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

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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

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Population Health Primer

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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

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Population Health – Consumer Focus PATIENTS INCREASINGLY SHOPPING FOR HEALTH CARE…

…AND THEY HAVE OPTIONS TO CHOOSE FROM

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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

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Provider Options for Population Health

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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

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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

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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

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Strategies for Value-Based Care

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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

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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

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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

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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

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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

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Direct Contracts - Today

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NBGH members include

74 of Fortune 100

companies and provide

coverage for > 50M

Americans

Re-Emergence of Provider-Sponsored Health Plans

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What Do Health Care Lawyers Need to

Know?

• Provider-Sponsored Health

Plans

- Potential Models

- Regulatory Considerations

• Direct Contracting

- Legal Relationships

- Regulatory Considerations

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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

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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”)

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#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)

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#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

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#3: Administrative Services Agreements

• TPA Administrative Services Agreement

- Claims processing

- Provider may offer TPA services instead of

independent TPA

• Network Administrator Administrative Services

Agreement

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#4: Network Administrator Provider Agreements

• Pre-existing payor/plan network

• Rates under participating provider agreements

between Network Administrator and providers

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Regulatory Considerations

• Insurance Licensing

• Antitrust

• Data Exchange

• Fraud and Abuse

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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)

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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

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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

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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

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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)

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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

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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

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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)

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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

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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

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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

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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

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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

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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

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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)

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PSHPs – Potential Models

• Build New Health Plan

• Buy Existing Health Plan

• Joint Venture with Existing Health Plan

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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

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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)

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Questions?

John Howard Novant Health 704 384 8943 jshoward@novanthealth.org

Evan Raskas Goldfarb Thompson Coburn LLP 314 552 6198 egoldfarb@thompsoncoburn.com

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