Harmony Healthcare International, Inc.

ACOs: Where Are We At? HARMONY UNIVERSITY The Provider Unit of Harmony Healthcare International, Inc. (HHI) Presented by: Kris Mastrangelo, OTR/L, MBA, NHA President & CEO Harmony Healthcare International, Inc. 1 Objectives The learner will be able to summarize goals of ACOs The learner will be able to identify and articulate examples of the ACO process The learner will be able to identify strategies for interdisciplinary management of ACOs Harmony Healthcare International, Inc. 2 Accountable Care Organizations Voluntary groups of physicians, hospitals, and other health care providers that are willing to assume responsibility for the care of a clearly defined population of Medicare beneficiaries attributed to them on the basis of patients use of primary care services. If an ACO succeeds in both delivering high-quality care or improving care and reducing the cost of that care below what would otherwise have been expected, it will share in the savings it achieves for Medicare. The New England Journal of Medicine (NEJM), October 20, 2011 Making Good on ACOs Promise The Final Rule for the Donald M. Berwick MD, Administrator, CMS Harmony Healthcare International, Inc. 3 1

Team Medicine First building blocks of integrated team medicine: Model, data and leadership Create a care team that maximizes impact for patients Build a physician culture of multidisciplinary practice Harmony Healthcare International, Inc. 4 Team Medicine 1. An integrated, flexible physician model Multispecialty group medical practice maximized physicians abilities to care for patients through doctor-to-doctor consultation, through the training and mentoring of young physicians, and through the inherent quality controls built into the group Harmony Healthcare International, Inc. 5 Team Medicine 2. Physician-Friendly Data Yields evidence-based medicine Harmony Healthcare International, Inc. 6 2

Team Medicine 3. Rethink physician leadership We recruit physicians with a sense that we re a group practice. We stand for quality. We measure quality and results. We think it s important that we tell patients we re going to give them the kind of quality they deserve. You then orient, evaluate, and promote people based on the same set of values and expectations. Eventually you end up with a culture that is very comfortable with a focus on quality, measurement, comparison, and improvement. Jack Cochran, MD Harmony Healthcare International, Inc. 7 Healthy Bones: Tests and Prescriptions to Prevent Problem: In 2010, osteoporosis was the ninth most costly major illness among the top 5% highest cost Medicare beneficiaries In 2005, 2 million fractures cost the United States $17 billion for both acute and long-term care. By 2025, the annual fracture rate is expected to increase by 50% to about 3 million at a cost of $25 billion per year. On average, 24% of patients presenting with a osteoperosisrelated fracture die within one year, and the mortality rate of men exceeds women Only 21% of women age 67 or older who have had an osteoporosis-related fracture had a bone mineral density test or a drug prescription to treat or prevent osteoporosis in the six months after the fracture * Information provided by Kaiser Permanente Harmony Healthcare International, Inc. 8 Healthy Bones Solution: Care managers, primary care physicians, and surgeons use daily reports generated from the electronic health record to identify members at risk for osteoporosis and fractures Care managers coordinate care for these patients to close care gaps Working together, the team provides patients with education, screening, treatments, and monitoring as needed. The multidisciplinary team includes: Orthopedic surgeons, endocrinologists, gerontologists, family practitioners, internists, rheumatologists, gynecologists, physical therapists, disease/care managers, radiologists and member education Harmony Healthcare International, Inc. 9 3

