whole health then v4

F O R W E L L P O I N T U S E O N L Y

1

Introducing… Whole HealthOriginal concept


2

Whole Health PPO – concept description

Whole Health PPO is plan that allows members to tailor their health coverage to their personal health style or situation, combining coverage for traditional and alternative health practices.

A high deductible plan combined with a free health style basket provides first dollar benefit for consumers.

The concept was intended to be tested in a small geographical area, where the network could be quickly assembled and managed, and utilization measured.


3

Overall concept – core intentions

One health style basket is included in the basic plan, with the cost covered through an increased deductible. Additional baskets can be added for $30 per month.

The plan’s intention is that the higher deductible for the PPO plan will cover the cost of the one “free” basket. The basket price was intentionally set at ~$30, a figure the focus groups found attractive and “worth it.”

The premium covers:High-deductible PPO + 1 health basket

+

Additional baskets can be added at $30 PMPM

+


4

Care baskets – core intentions

The core of the Whole Health offer are four baskets tailored to health styles and situations. Over time, more baskets will be developed.

The baskets were conceived with a compelling core benefit that was ‘free.’ This benefit was surrounded with thematically similar services provided as a covered benefit or as a discount. The mix of these services were intended to help utilization.


5

My Health portal – core intentions

The My Health portal is a personalized website with personal coverage and health information. It links to member-selected Whole Health wellness programs and to an on-line health store, where members can purchase prescriptions, supplements, vitamins and herbs.

The core intention behind the portal is to allow members to manage and interact with their coverage (to stay actively engaged in their health) and to frequent the online store where they can purchase prescriptions, herbs, vitamins, etc. The original idea was for the site to be the portal for all BCC members, not just for Whole Health, leveraging the development investment.


6

Concept specifics…


7

Plan details

The concept was meant to target consumers with a high level of engagement with their own health. The “menu” items (or care baskets) were tested with consumers and subsequently refined.

The concept can be a model for many BCC offerings, and the original idea centered on the Power HealthFund as a good candidate for piloting the concept. In later stages, replicating the architecture and leveraging resources to ISG and possibly beyond was the goal.

The plan had four levels of coverage, with simple and logical differences in deductible, copay, co-insurance, out-of-pocket maximum and pharmacy benefit. The intention was for straightforward communication and easy-to-understand benefits.

The people who were the target for this plan were already involved in the activities covered by the plan, and would likely “do the math” in order to justify the plan. Therefore, clear and tangible benefits were important. Discounts were not seen in testing as a sufficient benefit on their own.

Initial pricing for the pilot was meant to be competitive with other high deductible plans. The medical and utilization experience data would help adjust baskets and pricing for the actual launch.


8

Basket details

The baskets were conceived to have a clear and compelling core benefit completely covered, surrounded by related services provided with limits or at a discount. The additional services raise the perceived value of the basket, while avoiding adverse selection. As people are already spending money on many of these activities (one estimate showed this spending to be ~$34 Billion), the increased baskets would enhance WP revenues.

The core benefits of each basket are currently popular health-related activities. The additional basket elements are to complement the core, making the overall appeal of the basket stronger.

New baskets will be developed as new activities become popular, and as experience data became available.

The baskets or bundling of benefits are key to managing the risk of the plan. However, the value of the experience data will be beneficial to all WP plans, and might allow for lower margins on some benefits.


9

My Health portal – intentions of basic portal functions

1 2

3

4

My Health RecordsCoverage, health history, reminders for appointments and contacts

Simplifies the ongoing management of healthcare activities, offloading calls to BCC.

Health StoreOn-line source for health and wellness products. This helps drive traffic to the site, while helping to increase utilization of PrecisionRx.NewsPersonalized medical news scours the web for relevant stories, and help bring members back to the website.My Expenses

Tracking of expenses, payments and deductibles make ongoing account management simpler, offloading calls to BCC.


