Integrating Data Analytics Technology and Services to Maximize Quality-Based Payments for Hospitals October 2015

Readmissions, HAC and VBP Penalties 3% + 1% + 1.5% = up to 5.5% in Penalties for 2015 2016: Only 799 of 3,400+ hospitals avoided a penalty. Hospitals lost a combined $420 million New Jersey was the most penalized state with 97% of eligible hospitals receiving a penalty Hospitals at risk of losing <3% of Medicare Payments Readmissions Reduction Program Hospital Acquired Condition (HAC) Reduction Program Hospitals penalized 1% of Medicare Payments if HAC Score in lowest 25% 2015: 700+ hospitals had payments docked - CMS estimates payments lost is ~$330 million Value-based Purchasing (VBP) Program Cuts or bonuses of <1.5% Medicare payments 2015: 1,714 hospitals will get bonuses, 1,375 hospitals reductions Total VBP payment shifts for FY15 will reach $1.4 billion

Financial Impact of Readmissions, HAC and VBP Penalties Average 2016 Penalty: -0.61% Readmissions Program FY 2015 FY 2016 FY 2017 3-Year Total Medicare Revenue $100K $610,000 $1,830,000 Medicare Revenue $250K $1,525,000 $4,575,000 VBP Program Combined $300,000 $900,000 $750,000 $2,250,000 HAC Reduction Program  $1,000,000 $3,000,000 $2,500,000 $7,500,000 Average 2015 Penalty: -0.30% HAC Penalty: -1.00%

Capabilities Needed to Reduce Preventable Readmissions 98% NJ hospitals penalized by Medicare Predicting risk of readmission for Ambulatory Sensitive Conditions to target resources Model incorporates LACE, BOOST and proprietary elements to identify High Risk Patients upon admission Facilitating care coordination and discharge planning to reduce readmissions Analytics leverage BOOST and Project RED to significantly impact “Transitions in Care” Alerting the Emergency Department of recent discharges to prevent readmission .03%-2.65% Range of hospital penalty #1 N.J. leads nation for number of hospitals penalized for high readmissions

Capabilities Needed to Reduce Hospital Acquired Conditions Collecting and preparing data for infectious disease measures and hospital penalty calculations Predicting HACs with variables that are important predictors for hospital acquired conditions such as pressure ulcers Calculating potential HAC/HAI penalties

Capabilities Needed to Improve Value-based Purchasing Scores Predicting patients that qualify for VBP measures in real-time so interventions can be made to improve care and scores Providing alerts on gaps in documentation and care to enable targeted interventions Forecasting reimbursements with a VBP calculator so strategies can be implemented in advance to improve scores Providing scorecards to track VBP measures against CMS targets and benchmarks

Overall Quality/Performance Improvement Challenges Process and Change Management Challenges Lack of industry best practices Limited care coordination personnel Poor patient engagement Lack of commitment from care partners – community and providers Inadequate discharge processes Slow adoption of QI technology IT Challenges Multiple IT application systems Multiple, disparate data sources, feeds, code sets Migrating to HIS vendor's data warehouse Working around unstructured (text) data Lack of data governance

Overall Keys to Success in Readmissions, HAC ands VBP Programs Operational Strategy Clinical Transformation Clinically Integrated Network Strategies Operational Strategy Process & Performance Improvement Transition of Care Management Digital Transformation IT Strategy and Governance Clinical IT Strategy Enterprise Data Warehouse Strategy Data aggregation and normalization Organizational Transformation Provider Engagement Organization Design Enterprise Training & Communications Change Management Financial Transformation BI, Reporting & Analysis Managing Risks

IT Should be Integrated with Expert Managed Services A successful strategy includes better care continuum integration across three key areas ACCESS TO CARE Transfer process Referral sources Direct admission access (ED) PATIENT CARE DELIVERY Quality clinical outcomes Intensive care unit utilization Physician involvement Low cost alternatives to admission (CDU or telehealth) POST DISCHARGE MGMT Discharge follow up process Managed care program appropriateness Sub-acute follow up process Identify patients for high risk of return

Analytics and Reporting Measures Calculation/Reporting Measures Framework Predictive Analytics Hospital Measure Programs Custom Measures Predictive Engine Readmissions HAC/HAI Surveillance Risk Stratification and Population Health Operational impact LOS ED Throughput Utilization and Cost Analytics Analytics & Visualization EDW Real-time Analytics Inpatient Analytics Population Health Analytics Data collection from all available sources Electronic Interface Meds ADT EMR Labs Ambulatory HIE Custom Claims HCAHPS

Senior Manager, North Highland Thank You Presenter Contact Information Ivan Cheng Senior Manager, North Highland 215.207.0772 (Office) 404.889.0347 (Cell) Ivan.Cheng@northhighland.com Raj Lakhanpal, MD CEO, SpectraMedix 609.336.7733 Ext 301 (Office) 609.865.3244 (Cell) Raj.Lakhanpal@SpectraMedix.com