A better state of health care- Our Enhanced Personal Health Care payment innovation model

1. A better state of health care- Our Enhanced Personal Health Care payment innovation model August 20, 2014

2. Welcome Today’s presentation will begin shortly. • In order to hear the audio for this presentation, please turn up your speakers. • If you would rather use a toll free dial in number and access code, click on the “Info” tab above this presentation in the upper-left hand corner of your screen. • All lines have been placed on mute. If you’d like to ask a question, please use the Q&A window on the right • A copy of this presentation is available on Time Well Spent. Access the URL for your state: • CA: http://timewellspent-ca.anthem.com • NY: http://timewellspent.empireblue.com • GA: http://timewellspent.bcbsga.com/ • All other states: http://timewellspent.anthem.com/

3. We are Leading the Charge toTransform the System Introduction ofValue-Based Payment Fee-for-Service Without value-based payment Drivers of Cost Fragmentation With value-based payment Healthcare Costs Lack of accountability & coordination Bending the Cost Curve Narrower focus of providers • Aligned reimbursement • Empower with data • Invest in practice transformation Waste; repetitive units 1960 Today 40 years of FFS 2

4. National Blue FootprintBlue Distinction Total Care PCMHs in 48 States ACOs in 41 States $65 billion 12 million 130,000 in Blue claims spend is tied to ALL value-based payment programs members participating in PCMH/ACO care delivery models Patient-Centered Medical Home programs in 48 states, including D.C. and Puerto Rico Accountable Care Organizations in 41 states Participating ACO/PCMH providers • Beginning in 2015all Blue Plans will use a common data exchange platform (Blue Distinction Total Care) to recognize resident BlueCard members in the host plan payment innovation programs. 3

5. Common building blocks to drive transformation Driving change by rewarding and empowering PCPs POPULATION HEALTH promoting accountability and care coordination across the healthcare continuum to improve the overall health of the population. PERSONALIZED CARE PLANS we are providing the tools and strategies to help strengthen the doctor-patient relationship, even outside of office visits. data and Insights we empower providers by providing information, tools, practice support and resources to thrive under an outcome-based compensation model. PAYMENT INNOVATION moving from volume to value-based payment models.

6. Information • Standard reports and advanced analytics • Risk stratification • Identifying gaps in care • Avoidable ER use • Brand vs. prescription drugs • Interpretive guidance • Tools • Information Sharing • Toolkits for Enhanced Care Management • Practice Advisor tool by the American College of Physicians for PCMH evaluation • MMH+ • Advanced Longitudinal Patient Record • Resources • Dedicated local Anthem resources with hands-on assistance for practices. • Help with use of the new data, reports, and tools and support practice transformation • Guidance on appropriate toolkits and Anthem Care Management resources • We will meet providers where they are and help them move forward Empowering Providers 5

7. Foundation: Defining the Population • Attribution is the method we use to identify the provider’s patient population • It is the foundation for clinical coordination payments as well as shared savings calculations and payments.

8. Clinical Coordination Payments • Clinical coordination payments compensate primary care providers for work such as preparing care plans for patients with multiple and complex chronic conditions, maintaining health registries, and following up with patients to ensure they understand and are following their treatment plan • These activities improve health and reduce costs • Upfront PMPM payments enable PCPs to invest in supporting infrastructure (outreach staff, IT) and transform their practices to manage the health of their patients • While a new form of payment for the physicians receiving them, these payments are included in our unit cost forecasts and are managed just like we manage fee schedule adjustments today

9. Provider Performance Payments (shared savings) Shared savings applies in all of our Enhanced Personal Health Care arrangements. These payments reward PCPs when they successfully manage the quality and overall health care costs for their patient population Provider group qualifies for shared savings payment Quality metrics met Savings achieved • Amount of shared savings payment based on: • Scores on quality of care and either utilization and/or patient engagement metrics – both designed to measure the impact of PCP activity. • Total amount of savings calculated during the measurement period

10. How will ASO Customers Fund Provider Performance Payments? • We will charge ASO customers a uniform, per-attributed member per-month (PaMPM) amount that we actuarially determine will cover shared savings payments. • Because the cost of care varies by market and each program rolls out at a different time within each market the PaMPM will vary by program and by market to align with their unique expectations for that year. The PaMPM will be updated from year to year based on our experience and projections. • The shared savings payment will appear on invoices alongside clinical coordination payments, listed under “other provider payments”. • All funds collected will be used to pay shared savings payments to providers. • Customers do not need to accrue anything.

11. What kind of savings might customers experience? • We estimate that in their first year of participation, providers will generate savings that produce 1%-2% lower than projected medical spend, increasing to a cumulative 8% by their third year of participation. • The evidence tells us that patient-centered care saves money in several ways: • Better management of chronic conditions like diabetes and asthma and better access to care resulting in reduced admissions and ER visits • Care based on the best available clinical evidence – reducing waste in the system. • Value-based decisions by physicians, such as higher rates of generic drug substitutions, lowering the overall cost of prescription drugs. • Many factors, including the number of patients attributed to participating providers, and the length of time each provider has been participating in the program impacts the savings projections for any one customer.

12. Preliminary resultsEnhanced Personal Health Care $8.75 PaMPM (2%) savings over first 3 quarters1 Trends from providers indicate they are changing their practice behaviors. Significant increase in referral to preferred lab arrangements (NY, NH, VA and OH) Greater number of weekend visits for attributed members Increased rates of provider visits post discharge Significant decrease in the number of the low intensity (potentially avoidable) ER visits (VA & OH) Improvement in Inpatient and ER utilization 11 1 Gross savings before provider gain share. Performance period (4/1/13 – 12/31/13). Per attributed member per month.

13. Providing timely and evolving data on:  • Projected participation and savings • Quality, cost and patient experience • Targeted populations for improvement Measure the merits with value-based reporting.

14. Proposed Value Based Reporting Roadmap • Value reports supplement current client reporting • Identifies members that could be targeted • Quarterly reports at the customer level • State and industry level reports available • Reports are actionable, timely, and evolving • Metrics span quality, utilization and cost • Future reports will include provider transformation and patient experience

15. Coming soon Program enhancements New financial value reporting Benefit steerage Beginning in Q4 2014, in addition to the clinical value reports we offer, a new suite of financial value reports will show you what these programs mean to you and your bottom line. 2015 2016 2014 • Introduction of benefits steerage around Blue Distinction Total Care • Enhanced Personal HealthCare fully integrated into Blue Distinction Total Care • Q4 - Group level financial value reports 14 14 Subject to change

16. Questions?