1. New Payment Systems in Oncology: Aligning Incentives for Value and Accountability Linda D Bosserman, MD, FACP Medical Oncologist and President Wilshire Oncology Medical Group Affiliated with US Oncology

2. Disclosures President and stockholder of Wilshire Oncology Medical Group Consultant for US Oncology Received grant/research support from Pfizer

3. Pay Differently for Different Outcomes: Aligning Information and Incentives Current System Pays for Volume and Drugs and has inadequate data for meaningful evaluations of care, quality, costs or value New Payment Systems Need to Align Goals: Patients need: Ability to evaluate quality and cost of care by different groups Access to high comprehensive care, clinical research and support services Practices with approaches that achieve high patient satisfaction Lowest costs for best outcomes and choices on how to spend their money Payers need: Lowest Costs for Highest Quality of Care in most appropriate Site Targeted reports on delivered care, outcomes and costs Lower administrative burden for auth and UR, lower MLR Payers needs to work closely with Provider Delivery Network BUT: Payers need new systems and relationships to meet these needs

4. Pay Differently for Different Outcomes: Aligning Information and Incentives New Payment Systems Need to Align Goals: Oncology Delivery Networks Need: Support tools and engagement by providers Evidence based care prompting at the bedside with warranted variations Clinician leadership for high quality care coordination and documentation for analysis & reporting Comprehensive approaches to lower costs of doing business: supplies, HR management, benefits, networking, contracting, data analysis and business management UR, UM and Authorization functions within the care delivery model

5. New Payment Systems Need to Align Goals: Clinicians need to Lead the Care Delivery Model Development & Implementation of Evidence based Guidelines and warranted variations (tools and techniques) Coordinate all aspects of cancer-related evaluations and care Lead the delivery team: Mid Levels, RN, MA, Admin Staff Oversee/Coordinate the sites of care: office, urgent care, ER, Hospital, Hospice, Home Care Supported by oncology delivery networks to leverage expertise and cost savings benefits

6. Hematology & Oncology Challenges Significant growth in cancer incidence expected in next 5 and 10 years CARE COORDINATION NEEDED for complex cancer patients throughout the continuum: Primary care, specialists, infusion, after hours, disability, rehabilitation, urgent care, ER, Hospital, tertiary care, clinical trials, psychosocial support, palliative care & hospice, Prevention, Screening, Diagnosis, Therapy, Support, Recovery, Survival Plans, Palliative Care and Hospice Data Needed to analyze quality, value and care needs Partnership between Payers and Oncology leadership Partnership between patients, payers and providers New Contracting needed to align incentives Cancer Care Management to achieve quality and value

7. Findings from Milliman Report 1* Cancer patients are less than 1% of a commercially insured population, but they account for over 10% of costs The variation in medical utilization and costs for cancer patients highlights an opportunity for better management In particular, cancer patients receiving chemotherapy have high costs averaging $111,000 annually, approximately 4x the cost of cancer patients not receiving chemo Opportunities for quality and cost improvement for cancer patients on chemo include: Reduction in chemo costs Reduction in chemo sensitive admissions Reduction in ER sensitive admissions * Commissioned by US Oncology 10/09; Source:Milliman Analysis of Medstat 2007, 14 million commercially insured lives

8. Cancer Costs Are Rising Beyond Inflation, Other Healthcare Costs Cumulative % Increase $55 B $123 B Cancer Medical Cancer Drugs Healthcare US GDP -2.4% 9.2% 15.0% 15.1% Annual Increase $15.5 T $2.5 T $93.0 B $42.0 B 2009 US GDP 1 Healthcare 2 Cancer Medical 3 Cancer Drugs 4 Sources 1 Bureau of Labor and Statistics 2 Kaiser Family Foundation, CMS National Health Expenditures data 3 American Cancer Society, US Oncology data 4 Medco Health Solutions 2009 Drug Trend Report

9. Oncology Drugs are leading the Drug Development Horizon 400 new oncology drugs in pre-clinical or clinical development 171 in late stage trials Market projected to double from $26 B in 2004 to $55 B in 2010 136 167 171 91 Drugs in Clinical Trials Oncology & Hematology Central Nervous System Cardiovascular Respiratory Infectious Disease

10. Cancer Incidence Concentrations Vary Significantly: IE: Eastern LA-San Bernardino, & Riverside Counties 10  The 2008 adjusted cancer incidences within defined area is 11,991  The compound annual growth rate of cancer incidence is 2% 250 125 0 2008 Adjusted Cancer Incidences by Zip Code: Wilshire Oncology

11. Cancer Incidence by Cancer Type in Eastern LA, San Bernardino and Riverside Counties 11  Breast, prostate, lung & colorectal cancer incidences represent 54% of all cancer incidences in the Inland Empire region The “Other” cancer category includes all cancer specific ICD-9 codes (140-208 & 230-239), however, is not included within the above cancer definitions, as the majority of these “other” cancers are identified as malignant neoplasms of uncertain behavior whose point of origin could not be determined.

