presents accountable care organizations after healthcare...
TRANSCRIPT
presents
Accountable Care Organizations After Healthcare Reform
presents
Structuring ACOs That Avoid Violations of Antitrust, Fraud, Patient Privacy and Stark Laws
A Live 90-Minute Teleconference/Webinar with Interactive Q&A
Today's panel features:J. Peter Rich, Partner, McDermott Will & Emery, Los Angeles
C. Frederick Geilfuss, II, Partner, Foley & Lardner LLP, Milwaukee, Wis.D id L Kl t k P t M D tt Will & E LLP L A l
A Live 90-Minute Teleconference/Webinar with Interactive Q&A
David L. Klatsky, Partner, McDermott Will & Emery LLP, Los Angeles
Wednesday, July 7, 2010
The conference begins at:The conference begins at:1 pm Eastern12 pm Central
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Accountable Care Organizations under the PPACA:PPACA:Delivery System Reform
J. Peter Rich McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551-9310
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Today’s Agenda
Health Care Delivery Reform Through Accountable Care Organizations (“ACOs”) under the Patient Protection and Affordable Care Act (“PPACA”)Affordable Care Act ( PPACA )
ACO Organizational Issues
ACO Legal Issues ACO Legal Issues
“If you build it they will come ”“If you build it, they will come.” -- Field of Dreams
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What is an Accountable Care Organization (“ACO”)?( ACO )?
An ACO is an organization of physicians and other health care providersAn ACO is an organization of physicians and other health care providers accountable for the overall care of traditional fee-for-service Medicare beneficiaries who are assigned by CMS to an ACO
ACOs are to be financially incentivized by CMS to provide higher quality ACOs are to be financially incentivized by CMS to provide higher quality care and overall cost savings
By January 1, 2012, the Secretary of HHS must establish a shared i hsavings program that:
– promotes accountability for a patient population;
– coordinates items and services under Medicare parts A and B; andcoordinates items and services under Medicare parts A and B; and
– and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery
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What is the Pediatric Accountable Care Organization Demonstration Project?Organization Demonstration Project?
Allows qualified pediatric health care providers that agree toAllows qualified pediatric health care providers that agree to be accountable for quality, cost, and overall care of Medicaid and SCHIP beneficiaries to receive payments as ACOs
d M di id d SCHIPunder Medicaid and SCHIP
Begins on January 1, 2012, and ends on December 31, 2016
Individual states must submit an application to the Secretary of HHS in order to participate; pediatric ACOs then contract with their approved statewith their approved state
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CMS’ Open Door Forum – June 24, 2010
The new Center for Medicare and Medicaid Innovation (“CMMI”) isThe new Center for Medicare and Medicaid Innovation ( CMMI ) is developing new funding mechanisms to enhance quality and achieve cost savings through ACOs
CMS stated during its ACO Open Door Forum on June 24 2010 that it CMS stated during its ACO Open Door Forum on June 24, 2010, that it plans to propose ACO regulations in the fall of 2010
An audio recording and transcript of the CMS Open Door Forum: M di Sh d S i P A bl C O i iMedicare Shared Savings Program: Accountable Care Organizations (ACOs) will be posted to the Special Open Door Forum website at, http://www.cms.hhs.gov/OpenDoorForums/05_ODF_SpecialODF.asp and will be accessible for downloading beginning on or aroundand will be accessible for downloading beginning on or around Wednesday, July 7, 2010
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ACOs in a Nutshell
Groups of providers would work together to manage andGroups of providers would work together to manage and coordinate care for Medicare fee-for-service beneficiaries
Those ACOs that meet quality performance standards will be q y peligible to receive additional Medicare payments based on risk-adjusted shared savings against historical benchmarks
Locally focused on quality and cost across the continuum of care
I t d lti di i li di ti Inter- and multi-disciplinary care coordination
Built on collaboration and shared responsibility/accountability
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ACOs in a Nutshell (Cont’d)
Enhanced ability to capture and report data
Not limited to a single group of providers (e.g., contemplates f ll f id ) i l i d f (a full range of providers) or single episode of care (e.g.,
contemplates bundled case rate payments covering the care of a patient’s entire diagnosis, sometimes called Episode p g pTreatment Groupings or “ETGs”)
Migration from volume/intensity of care to efficiency and liquality
Financial Model: Shared Savings
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Key Elements of an Effective ACO
ACOs must be aligned with “high value” networks of PCPs, specialists, g g , p ,hospitals, and ancillary providers focused on enhanced outcomes and cost efficiency
Explicit care integration and coordination mechanismsp g
Payment arrangements with governmental and commercial payors that reward cost-effective, high-value (not high-volume) health care and improved outcomesp
Patient-centered “medical homes” that act as a tool to better deliver primary care and coordinate care
Health information infrastructure to enable community wide care Health information infrastructure to enable community-wide care assessment and coordination, including functional integrated electronic health records (“EHR”)
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ACOs – What They Are and What They Are NotAre Not
ACOs are organizational structures to incubate, facilitate, andACOs are organizational structures to incubate, facilitate, and implement innovative quality care coordination and incentive payment arrangements
ACO t i d t f ll i l ib d ACOs are not required to follow a single prescribed organizational form and are not necessarily limited to Medicare
“Clinical integration” is at least as important as “Corporate Integration”
ACOs require a comprehensive information infrastructure to enable quality care assessment and coordination, including state-of-the-art integrated electronic health records (“EHR”)
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g ( )
PHOs vs. ACOs
PHOs ACOsPHOs Insurance Risk
