BHCAG TCOC Discussion March 28, 2012 Meg Hasbrouck Vice President, Contracting and Reimbursement Mission We serve our communities by providing exceptional care, as we prevent illness, restore health and provide comfort to all who entrust us with their care.

Objectives for Today How TCOC and Shared Savings work together Key steps in transitioning to accountable care and TCOC payment methodology Lessons learned so far with ACO pilots How employers can help advance the triple aim

How do FFS and TCOC work together? Health Plan Payment Methodology FFS FFS FFS PMPM PMPM Interim Payment Methodology Other Drugs Ancillaries Hospital Services Clinic Services Admin fee Care Management Annual retrospective calculation on attributed patients TCOC

Shared Savings and TCOC: the target matters Savings achieved are shared between the payer and Allina at pre-negotiated levels

TCOC Metrics – short version Membership Attributed Membership Illness Burden Affordability Key Indicators TCOC Index Price Index Use Index ER Visits PMPM Rx PMPM Generic Use High Tech Radiology Use Shared Savings Gain / Loss TCOC Gain Potential (1,000’s) TCOC Loss Potential (1,000’s) Shared Savings & of Revenue Risk Adjusted Allina PMPM Estimated PMPM Target Actual Trend Compared to Baseline Market Average PMPM Market Average Trend

What are we doing to bend the trend? Integrate population data, disseminate and track Focus on waste Use Outcome improvement approach Strengthen the patient/primary care relationship Keep the patient at the center of all decisions

Map to accomplish our aim Tool Template: Driver Diagrams Aim and Outcome Primary Drivers Secondary Drivers Expand Team Care model to increase capacity Expand urgent care access points Expand non-visit based care options (evisit) Patient Care Model Redesign Implement Advance Care Team model for chronic disease/high risk patients Expand care navigators and deploy care guides Care Management & Coordination Better Health, Affordable Care Identify & prioritize top areas of care variation Expand clinical service line infrastructure Clinical Excellence & Consistency Increase percentage of contract revenue based on Value and evolve shared savings model Pilot bundled payment model(s) Payment Reform / Contracting Build clinically integrated network with independent physician groups Outcomes: Deliver Optimal Care for Allina’s core measures Improve patient & caregiver experience Improve affordability Network Development Establish a focused Value Analytics area and produce Pioneer patient profile & dashboard Enhance predictive modeling & risk stratification capabilities at the point of care Measurement & Reporting Promote self-care education in MyChart, After Visit Summary & Allina.com Expand patient advisory committees Implement shared decision making & advance care planning Patient Engagement 7

Focus on Waste Now Future Preventable Complications Waste Unnecessary Treatments Inefficiency All Services Add Value Errors Services That Add Value 100% Value Value

Lessons Learned - Challenges Investing in resources while building the program and planning for sustainability Engaging independent physicians in care improvement initiatives without well-aligned incentives Consistent and reliable care management, patient engagement and shared decision making A difficult hiring environment for case management and analytic staff Size and complexity make it difficult to implement change quickly and we have more ideas than resources. Purposeful planning, prioritization, communication and focus is needed Data Issues Overload, Analysis paralysis, Imperfect, Timeliness? Distribution within care system and Sharing/Consent with collaborators external to care system

Challenges – Aligned incentives? In Millions Target Actual FFS Revenue Change Shared Savings (Loss) Variable Cost (Increase) Decrease Net Change Before Investment Invest-ment Cost Net Impact Trend Favorable to Target by 5% Payer Participation $135 $128 $(7) $3.5 $4 $0.5 $(2) $(1.5) Payer Non- Participation $0 $(3) $(5.0) Trend Unfavorable to Target Payer Participation $142 $7 $(4) $1.5 $(0.5) $3 $1 For illustration only

Employers can help advance better, more affordable care Align Benefit design Some designs create barriers to care with high deductibles and coinsurance preventing good follow-up care and at times preventive care Some designs emphasize open access versus developing a relationship with a care system Ensure there are motivators and incentives for patient accountability Support incentives tied to triple aim outcomes, and explore ways to disconnect payment from utilization (separate from FFS)

Employers can help advance better, more affordable care Keep focus on outcomes and let us continue to innovate on best ways to achieve results Beware of adding administrative burden Help with community engagement, educating the healthcare consumer regarding healthcare choices and the appropriate and most beneficial way to access healthcare   Don’t Support the Race to the bottom If all care systems are improving cost, all savings should be shared