York. We operate in buffalo. Western new york is an area that has actually had some shrinkage in population over the past decade. Population is ageing a little bit. So those are factors in the effort that we have made to transform the population. This is where were located. Ill talk about specifically about western new york. Although we will begin to roll out similar processes in other locations as well. This is the region that we focus on. Its an eight county service area. As i mention it has static population trends. Two major hospitals systems. In that area. And controlling about 80 of in patient care. And theres one distinct cancer specialty hospital. Roz well park is in the area as well. Fairly typical of legacy territories that are hospital driven. They are very doctor centric. Not patient centric. And as we have evolved into more of a patient centric and consumer oriented segment in healthcare we we have a need to flip that around. We looked at the area and said how can we begin to transform the provider systems and in this specific area to make it patient centric and bring value based contracting to the region. There was a very high degree or concentration of specialists. Also not that unusual when you have hospital driven communities. And they were a very much a late adopter to any form of reimbursement other than fee for service. Our program is called best practice. And ill it really had two main objectives. One to transform into a value based and provide and realign incentive with the provider system as both michael and cur tis talk about. We have a pretty critical shortage of primary care physicians in western new york and you can see the numbers there. Showing our deficit. And they are shrinking all the time. Not unusual in a number of communities around the country. Because they have not been supported either economically or within their practices. In a way that makes primary care the preferred specialty if you will. In the provider system. As i mention we had an ageing population. And the result of the model the fee for Service Model calls primary care physicians to be reimbursed and their income levels to be such that they have a general incentive. To move towards specialties. And in a volume based reimbursement model the only way that primary care physicians can progress is to to do more volume. Which is exactly the opposite of the incentive we want to provide. So the current relationship is broken. Much of this you know and have heard. The responsibility of our system in a fee for Service World really falls on the patient. Pcp primary care physicians and specialist do not collaborate as well as they should. Often Electronic Medical records and other forms of patient records dont follow as concurrently and accurately as they should. That results in redundant testing and procedures. And theres also a fee for Service Environment an inability to reward pcps based on performance. Essentially theyre all reimbursed in the same way. And the result that we have today is our higher cost. Lower Patient Satisfaction scores. Very difficult to measure quality scores in that environment. And so we have moved forward towards best practice. This is primary care as we felt it should be. Its not perfect. And we did not want to go from a to z all in one year. That wouldnt be possible. Its a step in the right direction. First of all the pcp coordinates care and would be compensated accordingly. If to have a pcp assignment doesnt have to be an hmo type plan. Where its chosen. We use a tool to attribute all of our members to certain pcps such that they have a full panel. We focus on the total health which i think should become apparent in minute. Not just treating illnesses. The pcp becomes the source of referral. And reprovide support. We have changed the provoider support model such that the pcp has concurrent data to share with specialists. The net result of the Financial Model is reward out comes. We have already seen higher Patient Satisfaction scores. And we are early this program that ill display in a second, started january 1. We are already beginning to see primarily because of changes in referral patterns we are beginning to see cost decline. So functionally, and ill apologize for the granularity. Its important you know functionally what value based contracting can mean. Its not the only model. But its a terminology that we use a lot. And to bring it right down to a relationship between the health plan, the member and the provider is important to understand. We launched ours in this eight county area on january 1. We started the april before. And began educating the pcs in our region for nine months prior to implementation. We now have 1,000 pcps participating and about 400,000 of the members attributed to the pcps. One of the disadvantages although conceptionally aco arrangements or even patient centered medical home arrangements. One of the downsizes they generally work on smaller population. Theyre specifically about named population. It might be a segment based that might be very small regional basis or whatever that particular Provider Group can provide care for. We want a bigger effort than that. We want to transform the membership in an eight county area across the board. One of the things that we have been able to do is were including med kale. Were including medicare and including our employer population. Whether its selffunded or fully insure. It has a broader impact across the population. What we have done is created a combination. Of fee for service which we have just been saying is a bad thing and i know we have been saying that been saying is a bad thing and i know weve been saying it all morning but there are aspects where fee for service actually works. As well as a Monthly Payment that we refer to as a Care Management fee. Also because michael indicated we dont want to use cap taigs anymore. So we refer to it as a Care Management fee. But i have put cap taigs back into this explanation on purpose because i think it makes the point although it is not cap. Tation in the way most of us remember it. Heres generally how it works. What we did is took those 400,000 members. We looked back over a period of time. We started in 14. We have that claims data. On a per member per month basis we created a base rate and said the cost of that population historically on those claims under that traditional model is a certain amount per member per month, thats our base rate. We then used a form of capitation adjustment which has historically been age and gender related. Thats nothing new. But what we then did is we used the makesen risk scoring tool which looks back at and then can actually begin to predict what costs will be based on an individual score. And we applied those factors for everyone of those numbers. So for example a primary care physician has 100 of our members. He actually has a risk score that is different for every one of those 100 members base on on whether they have chronic illness, based on theyre very well, based on their age. So they are all different. We then take that population and we look to the providers. We use our heat of scoring methodology, and we create ten guidelines within our reports and we apply those against the factor on a per patient basis. Now, we could debate hetus. Its not perfect. However, we find that weve used the 3m system, risk scoring system as well. We found the results of those two analysis to be fairly similar. So were fairly comfortable that using our hetus scores was an adequate measure of quality. And we also because of our work on medicare advantage, like most health plans were having to do the hetus scoring methodology and do the code checking as well. Then on the efficiency model we used the mckesen risk scoring tool for that because it has a prospective measure to it and we combine those two and that is applied toward every