managed care contracting from a position of …€¦ · managed care contracting from a position of...

Adam J. Falcone, Esq.

Partner

MANAGED CARE CONTRACTING FROM

A POSITION OF STRENGTH!

November 27, 2018

DISCLAIMER

• This training is provided for general informational and

educational purposes only and does not constitute legal

advice or opinions.

• The information is not intended to create, and the

receipt does not constitute, an attorney-client

relationship between attorney and participant.

• For legal advice, you should consult a qualified attorney.

© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 2


PRESENTER: ADAM J. FALCONE

• Partner in FTLF’s national health law practice.

• Counsels health centers, behavioral health providers, and

provider networks on a wide range of health law issues,

including fraud and abuse, reimbursement and payment,

and antitrust and competition matters.

• Began his legal career in Washington, D.C. as a trial

attorney in the Antitrust Division’s Health Care Task Force

at the U.S. Department of Justice.

• Served as Policy Counsel for the Alliance of Community

Health Plans, representing non-profit and provider-

sponsored managed care organizations before Congress

and the Executive Branch.

• Received a B.A from Brandeis University, an M.P.H. from

Boston University School of Public Health, and a J.D., cum

laude, from Boston University School of Law.

Contact information [email protected] 202.466.8960

TRAINING OBJECTIVES / AGENDA

Purpose: To assist behavioral health agencies negotiate individual contracts with MCOs to serve Medicaid

individuals with mild to moderate mental illness as well as individuals covered under Medicare and

commercial contracts.

Part 1: The P.E.N. Strategy for Managed Care Contracting

1) Prepare for Managed Care Contracting

• Assessing Regulatory Leverage, Market Power, and Timing

• Participating in Value-Based Payment (VBP) Methodologies

2) Evaluate Managed Care Contracts

3) Negotiate with MCOs

Part 2: Key Terms and Legal Protections

Part 3: Participating or Forming Provider Networks

• Types of Provider Networks

• Accountable Care Organizations

• Federal Antitrust Law and Negotiating Jointly


PART 1

The P.E.N. Strategy for Managed

Care Contracting


WHO HAS AN ADVANTAGE?


BOTH.


MANAGED CARE CONTRACTING

A strategy is simply a plan of action for accomplishing an objective.

Take a moment to write down your managed care contracting objectives.

8© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

CONTRACTING STRATEGY

Before you sign,

use the P.E.N!

✓Prepare

✓Evaluate

✓Negotiate


STEP 1: PREPARATION PHASE

A party that

recognizes its

strengths has an

advantage in

achieving its

objectives.


IDENTIFY YOUR STRENGTHS

Assess

Leverage

Compete

Based on

Value

Increase

Leverage

or Value


ASSESSING LEVERAGE: LEGAL

Possible Leverage Points:– Participation: MCO is required to include me in its provider network

– Coverage: MCO is required to cover (all of) my services

– Payment: MCO is required to pay me a specific rate

Sources of Leverage: ➢ Federal Medicaid laws or regulations

➢ State insurance laws and regulations

➢ Contract with the State Medicaid agency (“Model Contract”)

https://www.hca.wa.gov/billers-providers-partners/programs-and-services/model-managed-care-

contracts

➢ Insurance Exchange regulations and rules

Hint: Key terms to look for: “provider network”, “network adequacy”, “network service”,

“payment”, “network contracting requirements,” and “minimum network standards”.


WASHINGTON STATE MODEL CONTRACT

Essential Behavioral Health Providers

Network Requirements – Section 6.2.5

• The Contractor must incorporate the following requirements when developing its behavioral

health network.

• The Contractor shall establish and maintain contracts with providers determined by HCA to

be Essential Behavioral Health Providers (EBHP):

• Certified residential treatment providers

• DBHR-licensed community MH agencies

• DBHR-certified CD agencies

• DOH-certified MAT providers

• DBHR-certified opiate substitution providers

• DOH-licensed and DBHR-certified free-standing inpatient, hospitals or psychiatric

inpatient facilities that provide evaluation of treatment services

• DOH-licensed and DBHR certified detox facilities

• DOH-licensed and DBHR certified residential treatment facility for crisis stabilization

services

• Certified wraparound and intensive services (WISe) provider

• Office-based opioid treatment qualifying providers operating under a DATA waiver



Payment to FQHCs/RHCs

Payment to FQHCs/RHCs – Section 5.21.2

• Each FQHC/RHC is entitled to its specific, full encounter rate for each qualifying encounter as

outlined in the Medicaid State Plan and in accordance with Section 1902(bb) of the Social

Security Act.

• The full encounter rate shall be at least equal to the Prospective Payment System (PPS) rate

specific to each FQHC/RHC and applies to FQHCs/RHCs reimbursed under the Alternative

Payment Methodology (APM) rate methodology and to FQHCs/RHCs reimbursed under the

PPS rate methodology.

• To ensure that each FQHC/RHC receives its entire encounter rate for each qualifying

encounter, the Contractor shall pay each contracted FQHC/RHC in one of two ways: (1) Pay

the specific monthly enhancement payment amount to the FQHC/RHC (within 30 days) in

addition to payment of claims for service made at standard rates paid to the FQHC/RHC; or

(2) Pay a monthly capitation rate for services and pay the specific monthly enhancement

payment amount to the FQHC/RHC (within 30 days).

Payment for Mental Health Encounters – Section 5.22.1

• The Contractor is required to contract with at least one FQHC/RHC in their service area if the

FQHC makes such a request.

• The Contractor must not pay a FQHC or RHC less than the level and amount of payment the

Contractor would pay non-FQHC/RHC providers for the same services.



Non-Participating Providers

Payment for Services by Non-Participating Providers – Section 5.18

• The Contractor shall limit payment for Emergency Services furnished by any provider who

does not have a contract with the Contractor to the amount that would be paid for the

services if they were provided under HCA’s Medicaid Fee-For-Service (FFS) program.

• Except as provided herein for Emergency Services, the Contractor shall coordinate with

and pay a Non-Participating Provider that provides a service to Enrollees under this

Contract no more than the lowest amount paid for that service under the Contractor’s

contracts with similar providers in the State.

• For purposes of this subsection, “contracts with similar providers in the State” means

the Contractor’s contracts with similar providers to provide services under the

Managed Care program when the payment is for services received by a Managed

Care Enrollee.



Enrollee Choice of PCP/Behavioral Health Provider

Enrollee Choice of PCP/ Behavioral Health Provider – Section 10.5

• The Contractor must implement procedures to ensure each Enrollee has a

source of primary care appropriate to their needs.

• The Contractor shall allow, to the extent possible and appropriate, each new

Enrollee to choose a participating PCP or behavioral health professional.


ASSESSING LEVERAGE: MARKET POWER

Leverage Points:

– MCO has no alternative providers in market if it does not contract with me

– MCO cannot meet network adequacy requirements without me

Understand Your Market

➢ What organizations (if any) furnish similar services to me?

➢ For each of my services, what percent of the market do I serve as compared to

other organizations?

Hint: Fewer providers = Greater leverage

– Assess breadth and scope of services

– Analyze market share

– Consider brand and reputation


ASSESSING LEVERAGE: TIMING

Leverage Points:

– MCO is establishing new provider network or product.

– MCO faces critical deadlines in order to enter marketplace by a

certain date.

Stay Informed:

• State timelines

• Managed care entities

• Your trade and professional associations

• Your peers


COMPETING ON VALUE

• Enhances your negotiating position

because you can offer something of

greater value than you competitors in the

marketplace.

– Sometimes referred to as “competitive advantage”

Identify Value Assess ValueCommunicate

Value


HEALTH CARE SERVICES MARKET

Managed Care Organization

Provider

Provider

Provider

SellerBuyer


IDENTIFYING VALUE

Self-Assessment Questions:

➢ Can you deliver greater value (potential cost-savings) to the MCO?

➢ Adherence to prescription drug treatment

➢ Reduction in ER visits or preventable hospitalizations

➢ Reduction in total expenditures for cost of care

➢ For any of the above, can you quantify the savings?

Get Answers!

➢ Collect data and report on quality measures

➢ Access data on total costs of care for your patients


IDENTIFYING VALUE

Self-Assessment Questions:

➢ Are you willing to incur some downside financial risk that

would otherwise fall upon the MCO?

• Capitated payment for the provision of services

furnished by your organization

• Bundled payments or case rates for specific diagnoses

or conditions

• Shared savings and losses for total costs of care


COMPETING ON VALUE

Communicate Your Value!