Panel of patients
S f Sh f R
ACOs Performance Risk Population of patients
R ti l All ti f R Scrum for Share of Revenue
Charge Based
Managed Care Leverage
Rational Allocation of Revenue Value Based Care Coordination Pay for quality and greater cost savings Pay for quantity (covered lives) and cost
savings
Shared hospital physician governance
Intervention/episode of care focused
Pay for quality and greater cost savings
Physician leadership – shared governance not required but advised
Intervention/episode of care-focused
Financial and some clinical Integration as necessary to achieve antitrust compliance
Prevention-focused and patient centric care Greater clinical and financial integration to
achieve efficiencies and quality improvement as well as antitrust
li
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compliance
Integration Is More Than Collaboration
BenchmarkingBenchmarking
Monitoring, Reporting, Counseling
Performance Improvement Tools
Technology Infrastructure (e.g. EHR)
Accountability of Participating Providers and Appropriate Sanctions (Fi i l d N Fi i l) f b d d f(Financial and Non-Financial) for substandard performance
Performance-Based Provider Compensation
Productivity– Productivity
– Quality
– Improvement
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Requirements for ACOs
Must have defined processes to promote evidence-based medicine, report on quality and cost measures, and coordinate care
Must enter at least a 3-year agreement with HHS and have at least 5,000Must enter at least a 3 year agreement with HHS and have at least 5,000 Medicare beneficiaries, without engaging in risk selection
Must demonstrate that it meets the defined criteria for “patient-centeredness”centeredness
– Patient and caregiver assessments
– Use of individualized care plansUse of individualized care plans
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Requirements for ACOs (Cont’d)
Must be accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to ACO t tl t i ti b fi i iACO; yet apparently no restrictions on beneficiaries receiving non-emergency care from non-ACO providers!
If the ACO is to be accountable for the overall care of a If the ACO is to be accountable for the overall care of a defined population of Medicare beneficiaries, how can the ACO be successful if its assigned Medicare beneficiaries
“l k d i ” h ACO id ?are not “locked-in” to the ACO providers?
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Requirements for ACOs (Cont’d)
Formal legal structure permitting receipt and distribution of any shared savings and quality bonuses to participating providersproviders
Sufficient primary care physicians for assigned panel patients (to be determined by CMS)
As a practical matter, each PCP should have an exclusive contract with only one ACO
Specialists generally need not be restricted to one ACO (though perhaps exceptions for cardiologists, oncologists, or other “quasi-PCP-gate-keeper” specialists?)
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ACOs are about Quality & Cost
ACO d t h th bilit t t d t d t t ACOs need to have the ability to capture and report data, at the group and individual provider level, relating to measures necessary to evaluate the quality of care furnished To earn incentive payments, the ACO will be expected to
meet Medicare performance standards measuring the quality of care furnished ACOs will be expected to improve the quality and cost of care
furnished over time by meeting continually enhancing quality and decreasing costs g
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ACOs are about Quality & Cost (Cont’d)
In determining the quality of care furnished by an ACO, CMS will measure:– clinical processes and outcomesclinical processes and outcomes– patient and caregiver perspectives on care– utilization and costs (such as rates of admissions andutilization and costs (such as rates of admissions and
readmissions) against historical benchmarks [Insert graph?]
If already cost effective will providers be financially If already cost-effective, will providers be financially penalized by being held to a higher benchmark standard?
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ACO Threshold Decisions
Providers should not wait for new Medicare ACO regulationsProviders should not wait for new Medicare ACO regulations to become effective
– Should immediately begin converting existing managed y g g g gcare integrated delivery systems (e.g., PHOs, contractual Hospital/Medical Group/IPA risk-sharing affiliations) into ACOsACOs
– HMOs and Insurers/PPOs, including Self-funded Employers/Union Trust Funds will want to contract withEmployers/Union Trust Funds, will want to contract with ACOs, particularly due to new medical-loss ratio (“MLR”) requirements under the PPACA
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Significant Unanswered Questions About ACOsACOs
What is the minimum organizational effort that is needed to have a successful ACO effort?
How many PCPs, medical specialists, surgical specialists, hospitals, and other providers need to participate in an ACO to make it effective?
Will specialists and even PCPs be willing to participate in ACOs given increasingly low levels of Medicare reimbursement and uncertainty of “shared savings” bonuses? How will CMS ensure that ACOs have the ability to provide real-time data related to the ACO program?y p CO p g
What level of savings below historical Medicare costs will trigger eligibility for bonus payments?
How will shared savings/compensation be easily and quickly allocatedHow will shared savings/compensation be easily and quickly allocated and paid by the ACO to its participating providers?
How can broad participation in ACOs be achieved in markets where one hospital/system has significantly more market power than other
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p y g y pproviders? Will weaker providers be left out in the cold?
Significant Unanswered Questions About ACOs (Cont’d)ACOs (Cont d)
Will CMS risk-adjust benchmark reporting to avoidWill CMS risk adjust benchmark reporting to avoid penalizing ACOs that treat very ill patients?
Can Medicare beneficiaries seek care from providers t id th ACO t k?outside the ACO network?
Will beneficiaries retain freedom of choice in selecting their individual physicians in an ACO?individual physicians in an ACO?
How will beneficiaries be assigned to ACO (e.g., prospective assignment)?
How will CMS ensure that ACOs have the ability to provide real-time data related to the ACO program?