Healthy Bones Impact: Annual bone density screening rates increased by 474% from 2002 to 2009 People on anti-osteoporosis medications increased by 214% from 2002 to 2009 Over 45% reduction in rate of hip fractures (preventing >1400 hip fractures) by 2010 If the Healthy Bones approach were adopted in the United States, the country could achieve a 25% reduction in the rate of hip fractures, preventing 75,000 hip fractures per year Harmony Healthcare International, Inc. 10 Improvement Standard As the New York Times reported on its front page Tuesday, Reuters (10/24, Morgan) reports that the Obama Administration has proposed a settlement to a class-action lawsuit, promising to broaden current Medicare regulations to allow coverage to "maintain the patient's current condition or... prevent or slow further deterioration." Previously, beneficiaries had to demonstrate improvement to continue to receive coverage, the change will likely benefit thousands of Americans with degenerative conditions like multiple sclerosis, Parkinson's, and cerebral palsy. An HHS spokeswoman said the settlement merely "clarifies" current policy, and continued, "We expect no changes in access to services or costs." Harmony Healthcare International, Inc. 11 Improvement Standard The case, Jimmo v. Sebelius, resulted in a focus on skilled service delivery in the context of maintenance programs Historically, patients with chronic conditions and anticipated functional deterioration were considered skilled for the establishment of a maintenance program This settlement now allows for coverage of the actual delivery of maintenance therapy by licensed nurses and therapy professionals Harmony Healthcare International, Inc. 12 4

Improvement Standard Current Medicare skilled guidelines state: The services must be provided with the expectation, based on the assessment made by the physician of the patient s restoration potential, that the condition of the patient will improve materially in a reasonable and generally predictable period of time, Or the services must be necessary for the establishment of a safe and effective maintenance program Harmony Healthcare International, Inc. 13 Improvement Standard The Proposed Settlement: Instead, providers, contactors, and adjudicators must recognize maintenance coverage and a beneficiary s need for skilled care that is performed or supervised by professional nurses and therapists. The manual revisions will clarify that, under the Skilled Nursing Facility, Home Health, and Outpatient Therapy maintenance coverage standards, skilled therapy services are covered when an individualized assessment of the patient s clinical condition demonstrates that the specialized judgment, knowledge, and skills of a qualified therapist ( skilled care ) are necessary for the performance of a safe and effective maintenance program Such a maintenance program to maintain the patient s current condition or to prevent or slow further deterioration is covered so long as the beneficiary requires skilled care for the safe and effective performance of the program Harmony Healthcare International, Inc. 14 Improvement Standard Quality Care is our number one objective Harmony embraces the OBRA 87 regulations which require facilities to provide services to meet the highest practicable physical, medical and psychological well-being of every resident This practice has been our standard since its inception. This new Improvement Standard, further supports our core values as providers of specialized services to the post acute care population. Harmony Healthcare International, Inc. 15 5

Continuum of Care Post Discharge When the asthma attack is done, the patient goes home, and the game s over. No one is accountable for any of the follow-up care. George Halvorson, Chairman & CEO Kaiser Permanente Harmony Healthcare International, Inc. 16 Integrated Follow-up Call patient to make sure they are taking their meds Call patient to make sure they are avoiding any allergic trigger Harmony Healthcare International, Inc. 17 Prevention Problem: One in eight women develops breast cancer, and nearly 40,000 die from it every year Regular mammograms which can identify breast cancer early, when it is most treatable can reduce breast cancer deaths by more than 30 percent The United States Preventive Services Task Force recommends screenings every one to two years for women aged 50-74 years. However, current screening rates fall short of these guidelines, and they have been steadily declining Harmony Healthcare International, Inc. 18 6

Prevention Through the Proactive Office Encounter program, the health care team identifies and targets patients with care gaps (including whether a patient is due for a mammography) or chronic medical conditions and encourages them to actively participate in own care Harmony Healthcare International, Inc. 19 Proactive Office Encounter and Mammography The program engages all members of the clinical care team in a coordinated and collaborative effort to encourage and support patient health Automated creation of care checklists for all patients whose records indicate gaps in care At every point of contact with patients, clinical care teams review checklists and help patients get the care they need Based on identified gaps in care, medical assistants during office visits discuss with patients the need for preventive screenings and routine care, such as cancer screenings and tests for abnormal blood sugar or cholesterol levels, and schedule appointments on the spot Harmony Healthcare International, Inc. 20 Proactive Office Encounter Also Helps: Along with other concurrent improvement initiatives, the Proactive Office Encounter has contributed to: 30% increase in colon cancer screening 11% increase in breast cancer screening 5% increase in cervical cancer screening 13% improvement in cholesterol control Harmony Healthcare International, Inc. 21 7