➢ Marketing materials that communicates the

value you offer to MCOs

➢ In-person meetings with MCOs to describe

cost and clinical outcomes

➢ Participation at conferences that highlight

your achievements

➢ Informal networking events

➢ Community events


INCREASE LEVERAGE OR VALUE

Collaborations with other providers through

joint ventures or integrated provider networks may

increase leverage in the marketplace, enhance your

value, or both, thereby improving your negotiation

position.


INTEGRATED CARE MODELS

Joint Venture

• Contractual

relationships

(e.g.,

affiliation)

• Joint

governance

committee

Partial

Integration

• Joint

ownership or

joint control

of new legal

entity (e.g.,

IPA, ACO)

Full Integration

• System owns

hospitals and

employs

salaried

physicians

25© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 25

INTEGRATED CARE DELIVERY MODELS

• Referral

Arrangement

• Co-location

Agreement

• Purchase of

Services

• Merger

© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com

Primary Care

Provider

Behavioral Health

Provider

Joint Venture

26

INTEGRATED CARE FINANCING MODELSPROVIDER NETWORKS

IPA

Behavioral

Health

Provider

Behavioral

Health

Provider

Primary Care

Provider

ACO

FQHC

Behavioral

Health

Provider

Hospital

Management

Services

Organization

DD/ID

DD/ID

DD/ID


VALUE-BASED PAYMENT METHODOLOGIES

• Value-Based Payment (VBP) generally refers to activities that move

away from traditional fee-for-service (FFS) payment system, which

rewards volume, to alternative payment models that reward high-

quality, cost-effective care.

• Nearly 40 percent of state Medicaid directors surveyed in 2016

reported plans to expand VBP arrangements in following year.

• CMS aims to move 50% of Medicare FFS payments into

alternative payment models by 2018.

• Today, most VBP arrangements in Medicaid support only providers of

physical health services. (Center for Health Care Strategies, June 2017)


VALUE-BASED PAYMENT ARRANGEMENTS

• Who serves Medicaid’s highest cost patients? The case for VBP

arrangements that support behavioral health providers can be

made, given that:

• Spending for individuals with a behavioral health diagnosis is

nearly four times higher than for those without.*

• 20 percent of Medicaid enrollees who have a behavioral

health diagnosis account for almost half of total Medicaid

expenditures.*

• VBP in Medicaid holds promise to improve quality and slow growth

if it were routinely extended to Medicaid behavioral health

providers.

*Medicaid and CHIP Payment and Access Commission. “Chapter 4: Behavioral Health in

the Medicaid Program — People, Use, and Expenditures. Report to Congress on the

Medicaid and CHIP.” June 2015.



ALTERNATIVE PAYMENT MODELS

The Health Care Payment

Learning & Action

Network (HCP-LAN) was

created to drive

alignment in payment

approaches across the

public and private sectors

of the U.S. health care

system.

The HCP-LAN created a

common framework for

adoption and

measurement of VBP

across all payer types

(Medicare, Medicaid, and

Commercial)

Alternative Payment Model (APM) Framework provides a continuum of payment models



Category 1: FFS payments not linked to quality.

• FFS payments are based on the number and units of service provided,

without linkages to, or adjustments for, provider reporting of quality data,

or performance on cost or quality data.

Category 2: FFS payments linked to quality and value.

• FFS payments are adjusted based on other factors, such as infrastructure

investments, whether providers report quality data (pay-for-

reporting),and/or performance on cost and quality metrics (pay-for-

performance).

• This may also include a penalty disincentive, i.e., a lower or withheld

payment if providers do not produce quality indicators, or report events or

procedures that are harmful and were avoidable.

Note: Washington State Health Care Authority’s definition of VBP starts with

Category 2C, i.e., rewards for high performance on clinical quality measures.



Category 3: Alternative payment models based on FFS.• Payments are based on FFS, but provide mechanisms to more effectively manage

services. Providers must meet quality metrics to share in cost savings, and payments are based on cost performance against a target. Models may include:

– Shared savings/shared risk. Also referred to as “upside” or “downside” risk respectively, providers must meet a total-cost-of-care target for some/all services for an attributed set of patients. If actual costs are below projections, providers may keep some savings or may also be at risk for higher-than expected costs.

– Bundled or episode-based payments. A single payment to providers for all services needed to treat a given condition (e.g., maternity care) or to provide a given treatment (e.g., hip replacement). Providers receive an inclusive payment for a specific scope of services to treat an “episode of care” with a defined start and endpoint (e.g., case rate for six months of SUD recovery services).

Note: Excludes risk-based payments that do not take quality (and therefore value) into account.



Category 4: Population-based payments.

• Payments are structured to encourage providers to deliver

coordinated, high-quality care within a defined budget.

• Payments may cover a wide range of preventive, medical, and

health improvement services.

• Examples include global or capitated per-member-per-month

payment that reflects the total cost of care for treating a primary

(typically chronic) condition, or for maintaining the health and

managing the illness of an entire population.

Note: Excludes population-based payments that do not take quality

(and therefore value) into account.

NATIONAL MEDICAID VBP LANDSCAPE

• Payment Reforms. States are using MCO contracts as a vehicle to

increase the number of providers paid under VBP arrangements. Such

approaches include requiring MCOs to:

• Adopt standardized VBP model to reimburse providers

(Minnesota, Tennessee)

• Make a specific percentage of provider payments through

approved VBP arrangements (Arizona, Pennsylvania, South

Carolina, New York State)

• Participate in a multi-payer VBP alignment initiative (Tennessee)

• Launch VBP pilot projects under state oversight (New Mexico,

Minnesota)

• States may also adjust payments to MCOs based on quality metrics and

efficiencies to drive behavioral health outcomes and advance integrated

models.


WASHINGTON STATE VBP LANDSCAPE

• Health Care Authority (HCA) has set a goal that 90% of state-financed payments to

providers will be in APM Categories 2C-4B by 2021.

• Between 2017-2021, HCA is withholding a percentage of MCO’s monthly premium

based on performance in the following areas:

– Provider Incentives Target (Percentage of premium payments that must be

spent on incentives to providers in APM Categories 2C or higher)

– VBP Arrangements Target (Percentage of provider payments that must be in the

form of VBP arrangements in APM Categories 2C or higher)

– Quality Improvement Score (Withholds that reward improvement and

achievement of targets for seven quality measures)

– Challenge Pool Incentives (Unearned VBP incentives from managed care

premiums will be available to reward plans that meet exceptional standard of

quality and patient experience based on subset of measures)

• Washington’s 1115 DSRIP (Medicaid Transformation Project) incentive funding is tied

to specific performance metrics and APM Categories 2C and above


VBP OPPORTUNITY FOR BEHAVIORAL HEALTH

Practice Pointers. Serving Medicaid’s highest cost patients, behavioral

health agencies should recognize their value to MCOs in managing the

total costs of care and leverage HCA financial incentives with MCOs.

Behavioral health agencies should:

1) Educate MCOs on the business case for VBP arrangements for

populations with a behavioral health diagnosis.

2) Identify (and promote!) specific VBP arrangements in APM

Categories 2C and higher that will achieve HCA targets / quality

scores, assisting MCO recover premium withholds


VBP: ACCESS TO CLAIMS INFORMATION

Providers need timely, accurate and usable data to be successful in VBP arrangements.

– Timely receipt of patient health information related to emergency room visits, hospitalizations, and physical health care is essential for performing well on P4P incentives and managing the total costs of care of the attributed population.

Practice Pointers. A provider’s terms of participation in VBP arrangements should contain language that requires the MCO to furnish to the provider the necessary claims information related to a patient’s use of services (or provide access to integrated databases), patient risk scores, and prior authorization requests on a real-time basis.

– Ideally, the contract would specify the type of data that the provider is entitled to receive, the timeliness of such data, and the frequency in which the MCO must provide the data to the provider.

– If the MCO fails to meet its data sharing obligations, the provider should be held harmless from any loss of revenue arising from unearned payment withholds or downside financial risk.


SIDEBAR: PATIENT CONFIDENTIALITY LAWS

• A Covered Entity may disclose protected health information (“PHI”) for the treatment

activities of any health care provider (including providers not covered by the Privacy

Rule).

– Covered Entities include health care providers who transmit health information in

an electronic form as well as health plans (e.g., health insurers, state Medicaid

programs)

– “Treatment” generally means the provision, coordination, or management of

health care and related services among health care providers or by a health care

provider with a third party, consultation between health care providers regarding

a patient, or the referral of a patient from one health care provider to another.

– Note: Disclosures for treatment purposes do not need to abide by the “Minimum

Necessary Standard” and can disclose all of a patient’s PHI.

• Generally, 42 CFR Part 2 restricts disclosure and use of substance use disorder records

which are maintained in connection with the performance of a federally-assisted Part 2

program.

