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CASE STUDY

Union Health and Welfare Benefit Plan 2011 Savings Projection based on 2010 Claims Data (1000 EEs)

MERCURY HEALTHCARE INTERNATIONAL 7/8/2011


CASE STUDY: SIC 2752; 1000 EEs Actual Scenario: 1000 union members and their dependents; SIC 2752 / NAICS 323110 Single metropolitan statistical area Relatively high provider billed charges in their home region compared with national provider rates for similar hospital services

Prior to running going live with their plan participants, our healthcare economics team performed an "ifthen" analysis.

Lower costs Better service case management, disease management predictive modeling We use multiple reference sources for predictive modeling and evidence based guidelines, including those commonly used here in the USA. As an added bonus, we also take into consideration a few other evidence-based guidelines in certain high cost specialties and that are rarely considered in the USA in high-cost areas of physiatry, pain management, Rheumatology, and certain musculoskeletal disorders.

We'll ratchet down your PEPM spend immediately

Lower PEPM fees Larger network Right away, our lower PEPM network access fees saved them nearly $170,000 annually. It also eliminated several network management tasks for the plan administrator because they had previously utilized a higher-priced quilted network instead of one single accountable care network with more participating providers.

Our lower hourly case management, disease management and predictive modeling fees would have saved them an additional $325,000 for the year compared to what they actually spent.

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Mercury Healthcare International, Inc.

800.727.4160


Lower Pharmacy Claims Experience

Magic pills! We make prescription costs invisible!

Some of our available negotiated savings are in the 50-70% range from typical retail prices. Our discount network includes all major chain pharmacies and most small independent neighborhood druggists. Since we did not sample pharmacy claims data, it was impossible to model the savings in this particular instance. Our web-based, real-time pricing transparency tool would have enabled their plan participants the ability to look up local and mail order pharmacy pricing at all pharmacies within a 25 mile radius of a zip code to determine pricing before arrival at the pharmacy to strategically plan their savings and be able to utilize drive-up window convenience commonly available at many nationwide participating pharmacies. Typically our plan participants save hundreds of thousands of dollars each month utilizing this free service.

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With our free pharmacy discount card, plan participants and their families would have been instructed to use the discount card first to determine what their out of pocket spend will be on their prescriptions. In many cases, with a copayment of $10-25 using plan benefits, the entire cost of the prescription would have been lower without involving their pharmacy benefit. Therefore, no claims expense would accumulate or charge to their plan, thus no claim cost recorded on claims experience. Based on the diagnoses reported and services claimed, we could assume that a high number of their pharmacy claims for certain medications could have been redacted from their historic claims spend making them essentially invisible to underwriting.

Mercury Healthcare International 800-727-4160


Modeled Savings Performance Comparison Sample size 129.934 claims Total claims $28,340,206 Covered Claims 91% Covered Dollars 86% Total Savings $6,829,888

By combining just our domestic local regional network assets,

we were able to save this group more than $3.9 million dollars on the previous years' claims experience matching for the providers that they had already selected from within our network

By combining just our domestic local regional network assets, we would have been able to save this group more than $3.9 million dollars on the previous years' claims experience matching for the providers that they had already selected from within our network. The drip pan analysis we provided demonstrated savings from claims repriced as in network (INET) using our network compared to the network they previously used which had more out of network (ONET) encounters.

We were also able to provide a disruption analysis using their specific claims history. Matches were based on TIN and in some cases provider name/zip code combination. Claims such as providers at veteran's facilities, pharmacy claims and county EMS services were redacted from the data file.

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Mercury Healthcare International, Inc.

800.727.4160


We owe a duty to our clients to find them the best deals One key point that contributed to the initial domestic savings was that our participating network provider prices are lower because with our network, unlike their previous network, providers in our network are not required to pay up to 4% of steered revenue in kickbacks back to the quilted PPO. This practice has been gaining traction across the USA with surprising frequency. To us, the kickback is unethical and ends up costing the payer more because the kickback money has to come from someplace.

Out of network fee negotiations

... unlike their current contracted network, providers in our network are not required to pay up to 4% of steered revenue in kickbacks back to the PPO... (what we deem as "double dipping" and a conflict of interest)

On ONET claims, we offer a one-off negotiation service priced on percentage of savings. If we don't save you any money on those claims, you don't pay a fee for our efforts. Our only requirement is that savings must also be passed on to the plan participant so that they benefit from the reduction on their out of pocket costs.

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Mercury Healthcare International 800-727-4160


Additional Potential Savings with our Domestic Health Travel Option With Mercury Healthcare International, you're no longer limited to regional PPO networks in the USA. Based on actual local claims experience, if this group had utilized our domestic health travel only, for a limited (15-20 /118,659 total claims) number of cases (filtered for medical appropriateness), this group could have realized potential savings of nearly $5.2 million. Mercury Healthcare International would have provided the case management, travel coordination and destination management services as a part of the case savings. Many of these cases may have utilized hospital and physician alternatives within a 2-hour drive.

... if this group had utilized our domestic health travel only, this group could have realized potential savings of nearly $5.2 million after travel costs, access fees and logistics coordination

The big difference is in having the pricing transparency data and the prescreened, credentialed providers willing to compete for their business through price arbitrage.

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Mercury Healthcare International, Inc.

No other globally integrated health delivery system速 or PPO offers this advantage. Plan participants would have also saved commensurate amounts on their out-of-pocket expenses.

