Managing Costly Chronic Conditions

1. Steven K. Schelhammer Founder and President Managing Costly Chronic Conditions Through Integrated Disease Management

2. Managing Costly Chronic ConditionsAgenda • Costly chronic conditions • Specialized disease management • Predictive modeling • Integrated care • Care coordination • Interventions • Results

3. SpecialtyDrugCostsPer Patient Per Year Costly Chronic Conditions Examples of Their Direct Impact on Spend Multiple Sclerosis $15,000 Rheumatoid Arthritis $15,000 + Hepatitis C $24,000 Oncology, BMT HIV/AIDS $5,000-10,000 Gaucher Disease $250,000 Pulmonary Hypertension $30,000 -100,000 Hemophilia $200,000 + Infertility $18,000-20,000 Growth Hormone Deficiency $18,000

4. Costly Chronic ConditionsAre Complex, Unique and Progressive • Require: • Specialized expertise • Patient self-management • Dynamic interventions to meet varying complications • Support to prevent crises • Result in: • High costs for inpatient hospitalization • Expensive specialty drugs utilization • Patient identification difficulty, due to many false positives • Progression of expense over time

5. Costly Chronic ConditionsSignificant Total Cost Trend For Conditions Medical cost increases for unmanaged chronic diseases average 15.6 percent, surpassing the rate of inflation 20% $1,500 $1,200 15% $900 Avg. PMPM Chronic Diseases 9.6% 10% 6.9% $600 5.7% CMS- Reported Inflation 5% $300 $0 0% 1999 2000 2001 Source: Accordant Health Services, Inc.

6. Specialized DM: Solution • Improves health and lower costs, through: • Predictive modeling • Supports patient identification • Case management • Nurses provide patient education and compliance monitoring • Disease management expertise • Serving patients with chronic, complex, progressive diseases • Specialty pharmacy services • Integrated workflow, reporting and intervention

7. Specialized DM: Predictive ModelingLeads a Targeted Approach • Why predictive modeling? • Use when the correlation between near-term costs and disease diagnosis is weak, like COPD, diabetes or asthma But, predictive modeling is not enough … • Standard predictive models can’t identify complex, chronic patients • For example, one client’s former predictive modeling vendor was only able to identify 161 of over 1,900 high-cost patients • For co-hort of Accordant diseases, the diagnosis IS the prediction of high-cost patients

8. Specialized DM: Predictive Modeling Population Management 70% of today’s high-cost patients were not high-cost 2 years ago Note: Population migration analysis, AHS vs. MCO. Figure shows percent of population at or above the “top” cost threshold.

9. Unmanaged: 95% of Patients Exceed the 90th Cost Percentile Specialized DM: Predictive Modeling A 24-month Cost Threshold • For Accordant diseases, diagnosis is the best predictor of future near-term costs • Patients exceed 90th cost percentile • 8 months, on average • Based on 24-month continuous enrollment Source: AHS-MCO-011113

10. Specialized DM: Integrated Care • Address entire condition and its typical course with population-based approach to: • Minimize the magnitude of acute events and high cost cases • Reduce the frequency of predictable events and high-cost cases Population DM opportunity PMPM PMPM Least Costly Most Costly Every patient with the condition is eligible

11. Opportunity for Specialty Pharmacy Integration Benefits Information flow from typical Specialty Rx vendors Accordant Health Services DM Coordination Specialty Pharmacy Info Provider Info Physician Info Homecare Info MCO Info Patient Info Nonexistent or One-Way Information Flow Solid Bidirectional Information Flow As-Needed Information Flow • Incompatible Systems • Mis-Aligned Incentives • Operational Priorities • Competitive Concerns

12. Accordant DM with AdvancePCS Specialty RXBetter Communication and Service DM Coordination Specialty Pharmacy Info Provider Info Physician Info Homecare Info MCO Info Patient Info Solid Bi-directional Information Flow Solid Bidirectional Information Flow As-Needed Information Flow • Compatible Systems • Aligned Incentives • Consistent Operational Priorities • No Competitive Concerns

13. Specialized DM: Integrated Carewith Specialty Pharmacy • Increases program savings by an additional 20% and ROI by 40% • Greater control over specialty drug spend with patient steerage and standard therapy guidelines • Enhanced patient services with single point of contact • More effective real-time interventions • Example • A large health plan client • Implemented integrated specialty pharmacy service • Realized $600K in savings to date • On track for an additional 20% savings

14. Specialized DM: Care Coordination • Benefits review • Facilitation between patient, physician, health plan and vendors • Coordination includes home infusion and therapies, DME, PT, OT • Same benefits review, coordination, facilitation with comorbid conditions, as with the DM program they are enrolled in

