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Quarterly Report Q3, 2009

Managed Care Company Rankings The goal of the Verden rankings system is to evaluate how well or how poorly managed care companies (Payers) are performing from the perspective of physician practice management. The data used to rank these Payers comes directly from the companies themselves in the form of policy changes posted on their web sites. For the purpose of this report, data with an effective date from April 1, 2009 to June 30, 2009 (Q2) is eligible for ranking. Please see ‘Who We Measured’ on page 2 for more information about the Payers selected.

We remind our readers that these are QUARTERLY rankings, and as such, an insurer may do better or worse inany given quarter than the quarter before. Therefore, our reports are not representative of overall performance, but instead provide a snapshot assessment of activity on these insurers’ websites over the prior three month period. Ranking accumulation tables at the end of this report provide a comparison to Q1, 2009.


The Verden Quarterly Report Quarter 3, 2009

What’s New

What we measured

Who we measured

In April, we transitioned the Verden Alert subscription service to Medical Present Value (MPV), an Austin-based company with the competence, infrastructure and market reach to more widely distribute this service across health care provider organizations. Verden will continue to rank insurers on a quarterly basis using the same Alert-based data, now licensed from MPV.

Our analysis is composed of five categories in which each insurance company is given a score. The more points accumulated, the worse companies fare. Points are designated based on multiple criteria, with each metric carrying a different weight.

Of the insurance companies tracked by MPV on a daily basis, we were able to rank these insurers.

We are very pleased with the transition of our Alert product to MPV as it is an exceptional company, stocked with some terrific talent that has designed innovative products for health care providers for many years. They share the same industry vision as Verden and therefore were a perfect choice for the continuation of the Alerts. The terms of the sale have allowed us to continue to produce our well-received rankings analysis work and in addition, has facilitated the extension of Verden’s research services. This allows for a deeper and most robust analysis of payer trends, providing insight into insurers’ policy decision-making, and spending more time assessing how those policies impact our population’s health. Our company is therefore evolving further into health care business research and analytics, considerably extending our consulting services and expertise. Watch this space for details of future offerings, including a special ranking of insurers’ web site capabilities and functionality at the end of this year. Thanks for your support and we look forward to bringing you better analyses and additional reports soon. Enjoy! Susanne Madden President and CEO

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Data selected for measurement are those policies with an effective date occurring between 04/01/2009 and 6/30/2009 (Q2, 2009). The source data is organized by administrative, reimbursement, pharmacy and medical policy categories and payers are ranked on five (5) measures: 1. 2. 3. 4. 5.

Cost to Provider (CP) Volume of Change (VC) Clarity of Communication (CC) Notification Period (NP) Posting Integrity (PI)

A note about the managed care companies listed Great-West became a Cigna company in mid-2008 and has been fully integrated into Cigna’s medical policies. HIP and GHI are both now collectively EmblemHealth, however, their respective policies have not been aligned so we expect to see further activity on each site throughout 2009. AmeriChoice and Oxford Health Plans are both UnitedHealthcare companies, however, each of these three companies have separate policies and procedures and therefore have been ranked separately. Please see endnote for the Anthem* plans evaluated under that name in these rankings.

Aetna AmeriChoice AmeriGroup AmeriHealth Anthem Asuris BCBS of Alabama BCBS of Florida BCBS of Georgia BCBS of Illinios BCBS of Louisiana BCBS of Massachusetts BCBS of Minnesota BCBS of Mississippi BCBS of Montana BCBS of New Mexico BCBS of North Carolina BCBS of Oklahoma BCBS of Rhode Island BCBS of South Carolina BCBS of Tennessee BCBS of Texas Blue Cross of Northeastern Pennsylvania

BlueChoice HealthPlan of South Carolina CareFirst BCBS CIGNA Corporation Emblem GHI / HIP Empire BCBS / Wellpoint Excellus BCBS Fallon Community Health Plan Harvard Pilgrim Health Care Health Partners, Inc. Horizon Humana Inc. Independence Blue Cross LifeWise Health Plan Oxford Health Plans, LLC Premera Blue Cross Priority Health Regence Tufts Health Plans UniCare United Healthcare Univera Healthcare Wellcare Wellmark, Inc.

