1. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 1 Casualty Actuarial Society 1999 Special Interest Seminar Health and Managed Care October 18, 1999 Presented by: David V. Axene, FSA, MAAA Milliman & Robertson, Inc. San Diego, California Managed Care – What Is It and What Might It Be? “The Next Generation”

2. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 2 The Butterflying of Managed Care Fee maximums Cost containment Fee discounts Incident management Episodic management Health status management

3. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 3 Five Guiding Principles Only medically necessary services, and no more intense than necessary to provide the improvement in health status that is reasonable for the patient to expect. Provided by a healthcare provider with the appropriate expertise level, or at a cost level not greater than the charge of the appropriate expertise level.

4. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 4 Five Guiding Principles continued Provided in a setting not more intensive or costly than necessary, recognizing the key non-clinical factors. Provided at a competitive price with other providers in the marketplace. Provided at a reasonable administrative cost.

5. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 5 Components Needed to Effectively Manage Health Status Clinical descriptions of appropriate care Utilization review and case management templates to monitor care concurrently and retrospectively Patient behavior/activity modification guidelines Duration of care guidelines describing key monitoring points to chart patient progress Computerized patient medical records to permit real- time monitoring (past, present and near term) Course-of-care maps and decision trees showing alternatives and interventions to minimize decline

6. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 6 Resource Management Models Financial or actuarial models to optimize structural and practice efficiency Helps providers adapt to more efficient structures and practices Key components Statistical data consistent with practice guidelines What, how many and how much it costs Incentives to achieve desired outcomes

7. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 7 Real Life Examples Outpatient surgery facility models Consumer communication tools Workers’ Compensation

8. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 8 Summary Valuable education tool for both patients and physicians Basis for benchmarking Foundation for future improvements Success through simple thoroughness Integration of actuarial science with the practice of medicine provides a strong foundation for all developments

9. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 9 Outpatient Surgery Facility Models

10. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 10 Consumer Communication Tools

11. Milliman & Robertson, Inc. INTERNATIONALLY Woodrow Milliman 11 Workers’ Compensation