OHIO HOSPITAL ASSOCIATION 2015 Annual Meeting. Accountable Care Organizations Comprehensive Integration Strategy

Transcription

1 OHIO HOSPITAL ASSOCIATION 2015 Annual Meeting Accountable Care Organizations Comprehensive Integration Strategy

2 ACO Development Market Conditions Increasing Economic pressures Consumerism Regulatory scrutiny and demands Fee-for-value programs Consolidation Chronic disease rates Decreasing Reimbursement rates Fragmented care delivery approaches Fee-for-service only markets Typical physician employment/acquisition arrangements have to some extent simply been an economic burden shift, allowing physicians to avoid the changing reimbursement landscape. In addition to plans for partnership/affiliation, market conditions have primed providers to consider ACO s as a viable, long-term response. 2

3 Health System Southwestern nonprofit healthcare system Multiple hospitals; 3,000 employees Largely rural population 300 physicians on active medical staff employed and independent Highly successful independent physician practices in the area 3

4 What ACO Meant for System Urban health systems and ACOs were seeking to attract patients from service area. Without a network strategy, system risked having members of their medical staffs picked off by competitors who could deliver alternative third party contracts. It was difficult for system to negotiate and manage performance-based contracts with third parties unless it could demonstrate genuine physician buy-in. Physician integration had been given a high priority Employment: specialists and PCPs Independent Physician Alignment: the challenge 4

5 ACO: Independent Physician Drivers Alternative payment arrangements (P4P, bundled payments, shared savings, etc.) are difficult for physicians to manage. Physicians lack the capital, data and management expertise to succeed under these new arrangements. ACO participation presents a way for physicians to deliver better care and get paid for it. Fewer payors will be willing to contract individually if there are adequatelystaffed, fully functioning networks in the market. Physicians wanted opportunity for potentially higher reimbursement. 5

6 Foundation for Achieving Goals Joint contracting through ACO in order to align interests of system and physicians. Through joint contracting, system and physician goals would be aligned because both need to meet the requirements of payor contract in order to achieve better reimbursement alternatives (potential higher reimbursement, potential for shared savings). Providers who are not economically integrated (such as independent physicians) may not engage in single-signature third-party contracting unless they become clinically integrated. 6

7 Clinical Integration - Legal Definition Clinical Integration is an active and ongoing program to evaluate and modify practice patterns by the network s physician participants and create a high degree of interdependence and cooperation among the physicians to control costs and ensure quality. - Federal Trade Commission (FTC) 7

8 Clinical Integration: Creating Legal Compliance Joint negotiation of fees for services by competing healthcare providers could be justified either through (1) the sharing of significant financial risks among the providers or (2) the providers clinical integration. Key elements of clinical integration are: Development of evidence-based clinical practice guidelines, with high degree of physician involvement in development and implementation of guidelines. Selection of (and continued participation by) only those providers who are committed to compliance with the ACO s requirements, including practice guidelines. Measurement, evaluation and enforcement of provider performance and compliance with guidelines, including corrective action on noncompliance. Meaningful contributions by participating providers, including commitments of time, effort, data and money to ACO s development, implementation and enforcement of clinical guidelines. Dedicated electronic platform by which participating providers provide data relating to cost, utilization and quality of care, allowing efficient monitoring of performance. 8

9 Steering Committee Physician engagement in ACO is key Prior to investing heavily, Steering Committee formed to determine/validate physician interest Strategic Determination of Members: Community physician leaders PCPs: to confirm that PCP participation in ACO would be at a level to provide sufficient patient population Specialists: to confirm that prevalent high cost conditions could be treated Independent and employed: to begin collaboration process and assure that all felt represented Time commitment and efforts of Steering Committee members gave system comfort that ACO would have advocates in community when signing up physicians 9

10 Major Steering Committee and Work Group Decisions/Discussions Entity Structure Governance Clinical practice guidelines Participation Agreements IT/EMR Distribution Methodology Expectations for timeline and payor commitment MSSP vs. Commercial 10

