Total Care Plan Joint development of a new and effective vehicle for delivering health benefits

1. Total Care PlanJoint development of a new and effective vehicle for delivering health benefits Tim Cappel, President, Humana of Ohio William Banks – VP, Revenue Cycle, St. Elizabeth

2. Project Selection & Purpose • Project Selection • The development of the Total Care Plan was selected as a unique opportunity to solve the problem of rising medical cost trends in a way that increases quality and preserves patient choice • Alignment • Both Humana and SEH stood to gain market share by developing a unique product in the market. • Both also stand to ‘re-develop’ an understanding about how to manage and market a limited network health plan. • Stakeholders • Humana and SEH are both major stakeholders • Every employer in No. KY is also a stakeholder, since they stand to gain as we learn to better manage medical trend.

3. Current Situation • Identifying the Root Causes or Improvement Opportunities • Medical cost trend statistics (Gr. Cincinnati/ No. KY market) • Key drivers – unit cost/ utilization/ mix change/ duplication • Identifying Final Root Causes • Utilization as THE actionable driver • St. E internal trend as proof that keeping care internal can help trend • Stakeholder Involvement • Humana as the keeper of data and actuaries who analyze • St. E as the keeper of local market knowledge and willing partner • Chamber of Commerce as catalyst to encourage local businesses to consider this option.

4. Solution Development • Method for Selecting Possible Solution(s) • To lower costs, we had three options to choose from: • More aggressive price negotiation, • Lowered benefit levels, • Design a system that reduced utilization of services • Final Solution Selection • Only option #3 above offered the promise of long term price and trend reduction • Offered a more limited access product alongside more traditional benefit plans • Shared expected savings with employees by lowering their payroll contribution • Benefits to Final Solution • Allowed those who didn’t want to switch the ability to stay with their current plan

5. Project Results • Sustainability • SEH has made a long-term commitment to this concept • To continue to attract buyers, the product must show approximately 10% savings vs. larger network offerings. • Applicability and Use By Other Organizations • The product was designed from the start to be available to any employer, fully insured or self funded. It requires no customization • Total Care Plan is a valuable precursor to ACO development. • Innovation • Previous efforts at trend management have failed because the care providers haven’t had incentive to reduce costs. The Total Care product represents a new approach to managing health care benefits in which each player brings their unique strengths and both are aligned around the common goal of medical cost trend reduction. • Results • The new product attracted 5,420 St. E members (49%) year 1 – now our largest offering • Humana estimates 7,500 members from all employers by 1/1/12 • Effectiveness • St. E overall medical trend (excluding high-cost cases 2011 vs. 2010 is -2.4%) • Admits (-5.8%), ER(-2.8%), OP svcs (-2.1%) all down • Within St. E, the HMO population showed significantly lower utilization rates in all areas – IP(-44%), OP(-31%), MD visits(-20%), Rx (-25%) • Validation • 54,830 member months of data (5,420 members in the HMO)