10

My Health portal – details

There is a high correlation between the target market for Whole Health and online research regarding health issues. For this reason, the website – if it contains rich and useful information – will be one of the key channels through which members interact with BCC and their health information. The key information for the site was found to be plan management (timely enrollment, provider listings, claims tracking, levels of deductible, FSA status, health history and resume), tailored health news and information (as news to healthy individuals, and as disease management information to members with chronic or acute conditions).

With a “critical mass” of content, the retail part of the site can capitalize through convenient one-click ordering of prescriptions, vitamins, herbs and other health-related products and services etc.


11

Original rollout plan


12

Phase 1 Goal

To enhance existing offerings with insights from the consumer experience project, while gaining insights on consumer ‘appetite’ for the broader health related concept. The ambition at this stage is to design expanded and improved coverage offerings while leveraging existing resources.

By selecting existing offerings (e.g.Power Health Fund, Precision Rx), we can achieve quick wins and grow the concept quickly.


13

Phase 1: integrate existing piecesWellPoint Benefits

My HealthExperience Portal

Wellness Promotion ProgramsWhole Health PPO

• Offer tailorable, personalized interactions

• Shift and channel spending to Precision Rx

• Capture a portion of CAM spend

• Facilitate avoidance of hazardous drug interactions

• Attract new members

• Capture a portion of out of pocket health expenditures

• Build extended network (ASHN+)

• Augment and accelerate appeal of existing products (Power HealthFund)

• Integrate existing services


14

Phase 1: integrate existing piecesMember Benefits


Whole Health PPO

• Personalized and simplified interactions

• Reliable information on health concerns and coverage

• Convenience of shopping through one channel for drugs and CAM

• Guidance on herbs and supplement choices

• Drug interaction notification

• Reduce out of pocket expenses for non-traditional health related activities


15

Phase 2 Goal

To gain regulatory approval and extend the concept to other groups within BCC while augmenting the consumer offer through increasing coverage and available services. The ambition at this stage is to gain significantly greater share of member’s health spending.


16

Phase 2: create platformWellPoint Benefits


Whole Health PPO

• Increase interactions with members

• Proactively push information to members

• Reduce call center loads• Expand CAM and DME

offerings• Collection of herb and

supplement data

• Implement new care baskets to attract additional potential members

• Extend network • Capture actuarial data on non-

traditional health activities• Extend product to ISG


17

Phase 2: create platformMember Benefits


Whole Health PPO

• Reliable breaking news and information pertinent to individual health concerns and interests

• Link to FSA/HRA accounts (ISG) and FSA tracker and alerts

• Expanded information on PPO providers (through HealthScope)

• Expanded non-traditional coverage and discounts with new and refined care baskets

• Benefits enjoyed by ISG as well as Large Group members


18

Phase 3 Goal

To open the platform to other groups and regions, while continuing to extend the consumer offer and make the provider offer compelling. The ambition at this stage is to leverage the platform and architecture throughout WellPoint to achieve improved margins and enhanced member satisfaction.


19

Phase 3: extend platformWellPoint Benefits


Whole Health PPO

• Extend website across WP, other regions and products

• Support and foster WellPoint’s relationship with providers

• Expedited transactions with My Health debit/credit and stored value cards

• Potentially lowering medical expenses

• Utilize actuarial data to refine care basket proposition and offer new ones

• Potential licensing or network renting opportunity


20

Phase 3: extend platformMember Benefits


Whole Health PPO

• Seamless integration of health information and health spending

• Additional baskets provide a broader array of choices for coverage of non-traditional health activities


21

Appendix


22

Phase 2 research overview


23

Phase 2 research

Goal:

To gather insured (individual & group), uninsured customers’ and breast cancer survivors’ reactions to the Whole Health product concept (n=20).