Metric Weighting (Aggregate Score) In order to calculate the overall ranking we have assigned weights to each metric:

When we measure Ranking reports are usually issued within 6 – 8 weeks after the close of the quarter. This allows enough time to capture and post any tardy policy changes that are made effective within the quarter’s timeframe but posted by insurers after the quarter closes, as well as the extensive time necessary to appropriately analyze and grade each of the alerts issued by the insurance companies that qualify for ranking.

Metric 1. 2. 3. 4. 5.

Cost to Provider (CP) Volume of Change (VC) Clarity of Communication (CC) Notification Period (NP) Posting Integrity (PI)

Weight 50% 18% 25% 7% Penalty points

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The Verden Quarterly Report Quarter 3, 2009

How we measured 1. Cost to Provider takes into account policy changes or initiatives affecting reimbursement, and those that added more or less administrative time or complexity to a process in order to adhere to changes. Examples include implementation or withdrawal of pre-authorization, pre-certification, notification, and referral processes; timelines or modified processes that require more or less resources in order to comply with changes; and claims, coding or data errors or improvements resulting in more or less efficiency. These points accounted for 50% of the aggregate score.

2. Volume of Change takes into account the total amount of policy and procedure change across all categories - medical, administrative, pharmacy and reimbursement – experienced by physicians in a given network. Points are determined by measuring the volume of change by each insurance company compared to overall volume in percentage. Each individual change with an effective date between the beginning and end of the quarter is included in the dataset for each of the insurance companies assessed. These points account for 18% of the aggregate score.

We first allocate each individual change a corresponding point before tallying the total points in a given metric for each insurance company. For comparison purposes, we incorporate the ratio of CP/VC in order to account for the variation in number of changes between Payers.

3. Clarity of Communication indicates how well or how poorly insurers make information available on their web sites and how clearly those changes are communicated in updated policies. Of the insurers ranked, their websites are utilized as the primary communication tool for notifying network participants of changes to policies and procedures. The expectation is that providers will monitor these sites for updates in order to keep themselves informed as part of their contractual obligations with an insurer. However, if providers participate with more than an insurer or two, this is a near-

impossible task as it requires constant monitoring and the ability to know exactly what has changed when updates are posted. The MPV Payer subscription service tracks these changes for you by insurer and specialty; please visit their website at mpv.com/sol_payer_alert.php for further information.

policies and updates on the site, the fewer points allocated. Additional points are given to insurers that keep their policies and network news behind a log-in barrier. Points are tallied as a whole, rather than for individual alerts, for each insurance company. These points account for 25% of the aggregate score.

This measurement captures whether insurers’ clearly identify a new or modified policy, its effective date, and what changes actually occurred. The easier it is to find medical

4. Notification Period measures the time elapsing between posting notification of a policy or procedure change and the date upon which the change became effective. We grade insurers on how much notice they give providers of their intent to change a policy or procedure – the less time between posting and effective date, the more points accumulated. We believe that at least thirty days of notification is necessary for providers to respond and adapt to changes. Payers that post 30 days or more ahead of effective date accumulate no points.

5. Posting Integrity measures policies posted on-line with a retro-active date, or policies altered without an update or revision date being added. Tracking insurers’ web sites every day allows us to see when notifications have been back-dated or altered. Because we view this practice as highly deceptive, we allocate a separate ranking for this metric and Payers observed retro-posting or altering information without notification are tagged with a penalty score.

These points account for 7% of the aggregate score.

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The Verden Quarterly Report Quarter 3, 2009

Overall Rankings Rank

Total Score

1 Aetna 2 LifeWise Health Plan 3 Priority Health 4 UniCare 5 Premera Blue Cross 6 BCBS of Illinios 7 BCBS of Oklahoma 8 BCBS of Mississippi 9 BCBS of Montana 10 BCBS of Texas 11 BCBS of Minnesota 12 BCBS of New Mexico

10.14 12.72 16.00 16.05 16.33 17.62 18.79 19.69 20.61 21.63 21.95 22.32

Rank

Total Score

13 CareFirst BCBS 14 Oxford Health Plans, LLC 15 Blue Cross of Northeastern Pennsylvania 16 Harvard Pilgrim Health Care 17 Wellmark, Inc. 18 BCBS of Tennessee 19 BCBS of Rhode Island 20 Tufts Health Plans 21 Health Partners, Inc. 22 United Healthcare 23 BCBS of Massachusetts

This quarter we’ve seen highly disparate strategies employed by the insurers as they scramble to shore up profits (ahem, I mean control costs) amid declining membership and patients loading up on medical services before losing their employer-sponsored health care.

