Population Health Management and Clinical Integration – The Center of the Reformed Health Care System

Population health management is bigger than ever now that health reform has become ingrained in our health care system.  The concept of population health management is not necessarily new.  Related concepts emerged in the 1990s when capitated reimbursement gained some converts.  It was known then that in order to succeed under fixed levels of total compensation required systems to be developed to make people healthier while at the same time managing cost and resource utilization.  When a network took on capitation, it knew that it had to look at its patients as a population.  This was a change from the fee-for- service mindset that was previously and subsequently predominant in the health care system.  I think it is fair to say that there were very few organizations that successfully applied population management standards under alternative payment systems in the 1990s.  We very quickly saw capitation fall into the background because, with a few exceptions, the system just did not have it figured out yet how to view and manage population health.

Population health management has come a long way since those early efforts in the 1990s.  The concept is again front stage, but this time organizations have a head start building on what was learned in the past.  Technology and data analysis has become much more sophisticated and commonplace.  Technology is a necessary component of managing a population health and quality.  Evidence based medicine supports population management by collecting and applying baseline data, comparing data to other baselines, helping to structure evidence based care protocols based on current medical outcomes studies, and the ability to measure the success of an applied process or protocol.  This move toward technological support of population management was behind the move to virtually mandate electronic health records through legislation and regulations.  This technological infrastructure now serves as the backbone to permit data to be extracted in support of evidence-based population health management.

Population management is being embraced by forward looking organizations that have a vision of the future.  It can be quite an adjustment to make the changes that are necessary to indicate success under a population management system.  The old system rewarded providing more services that were reimbursed on a fee for service basis.  The old fee-for-service model is changing rapidly.  Overall population quality, outcomes and cost efficiency are now taking front seat.  Some providers who did very well under the old system can have difficulty adjusting their practice patterns to adjust to the new regimen.  More service led to more revenues under the old system.  Under population management, more is not always better.  Concepts of “more” are being replaced by concepts of “appropriate.”  Appropriate levels of service performed in appropriate service locations, by appropriate providers.

Hospitals, health care system, physician groups and others are finding it necessary to adapt to a new world in which providers are rewarded for meeting quality objectives for their entire patient population.   Where volume used to be king, efficiency and quality have now taken over the health care kingdom.

Our health care practice is normally a great indicator of trends in the industry.  In the 90’s we did a lot of provider integration work.  This work has now come full circle and is again a major part of our health care practice.  Our health law practice is involved creating clinically integrated organizations that are equipped to manage population health on several fronts.  This is an exciting process for our health law team as we are on the cutting edge of the hottest issues in health care.  We are creating new health care systems that include new collaborative relationships between providers.  We are applying these concepts in unique and creative ways.  This creative process results in a very exciting legal practice.

We will be posting a series on clinical integration in which we share some f our experience applying population management and evidence-based evidence standards to a number of specific types of organizations.  We will touch on some of the legal, business and operational challenges that we have encountered.

Grab our rss feed and come along for the journey as we cover “clinical integration in the new millennium.”

About the Author

 Are You Ready for Clinical Integration?

When we take on a new clinical integration project, one of the first activities we advise is the performance of a snapshot clinical integration readiness analysis.  The theory is that a future CIN needs to know where it is in the clinical integration process before it can plan where it needs to go and the steps that it needs to take.  The initial assessment gives indications of the existing lay of the land and helps the organization shape an integration business model with a more accurate context.

Through this initial assessment process, we can identify structural or governance issues that may hamper further integration.  The readiness assessment is only the beginning of a long road toward clinical integration.  However, time spent on this initial stage can save significant time and effort in the long term.

During early assessment and design stages, we attempt to encourage broad participation by providers.  We will normally recommend the creation of a governance and committee structure that is as inclusive as possible.  Clinical integration is primarily a process that physicians perform.  Mechanisms are created through which physicians collaborate across specialty, in an interdependent way toward the end goals of increasing quality and efficiencies.  Ideally, the process should be collaborative between physicians and institutional providers.  However, the dynamics between hospitals and physicians can sometimes adversely impact the working relationship.

Hospitals have been the center of the health care system through recent history.  Changes in the health care system are beginning to change that paradigm.  Health systems that recognize the realities of this shift will be at a competitive advantage in the future.  In order to meet the challenges of the changing health care system, physicians and facilities need to collaborate.  True change and collaboration cannot be forced on physicians.  Failure to recognize this will put some institutions behind in the creation of the collaborative organizations that are required to compete in the future.

