Becker’s Hospital Review Chicago, May 2014 Phil Dyer, Senior Vice President

1. The ACA and Exchanges: A Catalyst for Change and Emerging Liability Issues Becker’s Hospital Review Chicago, May 2014 Phil Dyer, Senior Vice President Healthcare Management Services Kibble & Prentice/USI

2. The U.S. Healthcare Industry Currently under enormous financial strain and demographic pressure, healthcare will have to reinvent itself over the next few decades. National Health Expenditure as Share of GDP (Percent) National Health Expenditures (Billions USD) • In 2012: • $2.8 Trillion dollars • $8,937 per person • By 2020: • $13,709 per person (projected) SOURCE: Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group

4. ARRA – HITECHThe first step to major changes • American Recovery and Reinvestment Act (ARRA) including the Health Information Technology for Economic and Clinical Health Act (HITECH) • Signed into Law February 17, 2009

5. Patient Protection and Affordable Care Act (PPACA) Signed into law March 23, 2010

6. Unprecedented Change: Drivers of Fundamental Disruption in Healthcare Delivery Systems and Payment Methodologies

7. The Pace of Change Network Changes/Budget Impacts (Federal/State) – 1 year, recurring annually Reimbursement Reform – 10 years Cultural Transformation of Institutions – 30 years

8. The current ‘calm’ in healthcare professional liability An unprecedented period of ‘stability’ in the low frequency of claims and a steady, predictable severity trend, coupled with record levels of financial capacity.

9. Percentages of Practices Owned by… Source; Medical Group Management Association

10. ACO’s

11. Now add; EXCHANGES • Additional 25-27 million people in the system • Some states have their own, others default to the Feds • Increased pricing of healthcare in individual and small group markets (bigger increases for younger enrollees –Community Rating) • Enrollees with ‘skin in the game’ – greater point of service cost sharing • No provider pricing transparency (missed expectations) – Narrow Networks • Lack of ‘Health Literacy’ (of the H/C system, of Insurance) –languages and cultural barriers

12. Source: Deloitte

13. The Current Marketplace

15. The “Metallics” 80/20 90/10 60/40 70/30 Platinum Bronze Gold Silver Four Levels of Benefits

16. Subsidies in the Exchanges under the ACA

20. “No One Ever Washes A Rental Car”

22. Pressures on Providers Dramatic increases Moving away from patient care as top priority Demand grows unabated Growing population adding to financial and system stress

23. Reform ‘Stressors’

25. Driving the Value Proposition Providers are focused on moving from volume to value, which means more integration along the care continuum. High Integrated Delivery Network/ Health Plan Impact on Value Accountable Care Bundled Payments Clinical Integration Managed Care Shared Risk Medical Home Specialty Co-management Center of Excellence/ Specialty Institutes Low Limited Full Integration

26. Exposures associated with ACO and Integrated Delivery Systems activities and services may outweigh traditional insurance coverage Exposures & Mechanisms Coordination of care/ case management Accountability for quality of care Claims processing/ payment (if applicable) Medical necessity or other coverage determinations Increased involvement in coordination of care Compliance with state and federal laws, including HIPAA, HITECH and PPACA Insurance Increased control over ACO participants Utilization review (if applicable) Provider selection/ contracting/ termination/payment Medical treatment Billing Employment practices

27. P/P/P

28. ROLE PLAY ?

29. It’s Happening! Some hospital networks also become insurers By Roni Caryn Rabin Kaiser Health News, August 25, 2012

30. Hospitals Plot the End of Insurance Companies

31. “Follow the Money!”

32. Increased Liability Issues

33. “Corporatization” of Medicine Will increased “institutionalizing” of medicine make patients feel more disconnected from their providers, and more willing to bring action against “nameless, faceless” corporations?

34. Exchange Value – Specific Functions I. Issuers of QHPs • Marketing & Outreach • Eligibility Determination for tax credits • Enrollment • Premium Aggregation • Customer Service • Enrollment reconciliation with HHS • New Membership opportunity – previously uninsured • Easy plan comparison and purchase of health insurance • Reporting of cost/quality metrics • Awareness of need for health insurance • Supporting use of innovative product designs and payment methodologies • Expanded access to health insurance coverage • Reduced charity care II. Health Care Market III. Public and State • Appeals of eligibility determinations and individual responsibility • Information on health insurance carriers • Trustworthy source of health care reform information • Broad-based Public Information • Other impacts of ACA

35. The Shifting Sands of Reimbursements

41. Summary Fundamental Disruption Pace of Change Varies Exchanges as Catalysts for Change More Patients/Different Patients/Provider Shortage Reimbursement Pressures

42. Questions?