1. Health Care Reform: So, where is all this going?

2. Typically, they will be started by the tertiary facilities who have : The internal clinical decision support/ IT infrastructure to get going. While there will be a push to move quickly into commercial, It will likely start with Medicare volume, Develop the tools/processes to manage care Then shift to commercial. ACOs will happen! But Slowly………

3. This will drive the following: Large flow of Medicare money flowing through the ACO mechanism typically controlled by the large hospitals. A huge push to connect providers through health exchanges: Allowing better care coordination Real outcomes data for the rural providers Most providers are unsure what that data would reflect Pay for performance mechanisms….moving slowly now, will gain traction. The need for true hospital oversight of physician practice. ACOs will happen! Continued:

4. There will be a major power shift among providers: Recently The balance of power has swung away from hospitals toward : Surgical Specialties and Ancillary Providers Shifted profitable hospital volume into practice or ASC settings Financially benefiting the physicians Future model Large hospitals will likely be the principle sponsors of ACOs ACOs will control large sums of money which places them in a position of strength in how the rural providers are compensated. While this may not be necessarily a horrible outcome vs. those $’s being controlled by another payer, it does shift power back to those hospitals who lead those efforts. Power Shifts

5. Primary care physicians are key going forward. Their role as gatekeepers will be funded more substantially. It is probable that they will take a more active role in managing downstream costs. It will be in their best interest to know if their referrals are made to cost effective providers and avoid duplicative testing, etc. A shift in power in the market will likely be experienced to acknowledge their role in the market. PCP’s are Key

6. The health care exchanges are likely to look like: Normal insurance plans With the exception of provider pricing P ricing likely to be sub-Medicaid Analysis of these exchanges will be critical due to: Reduction of disproportionate share funding Assuming volume through the exchanges will be poorly funded Increased Insured Patients

7. Will push legislators to consider expanding managed care in the state. Medicaid funding is one of the largest, if not the largest, unknown budget line. While analysis is performed to set the number, it is still subject to actual volume and payments. With expanded coverage, this line item and the associated risk will increase which could result in a desire to expand managed care to the ABD population. Increase in Medicaid Enrollment

8. Fee for service pricing mechanisms are going away or will be deemphasized in the future. Therefore, growth strategies built around “add ancillary services or another doc” solely may not drive additional growth. In the future: The key to revenue growth will be to coordinate care and manage costs better. More IT/clinical decision support resources will be needed. Revenue Growth

9. Will equal demand for more services, especially primary care, specialty physician, and ancillary. It is doubtful that the current capacity of primary care services can meet this demand. In the short run increased volume equals revenue growth. In the long run – emphasis on care coordination equals revenue growth. Means that additional provider resources as well as IT/internal care management functions will be crucial to expand provider revenues. Improved Access to Coverage:

10. Tend to have a far lower market share for commercial/BCBS volume vs. Medicare/Medicaid volume. If the health exchanges are successful and cover their additional volume, much of this benefit may not accrue to the rural providers if they do not bridge this gap. It is typically 20-30% difference in market share between commercial vs. governmental (for example, one client hospital maintains a 72% Care/Caid market share and 44% commercial/BCBS). Rural Hospitals

11. Providers not only need an IT overhaul But an overhaul in internal processes to account for real care coordination/cost management responsibilities that are not considered currently. Having the tools are only half the issue: Most practices do not take seriously their “administration” functions for the Medicaid population And do not have substantive outbound patient contact mechanisms to ensure: Meds are obtained Appointments are kept (both repeat to their practice and downstream referrals) Nor do they have any internal monitoring of patient population health to chart a course to improve outcomes. Overhaul Needed

12. Financial reporting/tracking mechanisms: Currently Providers report revenue based: On volume Tracking with claims processing, etc. Future Revenue will be delayed due to being tied to: Coordination of care Performance indicators Overhaul of financial analysis and revenue reporting: Effecting analysis for: Additional equipment, services, and physicians Overhaul Needed

13. Expansion of RACs to include: State Medicaid programs, therefore: Further reduced reimbursement Requiring administrative effort to defend Expansion of RACs