1. LAN Update Accelerating and Aligning Clinical Episode Payment Models: Preliminary Recommendations on Elective Joint Replacement February 23, 2016 12:00 – 1:15 pm ET

2. 2 WELCOME Anne Gauthier LAN Project Leader, CMS Alliance to Modernize Healthcare (CAMH)

3. 3 SESSION OBJECTIVES Learn About Clinical Episode Payment (CEP) Work Group’s recommendations around episode payment for elective joint replacement Arkansas Payment Improvement Initiative Innovations in Clinical and Patient-Reported Outcome Measurement for Joint Replacement Engage Ask your questions of the presenters

4. 4 AGENDA Time (ET)Topic 12:00 – 12:05 pm Opening Remarks 12:05 – 12:15 pm LAN and Guiding Committee Update 12:15 – 12:30 pm CEP Work Group Overview 12:30 – 12:45 pm Arkansas Healthcare Payment Improvement Initiative 12:45 – 1:10 pm Facilitated Discussion 1:10 –1:15 pm Upcoming LAN Activities and Closing Comments

5. 5 POLL

6. 6 GUIDING COMMITTEE WELCOME Mark Smith Guiding Committee Co-Chair Visiting Professor, University of California at Berkeley Clinical Professor of Medicine, University of California at San Francisco

7. 7 OUR GOAL Goals for U.S. Health Care 2016 30% In 2016, at least 30% of U.S. health care payments are linked to quality and value through APMs. 2018 50% In 2018, at least 50% of U.S. health care payments are so linked. These payment reforms are expected to demonstrate better outcomes and lower costs for patients. Adoption of Alternative Payment Models (APMs) Better Care, Smarter Spending, Healthier People

8. 8 LEADERSHIP GROUPS LAN has established 7 groups with varying purposes Guiding Committee Work Groups APM FPT APM Framework & Progress Tracking Payer Collaborative CEP Clinical Episode Payment PBP Population Based Payment Affinity Groups CPAG Consumer & Patient PAG Purchaser States State Engagement

9. 9 APM FRAMEWORK The framework situates existing and potential APMs into a series of categories. The framework is a critical first step toward the goal of better care, smarter spending, and healthier people.framework Serves as the foundation for generating evidence about what works and lessons learned Provides a road map for payment reform capable of supporting the delivery of person-centered care. Acts as a "gauge" for measuring progress towards adoption of alternative payment models Establishes a common nomenclature and a set of conventions that will facilitate discussions within and across stakeholder communities Category 1 Fee for Service – No Link to Quality & Value Category 2 Fee for Service – Link to Quality & Value Category 3 APMs Built on Fee-for-Service Architecture Category 4 Population-Based Payment A Foundational Payments for Infrastructure & Operations B Pay for Reporting C Rewards for Performance D Rewards and Penalties for Performance A APMs with Upside Gainsharing B APMs with Upside Gainsharing/Downside Risk A Condition-Specific Population-Based Payment B Comprehensive Population-Based Payment Population-Based Payment

10. 10 APM MEASUREMENT The LAN intends to use the APM Framework as a "gauge" for measuring progress towards adoption of APMs Payer Collaborative A diverse group of health plans assembled to inform the LAN's approach for measuring adoption of APMs Measurement Pilot A subset of Payer Collaborative participants will take part in an exercise to further inform and test the feasibility of the approach The resulting approach will be used to measure the nation's progress towards the goals of 30 percent adoption by 2016 and 50 percent adoption by 2018

11. 11 PBP AND CEP WORK GROUPS Population-Based Payment (PBP) Work Group Sprints Launched Patient Attribution Financial Benchmarking Performance Measurement Data Sharing Clinical Episode Payment (CEP) Work Group Sprints Launched Elective Hip and Knee Replacement Maternity Cardiac Care

12. 12 CONTACT US We want to hear from you! Website www.hcp-lan.org | www.lansummit.org Twitter @Payment_Network Linked-In https://www.linkedin.com/groups/8352042 YouTube http://bit.ly/1nHSf1H Email PaymentNetwork@mitre.org

