Getting to know the Leapfrog Hospital Rewards Program™

1. Getting to know the Leapfrog Hospital Rewards Program™ April 4 & 6, 2006

2. Leapfrog’s Mission Statement Trigger Giant Leaps Forward in the Safety, Quality and Affordability of Healthcare By: • Supporting Informed Health Care Decisions by Those Who Use and Pay for Health Care • Promoting High-Value Health Care Through Incentives and Rewards

3. Pillars for Improving Quality Standard Measurements & Practices Reimbursement: Incentives & Rewards Transparency

4. Leapfrog Hospital Rewards Program: Improving patient care & advancing incentives & rewards • Expands on Leapfrog Hospital Quality and Patient Safety Survey to address quality and efficiency of care for five clinical areas important to the commercially insured population • Data feedback to hospitals allows for performance comparisons & improvements • Has an incentive & reward (I&R) structure designed around measured hospital performance & performance improvements • The I&R structure can be customized to fit local market needs and goals

5. What does the Program do? • Measures hospital performance on the two areas that matter to quality improvement: clinical quality and efficiency • Five clinical areas: • Coronary artery bypass graft (CABG); • Percutaneous coronary intervention (PCI); • Acute myocardial infarction (AMI); • Community acquired pneumonia; and, • Deliveries/newborn care. • Hospitals can participate in any of the clinical areas that are important to them

6. What does the Program do?: Measures • Uses nationally standardized measures: • JCAHO, Leapfrog Survey, National Quality Forum • Efficiency: first nationally collected/calculated efficiency measure • Leverage existing relationships & quality activities: • Data reported through JCAHO core measure vendors • Overlapping measurement with JCAHO & CMS’ Hospital Quality Alliance • Data gathered through the program provide basis for rewarding high performers, educating consumers and providing benchmark data to hospital participants

7. Measures • Quality measures: • Leapfrog Survey + JCAHO core measures • Resource-based measure of efficiency: • Average actual LOS / case, broken down by routine care days and specialty care days • Severity adjusted based on risk factors • Re-admission rate to same hospital, by clinical condition, within 14 days • Program Licensees will marry this resource-based measure of efficiency with payment data from their own experience • Overall Performance: • Nexus of Quality & Efficiency

8. How is the Program Used? • Publicly Available Data for purchasers and consumers • Overall Performance Group score displayed on The Leapfrog Group Web site, by condition. • The quality and efficiency results will be made available to health plans for pay-for-performance initiatives, tiering, etc • The data will also be made available to employers and data vendors to augment consumer education & decision support strategies

9. Locally customizable incentive & reward program • Leapfrog Hospital Rewards Program™ • Savings Calculation • National Rewards Principles • Customizable by implementers based on market dynamics and goals for the Program • Partner with The Leapfrog Group to implement • Use LHRP quality and efficiency data as basis for rewarding hospitals • Work with Leapfrog to determine savings calculation and rewards payment methodologies, in line with national Program guidelines • Collaborate with Leapfrog to engage stakeholders, hospitals, etc. • Use the Leapfrog name and brand

10. Implementation Status • Early Implementers & Users • Memphis Business Group on Health (Memphis, TN) • CIGNA (Memphis, TN) • Major regional health plan (statewide) • CIGNA (Hospital Value Profile, nationwide) • Others on the horizon … • Feasibility studies for future markets underway • Building the hospital database • Next data submission deadline: May 15th, 2006

11. Data Reporting: Process Flow 1 Leapfrog PatientSafety Survey ProgramLicensees Leapfrog Survey Results • Clinical Area-specificScores: • Quality • Resource-Based Efficiency AggregationandScoring JCAHO CoreMeasures Data 2 Hospital* Leapfrog 3 LFG Efficiency Measures Core MeasureVendor New DataLicensees Hospital Feedbackvia Vendors *All reported data must be hospital-specific to be reward-eligible

12. Leapfrog Hospital Rewards Program Data Requirements 1 • Leapfrog Hospital Quality and Safety Survey • Required for LHRP participation in ANY clinical area • Current survey, including affirmations • Latest survey as of Nov 30 for Jan 1 results • Latest survey as of March survey cycle-ending for July 1 results • Partial completion: no points earned for that componentExample: process compliance not measured

13. Leapfrog Hospital Rewards Program Data Requirements 2 • JCAHO Core Measures • Objective: no additional reporting burden • Core Measures must be reported for clinical area(s) • Copy of JCAHO data submission to LFG • add LFG hospital identifier • split HCO into component hospitals (<1%) • extraneous data ignored on submission, e.g., heart failure, unused measures • Timing • quarterly • 15-30 day lag after JCAHO deadlines

14. Leapfrog Hospital Rewards Program Data Requirements 3 • Leapfrog Resource-Based Efficiency Measures • By clinical area for which hospital participates in LHRP • Actual length of stay (LOS), routine and special* • Severity-adjusted expected LOS, routine and special** • # cases with readmit following discharge, within 14 days, same hospital, any condition at readmit * Total length of stay for Deliveries ** See details about risk adjustment models at http://leapfrog.medstat.com/hrp

15. Hospitals Arrayed in Four GroupsExample: Pneumonia Cohort 1 Cohort 2 Average Cohort 3 Cohort 4

16. Hospital Data Feedback • Hospitals receive their score and weight earned for each individual quality measure within each clinical area in which they participate. • Hospitals receive their scores on each individual element within the efficiency measure for each clinical area in which they participate.

17. Next Steps • Timeline • Next data submission deadline: May 15, 2006 • Initial release of results: July 2006 • How do I participate? • Ask your JCAHO core measure vendor to submit data to Leapfrog on your behalf • Participate in the Leapfrog Hospital Quality and Safety Survey • For more information • https://leapfrog.medstat.com/hrp/

18. Appendix

19. LHRP: Hospital Pricing Structure 1 Hospital elects to be eligible for rewards and is identified in results. 2 Hospital participates “anonymously” to receive benchmark results but elects not to authorize its identification in results, though its results are included in the national ranking

20. Weighting & Scoring – AMI

21. Weighting & Scoring – AMI (cont’d)

22. Weighting & Scoring – CABG

23. Weighting & Scoring – CABG (cont’d)

24. Weighting & Scoring – PCI

25. Weighting & Scoring – PCI (cont’d)

26. Weighting & Scoring – Pneumonia

27. Weighting & Scoring – Pneumonia (cont’d)

28. Weighting & Scoring – Deliveries * For a hospital indicating in its Leapfrog survey responses that it electively admits high-risk deliveries (mothers expected to deliver complicated newborns), NICU census and Antenatal steroids measures do not apply. The weights associated with these measures are allocated to the remaining measures and the second set of weights applies.