1. Changing Landscape in Provider Reimbursement Models Presentation to National Association of County Behavioral Health and Developmental Disability Directors March 4, 2013 Sandra Forquer, PhD SVP, State Government Programs Optum Public Sector sandra.forquer@optum.com

2. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Information- and technology-enabled health services Helping to make the health care system work better for everyone. Health care coverage and benefits Helping people live healthier lives. Optum Is Part of UnitedHealth Group

3. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. “A shift toward increased collaboration between payors and providers is driving innovation in outcome-based payment models and delivery system configuration.” — Sam Ho, Chief Medical Officer, UnitedHealth Group Changing Landscape in Provider Reimbursement Models

4. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Payment Reform Strategy Delivery System Strategy Network Innovation Strategy to Increase Value We are developing and implementing a suite of value-based incentive programs that reward care providers for improvements in quality and efficiency We are supporting delivery systems as they become more integrated and accountable for cost, quality and experience outcomes Alignment across our Network, Product and Clinical innovations allows us to increase value for customers and consumers

5. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Transition of the Model Compensation Continuum (Level of Financial Risk) Small % of financial riskLarge % of financial risk Moderate % of financial risk No Accountability Full Accountability Moderate Accountability Fee-for- service Performanc e- based Contracting Bundled and Episodic Payments Shared Savings Shared Risk Capitation a. 100% case by case UM Capitation + Performance- based Contracting In selected provider arrangements, we will be transitioning and supporting financial risk, accountability and utilization management practices. Basic Q and U measurements b. Utilization stats review supplemented by case review c. Data management and system Modifications to achieve targets d. Internal ownership of performance using data management Max quality process and outcomes driven measurements Passive involvement Provider engaged Provider active in management Assumes accountability

6. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 6 Nearly 10% of our total spending on network-based health care services across all OptumHealth Behavioral Solutions lines of business is tied to performance- based incentive contracts that reward providers for increased collaboration, outcome-based results, and improved cost-efficiencies. Performance-Based Contracting CA AZ NM MO GA RI MA FL OH IL WI MN States with formal performance-based agreements States with performance-based agreements in process TX CT IA NE WA KS CO OK KY NY

7. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Performance-Based Contracting – At A Glance  Demonstrated use of Evidence-Based Practices (EBP) Qualifies as High-Volume provider Participates in periodic meetings with clinical operations staff to review data Submits claims electronically Sample Facility Participation Requirements Sample Metrics Facility will earn escalator based sharing of savings if performance is within targeted range Facility will earn performance bonus for achievement of quality metrics Sample Performance Incentives Reduction in Average Length of Stay Reduction in 30 day Readmission rate to any inpatient LOC Improved results on ambulatory follow-up rates (7 days post inpatient discharge) Incentivizing provider performance leads to better outcomes for consumers

8. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Feet on the Street 8 UnitedHealthcare Community Plan partnered with Recovery Connection to provide behavioral health care especially designed to meet patients at the point of need: on the street Recovery Connection is a program designed to manage behavioral health care for the top 195 “high-utilizer” TennCare members in West Tennessee. EXAMPLE 1: Necessity as the Mother of Innovation

9. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Helping Our Members Where They Live A Majority of members were in the defined area of Shelby county West region, which includes many of these members, has a high rate of homelessness Higher overall expenses for members in area Significant problem with continuity of care in area Service Coordinators have a minimum of Bachelors-level education They are trained as a community interventional specialist, in conjunction with Neumann College, through a special curriculum Are supervised by a licensed Behavioral Health clinician 9 EXAMPLE 1: Necessity as the Mother of Innovation

10. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. Role of Service Coordinators Service Coordinators are responsible for providing street-based care coordination and connections to service providers and groups. They take part in discharge planning when members discharge from Inpatient care Help ensure members receive timely follow-up appointments with a Behavioral Health provider after Inpatient discharge Assist members connect with Primary Care Providers to address co-morbid conditions Connect members with family support systems to assist in community stabilization Pay for Performance The Recovery Connection group is paid a basic case rate, with an identified pool for meeting performance measures: –Initial assessments for hospital admissions with 24 hours of admission –Full assessments for all members completed with 30 days of assignment –Increases in 7-day follow-up after hospitalization (FUH) appointment –Decreases in 30-day readmissions 10 EXAMPLE 1: Necessity as the Mother of Innovation

11. Confidential property of Optum. Do not distribute or reproduce without express permission from Optum. 11 Pilot Background & Objectives In New Mexico, a performance-based contracting initiative aimed at improving affordability, quality outcomes and member health was launched July 2010 Specific objectives were to increase community tenure for consumers with history of Out-Of-Home (OOH) placements within the New Mexico public sector population Participation Requirements Program Execution Payments Demonstrated use of EBP and support models Minimum membership levels Weekly rounds with OHBS Data reviews Timely claims submission Program Structure Measured Outcomes MetricTargetAchievement Reduction in OOH Units 20%55% Readmit Rate Not to exceed baseline by more than 2% Readmit Rate Declined Critical Incidents Not to exceed baseline by more than 2% Critical Incident Rate Declined Post-Pilot Expansion Identified 25 high volume facilities serving both commercial and public sector members as part of a phased implementation effort Aligning incentives to achieve reduction in ALOS, readmissions, and improvements in HEDIS 7-day ambulatory follow up Provider has opportunity to earn rate escalator based on achievement levels Pay-for-performance Contracting Improves System of Care EXAMPLE 2: Necessity as the Mother of Innovation

12. Thank you. For more information, please contact: sandra.forquer@optum.com