strategizing for accountable care medical society of northern virginia march 29, 2011 mike newby...
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Strategizing for Accountable Care
Medical Society of Northern Virginia
March 29, 2011
MIKE NEWBYMARY MALONE
HANCOCK, DANIEL, JOHNSON & NAGLE, PC
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Presentation Overview
1. What is an ACO?
2. LLC Formation and Governance
3. Medicare’s Shared Savings Program
4. Legal Issues
5. How to Position Yourself for Accountable Care
6. Q&A
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1. What is an ACO?
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An ACO is an entity that is clinically and fiscally accountable for the entire continuum of care that a given population of patients may need
Focus of presentation is on the Medicare ACO opportunity, though “ACO-like” options are being discussed with health plans as well
What is an ACO?
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Three Principles:
Provider led organizations with a strong base of primary care that are collectively accountable for quality and total per capita costs across the full continuum of care for a defined patient population
Link payment to quality improvements to reduce overall costs
Evidenced-based medicine
What is an ACO?
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FINANCIAL PRESSURES CREATING SHIFT IN REIMBURSEMENT STRATEGY
MOVEMENT AWAY FROM FEE-FOR-SERVICE PAYMENT METHODOLOGY.
CURRENT SYSTEM PROMOTES HIGH-VOLUME AND HIGH-INTENSITY HEALTH SERVICES, REGARDLESS OF QUALITY AND WHETHER CARE IS COORDINATED.
EMPHASIS ON QUALITY, EFFICIENCY AND COORDINATED CARE.
What is an ACO?
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What is an ACO?
ACOS INCORPORATE IDEAS OF OTHER MODELS:
o Physician-hospital organizations (PHOs)
o Integrated delivery systems
o Independent provider associations (IPAs)
o Hospital employment of physicians
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Is This Déjà Vu All Over Again? Historical Managed
Care
o Focus on Insurers, HMOs
o Reliance on health plan intermediaries
o Shared financial risk; insurance regulation
o Beneficiaries required to enroll in particular plan, use only particular providers
ACOs
o Focus on delivery system
o Direct contracting with delivery organizations
o Potential for upside only sharing
o Beneficiaries assigned by primary care usage and may change ACOs at will
o Greater flexibility:
> Variety of eligible providers and models
> Variety in payment methodology
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2. LLC Formation and Governance
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LLC Formation and Governance
Initial Steps:
File Articles of Organization
Obtain EIN
Enact Operating Agreement and organizational resolutions
Register with VEC and the Virginia Department of Taxation
Obtain a Business License
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LLC Formation and Governance
Operating Agreement – Investment and Management
Capital Contributions (seed money)
Management by members or managers
Appointment of managers
Authority of managers
Capital calls
Distributions
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LLC Formation and Governance
Operating Agreement – Members Rights
Sale/acquisition of property over a certain dollar amount
Starting new business activities or entering in new contracts
Leases with minimum durations
Borrowing money
Requesting capital contributions
Admission of new members
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LLC Formation and Governance
Operating Agreement – Other Issues
Withdrawal
Admission of new members
Purchase/redemption price
Restrictive covenants
Fiduciary duties
Confidentiality
Conflicts and deadlock
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LLC Formation and Governance
Attributes:
Pass-through taxation
Limited liability
Flexible
Best approach for ACOs? Stay Tuned.
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3. Medicare’s Shared Savings Program
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Medicare’s Shared Savings Program
Effective January 1, 2012
Goalso Investment in infrastructure
o Redesign of care process – patient focused
o Quality and efficiency
Medicare Parts A and B (not parts C & D)
Serves traditional Medicare beneficiaries
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Medicare’s Shared Savings Program
ACO REQUIREMENTS CHECKLIST
Accountable for quality, cost, and overall care √3-year commitment by written agreement √Legal structure to distribute payments √PCPs caring for at least 5,000 beneficiaries √Report to Medicare on quality √Clinical and administrative systems and leadership √Promote evidence-based medicine, patient engagement, care coordination
√
Meet patient-centeredness criteria √Secretary may prefer ACOs with other contracts √
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Medicare’s Shared Savings ProgramCHARACTERISTICS OF AN ACO:
Emphasis on evidence-based clinical care
Close monitoring and reporting of quality and cost savings
Coordinated care: clinical protocols / EHR
No beneficiary network restrictions
Does CMS contract mean “certification”?
