• Massachusetts Finalizes Risk-Bearing Provider Organization Regulations
  • August 25, 2014 | Authors: Leslie J. Levinson; Michaela ("Kayla") Tabela
  • Law Firms: Edwards Wildman Palmer LLP - New York Office ; Edwards Wildman Palmer LLP - Boston Office
  • On August 15, 2014, the Massachusetts Division of Insurance (the “Division”) released the final regulations implementing Chapter 176T of the Massachusetts General Laws (“Chapter 176T”).

    Chapter 176T was created by the Massachusetts health care payment reform law, Chapter 224 of the Acts of 2012, and requires any provider organization that both manages the treatment of patients and bears downside risk for those patients (i.e., a “risk-bearing provider organization” or “RBPO”) to obtain a “Risk Certificate” from the Division of Insurance. “Downside risk” is defined as the “risk taken on by a Provider Organization as part of an Alternate Payment Contract with a Health Care Payer, Employer or Individual in which the provider organization is responsible for either the full or partial costs of treating a group or patients that may exceed the contracted budgeted payment arrangements.” The Division does not consider service-based payments, including but not limited to, diagnostic-related group payments, or “per diems” to constitute Downside Risk under Chapter 176T.

    The Division also issued Bulletin 2014-05. The Bulletin provides guidelines for submitting the required materials to the Division and, more importantly, extends the Transition Period first established in 2012, to March 1, 2015. Provider organizations that have a Transition Period Waiver and do not have significant downside risk must apply for an initial Risk Certificate no later than September 30, 2014. The Division also notes that, during the Transition Period, any RBPO that previously received a Transition Period Waiver from the Division, as well as any RBPO that has entered into Alternative Payment Contracts with Downside Risk but did not apply for and receive a Transition Period Waiver, may continue to participate in Alternative Payment Contracts with Downside Risk in 2014 if the RBPO now applies for a Risk Certificate or Risk Certificate Waiver. Such applications must be submitted by December 15, 2014.

    Going forward, the term for all Risk Certificates and Risk Certificate Waivers will be from March 1 through March of the following year.

    Massachusetts joins other states, including California, New York, and Colorado (proposed regulations), in expanding oversight of RBPOs.