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Aetna
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December 15, 2011
Mark Bertolini Chairman, CEO and President
Aetna’s Strategy for Success
13 AETNA INVESTOR CONFERENCE
Consumerism
in charge of their own
health care
What We Believe
Access and Affordability
Health Information Technology
Providers
Our strategy is designed to capitalize on the changing external environment
The Changing Environment
is a universal issue
Employers
helping people live
healthier lives
transforming the network model
demand more cost-effective
solutions
Source: PremierSource: Premier
14 AETNA INVESTOR CONFERENCE
What We Believe Access and Affordability
ACA = Affordable Care Act Photo: Bloomberg News
The ACA addresses access without providing for affordability
Deficit Reduction Efforts
Supreme Court
2012 Elections
Opportunity to improve the ACA
Currently implemented changes likely to remain
Employer sponsored insurance will continue
to thrive
The Changing Environment
15 AETNA INVESTOR CONFERENCE
Indemnity Medical Plans
Strong-form HMOs
Open Access Plans
Consumer Directed Health Plans
What We Believe Employers
Employers need more cost-effective solutions
Innovative Network Models
We are developing new products based on …
Tiered networks Narrow networks
Accountable Care Solutions
1990’s 2000’s 2012
The Changing Environment
16 AETNA INVESTOR CONFERENCE
What We Believe Consumers
Consumers will continue to bear higher health care cost increases
Sources: Milliman Medical Cost index 2007-2011: Average medical cost for a family of four shown.
Employees have borne half of the dollar increase in medical costs since 2007
The annual rate of increase in Employee costs has been almost 50% higher than Employer cost increases
$14,500
$19,393 +7.5%
+9.4%
+6.3%
CAGRs shown
The Changing Environment
17 AETNA INVESTOR CONFERENCE
What We Believe Providers
Accountable Care Organizations are the future business model for provider/plan collaboration
Less than one-third of US medical practices are truly
independent
The ACA and shifting economics are forcing providers to re-
evaluate their business models
Provider systems are increasingly institution-based
Source: “MGMA Physician Compensation and Production Survey Report”
0%
25%
50%
75%
100%
'02 '04 '06 '08 '10
Changing Hands Medical practice ownership
Physician-owned
Hospital-owned
Sources: MGMA and Wall Street Journal.
The Changing Environment
18 AETNA INVESTOR CONFERENCE
What We Believe Health Information Technology (HIT)
Today’s technologies enable a 360º view of the patient
The Changing Environment
19 AETNA INVESTOR CONFERENCE
What We Believe Health Information Technology (HIT)
Accountable Care
Solutions
Intellectual Property
Provider Meaningful Use
+ Consumer
Connectivity +
Incentive Alignment
= Paradigm
Shift Medical Membership
Consumers
The Changing Environment
27 AETNA INVESTOR CONFERENCE
Our Unique Capabilities Can Meet State and Local Needs
Positions Aetna as a solutions provider to address full set of State and Local needs
Unique and Configurable Aetna Capabilities
Advancing the Core
Medicare / Retirees Medicaid State Employees
Accountable Care Solutions ActiveHealth Medicity
iTriage Patient Centered Medical Home Care Management
28 AETNA INVESTOR CONFERENCE
Our Unique Capabilities Can Meet State and Local Needs
Positions Aetna as a solutions provider to address full set of State and Local needs
Unique and Configurable Aetna Capabilities
Advancing the Core
Medicare / Retirees Medicaid State Employees
Accountable Care Solutions ActiveHealth Medicity
iTriage Patient Centered Medical Home Care Management
North Carolina Patient Centered Medical Home
29 AETNA INVESTOR CONFERENCE
Our Unique Capabilities Can Meet State and Local Needs
Positions Aetna as a solutions provider to address full set of State and Local needs
Unique and Configurable Aetna Capabilities
Advancing the Core
Medicare / Retirees Medicaid State Employees
Accountable Care Solutions ActiveHealth Medicity
iTriage Patient Centered Medical Home Care Management
Carilion Clinic
