managed care contracting from a position of …€¦ · adam j. falcone, esq. partner managed care...

Adam J. Falcone, Esq.Partner

MANAGED CARE CONTRACTING FROM A

POSITION OF STRENGTH!

December 11, 2019

Greater Columbia Accountable Community of HealthFor Training Purposes Only – Does Not Constitute Legal Advice

Federal Grants Practice Group. We help clients through pre- and post-award matters, such as financial and program requirements, procurements, property issues, termination and enforcement, as well as how best to prepare for and respond to government reviews, audits, and cost disallowances.

Health Law Practice Group. We advise on legal issues arising under the Public Health Service Act (HRSA and SAMHSA grant programs), the Social Security Act (Medicare and Medicaid programs), Fraud and Abuse Laws (Anti-Kickback Statute, Stark Self-Referral Law, and False Claims Act), Health Insurance Portability and Accountability Act (HIPAA) Privacy and Security Regulations, Federal Tort Claims Act (FTCA), antitrust laws, and tax-exempt law.

© 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 2

FELDESMAN TUCKER LEIFER FIDELL LLP

A boutique law firm based in Washington, DC with 50 years of experience in the intersection of healthcare and federal grants law.

• Focused on Essential Community Providers

• Knowledge of Federal Health Care Law and Policy

• Counseling to Litigation: We’ve Got You Covered

3

PRESENTER: ADAM J. FALCONE

• Partner in Feldesman Tucker Leifer Fidell’s national health law practice group.

• Counsels health centers, behavioral health providers, and provider networks on a wide range of health law issues, including fraud and abuse, reimbursement and payment, and antitrust and competition matters.

• Began his legal career in Washington, D.C. as a trial attorney in the Antitrust Division’s Health Care Task Force at the U.S. Department of Justice.

• Served as Policy Counsel for the Alliance of Community Health Plans, representing non-profit and provider-sponsored managed care organizations before Congress and the Executive Branch.

• Received a B.A from Brandeis University, an M.P.H. from Boston University School of Public Health, and a J.D., cum laude, from Boston University School of Law.

Contact information [email protected] 202.466.8960

© 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

AGENDA

Part 1: The P.E.N. Strategy for Managed Care Contracting

1) Prepare for Managed Care Contracting

• Assessing Regulatory Leverage, Market Power, and Timing

• Participating in Value-Based Payment (VBP) Methodologies

2) Evaluate Managed Care Contracts

3) Negotiate with MCOs

Part 2: Key Terms and Legal Protections

Part 3: Participating or Forming Provider Networks

• Types of Provider Networks

• Accountable Care Organizations

• Federal Antitrust Law and Negotiating Jointly

44© 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

DISCLAIMER

• This training is provided for general informational and educational purposes only and does not constitute legal advice or opinions.

• The information is not intended to create, and the receipt does not constitute, an attorney-client relationship between attorney and participant.

• For legal advice, you should consult a qualified attorney.


PART 1

The P.E.N. Strategy for Managed Care Contracting


WHO HAS AN ADVANTAGE?


BOTH.


MANAGED CARE CONTRACTING

A strategy is simply a plan of action for accomplishing an objective.


CONTRACTING STRATEGY

Before you sign, use the P.E.N!

Prepare

Evaluate

Negotiate


STEP 1: PREPARATION PHASE

A party that recognizes its

strengths has an advantage in achieving its objectives.


IDENTIFY YOUR STRENGTHS

Assess Leverage

Compete Based on

Value

Increase Leverage or Value


ASSESSING LEVERAGE: LEGAL

Possible Leverage Points:– Participation: MCO is required to include me in its provider network– Coverage: MCO is required to cover (all of) my services– Payment: MCO is required to pay me a specific rate

Sources of Leverage: Federal Medicaid laws or regulations State insurance laws and regulations MCO’s contract with the State Medicaid agency (“Model Contract”) Insurance Exchange regulations and rules

Hint: Key terms to look for: “provider network”, “network adequacy”, “network service”, “payment”, “network contracting requirements,” and “minimum network standards”.


WASHINGTON STATE MODEL CONTRACTEssential Behavioral Health Providers

Network Requirements – Section 6.2.5

• The Contractor must incorporate the following requirements when developing its behavioral health network.• The Contractor shall establish and maintain contracts with providers determined by HCA to be Essential

Behavioral Health Providers (EBHP): • Certified residential treatment providers• DBHR-licensed community MH agencies• DBHR-certified CD agencies• DOH-certified MAT providers• DBHR-certified opiate substitution providers• DOH-licensed and DBHR-certified free-standing inpatient, hospitals or psychiatric inpatient facilities that

provide evaluation of treatment services• DOH-licensed and DBHR certified detox facilities• DOH-licensed and DBHR certified residential treatment facility for crisis stabilization services• Certified wraparound and intensive services (WISe) provider• Office-based opioid treatment qualifying providers operating under a DATA waiver


WASHINGTON STATE MODEL CONTRACTPayment to FQHCs/RHCs

Payment to FQHCs/RHCs – Section 5.21.2

• Each FQHC/RHC is entitled to its specific, full encounter rate for each qualifying encounter as outlined in the Medicaid State Plan and in accordance with Section 1902(bb) of the Social Security Act.

• The full encounter rate shall be at least equal to the Prospective Payment System (PPS) rate specific to each FQHC/RHC and applies to FQHCs/RHCs reimbursed under the Alternative Payment Methodology (APM) rate methodology and to FQHCs/RHCs reimbursed under the PPS rate methodology.

• To ensure that each FQHC/RHC receives its entire encounter rate for each qualifying encounter, the Contractor shall pay each contracted FQHC/RHC in one of two ways: (1) Pay the specific monthly enhancement payment amount to the FQHC/RHC (within 30 days) in addition to payment of claims for service made at standard rates paid to the FQHC/RHC; or (2) Pay a monthly capitation rate for services and pay the specific monthly enhancement payment amount to the FQHC/RHC (within 30 days).

Payment for Mental Health Encounters – Section 5.22.1• The Contractor is required to contract with at least one FQHC/RHC in their service area if the FQHC makes such a

request.• The Contractor must not pay a FQHC or RHC less than the level and amount of payment the Contractor would pay

non-FQHC/RHC providers for the same services.


WASHINGTON STATE MODEL CONTRACTNon-Participating Providers

Payment for Services by Non-Participating Providers – Section 5.18• The Contractor shall limit payment for Emergency Services furnished by any provider who does not have a

contract with the Contractor to the amount that would be paid for the services if they were provided under HCA’s Medicaid Fee-For-Service (FFS) program.

• Except as provided herein for Emergency Services, the Contractor shall coordinate with and pay a Non-Participating Provider that provides a service to Enrollees under this Contract no more than the lowest amount paid for that service under the Contractor’s contracts with similar providers in the State.

• For purposes of this subsection, “contracts with similar providers in the State” means the Contractor’s contracts with similar providers to provide services under the Managed Care program when the payment is for services received by a Managed Care Enrollee.


WASHINGTON STATE MODEL CONTRACT

Enrollee Choice of PCP/Behavioral Health Provider

Enrollee Choice of PCP/ Behavioral Health Provider – Section 10.5

• The Contractor must implement procedures to ensure each Enrollee has a source of primary care appropriate to their needs.

• The Contractor shall allow, to the extent possible and appropriate, each new Enrollee to choose a participating PCP or behavioral health professional.


ASSESSING LEVERAGE: MARKET POWER

Leverage Points:– MCO has no alternative providers in market if it does not contract with me– MCO cannot meet network adequacy requirements without me

Understand Your Market What organizations (if any) furnish similar services to me? For each of my services, what percent of the market do I serve as compared to other

organizations?

Hint: Fewer providers = Greater leverage– Assess breadth and scope of services– Analyze market share– Consider brand and reputation


ASSESSING LEVERAGE: TIMING

Leverage Points:– MCO is establishing new provider network or product.– MCO faces critical deadlines in order to enter marketplace by a certain date.

Stay Informed: • State timelines• Managed care entities• Your trade and professional associations• Your peers


COMPETING ON VALUE

• Enhances your negotiating position because you can offer something of greater value than you competitors in the marketplace.

– Sometimes referred to as “competitive advantage”

Identify Value Assess Value Communicate Value


HEALTH CARE SERVICES MARKET

Managed Care Organization

Provider

Provider

Provider

SellerBuyer


IDENTIFYING VALUE

Self-Assessment Questions: Can you deliver greater value (potential cost-savings) to the MCO?

Adherence to prescription drug treatment Reduction in ER visits or preventable hospitalizations Reduction in total expenditures for cost of care

For any of the above, can you quantify the savings?

