1. The Changing Landscape of Healthcare

2. Important Terms ACO: Accountable care Organization- group of healthcare providers that agree to be accountable for quality,cost and overall care of a specific population ACA: Affordable Care Act- common reference to PPACA, the Patient Protection and Affordable Care Act (Obamacare) Individual Mandate: stipulation that all people must have medical coverage as of 2014 or face a tax penalty, people earning less than 400% of poverty level can receive assistance to buy individual coverage on a state insurance exchange

3. EHB Essential Health Benefit-: 10 areas of medical coverage that must be included in individual and small group plans PVEHB: Pediatric Vision Essential Benefits-Most medical plans are expected to include this as one of the essential benefits included in the Affordable Care Act MA: Medicare Advantage: alternative to traditional fee for service Medicare, provide more financial protection for the senior but narrow their choice of providers PCMH: Patient Centered Medical Home- team based health care delivery mode, lead by MD, PA or NP provides comprehensive and continuous care with the goal of attaining maximum health outcomes Small Group: currently defined as 1-100 full time equivalent employees

4. Key Factors for Increased Cost for Employers No ceiling on lifetime expenditures for an individual Expansion of coverage for mental health benefits Guaranteed issue, lack of underwriting relating to denial of coverage

5. Why Will Medicare Advantage Impact Optometry Today there are 51 million Americans eligible for Medicare There are an additional 10,000 individuals “aging” each day A growing number have opted for the MA (Medicare Advantage) plan as an alternative to fee for service Medicare United Health, BCBS, Aetna and Humana are leading players in MA plans With MA, risk of coverage has shifted from government to commercial plans as the plan receives a fixed monthly payment from government for each covered life

6. Will More Seniors Move to MA Yes Of 51 million Americans covered by Medicare, 27% are in MA plans now There are currently 500 plus MA plans in the US

7. Large group practice vs small group practice Study in the JAMA Internal Medicine (June 2013) found that large groups of doctors focusing on primary care are more cost effective for Medicare than smaller groups This suggests that ACO’s set up under the ACA would improve care while lowering costs

8. Trends to be Aware Of Consolidation: Hospital mergers and acquisitions have increased recently Employers: seeking innovative, direct arrangements with health systems (Commercial ACO’s) Physicians: 15 years ago nearly two thirds of MD’s were independent, by the end of 2013 it’s estimated that figure will be one third Large physician groups will manage population health and participate in gain sharing programs to enhance reimbursement As this happens, they will need collaborative care models with optometry

9. More Trends ACO’s must manage patient populations to achieve certain quality metrics and cost less than risk adjusted benchmarks in order to receive a portion of the savings Bundled payment: An ACA pilot to bundle pre acute, inpatient and post acute payments with one payment for services performed before suring and after inpatient care Pay for Performance: value based incentive payments to hospitals with payments based on scores and performance Access to data: increasing prevalence of EMR’s alters how data is managed and analyzed Hospitals are acquiring health plans

10. Pressure on Reimbursement Levels Medicare and Medicaid have only so much money allocated for each individual “life” Because of the ACA, the system will have tens of millions of lives added Each commercial insurance company collects a finite amount of premium per life Employers are looking for ways to reduce health care costs CMS and commercial carriers want to align incentives to reduce costs, they will pay as little as possible to accomplish this Once the ACO, PCMH and MA plans receive their payments they must retain a certain amount to cover marketing, administration, reserves which leaves less to compensate providers Reimbursements will be influenced by performance in the areas of outcome and efficiency Cost pressure will be felt by all providers of healthcare VS feels now is the time to explore innovative models to protect viability and success of optometry

11. ACO’s, PCHM’s and MA plans will become important channels from which our patients and payments will flow To them, eye care is a very small part of the overall health care To them, optometry is a largely unknown quantity There is confusion about optometry, re scope of practice and clinical ability There are likely many decision makers who have never been to an optometrist, never met an optometrist nor co managed patients with an optometrist These plans will need convenient and cost effective access to medical eye care Vision Source is engaged in pilot programs to be a solution to this important problem These pilot programs send a message to share with the healthcare community— That is VS and it’s member doctors have the ability to provide medical eyecare while improving pt satisfaction in a timely and cost effective manner This will insure pt flow to our offices

12. Important Elements of Vision Source Strength of local leadership Over 3250+ locations with some of the most influential doctors in the industry Presence in all 50 states Need increased coverage to be competitive in local markets