67 AETNA INVESTOR CONFERENCE
Customer Experience: Enhanced for a Digital Age
Leveraging technology to redefine quality as convenience
Our new customer models target:
Installing cases in days, not weeks
Rate and product availability in minutes, not days
Online provider availability and scheduling
Online adjudication and payment estimation
Payment online, rather than by check or wire
Aetna’s consumer platform will be a competitive advantage in the changing environment
Commercial Insured
December 15, 2011
Charles E. Saunders, MD Head of Strategic Diversification
Accountable Care Solutions — Collaborating To Transform Health Care
86 AETNA INVESTOR CONFERENCE
Agenda
Accountable Care Solutions
Customer Testimonial
87 AETNA INVESTOR CONFERENCE
Consumerism
The Market is Demanding More Value
Access and Affordability
Health Information Technology
Providers Employers
Aetna believes Accountable Care Solutions will power the next transformative network model to help meet the needs
of the changing external environment
Source: PremierSource: Premier
Accountable Care Solutions
88 AETNA INVESTOR CONFERENCE
Rate Pressures are Forcing Providers to Re-evaluate the Network Model
100%
105%
110%
115%
120%Commercial HealthCare Cost Index
Medicare Health CareCost Index
Cost Shift Pressure
S&P Healthcare Economic Composite Index
Health Care Reform is forcing providers to re-evaluate their revenue and profit model
Source: S&P Healthcare Economic Composite Index
The growth in health care cost is ultimately
unsustainable
It is estimated that Medicare and Medicaid account for 55% of hospital revenues*
Commercial payors are unable to continue to
subsidize cost shifting
Accountable Care Solutions
* New York Times, July 4, 2011
89 AETNA INVESTOR CONFERENCE
Changing the provider focus from Volume to Value
Providers recognize the value offered through Accountable Care Solutions Collaborations
Volume Value
Provider revenues contingent on volume of care services provided
Re-aligned financial incentives create diversified revenue sources
Encourages additional capacity and unnecessary care
Improved cost structure and efficiency increases profitability
Denied claims, un-reimbursed admissions and other penalties as
payors manage utilization Quality improvement increases
performance-based reimbursement
Payors and providers as adversaries
Aligned incentives to provide appropriate care in the best setting
Accountable Care Solutions
90 AETNA INVESTOR CONFERENCE
We see Accountable Care as a Broad, Transformational Commercial Model
CMS Model Medicare only
Defined network Shared savings
Quality measures and reporting
Aetna Perspective All patient model – Medicare, Medicaid, Commercial
All payor model – not limited to Aetna members
Committed to quality and total cost management
Symmetrical risk sharing
Aetna’s Accountable Care Solutions offering is a sustainable long-term model for change
Accountable Care Solutions
91 AETNA INVESTOR CONFERENCE
Driving Change and Creating Value Through Accountable Care Solutions
Improved Medical Cost
Structure
Membership Growth
Service Fee
Revenue Intellectual Property
Aetna Capabilities… Empower Accountable Care Solutions… Driving…
Source: PremierSource: Premier
Accountable Care Solutions
92 AETNA INVESTOR CONFERENCE
Connecting Providers and Patients with Powerful, Personal Technology
AccountableCare
Solutions
Intellectual Property
Clinical Data Integration Secure Data Exchange
Population-based clinical intelligence, decision support, disease registries and alerts
Care Management, communication and workflow technology
Personal Health Record
Risk management Health plan services Network and member
management Distribution
Leading consumer mobile app
Symptom-to-Provider pathway
Navigation, access, appointments, registration
Intelligent provider interface
Cloud-based application store
Rapid / viral distribution
Accountable Care Solutions
93 AETNA INVESTOR CONFERENCE
Medicity Transforms Data Into Action
Patient Portal • Data Aggregation • Community Health Record • Identity Management • Semantic Interoperability • Security Framework • Patient Consent Framework
