1. Why ACOs are Good for Your Patients… PEAK Leadership Summit March 2014 © 2014 Franciscan Alliance, Inc. Presented by: Kimberly S. Hodge, PhD(c), MSN, RN, ACNS-BC, CCRN-CMC Clinical Operations Manager & Clinical Nurse Specialist Franciscan Alliance Pioneer ACO Indianapolis, IN

2. ©2013 Franciscan Alliance ACO Carmel Franciscan Alliance Has a rich history of serving local communities for over 135 years Operates in 4 regions throughout Indiana and Illinois with 13 hospitals and several healthcare support companies Employs over 600 providers (Franciscan Physician Network) Completed transition to the Epic Electronic Medical Record system during 2013 in all regions

3. ©2013 Franciscan Alliance ACO Franciscan Alliance: Accountable Care Journey ACOs originated from the Patient Protection and Affordable Care Act (Healthcare Reform) which was signed into law on March 23, 2010. One of the goals of healthcare reform was to find ways to deliver care that resulted in better quality at lower costs. The Centers for Medicare & Medicaid Services (CMS) was the first to pilot ACOs with the Pioneer ACO program. 3

4. ©2013 Franciscan Alliance ACO What is an Accountable Care Organization (ACO)? who come together voluntarily to give coordinated high quality careGroups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. THE RIGHT CARE AT THE RIGHT TIMEGoal: coordinated care is to ensure that patients, especially the chronically ill, get THE RIGHT CARE AT THE RIGHT TIME, while avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

5. ©2013 Franciscan Alliance ACO Different Types of ACOs Medicare Shared Savings Program (MSSP) Advance Payment ACO Model Pioneer ACO Model

6. ©2013 Franciscan Alliance ACO Pioneer ACO Model (Demonstration Project) already experienced in coordinating care for patients across care settingsDesigned for health care organizations and providers that are already experienced in coordinating care for patients across care settings. move more rapidly from a shared savings payment model to a population-based payment modelIt will allow these provider groups to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the Medicare Shared Services Program. It is designed to work in coordination with private payers by aligning provider incentives, which will improve quality and health outcomes for patients across the ACO, and achieve cost savings for Medicare, employers and patients.

7. ©2013 Franciscan Alliance ACO Pioneer ACO Payment Arrangement Options: 5 (core plus 4 alternatives) –Varying degrees of shared savings/losses, which are capped across performance years –Alternatives 1 and 2 have capitation options for Part B only or all Part A and B services –Function like MSSP first 2 years and transition to population- based payment approach in year 3 Beneficiary alignment –CMS assigns prospectively if there are 12 months of fee-for- service coverage under Part A and B –Two-step assignment: PCP and Specialist/FQHC

8. ©2013 Franciscan Alliance ACO Pioneer ACO Interim Payment Methodology –First 2 years: continue to receive payments under fee-for-service program; savings/losses compared to benchmark using retrospective reconciliation at end of each performance year –Beginning year 3: Core and Options A and B begin receiving combination of fee-for-service reimbursement and population-based payments for aligned beneficiaries Fee-for-service paid at 50% of usual allowable fee and [opulation- based payment estimated as 50% of ACO’s expected fee-for- service costs (at 100% allowable amounts) Eligible for shared savings/losses but must have 3% reduction in costs before sharing savings

9. ©2013 Franciscan Alliance ACO Pioneer ACO Benchmark Methodology –Compared to 3-year historical claims benchmark –Provision: limits the benchmark increase in areas of high costs or high cost trends and increases the benchmark more rapidly in areas of low cost or low cost trends –Calculated retrospectively –Recalculated in 4 th performance year for remaining 2 years of program –Adjusted to include claims for beneficiaries no longer aligned with ACO in the performance period

10. ©2013 Franciscan Alliance ACO Pioneer ACO Benchmark Methodology –Choices Benchmark that caps expenditures at 99 th percentile of national Medicare fee-for-service Part A and Part B expenditures (reduces variation from catastrophic claims) Uncapped benchmark and the requirement to purchase their own reinsurance –Capping done separately for ESRD and non-ESRD beneficiaries –National reference population No state-specific expenditures Adjusted using same age, sex, and eligibility distributions across prospectively aligned beneficiaries

