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Clinical Co-Management: A Precursor to ACO Development
- 1. Clinical Co-Management: A Precursor toACO Development Presented by Murer Consultants, Inc. January 21, 2011 · 9:00 am – 3:30 pm
- 2. Speakers Lyndean L. Brick, J.D. Senior Vice President/Principal Murer Consultants, Inc. 815-727-3355 · lbrick@murer.com Kyle A. Vasquez, J.D., LL.M. Senior Consultant Murer Consultants, Inc. 815-727-3355 · kvasquez@murer.com 2 1/21/2011 © Murer Consultants, Inc. 2011
- 3. ACO Stepping Stone If your organization is working towards an ACO model but is not fully prepared to make that leap, there is an effective model that your organization can use as a stepping stone Today, we will introduce you to clinical co-management 3 1/21/2011 © Murer Consultants, Inc. 2011
- 4. Clinical Co-Management Roadmap Why Collaborate with Physicians CCMA Nuts and Bolts CCMA Regulatory Guidelines High Level Steps to Develop a CCMA Frequently Asked Questions 4 1/21/2011 © Murer Consultants, Inc. 2011
- 6. Why Collaborate with Physicians – Reimbursement Pressures Value-based purchasing is on the horizon = emphasis on quality over quantity (FY 2013) Reimbursement cuts for poorly performing providers Reimbursement increases for those providing high quality care Continued PFS reimbursement cuts = physicians will be much less likely to volunteer time; need to maximize practice revenue Integration, alignment, and engagement of physicians is a critical imperative for organizations seeking to create high-performing, future-ready organizations 6 1/21/2011 © Murer Consultants, Inc. 2011
- 8. Why Collaborate with Physicians – Failure of Traditional Models Physicians are the gatekeepers and clinical experts, yet traditional physician integration models have historically failed to exploit this expertise Traditional models do not engage a sufficient # of physicians to make a “real” difference Traditional models lack a formal legal structure that brings most/all staff members together for a common purpose Traditional models do not provide incentives to a sufficient number of physicians that influence quality/efficiency 8 1/21/2011 © Murer Consultants, Inc. 2011
- 9. 9 Model Comparison Increased Physician Engagement ACO 1/21/2011 © Murer Consultants, Inc. 2011
- 10. One Solution A clinical co-management agreement (CCMA) provides a legal structure to align the physicians’ / hospital’s interests (both economic and non-economic) CCMAs can financially incentivize physicians to be an active partner in the quality/efficiency/ satisfaction improvement process in specific areas of need CCMAs provide a fair market value payment to physicians who advance high quality and cost-efficient care CCMAs require very little startup funding 10 1/21/2011 © Murer Consultants, Inc. 2011
- 11. One Solution Under a CCMA, physicians have greater day-to-day oversight For example, physicians may be more involved in policy drafting, budget preparation, human resources, etc. AND…CCMAs are effective in preparing hospitals and physicians for value-based reimbursement systems such as ACO’s, bundled payments, etc. 11 1/21/2011 © Murer Consultants, Inc. 2011
- 12. Ccma nuts and bolts 12 1/21/2011 © Murer Consultants, Inc. 2011
- 13. Sample CCMA Legal StructureJoint Venture Model 13 Class H Units Class P Units Class P Member Physicians and Physician Groups Class H Member Hospital Service Line Co-Management Company, LLC Base and Incentive Compensation Clinical Co-Management Duties Board of Managers Finance Comm. Quality Comm. Other Comm. 1/21/2011 © Murer Consultants, Inc. 2011
- 14. Sample CCMA Legal StructurePhysician Ownership 14 Joint Operating Council Physician Investors Hospital Service Line Co-Management Company, LLC Base and Incentive Compensation Clinical Co-Management Duties Board of Managers 1/21/2011 © Murer Consultants, Inc. 2011
- 15. CCMA Legal Structure Generally, a separate company is formed to execute the CCMA with the hospital and to manage the service line or facility at issue Management company may be physician owned or a joint venture Via ownership share, hospital may be in the position to offer certain administrative support to the management company Entity typically an LLC 15 1/21/2011 © Murer Consultants, Inc. 2011
- 16. Defining a CCMA A CCMA can recognize and financially reward (through FMV incentive payments) physicians/physician groups for improving quality, efficiency, and satisfaction of a particular hospital service line or facility 16 1/21/2011 © Murer Consultants, Inc. 2011
- 17. Defining a CCMA Permissible purposes of CCMAs: (1) improve quality of care, including heightened accreditation (i.e. Centers of Excellence), and/or clinical pathways/protocols, (2) increase operating efficiencies, (3) increase patient/staff satisfaction, and/or (4) reduce unnecessary costs without reducing necessary medical services 17 1/21/2011 © Murer Consultants, Inc. 2011