Get Answers! Collect data and report on quality measures Access data on total costs of care for your patients


IDENTIFYING VALUE

Self-Assessment Questions: Are you willing to incur some downside financial risk that would

otherwise fall upon the MCO?• Capitated payment for the provision of services furnished by your

organization• Bundled payments or case rates for specific diagnoses or conditions• Shared savings and losses for total costs of care


COMPETING ON VALUE

Communicate Your Value!

Marketing materials that communicates the value you offer to MCOs

In-person meetings with MCOs to describe cost and clinical outcomes

Participation at conferences that highlight your achievements

Informal networking events

Community events


INCREASE LEVERAGE OR VALUE

Collaborations with other providers through joint ventures or integrated provider networks may increase leverage in the

marketplace, enhance your value, or both, thereby improving your negotiation position.


INTEGRATED CARE MODELS

Joint Venture

•Contractual relationships (e.g., affiliation)

•Joint governance committee

Partial Integration

•Joint ownership or joint control of new legal entity (e.g., IPA, ACO)

Full Integration

•System owns hospitals and employs salaried physicians

26© 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 26

INTEGRATED CARE DELIVERY MODELS

• Referral Arrangement

• Co-location Agreement

• Purchase of Services

• Merger


Primary Care

Provider

Behavioral Health

Provider

Joint Venture

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INTEGRATED CARE FINANCING MODELSPROVIDER NETWORKS

IPA

Behavioral Health Provider


Primary Care Provider

ACO

FQHC


Hospital

Management Services Organization

DD/ID

DD/ID

DD/ID


VALUE-BASED PAYMENT METHODOLOGIES

• Value-Based Payment (VBP) generally refers to activities that move away from traditional fee-for-service (FFS) payment system, which rewards volume, to alternative payment models that reward high-quality, cost-effective care.

• Nearly 40 percent of state Medicaid directors surveyed in 2016 reported plans to expand VBP arrangements in following year.

• CMS aims to move 50% of Medicare FFS payments into alternative payment models by 2018.

• Today, most VBP arrangements in Medicaid support only providers of physical health services. (Center for Health Care Strategies, June 2017)


VALUE-BASED PAYMENT ARRANGEMENTS

• Who serves Medicaid’s highest cost patients? The case for VBP arrangements that support behavioral health providers can be made, given that:

• Spending for individuals with a behavioral health diagnosis is nearly four times higher than for those without.*

• 20 percent of Medicaid enrollees who have a behavioral health diagnosis account for almost half of total Medicaid expenditures.*

• VBP in Medicaid holds promise to improve quality and slow growth if it were routinely extended to Medicaid behavioral health providers.

*Medicaid and CHIP Payment and Access Commission. “Chapter 4: Behavioral Health in the Medicaid

Program — People, Use, and Expenditures. Report to Congress on the Medicaid and CHIP.” June 2015.



ALTERNATIVE PAYMENT MODELS

The Health Care Payment Learning & Action Network (HCP-LAN) was created to drive alignment in payment approaches across the public and private sectors of the U.S. health care system.

The HCP-LAN created a common framework for adoption and measurement of VBP across all payer types (Medicare, Medicaid, and Commercial).

The APM Framework was “refreshed” in 2017, removing subcategory 2D and establishing a new subcategory 4C.

The Alternative Payment Model (APM) Framework provides a continuum of payment models.



Category 1: FFS payments not linked to quality. • FFS payments are based on the number and units of service provided, without linkages to, or adjustments for,

provider reporting of quality data, or performance on cost or quality data.

Category 2: FFS payments linked to quality and value. • FFS payments are adjusted based on other factors, such as infrastructure investments, whether providers report

quality data (pay-for-reporting),and/or performance on cost and quality metrics (pay-for-performance).

• Category 2A (Foundational Payments): Payments for infrastructure investments that can improve the quality of patient care, even though payment rates are not adjusted in accordance with performance on quality metrics.

• Category 2B (Pay for Reporting): Positive or negative payment incentives to report quality data.

• Category 2C (Pay-For-Performance): Payments that reward providers that perform well on quality metrics and/or penalize providers that do not perform well, thus providing a significant linkage between payment and quality.

Note: Washington State Health Care Authority’s definition of VBP starts with Category 2C.



Category 3: Alternative payment models based on FFS.• Payments are based on FFS, but provide mechanisms to more effectively manage services. Providers must meet

quality metrics to share in cost savings, and payments are based on cost performance against a target. Models may include:

– Category 3A (APMs with Shared Savings): Also referred to as “upside” risk, providers must meet a total-cost-of-care target for some/all services for an attributed set of patients. If actual costs are below projections, providers may keep some savings if quality measures are met.

– Category 3B: • APMs with Shared Savings and Downside Risk. Also referred to as “upside” or “downside” risk respectively, providers must meet a

total-cost-of-care target for some/all services for an attributed set of patients. If actual costs are below projections, providers may keep some savings if quality measures are met, or if actual costs are above projections, providers must compensate payors for a share of the losses.

• Bundled or episode-based payments. A single payment to providers for all services needed to treat a given condition (e.g., maternity care) or to provide a given treatment (e.g., hip replacement). Providers receive an inclusive payment for a specific scope of services to treat an “episode of care” with a defined start and endpoint (e.g., case rate for six months of SUD recovery services).

Note: Washington State Health Care Authority’s definition of VBP includes all Category 3 arrangements.



Category 4: Population-based payments.• Payments are structured to encourage providers to deliver coordinated, high-quality

care within a defined budget.

• Category 4A (Condition-Specific Population-Based Payments): Providers are accountable for quality and cost, receiving per-member per-month payments for a specific condition or defined scope of practice.

• Category 4B (Comprehensive Population-Based Payments): Providers are accountable for quality and cost, receiving per-member per-month (or percent of premium) payments for all of the individual’s health care needs.

• Category 4C (Integrated Finance & Delivery Systems): Also involve comprehensive population-based payments but involve organizations that integrate financial and care delivery systems.

Note: Washington State Health Care Authority’s definition of VBP includes all Category 4 arrangements.

MEDICAID VBP LANDSCAPE

• Payment Reforms. States are using MCO contracts as a vehicle to increase the number of providers paid under VBP arrangements. Such approaches include requiring MCOs to:

• Adopt standardized VBP model to reimburse providers (Minnesota, Tennessee)• Make a specific percentage of provider payments through approved VBP

arrangements (Arizona, Pennsylvania, South Carolina, New York State)• Participate in a multi-payer VBP alignment initiative (Tennessee)• Launch VBP pilot projects under state oversight (New Mexico, Minnesota)

• States may also adjust payments to MCOs based on quality metrics and efficiencies to drive behavioral health outcomes and advance integrated models.



APM NATIONAL LANDSCAPE

Source: Bailit Health, “State Medicaid Approaches for Defining and Tracking Managed Care Organizations Implementation of Alternative Payment Models”, February 2018.

State LAN Category in MCO Contract

Arizona 2C or higher

California 2, 3, & 4 in 2018

New York 3A or higher

South Carolina 2C or higher

Virginia “Emphasis” on 3 and 4

Washington 2C or higher

WASHINGTON STATE VBP LANDSCAPE

• Health Care Authority (HCA) has set a goal that 90% of state-financed payments to providers will be in APM Categories 2C-4B by 2021.

• Between 2017-2021, HCA is withholding a percentage of MCO’s monthly premium based on performance in the following areas:

– Provider Incentives Target (Percentage of payments in VBP arrangements in APM Categories 2C or higher that are directly conditioned on meeting quality and financial metrics)

– VBP Arrangements Target (Percentage of provider payments that must be in the form of VBP arrangements in APM Categories 2C or higher)

– Quality Improvement Score (Withholds that reward improvement and achievement of targets for seven quality measures)

– Challenge Pool Incentives (Unearned VBP incentives from managed care premiums will be available to reward plans that meet exceptional standard of quality and patient experience based on subset of measures)

• Washington’s 1115 DSRIP (Medicaid Transformation Project) incentive funding is tied to specific performance metrics and APM Categories 2C and above


VBP OPPORTUNITY FOR BEHAVIORAL HEALTH

Practice Pointers. Serving Medicaid’s highest cost patients, behavioral health agencies should recognize their value to MCOs in managing the total costs of care and leverage HCA financial incentives with MCOs.

Behavioral health agencies should:

1) Educate MCOs on the business case for VBP arrangements for populations with a behavioral health diagnosis.

2) Identify (and promote!) specific VBP arrangements in APM Categories 2C and higher that will achieve HCA targets / quality scores, assisting MCO recover premium withholds


VBP: ACCESS TO CLAIMS INFORMATION

Providers need timely, accurate and usable data to be successful in VBP arrangements.

– Timely receipt of patient health information related to emergency room visits, hospitalizations, and physical health care is essential for performing well on P4P incentives and managing the total costs of care of the attributed population.