Objectives:

• Assess consumers’ reactions to the basic concept. Questions explored how consumers’ attitudes and behaviors influence their interest in the concept;

• Determine how compelling the Balanced Meal concept, web portal, and breast cancer components are terms of value to consumers versus their current healthcare coverage;

• Explore consumers’ receptivity to each of the four traditional healthcare coverage options and six care basket choices;

• Explore consumer price sensitivity as well as uncover potential ways to make the concept more financially attractive;

• Gather information on consumers’ perceptions of their overall health, associated health goals, and interest in and use of complementary and alternative healthcare options.


24

This behavioral health style model was used to screen participants for Phase 2 concept testing. It was intended as a starting point to map people’s approaches to dealing with their health in maintain and monitor modes.

Multi-focus

Single focus

Primarily external motivators

Primarily internal motivators

Phase 2 research screening

StriverGoal oriented – e.g. wants to lose weight, or run a marathon

Water-treaderExperiences chronic health conditions such as asthma, or IBS

Active maintainerGenerally feels healthy and works to maintain this state

Challenged maintainerHas a difficult time keeping health indicators like weight, cholesterol or blood pressure at acceptable levels


25

Phase 2 research screening, continued

All participants:

• Had at least minimal interest in Complementary/Alternative medicine

• Where medium to high health information seekers

• Were comfortable being interview in English


26

Research methods: Phase 2

In-depth interviews

Insured (12)

Actual 12

Uninsured (4)

Actual 4

Breast cancer survivors (4)

Actual 4

Gender Age Income Race GeoWP

coverage

Male (6)

Female (6)

Male (2) 2

Female(2) 2

NA

25-36 (4) 4

37-49 (4) 4

50-60 (4) 4

Mixed

25-36 (3)

37-49 (1)

35K-55K (4) 4

56K-75K (4) 4

76K+ (4) 4

35K-55K (1) 2

56K-75 (2) 1

76K+ (1) 1

Mixed

Caucasian 9

Other 3

Mixed

Caucasian 3

Other 1

Yes (8) 8

No (4) 4

NA

So. Cal (6) 6

No. Cal (6) 6

So. Cal (2) 2

No. Cal (2) 2

25-36 (1) 3

37-49 (2) 1

50-60 (1) 0

35K-55K (1) 3

56K-75 (2) 1

76K+ (1) 0

Cauc. (2) 2

Other (2) 2

Yes (2) 2

No (2) 2

So. Cal (2) 2

No. Cal (2) 2

Goal: To understand consumer reactionsto the base components of the Whole Health concept.


27

35K-55K (1) 0

56K-75K (1) 1

76K+ (1) 2

35K-55K (1) 1

56K-75K (1) 1

76K+ (1) 1

Research methods: Phase 2

In-depth interviews

Active Maintainer (3)

Actual 3

ChallengedMaintainer (3) 3

Striver (3) 3

Water Treader (3) 3

Gender Age Income Race GeoWP

coverage

Male (1) 0

Female (2) 3

M (1) 2

F (2) 1

M (1) 2

F (2) 1

M (1) 2

F (2) 1

25-36 (1) 0

37-49 (1) 2

50-60 (1) 1

25-36 (1) 2

37-49 (1) 0

50-60 (1) 1

35K-55K (1) 0

56K-75K (1) 2

76K+ (1) 1

35K-55K (2) 1

56K-75K (1) 1

76K+ (1) 0

Cauc. (2) 2

Other (1) 1

Cauc. (2) 3

Other (1) 0

Yes:(1)grp1(1) ind. 1No (1) 1

Yes: (1)grp 1(1) ind. 1 No (1) 1

So. Cal (1) 1

No. Cal (2) 2

So. Cal (2) 2

No. Cal (1) 1

25-36 (1) 0

37-49 (2) 2

50-60 (1) 1

25-36 (1) 2

37-49 (1) 1

50-60 (1) 0

Cauc. (2) 3

Other (1) 0

Cauc. (2) 1

Other (1) 2

Yes: (1)grp 2(1) ind. 0No (1) 1

Yes: (1)grp 0(1) ind. 2No (1) 1

So. Cal (2) 2

No. Cal (1) 1

So. Cal (1) 1

No. Cal (2) 2

Goal: To understand insured consumer reactions, by behavior categories, to the base components of the Whole Health concept


