Isn’t This HMOs All Over Again? PPACA’s Push for Integration

1. Isn’t This HMOs All Over Again?PPACA’s Push for Integration B. Kevin Burgess Donald R. Laird Watkinson Laird Rubenstein   Baldwin & Burgess, P.C. 101 E Broadway, Suite 200 Eugene, OR 97401 (541) 484-2277 www.wlrlaw.com

3. The problem is that 99.99% of the HMO's make a bad name for the rest ofthem.

4. A Look Back • Where we’ve been over the last 45 years.

5. Q) Will health care be any different in the next century? • A) No, but if you call right now, you might get an appointment by then

6. PPACA Push for Integration • Accountable Care Organizations (ACOs) • Center for Medicare and Medicaid Innovation • National Pilot Program on Payment Bundling • Gainsharing demonstration

7. ACOs in PPACA - Basics • Section 3022 of PPACA. • Medicare Shared Savings Program. • Established no later than January 1, 2012. • Statute provides great discretion to the Secretary. • Proposed rule set to be released in fall of 2010.

8. ACOs in PPACA - Requirements • ACO must: • Have a formal legal structure for receiving and distributing shared savings payments from Medicare. • Have in place a leadership and management structure that includes clinical and administrative systems. • Agree to participate in the program for at least three years. • Have the Secretary assign it at least 5,000 Medicare beneficiaries, and include a sufficient number of primary care physicians for serving those patients. • Have processes relating to quality and coordination of care, such as the use of telehealth, remote patient monitoring, and other technologies. • Have patient-centered processes that meet criteria specified by the Secretary. • Meet reporting requirements determined by the Secretary.

9. ACOs in PPACA - Compensation • Shared Savings. • ACO is eligible for shared savings payments if it meets quality and performance standards and the ACO’s estimated Medicare costs are a certain percentage below a benchmark set by the Secretary. • Shared savings model only applies to fee-for-service • Partial Capitation. PPACA also directs the Secretary to establish a partial capitation option.

10. ACOs in PPACA - Composition • ACOs must be “clinically integrated.” • Most frequently mentioned models (in reverse order of integration). • Independent Physician Association (IPA) • Physician Hospital Organization (PHO) • Multi-Specialty Group Practice (MSGP) • Fully Integrated Delivery System (IDS)

11. CORE CAPABILITIES

12. Integrated Delivery System IDS Holding Company Hospital Nursing Home Professional Corporation Health Plan Other Ancillaries MSO Physicians Physicians Physicians Physicians = ownership arrangement

13. Multi-Specialty Group Practice MSGP Holding Company Third-Party Payors Hospital Nursing Home MSO Professional Corporation Other Ancillaries Physicians Physicians Physicians Physicians = ownership arrangement = contractual relationship

14. Physician/Hospital Organizations Joint venture Hospital Primary Care Physicians and some Specialists PHO Third-Party Payors Nursing Home Home Health Other Ancillaries Specialists = ownership arrangement = contractual relationship

15. Independent Practice Associations Physician P.C. Physician P.C. Physician P.C. Physician P.C. Physician P.C. IPA Third-Party Payors Home Health Nursing Home Other Ancillaries Specialists Hospital = ownership arrangement = contractual relationship

16. ACOs in PPACA – Shared Savings • “Fee-for-service plus.” • Providers continue to bill fee-for-service, but are eligible to receive an incentive bonus if CMS determines the ACO saved CMS money through efficiencies while providing quality care.

17. ACOs in PPACA – Shared Savings • ACO must both save CMS money and delivery quality care. • Regulations have not been released detailing the program, but it is based on Medicare’s Physician Group Practice demonstration. (PGP demonstration). • The PGP demonstration measured savings and quality as follows on the next slide.

18. ACOs in PPACA – PGP Demo • Step 1. Calculate the Savings. • Step 2. Allocate Savings. • Step 3. Calculate Quality Measure Performance. • Step 4. Allocate Remaining Bonus Pool Amount. • Step 5. Payment of Allocated Amounts.

