[WEBINAR] Clinical and Financial Integration for Future Growth: Winning Payer Strategies in an Evolving Market

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Clinical and Financial Integration for Future Growth

Winning Payer Strategies in an Evolving Market

Presented by Evolent Health | March 2013, 2014


Clinical and Financial Integration for Future Growth

2

Seth Frazier

Chief Transformation Officer

Previously:

• Chief Transformation Officer, Geisinger Health System

• Senior Vice President, Strategic Services, The Children’s Hospital

of Pennsylvania

Carolyn Magill

Senior Vice President, Payer Strategy and Operations

Previously:

• Chief Operating Officer, UnitedHealth Community & State – New

Jersey

Julia Bietsch

Market President

Previously:

• Vice President of Clinical Operations, Anthem

• Vice President West Coast Network Negotiations, Anthem

#evolenthealth


Evolent At-a-Glance

3

Provider-focused integrated systems are best positioned to create innovative clinical

models that improve care and reduce costs

Risk management

infrastructure to

capture value from

population health

Population health

management to optimize

care and reduce cost

Physician ownership

to maximize success

Continued support of physicians, coupled with infrastructure investment

on a payer neutral platform, enable high quality, low cost care.

In combination these capabilities drive growth for our clients in a value-driven market

2+

since initial inception

years500+

Evolenteersin 2014

2Mlives impacted

by current model

15markets

served nationwide


Our Model

4

Clinical platformPopulation health

management

Financial platformPayer-neutral support and

infrastructure

Aligned operating partner providing the people, process and technology that leading

health systems require for provider-led, physician-driven care transformation

Tech platformIdentifi analytics and

care management engine

POPULATION HEALTH PLATFORM

BlueprintBoard-ready operational plan


Market Forces Driving Price-centric Insurance Products Featuring Narrow Networks with Care Integration

5

Drive value-focused health

coverage redesign with

increased consumer

financial responsibility…

Moving patients to

integrated, low priced

networks that

offload risk to providers

Broad cost/price

pressures…

• Health care costs represent

18% of GDP, despite recent

trend moderation

• Global competitive pressure

on private sector wage/

compensation levels,

including health benefits

• Continued state and Federal

government deficits; Health

care reform

• Price-oriented, narrow

network insurance products

• 2014 price-sensitive

exchanges

• Increasing Medicare

Advantage share nationally,

despite rate reductions

• Continued consumer cost

share growth (e.g., 7%

growth, 2012)

• Competitive total cost of care

with provider risk bearing

(e.g. capitation)

• Covered life access through

primary care attribution

• Physician/organizational

alignment around total cost

of care (ACOs)

• Strong care management

infrastructure and population

health IT


Consumer Price Sensitivity Creating Risk for Hospitals Excluded from Low-priced Insurance Offerings

6

Half of all commercial admissions are from families with middle-range income or

below, contributing to price sensitivity

$75k or less

$80-100k

>$100k

50%

28%

22%


Health Systems Have Many Options to Adopt Risk

7

Which model is right for your system?

Options to Adopt Risk

Payer Risk

Contracts

• Move existing

payer contracts

from FFS to

getting paid on a

population basis

(e.g., PMPM)

Employee Plan

• Reduce costs of

employee health

plan, where

savings fall

directly to bottom

line

Uninsured/

Indigent

• Reduce

inappropriate

uninsured

utilization,

decreasing losses

and freeing up

capacity

Health Plan

• Launch Medicare

Advantage,

commercial, or

other product

lines, to obtain the

full premium dollar

ASO / Direct to

Employer

• Offer products /

services to

employers

(wellness, on-site

clinics,

occupational

medicine)


Payer Risk Contracts

8

BENEFITS

SUCCESS FACTORS

CHALLENGES



• Speed to

membership for at-

risk population

• Lower cost, faster

ROI than alternatives

• Strong driver for

physician mindshare,

credibility for

contracting

organization

• Lower friction with

payers than

alternatives

9

BENEFITS

Liv

es, b

y P

ayer,

fo

r T

yp

ical P

hysic

ian

Pra

cti

ce P

an

el (%

)

