1. Managed Care 102 serves as an overview of today’s Behavioral Health benefit insurance plans. Presenting …… Managed Care 102 Brought to you by The Psychiatric Hospital at Vanderbilt, Network and Business Development Program 2004

2. 2 What is a “carve-out” Managed Care Organizations (MCO’s) frequently opt to “carve-out “ the management of select services to specialty organizations The most common “ carve-out” specialties are: Dental Vision Transplants Behavioral Health

3. 3 What is a “carveout”, continued When services are carved out, the MCO passes the financial risk and management of the service to the speciality organization(i.e. provider contracting, credentialing, Utilization Management, Claims processing, etc. In the Behavioral Health arena, carveout organizations are referred to as Behavioral Health Organizations (BHO’s)

4. 4 BHO’s provide a tiered reimbursement structure for different level’s of providers (MD, PhD, Master’s) BHO’s reimburse in this market at a level of approximately 80% of Medicare BHO’s are resistant to Delegated Credentialing BHO’s have historically limited panel participation and/or been resistant to group agreements BHO’s have typically refused exceptions to the contract language or reimbursement of the contracts during the negotiation process Overview of BHO carveouts

5. 5 PHV and VMG are contracted with the same BHO’s to provide continuity to members Reimbursement to both VMG and PHV must meet the minimum threshold to be considered for acceptance The majority of the large BH payor contracts have been renegotiated in the last year. CIGNA, United and and Magellan/AdvoCare/Tenncare are complete. Magellan – BC Commercial BH is in process to be concluded by 10/1/05. We have experienced double digit increases and consideration for delegated credentialing The current commercial behavioral health organization mix is:  Magellan /Blue Cross  United  CIGNA Current Contract status w/ BHO’s

6. 6 The Future for Managed Care: Employer Benefit Options and HealthCare Cost Management As the cost of healthcare continues to rise, employers are seeking ways to control the costs. New benefit options are Health Savings Accounts (HSA) with PPO high deductible health plans, focus on Disease Management programs, and Mail order Prescription Drug programs through national vendors. The Future for the HealthCare Provider: Understand the realities of the marketplace, and the complexity of the healthcare system.