Covenant Care – An Affordable Self-Funded AlternativeCovenant Care – An Affordable Self-Funded AlternativeFor Employer Groups of 25-250 EmployeesFor Employer Groups of 25-250 Employees

Offers a viable alternative to your clients who are fully insured

Helps you protect your fully insured business with an alternative Fully Funded product

Provides a clearly defined strategy for truly managing an employer’s real claim costs and those cost drivers, specifically employees who are at risk

The Covenant Care Program IntroductionThe Covenant Care Program Introduction

Lifestyle Disease Focus – 3 case studies The Covenant Care Program offers an Integrated Results Based Wellness

Program with Fixed Monthly Funding Caps. What do we mean by Integrated Results Based Wellness Programs?

Biometric Screenings to determine lifestyle related conditions Those results are tied to benefit plans and/or premium differentials

Case Studies and what we mean by lifestyle related costs What is driving the cost increases for most employers

Precept Ministries Benton County

Risk Management Strategies Bravo Integrated Results Based Wellness Programs Delphi (MAP) TelaDoc

Spaggregate – Special Aggregate Reinsurance Contract Summary

The Covenant Care Program OverviewThe Covenant Care Program Overview

Percent of Chronic Diseases That are Caused by Poor Lifestyle

71% 70%82%

91%

0%

20%

40%

60%

80%

100%

Cancers Stroke Heart Disease Diabetes

The Health Care DilemmaThe Health Care Dilemma

How Safeway is Cutting Healthcare Costs – Safeway’s plan capitalizes on two key insights gained in 2005. The first is that 70% of all health care costs are the direct result of behavior. “The second insight, which is well understood by the providers of healthcare, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity. Furthermore, 80% of the cardiovascular disease is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.” WSJ, 6-12-09

When All Else Fails: Forcing Workers Into Healthy Habits – AmeriGas Propane Inc. had tried a number of voluntary wellness programs to encourage healthy habits in its employees. But the company concluded that “optional programs just don’t work” says Bill Katz, Vice President of Human Resources. WSJ, 7-8-09

In 2008 PepsiCo introduced a $600 surcharge for smokers. It already offered a smoking-cessation program, but that year, it enhanced it by adding nicotine-replacement therapy such as patches and gum. "The combination of those two elements led to a tenfold increase in participation and increased the quit rate from 20% to 34% in 2008 over 2007," says Greg Heaslip, benefits vice president. USA Today 6-19-09

Marketplace Trends In WellnessMarketplace Trends In Wellness

Lifestyle 71 cents of the health care dollar is spent on treating conditions that are

lifestyle related and potentially reducible by behavioral changes. Prof. Roger Seehafer, Purdue University

Chronic diseases related to lifestyle account for 75% of the national medical costs. Eleven separate studies by the Centers of Disease Control (CDC) suggest that worksite wellness programs can produce significant improvements in employee health. CDC 2006

Average healthcare expenditures for people with diabetes run about $13,243 per person compared with $2,650 per person for people without diabetes. USDOHHS report, September 2003

Obesity More than one-third of US adults – over 72 million people – were obese in 2005-

2006. This includes 33.3 percent of men and 35.3 percent of women. CDC 2007

"In view of these alarmingly high rates of obesity in all population groups, CDC has made the prevention of obesity one of its top public health priorities," said Janet Collins, director of CDC’s National Center for Chronic Disease Prevention and Health Promotion. CDC 2007

35%

At Risk

50% Healthy

15%Acute

Chronic

59% of this years low cost population will be in next years high cost population.

Low Cost Population

The IssueThe Issue

15% of all plan participants have acute or chronic health conditions

This group drives 80% of the claims

59% of next years acute chronic high risk population will come from this years low cost population

The RealityThe Reality

Reinsurance Premium

Administrative Fees

Employers have implemented cost shifting strategies to reduce their portion of healthcare costs Plan Design Changes Plan Contribution Changes

The positive impact of these changes were/are short lived. Cost shifting will not provide a positive impact to the overall healthcare trend.

This strategy does not address the root cause of rising health care costs…lifestyle related conditions

Employer Healthcare Costs

2%

12%

86%

Administrative Costs Stoploss Premium Paid Medical Claims

The SolutionThe Solution We strive to discover the root cause of escalating health care costs

We help employers implement a strategy that will focus on risk shifting and not on cost shifting

This strategy will enable and motivate employees to take a more active role in managing their health care expenses

What is the root cause of escalating health care costs? The ClaimsThe Claims

Who is responsible for the increase in health care costs? EmployeesEmployees

Risk Shifting StrategyRisk Shifting Strategy

Precept MinistriesClaims Cost Per Member

$406.50 $375.18

$252.94

$406.50$463.41

$528.29

$0.00$100.00$200.00$300.00$400.00$500.00$600.00

2006 2007 2008

Covenant Risk Mgt. Strategy No Strategy

Claim Savings

Case Study 1 – Case Study 1 – Precept MinistriesPrecept Ministries

A faith based ministry needed to control their rising health care costs

Implemented our strategy in 2006 and have experienced a reduction in actual claims costs by as much as 62%

The ministry has saved $811,576 over past two years

Risk Shifting StrategyRisk Shifting Strategy

Case Study 2 – Case Study 2 – Benton County, ARBenton County, AR 2006 Health plan

