The document discusses a model for population health management emphasizing the need for healthcare reform and patient engagement, highlighting data-driven processes for managing costs and improving health outcomes. It outlines key methodologies like predictive modeling and physician profiling to effectively manage chronic diseases and incentivize healthcare providers. Additionally, it describes opportunities for deploying commercial Accountable Care Organizations (ACOs) that benefit employers and healthcare providers through coordinated care and shared savings.

1. CFO Breakfast - March 23, 2012
Model for Population Health Management with Quantifiable Results and
Optimal Gain Sharing Potential
Jack Hill, Executive Vice President & Partner

2. Agenda
1. The Current Health Care
Environment
2. Population Health
Management Process
3. Proven Results
4. Why You Should Care
5. Opportunities for
Commercial ACO
Deployment

3. 3
The Current Health Care Environment
Reform is Here and We
Have to Deal with It

4. 4
The Current Health Care Environment
The Patient Has to be
Engaged

5. 5
The Current Health Care Environment
The Political
Landscape is Rife with
Challenges

6. 6
The Current Health Care Environment
The Train Has Left the
Station – Reform for
Medical Providers is in
Play and Population
Health Management
should be THE Primary
Objective

7. 7
The Current Health Care Environment

8. 8
The Current Health Care Environment
Patient /Payor Shifts
Payment Reductions/
Changes

9. 9
The Changing Health Care Environment

10. 10
Population Health Management Process
* * Step Down
Employer
On-site Data
Benefit UM
Testing Warehouse
Consulting Management
Data Drill Ongoing
Gain Sharing Employer
Down Educational
Formulas Stop Loss
Capabilities Resources
Community Healthcare
* Small Health
Partner
=
Physician Geographic Employer
Profiling Benchmarks Financial Risk
Targets Assessments
Delivery of Quality
* * *
Predictive Episodic
Recognition
of High Cost Wellness Healthcare
Modeling Analysis Programs
Patients
Controlled Healthcare Costs
*
Chronic
* Treatment Member Personal Healthier Members
Criteria Incentive Health
Disease Compliance Program Records
Management
Structural * * *
Professional Employee Employer
Organization Telephonic Healthcare Healthcare
Phys Nurse Coaching Indexing Indexing
Hosp/etc
Gain Sharing Hospital/ Medical
ACO Medical
Distribution Physician Referral
Director
Methodology Discounts Control

11. 11
Population Health Management Process
Step 1
• Turn Claims and ERM into Actionable & Intelligent Data
Step 2
• Align & Engage With Highest Quality & Cost Efficient Physicians
Step 3
• Improve Medical Utilization & Member Health Status
Step 4
• Seamlessly Integrate the Entire Program
Step 5
• Communicate Effectively to the Ultimate User – The Patient

12. 12
Population Health Management Process

13. 13
Population Health Management Process
Why? Because data
mining identifies the
risks.

14. 14
Population Health Management Process

15. 15
Population Health Management Process
The Highest Quality Physicians…..
Provide the Needed Preventative
Service Rates for Chronically Ill
Patients…..

16. 16
Population Health Management Process – Chronic Disease
Management
• Monitors and manages chronic diseases and co-morbidities that total 80% of
costs
• Members with a chronic condition are assigned a Nurse Coach
• Physician profiling allows high dollar claimants to be shifted to high quality, cost
effective providers
• Incentives can be aligned with desired health outcomes
• Built in benchmarks and accountability measures to demonstrate member
compliance
• Reporting to the provider whether the chronically ill population meet the
minimum care standards
• Documented ROI
• Reinsurance credit when used with predictive modeling and physician profiling

17. 17
Population Health Management Process – Predictive Modeling
• Predictive modeling’s value proposition is that it shortens the cycle between an
adverse event and intervention
• Utilizes a Predictive Risk Model which is the science of ranking individuals from
those with the greatest probability of disease onset to the least probability
• The Predictive Risk Model utilizes a very sophisticated software application which
takes the following factors into consideration resulting in the assignment of a
Healthcare Index
 Age/gender
 Illness burden
 Co-morbidities
 Types/frequency of medicines
• Large claim prevention depends significantly on early identification, intervention
and coaching

