1. Davis Wright Tremaine LLP Basic Legal Issues in Implementing Healthcare Incentives and Pay for Performance Programs Paul T. Smith, Esq. Davis Wright Tremaine LLP San Francisco, CA Paul T. Smith, Esq. Davis Wright Tremaine LLP San Francisco, CA Thomas E. Jeffry, Jr., Esq. Davis Wright Tremaine LLP Los Angeles, CA National Pay for Performance Summit

2. Davis Wright Tremaine LLP Overview Context for P4P Antitrust Physician Incentive Programs Collection and Exchange of Data Context for P4P Antitrust Physician Incentive Programs Collection and Exchange of Data

3. Davis Wright Tremaine LLP A Growing Trend Many variations; we focus on health plan payments to providers to reward quality Examples: Integrated Healthcare Association (California) Bridges to Excellence (Boston, Cincinnati, Albany) Leapfrog Group Medicare Many variations; we focus on health plan payments to providers to reward quality Examples: Integrated Healthcare Association (California) Bridges to Excellence (Boston, Cincinnati, Albany) Leapfrog Group Medicare

4. Davis Wright Tremaine LLP Features Quality measures Clinical measures Screening, immunization and other prevention Patient satisfaction Adoption of technology Payment Incremental PMPM payment (typically < 5%) Often competitive Scorecards Quality measures Clinical measures Screening, immunization and other prevention Patient satisfaction Adoption of technology Payment Incremental PMPM payment (typically < 5%) Often competitive Scorecards

5. Davis Wright Tremaine LLP Antitrust The price-fixing concern Elements of payment Measures Weighting Payment The price-fixing concern Elements of payment Measures Weighting Payment

6. Davis Wright Tremaine LLP Antitrust The case for collaboration The MedSouth clinical integration opinion The FTC/DOJ Report - Improving Health Care The case for collaboration The MedSouth clinical integration opinion The FTC/DOJ Report - Improving Health Care

7. Davis Wright Tremaine LLP Antitrust How far is too far? Measures Weighting Payment Recommended or binding Possible anti-competitive effects How far is too far? Measures Weighting Payment Recommended or binding Possible anti-competitive effects

8. Davis Wright Tremaine LLP Physician Incentives Anti-kickback Laws Gainsharing Limitation of Care Physician incentive plans Anti-kickback Laws Gainsharing Limitation of Care Physician incentive plans

9. Davis Wright Tremaine LLP Anti-kickback laws Both federal and state Prohibits the offer/receipt of remuneration for referrals Civil penalties and criminal exposure Exception for managed care Both federal and state Prohibits the offer/receipt of remuneration for referrals Civil penalties and criminal exposure Exception for managed care

10. Davis Wright Tremaine LLP Gainsharing Alignment of financial incentives to improve efficiencies, increase quality of care, lower costs

11. Davis Wright Tremaine LLP Gainsharing Programs scrutinized by OIG Acceptable programs identify specific cost-saving actions must monitor quality to assure no adverse impact no cherry-picking incentives no hidden incentives for individual referrals Programs scrutinized by OIG Acceptable programs identify specific cost-saving actions must monitor quality to assure no adverse impact no cherry-picking incentives no hidden incentives for individual referrals

12. Davis Wright Tremaine LLP Limitation of Care Civil Monetary Penalties (CMPs) Prohibits remuneration intended to limit services to Medicare/Medicaid beneficiaries Civil Monetary Penalties (CMPs) Prohibits remuneration intended to limit services to Medicare/Medicaid beneficiaries

13. Davis Wright Tremaine LLP Physician Incentive Plans Compensation arrangement that may directly or indirectly have the effect of reducing or limiting services provided with respect to enrolled individuals

14. Davis Wright Tremaine LLP Physician Incentive Plans Contracts with CMPs no inducement to reduce of limit services stop-loss if physicians at substantial financial risk quality assurance/satisfaction survey Contracts with CMPs no inducement to reduce of limit services stop-loss if physicians at substantial financial risk quality assurance/satisfaction survey

15. Davis Wright Tremaine LLP Privacy/Confidentiality Protection of individually identifiable health information HIPAA allows disclosure to contractor for data aggregation Permissible use of aggregate data Reporting to provider and health plan Disclosure to others Research Public scorecards Collateral uses Protection of individually identifiable health information HIPAA allows disclosure to contractor for data aggregation Permissible use of aggregate data Reporting to provider and health plan Disclosure to others Research Public scorecards Collateral uses

16. Davis Wright Tremaine LLP Data Collection & Integrity HIPAA requires reasonable measures to secure electronic data encryption physical safeguards access controls audits and monitoring HIPAA requires reasonable measures to secure electronic data encryption physical safeguards access controls audits and monitoring

17. Davis Wright Tremaine LLP Data Collection & Integrity Issues Who collects and verifies data? How is accuracy of data assured? Publication of data regarding a specific provider Issues Who collects and verifies data? How is accuracy of data assured? Publication of data regarding a specific provider

18. Davis Wright Tremaine LLP Questions Paul Smith San Francisco, CA (415) 276-6500 paulsmith@dwt.com Paul Smith San Francisco, CA (415) 276-6500 paulsmith@dwt.com Tom Jeffry Los Angeles, CA (213) 633-6800 tomjeffry@dwt.com