CIGNA Plan Design & Financial Management

CIGNA Pharmacy ManagementCIGNA900 Cottage Grove RoadHartford, CT 06152

www.CIGNA.com

“CIGNA”, “CIGNA HealthCare”, “CIGNA Pharmacy Management“, “Return On Health”, and the “Tree of Life” logo are registered service marks of CIGNA Intellectual Property, Inc., licensed for use by CIGNA Corporation and its operating subsidiaries. All products and services are provided exclusively by such operating subsidiaries and not by CIGNA Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Tel-Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Intracorp, and HMO or service company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans are offered by CIGNA HealthCare of Arizona, Inc. In California, HMO plans are offered by CIGNA HealthCare of California, Inc. In Connecticut, HMO plans are offered by CIGNAHealthCare of Connecticut, Inc. In Virginia, HMO plans are offered by CIGNA HealthCare Mid-Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HealthCare of North Carolina, Inc. All other medical plans in these states are insured or administered by ConnecticutGeneral Life Insurance Company. “CIGNA Tel-Drug” refers to Tel-Drug, Inc. and Tel-Drug of Pennsylvania, L.L.C. “QuickClick” and “CIGNAChoice Fund“ are registered trademarks of CIGNA Intellectual Property, Inc.

© 2008 CIGNA Pharmacy Management. All rights reserved.

814469

Maximizing theValue of Pharmacy Benefits

Helping clients influence outcomes to deliver a Return On HealthSM

Choice Savings Flexibility

Employer

Member

Value

Flexible benefit design

Preventive options

Coverage options

Extensive retail network

Plan Cost

Effective formulary management

Cost management programs

Outcome Improvementprograms

Consumer-driven plans

CIGNA’s APPROACH TO PLAN DESIGN:

Maximum Value, Lowest Net Cost.

CIGNA Plan Design & FinancialManagement: Solutions for improved outcomes at the lowest net cost

As one of America’s oldest and most respected insurancecompanies, CIGNA understands risk — and our goal is tohelp our clients minimize theirs. At CIGNA, we helpclients design a benefit plan that controls costs, improvesmember outcomes and helps them reach their plan goals.Our clinically-driven approach to plan design along withour financial management discipline allows us to workclosely with clients to develop a plan that provides along-term solution for controlling costs year after year.And, CIGNA provides clients with a benefit design thatmaximizes every opportunity to give members the clinical support and medication access they need at thelowest total plan cost. In the end, that translates into aReturn On Health that only CIGNA can provide.

The right plan from the right partner:A proven approach to value maximization

CIGNA works with clients to recommend a plan designspecifically structured to influence overall health trend —the annual cost of providing all health-related benefits,not just pharmacy benefits. We do this through a clinically-focused approach that puts improving memberoutcomes at the forefront of reducing overall healthtrend. And, as only an insurance company can, CIGNAprovides risk-based products for customers who want the ease, convenience and certainty that an insured planprovides. Because our business involves managing risk, we provide solutions that help our self-insured clientsmitigate their risk.

Always driven by our commitment to engage membersand improve clinical outcomes, our plan design approachis supported by four key areas that drive lower total costs:

1. Flexible benefit structures that help you design a customized plan that’s tailored to your unique needs.

2. Clinically-based formulary management that enablesmembers to obtain the medications they need whilemanaging pharmacy spend.

3. Cost and Clinical Management add-on options that clients can leverage to further drive down costs while engaging members to make more informed, cost-effective choices.

4. Consumer-Driven Health Plan (CDHP) supportto assist HRA/HSA CIGNA Choice Fund clients by educating their members on how to maximize theirplan benefits.

For CIGNA, working closely with clients to maximizeplan value is not a new approach — we’ve always beencommitted to showing clients exactly how our programsand services work to offer the most clinically-appropriatedrugs to members at the lowest total plan cost. Throughflexible and consultative plan design support, aggressivecontracting strategies and clinically-based formularymanagement practices, CIGNA maximizes the investmentemployers make in the health of their employees and thefinancial success of their benefit plan.

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What does this mean to you?

As a single provider of medical and pharmacy

benefits, CIGNA is uniquely capable of customizing

a plan that balances member care with financial

performance. Through our value maximization

approach to plan design and financial management,

we offer customized plan design solutions that

drive positive outcomes at the lowest total cost.

That’s the peace of mind you get from working

with CIGNA — a Return On Health.

CIGNA Pharmacy Management: Delivering ROH through clinical integration

What does this mean to you?

An effective plan is one that’s customized to meet

current plan and member needs as well as one that

is strategically designed to mitigate future changes

that can impact drug spend. CIGNA can help you

design a plan that’s not only effective today,

but also ready to adjust to future market changes

so that you can continue to have a

high-performing plan tomorrow.