Data, Data, Data You cannot make bricks without clay. ~Sherlock Holmes Harmony Healthcare International, Inc. 22 Better Patient Management Using Evidence-Based Medicine Patient Registry and Concurrent Tracking System Identifies all members in the population Risk stratifies population for targeting interventions and resources Tracks and monitors each patient for key indicators (lab, pharmacy, encounters, clinical indicators) Easy access (web-based) Harmony Healthcare International, Inc. 23 Better Patient Management Using Evidence-Based Medicine Care Management Systems Flags/alerts Supports telephone management and documentation Identifies all members in the population Supports Automated Clinical Decision Support and Practice Tools In-reach/outreach Health Education and Self-Care Support Harmony Healthcare International, Inc. 24 8

Evidence-based Medicine/Prevention Proactive care instead of reactive care Patients who have the largest gaps in recommended care do not routinely visit their primary care physicians Specialty clinics must play a role to achieve optimal results. Fewer than 40% of patients needing a mammogram or testing for diabetes visited their primary care physician. Appointments can be made on the spot or referrals generated so gaps can be readily addressed Harmony Healthcare International, Inc. 25 Beyond the Patient: Widen Your Gaze Focus on primary care and prevention, and addressing chronic disease requires looking at larger communitywide issues Behavioral factors are as important as specific treatments: better diet, promoting physical activity, and reducing smoking Community education for adults and children in recognizing bad health habits and taking action to create a better health outlook Harmony Healthcare International, Inc. 26 What is an Accountable Care Organization? Healthcare organization with a coordinated set of providers Provider mix dependent on whether federal or commercial ACO structure Who share responsibility for the continuum of care Clinical accountability Quality of care Financial responsibility Cost of care By providing the highest possible value of care Increase quality Decrease costs Harmony Healthcare International, Inc. 27 9

What is an Accountable Care Organization? For financial incentives or shared savings Value-based payments Reimbursement for achieving cost and quality goals From participating payors Public payors (e.g., Medicare, Medicaid) Commercial payors (e.g., BCBS of MA) Harmony Healthcare International, Inc. 28 Key Principles and Elements of ACOs Local accountability Ability to provide and manage continuum of care Responsible and accountable for quality and cost of care Incentivize providers for quality not quantity Shared Savings Legal entity and governance structure that allows receiving/distributing shared savings payments Invest shared savings in delivery system improvements Capable of financial and resource planning AC0 Model Principles, The Accountable Care Organization Learning Network, http://www.acolearningnetwork.org/why-we-exist/aco-model-principles (Accessed 09/16/2011) Harmony Healthcare International, Inc. 29 Key Principles and Elements of ACOs Performance Measurement Ongoing metrics to obtain evidence of meaningful outcome improvements and cost impacts Measurements must be transparent and accessible Essential cost savings are result of meaningful improvements AC0 Model Principles, The Accountable Care Organization Learning Network, http://www.acolearningnetwork.org/why-we-exist/aco-model-principles (Accessed 09/16/2011) Harmony Healthcare International, Inc. 30 10

