The Evolution of Consumer Driven Health Plans White Paper will prepare you for the following regarding the shift to true healthcare consumerism: - What types of employer-sponsored health plans exist and what employers should consider - The impact of consumer driven health plans (CDHPs) and high deductible health plans (HDHPs) in controlling healthcare costs - What models challenge the fee-for-service delivery system and why employers need to explore them

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THE EVOLUTION OF CONSUMER
DRIVEN HEALTH PLANS
5 RECOMMENDATIONS FOR BENEFIT DESIGN OPTIMIZATION
January 2016 © 2016 Paladina Health, LLC. All rights reserved.
Proprietary and Confidential.

2.  Overview
 Key Drivers and Growth of CDHP Movement
 CDHP Impact
 Recommendation and Conclusion
Agenda
2

3. What are Consumer Driven Health Plans (CDHPs)?
3
High Deductible
Health Plan
Tax-Free Health
Savings Account CDHP
Goal: drive smart healthcare consumerism by making
consumers more responsible for the economic consequences
of their healthcare decisions

4. CDHPs are insufficiently addressing healthcare
cost and quality needs
4
Plan design alone is insufficient for consumers. Employers need
to offer innovative solutions that go beyond shifting costs.

5.  Overview
 Key Drivers and Growth of CDHP Movement
 CDHP Impact
 Recommendation and Conclusion
Agenda
5

6. 6
The U.S. has higher incidence of
chronic disease and lower life
expectancy than other countries
The average family household
now spends 20% of their
income on healthcare
The Catalyst for CDHPs

7. The CDHP solution has gained momentum with
employers over the last decade
CDHPs aim to solve the problem that consumers have:
 Limited understanding healthcare decision economic impact
 Little incentive to question advice they receive from providers
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8.  Overview
 Key Drivers and Growth of CDHP Movement
 CDHP Impact
 Recommendation and Conclusion
Agenda
8

9. Healthcare avoidance and dissatisfaction
CDHP participants utilize less
healthcare services, including
acute and preventive care, in
order to save on out-of-
pocket costs.
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10. Potential benefits of CDHPs are unsustainable
Cost Savings
Health
Outcomes
2
Patient
Satisfaction
3
1
Low utilization with unknown
health impact
Short-term savings, but
unsustainable if long-term health
declines
Low satisfaction; less than 30%
CDHP enrollees would
recommend to others
IMPACT OF CDHPs
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11.  Overview
 Key Drivers and Growth of CDHP Movement
 CDHP Impact
 Recommendation and Conclusion
Agenda
11

12. Focus on the 5 Key Priorities for Health Care
Consumerism
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13. Empower Primary Care Providers (PCPs)1
Better access to health services
Improved quality of care
Emphasis on prevention
Identification and early
management of chronic conditions
Reduction in unnecessary specialist
care
Lower PCP panel sizes (~1,000 patients) to allow time for patient-physician
relationship
Paladina Health
Solution
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VS.

14. Create a culture of transparency2
Paladina Health
Solution
Transparency database built from claims cost data, quality data, patient
perception and physician feedback made available to all physicians
$3,296 per
Procedure
$1,203
per
Procedure
Two colonoscopy providers: ~6 miles apart
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15. Improve access to care3
Paladina Health
Solution
24/7 access to physicians’ personal cell phones and secure virtual care delivery
through patient portal and Healow app
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16. Improve cross-provider collaboration4
Paladina Health
Solution
Physicians empowered by closed-loop referral management system to
quarterback all downstream care
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17. Align incentives through value-based compensation5
Alternative methods of payment create incentives to encourage
preventive care and better care coordination:
Paladina Health
Solution
Physicians receive incentive compensation based on patient health and
satisfaction
Bundled or
capitated
payments
Patient-centered
medical homes
Accountable
care
organizations
(ACOs)
1 2 3
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18. Refined, comprehensive delivery models drive
greater value
Cost Savings
Health Outcomes
2
Patient Satisfaction
3
1
Appropriate utilization of healthcare system
Drive prevention
Manage chronic diseases
Improve health
Enhance value
Reduce claims cost and drive short- and long-
term savings
Arm patients with transparency
Create access to the right care in the right setting
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“I became a Paladina Health physician because
my philosophy really aligns with Paladina's
philosophy. I'd like to see a change in healthcare
in the United States. I'd like to see more
prevention, more effective and efficient disease
management.”
- Dr. Crocker-Sabbagh, AZ Paladina Health
Physician

20. The Paladina Patient Experience
Lower healthcare costs
“I like that if I have something come up, I can
reach out to my doctor outside of business hours
and she can help me over the phone…It’s also a
great benefit financially because all of my
encounters have been covered. Relationships are
important and I feel very strongly about this
relationship with my new Paladina Health
doctor.”
- Clarke, Paladina Health Patient
Improved healthcare
experience
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Higher quality care
Better access to a
physician

21. Appendix
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22. 22
The Catalyst for CDHPs
U.S. percent of GDP spent on
healthcare more than
doubled since 1980, while
other nations have
experienced increases more
in line with economic growth

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Factors driving an increase in
healthcare spending:
 Fee-for-service reimbursement
 Fragmentation of care delivery
 Provider consolidation
 Administrative burden on provider,
payers and patients
 Aging population
 Increasing incidence of chronic
disease
 Advances in medical technology
 Rising drug costs
 Overall lack of transparency
 Overuse of emergency services
The Catalyst for CDHPs

24. Crisis of Access
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25. Clinical quality metrics for chronic conditions
Percent of members compliant
Notes: 1) Diabetic patients (n=665), Hypertensive patients (n=1752) and 2) All members must be active >180 days to be eligible for the measures 3) Source: NCQA HEDIS
2014 Benchmarks. * HEDIS uses >40 for Breast Cancer Screening and Paladina Health follows updated evidence-based medicine of >50 yrs.
72% 71% 68%
84%
79%
70%
58%
53%
59% 57%
0%
20%
40%
60%
80%
100%
Breast Cancer Screening
(>50 yrs)*
Colorectal Cancer
Screening
Diabetes HbA1C <8.0 Diabetes BP
Management
Blood Pressure Control
Paladina Results 2015 PPO Average 2014
Our Results: Clinical Quality Measures
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26. Service Excellence Is Integral To Our Care Delivery
30%
49% 53%
12%
71% 73% 76%
72%
0%
25%
50%
75%
100%
Computer Hardware Grocery Online Shopping Healthcare
Industry Average NPS "Star"
Apple Trader Joe's Amazon.com
Net Promoter Score: outperforming the healthcare industry
Notes: Paladina NPS as of 2014; All Industry NPS scores from Satmatrix.com; Healthcare Industry score from: http://www.prnewswire.com/news-releases/kaiser-permanente-
again-ranks-no-1-in-customer-loyalty-in-the-2015-satmetrix-net-promoter-benchmark-study-300061421.html
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27. References
Refer to the Paladina Health White Paper: The Evolution of Consumer
Driven Health Plans for all data sources
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