Insight Into Evolving Payment and Delivery Models

Insight Into Evolving Payment and Delivery Models

Overview Objectives Provide an overview of Accountable Care Organization (ACO)-like payment and delivery models Demonstrate Genentech s commitment to patient health across the continuum of care Executive Summary Accountable care organizations (ACOs) and ACO-like organizations are pilot integrated payer-provider models that are expected to grow in prominence In ACOs, healthcare providers take on greater financial responsibility Genentech has a commitment to patient health and has created customer programs across the continuum of care 2

Providers Are Accepting Greater Financial Accountability Through Alternate Payment Models Traditional Model Evolving Model ACOs and ACO-like entities A range of payment and delivery models wherein providers assume accountability for cost and quality of care for a specific patient population (besides ACOs, other examples include IDNs and medical homes) ACO, accountable care organization; IDN, integrated delivery network. 3

Rapid Growth of ACO-Like Models Is Expected to Continue Growth by Sponsoring Entity 1 11% Covered lives within ACO-like entities in 2014 1 >80% ACO lives within health systems in 2014 1 Up to 41% Covered lives within ACOlike entities by 2020 1 Data represented here include estimates of lives within ACOs, IDNs, select Medical Homes and Bundled Payment Programs; Graphic represents ACO entities only Source: 1. Data on file. Genentech, Inc. 4

ACO Model Adoption Is Variable and Typically Associated with Key Market Drivers ACOs and ACO Lives by State 1 Market drivers 15 24 3 58 1 2 7 11 0 2 0 14 4 0 1 5 4 2 45 14 11 26 8 12 9 12 6 13 5 4 1 3 18 17 1 20 6 10 2 6 26 29 11 3 18 25 19 1 54 16 RISK SHARING COMPETITION LARGE HEALTH SYSTEMS/ MEDICAL GROUPS Increased experience in provider risk sharing 2 Greater competition in areas dominated by a single health plan 3 Large health systems/ medical groups enabling better network management 2 % covered lives in ACOs # = number of ACOs 0-9 10-19 20-29 30+ PUBLIC AND PRIVATE POLICIES Public and private policies addressing cost containment 4-6 Note: All data represented here includes ACOs and IDNs only; not shown: DC, Delaware 0% of lives (0 ACO); upper end of scale adjusted down to 30+% to show greater visual variation across states. Excludes ACOs in Puerto Rico. Sources: 1. Data on file. Genentech, Inc. 2. Auerbach D, et al. Health Affairs. 1991;13(10):1781-88. 3. California Healthcare Foundation. California Healthcare Almanac: Physician Facts and Figures. Oakland, CA: California Healthcare Foundation; 2010. 4. Archambault J. Health Affairs Blog Web site. http://healthaffairs.org/blog/2013/02/25/now-for-the-rest-of-the-story-onmassachusetts-cost-control/. Published February 25, 2013. Accessed May 5, 2014. 5. Gosline A & Rodman E. Boston: Massachusetts Medicaid Policy Institute; September 2012. 6. Gross R. HealthLeaders Interstudy Web site. http://hl-isy.com/healthcare-reform-blog/january-2012/acos-012712. Published on January 27, 2012. Accessed December 17, 2013. 5

ACO Groups with Greater Willingness to Accept Financial Risk Are Driving Market Change Low Monitors Up-to-date on evolving ACO developments Not changing operating models Source: Data on file. Genentech, Inc. 6 Level of financial risk Joiners Believe evolving models are the future and require strategic shift Making limited operational changes Embracers Fully participating as ACO-like entity Making meaningful operational changes to support ACO models High Innovators Creating new ACOlike models, taking on most risk Significantly investing in care redesign and infrastructure Believe they are positioned to succeed 6

ACOs Focus Is on Chronic Diseases but Expanding to Other Areas Spanning the Continuum of Care Continuum of Care Prevention and Screening Diagnosis and Acute Care Chronic Disease Management Advanced Illness Clinical Areas of Focus Population Health Management Pharmacy Management Patient Engagement Source: Data on file. Genentech, Inc. 7 7

