Bundled Payment: 1 Year Later 2014 AAPM&R Annual Assembly

1. Bundled Payment: 1 Year Later2014 AAPM&R Annual Assembly

2. Brooks Rehabilitation: System of Care • Inpatient Rehabilitation • 157 freestanding IRF beds • 3,100+ admissions annually • Skilled Nursing • A new 100-bed SNF that opened July 2013 • Management of 35-bed SNU focused on joint replacements • Home Health Care • Covers 6 counties • 70,000+ skilled visits annually • Neuro Day Treatment • Day program for patients recovering from brain injury & other neurological disorders • Outpatient Therapy • 28 locations • 225,000 patient visits to over 23,000 patients • Physician Services • 11 employed PM&R physicians • Provide both IP and OP care • Community Programs • Adaptive Sports • Brain Injury Club House • Stroke Wellness • Rehabilitation Research • In partnership with the University of Florida • 14 active clinical trials

3. Brooks Rehabilitation: Where we are Brooks Rehabilitation Brooks Rehabilitation Hospital Brooks Outpatient Locations Brooks Bartram Crossing (Skilled Nursing) Brooks Brain Injury Clubhouse Total Joint Replacement Skilled Nursing Unit Brooks Contract Services Brooks Home Care Advantage Service Area

4. Participation in Model 3(Includes Post-Acute Only) • Bundled payment program is referred to as CompleteCare internally & externally with its own branding: • Brooks is an “awardee convener” for a Model 3 program covering the following MS-DRG’s: • As an awardee convener, Brooks is financially liable for excess spending owed to CMS based on episodes that initiate in Brooks owned locations for a episode length of 60 days. Conversely, we have a financial opportunity if the total spend is less than the target • Initial target price based on Brooks 3 year historical data (2009-2012) • Price adjusted regularly throughout demonstration to account for National trends • Target price is net of a 3% discount guaranteed to Medicare • Risk phase began October 1, 2013 As compared to MS-DRGs covering Stroke, CHF, COPD, etc.

5. Rationale for Participation in BPCI • Be on the forefront of possible payment reform and healthcare policy changes that might effect post-acute providers • Serve as a catalyst for our businesses to begin working together as a system • Experiment with clinical redesign • Have a stronger “voice” regarding future policy and payment reform changes • Prove that post-acute care providers have the sophistication to take “risk” and play a primary role in the continuum of care

6. Original Expectations • Bundled Payment would be an experiment, a form of “research” • Breakeven financial performance • Would require diversion of patients traditionally seen in Brooks Rehabilitation Hospital thereby challenging belief systems • We would be able to back-fill loss of patients from Brooks Rehabilitation Hospital • Development of the care navigator, we were not sure what it would mean • The need for tools that would facilitate communication between settings – we never envisioned CareCompass • Would we have the ability to self-manage Medicare claims data and Brooks clinical data?

7. What has Brooks changed internally as a result of Bundled Payment?

8. Care Compass - Assists clinical team in prioritizing patients, predicting future needs, and alerts of declining status - Updates every 2-4 hours with key metrics

9. General BPCI Volume Statistics • Cases triggering a Brooks Model 3 bundle since going live October 1, 2o13 through August 31, 2014 • Joint replacement cases = 665 • Hip fracture cases = 182 • Total cases = 847

10. First Site of Care is Shifting SNF SNF SNF Historical Source: Jan 2009 – June 2012; CMMI Claims Data File Actual Source: Oct 1 2013 – Aug 16 2014

11. 60 Day Readmission Rates Period: Oct 1 2013 – August 31, 2014; cases completed

12. Patient Specific Functional Scale Results • The Patient Specific Functional Scale (PSFS) is a self-reported, patient specific measure, designed to assess to functional change over an episode of care • Patients asked to identify important activities they were unable to perform or having difficulty performing • Rating on an 11-point scale: • Score of “0” reflecting no ability to perform activity • Score of “10” reflects full ability to perform activity Results: Time Period: 10/1/2013 – 5/31/2014

13. Financial Results *Episodes beginning between Oct 1, 2013 - August 31, 2014 *Before Administrative costs of $644 per episode *Before shared savings payout to two acute care hospitals *Savings estimated with a blend of actual Medicare reconciliation for 2 quarters and conservative projections based on actual 1st site of care and historical costs. Cost savings focused on diverting** certain IRF patients to SNF & reducing acute readmissions **Diversion focused on patients who meet a specific profile and where a SNF placement is highly predictable

14. Overall Performance • Financial performance has far exceeded expectations • It is extremely difficult to make large meaningful improvements in hospital readmissions rates – we have barely scratched the surface of the work we need to do • Patient self reporting of their functional improvements is extremely strong • Patient experience matches our overall high performance of our individual businesses • We have gained tremendous experience managing Medicare claims data and internal clinical data • Savings is very asymmetrical across our different referral partners

15. Lessons Learned

16. Next Steps for Brooks Rehabilitation • Evaluate BPCI expansion to other diagnoses • Possibilities include CHF, Stroke, and Spinal Fusions • Would go at risk for the new episodes on April 1, 2015 • Use CompleteCareTo Serve as the Brooks “System of Care Roadmap (regardless of BPCI participation) • Use learnings with other patient populations as best practice model • Begin adoption of the Complete Care Clinical Model With Other Inpatient Populations • New thinking and training for clinicians • Standardization in clinical programming • Competencies in care planning and coordination • Longitudinal care planning - Thinking beyond own setting

17. Observations and Possible Future Implications for Post-Acute Providers and Physicians • Post Acute represents a large portion of the cost of an episode of care and the increased scrutiny of PAC utilization will continue • Will lead to a decline in utilization of high cost settings • Less IRF admissions • Will require IRFs to develop new programs to offset loss of volume • Increased attention on physician driven metrics which drive costs • LOS, Discharge settings, Readmission rates • Physician gain sharing opportunities • Dramatic shifts in physician referral patterns • Physician differentiation based on being a high quality low cost provider • Close coordination and buy in from surgeons and PM&R physicians is a key success factor