18. 18
Population Health Management Process – Physician Profiling
• Patented process employs three stringent, clinically based tests which each
physician provider must pass in order to be an Endorsed Provider
 Practice patterns which result in low total costs for the types of illnesses
comparable to other physicians of the same specialty
 Delivery of high levels of post-primary preventive care services for
chronically ill patients
 Patterns of clinical and billing practices that avoid service up-coding,
services that are not appropriate for the diagnosis, invalid diagnostic coding
and services performed more frequently than typically appropriate.
• It has been statistically validated that Endorsed Providers are on average 42%
less expensive than providers who do not pass the three, clinically based tests
• There are on average 15% Non-Endorsed Providers in areas where there are
enough episodes to statistically measure
• It has been actuarially validated that Non-Endorsed Providers on average will
add 10% excess cost to costs

19. 19
Proven Results

20. 20
Why Should I Care?
Fee for Pay for Pay for Episodic New Payment
Shared Savings
Service Coordination Performance Payments Shared savings Models
Payment based on From better care
Paid for each Payment tied to Providers share
delivery of services coordination and
unit of service Additional per objective measures from better
within a given disease management
WITHOUT Capita payment of performance care coordination
timeframe Reform
constraint on Based on ability to Reform and disease
Reform ACOs
spending Manage care VBP/HIT/Readmit management
Bundled Payment

21. 21
Opportunities for Commercial ACO Deployment
Community
Employers
Hospital(s) & Product
Physician(s) Administration

22. 22
Opportunities for Commercial ACO Deployment

23. 23
Opportunities for Commercial ACO Deployment
BENEFIT BUDGET
• Employers and Healthcare Providers determine health benefit budgets.
• Healthcare Providers arrange for deeply discounted healthcare services.
• Employers and Healthcare Providers share in the savings to the healthcare budget through
financial performance rewards.
ENGINEERING AND COORDINATION OF CARE
• ACO Medical Director engineers the coordination of patient care pathways through top
performing medical providers.
BEST OF BREED CLINICAL VALUE NETWORKS AND PHYSICIAN RECRUITED
• Best of breed physicians are identified by the ACO Medical Director and are heavily
incentivized by the gain sharing due to favorable variances to the employers’ healthcare
budget.
• High Quality, Cost Effective Physicians.
DEVELOP A CULTURE OF WELLNESS
• Member Health Incentive Programs.
• Healthcare Coaching - Ongoing Healthcare Education.