Plan Design Flexibility:Benefit structures andconsultative support forgreater savings

CIGNA offers a suite of pharmacy plan design options thatcomplement our medical capabilities. Key options include:

• Copayment and coinsurance cost share choices

• Deductibles

• Home delivery pharmacy benefits

• Standard formulary that balances member choice and plan savings

Through an on-going consultative relationship, CIGNAsupports our clients’ need to maintain an affordable pharmacy benefit. Working closely with our clients, wedevelop a thorough understanding of their unique membership and plan needs. We analyze plan costs at amacro level to determine what programs and incentivescan be used to drive member actions that reduce long-termplan costs. We also monitor plan performance and makerecommendations on changes that can improve memberoutcomes to increase savings.

With our pulse on emerging industry trends, coupled withour understanding of our clients’ goals, we strive to ensureour clients’ plans deliver results today and continue toprovide cost savings and promote healthier member outcomes year after year. As a CIGNA client, you can beassured that you’re getting the best plan for your specificgoals while giving your employees options and tools thatempower them to make informed decisions.

Formulary Management:Clinical expertise andstrategic business analysisfor greater value

CIGNA offers standard three-tier and four-tier formularyoptions that separate prescription medications into categories and copayment or coinsurance levels with varying degrees of member contribution to fit your benefits strategy. Our standard three-tier incentive formulary separates prescription medications into threecategories and copayment levels and allows for differentdegrees of member cost share. We help clients develop aplan design that appropriately balances medication accessand cost share levels to promote the use of generics andlow cost, therapeutically equivalent brand medications.We work with clients to address unique needs, and can provide customized solutions such as the inclusion ofinjectible specialty medications or lifestyle drug optionson a fourth tier. And we’ll communicate formulary coverage rules with members so they understand how touse their plan to stay compliant with their medicationtherapies and to save money.

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To help ensure members have access to safe, effective andaffordable medications, CIGNA formulary decisions beginwith our Pharmacy and Therapeutics (P&T) Committee,which reviews new medications in the market anddetermines their coverage and formulary placement. OurP&T Committee performs a rigorous clinical and qualityreview of new medications to determine that they are safeand effective. If the Committee concludes that a new drugprovides no clinical difference, the decision whether ornot to include the drug on our formulary is referred to aCIGNA business decision team. This team analyzes issuessuch as cost and member satisfaction before determiningif the drug should be placed on the formulary and onwhich tier it will reside.

When it comes to our formulary management, we alsotake a proactive approach — long before a medication isavailable in the market, a CIGNA team of clinical pharmacists tracks its development through the Foodand Drug Administration (FDA) submission and approvalprocess. In doing so, our team can prepare for the possibilityof a “blockbuster drug” and determine an interim coverageposition prior to FDA approval and product launch. Byanalyzing the medication pipeline and planning for newdrugs in the market, we can better manage the impactnew drugs will have on your plan design and can makesuggestions on how you can continue to effectively manage your drug spend.

Blockbuster drug lifecycle strategies

Blockbuster brand Generic OTC

— Non-preferredtier 4

Incent home delivery

OTC coverage options

— Step Therapyprior authorization

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Additional Plan Options:Creating a customized,high-performing plan

CIGNA’s goal is to help clients design a benefit plan thatspeaks to their unique needs. We do this by offering asuite of plan design options that clients can choose toaddress specific membership needs and plan goals. Byoffering these additional benefit features, clients gain adeeper level of plan customization that leverages our clinical expertise and strategic plan design approach tomaximize plan value.

Cost Management ProgramsStep Therapy Programs: Easing the transition to generics and lower-cost alternatives

This cost management program is designed to graduallyencourage the use of generics and lower-cost medicationalternatives by giving members an initial grace period forfilling brand-name prescriptions before requiring them touse lower-cost alternatives. As a key component of theprogram, we also educate members on the merits of generics,easing their transition to clinically-appropriate lower-costalternatives.

OTC Programs: Encouraging members to try over-the-counter alternatives

For members who can benefit from over-the-counter alternatives to prescriptions they are currently taking,CIGNA offers money-saving coupons for trying medications such as Prilosec OTC® and Alavert®.

Outcome Improvement ProgramsIdentifying and connecting gaps in care

Through programs such as our Narcotics TherapyManagement and Complex Psychiatric Case Management,we work with physicians to identify and address gaps incare and promote more-informed dialogues betweenphysicians and their patients. By using integrated medical,behavioral and pharmacy information we educate physicians and members and promote healthier memberbehaviors that reduce long-term costs.