one of those members risk score. What that creates is an actually capit ation to the monthly scare physician which is unique to every one of the patients that is attributed to that pcp. And as i said, there are a number of things particularly in the preventive and wellness areas that we want to have happen and we continue to pay them on fee for service. So that creates the reimbursement model for the primary care physician. We believe everybody wins. I wont Read Everything on the chart. Certainly available if youd like to have it. But one of the things it does is it creates a baseline level of cash flow for a primary care physician to be able to build their practices and to know they have a certain income level attributed to their patients that they can count on. And there are factors in that base level of compensation that then allows because theres revenue there every month for a physician, it allows them to manage their patients the way they think its best. And a good example is under the traditional model of fee for service, in order for them to receive any compensation for a consultation the patient has to come into the office. It nay not be necessary. This way if they want to use telephonic or videoconferencing to communicate with their patients around conditions that are not as severe, theres actually a piece of that service fee that contemplates that, and they feel they have adequate compensation in order to adjust their practice accordingly. They also have access to cost and quality data that they traditionally had not had. And that cost data is important in the referral pattern process. Most times what we have found is the primary care physician making a referral to a specialist at one place or another had no idea of what the cost, quality and efficiency measures were for the specialist they were referring to. Now, thats a work in progress, but we are already seeing a difference in the referral patterns against this population from the primary care to the specialist. Because that as wellness and health of that population improves for those patients that are attributed to that primary care doctor then he begins to receive more money because of the way that the Monthly Service fee is calculated. And his reimbursements go up. Hes rewarded for the Higher Health status of his population. So he wants them to go. He wants his patients to go to the most effective, highest quality environments they can, to receive their care. Historically, he did not know where that was. The member, theyre dedicated to a pcp. Generally, we find our members, although choice is always important, want to have a pcp that helps them guide them through the system. The care is not limited to a Standard Office visit, as we mentioned. Its up to the physician and the patient to determine how that care, primary care would be administered. Its better coordinated. So when they leave their primary care on referral, their records are largely supported, and theyre very current. And that allows the member to have shared Decision Making with their pcp. On our side, on the payers side, it is aligned with our hedis measures, and affects our risk scoring, can affect our risk scoring for risk adjustment revenue. As well as star ratings. Theres a greater focus on population health. And as i mentioned, one of the things we have seen that we have underestimated a little bit, there is a change in referral patterns to more Cost Effective specialty environments. So its a major step from fee for service. Western new york was very traditional. I arrived there about four and a half years ago. There was essentially no valuebased contract in the market at all. So it was a territory that had lagged a little bit. And as i mentioned, we now have 90 of our pcps. And essentially all of our attributed population on the basis of that contract. I mentioned we spent nine months educating in advance. One of the critical things i heard curtis say the same thing, that it is essential in these environments that you change your provider support model. They need data in a different way and in different timing in order to make the right decisions over what they have had in the past. We have added about 25 Provider Service representatives that do nothing but administer these contracts with those thousand pcps. So outcomes. As mentioned, 90 are working with us now. We were told directly by cms that we were awarded a cpc plus contract as one of the 14 pilots for 2017 specifically because of our best practice program. I had hoped i would have a little runway in this process, but my largest competitor has copied us almost already. And i guess thats a way of saying that we feel we made some of the right decisions. And then after one year, were not quite done with the year yet. What do we expect to see . We would have a higher degree of cost transparency at the pcp level. Thats also helping them make appropriate referrals. We have, as i mentioned, a couple times, a change in the referral patterns as a result. We have a very different level of provider engagement. And our valuebased literacy among pcps, which they didnt know even two to three years ago, and we have seen hedis score improvement greater than traditional pay for performance programs. Which has helped us in risk adjustment processes as well as our star rating. As far as actual savings, what were looking at, were pretty aspirational. We think probably on an overall basis, around 2 in 2017. We dont know that yet. It looks like thats about what were tracking. And again, i think maybe i agree with the comment michael made. That may not seem like a lot. It seems like a lot of work and a transformation of an entire provider system for 2 . But this is a multiyear arrangement. And we think in year one, that would really be excellent. And remember that in a compounding environment, that 2 savings resets the baseline. So as you move that forward, that 2 becomes very significant over time once that baseline continually is reset. So thats best practice. Weve well hopefully have a chance to come back and report towards the beginning of next year after we have a full year in. But hopefully, that was helpful to give you some granularity around how some of these concepts are applied at a market level. Thanks for having me. Appreciate it. [ applause ] so, dave, thank you so much for that granular look at how these contracts really work, and its very impressive that you already have 90 of your primary care physicians under contract with it. So now well hear from avik roy. Always interesting. Avik is the cofounder and president of the foundation for research on equal opportunity. A nonpartisan, nonprofit think tank that conducts original research on the impact of Public Policies on americans with incomes or wealth below the u. S. Median. So its a very topical issue that youre addressing in your new foundation. You know, you will know him. Hes a leading conservative change agent. Hes advised three republican president ial candidates and influences and informs the policy debate in his role as opinion editor at forbes. He also has experience in medicine and finance as a former medical student and jobs early in his career at bain capital and jpmorgan. Were also honored to have avik as a member of nicms advisory board, and hes a Senior Adviser to the bipartisan policy center. Hes a fierce advocate for the free market and a very effective advocate for the free market and patientcentered reforms to lower the cost of Health Services and prescription drugs. Were just delighted to have him here today. Thank you, avik. [ applause ] thanks, nancy. Its great to be with you all and share the stage with what i thought were really interesting presentations from some very impressive people. As nancy mentioned, our new think tank, the foundation for research on equal opportunity is focused on trying to find ways to achieve the