13. 13 LAN SUMMIT https://www.lansummit.org Spring LAN Summit April 25-26, 2016 Sheraton Hotel 8661 Leesburg Pike Tysons, VA 22182 Tysons, VA Save the Date Presentations Planned from Work Groups on Work Group Products Call for Sessions Coming Soon! (end of February)

14. 14 GUIDING COMMITTEE Q&A

15. 15 PANEL FACILITATOR Lewis Sandy Member, LAN Guiding Committee Chair, HCPLAN Clinical Episode Payment (CEP) Work Group Executive Vice President, UnitedHealth Group

16. 16 ELECTIVE JOINT REPLACEMENT Elective hip and knee replacement for CEP models The draft white paper titled Accelerating and Aligning Joint Replacement Episode Payment: Considerations and Recommendations describes bundled payment for episodes of elective hip and knee replacement. The white paper reviews previous and existing joint replacement episode payment efforts in order to develop a set of recommendations that can potentially pave the way for broad adoption of bundled payment in a way that has not yet occurred. Key Components Design Elements Recommendations Operational Issues Development Dec. 2015 – Feb. 2016 Draft Release Feb. 26, 2016 Public Comment Feb. 26 – Mar. 28, 2016 Revise TBD Final Release TBD

17. 17 WORK GROUP MEMBERS Amy Bassano Director, Patient Care Models Group Center for Medicare and Medicaid Innovation, CMS Edward Bassin, PhD Chief Analytics Officer Archway Health John Bertko Chief Actuary Covered California Kevin Bozic, MD Chair, Department of Surgery and Perioperative Care Dell Medical School The University of Texas at Austin Alexandra Clyde Corporate Vice President Global Health Policy, Reimbursement, and Health Economics, Medtronic Brooks Daverman Director of Strategic Planning and Innovation State of Tennessee François de Brantes Executive Director Health Care Incentives Improvement Mark Froimson, MD Executive Vice President, Chief Clinical Officer Trinity Health Robert Lazerow Practice Manager, Research and Insights The Advisory Board Company Catherine MacLean, MD, PhD Chief Value Medical Officer Hospital for Special Surgery Jennifer Malin, MD Staff Vice President, Clinical Strategy Anthem Carol Sakala Director of Childbirth Connection Programs National Partnership for Women & Families Richard Shonk, MD, PhD Chief Medical Officer The Health Collaborative Steven Spaulding Senior Vice President, Enterprise Networks Arkansas Blue Cross Blue Shield Barbara Wachsman Chair Pacific Business Group on Health

18. 18 WORK GROUP CHARGE Provide a Directional Roadmap to: Providers Health Plans ConsumersPurchasersStates Promote Alignment: Design Approach Alignment Approach Find a Balance Between: Alignment/consistency and flexibility/innovation Short-term realism and long-term aspiration

19. CLINICAL EPISODE Clinical episode or episode of care is a series of temporally continuous healthcare services related to the treatment of a given spell of illness or provided in response to a specific request by the patient or other entity.

20. CLINICAL EPISODE PAYMENT Clinical episode payment is a bundled payment model that considers the quality, costs, and outcomes for a patient-centered course of care over a longer time period and across care settings.

21. 21 PURPOSE OF EPISODE PAYMENT Episode Payments Reflect How Patients Experience Care: A person develops symptoms or has health concerns He or she seeks medical care Providers treat the condition The patient receives care for his or her illness or condition Episode Payments Reflect How Patients Experience Care: A person develops symptoms or has health concerns He or she seeks medical care Providers treat the condition The patient receives care for his or her illness or condition Episode Payment Can: Create incentives to break down existing siloes of care Promote communication and coordination among care providers Improve care transitions Respond to data and feedback on the entire course of illness or treatment Episode Payment Can: Create incentives to break down existing siloes of care Promote communication and coordination among care providers Improve care transitions Respond to data and feedback on the entire course of illness or treatment Goal: The treatments the patients receive along the way reflect their wishes and cultural values.

