1. Ronald Bachman, FSA, MAAA, CHCC President & CEO Healthcare Visions, Inc. Chairman, IHC Editorial Advisory Board and League of Leaders RonBachman@healthcarevisions.net 404-697-7376 A Roadmap for Making Healthcare Consumerism Work Private Exchanges & Healthcare Consumerism: Choices, Options, and Flexibility Pre-conference BONUS: Links to Key Private Exchanges, 100 ACOs, and an Interactive ACA Preventive Care Guide. ALL PPT & Extras AVAILABLE ON LINE

2. 1 A 1.5 Day Agenda to Develop a Healthcare Consumerism Strategy Day#Goal 1 MorningAgenda, Change Formula, Scope of Work, Principles- Vision-Strategies (T1-3), Actuarial Issues, Consumerism, Building Blocks (T4-5), PPACA Preventive Care 1 Afternoon Building Blocks T(6-8), Multi-generational Issues (T9), Create Plans(T10), Time Frame for Implementation(T11) 2 Review Decisions (T 1-11), Potential Savings(T-12), Final Input to Roadmap Tasks To Be Completed During 1.5 Day “Extreme” Consumerism 1. Principles7. Decision Support Tools 2. Consumerism Vision Statement8. Incentives & Rewards 3. Strategies9. Viewing by Generations 4. Personal Care Accounts10. Create Consumerism Plans 5. Wellness11. Time Frames 6. Disease Management 12. Financial Analysis *

3. 2 The Formula for Making Change Happen Desire for Change + Vision / Roadmap + Process for Change = POSITIVE CHANGE Desire for Change + Vision / Roadmap + Process for Change = Put on Back Burner Desire for Change + Vision / Roadmap + Process for Change = Expensive False Starts Desire for Change + Vision / Roadmap + Process for Change = Frustration Set by Mgmt’s Direction IHC Workbook Implementation ImplementationResults *

4. 3 Is Your Company Ready for Real Change? NoCHANGENoCHANGE + + = - - - - - - - Alignment - - - - - - - - CHANGE Awareness Pros & Cons Gather Info Threshold CHANGECHANGE *

5. 4 Scope of Work for Developing the Roadmap and Beyond Diagnostic and Readiness Assessment Perform Financial & Actuarial Analysis (set metrics) Design Benefits and Contrib. Strategy (The Road Map) Evaluate, Select, Implement Vendors Develop and Implement Education, Comm., Training, etc. Monitor and Evaluate Evaluate current plans Interview stakeholders Identify Basic Principles for Change Create Consumer Vision Stmt Select Strategies Develop Obj. & scope, set timeframe Match HR/business plan Est. Rel. Value of Components HDHP & Accts Wellness & DM Transition strategy Optional Coverages Health Literacy Carve-out Programs Support services Health vs. Healthcare Debit/Credit Cards Incentive Programs Develop baseline costs Co.& Ee contrib. level Model options Evaluate cost impact and revise Develop measures of success Communication Strategy Web-based Training, education Print, video, other media uses Internal vs. External Services Vendors Technology Services Performance Accountability Reliability Periodic reevaluation of baseline metrics Consumer scorecards Survey, measure success, acceptance Vendor/supplier audits Reassess & modify as appropriate

6. 5 Task #1 – Setting Principles for Change Important…Not Important 1. Have the Right Vision & Vision Stmt 1 2 3 4 5 2. Have a 3-5 Year Roadmap/Strategic Plan 1 2 3 4 5 3. Consider Other Related Corporate Initiatives 1 2 3 4 5 4. Create plan as part of Employer of Choice 1 2 3 4 5 5. Consider other HR metrics impacted by Healthcare 1 2 3 4 5 6. Provide Information on Rx Costs & Alternatives 1 2 3 4 5 7. Provide Information on Dr. & Medical Service Costs 1 2 3 4 5 8. Provide Information on Hospital Costs 1 2 3 4 5 9. Provide Information on the Quality of Dr. Care 1 2 3 4 5 10. Provide Information on the Quality of Hospital Care 1 2 3 4 5 11. Focus on Discretionary Costs (Rx and OV) 1 2 3 4 5 12. Focus on High Cost Claims & Claimants 1 2 3 4 5 13. Focus on Wellness and Preventive Care 1 2 3 4 5 14. Focus on an Individual Behavior Changes 1 2 3 4 5 15. Focus on Group Behavior Changes 1 2 3 4 5 *

7. 6 Task # 1 – Setting Principles for Change Important…Not Important 16. Use Incentives and Compliance Rewards 1 2 3 4 5 17. Increase Costsharing to Change Behaviors 1 2 3 4 5 18. Increase Employee Contributions to Offset Costs 1 2 3 4 5 19. Focus on Overall Plan Cost Reduction 1 2 3 4 5 20. Set the Right Measurements for Monitoring Progress 1 2 3 4 5 21. Build Broad Employee Agreement for Change 1 2 3 4 5 22. Minimize Change from Current Plans 1 2 3 4 5 23. Make Choices and Plan Options available 1 2 3 4 5 24. Improve Access to Care 1 2 3 4 5 25. Maintain Existing Network of Providers 12 3 4 5 26. Provide $ for post-65 retirement healthcare 1 2 3 4 5 27. Provide $ for pre-65 retirement healthcare 1 2 3 4 5 28. Provide $ for non-plan medical 1 2 3 4 5 29. Provide $ for terminated ee’s healthcare 1 2 3 4 5 30. Provide $ for non-healthcare expenses 1 2 3 4 5 31. Alternative to cutting benefits or initiating contributions 1 2 3 4 5

8. 7 Task #2 Create a Healthcare Consumerism Visions Statement Starting with the identification of Basic Principles (Task #1),discuss ratings and levels of importance of top selected principles for the organization. Discussing and respectfully debating the principles will lead to key words that can be put into a simplified vision statement. A Vision Statement should be a simple and concise declaration of why the company intents implement healthcare consumerism. *

9. 8 Task #2 – Sample Healthcare Consumerism Vision Statements Sample Vision Statements: 1. Providing high performing highly educated employees and their families with the security of comprehensive health and healthcare coverage that meets their diverse needs and rewards their personal involvement and responsibility as wise users of services to optimize their individual health status and functionality. 2. Affect employee behavior change towards healthier lifestyles and greater consumerism through the use of rewards and incentives. 3. Make employees better consumers of healthcare services by providing them with the necessary health education, decision support tools and useful information including provider cost and quality data. 4. Encourage greater employee awareness and involvement in healthcare and financial decision making, as a building block towards a defined contribution strategy for healthcare in the future.

