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

B. Kevin BurgessDonald R. Laird

Watkinson Laird Rubenstein  Baldwin & Burgess, P.C.

101 E Broadway, Suite 200Eugene, OR 97401

(541) 484-2277www.wlrlaw.com

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

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A Look Back

• Where we’ve been over the last 45 years.

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• 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

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PPACA Push for Integration

• Accountable Care Organizations (ACOs)

• Center for Medicare and Medicaid Innovation

• National Pilot Program on Payment Bundling

• Gainsharing demonstration

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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.

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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.

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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.

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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)

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CORE CAPABILITIES

ACO Model Redesign Care

Processes

Teamwork Care Coordination

Performance Accountability

Information Technology

Knowledge Management

Change Management

IDS High High High High High High High

MSGP High High High High High High Medium

PHO Medium Medium Medium High High Medium Medium

IPA Varies Varies Varies Varies Varies Varies Varies

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Integrated Delivery System

IDSHolding

Company

Hospital Nursing Home

Professional Corporation

Health Plan

MSO

Physicians Physicians Physicians Physicians

= ownership arrangement

Other Ancillaries

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Multi-Specialty Group Practice

MSGPHolding

Company

Hospital Nursing Home

Professional Corporation

Third-Party Payors

MSO

Physicians Physicians Physicians Physicians

= ownership arrangement

= contractual relationship

Other Ancillaries

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Physician/Hospital Organizations

PHO

Third-Party Payors

Nursing Home

= ownership arrangement

Hospital Primary CarePhysicians and

some Specialists

Specialists

= contractual relationship

Joint venture

Home Health

Other Ancillaries

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Independent Practice Associations

IPA

PhysicianP.C.

PhysicianP.C.

PhysicianP.C.

Third-Party Payors

Physician P.C.

PhysicianP.C.

= contractual relationship

= ownership arrangement

HospitalNursing Home

SpecialistsHome Health

Other Ancillaries

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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.

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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.

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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.

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PGP Quality MeasuresExample

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Condition Measure Description Weight

Diabetes

HbA1c Management % of diabetic patients with 1 or more A1c tests

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HbA1c Control % of diabetic patients with most recent A1c level > 9.0%

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Blood Pressure Management % of diabetic patients with more recent BP < 140/90 mmHg

1

Lipid Measurement % of diabetic patients with at least one low-density lipoprotein (LDL) cholesterol test

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LDL Cholesterol Level % of diabetic patients with most recent LDL cholesterol < 130mg/dl

1

Urine Protein Testing % of diabetic patients with at least 1 test for microalbumin during year; or who had medical attention for nephropathy

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Eye Exam % of diabetic patients who rec’d a dilated eye exam or exam of retinal photographs by optometrist of ophthalmologist during year

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Foot Exam % of eligible diabetic patients rec’ing at least one complete foot exam

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Influenza Vaccination % of diabetic patients >50 yrs who rec’d flu shot during year

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Pneumonia Vaccination % of diabetic patients >65 yrs who ever rec’d a pneumococcal vaccination

1

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• Q) What accounts for the largest portion of health care costs?

• A) Doctors trying to recoup their investment losses.

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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

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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

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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

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ACOs in PPACA – Legal Issues

• Anti-Kickback Statute– Prohibits inducing or paying for government

paid business– No Safe Harbor protection applicable– Penalties– Waiver

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LEGAL RISKS

ACO Model Stark Anti-Kickback

Statute

Antitrust HIPAA CMP

IDS Low Low Very Low Low Medium +

MSGP Medium Low Medium Low Medium +

PHO Medium Low Medium Medium Medium +

IPA Medium + Low Medium + Medium + Varies

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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?

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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?

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• Q: What is the difference between an HMO and a car battery?

• A: The battery has a positive side.

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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.

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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

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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.

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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

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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.

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• 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."