Practice Pointers. A provider’s terms of participation in VBP arrangements should contain language that requires the MCO to furnish to the provider the necessary claims information related to a patient’s use of services (or provide access to integrated databases), patient risk scores, and prior authorization requests on a real-time basis.

– Ideally, the contract would specify the type of data that the provider is entitled to receive, the timeliness of such data, and the frequency in which the MCO must provide the data to the provider.

– If the MCO fails to meet its data sharing obligations, the provider should be held harmless from any loss of revenue arising from unearned payment withholds or downside financial risk.


SIDEBAR: PATIENT CONFIDENTIALITY LAWS

• A Covered Entity may disclose protected health information (“PHI”) for the treatment activities of any health care provider (including providers not covered by the Privacy Rule).

– Covered Entities include health care providers who transmit health information in an electronic form as well as health plans (e.g., health insurers, state Medicaid programs)

– “Treatment” generally means the provision, coordination, or management of health care and related services among health care providers or by a health care provider with a third party, consultation between health care providers regarding a patient, or the referral of a patient from one health care provider to another.

– Note: Disclosures for treatment purposes do not need to abide by the “Minimum Necessary Standard” and can disclose all of a patient’s PHI.

• Generally, 42 CFR Part 2 restricts disclosure and use of substance use disorder records which are maintained in connection with the performance of a federally-assisted Part 2 program.

– Unlike HIPAA, patient consent is required even for disclosures for the purposes of treatment.


VBP PERFORMANCE MEASURES

• To facilitate participation in multiple VBP arrangements, providers should seek performance measures that have standard definitions and methodologies for calculating scores (e.g., HEDIS measures). Ideally, the Medicaid measure sets and incentives would align with those used by Medicare and commercial payers.

• Providers should be familiar with the performance measures applicable to MCOs (particularly Medicaid MCOs), understand the financial rewards available to MCOs (if any), prioritize internal operations to score high on those performance measures, and leverage those results for favorable VBP arrangements with MCOs.

Practice Pointers:

– A provider’s terms of participation in VBP arrangements should contain clear language regarding the population of patients subject to the performance measures, the definitions and methodology for calculating scores, and the financial rewards available.

– The MCO should not be permitted to change the performance measures (or methodology) after they have been established for any given performance year, at least without the provider’s consent.


VBP PERFORMANCE MEASURES


• Comprehensive Diabetes Care - Poor Hb A1c Control (>9%)

• Comprehensive Diabetes Care - Blood Pressure Control (<140/90)

• Controlling High Blood Pressure (<140/90)• Antidepressant Medication Management –

Effective Acute Phase Treatment• Antidepressant Medication Management -

Effective Continuation Phase Treatment (6 Months)

• Childhood Immunization Status - Combo 10• Well-child visits in the 3rd, 4th, 5th and 6th years

of life• Medication Management for people with Asthma:

Medication Compliance 75% (Ages 5-11)

• Medication Management for people with Asthma: Medication Compliance 75% (Ages 12-18)

• Alcohol and Drug Treatment (Service) Penetration• Substance Use Disorder Initiation• Substance Use Disorder Engagement• Mental Health Treatment (Service) Penetration

2019 Quality Measures in Apple Health Contracts (Fully Integrated Managed Care)

• To connect payment to quality of care and to value, HCA is withholding 1.5 percent of a MCO’s monthly premium.

• 75% of that withhold can be earned back based on achieving targets for the following quality measures:

VBP: P4P REWARDS AND SHARED SAVINGS

P4P Rewards/Upside-Only VBP Arrangements. A provider is not placed at financial risk to participate in APM Category 2C (P4P bonus only) and 3A (upside-only shared savings) VBP incentive arrangements.

– Even if the provider does not qualify for incentive payments, participation in those arrangements may “kick-start” internal delivery changes and partnerships with other providers to qualify for future payments.

Practice Pointers. During negotiation of contracts (and contract amendments!) with MCOs, providers should affirmatively request participation in an MCO’s VBP arrangements to maximize overall reimbursement.

– If an MCO is not willing to permit participation in VBP arrangements at the point of contracting, a provider should seek language that entitles the provider to participation at a future date, upon meeting eligibility requirements, or otherwise.


VBP: P4P PENALTIES AND SHARED RISK

P4P Penalties / Downside Risk VBP Arrangements. A provider is placed at financial risk to participate in APM Category 2C (P4P penalties only) and 3B (upside and downside shared savings) VBP incentive arrangements. Providers should generally exercise caution in entering such arrangements as they could result in significant risk to the organization’s financial health.

Practice Pointers. When negotiating the terms of participation in any VBP arrangement that involve financial penalties or downside financial risk, the provider should add language that limits or mitigates any such penalties or downside risk.

– If the contract imposes a financial penalty on the provider, the provider should negotiate language that creates a ceiling on the penalty as a fixed dollar amount or percentage of total payments received from the MCO.


VBP: P4P PENALTIES AND SHARED RISK

(continued)

Practice Pointers. When negotiating the terms of participation in any VBP arrangement that involve financial penalties or downside financial risk, the provider should add language that limits or mitigates any such penalties or downside risk.

– If the provider enters a downside shared risk arrangement, the provider should negotiate language that limits financial losses to a percentage of total payments or the benchmark.

– If the provider is participating in a VBP arrangement that involves financial penalties, the provider should negotiate a provision that allows financial losses incurred in one year to be paid back to the MCO by financial gains earned in subsequent years.


POPULATION-BASED VBP ARRANGEMENTS

Attribution Methodology. The basis by which the MCO attributes patients to a population under a VBP arrangement. Possible attribution methods might include populations based on an enrollee’s:

– Geographic area (e.g., counties)– Specific behavioral health diagnoses – Receipt of services from a behavioral health agency (e.g., clients) – Receipt of health home services– Receipt of primary care services

Prospective Attribution. If attribution of patients is prospective, providers should recognize that the population of patients attributed to the provider may:

– Include patients who have not visited the provider during the current performance year; and

– Include patients who have received services from the provider but who were actually assigned to a different provider.


POPULATION-BASED VBP ARRANGEMENTS

(continued)

Practice Pointers. To avoid surprises related to the attributed patient population, a provider should:

• Request that the MCO generate a list of attributed patients based on prior year’s data so that the provider can learn how many and which patients would have been attributed to the provider under a VBP arrangement.

• Negotiate a provision that requires the MCO to provide a list of the attributed patient population at least 90 days prior to the start of the performance period for the VBP arrangement.

• Negotiate a provision that requires the MCO to provide monthly or quarterly patient rosters of attributed patients for the current performance year as well as the right to confirm or reject individuals attributed to the provider against the provider’s own records within 60 days of receipt of the patient rosters.


VBP CONTRACT TERM

• Providers should be aware that there may be a separate contract term that applies to VBP arrangements.

• In practical terms, the contract term reflects the amount of time that the provider is committing to participate in the VBP arrangement.

• Provider Pointer. When initially contracting with an MCO, it may be desirable for the term of the VBP arrangement to be shorter (e.g., one year)– possibly without automatic renewal--so that the provider can re-negotiate any problematic terms of participation in VBP arrangements.

• In any VBP arrangement, providers should seek contract language that permits them to receive payment of any earned payment incentives for completed performance periods prior to termination of the participation agreement, even if the payment incentives have not been distributed prior to termination.


VBP TERMINATION

• If participation in a VBP arrangement involves financial risk, the provider may wish to include contract language that permits the provider to terminate its participation in the VBP arrangement if the provider is incurring (or is likely to incur) financial penalties under the arrangement.

• Contracts can typically be terminated “for cause” or “without cause”.

– For cause. The situations that constitute cause will be listed in the contract, e.g., breaches of material terms of the contract.

• Practice Pointer: The provider may want to add other circumstances that would permit participation in the VBP arrangement to be terminated for cause, e.g., the MCO modifies the performance measures or methodologies.

– Without cause. In some contracts, a party may also terminate without cause after providing written notice to the other party.

• Practice Pointer: Contracts that contain termination without cause provisions mean that, from a practical perspective, the term of the contract is the notice period. This may be a desirable mechanism to exit the VBP arrangement if necessary.


VBP AMENDMENTS

• Amendment provisions are particularly crucial in VBP arrangements because the clinical, operational, and financial environments in which the parties operate are subject to constant change.

Practice Pointer. Determine whether there is a specific amendments clause that applies to participation in VBP arrangements.• Any amendments clause to VBP arrangements should offer the right to the provider to opt-out

but if the amendments clause permits the MCO to amend unilaterally the terms of participation in a VBP arrangement, then the provider should negotiate language that permits the provider to terminate its participation in the VBP arrangement.


