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Population Health Management and Provider Responses
John Howard
Novant Health
Charlotte, NC
Evan Raskas Goldfarb
Thompson Coburn LLP
St. Louis, MO
State Bar of New Mexico | Health Law Section Meeting | October 11, 2019
1
AGENDA
• What is Population Health Management?
• What are Providers Doing to Respond?
• What do Health Care Lawyers Need to Know?
- Direct-to-Employer Contracting
- Provider Sponsored Health Plans
2
Population Health Primer
3
Population Health - Accountability
• Market forces are shifting the accountability of care in the
current healthcare delivery climate
• Two primary shifts
- To consumer Movement of employer and insurer
accountability (through ASO and insured products) to members
- To provider Movement of insurance companies to shift to
various pay for performance, shared savings, and capitation
arrangements
4
Population Health – Consumer Focus PATIENTS INCREASINGLY SHOPPING FOR HEALTH CARE…
…AND THEY HAVE OPTIONS TO CHOOSE FROM
5
1 in 3 Covered by an employer-sponsored health
plan were enrolled in an HDHP1 in 2016
Increase in deductible level of non-HDHPs
since 2010
89%
Number of Retail Clinics in the U.S.
2,150
2,800
2015 2017
Source: Advisory Board
Population Health – Provider Focus
6
Provider Options for Population Health
7
MSSP
Capitation
Shared Savings
Shared Risk
CCP+
Commercial Bundles Oncology Bundles
Direct to Employer
Care Coordination HRR
HAC
Next Gen ACO
HVBP
TCM
BPCI Advanced
Provider Plans
7
Provider Responses
• Patient-centered care programs
• Adopting methods to engage patients
• Social determinants of health
• Looking beyond the “walls” of the institution
- Post-acute networks Home Health
SNF
ALF
- Chronic disease management
- Team-based care
- Breaking episodic care cycle
8
Provider Challenges
• Pace of change from volume to value
• Scope of accountability
• Network adequacy
• Change in practice patterns and training
• Data management and analytics - EHR
- Claims data
- Actionable data
9
Strategies for Value-Based Care
10
Knowing our
patients and
markets Quality and Data
Management
(Portrait of the Population)
Knowing how to
manage health Care Management
(Managing Care across
Continuum)
Understanding
costs & cost
containment Bending the Cost Curve
(Total Cost of Care)
Provider Success
11
Successful value-based care
programming increases the value of
care (and part of that is reducing the
cost/volume of care per capita).
It also, to be successful, must increase
the overall volume through being the
high quality, low cost provider that
captures increasing market share
(increased population it serves).
Value-Based Care is not
either value or volume.
It must be both.
Provider Requirements - MSSP
12
BASIC Track ENHANCED Track
Level A Level B Level C Level D Level E
Agreement Period
5 Years 5 Years
APM Status MIPS APM MIPS APM MIPS APM MIPS APM Advanced APM Advanced APM
MSR/MLR (Savings/Loss Thresholds)
MSR: 2% to 3.9% based on number of assigned beneficiaries; MLR: N/A
MSR: 2% to 3.9% based on number of assigned beneficiaries; MLR: N/A
Choice of symmetrical MSR/MLR: (i) 0% MSR/MLR; (ii) symmetrical MSR/MLR in 0.5% increment between 0.5% and 2.0%; (iii) symmetrical MSR/MLR to vary between 2.0% and 3.9% based upon number of assigned beneficiaries
Choice of symmetrical MSR/MLR: (i) 0% MSR/MLR; (ii) symmetrical MSR/MLR in 0.5% increment between 0.5% and 2.0%; (iii) symmetrical MSR/MLR to vary between 2.0% and 3.9% based upon number of assigned beneficiaries
Shared Savings Rate
40% 40% 50% 50% 50% 75%
Maximum Savings
10% of Benchmark
10% of Benchmark
10% of Benchmark
10% of Benchmark
10% of Benchmark
20% of Benchmark
Shared Loss Rate N/A N/A 30% 30% 30% 40% to 75%
Maximum Losses N/A N/A 2% of Revenue capped at 1% of Benchmark
4% of Revenue capped at 2% of Benchmark
8% of Revenue capped at 4% of Benchmark
15% of Benchmark
Beneficiary Assignment
Choice of Retro- or Prospective
Choice of Retro- or Prospective
Choice of Retro- or Prospective
Choice of Retro- or Prospective
Choice of Retro- or Prospective
Choice of Retro- or Prospective
Risk Adjustment CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
CMS-HCC (+3% cap over 5 year agreement period; no cap on downward adjustment)
Provider Responses – How?
• Payor Contracting Relationships
• CIN/ACO Participation
• Direct-to-Employer Contracts
• Provider-Sponsored Health Plans
13
Provider Responses – Why?
