Are You Ready for Managed Care?

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    14-Jan-2016

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Are You Ready for Managed Care?. Bearing and Contracting for Risk in New Yorks Managed Care Environment. Stephen A. Warnke, Esq. Ropes & Gray LLP. Agenda. Legislative and Regulatory Context for the Transition to Managed Care - PowerPoint PPT Presentation

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  • ROPES & GRAY LLP

    Are You Ready for Managed Care?Bearing and Contracting for Risk in New Yorks Managed Care EnvironmentStephen A. Warnke, Esq. Ropes & Gray LLP

    ROPES & GRAY*

    AgendaLegislative and Regulatory Context for the Transition to Managed CareImpact of Managed Care on Providers of Services to the Intellectually and Developmentally DisabledWhat It Means to Bear Risk Types of Risk Sharing ArrangementsIndependent Practice Associations (IPAs)Care Management Pitfalls to Avoid in Provider Contracting

    ROPES & GRAY*

    Legislative and Regulatory ContextNew Yorks application for a Medicaid Section 1115 waiver to enroll developmentally disabled (DD) individuals in managed care is poised for final federal approvalUnder 2013-2014 budget legislation passed in March, Medicaid DD recipients will receive a comprehensive benefit package, including habilitation services and health and long-term health care services, through one of the following Article 44 managed care organization (MCO) vehicles:A Developmental Disabilities Individual Support and Care Coordination Organization (DISCO)A commercial HMO that expands its service offerings and commercial benefit package to the DD populationA specialized Medicaid Long-Term Care Plan (MLTCP) capable of furnishing services to the DD population (three of which are eligible to participate in the Fully Integrated Duals Advantage demonstration program)Rules are still inchoate; we await:Special Terms and Conditions of CMSs Section 1115 approvalIssuance of a revised Request for Applications by OPWDD for DISCOsOther application forms and regulatory guidance

    ROPES & GRAY*

    Impact on DD ProvidersUnder the Cuomo Administrations philosophy of Care Management for All, a phase-out of fee-for-service payment for DD servicesDD providers will need to contract with multiple DD-authorized MCOs in order to maintain their existing revenue streamsParticipating provider agreements, not OPWDD Medicaid payment regulations, will determine: Rates of payment Claims submission windowsRemedies for late or denied paymentCredentialing standardsAudit and documentation requirementsPotential upside if a provider is able to assume and manage risk (i.e., the assumption of financial responsibility for the cost and utilization of services)

    ROPES & GRAY*

    Risk TransferRisk may be borne at both the MCO and downstream provider levelsBy statute and contract, an MCO accepts responsibility for payment of claims out of a capitation budgetMCO realizes surplus if the cost of claims and administrative expenses is less than aggregate premiumsMCO realizes loss if the opposite equation prevailsUnder New York law, an MCO may also share financial responsibility with its contracted providers under an approved risk-transfer arrangementRisk transfer is highly regulated, and never absolute: an MCO may share, but not divest itself of, financial responsibilityThe level of regulation and capital reserve requirements depends on the amount of risk transferred by the MCO to the provider

    ROPES & GRAY*

    DFS/DOH Jurisdiction Over RiskBoth the Department of Financial Services (DFS) and Department of Health (DOH) have jurisdiction over risk-transfer arrangements involving the cost of care delivered to MCO enrolleesDOH guidance requires advance review and approval of an MCOs template agreements with downstream providers, including any material amendments to such template agreementsMaterial amendments include any change in compensation terms, thus capturing all risk transfer arrangementsRegulatory impetus is two-foldEnsure adequate reserves against adverse claims experiencePrevent undue incentives for skimping or withholding of care

    ROPES & GRAY*

    Levels of Risk SharingDOH requires different types of provider arrangements to meet financial viability and financial security deposit requirements depending on the level of risk shared by the providerFee-for-Service: Payment for services on a fee-for-service basis pursuant to a pre-defined fee scheduleNo requirement to demonstrate financial viability or to maintain a financial security depositLevel 1: Fee-for-service arrangements with withholds or bonuses up to 25% of the payment for health care servicesNo requirement to demonstrate financial viability or to maintain a financial security depositLevel 2: Capitated risk transfers to a provider for a single specific service that the provider directly providesNo requirement to demonstrate financial viability or to maintain a financial security deposit

