AHLA. Q. Medicaid ACOs: Coming to a Neighborhood Near You. Clifford E. Barnes Epstein Becker & Green PC Washington, DC

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1 AHLA Q. Medicaid ACOs: Coming to a Neighborhood Near You Clifford E. Barnes Epstein Becker & Green PC Washington, DC Jennifer E. Gladieux Senior Health Policy Analyst Health Policy Source, Inc. Alexandria, VA Physicians and Hospitals Law Institute February 2-4, 2015

2 American Health Lawyers Association Hospitals and Physicians Law Institute February 2, 2015 Medicaid ACOs: Coming to a Neighborhood Near You Co authors of Accountable Care Organizations in the Medicaid Context: A Sixteen State Comparison, in the American Health Lawyers Association s book entitled THE ACO HANDBOOK: A GUIDE TO ACCOUNTABLE CARE ORGANIZATIONS,SECOND EDITION (forthcoming in early 2015) Agenda The Market Dynamics of Medicaid ACOs 1. Accountable care generally 2. Trends in state Medicaid ACOs 3. State Innovation Model Grants 4. Medicaid Populations and Benefits Legal Issues in Medicaid ACOs 1. Waivers and statutes 2. Antitrust 3. Governance 4. Attribution Issues Strategic State Initiatives 1. Payment Models 2. Quality Measurement 3. Health Information Technology & Infrastructure Lessons for Providers and Medicaid Managed Care 2 1

3 The Market Dynamics of Medicaid ACOs Accountable Care Generally Structures and organizations that assume responsibility for a specified patient population for a continuum of care with payments linked to performance measurements and value that demonstrates that savings are achieved in conjunction with improvements in care. Accountable care often involves health home initiatives that seek both to enhance and better coordinate care by expanding primary care provider accountability, preventive, acute and chronic care services and to share accountability among primary providers, specialists, hospitals and nonmedical providers and resources. Accountable Care Strategies are designed to: Improve value; Achieve better outcomes; Lower costs; Foster accountability for care provided to patients; and Link payment to performance indicators. 4 2

4 The Market Dynamics of Medicaid ACOs Trends in State Medicaid Accountable Care Strategies ACO Certification States are certifying Medicaid ACOs to contract with one or more payors or to include one or more payors including MCOs as in Texas Financing ACOs State finances Medicaid ACO models, which can be state only or in partnership with insurer as in Iowa Community Based Organizations or Redefining Managed Care Establishing new Medicaid ACO organizations or redesigning managed care contracts to align with accountable care principles as in Illinois 5 Trends in state ACOs Source: role states financing regulating and creating accountable careorganizations 6 3

5 The Market Dynamics of Medicaid ACOs Medicaid ACO populations span the broad spectrum of traditional populations Medicaid Expansion Population an example is Iowa Medicaid Fee for Service including CHIP an example is Colorado Medicaid Managed Care an example is Massachusetts and Minnesota Dual Eligibles an example is Maine; Colorado has an opt in option 7 The Market Dynamics of Medicaid ACOs State Innovation Models (SIMs) State Innovation Models (SIMs) are a creature of CMS s Centers for Medicare and Medicaid Innovation (CMMI) Funding grants in two rounds o $300 million to 25 states in Round One has been awarded o $665 million in Round Two awarded to 32 states/territories on December 16, 2014 Future of CMMI funding could possibly come into play politically SIMs develop, test, or implement innovative payment and service delivery models that meet triple aim in state Medicaid programs ACOs Primary care medical homes Other delivery and health transformation models (e.g., episode bundles) 8 4

6 State Innovation Model Activity Round One 9 The Market Dynamics of Medicaid ACOs State Innovation Model Activity Round Two A total of 28 states, 3 territories and the District of Columbia received $665 million funding through round two of SIM on December 16, 2014 $622 million in Model Test awards will support 11 states Colorado, Connecticut, Delaware, Idaho, Iowa, Michigan, New York, Ohio, Rhode Island, Tennessee and Washington These awardees join 6 states Arkansas, Maine, Massachusetts, Minnesota, Oregon, and Vermont currently in the testing phase of the State Innovation Models initiative $43 million in Model Design awards will support 21 awardees American Samoa, Arizona, California, District of Columbia, Hawaii, Kentucky, Illinois, Maryland, Montana, Nevada, New Hampshire, New Jersey, New Mexico, Northern Mariana Islands, Oklahoma, Pennsylvania, Puerto Rico, Utah, Virginia, West Virginia, and Wisconsin These states will further develop proposals for comprehensive health care transformation 10 5

