Presenting a live 90-minute webinar with interactive Q&A Structuring Physician-Pharmacy Ventures: Minimizing Regulatory Risks, Ensuring Reimbursement Navigating Corporate Practice of Medicine/Pharmacy, Anti-Kickback and Stark Laws, and State Regulation THURSDAY, NOVEMBER 19, 2015 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Reesa N. Handelsman, Wachler & Associates , Royal Oak, Mich. Rick L. Hindmand, McDonald Hopkins , Chicago Todd A. Nova, Hall Render Killian Heath & Lyman , Milwaukee The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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STRUCTURING PHYSICIAN-PHARMACY VENTURES: MINIMIZING REGULATORY RISKS, ENSURING REIMBURSEMENT Reesa Handelsman Rick Hindmand Todd Nova Wachler & Associates, P.C. McDonald Hopkins LLC Hall Render rhandelsman@wachler.com rhindmand@mcdonaldhopkins.com tnova@hallrender.com 248.544.0888 312.642.2203 414.721.0464
Agenda Overview - Drivers of Increased Pharmacy Integration Chatter • State Law, AMA • • Stark & Anti-Kickback Risk Profile • • Institutional Considerations • Pharmacy Management Agreements 6
Integration Drivers – Payment Systems Current: PPS Model • • Effective October 1983. • Today includes - Acute Care I/P (DRG); Outpatient (APC); FQHC (Visit PPS) Some limited exceptions - RHC; Hospice; CAH; etc. • Future: Value-Based Purchasing (VBP) • • Per CMS, current payment systems reward quantity, rather than quality What is VBP? • • Reward quality of care through incentives and transparency • Link payment more directly to the quality of care provided May 6, 2011 VBP Regulation: • • “The overarching goal of these initiatives is to transform Medicare from a passive payer of claims to an active purchaser of quality health care for its beneficiaries. ” 7
Integration Drivers –VBP… And Beyond CMS: Better Care. Smarter Spending. Healthier People: Paying Providers for Value, Not Volume (January 26, 2015) Consider – Role of pharmacy and other vertically integrated providers Source: Centers for Medicare and Medicaid Services – January 26, 2015. 8
Integration Drivers –VBP… And Beyond But when will real impact be seen? • • CMS January 26, 2015 announcement - significant push away from FFS Medicare payments to “alternative” payment models Today – approximately 20% of payments tied to VBP • Tomorrow (in addition to a focus on working with State • Agencies including Medicaid) … 9
Integration Drivers – Beyond VBP Source: Centers for Medicare and Medicaid Services – January 26, 2015. 10
Integration Drivers – Beyond VBP • CMS Bundled Payments for Care Improvement (BPCI) Initiative 1/1/2013: CMS announces the organizations selected to participate • Organizations to enter into payment arrangements that include financial and • performance accountability for episodes of care • 4 Models: • Model 1: Episode of care focused on the acute care inpatient hospitalization. Awardees provide a standard discount to Medicare from the usual Part A hospital inpatient payments • Separate TC and PC, but gainsharing permitted • Model 2: Starting at inpatient admission, episodic care payments for a 30-, 60- or 90-day period • Model 3: Starting at post-acute admission, episodic care payments for a 30-, 60-or 90- day period • Model 4: Prospective bundled payment arrangement Lump sum payment made to a provider for the entire episode of care includes PC • and TC Can still be in ACO • 11
Integration Drivers – Beyond VBP CMS BPCI Initiative Models 2-4: Year 1 Annual Report to CMS (February 2015) • “…BPCI appears to have affected provider performance.” “We observed statistically significant declines in SNF use and increases in HHA • use…” “Readmissions dropped more for BPCI Model 2 participants, although ED visits • without a hospitalization increased…” Late March 2015 - H.R. 2: “The Medicare Access and CHIP Reauthorization Act of • 2015” (SGR fix) • Reiterates a commitment to APMs Indicates APMs viewed as pay-for mechanisms • 12
Integration Drivers – Beyond VBP CMS CCJR Proposed Rule (July 14, 2015) • Certain Hospitals in 75 MSAs nationally must participate • Includes: • Drugs and biologicals • • Physician services DME • • Therapy services SNF services • • LTCH services Hospice • • Reconciliation payments may be shared with collaborators 13
Integration Drivers – Reimbursement General payment (Drugs): • Office-Based • PFS RVU (non-facility) administration • • E&M • Drug cost • Part B: ASP + 6% (was percentage of AWP) • Hospital-Based APC • • PFS RVU (facility – where available) • Drug cost (Part A, Part B bundled or pass-through) Part B: ASP + 6 % (bundled if drug cost <$95 for 2015 ) • Pharmacy • • Part D ingredient cost plus dispensing fee • Part B reimbursement not available for any drug usually self-administered • Ingredient cost: • 340B pricing 14
Integration Drivers – Others Proposed hospital discharge planning rule (November 3, 2015) • • Codification of multi-disciplinary discharge planning approach (including pharmacy) – attending physician must be involved Requires medication reconciliation • Discharge prescriptions likely enhanced focus • CMS considering mandatory PDMP checks • • Acute care payment reductions: DSH • CAH • Utilization shifts: • • Decreased acute inpatient care • Decreased infusion • Increased oral drugs (more limited provider involvement) • Many of which are specialty 15
Integration Drivers - Impact With shift to population health and cost reduction incentives, what are we to do? • Focus first on the clear quality and cost drivers through coordination (including • pharmacy/specialty) • Highest cost patients are demonstrably concentrated 16
Integration Drivers - Impact Healthcare moving away from acute care toward: • Integrated post-acute, home health, primary/preventive and specialty • pharmacy networks BUT , vertically integrated networks are complex • Without an integrated network: i) control over population health • components of care (including pharmacy) is reduced; and ii) cost to subcontract for services included in the bundle are higher • Past focus: horizontal integration Future focus: vertical integration • 17
Integration Drivers – Pharmacy-Specific • Risk Evaluation & Mitigation Strategies (REMS)/Limited Distribution • Competing interests for REMS manufacturers: • Difficult for small (physician) pharmacies to gain access to certain drugs • Technology and full-spectrum data access • Integrated EMRs E-Prescribing • • PDMP reporting Shortages • • Narrow payor networks Disconnect between specialty pharmacy locations and regional payor networks • • Less of an issue as more payors require national delivery scope As clinically integrated networks (CINs) more frequently include payors, complexity • increases. What if a specialty pharmacy with access to a limited distribution drug refuses to participate in a provider-sponsored plan? State pharmacy society concerns regarding specialty consolidation • 18
Integration Headwinds Recent Bipartisan Budget Act of 2015 – elimination of off- • campus provider-based payment benefit Physician desire for independence • • Physician practice inertia 19
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