The Latest in P4P Arrangements: How to Remain Compliant CSHA 2015 Annual Meeting & Spring Seminar Paul R. DeMuro Of Counsel Broad and Cassel pdemuro@broadandcassel.com Jennifer Johnson Partner VMG Health jenj@vmghealth.com
Overview Introduction P4P Trends, Clinical Integration, Informatics and Data Analytics Regulatory Guidance for Structuring Arrangements The Evolution of P4P FMV, Arrangement Types and Tips for How to Remain Compliant 2
P4P Trends, Clinical Integration, Informatics and Data Analytics 3
New Payment Models Fee for Service & Shared Savings Fee for Service & Managed Risk Episodic Bundled Payment Pay for Performance 4
New Contract Provisions Measuring clinical integration Sharing data EMR Privacy Data collected Other considerations 5
New Contract Provisions Clinical integration standards Quality metrics Shared savings Threshold shared risk Enterprise performance versus clinical integration 6
Regulatory Guidance for Structuring Arrangements 7
Antitrust Clinical Integration Concept introduced in FTC/DOJ Statements (1996) Handful of FTC advice letters since Common features of clinical integration: the use of common information technology to ensure exchange of all relevant patient data the development and adoption of clinical protocols care review based on the implementation of protocols, and mechanisms to ensure adherence to protocols 8
Fraud and Abuse Anti-Kickback Act Prohibits remuneration for referrals for care reimbursed by federal or state program Criminal intent required; standard lowered by ObamaCare legislation Civil Monetary Penalty Law Prohibits remuneration to beneficiary likely to influence selection of a particular provider Civil statute; no criminal intent required 9
Fraud and Abuse Fraud and Abuse Prohibitions implicate: wellness programs/health fairs/health promotion; Patient Assistance Programs; transportation/lodging assistance; promotion of adherence to treatment regimens; incentives to remain in network; readmission reduction; end of life palliative care programs; and payment of premiums for Qualified Health Plan ( QHP ) exchange enrollees 10
OIG October 3, 2014 Proposed Rules Revisions to Safe Harbors Under the Anti-Kickback Statute and Civil Monetary Penalty Rules OIG proposes to amend the definition of remuneration in the CMP regulations at 42 CFR 1003 by adding certain statutory exceptions for: Certain renumeration that poses a low risk of harm and promotes access to care. 11
OIG October 3, 2014 Proposed Rules (con't.) Our goal is to protect beneficial arrangements that enhance the efficient and effective delivery of health care and promote the best interests of patients, while also protecting the Federal health care programs and beneficiaries from undue risk of harm associated with referral payments. 12
OIG October 3, 2014 Proposed Rules (con't.) OIG specifically solicits comments on the following areas of concern: Should a hospital s decision to rely on protocols based on objective quality metrics for certain procedures ever be deemed to constitute reducing or limiting care? 13
OIG October 3, 2014 Proposed Rules (con't.) Should hospitals deciding to compensate physicians in connection with the use of such protocols be required to maintain quality-monitoring procedures to ensure that these protocols do not, even inadvertently, involve reductions in care? 14
Information-Sharing Sharing patient information is critical to clinical integration HIPAA generally accommodates sharing among patients current provider team for therapeutic or payment purposes State laws protect special information ; e.g., HIV/AIDS Mental Health Genetic Drug and Alcohol Treatment 15
Clinical Integration Is becoming key, whether or not physicians are employed May be fully integrated, physician to physician or hospital to hospital Should make extensive use of electronic health records (EHRs) Hopefully, interoperable in nature With informatics technologies 16
Key Informatics Technologies Clinical Decisions Support Systems (CDSS) Computerized Physician Order Entry (CPOE) E-Prescribing Mobile Health or mhealth 17
Health Information Technology Is key in the transition from fee-for-service to payment for quality and cost-effectiveness However, the stakeholders, including the lawyers need to be constructive in the design of clinically integrated systems Everyone, including the lawyers have to get out of their silos It is not healthcare business as usual The M & A lawyers have to see more than acquisitions, and the regulatory lawyers have to see more than fraud, and abuse, Stark self-referral, tax-exemption, and regulatory problems 18
All Stakeholders Must Work Together Health Plans, Physicians, Providers, and Ancillary Service Businesses To align financial incentives Bend the cost curve Compensate all fairly in the transition for doing the right things And, to minimize the legal risks for all 19
Data Analytics/Big Data A new concept? Data necessary to set metrics Is the data clean? Is the data comparable? May be used to measure increased quality and/or decreased costs. 20
Predictive Analysis Healthcare 3.0 Personalized medicine Genetic markers Is the data comparable? Focus may be on as little as one patient. 21
The Evolution of P4P 22
