Paul H. Keckley, Ph.D., Executive Director Deloitte Center for Health Solutions Washington, DC

1. Executive Briefing Health Reform Implementation: What’s Ahead Scottsdale Institute Spring Conference April 27, 2011 Paul H. Keckley, Ph.D. Executive Director Deloitte Center for Health Solutions Washington DC Health Reform: Executive Briefing Guy Carpenter Client Summit Las Vegas, Nevada April 14, 2011 Paul H. Keckley, Ph.D., Executive Director Deloitte Center for Health Solutions Washington, DC

2. PPACA timeline Its implementation will span 5 election cycles and occur simultaneous with efforts to reduce the federal deficit, restore economic growth, and reduce unemployment Economic recovery, Clinical Innovation, Demand 2010 - 2013 2017 + 2014 - 2016 Rules, Regulations & New Funding Mandates, Pilots & Exchanges “New Normal” Insurance compliance: MLR, premiums, coverage Coordination: state-federal governments, agencies Rules, guidelines, task forces, agencies Excise taxes—insurance, medical devices, drug companies • Individual mandate • Health exchanges • Employer pay or play • Demonstration/pilot programs: • Accountable care organizations • Value-based purchasing: FY 2013 • Episode based payments: Jan. 2012 • Medical home: Jan. 2011 Physician-hospital alignment Industry convergence Convergence: Public health & delivery system Volume to value ICD-10, Electronic Medical Record, Comparative Effectiveness implementation

3. Structure: intended delivery, payment system changes • Delivery system changes • Increased linkage between performance (outcomes, costs) and payments/incentives • Increase integration of physicians, hospitals and long term care providers • Increased access to health services by under-served populations • Increased alignment of coverage with evidence • Insurance system changes • Elimination of pre-existing condition, lifetime and annual limits for insurance plans • Required coverage of preventive health services without co-payments • Creation of health insurance exchanges in each state to facilitate access to affordable insurance and manage subsidized purchases by individuals and employers • Federal-state regulation of insurance plan coverage, premiums, and medical expenditures Consumerism Preventive health, individual insurance, PHR Primary Care 2.0 Home monitoring, retail medicine, LTC, medical homes, scope of practice expansion, health coaching Comparative Effectiveness/EBM Personalized medicine, bundled payments, provider adherence/performance-based payments liability reforms Health Information Technology EHR (HiTech), health information exchanges, fraud detectionadministrative simplification, clinical data ware-housing, ICD-10, direct to consumer e-medicine

4. CMS Center for Medicare and Medicaid Payment Innovation Independent Payment Advisory Board (IPAB) Patient-Centered Outcomes Research Institute (PCORI) Implementation: three boards will play key role, lightning rods • Test innovative payment and service delivery models • Broad authority to determine what models will be tested, in what populations, and for how long, with a preference for models that address deficits in care leading to poor clinical outcomes or potentially avoidable expenditures • The purpose is to reduce the per capita rate of growth in Medicare spending • Operates independently of MedPAC • Recommendations take effect absent Congressional action • May recommend changes to Part D to generate required savings • Broad scope of research (drugs, devices, procedures, delivery system) with a focus on clinical effectiveness research • Findings are not coverage/ payment recommendations, but can be used by HHS to inform coverage Patient-Centered Outcomes Research Trust Fund Created CMS Payment Innovation Center Established IPAB Begins to Propose Changes to Limit Medicare Spending 2010 2012 2013 2014 2011

5. The "four big bets" in health reform • Individual mandate: Will the uninsured and newly eligible for Medicaid enroll? Will the insured increase by 32 million as targeted? Or will only sicker, costlier enroll? Or the mandate thrown out?? • Employer pay or play: Will employers drop health benefits after 2016 to facilitate direct consumer engagement and their reduce operating costs? Will their employees purchase through the exchanges, or go without? • State solvency: Will states be able to manage their expansion new responsibilities and obligations? • Delivery system consolidation: Will delivery system reforms-accountable care organizations, value-based purchasing, medical homes, bundled payments, comparative effectiveness-- reduce costs over time?

6. Important themes • Optics of error: transparency, valid and reliable metrics substantially accessible • Market structure:consolidation in provider, plan sectors driving • Margin pressures pervasive: quest for sustainability might drive bad behavior • Data granularity: clinical-administrative clinical data warehousing and applied analytics • Integrated connectivity:crosswalks to LTC, ambulatory add complexity • Climate of fairness:public disaffection for "excess profit" in health care

7. Contact information • For more information, please contact: • Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutionspkeckley@deloitte.com202-220-2150 • And visit our website to subscribe to our content:www.deloitte.com/CenterforHealthSolutions/subscribe