This factor will often manifest itself in the form of governance and control issues.  A health care system may be reluctant to share governance and control with independent physicians.  Failing to create shared governance models will predictably make physicians reluctant to become adequately engaged in the creation or operation of the system.  Many projects shall cover governance and control issues and loose important momentum.

The degree of receptivity to joint governance and control is a significant indicator of potential success.  This is an important issue that must be considered early in the assessment process.  It is often difficult to “undo” the damage that can be inflicted over these issues early in the process.

John H. Fisher, CHC, CCEP is a health care attorney at the Ruder Ware law firm.  He has been involved in the creation and representation of provider networks since the early 1990s. John has followed legal issues impacting provider groups for over 25 years.  As such, he is knowledgeable on the current legal standards as well as the historic perspective that is often relevant to an appropriate analysis.  He is currently involved advising providers and their counsel on the development of clinically integrated provider groups in various locations around the country.

Health Care Quality Improvement Act and Clinically Integrated Provider Networks 

Clinically integrated networks present unique credentialing issues that are normally not present in hospital or facility credentialing.  These unique issues stem from the very nature of integrated networks which require providers to comply with evidence-based protocols, individualized care plans, quality metrics, efficiency standards, and other system standards.

In order to assure compliance with these standards, integrated networks need to assert much more control over the clinical practices of its provider members than has historically been exercised in the hospital setting.  Credentialing and recredentialing processes need to be put in place to assure that providers practice in conformance with evidence-based practice protocols, coordinate care with other network providers, and otherwise work well within the system.

Integrated networks face a number of choices when determining how to structure their credentialing and recredentialing processes.  A threshold decision is whether the credentialing process should be structured to take advantage of the immunities that are available under the Health Care Quality Improvement Act (“HCQIA”).

Qualifying under the HCQIA has some benefits but also carries some burdens.  In order to qualify for HCQIA immunities, the organization must implement a formal credentialing, hearing, and appeal process in order to qualify for immunities.

A CIN must also register with the HRSA and is required to make reports to the Practitioner Databank if adverse peer review determinations are made.  The CIN receives a Data Bank Identification Number and can be penalized for not reporting adverse determinations.  The reporting requirement is an issue that provider networks may wish to avoid.  The obligation to report has the practical effect of making peer review actions much more controversial and prone to litigation because a database report is a serious negative mark on a physician’s record.

On the other hand, the immunities offered by the HCQIA can be extremely valuable to a clinically integrated network.  One of the immunities that is available under the HCQIA is from the treble damage provisions under federal antitrust laws.  This immunity cannot be discounted; particularly with provider networks that make more aggressive credentialing decisions based on achievement of quality and cost issues and infirmity with system protocols.

If a choice is made to secure the HCQIA immunities, a comprehensive credentialing, peer review and fair hearing process is required as is use of the Practitioner Databank.  Furthermore, in order to qualify, adverse actions only be taken in furtherance of quality healthcare, after a reasonable effort to develop the facts, with adequate notice and hearing to the affected practitioner.  The Act and interpreting case law have created rather detailed requirements for notice and hearing.  The end result is that extensive procedural processes must be in place and consistently followed by the organization.  This of course adds another layer of complexity and cost to the organization.  At the same time, it greatly decreases the organization’s potential liability exposure which under certain circumstances could greatly exceed the cost of complying with HCQIA requirements.

Jointly Providing Health Care Fee Information to Payers 

As health care provider networks move down the path toward clinical integration, we are often asked to provide guidance on how information can be jointly provided to payors.  The antitrust laws recognize that collective sharing of some pricing information, even by otherwise competing providers, can be beneficial and does not necessarily violate antitrust laws.  However, there are significant limitations on what can be jointly provided and how the information can be shared.

At the outset, it should be clarified that collective negotiations by competing providers who are not financially or clinically integrated should never take place and constitutes a per se violation of federal antitrust laws.  Prohibited activities include any action in contemplation of or in furtherance of an agreement on fees or other aspects of reimbursement.  It is unlawful for a non-integrated group of competing providers to agree on or suggest a central fee schedule.  Any activity relating to prospective fees should be avoided.