- 18. Defining a CCMA Impermissible purposes of CCMAs: (1) increase referrals, retain referrals or promote goodwill of physicians or other referral sources, (2) cause change of payor mix of referring physicians, or (3) cause physicians to limit or deny medical services 18 1/21/2011 © Murer Consultants, Inc. 2011
- 34. Common CCMA Financial Terms Compensation may include the following components that are payable to the management company: Base Fee: Hospital pays a fixed hourly base fee for the following: Operating Expenses (staff) Medical Directors Committee Members/Participation Other Miscellaneous Expenses Incentive Fee: Hospital pays a periodic (annual, semiannual) incentive bonus if the service line meets pre-defined performance targets (quality, satisfaction, efficiency, etc.) Typically, CCMA contract splits the total annual compensation 50/50, i.e. 50% base pay and 50% at-risk incentive pay Fair Market Value: ALL fees must be fixed, fair market value and meet other applicable regulatory requirements discussed below 20 1/21/2011 © Murer Consultants, Inc. 2011
- 35. CCMA Compensation Introduction 21 Participating Physicians Prof. Fee Schedule Payments: Under a CCMA, physicians bill for and retain their professional fees. Physicians have access to additional revenue by providing CCMA management services = indirectly receive a portion of the hospital’s facility fee. CCMA Distributions: (1) Hourly- based distributions for documented time by individuals physicians + (2) per capita incentive fee distributions Distributions Time/Services Physicians provide administrative services to Hospital via the LLC MANAGEMENT COMPANY, LLC Medicare Reimbursement (Example) Administrative Services Agreement (billing, staff, etc.) Contract Base/Inc. Fees LLC executes a contract with Hospital to provide management services to a service line CCMA Payments: (1) Base Fee + (2) Incentive Compensation Inpatient / Outpatient Facility Fee and Bundled Payments: Hospitalreceives facility payments that represent the overhead expense Hospital Service Line 1/21/2011 © Murer Consultants, Inc. 2011
- 36. Sample CCMA Budget 22 *Applied sample hourly rate of $200/hr. Hourly rate and time allocations subject to third-party, fair market value analysis. This is a sample illustration only, and can vary significantly based the services offered, the number of physicians involved, the particular specialties, etc. The approximate annual value reflects the total compensation available to the management company. 1/21/2011 © Murer Consultants, Inc. 2011
- 71. Incentive Compensation Permissible incentive compensation components: Achievement of quality goals Achievement of operational efficiency goals that do not result in reduction of care to patients Achievement of patient/staff satisfaction goals New program development Modified gainsharing (e.g. direct variable cost per case), but some additional risk involved 24 1/21/2011 © Murer Consultants, Inc. 2011
- 74. More On Incentive Compensation Compensation must be targeted towards identified areas of need i.e. hospital must have a baseline Incentive measures can be based on improvement or on achievement of specified targets Incentive measures may be progressive or all-or-nothing Incentives should be objective, verifiable, supported by credible medical evidence, and individually tracked Independent, fair market value analysis required Parties may wish to use the services of an independent medical review organization (“IMRO”) to monitor compensation and compliance with objectives 27 1/21/2011 © Murer Consultants, Inc. 2011
- 76. Primary Regulatory Factors Physician Self-Referral Statute (Stark) No intent required Exceptions available (PSA/FMV) Anti-Kickback Statute/False Claims Act Intent-based No applicable safe harbor Analyzed under one-purpose test Civil Monetary Penalty (CMP) Statute Tax-Exemption/Bond Financing 29 1/21/2011 © Murer Consultants, Inc. 2011
- 77. Regulatory Guidelines The following is a summary of important factors that should be present in CCMA agreements This list is based on a 2008 proposed Stark exception that addressed incentive payments/shared savings programs – the rule was never finalized, but it mirrored many previous advisory opinions and existing regs Failing to adhere to the following list does not equate to non-compliance. Providers and physicians should assess the desired level of risk and consult with legal counsel to make a final determination of the applicable factors 30 1/21/2011 © Murer Consultants, Inc. 2011
- 78. Regulatory Guidelines Must meet typical Stark exception language: CCMA is set out in writing Signed by the parties Have a minimum term of one (1) year and a maximum of three (3) years Compensation is set in advance (percentage comp ok under Stark; issue under Anti-Kickback – analyzed under one purpose test) Compensation does not vary during the term of the agreement and is not determined in a manner that takes into account the volume or value of referrals 31 1/21/2011 © Murer Consultants, Inc. 2011