Why Accountable Care? National Health Expenditures per Capita, 1960-2009 Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/nationalhealthexpenddata/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip). Harmony Healthcare International, Inc. 31 Why Accountable Care? Dental Services and Other Professionals 7% Rx Drugs 10% Government Administration & Net Cost of Health Insurance 7% Investment 1 Nursing Care Facilities & 6% Continuing Care Retirement Communities 6% Other 14% Note: Sum of pieces may not equal 100% due to rounding. Centers for Medicare & Medicaid Services, Office of the Actuary, National Health Statistics Group. Physicians & Clinics 20% Hospital Care 31 % Other Health, Residential, and Personal Care 2 5% Home Health Care 3% Government Public Health Activities 3% Other Medical Products 3 3% 1. Includes Research (2%) and Structures and Equipment (4%) 2. Includes expenditures for residential care facilities, ambulance providers, medical care delivered in non-traditional settings (such as community centers, senior citizens centers, schools, and military field stations, and expenditures for Home and Community programs under Medicaid 3. Includes Durable (1%) and Non-durable (2%) goods Harmony Healthcare International, Inc. 32 ACOs by Sponsoring Entity 99 Hospital Systems 27 Health Plans 60% 16% 38 Physicians Groups 23% Note: Percentages don t total 100% due to rounding. Source: Leavitt Partners Harmony Healthcare International, Inc. 33 11

Perspective: Final Rule for Medicare Shared Savings Program We believe that today s ACO rule is the next step in our shared commitment to a better, more lasting health care system. We look forward to being a trusted partner in our nation s journey toward patient-centered, coordinated care. Donald M. Berwick MD, Administrator, CMS The New England Journal of Medicine (NEJM) October 20, 2011 Making Good on ACOs Promise The Final Rule for the Harmony Healthcare International, Inc. 34 ACO Requirements Legal Entity Formal legal structure established To receive and distribute any shared savings Proposed rule modified to allow participation of entities organized under Federal or tribal law Sufficient Size Sufficient number of primary care physicians To provide care for at least 5,000 beneficiaries Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 35 ACO Requirements 3-Year Commitment Must commit to participate in the program for at least three years Must provide CMS with 60 days advance notice if terminating agreement Participating ACO will not share in any savings in the performance year for which it notifies CMS of termination Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 36 12

ACO Requirements Leadership & Governance Must have a mechanism for shared governance and responsibility Management structure must include both clinical and administrative systems ACO participants must hold at least 75% control of the ACO s governing body Where ACO comprises multiple, otherwise independent entities not under common control, governing body must be separate and unique to the ACO Must provide for beneficiary representation on governing body Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 37 ACO Requirements Leadership & Governance (Cont.) If governing body does not meet requirements, ACO must describe why it seeks to differ from requirements and how it will involve ACO participants in governance in innovative ways and/or provide for meaningful governance participation by Medicare beneficiaries ACO s operations must be managed by an executive, officer, manager, or general partner, whose appointment and removal are under the control of the governing body Clinical management and oversight must be managed by a seniorlevel medical director who is one of the ACO s physicians, is physically present in an established ACO location on a regular basis, and is board-certified and licensed in one of the states in which the ACO operates Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 38 ACO Requirements Performance Measurement Must define, establish, implement, and periodically update processes to promote evidence-based medicine Guidelines must cover those diagnoses with significant potential for achieving quality improvements, while taking into account individual beneficiaries circumstances Must define, establish, implement, and periodically update processes and infrastructure for ACO participants and providers/suppliers to internally report on quality and cost measures Must report data on 33 quality measures for each year of performance agreement Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 39 13

ACO Requirements Patient-Centered Must adopt a focus on patient-centered care that is promoted by the governing body and integrated into practice by leadership and management Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67807-08, 67814-16, 67821-22, 67825, 67827, 67829, 67891, 67980. Harmony Healthcare International, Inc. 40 Eligible Entities Final Rule Designation ACO professionals in group practices Networks of individual practices of ACO professionals Partnerships or joint venture arrangements between hospitals and ACO professionals Hospitals employing ACO professionals Potential Provider Organizations Primary Care Physician Practices Independent Practice Associations (IPA) Multispecialty Physician Groups (MSPG) Integrated Delivery Networks (IDN) Clinical Integrated Networks (CIN) Hospital Medical Staff Organizations (MSO) Physician Hospital Organizations (PHO) Extended Hospital Medical Staff Critical Access Hospitals Such other groups of providers of services and suppliers as the Secretary determines Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67812; Accountable Care Organizations: A Roadmap for Success: Guidance on First Steps By Bruce Flareau and Joe Bohn, 1st ed., Virginia Beach, VA: Convergent Publishing, LLC, 2911, pg. 45. Harmony Healthcare International, Inc. 41 Quality Reporting Requirements 33 quality reporting criteria across 4 domains include: Domain CMS Criteria 1. Patient/Caregiver Experience Measures 1-7 2. Care coordination/patient Safety Measures 8-13 3. Preventive Health Measures 14-21 4. At-Risk Population Measures 22-33 Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67889-67890, 67897. Harmony Healthcare International, Inc. 42 14