STEP 2Evaluate The Contract

1. Negotiate the timeframe for review 2. Assemble your contract review team

– Establish a “point person” and review team lead – Assign areas of contract review to team members based on their

expertise 3. Assemble documents

– Obtain entire proposed contract from MCO, including all referenced and incorporated documents

– Do not assume MCO knows your scope of services!– Obtain other documents necessary to understand legal obligations (for

example, in Medicaid managed care, the MCO’s contract with the State)

51 © 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 51

EVALUATING THE CONTRACT

4. Assess the MCO’s Operational Performance

Considering past performance of the MCO is crucial. If possible, gather information about past experience of the provider with this MCO:

– Did the MCO meet its payment obligations on time?– Was the basis for denied claims reasonable?– Did the MCO give the provider a role in the development of policies, such as

utilization review?– Was the MCO responsive to the provider’s requests?



5. Assess the MCO’s Financial Stability

Evaluate the MCO’s background and fitness. If possible, the provider should examine the following elements of the MCO’s operation:

– Financial stability and strength– Administrative record– Operational methods– Structural framework



6. Review the Contract* Do you understand what all provisions mean? What provisions disadvantage your organization from a financial, clinical,

operational, or legal perspective? Are responsibilities for each party clearly stated and all terms defined? Does the contract include all of the relevant appendices and exhibits? Have you reviewed any policies, procedures and documents referenced in

the contract? Have you reviewed any references to statutes, codes, regulations to know

what they say? Does signing the contract reflect sound business judgment?

*See Part 2 of these slides!


WHAT’S TO EVALUATE?

• Scope of Services• Covered Services• Subcontracting Arrangements• Credentialing• Access/Quality Standards• Utilization Management• Regulatory Penalties• Reimbursement Rates• Waiver of Co-Payments and

Deductibles• Prompt Payment• Governing Law


• Payment Suspension• Overpayment Recoupment• Retroactive Disenrollment• Appeals • Dispute Resolution• “All Products” Clauses• Term and Termination• Breach and Cure• Post-Termination Responsibilities• Amendments


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7. Identify and Prioritize Issues

Categorize each issue as follows:

Red: Critical issues that without addressing you cannot afford to proceed because the risks (not just financial) are unacceptable for the organization

Yellow: Significant issues that should be addressed before proceeding because they create undesirable risks for the organization

Green: Issues that ideally would be addressed prior to proceeding to reduce potential risks


STEP 3: NEGOTIATE MANAGED CARE CONTRACTS

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Your idea of negotiation?


WHAT’S NEGOTIATION?

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Reframe negotiation as discussion aimed

at reaching agreement.


GETTING TO YES

Fisher, Roger; Ury, William; Patton, Bruce (2011) [1981]. Getting to Yes: Negotiating Agreement Without Giving In (3rd ed.). New York: Penguin Books.


NEGOTIATING LOGISTICS

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Preliminary questions• Who will be negotiating?

• A team?• An individual?

• How will issues be negotiated?• In writing?• By phone?• In person?


NEGOTIATING THE CONTRACT

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occurs when one or both parties get stuck in ensuring that they win on

their positions, regardless of whether the overall goal is attained occurs when parties take extreme

positions in the expectation that they will have room to bargain down

A common error is bargaining over positions.



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Respond with questions, rather than statements

Respond specifically to the MCO’s

concerns

Develop options for mutual gain and

generate a variety of possibilities

Look for zones of agreement and areas of overlap

Focus on underlying interests


NEGOTIATING TIPS

Educate: Do not assume that the MCO’s representative understands your concerns.

Learn: Respond with questions, rather than statements, and respond specifically to the MCO’s concerns

Voice options for mutual gain and generate a variety of possibilities before deciding what to do

Insist that resulting provisions be based on some objective standard

State the importance of maintaining an ongoing relationship



If you did not resolve all of the critical issues to your satisfaction, consider:

– whether this one MCO contract is essential to your operations

– whether the risks of contracting outweigh the risks of not contracting with the MCO

– whether you can terminate the contract early in the event that the financial or legal harm becomes too great to bear

– whether you have any other options for achieving a better outcome, i.e., using an agent for negotiations


NEGOTIATING CONTRACTS: KEY POINTS

Have a Plan! (Even if not my plan!)

• Step 1: Don’t Underestimate the Value of Preparation• Regulatory requirements, market power, and timing are critical levers in

negotiation• Position to compete on value and participate in value-based payment

arrangements

• Step 2: Evaluate the contract critically and realistically• Work as a team to understand contract provisions• Determine highest priority issues and implications

• Step 3: Negotiate firmly but kill them with kindness


PART 2

Key Terms and Legal Protections


SCOPE OF SERVICES

MCOs typically contract with a range of providers, each of which furnishes a subset of the full range of services that the MCO is responsible for covering on behalf of the payer.• The scope of services section of the contract specifies which covered plan services

the provider is responsible for providing.• Test for under-inclusiveness: Does the scope of services describe all of the

services you furnish? • Test for over-inclusiveness: Does the scope of services describe any services you

do not furnish?


COVERED SERVICES

68

Distinguish your scope of services from the enrollee’s

covered services (i.e., the services available under the

enrollee’s benefit plan).

Services must fall within bothCovered Services and Scope of Services in order to receive

payment from an MCO.

Often enrollees have different benefits plans; not every

service falling in the provider’s scope of service under the contract is covered under a particular enrollee’s benefit

plan.

Determine whether there are any significant coverage limitations that apply to

services you provide

The contract should make clear that the provider may treat

enrollees as private-pay patients for purposes of

providing non-covered services.

Review the documentation requirements to bill a patient

for non-covered services.


HOW SERVICES ARE PROVIDED

69

•Limitations on which types of clinicians may provide certain services

•Limitations on the provider’s ability to arrange for services through subcontract

The contract should clearly state any limits on how services can be provided by the provider, including:


TIMELY CLAIMING RULES

70

MCOs typically require the submission of claims no more than 90 days after the date of service.

•Determine whether state law or other obligations on the MCO dictate a longer claims filing period.

Review the proposed contract for provisions concerning the consequences of late claim submission

•Negotiate for a provision that makes MCO denial of late claims discretionary rather than mandatory



Timely Claiming Rules

Claims Payment Standards – Section 9.12• The Contractor shall allow providers 365 days to submit claims for services provided this

Contract unless the provider has agreed or agrees to a shorter timely filing timeframe in their contract with the Contractor.



Timely Claiming Rules

2.3 Billing LimitationTimely Claiming Rules• The Contractor must waive the timeliness rule for processing a claim and prior authorization

requirements when HCA program integrity activities result in recoupment of an improperly paid claim HCA paid but should have been paid by the Contractor.

• The servicing provider must submit a claim to the Contractor within 120 days from HCA’s notification of improper payment.


PROMPT PAYMENT RULES

73

Just as the MCO has an interest in timely claims submission, a provider has an interest in timely payment.

•A “clean claim” is a claim, received by a MCO for adjudication, that requires no further information, adjustment, or alteration by the provider of the services, or by a third party, in order to be processed and paid by the MCO. It does not include a claim from a provider who is under investigation for fraud or abuse, or a claim under review for medical necessity.

•Providers should seek to have prompt pay rules, including any automatic interest provisions, written into the provider agreement.

•Providers should have right to receive a written explanation for all denied claims and the information that is needed by the MCO to process the claim for payment.



Prompt Payment / Denied Claims Protections

74

Claims Payment Standards – Section 9.12• The Contractor shall meet the timeliness of payment standards specific for health carriers in WAC

284-170-431.• To be compliant with payment standards, the Contractor shall pay or deny 95% of clean claims

within 30 calendar days; 95% of all claims within 60 calendar days; and 99% of clean claims within 90 days of receipt.

• A “clean claim” is a claim that can be processed without obtaining additional information from the provider of the services.

• The date of receipt is the date the Contractor receives the claim from the provider.• The date of payment is the date of the check or other form of payment.


WASHINGTON STATE LAWPrompt Payment / Denied Claims Protections

WAC 284-170-431 - Provider contracts—Terms and conditions of payment.

(1) Every participating provider and facility contract shall set forth a schedule for the prompt payment of amounts owed by the carrier to the provider or facility and shall include penalties for carrier failure to abide by that schedule.

(2) Minimum payment standards:(i) 95% of clean claims paid within 30 days and 95% percent of all claims shall be paid or denied within 60 days.

(3) Any carrier failing to pay claims within that time period shall pay interest of 1% per month on undenied and unpaid clean claims until paid. The carrier shall add the interest payable to the amount of the unpaid claim without the necessity of the provider or facility submitting an additional claim.

(4) Denial of a claim must be communicated to the provider or facility and must include the specific reason why the claim was denied. If the denial is based upon medical necessity or similar grounds, then the carrier upon request of the provider or facility must also promptly disclose the supporting basis for the decision. For example, the carrier must describe how the claim failed to meet medical necessity guidelines.


