1. LAN Update Episode Bundles: Why It Matters and What Purchasers Can Do Now March 9, 2016 12:00 – 1:00 pm ET

2. 2 WELCOME Anne Gauthier LAN Project Leader, CMS Alliance to Modernize Healthcare (CAMH)

3. 3 SESSION OBJECTIVES Learn About What the LAN is and how it can help purchasers get better value for the tremendous amount of money they’re spending on health care Clinical Episode Payment (CEP) work group recommendations on episode payment for elective joint replacement Employer innovations and entry points for episode payment for elective joint replacement Engage Ask your questions of the presenters

4. 4 AGENDA Time (ET)Topic 12:00 – 12:10 pm Opening remarks, LAN overview 12:10 – 12:20 pm Why the LAN is important to purchasers, CEP workgroup overview 12:20 – 12:35 pm How Walmart is engaging in CEP 12:35 – 12:50 pm How mid-size employers are engaging in CEP—The Alliance’s “Quality Path” 12:50 – 1:00 pm Questions and Next Steps

5. 5 OUR GOAL Goals for U.S. Health Care 2016 30% In 2016, at least 30% of U.S. health care payments are linked to quality and value through APMs. 2018 50% In 2018, at least 50% of U.S. health care payments are so linked. These payment reforms are expected to demonstrate better outcomes and lower costs for patients. Adoption of Alternative Payment Models (APMs) Better Care, Smarter Spending, Healthier People

6. 6 LEADERSHIP GROUPS LAN has established 7 groups with varying purposes Guiding Committee Work Groups APM FPT APM Framework & Progress Tracking Payer Collaborative CEP Clinical Episode Payment PBP Population Based Payment Affinity Groups CPAG Consumer & Patient PAG Purchaser States State Engagement

7. 7 CONTACT US We want to hear from you! Website www.hcp-lan.org | www.lansummit.org Twitter @Payment_Network Linked-In https://www.linkedin.com/groups/8352042 YouTube http://bit.ly/1nHSf1H Email PaymentNetwork@mitre.org

8. 8 Spring LAN Summit April 25-26, 2016 Sheraton Hotel 8661 Leesburg Pike Tysons, VA 22182 Registration Now Open! Presentations Planned from Work Groups on Work Products Call for Sessions Open! (due March 18th) https://www.lansummit.org

9. 9 CEP PURCHASER REP Barbara Wachsman Member, CEP Work Group Chair, Pacific Business Group on Health (PBGH)

10. 10 Shape: Unique opportunity to influence national payment policies as the healthcare sector transitions away from fee-for-service Accelerate: Partner with providers and health plans to improve outcomes while lowering costs Align: Harmonize payment approaches among private and public purchasers with consistent signals to providers Leverage: Use ”real world” experience to effect broader health system change Learn: Hear about other innovative purchasing initiatives in the private and public sectors WHY IS THE LAN IMPORTANT TO PURCHASERS?

11. WHAT IS A “CLINICAL EPISODE”? Clinical episode or episode of care is a series of temporally continuous healthcare services related to the treatment of a given spell of illness or provided in response to a specific request by the patient or other entity.

12. CLINICAL EPISODE PAYMENT Clinical episode payment is a bundled payment model that considers the quality, costs, and outcomes for a patient-centered course of care over a longer time period and across care settings.

13. 13 PURPOSE OF EPISODE PAYMENT

14. 14 WHY JOINT REPLACEMENT? Commercial Market HipsKnees Number of procedures (2011)645,000306,000 Cost (2015)$11,327 - $73,987$11,317 - $69,654 Quality and patient experience Duplication of exams, imaging, and other diagnostics Lack of coordination between hospital and post-acute care Inconsistent use of standardized protocols

15. 15 WORK GROUP CHARGE Provide a Directional Roadmap to: Providers Health Plans ConsumersPurchasersStates Promote Alignment: Design Approach Alignment Approach Find a Balance Between: Alignment/consistency and flexibility/innovation Short-term realism and long-term aspiration

