Epic Insurance Solutions Bend Healthcare Trend Donald B. Thompson President Epic Insurance Solutions

AGENDA How Insurance Carriers Develop Premiums Implementing a Successful Long Term Wellness Strategy Utilizing Data Analytics to support your Wellness Plan Empowering and Educating Employees

Health Insurance Premium Health Insurance Premiums are a reflection of the underlying cost of care. When the cost of medical services such as doctors visits, hospital stays, and medical devices increase, these cost drive a corresponding increase in premiums Federal data shows that over the past 20 years health cost have increased by an average of 7.2% annually and premium increases have averaged 7.1% annually Calculating health insurance premiums is a process driven by three main factors Cost of medical benefits (claims / expected future claims) 80% Administrative cost (selling expense, administering the plan, profit) 15% Premium Tax (including new ACA taxes) 5%

What Drives Premium? Increased Utilization and Higher Prices for Medical Services Accounts for approximately 70% of the increase each year Demand for New Technologies One of our nation’s strengths lies in our ability to bring forth innovation. The newest treatments are typically much more expensive than current ones Provider Consolidation Providers are banding together which typically reduces competition. In addition, these providers demand higher reimbursements driving up the premium cost Cost Shifting From Public Programs such as Medicaid and Medicare to those with private coverage Medical Liability It is estimated that .10 of every premium dollar is spent on medical liability and defensive medicine Regulations, Mandated Benefits & Taxes State & Federal regulations, benefit mandates, and taxes increase the cost of coverage

Workplace Wellness - Why Affordability of Coverage Health Insurance premiums continue to increase 8-9% per year and at this pace will double over the next 8 years. The average cost per employee is quickly approaching $12,000 annually Deductible and Out of Pocket exposure continue to increase placing a larger burden an employee’s budget for care Lifestyle choices lead to increase costs for All Many health problems are a result of an unhealthy lifestyle; smoking, lack of exercise, poor diet, excess stress, etc. Lost productivity due to absenteeism, depression, and stress cost companies $70 billion annually Cost of Care for Unhealthy employee behaviors cost U.S. employers an average of $670 per employee each year Opportunity Researchers have estimated that preventable illness make up approximately 70% of the burden of illness and the associated costs in this country. Implementing a successful wellness plan can have a significant impact on an employees health and an employers bottom line Improved productivity as healthy employees tend to perform better Reduction in sick leave absenteeism Improved reputation as a company who cares about their employees – aids in recruiting and community perception Improved employee morale and stronger employee retention Sources: Society for Human Resource Management, The World Health Organization, The Wellness Councils of America,

Workplace Wellness Trends Many employers have begun their Wellness Journey with tactics that can help improve employee health and productivity, but the plans effectiveness are difficult to measure. Weight management programs Health fairs On Site Flu Shots Health risk assessments Smoking cessation programs Education classes Subsidized use of fitness facilities Internal policies/programs that promote healthy behavior Wellness Day off What is the next step to enhance the Program and produce measurable results? Policy changes that affect the health of employees Outcome based Incentives, Cash, Credits in HSA, HRA, FSA Outcomes based employee medical premium differentials Mandatory enrollment in the Wellness Program to be eligible for the medical plan Integrating your Medical / Rx claims data with your Wellness reporting on a single platform Worksite wellness programs are designed to promote healthy lifestyles for employees and their families. These programs can be simple or complex, and can require a minimal investment of time and money, if done correctly. More substantial programs often use more resources, yet there are many benefits to supporting and encouraging employee health and safety – and they typically outweigh the costs.

Creating a Workplace Wellness Program Workplace Wellness programs should be long-term strategies that help improve the quality of employees’ lives, reduce benefit costs, and increase productivity through sustained improvements in workforce health. Top Management Support & Participation Management must understand the benefits of the program Link health promotion to business goals, values and strategic priorities Create a Wellness Team Individuals who will have a role in program development, implementation and evaluation Develop a program that is responsive to the needs of all participants Tailor Your Initiatives to Employee Needs Employee interest surveys Health risk assessments Claims data analysis to determine current employee disease risks Biometric testing Create an Annual Plan An annual operating plan should include a mission statement for the program, along with specific, measurable short- and long-term goals. A means to evaluate the effectiveness of the program.