7 State Innovation Model Activity Round Two 11 Legal Issues in Medicaid ACOs 6

8 Legal Issues in Medicaid ACOs Waivers and Statutes 1115 waiver or SPA usually required because of CMS requirements for Medicaid value based purchasing Beneficiary access shall not be reduced and quality of care shall be improved Providers may not be required to participate (but can voluntarily) Beneficiary freedom of choice to be retained unless waiver granted (attribution) States must share savings with the Federal government States take one of two approaches to creation of Medicaid ACOs New statutes o ACO specific state statutes typically contemplate provider based Medicaid ACOs like in Alabama and New Jersey o Broad, transformative health care legislation to reform entire system such as in Massachusetts and Vermont Use existing authorities by building on existing 1115 Medicaid managed care waivers Minnesota and Hawaii 13 Legal Issues in Medicaid ACOs Antitrust Parker v. Brown and the State Action Doctrine generally State Action Doctrine has been extended to private actors when a two part requirement is met (1) that the State clearly articulates policy to displace competition; and (2) that any private conduct is actively supervised by state agency or official The need for states to be appropriately explicit about displacing competition and thereby extending the State Action Doctrine to Medicaid ACO Programs was recently underscored by the Supreme Court in FTC v. Phoebe Putney Health Systems 14 7

9 Legal Issues in Medicaid ACOs Antitrust States specifically authorizing Medicaid ACO programs have generally been appropriately explicit about extending the State Action Doctrine to exempt the ACO related activities from the antitrust laws. New Jersey legislature intends to exempt activities undertaken pursuant to the Medicaid ACO Demonstration Project that might otherwise be constrained by State antitrust laws and to provide immunity for such activities from federal antitrust laws through the state action immunity doctrine. In New York, the state statute states that it provides state immunity action to Medicaid ACOs, but also explicitly subjects the organization to supervision by the State Insurance Commissioner, who is also to provide for antitrust safe harbors in antitrust and other laws such as state fee splitting. Vermont s General Assembly indicated that its law is intended to ensure sufficient state involvement and action in designing and implementing an accountable care organization in order to comply with federal anti trust provisions by replacing competition between payers and others with state regulation and supervision. 15 Legal Issues in Medicaid ACOs Antitrust States authorizing Medicaid ACO programs through Medicaid State Plan Amendments have not been as comprehensive as other states, generally, in extending the State Action Doctrine to exempt ACO related activities. In at least one state, for example, the Arkansas ACO initiative grew out of state plan amendment that does not explicitly address state action. 16 8

10 Legal Issues in Medicaid ACOs Governance Legal Entity Some states such as Texas follow the Medicare Shared Savings Program A Texas health care collaborative means a separate legal entity that arranges for medical services for insurers or other payors in exchange for payments in cash or in kind; that accepts and distributes payments for medical services; and that consists of: o physicians; o physicians and other health care providers; o physicians and insurers or health maintenance organizations; or o physicians, other health care providers, and insurers or health maintenance organizations. Massachusetts, New Jersey, and Vermont require the ACO be a separate legal entity, whereas Minnesota stipulates that no separate entity is required. In addition, while most of the states are silent as to the type of entity, New Jersey requires that the ACO entity be a non profit entity. 17 Legal Issues in Medicaid ACOs Governance Governing Board New Jersey requires that the ACO governing board include representatives of the cross section of various provider types including general hospitals, clinics, behavior health care providers, physicians and dentists. Comparable requirements exist in states like Texas and Illinois. Other states like New York and Vermont require a specific percentage of the Board to be providers so that the participating providers compose 75% of the governing board. Most states that require participating providers on the board also require consumer representation on the board. Alabama, New Jersey and Vermont require specific numbers of community or Medicaid beneficiary representation States that do not require community or beneficiary representation on the board, in several instances, require community advisory boards or counsels that provide advice to the ACO (Oregon) 18 9