24.99 25.54 26.02 26.46 27.30 27.68 27.77 28.21

Total Score

24 Excellus BCBS 25 BCBS of Florida 26 CIGNA Corporation 27 Univera Healthcare 28 BCBS of North Carolina 29 BCBS of Georgia 30 AmeriGroup 31 Anthem 32 BCBS of Alabama 33 Wellcare 34 Fallon Community Health Plan 35 Humana Inc.

cialty). At the other end of the spectrum, some insurers have taken pharmacy management to new heights, imposing prior authorizations on contraceptive prescriptions (Humana) and all nasal allergy medications and implementing Pay For Performance. . . without the Pay (Regence).

28.39 28.64 28.73 29.12 29.13 29.73 30.43 30.82 31.44 32.30 33.71 34.37

Rank

Total Score

36 Asuris 37 Regence 38 Emblem GHI / HIP 39 AmeriHealth 40 Independence Blue Cross 41 BCBS of Louisiana 42 Empire BCBS / Wellpoint 43 BCBS of South Carolina 44 BlueChoice HealthPlan of South Carolina 45 AmeriChoice 46 Horizon

34.50 35.02 36.85 36.91 37.28 38.57 38.99 41.39 43.93 46.81 52.72

third overall, with BCBS of Oklahoma cutting its points by half this quarter, mostly due to improvements in communication.

LifeWise tops the chart again this quarter, while Aetna, who did so well in 2008, slid further down the rankings. Priority’s focus on cost reduction within the plan helped to secure a second place. Both AmeriChoice and Amerigroup improved substantially over last quarter, primarily due to a relaxation of prior authorizations for the former, and creating provider how-to sheets with posted provider rep information for the latter. BCBS of Illinois improved overall too, and rolled out an online ‘Electronic Refund Management’ system to help with overpayment reconciliation, but remains apart from its sister companies, BCBS of Texas, Oklahoma and New Mexico. Collectively, these three rank

BCNEPA has also slashed its points thanks to a new up front claims edit that rejects claims on members who do not have active coverage at the time of service. Now there’s a novel idea – don’t pay the claim in the first place so no take-back is required later on. It has also decided to staff its Quality Improvement Committee with – wait for it – actual practicing network physicians! I think these guys are beginning to catch on, unlike Wellmark who continue to scrape the bottom. Other interesting trends include a move by many insurers to add coverage of oncology drugs, expand the use of radiologic services such as MRIs, MRAs, and PET scans, and cover more genetic testing. I guess it gets harder to ignore clinical evidence that supports efficacy of such treatments and diagnostics.

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The biggest trend we’ve seen is the move toward actually helping to manage care. Several insurers have launched patient management programs such ‘medical home’ initiatives (Priority), disease management (AmeriChoice) and helpful patient alerts to providers (though the jury is out on whether or not these alerts will be more of a hindrance or a help in managing treatments) brought to you by AmeriHealth. BCNEPA is providing discount programs for gym membership, weight watchers, and has even secured discounted rates at Canyon Ranch for members. Some are even adding reimbursement for screening services and wellness care (Premera is covering massage with a prescription; Harvard is paying physicians with acupuncture as a secondary spe-

22.69 23.49 24.23

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The Verden Quarterly Report Quarter 3, 2009

1. Cost to Provider (CP) Rank 1 Premera Blue Cross 2 BCBS of Mississippi 3 LifeWise Health Plan 4 Wellcare 4 Aetna 5 Health Partners, Inc. 6 BCBS of Tennessee 7 Priority Health 8 BCBS of Illinios 9 Harvard Pilgrim Health Care 10 BCBS of Montana 10 BCBS of Rhode Island

0.03 0.22 0.31 0.36 0.36 0.38 0.45 0.47 0.48 0.54 0.56 0.56

Rank

Total Score

11 Blue Cross of Northeastern Pennsylvania 12 UniCare 13 BCBS of Oklahoma 14 Wellmark, Inc. 15 BCBS of Minnesota 16 BCBS of Texas 17 CIGNA Corporation 18 BCBS of New Mexico 19 Emblem GHI / HIP 20 Excellus BCBS 21 Oxford Health Plans, LLC