Quality Reporting Requirements Patient/Caregiver Experience (1-7): Getting Timely Care, Appointments, and Information How Well Your Doctors Communicate Patients Rating of Doctor Access to Specialists Health Promotion and Education Shared Decision Making Health Status/Functional Status Harmony Healthcare International, Inc. 43 Quality Reporting Requirements Care coordination/patient Safety (8-13): Risk-Standardized, All Condition Readmission: The rate of readmissions within 30 days of discharge from an acute care hospital for assigned ACO beneficiary population. Ambulatory Sensitive Conditions Admissions: Chronic Obstructive Pulmonary Disease [AHRQ Prevention Quality Indicator (PQI) #5] Ambulatory Sensitive Conditions Admissions: Congestive Heart Failure [AHRQ Prevention Quality Indicator (PQI) #8] Percent of PCPs who successfully qualify for an EHR incentive program payment Medication Reconciliation: Reconciliation After Discharge from an Inpatient Facility Falls: Screening for Fall Risk Harmony Healthcare International, Inc. 44 Quality Reporting Requirements Preventive Health (14-21): Influenza Immunization Pneumococcal Vaccination Adult Weight Screening and Follow-up Tobacco Use Assessment and Tobacco Cessation Intervention Depression Screening Colorectal Cancer Screening Mammography Screening Portion of Adults 18+ who have had their Blood Pressure measured within the preceding two years Harmony Healthcare International, Inc. 45 15

Quality Reporting Requirements At-Risk Population (22-33): Diabetes Composite (All or Nothing Scoring): Hemoglobin A1c Control (<8%) Diabetes Composite (All or Nothing Scoring): Low Density Lipoprotein (LDL) (<100) Diabetes Composite (All or Nothing Scoring): Blood Pressure > 140/90 mmhg Diabetes Composite (All or Nothing Scoring): Tobacco Non Use Diabetes Composite (All or Nothing Scoring): Aspirin Use: Daily Aspirin use for patients with Diabetes and Cardiovascular Disease Diabetes Mellitus: Hemoglobin A1c Poor Control (>9%) Harmony Healthcare International, Inc. 46 Quality Reporting Requirements At-Risk Population (Cont.) Hypertension (HTN): Blood Pressure Control: Percentage of patient visits for patients aged 18 years and older with a diagnosis of HTN with either systolic blood pressure 140 mmhg or diastolic blood pressure 90 mmhg with documented plan of care for hypertension Ischemic Vascular Disease (IVD): Complete Lipid Profile and LDL Control <100mg/dl Ischemic Vascular Disease (IVD): Use of Aspirin or Another Antithrombotic Heart Failure: Beta-Blocker Therapy for Left Ventricular Systolic Dysfunction (LVSD) Harmony Healthcare International, Inc. 47 Quality Reporting Requirements At-Risk Population (Cont.) Coronary Artery Disease (CAD) Composite (All or Nothing Scoring): Drug Therapy for Lowering LDL-Cholesterol Coronary Artery Disease (CAD) Composite (All or Nothing Scoring): Angiotensin-Converting Enzyme (ACE) Inhibitor or Angiotensin Receptor Blocker (ARB) Therapy for Patients with CAD and Diabetes and/or Left Ventricular stolic Dysfunction (LVSD). Percentage of patients aged 18 years and older with a diagnosis of CAD who also have Diabetes Mellitus and/or LVSD (LVEF <40%) who were prescribed ACE inhibitor or ARB Harmony Healthcare International, Inc. 48 16