10. 9 Sample Vision Statement: Create health and healthcare program options valued by employees that adapt effectively to environmental trends that increase the quality of services, improve access to care, and lower costs. Task #2 – Sample Consumerism Vision Statement Positioning to Balance Cost, Quality, and Access Access Cost Quality Consumer Valued Quality Consumer with Financial Stake, Engagement & Transparency Demand Driven Controls Uncertain, Clinically Oriented Third Party Reimbursement Supply Driven Controls *

11. 10 Task #3: A Check List to Create a Healthcare Consumerism Strategy  Current Benefits,  Design Issues,  Service Issues,  General Concerns,  Anti-selection issues,  Reasons for Change,  Interests in Consumerism,  Driving Forces for Change,  Perceptions of Employee Satisfaction, Dissatisfaction  Other Problems and Positives with Current Plans *

12. 11 Task #3 - Identification of Acceptable Strategies High Priority...Low Priority 1.Create Transparency – support “employee’s right to know,” minimize distortions of third-party reimbursement system, create transparency in costs, provide education/ training on healthcare costs, use decision support programs. 1 2 3 4 5 2.Create Personal Involvement – establish greater financial involvement through HDHPs, HRAs or HSAs, reward good behavior, offer valued options, provide long term incentives, provide immediate feedback. 1 2 3 4 5 3. Be Bold and Creative - Shift from supply-side controls to demand-side control designs. Be an early adopter/fast follower, consider out-of-the box ideas. 1 2 3 4 5 4. Focus on High Cost “Pareto” Population - Provide financial protection to families in need due to high unexpected medical costs and/or chronic conditions 1 2 3 4 5 *

13. 12 Task #3 - Identification of Acceptable Strategies Continued Important…Not Important 5. Focus on Saving Lives and Improving Health – Focus on improving the health of the entire population regardless of plan design selected. Implement prevention & wellness for long term savings and DM for immediate impact. 1 2 3 4 5 6. Focus on Preventive Care – Create incentive programs that change behaviors towards acceptance and compliance with wellness and early intervention, including pre-natal, non-smoking, diet, exercise, and safety 1 2 3 4 5 7. Minimize Impact of Cost Shifting – Use consumerism as an alternative to increased cost shifting or higher contributions. 1 2 3 4 5 8. Implement Optional Consumerism – Provide new programs and plan options on a voluntary basis. 1 2 3 4 5

14. 13 Task #3 - Identification of Acceptable Strategies Continued High Priority…Low Priority 9. Implement Change on a Multi-Year Program – Establish a consumer-centric program with a pre- determined multi-year introduction of options and use of accumulated HRAs and/or options. 1 2 3 4 5 10. Focus on Information Sharing Only – Provide ees with decision support systems and information sources w/o accounts or incentives to reward behavioural change. 1 2 3 4 5 11. Use Packaged Programs – use full integration of plan design, information, disease management, and decision support systems from single vendor. 1 2 3 4 5 12. Use Existing Vendors – develop consumerist programs through current vendor relationships only. 1 2 3 4 5 13. Use “Best of Class” Programs – use selected vendors that May overlay core benefit designs as long as integration is Non-disruptive and transparent to members 1 2 3 4 5

15. 14 Dominating Options: Supply Controls or Demand Controls? Plan Sponsors and Members have two basic choices to control costs: 1. Traditional Managed Care & HMOs - The “supply of care” is limited by a third party who controls the access to medical services (e.g. utilization reviews, medical necessity, gatekeepers, formularies, scheduling, types of services allowed), or 2. Healthcare Consumerism - The member controls their “demand for care” because of a direct and significant financial involvement in the cost of care, rewards for compliance, and the information to make wise health and healthcare value driven decisions. *

16. 15 Mega Trends Leading to More Demand Control 1. Personal Responsibility 2. Self-Help, Self-Care 3. Individual Ownership 4. Portability 5. Transparency (the Right to Know) 6. Consumerism (Empowerment) *

17. Healthcare Consumerism is about transforming an employer’s health benefit plan into one that puts economic purchasing power—and decision-making—in the hands of participants. It’s about supplying the information and decision support tools they need, along with financial incentives, rewards, and other benefits that encourage personal involvement in altering health and healthcare purchasing behaviors. 16 Healthcare Consumerism - Defined “The job of a leader is to create the possible” – Condi Rice *

18. 17 Consumerism – Saving Lives & Saving Money The Moral Imperative for Consumerism: Increasing the Quality of Care, Better Health, and Improving Lives The Economic Imperative for Consumerism: Saving Money (Lower Product Prices and More Jobs) *

19. 18 Objectives Of Healthcare Consumerism  Change participant health and healthcare purchasing behaviors  Narrow market cost and quality variations using “patient power” Increase transparency of healthcare costs to plan participants Give plan participants more control over and “shared responsibility” for managing own healthcare and related costs Supply participants with the tools to act as better informed healthcare consumers  Reduce Discretionary costs through informed purchasing & incentives  Reduce Acute Care costs with incentive hospital reimbursements by tiering based upon cost and quality  Reduce Chronic Care costs through improved adherence with treatments and disease/condition management programs  Reduce Long Term costs with added incentives/rewards for “good health” *

20. 19 Basic Requirements for Successful Healthcare Consumerism  Must work for the sickest members, as well as the healthy  Must work for those not wanting to get involved in decision-making, as well as those that do *

21. 20 The Core of Consumerism The Unifying Theme for a Health and Healthcare Strategy is: Behavioral Change “Implement only if it supports behavioral change consistent with the principles and selected strategies” *

22. 21 Healthcare Consumerism Roles & Responsibilities / Implications Plan Members  Increased responsibility for own health & healthcare  Involved in own treatment and medical necessity decisions  Improved access to care  Involved in financial costs of health & healthcare (P4C) Employers  Facilitators of change  Health Literacy: Provide increased information and decision making tools  Improved employee morale with choice and access  Link to productivity, absenteeism, disability, turnover, etc.  Consumerism can improve costs/budgeting (current & future) *

23. 22 Healthcare Consumerism Roles & Responsibilities / Implications Payers (Self-Insured Employers)  Focus on high cost case mgmt/disease mgmt/population mgmt  Will become responsible for more communications, training, education direct to consumers, healthcare literacy  Value added services may change, including transactions and asset management  Diminished role of managed care for routine care Providers  More direct involvement with patients and treatment  Service and quality will be determined by consumers  Pricing will become more flexible and visible (P4P) Overall implications  Roles will change for all players  The picture change quickly - your strategies must prepare you for rapid market changes *