Retail NetworkExtensive retail network that works for you

Through our retail pharmacy network consisting of over57,000 retail pharmacies (chains and independents), weoffer comprehensive retail pharmacy access for membersin urban, suburban and rural areas. Some clients, however,may wish to adjust their retail network coverage to meetspecific needs. Through our Out-of-Network Retail Coverageoption, clients can choose to extend coverage to a pharmacynot in the retail network.

Home Delivery OptionsDriving mail order utilization

CIGNA offers a range of options for clients looking todrive down costs by taking advantage of the plan savingsthat CIGNA Home Delivery Pharmacy provides. Throughgreater unit cost discounts, CIGNA’s home delivery pharmacyprovides a strong incentive for clients interested in maximizing plan and savings to encourage or requiremembers taking maintenance medications to fill themthrough CIGNA Home Delivery. Aggressive plan designstrategies encompass requiring members to fill prescriptionsexclusively through CIGNA Home Delivery after a certainnumber of fills at retail. Or, clients may opt to providecontinued retail coverage. Member cost share may increaseafter the fill threshold is reached and if the member continues to fill their maintenance prescriptions at retail.Other clients may wish to take a more educationalapproach by communicating the convenience and savingsmembers may enjoy by filling their maintenance prescriptions through home delivery.

Coverage Options for Additional ProductsProviding enhanced coverage where you need itthe most

Some clients may wish to extend coverage for specificdrugs that are not part of our standard plan offerings such as lifestyle and weight-loss drugs, certain vitaminsand drugs used to help smoking cessation. We also offerclients the opportunity to extend coverage for some self-administered injectable drugs that are typically coveredunder medical plans. In covering under pharmacy as well,we help clients address the special needs of their employeeswhile obtaining the cost-savings benefits of our aggressivepharmacy contracting strategies.

Preventive Prescription Drug OptionImproving compliance to reduce long-term costs

In recent years, with the industry focus on consumer-drivenhealth plans, CIGNA has recommended 100 percent coverage for in-network medical preventive care as a corefeature of our Choice Fund — our Health RetirementAccount/Health Savings Account (HRA/HSA) medical plandesigns. CIGNA’s Preventive Prescription Drug Optioncomplements our Choice Fund medical products throughan integrated approach to preventive care. We offer plansponsors the ability to waive the deductible for preventivedrugs, allowing members to receive these drugs through amember cost-share requirement, typically coinsurance.

The following conditions are those for which medicationtherapy is considered preventive:

• Hypertension

• Hyperlipidemia

• Diabetes

• Asthma

• Osteoporosis

• Stroke

• Pregnancy

And to promote generic use and further reduce costs formembers and plan sponsors, we suggest a plan design thatprovides 100 percent coverage with no deductiblerequirement when members make the choice to purchase a generic preventive medication. By eliminating the perceived “high deductible barrier” and reducing their out-of-pocket costs, members are more likely to complywith their prescription therapies.

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Consumer-Driven Health Plans:Support that engages membersto better understand their choices and manage their costs

CIGNA provides integrated medical and pharmacy management that maximizes the value of consumer-driven plans for clients and members. Through CIGNA’sChoice Fund Health Retirement and Health SavingsAccounts (HRAs and HSAs), CIGNA gives clients and members a single, integrated view that enables them tomore effectively manage their benefits. By providing bothmedical and pharmacy benefits, CIGNA is uniquely ableto provide the comprehensive support that lessens aclient’s administrative burden and empowers members tomanage their benefits for improved outcomes at an overalllower cost.

Through our Choice Fund Products, CIGNA clients benefit from:

• Real time pharmacy/medical plan integration

• Ability to administer out-of-pocket and lifetime maximum data end-to-end

• Integrated clinical management and disease management programs that help improve member outcomes for reduced medial expenses

• HRA and HSA plan designs that integrate pharmacy and medical to support the federal requirement of a single integrated medical and pharmacy deductible for Health Savings Accounts

• Simplified administration

• Flexible in- and out-of-network benefits with incentives that encourage in-network utilization

With a comprehensive suite of support services, CIGNAhelps members understand the options available to them and the associated costs. Through myCIGNA.com,members gain online tools that enable them to track combined deductibles and fund balances and roll overunused funds. They can compare information on healthproviders to make more informed choices, and contactCIGNA Health Advisors to support better outcomes.CIGNA’s Choice Fund products are designed to offeremployers and their employees affordability and anopportunity to make choices that meet their individual needs.

What does this mean to you?

CIGNA Choice Fund can reduce overall pharmacy

costs by improving compliance, better managing

waste and driving the use of lower-cost options

such as generics and home delivery use.