11 Entity Structure Separate Legal Entity ACO to be separately organized LLC Formed as a wholly-owned subsidiary of System A membership organization Allows for multiple classes of members depending on participating providers Role of System The sponsor of the ACO; physicians did not want to make capital contributions System brings capital, HIT and administrative support In exchange, System will retain certain reserve powers (primarily tax exempt) but ACO will still be dominated by practicing physicians Reserve Powers include: Approval of major transactions (mergers, asset sales, etc.) Decisions related to actions which could affect tax-exempt status of System Many decisions will require System approval after Governing Board approval payor contracts, amendments to governing documents, budgets, strategic plans System must make sure ACO acts in accordance with mission of System to provide quality care and meet community needs 11

12 Governance Meaningful Physician Participation in Governance: Governing Board: Physician Board Members to have majority voting control (subject to reserve powers) Specific requirements for number of PCPs/Specialists/Employed/Independent Nomination process to include specific considerations: balance between employed and independent; geographic distribution of Board members; services and expertise needed to support ACO s success Committees: To include physician representatives to be responsible for establishing the measures for individual and group performance benchmarks, monitoring individual and group compliance with network s standards, administering corrective actions as necessary Reserve Powers: Significant dispute 12

13 Clinical Practice Guidelines Physician participation in selection of clinical practice guidelines and performance metrics Capitalize on physician expertise and experience Promote high degree of confidence among participating providers in the nature of the guidelines and confidence will promote adherence Selection guidelines based on an analysis of physician data to assess high-prevalence, high-cost and high-risk conditions that most affect the patient population Performance measures designed to minimize variation in care Initial performance and quality measures to focus on a limited set of metrics which evidence suggests actually enhance quality and improve efficiency such initial focus would allow providers to understand what is expected and ACO to determine whether progress has been made 13

14 Participation Agreements Providers to be chosen for inclusion in ACO on a selective basis, based in part on willingness and ability to participate in ACO and providers likely value to patient population and ACO goals (based on expertise and specialty) Each participating provider is required to enter into a Participating Provider Agreement with the ACO Terms: Contracting with physician groups, rather than individual physicians, is key best for continuity Nonexclusive: Participating provider is free to contract independent of ACO with any payor that chooses not to contract with the ACO; participating provider can participate in other networks as well but if a payor requires exclusivity as a term of contract with ACO, participating provider must adhere to that contract and not participate in another contract with that payor. Participating provider agrees to provide covered services to members in accordance with policies and procedures of payors and ACO including those relating to credentialing, quality, record keeping and reports, member grievances 14

15 Participating providers will seek to facilitate in-network referrals this will increase efficiencies of network and further goal of coordination of care Participating providers must participate in/adhere to the ACO s clinical integration program *Participating providers must participate in all payor agreements entered into by the ACO Participating providers will have no right to opt out of individual plan agreements based on fee schedule or otherwise Participating providers must agree to ongoing contributions of time and effort (e.g. service on committees) Participating providers must acquire and maintain necessary computer equipment and software to connect with ACO s electronic platform Participating providers must make data available for developing, monitoring and enforcing clinical guidelines 15

16 IT/EMR Information Sharing ACO must establish a dedicated system, preferably electronic, by which participating providers in the ACO exchange relevant patient medical information, such as clinical notes, test results and prescriptions Critical to care coordination helps providers use clinical care guidelines in evaluating and treating patients and facilitates physician-to-physician communication Provides transparency and visibility into the participating providers actual practice patterns and accomplishments Critical to evaluation of provider performance and compliance with ACO s clinical practice guidelines Necessary to facilitate data collection, outcomes measurement and performance reporting required by payors Electronic systems pose cost issues for physicians and other providers 16

17 Most potential participants had already implemented EMR Systems - even though interoperable, structured information was not always transferred For best operation, system desired to provide EMR to participants, even those who currently possessed EMR systems Stark/AKS EMR Donation Exceptions HIPAA Donation of software or IT and training services necessary and used predominantly as EHR system Donate up to 85% Recipient cannot possess items or services substantially equivalent to those provided by donor Eligibility for donation not based on volume or value of referrals require ACO participation? ACO acts as business associate of each physician/covered entity need Business Associate Agreement ACO participants need to access, analyze and share PHI to further ACO s purposes. - Organized Healthcare Arrangement 17