ACOs Seek to Manage Chronic Diseases While Increasing Advanced Care Activity Clinical Areas of Focus ACOs prioritize chronic conditions (e.g., diabetes, heart failure) 1 Oncology is a priority but program development exists only within more advanced ACOs 1 Advanced ACOs focus on areas with high potential for ROI generation (e.g., hospice and advanced care planning) 1 Diabetes Heart Failure Asthma/COPD Oncology Cardiology Hypertension ACO Disease Area Focus 2 30% 30% 30% 30% 50% 60% Oncology is mentioned as a high cost driver and future priority for many ACOs. Orthopedics 30% Depression 20% Aetna/US Oncology Network cancer management program showed decreases in ER visits, days, and admits, leading to 12% total cost savings 3 Maternity/OB 20% Palliative 20% 0% 10% 20% 30% 40% 50% 60% 70% Percent of ACOs with disease-area focus ACO, accountable care organization; ROI, return on investment; COPD, chronic obstructive pulmonary disease; OB, obstetrics. Sources: 1. Data on file. Genentech, Inc. 2. ACO Primary and Secondary Market Research. Detailed Insights Document. July-August 2013. 3. Aetna press release. December 6, 2012. http://newshub.aetna.com/press-release/products-and-services/aetna-us-oncology-network-provide-more-evidence-clinically-prove. Accessed January 14, 2014. 8

ACOs Are Shifting From Individual Patient Care to a Population Health Approach Population Health Management Focus on hospital cost reduction, particularly reducing readmissions and unnecessary ER visits 1 Management of high-risk patients through care coordinators and interdisciplinary teams 1 Increasing deployment of pharmacists to lead MTM focused on 1 : Adherence Post-discharge medication review/reconciliation Appropriate use Regional Health System s Compliance Program 2 Combines patient education, monitoring by pharmacist, and communication between pharmacy and PCP to treat CV disease Led to 47% drop in medical costs ACO, accountable care organization; ER, emergency room; MTM, medication therapy management; PCP, primary care physician; CV, cardiovascular. Sources: 1. Data on file. Genentech, Inc. 2. Odum L, Whaley-Connell A. The role of team based care involving pharmacists to improve cardiovascular and renal outcomes. CardioRenal Med. 2012; 2: 243-250. 9

Generic Utilization Is the Most Commonly Used Tactic to Manage Pharmacy Costs Pharmacy Management Providers typically are not at risk for pharmacy costs except in specific cases (e.g., some commercial contracts, BPP) 1 Focus is on increasing generic and lower-cost alternative utilization (e.g., PPIs and statins) 1 Inclusion in quality metrics (P4P) More engaged in P&T committees Development of own formularies in advanced ACOs Common strategies include medical policies, EHR-based management, as well as preferred products within network, education, and deviation tracking 1 Set a generic target rate of 76% or better for the overall generic usage rate for all prescription drugs. Achieved 80%, resulting in savings of $41.1M in 2012 compared to two of the largest insurers in the area. Large Physician Group 2 We re spending a lot more time as part of P&T committees looking at health economic data than we used to. Regional Payer 1 BPP, bundled payment programs; PPI, proton pump inhibitors; P4P, pay for performance; ACO, accountable care organization; EHR, electronic health record. Sources: 1. Data on file. Genentech, Inc. 2. Advocate Physician Partners. The 2013 Value Report, 2013. Rolling Meadows, IL: Advocate Physician Partners; 2013. 10

Patient Engagement Is Critical to Success, Leading to Experimentation With Many Programs Patient Engagement Designing programs to increase awareness and healthy behavior in patients 1 Pursuing partnerships and/or integration to extend networks 1 Patient Engagement Impact on Outcomes 28% 13% Readmitted to a hospital within 30 days of discharge Exploring nontraditional programs such as weight loss management and social events 1 36% 19% Experience a medical error Higher patient engagement is associated with better outcomes 2 100 49% 40 13% 20 0 Less engaged patient Suffer a health consequence from poor communication among providers More engaged patient Sources: 1. Data on file. Genentech, Inc. 2. Nicolato C. Supporting ACO success with meaningful patient engagement. Becker s Hospital Review Web site. http:// www.beckershospitalreview.com/accountable-care-organizations/supporting-acosuccess-with-meaningful-patient-engagement.html. Published August 1, 2013. Accessed May 5, 2014. 11

Genentech Is Committed to Improving Patient Health Throughout the Continuum of Care PBMs Providers Government Employers Hospital Systems ACO-Like Models Specialty Pharmacies Health Plans Manufacturers Prevention and Screening Diagnosis and Acute Care Chronic Disease Management Advanced Illness Oncology Metabolism, Endocrinology, and Thrombolytics Immunology and Ophthalmology Virology and Specialty Care ACO, accountable care organization; PBM, pharmacy benefit manager. Patients are our shared interest 12 12

Genentech Customer Resources and Programs PBMs Providers Government Employers ACO-Like Models Specialty Pharmacies Health Plans Hospital Systems Manufacturers Genentech Programs* Prevention & Screening Diagnosis and Acute Care Chronic Disease Management Advanced Illness Oncology Trend Series Oncology Institute Regional Symposia Case Manager Workshops Improving Stroke Awareness Journey Forward Love Your Colon *Programs are representative only; please contact your Account Manager for more details. 13 13