Pharmacy Utilization

CIGNA Choice Drug Trend Traditional Drug Trend

CIGNA Choice Fund reduces costs for clients and members,while helping to improve overall compliance

The results1 of a two-year study of health care claims show:• Medical and Pharmacy costs for CIGNA Choice Fund members were lower than traditional plan costs

• Medical costs were more than 12 percent lower for first-year CIGNA CDHP members, and 5 percentlower for second-year members relative to HMP and PPO members

• Pharmacy costs were 6 percent lower even though utilization rates and days’ supply were higher, indicating that members were compliant with their medications while exercising lower-cost optionssuch as generic medications and mail-order purchasing.

• Member out-of-pockets costs were similar to traditional plans for first year CIGNA CDHP members, and actually decreased for second year members

• Preventive care visits increased, and medical care visit compliance improved

• Medication compliance improved. The use of maintenance medications that support chronic conditions increased while their overall costs decreased.

1 Based upon 470,000 CIGNA Choice Fund and traditional HMO and PPO members.

7

16%

12%

8%

4%

0%Eligible Charges Days Supply Eligible Charges/ Day

--55%% --11%%--66%%

5.9%

12.6%

1.3%

6.4%4.6% 5.8%

Medicare Part D Subsidy Option

Under the Medicare Modernization Act of 2003 (MMA),employers can reduce their costs for continuing to providepharmacy coverage to their Medicare population. Thisgovernment program helps employers achieve financialsavings via subsidy payments from the government basedon costs incurred for providing pharmacy coverage totheir Medicare-eligible retiree plan members. While manybenefit management companies charge fees to provide utilization and cost data and leave plan sponsors on theirown to work through the administrative process of filingwith the government, CIGNA’s approach is very different.Our industry-leading Medicare Part D Employer SubsidyOption uses a consultative approach to guide employersstep-by-step through the process of obtaining a tax-freesubsidy and provides comprehensive and transparentretiree drug utilization and cost data reports — all at nocost to plan sponsors, unlike other benefit managers.

Financial Management:Minimizing risk for maximumplan potential

With our roots in the insurance industry, CIGNA isaccountable for managing risk — one third of our business is risk-based. That means that our performance is tied to the financial success of our clients’ plan. All ofour plan design programs and options are designed tomaximize value for our clients:

• CIGNA continuously works to deliver lowest net costthrough generic maximization.

• We also encourage members to use preferred brands.This approach lowers your overall net cost by generatingrebates either through a client-specific sharing arrangement or, to the extent retained by CIGNA, as a contributor that allows us to maintain a lean cost structure.

• We employ aggressive contracting strategies to offer aformulary that has the right balance of quality carewhile lower lowering health trend.

Through the use of appropriate plan designs and clinicalprograms, CIGNA lowers your overall net cost while at thesame time improving medical outcomes.

Our business is getting you aReturn On Health

Managing risk takes experience. Managing care takes clinical expertise. Doing it all . . . that’s our business. In an industry where pharmacy management often producescommoditized programs, our focus is helping clientsdesign a customized plan that works hard to keep membershealthy while working wisely to lower costs. ChooseCIGNA as your partner and see how you can achieve aReturn On Health.

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CIGNA Plan Design & Financial Management

CIGNA Pharmacy ManagementCIGNA900 Cottage Grove RoadHartford, CT 06152

www.CIGNA.com

“CIGNA”, “CIGNA HealthCare”, “CIGNA Pharmacy Management“, “Return On Health”, and the “Tree of Life” logo are registered service marks of CIGNA Intellectual Property, Inc., licensed for use by CIGNA Corporation and its operating subsidiaries. All products and services are provided exclusively by such operating subsidiaries and not by CIGNA Corporation. Such operating subsidiaries include Connecticut General Life Insurance Company, Tel-Drug, Inc. and its affiliates, CIGNA Behavioral Health, Inc., Intracorp, and HMO or service company subsidiaries of CIGNA Health Corporation and CIGNA Dental Health, Inc. In Arizona, HMO plans are offered by CIGNA HealthCare of Arizona, Inc. In California, HMO plans are offered by CIGNA HealthCare of California, Inc. In Connecticut, HMO plans are offered by CIGNAHealthCare of Connecticut, Inc. In Virginia, HMO plans are offered by CIGNA HealthCare Mid-Atlantic, Inc. In North Carolina, HMO plans are offered by CIGNA HealthCare of North Carolina, Inc. All other medical plans in these states are insured or administered by ConnecticutGeneral Life Insurance Company. “CIGNA Tel-Drug” refers to Tel-Drug, Inc. and Tel-Drug of Pennsylvania, L.L.C. “QuickClick” and “CIGNAChoice Fund“ are registered trademarks of CIGNA Intellectual Property, Inc.

© 2008 CIGNA Pharmacy Management. All rights reserved.

814469

Maximizing theValue of Pharmacy Benefits

Helping clients influence outcomes to deliver a Return On HealthSM

Choice Savings Flexibility

Employer

Member