• Align provider services
• Grow market share and gain downstream revenue
• Protect current business relationships
• Shift cost and accountability burden
• Increase coordination of services
14
Direct Contracts – Why? (Employer Perspective)
• Establish direct relationships with medical providers to
improve quality, reduce costs and share risk
• Frustrated with lack of information on rate increases
• Looking at self-funding alternatives
- Increase of more than 30% in the last 12 years
• Manage plan benefit and design more directly
15
Direct Contracts - Today
16
17
NBGH members include
74 of Fortune 100
companies and provide
coverage for > 50M
Americans
Re-Emergence of Provider-Sponsored Health Plans
18
What Do Health Care Lawyers Need to
Know?
• Provider-Sponsored Health
Plans
- Potential Models
- Regulatory Considerations
• Direct Contracting
- Legal Relationships
- Regulatory Considerations
19
Direct Contracting Arrangements
• Legal Relationships
- #1: Client Services Agreement
- #2: Network Participation
Agreements
- #3: Administrative Services
Agreements
- #4: Network Administrator
Provider Agreements
• Regulatory Considerations
- Insurance Licensure
- Antitrust
- Data Exchange/HIPAA
- Fraud and Abuse
20
Direct
Contracting
Overview
CLINICALLY INTEGRATED
PROVIDERS
EMPLOYER/PLAN
NETWORK
ADMINISTRATOR
THIRD PARTY
ADMINISTRATOR
(“TPA”)
EMPLOYED
PHYSICIANS
NON-
INTEGRATED
INDEPENDENT
PROVIDERS
OWNED
HOSPITAL
#1
Client Services
Agreement
#3
Administrative Services
Agreements
#4
Network
Administrator
Provider
Agreements
INDEPENDENT
PHYSICIANS
PROVIDER
DIRECT CONTRACTING
NETWORK
(“Provider”)
21
#2
Network Participation
Agreements
#1: Client Services Agreement
• Parties
- Employer’s Plan and Provider’s Contracting Entity
• Provider Responsibilities
- Develop network
- Perform care management
• Employer/Plan Responsibilities
- Coordinating TPA and network administrator relationships (if applicable)
• Periodic Review of Performance Standards
- Quality of care
- Enrollee satisfaction
• Risk Sharing Terms
- Attribution methodology
- Cost of care targets (savings/deficit calculation)
22
#2: Network Participation Agreements • Direct Contracting
Network
- Owned and/or controlled health facilities
- Clinically Integrated Providers
Employed Providers
Independent Providers
- Wrap Networks (Non-Integrated)
• Participation in Care Management Programs
- Required by policy for employed providers
- Contractual requirement for others
23
#3: Administrative Services Agreements
• TPA Administrative Services Agreement
- Claims processing
- Provider may offer TPA services instead of
independent TPA
• Network Administrator Administrative Services
Agreement
24
#4: Network Administrator Provider Agreements
• Pre-existing payor/plan network
• Rates under participating provider agreements
between Network Administrator and providers
25
Regulatory Considerations
• Insurance Licensing
• Antitrust
• Data Exchange
• Fraud and Abuse
26
Insurance Licensing Considerations
• Key question = does risk sharing arrangement under direct contract with employer require insurance license?
• Different state approaches
- No licensure requirement
- Limited licensure requirement
- Full insurance company license (e.g., accident and health insurer or HMO)
27
Insurance Licensing Considerations
• NAIC Position 1997 White Paper: Regulation of Risk Bearing Entities
- Addresses risk assumption and state initiatives
• Includes Suggested Bulletin for State Insurance Departments
- Health care provider enters into arrangement with individual, employer or other group where provider assumes all or part of risk = business of insurance
- Hospital/physician enters into full or partial capitation with employer = business of insurance
- Exception = Provider assumes all or part of the risk for healthcare expenses under contract with HMO
• Not binding on States
- Review state licensure categories/definitions and bulletins
28
Insurance Licensing Considerations • Factors a state may consider in determining whether risk assumed
is “insurance risk” vs “business risk”: - Type of risk assumed by Provider may impact licensure requirement (e.g.
capitation, fee-for-service with shared savings, etc.)