12. Data to Understand Population What is your Hematology-Oncology population? Prevention and Genetic Risk: Assess and return to primary with care plan Screening Programs coordinated with primary care New abnormalities with possible cancer Initial diagnostic work up with primary and specialists, oversight of tertiary care referrals and care coordination Patients with Cancer or blood diseases Early/Curable Patients Advanced or Recurrent Cancer Patients Patients on follow up Palliative or Hospice Patients

13. Data for Therapy Population-1 Patient Info Disease, Stage, TNM, Tumor Features, Dx Date Treatment Plan: medical, surgical, XRT, other Performance Status and co-morbidities Therapy Regimens Name, # cycles, Goal, Start/Stop, Guideline compliant, Cost vs. Alternative, Reason for any variances Type and Line of Therapy with goal (cure/palliation) Support Regimens: Nausea and Growth factor Regimen, #cycles, guideline compliant, cost vs. alternative

14. Data for Therapy Population-2 Adjuvant/Neoadjuvant Therapies Guideline adherence vis a via tumor features ER/PR/Her2 for Breast, OncoDx or MammaPrint risks Adenocarcinoma vs. squamous cell for lung K-ras for Colorectal Metastatic or Recurrence Therapies Cost of regimens Response to regimen Duration of response to regimen Performance status Hospice discussion documented for 2 nd line and beyond Hospice and Palliative care costs and benefit analyses

15. Data Can Help Us Improve Care Which Patients with which characteristics benefit? How do performance status and co-morbidities factor in? How do we coordinate cost effective prevention strategies? What is cost effective for diagnostic and follow up studies? What are the cost effective evidence-based therapies? What are the cost effective support medication regimens? How are clinical trials integrated and at what cost/benefit? How do we coordinate care cost effectively? Med Onc, Rad Onc, Surgery, Reconstruction, Rehabilitation, Support What can be done in office and extended urgent care vs ER and hospital care? How are palliative care and hospice introduced and used?

16. Tracking Total Cost of Care Track Total Cost of Care for Patients Cost effective prevention and diagnostics Cost effective therapy and support with care coordination Cost effective site of care management Cost effective end of life care management Coordinate and manage out migration to tertiary care Clinical Trials: Integrate in network, track trial patients Regimen standard vs. investigational care given Track savings from free investigational drugs vs. standard Track any ‘extra’ care on trial and ensure billed to trial If metastatic disease Track therapy, PS, lines of therapy and outcomes Discussion of palliative and hospice care, Track time off Therapy and time on Hospice Track time off therapy to death

17. Oncology Medical Home Pilot Comprehensive Reporting on Accountable Care Demographics, diagnoses, co morbidities, performance status Initial Consult, Prevention, Recurrence, Follow up, Transition back to primary and Hospice-Palliative care Therapy: Cost Effective therapies and supportive care Clinical trials integration Care management: symptoms and side effects Care Coordination: surgery, XRT, tertiary care, others Site Optimization: ER/hospital vs. clinic/urgent care End of Life Care ASCO QOPI quality measures

18. Oncology Medical Home Pilot Pay differently for Different Outcomes Partnership with payers to understand issues of patients, providers and payers: many challenges Identify key issues, validation needs and costs for both sides Develop incentives to align goals Tiered drug pricing/supports greater Pathways adherence Pilot: Pay for desired services E&M, Therapy, Drugs: oral and IV Care Planning and Care Management Code Payments Management: UM, UR, Authorization and Reporting Track: projected savings from cost effective, coordinated care driven by payment for comprehensive planning and care management

19. Oncology Payment Pilots United Health Care 5 Sites, bundled payments for Breast, Colon and Lung Evidence based pathways, tracking of care costs/savings Aetna -USON Innovent Via Health: U Pittsburg Pathways P4 Health: drug payment differentials ABC-Wilshire Oncology Comprehensive care delivery and cost reporting Pathways, Care Management, End of Life care Standard payments + Care Management & Care Planning

20. Health Plan & IPA Support Community Oncology Networks Can: Bring practitioners together for common care pathways Provide evidence based pathways – monitor & measure Support practitioners Regional tumor boards and expert consultations Program and update Oncology EMR for Care Pathways Standardize IPA and health plan reporting and care tracking Regionalize urgent care, hospital and tertiary care referrals Share Clinical trials at regional sites to avoid outmigration Standardize cost effective care and support regimens Standard clinic processes: education, consent, delivery, reporting Lower supply costs by enlarging the specialized network Support Medical Directors and Administrators Financial and Care Delivery reporting for contracting support Utilization management tools

21. Questions & Discussion