1. HFMA Florida Chapter Fall Conference September 16, 2010 1

2.  Accountable Care – Approach or “Thing”  Physician/Hospital Integration Journey  Concepts of Bundling Payments  The Payer/Buyer Perspective  Roles and Accountabilities of an ACO  Potential ACO Models  The ACO Revenue Cycle Infrastructure 2

3.  Genesis from “HillaryCare” in 1993 ◦ Managed Competition and the PHO  Quality Payment for Services – CMS 2003 ◦ Process – Evidence Based Medicine Guidelines ◦ Outcomes – Improvement in Quality Measures ◦ Treatment of Chronic Diseases  Shared Savings for Cost Containment ◦ Emerging Payer/CMS Pilots in Episodes of Care  Integrated Care = Good Non-Integrated = Bad 3

4.  New Name with Newly Anticipated Functionality  Entity Will Need to be Able to do the Following: ◦ Assemble and Manage a Broad-based Group of Providers including Acute Hospitals, Primary Care Physicians, Sub-Specialists, and Ancillary Providers. ◦ Provide Services in a Seamless Business Infrastructure ◦ Accept and Administer Bundled Payments from Payers ◦ Identify Enrollment and Pay Providers ◦ Report on Quality, Costs, and Patient Outcomes ◦ Manage Risk and Gain-Sharing Methodologies 4

5.  Medical Staff Delegated Responsibilities ◦ Credentialing, Privileging, Quality Assurance  Creation of PHOs for Managed Care  Service Line Development ◦ Specialty Partnering with Hospital  Employment of Primary Care & Sub-Specialists  IT Connectivity and Meaningful Use 5

6.  Other than Employment – Not Much  Regulatory Constraints ◦ Stark, F&A, IRS, etc.  Cultural Issues ◦ Professional Independence ◦ Entrepreneurial Interests ◦ Control vs. Security  Financial IT Platform Differences ◦ Hospital Legacy & Practice Management Systems 6

7. Management of Chronic Care Patients –Screening and Lifestyle Management Medical Home Approach – Primary Care Population-based Semi-Capitation Episode of Care Fixed Payment Performance-based Payment Combinations of Those Above 7

8.  Slow the Rate of Cost Growth  Public Health Approach – Lifestyle/Prevention ◦ Obesity, Smoking Cessation, Screening, etc.  Reduce Fee-For-Service Exposure ◦ Bundling Acute Care Episodes for Elderly ◦ Medical Home Fixed Payments for M&M  Shift Risk to Provider Community ◦ Move toward “Partial Capitation” 8

9.  Four Clinical Areas Represent 61% of Spend ◦ Cardio-Vascular, Orthopedic, Neuro, Cancer  Difficulty Predicting Unit Cost and Utilization  Hospital and Physician Combined ◦ Bundled Payment Minimizes Risk of Outliers ◦ Pharma and Medical Device Usage Included  Pay For Performance / Enter “the Ratchet”  “They” Won’t be Able to Contract for This 9

10.  Clinically and Financially Integrated Provider Network  Capability to Underwrite Risk  Broad Scope of Clinical Services ◦ Acute Care, Primary Care, Out-Patient Care, Rehabilitation Services, Home Care, etc.  Information Technology Infrastructure ◦ Internal and External Transaction Capabilities  Ability to Engage with Consumers/Patients/Payers 10

11.  Health Plan as ACO  Independent Practice Association as ACO  Multi-Specialty Group Practice as ACO  Hospital as ACO  Hospital and Medical Staff as ACO  Other Entrepreneurial Models??? 11

12.  Management of Provider Networks  Administrative IT Platform - Eligibility  Financial IT Platform - Claims  Utilization Management Reporting  Patient Engagement and Incentives  Strong Capital Position  Experienced in P4P/Payment Bundling 12

13.  Strong Clinical and Financial Infrastructure  Durable Provider Relationships  Case Management Expertise  Leverage on Acute Care Costs  Managed Care Contracting Expertise  Focus on Patient Retention/Engagement 13

14.  Solid Administrative Infrastructure  Comprehensive Clinical Coverage  Integrated Clinical Platform  Integrated Financial Platform  Out-Patient Services  Built-in Referral Network 14

