MODERNIZE YOUR HEALTH PLAN BY INCREASING INDIVIDUAL HEALTH OWNERSHIP

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1 MODERNIZE YOUR HEALTH PLAN BY INCREASING INDIVIDUAL HEALTH OWNERSHIP Lancaster County Business Group on Health, Forecast Breakfast, September 25, 2014

2 Impact of ACA & Pharmacy on UHC Clients Financial: a. Community Rating b. Transitional Relief c. Taxes and Fees Plan Designs: a. Metallic Plans (2-50) b. Private Exchange Models (51 5,000+) c. Trends: Limited Copayments (Catalyst) Copayments after HSA deductibles Pharmacy: a. Combined Out of Pocket Maximums b. Specialty Pharmacy i. Hepatitis C & Compounded Medications d. Pharmacy Trend 2 Proprietary information of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.

3 Why INDIVIDUAL HEALTH OWNERSHIP is important The current health care situation in the U.S. is unsustainable. Driving sustained reduction in costs = increasing Individual Health Ownership. 52% Estimated U.S. population expected to have diabetes/ pre-diabetes by % Increase in family coverage costs since % Consumer health care decisions that are less than optimal 4 50% Patients who leave their doctor s appointment not knowing what they were told or what they are supposed to do 5 100,000 Number of deaths every year linked to poor health literacy 6 41% Consumer health care decisions 50% that are less than Patients who leave their optimal doctor s 4 appointment not knowing what they were told or what they are supposed to do 50-75% 5 Costs driven by lifestyle decisions 3 50% Medications not taken as prescribed % Employer health care costs due to avoidable diseases The time to act is now. But what does this mean for you and where do you start? Kaiser/HRET Survey of Employer Health Benefits. 2 UnitedHealth Center for Health Reform & Modernization study The United States of Diabetes: Challenges and Opportunities in the Decade Ahead. 3 Centers for Disease Control, Healthy Communities, 4,8 UnitedHealthcare Consumer Activation Index &6 AHIP Coverage Annals of Internal Medicine. Interventions to Improve Adherence to Self-administered Medications for Chronic Diseases in the United States: A Systematic Review. Dec , Vol 157, No

4 Increasing individual health ownership Empower your workforce to make confident health decisions Engage them with a single source for a simple, personalized service and clinical experience Optimize health outcomes and improve cost results Population Health & Productivity Population Easy Health access & to Engagement: programs, Easy customized access programs, outreach customized and care advocacy outreach for and improved customer productivity service for improved productivity and and outcomes Personalized Experience: Everyday health and wellness tools, proactive support and incentives that are convenient and tailored to specific needs Make the experience fit my life Health Plan Design & Cost-Sharing: Concise information that explains plan choices, benefits, and impacts of different options Network Design & Transparency: Guidance to choose doctors and facilities based on quality and efficiency Make smart health care choices Help me manage my health Choose the best plan for me Help me learn more about health care Driving simple, personal and optimal care while improving health and productivity 4