22. 22 EPISODE SELECTION CRITERIA Empowering Consumers Conditions & procedures with opportunities to include patients and family caregivers’ through the use of decision aids support for shared decision-making; goal setting and support for identifying high-value providers. $ High Volume, High Cost Conditions & procedures for which high cost is due to non-clinical factors such as inappropriate service utilization and poor care coordination that correlate with avoidable complications, hospital readmissions and poor patient outcomes. Unexplained Variation Conditions & procedures for which there is high variation in the care that patients receive, despite the existence evidenced based “best” practices. Care Trajectory Conditions & procedures for which there is a well- established care trajectory, which would facilitate defining the episode start, length and bundle of services to be included.  Availability of Quality Measures Conditions & procedures with availability of performance measures that providers must meet in order to share savings which will eliminate the potential to incentivize reductions in appropriate levels of care.

23. 23 WHY JOINT REPLACEMENT?

24. 24 EPISODE PARAMETERS $  Role & Perspective of Stakeholders Data Infrastructure Issues Regulatory Environment

25. 25 EPISODE DESIGN RECOMMENDATIONS Design Elements 1. Episode Definition 2. Episode Timing 3. Patient Population 4. Services 5. Patient Engagement Elective & appropriate total knee replacement due to osteoarthritis 30 d. pre-procedure to 90 d. post- discharge & meet requirements Broadest-possible pool of patients with risk/severity adjusted All services need for joint replacement Tools assess function & care path with transparent cost & care info 6. Accountable Entity 7. Payment Flow8. Episode Price 9. Type and Level of Risk 10. Quality Metrics Physician-level clinician preferred with caveats Retrospective reconciliation with upfront FFS 2 years historical cost Balance regional/provider data Upside/ Downside Risk PROMs and quality scorecards

26. 26 Stakeholder Perspectives: Ensure that the voices of all stakeholders – consumers, patients, providers, payers, states and purchasers – are heard in the design and operation of episode payments Data Infrastructure: Understand and develop the systems that are needed to successfully operationalize episode payment Regulatory Environment: Recognize and understand relevant state and/or federal regulations, and understand how they support or potentially impede episode payment implementation OPERATIONAL CONSIDERATIONS

27. 27 PANEL SPEAKER Steve Spaulding Senior Vice President, Enterprise Networks Arkansas Blue Cross Blue Shield

28. ARKANSAS BLUE CROSS and BLUE SHIELD An Independent Licensee of the Blue Cross and Blue Shield Association Arkansas Healthcare Payment Improvement Initiative Steve Spaulding Senior Vice President, Enterprise Networks Arkansas Blue Cross and Blue Shield February 23, 2016

29. ARKANSAS BLUE CROSS and BLUE SHIELD 29 Arkansas Healthcare Payment Improvement Initiative Today, we face major healthcare challenges in Arkansas  The health status of Arkansans is poor, the state is ranked at or near the bottom of all states on national health indicators, such as heart disease and diabetes  The healthcare system is hard for patients to navigate, and it does not reward providers who work as a team to coordinate care for patients  Healthcare spending is growing unsustainably: Insurance premiums doubled for employers and families in past 10 years (adding to uninsured population) Large projected budget shortfalls for Medicaid

30. ARKANSAS BLUE CROSS and BLUE SHIELD 30 Arkansas Healthcare Payment Improvement Initiative Our vision to improve care for Arkansas is a comprehensive, patient-centered delivery system … Objectives For patients For providers ▪ Improve the health of the population ▪ Enhance the patient experience of care ▪ Enable patients to take an active role in their care ▪ Reward providers for high-quality, efficient care ▪ Reduce or control the cost of care How care is delivered Population-based care ▪ Medical homes ▪ Health homes Episode-based care ▪ Acute, procedures or defined conditions Four aspects of broader program ▪ Results-based payment and reporting ▪ Health care workforce development ▪ Health information technology (HIT) adoption ▪ Expanded access for health care services

31. ARKANSAS BLUE CROSS and BLUE SHIELD 31 Arkansas Healthcare Payment Improvement Initiative Payers recognize the value of working together to improve our system, with close involvement from other stakeholders … Coordinated multi-payer leadership … ▪ Creates consistent incentives and standardized reporting rules and tools ▪ Enables change in practice patterns as program applies to many patients ▪ Generates enough scale to justify investments in new infrastructure and operational models ▪ Helps motivate patients to play a larger role in their health and healthcare 1 Center for Medicare and Medicaid Services

