▪ Consulting Capabilities ▪ Market Trends ▪ Best Practices in Benefits APRIL 2020
Our mission: To serve our clients to protect the health and financial well-being of people everywhere. 2
About Milliman ▪ Largest privately-held actuarial and consulting firm ▪ Over $1 Billion in annual revenue ▪ Providing consulting and actuarial expertise for more than 70 years ▪ 3,500+ employees operating in over 60 principal cities worldwide ▪ Over 1,400 credentialled actuaries and consultants ▪ Subject matter experts across the full spectrum of benefits ▪ Our primary customers include: − Employers and Other Plan Sponsors − Insurance Carriers, PBMs and other Health Plans − Health Care Providers 3
Data and Technology Drive Our Solutions and Inform Strategy OVER $12 MILLION Healthcare database hosts 9 billion records for over 80 million members, some of the largest health care data sets in the U.S. Total technology spend of $70 million is 7% of gross revenue, putting us at the top of the Gartner IT Spend Index for professional services firms. One of the largest Azure Cloud customers with Microsoft from a data processing perspective. 4
Capabilities: Our Data Analytics Tools & Resources Tools designed to proactively address employer challenges with data, quality, and analytic proficiency. # Solutions / Tools Objective Cost Efficiency Quality Utilization and costs benchmarks across 80 million members by ✓ ✓ Health Cost Guidelines (HCG) 1 detailed service categories Milliman Advanced Risk Utilize the risk adjustor for predictive modeling and patent health ✓ ✓ 2 Adjuster (MARA) improvement. ✓ ✓ 3 Rising Risk Identify members whose claim cost are expected to increase next year Chronic Condition Hierarchal Understand the chronic conditions of your population that are driving ✓ ✓ 4 Groups costs and utilization trends Quality Measures (Evidence ✓ 5 Measures plan and provider quality measures compliance Based Measures) Medical and Pharmacy Network Identify the most optimal vendor partners for your plan based on ✓ ✓ ✓ 6 Evaluations financial reimbursements and employee satisfaction Measure health waste based on Choosing Wisely and Physician ✓ ✓ ✓ Health Waste Calculator 7 Specialty panel guidelines Predictive modeling using advanced machine learning techniques to ✓ ✓ ✓ Predictive Analytics 8 avoid potentially avoidable expenses Analyze and benchmark your medical and pharmacy utilization and ✓ ✓ ✓ Analytics & Benchmarking Pro 9 cost Compare your cost against Milliman’s HCG - the industry leading cost ✓ ✓ Benchmarking Survey (free) 10 and utilization benchmarks Key: ✓ Impacted value driver 5
Capabilities: How is our Actuarial Approach Different? Predictive Analytics and Socio-Economic Modeling The Need for a Different Approach • Medical care determines only 10% of overall health • Social, economic & environmental factors determine an additional 20% of overall health • At least 25 cents of every health care dollar is spent on treatment of conditions resulting from Medical & Pharmacy Socio-Economic potentially changeable behaviors (AMA) Claim Predictive Modeling Modeling • Additional non-claims Target Results of Milliman’s approach: based insight • Incomplete view of • patient/member • Identify health events Identifies hidden trends and costs • Often reactionary to health before they happen • Improves health risk model accuracy events that have already occurred • Proactively addresses population health Integration 6
Example: Using Predictive Analytics and Socio-Economic Modeling to Drive Behavior Current Members – Expand & Supplement New Members – Immediate Insight 7
Capabilities: Providing Total Rewards Consulting Support Rewards Optimization Health & Welfare Benefits Retirement Benefits Communication • Assess compensation, benefits, • Focus on medical and pharmacy • Assess costs & risks of • Communication strategy and and overall employee expense, disability, ancillary retirement plans globally design engagement products, long-term care and • Pension plan valuation • Media assessment other forms of health insurance • Workforce optimization/ • Defined Contribution plan • Employee surveys • Integrated absence, workers restructuring / timing and cost management • Enrollment communications • Impact of change-in-control compensation, and health care • Pension administration • Microsites holistically with integrated data programs • DC plan administration • Year-round key messaging • Harmonization of reward • Total rewards statements programs with focus on employee communication • Support evaluation of candidates for key roles 8