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Accountable Care Organizations:Accountable Care Organizations:Structural Models
David Klatsky McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551 9379
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Possible Comprehensive Health System ACO Legal Structure(note that an ACO in theory may involve just a single physician group rather than(note that an ACO, in theory, may involve just a single physician group rather than a comprehensive hospital-physician integrated health system legal structure)
Accountable CareOrganizationOrganization
System Physician Organization
HospitalIPA
Foundation Model
Captive Group Practice Other Employed
S Ph i iClinic/FQHC
MedicalHome
Private Ph i i
System PhysiciansQ
Physicians
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Types of ACO Models
Highly Integrated Modelsg y g– Hospital Employment Model
– Tax Exempt Affiliated Practice Model
F d i M d l– Foundation Model
Partially Integrated Models– Joint-Ventured Physician Organizationy g
– PHO Model
Contractual Affiliation Models– Affiliation Model
– Management Services Model
– Service Line Co-Management Model
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g
Highly Integrated Models – Hospital Employment ModelEmployment Model
SYSTEM PARENT
HOSPITAL ACO PayorsOS Payors
MEDICAL DIVISION(Dept. of hospital)
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hospital)
Highly Integrated Models – Tax Exempt Affiliated Practice ModelAffiliated Practice Model
SYSTEM PARENTSYSTEM PARENT
HOSPITAL501(C)(3)
MEDICAL GROUP501(C)(3)ACO
HOSPITAL501(C)(3)
MEDICAL GROUP501(C)(3)ACO
PayorsPayors
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Highly Integrated Models – Medical Foundation ModelFoundation Model
SYSTEMSYSTEMSYSTEM PARENTSYSTEM PARENT
HOSPITAL MEDICAL FOUNDATIONACOHOSPITAL MEDICAL FOUNDATIONACO501(C)(3) 501(C)(3)
GROUP PRACTICE
501(C)(3) 501(C)(3)
GROUP PRACTICE
Payors
GROUP PRACTICE(For Profit)
Payors
GROUP PRACTICE(For Profit)
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Partially Integrated Models – Joint-Ventured Physician OrganizationPhysician Organization
SYSTEMSYSTEMSYSTEM PARENTSYSTEM PARENT
ACO HOSPITAL501( )(3)
PAYORS PHYSICIANSACO HOSPITAL501( )(3)
PAYORS PHYSICIANS501(c)(3)501(c)(3)
GROUP PRACTICE (For Profit)
GROUP PRACTICE (For Profit)
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Partially Integrated Models – PHO Model
SYSTEM PARENTSYSTEM PARENT
HOSPITAL501(c)(3)
MEDICAL GROUP(F P fit)
HOSPITAL501(c)(3)
MEDICAL GROUP(F P fit)501(c)(3) (For-Profit)501(c)(3) (For-Profit)
ACO CONTRACTING ENTITY(For-Profit)
ACO CONTRACTING ENTITY(For-Profit)
PAYORSPAYORS
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Contractual Affiliation Models – Affiliation ModelModel
SYSTEM PARENTSYSTEM PARENT
HOSPITAL501(c)(3)
ACO HOSPITAL501(c)(3)
ACO501(c)(3)501(c)(3)
IPAALLIEDPROVIDERS
MEDICAL GROUP
(For-Profit)IPAALLIED
PROVIDERS
MEDICAL GROUP
(For-Profit)IPAALLIED
PROVIDERS
MEDICAL GROUP
(For-Profit)
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Contractual Affiliation Models –Management Services ModelManagement Services Model
Provides comprehensive management services to a physician organization in exchange for a fair market value p y g gmanagement fee
The physician practice retains responsibility for and control over practice operations, including financial risk
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Contractual Affiliation Models – Service Line Co-Management Contract ModelCo Management Contract Model
SpecialistsSpecialists SpecialistsSpecialists Specialists p
NewcoNewco Co-Management Fee
Specialists p
NewcoNewco Co-Management FeeHospitalHospital
Newco Co-Management
Co.Co-Management
Co.
Co-Management FeeHospitalHospital
Newco Co-Management
Co.Co-Management
Co.
