©2003 Accordant Steven K. Schelhammer Founder and President Through Integrated Disease Management Managing Costly Chronic Conditions

©2003 Accordant Managing Costly Chronic Conditions Agenda  Costly chronic conditions  Specialized disease management  Predictive modeling  Integrated care  Care coordination  Interventions  Results

©2003 Accordant Specialty Drug Costs Per Patient Per Year Growth Hormone Deficiency $18,000 Hepatitis C $24,000 Infertility $18,000-20,000 Multiple Sclerosis $15,000 Oncology, BMT HIV/AIDS $5,000-10,000 Hemophilia $200,000 + Rheumatoid Arthritis $15,000 + Gaucher Disease $250,000 Pulmonary Hypertension $30, ,000 Costly Chronic Conditions Examples of Their Direct Impact on Spend

©2003 Accordant Costly Chronic Conditions Are Complex, Unique and Progressive  Require:  Specialized expertise  Patient self-management  Dynamic interventions to meet varying complications  Support to prevent crises  Result in:  High costs for inpatient hospitalization  Expensive specialty drugs utilization  Patient identification difficulty, due to many false positives  Progression of expense over time

©2003 Accordant 5.7% 9.6% 6.9% 0% 5% 10% 15% 20% $0 $300 $600 $900 $1,200 $1,500 Avg. PMPM Chronic Diseases CMS- Reported Inflation Costly Chronic Conditions Significant Total Cost Trend For Conditions Source: Accordant Health Services, Inc. Medical cost increases for unmanaged chronic diseases average 15.6 percent, surpassing the rate of inflation

©2003 Accordant Specialized DM: Solution  Improves health and lower costs, through:  Predictive modeling –Supports patient identification  Case management –Nurses provide patient education and compliance monitoring  Disease management expertise –Serving patients with chronic, complex, progressive diseases  Specialty pharmacy services –Integrated workflow, reporting and intervention

©2003 Accordant Specialized DM: Predictive Modeling Leads a Targeted Approach  Why predictive modeling?  Use when the correlation between near-term costs and disease diagnosis is weak, like COPD, diabetes or asthma But, predictive modeling is not enough …  Standard predictive models can’t identify complex, chronic patients  For example, one client’s former predictive modeling vendor was only able to identify 161 of over 1,900 high- cost patients  For co-hort of Accordant diseases, the diagnosis IS the prediction of high-cost patients

©2003 Accordant Specialized DM: Predictive Modeling Population Management Note: Population migration analysis, AHS vs. MCO. Figure shows percent of population at or above the “top” cost threshold. 70% of today’s high-cost patients were not high-cost 2 years ago

©2003 Accordant Source: AHS-MCO Unmanaged: 95% of Patients Exceed the 90 th Cost Percentile  For Accordant diseases, diagnosis is the best predictor of future near-term costs  Patients exceed 90 th cost percentile  8 months, on average  Based on 24-month continuous enrollment Specialized DM: Predictive Modeling A 24-month Cost Threshold

©2003 Accordant Specialized DM: Integrated Care  Address entire condition and its typical course with population-based approach to:  Minimize the magnitude of acute events and high cost cases  Reduce the frequency of predictable events and high-cost cases PMPM Least Costly Population DM opportunity PMPM Every patient with the condition is eligible Most Costly

©2003 Accordant Solid Bidirectional Information Flow Nonexistent or One-Way Information Flow As-Needed Information Flow  Incompatible Systems  Mis-Aligned Incentives Opportunity for Specialty Pharmacy Integration Benefits Information flow from typical Specialty Rx vendors Accordant Health Services DM Coordination MCO Info Patient Info Physician Info Homecare Info Provider Info Specialty Pharmacy Info  Operational Priorities  Competitive Concerns

©2003 Accordant Solid Bidirectional Information Flow Solid Bi-directional Information Flow As-Needed Information Flow Accordant DM with AdvancePCS Specialty RX Better Communication and Service DM Coordination MCO Info Patient Info Physician Info Homecare Info Provider Info Specialty Pharmacy Info  Compatible Systems  Aligned Incentives  Consistent Operational Priorities  No Competitive Concerns

©2003 Accordant Specialized DM: Integrated Care with Specialty Pharmacy  Increases program savings by an additional 20% and ROI by 40%  Greater control over specialty drug spend with patient steerage and standard therapy guidelines  Enhanced patient services with single point of contact  More effective real-time interventions  Example  A large health plan client  Implemented integrated specialty pharmacy service  Realized $600K in savings to date  On track for an additional 20% savings

