Collaborating To Transform Health Care

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2 2 AETNA ALIGNED CARE SOLUTIONS OVERVIEW Collaborating To Transform Health Care Aetna Accountable Care Solutions

3 The Market is Demanding More Value And is Willing to Shift Buying Decisions to Get It Economic Conditions Rising Costs Absenteeism & Presenteeism Globalization Quotes from plan sponsors: We want to reduce our annual healthcare costs by 15%... Willing to exchange access and choice for affordability Discounts alone are not sustainable...we need improved unit costs Where do you have innovative models in place with providers that?

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5 Hospital Finance Challenge Spending Reductions Will Break Traditional Business Model 140% 130% 120% 110% 100% 90% 80% Aggregate Hospital Payment-to-cost Ratios for Private Payers, Medicare, and Medicaid, Private Payer Breakeven Medicare Medicaid (1) Traditional hospital cost shift increases expense to insurers and employers to pay for losses on governmental programs. 70% % 38.7% 35.2% Distribution of Hospital Cost by Payer Type (% of Total Cost) % 38.3% 34.6% 16.1% 12.8% 9.6% 6.1% 6.0% 5.1% 5.8% 1.7% 2.7% 2.8% 1.4% 2.1% Decreasing employer/ insurer volume and increasing governmental volume end traditional cost shift. Health care reform accelerates this trend. Private Payer Medicare Medicaid Other Government Uncompensated Care(2) Non-patient(3) Hospitals who do not prepare for health care s fiscal cliff may not survive Source: Avalere Health analysis of American Hospital Association Annual Survey data, 2010, for community hospitals. (1)Includes Medicaid Disproportionate Share payments. (2)Uncompensated care represents bad debt expense and charity care, at cost. (3)Non-patient represents costs for cafeterias, parking lots, gift shops and other non-patient care operating services and are not attributed to any one payer. 5

6 Tiered Networks An Emerging Standard One of many strategies increasingly sought after and encouraged by payers 100% Base Aetna Network 100% Some customers still demand maximum access This is the most costly, least managed option 95% Quality Designation Network 60% Providers meet set of defined quality standards Consistent methodology across all geographies Appeals to multi-location employers 1st step for customers looking to improve quality & cost 90% Low Cost Networks 40% One-off network designs based on local market opportunities (clinical integration, contracting, other) Steerage to High Value Network physicians only Includes benefit changes to achieve 10% savings 85% ACO 25% Results dependent on ability to produce savings, provide superior customer experience & quality Tiered Networks may be used w/aco at Tier 1 Quality and convenience strengthened through care management and unique technology May include private label health plan product 6 AETNA ALIGNED CARE SOLUTIONS OVERVIEW

7 Provider Economics Providers are looking for margin and additional membership to close the future earnings gaps Current state Future state w/o a VBC Strategy Investments made to redesign delivery model 1 Future performance gap Operating Margin Goal Value creation Reduced earnings gap 2012 Operating Earnings 2017 Earnings without Strategic Transformation Invest in New VBC Capabilities Clinical Efficiency Improvement Clinical Integration/ HPN Operating Cost Improvement Risk/Gain Shared Savings Additional membership- Covered Lives Providers are acquiring other providers and participating in value based care to close the earnings gap Notes: 1. A cumulative investment is made throughout the transformation 2. Illustrative, not drawn to scale

8 Spectrum of Payer/Provider collaboration As collaboration increases, relationships with the leading organizer of care delivery in a market moves toward true partnership resulting in a durable competitive advantage Enablement Pay for Performance (P4P) Bonus for quality metrics No risk sharing Patient Centered Medical Home (PCMH) Bonus for cost and quality performance Typically no downside risk May include sharing of information or embedded CM nurse Global & Episodic Payments Includes capitation, bundled payments & attribution deals Typically includes downside risk Includes greater resource investment in the collaboration CMS Programs & MA Collaborations Product Provider branded insurance products Exchanges unit cost for steerage via benefit plan design Provides HITenabled services to manage all types of risk Services could include a Stop Loss offering to assist w risk mgt. Could include a JV or TPA if owning a plan is a critical objective for the ACO Broker Relationship Partner 8

9 Introducing Aetna Accountable Care Solutions: Programs for Success in a Post Reform World Hospitals must become more integrated with a focus on population management, efficiency, and effectiveness Drive Medicare and Medicaid programs toward profitability via population based medicine and governmental payment innovation Become recognized leader in commercial marketplace for efficient, effective, convenient care delivery Diversify sources of profit through private label health plans, clinical research, and innovations Doctors, hospitals, and patients must fundamentally change what they do and how they do it Clinical integration for optimized workflows Technology that innovatively reduces cost, increases quality, improves convenience and access Care Management programs which empower the doctor patient relationship across populations and care continuum Relentless focus on prevention, early detection, outcomes 9