– Unlike HIPAA, patient consent is required even for disclosures for the purposes of

treatment.


VBP PERFORMANCE MEASURES

• To facilitate participation in multiple VBP arrangements, providers should seek performance

measures that have standard definitions and methodologies for calculating scores (e.g.,

HEDIS measures). Ideally, the Medicaid measure sets and incentives would align with those

used by Medicare and commercial payers.

• Providers should be familiar with the performance measures applicable to MCOs

(particularly Medicaid MCOs), understand the financial rewards available to MCOs (if any),

prioritize internal operations to score high on those performance measures, and leverage

those results for favorable VBP arrangements with MCOs.

Practice Pointers:

– A provider’s terms of participation in VBP arrangements should contain clear language

regarding the population of patients subject to the performance measures, the

definitions and methodology for calculating scores, and the financial rewards available.

– The MCO should not be permitted to change the performance measures (or

methodology) after they have been established for any given performance year, at

least without the provider’s consent.


VBP PERFORMANCE MEASURES

2018 Quality Measures under Apple Health Contracts

• To connect payment to quality of care and to value, HCA is withholding 1.5

percent of a MCO’s monthly premium, of which 75% of that withhold can be

earned back based on achieving targets for the following quality measures:


VBP: P4P REWARDS AND SHARED SAVINGS

P4P Rewards/Upside-Only VBP Arrangements. A provider is not placed at

financial risk to participate in APM Category 2C (P4P rewards) and 3A (upside-

only shared savings) VBP incentive arrangements.

– Even if the provider does not qualify for incentive payments,

participation in those arrangements may “kick-start” internal delivery

changes and partnerships with other providers to qualify for future

payments.

Practice Pointers. During negotiation of contracts (and contract amendments!)

with MCOs, providers should affirmatively request participation in an MCO’s

VBP arrangements to maximize overall reimbursement.

– If an MCO is not willing to permit participation in VBP arrangements at

the point of contracting, a provider should seek language that entitles

the provider to participation at a future date, upon meeting eligibility

requirements, or otherwise.


VBP: P4P PENALTIES AND SHARED RISK

P4P Penalties / Downside Risk VBP Arrangements. A provider is placed at

financial risk to participate in APM Category 2D (P4P rewards and penalties) and

3B (upside and downside shared savings) VBP incentive arrangements.

Providers should generally exercise caution in entering such arrangements as

they could result in significant risk to the organization’s financial health.

Practice Pointers. When negotiating the terms of participation in any VBP

arrangement that involve financial penalties or downside financial risk, the

provider should add language that limits or mitigates any such penalties or

downside risk.

– If the contract imposes a financial penalty on the provider, the provider

should negotiate language that creates a ceiling on the penalty as a

fixed dollar amount or percentage of total payments received from the

MCO.


VBP: P4P PENALTIES AND SHARED RISK

(continued)

Practice Pointers. When negotiating the terms of participation in any VBP

arrangement that involve financial penalties or downside financial risk, the

provider should add language that limits or mitigates any such penalties or

downside risk.

– If the provider enters a downside shared risk arrangement, the provider

should negotiate language that limits financial losses to a percentage of

total payments or the benchmark.

– If the provider is participating in a VBP arrangement that involves

financial penalties, the provider should negotiate a provision that allows

financial losses incurred in one year to be paid back to the MCO by

financial gains earned in subsequent years.


POPULATION-BASED VBP ARRANGEMENTS

Attribution Methodology. The basis by which the MCO attributes patients to a population under a VBP arrangement. Possible attribution methods might include populations based on an enrollee’s:

– Geographic area (e.g., counties)

– Specific behavioral health diagnoses

– Receipt of services from a behavioral health agency (e.g., clients)

– Receipt of health home services

– Receipt of primary care services

Prospective Attribution. If attribution of patients is prospective, providers should recognize that the population of patients attributed to the provider may:

– Include patients who have not visited the provider during the current performance year; and

– Include patients who have received services from the provider but who were actually assigned to a different provider.


POPULATION-BASED VBP ARRANGEMENTS

(continued)

Practice Pointers. To avoid surprises related to the attributed patient

population, a provider should:

• Request that the MCO generate a list of attributed patients based on prior

year’s data so that the provider can learn how many and which patients

would have been attributed to the provider under a VBP arrangement.

• Negotiate a provision that requires the MCO to provide a list of the

attributed patient population at least 90 days prior to the start of the

performance period for the VBP arrangement.

• Negotiate a provision that requires the MCO to provide monthly or quarterly

patient rosters of attributed patients for the current performance year as

well as the right to confirm or reject individuals attributed to the provider

against the provider’s own records within 60 days of receipt of the patient

rosters.


VBP CONTRACT TERM

• Providers should be aware that there may be a separate contract term that

applies to VBP arrangements.

• In practical terms, the contract term reflects the amount of time that the

provider is committing to participate in the VBP arrangement.

• Provider Pointer. When initially contracting with an MCO, it may be

desirable for the term of the VBP arrangement to be shorter (e.g., one

year)– possibly without automatic renewal-- so that the provider can re-

negotiate any problematic terms of participation in VBP arrangements.

• In any VBP arrangement, providers should seek contract language

that permits them to receive payment of any earned payment

incentives for completed performance periods prior to termination

of the participation agreement, even if the payment incentives have

not been distributed prior to termination.


VBP TERMINATION

• If participation in a VBP arrangement involves financial risk, the provider may wish to include contract language that permits the provider to terminate its participation in the VBP arrangement if the provider is incurring (or is likely to incur) financial penalties under the arrangement.

• Contracts can typically be terminated “for cause” or “without cause”.

– For cause. The situations that constitute cause will be listed in the contract, e.g., breaches of material terms of the contract.

• Practice Pointer: The provider may want to add other circumstances that would permit participation in the VBP arrangement to be terminated for cause, e.g., the MCO modifies the performance measures or methodologies.

– Without cause. In some contracts, a party may also terminate without cause after providing written notice to the other party.

• Practice Pointer: Contracts that contain termination without cause provisions mean that, from a practical perspective, the term of the contract is the notice period. This may be a desirable mechanism to exit the VBP arrangement if necessary.


VBP AMENDMENTS

• Amendment provisions are particularly crucial in VBP arrangements because

the clinical, operational, and financial environments in which the parties

operate are subject to constant change.

Practice Pointer. Determine whether there is a specific amendments clause that

applies to participation in VBP arrangements.

• Any amendments clause to VBP arrangements should offer the right to the

provider to opt-out but if the amendments clause permits the MCO to

amend unilaterally the terms of participation in a VBP arrangement, then the

provider should negotiate language that permits the provider to terminate

its participation in the VBP arrangement.


STEP 2

Evaluate The Contract

1. Negotiate the timeframe for review

2. Assemble your contract review team

– Establish a “point person” and review team lead

– Assign areas of contract review to team members based on

their expertise

3. Assemble documents

– Obtain entire proposed contract from MCO, including all

referenced and incorporated documents

– Do not assume MCO knows your scope of services!

– Obtain other documents necessary to understand legal

obligations (for example, in Medicaid managed care, the

MCO’s contract with the State)

49© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com 49

EVALUATING THE CONTRACT

4. Assess the MCO’s Operational Performance

Considering past performance of the MCO is crucial. If

possible, gather information about past experience of the

provider with this MCO:

– Did the MCO meet its payment obligations on time?

– Was the basis for denied claims reasonable?

– Did the MCO give the provider a role in the development of

policies, such as utilization review?

– Was the MCO responsive to the provider’s requests?



5. Assess the MCO’s Financial Stability

Evaluate the MCO’s background and fitness. If possible, the

provider should examine the following elements of the MCO’s

operation:

– Financial stability and strength

– Administrative record

– Operational methods

– Structural framework



6. Review the Contract*

Do you understand what all provisions mean?

What provisions disadvantage your organization from a

financial, clinical, operational, or legal perspective?

Are responsibilities for each party clearly stated and all terms

defined?

Does the contract include all of the relevant appendices and

exhibits?

Have you reviewed any policies, procedures and documents

referenced in the contract?

Have you reviewed any references to statutes, codes,

regulations to know what they say?

Does signing the contract reflect sound business judgment?

*See Part 2 of these slides!


WHAT’S TO EVALUATE?

