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 Transparency Standard Measurements & Practices Reimbursement: Incentives & Rewards

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 Hospital* Leapfrog Leapfrog Patient Safety Survey *All reported data must be hospital-specific to be reward-eligible Core Measure Vendor JCAHO Core Measures Data LFG Efficiency Measures Leapfrog Survey Results Clinical Area-specific Scores: Quality Resource-Based Efficiency Data Licensees Program Licensees New Aggregation and Scoring Hospital Feedback via Vendors

12 Leapfrog Hospital Rewards Program Data Requirements 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 component Example: process compliance not measured 1

13 Leapfrog Hospital Rewards Program Data Requirements 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 day lag after JCAHO deadlines 2

14 Leapfrog Hospital Rewards Program Data Requirements 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 3 * Total length of stay for Deliveries ** See details about risk adjustment models at

15 Hospitals Arrayed in Four Groups Example: Pneumonia Cohort 4 Average Cohort 3 Cohort 2 Cohort 1

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 –

18 Appendix

19 LHRP: Hospital Pricing Structure Number of Conditions Reported Per Hospital Annual Fee Reward Eligible 1 Masked Identity 2 11,0002,000 21,3502,700 31,7003,400 42,0504,100 52,4004,800 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

© 2006 The Leapfrog Group and Thomson Medstat 20 Weighting & Scoring – AMI MeasureSourceWeightScoring Inpatient mortalityJCAHO (AMI=9) 15.33%Percent rank (0% = worst, 100% = best) times 15.33% weight Aspirin at arrivalJCAHO (AMI-1) 16.06% compliance times weight Beta blocker at arrivalJCAHO (AMI-5) 14.61% compliance times weight Aspirin prescribed at dischargeJCAHO (AMI-2) 4.83% compliance times weight Beta blocker prescribed at dischargeJCAHO (AMI-6) 4.83% compliance times weight ACEI for LVSDJCAHO (AMI-3) 4.83% compliance times weight Thrombolytic agent received within 30 minutes of arrival JCAHO (AMI-7a) 4.83% compliance times weight PCI with door-to-balloon time within 90 minutes of arrival LFG4.83% compliance times weight Adult smoking cessation advice/ counseling JCAHO (AMI-4) 4.83% compliance times weight

© 2006 The Leapfrog Group and Thomson Medstat 21 Weighting & Scoring – AMI (cont’d) MeasureSourceWeightScoring Computerized physician order entry (CPOE) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit Intensivist ICU staffing (IPS)LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit Leapfrog Quality Index (NQF Safe Practices) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit

© 2006 The Leapfrog Group and Thomson Medstat 22 Weighting & Scoring – CABG MeasureSourceWeightScoring MortalityLFG34.00%Full credit if Public risk-adjusted mortality rate better than state median OR STS risk-adjusted mortality rate better than national average … else no credit VolumeLFG12.00%Full credit if Volume ≥ 450 … else no credit Prophylactic antibiotic received within one hour prior to surgical incision JCAHO (SIP-1b) 3.50% compliance times weight Prophylactic antibiotic selection for surgical patients JCAHO (SIP-2b) 3.50% compliance times weight Prophylactic antibiotics discontinued within 24 hours after surgery end time JCAHO (SIP-3b) 3.50% compliance times weight Process measures: CABG using internal mammary artery Aspirin at discharge Beta blocker within 24 hours after surgery Beta blockers prescribed at discharge Lipid-lowering therapy prescribed at discharge Extubation within 24 hours after surgery LFG9.25% % % compliance times weight for two highest compliance rates of up to six measures reported … else no credit if not measured

© 2006 The Leapfrog Group and Thomson Medstat 23 Weighting & Scoring – CABG (cont’d) MeasureSourceWeightScoring Computerized physician order entry (CPOE) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit Intensivist ICU staffing (IPS)LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit Leapfrog Quality Index (NQF Safe Practices) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit

© 2006 The Leapfrog Group and Thomson Medstat 24 Weighting & Scoring – PCI MeasureSourceWeightScoring MortalityLFG34.00%Full credit if Public risk-adjusted mortality rate better than state median OR ACC risk-adjusted mortality rate better than national average … else no credit VolumeLFG12.00%Full credit if Volume ≥ 400 … else no credit Process measures: Aspirin at arrival 1 st balloon inflation within 90 minutes LFG14.50% % compliance times weight for each measure … else no credit if not measured Computerized physician order entry (CPOE) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit

© 2006 The Leapfrog Group and Thomson Medstat 25 Weighting & Scoring – PCI (cont’d) MeasureSourceWeightScoring Intensivist ICU staffing (IPS)LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit Leapfrog Quality Index (NQF Safe Practices) LFG8.33%Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit

© 2006 The Leapfrog Group and Thomson Medstat 26 Weighting & Scoring – Pneumonia MeasureSourceWeightScoring Initial antibiotic received within 4 hours of hospital arrival JCAHO (PN-5b) 5.50%Percent rank (0% = worst, 100% = best) times 5.50% weight Influenza vaccinationJCAHO (PN-7) 7.50% compliance times weight Pneumococcal vaccinationJCAHO (PN-2) 12.00% compliance times weight Adult smoking cessation advice/ counseling JCAHO (PN-4) 7.50% compliance times weight Intensivist ICU staffing (IPS)LFG13.50%Fully implemented: Full credit (13.50%) Good progress: 2/3 credit (9.00%) Good early stage effort: 1/3 credit (4.50%) … else no credit Oxygenation assessmentJCAHO (PN-1) 14.50% compliance times weight Blood cultures (collected prior to antibiotic administration) JCAHO (PN-5b) 14.50% compliance times weight

© 2006 The Leapfrog Group and Thomson Medstat 27 Weighting & Scoring – Pneumonia (cont’d) MeasureSourceWeightScoring Computerized physician order entry (CPOE) LFG12.50%Fully implemented: Full credit (12.50%) Good progress: 2/3 credit (8.33%) Good early stage effort: 1/3 credit (4.17%) … else no credit Leapfrog Quality Index (NQF Safe Practices) LFG12.50%Fully implemented: Full credit (12.50%) Good progress: 2/3 credit (8.33%) Good early stage effort: 1/3 credit (4.17%) … else no credit

© 2006 The Leapfrog Group and Thomson Medstat 28 Weighting & Scoring – Deliveries MeasureSourceWeight*Scoring Inpatient neonatal mortalityJCAHO (PR-2) 23.00% or 60.50% Percent rank (0% = worst, 100% = best) times 23.00% or 60.50% weight NICU census *LFG23.00% or 0.00% Full credit if NICU census ≥ 15 … else no credit Antenatal steroids for certain high-risk deliveries * LFG29.00% or 0.00% % compliance times weight (if measure is applicable) Third- or fourth-degree lacerationsJCAHO (PR-3) 8.33% or 13.17% Percent rank (0% = worst, 100% = best) times 8.33% or 13.17% weight Computerized physician order entry (CPOE) LFG8.33% or 13.17% Fully implemented: Full credit (8.33% or 13.17% ) Good progress: 2/3 credit (5.55% or 13.17% ) Good early stage effort: 1/3 credit (2.78% or 13.17% ) … else no credit Leapfrog Quality Index (NQF Safe Practices) LFG8.33% or 13.17% Fully implemented: Full credit (8.33%) Good progress: 2/3 credit (5.55%) Good early stage effort: 1/3 credit (2.78%) … else no credit * 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.