Value-Based Health Care for AMCs and Health Systems

Transcription

1 Value-Based Health Care for AMCs and Health Systems Part I: Network Development Michael B. Lampert +1 (617) Benjamin A. T. Wilson +1 (617) April 17, 2018

2 AGENDA Value-Based Health Care Overview Building Community Networks Structuring Platforms and Incentives Top Business, Legal, and Compliance Issues 2

3 Defining Value-Based Health Care VVVVVVVVVV = OOOOOOOOOOOOOOOO CCCCCCCC Derived from The Strategy That Will Fix Health Care, by Michael E. Porter and Thomas H. Lee, Harvard Business Review, October

4 Primary Value-Based Care Models Episode-Based Government Models BPCI Model 2 BPCI Model 3 BPCI Model 4 Comprehensive Care for Joint Replacement Oncology Care Model Population-Based Government Models Shared Savings Program Next Gen ACO Model Comprehensive ESRD Care Model ACO Investment Model Vermont All-Payer ACO 4

5 Other Value-Based Care Models P4P Commercial and employer-based bundles MLR-based arrangements Subcaps and global caps Vertical arrangements 5

6 AMC and Health System Advantages Large numbers of high acuity cases Concentration of sophisticated/innovative specialists Renowned specialty facilities (e.g., NCI-designated cancer centers and children s hospitals) Advanced IT and EMRs Administrative support Large capital budgets and access to capital Strong brand and reputation 6

7 Easy, right? There can be an inherent tension for AMCs in transitioning to accountable care and population health management, considering the need to maintain specialized referrals and high hospital bed occupancy rates related to subspecialty care. Scott Berkowitz, M.D., M.B.A., et al., Academic Medical Centers Forming Accountable Care Organizations and Partnering With Community Providers: The Experience of the Johns Hopkins Medicine Alliance for Patients, 91 Acad. Med (Mar. 2016) 7

8 Easy, right? You can't just pivot these places you have to realign each aspect of the mission. It's like turning a battleship around inside the Panama Canal. - David Nash, MD, MBA Herding Academic Cats: Engaging Doctors is Key to Teaching Hospital Reforms, Modern Healthcare, May 9, 2015, available at 8

9 Easy, right? Establishing ACOs at academic medical centers will be challenging, and creating appropriate governance for these organizations will present problems to many. - John A. Kastor, MD John A. Kastor, M.D., Accountable Care Organizations at Academic Medical Centers, 364 N. Engl. J. Med. 11 (Feb. 17, 2011). 9

10 Tensions Felt by AMCs and Health Systems Traditional Orientation Bundled Payments Population Health Tertiary acute care Acute + post acute Primary care + continuum Differentiated specialty care Higher volumes subsidize the mission and provide material Specialist autonomy Standardized pathways Complementary Coordination with care team, including post-acute care Standardized pathways Steer volume to less acute and less costly settings Coordination with care team across continuum of care 10

11 AGENDA Value-Based Health Care Overview Building Community Networks Structuring Platforms and Incentives Top Business, Legal, and Compliance Issues 11

12 Primary Value-Based Payment Model Strategies Strategy #1: double-down on specialist approach Recognizes most AMCs will never be low-cost providers generally Integrate with an established network of community providers for loweracuity care and higher-acuity referrals Strategy #2: participate in bundled payment programs Leverage strengths to focus on cost-effective care for particular disease states or episodes of care Utilize existing specialist network, adding post-acute care if needed Strategy #3: build AMC-centered community network and ACO AMCs in markets with stiff competition for high-acuity business Develop an integrated referral network, prioritizing primary care providers 12

13 Expanding Community Partnerships M&A and equity models Acquisition of community hospitals, other providers, and practices Joint ventures with community partners Consolidation continues, despite headwinds Contractual networks with community providers and practices Expand geographic footprint and reach into the community Less capital-intensive Position for joint risk contracting with a clinically or financially integrated model 13

14 Network Development Considerations Selection of Participants Bundled payments: specialists and post-acute providers Population health: primary care, community hospitals, others Exclusivity Bundled payments: required downstream Population health: required upstream Platform Design Governance and management requirements Structure 14

15 AGENDA Value-Based Health Care Overview Building Community Networks Structuring Platforms and Incentives Top Business, Legal, and Compliance Issues 15

16 Contract-Based Network Structures Must comply with relevant VBP program requirements Most structures involve formation of a separate legal network entity, potentially with intermediate parent entities Most use participation agreements establishing the risk-contracting funds flow and requiring participation in care coordination Most are structured to achieve sufficient clinical or financial integration to permit single signature contracting 16

17 Example of Single-Hospital Network Entity University Community Physician Group Academic Enterprise Teaching Hospital Faculty Practice Plan Network Entity Payors participation agreements Community IPAs and Physicians gainsharing upside & quality bonus flows up to AMC and community; AMC may bear most or all of gainsharing downside 17