Analytics, Risk-stratified Populations & Quality
Measures
Clinical Decision Support
HIS
Accountable Care Solutions
94 AETNA INVESTOR CONFERENCE
Meaningful Use
Coordinate
EMR
Clinical Decision Support
HIE
EMR
Outcomes Data
Clinical Decision Support
HIE
Workflow Management
Analytics
Manage performance
Clinical Integration
Accountable Care
Manage populations
Risk Management
EMR
Outcomes Data
Clinical Decision Support
HIE
Workflow Management
Analytics
Aetna provides a Path to Accountable Care at Any Stage of Provider Readiness
Accountable Care Solutions
95 AETNA INVESTOR CONFERENCE
ACS is aligning its Market Opportunities to its Core Business Network Strategy
Current Aetna
Presence
High Presence
Low Presence
Plan Sponsor Coverage
Needs
ACO Large integrated Systems No Provider-owned Plans Critical Mass Locally
PCMH Mid/large Group IPA / MSO
ACO / PCMH Network Strategy
~330(a) ~230(b)
(a) Ideal candidate Independent Delivery Network
(b) Ideal candidate groups Current pipeline is > 150 health systems
Accountable Care Solutions
96 AETNA INVESTOR CONFERENCE
In Addition to New Growth ACS Creates Synergies to the Core
Network enhancement
Improved value proposition to plan sponsors
Improved provider discounts
Reduced cost of care / MBR
Provider relationship enhancement
Differentiation of the Aetna brand
Accountable Care Solutions
97 AETNA INVESTOR CONFERENCE
Road to Competitive Product Rates and Membership Growth: Illustrative
Goal: 10% Better than Competitors
Unit Price Concessions = Parity
with Competitors
10-25% Cost Reduction from
Collaboration and IT
Market broker study concluded that small group
narrow network product would need to be priced ~10% lower
than competitors to attract members
Health System unit cost concessions of ~10% put collaboration on par with
local competitors
Health System and Aetna ACS collaborate to identify
opportunities and implement technology tools and care
management initiatives to close the gap
Aetna’s new network model is creating high-quality, low-cost options in local markets
Accountable Care Solutions
98 AETNA INVESTOR CONFERENCE
ACO Scope
Brea
dth
of P
opul
atio
ns S
erve
d 52 MA Collaborations
6 Multi-payor PCMHs
1 Medicaid PCMH
2 Statewide ACOs
10+ bundled payment models
26 multi-line, multi-payor ACOs being contracted or launched
>150 health systems in pipeline
Experience
Select Customer Examples
Accountable Care Solutions
99 AETNA INVESTOR CONFERENCE
Background
Headquartered in Roanoke, VA More than 1,200 licensed beds and net revenues of $1.25B in FY2009 600+ physicians in a multi-specialty group practice and 8 not-for-profit hospitals Serves approximately 1 million people in Western Virginia
Targeted Customer Markets
Employees Commercial Medicare Advantage (MA) Medicaid
Collaboration Model(s)
Improving profitability of Carilion Clinic’s MA health plan using, in part, Aetna’s MA provider collaboration model
Building a co-branded Carilion Clinic/Aetna suite of products for commercial market Transitioned employees off cycle to be Aetna members and manage them in the ACO Launching a provider-driven managed Medicaid program with Carilion
Payment Reform Highlights Risk sharing (up and down) – cost saving based on clinical and financial efficiencies
Other Collaborations
Care management: Exploring use of ActiveHealth care management platform, PHR, health management programs and staff support
Health plan services: Aetna insurance license, customized enrollment support, etc.
Case Study
Accountable Care Solutions
100 AETNA INVESTOR CONFERENCE
Accountable Care Solutions Can Play a Transformational Role in Health Care
Accountable Care Solutions is becoming the marketplace leader in enabling population health management for providers
… And it puts Aetna on a path to play a transformational role in health care
Aetna is uniquely positioned to drive benefit from this new model for health care finance and delivery
… And fundamentally change the value proposition for purchasers and patients
Accountable Care Solutions
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