols To: Memorial Hermann Sugar Land Zero Hospital Central Line Associated Blood Stream Infections for 36 Months February 1, 2008 to January 31, 2011 Zero CLABSIs x 36 Months 21

22 The Memorial Hermann ACO Commercial MHACO Medicare Shared Savings and Aligned Incentives More flexibility in ACO related quality, safety and efficiency program incentives MHMD contracting capability POPULATION MANAGEMENT Quality Assurance And Improvement Program Processes Promoting Evidence Based Medicine Promoting Beneficiary Engagement Internally Reporting On Quality And Cost Metrics Promoting Care Coordination 22

23 CI Results 100,000 Commercial Lives Admits/1, LOS Impactable Admissions Readmission Rate % MHMD Houston Market ER Visits/ 1, Avoidable ER Visits/1, Generic Prescribing %

24 Medicare Shared Savings Success 34,000 lives $58 million dollars in savings 100% quality data reporting

25 MHACO Lessons Learned Invest in the model, prime the pump Drive higher quality and lower cost through appropriate structures Physician/Hospital partnership Physician board involvement, education and communication Legal complexities throughout development

26

27 CIN Legal Issues Organization Form Governance Financial Arrangements with Physician Members CIN Participation Performance and Shared Savings Programs Risk Arrangements Data Usage CIN Start-Up and Development Support Payor Contracting 27

28 MSSP ACO Overview I. MSSP Introduction II. MSSP ACO Waivers III. FTC/DOJ Final Policy Statement 28

29 29 I. MSSP INTRODUCTION

30 MSSP Overview Medicare Shared Savings Program ( MSSP ) Purposes Promote accountability for the quality, cost, and overall care for a Medicare patient population Improve the management and coordination of care for Medicare fee-forservice beneficiaries Encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery Under the MSSP reimbursement model, CMS will share a percentage of shareable savings with accountable care organizations ( ACOs ) that: Generate shareable savings; and Meet quality performance standards Who Can Participate? ACO must have a minimum of 5,000 attributed beneficiaries A plurality of primary care services received by a beneficiary must be provided by ACO participants for the beneficiary to be attributed to the ACO Hospitals are permitted to participate if partnered with physicians 30

31 ACO Structure and Governance ACO must be a recognized legal entity under state law and have a taxpayer identification number (TIN) A separate legal entity required for ACOs formed by multiple ACO Participants At least 75% control of the ACO s governing body must be held by ACO Participants Governing body must include at least one Medicare beneficiary ACO Participants must have meaningful participation in the composition & control of the ACO s governing body 31

32 Shared Savings ACOs elect to participate in the MSSP under one of two tracks Track 1 = sharing rate up to 50%, with no sharing in potential losses Track 2 = sharing rate up to 60% and higher sharing cap, but ACO assumes risk for sharing in potential losses 32

33 33 II. MSSP ACO WAIVERS

34 Summary of MSSP ACO Waivers ACO Waivers and Laws Waived Strategic Opportunities Specific ACO Waiver Requirements Related Matters Examples General Examples Specific Examples 34

35 ACO Waivers and Laws Waived Pre-Participation Waiver Waives: Stark, Federal Anti-kickback Statute (AKS), Gainsharing CMP with respect to start-up arrangements that pre-date an ACO's participation agreement with CMS Participation Waiver Waives: Stark, AKS, Gainsharing CMP with respect to any arrangement of an ACO, one or more of its ACO participants or its ACO providers/suppliers, or a combination thereof Shared Savings Distribution Waiver Waives: Stark, AKS, Gainsharing CMP with respect to distributions or use of shared savings earned by an ACO Physician Self-Referral Law Waiver Waives: AKS and Gainsharing CMP with respect to any financial relationship between or among the ACO, its ACO participants, and its ACO providers/suppliers that implicates the Physician Self-Referral Law Waiver for Patient Incentives Waives: Beneficiary Inducements CMP and AKS with respect to items or services provided by an ACO, its ACO participants, or its ACO providers/suppliers to Medicare feefor-service beneficiaries for free or below fair-market-value 35

36 Strategic Opportunities Opportunities for initiatives and programs that are reasonably related to the purposes of the MSSP Purposes of the MSSP: 1.Promoting accountability for the quality, cost, and overall care for a Medicare patient population as described in the MSSP 2.Managing and coordinating care for Medicare fee-forservice beneficiaries through an ACO 3.Encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery for patients, including Medicare fee-for-service beneficiaries 36

37 1. Pre-Participation Waiver Requirements The arrangement is undertaken by a party or parties acting with the good faith intent to develop an ACO The parties developing the ACO must be taking diligent steps to develop an ACO that would be eligible for a participation agreement The ACO's governing body has made a bona fide determination that the arrangement is reasonably related to the purposes of the MSSP The arrangement, its authorization by the governing body, and the diligent steps to develop the ACO are documented. The documentation must identify at least the following: A description of the arrangement, including all parties to the arrangement and the financial or economic terms of the arrangement The date and manner of the governing body's authorization of the arrangement, including the Board s reasonably related determination A description of the diligent steps taken to develop an ACO The description of the arrangement is publicly disclosed (such disclosure shall not include the financial or economic terms) If an ACO does not submit an application for a participation agreement for the target year, the ACO must submit a statement describing the reasons it was unable to submit an application 37