CORRECTION OF OVERPAYMENTS & UNDERPAYMENTS

76

MCO contracts typically allow the MCO to recoup

overpayments (excess payment by the MCO to the

provider)

• Determine whether there are any limits on the MCO’s timeframe for recouping overpayments from a provider.

Contracts commonly permit the MCO to recoup an overpayment by offset;

the MCO subtracts the overpayment from any

amounts due to the provider

• Determine whether the contract requires the MCO to provide notice of the alleged overpayment (and afforded the provider an opportunity to appeal the determination) prior to offset.

• Determine whether the contract permits the provider to dispute underpayments within a time frame that is equal to the time frame that a MCO may recoup overpayments.



Recoupments of Overpayments

5.5 Recoupments• HCA shall recoup premium payments and retroactively terminate enrollment of an individual

Enrollee with duplicate coverage, who is deceased prior to month of enrollment, who retroactively has their enrollment terminated, who is an inmate of a correctional facility, who is residing in an IMD for more than 15 days, and when an audit determines that payment is in error.

• The Contractor may recoup payments made to providers for services provided to Enrollees during the period for which the HCA recoups premiums for those Enrollees.

• If the Contractor recoups such payments, providers may submit appropriate claims for payment to the HCA through its FFS program, if the Enrollee was eligible for services and if the provider was enrolled in the FFS program.


WASHINGTON STATE CODE

Recoupments of Overpayments - Exception

WAC 284-43-2000 - Health care services utilization review—Generally.

• (4) Each issuer when conducting utilization review must:• (h) Not retrospectively deny coverage for emergency and nonemergency care that

had prior authorization under the plan's written policies at the time the care was rendered unless the prior authorization was based upon a material misrepresentation by the provider or facility;


DISPUTE RESOLUTION PROCESS

79

The contract should contain a streamlined, expedited process for claims disputes, and a more

elaborate process for other disputes

The contract should use a graduated, step-by-stepdispute resolution process

Informal negotiation

Mediation

Arbitration (binding) or judicial remedies The contract should not require the provider to

exhaust an appeals process within the MCO before resorting to other measures


“ALL PRODUCTS” CLAUSES

80

MCOs frequently pay providers at different rates for various lines of business (private commercial insurers, Medicare Advantage, Medicaid.)

An “all-products” clause requires the provider to participate in all products (and rates) offered by the MCO (both currently and prospectively)

Providers should have the ability to opt-out of any new products offered by the MCO.



Participation in Non-Medicaid Products

RCW 48.39.020 - Payor may require provider to extend payor's medicaidrates—Limitations.• A payor may require a health care provider to extend the payor's medicaid rates, or some

percentage above the payor's medicaid rates, that govern a health benefit program administered by a public purchaser to a commercial plan or line of business offered by a payor that is not administered by a public purchaser only if the health care provider has expressly agreed in writing to the extension.

• For the purposes of this section, "administered by a public purchaser" does not include commercial coverage offered through the Washington health benefit exchange.

• Nothing in this section prohibits a payor from utilizing medicaid rates, or some percentage above medicaid rates, as a base when negotiating payment rates with a health care provider.


COLLECTING PATIENT COST-SHARING

82

As in traditional Medicare and Medicaid, the provider is responsible for collecting cost-sharing (copayments, coinsurance, and deductibles) required under the terms of the enrollee’s plan.

Under MCO contracts, providers are at financial risk for the collection of any cost-

sharing amounts.

Practice Pointer: Determine applicable cost-sharing amounts, particularly deductibles,

applicable to MCO product lines.

Practice Pointer: Cost-sharing should be collected at the time of the visit, either before

or after services are rendered.


WAIVER OR REDUCTION OF COST-SHARING

83

In many cases, the MCO does not permit a provider to reduce or waive the amount of cost-sharing owed by a patient.

• Providers should seek a modification that allows it to waive or reduce cost-sharing amounts for individuals who qualify under the provider’s charity care policy, if any.

• Providers should be aware that a routine practice of discounting or waiving these obligations for all patients should be avoided, as it opens the provider up to potential liability on numerous fronts.


REGULATORY PENALTY PROVISIONS

84

Some contracts hold a provider liable for any

fines or penalties assessed against the

MCO by a state or federal regulatory agency that result

from a provider’s non-compliance with a

requirement under the contract or provider

manual.

•Under these provisions, providers will be liable even if:•MCO was unaware of the non-compliance, took no steps to

monitor the provider, or correct the provider’s non-compliance.•Provider did not act negligently but made good faith efforts to

comply.•Providers do not have authority to appeal or dispute the regulatory

agency’s fines or penalties against the MCO.•Providers should avoid incurring liability for fines or penalties

assessed against MCO.


ACCESS STANDARDS

85

Access standards define the required level and availability of care from a patient-centered perspective, including:

required hours and days of operation (including evening

and weekend business hours)

after-hours coverage and on-

call coverage when a designated health care professional is

unavailable

maximum waiting times for

establishing an appointment for

various categories of services

maximum waiting-room times



ACCESS & APPOINTMENT STANDARDS

86

Appointment Standards - Section 6.9• Emergency services must be available 24 hours a day, seven days a week.

• Urgent, symptomatic office visits shall be available from the Enrollee’s primary care, behavioral health, or another provider within twenty-four (24) hours. An urgent, symptomatic visit is associated with the presentation of medical or behavioral health signs that require immediate attention, but are not emergent.

• Non-urgent, symptomatic (routine care) shall be available from an enrollee’s PCP or another provider within ten (10) calendar days, including behavioral health services from a behavioral health provider. A non—urgent, symptomatic visit is associated with the presentation of medical signs not requiring immediate attention.


LICENSURE – CONTRACT PROVISIONS

87

Notice

• MCO contracts typically require that provider report any loss of licensure immediately to MCO

• Providers should seek to avoid contract provisions that require that the provider report to the MCO whenever a clinician is in danger of losing license (e.g., under investigation), as divulging information at that stage could be a liability risk

Consequence

• Failure to maintain licensure is in some contracts grounds for immediate termination

• Loss of licensure by one clinician should not trigger immediate termination, so long as provider has continuing capacity to perform


CREDENTIALING – TIMING

88

Most MCO contracts provide for credentialing at the outset of the contract and at regular intervals (e.g., every three years) • MCO credentialing of a practitioner must be effective on the date of service in order for the provider to receive

payment for services to an MCO enrollee• MCOs may provide a maximum timeframe for completion of credentialing (usually around 30 days), but only

upon the MCO’s receipt of a “complete application” • Practice Pointer: Delay new practitioner’s start date until credentialed by at least one MCO


DELEGATED CREDENTIALING

89

Some providers have succeeded in negotiating a “delegated credentialing” relationship (i.e., the provider performs credentialing on behalf of the MCO, under MCO’s oversight)

MCO saves costs; provider gains control over timing

Delegated credentialing typically requires provider to use national standards (e.g., National Committee for Quality Assurance)



Credentialing Protections

90

Section 9.14 – Provider Credentialing

• The Contractor’s credentialing and recredentialing program shall include:

• A process for provision credentialing that affirms that:

• The practitioner may not be held in a provisional status for more than sixty (60) calendar days; and

• The provisional status will only be granted one (1) time and only for providers applying for credentialing the first time.

• A detailed description of the Contractor’s process for delegation of credentialing and recredentialing.

• The Contractor shall have a process for notifying providers within 15 calendar days of the credentialing committee’s decision.

• The Contractor shall have a process and criteria for assessing and reassessing organizational providers.


UTILIZATION MANAGEMENT

91

UM programs are relevant to behavioral health providers because:

• MCOs often impose prior authorization or visit limits for behavioral health services• MCOs often require authorization before ordering certain drug screening tests• MCOs increasingly require prior authorization before a provider may refer patients

for rehabilitative services


“MEDICAL NECESSITY”

92

The contract should specify all services that will be subject

to UM

The core function of the UM program is to ensure that

the MCO pays for only those services that are “medically

necessary”

Involves a determination of whether the service is necessary and appropriate for the patient’s

symptoms, diagnosis, and treatment

The definition of “medically necessary” in the MCO contract is

of critical importance to the provider and the enrollee

Many MCO contract definitions of “medically necessary” state that

services may not be provided primarily for the convenience of the

patient or the provider


UTILIZATION MANAGEMENT Contract Provisions/Provider Manual

93

MCO contract provisions or manual should specify:

Documents that the provider must submit to the MCO for the review

Special procedures for obtaining emergency authorization for services

The grievance / appeal procedure available to contest the denial of prior authorization (by either the enrollee or the provider on the enrollee’s behalf)

Whether under any circumstances the provider may obtain payment when the criteria for prior authorization were met, but the provider failed to timely request prior authorization.



