Alternate Oncology Payment Arrangements: The Convening of Risk

2. Alternate Oncology Payment Arrangements: The Convening of Risk

3. Panelists • Ronald Barkley, M.S., J.D. President Cancer Center Business Development Group • Atul Dhir, M.D., Ph.D. Chief Executive Officer, New Century Health • Alan Sokolow, M.D. Senior Vice President, ADVI • Jessica Turgon Principal, ECG Management Consultants

4. I. Drivers of ReformTransition to Value-Based Payments Long-term Medicare and Medicaid trends are pushing provider organizations to explore reimbursement models other than FFS as we move from a volume-based to a value-based payment system. As Medicare and Medicaid volumes expand, there will be significant pressure on providers to manage their costs in order to maintain positive margins. Reimbursement as a Percentage of Cost Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2011, for community hospitals. Includes Medicaid and Medicare disproportionate share (DSH) payments. 785\90\222314(pptx)-E2

5. I. Drivers of ReformManagement of Risk and Accountability Clinical Innovation Disease Management Clinical Standards/ Protocols Clinical Transformation Funds Flow and Distribution Quality and Performance Standards A comprehensive care delivery network, coupled with population health management capabilities, enables organizations to align reimbursement mechanisms with population health management strategies. Premium Pricing RiskSharing Premium Dollars Network Development Organization/Governance Benefit and Product Design Clinical and Geographic Scope Payor Contract Restructuring Clinical Informatics Utilization Management Infrastructure and Maintenance Performance Reporting 785\90\222314(pptx)-E2

6. I. Drivers of ReformNetwork Strategy Network formation typically includes participation tiers, allowing the founding organization(s) to choose the most appropriate level of their commitment and exclusivity related to clinical integration efforts. Typical Network Tiers • Network Core • Ownership (if necessary). • Governance. • Risk sharing. • Surplus sharing. • Network Contractors • No governance or decision-making participation. • FFS only. • For example, radiology group. • Network Participants • No governance or decision-making participation. • FFS with shared savings. • For example, home health agency. • Network Affiliates • Participation in decision making. • Potential risk sharing. • For example, aligned independent medical group. Level of Commitment and Exclusivity Participation levels can be adjusted to meet the unique requirements for clinical integration efforts; however, it is recommended that tiers are easily understood and implemented. 785\90\222314(pptx)-E2

7. I. Drivers of ReformEssential Population Management Competencies Providers must consider essential competencies that they have and/or will need to have in place to execute a population management strategy. Essential Population Management Competencies Providers will need to assume some of the traditional payor core competencies and should receive a portion of the premium for doing so. 785\90\222314(pptx)-E2

8. II. Alternative Approaches to Oncology Payments • Until recently, most healthcare risk-management models have been limited to the primary care setting. • Large patient population to offset risk from expensive outliers. • More established clinical pathways and clinical quality benchmarks. • Opportunity to reduce non-value-added downstream specialty care. • However, specialty care populations, like oncology, use more expensive healthcare services in a different manner. • Smaller patient cohort increases risk from cost variability. • More frequent utilization of high-cost testing, treatment, and hospital services. • Fewer evidence-based and/or non-controversial clinical pathways established. Tertiary Care Secondary Care Primary Care 785\90\222314(pptx)-E2

9. II. Alternative Approaches to Oncology PaymentsCommon Themes Alignment of Incentives • Promotes clinical behavior in terms of patient management and outcomes rather than service volume. • Supports shared goals across the continuum of care. Payor/Physician Partnership • Follows clinical pathway development with physician input. • Applies iterative process of using and sharing data to measure success and drive future pathway refinements. Targeting of Highest-Cost Services • Uses a combination of data, physician expertise, and patient/family priorities to balance quality/cost trade-off. • Targets ED, inpatient, and chemotherapy treatments with little or no proven/additional benefit to the patient. 785\90\222314(pptx)-E2

10. ` Panel Response The Road Ahead for Alternate Payment Arrangements in Oncology

11. The Road Ahead for Alternate Payment Arrangements in Oncology • Is there really any urgency to pursuing alternate payment/risk arrangements in oncology (any “burning platform”)? What are the risks of non-action?

12. The Road Ahead for Alternate Payment Arrangements in Oncology • Is there really any urgency to pursuing alternate payment/risk arrangements in oncology (any “burning platform”)? What are the risks of non-action? • Who is driving the dialogue about alternate payment/risk in oncology? Is this provider-initiated or health plan-initiated? Or a bit of both?

13. The Road Ahead for Alternate Payment Arrangements in Oncology • Is there really any urgency to pursuing alternate payment/risk arrangements in oncology (any “burning platform”)? What are the risks of non-action? • Who is driving the dialogue about alternate payment/risk in oncology? Is this provider-initiated or health plan-initiated? Or a bit of both? • Is oncology risk for everyone? Or is there a stratification of provider “risk readiness” depending on the extent of consolidation/integration in the local market?

14. The Road Ahead for Alternate Payment Arrangements in Oncology • In less consolidated/integrated settings, is a shared savings approach in oncology a viable mechanism for transitioning to risk?

15. The Road Ahead for Alternate Payment Arrangements in Oncology • In less consolidated/integrated settings, is a shared savings approach in oncology a viable mechanism for transitioning to risk? • Could it be that assumption of risk in oncology may be unrealistic if patient/family expectations are not well managed, particularly in end-of-life situations? How big of an issue is this?

16. The Road Ahead for Alternate Payment Arrangements in Oncology • In less consolidated/integrated settings, is a shared savings approach in oncology a viable mechanism for transitioning to risk? • Could it be that assumption of risk in oncology may be unrealistic if patient/family expectations are not well managed, particularly in end-of-life situations? How big of an issue is this? • What, if any, actions should community oncology providers take with regard to alternate payment arrangements and assumption of risk in oncology?

17. ` Supplemental Materials Examples of Alternate Payment Models

18. Examples of ModelsAccountable Care Organizations (ACOs) 1http://obroncology.com/obrgreen/print/The-Rapidly-Evolving-ACO-World 785\90\222314(pptx)-E2

19. Examples of ModelsPatient-Centered Medical Homes (PCMHs) 785\90\222314(pptx)-E2

20. Examples of ModelsBundled Payments/Episode of Care Payments 785\90\222314(pptx)-E2

21. Examples of ModelsChemotherapy Management Fee 785\90\222314(pptx)-E2

22. Examples of ModelsEnd of Life (EOL) Care Management Programs 785\90\222314(pptx)-E2