15. Offers physician support in caring for patients Highly trained and experienced patient support partner Helps promote treatment compliance Coordinates an array of complex care and services that ordinarily bewilder patients Improves health outcomes by providing additional service and support to the physician Specialized DM: Care CoordinationwithPhysicians

16. Specialized DM: InterventionsResearch & Development • Research natural history of the disease and develop construct • Identify and rank significant complications and their associated costs • Baseline cost analysis • Assess significant risks and match proven strategies to prevent problems and complications Medical guideline: Strategy-intervention grid

17. Specialized DM: InterventionsPreventing Complications • Risk stratification, each with their own interventions • Multiple sclerosis: • Exacerbations • UTI • Falls with fractures • Skin breakdown • Rheumatoid arthritis: • Flares • Infections • Falls with fractures • GI bleeding • Assess and monitor closely

18. Specialized DM: InterventionsPromotingPatient Self-Management • Access to general information and assessments • Education about disease, medications and therapies • Better communication with the health care team • Compliance with the treatment plan • Skills development assistance including coping, lifestyle and service coordination

19. Specialized DM: InterventionsData Analysis • Analysis of integrated claims and patient-reported data on MS flares • Findings: • Antidepressant users were 3 times more likely to have a flare • Patients with a concurrent infection are 1.5 times more likely to have a flare • Incidence and frequency of flares are related to disease progression • Results: • Investigating the link between these associations and flares

20. Specialized DM: Intervention ExamplePromoting Better Self-Management Skills for MS Goal: Decrease admissions to hospital for urinary tract infection and Pyelonephritis -- Ranked # 2 for hospital admissions • Assess patient’s knowledge of: • UTI and its major symptoms • Symptoms of spastic “neurogenic” bladder • What to do if they develop acute Sx’s • Intervene with: • Education • Assessment of clinical status • Facilitate appointments with physician, • Alert the physician of acute symptoms and untreated spastic neurogenic bladder Guidelines: American Academy of Neurology and NMSS

21. Specialized DM: Intervention ExampleFalls with Fractures are Common for RA Patients Goal: Decrease falls and fractures that lead to hospitalization • Assess: • Risk of falls with mobility scales such as HAQ for rheumatology conditions. • Individual risks (lives alone, frequent trips to bathroom, etc) • Risk of osteoporosis (steroids, cytotoxic drugs) • Intervene with: • Education to prevent falls • Arrange home safety evaluation • Education about use of Calcium and Vitamin D • Alert physician for preventive medications for osteoporosis • Monitor for compliance with medications   Guidelines: American Academy of Rheumatology, Osteoporosis Foundation

22. Specialized DM: Intervention ExampleOverutilization Among Hemophilia Patients Goal: Reduction of product overutilization • Manage by: • Preventing bleeding episodes • Minimizing the number of treatments needed to stop a bleed • Monitoring inventory/deliveries compared to prescription • Providing competitively priced products with aligned incentives • Intervene with: • Patient education • Behavior modification • Competitively-priced fulfillment of factor concentrates Guidelines: Hemophilia Treatment Center/National Hemophilia Foundation

23. Specialized DM: InterventionPromoting Drug Safety • Proactive interventions (education) • Patient pharmacy communications • Safe medicine practice at home • Safe medicine practice at hospital • Reactive intervention (monitoring) • Drug interactions • Contraindicated drugs • Medication duplications

24. Percent Carrying AHS Medication List MG-3 Source: Assessment Data through 6/30/2002 (95% CI Shown) 100% 90% 80% 70% 60% Percent 50% 40% 30% 20% 10% 0% 1 2 3 4 5 6 7 8 Length of Time in Program (LOTIP) by Qtr Results: ValueEnsuring That Myasthenia Gravis Patients Carry a List of Contraindicated Drugs

25. Results: ValueComparing Pre and Post Cost Trends PMPM PMPM Based on a specific client experience. Claims incurred through May 31 2002 Preprogram PMPM cost Post program PMPM cost Length of Time in Program (LOTIP) Monthly Eligible members - Excluding members that have died, members for whom coverage is secondary, and members covered by another disease management organization. All Diseases

26. Results: ValueComparing Preprogram Hospital Admit Costs Utilization Based on a specific client experience. Claims incurred through May 31 2002 LOTIP: Length Of Time In Program Preprogram hospital admits / 100 Post program cost / 100 Length of Time in Program (LOTIP) monthly Eligible members - Excluding members that have died, members for whom coverage is secondary, and members covered by another disease management organization. All Diseases