15.  Comprehensive Acute Care Services  Relationships with Ancillary Providers  Large Medical Staff Footprint  Local Brand Awareness  Solid Capital Structure  Administrative and Financial IT Infrastructure  Managed Care Relationships 15

16.  Full Spectrum of Patient Services  Superior Local Brand Awareness  Clinical Integration  Ability to Retain Risk  Contracting Leverage with Payers  Administrative/Financial Infrastructure 16

17.  Shared Governance Among Constituents  Community Benefit Organization/Co-Op  Medical Staff Roster Development  Invitation to Ancillary Providers  Participation Agreements  Information Technology Requirements  Health System Capitalization 17

18.  Choose Scope of Clinical Services  Establish EBM Guidelines for Services  Model Historical Financial Performance  Determine Professional Fee schedules  Establish Hospital Revenue Code Charges  Create Combined Charge Structures  Determine P4P Gain Sharing Rules  Determine Risk Retention Rules 18

19.  Patient Enrollment and Eligibility  Contract Modeling and Management  Maintenance of CDM/Fee Schedules  Case Management/Referral Services  Claim Re-Pricing/Clearing/Payment  Dispute Resolution/Collections  Performance and Dashboard Reporting 19

20.  Receive Enrollment Data from Payers to ACO Identifying Patient Enrollees  Develop Patient Roster for Physician Offices and Hospital Registration  Perform Eligibility Checking using HIPAA Transactions and Portal Interfaces  Transmit Authorizations to Practices and Hospital Accounting Operations 20

21.  Based on ACO Developed EBM Rules:  Track Utilization among Providers  Identify Variances from ACO Guidelines  Manage and Track Provider Referrals  Create Worklists for ACO Reviewers  Develop Internal Clinical Authorizations  Accommodate External Clinical Authorizations 21

22.  Model Bundled Contracts using Historical Claims Data and ACO Charge Master  Load Executed Contract Terms and Rules into ACO Master Contract Library  Disseminate Relevant Terms to Providers for Verification and Reconciliation  Identify Payer Variance Record 22

23.  Create Charge Master Indexes ◦ Chronic Care Bundles/Medical Home ◦ Acute Episodes/Procedure Package Pricing ◦ Bundled Charges for Episode of Care – 30 Days  Imbed Charge Master into ACO Platform  Maintain and Update  Disseminate to Providers 23

24.  ACO Platform Receives Un-scrubbed Claims from Physicians and Hospital – UBs & HCFAs  ACO Re-Prices Claims According to Contract Terms or CMS Methodology  ACO Bundles Individual Claims Into Bundled Claim Edited Format  ACO Clears Bundled Claim to Payer/CMS  ACO Receives Payments/Pays Providers 24

25.  There WILL BE Incorrect Payments within a Bundled Payment Environment  Administrative Denials/Underpayments ◦ Clinical Denials/Reduction of P4P Payments ◦ Financial Reconciliation Denials/Outliers  ACO Platform Re-Adjudicates Disputed Claims with Denial Management Tools  Patient Receivables – Co-Pays, etc. 25

26.  Care Management/Utilization Management ◦ Flash Reporting on Active Patients ◦ Concurrent Clinical Variance Reporting ◦ Summary Reporting On Process/Outcomes  Administrative Reporting – Process Costs  Financial Reporting ◦ Charge/Cost, Payer Variances, Gain-Sharing, Risk/Retention, Receivables, Distributions 26

27.  The New ACO Technology Platform is not simply the Traditional PHO Platform  The Buyer Market will Change its Approach  The ACO must have a Nimble Platform  Physicians will need Assurances that the Operating System is Accurate and Transparent  The Current Revenue Cycle Systems and Applications are Inadequate for the Future 27

28.  The Accountable Care Organization Concept and Construct is a MUST for Health Systems  As an ACO, Health Systems will be positioned as an Integrated Delivery Network  As an Integrated Delivery Network, the Health System can effectively deal with changing Reimbursement Methodologies from Payers  And, as an ACO, Health Systems can become a Participant in the planned State Exchanges 28

29. Nick Hilger JDA eHealth Systems 1717 Park Street, Suite 250 Naperville, IL 60562 nhilger@jdaehealth.com (630)355-5220 ext. 3279 (Office) (651)324-2943 (Mobile) 29