Now more than ever, we are entering a period of rapid change catalyzed by the power of data. On December 21, 2018, the Centers for Medicare and Medicaid Services (CMS) issued a final rule for the Medicare Shared Savings Program (MSSP), strengthening the financial incentives for ACOs to drive improved outcomes. The health systems that embrace data to achieve financial success will grow while the rest will struggle to compete. View this webinar for a discussion on how to prepare. The US healthcare system didn’t develop overnight, rather, it is the culmination of a series of revolutions within wealthy parts of the world. In this webinar, we explore the high points of history that have led us to our current challenges. While care has steadily improved over time, the cost of that care has risen at a much more dramatic rate. CMS created the MSSP to help mitigate the growth of these costs while providing better care for individuals and populations. On a larger scale, the program serves to shift the healthcare industry towards fee-for-value. Despite general frustration related to legislative involvement, history has proven that regulatory changes precede attitudinal changes and the MSSP (combined with accurate, timely data) may be just the piece of legislation to help make value-based care a reality. By viewing this webinar you will learn: - How the US healthcare industry reached its current state. - Why financial imperatives drive cultural change in our economic model. - Ways that the MSSP can help your organization achieve financial success. - Ideas for how to utilize data to develop better healthcare delivery systems. Dr. Will Caldwell is a strong proponent of the use of data analytics to promote good health and save lives. His area of expertise rests in technology-enabled health care delivery models and value-based care platforms. We hope that you will view this webinar and learn from his 17-years of work as a data-informed clinician.

1. The Next Revolution of Healthcare:
Why the New MSSP Revisions Matter
Now More Than Ever
Will Caldwell, MD, MBA
Senior Vice President
Health Catalyst

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Catalyst
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Catalyst
How many of the world’s one year old children today have been
vaccinated against some diseases?
1. 20% — 52%
2. 50% — 37%
3. 80% — 12%
Poll Question #1
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Catalyst
In all low income countries around the world today, how many girls finish primary school?
• 20%, 40%, 60%
In the last 20 years the proportion of the world’s population living in extreme poverty has…
• Doubled, remained about the same, almost halved
What is the average life expectancy in the world today?
• 50 years, 60 years, 70 years
How many of the world’s one year old children today have been vaccinated against some
diseases?
• 20%, 50%, 80%
How many people in the world today have access to electricity?
• 20%, 50%, 80%
Why Data Matters – A Little Fun
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Rosling, H. (2018) Factfulness

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Development of Healthcare – A Series of Revolutions

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Development of Healthcare – A Series of Revolutions

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Catalyst
• A child born in Malawi can expect to live 47 years while a child born in Japan can expect
to live 83 years.
• Children from the poorest 20% of households are twice as likely to die before the age of
five as compared to the richest 20%.
• Worldwide, 100 million people a year are driven below the poverty line due to healthcare
costs.
• Low income countries have 10 times fewer physicians than high income countries.
Raising the Bar… and the Gini Coefficient
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– WHO Report 2018

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Catalyst
What is the Next
Revolution in Healthcare?
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Is it all about the Quadruple Aim?
• Ability to reduce cost per unit of quality
• Sustained improvement in clinical patient outcomes
• Overall patient happiness with healthcare provided
• Appropriate utilization of services
The definition of value is not the same for each potential
Health Catalyst customer. Hence, it is imperative to
understand where the customer is on the spectrum of FFS
and VBC, realizing data management is central to any
definition of value.
What is “Value” Based Care?

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Catalyst
https://youtu.be/FF-tKLISfPE
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Is the Shift to
Value Real?

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Is the Move to Value Real?
Baxter. Healthcare Economics and Policy, December 20, 2018.