Payment Mechanism Shared Savings ACOs to receive payment for shared Medicare savings provided it Meets the quality performance requirements Demonstrates that it has achieved savings against benchmark of expected average per capita Medicare FFS expenditures An ACO shall be eligible for payment of shared savings [O]nly if the estimated average per capita Medicare expenditures under the ACO for Medicare FFS beneficiaries for Parts A and B services is at least the percent specified by the Secretary below the applicable benchmark. Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67910, 67927-67930. Harmony Healthcare International, Inc. 49 Payment Mechanism Shared Savings ACOs receive bonuses for achieving resource use and quality targets over the course of a year ACOs face penalties for failing to meet these requirements The final rule sets out two risk models with various incentives for ACOs to receive shared savings payments Medicare Program; : Accountable Care Organizations; Final Rule Federal Register, Vol. 76, No. 212 (November 2, 2011), p. 67910, 67927-67930. Harmony Healthcare International, Inc. 50 Regulatory Considerations Federal Anti-Kickback Statute (AKS) Federal Physician Self-Referral Law (Stark Law) Federal Civil Monetary Penalty (CMP) Federal Antitrust Law Federal Tax Law State Regulations Antitrust Fraud and Abuse False Claims Corporate Practice of Medicine Insurance Law Harmony Healthcare International, Inc. 51 17

Regulatory Considerations Federal Anti-Kickback Statute Definition ACO Implication Prohibition against soliciting, receiving, or paying remuneration in exchange for the referral healthcare service billed to Medicare, Medicaid, or any other federal healthcare program. Current safe harbors to potentially shield ACOs from possible violations Direct employment Co-management arrangements Gainsharing Medicare Program; : Accountable Care Organizations and Medicare Program: Waiver Designs in Connection With the and the Innovation Center; Proposed Rule and Notice Federal Register, Vol. 76, No. 67 (April 7, 2011). Harmony Healthcare International, Inc. 52 Regulatory Considerations Federal Stark Law Definition Prohibition against physician referrals to providers of Designated Health Services with whom the referring physician has a financial relationship. ACO Implication Compliance with the AKS and Stark may be waived, as may be necessary, to conduct: Any payment model for ACOs that the Secretary determines will improve the quality and efficiency of items and services furnished under the Medicare program The bundled payment/episode of care pilot Medicare Program; : Accountable Care Organizations and Medicare Program: Waiver Designs in Connection With the and the Innovation Center; Proposed Rule and Notice Federal Register, Vol. 76, No. 67 (April 7, 2011). Harmony Healthcare International, Inc. 53 Regulatory Considerations Federal Civil Monetary Penalties Definition ACO Implication Civil penalties against hospital payments to physicians for Reducing length of stay Reducing readmission rates Other forms of fraud and abuse HHS has provided a waiver similar to those given for Stark Law and the AKS. Medicare Program; : Accountable Care Organizations and Medicare Program: Waiver Designs in Connection With the and the Innovation Center; Proposed Rule and Notice Federal Register, Vol. 76, No. 67 (April 7, 2011). Harmony Healthcare International, Inc. 54 18