Utilization Management and Authorization

Utilization Management and Authorization – Section 11

• The Contractor shall maintain a list of all behavioral health services requiring prior authorization by the Contractor and submit to the HCA annually and publish this list on its website.

• The Contractor shall require authorization decisions for behavioral health services made by US licensed behavioral health professionals.

• A physician board-certified or board-eligible in General Psychiatry or Child Psychiatry;• A physician board-certified or board-eligible in Addiction Medicine, a subspecialty in Addiction

Psychiatry or by ASAM;• A licensed, doctoral level psychologist; or• A pharmacist, as appropriate.

• The Contractor shall ensure that any behavioral health actions must be peer-to-peer – that is, the credential of the licensed clinician making the decision to authorize service in an amount, duration or scope that is less than requested must be at least equal to that of the recommending clinician.



Utilization Management and Authorization

Level of Care Guidelines– Section 11.1.25

• The Contractor shall develop and implement UM protocols, including policies and procedures and Level of Care Guidelines for behavioral health services that are specific to Washington State Levels of Care, consistent with the HCA”s medical necessity criteria and comply with federal and state party requirements.


CONTRACT TERM

96

When initially contracting with an MCO, the provider may want to limit the term of the contract to one year without automatic renewal (“evergreen”) provisions

Contracts generally state how long the contract will be in

force (term) and the procedures for renewing or terminating the

contract


TERMINATION

97

Contracts can typically be terminated “for cause” or

“without cause”

The situations that constitute cause will be listed in the contract, e.g., breaches of material terms of

the contract

Sometimes a party may terminate without cause after providing notice to the other

party

Recognize that when contracts may be terminated without cause,

the notice period becomes the effective term of the contract.


AMENDMENTS

98

•Amendment provisions are particularly crucial in MCO contracts, because the clinical, operational, and financial environments in which the parties operate are subject to constant change.

•Determine whether the amendments clause applies solely to the contract itself or also includes documents incorporated by reference, such as “program attachments”, “payment exhibits”, and the MCO’s policies and procedures

Scope


AMENDMENTS

99

•Immediate amendment: Notice (only for regulatory or statutory changes)•Auto-amendment: Notice and right to opt-out (non-regulatory amendments)•Written amendment: Notice and Consent (signed by both parties)

Provider Rights

•Providers might consider proposing the right to amend the contract.

Initiator



Material Amendments

RCW 48.39.010 - Notice of material amendments to contract—Failure to comply.

• A third-party payor shall provide no less than sixty days' notice to the health care provider of any proposed material amendments to a health care provider's contract with the third-party payor.

• Any material amendment to a contract must be clearly defined in a notice to the provider from the third-party payor as being a material change to the contract before the provider's notice period begins.

• The notice must also inform the providers that they may choose to reject the terms of the proposed material amendment through written or electronic means at any time during the notice period and that such rejection may not affect the terms of the health care provider's existing contract with the third-party payor.

• A health care provider's rejection of the material amendment does not affect the terms of the health care provider's existing contract with the third-party payor.

• A failure to comply with the terms of subsections (1), (2), and (3) of this section shall void the effectiveness of the material amendment.


INDEMNIFICATION

101

•A party is “indemnified” if, by virtue of a contract provision, it avoids assuming responsibility for another party’s acts or omissions arising out of performance of the contract

•Indemnification clauses should apply to both parties

Indemnification provisions state which party to a contract bears

the risk (and liability) for certain events or acts of third parties


INDEMNIFICATION

102

•to the MCO for coverage decisions, selection of providers, utilization management activities, compliance with state and federal insurance laws, and other acts within its control.

•to the provider for professional medical judgment (including malpractice claims), medical record documentation requirements, accurate claims submission, and other acts within the provider’s control

The contract should allocate

responsibility:


PART 3

Participating or Forming Provider Networks


Behavioral Health

Primary care

Hospitals

ACCOUNTABLE CARE ORGANIZATION (ACO)


Health Services Marketplace (of the future?)

Managed Care Organization

ACO 1

ACO 2

ACO 3

ACCOUNTABLE CARE MARKETPLACE?


106

• Combination of one or more hospitals, physician groups (primary care and specialty), and other providers

• Local accountability

• Financial incentives to meet quality benchmarks or cost-savings

• Shared governance structure

• Formal legal structure that allows organization to receive and distribute payments to participating providers

• Leadership and management structure that includes clinical and administrative systems

• Performance measurement

BASIC FEATURES OF THE ACO


PROVIDER LEADERSHIP

“The concept of ACOs is an entirely new paradigm– giving healthcare providers the responsibility and appropriate incentives to improve outcomes and giving them the flexibility to design the most efficient and effective way to do so.”

– Harold Miller, “How to Create Accountable Care Organizations, “Center for Healthcare Quality & Payment Reform, September 2009.


108

ACO GROWTH BY CONTRACT TYPE

8 8 10 3362

182 183

295 296 296 297

418 418

418

523

76 78 88

173196

212 230266 285

316341

381416

463528

84 86 98

206258

394 413

561 581612

638

799834

881

1051

0

200

400

600

800

1000

1200

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

# of

ACO

Con

trac

ts

Government Commercial Total

SOURCE: Muhlestein, Leavitt Partners


Includes ACO partners with sufficient claims to measure year-over-year trend

-

--

- -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-ACO 1 ACO 2 ACO 3 ACO 4 ACO 5 ACO 6 ACO 7ACO 1 ACO 2 ACO 3 ACO 4 ACO 5 ACO 6 ACO 7

BLUE SHIELD OF CALIFORNIA ACO RESULTS

Data paid through 12/13Comparison of baseline (pre ACO) to

most recent completed ACO contract period

1 trend as of Feb 2013

-

-

Includes ACO partners with experience through CY 2013

Nearly $300 Million saved

> $40 PMPM

Source: K. Miranda, Blue Shield of CA, DOJ/FTC Workshop

109 109© 2019 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

Patient Centered Medical Home

Specialists

ACO

ACCOUNTABLE CARE ORGANIZATION: IN THEORY

Behavioral Health

Providers

Rehab and LTCPrimary Care

Providers

Hospitals

Specialists


Primary Care Providers Hospital

ACOACOs may actually feel more like this.

ACCOUNTABLE CARE ORGANIZATION:IN REALITYHuman Services

Agencies

Rehab and LTCBehavioral Health

Specialists


ACO FINANCIAL INCENTIVES



PROVIDER NETWORKS

Many terms have been given to describe different types of provider-led entities:• Independent Practice Association (IPA)• Management Services Organization (MSO)• Administrative Services Organizations (ASO)• Clinically Integrated Network (CIN)• Accountable Care Organization (ACO)• Group Purchasing Organization (GPO)

Note: Some of these terms may only be used when approved by regulatory agencies.

FUNCTIONS OF PROVIDER NETWORKS

Shared Support Services

IT Support for Electronic Health Record (EHR)

Health Information Exchange (HIE)

Credentialing practitioners; exclusion/debarment background checks

Third-Party Billing

Managed Care Contracting

Marketing network of health care providers/agencies

Facilitating managed care contracting

Negotiating contracts


115

CAUTION: ANTITRUST RISKS

In general, providers must make independent, unilateral decisions on

contractual terms and negotiate separately in order to comply with state

and federal antitrust laws.


ANTITRUST LAWTHE SHERMAN ACT (15 U.S.C. §1)

• Purpose: To promote competition and protect consumers, not competitors.

• Prohibits anti-competitive activities (i.e., agreements) among private, competing businesses, that unreasonably restrain competition

• Enforced by both the U.S. Department of Justice (Antitrust Division) and Federal Trade Commission (FTC) as well as private parties


ANTITRUST LAWTHE SHERMAN ACT (15 U.S.C. §1)

• Price fixing• Market allocation• Concerted refusals to deal• Boycotts

Per-Se Illegal Agreements

• Do not discuss (with other providers) the reimbursement rates currently offered or paid by MCOs.

• Do not discuss (with other providers) whether you plan to accept or seek certain rates in the future.

Compliance Tips:


ANTITRUST LEGAL STANDARDS

118

Per-Se Illegal (e.g., price-fixing, market allocation)

• The joint activity of the network is likely to produce significant efficiencies that benefit consumers and

• Price agreements by the network providers are reasonably necessary to realize those efficiencies.

“Rule of Reason” test determines whether lawful if:

• DOJ/FTC Statements of Enforcement Policy in Health Care (1996)• http://www.ftc.gov/bc/healthcare/industryguide/policy/statement8.htm

• Medicare Shared Savings Program (MSSP)

Antitrust “Safety Zones”


http://www.ftc.gov/bc/healthcare/industryguide/policy/statement8.htm

119

HEALTH CARE ENFORCEMENT POLICY

Statement 4: Collection/Sharing Of Non-fee Related Information

• Collective provision of non-fee related information by competing health care providers to a purchaser [such as an MCO] in an effort to influence terms upon which the purchaser deals with the providers does not necessarily raise antitrust concerns.

