DUAL CHAPTER CONFERENCE – HFMA CENTAL OHIO / SOUTHWESTERN OHIO DAYTON, OH – SEPTEMBER 25, 2014 {Bundled Payments.}

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} OUR DISCUSSION TODAY Agenda 1 Define Bundles Creating a Successful Bundle The Commercial Movement Impact on Revenues and Operations Questions

2 Define Bundles

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 3 PACKAGED SERVICES Pre-AdmitInpatientRecoveryFollow-Up Pre-Window Excludes charges through surgeon evaluation Excludes Hospice, Outpatient Rx, ESRD Includes specific pre- surgical workup expenses Includes all physician hospital charges Includes physician, hospital charges for complications and re-admissions and PT, HHC, SNF, IP Rehab 3 Days 30 - ??? Days Post-Window

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 4 CMS BPCI – MODEL 1 PARTICIPANTS 15 representing 15 providers CLINICAL CONDITION EPISODES Most Medicare FFS discharges BUNDLE COVERAGE Hospitals, physicians PAYMENT ARRANGEMENT Retrospective EPISODE TRIGGER Acute hospital stay EPISODE DURATION Acute hospital LOS

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 5 CMS BPCI – MODEL 2 PARTICIPANTS 656 representing 2,150 providers CLINICAL CONDITION EPISODES 48 BUNDLE COVERAGE Hospitals, physicians, post- acute, re-admissions, lab, DME, Part B Rx PAYMENT ARRANGEMENT Retrospective EPISODE TRIGGER Acute hospital stay EPISODE DURATION 30 or 90 days after discharge

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 6 CMS BPCI – MODEL 3 PARTICIPANTS 287 representing 4,617providers CLINICAL CONDITION EPISODES 48 BUNDLE COVERAGE Physician, SNF, IRF, LTAC, HHA, re-admissions, lab, DME, Part B Rx PAYMENT ARRANGEMENT Retrospective EPISODE TRIGGER Acute hospital stay, and begins at initiation of post-acute services EPISODE DURATION 30, 60 or 90 days after initiation of episode

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 7 CMS BPCI – MODEL 4 PARTICIPANTS 17 representing 18 providers CLINICAL CONDITION EPISODES 48 BUNDLE COVERAGE Hospitals, physicians PAYMENT ARRANGEMENT Prospective EPISODE TRIGGER Acute hospital stay EPISODE DURATION Acute hospital LOS

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Define Bundles 8 What constitutes an Episode Family Similar services by DRG, across an acuity Necessary ‘n’ What occurrences (claims) should not be included within an Episode Duration Irrelevant readmissions Principle diagnosis code exclusions INCLUSIONS / EXCLUSIONS

9 Creating a Successful Bundle

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 10 CHOOSING WISELY Sufficient Volume Clinical Leadership Existing Variability Valid Plan for Protocols Controllable Costs Required Partners Target $ Price

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 11 EXISTING VARIABILITY

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 12 EXISTING VARIABILITY Length of Reconciliation Period Risk Assessment Qualification of the Bundle Family of Episodes

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 13 VALID PLAN FOR PROTOCOLS Source: HCI3 – Prometheus Model

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 14 VALID PLAN FOR PROTOCOLS Source: HCI3 – Prometheus Model

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 15 VALID PLAN FOR PROTOCOLS Care re-design Care Coordination – elimination of redundant testing, readmission prevention, improved follow-up care Clinical Practice Improvement – Reduction of preventable errors, clinical best practice guidelines in concordance with evidence based medicine Supply Chain – reduce variation in supply costs Patient Centered Interventions – improve engagement of patients in their care

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 16 VALID PLAN FOR PROTOCOLS Care re-design examples Proven Care – Geisinger Health System CABG Integrated Healthcare Association – Orthopedic Procedures Iowa Health System St. Luke’s – Heart Failure Prometheus – Total Knee Replacement Toolkit

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 17 CONTROLLABLE COSTS Valid Plan for Protocols Controllable Costs Target $ Price Historic Claims Paid less 3% Operating Costs less than Target Price

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Creating a Successful Bundle 18 CONTROLLABLE COSTS Valid Plan for Protocols Controllable Costs Target $ Price Duplication Unnecessary Least Acute Process Change Labor Supply Standardization

19 The Commercial Movement

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} The Commercial Movement 20 EMPLOYER AND COMMERCIAL

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} The Commercial Movement 21 EMPLOYER 250,000343,000 2,200, ,000

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} The Commercial Movement 22 COMMERCIAL TESTED BUNDLES ADHD Colon- oscopy Developmental Disability Tonsillectomy Upper Resp. Infection Bariatric Surgery Source: Bailit Healthcare Purchasing

23 Impact on Revenue & Operations

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 24 CLINICAL + - Discount on FFS Source: Adapted from The Advisory Board

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 25 CLINICAL + - Discount on FFS Start-Up Costs Source: Adapted from The Advisory Board

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 26 CLINICAL + - Discount on FFS Start-Up Costs Process Improvement Source: Adapted from The Advisory Board

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 27 CLINICAL + - Discount on FFS Start-Up Costs Process Improvement Device Management Source: Adapted from The Advisory Board

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 28 CLINICAL + - Discount on FFS Start-Up Costs Process Improvement Device Management Source: Adapted from The Advisory Board Physician Gainsharing

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 29 CLINICAL + - Discount on FFS Start-Up Costs Process Improvement Device Management Source: Adapted from The Advisory Board Physician Gainsharing Change in Utilization Practices on % Of Charge Agreements

DUAL CHAPTER AUTUMN INSITUTE – DAYTON, OH – SEPTEMBER 25, 2014 {BUNDLED PAYMENTS.} Impact on Revenue & Operations 30 CLINICAL + - Discount on FFS Start-Up Costs Process Improvement Device Management Source: Adapted from The Advisory Board Physician Gainsharing Change in Utilization Practices on % Of Charge Agreements Volumes

31 Questions

DUAL CHAPTER CONFERENCE – HFMA CENTAL OHIO / SOUTHWESTERN OHIO DAYTON, OH – SEPTEMBER 25, 2014 Tony Colarossi FHFMA Partner Healthcare Consulting {Bundled Payments.}