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TRANSCRIPT
Adam J. Falcone, Esq.
Partner
MANAGED CARE CONTRACTING FROM
A POSITION OF STRENGTH!
November 27, 2018
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 2
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 3
PRESENTER: ADAM J. FALCONE
• Partner in FTLF’s national health law practice.
• 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
TRAINING OBJECTIVES / AGENDA
Purpose: To assist behavioral health agencies negotiate individual contracts with MCOs to serve Medicaid
individuals with mild to moderate mental illness as well as individuals covered under Medicare and
commercial contracts.
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
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PART 1
The P.E.N. Strategy for Managed
Care Contracting
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WHO HAS AN ADVANTAGE?
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BOTH.
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MANAGED CARE CONTRACTING
A strategy is simply a plan of action for accomplishing an objective.
Take a moment to write down your managed care contracting objectives.
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CONTRACTING STRATEGY
Before you sign,
use the P.E.N!
✓Prepare
✓Evaluate
✓Negotiate
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STEP 1: PREPARATION PHASE
A party that
recognizes its
strengths has an
advantage in
achieving its
objectives.
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IDENTIFY YOUR STRENGTHS
Assess
Leverage
Compete
Based on
Value
Increase
Leverage
or Value
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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
➢ Contract with the State Medicaid agency (“Model Contract”)
https://www.hca.wa.gov/billers-providers-partners/programs-and-services/model-managed-care-
contracts
➢ 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”.
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WASHINGTON STATE MODEL CONTRACT
Essential 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 13
WASHINGTON STATE MODEL CONTRACT
Payment 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 14
WASHINGTON STATE MODEL CONTRACT
Non-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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 15
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 16
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 17
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
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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 ValueCommunicate
Value
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HEALTH CARE SERVICES MARKET
Managed Care Organization
Provider
Provider
Provider
SellerBuyer
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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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 21
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 22
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
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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.
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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
25© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 25
INTEGRATED CARE DELIVERY MODELS
• Referral
Arrangement
• Co-location
Agreement
• Purchase of
Services
• Merger
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Primary Care
Provider
Behavioral Health
Provider
Joint Venture
26
INTEGRATED CARE FINANCING MODELSPROVIDER NETWORKS
IPA
Behavioral
Health
Provider
Behavioral
Health
Provider
Primary Care
Provider
ACO
FQHC
Behavioral
Health
Provider
Hospital
Management
Services
Organization
DD/ID
DD/ID
DD/ID
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 27
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)
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 28
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 29
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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)
Alternative Payment Model (APM) Framework provides a continuum of payment models
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 31
ALTERNATIVE 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).
• This may also include a penalty disincentive, i.e., a lower or withheld
payment if providers do not produce quality indicators, or report events or
procedures that are harmful and were avoidable.
Note: Washington State Health Care Authority’s definition of VBP starts with
Category 2C, i.e., rewards for high performance on clinical quality measures.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 32
ALTERNATIVE PAYMENT MODELS
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:
– Shared savings/shared 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 or may also be at risk for higher-than expected costs.
– 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: Excludes risk-based payments that do not take quality (and therefore value) into account.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 33
ALTERNATIVE PAYMENT MODELS
Category 4: Population-based payments.
• Payments are structured to encourage providers to deliver
coordinated, high-quality care within a defined budget.
• Payments may cover a wide range of preventive, medical, and
health improvement services.
• Examples include global or capitated per-member-per-month
payment that reflects the total cost of care for treating a primary
(typically chronic) condition, or for maintaining the health and
managing the illness of an entire population.
Note: Excludes population-based payments that do not take quality
(and therefore value) into account.
NATIONAL 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 34
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 premium payments that must be
spent on incentives to providers in APM Categories 2C or higher)
– 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 35
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 36
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 37
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 38
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 39
VBP PERFORMANCE MEASURES
2018 Quality Measures under Apple Health Contracts
• To connect payment to quality of care and to value, HCA is withholding 1.5
percent of a MCO’s monthly premium, of which 75% of that withhold can be
earned back based on achieving targets for the following quality measures:
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 40
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 rewards) 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 41
VBP: P4P PENALTIES AND SHARED RISK
P4P Penalties / Downside Risk VBP Arrangements. A provider is placed at
financial risk to participate in APM Category 2D (P4P rewards and penalties) 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 42
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 43
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 44
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 45
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 46
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 47
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 48
STEP 2
Evaluate 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)
49© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 49
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?
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 50
EVALUATING THE CONTRACT
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 51
EVALUATING THE CONTRACT
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!
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 52
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 53
• Payment Suspension
• Overpayment Recoupment
• Retroactive Disenrollment
• Appeals
• Dispute Resolution
• “All Products” Clauses
• Term and Termination
• Breach and Cure
• Post-Termination
Responsibilities
• Amendments
EVALUATING THE CONTRACT
54
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
STEP 3: NEGOTIATE MANAGED CARE CONTRACTS
55
Your idea of negotiation?
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WHAT’S NEGOTIATION?
56
Reframe negotiation as discussion aimed
at reaching agreement.
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NEGOTIATING LOGISTICS
57
Preliminary questions
• Who will be negotiating?
• A team?
• An individual?
• How will issues be negotiated?
• In writing?
• By phone?
• In person?
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
NEGOTIATING THE CONTRACT
58
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
NEGOTIATING THE CONTRACT
59
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 60
NEGOTIATING THE CONTRACT
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 61
PART 1: SUMMARY OF KEY POINTS
• Know Your Contracting Objectives
• Use the P.E.N. Strategy
Step 1: Prepare thoroughly for managed care contracting
• 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 62
PART 2
Key Terms and Legal Protections
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 63
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?
