APOLLO MEDICAL HOLDINGS, INC. (OTCMKTS:AMEH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01
| Entry into a Material Definitive Agreement. |
In connection with the approval by the Centers for Medicare and
Medicaid Services (CMS) for APA ACO, Inc. (APAACO), which is
owned 50% by Apollo Medical Holdings, Inc. (the Company), to
participate in the Next Generation ACO Model (the NGACO Model),
CMS and APAACO have entered into a Next Generation ACO Model
Participation Agreement (the Participation Agreement). For more
information concerning the CMS announcement, accountable care
organizations (ACOs) generally and the NGACO Model, see Item
8.01, Other Events below.
Apollo Medical Management, Inc., a wholly-owned subsidiary of the
Company, has a long-term management services agreement with
APAACO. APAACO is a variable interest entity of the Company and,
as such, its results of operations will be consolidated with
those of the Company.
The term of the Participation Agreement is two performance years,
through December 31, 2018. CMS may offer to renew the
Participation Agreement for an additional two performance years.
Additionally, the Participation Agreement may be terminated
sooner by CMS as specified therein.
As required by the Participation Agreement, APAACO shall maintain
an aligned population of at least 10,000 beneficiaries during
each performance year. APAACO and its participants may not
participate in any other Medicare shared savings initiatives.
APAACO shall require its participants and preferred providers to
make medically necessary covered services available to
beneficiaries in accordance with applicable laws, regulations and
guidance.
APAACO shall implement processes and protocols that relate to
specified objectives for patient-centered care consistent with
the NGACO model. In connection therewith, APAACO shall require
its participants to comply with and implement these designated
processes and protocols, and shall institute remedial processes
and penalties, as appropriate, for participants that fail to
comply with or implement a required process or protocol.
CMS shall use the APAACOs quality scores calculated under the
relevant provisions of the Participation Agreement to determine,
in part, its Performance Year Benchmark. CMS shall assess APACOs
quality performance using the quality measures set forth in the
Participation Agreement and the quality measure data required to
be reported by APAACO as set forth in the Participation
Agreement. CMS shall use APAACOs performance on each of the
quality measures to calculate its total quality score according
to a methodology to be determined by CMS prior to the start of
each performance year.
For each performance year, CMS shall determine APAACOs
Performance Year Benchmark. No later than 15 days before the
beginning of each performance year, CMS shall provide the ACO
with a Performance Year Benchmark Report consisting of APAACOs
Performance Year Benchmark. On a quarterly basis during each
performance year, CMS shall provide APAACO with a Quarterly
Financial Report. The Quarterly Financial Report may comprise
adjustments to the Performance Year Benchmark resulting from
updated information regarding any factors that affect the
Performance Year Benchmark calculation.
For each performance year, APAACO shall submit to CMS its
selections for risk arrangement; the amount of a savings/loss
cap; alternative payment mechanism; benefits enhancements, if
any; and its decision regarding voluntary alignment under the
NGACO model. APAACO must obtain CMS consent before voluntarily
discontinuing any benefit enhancement during a performance year.
For each performance year, CMS shall pay APAACO in accordance
with the alternative payment mechanism, if any, for which CMS has
approved APAACO; the risk arrangement for which APAACO has been
approved by CMS; and as otherwise provided in the Participation
Agreement. Following the end of each performance year, and at
such other times as may be required under the Participation
Agreement, CMS will issue a settlement report to APAACO setting
forth the amount of any shared savings or shared losses and the
amount of other monies owed. If CMS owes APAACO shared savings or
other monies owed, CMS shall pay the ACO in full within 30 days
after the date on which the relevant settlement report is deemed
final, except as provided in the Participation Agreement. If
APAACO owes CMS shared losses or other monies owed as a result of
a final settlement, APAACO shall pay CMS in full within 30 days
after the relevant settlement report is deemed final. If APAACO
fails to pay the amounts due to CMS in full within 30 days after
the date of a demand letter or settlement report, CMS shall
assess simple interest on the unpaid balance at the rate
applicable to other Medicare debts under current provisions of
law and applicable regulations. In addition, CMS and the U.S.
Department of the Treasury may use any applicable debt collection
tools available to collect any amounts owed by APAACO.
Unless specifically permitted under the Participation Agreement,
APAACO participants, preferred providers and other individuals or
entities performing functions and services related to ACO
activities are prohibited from providing gifts or other
remuneration to beneficiaries to induce them to receive items or
services from APAACO, its participants or preferred providers, or
to induce them to continue to receive items or services from
APAACO, its participants or preferred providers.
APAACO shall maintain the privacy and security of all
NGACO-related information that identifies individual
beneficiaries in accordance with the Health Insurance Portability
and Accountability (HIPAA) Privacy and Security Rules and all
relevant HIPAA guidance applicable to the use and disclosure of
protected health information by covered entities, as well as
applicable state laws and regulations.
The Participation Agreement requires APAACO to report specified
information on a publicly accessible website maintained by it,
which information includes organizational information, shared
savings and shares losses information, and performance on quality
measures.
