WHAT IS AN ORGANIZED DELIVERY SYSTEM IN NEW JERSEY? July 16 , 20 - PowerPoint PPT Presentation

WHAT IS AN ORGANIZED DELIVERY SYSTEM IN NEW JERSEY? July 16 , 20 14 Presented by: Carol Grelecki, Esq. Brach Eichler L.L.C. 1

Definition of an Organized Delivery System An organized delivery system (“ODS”) is a legal entity that contracts with a carrier for the purpose of providing or arranging for the provision of health care services to persons covered under a carrier’s health benefits plan, but which is not a licensed health care facility or other health care provider. 2

Types of Services Performed by ODS Entities • Performing/ Arranging for Health Care Services • Network Management • Credentialing and Recredentialing • Utilization Management • Utilization Management Appeals • Processing of Complaints • Continuous Quality Improvement 3

Example of Carriers • Health Insurers • Hospital Service Corporations • Medical Service Corporations • Health Service Corporations • Health Maintenance Organizations (“HMOs”) 4

Examples of ODS Entities • Preferred Provider Organizations (“PPOs”) • Physician Hospital Organizations (“PHOs”) • Independent Practice Associations (“IPAs”) 5

Types of ODS Entities • Certified ODS. An ODS in New Jersey that is compensated on a basis which does not entail the assumption of financial risk is required to become certified by the New Jersey Department of Banking and Insurance (“DOBI”). • Licensed ODS. An ODS in New Jersey that is compensated on a basis which entails the assumption of financial risk is required to become licensed by DOBI. 6

Financial Risk • Financial Risk means exposure to financial loss for the payment of claims or other losses arising from covered benefits for treatment or services, other than those performed directly by the person or ODS liable for payment, including a loss sharing arrangement. • The Commissioner may grant an exemption from the licensure requirement if the ODS’s exposure to financial loss is limited or de m inim is . 7

De Minim is Risk Financial risk may be deemed de m inim is if the ODS’s exposure to • financial loss is limited in amount or likelihood, to the degree that it reasonably will not prevent the ODS from satisfying the liabilities imposed under the terms of the ODS’s contracts. Factors considered: • – existence of stop loss – whether the carrier has taken a deduction or credit against the liability it is required to maintain for any risk transferred – the nature of the risk assumed and type of coverage related to the risk – any limit on the ODS’s liability Financial risk shall be deemed de m inim is if the total annual • compensation received by the ODS from any one carrier is less than $250,000. 8

Additional Requirements for Licensure • Minimum Net Worth • Segregated Accounts • Account with the Commissioner • Fidelity Bond • Ongoing Financial Reporting 9

Why an ODS? • Changing Nature of Reimbursement Arrangements • Shared Savings Models/ Performance Incentive Arrangements • Clinically Integrated Networks • Financial Risk-Sharing Arrangements 10

Certified ODSs • An ODS that is not required to be licensed must be certified in order to operate. • The ODS may operate for a period of up to 12 months during the pendency of the application process. • The certification is valid for three years. • A certified ODS may not directly issue health benefit plans. 11

Application for Certification • Applicant’s organizational documents • A list of the persons responsible for the conduct of the affairs of the applicant • Business plan • Specimen Copies of Agreement (provider agreements, agreements with sub-contractors, management agreements with carriers) • Required fee 12

Provider Agreement Requirements • Compliance with law • No financial incentives to withhold covered, medically necessary, services • Portions of compensation that are tied to occurrence or non-occurrence of a pre-determined event must be clearly specified • Must allow appeals of compensation determinations • Compensation must be determined prior to execution of the contract • Provision specifying the ODS’s right to monitor provider activities 13

Provider Agreement Requirements (cont’d) • Explanation of the Quality Assurance (“QA”) program and who is responsible for the QA program • Explanation of the Utilization Management (“UM”) program and who is responsible for the UM program • Explanation of the UM appeal process • Termination and renewal rights • Provision prohibiting providers from directly billing covered persons for covered services • Credentialing requirements • Malpractice insurance requirements 14

Provider Agreement Requirements (cont’d) • Description of provider services to be provided • Claims submission process • Complaint and grievance procedures • No denials for lack of pre-authorization (but reduction permissible) • No “most favored nation” clauses • Notice of termination requirements • Continuity of care • Carrier’s third party beneficiary rights 15

Application for Specific Services • Performing or arranging for the performance of health care services • Network management, including recruitment and retention • Credentialing and recredentialing • Utilization Management development • Utilization Management appeals • Member complaints • Provider complaints • Continuous quality improvement 16

Performing or Arranging Health Care Services • Types of health care services ODS has agreed to perform • A list of all providers under contract with the ODS • List of providers categorized by type such as hospital, health care professional, ancillary provider contracted by ODS or contracted through another entity • Whether any providers are affiliates of the ODS • Criteria ODS will use to ensure availability and accessibility of coverage, including emergency services • Tables indicating number of types of providers 17

Network Management • More detailed information regarding number of providers in relation to covered persons • Continuous quality improvement • ODS’s complaint and appeal system • Explanation of ODS’s provider participation panel • Explanation of ODS’s hearing panel for provider termination actions • Maintenance of, and access to, patient records • Credentialing and recredentialing standards 18

Credentialing and Recredentialing • Copies of policies and procedures of standards for credentialing • Medical Director’s name and other information • Description of how ODS’s functions are linked with each carrier’s quality improvement program and complaint system • Outline of organizational structure between ODS and carriers regarding communication process for credentialing issues 19

Utilization Management • Policies and procedures for development of protocols and guidelines • Medical Director’s name and information and involvement in protocol development • Copies of protocols, guidelines and UM criteria 20

Utilization Management Appeals • Policies and procedures for appeal process • Medical Director’s name and information • How the Medical Director will provide oversight of the appeal process • Explanation of utilization management criteria to be used • Specimen forms of letters regarding appeal rights and appeal decisions that will be used 21

Processing of Complaints • Policies and procedures for handling complaints from covered persons or providers, as applicable • How the process is linked to carriers’ quality improvement programs and complaint systems • How the ODS will segregate complaints among carriers • Specimens forms of letters regarding complaints and complaint resolution 22

Continuous Quality Improvement • Policies and procedures of the continuous quality improvement program • How the process is linked to complaint systems and carriers’ other quality improvement programs, if any • Medical Director name and information • Explanation of Medical Director’s involvement with continuous quality improvement program 23

Additional Items for Applications for Licensure A plan, in the event of the insolvency of the ODS, for the • continuation of the health care services to be provided under each agreement between the ODS and a health care provider A copy of the applicant’s most recent financial statements • audited by an independent certified public accountant A copy of the applicant’s financial plan, including a three year • projection of anticipated operating results, a statement of the sources of working capital and any other sources of funding and provisions for contingencies All other information as may be required by DOBI • 24

Net Worth of Licensed ODSs • Licensed ODSs must maintain a minimum net worth equal to the greater of – 2% of the annual compensation received by the ODS under all its contracts (but no less than $100,000); or – 8% of the annual health care expenditures (not including expenditures paid on a capitated basis or made on a managed hospital payment basis), plus 4% of the annual hospital expenditures paid on a managed hospital payment basis, each for the most recent four calendar quarters • Minimum net worth for new licensed ODSs phased in over 48 months 25