• Scope of Services

• Covered Services

• Subcontracting Arrangements

• Credentialing

• Access/Quality Standards

• Utilization Management

• Regulatory Penalties

• Reimbursement Rates

• Waiver of Co-Payments and

Deductibles

• Prompt Payment

• Governing Law


• Payment Suspension

• Overpayment Recoupment

• Retroactive Disenrollment

• Appeals

• Dispute Resolution

• “All Products” Clauses

• Term and Termination

• Breach and Cure

• Post-Termination

Responsibilities

• Amendments


54

7. Identify and Prioritize Issues

Categorize each issue as follows:

Red: Critical issues that without addressing you cannot afford to proceed because the risks (not just financial) are unacceptable for the organization

Yellow: Significant issues that should be addressed before proceeding because they create undesirable risks for the organization

Green: Issues that ideally would be addressed prior to proceeding to reduce potential risks


STEP 3: NEGOTIATE MANAGED CARE CONTRACTS

55

Your idea of negotiation?


WHAT’S NEGOTIATION?

56

Reframe negotiation as discussion aimed

at reaching agreement.


NEGOTIATING LOGISTICS

57

Preliminary questions

• Who will be negotiating?

• A team?

• An individual?

• How will issues be negotiated?

• In writing?

• By phone?

• In person?


NEGOTIATING THE CONTRACT

58

occurs when one or both

parties get stuck in ensuring

that they win on their

positions, regardless of

whether the overall goal is

attained

occurs when parties take

extreme positions in the

expectation that they will have

room to bargain down

A common error is bargaining over positions.



59

Respond with

questions, rather

than statements

Respond

specifically to the

MCO’s concerns

Develop options

for mutual gain

and generate a

variety of

possibilities

Look for zones of

agreement and

areas of overlap

Focus on underlying interests


NEGOTIATING TIPS

Educate: Do not assume that the MCO’s

representative understands your concerns.

Learn: Respond with questions, rather than

statements, and respond specifically to the MCO’s

concerns

Voice options for mutual gain and generate a

variety of possibilities before deciding what to do

Insist that resulting provisions be based on some

objective standard

State the importance of maintaining an ongoing

relationship



If you did not resolve all of the critical issues to

your satisfaction, consider:

– whether this one MCO contract is essential

to your operations

– whether the risks of contracting outweigh

the risks of not contracting with the MCO

– whether you can terminate the contract

early in the event that the financial or legal

harm becomes too great to bear

– whether you have any other options for

achieving a better outcome, i.e., using an

agent for negotiations


PART 1: SUMMARY OF KEY POINTS

• Know Your Contracting Objectives

• Use the P.E.N. Strategy

Step 1: Prepare thoroughly for managed care contracting

• Regulatory requirements, market power, and timing are critical levers in

negotiation

• Position to compete on value and participate in value-based payment

arrangements

Step 2: Evaluate the contract critically and realistically

• Work as a team to understand contract provisions

• Determine highest priority issues and implications

Step 3: Negotiate firmly but kill them with kindness


PART 2

Key Terms and Legal Protections


SCOPE OF SERVICES

MCOs typically contract with a range of providers, each of which furnishes a subset of the full range of services that the MCO is responsible for covering on behalf of the payer.

• The scope of services section of the contract specifies which covered

plan services the provider is responsible for providing.

• Test for under-inclusiveness: Does the scope of services describe

all of the services you furnish?

• Test for over-inclusiveness: Does the scope of services describe

any services you do not furnish?


COVERED SERVICES

65

Distinguish your scope

of services from the

enrollee’s covered

services (i.e., the

services available

under the enrollee’s

benefit plan).

Services must fall within

both Covered Services

and Scope of Services in

order to receive

payment from an MCO.

Often enrollees have

different benefits plans;

not every service falling in

the provider’s scope of

service under the contract

is covered under a

particular enrollee’s

benefit plan.

Determine whether

there are any significant

coverage limitations

that apply to services

you provide

The contract should make

clear that the provider

may treat enrollees as

private-pay patients for

purposes of providing

non-covered services.

Review the

documentation

requirements to bill a

patient for non-covered

services.


HOW SERVICES ARE PROVIDED

66

• Limitations on which types of clinicians may

provide certain services

• Limitations on the provider’s ability to arrange for

services through subcontract

The contract should clearly state any

limits on how services can be

provided by the provider, including:


TIMELY CLAIMING RULES

67

MCOs typically require the

submission of claims no

more than 90 days after the

date of service.

• Determine whether state

law or other obligations on

the MCO dictate a longer

claims filing period.

Review the proposed contract

for provisions concerning the

consequences of late claim

submission

• Negotiate for a provision

that makes MCO denial of

late claims discretionary

rather than mandatory



Timely Claiming Rules

Claims Payment Standards – Section 9.12

• The Contractor shall allow providers 365 days to submit claims for services

provided this Contract unless the provider has agreed or agrees to a shorter

timely filing timeframe in their contract with the Contractor.




2.3 Billing Limitation


• The Contractor must waive the timeliness rule for processing a claim and prior

authorization requirements when HCA program integrity activities result in

recoupment of an improperly paid claim HCA paid but should have been paid

by the Contractor.

• The servicing provider must submit a claim to the Contractor within 120 days

from HCA’s notification of improper payment.


PROMPT PAYMENT RULES

70

Just as the MCO has an interest in timely claims submission, a

provider has an interest in timely payment.

• A “clean claim” is a claim, received by a MCO for adjudication, that requires

no further information, adjustment, or alteration by the provider of the

services, or by a third party, in order to be processed and paid by the MCO.

It does not include a claim from a provider who is under investigation for

fraud or abuse, or a claim under review for medical necessity.

• Providers should seek to have prompt pay rules, including any automatic

interest provisions, written into the provider agreement.

• Providers should have right to receive a written explanation for all denied

claims and the information that is needed by the MCO to process the claim

for payment.



Prompt Payment / Denied Claims Protections

71

Claims Payment Standards – Section 9.12

• The Contractor shall meet the timeliness of payment standards specific for

health carriers in WAC 284-170-431.

• To be compliant with payment standards, the Contractor shall pay or deny 95%

of clean claims within 30 calendar days; 95% of all claims within 60 calendar

days; and 99% of clean claims within 90 days of receipt.

• A “clean claim” is a claim that can be processed without obtaining

additional information from the provider of the services.

• The date of receipt is the date the Contractor receives the claim from the

provider.

• The date of payment is the date of the check or other form of payment.


WASHINGTON STATE LAW

Prompt Payment / Denied Claims Protections

WAC 284-170-431 - Provider contracts—Terms and conditions of payment.

(1) Every participating provider and facility contract shall set forth a schedule for the

prompt payment of amounts owed by the carrier to the provider or facility and

shall include penalties for carrier failure to abide by that schedule.

(2) Minimum payment standards:(i) 95% of clean claims paid within 30 days and 95%

percent of all claims shall be paid or denied within 60 days.

(3) Any carrier failing to pay claims within that time period shall pay interest of 1% per

month on undenied and unpaid clean claims until paid. The carrier shall add the interest

payable to the amount of the unpaid claim without the necessity of the provider or

facility submitting an additional claim.

(4) Denial of a claim must be communicated to the provider or facility and must

include the specific reason why the claim was denied. If the denial is based upon

medical necessity or similar grounds, then the carrier upon request of the provider or

facility must also promptly disclose the supporting basis for the decision. For example,

the carrier must describe how the claim failed to meet medical necessity guidelines.


CORRECTION OF OVERPAYMENTS & UNDERPAYMENTS

73

MCO contracts

typically allow the

MCO to recoup

overpayments

(excess payment by

the MCO to the

provider)

• Determine whether there are any limits on the MCO’s timeframe

for recouping overpayments from a provider.

Contracts commonly

permit the MCO to

recoup an

overpayment by

offset; the MCO

subtracts the

overpayment from any

amounts due to the

provider

• Determine whether the contract requires the MCO to provide

notice of the alleged overpayment (and afforded the provider an

opportunity to appeal the determination) prior to offset.

• Determine whether the contract permits the provider to dispute

underpayments within a time frame that is equal to the time

frame that a MCO may recoup overpayments.



Recoupments of Overpayments

5.5 Recoupments

• HCA shall recoup premium payments and retroactively terminate enrollment of

an individual Enrollee with duplicate coverage, who is deceased prior to month

of enrollment, who retroactively has their enrollment terminated, who is an

inmate of a correctional facility, who is residing in an IMD for more than 15

days, and when an audit determines that payment is in error.

• The Contractor may recoup payments made to providers for services

provided to Enrollees during the period for which the HCA recoups

premiums for those Enrollees.

• If the Contractor recoups such payments, providers may submit appropriate

claims for payment to the HCA through its FFS program, if the Enrollee was

eligible for services and if the provider was enrolled in the FFS program.


WASHINGTON STATE CODE

Recoupments of Overpayments - Exception

WAC 284-43-2000 - Health care services utilization review—

Generally.