18 Example of Single-Hospital Network Entity Ownership: University and community physician group are members of a network entity, which is formed to integrate a large community practice into the system. The network entity is responsible for setting clinical integration standards and for contracting. Governance: The network entity board has equal representation between the physician group and the University, with certain reserved rights to the University. Participation Agreements: Solo physicians and group practices join through participation agreements, under which they agree (i) to participate in the network entity clinical integration program whereby the network entity will provide management, planning, policy and other clinical integration support services, and will enter into arrangements with payors; (ii) to distribution of gainsharing or quality bonuses earned by the network entity; and (iii) if the network entity assumes risk, to downside contributions (which the AMC may bear entirely). Payor Contracting: The participation agreements yield clinical integration between the community physicians and AMC sufficient to permit single-signature joint contracting. Gainsharing: The network entity has entered into shared savings and bundled payment contracts. EMR: The University implemented single EHR for all clinical and ambulatory facilities, which is available to community physicians and facilitates their clinical integration. 18

19 Example of Multi-Hospital Network Entity Community Physicians Faculty Practice Plan Teaching Hospital Community Hospital 1 Community Hospital 2 Physician LLC Hospital LLC Academic Enterprise Network Entity Gainsharing Upside & Quality Bonus flows up to physicians and hospitals Payors Gainsharing Downside hospitals may bear entirely Payments for Services Fee-for-Service Payments to: Physicians Hospitals Non-Network Providers 19

20 Example of Multi-Hospital Network Entity Ownership: Faculty practice plan and teaching hospital are majority members of respective physician and hospital participation organizations, and collectively of the Network Entity. Faculty practice plan is not a subsidiary of either the university or teaching hospital. Community physicians and hospitals also participate. Governance: Network Board has equal representation from both the hospitals and physicians, with majority representation from the faculty practice plan and the teaching hospital. Participation Agreements: Physicians and hospitals join through participation agreements, under which they agree (i) to participate in care coordination efforts, which would be Network-led (and thus led by the controlling faculty practice plan and teaching hospital); (ii) to distribution of gainsharing or quality bonuses earned by the Network; and (iii) if the Network assumes risk, to downside contributions (which may not be borne equally by the physicians and hospitals, and indeed may be borne entirely by the hospitals). Payor Contracting: The model assumes sufficient clinical or financial integration to permit joint contracting, but could be implemented on a messenger-model basis if integration is insufficient. Gainsharing: The Network would seek to enter contracts with payors that are similar to the Medicare Shared Savings Program, i.e., payors would pay participating providers on a fee-for-service basis over the year, with a reconciliation against a budget and gainsharing distribution if the Network comes in under budget. 20

21 Clinical Network Staffing Arrangements University (Faculty Practice Plan) Community Clinic Network Community Physicians Community Physicians Teaching Hospital Long-Term Professional Services Agreements Management Agreements A university and its teaching hospital operate a number of clinic sites, staffed by faculty physicians The university built additional clinics in the community, to be managed by the teaching hospital and staffed by community physicians Doubled primary care capacity in the community under flag of co-branded clinics 21

22 AGENDA Value-Based Health Care Overview Building Community Networks Structuring Platforms and Incentives Top Business, Legal, and Compliance Issues 22

23 The Usual Business Issues Membership issues: initial members, addition/withdrawal, classes, contributions, and voting powers Governance: board composition, reserved powers / supermajority voting, and committees Capitalization and Distributions: initial capitalization, pro rata capitalization and distribution, tax distributions Management and Staffing: responsibility for day-to-day management and administration, leased employees, management agreements Participants: closed (members only) vs. hybrid (non-members participate for certain needs), or open Contracting: joint contracting (financial/clinical integration or messenger model), risk contracting, opt-in vs. opt-out, exclusivity 23

24 The Usual Legal and Compliance Issues Insurance, Risk-Bearing Provider Organizations, Managed Care Antitrust Fraud and Abuse Corporate Practice Payor Contracting Value-Based Payment Program Requirements Tax and Tax-Exempt Organizations Data Privacy and Security 24

25 Coordination in Governance and Management Value-based payment models typically require more centralized coordination of care This can be easier or more challenging depending on the degree of integration across AMC or system components AMCs: consider separate academic and clinical governance and reporting structures, as well as autonomy and authority of chairs Systems: degree of integration varies from little (e.g., substantial local or subsystem autonomy) to total (e.g., mirror governance and management) 25

26 Financing Issues in Value-Based Care Financing IT Infrastructure and EMRs Security interests, private business use, useful life Credit and Liquidity Support Arrangements for Networks Obtaining letters or lines of credit to support downside risk Navigating Covenants Guaranties, liens, asset transfers, investments Capital Market Disclosure Regarding Network Development 26

27 New Frontiers in False Claims Act Liability False Claims Act ( FCA ) and Quality and Outcomes Measures Payments/liabilities based on reported quality/outcomes data Know Your Quality and Outcomes Including data entry/collection, aggregation, and analysis Diligently monitor vendors Integrate Quality/Outcomes Reporting into Compliance Program Innocent overpayments ripen into FCA violations if not repaid Identify and Repay Overpayments Promptly 27

28 Michael B. Lampert +1 (617) Benjamin A.T. Wilson +1 (617)