Competing providers can jointly provide information on fees currently being charged or that have been charged in the past as long as certain safeguards are implemented and strictly followed.  The FTC and DOJ have stated that the joint provision of historic fee information to payors raise little anticompetitive concerns as long as the following conditions are met:

1.         Collection of fee information is managed by a third part;

2.         Any information that is made available to competing providers must be at least three (3) months old;

3.         Data provided to participating providers must meet further requirements, including:

a.         It must be aggregated so recipients cannot identify the prices charged by individual providers;

b.         There must be at least five (5) providers reporting data that goes into an integrated statistic; and

c.         No provider can represent more than twenty-five percent (25%) on a weighted basis for any statistical item.

I normally recommend that provider groups create antitrust policies that address the provision of fee information to payors and other sensitive antitrust issues.  Even an organization that is significantly clinically integrated should be concerned with the method used to convey fee information to payers.

Adopting and applying specific antitrust policies is a step toward assuring antitrust compliance.  Antitrust policies should include detailed processes for conveying fee information that incorporate the parameters applicable to the organization.

Antitrust “Spillover” In Integrated Networks

Even clinically or financially integrated networks need to take affirmative steps to limit what has been labeled by enforcement agencies as “antitrust spillover.”  This term generally refers to the affect that an agreement on price within a network might have on pricing that occurs outside of the network.  It is not wise for an organization to openly debate fees among competing provider members, even if the organization is clinically integrated.  Affirmative steps should still be taken to limit distribution of sensitive fee information.

Clinically integrated networks should implement detailed antitrust policies that reduce any adverse effects on an agreement on pricing.  Ideally, specific pricing terms should be lock boxed.  Perhaps most importantly, the clinically integrated network should assure that all providers receive training on the content of the antitrust policies and general antitrust law considerations.  Training should be verified and documented in the same manner as other compliance training.

I am often asked to provide my opinion on the standards that must be met in order to be considered to have achieved clinical integration.  Clinical integration provides some significant benefits under the antitrust laws.  Failure to meet clinical integration standards can have some significant downsides for providers who are attempting to adapt to health care reform by establishing new organizational models to manage care.

There is no single test to determine whether an organization is clinically integrated for antitrust purposes.  The DOJ/FTC Joint Statement on Antitrust Enforcement Policy in Health Care provides some very general guidance on factors that are indicative of clinical integration.  More detailed analysis of clinical integration requirements can be found in several advisory opinions that have been issued by the FTC.  Analysis of all available resources makes it clear that there is no single formula for achieving clinical integration and each organization will be unique in the mechanisms and processes that are used to achieve required levels of collaboration and interdependence between providers.  I can sense a degree of frustration when I am unable to provide a certain answer of the precise conditions that must be in existence to meet clinical integration tests.  I believe some of the uncertainty is due to the fact that clinical integration is a system and a process rather than a static model of operation.

We are certainly able to flush out the primary elements of a clinically integrated network.  An organization that wishes to create a CIN should clearly set its objectives, define the mechanisms that it intends to create, and should develop a plan to move toward achievement of defined goals and operation of the CIN mechanisms.  Too much focus on precisely when clinical integration is achieved tends to place the emphasis on the wrong factors and assumes that clinical integration is an end in and of itself rather than a system and a process that much be created and continuously operated.  Clinical integration changes the very fabric of how health care is delivered.  It does this by reshaping the culture in which health care providers operate.  It is not something that can be achieved overnight.  Rather, it is a continual process of growth and development.

If the focus is on creation of the system and processes, the antitrust benefits will naturally flow.  Therefore, we should be cognizant of the way that clinical integration is defined under the antitrust laws as we structure clinically integrated organizations.  But we should avoid getting bogged down in questions about how much integration is enough.

Key Clinical Integration Factors

Here are just a few of the key factors that are indicative of clinical integration.

• Collaboration and Coordinated Care
• Care Protocols
• Provider Selection Criteria
• Enforcement of Standards
• Use of Shared Data
• Robust Quality and Efficiency Standards
• Provider Training
• Continual Process

I am releasing a series of articles on various legal aspects of clinically integrated networks.  Sign up for our Newsletter or grab the RSS feed to receive notification when I publish articles in the series.

Antitrust Law is a “Big City” Legal Issue, Right?  Wrong.