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Medicare’s Shared Savings ProgramUpside-only Model
Source: Dartmouth Institute for Health Policy and Clinical Practice
-3 -2 -1 0 1 2 3
Year
Projected SpendingTarget Spending
Actual Spending
Shared Savings
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Medicare’s Shared Savings Program
PROVIDERS - ACO MUST BE BIG ENOUGH SO THAT COST SAVINGS CAN BE TIED TO QUALITY IMPROVEMENTS AND NOT YEAR-TO-YEAR FLUCTUATIONS IN CARE
o Equity participants
o Contractors
AT LEAST 5,000 MEDICARE BENEFICIARIES ACCORDING TO THE MEDICARE PAYMENT ADVISORY COMMISSION
o Approx. 5-6 PCPs per 5,000
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Medicare’s Shared Savings ProgramNEED FOR FORMAL ORGANIZATION
AND DESIGNATED ADMINISTRATOR
o Point of contact
o Ability to work with and negotiate with payors
o Monitor performance and shared savings
o Development and implementation of strategies and infrastructure to coordinate care
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Accountable Care OrganizationsAPPROACHES TO REIMBURSEMENT
GOAL: REWARD STRONG CLINICAL PERFORMANCE AND EFFICIENCY THROUGH:
Shared savings
Capitation / Bundling
P4P / Gainsharing
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4. Legal Issues
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Primary Legal Issues Related to ACO Formation Antitrust Issues
o Lessen competition
o Conspiracy to fix prices
o Unreasonable restraints of trade
Stark / CMP / Antikickback
o Waivers
o But watch out for state law
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Antitrust Issues Related to Network Formation
INTEGRATED VS. NON-INTEGRATED MODELS
TYPES OF INTEGRATION:
o Clinical Integration
o Financial Integration
FTC: Agreements between competing physicians, or other health care providers, on the prices to be charged for their individual services are agreements in restraint of competition and are generally illegal, absent a showing of substantial financial or clinical integration.
If integrated single signature contracting
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Antitrust Issues Related to Network FormationUSE MESSENGER MODEL IF NO
INTEGRATION ALLOWS NETWORK CONTRACTING WITH HEALTH
INSURANCE PLANS WITHOUT COLLECTIVE NEGOTIATION
THE MESSENGER:
o Serves as an intermediary between the payor and the physician on rates and competitive issues
o May share objective factual information with providers about the payor and its business
o May negotiate non-competitive terms
o May not negotiate rates or competitive terms
o May not serve as an advocate on rates or share competitive information
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Antitrust Issues Related to Network FormationMedSouth Advisory Opinion
BACKGROUNDo Multi-specialty IPA consisting of 432 physicians (101
primary care/ 331 specialists) in Denver area covering 3 hospitals
o Non-exclusive, but covered more than 50% of the physicians in over 20 practice areas at 3 area hospitals
o Clinical protocols covering 80%-90% of diagnosis>48 established as of date of opinion; additional 100-
150 protocols contemplatedo Utilization and quality measured against protocols
>Clinical Information System to monitor quality measures
>Ability to discipline non-complying physicians o Web-Based Clinical Data Systemo Online prescriptions
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Antitrust Issues Related to Network FormationMedSouth Advisory Opinion
o Purposes: improved patient care and outcomes, reduction in medical errors, increased efficiency, reduction in costs, ability to discipline and terminate sub-standard physicians
o Conclusion: Substantial likelihood of achieving efficiencies outweighed anti-competitive effects
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FTC’s Gloss on Clinical Integration
Integration of institutions and practitioners that presents the opportunity for true collaboration and productive sharing of information reflecting actual “interdependence”
Participation of both specialists and primary care physicians with a requirement of in-network referrals
Treatment of a broad spectrum of diseases and disorders and corresponding clinical protocols
A high level of physician investment, both economically and in terms of time for training and utilization of the system, and agreement among physicians to comply with the standards, benchmarks, and protocols put in place by the network
Antitrust Issues Related to Network Formation
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FTC’s Gloss on Clinical Integration (Continued)
Integrated information technology whereby:
o network participants can efficiently exchange information regarding patients and practice experience
o utilization and claims information can be gathered, analyzed, and communicated in order to improve treatment quality, rates of utilization, and cost containment
o physician compliance and performance, in accordance with collective, physician-authored benchmarks and standards, may be measured
Enforceable consequences for noncompliance by physicians and institutions, and systems for improving performance and compliance
Antitrust Issues Related to Network Formation
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Legal Issues - TakeawaysANTITRUST: ACO NETWORK
FORMATION MAY IMPLICATE ANTITRUST LAWS, BUT INTEGRATED APPROACH CAN MITIGATE RISK.