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Catalyst
“The percentage of total healthcare payments linked to
some sort of value based payment model (shared savings,
shared risk, bundled payments, population based
payments) reached 34% of total dollars paid to providers in
2017, up 23% from 2015”
Health Care Payment Learning and Action Network (DHHS). Measuring Progress: Adoption of alternative payment models in
commercial, Medicaid, Medicare Advantage, and fee for service Medicare programs. October 22, 2018.
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“This is all just a phase…”

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The move to value is working!
• Gross reduction in utilization of services by $1.1 billion
• ACOs in the MSSP generated $314 million in net savings to Medicare after
accounting for bonuses paid to participants
• $800 million in shared savings bonuses were paid to ACOs
• 34% of ACOs earned some shared savings bonus
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Medicare in 2018
“These recent results show that ACOs have turned the
corner and this evidence dispels confusion about ACO
performance. The hard work of ACOs is paying off for
patients, providers, and for the Medicare trust fund.”
Clif Gaus Sc.D. NAACOS

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• The number of Medicare advantage plan choices will increase 20% in 2019 to over
3,700 options in the marketplace.1
• “The Humana study is the latest to show that value-based models are unlikely to
go away. Humana MA value-based physicians had better results than their peers
in fee-for-service. The goal of taking costs out of the system and creating more
value for the care received showing results thus, value-based care is achieving the
goal of creating higher quality medical care for lower-cost.”2
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Medicare Advantage
1Source: Centers for Medicare and Medicaid Services 2018
2Dr. Kathryn Lueken, Humana Medical Director for Clinical Integration, 22/2018

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Catalyst
With any major societal change in a developed society, what changes
first?
1. People’s attitudes — 61%
2. Laws and regulations — 39%
Poll Question #2
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Catalyst
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What is the
Medicare Shared Savings Program
(MSSP)?
?
By 2022, it is estimated that 40% of all covered lives in the US healthcare
system will be part of either Medicare or Medicaid.

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Catalyst
Success in Shared Savings
RAISE QUALITY and meet all targets for your covered populations.
• Identify the close gaps in care across the continuum
• Efficiently target interventions for rising and high-risk populations
• Leverage evidence-based care protocols to reduce unnecessary variation in
quality of care
LOWER THE TOTAL COST OF CARE below the expected level set by the payer.
• Improve risk identification, documentation and benchmarking
• Right-size utilization by matching medical necessity with need
• Identify and reduce unwarranted variation in costs across providers and
facilities
Common focuses for management of value-based care delivery
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~60% of all US healthcare payments in 2017
were tied to models linked to quality and value
32.7 million patients covered in ACOs
in 2018—10% of the US population
90% of payers predict increasing
alternative payment activity
GROWTH in the movement from volume to value….

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Catalyst
Revised MSSP/ACO 2019
• CMS is capping risk score change at ± 3% over the life of an ACO’s 5-year agreement
period.
• Benchmarking will be regional rather than national in scope.
• ACOs will be required to move into downside-risk faster than in previous rulemaking with
no ACO allowed to spend more than 2.5 years in an upside-only track (one exception).
• Participants will either be “high revenue” or “low revenue” ACOs.
A burning platform
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• Providers opting out of the MSSP will be subject to a MIPS. Going forward, it will be very
difficult to perform well in the MIPS program with considerable dual sided risk in fee
schedules (14-18% in 2019).

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Catalyst
• Shift routine patient management away from MD to other providers (PAs, NPs, RNs, case
managers, and CHWs).
• Must prospectively track performance around financial, clinical, and patient experience
metrics.
• Enhance primary care experience with new delivery models (AWV).
• Leverage data to drive predictive analytics for specific populations.
• Size matters (> 100,000 covered lives).
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How to Succeed in the Revised MSSP
You must embed technology in care model
design to succeed in the MSSP.

