Managed Care for ASCs

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Managed Care for ASCs

David Cordova Gary Scott Davis, P.A.

Director, Managed Care Finance Partner

Outpatient/Physician Services McDermott Will & Emery LLP Tenet Healthcare Corporation

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The Coming Storm

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Negotiation Strategy

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Today’s Discussion Topics

▪ Narrow Networks

▪ Out of Network

▪ ACA Exchanges

▪ Hospital Affiliations

▪ New Delivery Models

▪ Changing Reimbursement

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Narrow Networks

▪ “Narrow,” “Tailored,” “Tiered” and “High

performance” are often used inter-changeably to

describe benefit plans with lower premiums than

those charged for traditional open access

networks

– Proponents: the network is predicated on both quality and cost indicators

– Opponents: the composition of these networks are based solely on price/cost

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Narrow Networks

▪ Getting a seat at the table

– Telling your story – more importantly getting it heard

▪ What is your “value proposition”

– Clarity, Resolve, Strategy, Story, Discipline (Revive)

– Can you “prove” your quality

– How do you compare with your competitors

▪ Getting end users to care about your inclusion

– Are you going to bend the cost curve

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Narrow Networks

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Out of Network

▪ Payors still challenging

– Aetna sued New Jersey ASC for “damages and treble damages based upon fraudulent and excessive billing”

▪ Allegations – ASC and its physician owners knowingly referred patients even though non-par

▪ Overpayment of $10M resulting from “regularly submitting false and fraudulent claims … which misrepresent and inflate the actual charges of out of network services.”

▪ ASC and physicians assured patients that they would have no obligations for “inappropriately charged out of network costs”

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Out of Network

▪ Payors still challenging

– Cigna suing NJ ASC for $6.6M

▪ Claim represents amount paid for 1400 claims for which patients were not billed co-pay/deductible amounts

▪ Cigna alleged practice drives up claim costs and constitutes deceptive and fraudulent insurance practices

▪ ASC sees suit as a “negotiating strategy” by Cigna as it was filed while the parties were engaged in settlement discussions relating to “overdue and unpaid claims”

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Out of Network

▪ Other tactics and strategies

– Pressure on physicians

– Benefit plan design changes

– Patient engagement and steerage to “in network” facilities

– Physician required to obtain “Member Advance Notice” regarding options to obtain services “in network”

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Out of Network

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ACA Exchanges

▪ Provides a structured marketplace for the sale and

purchase of health insurance

▪ Fundamental purpose of the exchanges is to

facilitate the offer and purchase of health

insurance

▪ However, nothing prohibits qualified individuals,

qualified employers, and insurance carriers from

participating in the health insurance market

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ACA Exchanges

▪ Qualified individuals and small businesses can

purchase private health insurance through

exchanges

▪ Issuers selling health insurance plans through an

exchange have to follow certain rules

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ACA Exchanges

▪ Offered plans generally provide comprehensive

coverage and meet all applicable private market

reforms specified in ACA

– Coverage for “essential health benefits”

– Subject to certain limits on cost-sharing, including out-of-pocket costs

– Meet one of four levels of plan “generosity” based on actuarial value

▪ HMO options predominate

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ACA Exchanges

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Hospital Affiliations and Antitrust

▪ The Lift

– An informal industry term used to describe the

enhanced revenue an ASC achieves by partnering with a health system, hospital, or another entity capable of delivering higher reimbursement on commercial

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Hospital Affiliations and Antitrust

▪ The Lift and Antitrust

– Can an ASC that is not wholly owned by a hospital get the lift?

– Does the lift raise antitrust issues because the prices payors will pay post-closing are higher?

– How does today’s antitrust enforcement climate in healthcare this strategy?