24. 24
Opportunities for Commercial ACO Deployment

25. 25
Opportunities for Commercial ACO Deployment
SAMPLE GAINSHARING TARGET FORMULA ONE
Total Bonus Pool
Hospital $ 281,896.78 Physician Distribution
Physicians $ 657,759.15
$100,000 Specific Stop Loss
Reinsurer 1 Reinsurer 2 Reinsurer 3
$7,531,413 $7,391,071 $7,402,033
SAMPLE GAINSHARING DISTRIBUTION FORMULA Example: Total Bonus Pool $716,700
Average Expected Paid Claims Hospital $238,898
Annual Budget Target Physician $477,795
$7,441,506
Patient Cost
Patient Risk Difference - Total Patient Physician Index Bonus
# of Target Actual Difference per Distribution Bonus Bonus
Monthly Target Factors Physician Risk Adjusted Risk Adjusted Cost Difference Allocation Profiling Bonus Forfeiture
Patients PMPM PMPM Year for Amount Forfeiture Distribution
Single $ 375.72 Score PMPM minus Actual per Year Index Factor Reallocation
Allocation
Family $ 939.30 a b c d e f g h i j k l m n o p
(j x bonus (pro-rata
(c x d) (e - f) (g x b x 12) (i / total of i) (l x m) (k + n + o)
pool) allocation)
Sample Monthly Calculation
1 1,400 0.95 $700 $665 $650 $15 $ 252,000 $ 252,000 11.6% $ 55,358 0.80 20.0% $ - $ 7,545 $ 62,903
Month Single Census Factor Total Family Census Factor Total Target Actual
January 413 $ 375.72 $ 155,172.26 495 $ 939.30 $ 464,953.21 $ 620,125.47 $ 106,849.34
2 1,200 0.98 700 686 710 (24) (345,600) - 0.0% - 0.85 15.0% - - -
February 425 $ 375.72 $ 159,680.90 488 $ 939.30 $ 458,378.11 $ 618,059.01 $ 200,483.45
March 418 $ 375.72 $ 157,050.86 490 $ 939.30 $ 460,256.71 $ 617,307.57 $ 246,395.45
3 1,100 1.01 700 707 690 17 224,400 224,400 10.3% 49,295 0.90 12.0% 6,719 56,014
April 423 $ 375.72 $ 158,929.46 492 $ 939.30 $ 462,135.31 $ 621,064.77 $ 332,940.76
May 428 $ 375.72 $ 160,808.06 490 $ 939.30 $ 460,256.71 $ 621,064.77 $ 512,394.34
4 1,250 1.08 700 756 715 41 615,000 615,000 28.3% 135,101 1.00 8.0% 18,414 153,514
June 426 $ 375.72 $ 160,056.62 490 $ 939.30 $ 460,256.71 $ 620,313.33 $ 529,450.56
July 419 $ 375.72 $ 157,426.58 493 $ 939.30 $ 463,074.61 $ 620,501.19 $ 488,394.34
5 1,100 1.10 700 770 800 (30) (396,000) - 0.0% - 1.50 0.0% -
August 422 $ 375.72 $ 158,553.74 496 $ 939.30 $ 465,892.51 $ 624,446.25 $ 501,935.40
September 427 $ 375.72 $ 160,432.34 499 $ 939.30 $ 468,710.41 $ 629,142.75 $ 462,384.56
6 1,200 1.12 700 784 725 59 849,600 849,600 39.1% 186,637 1.75 -12.0% (22,396) 164,240
October 428 $ 375.72 $ 160,808.06 498 $ 939.30 $ 467,771.11 $ 628,579.17 $ 440,586.45
November 425 $ 375.72 $ 159,680.90 491 $ 939.30 $ 461,196.01 $ 620,876.91 $ 523,940.56
7 1,300 1.15 700 805 790 15 234,000 234,000 10.8% 51,404 2.00 -20.0% (10,281) 41,123
December 426 $ 375.72 $ 160,056.62 490 $ 939.30 $ 460,256.71 $ 620,313.33 $ 412,940.56
IBNR $ 1,908,656.41 $ 5,553,138.13 $ 7,461,794.53 $ 4,758,695.77
$ 1,433,400 $ 2,175,000 100.00% $ 477,795 $ (32,677) $ 32,677 $ 477,795
January $ 323,859.34
February $ 212,945.45
March $ 198,485.67 Score Indicates Physician is Practicing High
April $ 88,496.45
$ 7,461,794.53 $ 5,582,482.68 Health Index Score of Quality Cost Efficient Medicine
Favorable
Variance to $ 1,879,311.85 Patient Population
Budget

26. 26
Opportunities for Commercial ACO Deployment

27. 27
Targeted Strategy
Medical Providers’ Own Employees
Captured Population Controlled Population
Uninsured
Currently Underwriting Risk Need to be Managed & Risk Mitigated
Local Employers
Gain Sharing with little or no risk Shared Benchmarks & Incentives
Commercial Payers
Participate in closed networks and risk Reduce trend
Public Programs (Medicare under ACO Rules & Medicaid)
ACO Gain Sharing and Risk Mature Management Expertise – Proven Results

28. Questions & Answers
Jack Hill
Executive VP & Partner
www.accountablecaresg.com
Phone: 630.878.7539
Email: jack.hill@accountablecaresg.com