0.57 0.62 0.63 0.75 0.79 0.84 0.85 0.88 0.90 0.95 0.99

Rank

Wellmark lands dead-last for continuing its strategy of cost-shifting to providers in the form of step therapy and prior authorizations being slapped on policies everywhere. Tufts removed some of its imaging codes from prior authorization lists, but it wasn’t enough to offset the other cost-producing measures it undertook in Q2. Meanwhile Regence got really creative and developed a whole new type of red tape – under the guise of quality all Regence BCBSO providers will be required to obtain an order identification (ID) number from AIM (American Imaging Management) before scheduling one of the advanced diagnostic

Despite Humana’s implementation of a prior authorization requirement for contraceptives (as well as a bunch of others) it managed to improve its score over the previous quarter thanks to adjusting some additional procedures to medically necessary status. Empire BCBS improved on news that certain providers no longer need to go through the credentialing process and the addition of coronary MRA as a medical necessity when certain criteria are met, however, it began bundling counseling services in to certain well visit codes and moved to a new claims editing software, no doubt causing problems for providers.

1.00 1.00 1.00 1.03 1.05 1.06 1.13 1.17 1.21 1.22 1.24 1.27

Rank

Total Score

32 AmeriChoice 33 BCBS of North Carolina 34 Independence Blue Cross 34 Fallon Community Health Plan 35 AmeriGroup 36 Empire BCBS / Wellpoint 37 Regence 38 BCBS of South Carolina 39 AmeriHealth 40 BlueChoice HealthPlan of South Carolina 41 Horizon

1.31 1.35 1.36 1.36 1.39 1.53 1.54 1.56 1.62 1.76 2.27

Oxford more than doubled its points in Q2. It wasn’t so much the additional precertification requirements that got them in to trouble; it was the decision to make pregnancy a pre-existing condition for individual plans in NY. If it truly is a pre-existing condition, why only in NY? I guess CT and NJ have laws against that sort of thing. Oddly, Oxford also took the position to cover Soma™ (a muscle relaxer) for NJ members, but for NY and CT folk, certain criteria must be met first. Even stranger, United Healthcare (Oxford’s parent company) issued a policy change stating that it will no longer cover Soma™ at all under UHC plans. Clearly these decisions are not based on efficacy or clinical outcomes (i.e. medicine).

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imaging procedures such as CT and MRI scans. So, first obtain an ID number, and then place an order for preauth? What a waste of provider time. Additionally, it has rolled out the Regence Quality Program, in which participation is mandatory for its network providers. We can call this one 4P, and the P for Pay is missing from the program.

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Total Score

22 BCBS of Florida 22 BCBS of Louisiana 22 Univera Healthcare 23 BCBS of Alabama 24 Anthem 25 BCBS of Georgia 26 CareFirst BCBS 27 Asuris 28 BCBS of Massachusetts 29 Tufts Health Plans 30 United Healthcare 31 Humana Inc.

AmeriChoice significantly climbed the ranks to take the lead in this category this quarter thanks to removing prior authorization requirements from several policies, expanding supportive patient disease management programs, adding reimbursement for certain screening services and identifying more clearly in its policies what codes are covered.

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The Verden Quarterly Report Quarter 3, 2009

2. Volume of Change (VC) Rank 1 2 2 3 4 4 5 6 7 8 9 9

Total Score

Horizon Harvard Pilgrim Health Care UniCare Wellcare LifeWise Health Plan Wellmark, Inc. BCBS of Louisiana Health Partners, Inc. Tufts Health Plans BCBS of Alabama BCBS of Rhode Island Premera Blue Cross

0.50% 0.59% 0.59% 0.63% 0.72% 0.72% 1.00% 1.09% 1.22% 1.36% 1.45% 1.45%

Rank 9 Priority Health 10 AmeriGroup 10 BlueChoice HealthPlan of South Carolina 11 BCBS of Massachusetts 11 BCBS of North Carolina 12 Regence 13 BCBS of Oklahoma 13 Univera Healthcare 14 BCBS of Montana 15 BCBS of Minnesota 16 BCBS of South Carolina

