Contracting With An ACO: What Evidence of Financial Responsibility Should The Payor Require?

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Maria Logan
6 years ago
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Donahue, CEO, Gaen Healthcare Advisors, LLC Alice Johansson, SVP,

1 Contracting With An ACO: What Evidence of Financial Responsibility Should The Payor Require? Presented by: William P. Donahue, CEO, Gaen Healthcare Advisors, LLC Alice Johansson, SVP, Ironshore Kathy Kunigiel, Willis National Healthcare Practice September 12, 2012

2 Today s Take-Aways The Why, What, Who, and How Why Invest in an ACO What Are the Risks Who Owns The Risks How to Manage The Risks 1

3 Why Invest In An ACO? Achieve the Dual Goals of Health Care Reform Cost Containment Improved Quality of Care Types of ACO s Pioneer Model ACOs Medicare Shared Savings ACOs Commercial ACOs 2

4 Shared Risks Created by ACO Model Operational Challenges Liability Risks Complex Contractual Relationships Access to Capital for Investment Distribution Savings and Losses Provider Mix Leadership Compliance Claims and Litigation Ethics Technology and Privacy Issues Marketing Materials Vicarious Liability Competition and M&A 3

5 Operational Challenges Payors Must Anticipate Who owns the risk/problems in a commercial environment? Who does the marketing? Approval by the carrier? How do you manage social media? How do you handle patient/member selection of a PCP in a PPO environment? 4

6 Operational Challenges Payors Must Anticipate Providers have the desire, but do they have the infrastructure?: Technology Financial Bonding Insurance Provider contracts Properly aligned incentives Ambulatory arrangements Pharmacy management Patient incentives Employees 5

7 Operational Challenges Payors Must Anticipate 6

8 Operational Challenges Payors Must Anticipate Awareness and Capabilities of Providers: Operational gap analysis is needed to identify capabilities Benchmark current management o Statistical evidence of management and control Population management Performance measurements Network adequacy Continuum of Care with non-aco providers Care management Provider o Management and control o Communication o Incentives 7

9 Who Owns The Risk Dependent on the Payor s Ownership Interest Manager Owner Contractor 8

10 Who Owns The Risk Health Plan As Owner Of The ACO You Own The Risk Health Plan ACO Bodily Injury Marketing Financial transactions Regulatory/Compliance Ethics Technology/Privacy Mismanagement Employment Practices 9

11 Who Owns The Risk Health Plan As contractor I know nothing does not always work Health Plan Vicarious BI Did the Plan make marketing representations? Was the Plan involved in data collection/manipulation? Did personal information of Plan members get lost? Etc ACO Bodily Injury Marketing Financial transactions Regulatory/Compliance Ethics Technology/Privacy Mismanagement Employment Practices 10

12 Who Owns The Risk Health Plan As manager It Depends. Health Plan Who is doing what? What does the contract say? What has been represented by whom? ACO Who is doing what? What does the contract say? What has been represented by whom? 11

13 Is All of This Risk Insurable? No. So, don t forget good risk management But a lot of it is insurable: Direct and vicarious medical malpractice Other BI exposures CM, DM, UR (including allegations that UR decisions are influenced by financial incentives) Economic credentialing Antitrust Privacy and network security breach Regulatory and compliance issues including allegations of fraud, kickbacks, self referrals, and/or false claims How to structure an insurance program varies with risk appetite and owner/contractor/manager relationship 12

Stop Loss Auto Employed Lawyers K&R Security & Police Professional Employee Benefits Consider Exposures Aviation,

14 ACO Coverages To Consider Need Directors & Officers EPL Fiduciary Professional Liability General Liability Excess/Umbrella Managed Care E&O Network Security & Privacy Workers Comp Property & BI Billing E&O Crime Probably Need Stop Loss Auto Employed Lawyers K&R Security & Police Professional Employee Benefits Consider Exposures Aviation, Helipad Volunteer Accident Travel Accident & Evacuation Environmental Product Liability Which of these coverages do you feel are important? 13

15 Insurance Products What Type of Insurance Products are Available Commercial Market? Stand Alone Policies Integrated Products 14

16 For more information contact: 15

17 Disclaimer This material is meant to be a useful reference, but it is not a substitute for legal advice. The information is provided from or developed with the use of sources generally considered to be reliable. The information included may not be accurate for all states and all situations. Accuracy and completeness are not guaranteed. The information is intended as risk management advice. It does not constitute a legal opinion, nor is it a substitute for legal advice. Legal inquiries about topics covered in these pages should be directed to your attorney. 16

Physical Address: (Number) (Street) (City) (State) (Zip Code) Date of ACO Formation Date of Incorporation:

Physical Address: (Number) (Street) (City) (State) (Zip Code) Date of ACO Formation Date of Incorporation: APPLICATION for: Accountable Care Organization Errors and Omissions and Directors and Officers Liability Insurance Claims Made Basis. Underwritten by Underwriters at Lloyd s, London Notice: This is an