• (4) Each issuer when conducting utilization review must:

• (h) Not retrospectively deny coverage for emergency and

nonemergency care that had prior authorization under the plan's

written policies at the time the care was rendered unless the prior

authorization was based upon a material misrepresentation by the

provider or facility;


DISPUTE RESOLUTION PROCESS

76

The contract should contain a

streamlined, expedited process for claims

disputes, and a more elaborate process

for other disputes

The contract should use a graduated,

step-by-step dispute resolution process

Informal negotiation

Mediation

Arbitration (binding) or judicial

remedies

The contract should not require the

provider to exhaust an appeals process

within the MCO before resorting to other

measures


“ALL PRODUCTS” CLAUSES

77

MCOs frequently pay providers at different rates for various lines of

business (private commercial insurers, Medicare Advantage,

Medicaid.)

An “all-products” clause requires the provider to participate in all

products (and rates) offered by the MCO (both currently and

prospectively)

Providers should have the ability to opt-out of any new products

offered by the MCO.



Participation in Non-Medicaid Products

RCW 48.39.020 - Payor may require provider to extend payor's medicaidrates—Limitations.

• A payor may require a health care provider to extend the payor's medicaid

rates, or some percentage above the payor's medicaid rates, that govern a

health benefit program administered by a public purchaser to a commercial

plan or line of business offered by a payor that is not administered by a public

purchaser only if the health care provider has expressly agreed in writing

to the extension.

• For the purposes of this section, "administered by a public purchaser" does not

include commercial coverage offered through the Washington health benefit

exchange.

• Nothing in this section prohibits a payor from utilizing medicaid rates, or some

percentage above medicaid rates, as a base when negotiating payment rates

with a health care provider.


COLLECTING PATIENT COST-SHARING

79

As in traditional Medicare and Medicaid, the provider is responsible for collecting

cost-sharing (copayments, coinsurance, and deductibles) required under the terms

of the enrollee’s plan.

Under MCO contracts,

providers are at financial risk

for the collection of any cost-

sharing amounts.

Practice Pointer: Determine applicable cost-

sharing amounts, particularly deductibles,

applicable to MCO product lines.

Practice Pointer: Cost-sharing should be

collected at the time of the visit, either before or

after services are rendered.


WAIVER OR REDUCTION OF COST-SHARING

80

In many cases, the MCO does not permit a provider to

reduce or waive the amount of cost-sharing owed by a

patient.

• Providers should seek a modification that allows it to waive

or reduce cost-sharing amounts for individuals who qualify

under the provider’s charity care policy, if any.

• Providers should be aware that a routine practice of

discounting or waiving these obligations for all patients

should be avoided, as it opens the provider up to potential

liability on numerous fronts.


REGULATORY PENALTY PROVISIONS

81

Some contracts

hold a provider

liable for any fines

or penalties

assessed against

the MCO by a

state or federal

regulatory agency

that result from a

provider’s non-

compliance with a

requirement

under the contract

or provider

manual.

• Under these provisions, providers will be liable even if:

• MCO was unaware of the non-compliance, took no

steps to monitor the provider, or correct the

provider’s non-compliance.

• Provider did not act negligently but made good faith

efforts to comply.

• Providers do not have authority to appeal or dispute

the regulatory agency’s fines or penalties against the

MCO.

• Providers should avoid incurring liability for fines or

penalties assessed against MCO.


ACCESS STANDARDS

82

Access standards define the required level and availability of care

from a patient-centered perspective, including:

required hours

and days of

operation

(including

evening and

weekend

business hours)

after-hours

coverage and

on-call

coverage when

a designated

health care

professional is

unavailable

maximum

waiting times

for establishing

an appointment

for various

categories of

services

maximum

waiting-room

times



ACCESS & APPOINTMENT STANDARDS

83

Appointment Standards - Section 6.9

• Emergency services must be available 24 hours a day, seven days a week.

• Urgent, symptomatic office visits shall be available from the Enrollee’s primary

care, behavioral health, or another provider within twenty-four (24) hours.

An urgent, symptomatic visit is associated with the presentation of medical or

behavioral health signs that require immediate attention, but are not

emergent.

• Non-urgent, symptomatic (routine care) shall be available from an enrollee’s

PCP or another provider within ten (10) calendar days, including behavioral

health services from a behavioral health provider. A non—urgent,

symptomatic visit is associated with the presentation of medical signs not

requiring immediate attention.


LICENSURE – CONTRACT PROVISIONS

84

Notice

• MCO contracts typically require

that provider report any loss of

licensure immediately to MCO

• Providers should seek to avoid

contract provisions that require

that the provider report to the

MCO whenever a clinician is in

danger of losing license (e.g.,

under investigation), as

divulging information at that

stage could be a liability risk

Consequence

• Failure to maintain licensure is

in some contracts grounds for

immediate termination

• Loss of licensure by one

clinician should not trigger

immediate termination, so long

as provider has continuing

capacity to perform


CREDENTIALING – TIMING

85

Most MCO contracts provide for credentialing at the outset of the

contract and at regular intervals (e.g., every three years)

• MCO credentialing of a practitioner must be effective on the date of service in order for the

provider to receive payment for services to an MCO enrollee

• MCOs may provide a maximum timeframe for completion of credentialing (usually around

30 days), but only upon the MCO’s receipt of a “complete application”

• Practice Pointer: Delay new practitioner’s start date until credentialed by at least one MCO


DELEGATED CREDENTIALING

86

Some providers have succeeded in negotiating a “delegated credentialing”

relationship (i.e., the provider performs credentialing on behalf of the MCO,

under MCO’s oversight)

MCO saves costs; provider gains control over timing

Delegated credentialing typically requires provider to use national

standards (e.g., National Committee for Quality Assurance)



Credentialing Protections

87

Section 9.14 – Provider Credentialing

• The Contractor’s credentialing and recredentialing program shall include:

• A process for provision credentialing that affirms that:

• The practitioner may not be held in a provisional status for more

than sixty (60) calendar days; and

• The provisional status will only be granted one (1) time and only for

providers applying for credentialing the first time.

• A detailed description of the Contractor’s process for delegation of

credentialing and recredentialing.

• The Contractor shall have a process for notifying providers within 15

calendar days of the credentialing committee’s decision.

• The Contractor shall have a process and criteria for assessing and reassessing

organizational providers.


UTILIZATION MANAGEMENT

88

UM programs are relevant to behavioral health providers

because:

• MCOs often impose prior authorization or visit limits for behavioral

health services

• MCOs often require authorization before ordering certain drug

screening tests

• MCOs increasingly require prior authorization before a provider

may refer patients for rehabilitative services


“MEDICAL NECESSITY”

89

The contract

should specify

all services that

will be subject

to UM

The core function of

the UM program is to

ensure that the MCO

pays for only those

services that are

“medically necessary”

Involves a determination of

whether the service is

necessary and appropriate

for the patient’s symptoms,

diagnosis, and treatment

The definition of “medically

necessary” in the MCO

contract is of critical

importance to the provider

and the enrollee

Many MCO contract

definitions of “medically

necessary” state that

services may not be

provided primarily for the

convenience of the patient

or the provider


UTILIZATION MANAGEMENT

Contract Provisions/Provider Manual

90

MCO

contract

provisions

or manual

should

specify:

Documents that the provider must submit to the MCO for the

review

Special procedures for obtaining emergency authorization for

services

The grievance / appeal procedure available to contest the denial

of prior authorization (by either the enrollee or the provider on

the enrollee’s behalf)

Whether under any circumstances the provider may obtain

payment when the criteria for prior authorization were met, but

the provider failed to timely request prior authorization.



Utilization Management and Authorization

Utilization Management and Authorization – Section 11

• The Contractor shall maintain a list of all behavioral health services requiring prior

authorization by the Contractor and submit to the HCA annually and publish this list on

its website.

• The Contractor shall require authorization decisions for behavioral health services made

by US licensed behavioral health professionals.

• A physician board-certified or board-eligible in General Psychiatry or Child

Psychiatry;

• A physician board-certified or board-eligible in Addiction Medicine, a subspecialty in

Addiction Psychiatry or by ASAM;

• A licensed, doctoral level psychologist; or

• A pharmacist, as appropriate.

• The Contractor shall ensure that any behavioral health actions must be peer-to-peer –

that is, the credential of the licensed clinician making the decision to authorize service in

an amount, duration or scope that is less than requested must be at least equal to that of

the recommending clinician.



Utilization Management and Authorization

Level of Care Guidelines– Section 11.1.25

• The Contractor shall develop and implement UM protocols, including policies

and procedures and Level of Care Guidelines for behavioral health services that

are specific to Washington State Levels of Care, consistent with the HCA”s

medical necessity criteria and comply with federal and state party requirements.


