Medical Group Development, PHOs, MSOs, Nonprofit Medical Foundations and Fully Integrated Delivery Systems

Transcription

1 Medical Group Development, PHOs, MSOs, Nonprofit Medical Foundations and Fully Integrated Delivery Systems Medical Group Formation Medical Group Foundation Physician Hospital Organizations (PHOs) Management Services Organizations Nonprofit Medical Foundations Fully Integrated Delivery Systems Independent Practice Associations Nonprofit For profit Large multispecialty (1980s style) Primary care based (1990s style) Specialty care based (emerging) Clinics Without Walls Sharing of greater economic risks Practices may be transferred MDs remain in separate locations Difficult to manage care and expenses Often, bad-mouthed Integrated Medical Groups Share assets and liabilities May be primary care based (define primary care physician) May be multi-specialty Should have good mix of primary care (2/3) and specialty MDs (1/3) Can serve as a good base for managed care Start with a Medical Group Form one, affiliate with one, or buy one Medical Group may need to be MD contracting entity Most initial stages of integration, e.g., PHO, MSO assume a medical group

2 Even a nonprofit medical foundation in corporate practice states requires one Actually, the physicians are the FOCUS PHYSICIAN HOSPITAL ORGANIZATION (PHO) Primarily a managed care contracting vehicle Contracts on behalf of Physicians and a hospital May provide billing and management information system services Develops Utilization Review (UR) and Quality Assurance (QA) Aligns physician and hospital incentives Facilitates the management of care MANAGEMENT SERVICES ORGANIZATION Generally, at least provides the services of a PHO May provide additional services such as: Turnkey MSO Legal Issues Purchase of equipment and supplies (Management Service Bureau activities) Management of physician offices Employment of nonprofessional and professional staff (but, note: incident to regulations) Leasing of equipment and office space MSO Models Must not be a sham; should be sufficiently capitalized, with true business purposes. Generally, not a provider or supplier of services for Medicare purposes. Service Agreements with physicians may be closely scrutinized. Transfer of physician assets to MSO must be fair value; cab generally only include hard assets and soft assets which can be owned by nonphysicians. Medicare fraud and abuse laws Medicare reimbursement Nonprofit taxation Stark II, anti-referral Antitrust Corporate practice of medicine

3 Freestanding MSO Hospital Affiliated MSO Physician Affiliated MSO Joint Venture (e.g., Hospital/Physician) MSO Managed Care Organization Freestanding MSO Hospital Affiliated MSO Physician Affiliated MSO Joint Venture MSO MCO Affiliated MSO Nonprofit Medical Foundations Nonprofit organizations employing or contracting with physicians and/or physician groups to provide medical services. Alternative too Hospitals employing physicians. Foundation operations can be kept separate from Hospital or MCO. May serve as the basis for an Accountable Health Plan (AHP). Activities of a Foundation Operation of outpatient clinics. Furnishing of equipment and supplies for the provisions of medical services. Employment of non-physician individuals to operate facilities. Contracting with managed care plans. Physician practice activities, such as billing, collections, procurement of insurance, UR, QA, and administrative and general services. Under health care reform, serve as the basis for the AHP. California Health and Safety Code 1206(I) Foundation Requirements Nonprofit IRS 501(c)(3) entity. Conducts medical research and health education. Provides healthcare to its patients through a group of 40 or more physicians and surgeons. Physicians and surgeons are independent contractors not employees.