Creating a Workplace Wellness Program Choose Appropriate Programs and Initiatives Select health initiatives that are relevant to the data you collected. Address specific risk factors of employees Programs are in line with what management and employee culture Create an Annual Operating Plan Vision statement outlining what you are trying to achieve with the program Goals for the program A timeline, budget, communication plan, implementation plan Evaluation – measuring success of the program Create a Supportive Environment Provide employees with ongoing encouragement, support, opportunities and rewards Offer healthy food choices in your vending machines Reward healthy achievements Consistently Evaluate Outcomes Take a close look at your goals and objectives, and determine whether you have achieved the desired result Evaluation allows you to celebrate achieved goals and discontinue efforts that are not as successful Surveying employees again can be effective – after participating in the wellness program thus far, they can provide feedback about what they liked, what they would change, etc.

Creating a Workplace Wellness Program Implementing a wellness plan can be a difficult process. Depending on your current culture and employee readiness for change, a three year strategy may be necessary to ensure the success of the plan. Participation Phase - Year 1 Start slow and communicate heavily Get Employee Buy In Promote Program and Drive Engagement with Rewards Engagement Phase - Year 2 Employee and Leadership Accountability Set Goals Personal Alternatives Reward Improvement Outcomes Phase - Year 3 Continued Employee and Leadership Accountability Outcomes Based Rewards / Premium Integrate Data Analytics Design Health Plan around known drivers of claims

Data Analytics Reviewing and understanding your healthcare data and claims information is instrumental to your cost-controlling strategy. Carrier Data is available depending on an employers size and funding arrangement, fully insured/self-funded Traditional carrier data is somewhat limited but the Health Carriers have started producing reports that are much more detailed Wellness Programs that include Personal Wellness Assessments and Blood Profiles can also be a good, but a limited data source Integrating your medical and Rx claims data with your Wellness reporting on a single platform can enhance your ability to understand risk, create actionable plans, and measure the ROI of the plan

Integration Health Risk Assessment Clinical Services/ Health Coaching/ Disease Mgt Biometrics/Lab Data Claims Data Integration

Data Analytics & Predictive Modeling Based on an employers size and the current carrier in force, Data can be utilized in a manner to predict future claims Review member gaps in care & pharmacy compliance Negotiate fully insured premiums or stop loss contracts with carriers at an employer’s renewal. Raw Carrier Data Create Predictive Model Apply to Health Plan Medical Claims Drill Down Capability Forecast Cost & Risk Rx Claims Forecasting Reports for each member Member Eligibility Data Analytics Predict Clinical Events HRA Identify Gaps in Care Lab Results

Data Analytics Identifying Trends Budgeting Data analysis allows employers to identify disease trends that impact their population. Spikes in utilization Gaps in evidence-based care standards Disease prevalence Admission rates ER & Urgent Care Utilization Rx Utilization Budgeting Data analysis platforms can help employers get a handle on current and future cost. Allow for employers to make adjustments for risk to their plan Measure plan performance Refine wellness strategies Track trends in cost Establish pricing assumptions Aids in the underwriting & premium negotiation process

Data Analytics Wellness Program Effectiveness If employers better understand the overall health of their population, they can Allocate resources focusing on their unique needs Assess the programs participation, utilization, and effectiveness Identify initiatives that work Track ROI Data Clarity and Transparency Empowers employers to make informed decisions about premiums Accurately quantify risk of their populations Assist in benefit plan designing Steering Employees to more affordable providers

Empower & Educate In addition to developing a robust wellness Program, how can we help employees understand their impact on healthcare cost and empower them with tools to make educated decisions. Dedicate time during Open Enrollment and throughout the year Mandatory Meetings Invite Spouses if they are eligible for coverage Consider one on one meetings with employees to review their plans Educate Employees Discuss how a premium increase impacts their take home pay If your company is self-insured make the employees aware of that If you are large enough to receive claims data, share a summary of that data. Share benchmarking with the employees showing them how their claims compare to other similar companies Review Transparency Tools Inform employees that the same service at different provider locations can vary dramatically in cost Utilize the tools that the Carriers offer online and incentivize employees to do so Look into Companies that will help steer employees to lower cost providers, Compass, Healthcare Bluebook, etc. Review the cost of services like the ER compared to Urgent Care and their PCP. Consider Tele-medicine for some types of treatment to reduce cost

Bend the Trend A solid Wellness and Education Plan will empower your employees and impact your Healthcare Spend. Plans are nothing; planning is everything. Dwight D. Eisenhower