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Strategic positioning for community-based health care

“One of the best aspects of health care reform is it starts to emphasize prevention.”
Anne Wojcicki

Last month’s column described the monumental Medicaid Managed Care Reform Initiative 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 with the formation, implementation, and operation of 25 Performing Provider Systems throughout New York State.

The Finger Lakes Performing Provider System is the sole PPS for the 13 counties in the Greater Rochester/Finger Lakes Region. FLPPS health care providers accounted for $1.3 billion of Medicaid spending in 2013, which represents less than 5 percent of total New York annual Medicaid spending. As one might expect, the vast majority of state Medicaid spending occurs in the Greater New York Metro area, with 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 FLPPS region. Each of the 25 PPSs is led by hospital systems. In the case of FLPPS, sponsors include the Rochester Regional Health System (RRHS-Unity/Rochester General) and Strong/UR Hospital/Medicine.

The hospitals in the FLPPS region, 24 in total, are supported by more than 600 health care and community-based providers who have committed to be a part of the FLPPS Care Network that will provide cost-effective, coordinated managed care to Medicaid-eligible individuals in the region.

Each PPS is required to submit 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 FLPPS following a Comprehensive Needs Assessment (CNA). The FLPPS projects are extensive and impact virtually every one of the 600 Medicaid service providers in the region. The projects selected by FLPPS requiring an implementation plan are as follows:

1. Form an integrated delivery system for all providers. Easy to say, difficult to achieve.

2. Establish hospital emergency room, managed-care triage for at-risk populations.

3. Develop a managed care intervention model to reduce hospital readmissions for patients with chronic health issues who have been discharged from a hospital within the past 30 days.

4. Develop transitional supportive housing services for vulnerable populations.

5. Implement community outreach activities to engage, educate and integrate the uninsured and low/non-utilizing Medicaid populations in community-based care.

6. Implement delivery service models that achieve the integration of behavioral health and primary care services.

7. Develop and expand community-based crisis stabilization services for the mental health/substance abuse population.

8. Implement effective behavioral health interventions in long-term care facilities.

9. Implement increased supports for timely and effective maternal and child health services.

10. Strengthen mental health and substance abuse delivery system infrastructure throughout the FLPPS region.

11. Improve access to high-quality chronic disease preventive care and case management in both clinical and community service locations.

The current Medicaid Service Delivery System is fragmented, as evidenced by 600 providers in the 13-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 question is complex. This is particularly true since community-based service providers are purported to be integral 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. An IPA is 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 (P4P) (partial capitation), service care-outs, and/or targeted performance incentives.

There are three types of IPAs: independent; captive, which is typically owned or controlled by the MCO or a health system; and partnership between MCO and IPA entities. Depending upon 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 not.

Characteristics of the independent IPA model include:

  •  Formation is a grassroots effort of the providers who are also members of the IPA.
  •  Board representation consists only of representatives from participating provider members of the IPA.
  •  Decision-making authority rests with the IPA board that is initially ap-pointed by the IPA provider members.
  •  Can be formed as either taxable or tax-exempt, depending on membership, structure and objectives. 

Also, in the independent IPA model, contract negotiations with PPSs/MCOs are managed directly by the IPA Board, its independent legal counsel, and individuals designated with contract negotiation authority. The 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. Single signature contract authority by the IPA board is powerful from a negotiation and leverage perspective.

In order to pass legal requirements and anti-trust regulations, independent IPAs cannot be formed for the sole purpose of negotiating rates. 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.

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. Financial risk, coupled with clinical and financial integration, represents “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 in developing a strategic position that is responsive to integrated and regional reform initiatives. 

Gerald J. Archibald, a CPA, is a partner in charge of management advisory services at the Bonadio Group, and is known for his expertise in non-profit and tax-exempt accounting, management and governance issues. He can be reached at (585) 381-1000 or garchibald@bonadio.com. Download podcasts of his articles at http://viewpoints.bonadio.com.

3/13/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email rbj@rbj.net.

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