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Rank

Total Score

16 Independence Blue Cross 2.04% 17 Asuris 2.08% 18 BCBS of Florida 2.13% 19 BCBS of New Mexico 2.31% 20 BCBS of Georgia 2.35% 20 Emblem GHI / HIP 2.35% 21 AmeriHealth 2.40% 22 Blue Cross of 2.44% Northeastern Pennsylvania 23 CareFirst BCBS 2.49% 23 CIGNA Corporation 2.49% 24 BCBS of Illinios 2.63%

1.45% 1.49% 1.49% 1.54% 1.54% 1.67% 1.72% 1.72% 1.86% 1.95% 2.04%

Total Score

24 Fallon Community Health Plan 25 BCBS of Mississippi 26 BCBS of Texas 26 Excellus BCBS 27 BCBS of Tennessee 28 AmeriChoice 29 Empire BCBS / Wellpoint 30 Oxford Health Plans, LLC 31 Aetna 32 Humana Inc. 33 United Healthcare 34 Anthem

2.63% 2.67% 2.76% 2.76% 2.94% 3.26% 3.40% 3.76% 4.16% 4.44% 4.98% 6.75%

In addition to the strategies employed and policies changed, several insurers have reduced reimbursement rates and have begun shifting to new pricing models.

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As the pressure on their profits continues due to falling enrollment, more employers moving to less expensive risk-based coverage, and investors howling for ever greater margins, insurers will continue to feel the effect of change after change being pushed to them to manage.

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In Q1, 2009, we saw a 30% increase in volume of change across all insurers in that period over Q4, 2008. This quarter has seen volume go down by 8% over Q1 (thanks to lower volume primarily from Anthem and United Healthcare) but is still nearly 25% above the average volume for 2008. This clearly indicates that insurers are continuing to scramble to shift cost off their books and on to providers of care.

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The Verden Quarterly Report Quarter 3, 2009

3. Clarity of Communication (CC) Rank 1 2 2 4 3 3 4 4 4 5 5 5

Total Score

Aetna UniCare CareFirst BCBS LifeWise Health Plan Oxford Health Plans, LLC Priority Health BCBS of North Carolina Tufts Health Plans United Healthcare BCBS of Illinios BCBS of New Mexico BCBS of Oklahoma

Rank

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Total Score

BCBS of Texas AmeriGroup BCBS of Florida BCBS of Georgia BCBS of Massachusetts BCBS of Minnesota BCBS of Mississippi BCBS of Montana Excellus BCBS Univera Healthcare Premera Blue Cross Anthem

Last quarter we reported that we believed BCBS of Texas and MVP were implementing changes to their sites and policy change notification processes that may result in ranking improvement for this quarter. BCBS of Texas and its sister companies certainly made the grade, shaving 3 points from their total for modifying their policies to now include a descriptive change history within each policy that changed. AmeriChoice continues to have difficulty getting policies posted timely and listing dates that make sense; it seems like such a simple thing to fix we wonder why they continue to need to be called out on it every quarter. Step it up AC!

Total Score

8 Humana Inc. 8 Regence 8 Wellmark, Inc. 9 CIGNA Corporation 10 AmeriHealth 10 BCBS of Alabama 10 BCBS of Rhode Island 10 Blue Cross of Northeastern Pennsylvania 10 Harvard Pilgrim Health Care 11 Fallon Community Health Plan 12 Empire BCBS / Wellpoint

be made but no details about the changes, and generally caused a level of confusion that we hope will be adequately cleared up in its next publication. As stated in previous rankings, those companies that continue to score the worst are those that issue policies without effective dates, and/or updates without details about what has actually changed in those policies. This not only causes confusion for providers, but allows for certain insurers to routinely breach contract agreements regarding notification periods (e.g. in the case where policy changes have to be posted 30 days prior to implementation, it would be impossible to contest this if no effective and update dates are given). You know who you are. Therefore, we continue to push for basic standards to be adopted across insurance networks to ensure that a minimum set of criteria is present for each policy. Those standards need to include:

8 8 8 8.5 9 9 9 9 9 9.5 10

Rank

Total Score

13 Asuris 14 BCBS of South Carolina 14 BCBS of Tennessee 14 BlueChoice HealthPlan of South Carolina 15 Independence Blue Cross 16 Health Partners, Inc. 17 BCBS of Louisiana 17 Emblem GHI / HIP 17 Horizon 18 Wellcare 19 AmeriChoice