5 Depending on group intelligence, Client Position may/may not be documented MODERNIZATION FRAMEWORK Pinpointing areas to optimize Health Ownership Plan Benefits Better Decisions Client Position CORE PLAN DESIGN COST-SHARE AND FUNDING (REFORM METALLIC PLANS) NETWORK DESIGN UHC Book Norm QUALITY AND TRANSPARENCY CDHP <25% Mainly PPO or POS type designs >90% actuarial value Gold/Platinum Broad network Limited OON cost share myuhc network directory Basic messaging Client 2014 INITIATION AWARENESS ACCOUNTABILITY OWNERSHIP CDHP 25-50% More HSA enrollment 90-80% actuarial value Silver/Gold High OON cost share Participation in value-based reimbursement models Target messaging Cost transparency emphasis CDHP 50%+ HSA or dynamic account <80% with rewards integration Silver level designs CDHP 75%+ HSA or dynamic account <70% with rewards integration Silver and Bronze Narrow and/or gatekeeper market enrollment options Micro Network designs: ACOs, PCMHs, other Gatekeeper designs (embedded or plan option) Onsite clinics or other network augmentation (virtual/tele) Tiered cost sharing (Premium, place of service) Centers of Excellence (COE) incentives COE coverage mandates Additional resources for high cost conditions Defined Contribution Population Health CLINICAL RESOURCES/ Rx, SPECIALTY INTEGRATION REWARDS/ WELLNESS STRATEGY Initial deployment of programs Variability evaluation Limited to none (e.g. health assessment reward <$200) Challenges/Health site Optimize fit to risk profile of the population Performance norm or better Medical Necessity Activity based rewards $300-$1000 Screening and coaching Or <50% engagement Total population management Value-based designs Seamless integration Outcomes-based and compliance Active vs. non-active impact >50% engagement Single experience synchronized Most health outcomes tied to a reward or plan design impact (including DC subsidy) Multi-year recognition / autonomy and mobility PERSONALIZED EXPERIENCE (Communications, Devices, Resources) Myuhc.com <30% overall Enrollment support / communications only Consumerism 101 Limited member support: tools and resources Culture of health Framing of decisions Multi-media / frequency Personalization through tools / devices Ongoing reinforcement Concierge models Segmentation 5

6 PLAN DESIGN & COST-SHARING Consumer-driven health (CDH) plans Consumer decisions improve with greater health ownership +7.1% more members over age 40 get preventive care +6.0% more members enroll in wellness coaching +4.6% more members use generic medications +3.1% more members use UnitedHealth Premium designated physicians Results based on UnitedHealthcare book of business results, UnitedHealthcare is the CDH industry leader with more than 44,000 customers and 5.6 million members.

7 NETWORK DESIGN & TRANSPARENCY Make smart health care choices Guidance to choose doctors based on quality and efficiency Be transparent I can check if a provider is in my network. I can see if a doctor meets quality and efficiency guidelines. I m able to make informed decisions and understand the costs. Resources Mobile and online physician search Member website as gateway to information Provider rating program Specialized networks for complex conditions Online cost estimator and management tools Online claims payment Save 65% of members choose a UnitedHealth Premium Tier 1 doctor, gaining 9.6% incremental savings Estimate $192M in cost estimates were evaluated by members using myhealthcare Cost Estimator before they made a health care decision Manage $6.4M in consumer out-of-pocket expenses were paid online in the first two months after the myclaims Manager bill pay function launched 7

8 NETWORK DESIGN & TRANSPARENCY Accountable Care Platform Nearly $28 billion of network spend is tied to our accountable care platform 1 Performance-based Programs Condition or Service Line Programs Accountable Care Programs Achieving specific METRICS Primary care incentives, Performance-based contracts Managing a specific CONDITION or SERVICE LINE Bundle/episode payments Service Specific Programs Managing ENTIRE POPULATION HEALTH Shared savings, Shared risk, Capitation (including ACO, PCMH) 32,000+ physicians 900+ medical groups 575+ hospitals 2,300+ physicians 25 ancillary providers 160+ hospitals 70,000+ physicians 550+ medical groups 90+ hospitals Increasing level of integration, financial risk and accountability 1 Deployment statistics for executed contracts as of July 2013, net of program overlap. 8 We have value-based engagement with more than 600 hospitals, 1,150 medical groups and 80,000 physicians participating in our Accountable Care Platform. 1 Proprietary information of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.