©2003 Accordant Specialized DM: Care Coordination  Benefits review  Facilitation between patient, physician, health plan and vendors  Coordination includes home infusion and therapies, DME, PT, OT  Same benefits review, coordination, facilitation with comorbid conditions, as with the DM program they are enrolled in

©2003 Accordant Specialized DM: Care Coordination with Physicians  Offers physician support in caring for patients  Highly trained and experienced patient support partner  Helps promote treatment compliance  Coordinates an array of complex care and services that ordinarily bewilder patients  Improves health outcomes by providing additional service and support to the physician

©2003 Accordant Specialized DM: Interventions Research & Development  Research natural history of the disease and develop construct  Identify and rank significant complications and their associated costs  Baseline cost analysis  Assess significant risks and match proven strategies to prevent problems and complications Medical guideline: Strategy-intervention grid

©2003 Accordant Specialized DM: Interventions Preventing Complications  Risk stratification, each with their own interventions  Multiple sclerosis: –Exacerbations –UTI –Falls with fractures –Skin breakdown  Rheumatoid arthritis: –Flares –Infections –Falls with fractures –GI bleeding  Assess and monitor closely

©2003 Accordant Specialized DM: Interventions Promoting Patient Self-Management  Access to general information and assessments  Education about disease, medications and therapies  Better communication with the health care team  Compliance with the treatment plan  Skills development assistance including coping, lifestyle and service coordination

©2003 Accordant Specialized DM: Interventions Data Analysis  Analysis of integrated claims and patient-reported data on MS flares  Findings: –Antidepressant users were 3 times more likely to have a flare –Patients with a concurrent infection are 1.5 times more likely to have a flare –Incidence and frequency of flares are related to disease progression  Results: –Investigating the link between these associations and flares

©2003 Accordant Specialized DM: Intervention Example Promoting Better Self-Management Skills for MS Goal: Decrease admissions to hospital for urinary tract infection and Pyelonephritis -- Ranked # 2 for hospital admissions  Assess patient’s knowledge of:  UTI and its major symptoms  Symptoms of spastic “neurogenic” bladder  What to do if they develop acute Sx’s  Intervene with:  Education  Assessment of clinical status  Facilitate appointments with physician,  Alert the physician of acute symptoms and untreated spastic neurogenic bladder Guidelines: American Academy of Neurology and NMSS

©2003 Accordant Specialized DM: Intervention Example Falls with Fractures are Common for RA Patients Goal: Decrease falls and fractures that lead to hospitalization  Assess:  Risk of falls with mobility scales such as HAQ for rheumatology conditions.  Individual risks (lives alone, frequent trips to bathroom, etc)  Risk of osteoporosis (steroids, cytotoxic drugs)  Intervene with:  Education to prevent falls  Arrange home safety evaluation  Education about use of Calcium and Vitamin D  Alert physician for preventive medications for osteoporosis  Monitor for compliance with medications Guidelines: American Academy of Rheumatology, Osteoporosis Foundation

©2003 Accordant Specialized DM: Intervention Example Overutilization Among Hemophilia Patients Goal: Reduction of product overutilization  Manage by:  Preventing bleeding episodes  Minimizing the number of treatments needed to stop a bleed  Monitoring inventory/deliveries compared to prescription  Providing competitively priced products with aligned incentives  Intervene with:  Patient education  Behavior modification  Competitively-priced fulfillment of factor concentrates Guidelines: Hemophilia Treatment Center/National Hemophilia Foundation

©2003 Accordant Specialized DM: Intervention Promoting Drug Safety  Proactive interventions (education)  Patient pharmacy communications  Safe medicine practice at home  Safe medicine practice at hospital  Reactive intervention (monitoring)  Drug interactions  Contraindicated drugs  Medication duplications

©2003 Accordant MG-3 Source: Assessment Data through 6/30/2002 (95% CI Shown) Percent Carrying AHS Medication List 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent Length of Time in Program (LOTIP) by Qtr Results: Value Ensuring That Myasthenia Gravis Patients Carry a List of Contraindicated Drugs

©2003 Accordant Eligible members - Excluding members that have died, members for whom coverage is secondary, and members covered by another disease management organization. All Diseases Based on a specific client experience. Claims incurred through May Results: Value Comparing Pre and Post Cost Trends PMPM Length of Time in Program (LOTIP) Monthly Preprogram PMPM cost Post program PMPM cost PMPM

©2003 Accordant Based on a specific client experience. Claims incurred through May LOTIP: Length Of Time In Program Eligible members - Excluding members that have died, members for whom coverage is secondary, and members covered by another disease management organization. All Diseases Results: Value Comparing Preprogram Hospital Admit Costs Length of Time in Program (LOTIP) monthly Utilization Preprogram hospital admits / 100 Post program cost / 100