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Hospital Affiliations and Antitrust

▪ Effective Control - independent (acting by itself,

and without having to obtain any other entity or

individual's consent or approval) ability to exercise

overall effective control over the economic side of

the business, as evidenced by:

– the right to approve a majority of the governing board of JV, coupled with simple majority voting requirements at the JV level

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Hospital Affiliations and Antitrust

▪ The majority of the JV governing board is not

necessarily dispositive as long as:

– no action can be taken that the Hospital does not approve

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Hospital Affiliations and Antitrust

▪ Joint approval is permissible with respect to:

– any debt of the JV entity requiring the guarantee of a member

– any sale of all or substantially all of the assets of the JV entity

– any change in the basic organization or operation of the JV entity

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Hospital Affiliations and Antitrust

▪ Joint approval is permissible with respect to:

– any sale in a single transaction or series of transactions to the same buyer of over 30% of the fair market value of the assets of the JV entity

– any amendment of the JV entity governing documents

– any requirement for additional capital contributions from the members

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Hospital Affiliations and Antitrust

▪ The “Value” of the “Lift”:

– Declining viability of “out of network” strategy

– Lack of opportunity to grow case volume and negotiating leverage with commercial payers

▪ The risks of achieving and maintaining the lift

– Effect on ASC’s current contracts?

– Is the lift “guaranteed”? “Ready rates”? – Sustainability of lift

▪ Term length of contracts?

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Hospital Affiliations

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Who Moved My Cheese: Emergence of

New Delivery Model

▪ Accountable Care Organizations

– Groups of doctors, hospitals, and other health care providers voluntarily coming together to focus on providing coordinated high quality care to a defined population of patients

– The goal: ensuring patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors

– If successful at “raising the quality bar” and “bending the cost curve” often participate in shared savings

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Who Moved My Cheese: Emergence of

New Delivery Model

▪ Clinically Integrated Networks

– An organization focused on the active and on-going

program to evaluate and modify the practice patterns of all participating providers and which creates a high

degree of interdependence and cooperation among those providers to control costs and achieve quality

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Who Moved My Cheese: Emergence of

New Delivery Model

▪ Who is Your Primary Client/Customer

– Third Party Payor

– Physician

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Who Moved My Cheese: Emergence of

New Delivery Model

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Now Your See It, Now Your Don’t: The

Changing Reimbursement Landscape

▪ Bundled Payments

– Combines reimbursement for multiple providers into a single, comprehensive payment covering all of the

services involved in a patient’s care

– Aims to:

▪ control cost

▪ integrate care

▪ improve the patient care experience

▪ improve outcomes

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Now Your See, Now Your Don’t: The

Changing Reimbursement Landscape

▪ Value Based Purchasing:

– System designed to:

▪ lever third party payor market power to promote quality and value of health care services – not simply focused on negotiating price discounts

▪ enables buyers to hold providers accountable for both cost and quality of care

▪ brings together information on the quality of health care,

including patient outcomes and health status, with data on the cost of care

▪ focused on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers.

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Now Your See, Now Your Don’t: The

Changing Reimbursement Landscape

▪ Value-Based Benefit Design

– The use of plan incentives to encourage insured adoption of one or more of the following:

▪ appropriate use of high value services

▪ adoption of healthy lifestyles

▪ use of high performance providers who adhere to evidence-based treatment guidelines

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Now Your See, Now Your Don’t: The

Changing Reimbursement Landscape

▪ Value-Based Insurance Design

– Patients’ copayments based on the relative value of the clinical intervention (not costs) to align insurance

incentives (co-pays, deductibles, etc.) with the goals of consumer health behavior

– The principle tenets are:

▪ medical services differ in the clinical benefit achieved

▪ the value of a specific intervention likely varies across patient groups

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Now Your See, Now Your Don’t: The

Changing Reimbursement Landscape

▪ Regency Healthcare (New York)

– Cash based, global discount program

▪ Payment “upfront”

– Knee, shoulder, elbow, hand, foot, ankle and spinal procedures included

– Prices listed on Internet

– Anesthesia included but post-surgical rehab and physical therapy is excluded

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Now Your See, Now Your Don’t: The

Changing Reimbursement Landscape

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