Regulatory Considerations Federal Tax Law Definition ACO Implication Integration between providers coordinating care may cause nonprofit, tax exempt providers and for profit, taxable entities, to merge. Tax-exempt participants in ACOs should be able to remain that way as long as ACO furthers charitable purposes. Accountable Care Organizations: Promise of Better Outcomes at Restrained Costs; Can They Meet Their Challenges? By C. Frederick Geilfuss and Renate M. Gray, BNA s Health Law Reporter, Vol. 19, no. 956 (July 8, 2010). Herding Cats? What Health Care Reform Means for Hospital-Physician Alignment and Clinical Integration, By Daniel H. Melvin and Chris Jedrey, McDermott, Will & Emery (October 13, 2010), p.38. Harmony Healthcare International, Inc. 55 Regulatory Considerations Federal Antitrust Definition Sherman Act, Section 1 prohibits contracts, combinations and conspiracies that unreasonably restrain trade Applies to independent, competing providers Does not apply to: Physicians all within the same group A hospital and its full-time, employed physicians A hospital and its controlled subsidiaries ACO Implication FTC and DOJ released proposed rules governing mandatory antitrust monitoring, based on the percentage of market share an ACO has for any specific service line. Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Saving Program 76 FR 75 (April 19, 2011), p. 21895. Harmony Healthcare International, Inc. 56 Reimbursement Considerations Hospitals Large health systems may be in best position to form ACOs Attract more PCPs Vertical Integration will likely aid in transition to ACO May easily meet quality requirements Greater access to capital and IT requirements Potential Hurdles: May need to lower cost or increase private insurers cost to generate shared savings Investors Not Likely to Provide ACO Funding Under Proposed Rule, Venture Capitalist Says By Sara Hansard, Bureau of National Affairs, Health Law Reporter, Vol. 20, No. 1026, 2011; Quality over Quantity By Bryn Nelson, The Hospitalist (December 2009), www.the-hospitalist.org/details/article/477391/quality_over_quantity.html, (Accessed 2/28/11).; Will Mayo Clinic save money as an ACO? By Christopher Snowbeck and Don McCanne, Physicians for a National Health Program (February 8, 2011), www.pnhp.org/print/news/2011/february/will-mayo-clinic-save-money-as-an-aco, (Accessed 2/28/11). Harmony Healthcare International, Inc. 57 19

Technology Considerations Electronic Medical Records Significant cost Help eliminate silos and increase continuity of care Meaningful use standards The technological impacts on providers choosing to participate in an ACO are rooted in the primary issue of purchasing or updating an EHR system Costly Must meet meaningful use standards to be eligible for savings EHR integration and alignment among ACO participants is critical to ensure benefits of HIT utilization are obtained Technology Fundamentals for Realizing ACO Success, Medicity, September 2010, http://www.himss.org/content/files/medicity_aco_whitepaper.pdf, (Accessed June 30, 2011). Harmony Healthcare International, Inc. 58 Key Principles of Accountable Care Underlying Causes of Poor Performance Lack of clarity about aims, and about whose perspectives are most relevant. Principles of Accountable Care Clear aims: better overall health through higherquality care and lower costs with a focus on patients. Providers are fragmented and unable to coordinate care well; providers accept responsibility only for what they directly control. Establish provider organizations accountable for achieving better results for all of their patients at a lower cost. Payment system drives fragmentation, rewards unnecessary care, and penalizes care coordination and overall efficiency. Align financial, regulatory, and professional incentives with the aims of better health through higher-quality care, lower costs. Inadequate information to support provider and patient confidence about the value of reforms. Valid, meaningful performance measures that support provider accountability for aims and support informed and confident patient care choices. Harmony Healthcare International, Inc. 59 Where The ACOS Are Harmony Healthcare International, Inc. 60 20