18 Distribution Methodology Performance-based contracts with payors typically to involve payment directly to ACO, with distribution by ACO to providers Distribution % distributed to System as return on initial and ongoing investment in ACO(?) % retained by ACO for ongoing administrative expenses Remainder distributed to providers (including Hospital) Board must determine distribution methodology equal share, performance-based; ACO may also agree with payor on provider distribution methodology to further align incentives Distribution % among PCPs/Specialist point of contention 18

19 Expectations 19

20 Commercial ACO vs. MSSP Goals are the same: improve care delivery, improve heath of population and reduce growth in costs MSSP: Less Flexibility Based solely on Medicare beneficiaries Must agree to participate for 3 years PCP exclusivity Cannot participate if have an ACO participant that participates in certain other Medicare initiatives involving shared savings (Independence at Home, Pioneer ACO model) Must meet quality and performance benchmarks determined by CMS Public reporting requirements Payment based solely on shared savings Can participate in one-sided risk only for initial agreement period Subject to CMS monitoring 20

21 Commercial ACO vs. MSSP Commercial: Flexibility Negotiate quality metrics with payor to meet unique skills and needs of providers and patient populations Focus on the most prevalent chronic conditions of patient population Flexibility in pay-for-performance arrangements 21

22 Fraud and Abuse Laws Premised on fee for service and the incentives to increase utilization Inhibit arrangements that are beneficial to incentivizing quality, care coordination, cost reduction Stark Law (42 U.S.C. 1395nn) Prohibits physicians from making referrals for certain designated health services payable by Federal Health Care Programs to an entity with which physician or immediate family member has financial relationship Penalties include denial of payment, refund of overpayments, exclusion, civil penalties ranging from $15,000 per each service to $100,000 per each circumvention scheme Enforcement authority in CMS and OIG 22

23 Anti-Kickback Statute (42 U.S.C. 1320a-7b) Prohibits remuneration paid purposefully to induce or reward referrals of items or services payable by Federal Health Care Programs Criminal penalties of maximum fine of $25,000, imprisonment up to 5 years, or both, and automatic exclusion and civil monetary penalties Enforcement authority in OIG Civil Monetary Penalties Law (42 U.S.C. 1320a-7a) Prohibits: payments to physicians to induce reduction or limitation of services; remuneration to beneficiary to influence provider selection Penalties include treble damages of amount improperly claimed and varying penalty amounts per violation (from $10,000 to $50,000) Enforcement authority in OIG 23

24 Stark Cannot be ignored simply because an ACO Potential indirect compensation arrangement between Hospital and physicians Hospital ACO Referrals Funds might be calculated or used in downstream arrangements which influence referrals of Federal program patients Physicians CMS has stated that many commercial shared savings arrangements can be structured to fit within Stark exceptions 24

25 Review all compensation arrangements between ACO and physicians Indirect Compensation Arrangement referring physician receives aggregate compensation from ACO that varies with, or takes into account, the volume or value of referrals (DHS) or other business generated by the physician for the Hospital Hospital is part of the ACO contracts with Hospital Employee Health Plan or other payors could include savings or incentives related to Hospital services based on referrals from physicians Aggregate compensation may vary based on volume/value Applicable Exceptions Employment Exception/Personal Services Exception/FMV Exception: Fair Market Value: Compensation received by Physician must be FMV for services provided by Physician Volume or Value : - Straightforward test that compensation arrangements should be at FMV for the work or service performed not inflated to compensate for the physician s ability to generate other revenues. (66 FR 856, 877) - Compensation must not be determined in any manner that takes into account the volume or value of referrals (DHS) or other business generated by Physician for Hospital 25