24. 23 Changing Role for Plan Members Plan Member / Consumerism Choices: Wellness Preventive care Early Intervention Lifestyle Options (diet, exercise, smoking, safety) Self-help, self care (Health literacy) Discretionary Expenses (e.g. OV, ER, Rx) Value purchasing (e.g. DXL, o/p vs. in/p, online) Participation in Condition Management Programs Adherence to Medical Treatment Plans *

25. 24 Changing Roles of Insurers & Providers From Traditional PPO‘s Building Blocks EmployerPlan Member (Consumer) TPAs/ Insurer Providers Personal Care Accts Account Options Create Savings Admin. Accounts N/A Health Management Worksite Wellness Healthy Lifestyle Benefit Designs Prevention, Primary Care Condition Management Access to Specialists Treatment Compliance EBM & Protocols Standards of Care Health Literacy CommunicationEducationDecision Tools Medical Counsel IncentivesFinancierPay for Compliance Admin. Pymts. Negotiated Rates / P4P CDHC FocusFacilitator, Coordinator Empowered, Responsible EnablerCare Manager FOCUS on Behavior Change of Members *

26. 25 Changing Roles of Insurers & Providers To Aligned PPOs: IDS’s / ACO’s Building Blocks EmployerPlan Member (Patient) ProviderTPAs/ Insurer Personal Care Accounts Acct. Options Create Savings N/A Administer Accts. Health Management Worksite Support Healthy Lifestyle Prevention, Primary Care Benefit Designs Condition Management Access to Specialists Treatment Compliance Standards of Care EBM & Protocols Health Literacy Communication EducationInformation Therapy Tools IncentivesPay for Risk Pay for Compliance Pay for Performance Pay for Administration Healthcare Consumerism Accountable Plans Acct’ble Health Acct’ble Care Acct’ble Administration FOCUS on Patient - Provider Relationship *

27. 26 Consumerism – Much Broader than HDHP & Consumer-Driven Healthcare Healthcare Consumerism is NOT a plan Design It IS an HR Strategy ****************** It’s about increasing one’s “human capital” *

28. 27 Evolution of Healthcare Consumerism FocusImpactChoices First Generation High Ded. Plans with HRAs or HSAs Discretionary Expenses: Rx, ER, OV, D-X-L Type of Accounts with CDHC / HDHP Designs, Second Generation Behavior Change Through Rewards & Incentives Chronic and Persistent Conditions, Pre-natal, Preventive Care Type and Level of Matching Funds and P4C / P4P Incentives Third Generation Workplace health & safety Turnover, Absenteeism, Productivity, Disability, and Presenteeism Group rewards, Importance and Impact on non-health Corporate metrics Fourth Generation Personalized Health and Lifestyle Needs Personalized Health and Performance Outcomes, Genetic Predispositions Lifecycle Needs, Culturally Sensitive DM, Holistic Care, Information Therapy Fifth Generation Community, Group Support Productive LongevitySharing Circles, Stress Relief, Family & Lifestyle Choices *

29. 28 The Evolution of Healthcare Consumerism Future Generations of Healthcare Consumerism Behavioral Change and Cost Management Potential Low Impact ---- ---- ---- ---- ---- ---- ---- ---- ---- High Impact Traditional Plans with Consumer Information 2 nd Generation Focus on Behavior Changes Traditional Plans 3 rd Generation Integrated Health & Performance 1 st Generation Focus on Discretionary Spending 4 th Generation Personalized Health & Healthcare 5 th Generation ??? Community Health & Longevity *

30. 29 The Promises of Consumerism Personal Care Personal CareAccounts Incentives & Incentives & Rewards Rewards Wellness/Prevention Wellness/Prevention Early Intervention Early Intervention Disease and Case Management Disease and Case Management Information Information Decision Support Decision Support The Promise of Demand Control & Savings The Promise of Wellness The Promise of Shared Savings The Promise of Transparency The Promise of Health It is the creative development, efficient delivery, efficacy, and successful integration of these elements that will prove the success or failure of consumerism. Major Building Blocks of Consumerism *

31. 30 Personal Accounts Health Mgmt Wellness/Prevention Early Intervention Condition Management Health Literacy Decision Support Incentives & Rewards Longevity *

32. 31 Basic Plan Design Options & Healthcare Consumerism Personal Accounts Incentives & Rewards Rewards Health Management Wellness/Prevention Early Intervention Condition Management Case Management HMO&FSAsHRAs? PPO&FSAsHRAs? PPO&FSAswithHRAs HDHPPPO&LtdFSAs&HSAs HDHPPPO& Ltd FSAs &HSAs&LtdHRAs Most Healthcare Consumerism Plan Designs Must Meet HSA / HDHP Legal Definition Health Literacy Decision Support Typical HRA CDHP Traditional Health Plans

33. 32 Task #4 - Personal Care Accounts The Promise of Demand Control & Savings HSAs, HRAs, FSAs “Of the 5 building blocks, the greatest among them is the Personal Care Account” *

34. 33 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy. Social networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

35. 34 HSAs and HRAs - Two Very Different Accounts to Support Consumerism  HSA (2003 Medicare Modernization Act) - A law, with specific requirements and benefit design requirements. - Most TAX ADVANTAGED vehicle ever created  HRAs (6/26/2002) - A regulatory creation based upon an IRS ruling - Most FLEXIBLE vehicle ever created *

36. 35 Health Savings Accounts – Advantage Employees  Tax-free savings vehicles for medical expenses, no use-it-or- lose-it rule  Effective January 1, 2004  Eligibility: must be covered under high deductible health plan (HDHP)  Portable *

37. 36 Health Savings Accounts Individual accounts  To permit saving for qualified medical and retiree health expenses on a tax-free basis  Must be offered in conjunction with a legally defined HDHP - “High Deductible Health Plan” Portable  An HSA is owned by the individual, similar to IRAs, and transfers if the employee changes jobs  Held in a trust or custodial account; trustees – banks, insurance companies, approved non-bank trustees

38. 37 HSAs – Real Dollars, Portable, Vested  Can be used or taken in cash at anytime, even when no longer eligible to make contributions  Tax-free if used to pay for qualified medical expenses (IRC Section 213(d))  For other purposes, subject to income tax and 20% penalty - 20% penalty waived in case of death or disability - 20% penalty waived for distributions after age 65 or older  HSA can be transferred tax-free to spouse on death; otherwise taxable to estate or beneficiary  Transfers upon divorce, nontaxable, becomes spouse’s HSA *

39. 38 2016 HSA Eligible HDHP High Deductible Health Plan – By Law  Self-only: a deductible of at least $1,300; maximum HSA is $3,350; no more than $6,550 maximum out-of pocket expenses (incl. Ded.)  Family coverage: a deductible of at least $2,600; maximum HSA is $6,750; no more than $13,100 on out-of pocket expenses (incl. Ded.)  2016+ Age 55 and over catch up amount of $1,000  Preventive services are not subject to the deductible  OK for out of network costs to exceed maximum out-of pocket limits

