Mass. Requires Risk-Bearing Provider Organizations to Register

State Update

Providers Must Determine if Waiver for 2014 Needed

One of the contentious elements of Massachusetts’s payment reform law, Chapter 224 of 2012, was the creation of risk-bearing provider organization, or RBPO, registration requirements. The law requires RBPOs to register with the Division of Insurance, with the Center for Health Information and Analysis, and with the Health Policy Council.

The rationale was that provider organizations, which take on significant risk, must fall under the DOI oversight before such RBPOs may take on alternative payment or risk-based contracts with insurers regulated by the division.

In the case of the HPC, the oversight authority is based on the council’s desire for detailed information from providers on services provided and costs. The MMS was active in the legislative arena to try to create exemptions for small groups which would allow them to compete for risk-based contracts. The statutory exemption is for those who do not take significant risk contracts and do not have a patient panel greater than 15,000 or represent providers who collectively receive $25 million or more in annual net patient service revenue from carriers or third-party administrators.

These provisions apply to any provider organization that enters into contracts in which the payment methodology creates a downside risk. The DOI does not consider “service-based payments, including but not limited to, diagnostic-related group payments, ‘per diems’ or bundled payments, to constitute downside risk.”

Under the initial exemption process, 79 organizations obtained transitional waivers from DOI certification in March 2013 while regulations were pending. These waivers allowed them to take on risk-based contracts with insurers. Initial rules required this only from parent organizations, which take on risk to register, and not from subcontractors within bargaining units.

This year, organizations will have to certify to the DOI that their contracts do not place their solvency at risk. Waivers may be obtained by organizations with no significant downside risk. Fee-for-service providers would not be affected. Providers will have to work with insurers for contracts renewing in 2014 to determine whether they need registration or waivers from the DOI.

The law allows the DOI to prohibit carriers from entering into or continuing an alternate payment contract with downside risk with a RBPO, unless the organization has obtained either a risk certificate or a risk certificate waiver. The initial onus is on carriers to comply with the law.

The law allows the HPC to require a fee from provider organizations upon registration, but this provision is waived for the first year. We anticipate further regulatory discussions in the spring of 2014.

Any questions regarding registration or waivers from DOI should be directed to Kevin P. Beagan, Deputy Commissioner of the Health Care Access Bureau, at (617) 521-7323 or kevin.beagan@state.ma.us.

—William Ryder, ESQ.
MMS Legislative Counsel

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