Co-Management Fee
Service LineLeadership Council orOperating Committee
Service LineLeadership Council orOperating Committee
Appoint MembersAppoint Members Service LineLeadership Council orOperating Committee
Service LineLeadership Council orOperating Committee
Appoint MembersAppoint Members
QualityCommittee
FinanceCommittee
OperationsCommittee
Technology & Products
QualityCommittee
FinanceCommittee
OperationsCommittee
Technology & Products
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STRAFFORD PUBLICATIONSPUBLICATIONS
July 7, 2010 Presentation on Accountable Care OrganizationsAccountable Care Organizations
C. Frederick GeilfussFoley & Lardner LLP
777 East Wisconsin Avenue777 East Wisconsin AvenueMilwaukee, WI 53202
©Foley & Lardner LLP
34
©Foley & Lardner, LLP
ACO REIMBURSEMENT REFORMACO REIMBURSEMENT REFORM AND IMPLICATIONS
C. Frederick GeilfussC ede c Ge ussFoley & Lardner LLP
Milwaukee, [email protected]
414 297 5650
35
414.297.5650
ACOs: Reimbursement ReformACOs: Reimbursement Reform
• ACOs to be Effective Will RequireACOs to be Effective Will Require Changes in Reimbursement
• ACOs Are Designed to Move From Fee• ACOs Are Designed to Move From Fee-For-Service Payment of Physicians and Place Risk and Accountability onPlace Risk and Accountability on Providers (Mostly Physicians)
36
Reimbursement Reform ( i d)(continued)
• Reimbursement Designed to RewardReimbursement Designed to Reward Efficient Care/Good Outcomes and/or Penalize Failures to Deliver EitherPenalize Failures to Deliver Either
• Reimbursement Will Drive Provider BehaviorBehavior
37
Reimbursement Reform ( i d)(continued)
• Today, Fee-For-Service Payment of Physicians y y y(There is No Real Management of Medicare Physician Services)
• Moving to: – Shared Savings Programs (Required By 1/1/12)
B dl d P t /C R t– Bundled Payments/Case Rates – Global Payments/Partial Cap
38
Shared Savings ProgramsShared Savings Programs• Logical First Step Transition: UpsideLogical First Step Transition: Upside
Reward Without Downside Risk • ACO Assumes Care for a Population With• ACO Assumes Care for a Population With
Projections of Expected Cost of Providing CareCare
• Paid Fee-for-Service With Potential for Additional Payments if (A) QualityAdditional Payments if (A) Quality Performance Standards Met and/or (B) Costs Redirected Below Benchmark
39
Costs Redirected Below Benchmark
Shared Savings Programs ( i d)(continued)
• PPACA Authorizes Secretary to UtilizePPACA Authorizes Secretary to Utilize Specified Payment Models Other Than SSP – Partial Capitation Where ACO at Financial
Risk for Some, But Not All, of Part A and Part B S i (S h All Ph i i S iB Services (Such as All Physician Services Provided to a Set Population Over a Set Time) )
– Secretary May Substitute Any Payment Model That the Secretary Determines Will Improve Q li d Effi i
40
Quality and Efficiency
Shared Savings Programs ( i d)(continued)
• What Services May ACOs Provide? Wh S i A C d d Whi h E l d d?• What Services Are Covered and Which Excluded?
• What Are Quality Standards and What Sets Them Apart? • How Are Cost Benchmarks Set (Adjustments For Age, Sex, Health
Conditions Severity)? Can They Be Measured?Conditions, Severity)? Can They Be Measured? • How Will ACO Contract With Payors? • What If Out-Of-Network Services Needed? • How Will ACO Be Paid? How Will ACO Share Payment? y• Do Benchmarks Get Rebased? • How To Assure No Stinting On Care? • What Infrastructure Is Needed?
41
Bundled Payments/Episodes of CCare
• One payment for an Episode of CareOne payment for an Episode of Care, Combining Hospital/Physician and Perhaps Other Services in One PaymentPerhaps Other Services in One Payment
• Secretary Required to Establish a Pilot Program for Integrated Care During anProgram for Integrated Care During an Episode of Care Around a Hospitalization
42
Bundled Payments/Episodes of C ( i d)Care (continued)
• Downside Risk of Services Provided by DifferentDownside Risk of Services Provided by Different Providers
• In Essence a Budget is Set for An Episode of g pCare
• Promotes Integrated Care and Efficient gProvision of Care by All Involved
• Incentivizes Collaboration • However, No Incentive to Avoid Episodes of
Care in the First Place
43
In the Bundled Pilot ProgramIn the Bundled Pilot Program
• Secretary Selects Up to 10 ConditionsSecretary Selects Up to 10 Conditions • Look at Applicable Services to Include:
A t C I ti t S i– Acute Care Inpatient Services – Physician Services In and Out of a Hospital
O S– Hospital Outpatient Services – Post Acute Services
44
In the Bundled Pilot Program ( i d)(continued)
• Episode of Care p– 3 Days Prior to Hospitalization – During Length of Inpatient Stay – 30 Days Post Discharge– 30 Days Post Discharge
• Reimbursement For All Services Included in Treating the Condition During the Episode of CCare– Sole Payment (No Fee-for-Service) – Also Patient Assessment and Quality Measures y
• No Specification on How Bundled Payment To Be Shared With Those Providing Care
45
Bundled Payment lssues ( i d)(continued)
• Key lssues with Bundled Payments: y y– What Services Are Conducive To Being Paid on an
Episode of Care/Bundled Payment?What Range of Services Are Included in the Episode– What Range of Services Are Included in the Episode of Care?
– Can ACO Participating Providers Furnish All of the Bundled Services?
– How Does ACO Ensure Patient Will Follow-Up With ACO Providers and Remain In-Network?
– What if Patient Experiences Another Medical Condition During the Treatment Period? How is Bundled Rate Set?
46
– How is Bundled Rate Set?
Bundled Payment Issues ( i d)(continued)
– Based on What Data is Bundled Rate Determined?Based on What Data is Bundled Rate Determined? – What are Quality Standards and How are They Set? – Do Rates and Quality Standards Adjust Over Time? – Who Measures Compliance With Quality Standards and How areWho Measures Compliance With Quality Standards and How are
They Measured? – How is Cost of Care Benchmark for the Episode Determined? – What Administrative Infrastructure is Needed to Track and MeasureWhat Administrative Infrastructure is Needed to Track and Measure
Quality and Cost? – How to Avoid Stinting? – How Does ACO Share Bundled Payment Among Participants (and y g p (
Out-of-Network Providers)? – Any Limits on Cherry-Picking Patients? – Who Credentials the Participants in the ACO?