10.5 11 11 11 12 13 14 14 14 16 17

• Original policy effective date and the date policy was posted to site • Date policy was updated and the date those changes became effective • Clear statement within the policy about what precisely changed or was updated Policies should be easy to find on websites, should not be hidden behind a security layer (log in and password requirement) and providers should be able to search policies by CPT / HCPCS / ICD codes and keywords. In addition, notification of upcoming changes should be prevalent. For example, both Oxford Health Plans and Aetna publish lists of policy changes by date. BCBS of Texas / Illinois / New Mexico / Oklahoma have pages dedicated to ‘pending policies’ and a ‘policy update’ section where effective and change implementation dates are clearly noted. In addition, listing a change history within each policy allows providers to better understand what has changed and be able to act upon those changes.

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The Verden Quarterly Report Quarter 3, 2009

4. Notification Period (NP) Rank

Total Score

1 BCBS of Minnesota 2 BCBS of Oklahoma 3 BCBS of Texas 4 BCBS of New Mexico 5 BCBS of Illinios 6 Fallon Community Health Plan 7 BCBS of Massachusetts 8 Independence Blue Cross 9 BCBS of Montana 10 AmeriHealth 11 AmeriGroup 12 Blue Cross of Northeastern Pennsylvania

Rank

1.14 1.29 1.34 1.45 1.59 1.72 1.79 1.89 2.02 2.11 2.12 2.35

13 Priority Health 14 Regence 15 United Healthcare 16 BCBS of Tennessee 17 Health Partners, Inc. 18 Horizon 19 Tufts Health Plans 19 Asuris 20 Aetna 21 Oxford Health Plans, LLC 21 Wellmark, Inc. 22 BCBS of North Carolina 23 Empire BCBS / Wellpoint

24 CareFirst BCBS 25 Anthem 26 Wellcare 27 Harvard Pilgrim Health Care 28 Emblem GHI / HIP 29 BCBS of Alabama 30 CIGNA Corporation 31 LifeWise Health Plan 32 Premera Blue Cross 33 BCBS of Florida 34 Excellus BCBS 35 AmeriChoice 35 BCBS of South Carolina

Total Score 3.07 3.09 3.14 3.23 3.25 3.30 3.31 3.38 3.41 3.45 3.59 3.60 3.60

Rank

Total Score

36 BCBS of Georgia 37 BlueChoice HealthPlan of South Carolina 38 BCBS of Louisiana 39 Univera Healthcare 40 Humana Inc. 41 BCBS of Rhode Island 42 BCBS of Mississippi 43 UniCare

3.63 3.67 3.68 3.76 3.80 3.81 3.85 3.92

how well BCNEPA fared this quarter, we suspect that someone new may be in charge over there. Oxford and United also got their act together this quarter, returning to their former turn-around times in this metric. Now if they can do it, why not United’s subsidiary, AmeriChoice?

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Notification period improved overall across insurers. We still do not see consistency with at least 30 days notification, even though technology is improving and getting policies updated on sites would seem to be an easy process to maintain. Notably, AmeriHealth, BCBS of Massachusetts, and Fallon all improved their NP rankings. Based on

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The Verden Quarterly Report Quarter 3, 2009

5. Posting Integrity (PI) Posting Integrity infractions occur when an insurer posts a policy with one date, then changes that date to some time prior to the original posting date. We take the position that the primary reason for doing so is to align with claim edits or some other such business decision, which may have an adverse affect on providers. There were no infractions recorded for the second quarter, 2009.

Certificates of Merit Certificate of Merit has been issued to the following company

Lifewise Health Plans Most Provider-Friendly Insurer Q2, 2009 Prior Awards

Lifewise Health Plans Most Provider-Friendly Insurer Q1, 2009

Aetna Health Plans Annual Award for Most Provider Friendly Network 2008

Oxford Health Plans Most Improved Clarity of Communication Q2, 2008

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The Verden Quarterly Report Quarter 3, 2009

Comparison Data Payer Aetna AmeriChoice AmeriGroup AmeriHealth Anthem Arkansas BCBS Asuris BCBS of Alabama BCBS of Florida BCBS of Illinios BCBS of Kansas BCBS of Louisiana BCBS of Massachusetts BCBS of Minnesota BCBS of Mississippi BCBS of Montana BCBS of New Mexico