CONTRACT TERM

93

When initially contracting with an

MCO, the provider may want to limit

the term of the contract to one year

without automatic renewal

(“evergreen”) provisions

Contracts generally state

how long the contract will

be in force (term) and the

procedures for renewing

or terminating the

contract


TERMINATION

94

Contracts can typically be

terminated “for cause”

or “without cause”

The situations that

constitute cause will be

listed in the contract, e.g.,

breaches of material terms

of the contract

Sometimes a party may

terminate without cause

after providing notice to

the other party

Recognize that when

contracts may be terminated

without cause, the notice

period becomes the

effective term of the

contract.


AMENDMENTS

95

• Amendment provisions are particularly crucial in MCO contracts, because

the clinical, operational, and financial environments in which the parties

operate are subject to constant change.

• Determine whether the amendments clause applies solely to the contract

itself or also includes documents incorporated by reference, such as

“program attachments”, “payment exhibits”, and the MCO’s policies and

procedures

Scope


AMENDMENTS

96

• Immediate amendment: Notice (only for regulatory or statutory

changes)

• Auto-amendment: Notice and right to opt-out (non-regulatory

amendments)

• Written amendment: Notice and Consent (signed by both parties)

Provider Rights

• Providers might consider proposing the right to amend the contract.

Initiator



Material Amendments

RCW 48.39.010 - Notice of material amendments to contract—Failure to comply.

• A third-party payor shall provide no less than sixty days' notice to the health care

provider of any proposed material amendments to a health care provider's contract with

the third-party payor.

• Any material amendment to a contract must be clearly defined in a notice to the provider

from the third-party payor as being a material change to the contract before the

provider's notice period begins.

• The notice must also inform the providers that they may choose to reject the terms

of the proposed material amendment through written or electronic means at any

time during the notice period and that such rejection may not affect the terms of

the health care provider's existing contract with the third-party payor.

• A health care provider's rejection of the material amendment does not affect the terms of

the health care provider's existing contract with the third-party payor.

• A failure to comply with the terms of subsections (1), (2), and (3) of this section shall void

the effectiveness of the material amendment.


INDEMNIFICATION

98

• A party is “indemnified” if, by virtue of a

contract provision, it avoids assuming

responsibility for another party’s acts or

omissions arising out of performance of the

contract

• Indemnification clauses should apply to both

parties

Indemnification

provisions state which

party to a contract bears

the risk (and liability) for

certain events or acts of

third parties


INDEMNIFICATION

99

• to the MCO for coverage decisions, selection of

providers, utilization management activities,

compliance with state and federal insurance

laws, and other acts within its control.

• to the provider for professional medical

judgment (including malpractice claims),

medical record documentation requirements,

accurate claims submission, and other acts

within the provider’s control

The contract

should allocate

responsibility:


PART 3

Participating or Forming Provider Networks


Behavioral

Health

Primary

care

Hospitals

ACCOUNTABLE CARE ORGANIZATION (ACO)


Health Services Marketplace (of the future?)

Managed Care

Organization

ACO 1

ACO 2

ACO 3

ACCOUNTABLE CARE MARKETPLACE?


103

• Combination of one or more hospitals,

physician groups (primary care and

specialty), and other providers

• Local accountability

• Financial incentives to meet quality

benchmarks or cost-savings

• Shared governance structure

• Formal legal structure that allows

organization to receive and distribute

payments to participating providers

• Leadership and management structure that

includes clinical and administrative systems

• Performance measurement

BASIC FEATURES OF THE ACO


PROVIDER LEADERSHIP

“The concept of ACOs is an entirely new paradigm–

giving healthcare providers the responsibility and

appropriate incentives to improve outcomes and

giving them the flexibility to design the most

efficient and effective way to do so.”

– Harold Miller, “How to Create Accountable Care

Organizations, “Center for Healthcare Quality &

Payment Reform, September 2009.


105

ACO GROWTH BY CONTRACT TYPE

8 8 10 3362

182 183

295 296 296 297

418 418

418

523

76 7888

173196

212 230266

285316

341

381416

463

528

84 86 98

206

258

394413

561581

612638

799834

881

1051

0

200

400

600

800

1000

1200

2011Q2

2011Q3

2011Q4

2012Q1

2012Q2

2012Q3

2012Q4

2013Q1

2013Q2

2013Q3

2013Q4

2014Q1

2014Q2

2014Q3

2014Q4

# o

f A

CO

Co

ntr

acts

Government Commercial Total

SOURCE: Muhlestein, Leavitt Partners


Includes ACO partners with sufficient claims to measure year-over-year trend

-

--

- -

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-ACO 1 ACO 2 ACO 3 ACO 4 ACO 5 ACO 6 ACO 7ACO 1 ACO 2 ACO 3 ACO 4 ACO 5 ACO 6 ACO 7

BLUE SHIELD OF CALIFORNIA ACO RESULTS

Data paid through 12/13Comparison of baseline (pre ACO) to

most recent completed ACO contract period

1 trend as of Feb 2013

-

-

Includes ACO partners with experience through CY 2013

Nearly $300 Million saved

> $40 PMPM

Source: K. Miranda, Blue Shield of CA, DOJ/FTC Workshop


Patient Centered

Medical Home

Specialist

s

ACO

ACCOUNTABLE CARE ORGANIZATION:

IN THEORY

Behavioral

Health

Providers

Rehab and

LTC

Primary Care

Providers

Hospitals

Specialists


Primary Care

Providers Hospital

ACOACOs may actually feel more like this.

ACCOUNTABLE CARE ORGANIZATION:

IN REALITYHuman

Services

Agencies

Rehab and

LTCBehavioral

Health

Specialists


ACO FINANCIAL INCENTIVES



PROVIDER NETWORKS

Many terms have been given to describe different types of

provider-led entities:

• Independent Practice Association (IPA)

• Management Services Organization (MSO)

• Administrative Services Organizations (ASO)

• Clinically Integrated Network (CIN)

• Accountable Care Organization (ACO)

• Group Purchasing Organization (GPO)

Note: Some of these terms may only be used when approved by

regulatory agencies.

FUNCTIONS OF PROVIDER NETWORKS

Shared Support Services

✓ IT Support for Electronic

Health Record (EHR)

✓ Health Information

Exchange (HIE)

✓ Credentialing practitioners;

exclusion/debarment

background checks

✓ Third-Party Billing

Managed Care Contracting

✓ Marketing network of health

care providers/agencies

✓ Facilitating managed care

contracting

✓ Negotiating contracts


112

CAUTION: ANTITRUST RISKS

In general, providers must make

independent, unilateral decisions

on contractual terms and negotiate

separately in order to comply with

state and federal antitrust laws.


ANTITRUST LAW

THE SHERMAN ACT (15 U.S.C. §1)

• Purpose: To promote

competition and protect

consumers, not competitors.

• Prohibits anti-competitive

activities (i.e., agreements)

among private, competing

businesses, that unreasonably

restrain competition

• Enforced by both the U.S.

Department of Justice (Antitrust

Division) and Federal Trade

Commission (FTC) as well as

private parties


ANTITRUST LAW

THE SHERMAN ACT (15 U.S.C. §1)

• Price fixing

• Market allocation

• Concerted refusals to deal

• Boycotts

Per-Se Illegal

Agreements

• Do not discuss (with other providers) the

reimbursement rates currently offered or paid by

MCOs.

• Do not discuss (with other providers) whether you

plan to accept or seek certain rates in the future.

Compliance

Tips:


ANTITRUST LEGAL STANDARDS

115

Per-Se Illegal (e.g., price-fixing, market allocation)

• The joint activity of the network is likely to produce significant

efficiencies that benefit consumers and

• Price agreements by the network providers are reasonably necessary to

realize those efficiencies.

“Rule of Reason” test determines whether lawful if:

• DOJ/FTC Statements of Enforcement Policy in Health Care (1996)

• http://www.ftc.gov/bc/healthcare/industryguide/policy/statement8.htm

• Medicare Shared Savings Program (MSSP)

Antitrust “Safety Zones”


http://www.ftc.gov/bc/healthcare/industryguide/policy/statement8.htm

116

HEALTH CARE ENFORCEMENT POLICY

Statement 4: Collection/Sharing Of Non-fee Related Information

• Collective provision of non-fee related information by competing

health care providers to a purchaser [such as an MCO] in an effort to

influence terms upon which the purchaser deals with the providers

does not necessarily raise antitrust concerns.

• Does not apply to providers acting individually (which may provide

any information to purchasers) or the collective provision of

information through an integrated joint venture, discussed in later

Statements.


117



Safety Zone (Not challenged “absent extraordinary circumstances”):

– Collection of outcome data from network members about a particular

procedure that they believe should be covered by a purchaser or

– Providers’ development of suggested practice parameters (e.g.,

standards for patient management to assist clinical decision-making)

Collective provision of such information poses little risk of restraining

competition and may help in the development of protocols that increase

quality and efficiency.