• Does not apply to providers acting individually (which may provide any information to purchasers) or the collective provision of information through an integrated joint venture, discussed in later Statements.


120


Statement 4: Collection/Sharing Of Non-fee Related InformationSafety Zone (Not challenged “absent extraordinary circumstances”):

– Collection of outcome data from network members about a particular procedure that they believe should be covered by a purchaser or

– Providers’ development of suggested practice parameters (e.g., standards for patient management to assist clinical decision-making)

Collective provision of such information poses little risk of restraining competition and may help in the development of protocols that increase quality and efficiency.


121


Statement 4: Collection/Sharing Of Non-fee Related InformationConduct Falling Outside of Safety Zone:

– Any attempt by providers to coerce a purchaser's decision-making by implying or threatening a boycott of any plan that does not follow the providers' joint recommendation;

– Providers who collectively threaten to or actually refuse to deal with a purchaser because they object to the purchaser's administrative, clinical, or other terms governing the provision of services run a substantial antitrust risk; or

– Providers' collective attempt to force purchasers to adopt recommended practice parameters by threatening to or actually boycotting purchasers that refuse to accept their joint recommendation also would risk antitrust challenge.


122


Statement 5: Collection/Sharing Of Fee Related Information

• Collective provision to purchasers of factual information concerning fees charged currently or in the past for the providers’ services does not necessarily raise antitrust concerns.

– Factual information includes other aspects of reimbursement, such as discounts or alternative reimbursement methods accepted (including capitation arrangements, risk-withhold fee arrangements, or use of all-inclusive fees)

• Such factual information can help purchasers efficiently develop reimbursement terms to be offered to providers and may be useful to a purchaser when provided in response to a request from the purchaser or at the initiative of providers.

• Does not apply to providers acting individually (which may provide any information to purchasers) or the collective provision of information through an integrated joint venture, discussed in later Statements.


123


Statement 5: Collection/Sharing Of Fee Related InformationSafety Zone (Not challenged “absent extraordinary circumstances”): In order to qualify for this safety zone, the collection of information to be provided to purchasers must satisfy the following conditions:

1. Collection is managed by a third party; and2. Although current fee-related information may be provided to purchasers, any information

that is shared among or is available to the competing providers furnishing the data must be more than three months old; and

3. For any information that is available to the providers furnishing data, there are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data may represent more than 25 percent on a weighted basis of that statistic, and any information disseminated must be sufficiently aggregated such that it would not allow recipients to identify the prices charged by any individual provider.


124


Statement 5: Collection/Sharing Of Fee Related InformationConduct Falling Outside of Safety Zone:

– Collective negotiations between unintegrated providers and purchasers in contemplation or in furtherance of any agreement among the providers on fees or other terms or aspects of reimbursement, or to any agreement among unintegrated providers to deal with purchasers only on agreed terms;

– Providers who collectively threaten implicitly or explicitly, to engage in a boycott or similar conduct, or actually undertake such a boycott or conduct, to coerce any purchaser to accept collectively-determined fees or other terms or aspects of reimbursement; or

– Providers' collective provision of information or views concerning prospective fee-related matters (which is assessed on a case-by-case basis based on all the facts and circumstances surrounding the provision of the information.)


125


Statement 6: Provider Participation In Exchanges Of Price And Cost Information

• Participation by competing providers in surveys of prices for health care services, or surveys of salaries, wages or benefits of personnel does not necessarily raise antitrust concerns.

– Providers can use information derived from price and compensation surveys to price their services more competitively and to offer compensation that attracts highly qualified personnel.

– Purchasers can use price survey information to make more informed decisions when buying health care services.

• Such factual information can help purchasers efficiently develop reimbursement terms to be offered to providers and may be useful to a purchaser when provided in response to a request from the purchaser or at the initiative of providers.

• Without appropriate safeguards, however, information exchanges among competing providers may facilitate collusion or otherwise reduce competition on prices or compensation, resulting in increased prices, or reduced quality and availability of health care services.


126


Statement 6: Provider Participation In Exchanges Of Price And Cost InformationSafety Zone (Not challenged “absent extraordinary circumstances”).

Provider participation in written surveys of (a) prices for health care services or (b) wages, salaries, or benefits of health care personnel, if the following conditions are satisfied:

1. Collection is managed by a third party; and

2. Information provided by survey participants is more than three months old; and

3. There are at least five providers reporting data upon which each disseminated statistic is based, no individual provider's data may represent more than 25 percent on a weighted basis of that statistic, and any information disseminated must be sufficiently aggregated such that it would not allow recipients to identify the prices charged by any individual provider.


127


Statement 6: Provider Participation In Exchanges Of Price And Cost InformationConduct Falling Outside of Safety Zone:

– Exchanges of price and cost information that fall outside the antitrust safety zone generally will be evaluated to determine whether the information exchange may have an anticompetitive effect that outweighs any procompetitive justification for the exchange.

– Depending on the circumstances, public, non-provider initiated surveys may not raise competitive concerns. Such surveys could allow purchasers to have useful information that they can use for procompetitive purposes.

– Exchanges of future prices for provider services or future compensation of employees are very likely to be considered anticompetitive. If an exchange among competing providers of price or cost information results in an agreement among competitors as to the prices for health care services or the wages to be paid to health care employees, that agreement will be considered unlawful per se.


NEGOTIATING MANAGED CARE CONTRACTS

• Can a provider network negotiate fee-for-service (i.e., non-risk) contracts with MCOs?

• Generally, no as it would constitute price-fixing.

• But the answer can change:

• If the network is not composed of competitors (or potential competitors)

• If the network is “financially integrated“

• If the network is “clinically integrated” and the joint negotiation is necessary to make the clinically integrated activities work

• If the network participates as an ACO in the Medicare Shared Savings Program (MSSP)



Statement 9: Multiprovider Networks• Health care providers are forming a wide range of new relationships and affiliations,

including networks among otherwise competing providers, as well as networks of providers offering complementary or unrelated services.

• These affiliations-- referred to as “multiprovider networks”-- can offer significant procompetitive benefits to consumers. Such ventures may contract to provide services to subscribers at jointly determined prices and agree to controls aimed at containing costs and assuring quality.

• They also can present antitrust questions, particularly if the network includes otherwise competing providers.

• Because multiprovider networks involve a large variety of structures and relationships among many different types of health care providers, and new arrangements are continually developing, the Agencies were unable to establish a meaningful safety zone for these entities.



Statement 9: Multiprovider Networks

• Multiprovider networks will be evaluated under the “rule of reason,” and will not be viewed as per se illegal, if the providers' integration through the network is likely to produce significant efficiencies that benefit consumers, and any price agreements (or other agreements that would otherwise be per se illegal) by the network providers are reasonably necessary to realize those efficiencies.

• Significant efficiencies may be achieved by competing providers sharing “substantial financial risk” (defined in next slide) for the services provided (and jointly priced) through the network.



Statement 9: Multiprovider NetworksExamples of “substantial financial risk-sharing” include:

– capitation payments– global fee arrangements – fee withholds– cost or utilization based bonuses or penalties for participants, as a group, to achieve specified

cost-containment goals– agreement by the venture to provide a complex or extended course of treatment that requires

the substantial coordination of care by different types of providers offering a complementary mix of services, for a fixed, predetermined payment, where the costs of that course of treatment for any individual patient can vary greatly due to the individual patient's condition, the choice, complexity, or length of treatment, or other factors.

Tip: The Enforcement Agencies encourage multiprovider networks which are uncertain whether their proposed arrangements constitute substantial financial risk sharing to take advantage of the Agencies' expedited business review and advisory opinion procedures.



The Rule Of Reason• A rule of reason analysis determines whether the formation and operation of the joint venture may have a

substantial anticompetitive effect and, if so, whether that potential effect is outweighed by any procompetitive efficiencies resulting from the venture.

• The rule of reason analysis takes into account characteristics of the particular multiprovider network and the competitive environment in which it operates to determine the network's likely effect on competition.

• The steps ordinarily involved in a rule of reason analysis of multiprovider networks are set forth below.:1. Market Definition - Product and geographic markets, i.e., what substitutes, as a practical

matter, are reasonably available to consumers for the services in question?2. Competitive Effects – vertical and horizontal, i.e., market share and concentration3. Efficiencies - lower prices or higher quality


NETWORK SERVICES

• Can provider networks jointly price and offer “network services”?– Delegated credentialing activities– Care management activities– Quality improvement activities– Utilization review/management activities

• Legal Test: Do the network members share “substantial financial risk” in providing all the services that are jointly priced through the network?

– Yes, if the network receives a capitated or fixed pre-determined fee for providing the network services.

• Conclusion: The network may negotiate payment for furnishing services that it directly provides to an MCO.