Primary Care Physician Panel Composition

for Select Evolent Clients

1,700

1,900

2,20013 27127665433322111

1

1

1

289988873 4422211

1 1

24161097573333

11

1 1

2 2

2

Payer 4-FI

Payer 3-FI

Payer 2-FI

Payer 1-FI

Payer 5-SI

Payer 4-SI

Payer 3-SI

Multiple Attribution

Payer 1-SI

Payer 2-SI

Payer 4-MA

Payer 10

Payer 9

Payer 7

Payer 6

Payer 5-MA

Payer 3-MA

Payer 2-MA

Payer 1-MA

Payer 8-MM

Evolent analysis of client physician panel data in 3 different MSAs



• Strong alignment

with physicians

• Deal terms that

position providers to

keep a substantial

proportion of

savings from PMPM

revenue

• Strong payer data

partnership

• Robust network

alignment to

manage care within

ACO

10

SUCCESS FACTORS

MAPD

$1,000

$550

$900

$350

Commercial

Individual

MSSP

(Excludes

Pharmacy)

$600

$150

$350

Commercial

Small Group

$350

Exchange

(Silver)

Commercial

Large Group

$380

$230$270

$180

Low High

Excludes member cost sharing and administrative cost; Includes pharmacy costs with the exception of MSSP

Source: 2012 SNL financial database, CMS 2014 rate book, and research materials

Low-High Average Revenue $PMPM, by LOB, for Risk Deals

SUCCESS FACTORS



• Deal terms that

erode savings

• Inability to:

• Access real-time

data

• Change provider

rates to incent

behavior

• Shift benefit

design to incent

coordinated care

• Potential exclusion

of self-insured lives

• Non-existence of

independent asset

11

Key Deal Terms and Illustrative Comparison

ElementDeal

A

Deal

B

Deal

C

Deal

D

Deal

E

Attribution Model

Savings Corridor

Base Line Expense

Trend Methodology

Care Coordination Fee PMPM

Provider Share of Savings

DOFR (Division of Fin Resp.) /

Catastrophic/OON

Care Coordination Fee Treatment

Maximum Savings

Quality Gates

Favorable Acceptable Un-Favorable

Evolent analysis of deal terms in select MSA

CHALLENGES


BENEFITS

SUCCESS FACTORS

CHALLENGES

Provider Sponsored Health Plan



• Creation of tangible

asset with

independent

market value

• Greater control of

levers of performance

drivers and full

premium dollar

• Capture of 100% of

utilization

improvements

(after administrative

expenses are

accounted for)

• Direct-to-consumer

relationship

• Potential for

relatively higher,

long-term NVP

13

Evolent projections based on CMS data and market analysis.

Projected Annual Net Income ($M)

-$15

-$5

$5

$15

$25

Year 6Year 5Year 4Year 3Year 2Year 1Year 0

Case Study A

Health Plan

Payer Risk

Case Study B

-$15

-$5

$5

$15

$25Health Plan

Payer Risk

Year 6Year 5Year 4Year 3Year 2Year 1Year 0

BENEFITS



• Robust physician

alignment and

engagement

• Competitive product

pricing, benefit

design, and network

to attract

membership/risk

• Distribution strategy

leveraging community

relationships

• Strong

communications with

current contracting

payers

• Market factors, such

as attractive county

profile

14

Percentage of Medicare Eligibles, by MA County Attractiveness

for Select Evolent Clients

Low Average High

Attractive 11% 2% 31%

Competitive 44% 8% 4%

Current MA Penetration

MA

Re

imb

urs

em

en

t

SUCCESS FACTORSSUCCESS FACTORS



• Significant capital

requirements

• Competing priorities

and incentives, which

can impact execution

and speed to market

• Limited scale,

particularly among

newer plans

• Gaps in expertise

• Adverse selection

15

Evolent analysis of data from select clients

Capital Requirements to Launch Medicare Advantage

Start Up/ License

Application

$5M

$15M

Reserves Early Year

Operating Losses

$5M

$30M

$10M

$30M

CHALLENGES

Low High


Consequences of Not Moving

• Competitors gain control of covered lives and

redirect care

• Health plans exclude or tier high-quality providers

out of network and/or secure physician alignment

• Health systems become forced to bid for care in

price-driven markets (e.g., packaged prices for

procedures)

• Payer mix becomes more Medicare-dependent,

as the large remaining population of unmanaged

patients

16


Q&A

17


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[WEBINAR] Clinical and Financial Integration for Future Growth: Winning Payer Strategies in an Evolving Market