32. ARKANSAS BLUE CROSS and BLUE SHIELD Arkansas Healthcare Payment Improvement Initiative 32 Medicaid and private insurers believe paying for results, not just individual services, is the best option to improve quality and control costs   Transition to payment system that rewards value and patient health outcomes by aligning financial incentives   Reduce payment levels for all providers regardless of their quality of care or efficiency in managing costs   Pass growing costs on to consumers through higher premiums, deductibles and copayments (private payers), or higher taxes (Medicaid)   Intensify payer intervention in decisions though managed care or elimination of expensive services (e.g. through prior authorizations) based on restrictive guidelines   Eliminate coverage of expensive services or eligibility

33. ARKANSAS BLUE CROSS and BLUE SHIELD Arkansas Healthcare Payment Improvement Initiative 33 Ensuring high-quality care for every Arkansan is at the heart of this initiative, and is a requirement to receive performance incentives Two types of quality metrics for providers Description 1 Quality metric(s) “to pass” are linked to payment  Core measures indicating basic standard of care was met  Quality requirements set for these metrics, a provider must meet required level to be eligible for incentive payments  In select instances, quality metrics must be entered in portal (heart failure, ADHD) 2 Quality metric(s) “to track” are not linked to payment  Key to understand overall quality of care and quality improvement opportunities  Shared with providers but not linked to payment 1 There are five or fewer per episode

34. ARKANSAS BLUE CROSS and BLUE SHIELD Arkansas Healthcare Payment Improvement Initiative 34 We have worked closely with providers and patients across Arkansas to shape an approach and set of initiatives to achieve this goal ▪ Providers, patients, family members and other stakeholders who helped shape the new model in public workgroups ▪ Public workgroup meetings connected to 6-8 sites across the state through videoconference ▪ Months of research, data analysis, expert interviews and infrastructure development to design and launch episode-based payments ▪ Updates with many Arkansas provider associations (e.g., AHA, AMS, Arkansas Waiver Association, Developmental Disabilities Provider Association) 500+ 21 16 Monthly

35. ARKANSAS BLUE CROSS and BLUE SHIELD The episode-based model is designed to reward coordinated, team-based, high-quality care for specific conditions or procedures 35 ▪ Coordinated, team-based care for all services related to a specific condition, procedure, or disability (e.g., pregnancy episode includes all care prenatal through delivery) The goalAccountability ▪ A provider “quarterback,” or Principal Accountable Provider (PAP) is designated as accountable for all pre-specified services across the episode (PAP is provider in best position to influence quality and cost of care) Incentives ▪ High-quality, cost-efficient care is rewarded beyond current reimbursement, based on the PAP’s average cost and total quality of care across each episode DETAILS FOLLOW Arkansas Healthcare Payment Improvement Initiative

36. ARKANSAS BLUE CROSS and BLUE SHIELD The model rewards a Principal Accountable Provider (PAP) for leading and coordinating services and ensuring quality of care across providers 36 PAP role PAP selection: ▪ Payers review claims to see which providers patients chose for episode related care ▪ Payers select PAP based on main responsibility for the patient’s care PAP selection: ▪ Payers review claims to see which providers patients chose for episode related care ▪ Payers select PAP based on main responsibility for the patient’s care What it means … ▪ Physician, practice, hospital or other provider in the best position to influence overall quality, cost of care for episode Core provider for episode ▪ Leads and coordinates the team of care providers ▪ Helps drive improvement across system (e.g., through care coordination, early intervention, patient education, etc.) Episode “Quarterback” Performance management ▪ Rewarded for leading high-quality, cost- effective care ▪ Receives performance reports and data to support decision-making NOTE: Episode and health home model for adult DD population in development. Model will utilize lead provider and health home to drive coordination Arkansas Healthcare Payment Improvement Initiative

37. ARKANSAS BLUE CROSS and BLUE SHIELD How episodes work for patients and providers (1/2) 37 Patients seek care and select providers as they do today Providers submit claims as they do today Payers reimburse for all services as they do today 123 Patients and providers deliver care as today (performance period) Arkansas Healthcare Payment Improvement Initiative