P4P Physician Alignment Arrangements Growing Physicians and hospitals need to collaborate more than ever P4P drivers Affordable Care Act 6 sections on P4P Security healthcare reform, changing reimbursement Investment requirements for information technology Participate in risk-based contracting, ACOs, quality initiatives January 26, 2015 HHS Secretary Burwell Announces P4P plan 85% of all traditional Medicare payments to quality or value by 2016 50% percent of payments to alternative payment models by the end of 2018 (ACO, bundled payments) 23
P4P Background - Quality Sharing savings was a slippery slope -> quality focus for years Hospital Quality Incentive Demonstration (HQID) for over 250 hospitals: 2003-2009 Physician Group Practice Demonstration for ten physician groups: 2005-2010 In 2008, the Robert Wood Johnson Foundation and California HealthCare Foundation reported results of a national program that tested the use of financial incentives to improve the quality of health care. Tested seven projects across the nation that adjusted compensation based on performance scores hospitals and physicians. Notable findings: Financial incentives motivate change Alignment with physicians is a critical activity for quality outcomes Public reporting is a strong catalyst for providers to improve care February 2012 Committee on Ways and Means 1 example UnitedHealth Group discusses results of its Premium Designation Program (PD) Results show over 50% decrease in some complication rates 24
Savings & Quality Combined Savings alone (capitation) no longer in the mix 13 Gainsharing Opinions (2001-2008) guidance Quality thresholds key ACO Business News Reports on programs always mixed reviews late 2014-early 2015 ACO Pioneer Program 24% earned shared savings in 1st 2 years, 19 of 32 remain Wellmark/BCBS 5 ACOs improved quality 35% and saved $12 million over 2 years Sharp dropped out because it was at risk for a significant shared loss Medicare ACO New proposal 3 models taking comments now Keeping 1 sided model, but want to reduce savings rate from 50% to 40% - consensus this track is key Adding 3 rd track, 75% savings, but downside 40% to 75% Payments for telehealth included Multiple Models and arrangements exist today beyond commercial and Medicare ACOs 2013 Greater New York Hospital Association - 100 hospitals desired to work with participating physicians to account for the use of hospital resources. Physicians that met hospital quality targets while lowering costs could be compensated a portion of the savings. Medicare Shared Savings Program Commercial payor programs growing exponentially 25
2014 RAND Report: Measuring Success in Health Care Value Based Purchasing Programs U.S. Department of Health and Human Services requested study 129 VBP programs (91 P4P, 27 ACOs, 11 bundled payments) Measures: clinical quality, cost, outcomes, experience Recommendations: Set measurable goals, use national data Case-mix adjust outcomes measures, use broad set of measures, identify overtreatment measures, monitor Evolve from narrow process measures to broader set emphasizing outcomes Sponsor engage providers in design/implementation VBP sponsors should collect a common set of factors to find best working program Need more information: HHS should develop a structured research agenda to address gaps in VBP knowledge base CMS should study private-sector programs, program design information not available Study changes and investments, experiences and challenges 26
Evolution of P4P Arrangements What We Do Know Standard process leading up to P4P payments Recognized organization identifies quality metrics or average costs Reporting measures is required, or costs are tracked Benchmarking data is gathered Payments for outcomes or savings is observed in market FMV can now be established Justification for payments changing Payments for Reporting (ie: PQRI) Pay for Process Pay for Outcomes At risk for sub-par quality Common factors included in P4P arrangements Lowering costs without sacrificing quality Quality outcomes payments individual, services line level, entire population Use of technology Valuation drivers Outcomes New dollars coming in from 3rd parties Service line or practice level 27
FMV and Tips for How to Remain Compliant 28
Fair Market Value & P4P Based on the anti kickback statute, and other healthcare regulations and guidelines, any transaction between hospitals and physicians must be at Fair Market Value. The amount at which property would change hands between a willing seller and a willing buyer when the former is not under any compulsion to buy and the latter is not under any compulsion to sell and when both have reasonable knowledge of the relevant facts, absent the consideration of referrals. Provides a conclusion which should not reflect consideration for value or volume of referrals. Offer equal P4P opportunities to all providers Do not tie P4P compensation to expected referrals P4P comparables Stick to regulatory guidance when it comes to paying for quality or shared savings Governmental programs and third party payors are good market comparables 29
OIG Opinions General P4P Guidance Valuation Lens Advisory Opinion 00-02 (non-physician hospital employee cost savings reward programs) could not approve pre-payments without understanding: The amount of the payment The person the payment will made to The action or activity that will be proposed *Therefore, these factors must be essential in order to determine if payments are proper Advisory Opinion 01-01 (Cardiac Surgery Gainsharing) favorable partially due to: Transparency setting out verifiable cost savings tied to specific actions Limited duration and specific scope 30