APAACO is required to maintain a compliance plan that includes at
least certain specified elements. CMS shall maintain monitoring
and oversight responsibility over APACO, its participants and
preferred providers. At the end of each performance year, an
individual with the legal authority to bind APAACO must certify
(i) that it, its participants, preferred providers and other
individuals or entities performing functions or services related
to ACO activities are in compliance with program requirements;
and (ii) the accuracy, completeness and truthfulness of all data
and information that are generated or submitted by APAACO, its
participants, preferred providers or other individuals or
entities performing functions or services related to ACO
activities.
The Participation Agreement contains additional provisions,
including those concerning governance requirements, financial
arrangements with participants and preferred providers,
maintenance and updating procedures of a list of APACOs
participants and preferred providers, the requirement to
participate in independent evaluations and site visits,
protection of APAACOs intellectual property, the requirement for
APACO to comply with all applicable Federal laws and state
licensure requirements, record retention requirements, the
Federal Governments audit rights of APAACO, provisions for
remedial action that CMS may take against APAACO, financial
settlement upon termination of the Participation Agreement,
acknowledgment of limited administrative or judicial review for
certain ACO activities, dispute resolution, prohibition of
assignment of the Participation Agreement and change of control
provisions.
| Item 8.01 | Other Events. |
On January 18, 2017, CMS announced that APAACO, which is owned
50% by the Company, has been approved to participate in the NGACO
Model. Through this new model, CMS will partner with APAACO and
other ACOs experienced in coordinating care for populations of
patients and whose provider groups are willing to assume higher
levels of financial risk and reward under the NGACO Model. The
NGACO program began on January 1, 2017.
Previously, APAACO was approved by CMS to operate a Medicare
accountable care organization (Medicare ACO). A Medicare ACO is
an entity formed by certain health care providers that accepts
financial accountability for the overall quality and cost of
medical care furnished to Medicare fee-for-service beneficiaries
assigned to the entity. Typically, the health care providers
participating in a Medicare ACO continue to bill Medicare under
the traditional fee-for-service system for services rendered to
beneficiaries. However, a Medicare ACO may share in any Medicare
savings achieved with respect to the aligned beneficiary
population if the Medicare ACO satisfies minimum quality
performance standards. A Medicare ACO may also share in any
Medicare losses recognized with respect to the aligned
beneficiary population. Medicare ACOs participating in a
two-sided risk model are liable to CMS for a portion of the
Medicare expenditures that exceed a benchmark.
CMS is implementing the NGACO Model under section 1115A of the
Social Security Act, which authorizes CMS, through its Center for
Medicare and Medicaid Innovation, to test innovative payment and
service delivery models that have the potential to reduce
Medicare, Medicaid or Childrens Health Insurance Program
expenditures while maintaining or improving the quality of
beneficiaries care. The purpose of the NGACO Model is to test an
alternative Medicare ACO payment model. Specifically, this model
will test whether health outcomes improve and Medicare Parts A
and B expenditures for Medicare fee-for-service beneficiaries
decrease if Medicare ACOs (1) accept a higher level of financial
risk compared to existing Medicare ACO payment models, and (2)
are permitted to select certain innovative Medicare payment
arrangements and to offer certain additional benefit enhancements
to their assigned Medicare fee-for-service beneficiaries.
APAACO previously submitted an application to participate in the
NGACO Model. In connection with the approval by CMS for APACO to
participate in the NGACO Model, CMS and APAACO entered into the
Participation Agreement, the principal terms and conditions of
which are summarized above under Item 1.01, Entry into a Material
Definitive Agreement.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit No. | Description |
| 10.1 | Next Generation ACO Model Participation Agreement |
| 99.1 |
Apollo Medical Holdings, Inc. Press Release dated January 19, 2017. |
| 99.2 |
Apollo Medical Holdings, Inc. Press Release dated January 20, 2017. |
About APOLLO MEDICAL HOLDINGS, INC. (OTCMKTS:AMEH)
Apollo Medical Holdings, Inc. is a patient-centered, physician-centric integrated population health management company working to provide coordinated, outcomes-based medical care. The Company operates in healthcare delivery segment. Its operations include Hospitalists, which include its contracted physicians focusing on the delivery of medical care to hospitalized patients; an accountable care organization (ACO), which focuses on providing care to Medicare fee-for-service patients; an independent practice association (IPA), which contracts with physicians and provides care to Medicare, Medicaid, commercial and dual-eligible patients on a risk- and value-based fee basis; approximately three clinics, which it owns or operates, and which provide specialty care in the greater Los Angeles area, and Palliative care, home health and hospice services, which include its at-home and end-of-life services. APOLLO MEDICAL HOLDINGS, INC. (OTCMKTS:AMEH) Recent Trading Information
APOLLO MEDICAL HOLDINGS, INC. (OTCMKTS:AMEH) closed its last trading session 00.00 at 10.24 with 1,000 shares trading hands.