Agenda

1. One foot in two canoes:Preparing for Value-Based Care in a Fee-Sor-Service WorldStrategic Healthcare Partners, LLC www.shpllc.com

2. Agenda www.shpllc.com

3. First and Foremost www.shpllc.com 1 Health Affairs

4. Value Equation www.shpllc.com

5. VBC Defined Cleveland Clinic Value-based care is simply the idea of improving quality and outcomes for patients. Reaching this goal is based on a set of changes in the ways a patient receives care. We’re looking to make healthcare proactive instead of reactive, preventing problems before they start. Revenue Cycle Intelligence Value-based care is a form of reimbursement that ties payments for care delivery to the quality of care provided and rewards providers for both efficiency and effectiveness. CMS Value-based programs reward health care providers with incentive payments for the quality of care they give to people with Medicare. These programs are part of our larger quality strategy to reform how health care is delivered and paid for. Value-based programs also support our three-part aim: Better care for individuals, Better health for populations, Lower cost. UVA Sponsored – State Healthcare Cost Containment Committee Report (2014) The goal is straightforward but ambitious: Replace the nation’s reliance on fragmented, fee-for-service care with comprehensive, coordinated care using payment models that hold organizations accountable for cost control and quality gains. www.shpllc.com

6. Defining Value Based Care • Value Based Care has no single definition • At its most basic, VBC is ‘intended’ to be improved outcomes for less money. • Who’s Doing the Defining – Patients / PCP’s / Specialists / Payors / Health Systems ? • Variables: • Type of population: Medicare/Medicaid/Commercial • Type of Insurance: HMO, PPO, Narrow Network • Type of Provider: PCP, Specialist, Hospital • Market environment / pulse www.shpllc.com

7. VBC Defined By and For Who? • Patients • Ideally: Efficient patient-centered care with organized dedicated care team for chronic conditions. • Realistically: Increased consumerism, transparency, out-of-pocket burden, and network understanding. • Primary-Care Providers • Ideally: Reimbursement built upon effectiveness of care, open to nontraditional service offerings rather than reimbursement reliant on (burnout inducing) office-visit maximization. • Realistically: More coding expectations, complicated attribution models, ‘population health’ demands likely to occur ahead of resource capacity to handle shifting priorities. www.shpllc.com 1 Understanding Value-Based Healthcare

8. VBC Defined By and For Who? Cont’d • Specialists • Ideally: Payment bundles that enhance presurgical and post-acute care pathways, ultimately improving the patient experience and outcomes. • Realistically: Practice variation scrutiny including focus on financial outcomes outside of the specialists capacity to influence. • Payors • Ideally: Big data capabilities to pressure providers into reducing “low value” care that results in high utilization of unnecessary services through shared savings programs. • Realistically: More narrow networks, continued prior authorizations, and high likelihood of complicated quality program rollouts. www.shpllc.com 1 Understanding Value-Based Healthcare

9. So, Essentially… www.shpllc.com

10. However… • All roads lead in and out of the billing department… • All tenants of value-based care directly tie to medical coding • Quality Measures almost certainly rely on coding specifications • Population-based metrics such as diabetes “Hemoglobin A1c Poor Control” patient populations are defined by diagnostic coding • Compliance is almost entirely calculated by coding specifics • Hierarchical Condition Categories (HCC) tie payment rates directly to diagnostic coding • All forms of similar patient risk-stratification models depend on coding specificity • Chronic Care Management Services and all attribution-models rely heavily on certain coding patterns www.shpllc.com

11. Industry Trends • CMS Administrator slams non-risk bearing ACOs • MACRA rollout effectively hustles people from MIPS into Advanced APMs • Hierarchical Condition Categories (HCC) Risk-stratified payments solidify • Partnerships • Partnership to Empower Physician-Led Care (PEPC) • PEPC Objectives: • Development of physician-led APM’s • An equitable feasible policy and framework for independents • Opportunities in MA and other commercial markets • Assisted with the ‘consumerism’ of healthcare delivery • Payer Acquisition/IT Consolidation • Aetna/CVS Merger • IBM Watson Acquisition of Phytel, Truven Analytics, Merge Healthcare • Allscripts Acquisition of McKesson • Accreditations • NCQA Population Health Accreditation Theory: Taking on risk will incentivize change. www.shpllc.com

12. National Trends www.shpllc.com

13. National Trends www.shpllc.com

14. National TrendsDHS / CMS Response • To combat,CMS goals of having traditional FFS payments linked to VBC models by 2019. Some of the common models listed below: • Accountable Care Organizations (ACO’s) • MIPS • Alternative Payment Models (APM) • Comprehensive Primary Care Plus (CPC+) • Bundled Payments (i.e. Episode-based payment) • Bundled Payments for Care Improvement Advanced Program (Oct 1, 2018 launch date) • Pay For Performance (Hospital Value-Based Purchasing) www.shpllc.com

15. National Commercial Trends • United Healthcare CEO plans to move from 15m ‘value-based’ covered lives to 150m by 2025. UHC VBC contracts reduced hospitalizations by 17% and costs by 8%. • BCBS is scaling their VBC operations up into a network now covering 19 million beneficiaries. BCBS touts a 35% decrease in costs and improved provider performance above national standards of care. • National Business Group on Health Survey • 26% of large employers are considering offering ACOs by 2020 . • 40% of large employers have already incorporated value-based benefit designs. • Amazon, JPMorgan, and Berkshire Hathaway partner up to ‘address the health needs of their employees.’ www.shpllc.com

