1. Managed Consumerism: The Next Generation of Consumer-Directed Health Insurance Terence Fitzgerald, M.D. Regional Medical Director Oxford Health Plans, LLC A UnitedHealthcare Company January 5, 2006

2. Background  1980s – Rise of managed care  Network restrictions, utilization rules  Co-pays limit cost exposure  Evolution towards “managed competition”  Late 1990s – Backlash against HMOs and managed care  Employer retreat from active engagement in health care policy/cost management  Broader networks, dismantling of utilization management, rise of PPOs  2000s – Focus on effects of unjustified clinical variability  Outcomes transparency drive quality improvement  Hospital and physician quality metrics gain acceptance  Employers shift from “co-pay cost shielding” to cost-share transparency

3. Early CDHP Results CDHP cost-share strategy works  Preventive visits maintained  Lower utilization in other areas  Inpatient admissions (  10%)  Primary care (non-preventive) visits (  5-6%)  ER visits/outpatient events (  3-5%)  Higher utilization of specialty visits (  3-4%)  Chronic conditions appear to get care (e.g. diabetes) Aetna, 2005

4. CDHP Results: Concerns  Are lower inpatient admits related to lower PCP visits?  Do CDHPs with HRA/HSA only benefit the healthy and the wealthy?  Commonwealth Fund Study (released December 2005)  Americans enrolled in HDHPs/CDHPs less satisfied  But more cost conscious  And more likely to skip care  Lack information to make decisions  Do not trust information provided by health plans

5. The Future: Managed Consumerism Role of Payers  Create meaningfully distinct networks based on transparency of quality and efficiency (quality drives lower cost)  Embrace “Pay for Performance” – transient incentive to drive change as performance becomes standard for maintaining in-network status Role of Providers  Create meaningfully distinct organizations based on performance (Q and E) Role of Consumers  Understand benefits and network composition Role of Employers  Educate employees on benefits  Provide more information on quality and cost issues