STARK: CURRENTLY NO CLEAR MECHANISMS FOR DISTRIBUTING SHARED SAVINGS, BUT MAY PRESENT OPPORTUNITIES WITH COMMERCIAL PAYORS
CMP: CAN’T PAY TO REDUCE SERVICES, BUT FAVORABLE GUIDANCE FOR QUALITY AND EFFICIENCY BASED COMPENSATION ESPECIALLY WHEN OPERATING IN THE COMMERCIAL MARKET
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5. How to Position Yourself for Accountable Care
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How to Position Yourself
BUILDING AN INFRASTRUCTURE
o Leadership and Vision
o Engaged Provider Network
o Network Formation and Formalized Legal Structure
o IT infrastructure and clinical benchmarking
o Effective Medical Management
o Capital to Fund Development and Cash Flow
o Risk Management
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How to Position Yourself
DEVELOP LEADERSHIP AND VISION
o Identify strategically important, high performing physicians who are committed to organizational goals
DEVELOP ENGAGED PROVIDER NETWORK
o Expand management and governance roles of physicians
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How to Position Yourself CREATE A NETWORK WITH A FORMALIZED
LEGAL STRUCTURE
o Capable of distributing shared savings
o Significant physician involvement in governance
o Platform for clinical integration, joint contracting, information sharing
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How to Position Yourself IMPLEMENT HEALTH INFORMATION
TECHNOLOGY
o Benchmarking and quality improvement as conditions of participation
o Consent to share information
o Can use Stark exception to subsidize up to 85% of EHR for physicians
o Eligibility for federal programs (and avoidance of penalties when programs like PQRI become mandatory) may be conditioned on having information technology
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How to Position Yourself HITECH ACT: A CARROT AND STICK APPROACH TO
ADOPTION AND MEANINGFUL USE OF HIT
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How to Position YourselfPHYSICIAN QUALITY REPORTING INITIATIVE
(PQRI)
STARTED IN 2007 AS AN INCENTIVE PROGRAM TO ENCOURAGE DATA REPORTING
AFFORDABLE CARE ACT RENAMED TO PQRS
BONUS PAYMENTS FOR QUALITY REPORTING BY “ELIGIBLE PROFESSIONALS”: 1% IN 2011 AND .5% IN 2012 THROUGH 2014.
BUT BEGINNING 2015, EPS WHO FAIL TO MEET REPORTING REQUIREMENTS WILL SEE A 1.5% REDUCTION IN MEDICARE REIMBURSEMENT
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How to Position Yourself FINANCIAL INCENTIVES FOR ADOPTION OF
EPRESCRIBING TECHNOLOGY UNDER MEDICARE IMPROVEMENTS FOR PATIENTS AND PROVIDERS ACT OF 2008
INCENTIVE PAYMENTS AND PENALTIES TO ELIGIBLE PROFESSIONALS WHEN THEY EPRESCRIBE FOR MEDICARE PATIENTS SEEN IN THEIR OFFICES
CARVE OUR FROM PQRI PROGRAM
CMS Electronic Prescribing Incentive Program
Calendar Year Of ePrescribing
Incentive Amount
Penalty Amount
2011 1% n/a
2012 1% -1%
2013 .5% -1.5%
2014 n/a -2%
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How to Position Yourself PEER REVIEW AND PSO
o Peer review to enforce quality standards applicable to the ACO and individual participants
o Virginia law permits sharing of peer review information among peer review bodies
o PSO to aggregate and analyze data, establish benchmarks, conduct educational programs and corrective action plans
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How to Position YourselfP4P AND GAINSHARING
o Implement compensation structure that rewards participants for quality and efficiency
ADDITIONAL ADD-ON FEATURES
o MSO, Joint Purchasing, Risk Purchasing Group, Clinical Co-Management, Professional Employer Organization, Recruitment Assistance, CME, Credentialing Verification Organization, etc.
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How to Position Yourself
CAPITAL TO FUND DEVELOPMENT AND CASH FLOW
o Secure seed money in advance
RISK MANAGEMENT
o Limit risk through incremental, small pilots
o Test models through controlled models, such as an owned health plan or an insured employee base
o Prepare exit strategy if experiments do not go as planned
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Soon to be revealed . . .
How will the rewards be structured?
How will beneficiaries be assigned?
How burdensome will Medicare reporting requirements be?
Will there be regulatory relief on Stark and Anti-kickback to facilitate shared savings with physicians?
How many ACOs will be approved initially; what about subsequent rounds?
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Next Steps: Identify the key facilitators
Set goals and expectations
EHR
Develop protocols and benchmarks
Structure, administration, leadership, financing
Timeline
Meet with commercial payors
Evaluate strengths and weaknesses
Evaluate horizontal and vertical alliances
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MIKE NEWBY
MARY MALONE
HANCOCK, DANIEL, JOHNSON & NAGLE, P.C.
P.O. BOX 72050
RICHMOND, VA 23255
804-967-9604