47
Global Payment/Partial Cap• Payments to Furnish All or Part of (For Example, Physician Only)
Care For a Given Population of Patients Over a Time Period • Eliminates Volume-Based Payment Incentives • A Budgeted Cost/Utilization and Associated Payment for ACOs for
All or Part of Care for a Population Over a Defined Period• Often Risk Adjusted Payments (For Such Things as Age, Health
Status, etc.) to Help Avoid Providers from Taking "Insurance Risk" • Still Significant Downside to ACOs and ACO Participants g p
48
Global Payment/Partial Cap ( i d)(continued)
• Key Issues in Global Payments: – What Services Are Covered and Which Are Excluded (e.g.,
Vision, Dental, Mental Health, Neonatology, Pediatric Specialty Surgery, Ambulance)? Wh t i S t f S i P id d b th ACO d Wh t– What is Spectrum of Services Provided by the ACO and What Costs Can it Control?
– How Will ACO Contract For and Control/Manage Out-Of-Network Services?Network Services?
– How to Utilize Outliers? – On What Data Are Global Payments Based?
Is it Possible that Providers Will Not Assume “Insurance Risk?"– Is it Possible that Providers Will Not Assume Insurance Risk? – What Stop Loss and Risk Corridors Apply; Is Reinsurance
Available?
49
Global Payment/Partial Cap ( i d)(continued)
• How To Share Payment and Risk Among ACO Participants And At What Levels?What Levels?
• What Patient Incentives Will Apply (Co-Pays, Deductibles, In-Network Incentives)?
• What Risk Adjusters Apply and How? j pp y• How Will Payments Be Adjusted to Account for Changes In
Demographics and Health Conditions? • Are Payments Adjusted for Eligibility and Fraudulent Identity Risks?
Wh D t i M di l N it ?• Who Determines Medical Necessity? • How To Assure Quality and How Are Quality Standards Set? • Who Credentials the Participants in the ACO? • How to Avoid Stinting on Services?• How to Avoid Stinting on Services? • How to Manage IBNR? • How to Limit Cherry-Picking of Groups and Avoidance of Sicker
Patients/Groups?
50
p
Overriding Payment IssuesOverriding Payment Issues• If Goal is to Transform How Health Care is Delivered and Given
Expense of Providing Accountable Care it is Critical that BothExpense of Providing Accountable Care, it is Critical that Both Private Payors as Well as Government Programs Participate and Utilize ACOs and Similar Payment Arrangements
• Rates Must be Adequate to Fairly Compensate P idProviders
• What of Unique Attributes of Specified Providers (Children's Hospital, Long Term Acute, Psych Hospital, Sole Community Hospital, CAHs)p , )
• In New Payment Arrangement How Does System Pay For: Capital, Medical Education, Innovation, Geographic Variation - Adequacy of Payment Issue
• Issues of Cost Shift from Below Cost Providers• Issues of Cost Shift from Below Cost Providers
51
ACO Legal Issues
David Klatsky McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551 9379
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Legal Issues
Antitrust/Clinical Integration and Market Concentration Issues
F d d Ab /St k/CMP Fraud and Abuse/Stark/CMP
Tax exemption issues for exempt hospitals
Representative State Law Issues: HMO/Insurance, Corporate Practice of Medicine, Peer Review
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Antitrust & Clinical Integration
David Klatsky McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551 9379
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Antitrust
Can ACO participants jointly contract with payors?Can ACO participants jointly contract with payors?
– Single Entity
Fi i l I t ti– Financial Integration
– Clinical Integration
– Market Power
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Antitrust: Sherman Act Section 1
Tests for Determining Unreasonable Restraint of TradeTests for Determining Unreasonable Restraint of Trade
Per se: so obvious that the challenged activity is anti-competitive that there is no need to review facts: Conclusive pPresumption of Illegality
Rule of Reason: defendants can prove that pro-competitive benefits outweigh anti-competitive effects
Prohibits agreements between two or more non-integrated entities that unreasonably restrains trade
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ACOs & Antitrust: Clinical Integration
If providers in an ACO are considered a single entity theyIf providers in an ACO are considered a single entity, they are incapable of violating Section 1
If providers in an ACO are not considered a single entity, p g y,then they must demonstrate sufficient financial and/or clinical integration through which they can operate as a single entity for antitrust purposesfor antitrust purposes
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ACOs & Antitrust (Cont’d)
Financial IntegrationFinancial Integration– Capitation
– Percentage of premiumPercentage of premium
– Withholds
– Bundled paymentsp y
Clinical Integration– Four advisory opinions; three favorabley p ;
– Match PPACA clinical integration requirements
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ACOs & Antitrust (Cont’d)PPACA ACO REQUIREMENTS COMPARED TO CHARACTERISTICS OF
PROVIDER NETWORKS WHOSE CLINICAL INTEGRATION PROGRAMS THE FTC HAS REVIEWED AND APPROVED IN ADVISORY OPINIONS
ACO Requirements MedSouth GRIPA Tri-State q
Accountable for quality, cost and overall care of patients
Yes Yes Yes
Formal legal structure that allows organization to receive and distribute payments
Yes Yes Yes
p y
Includes sufficient number of primary care physicians for number of patients
Yes Yes Yes
Leadership and management structure that includes clinical and administrative systems
Yes Yes Yes
Reports on quality, utilization and clinical processes and outcomes
Yes Yes Yes
Defines processes to promote evidence-based medicine, reports on quality and cost measures, and coordinates care, such as through use of telehealth, remote patient
Yes Yes Yes
monitoring, and other technologies
Meets patient-centeredness criteria specified by HHS
TBD TBD TBD
Th FTC h id d h f ll i i l i f li i l i i
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The FTC has considered other factors, as well, in its evaluation of clinical integration programs to achieve procompetitive efficiencies that will benefit patients/consumers.