19. PGP Quality MeasuresExample

21. Q) What accounts for the largest portion of health care costs? • A) Doctors trying to recoup their investment losses.

22. ACOs in PPACA – Legal Issues • Potential legal issues: • Antitrust laws • Stark law • Anti-kickback statute • Services reduction civil money penalty • HIPAA • State corporate practice of medicine

23. ACOs in PPACA – Legal Issues • Antitrust issues • Clinical integration model and possible safe harbor • Urban v. rural providers • Provider fee negotiations • Market allocations within an ACO or between ACOs • Provider exclusivity • Problems with boycotts and refusals to deal • Problems with ACO or participant having market power • Ancillary service referrals

24. ACOs in PPACA – Legal Issues • Stark • Referrals for designated health services • Prohibits financial relationship between referring physicians and participating designated health services entity • Penalties • Waiver • Waiving distribution of shared savings • Waiving unequal start-up expenditures such as EHR/IT • Waive before or after certification as ACO

25. ACOs in PPACA – Legal Issues • Anti-Kickback Statute • Prohibits inducing or paying for government paid business • No Safe Harbor protection applicable • Penalties • Waiver

26. LEGAL RISKS

27. ACOs in PPACA – Other Issues • What standards will CMS use to certify ACOs • What is the best method to measure physician performance? • Who will drive the ACO – hospitals or providers? Is an ACO right for all providers? • Will there be room for small practices outside ACOs? • How large should an ACO be? Does it depend on market and patient population?

28. ACOs in PPACA – Other Issues • Will ACOs aggregate dominant providers and drive up private market reimbursement rates? • How will ACOs contract with private third-party payors? • Should providers participate in more than one ACO? • Will patients know their in an ACO? • What prevents ACOs from selecting patients to maximize savings or to meet quality targets? • Will ACO performance be available to patients? • What if patients don’t follow their treatment plans?

29. Q: What is the difference between an HMO and a car battery? • A: The battery has a positive side.

30. Center for Medicare and Medicaid Innovation (CMI) • Center within CMS. • Purpose. Develop and test innovative payment and delivery models to reduce the rising cost of Medicare and Medicaid expenditures. • January 1, 2011 • Allocated $10 billion for each 10-year fiscal period beginning with 2011 through 2019.

31. Center for Medicare and Medicaid Innovation (CMI) (cont.) • Models include: • Medical homes • Alternative payment mechanisms • Coordinated care • Health IT • Medication management • Patient education • Integrated care for dual eligibles • Care for cancer patients • Post-acute care • Chronic care management • Collaboration among mixed provider types • Rural telehealth expansion • Development of a rapid learning network

32. National Pilot Program on Payment Bundling • Effective Date. January 1, 2013 and continuing for five years thereafter unless extended. • Pilot program. Encourages hospitals, physicians, and post-acute providers to provide integrated care during, and be jointly accountable for an episode of care beginning three days prior to, an inpatient admission and continuing for 30 days following discharge. • Providers will receive a bundled payment for eight conditions selected by the Secretary.

33. National Pilot Program on Payment Bundling • The bundled payment will be comprehensive. • Providers must submit quality measures, including, at a minimum: • Measures of functional status improvement • Reduction in avoidable hospital readmissions • Rates of discharge to the community • Rates of admission to an emergency room after hospitalization • Incidence of health care acquired infections • Efficiency • Patient-centeredness of care • Patient perceptions of care • Other measures as determined by the Secretary

34. Gainsharing Demonstration Extension • PPACA extends the gainsharing demonstration authorized by the Deficit Reduction Act of 2005. • This demonstration evaluates arrangements between hospitals and physicians designed to improve the quality and efficiency of care provided to beneficiaries. • PPACA continues the demonstration through September 30, 2011. • It also authorizes an additional $1.6 million in 2010 for carrying out the demonstration.

35. Doctors can be frustrating. You wait a month-and-a-half for an appointment, and he says, "I wish you'd come to me sooner."