1. Baystate Health:Innovation for Improved Care Evan Benjamin, MD Senior VP, Healthcare Quality, Baystate Health and Associate Professor of Medicine Tufts University School of Medicine Massachusetts Division of Health Care Finance and Policy Cost Trends Hearings, June 2011

2. Baystate Health Is Committed to the Development of an Integrated Regional System of Care for All Residents of Western Massachusetts Focused on Quality Partner to the Community • Nationally recognized for Quality Care - Leapfrog Top Hospital - Thomson-Reuters Top100 - Top 100 Integrated Systems - Magnet Designation - NCQA level 3 PCMH • Health New England: - Top 10 health plan in country - #1 in customer service in the country • Volunteer community board • $37.8M hospital community benefit • Partners for a Healthier Community public/private partnership • Baystate – Springfield Educational Partnership • $2.6B economic impact Integrated Delivery System Integrated Health Plan Committed to Education • Western Campus of Tufts/New England Medical Center • 320 residents • Educated 1/3 of PCPs in region • Pioneer Valley Life Science Institute • Center for Quality of Care Research • Baystate Medical Center – tertiary center • Baystate Mary Lane & Baystate Franklin – community hospitals • Baystate VNA and Hospice • Baystate Medical Practices (630 MDs and advanced Practitioners) • Baycare Health Partners (1,200 MDs in our PHO) • Over 120,000 members • Only Provider Sponsored Health Plan offering commercial, Medicare Advantage and Medicaid Managed Care choices • Medical Home Prototypes for all lines of business, including MassHealth. “To Improve the Health of the People in Our Communities Every Day, With Quality and Compassion”

3. Triple Aim Population Health Triple Aim Per Capita Costs Experience of Care • Optimal Care Delivery within and Across the Continuum, • Focused on improving the Health of the Population and • Cost of Care • Right Care, Right Place, Right Time

4. What is Bundled Care ? • An integrated payment model to improve quality and value for a defined set of health care services by: • Redesign of complex systems to embed evidence based best practices reliably • Activating patients and families to be engaged in the care processes • Aligning the interests of the patient, provider, payor by focusing on a defined “episode” of care that is bundled together

5. “Baystate Best Care” Bundled Payment Prototype Objectives • Reliable, more efficient patient care driven by proven clinical care processes • Predictable costs, with no overall increase in cost per episode of care across the continuum of care • Opportunity to learn and develop competencies to succeed under a “bundled payment” paradigm; • Alignment of payment incentives among hospital, physicians and health plan.

6. Bundled Payments: Assumptions & Principles • No expectation of more reimbursement for simply doing “the right thing” • Treatment of “preventable” complications without charge • Shared Savings principle • No need to pay prospectively; reconciled later

7. The Collaborative: Baycare Health Partners, Baystate Health & Health New England PHO (Orthopedic Surgeons) The Collaborative Health New England (Health Plan) Baystate Health (Hospital, VNA) Infrastructure Group Model of Care Group Payment Model Group

8. Bundled Payments for Episode of THR Care: Risk-Based Pricing SNF Rehabilitation Hospitalization Readmission Hospitalization High Pre-op Office visit Post-op Office Visit payment bundled at $24,600 Hospital Spending for the Care Episode – $10,000 VNA Home Health Rehab visits Hospitalization Low Pre-op Office visit Post-op Office Visit = Physician Visit Shared savings: 45% Physicians 45% Hospital 10% Visiting Nurse

9. Baystate Best Care THR Performance Metrics

10. Clinical Care Changes • Bundle Coverage increment: Prep-op History & Physical through third post op visit • Return visit for History & Physical includes: • Pre-hab visit=> safety and home screening • Patient compact • Education => going home on PM of POD 2 or AM of POD 3 • Pre-op class and screening: • Review of safety issues, exercises, precautions, what to expect, pain management options • Reinforcement => going home • Case managers arrange for VNA Home Health 6-8 visits: • VNA protocol planned in conjunction with MDs and Health plan • Quality Measures review and reporting: • Against evidence based consensus guidelines (ie SCIP/Chest) • Control of Rehab: • 7 days a week operation, 5 days for rehab

11. Results *Hospital Consumer Assessment of Healthcare Providers and Systems

12. Lessons Learned • Tightly aligned physician partners critical at the outset • Data analytics important to get right first • Difficult to determine which services to include in the bundle • Begin planning early for development of the infrastructure to administer the bundled payment • Manage politics through transparency and participation of all providers and health plan

13. Thoughts from Michael Porter • To improve value we must understand the quality and cost of an episode/condition • The unit of reimbursement needs to be aligned with the unit of value