Integrating Data Analytics Technology and Services for Quality-Based Payments

1. Integrating Data Analytics Technology and Services to Maximize Quality-Based Payments for Hospitals October 2015

2. 3% + 1% + 1.5% = up to 5.5% in Penalties for 2015 Readmissions, HAC and VBP Penalties • 2016: Only 799 of 3,400+ hospitals avoided a penalty. Hospitals lost a combined $420 million • New Jersey was the most penalized state with 97% of eligible hospitals receiving a penalty Hospitals at risk of losing <3% of Medicare Payments Readmissions Reduction Program Hospital Acquired Condition (HAC) Reduction Program Hospitals penalized 1% of Medicare Payments if HAC Score in lowest 25% • 2015: 700+ hospitals had payments docked - CMS estimates payments lost is ~$330 million Value-based Purchasing (VBP) Program Cuts or bonuses of <1.5% Medicare payments • 2015: 1,714 hospitals will get bonuses, 1,375 hospitals reductions • Total VBP payment shifts for FY15 will reach $1.4 billion

3. Financial Impact of Readmissions, HAC and VBP Penalties Average 2016 Penalty: -0.61% Average 2015 Penalty: -0.30% HAC Penalty: -1.00%

4. Capabilities Needed to Reduce Preventable Readmissions 98% NJ hospitals penalized by Medicare • Predicting risk of readmission for Ambulatory Sensitive Conditions to target resources • Model incorporates LACE, BOOST and proprietary elements to identify High Risk Patients upon admission • Facilitatingcare coordination and discharge planning to reduce readmissions • Analytics leverage BOOST and Project RED to significantly impact “Transitions in Care” • Alertingthe Emergency Department of recent discharges to prevent readmission .03%-2.65% Range of hospital penalty #1 N.J. leads nation for number of hospitals penalized for high readmissions

5. Capabilities Needed to Reduce Hospital Acquired Conditions • Collecting and preparing data for infectious disease measures and hospital penalty calculations • Predicting HACs with variables that are important predictors for hospital acquired conditions such as pressure ulcers • Calculating potential HAC/HAI penalties

6. Capabilities Needed to Improve Value-based Purchasing Scores • Predicting patients that qualify for VBP measures in real-time so interventions can be made to improve care and scores • Providing alerts on gaps in documentation and care to enable targeted interventions • Forecasting reimbursements with a VBP calculator so strategies can be implemented in advance to improve scores • Providing scorecards to track VBP measures against CMS targets and benchmarks

7. Overall Quality/Performance Improvement Challenges IT Challenges • Multiple IT application systems • Multiple, disparate data sources, feeds, code sets • Migrating to HIS vendor's data warehouse • Working around unstructured (text) data • Lack of data governance • Process and Change Management Challenges • Lack of industry best practices • Limited care coordination personnel • Poor patient engagement • Lack of commitment from care partners – community and providers • Inadequate discharge processes • Slow adoption of QI technology

8. Overall Keys to Success in Readmissions, HAC ands VBP Programs Operational Strategy

9. IT Should be Integrated with Expert Managed Services A successful strategy includes better care continuum integration across three key areas • ACCESS TO CARE • Transfer process • Referral sources • Direct admission access (ED) • PATIENT CARE DELIVERY • Quality clinical outcomes • Intensive care unit utilization • Physician involvement • Low cost alternatives to admission (CDU or telehealth) • POST DISCHARGE MGMT • Discharge follow up process • Managed care program appropriateness • Sub-acute follow up process • Identify patients for high risk of return

10. Analytics and Reporting Measures Calculation/Reporting Measures Framework Predictive Analytics • Hospital Measure Programs • Custom Measures Predictive Engine • Readmissions • HAC/HAI Surveillance • Risk Stratification and Population Health • Operational impact • LOS • ED Throughput • Utilization and Cost Analytics Analytics & Visualization EDW Real-time Analytics • Inpatient Analytics • Population Health Analytics Data collection from all available sources Electronic Interface HIE Ambulatory EMR Claims Labs ADT Custom Meds HCAHPS

11. Thank You • Presenter Contact Information Raj Lakhanpal, MD CEO, SpectraMedix 609.336.7733 Ext 301 (Office) 609.865.3244 (Cell) Raj.Lakhanpal@SpectraMedix.com Ivan Cheng Senior Manager, North Highland 215.207.0772 (Office) 404.889.0347 (Cell) Ivan.Cheng@northhighland.com