118



Conduct Falling Outside of Safety Zone:

– Any attempt by providers to coerce a purchaser's decision-making by

implying or threatening a boycott of any plan that does not follow the

providers' joint recommendation;

– Providers who collectively threaten to or actually refuse to deal with a

purchaser because they object to the purchaser's administrative,

clinical, or other terms governing the provision of services run a

substantial antitrust risk; or

– Providers' collective attempt to force purchasers to adopt

recommended practice parameters by threatening to or actually

boycotting purchasers that refuse to accept their joint

recommendation also would risk antitrust challenge.


119


Statement 5: Collection/Sharing Of Fee Related Information

• Collective provision to purchasers of factual information concerning fees

charged currently or in the past for the providers’ services does not

necessarily raise antitrust concerns.

– Factual information includes other aspects of reimbursement, such as

discounts or alternative reimbursement methods accepted (including

capitation arrangements, risk-withhold fee arrangements, or use of all-

inclusive fees)

• Such factual information can help purchasers efficiently develop

reimbursement terms to be offered to providers and may be useful to a

purchaser when provided in response to a request from the purchaser or at

the initiative of providers.

• Does not apply to providers acting individually (which may provide any

information to purchasers) or the collective provision of information

through an integrated joint venture, discussed in later Statements.


120



Safety Zone (Not challenged “absent extraordinary circumstances”):

In order to qualify for this safety zone, the collection of information to be provided to

purchasers must satisfy the following conditions:

1. Collection is managed by a third party; and

2. Although current fee-related information may be provided to purchasers,

any information that is shared among or is available to the competing

providers furnishing the data must be more than three months old; and

3. For any information that is available to the providers furnishing data, there

are at least five providers reporting data upon which each disseminated

statistic is based, no individual provider's data may represent more than 25

percent on a weighted basis of that statistic, and any information

disseminated must be sufficiently aggregated such that it would not allow

recipients to identify the prices charged by any individual provider.


121




– Collective negotiations between unintegrated providers and purchasers in

contemplation or in furtherance of any agreement among the providers on

fees or other terms or aspects of reimbursement, or to any agreement among

unintegrated providers to deal with purchasers only on agreed terms;

– Providers who collectively threaten implicitly or explicitly, to engage in a

boycott or similar conduct, or actually undertake such a boycott or conduct, to

coerce any purchaser to accept collectively-determined fees or other terms or

aspects of reimbursement; or

– Providers' collective provision of information or views concerning prospective

fee-related matters (which is assessed on a case-by-case basis based on all the

facts and circumstances surrounding the provision of the information.)


122


Statement 6: Provider Participation In Exchanges Of Price And Cost Information

• Participation by competing providers in surveys of prices for health care services, or

surveys of salaries, wages or benefits of personnel does not necessarily raise antitrust

concerns.

– Providers can use information derived from price and compensation surveys to

price their services more competitively and to offer compensation that attracts

highly qualified personnel.

– Purchasers can use price survey information to make more informed decisions

when buying health care services.

• Such factual information can help purchasers efficiently develop reimbursement

terms to be offered to providers and may be useful to a purchaser when provided in

response to a request from the purchaser or at the initiative of providers.

• Without appropriate safeguards, however, information exchanges among competing

providers may facilitate collusion or otherwise reduce competition on prices or

compensation, resulting in increased prices, or reduced quality and availability of

health care services.


123



Safety Zone (Not challenged “absent extraordinary circumstances”).

Provider participation in written surveys of (a) prices for health care services or (b) wages,

salaries, or benefits of health care personnel, if the following conditions are satisfied:

1. Collection is managed by a third party; and

2. Information provided by survey participants is more than three months old; and

3. There are at least five providers reporting data upon which each disseminated

statistic is based, no individual provider's data may represent more than 25 percent

on a weighted basis of that statistic, and any information disseminated must be

sufficiently aggregated such that it would not allow recipients to identify the prices

charged by any individual provider.


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– Exchanges of price and cost information that fall outside the antitrust safety zone

generally will be evaluated to determine whether the information exchange may

have an anticompetitive effect that outweighs any procompetitive justification for

the exchange.

– Depending on the circumstances, public, non-provider initiated surveys may not

raise competitive concerns. Such surveys could allow purchasers to have useful

information that they can use for procompetitive purposes.

– Exchanges of future prices for provider services or future compensation of

employees are very likely to be considered anticompetitive. If an exchange among

competing providers of price or cost information results in an agreement among

competitors as to the prices for health care services or the wages to be paid to

health care employees, that agreement will be considered unlawful per se.


NEGOTIATING MANAGED CARE CONTRACTS

• Can a provider network negotiate fee-for-service (i.e., non-risk)

contracts with MCOs?

• Generally, no as it would constitute price-fixing.

• But the answer can change:

• If the network is not composed of competitors (or potential

competitors)

• If the network is “financially integrated“

• If the network is “clinically integrated” and the joint

negotiation is necessary to make the clinically integrated

activities work

• If the network participates as an ACO in the Medicare Shared

Savings Program (MSSP)



Statement 9: Multiprovider Networks

• Health care providers are forming a wide range of new relationships and

affiliations, including networks among otherwise competing providers, as

well as networks of providers offering complementary or unrelated services.

• These affiliations-- referred to as “multiprovider networks”-- can offer

significant procompetitive benefits to consumers. Such ventures may

contract to provide services to subscribers at jointly determined prices and

agree to controls aimed at containing costs and assuring quality.

• They also can present antitrust questions, particularly if the network

includes otherwise competing providers.

• Because multiprovider networks involve a large variety of structures and

relationships among many different types of health care providers, and new

arrangements are continually developing, the Agencies were unable to

establish a meaningful safety zone for these entities.

126 126© 2018 Feldesman Tucker Leifer Fidell LLP. All rights reserved. | www.ftlf.com



• Multiprovider networks will be evaluated under the “rule of reason,”

and will not be viewed as per se illegal, if the providers' integration

through the network is likely to produce significant efficiencies that

benefit consumers, and any price agreements (or other agreements

that would otherwise be per se illegal) by the network providers are

reasonably necessary to realize those efficiencies.

• Significant efficiencies may be achieved by competing providers

sharing “substantial financial risk” (defined in next slide) for the

services provided (and jointly priced) through the network.




Examples of “substantial financial risk-sharing” include:

– capitation payments

– global fee arrangements

– fee withholds

– cost or utilization based bonuses or penalties for participants, as a group, to achieve specified cost-containment goals

– agreement by the venture to provide a complex or extended course of treatment that requires the substantial coordination of care by different types of providers offering a complementary mix of services, for a fixed, predetermined payment, where the costs of that course of treatment for any individual patient can vary greatly due to the individual patient's condition, the choice, complexity, or length of treatment, or other factors.

Tip: The Enforcement Agencies encourage multiprovider networks which are uncertain whether their proposed arrangements constitute substantial financial risk sharing to take advantage of the Agencies' expedited business review and advisory opinion procedures.



The Rule Of Reason

• A rule of reason analysis determines whether the formation and operation of the joint

venture may have a substantial anticompetitive effect and, if so, whether that potential

effect is outweighed by any procompetitive efficiencies resulting from the venture.

• The rule of reason analysis takes into account characteristics of the particular

multiprovider network and the competitive environment in which it operates to

determine the network's likely effect on competition.

• The steps ordinarily involved in a rule of reason analysis of multiprovider networks are

set forth below.:

1. Market Definition - Product and geographic markets, i.e., what substitutes,

as a practical matter, are reasonably available to consumers for the services in

question?

2. Competitive Effects – vertical and horizontal, i.e., market share and

concentration

3. Efficiencies - lower prices or higher quality


NETWORK SERVICES

• Can provider networks jointly price and offer “network services”?

– Delegated credentialing activities

– Care management activities

– Quality improvement activities

– Utilization review/management activities

• Legal Test: Do the network members share “substantial financial risk” in

providing all the services that are jointly priced through the network?

– Yes, if the network receives a capitated or fixed pre-determined fee

for providing the network services.

• Conclusion: The network may negotiate payment for furnishing services

that it directly provides to an MCO.


INCENTIVE-ONLY PAYMENTS

• Can provider networks jointly negotiate incentive payments?

– “Value-based” payment models such as shared savings (upside only)

or shared risk (upside/downside) for managing total costs of defined

population

– Performance incentives earned for achieving certain clinical outcomes

(e.g., HEDIS measures)

• Legal Test: Do the network members share “substantial financial risk” under

the proposed arrangement?