16. Marketplace Trends • “New Money” • Physician Scorecarding • GA Market Saturation: VBC saturation is low; especially south of Macon. • Emphasis on Primary Care Models: Payers do not understand / appreciate how specialists move the dial. • “We don’t know what we don’t know” - Plan infrastructure is lacking with the payers as much as providers; resulting in an issue with the “flow of dollars.” • Should your $1m incentive actually be $2m……? • Proper capturing and subsequent payment of codes submitted to payors. • Partnerships are key, whether it’s ACOs, software providers, other networks, etc. www.shpllc.com 1 Understanding Value-Based Healthcare

17. What’s Happening Now – The Providers Perspective • Black Book 2018 Study: • Study of 877 physician organizations / practices • 93% have no plan for population health or VBC and no in-house expertise to help with transformation • 95% do not believe they have the proper IT infrastructure, analytics, or staff to support VBC • 88% of the Practice Managers stated their practices are not prepared for the impact of VBC • Oliver Wyman Report: • 22 payer-provider partnerships in 1Q 2018 with a trend towards co-branded or JV. 44 such arrangements in 2017 total • 90% of payer-provider initiatives over the past two years have included value-based reimbursement as a component • National Business Group on Health: • 40% of employers surveyed have incorporated some type of value-based design in their benefit plans • Evidence displayed with IBM Watson and AHRQ data the impact admission rates and decline in hospital-acquired conditions www.shpllc.com

18. What’s Happening Now – What Payors are saying • Change Healthcare / ORC International (Survey released 6/18/2018): • Included 120 payers including Managed Medicare, Managed Medicaid, and commercial plans.  • Pure fee-for-service now accounts for 37% of reimbursement, a figure expected to go below 26% by 2021. • Almost 80% reported quality improvements. • Only 21% of payers claimed they were capable of rolling out a new episode of care program in three to six months. • Over 33% of payers claimed they need up to a year to launch a new program. • 13% said they need up to 24 months or more. • 43% to 58% reporting it is very or extremely difficult to generate interest among providers to participate, to agree on episode definitions and gain consensus on budgets, risk/gain sharing and performance metrics. • 66 % of payers plan to invest in administrative staff to support future growth of episode-of-care programs. • Over 50% of payers are not very satisfied with their current value-based analytics, automation, and reporting capabilities. www.shpllc.com

19. What’s Happening in the RHC world • National Advisory Committee on Rural Health and Human Services • Aimed to revise the 30 year old statutory authorization that is not in line with today’s market. • Policy Brief & Recommendations: Modernizing Rural Health Clinic Provisions. • 6 Key Recommendations - #2 Program Support: To provide grants to State Offices of Rural Health to support a state program that would provide technical assistance on quality reporting and other services to support the transition of RHC’s to value-based care. • FQHC’s and RHC’s not set up to participate effectively in the redesigned payment and delivery system focused on quality and value / cost as the determinant of payment. • Not prepared to take on risk and/or not seen as viable partners to larger organizations such as ACO’s or CIN’s. • RHC’s lack the administrative capacity to respond to such changes and culture shifts. www.shpllc.com

20. What’s Happening in the RHC world – NQF • The NQF's Measure Applications Partnership (MAP) Rural Health Workgroup • Identify over 59 million Americans, 19% of the population live in rural areas • These diverse, sparsely populated regions require customized measures, defined as “rural relevant • They recommend these quality measures should be: • Cross-cutting (not condition- or procedure- specific) • Resistant to low-case volume • Care transition focused • They’re May 2018 draft report, widely known, of course, as the “ MAP 2018: Recommendations for a Core Set of Rural-Relevant Measures for Hospitals and Selected Ambulatory Care Settings and Measuring and Improving Access to Care” • Redirected focus on the following issues pertinent to rural regions: • Mental Health • Substance Abuse • Medication Reconciliation • Diabetes, hypertension, and chronic obstructive pulmonary disease (COPD) • Hospital readmissions • Perinatal and pediatric conditions and services www.shpllc.com

21. How to prepare? www.shpllc.com

22. Rural RelevantSample Quality Performance Scorecarding www.shpllc.com

23. Sample Quality Reporting Cont’d www.shpllc.com

24. CMS' Desired Path to VBC

25. Quality Game plan • Identify your starting line • Which payors, if any, need quality data? • Which metrics overlap? Create yourself a simple matrix. • What quality metrics can your practice automate both technically and logistically? • Specify your internaltarget(s) • What are your performance goals? • 50% in year one, 80% in year two? • Ultimately – every patient, every time? • What are your related reimbursement/contracting goals? • Continuously re-define clinical workflow • Outreach? • Team-based care approach? Pre-visit prep? Time constraints? www.shpllc.com

26. Value-Based Playbook Long Term Stability Short Term Initiatives www.shpllc.com

27. Keys to VBC Success • Real end to end value based transformation requires: • Education – Key measures, your EMR capabilities, partnership opportunities, MIPS • Technology optimization & support - actionable data and analytics • Scorecard internal performance • Staff training • Provider engagement • Culture change • Patient engagement / communication / satisfaction • Community and clinical collaboration • Expect change to be slow. • VBC Readiness Tool - https://cph.uiowa.edu/ruralhealthvalue/TnR/vbc/vbctool.php www.shpllc.com

28. Thank You • Jason Crosby • jcrosby@shpllc.com • (912) 691-5711 www.shpllc.com