Q2

10.14 46.81 30.43 36.91 30.82 34.50 31.44 28.64 27.93 17.62 N/A 38.57 28.21 21.95 19.69 20.61 22.32

20.98 30.72 24.70 34.19 33.99 42.14 47.99 44.08 27.99 20.88 N/A 47.22 28.01 30.76 25.55 27.11 15.93

Q1

Payer

19.40 53.60 40.08 33.76 36.56 N/A N/A 49.64 20.60 27.83 20.13 N/A 30.65 N/A 21.91 N/A N/A

Q3

Q2

Q1

BCBS of North Carolina 29.13 BCBS of Oklahoma 18.97 BCBS of Rhode Island 26.46 BCBS of South Carolina 41.39 BCBS of Tennessee 26.02 BCBS of Texas 21.63 BCBS of Western New York N/A Blue Cross of Northeastern 24.23 Pennsylvania BlueChoice HealthPlan of 43.93 South Carolina CareFirst BCBS 22.69 CIGNA Corporation 28.73 Commonwealth-Unicare N/A EmblemHealth 36.85 Empire BCBS / Wellpoint 38.99 Excellus BCBS 28.39

32.65 15.08 N/A N/A 41.19 15.59 40.52 25.81

N/A N/A N/A N/A N/A 18.07 N/A 42.86

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17.26 26.71 16.84 34.34 29.45 32.47

35.19 28.66 N/A N/A 34.67 35.18

Payer Fallon Community Health Plan Harvard Pilgrim Health Care Health Partners, Inc. Horizon BCBS NJ Humana Inc. Independence Blue Cross LifeWise Health Plan MVP Health Plan, Inc. Oxford Health Plans, LLC Premera Blue Cross Priority Health Regence BCBS Tufts Health Plans UniCare United Healthcare Univera Healthcare Wellcare

Q3

Q2

33.71 24.99 27.68 52.72 34.37 37.28 12.72 N/A 23.49 16.33 16.00 35.02 27.30 16.05 27.77 29.12 32.30

37.15 35.09 31.98 32.12 34.59 27.65 10.77 28.81 23.94 30.10 14.87 35.43 40.72 17.98 26.68 30.26 39.07

Q1 42.61 41.93 43.96 39.78 44.63 23.74 14.16 24.85 17.59 24.40 20.80 40.31 34.33 22.08 30.69 36.27 29.15

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The Verden Quarterly Report Quarter 3, 2009

Literature Review: Cost Studies and Research As healthcare reform is sought and insurers come under more and more scrutiny, organizations are finally beginning to assess and analyze the impact of administrative burden on providers, and the cost of a for-profit health care system on our economy and society. Further supporting the work we do here at the Verden Group, some recent excellent studies / articles include: RAND Study: Employer-Sponsored Insurance - Health Care Cost Growth and the Economic Performance of U.S. Industries Study published by RAND: Neeraj Sood, Arkadipta Ghosh, José J. Escarce. Employer-Sponsored Insurance, “Health Care Cost Growth, and the Economic Performance of U.S. Industries,” HSR: Health Services Research. Published Online: June 3, 2009. h ttp://www.randcompare.org/publications/summary/health_care_cost_ growth_and_the_economic_performance_of_us_industries This study examined how increasing health care costs affect the U.S. economy by estimating how health care cost growth that exceeds growth in GDP (“excess” cost growth) affected three important economic outcomes: employment, output (measured as revenues), and value added to GDP. The analysis included data from 38 industries over the 19-year period 1987-2005. The study found that excess growth in health care costs has adverse effects on employment, output and value added to GDP in the U.S., and that these effects are greater for industries where high percentages of workers have employer sponsored insurance. For example, the study estimated that a 10% increase in excess health care costs would reduce employment by about 0.24 percent in an industry such as motor vehicles, where about 80% of workers have Employer Sponsored Insurance (ESI), compared with about 0.13% percent drop in the retail trade, where about one-third of workers have ESI. Economy-wide across all the 38 industries, a 10% increase in excess health care costs growth would result in about 120,800 fewer jobs, $28 billion in lost revenues, and about $14 billion in lost value added. The conclusion is that excess growth in health care costs has adverse economic effects here in the U.S., and that these effects are more

