Practical Approaches to Healthcare Cost Containment

1. Practical Approaches to Healthcare Cost Containment Simon Stevens Executive Vice President, UnitedHealth Group Chairman, UnitedHealth Center for Health Reform & Modernization www.UnitedHealthGroup.com/reform

2. Supply Demand Administration and net cost of private insurance HospitalCare Physicians & Clinical Drugs Dental Home Health/ Nursing Home Etc. 300M people across America $2.371T 93% $2.555T 100% $0.184T 7% Where are the costs in US health care? $800B $533B $264B $177B $210B Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

3. Supply Demand Administration and net cost of private insurance HospitalCare Physicians & Clinical Drugs Dental Home Health/ Nursing Home Etc. 300M people across America $2.371T 93% $2.555T 100% $0.184T 7% Where are the costs in US health care? $800B $533B $264B $177B $210B Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

4. Supply Demand Administration and net cost of private insurance HospitalCare Physicians & Clinical Drugs Dental Home Health/ Nursing Home Etc. 300M people across America $2.371T 93% $2.555T 100% $0.184T 7% Where are the costs in US health care? $800B $533B $264B $177B $210B Source: Congressional Budget Office: Key Issues in Analyzing Major Health Insurance Proposals , December 2008, page 19

5. Common technology and information standards to ensure interoperability and connectivity Administrative savings: how technology can cut red tape Category2010-2019 Administrative Savings in National Health Expenditure $225 billion Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

6. Common technology and information standards to ensure interoperability and connectivity Advanced system-wide techniques for payment speed and accuracy Administrative savings: how technology can cut red tape Category2010-2019 Administrative Savings in National Health Expenditure $225 billion $88 billion (+ $361 billion in medical costs) Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

7. Common technology and information standards to ensure interoperability and connectivity Advanced system-wide techniques for payment speed and accuracy Streamlined provider credentialing, privileging and quality designation processes Administrative savings: how technology can cut red tape Category2010-2019 Administrative Savings in National Health Expenditure $225 billion $88 billion (+ $361 billion in medical costs) $19 billion $332 billion Around 50% of the savings go to hospitals and physicians; 20% directly to government; and 30% to health plans Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

8. Administrative savings: ‘real world’ case studies “The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson Magnetic Identification Cards • 30 million UnitedHealthcare swipe cards in circulation • Provides physician with patient’s personal health record and relevant health alerts • Plus verification of coverage and collection information Monthly Health Statements • Consolidated monthly like a bank statement • Summary of activity, balances, and health information • Replaces Explanations of Benefits and other mailings • Provided to 20 million members Electronic Payments • Eliminates data entry in doctors office and delays Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

9. Administrative savings: ‘real world’ case studies “The future is already here – it’s just unevenly distributed” Sci-Fi writer William Gibson Estimated 2010-2019 NHE savings from wide adoption $18 billion $14 billion $109 billion Magnetic Identification Cards • 30 million UnitedHealthcare swipe cards in circulation • Provides physician with patient’s personal health record and relevant health alerts • Plus verification of coverage and collection information Monthly Health Statements • Consolidated monthly like a bank statement • Summary of activity, balances, and health information • Replaces Explanations of Benefits and other mailings • Provided to 20 million members Electronic Payments • Eliminates data entry in doctors office and delays Source: Health Care Cost Containment – How Technology Can Cut Red Tape. Working Paper 2: UnitedHealth Center for Health Reform & Modernization, June 2009

10. Examples from employer programs being run by UnitedHealth Group Performance transparency – identified 100,000 physicians across 20 specialties with higher quality, and costs up to 20% lower Informing consumers - sharing data to inform their decisions eg UHG Consumer Activation Index Supporting choices - employers incentivizing use of high quality & efficiency providers eg UHG Premium Networks Aligned provider payment models - rewarding high quality appropriate care not just volume eg cardiology, oncology, primary care Supporting patients’ health behaviors eg UnitedHealthcare’s Diabetes Health Plan Customer/EmployerData ClinicalData Enterprise-Wide Database Consumer Data Eligibility Data Network Data Product/Benefits Data PricingData Medical cost savings: ‘real world’ case studies tackling quality and efficiency variation

11. Medicare spending per beneficiary, 2005

12. Medical cost savings: ‘real world’ case studies for Medicare Improved Care Management Option 4: Skilled Nursing Hospital Pre-admission Program Option 5: Hospital Discharge Re-admission Management Option 6: Advanced Illness Program Option 7: CHF Disease Management Option 8: Gaps in Care Program Option 9: Integrated Medical Management Incentivizing Use of High-Quality Providers Option 1: Patient Incentives Option 2: Cancer Support Programs Option 3: Transplant Solutions Program $43 Billion $367 Billion Physician Incentives and Information Option 10: Patient-centered Medical Home Option 11: Physician Performance Incentives Option 12: Specialist Data-sharing Evidence-Based Reimbursement Option 13: Radiology Benefit Management Option 14: Radiology Therapy Management Option 15: Prospective Claims Review $75 Billion $59 Billion An estimated $540 billion in Federal savings from proven approaches Source: Federal Health Care Cost Containment – How in Practice Can it be Done? Working Paper 1: UnitedHealth Center for Health Reform & Modernization, May 2009