28

Phase 2

Research findings: medical coverage options

Preferred coverage option across all participants (including uninsured):

Premium: 85% Preferred: 10% Standard: 0%Basic: 5%

Preferred coverage option across participants with health insurance only:

Premium: 76% Preferred: 12% Standard: 0%Basic: 5%

Preferred coverage option by type of current coverage:

Those with Group coverage:Premium: 100% Preferred: 0%Standard: 0%Basic: 0%

Those with Individual coverage:Premium: 66% Preferred: 22% Standard: 0%Basic: 11%


29

Phase 2

Research findings: medical coverage by behavioral category

PremiumActive Maintainers: 100% Challenged Maintainers: 33% Water Treaders: 66%Strivers: 100%Uninsured 100% Breast Cancer Survivors 100%Other 100%

PreferredActive Maintainers: 0% Challenged Maintainers: 33% Water Treaders: 33% Strivers: 0% Uninsured 0%Breast Cancer Survivors 0%Other 0%

StandardActive Maintainers: 0%Challenged Maintainers: 0%Water Treaders: 0%Strivers: 0%Uninsured 0%Breast Cancer Survivors 0%Other 0%

BasicActive Maintainers: 0%Challenged Maintainers: 33%Water Treaders: 0%Strivers: 0%Uninsured 0%Breast Cancer Survivors 0%Other 0%


30

Most to least liked (by rank)

1. Rejuvenation

2. Alternative (therapy)

3. Enhanced health

4. Integrative care

5. Elder caregiver support

6. Family support

Phase 2

Research findings: care basket preferences


31

Participant ranking of web portal components they would use most regularly**:

1. Automated Reminders (especially if they could be uploaded to a PDA)

2. Provider Ratings

3. Health Resume (doctor forms)

4. Automated Health History

5. Health Expense Tracking (for both pre and post-tax health expenses)

Overall, the web portal received 108 points out of a possible 140 total.

** Regularly was self-defined by each participant.

Phase 2

Research findings: web portal components


32

Breast cancer research participants:

• Liked the overall concept as it demonstrated an intuitive understanding of what breast cancer patients endure.

• Found the five steps and sub-points accurately captured the issues and questions that they had as breast cancer patients.

• Stated it is an informational resource they would have used, if it had been available at the time of their diagnosis.

• Suggested that the language be as positive and empowering as possible (e.g., change “coping with the bad news” to “coping with the news.”).

• Suggested that a sub-point be added to Step 2 called “Understanding your treatment plan, or something that reflects planning one’s course of treatment with the doctor.

• Stated the need to have this resources available via telephone as well as on-line.

Phase 2

Research findings: breast cancer support


33

High-level financials


34

Preliminary financial analysis

Key assumptions:

• Income tax = 40%• Premium increase = 5% per year• Broker commission = 5.60% (based on total BCC)• Discount rate = 12.50%• One time costs:

– Development costs = estimated at $4M (rounded up from the first year of PHF at $3.9M)

– Launch and marketing costs = estimated at $2M– Infrastructure costs = estimated at $1.5M

• Investment income = average 3% (from PHF)• Premiums = average of $250 PMPM (average of LG rates supplied)• Underwriting margin = average 12% (from PHF)

Using these assumptions, the concept would need 16,667 members to break-even


35

Preliminary financial analysisYear 2 Year 3 Year 4 Year 5 Year 6Year 1

Members

Growth rateMember months(assumes 1/1 enrollment)

Base revenue PMPM

Premium Increase

MCR

Premium Revenue

Claims Expense

U/W Margin

Broker commissions

U/W Margin after Broker

One time costs

Development

Launch

Total

Infrastructure costs

Total costs

Pretax Income

Income tax

Net Income

NPV

--

--

--

2,000

--

24,000

4,000

100%

48,000

7,000

75%

84,000

10,500

50%

126,000

13,125

25%

157,500

$250

--

88%

--

--

--

--

--

$4,000,000

$2,000,000

$6,000,000

$1,500,000

$7,500,000

($7,500,000)

