Value-Based Payments and Managed Care Contracting - Crash Course Webinar Series

© 2016 Epstein Becker & Green, P.C. | All Rights Reserved. ebglaw.com
Value-Based Payments and
Managed Care Contracting
May 31, 2016

© 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com 2
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© 2016 Epstein Becker & Green, P.C. | All Rights Reserved. | ebglaw.com
Presented by
Basil H. Kim
Associate
bkim@ebglaw.com
212-351-3736
3

VBP & Managed Care Contracting
 Payer/Provider incentive and rating arrangements are not
novel, but they also have not been without challenges in the
past, including lack of transparency, use of incomplete or
inaccurate data, and complex incentive calculation
methodologies.
 We are now in an era of increasingly sophisticated and complex
VBP contracting, and Payers and Providers need to work
together to form successful VBP arrangements.
 Each party needs to understand its own operational and
financial strengths and vulnerabilities, especially with regard to
information and data infrastructure.
4

Contracting Skills
 The competencies required for successful VBP contracting and
implementation include:
• High-level business and contracting strategic vision and
coordination
• Actuarial, legal, compliance and risk management skills
• Financial modeling and analytics capacity
• Sophisticated IT, privacy and technological capabilities
• Robust care management and integration systems
• Strong collaborative leadership and an engaged provider base
5

Key Initial Questions
 Who makes up our patient population, and how do we meet their needs
through these arrangements? Do we have the infrastructure to do so?
 What types of VBP arrangements have succeeded or failed in my market?
• What are the lessons learned and takeaways from each example?
 What are we looking to achieve in our arrangement?
• Are the expectations and goals realistic?
• Where are we now; where do we hope go?
• How do we measure success?
 Who is the key leadership on both the Provider and Payer side?
• How committed are they to the success of the VBP relationship? How much risk
are they willing to take on? Do we have alignment?
• Have the organizations involved demonstrated a history of integrated and
collaborative care?
6

Contracting Considerations
 What is the reimbursement model?
• Quality Bonus (outcomes or also process?)
• Shared Savings (upside only or also downside?)
• Bundled Payments
• Capitation / percent of premium
 For each of these frameworks, there are different contracting
considerations, including requirements under state and federal
law.
7

 Examples of different levels of insurance risk shared:
• New York State VBP Tiers (from the NYS MCO/Provider Contract Guidelines):
o Level 1: Contracts with providers or IPAs based on fee-for-service arrangements,
including withholds or bonuses up to 25% of the payment to the provider
o Level 2: Contracts that transfer financial risk to providers or group of providers (e.g.
capitation) for a single specific service the providers directly provide, i.e., primary care,
(except inpatient hospitalization) with the provider accepting all medical risk for that
service
o Level 3: Contracts that transfer broader risk to providers (multiple services provided
directly, inpatient hospitalization, or fee-for-service with withholds or bonuses of greater
than 25%)
o Level 4: Contracts that transfer risk to IPAs for a single or multiple services
o Level 5: Contracts falling under risk level 3 or 4 above that include services not provided
directly (out-of-IPA/provider network services)
• For each of these tiers, there are also different contracting considerations
8

Some states are
adopting “VBP
Roadmaps” in the
context of Medicaid
Managed Care reform
and are requiring
managed care plans to
pay providers based on
value.
For example, NYS is
requiring 80-90 percent
of Medicaid Managed
Care payments be
value-based by the end
of 2019.
9

Important Contracting Questions
 Term of agreement - locked in? Hard end date or evergreen?
 Amendment - can agreement be unilaterally amended?
 Performance - who measures? Are target/metrics clearly
defined?
 Access to data needed/available; do we have the required data
infrastructure and sophistication?
 What are the reporting requirements, and can we meet them?
 What are the audit rights related to data used for measuring
performance, and what is the level of burden associated with
these audits?
10

Important Contracting Questions
 Payment obligations - clearly defined? Preliminary and final
payment?
 Distributions to providers in network? If so, how determined?
 If downside risk, how will any deficit be paid? Reserve/security
requirements?
 How will disputes be handled?
11

Value-based Contracting
 Remember that the primary goals of collaborative VBP
agreements are to:
• Drive improvement in clinical quality
• Reduce costs/spending
• Improve health outcomes
 All decisions made in the negotiation of VBP agreements must
make sure to keep these primary objectives in mind.
12

Questions?
Basil H. Kim
Associate
bkim@ebglaw.com
212-351-3736
13

Value-Based Payments and Managed Care Contracting - Crash Course Webinar Series

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Value-Based Payments and Managed Care Contracting - Crash Course Webinar Series