- 79. Regulatory Guidelines Compensation must be at fair market value, and an independent appraisal is strongly recommended Incentive comp should not to exceed specific percentages identified in IRS Rev Proc 97-13 if tax-exempt bond-financed property involved; cost sharing incentive measures should not exceed 50% of total comp Quality/cost savings measures supported by objective, independent medical evidence indicating that the measures will not adversely impact patient care Quality measures must use objective methodology, be verifiable, be individually tracked and canbe derived from CMS’ Specifications Manual for National Hospital Quality Measures 32 1/21/2011 © Murer Consultants, Inc. 2011
- 80. Regulatory Guidelines Quality measures reasonably related to patient population and hospital practice Performance measures clearly and separately identified Advisable to obtain an independent medical review prior to implementation and at least annually following implementation; review shouldgenerate a written report Participation shouldbe offered to all physicians on the medical staff that belong to the applicable specialty Per capita distributions to a pool of at least five (5) physicians Distributions supported by written documentation Physicians should be on medical staff for at least one (1) year prior to CCMA 33 1/21/2011 © Murer Consultants, Inc. 2011
- 81. Regulatory Guidelines No limit on physicians’ discretion to make medically necessary/appropriate decisions for patients, including supplies or devices Notice given to patients Payment should notchange during term Payments mustnot reward change in case mix or increase in referrals Hospital should exercise ability to terminate agreement if there is a material change in acuity (cherry-picking issues) Payment for maintenance of performance questionable 34 1/21/2011 © Murer Consultants, Inc. 2011
- 82. Regulatory Guidelines Should include protections against inappropriate reductions or limitations in patient care or services Physicians whose referral patterns significantly change in a manner beneficial to the hospital, due in any part to the rewards available, will be terminated from the arrangement Immediate corrective action if adverse impact on quality No length of stay incentives 35 1/21/2011 © Murer Consultants, Inc. 2011
- 83. Regulatory Guidelines If gainsharing / shared savings included in CCMA, agreement must also include the following: Transparency of cost savings and actions Payment to physicians based on all surgeries regardless of payer Same selection of materials/devices available under program Re-basing of baseline thresholds each year Case severity, ages, and payors of the subject patients monitored to ensure no significant changes from historical standard – physicians terminated from gainsharing agreement if significant change occurs Incentive comp should not exceed 50% of total comp Until further guidance is released, an Advisory Opinion might be considered if gainsharing components are included in a CCMA 36 1/21/2011 © Murer Consultants, Inc. 2011
- 84. High level steps to develop a ccma 37 1/21/2011 © Murer Consultants, Inc. 2011
- 85. CCMA Development Process Formation of a steering committee with hospital/medical staff representation Determination of scope of CCMA (service line, facility, DRGs, etc) Identification of areas need/baseline using hospital’s data Steering committee to develop quality, operational efficiency, and patient satisfaction metrics using historical baseline data Steering committee to develop list of base administrative duties 38 1/21/2011 © Murer Consultants, Inc. 2011
- 86. CCMA Development Process Agree on duties, performance metrics, and compensation structure Obtain fair market value assessment of services and fees Engage services of an independent medical review organization (“IMRO”) Form management company Offer equity interests to all physicians in specialty at issue Execute CCMA Program roll-out 39 1/21/2011 © Murer Consultants, Inc. 2011
- 88. CCMA FAQ’s Who must be offered the opportunity to participate in the CCMA? According to CMS’s intent as previously expressed in the Stark exception, all medical staff members with privileges in the specialty or specialties at issue must be offered the opportunity to participate. Can the co-manager add physicians to the LLC during the contract period due to new staff members? No, participation should be limited to those who join when the contract is executed. If the non-participating physician’s services are needed and can be justified, co-manager may contract and pay the physician a fair market value consulting fee in order to recognize his/her expertise that is contributed to the co-management project. 41 1/21/2011 © Murer Consultants, Inc. 2011
