University of California

Union Coalition Health Program Bid Update

September 10, 2013

Prepared by Deloitte Consulting LLP2 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

2013 Medical Program Portfolio

Health Net Full (HMO)

Best Member Fit:Want providers not available in Blue & Gold network, but don’t need a non-network optionAgreeable to HMO model, PCP role, staying in medical groupAccept higher premium but want lower cost per service

Anthem PLUS (POS)

Best Member Fit:Want access to non-network providers, but accept PCP model for in-network careAccept higher premium but want fixed copays in-network

Anthem PPO

Best Member Fit:Want access to in & out of network providersWant direct access to all providers without PCP or medical group restrictionsAccept higher premium and cost per service

Health Net Blue & Gold (HMO)

Best Member Fit:Want lowest premium and cost per serviceAgreeable to HMO model, PCP role, staying in medical groupComfortable with smaller selection of providers

Anthem Lumenos PPO w/ HRA

Best Member Fit:Want lower premium without limiting access to providersAccept need to learn and manage plan; risk of incurring greater out of pocket costsSee opportunity to grow balance in health care reimbursement account for future use

PREMIUM Tier

Higher cost to enroll

VALUE TierLower cost to

enroll

Kaiser (HMO)

Best Member Fit:Want lowest premium and cost per serviceComfortable with getting care only within Kaiser system

Overlap in Plan Design & Accelerated Rate Increases in “Premium Tier” (Inclusion of high cost providers driving double digit rate increases in Premium Tier.)

Prepared by Deloitte Consulting LLP3 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Scope of Request for Proposals (RFP)5 Separate RFPs issued for the products noted below

Network HMO

Account-Based PPO

Rx Benefit Management

Wellness/DM

NEW OFFERRING: UC CARE

Prepared by Deloitte Consulting LLP4 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Medical P lanP rescription

DrugsBehavioral

HealthWellness

Disease/ Demand

ManagementMedical P lan

P rescription Drugs

Behavioral Health

WellnessDisease/ Demand

Management

Anthem P P O Integrated Integrated

Anthem P OS Integrated Integrated

Anthem

HRA-P P O

Anthem “Core”

Integrated Integrated HSA-P P O

Health Net Narrow Network

HMO

Integrated Integrated

Health Net Full Network

HMOIntegrated Integrated

WHA HMO Integrated Integrated WHA HMO

Kaiser HMO IntegratedIntegrated +

OptumHealth Overlay

Integrated Integrated Kaiser HMO IntegratedIntegrated +

OptumHealth Overlay

Integrated or Overlay

Integrated

2013 Prospective 2014

Care Support Care Support

OptumHealth Carve-out

StayWell Carve-out

UC Care Carve-out

OptumHealth Carve-out

Carve-out

Integrated or Carve-out

Integrated Integrated HRA-P P O

Integrated or Carve-out

Integrated or Carve-outNarrow or

Tiered Network

HMO

Example of Possible 2014 Portfolio*

Plans/program elements shaded in yellow are not subject to this bidding process

* Actual 2014 portfolio will not be known until proposals are received and evaluated and product costs are confirmed.

…….From January 24 Union Coalition Presentation

Prepared by Deloitte Consulting LLP5 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Disposition of Carve Outs

Benefit Carve-out? Rationale

Prescription Drugs No

Key PBMs declined to bid in deference to health plan relationships

Projected costs for two carve-out bidders did not offer clear superiority to offset risks and member disruption

Wellness Yes Fees substantially higher from medical plan bidders Interviews highlighted deficient priority/focus from medical plans

Disease Management

No

DM tends to be secondary to wellness for carve-out vendors; lacked unequivocal value differentiation

Structural challenges of carving out from HMO remain Trend toward ACO and patient-centered medical home may

undercut carve-out value in future

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Awarded Vendors

Benefit Awarded Vendors

Network HMO

Health Net

Health Net’s attributes made them a clear choice: in-place custom network, existing UCMC relationships, superior balance of rates and disruption

Health Savings-Model PPO

Blue Shield of California

Strong insured proposal and particularly forward-leaning strategic approach with high touch HSA Vendor

Wellness

Optum

Put forward a solid team and favorable cost baseline; advanced technology in place which is expected to be more engaging to membership than incumbent.