$500K in the red 2006 implemented The

Covenant Risk Strategy 2008 Results

Paid back $500K Plan $2.3M in the

black Success brought to the

attention of the national media

Benton County Board of CommissionersClaims Cost Per Member

$395.37

$283.12$210.20

$395.37$450.72

$513.82

$0.00$100.00$200.00$300.00$400.00$500.00$600.00

2006 2007 2008

Covenant Risk Mgt. Strategy No Strategy

Claim Savings

Risk Management Strategy – Integrated Results Risk Management Strategy – Integrated Results Based WellnessBased Wellness

Bravo Wellness offers a HIPAA compliant, integrated results based wellness program designed to implement options that motivate employees to participate in your wellness program and achieve measurable results:

Increased Premium Contribution and/or Plan of benefit differentials

Bravo’s program includes biometric screenings that give employees financial rewards for achieving healthy outcomes based on the following measurements:

Body Mass Index (BMI) − Blood Pressure Cholesterol Level (LDL) − Tobacco/Nicotine

A “win-win” process that helps nurture a culture of wellness while holding employees accountable for their lifestyle choices

Risk Management Strategy – Delphi MAPRisk Management Strategy – Delphi MAP

DELPHI MAP (Medical Advocacy Program) Empowering employees to become informed purchasers of

healthcare Advocate Nurses guide and coach employees through their

episode of care to higher qualified physicians and the most cost effective facilities

Empowering employers to reduce/manage their medical cost through a “transparency” solution with an extensive data base that profiles the quality of every specialist and the cost of every medical facility in the USA

Encourage employers to change their Summary Plan Description to:

Develop a plan organized approach to benefit payments Empower employees through MAP to obtain better outcomes Encourage employees with incentives/penalties to change

their purchasing habits and Set goals and benchmarks for the benefit plan to monitor

results

Risk Management Strategy – TelaDocRisk Management Strategy – TelaDoc

TelaDoc Medical Services A network of board certified Primary Care Physicians providing

consultations 24 hours a day, 7 days a week, 365 days a year Physicians diagnose routine, non-emergency medical problems via

telephone, recommend treatment and prescribe medication when appropriate

TelaDoc Benefits The three key challenges facing healthcare today…

Access Affordability Convenience

Additional Benefits Significant cost savings No time off needed to “see the doctor” Access for rural residents, mobile employees or those traveling Normal access time is 30 minutes

The Spaggregate PlanAn Attractive Reinsurance Alternative for the Fully Insured Employer

For Employer Groups currently fully insured who… Want the advantage of Self-Funding, but are hesitant to leave the

safety of fixed premiums Want to test the waters of Self-Funding without a huge commitment Want reports and claim experience to aid in managing benefit

decisions Want to retain the profit margin of the plan rather than feed the profits

of the insurance company Want a capped risk based on expected claim factors and fixed costs Want to design your own health plan or use the variety of pre-set

designs

With the Spaggregate Plan, the only money the client is required to fund are the administration fees, aggregate premiums and aggregate factors (Fully Funded Equivalent)

Spaggregate AdvantagesSpaggregate Advantages

Fully Insured Spaggregate Self-Funded

Capped Funding Yes Yes No

Lasers No No Yes

Access to Claim Experience

No (under 100 EE’s)

Yes Yes

Premiums Fixed Fixed Variable

Cash Calls None None Weekly funding of claims up to specific per member

Administration Higher Cost, Less Service

Lower Cost, Great Service

Lower Cost, Great Service

Potential for year end savings

No Yes Yes

Spaggregate Plan Features

Immediate Advance Funding The plan allows for a fixed budget each month. If claims

exceed the cumulative monthly attachment point, then claims are immediately advanced by Pan American Life. The employer is only responsible for funding monthly factors and premiums on the first of each month

Terminal Liability Option - can be elected and paid for any time prior to the contract end date. Three months of paid run out costs 1.5 months of

premium and factors Six months of run out costs 2 months of premium and

factors Unlimited Aggregate Maximum

LTM - Lifetime Maximum per individuals apply, but unlimited for the group

Covenant Care Plan Design Comparison

Premier Plan Plus Plan Access Plan

Plan Maximum $5,000,000 $5,000,000 $250,000

Deductible $500 $1,500 $1,000

Coinsurance 80/20 to $12,500

100% after deductible

50/50 to $10,000

Office Visit $20 / $40 100% after deductible

$20 / $40

RX Benefit $10 / $25 / $50 100% after deductible

$10 (Generic Only)

Maximum OOP $3,000 $1,500 $6,000

Covenant Administrators

Insurance Protection

Medicor

Bravo

Delphi-MAP

Tela-Doc/ Care Here

CustomerHitting The Mark In Controlling Healthcare Costs

The Covenant Care Advantage

If you have a Fully Insured client who is: willing to take an aggressive strategic

approach to managing their health care program,

with the potential benefits of self-funding AND the protection of a fully-funded program, Covenant Care is the program for them.

For General Agency Opportunities or to Obtain a Quote, Contact:Robert M. GearhartStratum Group6133 Rockside RoadSuite 201Independence, Ohio 44131216-901-9133 phone216-524-5773 faxbobg@stratumbenefits.com