One might tend to believe that the rather obscure area of antitrust law would have little application in small town America.  After all, most of the legal expertise on the antitrust is located in big cities (Ruder Ware being a major exception).

When you really examine the cases that are being brought by the Federal Trade Commission, you will begin to see that it is the market where there are few competitors that tend to be on the receiving end of antitrust enforcement activities.  Market areas where there are only three or four hospitals are much more likely to see antitrust enforcement activity than are markets with more competing hospitals.

The same concepts hold true with physician affiliation and mergers.  For example, the merger of two urology groups in a big city market would quite possibly not involve a sufficient number of providers to adversely impact competition in the market.  In a smaller market, those same two urology groups could involve all of the urologists in town.  A merger in that situation could create a monopoly.

Similar issues arise in the development of clinically integrated provider networks.  Even if independent physicians achieve clinical integration control of too much of the market could adversely impact competition and could raise antitrust concerns.  These risks are often much greater in small town markets.  This “big city” legal issue cannot be overlooked when putting together “small town” business deals.

Elements of Clinical Integration

Identified in FTC Reviews; No Action Letters

With the release by the FTC of the Norman PHO letter, I thought it would be appropriate to summarize some of the key factors relevant to clinical integration decisions.  This list is not necessarily exhaustive.  Additionally, it is worth pointing out that clinical integration factors are slightly different as applied to Accountable Care Organizations.  The Norman PHO letter was released about 9 months ago.  It involved a physician-hospital organization that had historically operated as a messenger model contracting mechanism for its providers.  The PHO wanted to implement higher levels of clinical integration and sought an opinion from the FTC as to whether its structure raised risk under the antitrust laws.  The resulting opinion from the FTC is perhaps the most complete iteration to date of the various factors that the FTC considers when examining levels of clinical integration.

 Clinical Integration factors include:

1.         The organization is accountable for the quality and cost of services.

2.         Accountability for overall care of patients.

3.         Strong primary care component (sufficient to support specialty network).

4.         Central governance, leadership and management of system.

5.         Central clinical and administrative systems.

6.         Ability to report on outcomes, quality, utilization, and clinical process.

7.         Actively promotes evidence-based medicine through continual process.

8.         Coordinates care across system.

9.         Information technology and central data analysis.

10.       Financial investment or financial risk by members.

11.       Degree of exclusivity.  Exclusivity begins to indicate clinical integration.

12.       Joint contracting is required to meet system goals and create efficiencies.

13.       Systems are in place to enforce member obligations to comply.

Factors taken from Norman PHO, Tri-State, GRIPA, MedSouth and treatises on clinical integration.  Also uses factors required of ACOs as guidance although ACO requirements differ.

 Initial Antitrust Market Analysis In Provider Affiliations

Antitrust analysis of potential integrated provider groups necessarily requires identification of the applicable market.  Market share issues cannot be addressed without first knowing the market parameters.  Market analysis has both a geographic and a product component.  In the health care area, the product component involves the specialty area of the physician or other provider involved.  The market may include a specific specialty or may be subject to expansion when there is a degree of functional overlap between specialties.

The geographic nature of the market can involve an extremely complex analysis.  From a planning perspective, it is generally most prudent to begin with the most restrictive definition of the geographic model.  If the network meets market standards based on a conservative market definition, further analysis is not required.  Geographic market definition can be expanded from the most conservative parameters as an exercise in risk assessment.  Based on the degree of market expansion, determinations can be made regarding elements of risk which will in turn help assess whether more complete market definition and analysis is required as a risk assessment tool.  The more conservative market definition is generally where regulators will begin their analysis and is a useful starting point for initial antitrust risk assessment.

Once the market is defined, there needs to be some analysis of the market share that will be represented by the combined group.  The number of physicians in the applicable market can be examined but does not necessarily lead to an accurate indication of market share in any given specialty.  The reality is that not all providers in a given specialty market are “equal” from an antitrust market share perspective.  The degree of market share between similarly qualified providers can be extensive.

Parties who are in the planning stages need to gather enough information to get some feel for market share without spending the money to engage an economist to do a full analysis.  Some cases will be clear on one side or the other.  If the initial conservative analysis does not indicate significant market share problems, the planning can move forward knowing that antitrust exposure is extremely low.  If the conservative market analysis indicates that the merger would result in significant market share, further analysis is required in order to identify and mitigate antitrust risk.