August 7, 2009 North Carolina BTE Collaborative George Chedraoui BTE Consultant

Bridges To Excellence, Proprietary & Confidential Page 2 NC Status Date PaidTotal Reward Amt 1Q08$20,480 2Q08$23,130 3Q08$38,185 4Q08$95,815 RTP increased from 19 to 258 recognized physicians since % of the eligible physicians are recognized. 396 physicians have 63% of the reward/savings potential Charlotte increased from 91 to 687 recognized physicians since % of the eligible physicians are recognized. 136 physicians have 41% of the reward/savings potential RegionEligible # Physicians Potential # Patients Affected Potential Rewards Amounts Physician Recognitions Charlotte2,05159,529$2.9 million 396 physicians have 63% of the reward/savings potential  POL -190  DCL – 298  CCL RTP2,00127,130$1.4 million 136 physicians have 41% of the reward/savings potential  POL - 76  DCL – 139  CCL - 42

Bridges To Excellence, Proprietary & Confidential Page 3 Health Plan Partnerships  BCBSNC – Completed state-wide pilot of 3 BTE programs. Supporting BTE implementation for ASO customers. Working on integrating BTE and NCQA programs into overall physician performance assessment.  Aetna – BTE baked in to Aexcel as a means to identify high performing specialists. Rewards paid on full book of business in select states. Supporting ASO customers in regional implementations  CIGNA – Supporting BTE implementations in various regions for ASO customers. Working on network-wide incentive program using BTE programs as a part of how physician performance is assessed  UHC – Supporting ASO customers in various regional implementations. Working on baking in BTE recognitions as part of overall physician performance assessment in Premium Network designation.

Bridges To Excellence, Proprietary & Confidential Page 4 Physicians increasingly have more options for BTE assessment through existing reporting initiatives MNCM Allscripts DocSite CINA GE EPIC Cleveland Cincinnati Meridios BioSignia NCQA Physician A Physician B Physician C IPRO NYC DOH NextGeneCW ABIM Athena MAeHC BTE

Bridges To Excellence, Proprietary & Confidential Page 5 The additional technologies and BTE Care Links will increase the number of physicians assessed Program/ PathwayNCQAEMRPortalABIM PIM Diabetes Cardiac Hypertension CAD CHF Asthma COPD Spine POL/Systems Use I.NCQA Provider Recognition Programs ($400) II.BTE Automated Performance Assessment through MNCM & IPRO ($ Free)  Data aggregator (e.g. EMR, registry, decision support tool vendor) data submission III.BTE-IPRO Direct Data Submission Portal  Physician upload of standardized file format ($95) IV.American Board of Internal Medicine ($95))  Elect to supplement sample for Performance Improvement Module (PIM) data for submission through IPRO portal

Bridges To Excellence, Proprietary & Confidential Page 6 We Used To Think These Forces Were The Main Drivers of Costs. They Are, But…… Waste due to information deficiencies and defensive medicine Medical Technology emerging at an accelerated rate Costs of Uninsured drive overall medical costs Consumer Behavior Lifestyle choices and cost sharing Crisis in Primary care Access limitations, failing office economics, flight to sub-specialty fields Medical Errors affect the quality of care and increase costs; malpractice Labor Shortage Provider & health plan consolidation Prescription drug costs continue to grow significantly

Bridges To Excellence, Proprietary & Confidential Page 7 Potentially Avoidable Complications (PAC) consume close to 50¢ out of every chronic care dollar Prometheus Payment, April 2009 The results of an analysis for a large employer in one state showed that $150MM, or roughly $1,700 per chronic care patient could be saved if PACs were reduced to zero

Bridges To Excellence, Proprietary & Confidential Page 8 Diabetes costs for a large employer $55,000,000 $110,000,000 Typical Care Defects Average total cost is ~ $6,000 89% of patients have some avoidable costs

Bridges To Excellence, Proprietary & Confidential Page 9 North Carolina PACs

Bridges To Excellence, Proprietary & Confidential Page 10 North Carolina PACs Condition Typical NC Costs Potentially Avoidable NC Cost Total NC Episode Cost Rate of NC PAC to Total CHF7,25925,93133,18978% COPD4,9247,07712,00159% Diabetes5,9705,54011,50948% Hypertension2, ,89919% CAD8,6543,34912,00328% Adult Asthma1, ,14444% Child Asthma4,3343,5567,89045%

Bridges To Excellence, Proprietary & Confidential Page 11 North Carolina Opportunity for Savings Yearly per patient savings Reducing PACs by Best in Country PAC rate Potential savings per NC patient 6.00% 10.00%15.00% $1,556$2,593$3,890 CHF 35%$11,616 $425$708$1,062 COPD 33%$3,960 $332$554$831 DIA 21%$2,417 $34$56$85 HTN 12%$348 $201$335$502 CAD 11%$1,320 $57$95$142 ADLT 20%$429 $213$356$533 CHLD 25%$1,972

Bridges To Excellence, Proprietary & Confidential Page 12 Bridges to Excellence Achieves Value  Recognized physicians deliver better quality care:  Their submission and scoring of medical record data confirms this fact  Less variations in practice pattern  Recognized physicians deliver lower cost of care:  Patients seen by Diabetes Care Link physicians are 20% less likely to have an acute flare up (less defects).  The average savings for physicians recognized under the Physician Office Link is $363 per patient per year  The real transformation occurs when the programs are used together to drive systems use towards patient improvement.

Bridges To Excellence, Proprietary & Confidential Page 13 The key to positive ROI is to payout less than what you save  These defects can be calculated for any condition by practice/group with more than 500 patients having that condition.  For smaller practices, budgets per patient can be estimated prospectively as well as total bonus opportunities.  Incentives get tied tightly to reductions in costs caused by care defects. The greater the decrease in these costs, the higher the bonus, and the greater the savings

Bridges To Excellence, Proprietary & Confidential Page 14 To be successful in changing behaviors we have to continuously up the ante Fixed bonus Defect reduction- based incentives Case rates/Episode of care payment Provider Risk & Reward Employer Savings

Bridges To Excellence, Proprietary & Confidential Page 15 Closing thoughts  You can’t go up the glide path if you’re not on it – NC Collaborative and BTE have gotten us on and will keep us moving!  The forces of the status quo have been greater than the forces of change….however that’s changing.  If you don’t know how much money is currently being spent on avoidable complications (care defects), then how can you increase value in any significant way?