11. ©2013 Franciscan Alliance ACO Pioneer ACO Trending Methodology –ACO-specific baseline expenditure Base year one and base year two are trended to base year three using trends for beneficiaries residing in the same state and having the same age, sex, and eligibility Trends developed separately for trending base year one to base year three and from base year two to base year three –ACO-expenditure benchmark Trends ACO-specific baseline expenditure to the performance year using national growth rate and absolute amount of growth, blended 50%/50%

12. ©2013 Franciscan Alliance ACO Pioneer ACO Calculation of Shared Savings/Losses –Determined using retrospective reconciliation at the end of each performance year against the Pioneer ACO’s benchmark for the first two performance years Performance year expenditures < applicable benchmark in a given year AND quality performance metrics are met = ACO will share in portion of savings Performance year expenditures > applicable benchmark in a given year = ACO required to pay back a portion of the losses –Must achieve savings AND meet quality standards and other program requirements to move to population-based payment CMS determines whether participating ACOs will be able to move to population-based payment for years 3–5

13. ©2013 Franciscan Alliance ACO Pioneer ACO Calculation of Shared Savings/Losses –Minimum savings/loss: 1% –Savings/losses based on difference to the benchmark rather than only the excess over the benchmark plus the minimum savings rate / minimum loss rate (MSR/MLR) –Potential gains/losses are greater for Pioneer ACOs under ALL program options

14. ©2013 Franciscan Alliance ACO Franciscan Alliance Accountable Care Journey In October 2011, Franciscan Alliance was awarded Pioneer ACO status by Medicare, along with 31 other organizations across the country. The program began January 1, 2012. Franciscan is the only Pioneer ACO in Indiana and was officially the first Medicare ACO in the state.

15. ©2013 Franciscan Alliance ACO Medicare ACO Initiatives: 2014

16. ©2013 Franciscan Alliance ACO Why Franciscan Alliance Chose To Participate In An ACO As the state’s largest Catholic-based health-care system, the Franciscan Alliance worked diligently to become an ACO. We recognize the vital role our hospitals, staff and partnering providers will play in health care reform. Our goal is to become a model for the future of health care!

17. ©2013 Franciscan Alliance ACO Why Franciscan Alliance Chose To Participate In An ACO The concept of ACOs aligns with our corporate values: –Respect for Life: ACOs allow patients to play a more active role in directing their own care. –Joyful Service & Compassionate Concern: ACOs offer better quality of care with personalized care coordination. –Fidelity to Mission & Christian Stewardship: ACOs provide the opportunity to significantly reduce costs associated with duplicative testing and medical waste while benefiting from shared savings.

18. ©2013 Franciscan Alliance ACO Franciscan Alliance ACO at a Glance Franciscan Alliance (FA) Central Indiana Region (CIR) hospitals & physicians partnered with other organizations in the Pioneer ACO. These partners include: Major Health Partners Indiana Internal Medicine Consultants Fairbanks Hospital Rush Memorial Hospital WindRose Health Network Franciscan Visiting Nurse Service Advanced Healthcare Associates

19. ©2013 Franciscan Alliance ACO Franciscan Alliance ACO at a Glance Participating providers include: Made up of over 1,000 providers across Indiana and serves nearly 50,000 Medicare beneficiaries with 600+ Franciscan Physician Network physicians Non-Franciscan Alliance affiliated health care providers, hospitals, and other entities

20. ©2013 Franciscan Alliance ACO Franciscan Alliance ACO at a Glance 2014 Population: Approximately 50,000 fee-for-service Medicare beneficiaries Approximately 22,000 of those located within CIR Medicare Status Aged Non-Dual75.8% Disabled16.9% Aged Dual6.5% ESRD0.8% Chronic Conditions 19+19.2% 15-1810.4% 11-1415.2% 7-1021.5% 3-623.2% 0-210.6%

21. ©2013 Franciscan Alliance ACO Franciscan Alliance ACO at a Glance Medicare Status Summary Total Population Beneficiaries High Emergency Department Utilizers Clinical Condition Prevalence CHFCOPDDiabetes Aged Non- Dual 16,580 (75.8%) 293 (1.8%) 2,435 (14.7%) 4,002 (24%) 6,061 (36.6%) Aged Dual1,431 (6.5%) 65 (4.5%) 486 (34%) 644 (45%) 709 (49.5%) Disabled3,690 (16.9%) 216 (5.9%) 411 (11.1%) 1,320 (35.8%) 1,379 (37.3%) ESRD168 (0.8%) 42 (25%) 108 (64.3%) 85 (50.6%) 133 (79.2%)

22. ©2013 Franciscan Alliance ACO Focused on the Triple Aim There are 3 main goals of an ACO, often referred to as the “Triple Aim:” 1.Better health for the population 2.Higher-quality care 3.Lower costs of care

23. ©2013 Franciscan Alliance ACO Changes in Care Delivery To meet the goals of an ACO, we must change the way we deliver and provide care. Because patients can still go anywhere for care, ACO providers and facilities must work together to help coordinate care for the patients we serve.