ACOs & Antitrust (Cont’d)
ADDITIONAL FACTORS RELEVANT TO FTC ANALYSIS OF CLINICALADDITIONAL FACTORS RELEVANT TO FTC ANALYSIS OF CLINICAL INTEGRATION PROGRAMS
FACTOR MedSouth GRIPA Tri-Health
Use of health information technology Yes Yes Yes
Physician investment of capital Yes Yes Yes
Non-exclusive contracting by physician members
Yes Yes Yes
Joint contracting ancillary to expected procompetitive efficiencies
Yes Yes Yes
Enforcement mechanisms to ensure member compliance
Yes Yes Yes
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ACOs & Antitrust (Cont’d)
Policy statements by federal officials recognize that clinical integration can achieve pro-competitive benefitsg p p– Efficiencies → cost savings passed to consumers
– Improvements in qualityp q y
– Expanding services beyond current offerings
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ACOs & Antitrust (Cont’d)
Market PowerOverinclusive– Overinclusive
– Forecloses competition
– Safety ZonesSafety Zones
• Exclusive vs. non-exclusive physician networks
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STRAFFORD PUBLICATIONS
ACO LEGAL ISSUES
C. Frederick GeilfussFoley & Lardner LLP
777 East Wisconsin Avenue777 East Wisconsin AvenueMilwaukee, WI 53202
©Foley & Lardner LLP
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©Foley & Lardner, LLP
Antikickback/Stark/CMP Law
• Today Three Principal Laws Designed To R l t F d d Ab i F FRegulate Fraud and Abuse in Fee-For-Service Health Care Financial R l ti hiRelationships – Antikickback Statute (AKS) (42 U.S.C. 1320a-7b(b))
St k L (St k) (42 U S C § 1395 )– Stark Law (Stark) (42 U.S.C. § 1395nn)– Civil Monetary Penalty Law -- Limiting Hospital
Payments to Reduce or Limit Provision of Medical ay e ts to educe o t o s o o ed caCare (CMP Law) (42 U.S.C. § 1320a-7a(b)(1))
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Current Laws Principally Address
• Potential for Overutilization in Our Fee-Potential for Overutilization in Our FeeFor-Service Payment System
• Removal of Financial Considerations from• Removal of Financial Considerations from Medical Decision-Making N P t f R f l• No Payments for Referrals
• Unfair Competition • In Hospital PPS System: Avoid Stinting on
Care (Underutilization of Necessary Care) 65
( y )
With ACOs
• Change in Our Payment SystemChange in Our Payment System – Moving Toward
– Payment for Better Outcomes (Meeting Quality– Payment for Better Outcomes (Meeting Quality Targets)
– Provision of More Efficient Care, Avoiding Unnecessary Care (Lowering Costs) While Not Stinting on Medically Necessary Care More Risk on Providers to Make Them– More Risk on Providers to Make Them Accountable
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Nature of Financial RelationshipsNature of Financial Relationships
• ACO Receipt of Payment From PayorsACO Receipt of Payment From Payors • Payments by ACO (or Payors) to Provider
Participants p• Distributions by ACO to Any Equity Owners • Do ACO Owners and Participants Have OtherDo ACO Owners and Participants Have Other
Relationships Outside of ACO Structure? Does any Fee-For-Service Business Remain?y
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Effect of ACO Legal Structure on L l A l iLegal Analysis
• lntegrated Delivery Systems with Participants Alllntegrated Delivery Systems with Participants All in a Single Entity or Fully Controlled Entities and With Employed Physicians
• Academic Medical Center • Partially lntegrated with Some Independents y g p• Independent Providers Linked by Contract • ACO with Equity Owners (Including Physicians) CO t qu ty O e s ( c ud g ys c a s)
vs. Non-Stock Tax-Exempt Entity • Is ACO a Provider on its Own?
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• How Will AKS Stark and CMP Law ApplyHow Will AKS, Stark and CMP Law Apply to
Shared Savings Programs– Shared Savings Programs – Bundled Payments
Capitation Programs– Capitation Programs
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Share Savings/Gainsharing PPrograms
• Have Been AnalyzedHave Been Analyzed • Still Fee-For-Service Arrangements • OIG Special Advisory Bulletin in 1999OIG Special Advisory Bulletin in 1999 • Gainsharing Advisory Opinions Under AKS and
CMP LawsCMP Laws • Stark Law Proposed Exception July 7, 2008 • Employment Exceptions Under AKS and Stark• Employment Exceptions Under AKS and Stark
(But Not the CMP Law) • Academic Medical Center
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Academic Medical Center
Share Savings/Gainsharing PPrograms
Advisory Opinions and Proposed Stark Exception N P h i h M S f d• Narrow Pathway with Many Safeguards
• Do They Provide Sufficient Flexibility for ACOs to Work? • Safeguards Include:
Evidentiary Support for Quality/Performance Targets– Evidentiary Support for Quality/Performance Targets– What Targets are Inappropriate? – Objective Historical and Clinical Measures to Set Targets – Written Disclosures to Patient of Participants and Their Participation – No Disproportionate Focus on Federal Health Care Program Patients – Independent Monitoring To Ensure Quality of Care Delivered – Per Capita Distributions to Physicians – Reasonable Time Limitation of One to Three YearsReasonable Time Limitation of One to Three Years – Amount of Incentive Limited in Amount – Restricted Participation to Existing Physicians on Staff: So as Not Used
to Pick Up New Referrals
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BUNDLED PAYMENTS AND GLOBAL OR PARTIALGLOBAL OR PARTIAL
CAPITATION• Focus on Sharing of Payments by ACO • Stark Law: What Exceptions Are• Stark Law: What Exceptions Are
Available? Employment– Employment
– Academic Medical Center Ri k Sh i– Risk Sharing
– Personal Services/Fair Market Value/Indirect Compensation
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Compensation
BUNDLED PAYMENT/CAPITATION Stark Law (continued)
• Personal Services, Fair Market Value, and lndirect Compensation , , p– Volume or Value of Referrals or Other Business Generated – Fair Market Value Compensation – Compensation Set in Advance (Not in lndirect Compensation
E ti )Exception) – Commercially Reasonable (Not in Personal Services Exception) – No Activity that Violates Promotion of Federal Law
• In this Context:• In this Context: – What is FMV? – Can Compensation Be "Set in Advance?" – Is Compensation Commercially Reasonable?Is Compensation Commercially Reasonable? – Does it Violate Other Laws? (CMP Law?)