32 Pioneer ACOs ACO STATE Banner Health Network Brown & Toland Physicians Healthcare Partners Medical Group Heritage California ACO Monarch Healthcare Primecare Medical Network ACO Sharp Healthcare ACO Physician Health Partners JSA Medical Group TriHealth, Inc. OSF Healthcare System Franciscan Alliance ACO Atrius Health Beth Israel Deaconess Physician Organization Mount Auburn Cambridge Independent Practice Association (MACIPA) Partners Healthcare Steward Health Care System AZ CA CA CA CA CA CA CO FL IA IL IN MA MA MA MA MA Harmony Healthcare International, Inc. 61 32 Pioneer ACOs ACO STATE Eastern Maine Healthcare Systems Genesys Physician Hospital Organization Michigan Pioneer ACO University of Michigan Health System Fairview Health Services Park Nicollet Health Services Allina Hospitals & Clinics Dartmouth-Hitchcock ACO Presbyterian Healthcare Services Central New Mexico Pioneer Accountable Care Organization Healthcare Partners of Nevada Bronx Accountable Healthcare Network (BAHN) Renaissance Medical Management Company North Texas ACO Seton Health Alliance Bellin-Thedacare Healthcare Partners ME MI MI MI MN MN MN/WI NH/VT NM NV NY PA TX TX WI Harmony Healthcare International, Inc. 62 27 Shared Savings Program ACOs ACO STATE Arizona Connected Care, LLC AppleCare Medical ACO, LLC Premier ACO Physician Network Accountable Care Coalition of Coastal Georgia Accountable Care Coalition of the Mississippi Gulf Coast, LLC Florida Physicians Trust, LLC Primary Partners, LLC West Florida ACO, LLC Accountable Care Coalition of Greater Athens Georgia Jackson Purchase Medical Associates, PSC Jordan Community ACO Physicians of Cape Cod ACO Description of Organization Accountable Care Coalition of Caldwell County, LLC Accountable Care Coalition of Eastern North Carolina, LLC Coastal Carolina Quality Care, Inc. AZ CA CA FL FL FL FL FL GA KY MA MA NC NC NC Harmony Healthcare International, Inc. 63 21

27 Shared Savings Program ACOs ACO STATE North Country ACO AHS ACO, LLC Hackensack Physician-Hospital Alliance ACO, LLC Optimus Healthcare Partners, LLC Accountable Care Coalition of Mount Kisco, LLC Accountable Care Coalition of the North Country, LLC Chinese Community Accountable Care Organization CIPA Western New York IPA, doing business as Catholic Medical Partners Crystal Run Healthcare ACO, LLC Accountable Care Coalition of Texas, Inc. RGV ACO Health Providers, LLC Accountable Care Coalition of Southeast Wisconsin, LLC NH NJ NJ NJ NY NY NY NY NY/PA TX TX WI Harmony Healthcare International, Inc. 64 89 Additional ACOs As of July 1, 2012 89 new Accountable Care Organizations (ACOs) began serving 1.2 million people with Medicare in 40 states and Washington, D.C. Brings total number of organizations participating in Medicare shared savings initiatives to 154, including the 32 ACOs Pioneer ACOs and six Physician Group Practice Transition Demonstration organizations that started in January 2011 As of July 1, more than 2.4 million beneficiaries are receiving care from providers participating in Medicare shared savings initiatives Harmony Healthcare International, Inc. 65 The Spread of ACOs Harmony Healthcare International, Inc. 66 22

Impact on SNF Transparency Might as well adjust to the fact that entities, other than surveyors, will be more interested in what SNFs are doing Outcomes Coordinated, efficient, error free transitions of care Length of Stay Functional rehabilitation progress: Service delivery Re-hospitalization rates Patient and Family Satisfaction Harmony Healthcare International, Inc. 67 Impact on SNF Regulatory Level Outcomes Clinical QMs (falls, pressure sores, infection, restraints, pain, psychotropic meds, etc) Pharmacy error rates and Safety Annual and Complaint Survey compliance Harmony Healthcare International, Inc. 68 Depression, PH Q9 The monitoring and prevention in the geriatric population requires closer scrutiny Harmony Healthcare International, Inc. 69 23

Questions/Answers Harmony Healthcare International 1.800.530.4413 www.harmony-healthcare.com Harmony Healthcare International, Inc. 70 Harmony Healthcare International Have you Considered a Customized Complimentary HARMONY(HHI) MEDICARE PROGRAM EVALUATION or CASE MIX ANALYSIS for your Facility? Perhaps your facility has potential for additional revenue Benchmark your facility against key indicators and national norms Email us at for more information RUGS@harmony-healthcare.com Analysis is cost & obligation free Harmony Healthcare International, Inc. 71 24