Encouraging and Regulating Accountable Care: The New York Experience James R. Knickman May 8, 2015 Berkeley ACO Workshop
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Encouraging and Regulating Accountable Care:
The New York Experience
James R. KnickmanMay 8, 2015Berkeley ACO Workshop
The New York Context
• Expensive
• Large and expensive Medicaid system
• Downstate dominated by 5 academic health systems
• Upstate has active pockets of regional planning
– Rochester
– Mid-Hudson Valley
– Adirondacks
• History of very active government regulation
The New York Context
• Expensive
• Large and expensive Medicaid system
• Downstate dominated by 5 academic health systems
• Upstate has active pockets of regional planning
– Rochester
– Mid-Hudson Valley
– Adirondacks
• Hospital-centric with weaker primary care system
The New York Context
• Expensive
• Large and expensive Medicaid system
• Downstate dominated by 5 academic health systems
• Upstate has active pockets of regional planning
– Rochester
– Mid-Hudson Valley
– Adirondacks
• Hospital-centric with weaker primary care system
Current Status of Value-Based Payments
Current Status of Value-Based Payments in New York State
Commercial payments Medicaid payments
• 73% are fee-for-service
• 33% are tied to value
• 46% involve performance-based financial risk for providers
• 13% contain shared risk
• 94% are fee-for-service
• 34% are tied to value
• < 15% involve performance-based financial risk for providers
• 3% contain shared risk
ACOs Across New York State
10
Sources of System Change Dynamics Now
• Goals and Metrics– System transformation; clinical and population health
improvements
– Reduce unnecessary hospital use by 25%
• Approach– Integrated care
– 25 Performing Provider Systems (PPSs)
Part 1: DSRIP (Delivery System Reform Incentive Payment)
Sources of System Change Dynamics Now
• Funding– $6.4 billion total
– Includes hospital payments, technical assistance, evaluation
– Payments to PPSs based on performance
• Expectation– 25 PPSs become ACO-type organizations
– Preparation for switch to value-based payments
– Spread to commercial payers
Part 1: DSRIP (continued)
Sources of System Change Dynamics Now
• Federal grant: $100 million
• Payment reform emphasis
– 80% of New Yorkers cared for under value-based arrangements by 2020
• Advanced primary care emphasis
Part 2: State Health Innovation Plan
Sources of System Change Dynamics Now
• Many variants of risk-based payment arrangements emerging
• Hospital-owned insurance companies
• Direct contracting of businesses to providers
• Disruptive innovation
Part 3: Private Sector
New York State’s Regulatory Framework
• Dept. of Financial Services (DFS) regulates commercial health insurance rates– Has specific review process (Reg. 164) for contracts in which
payers transfer risk to providers
• NYS Dept. of Health (DOH) regulates health facilities and organizations under Article 28– CON, “character and competence” reviews required for
licensure of new providers
– DOH oversees Medicaid contracting and rates
New York State Insurance Department Regulation 164
• Applies to HMOs and commercial insurance transferring risk to health care providers via capitation and prepayment
• Contracts must be submitted to and approved by the New York State Superintendent of Insurance
• Insurer can transfer risk to provider group for contracted “in-network” services, provided that– The provider can demonstrate financial responsibility, and
– establishes a financial security deposit of 12.5% of the estimated annual in-network capitation revenue
• Payer reserves adequate funds to cover out-of network health care services, and retains full financial risk, in event of failure of the contracted provider group.
New York State Department of Health: Part 1003 of 10NYCRR
• Accountable Care Organization voluntary certification program
• Extensive assurances and reporting requirements
• Quid Pro Quo: Immunity from anti-trust provisions
• Letter of October 10, 2014 from PPSs concerned about use of COPA protection
• Letter of April 22, 2015 from FTC questioning appropriateness of COPA protection
Issues and Concerns
• Pro-competitive collaborations are fully permissible within anti-trust laws
• COPA protection only needed when there is no efficiency associated with anti-competitive collaborations
• State says there are efficiencies; PPSs are concerned and fear anti-trust boundaries
• Real need: An assessment of risks and benefits
Issues and Concerns
• Competitiveness
• Need for a focus on performance standards rather than structure and process
– An interest of NCQA
• Simplicity of rules and reporting
• Population health and prevention
• Political power: Where will it take us?
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