38. ARKANSAS BLUE CROSS and BLUE SHIELD How episodes work for patients and providers (2/2) 38 ▪ Based on results, providers will: ▪ Share savings: if average costs below commendable levels and quality targets are met ▪ Pay part of excess cost: if average costs are above acceptable level ▪ See no change in pay: if average costs are between commendable and acceptable levels Review claims from the performance period to identify a “Principal Accountable Provider” (PAP) for each episode Payers calculate average cost per episode for each PAP 1 Compare average costs to predetermined “commendable” and “acceptable” levels 2 456 Calculate incentive payments based on outcomes after close of 12-month performance period 1 Appropriate cost and quality metrics based on latest and best clinical evidence, nationally recognized clinical guidelines and local considerations Arkansas Healthcare Payment Improvement Initiative

39. ARKANSAS BLUE CROSS and BLUE SHIELD Five initial episodes launched in July 2012 (1/2) 39 Ambulatory URI Perinatal (non-NICU 1 ) Acute-, post-acute heart failure ADHD Total Hip/ Knee replacement Details ▪ Includes colds, sore throats, sinusitis ▪ Care from initial consultation to 21 days after ▪ Excludes inpatient hospitalizations and surgical procedures ▪ Prenatal care, delivery and postnatal care for the mother ▪ 40 weeks before to 60 days after delivery ▪ Excludes neonatal care ▪ Care from hospital admission for heart failure to 30 days after discharge ▪ Care over 12-month period, including all ADHD services and pharmacy costs (with exception of initial assessment of patient) ▪ Care from 30 days before to 90 days after the surgical procedure NOTE: Episode and health home model for adult DD population in development. 1 Neonatal intensive care unit Arkansas Healthcare Payment Improvement Initiative

40. ARKANSAS BLUE CROSS and BLUE SHIELD Five initial episodes launched in July 2012 (1/2) 40 Ambulatory URI Perinatal (non-NICU 1 ) Acute-, post-acute heart failure ADHD Total Hip/ Knee replacement Principal Accountable Provider (PAP) ▪ First provider to diagnose patient in-person ▪ Delivering provider ▪ Admitting hospital ▪ Depends on care pathway Physician Licensed clinical psychologist, and/or RSPMI provider ▪ Orthopedic surgeon NOTE: Episode and health home model for adult DD population in development. 1 Neonatal intensive care unit Arkansas Healthcare Payment Improvement Initiative

41. ARKANSAS BLUE CROSS and BLUE SHIELD Guiding principles that payers use to determine cost levels (e.g., ‘commendable’ and ‘acceptable’ thresholds) and incentive payments 1.Reward high-quality, efficient delivery of clinical care 2.Promote fairness by considering patient access, provider economics and changes required for improvement 3.Acknowledge that poor performance is a reality and should not be rewarded 4.Protect quality and access by setting a gain-sharing limit at a reasonable, achievable level 5.Sustain thresholds for reasonable period to allow for adjustment and learning 41 Arkansas Healthcare Payment Improvement Initiative

42. ARKANSAS BLUE CROSS and BLUE SHIELD Each payer assesses historic provider average costs for an episode 42 Year 1: Preparatory period Year 1: Distribution of provider costs Arkansas Healthcare Payment Improvement Initiative

43. ARKANSAS BLUE CROSS and BLUE SHIELD … then selects thresholds to promote high- quality, guideline-based and cost-effective care 43 Year 1: Preparatory period Year 1: Distribution of provider costs Low High Acceptable Commendable Gain sharing limit Individual providers, in order from highest to lowest average cost Arkansas Healthcare Payment Improvement Initiative

44. ARKANSAS BLUE CROSS and BLUE SHIELD Selected thresholds applied to provider performance in the following year … even though we expect that cost effectiveness will have improved 44 Low High Year 2: Performance periodYear 1: Distribution of provider costs Year 2: Distribution of provider costs Acceptable Commendable Gain sharing limit Individual providers, in order from highest to lowest average cost Arkansas Healthcare Payment Improvement Initiative