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Health Catalyst Support
Intelligent solutions for the PHM transformation
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TECHNOLOGY
• DOS™ & DOS™ Marts
• Population Builder
• PMPM Analyzer
• HCC Insights
SERVICES
• Solution Optimization
• Strategic Consulting
• Opportunity Analysis
• Care Management Services
• Community Care
• CORUS
• Touchstone/KPA Tool
• Government Payer Program Consulting
• Financial Management and Optimization
• Care Redesign Quality and Operations

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Catalyst
Track Participation Options
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BASIC ENHANCED
Level A Level B Level C Level D Level E
Agreement
Period
5 Years 5 Years
APM Status MIPS APM MIPS APM MIPS APM MIPS APM Advanced
APM
Advanced APM
Shared
Savings
Rate
40% 40% 50% 50% 50% 75%
Maximum
Savings
10% of
Benchmark
10% of
Benchmark
10% of
Benchmark
10% of
Benchmark
10% of
Benchmark
20% of Benchmark
Shared Loss
Rate
N/A N/A 30% 30% 30% 40% to 75%
Maximum
Losses
N/A N/A 2% of
Revenue
capped at
1% of
Benchmark
4% of
Revenue
capped at
2% of
Benchmark
8% of
Revenue
capped at
4% of
Benchmark
15% of Benchmark

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What Does This All Mean?
Current Track 1 or new participants*
Enter BASIC Level A - Low revenue (think MD groups)
Enter BASIC Level B - High Revenue (think health system)
Current Track 1+, 2, 3 participants
Enter BASIC Level E or above
Current NextGen ACO participants
ENHANCED Track only
*Low revenue new participants can opt for one additional renewal
year in an upside only model.
Earliest downside risk
2.5 years after 7/2019
1.5 years after 7/2019
Downside/upside - starts 7/2019
30% downside capped 15% rev or 4% benchmark
50% upside shared savings
Downside/upside - starts 7/2019
40-75% downside capped 15% revenue
75% upside shared savings
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ACO-45 Courteous and helpful office staff
ACO-46 Care coordination
ACO-47 Screening and prevention of falls

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“Despite their relatively small effect on overall revenue, VBC arrangements
often have disproportionate margin impact… Give a 5 percent operating
margin, a system would need to have only 1 to 2.5 percent of revenue at risk
from VBC payments for upside or downside revenue potential to equal 20-50
percent of system EBITDA.
“In 20 percent of 4,000 health systems studied, “the upside potential in VBC
arrangements from Medicare FFS programs alone was greater than their total
reported margin.”
“We have such a small amount of our total revenue
in value based products.”
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Gibler et al. How providers can best confront the reality of value based care. McKinsey and Co. April 2019.

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• If the shared savings rate is greater than the operating margin (plus
any additional fixed costs incurred) for a given population, it makes
financial sense to participate in the product
• Use of technology to highlight physician behavior can lead to
improved retention of patients within the system AND reduce
unnecessary utilization or increased variation in care.
(ex) If you move retention from 50-60 percent, that is the
equivalent of a 10 percent growth in topline volume. This could
offset any lost revenue from a reduction in unnecessary care.
“It just doesn’t make sense to cannibalize our FFS business”
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Total operating revenue (net) $944,473,355
Medicare payer mix % (net revenue) 31%
Medicare payments (cost report) $291,779,510
70th percentile average = 42.5 or 40% shared savings rate year 1
Annual per capita TCC benchmark = $8,900* (MSR of 2% = $178)
57K Medicare lives x 4% savings = $20.2M x .40 = $8,116,800 YR1
57K Medicare lives x 4% savings = $20.2M x .50 = $10,100,000 YR 2
*Risk adjusted TCC per capita benchmark
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An MSSP Example

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Now for potential maximum losses in year 2 of MSSP
Shared loss rate of 30% with maximum at 1% benchmark
Increase of per capita TCC by $89 ($89 x .30 = $27 shared loss)
Net loss of $1.54M ($27 x 57K lives)
Total delta of $19,700,000 (direct impact on contribution margin)
How can you impact TCC?
How much did you invest in your EMR? How many of your providers get
excited about the EMR and its ability to improve patient care? What do
you invest in data analytics?
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An MSSP Example

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Catalyst
Jaime Jaramillo
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37. Q&A

38. Thank You!