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BUNDLED PAYMENT/CAPITATION SAnti-Kickback Statute
• Focus on Payments from ACO to Participants y p– Employment – Risk Sharing – Personal Service and Management Contract Safe
Harbor • Set In Advance • Fair Market Values • Volume or Value of Referrals or Other Business • No Promotion of Businesses Violating Other Law g
• But Are Payments Intended to Induce Referrals?
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BUNDLED PAYMENTS/CAPITATION CMP LCMP Law
• No Employment Exception p y p• Is Hospital Payment Involved? • In Managed Care Area:In Managed Care Area:
– Different Standard – Medicare HMO and Competitive Medical Plans – Medicare Advantage – Medicaid Risk
• Need More Flexibility
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OTHER RISKS TO BE REGULATED IN ACOREGULATED IN ACOs
• Setting TargetsSetting Targets • Reports on Meeting Targets
Sti ti ith t B tt O t• Stinting without Better Outcomes • Cherry-Picking Patients/Avoidance of
Sicker Patients
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Tax Exemption
David Klatsky McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551 9379
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Tax Exemption & ACOs: Tax Considerations
Overview of Key concepts for Tax Exemption underOverview of Key concepts for Tax Exemption under IRC §501(c)(3):
Must organize and operate exclusively for charitable Must organize and operate exclusively for charitable purposes [as defined by 501(c)(3)]
– With no Private Benefit ( a de minimus amount of profits or earnings ( p gmay be distributed to individuals or non-exempt entities, provided none is an “insider”)
And no Private Inurement (per se violation of tax laws; no de– And no Private Inurement (per se violation of tax laws; no de minimus exception)
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Tax Exemption & ACOs: Tax Considerations (Cont’d)(Cont d)
Can a nonprovider ACO contracting entity be tax-exempt?Can a nonprovider ACO contracting entity be tax exempt?– PHO analysis: More than incidental private benefit
– Community benefit analysis:Community benefit analysis:
• Does not have to provide health care services
• Community Board
• Activities further charitable purposes
• Reduces health care costs
R d di l• Reduces medical errors
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Tax Exemption & ACOs: Tax Considerations (Cont’d)(Cont d)
Will participation in a taxable ACO jeopardize exemptWill participation in a taxable ACO jeopardize exempt status?– Primary purposes test
• Corporation vs. LLC
– Inurement
– Private Benefit
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Can an ACO Help Physicians Acquire EHR?
The potential incentives available to hospitals for theThe potential incentives available to hospitals for the “meaningful use” of EHR are of particular significance to ACOs, since EHR will constitute an essential part of their
i it li i l i t tirequisite clinical integration
Physicians and other eligible professionals who provide substantially all of their professional services in facilities thatsubstantially all of their professional services in facilities that are hospital-based outpatient department locations are eligible to receive Medicare and Medicaid EHR incentives
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Can ACO Providers Share Patient Data? Yes, pursuant to HIPAA and HITECHpursuant to HIPAA and HITECH
Affiliated Covered Entity – ACO with 2 or more legally separate covered entities under common ownership – permitted to act as a single covered entity for HIPAA complianceentity for HIPAA compliance
Organized Health Care Arrangement – ACOs that are separately owned covered entities may share protected PHI for the benefit and
f j i h l h imanagement of any joint health care operations
ACO/MSO Integration Models – ACOs must enter into a Business Associate Agreement with the MSOg
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Accountable Care Organizations:Representative State LawRepresentative State Law Issues
J. Peter Rich McDermott Will & Emery2049 Century Park East, Suite 3800Los Angeles, CA 90067
www.mwe.com
[email protected](310) 551-9310
Boston Brussels Chicago Düsseldorf Houston London Los Angeles Miami Milan Munich New York Orange County Rome San Diego Silicon Valley Washington, D.C.
Strategic alliance with MWE China Law Offices (Shanghai)
© 2010 McDermott Will & Emery LLP. McDermott operates its practice through separate legal entities in each of the countries where it has offices. This communication may be considered attorney advertising.Previous results are not a guarantee of future outcome. The following legal entities are collectively referred to as "McDermott Will & Emery," "McDermott" or "the Firm": McDermott Will & Emery LLP, McDermott Will &Emery/Stanbrook LLP, McDermott Will & Emery Rechtsanwälte Steuerberater LLP, MWE Steuerberatungsgesellschaft mbH, McDermott Will & Emery Studio Legale Associato and McDermott Will & Emery UK LLP.These entities coordinate their activities through service agreements. This communication may be considered advertising under the rules regulating the legal profession.