800.727.4160


Additional Potential Savings with our International Health Travel Option

Had this group used our international network providers on a few nonemergency international health travel claims (scheduled ortho care, scheduled cardiac care, scheduled cancer care, etc.) they would have increased their savings to $6.9 million.

Do the Math! $3 Million In Additional Savings á 1200 Member Months = $2500 Pepm Plan & Ee Savings...

"Had this group used our international network providers for a few non-emergency international health travel claims (scheduled ortho care, scheduled cardiac care, scheduled cancer care, etc.) they would have increased their savings to $6.9 million."

These savings are net of the costs of Care Navigators™, case managers, and travel coordination staff to handle the specialized national and international health travel logistics coordination. Plan participants would have also saved commensurate amounts on their out-ofpocket expenses.

No Need to Reduce Benefits to Achieve Greater Affordability!

After Travel

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Mercury Healthcare International 800-727-4160


Lower Claims Experience = Lower Reinsurance Costs Lower Claims Cost =

We've worked with group sizes down to 10EEs.

Lower Reinsurance Rates

Additional savings across all three options would have been realized in lower claims spend. Lower claims experience ratings would have yielded lower reinsurance costs and underwriting risks, which would have affected reinsurance pricing over the first three years. We'll refer you to our knowledgeable actuaries if your present actuaries and underwriters are unable to confidently opine on the modeling of national and international health travel benefit utilization.

the days of healthcare business as usual...are over If your group is smaller in size, we can direct you to excellent reinsurance options utilizing incubation captives that are knowledgeable and receptive to health travel benefit options using our Globally Integrated Health Delivery System速.

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Mercury Healthcare International, Inc.

800.727.4160


Wellness Integration

Additional savings would have been realized if the population would have had our wellness program in place. Health risk assessment findings were evaluated assuming average outcomes from groups with similar demographics. Wellness initiatives combined with case management, pharmacy benefit management, second surgical opinion, and earlier treatment intervention through the health travel program to model ROI. Our complementary early intervention solutions were compared with traditional managed care methods of utilization management, which often employs treatment delay hurdles such as gathering additional imaging studies, "wait and see" tactics, 6-week trials of pharmacotherapeutics (NSAIDS, antibiotics, etc.), along with only a targeted 5% overall health status improvement (e.g., weight, smoking cessation, alcohol reduction, etc) was modeled across the population.

Our popular annual checkup and Corporate Registry™ executive annual physicals programs also add value and tremendous cost savings on health spend and on the services themselves. We have five age and gender matched health screening packages that match or exceed those found at the big prestigious clinics but at much lower prices. If there is a finding, we can easily call upon those high profile specialists -- because they're in our network too!

Projected ROI: 7x 9

Mercury Healthcare International 800-727-4160


We are authorized resellers of all MultiPlan and PHCS products, including their Center of Excellence Transplant program.

Medical Travel ... and so much more With MHI, you'll have access to local, innetwork, routine care and emergency care for all employees/members, regardless of where they work or live. Our fully inclusive PEPM includes our networks and embedded national access for PHCS and Multiplan, instead of only having network access for your local market area.

LET US MODEL YOUR PROJECTED SAVINGS AT NO COST OR OBLIGATION There are many similar cases such as these with comparable savings relative to group size, demographics, and home metropolitan statistical area provider billed charges.

Discover the Difference with Mercury Healthcare International We work with more than 800,000 hospitals, physicians and ancillary facilities. We also have relationships with multiple pharmacy benefit managers (PBMs), independent imaging networks, vision care networks, hearing and audiology networks, laboratories, air and ground ambulance, and dialysis providers.

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Please call us today for an analysis of your historic claims spend and a no cost, no obligation "what if" analysis.

Mercury Healthcare International, Inc.

Toll Free: 800.727.4160

800.727.4160


Organize Your Thoughts Current Fees

MHI Fees Network Access PHCS MultiPlan National Network + Mercury Global Access Network

N/A

Mercury Network and Case rates Domestic Only

N/A

Mercury Network and Case rates International Only National PBM with daily adjudicated claims data access Bonus Extras

N/A

No Charge

Imaging Network

N/A

No Charge

Hearing Network

N/A

No Charge

Free Pharmacy Discount Card National Alternative Medicine PPO

Medical Management Global Case Management Emergency Travel Assistance Case Management Global Air Ambulance and Ground Ambulance Remote telehealth consultations Global Transplant Network Global Disease Management Replace IPMI, Travel Accident and Workers' Comp Indemnity Carriers in 92 countries Global Physician Network vetted to NCQA standards (800,000+ physicians) Predictive Modeling (Elsevier or Johns Hopkins) Disease Management 24-hour global nurse access line Wellness program Wellness and Benefit Management Intranet Global Access Executive Checkup Program

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Mercury Healthcare International 800-727-4160


TPA Services for which you may be paying extra ICD-10 to ICD-9 Crosswalk conversion Medical Records Audit (International) International and Domestic Claims Audit Medical Records Translation Claims Currency Conversion Certified Medical Translation Services for Expats

Mercury Exclusives, Not Offered Elsewhere N/A

No Charge

Cloud-based Globally Integrated Medical Records

N/A

No Charge

Global Implant Registry

N/A

No Charge

Smart Records Technology connection to health providers worldwide

N/A

Global Independent Medical Exam (IME)

N/A

No Charge

N/A

Discount Travel Agency for health travel and all other business and leisure travel Special Purpose HRA

No Charge

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Up to 36 months outcomes monitoring & measurement by RNs

Mercury Healthcare International, Inc.

800.727.4160


Mercury Healthcare International Case Study