Regulatory Guidance - Quality Quality measures should be clearly and separately identified Quality measures should utilize an objective methodology verifiable by credible medical evidence Quality measures should be reasonably related to the hospital s practice and consider patient population Do not consider the value or volume of referrals Consider an incentive program offered to all applicable providers Incentive payments should consider the hospital s historical baseline data and target levels developed by national benchmarks Thresholds should exist where no payment will accrue and should be updated annually based on new baseline data Hospitals should monitor the incentive program to protect against the increase in patient fees and the reduction in patient care Incentive payments should be set at FMV 31
Regulatory Guidance Shared Savings Gainsharing Guidance Favorable OIG Opinions Each member of the physician group should have medical staff privileges The arrangement should be administered by a program administrator, whose compensation was not tied in any way to the incentive compensation. A program administrator should identify cost-savings metrics after reviewing historical practices and understanding its medical appropriateness. The savings targets should be re-based at the end of each year in multi-year arrangements. The hospital should calculate the cost savings separately for each group and for each cost savings recommendation. The arrangement should include objective measures to monitor quality (i.e., CMS Specification Manual for National Hospital Quality Measures). Incentive payments should be set at FMV ------------------------------------------------------------------------------------------------------- More complex factors should be considered for allocating savings associated with patient population and bundled payments Responsibility for outcomes and savings Risk adjustment for patient population Responsibility for infrastructure costs (if applicable) Caps are prudent and seen in demonstration projects 32
Physician Arrangement Types with P4P Less risk for physicians - traditional deals with P4P component Simpler FMV Clinical (% of base add-on) Medical directorships (hourly rate differential) Call coverage (portion at risk for outcomes) Medium risk - Co-management of service line = fixed + variable fee More intricate FMV Quality outcomes Sometimes savings More risk for physicians Complex or model-based FMV ACO type models - Quality initiatives provide gate or extra upside Upside based on actual savings Downside risk Bundled Payments
Clinical Integration Payment Models The following payment allocations may be included within a clinical integration model Bundled payment splits understand who is providing what service Quality and Shared Savings splits among ACO entity and hospital and physicians FMV process - balanced approach for overall model should be assessed Third party funded or from hospital Infrastructure cost recovery Buy-in or participation Fee Time spent/effort hourly rate paid Split of savings existence of minimum savings threshold Split of quality - benchmarks utilized Upside and downside risk Care coordinator payments ie: Nurse care manager 34
P4P Program Starting Guidelines Start small Have a written agreement Modest set of metrics perhaps consistent with those found in both commercial ACOs and Medicare ACOs Update and rebase metrics annually Understand who is driving cost savings and quality Have safeguards which prevent cherry picking and lemon dropping Identify flow of funds allocation early on in process Understand your FMV opinion and underlying assumptions Compliant P4P payment formula = Good Data + Logic + FMV guidance 35
Thank you! Paul R. DeMuro Broad and Cassel pdemuro@broadandcassel.com 954-745-5224 Jen Johnson VMG Health jenj@vmghealth.com 214-545-5882 36
Paul R. DeMuro, CPA, MBA (Finance), MBI (Biomedical Informatics), JD, PhD Candidate, FHFMA, FACMPE, CHC Health Care Attorney at Broad and Cassel, Fort Lauderdale, Florida Practices extensively in the areas of health reform, emerging markets, healthcare information technology, biomedical informatics, accountable care organizations, clinical integration, and value-based purchasing PhD Candidate in Biomedical Informatics at the Oregon Health & Science University School of Medicine Post-Doctoral Fellow, Oregon Health & Science University Chair, Finance Committee, American Medical Informatics Association Penned or co-penned over 140 publications/commentaries/columns, including Predictive Analytics The Future of Healthcare? Delivered approximately 400 presentations around the world Member of the bars of ten jurisdictions. 37
Jen Johnson, CFA Partner at VMG Health Leads Professional Service Agreements Division Previously with KPMG s litigation department Former Finance professor from the University of North Texas Published and presented over 50 times related to physician compensation and fair market value Board meetings, articles and presentations on P4P initiatives April 2014 HFM Magazine Evaluating The Fair Market Value of Pay for Performance Finance Committee Attendance on major P4P initiatives 38