Accountable Care Organizations 101. MultiCare Connected Care October 20 22, 2014

Accountable Care Organizations 101 MultiCare Connected Care October 20 22, 2014 1

Objectives 1. Describe what an ACO is and why we believe developing an ACO is important 2. Describe examples of what integration looks like and how we can work together to meet the challenges of health care reform successfully 3. Articulate the three pillars of our ACO approach 2

MHS ACO Strategy & Status Payors Purchasers (Employers) People & Populations Providers 3

BACKGROUND 4

What is an Accountable Care Organization (ACO)? Group of providers responsible for: Meeting the health care needs of a defined population; Working together while pursuing the goals of improved health; Improving the patient experience; and Controlling medical cost and achieving defined clinical outcomes. 1 Better Care for Individuals Better Health for Populations ACOs are built on the foundation of the Triple Aim. 2 Lower Cost per Capita 1 1 National Committee For Quality Assurance - NCQA.org 2 Berwick, Don M. Workshop on Issues Related to Accountable Care Organizations. 2010 5

Goal: Improve Quality via Clinical Integration Communication Patient Experience Medical Management Care Coordination Population Health Technology and Analytics Collaborative communication and data sharing among providers and across the spectrum of care Open communication, active involvement and improved clinical outcomes and access through the use of Patient Centered Medical Homes Chronic Condition and Case Management; frequent ED user and high risk patient management Support to patients across the continuum of care Data management to support clinical outcomes and cost management Integrated technology and data access to patient records, and enhanced continuity of care 6

Why are ACOs evolving? Issues Healthcare costs in the US are rising faster than all other goods and services; these increases are unsustainable Quality of care is inconsistent and geographically determined Declining reimbursement Market Responses Businesses are demanding change in continuously rising insurance rates Implementation of the Affordable Care Act Development of integrated systems and Electronic Health Records Consumerism is raising expectations for quality and price transparency 7

Current vs. Future State Providers PCP Specialist Surgeon Other Providers Services Lab Radiology Imaging Pathology Other Facilities Outpatient Inpatient Surgery Center Rehab Emergency Services Long Term Care Current State Silos and fragmentation Duplication Independent decision making Patient self-navigates system and coordinates services 8

Current vs. Future State Future State Patient-centered and integrated Providers work to coordinate care for patients Designed to meet comprehensive patient needs Utilizes community services and resources 9

NATIONAL TRENDS 10

National Trends More than 600 ACOs operating across the US at the beginning of 2014 5,7 As of the beginning of 2014, it was estimated that 18.2 million American were receiving healthcare through Accountable Care Organizations 6 ACOs are now located in all 50 states and the District of Columbia 6 Quality Performance Comparing commercial ACO results is difficult due to lack of uniformity in measurement and reporting 5 Outcome and financial performance are preliminary and incomplete at this time 5 Exhibit 1: Accountable Care Organizations By State 5 5 Health Affairs May 2014 6 Health Affairs January 2014 7 California HealthCare Foundation, 2014 11

Case Study - Monarch Healthcare ACO OC s Monarch HealthCare ACO Model Gets High Marks for First Year 1 Ranking 2 nd highest performing Pioneer ACO Location and Structure Orange County CA, IPA Size 300 PCPs/50 specialist serving 21,856 members Highest Scores Physician communication, patient satisfaction, care coordination, patient safety metrics Financial Results Cut costs by 5.4% in 2012 Key Drivers for Success Narrowing network with top-performing physicians Giving doctors incentives to perform annual wellness visits Identifying high risk patients using stratification tools and care managers Integrating a 12-month patient history to web interface 1 Physicians Network News.com Posted: Sunday, January 12, 2014 12

Case Study: Anthem Blue Cross PPO/ACO Anthem Blue Cross and HealthCare Partners Save $4.7 Million In Six Months While Improving Quality of Care Provided 1 Location and Structure Southern California, Commercial ACO, Healthcare Partners PPO Size 6300 PCP s and Specialists Key Metrics Reduced incidence of hospital visits and outpatient visits, including ED by 4% Members reported 4% fewer lab and radiology visits; slightly better results in managing cholesterol and blood sugar levels Key Drivers for Success Anthem (insurer) paid management fee and provided rich-data set of information identifying out-of-network utilization which incentivized Partners to reach out to those patients Synergies established between healthplan and providers through data sharing 1 HealthLeadersMedia.com June 18 2014 13

ROADMAP TO SUCCESS 14

Requisites for Successful ACOs Strategic and Cultural Capabilities 8 Shared strategic vision that identifies long term goals within the context of community health needs, provider capabilities and state/federal policy Respectful relationships and clear channels of communication between ACO participants Operational and Infrastructural Capabilities 8 1. Use of care model principles that support the clinical and organizational infrastructure, including care coordination, IT, and financial systems 2. Governance and organizational structure that support ACO strategy through shared hospital-physician leadership, transparent decision making and clarity surrounding participants roles 3. Provider financial incentives and management that address cost, access, quality, and choice and are consistent the ACOs strategic goals 4. Analytics and population management for health analysis and tracking of care model impact on quality of care and cost management 8 8 California Health Care Foundation 15