($3,000,000)

($4,500,000)

$54,477

$250

--

88%

$6,000,000

$5,280,000

$720,000

$336,000

$384,000

--

--

--

--

--

$564,000

$225,600

$338,400

$262.50

5%

88%

$12,600,000

$11,088,000

$1,512,000

$705,600

$806,400

--

--

--

--

--

$1,184,400

$473,760

$710,640

$275.63

5%

88%

$23,152,500

$20,374,200

$2,778,300

$1,296,540

$1,481,760

--

--

--

--

--

$2,176,335

$870,534

$1,305,801

$289.41

5%

88%

$36,465,188

$32,089,365

$4,375,823

$2,042,051

$2,333,772

--

--

--

--

--

$3,427,728

$1,371,091

$2,056,637

$303.88

5%

88%

$47,860,559

$42,117,292

$5,743,267

$2,680,191

$3,063,076

--

--

--

--

--

$4,498,893

$1,799,557

$2,699,336


36

Concept details


37

Traditional coverage levelsSmall group

$500 deductible40% co-insurance up to out of pocket maximums of $7500 per person 4 provider visits per year for a $40 copay Full hospital coverageMyHealth™ web portal

$500 deductible30% co-insurance up to out of pocket maximums of $6000 per person 12 provider visits per year for a $30 copayPharmacy coverage (after a $250 deductible) Full hospital coverage MyHealth™ web portal

$250 deductible 20% co-insurance up to out of pocket maximums of $5000 per person Provider visits at $20/visit Full pharmacy coverage Full hospital coverage MyHealth™ web portal

$250 deductible 10% co-insurance up to out of pocket maximums of $4000 per person Provider visits at $10/visit Full pharmacy coverage Full hospital coverage MyHealth™ web portal

Individual

$5000 deductible30% co-insurance up to out of pocket maximums of $7500 per person4 provider visits per year for a $40 copayFull hospital coverageMyHealth™ web portal

$2500 deductible30% co-insurance up to out of pocket maximums of $6000 per person12 provider visits per year for a $30 copayPharmacy coverage (after a $250 deductible)Full hospital coverageMyHealth™ web portal

$1500 deductible30% co-insurance up to out of pocket maximums of $5000 per personProvider visits at $25/visitFull pharmacy coverageFull hospital coverageMyHealth™ web portal

$500 deductible30% co-insurance up to out of pocket maximums of $4000 per personProvider visits at $10/visitFull pharmacy coverageFull hospital coverageMyHealth™ web portal

Basic

Standard

Preferred

Premium


38

Potential pricing of Whole Health PPO for Individual

Traditional medical coverage

2 3 4

basic

standard

preferred

premium

$115

$150

$145

$205

$180

$175

$290

$235

$210

$205

1

$320

$265

$240

$350

$295

$380

Number of baskets selected


39

Potential pricing of Whole Health PPO for Small Group

Traditional medical coverage

Number of baskets selected

2 3 4

basic

standard

preferred

premium

$205

$245

$235

$285

$275

$265

$330

$315

$305

$295

1

$360

$345

$335

$390

$375

$420


40

Potential pricing of Whole Health PPO for Large Group

Southern CA: LA

Ranges from:

$268.14 - $238.77

Includes one basket

Northern CA: SF

Ranges from:

$344.21 - $306.15

Includes one basket


41

One IBM Plaza330 North Wabash AvenueSuite 1300Chicago IL 60611

312 443 0800 phone312 443 0567 fax

www.doblin.comDoblin Inc.

Thank you!

Access the Doblin client website at:

http://clientweb.doblin.com

username: WellPoint

password: innovate

whole health then v4

Business