Health Risk Appraisal optional – not required to achieve incentive

Prepared by Deloitte Consulting LLP7 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Portfolio Change

- Sustainable Cost (For Members and UC)- Comprehensive Care- Distinct Value

2013 (8 plans)

2014 (6 plans)

Anthem PPOUC Care (Blue Shield )

Anthem POS

CoreCore

Anthem HRA-PPO Health Savings Plan (Blue Shield)

Health Net Blue & Gold HMO Health Net Blue & Gold HMO

Health Net Full Network HMO

Kaiser HMO Kaiser HMO

WHA HMO WHA HMO

Prepared by Deloitte Consulting LLP8 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

New Products

UC Care

Health Savings Plan

Prepared by Deloitte Consulting LLP9 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

UC Care: Network & Plan Design

• PPO plan that allows members the choice to see care from providers either in-network or out- of- network •Blue Shield of California – is the claims administrator and network provider•Members utilize the BlueCard network outside of California

Prepared by Deloitte Consulting LLP10 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

UC Care: Network & Plan Design

UC Medical Center Markets

Davis, Irvine, Los Angeles, San Francisco and San Diego

UC Select: All UC medical centers, provider groups, and affiliated providers

Blue Shield Preferred: Non-UC, Providers in the full Blue Shield Preferred (PPO) network; all services not available at UC

Non-UC Medical Center Markets

UCOP, Berkeley, Riverside, Santa Cruz, Santa Barbara and Merced

– UC Select: Blue Shield “UC select” providers

– Blue Shield Preferred: Providers in the full Blue Shield Preferred (PPO) network

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Blue Shield Health Savings PlanNew high deductible plan with a Health Savings Account (HSA)

Replaces the Anthem Lumenos high-deductible HRA-PPO and has similar

“out of pocket” cost as Lumenos

Blue Shield PPO + Health Savings Account

Blue Shield’s large * UC provides an initial contribution

Provider network offers * Member can also make contributions

a wide choice of doctors * No “use it or lose it” feature

and hospitals OR you can *Pay for health care with tax-free dollars

see out-of-network providers * HSA fund is owned by member

if you want to pay more.

Prepared by Deloitte Consulting LLP12 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Plan Choice Priorities

Doctor Dollars & Delivery

Specific physician, hospital, or least restricted choice

Monthly cost, fixed copay vs. cost exposure, savings option,

administrative ease

Find preferred doctor in best available benefit/value option

Find preferred plan type, select best available physician choice

Member Priority

Prepared by Deloitte Consulting LLP13 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Health Net Full Network – Possible Migration Paths

Health Net Full Network Blue & Gold

UC Care

HSA PPO

Kaiser

1/3 of HN Full Members aligned with Blue & Gold providers

Members who prioritize network HMO benefit, whose provider is not in UC Care Tier 1, and who are willing to change providers

Members who prioritize keeping current provider at highest available benefit level (Tiers 1/2)

Members aligned with UCMCs if UC Care rate < Blue & Gold rate

Members who prioritize keeping current provider at lowest available contribution rate

Members who see financial advantage in savings plan

Those in good health

Members who prioritize highest available benefit for lowest available cost, willing to change providers

Profile: Have made decision to pay more to keep current provider while keeping HMO benefits.

*

*

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Anthem PPO – Possible Migration Paths

Anthem PPOBlue & Gold

UC Care

HSA PPO

Kaiser

Members using UCMC/MG only if UC Care at higher price point and willing to accept restriction to network providers and primary medical group/PCP model

Members using UCMC/MG and other Tier 1 providers

Members who prioritize PPO benefits and whose provider is in Tier 2

Members who prioritize current provider relationship and provider is not in UC Care Tier 1 or 2

Members who see financial advantage in savings plan – generally higher income, good health, not near retirement age

Members who fundamentally rethink benefit priorities and opt for highest available benefit for lowest available cost, willing to change providers

Profile: Willing to pay highest premium for the most provider choice and fewest managed care applications (e.g., no PCP)

*

*

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Migration Path – Anthem PLUS

Anthem PLUSBlue & Gold

UC Care

HSA/HRA

Kaiser

Members using Blue & Gold providers that are not available in UC Care Tier 1, if willing to accept network-only providers in exchange for maintaining fixed copay

Members using UCMC/MG and other Tier 1 providers

Members whose provider is available in Tier 2 but not in Blue & Gold

Members who prioritize current provider relationship and provider is not in UC Care Tier 1 or 2, or B&G