Representative State Law Issues
Corporate Practice of Medicine
HMO/I /M d C C t ti L HMO/Insurance/Managed Care Contracting Laws
Peer Review Laws
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Representative State Law Issues: Corporate Practice of MedicinePractice of Medicine
Most states have laws that prohibit, to varying degrees, the “corporateMost states have laws that prohibit, to varying degrees, the corporate practice of medicine” (“CPOM”)
CPOM laws generally prevent unlicensed lay entities from employing physicians or otherwise contracting with physicians to furnish medicalphysicians or otherwise contracting with physicians to furnish medical care
CPOM laws may limit the flexibility of physicians and non-physicians to hi d l f ACOstructure ownership and employment arrangements of an ACO
Some states with strong CPOM laws (e.g., California and Texas) have laws providing for non-profit-owned "medical foundations" to permit non-p g p pprofit hospitals to engage physicians indirectly to provide medical care
“Friendly Physician” or “Management” models in CPOM states will require careful regulatory analysis to minimize regulatory risk
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careful regulatory analysis to minimize regulatory risk
Representative State Law Issues: HMO/Insurance/Managed Care Contracting LLaws
Capitated Payments?– In a number of states (e.g., California, Colorado, Illinois, Florida, New
York, and Pennsylvania) an ACO contracting entity that is not a licensed provider or a medical foundation would be prohibited from assuming capitated or other substantial financial risk unless suchassuming capitated or other substantial financial risk unless such entity is licensed by the state to assume such financial risk.
– In some states, such as California, even providers that lack a state health plan license may not capitate or assume substantial financial p y prisk other than under contract with a licensed HMO.
– In those states, an ACO may engage in fee-for-service contracting as permitted by CPOM (including case rates and other bundled pricing) b t t i t d f it ti th i i b t ti lbut are restricted from capitating or otherwise assuming substantial financial risk unless they have the required state HMO, PPO or insurance license.
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Representative State Law Issues (Cont’d)
Examples of State Managed Care Laws that May Apply toExamples of State Managed Care Laws that May Apply to ACOs include:– California’s Knox-Keene Act
– Illinois’ PPO Regulations under the Health Care Reimbursement Reform Act of 1985
– Pennsylvania’s Department of Insurance Regulationsy p g
– Colorado’s Division of Insurance Regulations
– Florida’s Definition of Fiscal Intermediary Service Organization
ACO may be required to obtain a State third party administrator (“TPA”) license
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Representative State Law Issues: Peer Review & ACOsReview & ACOs
ACOs will need to credential, discipline, and terminate physicians who , p , p ydo not meet quality and cost-effective care coordination standards
How will the ACO peer review interact with the affiliated hospital’s medical staff peer review?p
Federal Immunity for Peer Review Participants: Health Care Quality Improvement Act (“HCQIA”)
Purpose of HCQIA is to improve quality of medical care nationally Purpose of HCQIA is to improve quality of medical care nationally
Intended to strengthen the professional peer review process by providing immunity from civil liability to physicians in exchange for their honest assessment of their peershonest assessment of their peers
State law may provide hearing rights (e.g., California Business and Professional Code §§ 809 et seq; Potvin).
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Representative State Law Issues: Peer Review (Cont’d)Review (Cont d)
HCQIA establishes minimum proceduresHCQIA establishes minimum procedures
Protects only decisions based on quality concerns
P id i it f d ti ( t i il i ht Provides immunity from damages actions (except civil rights claims) to hospitals and participating physicians complying with HCQIA requirements
Note that only hospitals are mandated to query and report to the NPDB under the HCQIA
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Representative State Law Issues: Peer Review (Cont’d)Review (Cont d)
In order to invoke HCQIA’s provisions for qualified or conditional p qimmunity, the professional review action must have been undertaken:
– In the reasonable belief that the action was in furtherance of the quality of health care; andq y ;
– After a reasonable effort to obtain the facts of the matter has been made; and
After adequate notice and hearing procedures are afforded to the– After adequate notice and hearing procedures are afforded to the practitioner involved or after such other procedures as are fair to the practitioner under the circumstances; and
In the reasonable belief that the facts warranted an adverse– In the reasonable belief that the facts warranted an adverse determination regarding the physician’s application, privileges and/or membership.
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Representative State Law Issues: Peer Review (Cont’d)Review (Cont d)
State “Any Willing Provider” and due process requirements may limit ability of ACOs to terminate providers from their networks or to deny providers access to their networks without permitting some form of appeal
Example of De-Selection: Potvin v. Metropolitan Life Insurance, 95 Cal Rptr 2d 496 (2000)Cal.Rptr.2d 496 (2000). – removal of a preferred provider by an insurer must be both substantively
rational and procedurally fair; terminated physician has a right to a hearing if the contract is a substantial portion of the physicians income.
– other states have not followed the Potvin holding thus far, but may have other statutory regulations or common law restrictions on provider termination: As ACOs become more important, their legal fair hearing requirements may expand to mimic medical staff fair hearing requirements.p g q
Also, state laws may exist that prohibit taking a physician off of a preferred provider list for reporting quality concerns or advocating on behalf of patients or disclosing financial incentives provided by HMOs
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p g p y
Representative State Law Issues: Peer Review (Cont’d)Review (Cont d)
Will ACO quality standards create opportunities for plaintiffs’Will ACO quality standards create opportunities for plaintiffs medical malpractice attorneys to hold ACO participating physicians and other providers to higher than otherwise
li bl it t d d f ?applicable community standards of care?
Nothing in the PPACA prohibits that result, though Congressman Henry Waxman made a public statement onCongressman Henry Waxman made a public statement on the floor of the House of Representatives that this result is not intended by the PPACA
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