Provider Leadership and Legal Structures Provider Leadership Majority of ACOs are physician led (51%) or jointly led with hospitals (33%) 3 Legal Requirements Defined management functions and leadership team capable of achieving ACO goals Governing body (Board of Directors) to provide management/operations oversight Bylaws applicable to state and federal requirements Adherence to anti-kickback, anti-trust and other regulatory rules Shared governance between hospitals and physicians Processes in place to ensure ACO participants have meaningful participation 3 Health Affairs June 2014 16

Financial Incentives and Management Fee-For-Service Payment Unit based payment rewarding high volume Value/Outcomes-Based Payment Risk/gain sharing Percent of Premium Bundled payments Pay for Performance (P4P) Full Risk The most successful ACOs to date are those that implement proper financial incentives and closely monitor and manage financial performance. Other necessary capabilities include: Financial investments to develop, utilize and provide ongoing support for payment systems Analytics to monitor cost/quality metrics Sufficient capital and clinical/financial capabilities to support risk assumptions Strategy for transition from lower to higher risk models 17

MULTICARE CONNECTED CARE 18

Antitrust Law and Regulation Sherman Antitrust Act Federal Trade Commission Act Clayton Act Antitrust laws prohibit physicians, hospitals and other providers from collaborating to the extent that allows too much control over the market. Agreements among providers to fix prices are per se illegal. Networks that are clinically or financially integrated can be an exception to the rule, as long as the benefits to the consumer outweigh any anticompetitive effects. Networks must have a high degree of interdependence and cooperation among physicians to control cost and ensure quality. MultiCare is committed to stringently comply with these laws and has developed the infrastructure necessary to meet the clinical integration requirements for Connected Care. 19

Three Pillars for Success Accountable Care Organization (ACO) The Legal Entity Clinically Integrated Network (CIN) The Providers Clinical Collaboratives The Engine Achieving the Triple Aim: Improved Quality, Service and Cost 20

MultiCare Connected Care, LLC MultiCare Connected Care (MCC) is an affiliated entity of MultiCare Health System. MCC is wholly owned by MultiCare who will invest in developing the required care management, population health management and quality improvement programs supported by financial and clinical analytic platforms. MultiCare will fund the start up operations and team. The Governing Board structure and composition is shown here. 21

MultiCare Connected Care Network Substantive clinical integration is the foundation of MultiCare s CIN Detailed, documented clinical integration roadmap Supported by clinical and financial analytics; EMR data exchange Target size: 1,700 providers; all MultiCare facilities Single signature responsibility for payer/plan sponsor agreements, subject to approval of the governing board. 22

Clinical Collaboratives Pediatrics Obesity Appendectomy Medicine COPD Pneumonia Critical Care Sepsis Respiratory Failure Surgery Total Joint Colon Surgery Women s Health OB (e.g. elective C-Sxn rate reduction) GYN (e.g. hysterectomy) Cardiovascular CHF AMI Atrial Fibrillation 23

Paradigm Shifts FROM Sick care Episodic Care Silos & Fragmented Care Exclusively Fee-For-Service Duplication Bricks & Mortar Care Single EHR WIIFM TO Wellness and disease management Seamless comprehensive care across the continuum Patient-Centered & Integrated Total Cost of Care Coordinated Providers Continuum of Care Single Source of Information WIIFU* *What s in it for Us include patients, providers, payers, purchasers = populations 24

MultiCare ACO Closing Thoughts Purchaser activity in the local market is high. MultiCare currently has ACO agreements with a number of commercial payers and is working on pre-launch activities with UW for Boeing. Additionally, MultiCare has responded to the State of Washington ACO RFI. These agreements currently cover approximately 60,000 lives. Reimbursement today is fee-for-service with quality incentive bonus opportunity; gain share and risk share. It is our intent, as our CIN achieves network adequacy in terms of geographic and specialty coverage, to move these arrangements from the MHS owned/employed network to the ACO CIN. We will execute future ACO arrangements under the ACO with the CIN. We believe Accountable Care products, with narrow networks, will become very important in defending and increasing market share. Through Accountable Care products and arrangements, we will provide greater value to our patients and the community by managing the cost of care while ensuring quality and service. 25

Objectives 1. Describe what an ACO is and why we believe developing an ACO is important 2. Describe examples of what integration looks like and how we can work together to meet the challenges of health care reform successfully 3. Articulate the three pillars of our ACO approach 26