- 89. CCMA FAQ’s How do we ensure that participants contribute positively to quality, efficiency and satisfaction goals? Establish LLC entry requirements relative to licensure, initial capital contributions, minimum hours commitment, minimum individual quality monitoring/commitment to ensure that physicians consider effort necessary to join and remain in the co-management entity. Establish requirements that participants/owners must continue to meet in order to remain in LLC such as hours and quality requirements (i.e. must meet or exceed the average SCIP compliance scores of the entire group – if below average in two consecutive semiannual periods, physician may be removed) Base fee is a means to recognize individual time/efforts 42 1/21/2011 © Murer Consultants, Inc. 2011
- 90. CCMA FAQ’s How are base and incentive payments distributed? Base Payment – Typical approach is physicians turn in time cards and hospital pays the LLC a fair market value hourly rate for the individual physician’s work (whether its committee participation, reviewing and revising policies, etc.). The LLC distributes the hourly payments accordingly. Incentive Fees – Hospital pays LLC a fair market value incentive payment based on attainment of certain pre-established goals. Must be distributed to physician owners on a per capita basis (Equal share to all owners – must have a minimum of five owners/participants) 43 1/21/2011 © Murer Consultants, Inc. 2011
- 91. CCMA FAQ’s Can we continue to receive incentive payments for maintenance of performance (i.e. meet and stay at 100% compliance)? Some disagreement in this area. Conservative approach says no due to the language in the proposed Stark exception i.e. providers must always improve or payments will not be considered fair market value = Stark/Anti-Kickback risk; others consider payment for maintenance acceptable, particularly when maintaining performance above a national benchmark Important to select enough measures and set goals high enough that you will not easily reach all goals in year one 44 1/21/2011 © Murer Consultants, Inc. 2011
- 92. CCMA FAQ’s Is the co-manager responsible for the performance of those physicians who choose not to join the co-management entity? Yes, performance measurement and metrics pertain to all physicians of the ENTIRE service line, regardless of whether they are owners in the management company Must use committees, individual meetings, procedures under medical staff bylaws, etc. to ensure that all other physicians are performing up to expectations 45 1/21/2011 © Murer Consultants, Inc. 2011
- 93. What We Know Today Value-based purchasing is inevitable Reimbursement cuts will continue due to an attempt to reduce health care spending Hospitals, physicians, and other types of providers will need to collaborate in order to fit within future reimbursement models More covered lives will require providers and physicians to be more efficient than ever Hospitals and physicians will be required to share patient data and reduce the silos of health information 1/21/2011 © Murer Consultants, Inc. 2011 46
- 94. What Can We Do To Prepare For Tomorrow Re-align relationships between physicians, hospitals, and other venues of care Develop internal incentive programs that focus on quality and efficient care delivery Develop formal legal structures and engage in quality/efficiency incentive programs with private payers Participate in government-sponsored demonstration projects that focus on alternative reimbursement structures 1/21/2011 © Murer Consultants, Inc. 2011 47
- 95. What Can We Do To Prepare For Tomorrow Wecan provide both on-site and off-site training sessions to further discuss innovative alignment models, such as CCMAs We can facilitate the CCMA development process and provide sound consulting support that results in a trusting relationship between the hospital and participating physicians The Murer/Reinhart team of experts is available to address your health care consulting and legal needs 1/21/2011 © Murer Consultants, Inc. 2011 48
- 96. Feel free to call us if you have any questions or concerns: Lyndean L. Brick, J.D. Senior Vice President/Principal Murer Consultants, Inc. 815-727-3355 · lbrick@murer.com Kyle A. Vasquez, J.D., LL.M. Senior Consultant Murer Consultants, Inc. 815-727-3355 · kvasquez@murer.com 49 1/21/2011 © Murer Consultants, Inc. 2011
- 97. Clinical Co-Management: A Precursor to ACO Development Clinical Co-Management: A Precursor to ACO Development © 2011 was developed by Murer Consultants, Inc. All rights reserved. No part of this presentation may be reproduced in any form without the prior written consent of Murer Consultants, Inc. This presentation is intended to provide accurate and authoritative guidance on the subject matter covered, but does not constitute legal advice. If legal advice is required, please consult counsel prior to implementing a CCMA. 1/21/2011 © Murer Consultants, Inc. 2011 50