4 Physicians and surgeons must represent not less than 10 board certified specialties. Not less than 2/3 of the physicians and surgeons must practice on a full-time basis at clinic. Nonprofit Medical Foundation Model (Example) Advantages of a Medical Foundation Can expand provider networks. True form of physician practice acquisition. Advanced step forward an integrated delivery system. Greater security for parties. May achieve greater economies of scale and efficiencies. Advantages of a Medical Foundation Raises legal concerns - Medicare fraud and abuse, nonprofit taxation, antitrust, Stark, corporate practice. Less autonomy for physicians. An independent foundation may not be controllable. Presents a myriad of Medicare provider number and reimbursement concerns. Important Factors In Obtaining and Maintaining Tax Exempt Status Open emergency department. Open medical staff. Accessible to Medicare and Medicaid patients. Physicians cannot control the foundation. Limitation on physicians' ability to compete should be directed to existing managed care arrangements for a limited period of time. Assets must be acquired for fair market value. Should probably conduct medical research and education. Note OIG December 22, 1992 letter. Valuation Issues Fair market value based on arms's length basis. Establishes uniform terms for acquiring all physicians practices. Appraisals are necessary. Consider OIG concerns with respect to: goodwill value of ongoing business covenants not to compete

5 exclusive dealing arrangements patient lists patient records Integrated Delivery Systems An organization, or group of affiliated organizations, which provides physician and hospital services to patients. More integrated systems might provide: home health hospice SNF preventive medicine mental health rehabilitation long term care May include a payment component Other Names for Integrated Delivery Systems Integrated Healthcare Systems Integrated Healthcare Delivery Systems Integrated Healthcare Organizations Physician Hospital Organizations (confusing) Whatever Name Most Likely Will Assist You In Accomplishing Your Objective Advantage of an IDS Facilitates the expansion of provider networks through physician recruitment and retention. Makes a possible the development of a unified strategic plan and the broadening of services offered. Allocation of capital can be based on maximum benefit for the community. Offers an attractive option for managed care plans. Can maximize physician and hospital incentives and align them to deliver the best quality medicine to patients in the most effective manner. Excellent vehicle for managing care. Disadvantages of an IDS May strain some physician relationships. Physician compensation issues are complicated. Myriad of legal issues and provider number considerations.

6 Single Organization with MCO Single Organization without MCO Parent Holding Company Model Hospital Controlled System Physician Controlled System MCO Controlled System Steps to Forming an IDS Know hat you are creating: If it is a PHO, do you have a medical group? In what form? Will a managed care plan contract with it? Understand the models and what they are, otherwise you cannot develop the variations once you have direction. Have well-defined goals and objectives. Parties should be equal partners in planning. Be inclusive, not exclusive in planning, but exclusive not inclusive, in who is managing care. Evidence participation by some document - Preliminary Approval, Letter of Intent, Affiliation Agreement. Develop a unified strategic plan. Establish committees: Organizational Utilization Review (UR) and Quality Assurance (QA) Physician Staffing and Productivity Physician Compensation MIS Managed Care Contracting Miscellaneous Plan for management, try to minimize politics.

7 Do not make control the issue. Develop a facilities plan, emphasizing efficiencies and economies of scale. Develop finance plans. Develop a services plan. Do no underemphasize MIS needs and time investment. Develop a coordinated marketing strategy. Determine overall administrative staff needs. Develop a fair compensation system, but be prepared to revise it frequently. Align incentives. Minimize legal risks. Avoid Practical Mistakes Do not rush. Do not proceed with other parties. Do not be secretive. Involve all essential entities. Do no leave non-participants out forever, except... Do not create the impression that the relationship is exclusive. Do not focus on fear. Do not focus on control. Do not fail to create true integration. Do not make the mistake of buying nothing. Do not favor political balance over substantive competence. Do not view the system as a project, but as a direction for the parties. Do not underestimate the organizational and capitalization costs. Do not confuse the process with the goals. Do not model yourself to death. Agreements and Others Documents Do a business plan. Obtain appraisals. Draft an organizational plant. Draft an affiliation agreement or letter or intent. Draft articles and bylaws for the organizations. Prepare the application for tax-exempt status, if any. Develop MSO Agreements, if any. Develop Professional Services Agreements, if any. Draft Asset Purchase Agreements.

8 Prepare financing documents, if any. Prepare and file provider number application. Assign contracts. Solve the MSO licensing and regulatory issues. And then, proceed to Phase II: