1. Medicaid Expansion New Issues and Regulations

2. Medicaid Expansion Map 2 Source: Medicaid & CHIP Monthly Applications, Eligibility Determinations and Enrollment Report, March 2015. Centers for Medicare and Medicaid Services.

3. Impact of Medicaid Expansion Avg. Monthly Enrollment in Medicaid/CHIP Pre- PPACA: 57,794,096 Avg. Monthly Enrollment in Medicaid/CHIP Post- PPACA (March 2015) 71,050,561 Increase of 21% overall, 54% for Child Enrollment as a percentage of Total Source: Medicaid & CHIP Monthly Applications, Eligibility Determinations and Enrollment Report, March 2015. Centers for Medicare and Medicaid Services.

4. New & Continuing Challenges Enrollment and Renewal Issues Access to Care – Network Adequacy Financial Stability of State-Based Exchanges Political Concerns Complexity of New Regulations MLR Quality Measures

5. Regulatory Complexity Since PPACA was enacted, there have been dozens of new and proposed federal regulations enacted that affect the Medicaid Program. NCSL has identified over 220 newly enacted state laws and pending resolutions in 41 states* New rules impact every aspect of the program Proposed rules add new facets to the program *As of July 15, 2015

6. NEW GUIDANCE IN 2015 Coverage of Housing-Related Activities and Services for Individuals with Disabilities Home and Community-Based Setting Requirements Criminal Background Checks for Providers Medicaid Managed Care, CHIP Delivered in Managed Care, Medicaid and CHIP Comprehensive Quality Strategies, and Revisions Related to Third Party Liability Mental Health and Substance Abuse Disorder Parity; Behavioral Health Services Federal Poverty Level Standards Medicaid Managed Care Marketing

7. What is an ACO? Image, Institute for Healthcare Improvement (Available on www.IHI.org)www.IHI.org “Groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to provide high-quality care to their patients to help them deliver better care at lower cost.” (CMS 2015)

8. April 2015 Page 2 Source: CMS Medicare Shared Savings Program ACO and Pioneer ACO Assigned Beneficiary Population by ACO by County (counties with more than 1 percent of an ACO’s assigned beneficiaries )

9. Open to all physician/Hospitals interested in shared savings model Must serve at least 5,000 Medicare Lives Bonus potential depends on Medicare cost savings, quality metrics Accelerated pathway to ACO formation designed for organizations able to assume clinical risk immediately Must serve at least 15,000 Medicare Lives Must meet all quality measurements Offers higher risk, higher reward model: providers can earn reward of 50-70% of savings Medicare Shared Savings ProgramMedicare Pioneer ACO Model 32 total - now closed Physician-based and rural providers (Critical access) who come together voluntary to give coordinated high quality care but lack capital Advanced shared saving based on expected reductions Upfront, fixed payment Upfront, variable based on population Monthly payment depending on size “Virtual Integration” or “Virtual Delivery Models” involving a commercial payer as the entity that provides financial incentives for quality and cost performance to the provider organization Greater flexibility on contract models and payment models Focus on premium reduction, cost savings Medicare Advanced Payment Model Commercial ACO Model Source: CMS, https://data.cms.gov/ACO/Medicare-Shared-Savings-Program-Accountable-Care-O/ay8x-m5k6?

10. New for 2016 ACO Investment Model Pre-paid shared savings to encourage formation of new ACOs in rural & underserved areas and to encourage transition of current ACOs to a model which takes on more financial risk Includes Telehealth Expansion, Beneficiary Coordinated Care Award Application deadline for 2017 is 6/2016 Program may extend through 2019-20

11. Initial Results of ACO Programs Medicare Shared Savings Program (MSSP) Year One results 58 of the ACOs held spending $705 million below targets and earned performance payments of more than $315 million One ACO overspent by $10 million and owed shared losses of $4 million Improvement in 30 of 33 quality measures Pioneer ACO program Year 2 results (now closed) Pioneer ACOs generated estimated savings of $96 million and earned shared savings payments of $68 million 11 Pioneer ACOs earned shared savings, 3 generated losses and 3 elected to defer reconciliation until after Year 3 Improvement in 28 of 33 quality measures Source: CMS Fact Sheet: Medicare ACOs continue to succeed in improving care, lowering cost growth September 16, 2014

12. Final Regulations Creates new Track 3 based on Pioneer Model Streamlines data sharing between CMS & ACOs Establishes waiver of 3-day Skilled Nursing Facility rule for prospective beneficiaries Refines policies for resetting ACO benchmarks

13. Commercial ACOs As of January 1, 2015, 217 ACOs had commercial contracts and 103 had commercial & government contracts* Similar & different challenges from Medicare ACOs - Antitrust Quality Measures are Variable Contracting Issues Consolidation Pressures *Source: Leavitt Partners

14. Impact on Private Sector Pressure from Employers on Payers, Providers to create innovative products, networks, programs to lower cost Data sharing/privacy issues Integration requires trust Agreement on metrics What constitutes success?