- Whether self-insured plan will have direct and ultimate responsibility for health care costs
- Whether upside/downside to the Provider is reasonable, limited by a cap
- Whether the arrangement increases the risk that Enrollees will not have access to health care services or rather promotes and enhances such access
• Limited licensure requirement generally contains less stringent solvency and reporting requirements than full licensure requirement
29
Related Licenses
• TPA license Typically required for claims administration services
Some states definition of TPA is very broad (e.g., New Mexico)
• Utilization review license
• Any willing provider laws Generally require health plans to admit health care providers that meet the certain
requirements set forth in AWP laws
May apply to self-insured plans under certain conditions
30
Antitrust Considerations
• Issue
- Employers want to negotiate with one person
- But, a Direct Network often is made up of many participants, including competitors
- One entity cannot negotiate rates on behalf of multiple competitors unless they meet an approved antitrust structure
Sherman Act (15 U.S.C. §1)
FTC Health Care Statements 8 and 9 (1996)
31
Antitrust Considerations
• Permissible Structure #1: Single Entity
- Common Ownership
Copperweld decision: a parent and its wholly-owned subsidiary are not capable of “conspiring” with eachother
- Single Entity
Commonality of interest such that two parties have the same economic center of decision-making
Cannot be separate economic actors
32
Antitrust Considerations
• Permissible Structure #2: Financial Integration
- Must share substantial financial risk (e.g. 15%-20%)
Examples:
◦ Capitation
◦ Percentage of premium or percentage of revenue
◦ Upside and downside incentives, such as withholds or rewards/penalties for meeting utilization or cost targets
◦ Global fees or all-inclusive case rates
- Goal= share risk so incentivized to generate greater efficiencies
33
Antitrust Considerations
• Permissible Structure #3: Clinical Integration
- No FTC mandate on structure but must be…
An active and ongoing program
To evaluate and modify the practice patterns of providers
Create a high degree of interdependence and cooperation
Control Costs and ensure quality
- Need documentation (proof)
34
Antitrust Considerations
• Permissible Structure #3: Clinical Integration (cont.)
- Most clinically integrated networks have:
(i) programs that monitor, report and control utilization and costs while ensuring quality,
(ii) selective inclusion of types of providers,
(iii) investment by participants both monetarily and human/time investment,
(iv) common information technology platform (not EMR),
(v) standard clinical protocols that must be adopted by all participants,
(vi) review of individual physician/provider performance under the protocols, and
(vii) consequences for refusing to adhere to protocols
35
Antitrust Considerations
• Permissible Structure #4: Messenger Model
- A neutral “messenger” communicates pricing to competitors and each party has a separate contract with the payor
- Neutral = no recommendations, no leading group, no suggested modifications to terms
- Participants cannot communicate with each other
- Beware: improper messenger model = price fixing
36
Data Exchange Considerations
• Direct Contracting Arrangements typically involve the
exchange of PHI between participants
• Exchange of PHI implicates federal and state privacy
and security laws
- HIPAA Privacy and Security Rules
- HITECH Act
- Others
37
Data Exchange Considerations
• HIPAA relationships in a common Direct Contracting
Arrangement model often include:
- Employer Plan (Covered Entity/CE) delegates care management to the
Provider as its Business Associate
- Employer Plan and the Provider enter into Business Associate
Agreement consistent with HIPAA requirements
- Provider Network participants share data necessary for care
management under “treatment, payment and healthcare operations”
(TPO) exception to HIPAA
38
Data Exchange Considerations
• HIPAA “Health Care Operations” definition generally includes
any of the following activities of a CE relevant to Direct
Contracting Arrangements:
- Conducting certain quality assessment and improvement functions
- Patient safety activities
- Population-based activities relating to improving health or reducing
health care costs, protocol development, case management and care
coordination
39
Data Exchange Considerations
• Direct Contracting Arrangements involving a CIN may
implicate additional HIPAA concerns:
- CIN typically acts as the BA to participating providers (the CEs)
- Participating providers share PHI with CIN (their BA) for purposes of
patient safety activities, quality assurance, developing protocols, etc.
- If Employer Plan data is also necessary for such purposes, Employer
Plan may share data relevant to the patients of the CIN’s participating
providers with the CIN under TPO exception to HIPAA
40
Fraud and Abuse Considerations
• Rare that Medicare or Medicaid beneficiaries are part of an employer plan population, but possible
• First, ask if Stark and Anti-Kickback Apply
- If yes, consider applicable exceptions/safe harbors
- If no, are there state fraud and abuse laws that apply?
• If there are state laws, analyze payments to physicians under those laws (e.g., shared savings distributions)
41
PSHPs – Potential Models
• Build New Health Plan
• Buy Existing Health Plan
• Joint Venture with Existing Health Plan
42
PSHPs – Overview of Regulatory Considerations
• State Insurance Licensure - New license – health insurance company, HMO, limited license
- Change of ownership
- Capital and surplus requirements
- Network adequacy
- NAIC Biographical affidavits
• Federal and State Program Requirements - Medicare Advantage
- State Managed Medicaid Programs
- Health Insurance Exchange Programs
43
PSHPs – Overview of Regulatory Considerations
• Antitrust
- Separation of Provider and Plan
• Data Exchange/HIPAA
- Business Associate Relationships
- Separation of Provider and Plan
• Tax
- Possible Tax-Exempt Status under Section 501(c)(4)
44
Questions?
John Howard Novant Health 704 384 8943 [email protected]
Evan Raskas Goldfarb Thompson Coburn LLP 314 552 6198 [email protected]
45