June 2003 Participating Provider Reimbursement Key Facts

June 2003 Participating Provider Reimbursement Key Facts Pay for Performance Defined as "Differentiated payment among providers based on performance of quality and efficiency measures so that desired outcomes occur through changed behavior.” Source: Med-Vantage, Inc

June 2003 Participating Provider Reimbursement Key Facts Pay for Performance Percent of total reimbursement involved for pay for performance incentive payments often averages: 10% for physicians 2-4% for hospitals Source: Med-Vantage, Inc; 2003

June 2003 Participating Provider Reimbursement Key Facts Revenue Cycle Management Process to oversee and evaluate the entire system involving patient charges and payments, including: Registration Insurance Verification Order Entry Charge Capture Billing Processing Account Monitoring and Collection; Payment Posting; Financial Analysis & corrective actions

June 2003 Participating Provider Reimbursement Key Facts Electronic Claims % of claims processed electronically is 67% overall 48% Physicians 86% Hospitals Almost 70% of group MD practices automate some portion of their claims Source: Health Data Management Magazine; 2003

June 2003 Participating Provider Reimbursement Key Facts Physician Participation The Average % of Physician Practice Revenue from Managed Care Plans is 45.8% Overall 49.7 Primary Care 43.1% Specialists Source: Center for Studying Health System Change; 2002

June 2003 Participating Provider Reimbursement Key Facts Physician Participation 90.% of MDs have at least 1 contract. The average number of managed care contracts per physicians who contract: 13.1 Overall 11.4 Primary Care 14.3 Specialists Source: Center for Studying Health System Change; 2002

June 2003 Participating Provider Reimbursement Key Facts Physician Reimbursement Methods of Physician Reimbursement Used by HMOs: 8.8% Salary 0.8% Profit Sharing 72.7% Fee-For-Service 12.4% Bonus Program 71.6% Capitation Source: Aventis; 2001 Data

June 2003 Participating Provider Reimbursement Key Facts Physician Capitation Physicians with managed care contracts that derive some level of revenue from capitation: 48.6 % Overall 66.7 % Primary Care 36.4 % Specialists Source: Center for Studying Health System Change; 2002

June 2003 Participating Provider Reimbursement Key Facts Physician Capitation Physicians with capitated contracts avg % of Total Revenue from capitation: 29.7 % Overall 32.2 % Primary Care 26.6 % Specialists Source: Center for Studying Health System Change; 2002

June 2003 Participating Provider Reimbursement Key Facts Physician Capitation Average Primary Care Capitation Rates: $ Commercial $ Medicare Source: NHI: 2001 Data