1. State Actions to Promote the Responsible Development of Commercial ACOs Ann Hollingshead Graduate Student Researcher, Petris Center on Health Care Markets Co-Authors: Dr. Richard Scheffler and Dr. Brent Fulton Accountable Care Organization Workshop May 8, 2015

2.  Tools that promote the responsible development of commercial ACOs.  How to balance the potential benefits against their potential risks? Policy Motivation

3. Study Overview  Four case study states:  New York  Massachusetts  Rhode Island  Texas  Interviews with key regulators  Six key policy goals  Regulatory tools that achieve these policy goals

4. Support and Encourage Integrated Care States may want to remove barriers to integration. Support Alternative Payment Methodologies States may want to remove barriers to alternative payment methodologies. Support Alternative Payment Methodologies Support Strong Networks of Primary Care States may want to promote primary care. Support Strong Networks of Primary Care Protect the Public from Anticompetitive Behavior AGs cannot use litigation as a full substitute for regulation. States may want to preemptively protect the public. AGs cannot use litigation as a full substitute for regulation. States may want to preemptively protect the public. Protect the Public from Anticompetitive Behavior Ensure Providers to Responsibly Assume Risk States may want to regulate solvency. Ensure Providers to Responsibly Assume Risk Develop and Support Comprehensive Databases States may want to fund IT services like EMRs and claims- based data. Develop and Support Comprehensive Databases State Actions to Realize Varying Policy Goals

5. Risk Certificates Certificates of Authority Legal Exemptions Support and Funding Various State Targets Cost Caps and Benchmarks Support and Encourage Integrated Care Support Alternative Payment Methodologies Support Strong Networks of Primary Care Protect the Public from Anticompetitive Behavior Encourage Providers to Responsibly Assume Risk Develop and Support Comprehensive Databases Tools that Support and Regulate Providers Tools that Support and Regulate Payers Risk Certificates Certificates of Authority Legal Exemptions Regulatory Tools Support and Funding Cost Caps and Benchmarks Various State Targets Population-Based Contracting Targets Primary Care Targets Targets for Alternative Payments Population-Based Contracting Targets Primary Care Targets Targets for Alternative Payments Antitrust safe harbors Exemptions from: ban on corporate practice of medicine ban on fee-splitting anti-kickback laws Antitrust safe harbors Exemptions from: ban on corporate practice of medicine ban on fee-splitting anti-kickback laws Hospital price increase limitations ACO budget increase limitations Hospital price increase limitations ACO budget increase limitations

6. NY RI NY (RI)RI TX MATX (MA) Support and Encourage Integrated Care Support Alternative Payment Methodologies Support Strong Networks of Primary Care Protect the Public from Anticompetitive Behavior Encourage Providers to Responsibly Assume Risk Develop and Support Comprehensive Databases Tools that Support and Regulate Providers Tools that Support and Regulate Payers Risk Certificates Certificates of Authority Legal Exemptions Support and Funding Cost Caps and Benchmarks Regulating and Promoting ACOs Various State Targets

7. Certificates of Authority MassachusettsTexasNew York ACO Certification Risk Certificates 1 HCC Certification 2 ACO Certification 3 Voluntary/MandatoryVoluntaryMandatory Voluntary May Create a Safe Harbor or Safety Zone NoN/AYes Provides Exemptions to Other Laws or Requirements NoN/ANoYes 4 Includes a Solvency ReviewNoYes No Requires Quality ReportingTBDN/ANoYes Includes a Re-Certification Requirement Yes Source: Authors’ Analysis Notes 1 Applies to Risk Bearing Provider Organizations 2 Applies to Health Care Collaboratives that assume downside risk 3 Applies to Accountable Care Organizations that do not assume downside risk 4 Other exemptions include: ban on corporate practice of medicine, fee splitting, and self-referral laws

8.  California has a long history of managed care.  The number of commercial ACOs in California is growing rapidly.  California’s ACOs face many of the same opportunities and barriers to growth.  Stay tuned for forthcoming Petris Center report! Next Step: Lessons for California

9. Thank you! Contact Information For information about State Regulation and Promotion of Commercial Accountable Care Organizations, contact: katiphillipsucb@berkeley.edu katiphillipsucb@berkeley.edu For further discussion, contact Ann Hollingshead: ahollingshead@berkley.edu ahollingshead@berkley.edu

10. PART I: California Context

11. The Number of ACOs in California is Growing

12. California Has a Long History of Managed Care  Kaiser Permanente  Medi-Cal and Managed Care

13. California’s Regulatory Framework  Knox-Keene Act  Entities that assume global financial risk must get a license from DMHC – health plans but not RBOs  If plan operated by an insurer, must also get a license from CDI  Will only apply to risk-bearing ACOs  Cartwright Act  Like many other states, anti-kickback laws, ban on corporate practice of medicine, and self- referral laws.

14. Main Takeaways  States must balance competing policy goals around ACOs  States have a variety of policy tools at their disposal (perhaps more than you’d think)  The diverse certification processes allow for effective balancing of various state goals