9 POPULATION HEALTH & PRODUCTIVITY Help me manage my health Easy access to programs, customized outreach and care advocacy for improved productivity and outcomes Open Doors I m anxious, but I know the care ahead of me. I m able to make informed decisions and understand the costs. Resources: New Advocate4Me TM service* 24-hour nurse and treatment decision support Nurse case and disease managers Support 97% of members are satisfied or more than satisfied in working with our case and disease management program nurses Connect 25% of members who call our 24-hour NurseLine SM service are referred and connected to an available health or wellness program I feel confident and ready. Action 68% of members are more likely to take action and close a medical management gap after they, and their doctor, receive a personalized HealtheNotes communication (based on 14.3M annual mailings) Programs for complex medical conditions Intervention and outreach communications *Limited availability at this time. 9

10 The Levers Features within each allow for progressive intensity of design Lever Savings Definitions Typical Savings* Max Savings* Core Plan Design Activation savings from CDH plans Up to 2% 4% Comments Based on UHG studies; excludes cost-share impact Typical savings: Slice CDH, or from slice to full replace HSA Cost Share Price elasticity Metallic reform alignment Defined contribution modeling Up to 4% Up to 10% Base on literature reviews and UHG studies Includes cost-share impact Network Design Quality and Transparency Clinical and Integration Strategies Wellness and Rewards Discount and steerage savings Narrowing and gatekeeper designs Up to 4% 7% Premium and Place of service COE Up to 4% 6% Traditional PHS packages DM, Chronic condition programs Rx integration Up to 2% 4% Savings from slowing down health risk migration (health continuum) Up to 2% 3% Typical savings: Narrow network, gatekeeper, medical necessity Includes plan design and steerage Typical savings: Premium and Place of Service tiering, COEs Measure the effectiveness and fit of packages Typical savings: Standard/Custom PHS + other clinical programs Internal and published studies Based on best practice wellness incentive designs including earnback The Experience No formal scoring Enabler to all other levers Multiplier Effect Necessary for successful implementation of any program * Reflects mature savings, and includes impact of member cost-share and payroll contributions (net paid basis) 10

11 PROVEN RESULTS: A Culture of Health Ownership UnitedHealth Group Cost Trends Industry reported: Comparative plans UnitedHealth Group net employer cost trend* 15% 10% 5% 0% Key plan milestones Trend performance Covered employees 5.4% 2005 CDHP full replacement (HRA and HSA) 14.0% 5.0% 11.4% 5.0% 7.0% 3.1% 8.3% 8.4% Unusual number of high cost claims 2009 Most employees in HSA Plan option UnitedHealth Personal Rewards & Custom Medical Management ,000 37,000 37,000 46,000 53,000 56,000 57,000 61,000 67, % 4.3% 6.2% 6.5% 5.9% 3.6% 0.5% 2012 Est 3.9% Employee cost share 30% 30% 31% 29% 27% 27% - full reward 34% - no reward UnitedHealth Group cost share 70% 70% 69% 71% 73% 66% to 73% Employee cost sharing creates a culture of health ownership, helping to encourage engagement and health improvement. 11

12 THE VALUE OF MODERNIZATION Is modernization worth it for the plan sponsor? INITIATION AWARENESS ACCOUNTABILITY OWNERSHIP MOVEMENT TOWARD OWNERSHIP OPPORTUNITY FOR IMPACT $9,310 Annual cost per year/per person Low Initiation No clinical programs; low RX integration Richness >90%; no CDHP Network: INN vs. OON tiered benefits; some COEs No rewards strategy N=30 Clients, (10 th pctle), 477k members 24% lower costs $7,080 Annual cost per year/per person Early Accountability Clinical suite of programs; Rx integrated 70% of the time Richness average of 77%; CDHP average of 68% Network: almost all have COEs Consequential incentives N=30 Clients, (90 th pctle), 1.3 million members *Annual Net Per Employee Per Year Costs 2012 experience: after cost share and adjusted for demos, geo mix and high cost claimants. 24% cost attributed to 12% for covered decrease and 12% for richness. 12

13 Getting Started So how do you get started? We ll guide you through the process. Leverage our experience and expertise to guide your strategy UNDERSTAND YOUR POPULATION. POSITION YOUR PLAN. EVALUATE YOUR CULTURE. 4 TAKE ACTION. The Numbers tell the Story. 13 Proprietary information of UnitedHealth Group. Do not distribute or reproduce without express permission of UnitedHealth Group.