“One of the best aspects of health care reform is it starts to emphasize prevention.”
— Anne Wojcicki
My recent column described the monumental Medicaid Managed Care Reform Initiative (MMCRI) being implemented by New York state as rapidly as possible.
The reform initiative is being implemented under the umbrella of the Delivery System Reform Incentive Program (DSRIP) with the formation, implementation, and operation of 25 Performing Provider Systems (PPS) throughout the state.
Acronyms, acronyms — when it comes to health care, their use is without limits.
The Central New York Care Collaborative (CNYCC) is the state-authorized PPS for six counties in Central New York. Cayuga, Oneida, Cortland, Onondaga, Madison, and Oswego counties represent the primary counties forming the PPS Region Provider Network. CNYCC health-care providers accounted for less than $1 billion of Medicaid spending in 2013, which represents less than 2 percent of total New York annual Medicaid spending ($55 billion). As one might expect, the vast majority of state Medicaid spending occurs in the greater New York City metro area, where there are 15 separate PPS regional entities.
The focus of this column is on strategic positioning for community-based health care and human-service providers in the CNYCC region. Each of the 25 Performing Provider Systems is led by hospital systems. In the case of CNYCC, sponsors include Auburn Community, Faxton St. Luke’s, St. Joseph’s, and Upstate University hospitals.
The hospitals in the CNYCC region are supported by more than 100 health-care and community-based providers who have committed to be a part of the CNYCC Network that will provide cost-effective, coordinated managed care to Medicaid-eligible individuals in the region (https://cnycares.org).
Each PPS was required to submit project implementation plans to the New York State Department of Health by April 1, 2015. These implementation plans relate directly to the 11 DSRIP reform projects selected by CNYCC, following a comprehensive needs assessment. The CNYCC projects are extensive and affect virtually every one of the more than 100 Medicaid service providers in the region. The projects selected by CNYCC requiring an implementation plan are as follows:
a) reate integrated delivery systems that are focused on evidence-based medicine/population health management
b) mergency-department care triage for at-risk populations
c) mplementing the INTERACT project (inpatient transfer-avoidance program for SNF)
d) ospital home-care collaboration solutions
e) ntegration and co-location of primary-care services and behavioral health services
f) nstitute for Healthcare Improvement — implementation of its “Conversation Ready Model” for palliative-care options
g) trengthen mental health and substance-abuse infrastructure across systems
If the initiatives above sound like monumental efforts at moving mountains, they are. Others may say, “I thought we were doing an effective job in each of these areas already.” Those individuals would be dead wrong. The current Medicaid service delivery system is fragmented as evidenced by the more than 100 providers in the six-county region.
So, from a strategic-positioning perspective, what should a community-based Medicaid service provider do in response to the MMCRI and PPS structure?
The answer to this strategic question is both complicated and complex. This is particularly true since community-based service providers are purported to be an integral component to the primary objectives of MMCRI. Those objectives are a 25 percent reduction in avoidable Medicaid emergency-room visits, hospital admissions, and readmissions within 30 days of discharge, over a five-year DSRIP timeframe.
One of the key strategies for community-based providers to consider has been and continues to be the formation of and membership in one or more Independent Provider Associations (IPA).
1. Independent Provider Association (IPA) defined
An individual group of physicians and/or other health-care providers that are under contract to provide services to members/enrollees of different MCOs, ACOs, and PPSs, as well as other insurance plans, incorporating a fixed-fee per enrollee (capitation) or based on a pay-for-performance model (partial capitation), service care-outs, and/or targeted performance incentives.
ν For example, the primary focus of managed-care organizations (MCOs) since the early 1970s has been on reducing the utilization of emergency room and hospital inpatient admissions.
ν The increased recent emphasis on reducing hospital re-admissions is an area where community-based providers can have direct and significant influence.
ν An IPA serves as the fiscal intermediary between groups of providers, which are members of the IPA and the MCO.
2. Types of IPAs
b. Captive — typically owned/controlled by the MCO or a health system
c. Partnership between MCO and IPA entities
Depending upon facts and circumstances, any one of the three alternatives may be appropriate. Provider control is greatest in the independent model IPA.
Depending upon the attitude and relationship between the PPS/MCO and the individual providers, the captive and partnership models may be desirable or,
alternately, not feasible.
3. Characteristics of the Independent IPA model
ν Formation of the independent IPA is a grass-roots effort of the providers who are also members of the IPA.
ν Board representation consists only of representatives from participating provider members of the IPA.
ν Decision-making authority rests with the IPA board that is initially appointed by the IPA provider members.
ν Can be formed as either taxable or tax-exempt, depending on membership, structure, and objectives.
ν Contract negotiations with PPSs/MCOs are managed directly by the IPA board, its independent legal counsel, and individuals designated with contract-negotiation authority.
ν Primary advantage for the PPS/MCO is that through a single signature, a regional network of providers can be PPS/MCO network participants without having individual negotiations with each provider.
ν Single-signature contract authority by the IPA Board is powerful from a negotiation and leverage perspective.
ν In order to pass legal requirements and anti-trust regulations, an IPA cannot be formed for the sole purpose of negotiating rates.
ν Rather, in addition to rate negotiation, the IPA must assume some degree of financial risk and/or targeted performance-based incentives as a condition of the contract with the PPS/MCO.
ν In order to effectively function as a joint network entity of multiple providers, there must be some evidence of “clinical and financial integration” (e.g., electronic medical records, billing systems, clinical protocols, etc.) among IPA provider members.
ν Financial risk, coupled with clinical and financial integration, represent “safe harbors” that allow regional provider IPA networks to operate without substantial risk of anti-trust challenges.
Membership in a provider-sponsored IPA is one of many strategic considerations for community-based service providers to evaluate in developing an appropriate strategic position that is responsive to integrated and regional reform initiatives.
Gerald J. Archibald, CPA, is a partner in charge of the management advisory services at The Bonadio Group. Contact him at (585) 381-1000, or via email at firstname.lastname@example.org