45. ARKANSAS BLUE CROSS and BLUE SHIELD PAPs that meet quality standards and have average costs below the commendable threshold will share in savings up to a limit 45 Shared savings Shared costs No change Low High Individual providers, in order from highest to lowest average cost Acceptable Commendable Gain sharing limit Year 2: Performance period Arkansas Healthcare Payment Improvement Initiative

46. ARKANSAS BLUE CROSS and BLUE SHIELD What this approach means for a PAP’s opportunity to share in gains 46 What this means for PAPs ▪ There can be many winners Aim to have as many providers as possible gain Risk/reward levels are set to make this a reality ▪ Average costs are what count Episode costs are risk adjusted to ensure fairness Outliers are removed Arkansas Healthcare Payment Improvement Initiative

47. ARKANSAS BLUE CROSS and BLUE SHIELD PAPs will be provided new tools to help measure and improve patient care 47 Example of provider reports Reports provide performance information for PAP’s episode(s): ▪ Overview of quality across a PAP’s episodes ▪ Overview of cost effectiveness (how a PAP is doing relative to cost thresholds and relative to other providers) ▪ Overview of utilization and drivers of a PAP’s average episode cost Arkansas Healthcare Payment Improvement Initiative

48. ARKANSAS BLUE CROSS and BLUE SHIELD PAP performance reports have summary results and detailed analysis of episode costs, quality and utilization 48 ▪ First time PAPs receive detailed analysis on costs and quality for their patients increasing performance transparency ▪ Guide to Reading Your Reports available online and at this event Valuable to both PAPs and non-PAPs to understand the reports ▪ Reports issued quarterly starting July 2012 July 2012 report is informational only Gain/risk sharing results reflect claims data from Jan – Dec 2011 ▪ Reports will be available online via the provider portal Details on the reports Arkansas Healthcare Payment Improvement Initiative

49. ARKANSAS BLUE CROSS and BLUE SHIELD The provider portal is a multi-payer tool that allows providers to enter quality metrics for certain episodes and access their PAP reports 49 ▪ Accessible to all PAPs Login with existing username/ password New users follow enrollment process detailed online ▪ Key components of the portal are to provide a way for providers to Enter additional quality metrics for select episodes (Hip, Knee, CHF and ADHD with potential for other episodes in the future) Access current and past performance reports for all payers where designated the PAP Details on the provider portal Login to portal from payment initiative website Arkansas Healthcare Payment Improvement Initiative

50. ARKANSAS BLUE CROSS and BLUE SHIELD AHCPII: Quarterly and Annual Reports 50 Arkansas Healthcare Payment Improvement Initiative

51. ARKANSAS BLUE CROSS and BLUE SHIELD AHCPII: Review 51  First-year settlements, Wave 1 episodes Gain Share: $400,000 (81 PAPs) Loss Share: $169,000 (36 PAPs)  Second-year settlements, Wave 1 and 2a episodes Gain Share: $1,484,000 (248 PAPs) Loss Share: $79,000 (34 PAPs)  Program “wins” Seeing improved compliance in clinical quality, especially in perinatal screening measures Now tracking quality information that we could not before  DVT/PE management in TKR/THR  ACE/ARB prescription in heart failure Increased transparency  Orthopedic surgeons are more selective in hospitals they choose to do replacements  Facilities are now encouraged to be more competitive in negotiated costs  Providers are more engaged with Arkansas Blue Cross and Blue Shield and are collaborating to help shape the program Arkansas Healthcare Payment Improvement Initiative

53. 53 PANEL Q&A

54. 54 LAN Updates No Events Currently Scheduled UPCOMING WEBINARS Opportunities for LAN Participants to Learn, Engage and Act LAN Learnings February 24 @ 12:00 – 1:15 PM Value-Based Payment for Patients Living with Chronic Illness Listening Sessions March 1 @ 1:00 – 2:00 PM Providers: Preliminary Recommendations on Patient Attribution and Financial Benchmarking

55. 55 Visit the Website Join the Discussion Follow Us Attend Webinars Access Resources Submit Comments Attend LAN-wide Meetings ENGAGE, LEARN, AND ACT The LAN will only succeed with robust stakeholder engagement across the field