    ROPES & GRAY*

    Levels of Risk Sharing (cont.)Level 3: Broader risk transfer to a provider (e.g., capitated arrangement for multiple services provided directly or fee-for-service arrangements with withholds or bonuses of greater than 25% of the payment for health care services)Such contracts must demonstrate the providers financial viabilityIf the providers net worth is less than or equal to zero, a security deposit must be established for the providers in-network costs Level 4: Contracts that transfer risk to IPAs for single or multiple servicesSuch contracts must demonstrate the IPAs financial viability and establish a security deposit

    ROPES & GRAY*

    Medical Loss Ratio RequirementsRegardless of the amount of risk transferred to a provider, MCOs receiving New York state funding will be held to increasing medical loss ratio (MLR) requirementsMLR requirements limit the percentage of state funds received by an MCO that may be spent on services other than health care services (e.g., a MLR of 75/25 requires that 75% of state funds received by an MCO be spent on health care services, leaving 25% to support administrative costs)Governor Cuomo has mandated a phase-in of MLR requirements such that, by April 1, 2015 and thereafter, MCOs will be held to an 85/15 MLR

    ROPES & GRAY*

    IPA Structure and FormationAn IPA is a special-purpose MCO contracting vehicle under Part 98 of DOH regulationsServes as an intermediary between an MCO and all or a portion of the MCOs downstream providers, subcontracting with providers to arrange for the delivery of care to MCO enrolleesAuthorized to arrange for services of multiple providers, whether on a fee-for-service or risk sharing basis, without violating New York corporate practice of medicine prohibitions

    ROPES & GRAY*

    IPA Reserve RequirementsIf at risk, an IPA must carry a separate, IPA-level reserveEqual to 12.5% of the payments received from the MCOMust be held in a special account, subject to the approval of DOHUnlike with reinsurance contracts, IPA reserves are not a basis for reducing the MCOs reserve requirementsEnd Result: Downstream risk-based payments to an IPA require reserves to be met by both the MCO and IPA

    ROPES & GRAY*

    ProsRelatively easy to formAllows separately organized (otherwise competitive) DD providers to come together for purposes of single-signature contracting with MCOsAllows DD providers to accept risk (upside/downside) and realize benefits of care coordination without the burdens of MCO licensure and operationsVehicle through which to perform key MCO delegated functions (e.g., credentialing, quality assurance)ConsJoint contracting must be ancillary to integrative efficienciesBasing joint contracting on clinical integration can be time consuming and expensiveSeparate, non-waivable IPA reserve requirementsIf IPA engages in utilization review, it must:Do so through a separate DOH-approved management contract, andBe licensed as a utilization review agentIPAs: Pros and Cons

    ROPES & GRAY*

    Care Management as an AlternativeAs an alternative to forming an IPA with other DD providers, a DD provider may contract to provide care management administrative services (CMAS) for MCOsThrough a CMAS arrangement, a DD provider can realize the benefits of care coordination without many of the burdens associated with being part of an IPADOH requirements for CMAS contracts are less onerousTraditional management functions such as quality assurance must be addressed in a separate management services agreement that satisfies applicable DOH guidance The CMAS-contracting entity must be a licensed health care provider or other entity approved by DOHStand-alone care management contracts may have a short shelf live as delegated care coordination functions transition to health homes, as they have for certain non-DD populations

    ROPES & GRAY*

    Managed Care Provider Contracts: Potential PitfallsUnderstanding key terms and issues for a DD provider contracting with an MCO:Definition of clean claimSubmission windows and pre-authorizationPrompt payment requirementsDefinition of medical necessityAppeal and grievance processesRecoupment rightsUnilateral amendment based on MCOs government contractUnilateral amendment based on changes in MCOs Provider ManualUnderstand the MCOs Utilization Review and Quality Assurance processesUnderstanding bargaining power and limited room for negotiation (many requirements are mandated by DOH)Thinking carefully about how provisions will be operationalized

    ROPES & GRAY*

    Thank YouStephen A. WarnkeRopes & Gray LLPstephen.warnke@ropesgray.com212-841-0681