Members who see financial advantage in savings plan – generally higher income, good health, not near retirement age

Members who fundamentally rethink benefit priorities and opt for highest available benefit for lowest available cost, willing to change providers

Profile: Accept PCP model, prefer fixed copays, but want option to go out-of-network. *

*

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Open Enrollment October 28 – November 26

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Wellness Program

NEW DIRECTION IN WELLNESS WITH NEW VENDOR – OPTUM HEALTH

Eligibility Incentive now available to Kaiser members

Spouses: no longer eligible for incentive but have access to Optum (and/or Kaiser) wellness resources (online tools, health coaching)

Incentive $75 Gift Card

Point System to earn Gift Card

Many UC and Vendor activities available to earn incentive

Health Assessment No longer required for Gift Card

Still available for members having interest in personal health status

UC Wellness Solution

Engaging Individuals. Inspiring Healthy Behaviors

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What We Do at OptumHealth

All as of 6/30/12, except where noted; *as of 3/31/12; **as of 12/31/2011

*

*

**

**

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University of California Wellness

Absolutely no sharing of individual data/information outside of Optum - UC Wellness priority is individual improvement •Optum is HIPAA Compliant•NO sharing of personal, identifiable information with medical plan•NO sharing of personal, identifiable information with UC•No penalties or surcharges for non-compliance of any kind•Participation is voluntary, rewarded and appreciated•Health assessment provides information to individuals who are interested in behavior change•Outreach to individuals who may benefit from coaching assistance•Refer individuals to options in medical plans who may have a greater sense of urgency for assistance

A shared common goal of healthy employees and their families

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Total Health Profile Health AssessmentNew approach to the way we think about health assessments —No more “HRAs”

INDIVIDUAL DATA/INFORMATION IS NOT SHARED OUTSIDE OF OPTUM

• Addresses well-being — emotional, social, career, financial, sleep, pain and mental health

• Uses more-comprehensive risk assessment to go beyond standard risks to identify individuals with a greater sense of urgency

• Produces immediate feedback as individuals participate with highly tailored results

• Enhances approach to behavior change

• Provides highly relevant messages and recommendations for action: assess goals, barriers and benefits to change; social networks; core values; and perceptions of health

For display purposes only, final subject to change.

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Prepared by Deloitte Consulting LLP22 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure22

University of California Wellness Coaching

• Inclusive Model: We offer telephonic and online support to all individuals regardless of risk level 39% of all weight loss occurs with those who have a BMI<30*

• Delivered by cross-trained coaches who provide a personalized and holistic approach 66% of completers achieve their goal; of those, nearly 51% achieve a secondary outcome as well*

Wellness Coaching Programs

• Tobacco Cessation

• Diabetes Lifestyle

• Heart Health Lifestyle

• Weight Management

• Stress

• Nutrition

• Exercise

Source: *Optum Book of Business results; **Optum Risk Reduction Survey, 2012 22

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UC Member Consumer Centric Coaching Modules

OptumHealth Wellness Coaching receives a 96% overall program satisfaction rate, 97% Coach satisfaction as able to answer my questions, and 87% recommendation rate

Weight Management214,000 total pounds lostAverage weight loss for losers is 8.7lbs

Quit Power39% quit smoking15% reduced tobacco intake by 50% or more (excludes quitters)

Nutrition57% reduced to less than 2 fatty food servingsAverage weight loss for losers is 5.7lbs

Exercise132 minutes of average increase in exercise minutesAverage weight loss for losers is 6.6lbs

Stress 45% of enrollees reduced stress

Heart Health63% reported a heart health lifestyle improvement38% lost weight

Diabetes Lifestyle35% better manage their condition through lifestyle changes Average weight loss for losers is 7.1lbs

Prepared by Deloitte Consulting LLP24 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure

Health Trackers

Action Plans

Incentives

Health Assessment

Nurses and Coaches:eSync Value Interface

Creating A Consumer Centric Supportive Environment

Health & Wellness Website

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Prepared by Deloitte Consulting LLP25 PRE-DECISIONAL INFORMATION – Confidential and Not Subject to Disclosure25

Healthy living is possible

We have a track record of helping people succeed because of how we approach improving health outcomes.

Our focus on (1) driving personal engagement, (2) guiding better

health decisions, and (3) delivering

personalized health improvement creates Health Ownership.

Here’s how we move people to sustainable health action …

Optum’s unique approach can help

Questions?