Realities of Reform: Navigating New Payment Models July 18, 2012, 2:00 - 3:00 pm ET

1. Realities of Reform: Navigating New Payment Models July 18, 2012, 2:00 - 3:00 pm ET • Eric Schultz • President & CEO • Harvard Pilgrim Health Care • Suzette Jaskie • President & CEO • MedAxiom Consulting • Former CEO of West Michigan Heart • Laurel Sweeney (moderator) • Senior Director • Global Health Economics & Reimbursement • Philips Healthcare Welcome to Philips Healthcare’s “Reimbursement Simplified” Webinar Series

2. Realities of Reform: Navigating New Payment Models Eric H. Schultz President and CEO – Harvard Pilgrim Health Care July 18, 2012

3. What We Know • The market is not a market: no real price connection between patients’ demand and providers’ supply • The system is not a system: care and payment can be fragmented • Health Care Reform expands coverage but adds new administrative expenses and taxes

4. What’s Next • The Challenge is getting control of medical cost trend while introducing insurance reforms • One size will not fit all • What’s needed are provider, member and employer strategies that include • Information • Incentives • Health Engagement

5. Provider Engagement • Move away from Fee for Service • Introduce Payment for Value • Organize Care Delivery Systems • Offer Transparency – cost, quality and service

6. What We Are Doing at Harvard Pilgrim • Provide actionable information to physicians and hospitals for population management • Develop care delivery models that are built around patients’ needs • Evolve existing incentive and reward programs (Harvard Pilgrim’s Quality Grant Program)

7. Consumer Engagement • Transparency • Consumer Incentives • Create Competition among providers - deal with market and brand power leaders

8. What We Are Doing at Harvard Pilgrim • Tiered Networks • Focus Network • SaveOnSM • Healthy Futures rewards program (High deductible plans w/HRA/HSAs, in combination with health and wellness)

9. Lessons Learned • Offer choice • Defined dollar contribution • Shift financial risk sufficient to change behaviors • Shift volume • Keep it simple • Marketing partnerships with high value providers

10. Realities of ReformRequired organizational core competenciesSuzette JaskiePresidentMedAxiom Consulting 10

11. The new payment models are raising the bar…. • Care coordination • Quality • Financial justification • Transparency • Appropriateness • Patient engagement 11

12. Environment • Increased regulatory • Decreased ability to partner, be creative • Public trust of healthcare system at issue • Less money • Individual physician : patient relationship model 12

13. Every System is Perfectly Designed to Achieve the Results That It Yields. Demming. 13

14. New model encourages systems thinking • Create a care delivery system • Produces Value: • Common notion of quality • Lowest reasonable cost 14

15. SystemComponents PROCESS INFORMATION TECHNOLOGY PEOPLE 15

16. Shifting Core Competencies 16

17. Continuous Value Improvement Detail Operation Efficiency: • Lean • Six Sigma • Re-engineering Goal = eliminating waste Clinical Effectiveness: • Appropriateness • Guidelines Goal = Consensus standard of care 17

18. Technology Integration Data management: • Publically reported data • Registries • Value based purchasing Solution deployment • EMR • Structured reports • CPOE 18

19. Talent management Performance environment: • Philosophy • Clear expectations • Metrics base measures • Career ladder Training and education: • Growth as performance expectation • Planned training • Train the trainer 19

20. Core Competencies applied to Clinical Quality • Hardwiring evidence based • Hardwiring good documentation • Roles & responsibilities designed to deliver • Digging into the data, not refuting it! • Debate over the gray zone • Sharing not only the good cases • Reaching consensus and evaluating its application and effectiveness 20

21. SIX TOOLS : Success in the CV Enterprise Today • Physician /Administration collaborative leadership • Physician driven reduction in variation of care • Care team development • Leveraging information technology advances in order to manage data and processes • Performance environment to create value • Talent redevelopment Preparing for transformed CV Enterprise of tomorrow! 21

22. The best way to predict the future is to create it” --Peter Drucker 22

23. We would like to hear your views on today’s webinar. Go to http://www.surveymonkey.com/s/8W9WB5JFor more information on reimbursement, please visit the Philips Healthcare Reimbursement Website at www.philips.com/reimbursement Questions?Please type your questions into the video player window.The moderator will pose questions to the panelists.

24. Speaker Bios Eric H. Schultz President and Chief Executive Officer Harvard Pilgrim Health Care Eric H. Schultz is President and Chief Executive Officer of Harvard Pilgrim Health Care, the #1 private health plan in America according to an annual ranking of the nation’s best health plans by the National Committee for Quality Assurance (NCQA). Harvard Pilgrim is the only private health plan in the nation to be named #1 for member satisfaction and quality of care for eight consecutive years. During his 26-year career, Eric has taken an active role in defining and implementing changes leading to improvements and greater efficiencies in the financing and delivery of health care through greater consumer and physician engagement. Prior to joining Harvard Pilgrim, Eric was President and Chief Executive Officer of Fallon Community Health Plan, and held executive positions with CIGNA Healthcare, Prudential Healthcare and Nashville Healthcare Physician Group. Eric was recently appointed as Chair of the Board of AHIP. Eric holds an MBA in Health Care Leadership from Yale University’s School of Management, as well as a Bachelor of Science degree in Biology and a Bachelor of Arts degree in Economics from the University of Connecticut.

25. Speaker Bios Suzette Jaskie Chief Executive Officer MedAxiom Consulting Suzette Jaskie, CEO of MedAxiom Consulting, is a health care industry thought leader with over 20 years of executive healthcare management experience in both physician practice and hospital environments. Ms. Jaskie has extensive experience in healthcare organizational development, strategic planning, hospital/physician alignment, improving financial, operations and market organization performance, market and program development, financial management and physician compensation. Suzette is a coach and a performance improver who relishes in motivating change and assisting organizations to achieve their optimal performance. Previously, Suzette served as the CEO of West Michigan Heart, a 33-cardiologist practice, and Executive Director of Spectrum Health’s Frederik Meijer Heart & Vascular Institute, both in Grand Rapids. In that role, Ms. Jaskie provided executive management to both organizations, coordinating 98-physicians in several cardiovascular specialties across a 7 hospital, 14 county system. Ms. Jaskie is a frequent speaker at national meetings and a contributor to several journals and articles. She is a faculty member of American College of Cardiology’s Advanced Leadership Institute. Suzette has a Master’s Degree in Business Administration from the University Of Hartford, CT and a Bachelor of Science from the University of Wisconsin.