26 Indirect Compensation Arrangements Exception Exception looks at individual payments without aggregating them (72 FR 51012, 51029) relevant inquiry is whether the individual payments are FMV not taking into account the volume or value of referrals and do not change after inception fair market value and not inflated to compensate for the generation of business. (69 FR 16054, 16069) Similar analysis as direct compensation arrangements FMV/Volume-Value Can amount of individual payments vary from period to period? Shared Savings Example: Individual distribution requirements based on performance metric achievements and reviewed for FMV; potential cap on distribution amount Risk-Sharing Exception: Compensation pursuant to a risk-sharing arrangement (withholds, bonuses, risk pools) between an MCO and a physician (either directly or through a subcontractor) for services provided to enrollees of a health plan Exception intended to be very broad MCO not defined to create maximum flexibility Meant to cover all risk-sharing compensation paid to physicians by an entity that is downstream of any type of health plan or insurance company No quantification of financial risk required physician assumes some risk for the cost of services 26

27 Anti-Kickback Statute Although intent-based, implicated if even one purpose of a payment is to induce a prohibited referral - Purposes of most ACOs are legitimate - Careful in business documentation not to reference development of ACO in order to maintain physician base against competitors - Try to meet as many requirements of applicable safe harbors as possible Civil Monetary Penalties Statute Incentives must not induce a physician to reduce or limit items or services provided to Medicare or Medicaid beneficiaries. Difficult for physicians to understand goal of improved efficiency and costeffectiveness is more easily verifiable if the results of the efficiency (i.e. cost savings) are part of the metric. Potential cap on shared savings. Compensation related to specific actions and changes in behavior of physicians (e.g., implementation of procedures/guidelines) that result in and have been recognized as improving patient care. The focus of the metric should be on process, not outcome. E.g., the metric should not state: reduce number of procedures performed or reduce length of stay. 27

28 Annually review data related to the metrics to confirm that the incentive arrangement is not negatively impacting patient care. Physicians should retain ultimate discretion in care-related decision-making not limited in their ranges of treatment options or modalities as a result of the incentive arrangement. Other Issues Remuneration related to Hospital-provided resources for care coordination, clinical integration and practice transformation Hospital-provided capital to ACO (including funds and human capital) 28

29 MSSP Waivers The fact that CMS and OIG determined it necessary to establish waivers to carry out the Shared Savings Program highlights need to be careful with Commercial ACOs Pre-Participation Waiver (Stark, AKS and Gainsharing CMP) ACO-related start-up arrangements in anticipation of MSSP participation Participation Waiver (Stark, AKS and Gainsharing CMP) applies broadly to ACOrelated arrangements Shared Savings Distributions Waiver (Stark, AKS and Gainsharing CMP) applies to distributions and uses of shared savings payments earned under MSSP Patient Incentive Waiver (AKS, Beneficiary Inducements CMP) applies to medically related incentives offered by ACOs under MSSP to beneficiaries to encourage preventive care and compliance with treatment regimes 29

30 Key Element (Pre-Participation Waiver, Participation Waiver, Shared Savings Distributions Waiver, Stark Waiver): Reasonably Related to the Purposes of the Shared Savings Program one or more of: Promoting accountability for the quality, cost and overall care for a Medicare patient population Managing and coordinating care for Medicare fee-for-service beneficiaries through an ACO Encouraging investment in infrastructure and redesigned care processes for high quality and efficient service delivery for patients, including Medicare beneficiaries Purposes can involve promoting evidence-based medicine and patient engagement; coordinating care; meeting quality performance standards Arrangements that involve care for non-medicare patients as well as Medicare beneficiaries are eligible for the waiver 30

31 Pre-Participation Waiver Arrangement undertaken with good faith intent to form an MSSP ACO Applies to arrangements within the ACO (between or among ACO, ACO participants, ACO providers/suppliers) and ACO-related arrangements with outside providers and suppliers hospitals, specialists, post-acute care facilities (help coordinate and manage care) (some participation exclusions apply) Waiver period begins 1 year preceding an application due date and generally ends on start date of Participation Agreement Infrastructure creation; clinical management systems; hiring staff; EHR systems; consultant and professional support; incentives to attract PCPs; capital investments 31

