1. Network Models for Integrated Care Partnerships Network Models for Integrated Care Partnerships M. Crystal Lowe, M.S.W Executive Director PA Association of Area Agencies on Aging

2. It’s a Journey

3. Pennsylvania’s Story An opportunity arose that encouraged AAAs to work together; working toward mutual benefits. Organizations were willing to step forward to serve as the lead contractors. The work gave partnering organizations a “toe” into an entrepreneurial environment.

4. Network Structure VA Medical Center Catchment Area MIFFLIN SUSQUEHANNA BRADFORD LYCOMING WYOMING SULLIVAN CAMERON WAYNE UNION ALLEGHENY BLAIR CLINTON POTTER WESTMORELAND BEDFORD 600 ADAMS DAUPHIN CARBON LEHIGH PIKE FAYETTE GREENE CLEARFIELD FULTON PERRY NORTHAMPTON McKEAN ELK INDIANA ARMSTRONG CENTRE SOMERSET JUNIATA SCHUYLKILL MONROE SNYDER BUCKS JEFFERSON WARREN LANCASTER YORK LEBANON ERIE MONTGOMERY CHESTER DELAWARE FRANKLIN BUTLER LAWRENCE MERCER VENANGO CRAWFORD CLARION FOREST Philadelphia CUMBERLAND COLUMBIA MONTOUR BEAVER WASHINGTON CAMBRIA LUZERNE LACKAWANNA HUNTINGDON TIOGA BERKS NORTHUMBERLAND 3,000 4,500 120 600 3004,000 800 600 5,300 900 800 900 100 2,500 900 700 200 2,300 2,100 1,300 2,700 2,500 400 3,200 200 1,300 1,000 700 100 250500 100 300 250 100 800 250 100 1,500 2,000 1,100 800 4002,500 3,100 800 3,000 4,000 C-1,200 L-100 300 400 3,100 3,000 1,500 450 850 500 200 700 200 300 2002,100 1,300 3,700 1,300 1,100 200

5. Business Roles Memorandum of Understanding Receiving referrals Reporting – Data – Invoices Interfacing with the Fiscal Management Agency Communicating with the VA Medical Staff on clinical issues Providing Quality Assurance

6. Other Possibilities Made Us Evaluate Our Structural Options

7. Additional Options 1.Unincorporated Business Association 2.C - Corporation 3.S - Corporation 4.Non-profit Corporation (501(c)(3)) 5.Limited Liability Company 6.Management Service Organization (MSO) © 2014, SOGT, LLC

8. Caveat Emptor Caveat Emptor This is Not Legal Advice

9. Unincorporated Business Association 1. Unincorporated association consisting of three or more members joined by mutual consent for a common purpose. (not a partnership). –Has separate legal standing, but there is potential personal liability to members.

10. C - Corporation 2.Subject to double taxation a.Profits taxed at the corporate level b. Rates 15% to 35% c.For-profit entities will pay additional tax on distributions/income when received. © 2014, SOGT, LLC

11. S - Corporation 3.Subchapter S Corp. – no corporate level tax, but many limitations. a.Limitation on who can be a shareholder: Individuals or other S corps; qualified subchapter; S trusts (QSST) or a 501(c)(3) corporation. Any other for-profit entity is not permitted to be a shareholder. b. Profits and losses must be allocated proportionately to each shareholder’s interest in the company. c. May only have one class of stock. d. May not have more than 100 shareholders. © 2014, SOGT, LLC

12. Non-Profit Corporation – 501(c)(3) Public Charity 4.To be tax-exempt under Section 501(c)(3) of the Internal Revenue Code, the organization must be organized and operated exclusively for exempt purposes set forth in Section 501(c)(3), and none of its earning may inure to the benefit of any private shareholder or individual. Thus, the 501(c)(3) organization could only be used to contract with an MCO if all of its members are 501(c)(3) corporations. © 2014, SOGT, LLC

13. Limited Liability Company 5.Very flexible form of entity. No limitation on who can be members, capital, distributions or management. Terminology is different – but can be set up the same as a corporation (but doesn’t have to be). Corp. (required) LLC Shareholders Members Directors Managers (not required) Officers: Officers (not required, but President, recommended) Secretary Treasurer, Other) © 2014, SOGT, LLC

14. Limited Liability Company (cont’d) Taxed as a partnership. No entity level tax; pass through entity. All profits and losses pass through to members. Can be pro rata based on ownership interests, but doesn’t have to be. © 2014, SOGT, LLC

15. Limited Liability Company Operating Agreement (cont’d) Voting thresholds (majority (50%), super-majority (70%?), unanimous) Fundamental transactions (require higher voting threshold; i.e. super-majority or unanimous) - buy/sell real estate - admit new members - enter lease - capital expenditures in - borrow money excess of $______ - pledge assets - distribution/salaries - capital call - other - dissolution/bankruptcy - sell assets (except in ordinary course/ merger/consolidation/division) © 2014, SOGT, LLC

16. Limited Liability Company Operating Agreement (cont’d) Territories, non-compete, non-solicitation, confidentiality, inventions, indemnity Anti-trust; anti-competition issues Transfers or withdraw (dissociation) © 2014, SOGT, LLC

17. The TRUE Courage is Facing Danger When You are Afraid

18. Management Service Organization 6.Defined: An entity that under contract provides services such as facility, equipment, staffing, contract negotiation, administration or marketing. MSO’s are most commonly known for providing management and administrative services to groups of physician practices or between physician practices and hospitals or health systems. Such organizations can alleviate the administrative burden on the organization (s) and allow them to take advantage of economies of scale and group buying power when negotiating © 2014, SOGT, LLC

19. Management Service Organization (cont’d) with “integrated care” organizations. An MSO performs certain administrative functions and can contracts with “integrated care organizations” on behalf of an individual agency or on a group-wide basis. An MSO, however, is not an entity. It is simply a “buzz word” that has been used to describe entities performing these functions. © 2014, SOGT, LLC

20. Lessons Learned

21. More Lessons It takes more money and time than you expect. The work is not for the faint of heart, but has opportunity for big payoffs for your organization. Clarity of expectations is key. And, Both

22. “You’ve always had the power, you just needed to learn it for yourself”