10 10 AETNA ALIGNED CARE SOLUTIONS OVERVIEW Benefits to Providers: Ways Health Systems, Medical Groups and IPAs Can Benefit from Collaborating with Aetna Increase patient volume through steerage (e.g., private label, branded networks, transparency tools) Shared savings (increased margin) on: Current patients (all commercial patients, Medicare, Medicaid) Net new patients Self insured employer Reduced cost for your health systems, self funded employees Access to national Aetna Network facilitating direct to employer sale of ACO models to local employers Increased revenue via Medicare risk adjustment (e.g., HCC coding) Enable virtual integration of physician network vs. capital intensive employment Revenue diversification (i.e., reduced dependency on one dominant payer) Share in topline - premium revenue and percent of premium savings Enhanced profitability for all case rate based reimbursement (e.g., Medicare FFS, Commercial, Medicaid)

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12 Three models of collaboration (w/ many combinations and permutations) A Model Enhanced Clinical Capabilities All Payer Health IT Designed for ACOs Description Enable sharing of clinical, financial & administrative data via clinical data sharing Apply >2K clinical rules and rule based quality measures to deliver actionable information as doctors take care of patients in real time Stratify entire patient population by risk, track compliance with evidence base Assist with workflow redesign, practice optimization & business alignment to achieve clinical integration & maximize care team productivity B Population-Specific Collaboration (e.g., Medicare Advantage) Utilize case management staff and programs (e.g., end of life) to assist transition between hospital and physician practices Optimize revenue through appropriate Medicare risk severity coding Access actionable clinical data, analytics, & reporting on patient population through provided technology C Private Label Health Plan (Full Transparency) Use of Aetna insurance license and expertise (e.g., actuarial) to enable private label/co-branded health plan offering and manage risk Leverage Aetna scale/operations claims processing, customer service, call center, & care management (e.g., staff, programs, technology)

13 Aetna Medicare Collaboration Model Care Management Drives Incremental Value For Physicians, Hospitals, and Patient Financial Gain The Aetna Medicare Collaboration Model for Medicare Advantage is a frequent starting point in creating an ACO. This model includes three components for aligned incentives and resources. Medicare Risk Adjustment The Risk Adjustment provides the opportunity for enhanced reimbursement for management of Aetna Medicare patients with chronic conditions, which requires more time and effort Quality Measures The Quality Measures provide the opportunity for enhanced reimbursement for achieving defined quality measures for an Aetna Medicare patient population. Collaborative Care Management Collaborative Care Management provides dedicated, funded Aetna resources for the management of an Aetna Medicare patient population

14 Population Health Enablement: Aetna and NovaHealth Collaboration Results since % fewer inpatient hospital days* 45% percent fewer hospital admissions* 56% fewer readmissions* Impact reported in % lower PMPM costs for Aetna Medicare Advantage members ** HealthAffairs September 2012 * Compared to unmanaged Medicare populations statewide ** Compared to other Aetna Medicare Advantage members 14

15 A bold alliance delivering unparalleled health care expertise and value. Nationally Recognized health care system 160 years of experience and expertise Unparalleled Expertise and Value Local focus and advanced technology Broad, national network Broad access to cost-effective, quality care Significant Unit cost reduction Market-leading administrative costs Lower costs and premiums for employers and members Locally-delivered clinical programs Locally-delivered clinical programs Care Engine technology Extensive Wellness Capabilities and industry leading member tools Healthier members through enhanced, coordinated care Healthier employees through Premier Wellness Services and engagement opportunities = Aligned incentives for improved health, sustained cost savings through 50/50 joint venture

16 Attributes for Inova s Health Plan Partner Common vision/mutual goals and objectives Fiscally sound Multi-year track record of high level operational performance High customer satisfaction & retention Opportunity/capacity for scale in management & operations State of the art data & information systems NCQA and/or URAC quality designation Innovator in physician integration Experience in Commercial, Medicare & Medicaid Agile able to adapt and change quickly Willingness to share insurance and business risk

17 Healthagen Ecosystem

18 Medicity Leading HIE-powered solution Connects more than 800 hospitals and 250,000 end users Secure data exchange with other providers and systems Interoperability of electronic health records Secure data exchange with other providers and systems Fulfillment of functionality gaps within existing technology

19 ActiveHealth Management Integrates with HIE to aggregate patient data Analyzes all patient data against the latest evidence-based medicine Stratifies risk and identifies population trends Evaluates quality measures and compares to benchmark Customizes quality metrics Creates outreach programs targeting patients with specific conditions Connects all care team members in one workflow

20 Clinical view: Integrated clinical-claim data 20

21 itriage Change behavior by putting relevant, concise and actionable content in members hands Leads to improved, more educated decisions Positively impacts non-urgent ER visits and out-of-network care Consistently ranked in top 10 health and fitness apps

22 InvolveCare Problem: Caregiving is a lonely and isolating experience for employees with significant impact on personal health and professional productivity Solution: Create a collective experience that includes family, friends, and health care professionals to coordinate activities Appointment setting and audio recording Discounts on common care items Picture sharing and comments 24/7 Nurse Line Shared rides and errands Medication adherence & Rx refills Influence where patients seek care

23 Aetna ACO Collaboration Summary Aetna is replacing the valueless competition business model in the health care industry with synergistic collaborations in preparation for ACO operations Aetna is deploying market leading programs which improves quality, reduces supply sensitive care, and optimizes the care management process Aetna population based management approaches use state of the art Health Information Technology to apply evidence based medicine to each and every care encounter Aetna collaborations offer delivery systems the ability to prosper financially while reducing the cost of care to employers and improving the convenience and care quality for individual members

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