INCENTIVE-ONLY PAYMENTS

• Can provider networks jointly negotiate incentive payments?– “Value-based” payment models such as shared savings (upside only) or shared risk

(upside/downside) for managing total costs of defined population– Performance incentives earned for achieving certain clinical outcomes (e.g., HEDIS

measures)

• Legal Test: Do the network members share “substantial financial risk” under the proposed arrangement?

– Yes, if the financial incentives are based on group performance, as a whole, to achieve specified cost-containment or clinical goals.

• Conclusion: The network may negotiate incentive-only payments that are based on overall network performance.


“RULE OF REASON” TEST FOR CLINICAL INTEGRATION

“Rule of Reason” test applies to determine whether providers’ integration through the network is likely to produce significant efficiencies that benefit consumers and the price agreements by the network participants are reasonably necessary to realize those efficiencies.

Clinical Integration: Active and on-going programs to evaluate and modify clinical practice patterns of all network providers

– Establishing mechanisms to monitor and control utilization of health care services;

– Selectively choosing network participants; and– Significant investment of capital.

FTC has issued Advisory Opinions to guide organizations on sufficiency of clinical integration activities.


EXAMPLES OF CLINICAL INTEGRATION

• Implementing utilization control mechanisms to control costs and assure quality of care• Establishing information systems to gather aggregate and individual data in order to measure

performance of the group and of the individual participating providers, and to ensure exchange of all relevant patient data.

• Monitoring patient satisfaction with the participating providers.• Establishing reporting systems to provide payers with detailed reports on the costs and quantity of the

services delivered, and on the collaboration’s success in meeting its goals.• Employing centralized staff• Investing significant time and money in the development of necessary infrastructure, including practice

standards and protocols and care management protocols, and actively monitoring the care provided through the collaboration.

• Monitoring the participating providers’ compliance with network’s standards and protocols, and taking remedial action against those individuals who fail to adhere to them.


HOW THE GOVERNMENT WILL ASSESSCLINICAL INTEGRATION

• What do the participating providers plan to do together from a clinical standpoint (i.e., the specific activities, the desired results, how the activities differ from what each provider does individually)?

• How do the providers expect to accomplish these goals (i.e., necessary infrastructure and investment, specific implementing mechanisms, specific evaluation measures)?

• What basis is there to think that the individual provider will actually attempt to accomplish the goals (i.e., individual incentives, specific mechanisms to change and re-align incentives)?

• What results can reasonably be expected from undertaking these goals (i.e., evidence to support the goals, potential for success)?

• How does joint contracting contribute to accomplishing the goals (i.e., is it reasonably necessary and in what ways)?

• To accomplish the goals of the collaboration, is it necessary for providers to affiliate exclusively with one network, or can they effectively participate in multiple networks and continue to contract outside of the network?

Federal Trade Commission and Department of Justice, Improving Health Care: A Dose of Competition (July 2004), available at http://www.usdoj.gov/atr/public/health_care/204694.htm.


http://www.usdoj.gov/atr/public/health_care/204694.htm

CLINICAL INTEGRATION: EXAMPLE 1

FTC Advisory Opinion to MedSouth, Inc.• Network composed of competing primary and specialty care physicians who sought to negotiate

price and other terms on a fee-for-service basis with payors.• Proposed to coordinate and integrate certain health care services by its members with a clinical

resources management program that would include:– Web-based electronic clinical data record system– Clinical practice guidelines– Measurable performance goals– Centralized Medical Director– All network members would commit to participate in the network’s programs and adhere to

network’s protocols.• FTC approved the proposal on Feb. 19, 2002

– http://www.ftc.gov/bc/adops/medsouth.htm– http://www.ftc.gov/bc/adops/070618medsouth.pdf



FTC Advisory Opinion to Greater Rochester IPA, Inc.• Network composed of two hospitals and approximately 600 physicians who sought to

negotiate price and other terms on a fee-for-service contracts with payers.• Proposed developing an internet-based health information system to identify high-cost, high-

risk patients and facilitate the exchange of patient treatment information to better manage them.

– Network would develop clinical practice guidelines, report information using the internet-based system, and then monitor physicians’ compliance with those guidelines.

– The network would also set performance targets, monitor performance using its own benchmarks, and take action when physicians failed to meet performance expectations.

• FTC approved the proposal on September 17, 2007– http://www.ftc.gov/bc/adops/gripa.pdf



FTC Advisory Opinion to Tri-State Health Partners, Inc.• Network composed of more than 200 physicians and one hospital that sought to

contract jointly with payers on a fee-for-service basis• Proposed a formal and stringent medical management program that includes

protocol development and implementation, performance reporting, procedures for corrective action when necessary, and aggressive management of high-cost, high-risk patients.

• Plans to implement a web-based health information technology system to review episodes of care to determine where performance improvement will have the greatest financial and quality benefits.

• FTC approved the proposal on April 13, 2009– http://www.ftc.gov/os/closings/staff/090413tristateaoletter.pdf



FTC Advisory Opinion to Norman PHO• Network composed of a health system (hospitals) and 280 physicians in 38 medical

specialties and one hospital that sought to contract jointly with payers on a fee-for-service basis.

• Already had an extensive electronic system including e- prescribing, EHR and electronic health interface system.

• Proposed physician led advisory groups and committees that were responsible for developing the clinical practice guidelines on an ongoing basis

• Proposed to measure and evaluate physician performance and compliance with the clinical practice guidelines.

• Notable advisory opinion request in that it stated that it couldn’t quantify the potential savings from the improvements in care but that did not prevent FTC for issuance of a favorable opinion.

• FTC approved the proposal February 13, 2013


BASE REIMBURSEMENT RATES

• Can provider networks negotiate base reimbursement rates?– Fee-for-service (“FFS”) schedules

• Legal Test: – Do the network members share “substantial financial risk”?

• No, because the network participants do not share financial risk for the services priced through the network.

– Are the network members “clinically integrated”?• Analyze extent of integration under DOJ/FTC standards.

• Conclusion: Until the network satisfies the test for clinical integration it cannotnegotiate base reimbursement rates.


NEGOTIATING MANAGED CARE CONTRACTS

Medicare Shared Savings Program Antitrust Safety Zone

• If ACO participates in MSSP and qualifies for this safety zone, it protects joint negotiation of fee-for-service rates with private payors .

• Eligibility must be determined under four-step process that requires calculating an ACO’s share of services in the Primary Service Area (PSA) of each participant in that ACO.

• ACOs whose combined common service share in each participant’s PSA is less than 30% or less qualify for the antitrust safety zone, with certain qualifications and exceptions.


NON-INTEGRATED NETWORKS

Non-integrated provider networks do not meet legal standards for financial or clinical integration

Non-integrated provider networks may facilitate (but not negotiate)

contracts involving base reimbursement rates if they

carefully comply with the “Messenger Model”


MESSENGER MODEL

Provider Network communicates each provider’s decision back to MCO

Each provider determines whether to accept (or reject) MCO’s payment terms

Provider Network, as the messenger, transmits proposed rates to each provider in network


MESSENGER MODEL

CON

• No additional leverage• Long formation periods• Difficult to maintain over time• Infrastructure costs• Risky

PRO

• Transaction cost-efficiencies• Increased patient volumes• Analysis of contracting terms and

provisions• In certain cases not related to market

power, higher reimbursement

CON


COMBINATION APPROACH

Base Reimbursement Messenger Model• Network members accept FFS

rates offered by MCO (without engaging in any negotiation).

• May be little or no downside if State mandates minimum rates for Medicaid enrollees.

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Payment Incentives Financial Risk-Sharing• Network negotiates incentives (e.g.,

P4P, shared savings, shared risk) with MCO

• Payment incentives won or lost on group performance

• Network distributes incentive payments, if any, to providers, pursuant to methodology agreed by the members of the network.


FINAL THOUGHTS

• Grant-funded payment models do not generate “margin” for investments and long-term sustainability.

• MCO participation agreements generally favor MCOs and the default payment method of FFS often fails to cover the cost of services.

• Regulatory requirements, market power, and timing offer critical leverage to providers in negotiating favorable participation agreements.

• To participate fully in population-based VBP methodologies, providers should consider forming or joining provider networks that are able to manage the total costs of care and quality for a population.

• Primary care and behavioral health-controlled provider networks can:• Develop expertise to negotiate “smarter” contracts with MCOs • Protect smaller primary care and behavioral health providers from unfair terms typically

found in MCO participation agreements• Support community-based organizations that address SDOH• Distribute shared savings to primary care and behavioral health providers


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QUESTIONS?

Adam J. Falcone, Esq.FELDESMAN TUCKER LEIFER FIDELL LLP1129 20th Street, N.W.Suite 401Washington, DC 20036(202) [email protected]