32 Participation Waiver Applies to arrangements within the ACO (between or among ACO, ACO participants, ACO providers/suppliers) and ACO-related arrangements with outside providers and suppliers hospitals, specialists, post-acute care facilities (help coordinate and manage care) Includes start-up arrangements Begins on start date of Participation Agreement and generally ends 6 months after expiration/termination CMS has specifically stated that nothing precludes arrangements downstream from commercial plans from qualifying for the Waiver Waiver does not turn on source of the funds for the arrangement 32

33 Shared Savings Distributions Waiver Applies only to shared savings earned under MSSP not to commercial Payments of shared savings to a physician must not knowingly be made to induce the reduction or limitation of medically necessary items or services Can be used to pay parties outside ACO if payments are reasonably related to purposes of MSSP Applies to distributions/uses of shared savings even after expiration of Participation Agreement Shared Savings distributions can be structured to fit under other waivers 33

34 Waiver for Patient Incentives Limited to items or services provided by an ACO, its ACO participants or its ACO providers/suppliers to beneficiaries for free or below FMV Does not apply to items or services given by manufacturers or other vendors to beneficiaries or ACO Items or services must be: In-kind (not financial e.g. waiver of co-pay) Reasonably connected to medical care of beneficiaries; and Preventive care items or services or advance one or more of (i) adherence to a treatment regime, (ii) adherence to a drug regime; (iii) adherence to a follow-up care plan, (iv) management of a chronic disease or condition Blood pressure cuffs for hypersensitive patients, not beauty products or theatre tickets Begins on start date of Participation Agreement and generally ends on expiration/termination of Participation Agreement provided beneficiary may keep items received and receive remainder of any service initiated during waiver period 34

35 Commercial MSSP Must have enough PCPs who can participate exclusively in the System s MSSP ACO Commercial ACO Participation Agreements should include language either: Requiring participants to sign an Addendum in the event ACO (with Governing Board approval) determines to participate in MSSP (unless Participant is excluded due to participation in another MSSP ACO) Noting that ACO will give Participant the option to continue to participate solely in commercial activities or sign Addendum to participate in both commercial and MSSP Addendum would include any requirements of MSSP for MSSP participation (Operating Agreement may also need to be amended) MSSP Regulations contain specific language which must be included in Participation Agreements, most of which will likely not be objectionable In drafting initial ACO Operating Agreement and Participation Agreements, parties should seek to include as many MSSP provisions as possible to ease the transition process 35

36 Other Legal Considerations State fee splitting and fraud and abuse laws State insurance laws risk based contracts Risk Management impact on care Tax exemption Certain states have implemented ACO regulations which provide waivers 36

37 ACO development and relationships developed with physicians permeates future decisions and strategy Physician understanding of changing payor landscape and need to collaborate particularly for employed physicians with current compensation plans based on productivity more open to new compensation models going forward BPCI Ease of implementation (data sharing mechanisms and coordination plans already in place); physician understanding of need and purpose; physician desire to participate; utilize ACO as BPCI Entity for administration ASC No conversion to HOPD (goal of cost reduction); ACO facility selection criteria was considered (can t simply force Hospital-owned facility on ACO selection/participation committee) SNF Care Coordination Services utilize MSSP waiver for free services provided by SNF Cost-Savings Compensation Program run through ACO utilize MSSP waivers 37

38 Adam D. Colvin Squire Patton Boggs (US) LLP 221 E. Fourth Street Suite 2900 Cincinnati, Ohio Adam Colvin focuses his practice on regulatory and transactional matters in healthcare, including fraud and abuse issues, the Stark Law, ACOs, clinically integrated networks, hospital-physician alignment and integration, joint ventures, purchase and sale of physician practices, employment and recruitment agreements, establishment of ambulatory surgery centers, imaging center and other ancillary service providers, managed care contracting and general business matters. A member of the American Health Lawyers Association, Adam has been named one of the Best Lawyers in America in Healthcare and recognized as an Ohio Rising Star by Law & Politics. 38