40. 39 HRAs- Advantage Employers Notional Accounts, Er Controlled Rules  Employer does not fund $$’s so has no cash flow value  Employer can determine rules for HRA usage; they are subject to forfeiture; they are not portable, but can be subject to vesting  HRAs are more flexible in plan design, can tailor scope of reimbursements, are less costly for employer  Employer decides if HRA can be used for (1) medical plan expenses not otherwise reimbursed, (2) non-plan QME 213(d), and/or (3) insurance premiums *

41. 40 Task #5 - Wellness, Prevention, and Early Intervention The Promise of Wellness

42. 41 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic ACA Mandated Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info and services, information therapy Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

43. 42 Wellness - Defined Wellness is a proactive organized program providing lifestyle and medical/clinical assistance to employees and their family members in maintaining good health. Wellness programs encourage voluntary behavior changes and support compliance with proven approaches to maintain health, reduce health risks and enhance their individual productivity. *

44. 43 Wellness – The Need For every 100 members:  23-30% smoke (70% want to quit, 35% try each year)  29% have high blood pressure  30% have cardiovascular disease  80% do not exercise regularly  55% or more are overweight or obese  30% are prone to low back pain (many linked to obesity)  6-9% have diabetes  10% are depressed  35% are under significant stress  50% do not wear their seat belts *

45. 44 Wellness – The Desire for Change For every 100 members:  47% are trying to improve their diet  37% plan to undergo some health screening  30% state they exercise regularly  Only 23% are aware of the health promotion and wellness programs offered by their employer sponsored health plans  76% of employers with over 11,000 employees offer health management programs

46. 45 Wellness – Planning  Will the wellness program be for employees only, or employees and dependents?  Will you purchase from vendor, internally developed, or a combination  Consider in conjunction with plan covered wellness benefits (immunizations, mammograms, screening, EAP, physical exams, pre-natal care, well child care, etc.)  Consider in conjunction with worksite programs (safety, ergonomics, work-life programs, etc.)  Incentives/rewards provided for compliance

47. 46 Wellness - How Does It Impact Employees and Family Members? Well e.g., Low Risk, Good Nutrition, Active Lifestyle At-Risk / Acute Condition e.g., Inactivity, High Stress, Overweight, High Blood Pressure, Smoking Chronically-Ill e.g., Diabetes, Musculoskeletal, Heart Disease, Asthma, MH/SA Catastrophic e.g., Cancer, Rare Diseases, Head Trauma No Claims Generally Healthy O/P (Low) In/P (High) MaternityO/P (Low)In/P (High) % Ee 15% 48% 14% 3% 12%4%1% % $ 0% 12% 15% 12%5% 21% 20% 15% % Ee 63%20%17% % $ 12%32%56% Prevention Wellness – Lifestyle Wellness - Lifestyle Minimize Acute Episodes Minimize Complications Maximize Recoveries Maximize Stabilization Early Intervention Wellness - Clinical Traditional Wellness Programs *

48. 47 Wellness – Examples for Employer Sponsored Programs Common Programs  Health Risk Appraisals  Weight Management  Fitness/exercise/health clubs  Smoking cessation Employer Support  Communication and awareness (newsletters, health fair, posters)  Screening (health awareness profiles, blood pressure check, blood tests, body fat analysis)  Health Literacy Education (seminars/classes, self help kits, group discussions, lunch and learn)  Behavioral Change (on-site fitness center, flu shots, lunchtime walks, yoga classes)

49. 48 Consumerism - Programs and Services Prescription Drugs Information Evidence Based Medicine  Medical Care Guidelines  Health Library Disease/Condition Management  Condition Specific Assessment Tools  Chronic & Persistent Wellness  Voluntary Participation  Voluntary & Incentive Based  Mandatory Participation  Mandatory & Incentive Based Self Care Management Information On-Line Health Risk Assessment  Personal and Family Tracking Health & Performance  Population Management  Case Management  Cost & Quality Management Stress Management  Assessment Tools  Self Help Tools Depression Screening Preventive Care – Lifestyle  Lifestyle  Nutrition  Fitness  Personal Health Management Preventive Care – Clinical  Immunizations  Hypertension Screening  Cholesterol Testing  Mammograms  Pap Smears  Blood Pressure Checks  Colorectal Cancer Testing  Diabetes Testing  Osteoporosis Testing  Chlamydia Tests Early Prevention Wellness  Online News Safety Pre-Natal Well Baby Care New Mom Programs Medical Services Support  FAQ, Preparation for In/P End of Life Care Provider Cost/Quality Incentives Regional Centers of Excellence

50. 49 ACA Preventive Care Services Primary Prevention is aimed at preventing the on-set of disease. Examples: Immunizations and promotion of physical activity. Secondary Prevention is aimed at treating a disease after its onset, but before it causes serious complications. Examples: Identifying individuals at risk and providing early intervention. Tertiary Prevention is aimed at treating the late or final stages so as to minimize the degree of disability. *

51. 50 ACA Preventive Care Mandate The Patient Protection and Affordable care Act (PPACA) mandates that all insurance companies that are not grandfathered and all new plans must cover preventive services without cost-sharing requirements that are: Graded “A” or “B” by the U.S. Preventive Services Task Force (USPSTF), Certain immunizations; Preventive services for infants, children, adolescents and women as provided in guidelines developed by HHS’s Health Resources and Services Administration. While many may believe that the legislation uses only USPSTF A&B recommendations, the actual law includes other sources for developing and maintaining the list of required services. *

52. 51 Entities Impacting ACA Preventive Care Mandates (1) United States Preventive Services Task Force: evidence-based items or services that have a recommendation rating of ‘A’ or ‘B’ (2) Advisory Committee on Immunization Practices of the Centers for Disease Control and Prevention immunizations: recommendations from the (ACIP/CDC Immunization website), and ‘(3) Health Resources and Services Administration (HRSA): a. with respect to infants, children, and adolescents, evidence- informed preventive care and screenings ‘b. with respect to women, such additional preventive care and screenings not described in paragraph (1) as provided for in their comprehensive guidelines *