38 2. Participation Waiver Requirements The ACO has entered into a participation agreement and remains in good standing The ACO meets the requirements of the regulations relating to governance, leadership, and management The ACO's governing body has made and duly authorized a bona fide determination that the arrangement is reasonably related to the purposes of the MSSP Both the arrangement and its authorization by the ACO governing body are documented. The documentation must identify at least the following: A description of the arrangement, including all parties to the arrangement, the purposes of the arrangement, the items, services, facilities and/or goods covered by the arrangement and the financial or economic terms of the arrangement The date and manner of the governing body's authorization of the arrangement, including the ACO governing body s determination that the arrangement is reasonably related to the purposes of the MSSP The description of the arrangement is publicly disclosed (disclosure shall not include the financial or economic terms). 38

39 3. Shared Savings Waiver Requirements The ACO has entered into a participation agreement and remains in good standing under its participation agreement with CMS The shared savings are earned by the ACO pursuant to the MSSP The shared savings are earned by the ACO during the term of its participation agreement, even if the actual distribution or use of the shared savings occurs after the expiration of that agreement The shared savings are: Distributed to or among the ACO's ACO participants, its ACO providers/suppliers, or individuals and entities that were its ACO participants or its ACO providers/suppliers during the year in which the shared savings were earned by the ACO; or Used for activities that are reasonably related to the purposes of the MSSP With respect to the waiver Gainsharing CMP, payments of shared savings distributions made directly or indirectly from a hospital to a physician are not made knowingly to induce the physician to reduce or limit medically necessary items or services to patients under the direct care of the physician. 39

40 4. Physician Self-Referral Waiver Requirements The ACO has entered into a participation agreement and remains in good standing under its participation agreement with CMS The financial relationship is reasonably related to the purposes of the MSSP The financial relationship fully complies with a Stark Law exception 40

41 5. Patient Incentive Waiver Requirements 41 The ACO has entered into a participation agreement with CMS and remains in good standing. There is a reasonable connection between the items or services and the medical care of the beneficiary The items or services are in-kind and: Are preventive care items or services; or Advance one or more of the following clinical goals: Adherence to a treatment regime. Adherence to a drug regime. Adherence to a follow-up care plan. Management of a chronic disease or condition Examples of permitted incentives include: Blood pressure cuffs for hypertensive patients Smoking cessation treatment Free home visits to coordinate in-home care during a post-surgical patient s recovery period Excludes financial incentives. For example: waiving copayments or deductibles Sporting or entertainment event tickets Jewelry, household items, beauty products, gift certificates for non-health care related retail items Prohibition on providing gifts or other remuneration to Medicare beneficiaries as inducements for joining/remaining in the ACO or seeing providers in the ACO

42 ACO Waiver Protection: Related Matters Commercial Arrangements: No separate waiver for commercial arrangements. However, CMS indicated in comments to regulations that it believes avenues exist to provide flexibility for ACOs participating in commercial plans Nothing precludes arrangements downstream of commercial plans (e.g., arrangements between hospitals and physician groups) from qualifying for the ACO participation waiver 42

43 ACO Waiver Protection: Related Matters (con t) CMS indicated that the ACO pre-participation waiver and participation waiver do not turn on source of funds for arrangement Examples provided: arrangements with specialists or nursing facility staff members to engage in care coordination for ACO beneficiaries or implement evidence based protocols could be reasonable related to the purposes of the MSSP even if the arrangement were to reflect a likelihood that the patient might be referred to or within the ACO a per-referral payment (e.g., $500 for every referral generated by the specialist or paying $100 for every patient transported to an ACO hospital provider) would not be reasonable related to the purposes of the MSSP ACO Regulations generally prohibit ACOs, ACO participants and ACO provider/suppliers from requiring that beneficiaries be referred only to ACO participants or ACO providers/suppliers within the ACO or to any other provider or supplier 43

44 ACO Waiver Protection: General Examples Per patient fee paid to doctors to manage patients through the health care system A portion of savings paid to physicians for decreasing hospital s costs and/or increasing hospital s efficiencies Performance-based incentive payments, potentially rewarding, for example: Meeting requirements for reporting on quality and cost measures Positive performance on MSSP quality metrics Physician performance on other quality, safety and efficiency performance metrics Adherence to the ACO s policies and protocols Adherence to care protocols and implementation of evidence-based medicine 44

45 ACO Waiver Protection: Specific Examples Program to incentivize use of more cost-effective providers Incentive programs for implementation of quality and efficiency programs at managed surgery centers Incentives to physicians for implementation of care processes to reduce cost, create efficiencies and improve quality Incentives to implement population health management programs 45

46 III. FTC/DOJ FINAL POLICY STATEMENT 46

47 FTC/DOJ Final Policy Statement October 28, 2011 the Agencies will treat joint negotiations with private payors as reasonably necessary for an ACO s primary purpose of improving health care delivery, and will afford rule of reason treatment to an ACO that meets CMS s eligibility requirement for, and participates in the [MSSP] and uses the same governance and leadership structure and clinical and administrative processes it uses in the [MSSP] to serve patients in the commercial markets 47

48 Sources Medicare Shared Savings Program Regulations: 42 C.F.R. Part 425 CMS Commentary: 76 Fed. Reg. 67,802 (Final Rule, Nov. 2, 2011) CMS/OIG Waiver CMS/OIG Commentary: 76 Fed. Reg. 67,992 (Uncodified Interim Final Rule With Comment Period, Nov. 2, 2011) Federal Trade Commission (FTC)/Department of Justice (DOJ) Final Policy Statement Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program, 76 Fed. Reg. 67,026 (Final Policy Statement, Oct. 28, 2011) IRS Notice and Fact Sheet 48 IRS Notice , I.R.B. 652 (April 18, 2011) Tax-Exempt Organizations Participating in the Medicare Shared Savings Program through Accountable Care Organizations, IRS Fact Sheet, FS , Oct. 20, 2011

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