16. 16 WHAT IS THE GROUP RECOMMENDING? Design Elements 1. Episode Definition 2. Episode Timing 3. Patient Population 4. Services 5. Patient Engagement Elective & appropriate total knee replacement due to osteoarthritis 30 d. pre-procedure to 90 d. post- discharge & meet episode definition requirements Broadest-possible pool of patients, adjusted for risk/severity All services need for joint replacement procedure Tools for shared decision-making, assessing function & care path, with transparent cost & care info 6. Accountable Entity 7. Payment Flow8. Episode Price 9. Type and Level of Risk 10. Quality Metrics Physician-level clinician preferred with caveats Retrospective reconciliation with upfront FFS 2 years historical cost (assuming appropriate # of cases in 2 years); Balance with regional/provider data Upside and Downside Risk Clinical Outcomes, PROMs, and quality scorecards

17. 17 Stakeholder Perspectives: Ensure that the voices of all stakeholders – consumers, patients, providers, payers, states and purchasers – are heard in the design and operation of episode payments Data Infrastructure: Understand and develop the systems that are needed to successfully operationalize episode payment Regulatory Environment: Recognize and understand relevant state and/or federal regulations, and understand how they support or potentially impede episode payment implementation OPERATIONAL CONSIDERATIONS

18. 18 IMPLEMENTING CEP Sally Welborn Senior Vice President, Global Benefits Wal-Mart Stores, Inc. Cheryl DeMars President and CEO The Alliance, Employers Moving Health Care Forward

19. 19 WALMART’S MOTIVATION Provide competitive benefits program Ensure appropriate care Improve quality of care for all

20. 20 WHAT WALMART IS DOING IN CEP Multi-payer alignment around 16 conditions with Arkansas Health Care Payment Improvement Initiative Direct Contracts with Centers of Excellence for specific procedures or conditions

21. 21 ARKANSAS PAYMENT IMPROVEMENT INITIATIVE’S INTEGRATED MODEL Episode

22. 22 Coordinated Multi-payer Leadership ▪ Consistent incentives and standardized reporting rules and tools ▪ Change in practice patterns as program applies to many patients ▪ Enough scale to justify investments in new infrastructure and operational models ▪ Motivate patients to play larger role in their health and health care

23. 23 ARKANSAS - HOW EPISODES WORK FOR PATIENTS AND PROVIDERS (1/2) Patients seek care and select providers as they do today Providers submit claims as they do today Payers reimburse for all services as they do today 123 Patients and providers deliver care as today (performance period)

24. 24 HOW EPISODES WORK FOR PATIENTS AND PROVIDERS (2/2) ▪ Based on results, providers will: ▪ Share savings: if average costs below commendable levels and quality targets are met ▪ Pay part of excess cost: if average costs are above acceptable level ▪ See no change in pay: if average costs are between commendable and acceptable levels Review claims from the performance period to identify a “Principal Accountable Provider” (PAP) for each episode Payers calculate average cost per episode for each PAP 1 Compare average costs to predetermined “commendable” and “acceptable” levels 2 456 Calculate incentive payments based on outcomes after close of 12-month performance period 1 Appropriate cost and quality metrics based on latest and best clinical evidence, nationally recognized clinical guidelines and local considerations

25. 25 FIVE INITIAL EPISODES LAUNCHED IN JULY 2012 (1/2) Ambulatory URI Perinatal (non-NICU 1 ) Acute-, post-acute heart failure ADHD Total Hip/ Knee replacement Details ▪ Includes colds, sore throats, sinusitis ▪ Care from initial consultation to 21 days after ▪ Excludes inpatient hospitalizations and surgical procedures ▪ Prenatal care, delivery and postnatal care for the mother ▪ 40 weeks before to 60 days after delivery ▪ Excludes neonatal care ▪ Care from hospital admission for heart failure to 30 days after discharge ▪ Care over 12-month period, including all ADHD services and pharmacy costs (with exception of initial assessment of patient) ▪ Care from 30 days before to 90 days after the surgical procedure NOTE: Episode and health home model for adult DD population in development. 1 Neonatal intensive care unit