53. 52 New Preventive Care Mandates Since ACA Enactment CT Scans for High-risk Smokers Who: High-risk smokers covered for insurance under Medicare, Medicaid or private insurance. When: Starting January 1, 2015 or the beginning of their next plan year. What: The USPSTF improved the grading of annual low-dose CT screening for individuals at high risk for lung cancer from an “I” to a “B” Grade. Children’s Fluoride Varnish Treatments Who: Children covered for insurance under Medicare, Medicaid or private insurance (individual and group plans whether insured or self-insured) When: Starting the later of January 1, 2015 or the beginning of their next plan year. What: The USPSTF recommendation “B” to include fluoride varnish to the primary teeth of all infants and children starting with primary tooth eruption. Abdominal Aortic Aneurysms Who: Males covered for insurance under private insurance (individual and group plans whether insured or self-insured) When: Starting January 1, 2015 or the beginning of their next plan year. What: The USPSTF changed its recommendation to “B” for plans to include one-time screening for abdominal aortic aneurysm (AAA) by ultrasonography in Men ages 65 to 75 years who “have ever” smoked. *

54. 53 Task #6 – Condition Management Programs The Promise of Health The “Holy Grail” of Cost and Quality Improvements

55. 54 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition ConditionManagement Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy, social networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

56. 55 Condition Management - Defined Condition Management is an proactive organized program providing lifestyle and medical/clinical assistance to employees and their family members with chronic and persistent conditions. Condition Management programs encourage voluntary behavior changes and support compliance with proven medical practices which stabilize conditions, reduce health risks and enhance their individual productivity. *

57. 56 Condition Management – The Need  60+% of an employer’s total medical costs come from chronic and persistent diseases such as, diabetes, asthma, congestive heart failure, back pain, and depression.  45% of Americans live with at least one chronic disease. 14% live with two or more chronic diseases.  76% of hospitalizations, 72% of physician visits, and 88% of Rx is due to chronic conditions  The average cost of health care for a diabetic is $13,200/yr compared to $2,600/yr for a non-diabetic.  61 million Americans live with cardiovascular disease  50% of chronic disease deaths are traced to cardiovascular disease.  Coronary artery disease is a leading cause of premature permanent disability.  Obesity is becoming the #1 preventable cause of death *

58. 57 Condition Management – The Desire for Change Very Little under Traditional System:  50% do not follow recommended standards of care  33% with high blood pressure do not know  33% of diabetics do not know it  Patient’s lack of knowledge and information  Patients without financial incentives to change health and healthcare behaviors  Distortions of current 3 rd party reimbursement medical financing system.  Plans pay for treatments not prevention or compliance  Physicians without incentives to take time and effort to deal effectively with chronic conditions *

59. 58 Condition Management Potential Focus on Hi-Volume / Hi-Cost Users Cost Curve % Members % Costs 1% -> 20% 15% -> 68% 50% -> 95% EBRI -Stakeholders in Consumer-Driven Health Care *

60. 59 *

61. 60 Condition Management – Elements for a Successful Program There are four elements of a successful disease management: 1. A delivery system of health care professionals and organizations closely coordinating to provide medical care and support the patient’s compliance throughout the course of a disease. 2. A process that monitors the compliance and describes outcome- based care guidelines for targeted patients. 3. A process for continuous improvement that measures clinical behavior, refines treatment standards, and improves the quality of care provided. 4. Incentive awards that support the condition management medical and clinical care services

62. 61 Condition Mgmt - How Does It Impact Employees and Family Members? Well e.g., Low Risk, Good Nutrition, Active Lifestyle At-Risk / Acute Condition e.g., Inactivity, High Stress, Overweight, High Blood Pressure, Smoking Chronically-Ill e.g., Diabetes, Musculoskeletal, Heart Disease, Asthma, MH/SA Catastrophic e.g., Cancer, Rare Diseases, Head Trauma No Claims Generally Healthy O/P (Low) In/P (High) MaternityO/P (Low)In/P (High) % Ee 15% 48% 14% 3% 12%4%1% % $ 0% 12% 15% 12%5% 21% 20% 15% % Ee 63%20%17% % $ 12%32%56% Prevention Wellness – Lifestyle Wellness - Lifestyle Minimize Acute Episodes Minimize Complications Maximize Recoveries Maximize Stabilization Early Intervention Wellness - Clinical Condition Management Program

63. 62 20 Condition Management Priority Areas per the Institute of Medicine 1. Asthma, supporting and treating those with chronic conditions. 2. Care coordination for patients with multiple chronic conditions. 3. Children with special health and care needs, particularly those with chronic conditions. 4. Diabetes, which can lead to high blood pressure, heart disease, blindness and other complications. 5. End-of-life care for people with advanced organ failures, concentrating on reducing symptoms. 6. Frailty - preventing accidents, treating bedsores and improving advanced care. 7. High blood pressure - left untreated it can lead to heart attack, stroke and kidney failure. 8. Immunization. 9. Evidence-based cancer screening, which can reduce death rates for many cancers, including colorectal and cervical. 10. Ischemic heart disease, also known as coronary heart disease. Efforts should focus on prevention. *

64. 63 11. Major depression, which currently has a much lower treatment rate that other major diseases. 12. Medication management to prevent errors. 13. Noscomal infections. These are infections acquired in the hospital and kill an estimated 90,000 Americans annually. 14. Obesity, which is blamed for as many as 300,000 deaths annually in the United States. 15. Pain control in advanced cancer. 16. Pregnancy and childbirth, especially improving the quality of prenatal care. 17. Self-management and health literacy, using public and private organizations to increase the level of health education. 18. Severe and persistent mental illness; improving mental health care in the public sector, including state hospitals and community centers. 19. Stroke, the third highest cause of death in America. 20. Tobacco-dependence treatment for adults. 20 Condition Management Priority Areas per the Institute of Medicine

65. 64 Condition Management Programs Designed and Financially Aligned for Success *

66. 65 Task #7 – Health Literacy & Decision Support Tools The Promise of Transparency & The “Right to Know”

67. 66 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy, social networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

68. 67 Healthcare Consumerism – Developing Active Consumers Consumers Search Internet for Medical Content Consumers Ask Physicians for Genetic Testing Consumers Work with Providers on Personalized Health Plans Consumers Monitor and Track Their Own Medical Status Regularly Consumers and Providers Coordinate Care and Understanding through Integrated Clinical and Information Therapies

69. 68 Health Literacy & Decision Support Tools for Consumerism Basic Design InformationProvider Selection Support HRA Fund Accounting Physician Quality Comparison Underlying PPO Plan Design Physician Cost Comparison Disease and/or Medical Management Hospital Quality Comparison HSA Fund Accounting Hospital Cost Comparison Debit/Credit Card Personal Benefit SupportCare Support Plan Comparison Cost Estimator On-line Provider Directory Account Balance Provider Scheduling On-line Claim Inquiry On-line Rx Comparisons SPD On-line Patient Decision Support 24/7 Nurse Line Personal Health Management Telemedicine Health Risk Appraisal Health & Wellness Information Targeted Health Content Medical Record, History Health Coach Wearables

