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Encouraging and Regulating Accountable Care: The New York Experience James R. Knickman May 8, 2015 Berkeley ACO Workshop
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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
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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
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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
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Current Status of Value-Based Payments
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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
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ACOs Across New York State 10
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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)
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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)
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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
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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
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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
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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.
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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
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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
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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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James R. Knickman President and CEO New York State Health Foundation knickman@nyshealth.org www.nyshealth.org
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