1. Avalere Health LLC | The intersection of business strategy and public policy Medicare in 2008+: A Framework for Discussion November 2, 2005 Jon Glaudemans Avalere Health LLC

2. © Avalere Health LLC Page 2 Medicare in 2008+:Trends, Challenges, and Choices  Consumerism  Demographics  Technology  Genomics  Participation  Partnership  Enrollment  Solvency  Price Setting  Care Management

3. © Avalere Health LLC Page 3 Societal Trends Consumerism  Demographics   Will beneficiaries’ ability to manage more of their own coverage and care decisions keep pace with nuanced Medicare plan differences and more complex medical decisions?  What role will consumers’ perceptions about care play in determining payment levels at the practitioner level?  How will Medicare adapt to the bifurcated Medicare population and the varying preferences and needs of the healthy aged vs. the frail elderly?  How will Medicare and Medicaid coordinate their support of condition-appropriate care to the low-income, frail elderly population?

4. © Avalere Health LLC Page 4 Medical Trends Innovative Technologies  Genomic Advances   How will Medicare use emerging data on new and existing treatments in determining coverage and payment?  How will Medicare promote and/or respond to the increased information and evidence that might enable customized care for individual conditions and illnesses?  As our ability to assess individual-level risk factors increases, how will Medicare use this data while retaining its social insurance function and preventing discrimination?  As our ability to fashion personalized Rx treatments increases, how will Medicare adapt?

5. © Avalere Health LLC Page 5 Financial Challenges Part D Enrollment  Trust Fund Solvency   If enrollment lags projections and premiums rise in 2008+, what choices are available to Medicare and its beneficiaries?  What can and should Medicare do in 2006/7 to assure a broad and representative risk pool for Part D enrollees into the future?  As Medicare’s solvency deteriorates, what will be the impact on Part D’s benefit structure and progressiveness?  How will Medicare balance beneficiaries’ view of Medicare as a “defined benefit” with the statute’s “defined contribution” approach?

6. © Avalere Health LLC Page 6 Relationship Challenges Provider Participation  Business Partnership   As Medicare expands its reliance on primary care physicians, are market forces sufficient to assure an adequate supply?  How will Medicare exert its market power in areas of e-technology and evidence- based medicine without jeopardizing physicians’ willingness to participate?  Will Medicare prove to be a sufficiently reliable “partner” with private plans in terms of transparency and predictability?  How will private “partners” be held publicly accountable?  How will Medicare address below-average performers in pay-for-performance?

7. © Avalere Health LLC Page 7 Policy Choices Price Setting  Care Manager   Can Medicare continue to rely on private entities (MACs, PDPs, MA-PDs) to establish market-based price/coverage policies?  If Medicare continues its move to capitated payment systems, will its fee-for-service policies follow – and not lead – private sector decisions?  What will be the respective roles of the Medicare program and its beneficiaries in playing a more aggressive role in “managing” care?  Will efforts to manage elements and/or episodes of care (e.g., radiology, diabetes) perpetuate artificial boundaries of care?

8. © Avalere Health LLC Page 8 Medicare in 2008+: Trends, Challenges, and Choices  Consumerism  Demographics  Technology  Genomics  Participation  Partnership  Enrollment  Solvency  Price Setting  Care Management