1. CENTERS OF EXCELLENCE The Way Health Care Gets Better™

2. ©2013 Arches Health Plan | Confidential Portrait of a Dysfunctional Market Health Care Market Place Government pays for over 40% of the care delivered in the United States The Federal Government dictates what fees will be paid to providers for Medicaid and Medicare recipients Economic principal of supply and demand to determine price is ignored (increased volume for lower price) No incentives to use efficient, quality providers Results in a cost shift to the private sector Cost and quality information not available to consume to foster a competitive marketplace Over Utilization Financial incentives encourage more services

3. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Why Centers of Excellence? 2.93% of the members used 50.7% of the claims dollars 12.63% of the members used 79.3% of the claims dollars

4. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Federal HHS “Four Cornerstones”  Connecting the System Standards and support for e-health.  Measure & Publish Quality Partner with providers to get measures that work.  Measure & Publish Price “Episodes of Care” model.  Create Positive Incentives Reward those who offer, provider and choose value (Quality/Price). “Every American should have access to a full range of information about the quality and cost of their health care options” - HHS Secretary, Michael O. Leavitt

5. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Some Enterprises Found Centers of Excellence Cut Costs by 25-40% Procedure: Several Procedure: Cardiac, Spine, Orthopedic & Transplant Procedure: Cardiac & Orthopedic Procedure: Orthopedic Procedure: Cardiac & Orthopedic

6. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Creation of Centers of Excellence for episode of care payment Global Fees for Episodes of Care Includes all services to complete episode Episodes with Complications Complicated cases revert to fee for service Payment Systems Global fee paid to facility for disbursement Global fee based on episode benchmark 20% Physician withhold Complete Episode Physician receives withhold plus 50% of savings if total costs are below benchmark

7. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential To enable the creation of Centers of Excellence a robust Data Base is required Cost Effective Quality Providers Selected from Database Health Insurers Data Base All Payer Data Base Utah Health Information Network Designated Centers of Excellence Chronic conditions Outpatient surgery Inpatient surgery Centers of Excellence Increases Volume to Designated Providers Increased volume used to negotiate global fees

8. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Maternity Selection For Center of Excellence

9. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Physician Review Specialty Episode Case-Mix Summary Top ETGs, by Total Costs (Complete Episodes of Care) EPISODES

10. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Example: Fee-for-service Prostate Procedure

11. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential

12. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Results: Centers of Excellence for Prostate Total cost non-Center of Excellence: $38,533 (Patient paid $14,263) Total cost Center of Excellence: $14,451 (Patient paid $1,298)

13. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Center of Excellence Member Engagement Online Consumer Guide Procedure Education List of DSP (Designated Service Plan) Providers Favorable Co-Payments for DSP Providers High, low and average cost for procedures

14. The Way Health Care Gets Better™ ©2013 Arches Health Plan | Confidential Consumer Guide