Capabilities: Health & Group Benefits Consulting Services Approaches designed to proactively address employer challenges with data, quality, and analytic proficiency. 9
Market Trends: Healthcare Costs Indicators show the pace of healthcare cost has slowed. So why don’t we feel it? Milliman Medical Index (MMI) ▪ For the third year in a row, the MMI trend is under 5% annually. ▪ Prescription drug trends continue to come down with last year’s cost increase at 6%. ▪ Still, the MMI has increased over $100 per month for the past 10 years. ▪ Health cost is outpacing inflation and the U.S. leads the highest per capital health care spend worldwide. 10
Market Trends: Employee Cost Share Grows Faster ▪ Employees continue to foot more of the healthcare bill with their costs rising 5.9% compared to employer costs increasing at 3.5%. ▪ Our higher costs are not leading to better outcomes (at all). The accelerating cost pressures continue to be coupled with poor care quality among preventative health, acute, and chronic care. ▪ Spousal surcharges are increasing/ACA encourages significant tobacco surcharges. ▪ Trends compounding disruption include: Wellness Balancing Consumerism expands to changes priorities by improve generational employee engagement behavior preferences Technology and Regulatory Election impact analytics changes are will be felt by personalize the spurring all stakeholders experience delivery options 11
Best Practice: Milliman’s COVID19 Cost Impact Modeler COVID-19 – What does it mean for your population and your 2020 budget Milliman is closely monitoring the pandemic and has developed a Micro and Macro model to help businesses assess the financial risk to its overall benefit programs Milliman’s Model Considerations Increase services due to COVID-19 diagnosis (screening and admissions) ▪ ▪ Deferred services (e.g. elective procedures) Current infection rates (by geography) ▪ Infection spread rate / doubling rate ▪ Inflection date ▪ Resource capacity: ventilators, staffing, hospital beds ▪ Severity by age group (level 1 – 6) ▪ Medical cost by top procedures / services at the geographic level ▪ Company intervention programs (e.g. work from home, staggered shifts, etc.) ▪ 12
Best Practice – More Focused Vendor Management Recent Client Savings: Client Savings - Due to Medical Vendor Change* 25% 20% Percentage of Clients 15% 10% 5% 0% 0-2.5% 2.5-5% 5%-7.5% 7.5%-10% 10-15% 15%+ Claim Cost Savings * Claim savings based on clients who changed vendor / network. Current market trends: Financial Impact Employee Impact Increase in New • Identify financial • Provide impact to Value Based Network impact due to network employees through Payments Offerings changes Disruption and • Review and negotiate GeoAccess analysis contracts with carriers Health Digital Advocacy & Solutions & Concierge Integration Programs 13
Best Practice: Financial Benchmarks & Cost Driver Analytics Benchmarking • Compare historical claims data against robust data sets to determine savings opportunities based on utilization, unit cost, or other claims metrics. • Claims databases represent data from over 80 million member lives • Results shown on a total allowed basis or a percent of Medicare basis. Cost Driver Analysis • Determine key drivers • Uses advanced analytics to identify overall trends in utilization, unit cost, and/or total allowed costs. • Deep dive into historical claims data to determine specific service categories, procedures, or providers driving costs. • Consultative insight into strategies to control and maintain costs through proactive measures and monitoring of both leading and lagging indicators. 14
Best Practice: Financial Benchmarks - Assessment Opportunity Financial Benchmark Assessment Industry gold Benchmark standard for cost against 80M and utilization members benchmarks Normalized for Spectrum of well geography, managed to age/gender, and loosely managed plan design employerconsulting@milliman.com Email us to participate in Milliman’s Benchmark Survey 15
Best Practice: Milliman Waste Calculator Developed as a way to assess and identify the amount of healthcare waste occurring within a population as a result of over-utilization, unnecessary procedures and other systemic issues within the healthcare delivery system. The Waste Calculator is a collaboration between Milliman and V-BID Health – the organization recognized as setting the national standard of appropriate care by the medical community. ▪ Measures 47 potentially unnecessary services ▪ Analyze cost savings potential ▪ Generates actionable reports and summaries Case Study: Commonwealth of Virginia 16
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