Alice Rosenblatt

1
Private Sector Initiatives to Control
Costs Presentation to Citizens Health Care
Working Group May 13, 2005

• Alice Rosenblatt
• Executive Vice President Chief Actuary,
  WellPoint

2
Agenda

• About WellPoint
• Product Innovation
• Network Design
• Health Care Management
• Pharmacy Management
• Leveraging Technology

3
About WellPoint

• Leading health benefits company in the nation
• Approximately 28 million medical members
• Blue plans in 13 states California, Colorado,
  Connecticut, Georgia, Indiana, Kentucky, Maine,
  Missouri, Nevada, New Hampshire, Ohio, Virginia
  and Wisconsin
• UniCare across the country, including significant
  presence in Illinois, Texas, and Massachusetts
• HealthLink in Missouri and six other states
  Arkansas, Illinois, Indiana, Iowa, Kentucky and
  West Virginia
• Major specialty businesses pharmacy, dental,
  vision, life/disability, behavioral health, EAP,
  workers compensation, state-sponsored
• Nations 2nd largest Medicare contractor
• Cover 1.8 million State Sponsored members
  (Medicaid, SCHIP, etc.)
• More than 38,000 associates

4
Product InnovationConsumer Driven Health Care
Five key elements comprise the
framework for the most common product offerings
Cost-share Funding Mechanisms
Product and Plan Design

• Typically a high-deductible PPO (1,500 - 4,000)
• 100 covered preventive care

• Health Reimbursement Account (HRA)
• Health Savings Account (HSA)
• Complemented by Flexible Spending Account (FSA)

Consumer-Centric Product
Consumer Decision Support Tools
Flexible Provider Network

• Deep and broad
• Choice-driven

• eHealth tools
• eService tools
• Provider directories
• Quality guidance

Technology Platform

• Web based front end
• Benefits integration framework

5
Product InnovationHealthcare Advisor

• User-friendly with context-consistent data and
  information
• Research more than 150 different medical
  conditions and procedures
• Compare hospital quality

6
Product InnovationHealthcare Advisor

• Clinical outcomes
• Patient safety
• Hospital reputation
• Market-specific studies
• Hospital comments

7
Product InnovationTonik

• Developed by and for the Young Invincibles

• Educates audience
• Offers low price points

• Unique package of benefits

8
Product InnovationBeneFits Plans for Small
Businesses

• Makes it easier for small businesses to offer
  coverage to their employees
• employee participation requirements reduced to
  60
• employer contribution reduced to 25 or 50
• coverage options for part-time employees
• 84 of groups buying BeneFits plans to date were
  previously uninsured

9
Network DesignProvider Contracting
10
Network DesignInformation-Based Networks
Centers of Excellence

• Narrow network for high cost procedures
• CABG
• Transplant
• Bariatric Surgery

Hospitals
Subspecialists
Segmented Networks
Specialists

• Smaller, more efficient quality networks
• Select HMO
• Select PPO

Primary Care Physicians
11
Network DesignP4P Programs at WellPoint
Partnerships with physicians and hospitals on
quality incentive programs that include PPO and
HMO products, and Medicaid
PCP Programs
Specialist Programs
Hospital Programs
Focused on primary care physicians. Typical major
components
Focused on specialty care physicians. Early
initiatives in Ob/Gyn, Cardiology, Orthopedics.
Measures similar to PCP programs
Focused on acute care hospital, typically full
service facilities. Hospital programs typically
have the following components

• Clinical Outcomes
• Evidence-based medical procedures
• Generic Prescribing Rates
• Technology streamlined administrative processes
• Patient Satisfaction

• Clinical Outcomes
• Evidence-based medical procedures
• Generic Prescribing Rates
• Technology streamlined administrative processes
• Patient Satisfaction

