1. 1 Emerging Provider Payment Models Medical Homes and ACOs

2. 2 Aligning Reimbursement and Incentives provider infrastructure and ability to accept risk patient condition benefit design Fee-for-Service Pay-for- Performance Episodic Bundling Global Payment Full Risk / % of Premium Episodic CostTotal Cost Provider Accountability Continuum of Payment Models Patient Centered Medical Home Accountable Care Organization Deployment depends on a number of factors:

3. 3 3 ACA Alternative Payment Legislation Title III, Subtitle A, Part III – Improving the Quality and Efficiency of Health Care – Transforming the Health Care Delivery System – Encouraging Development of New Patient Care Models §3022 – Medicare Shared Savings Program - ACOs §3023 – National Pilot Program on Payment Bundling

4. 4 Patient Centered Medical Home Model Redesigning the way primary care is delivered and financed Trusted personal physician Physician who provides, manages and facilitates care Care is coordinated or integrated across healthcare system More accessible practice with increased hours and easier scheduling Payment mechanisms that recognize the added value of delivering care through the PCMH model Assistance to practices seeking transformation Support to practices adopting HIT for QI Specialist Care Pharmacist Care Hospital Care Imaging Services * Includes Non Physician Professionals Lab Services Patient Personal Physician* 4

5. 5 Blue Patient Centered Medical Home Pilots as of July 2010 Time in Market Less than one yearOne YearTwo Years Three Years Will Launch in 2011

6. 6 Accountable Practice Models Medical Home/ACO Hybrid Effective date: January 1, 2011 Austin Regional Clinic (Austin) 288 total physicians 159 Primary Care Physicians Kelsey Seybold (Houston) 379 total physicians 195 Primary Care Physicians Trinity Clinics (Tyler) 269 total physicians 92 Primary Care Physicians Client Participation in Pilots Approximately 75,000 Total physicians includes PCPs. Total PCPs include IM, Family, and Peds. BCBSTX Pilots Eff. February 1, 2010 Medical Clinic of North Texas 131 total physicians 88 Primary Care Physicians Village Health Partners (Plano) 10 total physicians 10 Primary Care Physicians Client Participation in Pilots Approximately 25,000 Texas Medical Home Initiatives: Current and Future

7. 7 ACO - Everybody has heard about it but few have seen ……

8. 8 ACO Definition and Key Impacts ACO (Accountable Care Organization) – a entity that takes accountability for total cost and quality of care for a specified population Cost – reduce or at least control the growth e.g. reduce the historical trend Quality – maintain or improve clinical quality and patient experience and satisfaction

9. 9 ACO Development Primary Care foundation Provider and payer collaboration HIT/connectivity Population management systems Care coordination Cost efficiency focus Quality thresholds Shared Savings → fixed payment (risk adjusted)

10. 10 Cost and quality improvement sources Improved prevention and early diagnosis of conditions Unnecessary testing, referrals and medications Chronic disease management Emergency room visits Avoidable hospital admissions Healthcare acquired infections Hospital complications Hospital readmissions Lower cost treatments/conservative medicine Lower cost place of service Lower cost and/or cost efficient providers

11. 11 ACO Barriers Primary care shortage FFS system Lack of alternative payment arrangements with incentives Unaffiliated/uncoordinated providers Lack of HIE/HIT Financing for population management systems Loss of revenue to some providers Antitrust concerns Significant resources required

12. 12 Questions????