The document summarizes a webinar on leveraging value-based benefit design to improve member health outcomes and lower costs. It introduces the panelists, who are experts from health plans that have implemented value-based benefit designs. It defines value-based benefit design and provides examples from early adopters, such as tiered benefit structures and lessons learned around member and provider communication and engagement. The document concludes by inviting participants to ask questions.

1. © 2010 SCIOinspire Corp. Leveraging Value Based Benefit Design to Improve Adherence and Lower Costs While Improving Member Health Part One December 8, 2010 www.scioinspire.com

3. Defining Value Based Benefit Design

4. VBBD Overview

5. Lessons from Early Adopters

7. Defining Value Based Benefit Design (VBBD) “VBBD is using plan designs and incentives to drive member engagement for high value services which can improve adherence leading to improved health status and longer term medical savings. VBBD will also identify low value services and create the right disincentives to use those services which can be adjusted based on the clinical severity.” David Hom (President, Care Management Services, SCIOinspire Corp.)

9. Reduce payment errors

10. Recover complex overpayments

11. Improve effectiveness of care programs and ROI

12. Improve Product Design

13. Leverage technology and media

14. Better value-based benefit designs tie incentives with behavior change

15. Data Integration

16. Global Delivery

18. Began to productize for their book of business

19. Regional Health plan adoption for their own associates

20. Creating products for self insured and assessing for fully insured business

21. National health plans began product introductions

22. Products created for specific chronic conditions e.g., Diabetes

24. Evaluation Methodologies

25. Aligning to supply side (P4P, Tiered network)

26. Solution based sales

28. Designs need to align with physician incentives

29. Designs should coordinate with care management programs (e.g., Health coaching and Disease Management)

31. Systems updates take time and resources

32. VBBD needs to be integrated into all communications and outreach to the member

33. Need to integrate VBBD compliance goals with providers and other professionalsVBBD compliance goals require more detailed Clinical and Financial Reporting

34. Marcia Bondi Director, New Product Implementation Early adopter experience Background Internal Drivers of VBBD Product Packages Key Lessons and Conclusions

35. Background Highmark has offered Value-Based since 2007 Pitney-Bowes’ success prompted market entry Focused on prescription drug – 8 conditions Offered Rewards program since 2007 Employer funded rewards program focuses on all employees and rewards for engagement Packages: health risk assessment, lifestyle improvement, preventive, condition management and online tools

37. Implementation Lessons Key Lessons and Conclusions Key Conclusions Analyze data to determine what your population needs Savings must be built into the price for mass acceptance Target the right customers to steer them to the right products Communications need to be robust throughout the year supporting various media types and engaging based on health personality Take time to design, build your product continuum and implement in phases Ensure legacy systems are compatible Establish evidence-based guidelines -takes time to define Perform segmentation on your population to develop the right messaging Ensure portal is friendly and engages, provides tools, is educational and provides benefit summary and status of protocols

38. Barbara Christensen Chief Sales and Marketing Officer Early adopter experience Background and Internal Drivers Goals Tiered Structure Lessons Conclusions

39. Drivers Internal Driver: The Health Leadership Task Force Commissioned by the Portland business community in the summer 2008 Goal: Develop solutions and actions to keep health care costs and premium increases closer to the CPI Sponsors: Major health systems and health plans Build on Oregon Health Plan history of collaboration

40. Value-Based Benefit Design Goals Create a culture of health Support, prevention, and health maintenance Reduce financial barriers to the management of chronic care Reduce the use of nationally-recognized (Wennberg/Fisher) care that, for a population, is driven by provider-preference or supply rather than medical evidence Implement benefit design that encourages the most effective care with more appropriate incentives Achieve a 10% reduction in premium relative to a comparable open option plan Engage employers and employees in discussing plan design in a new way: drives innovation for early adopters

41. Design Features: Three Tiers PREFERENCE/SUPPLY SENSITIVE SERVICES THE “USUAL” STUFF DESIGNED TO BETTER MANAGE CHRONICS

42. Design Features: Tier 1 - Designed to better manage chronics No deductibles & zero or minimal co-pays Preventive health & wellness services Screening exams Routine immunizations Nutritional counseling Smoking deterrent medications Chronic care management (Depression, CHF, CAD, Diabetes, COPD, Asthma) Generic Drugs Condition-specific labs/imaging/tests Primary care office visits PREFERENCE/SUPPLY SENSITIVE SERVICES THE “USUAL” STUFF DESIGNED TO BETTER MANAGE CHRONICS

43. Design Features: Tier 2 - The “usual” stuff Medical services subject to the standard deductibles/co-insurance/out-of-pocket maximums Inpatient services X-ray Lab Maternity services DME Outpatient surgery & services Home health PREFERENCE/SUPPLY SENSITIVE SERVICES THE “USUAL” STUFF DESIGNED TO BETTER MANAGE CHRONICS

44. Design Features: Tier 3 - Preference/Supply sensitive services Preference/Supply sensitive treatments (18.4% all expenses) Separate deductible Higher co-insurance Separate out-of-pocket maximum Preference/Supply sensitive treatments Upper GI endoscopy X Nuclear cardiology Spine procedures for pain X Knee replacement X Knee Arthroscopy X Hip replacement X Shoulder surgery X Hysterectomy Emergency room Visits Coronary stents and angioplasty Coronary artery bypass surgery High tech imaging (CT, PET, MRI) X PREFERENCE/SUPPLY SENSITIVE SERVICES Our Customer: 6000 members X = Additional Cost Tier $500 co-pay in addition to hospital & outpatient co-pays Imaging $100 THE “USUAL” STUFF DESIGNED TO BETTER MANAGE CHRONICS

45. Implementation Lessons Preference sensitive is lousy consumer language: customer used “additional cost tier” For shelf product we have used “select value” and “value level 1,2,3” Allow customer to pick among treatment categories but no exception on how the category is defined by codes. No exception panel if someone really needs the treatment in a category. Claims payment depends on correct coding by providers Decision tools important so consumer can learn treatment options Health Risk Assessment useful in finding chronic care members early We anticipate uptick in member appeals Employer, member and provider education is key Important to keep both tiers 1 and 3 to achieve price point Important to keep nationally recognized list in tier 3

46. Key Conclusions Decision tools important: provider usage/endorsement best Employers philosophically get it but prefer to not deal with noise and individual that needs a treatment category Will not be mainstream soon Great innovation discussion

47. Interactive Q&A Session Please use the messenger on your screen to submit your questions

48. © 2010 SCIOinspire Corp. Contact Us Annie Welsch Email: marketing@scioinspire.com SCIOinspire Corp. 220 Farmington Ave, Suite 4 Farmington, CT 06032 Phone: 1.412.278.5800 Fax: 1.412.278.5810 www.scioinspire.com