24. ©2013 Franciscan Alliance ACO Changes in Care Delivery & Reimbursement ACOs focus on improving care through change in two main areas: 1.Care delivery – the way care is delivered across different providers along the care continuum. 2.Reimbursement Providers are still paid by fee-for-service. In order for providers to receive shared savings from the ACO, they must be focused on AND meet quality goals.

25. ©2013 Franciscan Alliance ACO Quality Measures Quality is an important piece in the ACO. There are 33 quality metrics that CMS uses to rate the quality of care the ACO is providing to patients. If the ACO does not meet certain quality metrics, it cannot receive shared savings. Some of the quality metrics include: Patient satisfaction scores Preventive health measures Depression screenings Fall risk assessments Electronic Health Records (EHR)/Meaningful Use

26. ©2013 Franciscan Alliance ACO Accountable Across the Care Continuum Primary Care Physician Long Term Acute Care Hospital: Inpatient & Outpatient Visits Specialist Skilled Nursing Facility Home An ACO is responsible for overseeing the cost and quality of a patient’s healthcare across all healthcare provider settings regardless of where the patient seeks care. This includes facilities not in the ACO.

27. ©2013 Franciscan Alliance ACO Accountable Across the Care Continuum TRUE coordination of care requires communication across the entire continuum of care and at every transition, which requires that many approaches be used. Communication vehicles and approaches include: Electronic (e.g., Epic, MIE, ADVantis) Verbal (e.g., medication reconciliation by pharmacists prior to hospital discharge, visit by complex care coordinator, ACO champion and stakeholder meetings) Written (e.g., provider update letters)

28. ©2013 Franciscan Alliance ACO How do we traverse the care continuum?

29. ©2013 Franciscan Alliance ACO How do we traverse the care continuum? Complex Case Management: Registered Nurses, Advanced Practice Nurses (NP and CNS), Social Workers, and Respiratory Therapist –Post-ED visit calls –Home visits –Provider office visits –Health coaching –Care coordination –Disease management

30. ©2013 Franciscan Alliance ACO How do we traverse the care continuum? Medication Reconciliation –Inpatient pharmacists perform prior to discharge home –Post-acute care teams address across care settings –Providers perform during first visit after discharge Advance Care Planning –Palliative team visits beneficiary during inpatient visit and discusses care planning options followed by documentation and communication with the healthcare team –Palliative team available to Complex Case Managers for consultation Franciscan VNS –Preferred home health provider –Health coaching provider

31. ©2013 Franciscan Alliance ACO Integrating Care Across the Continuum: Continuing Care Networks Transitional / post-acute care (launched 2/2013) –Registered Nurse (RN) facilitates beneficiary transition from inpatient to home/post-acute setting (long-term acute care, subacute rehabilitation, inpatient rehabilitation or home health) Renal (launched 8/2013) –Adult Nurse Practitioner and Social Worker facilitate transitions across settings for the beneficiary with end-stage renal disease Behavioral Health (launched 3/2014) –Social worker facilitates transitions across settings for the beneficiary with behavioral health concerns (e.g., depression, anxiety, addictions, etc.)

32. ©2013 Franciscan Alliance ACO Franciscan Alliance 2012 Results In 2012, via care management and care coordination programs, the Franciscan Alliance Pioneer ACO saved Medicare over 13 million dollars Ranked 4 th out of 32 Pioneer ACOs 50% ($6.6 million) of those dollars were returned to the ACO, which in turn were: –Distributed to ACO participants, and –Reinvested into new ACO care management programs

33. ©2013 Franciscan Alliance ACO Why are ACOs good for your patients? Quality-focused Cost-effective Optimizes communication Creates a continuum of coordinated, integrated care