• Patient Safety
• Clinical Outcomes
• Patient Satisfaction

12
Health Care Management
At Risk with Unhealthy Lifestyles Single Factor -
Multi-Factor
Chronically Ill / Complex Conditions Early Stage
- Late Stage
Healthy, Wanting to Remain Healthy Wellness -
Fitness
Manage Disease
Improve Health
Sustain Wellness
13
Health Care ManagementClinically Appropriate,
Cost-Effective Imaging

• Pre-Authorization of Advanced Imaging
• MRI, CT, PET and Nuclear Stress
• Redirects Imaging to most clinically appropriate
  modality
• Steerage from higher cost to lower cost site of
  service, e.g., benefit designs in consumer
  directed plans
• Criteria developed in collaboration with American
  College of Radiology

13
14
Health Care ManagementDisease Management Programs

• Midwest Care Counselor
• Prospective controlled study of 12,000 members
• Control group 4,134
• Intervention group 7,797
• Multiple chronic diseases Average cost per year
  24,000
• Savings of 14 or 3,500 per year for members
  enrolled in program
• ROI of 41
• Health Management Corporation (HMC)
• ASO groups who purchased DM (study group of
  76,000 members) and those who did not (control)
• Chronic diseases (diabetes, asthma, coronary
  artery disease)
• Savings of 11 for those enrolled in the program
• ROI of 2.81

Sources Cousins, Liu, Disease Management, Vol.
6, 2003. Harvard Blue Works Award, Program
Description.
15
Health Care ManagementBehavioral Health

• Follow-up after psychiatric hospitalization
• Health management program for depression and
  co-existing illness
• Postpartum depression screening and education
  program
• Anti-depressant medication compliance in
  cooperation with PBM

16
Pharmacy Management

• 4th largest PBM
• Over 336M scripts in 2004
• Full spectrum of PBM services

• Innovative programs to manage drug trend
• Clinical programs outcomes-focused,
  patient-centric

17
Leveraging Technology

• Process around 600 million medical and pharmacy
  claims per year
• Benefits, eligibility claims status inquiries
  account for about 85 of customer service call
  volume

MEMBER
MEMBERSHIP SERVICES
EMPLOYER
BROKER / AGENT
PROVIDER
Constituents
IVR
WEB
EMAIL
FAX
POSTAL
EDI
PHONE
Contact Channels
Contact Point

• Member Self-service
• Employer Access
• AgentFinder / AgentConnect
• Provider Finder

• Auto-adjudication rates
• Standard plan designs
• Enhanced workflow management
• Associate training

• Provider connectivity (EDI)
• Consistent claim edits
• Provider education / training

18
Leveraging TechnologyPhysician Quality
Technology Initiative
Move from basic administrative services to
transactions that support quality care
GOAL
Basic Connectivity
Claims Processes
Medical Management
Clinical Support
Eligibility Member Benefits Claim
Status Referrals Claim Submission Re-Credentialing
Provider Directory Provider Change
Preprocessing Claims Remittance Allowance
Inquiry Claims Correction Plan AR Aging
ER Notifications Formulary Management Alerts
and Reminders Auto-Adjudication Pre-Certification
Disease Management
E-prescribing Outcomes Research Electronic Med
Record Virtual Visits
19
Leveraging TechnologyPhysician Quality
Technology Initiative
Prescription Improvement Package
AFTER
BEFORE

• High Handwriting Risk
• No Drug Utilization Review
• No Formulary Check

• No Handwriting Risk
• Full Drug Utilization Review
• Formulary Check Completed

20
Leveraging TechnologyCalRHIO

• WellPoint Foundation made 1M grant to support
  California Regional Health Information
  Organization
• CalRHIO Goal build a statewide data exchange
• Support use of IT and creation of a secure health
  information data exchange system to improve
  safety, quality, and efficiency of health care
• Enable healthcare providers to use IT to securely
  exchange vital patient information
• Identify legislation and regulation necessary for
  statewide data sharing
• Ensure Californias data exchange projects are
  consistent with national technology platforms and
  networks