70. 69 Task #8 - Incentives, Rewards, The Promise of Shared Savings Pay for Compliance & Pay for Performance “Two sides of the same coin”

71. 70 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinic, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy, social networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

72. 71 Wellness Incentives – Participation Based All wellness programs that are based on participation rather than outcomes are permitted. For example, financial incentives for participating in a health fair, joining a health club, or attending smoking cessation program, regardless of the health outcomes or results, are allowed. - National Business Group on Health

73. 72 The Evolution of Incentives Plan Design Education Incentives & Rewards Participation Engagement Compliance (specific Condition focus) Outcomes Health Status 72 Traditional Insurance Early Generation Consumerism Mid-generation Consumerism ACA Allowed & More Plans going to Health Status *

74. 73 Wellness Incentives – Outcomes Based While HIPAA & ACA generally prohibits plans from differentiating benefits or premiums based on health status, employers can still design and implement wellness programs with financial incentives. Only a "bona fide wellness program" can provide a reward based on a health standard or health outcome. To be a "bona fide wellness program," the law specifies that the program must meet four requirements: 1. Limit the reward to a specified amount (not to exceed 30% under PPACA, can be up to 50% with nicotine use). 2. Be reasonably designed to promote health or prevent disease. 3. Be available to all similarly situated individuals. There must be a feasible alternative for those that cannot reach the health standard because of a medical condition. 4. Inform employees that individual accommodations and alternatives are available. - National Business Group on Health *

75. 74 Rewards & Incentives for Smoking Cessation The NGBH conducted a Quick Survey on "Smoking Cessation Incentives/Disincentives." The results from 26 respondents showed:  69% of the respondents offered discounts on annual health care premiums/contributions for non-smokers, and 15% offered another type of benefit enhancement.  Similarly, 45% of the respondents offered premium discounts for employees that participated in smoking cessation/wellness programs.  57% included smoking cessation as part of a broader wellness initiative/incentives at the worksite. - National Business Group on Health

76. 75 The National Business Group on Health and Fidelity Investments survey :  * 73% of Employers used incentives in 2011 in their health improvement programs.  * The average incentive value was $460 (2010:$430 and 2009: $260).  * Incentives used by employers include cash, gift cards and contributions to health savings accounts (HSA).  * A small but growing percentage of employers link eligibility for enrollment in their health care plans to participation in health improvement programs.  * 7% of employers in 2011 required completion of a health risk assessment for employees to be eligible for health care plan coverage, and  * 10% will link completion of an HRA to plan eligibility in 2012. The survey is based on the responses of 139 employers, ranging in size from 1,000 employees to 100,000 employees. NBGH Study

77. 76 A Quest Diagnostic report showed 60% of employees who participate in wellness programs report that the incentive is a deciding factor in their choice to participate. Incentives have been so successful in increasing participation that approximately two-thirds of the employers who invest in employee wellness use an incentive to drive employee participation. Bio-metrics (e.g. blood pressure, cholesterol, body mass index, waist size, and A1(c)) are popular as measuring standards for improved outcomes. Quest Diagnostic Report *

78. 77 Review of Plan Design Concepts by Generation Task #9 – Viewing Healthcare Consumerism by Generations

79. 78 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition ConditionManagement Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy. Social Networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

80. 79 A recent Rand study found that when people shifted into health insurance plans with deductibles of at least $1,000 per person, their health spending dropped an average of 14 %. Health care spending also was lower among families enrolled in high-deductible plans that had HSAs. Account based plans are a good start, but if the goal is to change member behaviors and to engage them to make better informed health and healthcare decisions more than a new plan design is needed. Rand Study *

81. 80 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy, social networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

82. 81 Health Promotion Health Management Chronic Disease Management High Cost Case Management Website Wellness Appraisal Patient Identification and enrollment Targeted Behavior Modification Care Coordination Practice Guidelines Healthy Lifestyle Promotion Physical Activity Campaign Address Comorbid Conditions Integrated Services, Communications, Measurement and Evaluation 2 nd Generation Programs to Change Behaviors Acute Conditions e.g., Infections, Respiratory, Lacerations Navigational Support Patient Advocacy Care Coordination Address Comorbid Conditions At Risk / Acute Condition e.g., Inactivity, High Stress, Overweight, High Blood Pressure, Lacerations, Infections Chronic Conditions e.g., Diabetes, Depression, Heart Disease, Asthma, MS/SA Catastrophic Conditions e.g., Cancer, Hepatitis C, Head Trauma Well e.g., Low Risk, Good Nutrition, Active Lifestyle

83. 82 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Wellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info & services, info therapy. Social Networking Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

84. 83 What are “Manageable Employment Costs”? 1.Health care: the dollars spent on health care whether self- insured or insured. 2.Turnover: the direct hiring costs, temporary replacement costs, learning curve costs, and lost productivity costs. 3.Presenteeism: the time an employee is at work and assumed to be productive, but is not productive. 4.Disability: the direct costs associated with workers’ compensation and non-occupational disability. 5.Unscheduled Manageable Absence: the cost of absence that could be positively influenced with proactive intervention. Five components of “Manageable Employment Costs”: *

85. 84 3 rd Generation Health & Performance ROI Health & Performance ROI will be measured by:  Reduced unscheduled sick days  Reduced paid time off  Fewer disability claims, more and faster recoveries  Reduced turnover  Improved survey results on teaming, creativity, staff moral Resulting in:  More productive employees  More effective employees  Increased teaming, creativity, moral, workplace conflicts  Better bottom line results

86. 85 Healthcare Consumerism & Stress Management Consumerism Stress Management is a process improvement methodology designed to quickly improve bottom line saving and progresses into a business strategy that optimizes a company’s human capital an innovation efforts. Consumerism Stress Management emphasizes employee participation, the inclusion of corporate and operational performance metrics, and the power of the Internet to achieve savings by quantifying and positively influencing stress-related “Manageable Employment Costs”. *

87. 86 3 rd Generation – Stress Management and Corporate Impact 21.5% of total health care costs 40% of the primary reasons that employees leave a company 50% of presenteeism is a function of stress 33% of all disability and workers’ compensation costs 50% of the primary reasons that employees take unscheduled absence days Research suggests that stress has been directly attributed to: *

88. 87 Related / Imbedded Health Costs From Stress Source of Demand Major Body Systems And Pressure Affected by Stress JobMuscular System FamilyDigestive System PersonalCardiovascular SocialEmotional FinancialEndocrine, Immune EnvironmentCognitive *