– Yes, if the financial incentives are based on group performance, as a

whole, to achieve specified cost-containment or clinical goals.

• Conclusion: The network may negotiate incentive-only payments that

are based on overall network performance.


“RULE OF REASON” TEST FOR CLINICAL INTEGRATION

“Rule of Reason” test applies to determine whether

providers’ integration through the network is likely to

produce significant efficiencies that benefit consumers and

the price agreements by the network participants are

reasonably necessary to realize those efficiencies.

Clinical Integration: Active and on-going programs to

evaluate and modify clinical practice patterns of all network

providers

– Establishing mechanisms to monitor and control

utilization of health care services;

– Selectively choosing network participants; and

– Significant investment of capital.

FTC has issued Advisory Opinions to guide organizations on

sufficiency of clinical integration activities.


EXAMPLES OF CLINICAL INTEGRATION

• Implementing utilization control mechanisms to control costs and assure quality of

care

• Establishing information systems to gather aggregate and individual data in order to

measure performance of the group and of the individual participating providers, and

to ensure exchange of all relevant patient data.

• Monitoring patient satisfaction with the participating providers.

• Establishing reporting systems to provide payers with detailed reports on the costs

and quantity of the services delivered, and on the collaboration’s success in meeting its

goals.

• Employing centralized staff

• Investing significant time and money in the development of necessary infrastructure,

including practice standards and protocols and care management protocols, and

actively monitoring the care provided through the collaboration.

• Monitoring the participating providers’ compliance with network’s standards and

protocols, and taking remedial action against those individuals who fail to adhere to

them.


HOW THE GOVERNMENT WILL ASSESS

CLINICAL INTEGRATION

• What do the participating providers plan to do together from a clinical standpoint (i.e.,

the specific activities, the desired results, how the activities differ from what each

provider does individually)?

• How do the providers expect to accomplish these goals (i.e., necessary infrastructure

and investment, specific implementing mechanisms, specific evaluation measures)?

• What basis is there to think that the individual provider will actually attempt to

accomplish the goals (i.e., individual incentives, specific mechanisms to change and re-

align incentives)?

• What results can reasonably be expected from undertaking these goals (i.e., evidence

to support the goals, potential for success)?

• How does joint contracting contribute to accomplishing the goals (i.e., is it reasonably

necessary and in what ways)?

• To accomplish the goals of the collaboration, is it necessary for providers to affiliate

exclusively with one network, or can they effectively participate in multiple networks

and continue to contract outside of the network?

Federal Trade Commission and Department of Justice, Improving Health Care: A Dose of Competition (July 2004), available at

http://www.usdoj.gov/atr/public/health_care/204694.htm.


http://www.usdoj.gov/atr/public/health_care/204694.htm

CLINICAL INTEGRATION: EXAMPLE 1

FTC Advisory Opinion to MedSouth, Inc.

• Network composed of competing primary and specialty care physicians who

sought to negotiate price and other terms on a fee-for-service basis with payors.

• Proposed to coordinate and integrate certain health care services by its members

with a clinical resources management program that would include:

– Web-based electronic clinical data record system

– Clinical practice guidelines

– Measurable performance goals

– Centralized Medical Director

– All network members would commit to participate in the network’s

programs and adhere to network’s protocols.

• FTC approved the proposal on Feb. 19, 2002

– http://www.ftc.gov/bc/adops/medsouth.htm

– http://www.ftc.gov/bc/adops/070618medsouth.pdf



FTC Advisory Opinion to Greater Rochester IPA, Inc.

• Network composed of two hospitals and approximately 600 physicians who

sought to negotiate price and other terms on a fee-for-service contracts with

payers.

• Proposed developing an internet-based health information system to

identify high-cost, high-risk patients and facilitate the exchange of patient

treatment information to better manage them.

– Network would develop clinical practice guidelines, report information

using the internet-based system, and then monitor physicians’

compliance with those guidelines.

– The network would also set performance targets, monitor performance

using its own benchmarks, and take action when physicians failed to

meet performance expectations.

• FTC approved the proposal on September 17, 2007

– http://www.ftc.gov/bc/adops/gripa.pdf



FTC Advisory Opinion to Tri-State Health Partners, Inc.

• Network composed of more than 200 physicians and one hospital

that sought to contract jointly with payers on a fee-for-service basis

• Proposed a formal and stringent medical management program that

includes protocol development and implementation, performance

reporting, procedures for corrective action when necessary, and

aggressive management of high-cost, high-risk patients.

• Plans to implement a web-based health information technology

system to review episodes of care to determine where performance

improvement will have the greatest financial and quality benefits.

• FTC approved the proposal on April 13, 2009

– http://www.ftc.gov/os/closings/staff/090413tristateaoletter.pdf



FTC Advisory Opinion to Norman PHO

• Network composed of a health system (hospitals) and 280 physicians in 38 medical specialties and one hospital that sought to contract jointly with payers on a fee-for-service basis.

• Already had an extensive electronic system including e-prescribing, EHR and electronic health interface system.

• Proposed physician led advisory groups and committees that were responsible for developing the clinical practice guidelines on an ongoing basis

• Proposed to measure and evaluate physician performance and compliance with the clinical practice guidelines.

• Notable advisory opinion request in that it stated that it couldn’t quantify the potential savings from the improvements in care but that did not prevent FTC for issuance of a favorable opinion.

• FTC approved the proposal February 13, 2013


BASE REIMBURSEMENT RATES

• Can provider networks negotiate base reimbursement rates?

– Fee-for-service (“FFS”) schedules

• Legal Test:

– Do the network members share “substantial financial risk”?

• No, because the network participants do not share financial risk for the

services priced through the network.

– Are the network members “clinically integrated”?

• Analyze extent of integration under DOJ/FTC standards.

• Conclusion: Until the network satisfies the test for clinical

integration it cannot negotiate base reimbursement rates.


NEGOTIATING MANAGED CARE CONTRACTS

Medicare Shared Savings Program Antitrust

Safety Zone

• If ACO participates in MSSP and qualifies for this

safety zone, it protects joint negotiation of fee-for-

service rates with private payors .

• Eligibility must be determined under four-step

process that requires calculating an ACO’s share of

services in the Primary Service Area (PSA) of each

participant in that ACO.

• ACOs whose combined common service share in each

participant’s PSA is less than 30% or less qualify for

the antitrust safety zone, with certain qualifications

and exceptions.


NON-INTEGRATED NETWORKS

Non-integrated provider

networks do not meet

legal standards for

financial or clinical

integration

Non-integrated provider

networks may facilitate

(but not negotiate)

contracts involving base

reimbursement rates if they

carefully comply with the

“Messenger Model”


MESSENGER MODEL

Provider Network communicates each provider’s decision

back to MCO

Each provider determines whether to accept (or reject)

MCO’s payment terms

Provider Network, as the messenger, transmits proposed

rates to each provider in network


MESSENGER MODEL

CON

• No additional leverage

• Long formation periods

• Difficult to maintain over time

• Infrastructure costs

• Risky

PRO

• Transaction cost-efficiencies

• Increased patient volumes

• Analysis of contracting terms and

provisions

• In certain cases not related to

market power, higher

reimbursement

CON


COMBINATION APPROACH

Base Reimbursement

Messenger Model

• Network members accept

FFS rates offered by MCO

(without engaging in any

negotiation).

• May be little or no

downside if State mandates

minimum rates for

Medicaid enrollees.

144

Payment Incentives

Financial Risk-Sharing

• Network negotiates incentives

(e.g., P4P, shared savings,

shared risk) with MCO

• Payment incentives won or lost

on group performance

• Network distributes incentive

payments, if any, to providers,

pursuant to methodology

agreed by the members of the

network.


FINAL THOUGHTS

• Grant-funded payment models do not generate “margin” for investments and

long-term sustainability.

• MCO participation agreements generally favor MCOs and the default payment

method of FFS often fails to cover the cost of services.

• Regulatory requirements, market power, and timing offer critical leverage to

providers in negotiating favorable participation agreements.

• To participate fully in population-based VBP methodologies, providers should

consider forming or joining provider networks that are able to manage the total

costs of care and quality for a population.

• Primary care and behavioral health-controlled provider networks can:

• Develop expertise to negotiate “smarter” contracts with MCOs

• Protect smaller primary care and behavioral health providers from unfair

terms typically found in MCO participation agreements

• Support community-based organizations that address SDOH

• Distribute shared savings to primary care and behavioral health providers


146

QUESTIONS?

Adam J. Falcone, Esq.

FELDESMAN TUCKER LEIFER FIDELL LLP

1129 20th Street, N.W.

Suite 401

Washington, DC 20036

(202) 466-8960

[email protected]