26. 26 CEP Clinical Episode Payment DIRECT CONTRACT CENTERS OF EXCELLENCE Direct Contracting for Spine Surgeries and certain Heart Surgeries Goals Improved quality of care Aligned incentives through prospective bundled pricing – negotiated in advance for Evaluation or Surgery Direct Contracting through Employers Centers of Excellence (PBGH) for Joint Replacement Goals Same goals as Walmart Direct Contracting PLUS, efficiencies and alignment due to collaborating with other employers

27. 27 CEP Clinical Episode Payment EMPLOYERS CENTERS OF EXCELLENCE Walmart shared methodology with PBGH Travel surgery program with highest quality facilities using bundled pricing methodology PBGH contracts with administrator PBGH determines the Centers based on quality indicators. They negotiate and hold the contracts Employer contracts with PBGH to participate – Turnkey approach

28. 28 PANEL SPEAKER Cheryl DeMars President and CEO The Alliance, Employers Moving Health Care Forward

29. About The Alliance ® >Not-for-profit, employer-owned cooperative >Move health care forward by controlling costs, improving quality and engaging individuals in their health >Founded in 1990 by 7 employers; now over 240 employers 100,000 employees and family members 26 counties in WI, IA and IL $750,000,000 in health care/yr

30. Two-Tiered Value Proposition >We help self-funded employers manage the total cost of their health benefit plan Broad network of providers coupled with information to help consumers choose best value Data, programs, services to improve workplace population health >We unite employers as purchasers of health care in the same market to drive change Value-based purchasing Payment reform

31. The QualityPath to Higher Value 1.Focus on common, expensive elective procedures 2.Evaluate individual physicians + hospitals on important quality measures and clinical processes 3.Use available market strategies to recognize and reward providers that meet standards 4.Elevate the standard of care in our region

32. What is QualityPath? >Designation of physician + hospital pairs –Quality criteria of importance to purchasers and consumers – outcomes and important clinical processes –WI, northern IL, eastern IA >High-cost cardiac and ortho procedures –Knee and total hip replacement –CABG

33. What is the Value Proposition? >Facilities and surgeons receive recognition and gain market share, resulting in overall revenue increase. >Employers can feel confident employees are receiving high-quality care and have lower expense on per-procedure basis. >Patients receive high-quality care, have no out-of-pocket expenses*, and receive a warranty. *Some modifications needed for HSA Plans

34. What is Required of each Stakeholder? >Facilities and surgeons share data, implement standard care processes and agree to a bundled payment and warranty. >Employers change their benefit plans to include significant incentives for patients to choose QualityPath providers. >Patients may need to switch systems and/or travel and need to comply with care plan. –Patient Experience Manager provides support for consumers throughout the process

35. QualityPath Key Criteria >Contribute results to a Patient Registry >Participate fully in Public Reporting >Decision Supports for appropriate imaging >Shared Decision Making between patients and their doctor >Patient Reported Outcomes >Discussion of Future Care Needs >Disclosure of all industry payments

36. Results (launch Jan, 2015) >Designated hospitals and surgeons –5 designated facilities; 11 surgeons –15 applicants >Bundled payment and warranty –Prospective payment with withhold for warranty >Employer enrollment –33 employers (13.6% of eligible employers) >8,516 employees (17.8%)

37. Results (launch Jan, 2015) >Consumer use and experience –3 completed cases thus far (episode closed, patient back to work) –3 surgeries complete, but episode still open –20 cases in the queue >Missed opportunities –25 cases eligible but had surgery at non QP provider –222 cases among employers who did not enroll

38. Next Steps >On-going monitoring, evaluation and improvement of current program –Maintenance of designation –Continued and ongoing education and promotion – to employers, to employees >Add new procedures - CT and MRI >Continue to seek buy-side partners

39. 39 PANEL Q&A

40. 40 Visit the Website Join the Discussion Follow Us Attend Webinars Access Resources Submit Comments Attend LAN-wide Meetings ENGAGE, LEARN, AND ACT The LAN will only succeed with robust stakeholder engagement across the field