1. Care Delivery in RI Now, and A Look Ahead May 2015 Gus Manocchia, MD Senior Vice President & Chief Medical Officer BCBSRI

2. 2 The Growing Affordability Gap Cumulative active employee health care costs vs. wage increase Source: Towers Watson Health Care Cost Survey 2010 (active employee data) and Bureau of Labor Statistics, seasonally adjusted data from the Current Employment Statistics Survey August to August, 2000 – 2009 Health Care Cost Growth vs. Wage Increases

3. Hospital 38% Lab 4% Physician 15% Pharmacy 18% Other 6% Imaging 7% Surgery 9% Machine Tests 3% BCBSRI Healthcare "Pie" 3

4. 4 Regional and National Benchmarks tell us BCBSRI prices to providers on target BCBSRI has focused on large scale price moderation with hospitals BCBSRI Impact on Hospital Price Increases BCBSRI Price for Medical Services; Too High? Incurred: Nov 2013 – Oct 2014; Allowed Dollars; RI Residents, Commercial & Medicare Advantage Only

5. 5 Blue Cross Commercial Utilization Compared to “Well Managed” Markets Regional and National Benchmarks tell us utilization is too high Utilization of Services; Too High?

6. Primary Care Reimbursement Transition to Systems of Care 6

7. BCBSRI Supporting Formation of Systems of Coordinated Care Rhode Island Today Rhode Island in 2018 Advanced Primary Care Medical home Labs & Radiology Hospitals Advance Primary Care Medical Home 24/7 Access Nursing homes Partnering specialists physicians Labs, Radiology, etc. Hospitals 7 Independent specialist physicians Home Care Rehab: PT/OT

8. Today’s Membership in Systems of Coordinated Care Membership Distribution Denominator = 387K BCBSRI Members Living in Rhode Island 2018 Goal: 70% of BCBSRI Members in Systems of Coordinated Care 8

9. CTC PCMH Practice considerations: “Raise the bar” Focus on “Population Health” Higher Quality = Lower Cost … “Community” Expectations [access, cost, patient experience, etc] No More “Hamster Wheels” … How do you care for the “sickest of the sick” ? What happens when patients get outside the PCMH practice confines ?? Do you know how your practice is performing ?? Etc, etc … 9

10. Retail Based Clinics CVS MinuteClinic 10

11. Questions?