89. 88 88 3 rd Generation Stress Management The Corporate Costs of Mental Illness Medical Intensity Type of Condition Direct MH Costs Co-Morbid Conditions Indirect Corporate Costs Low Cost Frustration Anxiety Low Stress Minor Depression LOW Tobacco Use Sleeplessness Colds/Flu Blood Pressure Moderate–HIGH Increased Errors Presenteeism Loss of Teaming Medium Cost Moderate Stress Depression Anger Attention Deficit PostTraumatic Stress MEDIUM Hypertension Musculoskeletal Digestive Gastrointestinal Moderate-HIGH Unsch Absences Poor Morale Relation Conflicts Lost Productivity High Cost High Stress Major Depression Schizophrenia Bipolar Disorder Obsessive Compulsive Panic Disorder Anorexia-Bulimia HIGH Cardiovascular Cancer Diabetes Asthma Back Pain Alcoholism HIGH-VERY HIGH Low Productivity Divorce Turnover Early Retirement Worker’s Comp Disability CatastrophicViolence Suicide HIGHAccidents Burns VERY HIGH Death Work Violence Disaster Recovery *

90. 89 2 nd Generation Consumerism Focus on Behavior Changes 3 rd Generation Consumerism Integrated Health & Performance 1 st Generation Consumerism Focus on Discretionary Spending 4 th Generation Consumerism Personalized Health & Healthcare Personal Accounts Personal Accounts Incentives & Incentives & Rewards Rewards Health Management Health ManagementWellness/Prevention Early Intervention Early Intervention Condition Management Condition Management Health Literacy Health Literacy Decision Support Decision Support Initial Account Only Activity & Compliance Rewards Indiv. & Group Corporate Metric Rewards Specialized Accts, Matching HRAs, Expanded QME 100% Basic Preventive Care Web-based behavior change support programs Worksite wellness, on- site clinics, safety, stress & error reduction Genomics, predictive modeling push technology Information, health coach Compliance Awards, disease specific allowances Population Mgmt, IHM, Integrated Back-to- Work Wireless cyber – support, cultural DM, Holistic care Passive Info Discretionary Expenses Personal health mgmt, info with incentives to access Health & performance info, integrated health work data Arrive in time info and services, information therapy Cash, tickets, Trinkets Health Incentive Accounts, activity based incentives Non-health corporate metric driven incentives Personal development plan incentives, health status related The Consumerism Grid *

91. 90 4 th Generation – Personalized Health and Healthcare  Based on genomics, predictive modeling, and push technology.  Preventive care will include both lifestyle and clinical factors.  Treatments will include culturally sensitive care and guidance  Cyber-health Aides - decision support systems and wireless connections that link each person to a personalized health and healthcare cyber-support system (e.g. diabetes phone).  Personalized Internet Search engines based upon individual profile health and healthcare needs. Cyber-support systems built to profile activity and anticipate areas of interest (e.g. TIVO/Travelocity)  Connected to services through monitors/wearables that will provide real time feedback on health status, lifestyle, and health concerns. (e.g. FitBit/OMSignal)

92. 91 Revealing the 5 th Generation A New Developing Generation of Healthcare Consumerism

93. 92 Personal Accounts Health Mgmt Wellness/ Prevention Condition Management Health Literacy Decision Support Incentives & Rewards Longevity *

94. 93 A PricewaterhouseCoopers study found that nearly a third (32%) of consumers has used some form of social media for healthcare purposes. The self-absorbed “Me” generation is giving way to sharing communities on Facebook, Picassa, Linked-In, Plaxo, and YouTube. PwC Study Shows Growing Community Health *

95. 94 5 th Generation Healthcare Consumerism 1. From Personalized (self) to Community (others) 2. From Health to Productive Longevity 3. From Self-help to helping Others 4. From Being Served to Sharing 5. From Taking to Giving 6. From Secular to Spiritual 7. From Monetary to Emotional 8. From Head (logic) to Heart *

96. 95 5 th Generation Consumerism Longevity Basics 1.Move Naturally – Be Active Without Thinking About It 2.Painlessly Cut Calories by 20% 3.Avoid Meat & Processed Foods 4.Drink Red Wine in Moderation 5.Take Time to See the Big Picture 6. Take Time to Relieve Stress 7. Participate in a Spiritual Community 8. Make Family a Priority 9. Surround with Others who Share Values Adapted from Blue Zone by Peter Buettner

97. 96 Leadership: Are the organization’s leaders (at all levels) modeling well-being behaviors and influencing an environment that supports the well-being of others? Purpose: Does the organization have a purpose that employees connect with, and does the organization support employees to identify and pursue their own purpose inside the context of their work? Habitat/physical environment: Does your worksite promote healthy practices and empower employees to make healthful choices through the physical layout and worksite setting? Engagement/creation of social networks: Is there a clearly defined engagement strategy that uses an effective mix of communications, incentives and social events to help promote well- being improvement? Policies and benefits: Are your human resources policies and benefits designed to encourage well-being? Well-being solutions: Are there engaging solutions to support employee efforts to improve and sustain well-being? Blue Zone Worksites

98. 97 Health Literacy / Education Communication Acute Case Mgmt Utilization and Case Management NETWORK A / TPA ANETWORK B / TPA B Wellness Prevention Demand Management Condition Mgmt Programs Integrated Absence Mgmt The secret is cooperation and synergy between components supporting the corporate strategies Private Exchanges & Coordinating Consumerism Private Exchanges General Manager Personal Care Accts. FSAs, HRAs, HSAs Process Integration & Disciplined Improvement Company Data Warehouse & Metrics

99. 98 Potential Savings & Actual Industry Results from Early Generation Implementations More than just Theory and Promises “To achieve transformation to a future model of healthcare consumerism, all participants must advance in a consistent way to the future model.”

