1. THE GROUP INSURANCE COMMISSION’S CLINICAL PERFORMANCE IMPROVEMENT INITIATIVE January 15, 2015

2. MERCER June 9, 2015 1 Clinical Performance Improvement Initiative Began in 2003 – with the purpose of using a large database of claims to analyze performance of physicians on both cost-efficiency and quality, the project: –Tiers specialty physicians based on both quality and cost-efficiency scores –Health insurers tier individual physicians, placing approximately 20% in Tier 1, 65% in Tier 2, 15% in Tier 3 so a physician’s tier may vary by plan –In pursuit of greater transparency, informs patients of results of physician evaluation and give modest incentives to encourage the use of Tier 1 & Tier 2 providers High level methodology for Round 11 –All six GIC health insurers tiered providers in at least eight clinical specialties using quality (where available) and cost-efficiency scores ­20% / 65% / 15% distribution by specialty ­Providers with insufficient data (ID) are not included in the distribution ­Providers are compared to other providers in their own specialty ­Not all specialties are tiered ­Provider tiers are published in provider directories – not a publicly distributed “Report Card” –Although Primary Care Physicians are not assigned a tier, they received their quality and efficiency data for the first time –Sent provider data to 17 selected Large Group Practices for the first time

3. MERCER June 9, 2015 2 Core Specialties Cardiology Endocrinology Rheumatology OB-GYN Orthopedics Gastroenterology Pulmonology/Pulmonary Disease ENT/Otolaryngology Clinical Performance Improvement Initiative Non-Core Specialties Hematology & Oncology Neurology Ophthalmology Dermatology Allergy/Immunology General Surgery Urology Nephrology Podiatry

4. MERCER June 9, 2015 3 Clinical Performance Improvement Initiative TIERING PROCESS STEP 1: Quality ‘hurdle’ Quality scores are developed by Resolution Health, Inc. (RHI) – a division of WellPoint Over 100 quality measures are used to develop quality scores –Many endorsed by NQF; almost all based upon quality rules developed by recognized organizations such as HEDIS Providers scored on measures specific to their specialty In response to physician concerns, scores are adjusted through a statistical model created by a John Hopkins biostatistician to account for the relative difficulty of each measure, patient compliance, and the number of observations (e.g. “adjusted quality score”) Only physicians who have a 90% probability of being in quality designation A, B, or C are assigned a quality designation Physicians who scored a C on quality automatically go to Tier 3 All other providers move on to cost-efficiency scoring

5. MERCER June 9, 2015 4 Clinical Performance Improvement Initiative TIERING PROCESS STEP 2: Cost-efficiency score Cost-efficiency scores are developed by General Dynamics (GDIT) using Episode Treatment Groups (ETGs), a product of Symmetry that is well known and widely used by health insurers and physician groups Claims are bundled into ETGs and contract-neutral prices (proxy prices) are applied An expected price is developed for each ETG with 100 or more occurrences Any provider with over 30 observations is scored Physicians who passed the quality hurdle are assigned to tiers based on their efficiency scores to achieve the overall 20%-65%-15% distribution in each specialty

6. CLINICAL PERFORMANCE IMPROVEMENT INITIATIVE UPDATE ON QUALITY MEASURES

7. MERCER June 9, 2015 6 Update on Quality Measures Current methodology The statistical model calculates a physician’s adjusted quality score –106 Quality Measures used for Round 11 Factors that affect a physician’s adjusted quality score: 1.Measure Effect: Level of difficulty of each quality measure – evaluates the physician’s performance relative to how other physicians in the same specialty performed on that same measure 2.Patient Effect: An indicator for the likelihood of a particular patient complying with his/her physician’s recommendations 3.Sample Size: Effect of the number of observations for a particular physician available in the GIC CPII database

8. MERCER June 9, 2015 7 Update on Quality Measures Current methodology GIC CPII decision rules for quality tiering Minimum of 30 observations for a physician, AND Probability of 90% of being in A or C If either the above criteria is not met, physician is assigned to B

9. MERCER June 9, 2015 8 Update on Quality Measures Current methodology The CPII provider attribution logic identifies all physicians that have had encounters with the patient, but attributes the quality measure to only one physician in a given specialty –Expectation is that the PCPs and relevant specialists should coordinate to ensure that the patient has the recommended care –Attribution logic for chronic disease management identifies relevant physicians with the most evaluation and management claims over past 18 months

10. MERCER June 9, 2015 9 Update on Quality Measures Recent changes Increased measure count –Majority approved by NQF 2 nd year of data added –Increased number of doctors with quality scores –Decreased tier shifting Increased the confidence level required for a physician to receive a quality score from 75% to 90% Two or more evaluation and measurement visits are required for a quality observation to be attributed to a physician

11. EFFICIENCY UPDATE ON EFFICIENCY MEASUREMENT

12. MERCER June 9, 2015 11 Upgrade on Efficiency Measurement Current methodology ProcessesDescription Run episode grouperThis process creates input to the grouper, runs the grouper, and stores the output from the grouper. The Symmetry ETG version 7.6 grouper used in FY16 tiering. Input data is limited to only those members that have a pharmacy benefit (otherwise, episode costs would be skewed), and to only those claims that are paid. The three most recent calendar years of claims are processed by the grouper. Proxy pricing (contract-neutral pricing) Proxy pricing is done to eliminate differences in pricing methods across plans. All claims are priced individually and then the episodes are priced as the sum of the claims. Note: Proxy prices are not used if the allowed dollars supplied by the plan deviates from the proxy price by more than a certain amount. Attribute providersThis process attempts to attribute a physician to every episode. Episodes are attributed to the clinician with the highest percentage of dollars over 25%. If there are no clinicians with more than 25%, the episode is unattributed and excluded. ExclusionsThis process flags each episode for inclusion / exclusion based on different factors. Episodes are excluded for the following: Catastrophic episodes, ETG type (Incomplete episodes or $0), Transplants, Ophthalmology, Specialty/ETG pair exclusions (ETGs not logical for the specialty), MPC Profiling filter (% threshold for specialty), and Excluded Providers (from Master Provider file). OutliersAfter all exclusions have been applied, episodes go through outlier logic. High outliers are those episodes whose price is two standard deviations above the mean cost for that episode. Low outliers are the bottom 1%. Episodes are flagged as outliers at the all plan level and the individual plan level. Calculate efficiency scoresThis process first creates norms (excluding outliers) which are an average cost that is used to compare the individual physicians to other physicians in the same specialty. Then it assigns an efficiency score to each qualified provider as the ratio of the weighted actual cost (proxy priced dollars) to the weighted expected cost (proxy priced dollars).

13. MERCER June 9, 2015 12 Upgrade on Efficiency Measurement Recent changes Created separate norms for adult vs. pediatric ETGs Increased the minimum number of episodes necessary for a norm to be created for a particular ETG to 100 Expanded the list of excluded specialty/ETG pairs to over 400 Upgraded to Symmetry Grouper to 7.6 Calculations incorporate a severity adjustment For some specialties, separate norms are calculated with and without surgery –Norm With Treatment Indicator: ­Core: OBGYN, Otolaryngology, Orthopedic Surgery ­Non Core: Hematology & Oncology, Ophthalmology, Urology, Podiatry, General Surgery –Norm Without Treatment Indicator ­All other specialties