11 Legal Issues in Medicaid ACOs Governance Leadership and Management Structure About eight states require a medical director or similar professional in the management of the ACO. In Iowa, ACOs must have meaningful involvement of a Chief Medical Officer and Patient Managers on the governing Board. Likewise, Louisiana requires a medical director as a key personnel requirement. In Oregon, coordinated care organizations must simply have key leaders who are responsible for successful implementation and sustainable operation of the [organization]. And in states such as Minnesota which do not require a separate legal entity, no specific leadership or management requirements are placed on participating providers. 19 Legal Issues in Medicaid ACOs Attribution Medicaid ACO enrollment required in some states Attribution varies by state design: Alabama and New Jersey have mandatory enrollment in specific geographic areas; Illinois, Louisiana, and Oregon use passive enrollment; and Colorado uses mandatory enrollment for most adults, and passive enrollment for others Some states follow MSSP or Pioneer ACO attribution methods using historical data In at least one state, Illinois, enrollees are locked in for 12 months with an annual open enrollment period 20 10

12 Legal Issues in Medicaid ACOs Compared to the Medicare Shared Savings Program (MSSP) More stringent requirements for maintaining working relationships with community partners Integrating with existing Medicaid patient centered medical homes Assume responsibility for additional services Payment mechanisms much more varied some closely resembling managed care capitation rates Some are disease or episode specific Arkansas and Colorado Partner with managed care payers like the Pioneer program Iowa 21 Strategic State Initiatives 11

13 Payment Models State Initiatives Offering groups of providers and partners, including HMOs, meeting performance benchmarks the opportunity To accept some shared savings with no downside risk To accept greater shared savings if downside risk accepted Medical home bonus payments may be linked to performance benchmarks, including: Primary, secondary, tertiary prevention scores Indicators of capacity to manage disease and coordinate care Novel provider payment methodologies through contracts with payors include episode based global, pay for performance, capitation, and bundled payments Risk adjusted global budgets with shared savings based on quality measures. 23 Payment Models State Initiatives Collaborative organizations receive PMPM payment plus performance based incentives and providers receive PMPM for population management and shared savings Risk bearing organization with capped downside risk Global budgets, transformation incentives and value based payments to providers 24 12

14 Quality Measurement CMS requirements very flexible; encourages Medicaid specific metrics Vermont is an example of a state that is piloting its ACO program with an effort toward developing quality measures over time in an iterative fashion New Jersey allows flexibility in its quality metrics: Set of mandatory measures; Menu of voluntary measures; and Other measures that will not be included in payment calculations. Iowa proposes using a value index score (VIS) to provide an overview of the value of care, enable Iowa to find specific opportunities for improvement, and utilize current claims data and patient experience to determine a provider s performance Illinois requires Medicaid ACOs to meet four quality measures to obtain a 10% savings amount; required to report more than four measures in order to obtain the 40% maximum shared savings 25 Health Information Technology & Infrastructure HIT is focus of states and CMS Data analytics important to both CMS and states Data analytics to be used in payment methodologies Data analytics is a business opportunity Alabama and Maine require Medicaid ACOs to use the state s health information exchange (HIE) Iowa, Minnesota, Oregon, and Texas require data feedback to ACOs to compile and report statistics on performance measures on quality and cost patterns of service utilization availability and accessibility of services Colorado has a State wide Data and Analytics Contractor who profiles individual clients based upon predictive modeling with the intent to identify areas for clinical process improvement 26 13

15 Health Information Technology & Infrastructure State administrative capacity needs to increase Additional federal investment in infrastructure necessary for Medicaid ACOs likely to come through the State Innovation Model (SIM) grants State government support staff to ACOs limited Examples of innovative infrastructure: Arkansas plans to advance technical assistance, feedback, and evaluations through a provider portal over the Internet Illinois has a matchmaking tool to link potential ACO partners, including managed care organizations, in the state 27 Lessons Medicaid ACOs are here to stay States are using leverage as payor, legislator and regulator to transform the Medicaid health care system State accountable care initiatives are spreading rapidly Although broad range of approaches, all models focus on accountable care principles payment linked to performance, reliable performance measurements, and defined population Federal government is funding state initiatives (SIM grants) Incorporating ACO concepts may be an effective way to address competition A side effect of ACO activity is a more organized, savvy provider and could impact Medicaid managed care network contracting Accountable care is or will be coming to a neighborhood near you 28 14

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