pronounced in industries that have a higher percentage of workers with ESI. Chad Terhune and Keith Epstein. “The Health Insurers Have Already Won” Business Week 6 Aug. 2009 (Cover Story) h ttp://www.businessweek.com/magazine/content/09_33/ b4143034820260.htm How UnitedHealth and rival carriers, maneuvering behind the scenes in Washington, shaped health-care reform for their own benefit. A chilling account of how insurers have been shaping healthcare reform from within Washington for their own benefit since the beginning of the debate. Highlights include: “The likely victors are insurance giants such as UnitedHealth Group (UNH), Aetna (AET), and WellPoint (WLP). The carriers have succeeded in redefining the terms of the reform debate to such a degree that no matter what specifics emerge in the voluminous bill Congress may send to President Obama this fall, the insurance industry will emerge more profitable. Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling.” “Impressing fiscally conservative Democrats like Matheson, a leader of the House of Representatives’ Blue Dog Coalition, is at the heart of UnitedHealth’s strategy. It boils down to ensuring that whatever overhaul Congress passes this year will help rather than hurt huge insurance companies.” “The industry has already accomplished its main goal of at least curbing, and maybe blocking altogether, any new publicly administered insurance program that could grab market share from the corporations that dominate the business. UnitedHealth has distinguished itself by more deftly and aggressively feeding sophisticated pricing and actuarial data to information-starved congressional staff members. With its rivals, the carrier has also achieved a secondary aim of constraining the new benefits that will become available to tens of millions of

people who are currently uninsured. That will make the new customers more lucrative to the industry.” “Matheson, whose Blue Dogs command 52 votes in the House, can’t offer enough praise for UnitedHealth, the largest company of its kind. “The tried and true message of their advocacy,” he says, “is making sure the information they provide is accurate and considered.” Insurance companies advising our politicians on how to craft health reform? that’s about as credible as having for-profit entities manage health care dollars in the first place. Health Care Reform, Explained Kaiser Family Foundation: Side-by-Side Comparison of Major Health Care Reform Proposals. Jun. 2009 http://www.kff.org/healthreform/sidebyside.cfm This interactive side-by-side compares the leading comprehensive reform proposals across a number of key characteristics and plan components. Included in this side-by-side are proposals for moving toward universal coverage that have been put forward by the President and Members of Congress. In an effort to capture the most important proposals, Kaiser have included those that have been formally introduced as legislation as well as those that have been offered as draft proposals or as policy options. This side-by-side offers a summary of the major components of these proposals; detailed descriptions of provisions relating to the Medicare and Medicaid programs can be found online. It will be regularly updated to reflect changes in the proposals and to incorporate major new proposals as they are announced.

Our thanks to Brandon Betancourt over at http://pediatricinc.wordpress. com/ for the heads up on the innovative Dan Roam’s ‘American health care on (4) napkins’. This is a must read for anyone who wants to simply understand what reform is all about! http://www.slideshare.net/danroam/healthcare-napkins-all

Stay up-to-date with changes as they occur by becoming an MPV Payer Alert subscriber. Sign up at www.mpv.com *Anthem Blue Cross and Blue Shield is the trade name for the following: In Connecticut: Anthem Health Plans, Inc. In Colorado, Rocky Mountain Hospital and Medical Service, Inc. In Indiana: Anthem Insurance Companies, Inc. In Georgia: Blue Cross and Blue Shield of Georgia, Inc. and Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. In Indiana: Anthem Insurance Com panies, Inc. In Kentucky: Anthem Health Plans of Kentucky. In Maine: Anthem Health Plans of Maine, Inc. In Missouri: RightCHOICE Managed Care, Inc. (RIT), Healthy Alliance Life Insurance Company (HALIC) and HMO Missouri, Inc. In Nevada: Rocky Mountain Hospital and Medical Service, Inc. In New Hampshire: Anthem Health Plans of New Hampshire, Inc. In Ohio: Community Insurance Company. In Virginia: Anthem Health Plans of Virginia, Inc. In Wisconsin: Blue Cross Blue Shield of Wisconsin (BCBSWi) and Compcare Health Services Insurance Corporation (Comp care). All other Anthem plans including Empire Blue Cross Blue Shield and Blue Cross of California are excluded.

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Quarterly Rankings Q3_09