Value-Based Payments and Managed Care Contracting

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Violet Maxwell
7 years ago
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2 This presentation has been provided for informational purposes only and is not intended and should not be construed to constitute legal advice. Please consult your attorneys in connection with any fact-specific situation under federal, state, and/or local laws that may impose additional obligations on you and your company. Cisco WebEx can be used to record webinars/briefings. By participating in this webinar/briefing, you agree that your communications may be monitored or recorded at any time during the webinar/briefing. Attorney Advertising 2

3 Presented by Basil H. Kim Associate

4 VBP & Managed Care Contracting Payer/Provider incentive and rating arrangements are not novel, but they also have not been without challenges in the past, including lack of transparency, use of incomplete or inaccurate data, and complex incentive calculation methodologies. We are now in an era of increasingly sophisticated and complex VBP contracting, and Payers and Providers need to work together to form successful VBP arrangements. Each party needs to understand its own operational and financial strengths and vulnerabilities, especially with regard to information and data infrastructure. 4

5 Contracting Skills The competencies required for successful VBP contracting and implementation include: High-level business and contracting strategic vision and coordination Actuarial, legal, compliance and risk management skills Financial modeling and analytics capacity Sophisticated IT, privacy and technological capabilities Robust care management and integration systems Strong collaborative leadership and an engaged provider base 5

6 Key Initial Questions Who makes up our patient population, and how do we meet their needs through these arrangements? Do we have the infrastructure to do so? What types of VBP arrangements have succeeded or failed in my market? What are the lessons learned and takeaways from each example? What are we looking to achieve in our arrangement? Are the expectations and goals realistic? Where are we now; where do we hope go? How do we measure success? Who is the key leadership on both the Provider and Payer side? How committed are they to the success of the VBP relationship? How much risk are they willing to take on? Do we have alignment? Have the organizations involved demonstrated a history of integrated and collaborative care? 6

7 Contracting Considerations What is the reimbursement model? Quality Bonus (outcomes or also process?) Shared Savings (upside only or also downside?) Bundled Payments Capitation / percent of premium For each of these frameworks, there are different contracting considerations, including requirements under state and federal law. 7

8 Contracting Considerations Examples of different levels of insurance risk shared: New York State VBP Tiers (from the NYS MCO/Provider Contract Guidelines): o Level 1: Contracts with providers or IPAs based on fee-for-service arrangements, including withholds or bonuses up to 25% of the payment to the provider o Level 2: Contracts that transfer financial risk to providers or group of providers (e.g. capitation) for a single specific service the providers directly provide, i.e., primary care, (except inpatient hospitalization) with the provider accepting all medical risk for that service o Level 3: Contracts that transfer broader risk to providers (multiple services provided directly, inpatient hospitalization, or fee-for-service with withholds or bonuses of greater than 25%) o Level 4: Contracts that transfer risk to IPAs for a single or multiple services o Level 5: Contracts falling under risk level 3 or 4 above that include services not provided directly (out-of-ipa/provider network services) For each of these tiers, there are also different contracting considerations 8

9 Contracting Considerations Some states are adopting VBP Roadmaps in the context of Medicaid Managed Care reform and are requiring managed care plans to pay providers based on value. For example, NYS is requiring percent of Medicaid Managed Care payments be value-based by the end of

10 Important Contracting Questions Term of agreement - locked in? Hard end date or evergreen? Amendment - can agreement be unilaterally amended? Performance - who measures? Are target/metrics clearly defined? Access to data needed/available; do we have the required data infrastructure and sophistication? What are the reporting requirements, and can we meet them? What are the audit rights related to data used for measuring performance, and what is the level of burden associated with these audits? 10

11 Important Contracting Questions Payment obligations - clearly defined? Preliminary and final payment? Distributions to providers in network? If so, how determined? If downside risk, how will any deficit be paid? Reserve/security requirements? How will disputes be handled? 11

12 Value-based Contracting Remember that the primary goals of collaborative VBP agreements are to: Drive improvement in clinical quality Reduce costs/spending Improve health outcomes All decisions made in the negotiation of VBP agreements must make sure to keep these primary objectives in mind. 12

13 Questions? Basil H. Kim Associate