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 64
COVERED SERVICES
65
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
both Covered 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
HOW SERVICES ARE PROVIDED
66
• 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:
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
TIMELY CLAIMING RULES
67
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 68
WASHINGTON STATE MODEL CONTRACT
Timely Claiming Rules
2.3 Billing Limitation
Timely 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 69
PROMPT PAYMENT RULES
70
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
Prompt Payment / Denied Claims Protections
71
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE LAW
Prompt 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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 72
CORRECTION OF OVERPAYMENTS & UNDERPAYMENTS
73
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 74
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;
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 75
DISPUTE RESOLUTION PROCESS
76
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-step dispute 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
“ALL PRODUCTS” CLAUSES
77
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE CODE
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 78
COLLECTING PATIENT COST-SHARING
79
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WAIVER OR REDUCTION OF COST-SHARING
80
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
REGULATORY PENALTY PROVISIONS
81
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
ACCESS STANDARDS
82
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
ACCESS & APPOINTMENT STANDARDS
83
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
LICENSURE – CONTRACT PROVISIONS
84
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
CREDENTIALING – TIMING
85
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
DELEGATED CREDENTIALING
86
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)
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
Credentialing Protections
87
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
UTILIZATION MANAGEMENT
88
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
“MEDICAL NECESSITY”
89
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
UTILIZATION MANAGEMENT
Contract Provisions/Provider Manual
90
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE MODEL CONTRACT
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 91
WASHINGTON STATE MODEL CONTRACT
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 92
CONTRACT TERM
93
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
TERMINATION
94
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
AMENDMENTS
95
• 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
AMENDMENTS
96
• 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
WASHINGTON STATE CODE
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 97
INDEMNIFICATION
98
• 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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
INDEMNIFICATION
99
• 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:
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PART 3
Participating or Forming Provider Networks
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Behavioral
Health
Primary
care
Hospitals
ACCOUNTABLE CARE ORGANIZATION (ACO)
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Health Services Marketplace (of the future?)
Managed Care
Organization
ACO 1
ACO 2
ACO 3
ACCOUNTABLE CARE MARKETPLACE?
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 102
103
• 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
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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.
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105
ACO GROWTH BY CONTRACT TYPE
8 8 10 3362
182 183
295 296 296 297
418 418
418
523
76 7888
173196
212 230266
285316
341
381416
463
528
84 86 98
206
258
394413
561581
612638
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
# o
f A
CO
Co
ntr
acts
Government Commercial Total
SOURCE: Muhlestein, Leavitt Partners
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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
106106© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
Patient Centered
Medical Home
Specialist
s
ACO
ACCOUNTABLE CARE ORGANIZATION:
IN THEORY
Behavioral
Health
Providers
Rehab and
LTC
Primary Care
Providers
Hospitals
Specialists
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 107
Primary Care
Providers Hospital
ACOACOs may actually feel more like this.
ACCOUNTABLE CARE ORGANIZATION:
IN REALITYHuman
Services
Agencies
Rehab and
LTCBehavioral
Health
Specialists
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ACO FINANCIAL INCENTIVES
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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
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112
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.
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ANTITRUST LAW
THE 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
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ANTITRUST LAW
THE 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:
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ANTITRUST LEGAL STANDARDS
115
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”
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116
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.
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117
HEALTH CARE ENFORCEMENT POLICY
Statement 4: Collection/Sharing Of Non-fee Related Information
Safety 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.
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118
HEALTH CARE ENFORCEMENT POLICY
Statement 4: Collection/Sharing Of Non-fee Related Information
Conduct 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.
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119
HEALTH CARE ENFORCEMENT POLICY
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.
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120
HEALTH CARE ENFORCEMENT POLICY
Statement 5: Collection/Sharing Of Fee Related Information
Safety 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; and
2. 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.
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121
HEALTH CARE ENFORCEMENT POLICY
Statement 5: Collection/Sharing Of Fee Related Information
Conduct 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.)
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122
HEALTH CARE ENFORCEMENT POLICY
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.
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123
HEALTH CARE ENFORCEMENT POLICY
Statement 6: Provider Participation In Exchanges Of Price And Cost Information
Safety 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.
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124
HEALTH CARE ENFORCEMENT POLICY
Statement 6: Provider Participation In Exchanges Of Price And Cost Information
Conduct 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.
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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)
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HEALTH CARE ENFORCEMENT POLICY
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.
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HEALTH CARE ENFORCEMENT POLICY
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.
127 127© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
HEALTH CARE ENFORCEMENT POLICY
Statement 9: Multiprovider Networks
Examples 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.
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HEALTH CARE ENFORCEMENT POLICY
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
concentration
3. Efficiencies - lower prices or higher quality
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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.
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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.
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“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.
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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.
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HOW THE GOVERNMENT WILL ASSESS
CLINICAL 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.
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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
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CLINICAL INTEGRATION: EXAMPLE 2
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
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CLINICAL INTEGRATION: EXAMPLE 3
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
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CLINICAL INTEGRATION: EXAMPLE 4
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
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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 cannot negotiate base reimbursement rates.
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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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 140
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”
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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
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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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 143
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.
144
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.
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com
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
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 145
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QUESTIONS?
Adam J. Falcone, Esq.
FELDESMAN TUCKER LEIFER FIDELL LLP
1129 20th Street, N.W.
Suite 401
Washington, DC 20036
(202) 466-8960
© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com