100. 99 The Value Proposition  5-8% Savings over 5 years with 2% lower trends  Low Range of Savings 5% x 5 years + 2% x 5 years = 35%  High Range of Savings 8% x 5 years + 2% x 5 years = 50%  20-35% lower Rx costs Low Range: 20% x 20% = 4% High Range: 35% x 20% = 7%

101. 100 Potential Savings from Full Implementation of Consumerism Achievement of savings and improved outcomes is dependent upon both the Type and Effectiveness of the programs implemented. Gross* Savings as % of Total Plan Costs (Programs Applicable to All Members) Effective Programs Implemented Traditional plans Consumerism Plans Passive1 st Generation2 nd Generation3 rd Gen & Future Basic2%3%7%10% Expanded3-4%5-8%12-15.0%20.0+% Complete4%7%17%25% Comprehensive (Future)5%10%20%30% *Excludes Carry-over HRAs/HSAs and any added Administrative Costs of Specialized Programs *

102. 101 Healthcare Consumerism Experience Results

103. 102 American Academy of Actuaries 2009 Non-partisan CDH Consumerism Studies 1 st Year Savings: The total savings generated could be as much as 12 percent to 20 percent in the first year. - All studies showed a drop in costs in the first year of a CDH plan from -4 percent to -15 percent. A control population of traditional plans experienced increases of +8 percent to +9 percent. 2+ Year Savings: At least two of the studies indicate trend rates lower than traditional PPO plans by approximately 3 percent to 5 percent. - If these lower trends can be further validated, it will represent a substantial cost-reduction strategy for employers and employees. Cost Shifting: The studies indicated that while the possibility for employer cost-shifting exists with CDH plans, (as it does with traditional plans) most employers are not doing so, and might even be reducing employee cost-sharing under certain circumstances. 102

104. 103 2011 Rand Study of CDHCs The largest-ever assessment of high-deductible health plans finds that while such plans significantly cut health spending, they also prompt patients to cut back on preventive health care, according to a 2011 RAND Corporation study. Studying more than 800,000 families from across the United States, researchers found that when people shifted into health insurance plans with high deductibles, their health spending dropped an average of 14 percent when compared to families in health plans with lower deductibles. Health care spending also was lower among families enrolled in high- deductible plans that had moderate health savings accounts sponsored by employers.

105. 104 Experience Results Aetna reported in 2011 that employers who switched to account- based health plans as their only plan option had saved $21.8 million per 10,000 members over the past five years. Cigna published a 2012 study concluding that employers can save an average of $9,700 per employee over five years by switching to account-based health plans. According to Towers Watson and the NBGH, companies that successfully move their employees into account-based health plans can achieve significant savings on their health benefit costs. For example, companies with at least half of their workers enrolled in an account-based health plan report that their per- employee costs are over $1,000 lower than companies without an account-based health plan.

106. 105 Ronald E. Bachman Chairman IHC Editorial Advisory Board President & CEO Healthcare Visions, Inc. 404-697-7376 ronbachman@healthcarecisions.net Private Exchanges

107. 106 Private Health Information Exchanges (PHIE) Typically web-based portals providing consumer health and health care information. These Exchanges provide individuals and company health plans with medical and clinical education, treatment options, care costs, provider quality metrics, repositories for personal medical records, and much more. Others may provide medical information and online clinical care. Examples: WebMD, MDLiveCare

108. 107 Private Health Insurance Marketplaces (PHIXs) What: Typically are web-based portals focusing on consumer guidance and information for the private purchase of health insurance. These Exchanges serve as marketing and lead generation sites for brokers/agents. Individual and group product descriptions, premium estimates, and purchases can be made online or by follow up with an agent. Private sites may also provide information and guidance for those eligible for government insurance options (Medicaid, CHIP, or Social Security Disability). 107

109. 108 Types of PHIXs by Sponsor Business group PHIXs: developed from existing employer associations. Typically will ensure portability for ees, but only when the ee moves between participating ers and health plans. Insurer-sponsored PHIXs: developed for insured policyholder, making it easy to move current small es into an exchange and allow individual ees a wider choice of health plan design. The portability (the ability of a consumer to keep the same coverage as they move between jobs) is available to individuals moving companies covered by the same insurer. 108

110. 109 Types of PHIXs (continued) by Sponsor Independent companies: developed with various sponsorships, existing relationships, and business models. These companies include existing information technology vendors, consultants/brokers, and entrepreneurs. These players seek to meet the needs of existing health industry customers, employer groups, and broker clients. They see the opportunity to expand on existing services and technology to create new businesses in a growing market. 109

111. 110 Types of PHIXs by Carrier Offering Single-carrier Exchanges: These exchanges are promoted by a single payor. They target employers that wish to maintain some role in choosing both the insurance carrier and plan design Multi-carrier Exchanges: Promoted by brokers or benefits consultants to provide a broad range of payor and plan design options. Multi-carrier exchanges typically list individual products on a menu of offerings. 110

112. 111 Types of PHIX by Business Model The Group Model: there may be as many as 20 different health plans for an employee to choose from but they’re all in a group platform and they are generally from just one carrier. Individual Model: Individual insurance policies. Especially good for smaller groups that have not been offering group insurance and can’t meet the minimum participation of funding requirements of the group model. 111

113. 112 Projected Growth of Private Exchanges: Mercer Mercer: The % of US employers considering offering a private exchange for active and/or retired employees has tripled in the past year to 56%. Mercer said that 10 major insurance carriers—including Aetna, Cigna, Humana, UnitedHealthcare and a number of Blue Cross and Blue Shield plans—have signed on to the firm’s private exchange for 2014 enrollment. Mercer’s exchange will be available to employers with at least 100 employees 112

114. 113 Projected Growth of Private Exchanges: Aon Aon Hewitt said all of the new clients have at least 5,000 employees and represent a range of industries. With the additional clients, Aon Hewitt said 330,000 employees will be receiving coverage through its exchange. In total, Aon Hewitt anticipates more than 600,000 U.S. employees and their families will be covered under plans in the Aon Hewitt Corporate Health Exchange in 2014. 113

115. 114 Self-Insured Plans PPACA creates significant mandate differences and cost implications between fully insured and self-insured plans. Self-insured employer plans are explicitly exempted from some PPACA requirements. Self- Insured Plans are NOT: Required to provide minimum essential benefits (required to meet the cost-sharing limits, benefit levels, and “minimum essential coverage” but are not required to provide the “minimum essential benefits”). Required to participate in a risk-adjustment system, Subject to single risk pool standards, Subject to 3-1 age pricing compression and other rating mandates, Subject to medical loss ratio (MLR) mandates, Subject to review of premium increases, and Subject to the annual insurance fee that starts in 2014 for fully insured plans.

116. 115 Self-Insured Plans The existing benefits of self-insured are retained. They are NOT: Subject to state premium taxes, Subject to state coverage mandates, and Subject to insurance reserve requirements. Under PPACA, employers will retain the choice of fully insured and self-insured arrangements. However, fully insured plans will mostly be offered through health exchanges because federal employee premium subsidies (up to 400% of the federal poverty level) will only be available through exchanges. The size of groups eligible for participation in an exchange may vary by state and can increase over time based on PPACA requirements.

117. 116 IHC Certification Materials Website www.theihcc-hcv.com Enroll to take CHCC Exam In addition, the link will direct you to a complete IHC proprietary interactive PDF detailing the specific PPACA mandated Preventive Care Coverages. Click below for Additional Information and/or to review course materials