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Comprehensive HealthcareCoverage for Retirees

Retiree Solutions – What’s New for 2007

October 24 & 25, 2006

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Agenda

Training Agenda

• Introductions

• Value of Aetna

• PFFS Overview/Plan Designs

• Eligibility/Enrollment

• Customer Service

• Communications

• Implementation

• Q&A

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What We Believe

Aetna has helped protect people against the risks and uncertainties of life for over 150 years. We strive to continually evolve in order to meet the changing needs of our customers while keeping true to our values. Our products incorporate a strong customer service foundation and focus on providing easy-to-understand, user friendly information.

Aetna Today

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Today’s Challenges

• Demographic trends– 40 million post-65 by 2010

– 71 million post-65 by 2030

• Health care costs–Since 1999, retiree health costs have risen 25% higher than

actives

• Reduction in plan sponsor support of retiree health benefits

• MMA creating new opportunities

• Impact of government changes in Medicare (GASB)

• Market dictating need for national, fully insured solution

Forces Impacting Prospective and Current Retirees’ Medical Plans:

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The Aetna Answer

Our Medicare Advantage Private Fee For Service (PFFS) options with or

without prescription drug coverage provide an efficient, cost-effective

solution.

Current Retiree Plan Considerations

With traditional retiree plans there can be complexity, unpredictable costs, confusion with

multiple ID cards, cumbersome plan designs, no medical management.

Aetna Solutions

Single carrier, fully insured (predictable costs), reduced GASB liability, nationwide

coverage, simple plan designs, specialized geriatric case/disease mangement programs.

Finding Solutions

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• Distinctive senior-focused care approach

• Dedicated intensive Case Management for older adults – case managers with specialized training in geriatrics

• Dedicated pre and post sale telephonic customer services trained in age sensitivity

• Wide array of decision support information and tools (aetnamedicare.com)

• Voluntary options provide no cost solutions eliminating or reducing client administration - including member direct bill capabilities

• Turn-key enrollment and fulfillment services

• Dedicated Account Management team including sales support consultants

Aetna Value

Aetna Provides Additional Value

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PFFS Retiree Solution

Retirees Seeking Alternatives

Of all the private Medicare options, it is private fee for service

that is seeing the most explosive growth. These plans

accounted for about half of the recent growth in Advantage-

plan enrollment, according to Avalere Health LLC, a health-

care advisory firm that analyzes Medicare data. As of July,

more than seven million people were in some form of

Advantage plan, or about 17% of all Medicare beneficiaries,

up from 14.3% in December

Global Action on Aging (Aug, 29, 2006)

Senior Flock to Private Medicare Plans --- Flexible Fee-for-Service Policies Spur Growth in Alternatives to Government-Run Coverage

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Private-Fee-For-Service (PFFS) is a fully insured Medicare Advantage (MA) plan that offers all of the benefits covered by original Medicare and more, such as unlimited hospitalization and full coverage for preventive services. s PFFS plan is available in all 50 states.

PFFS affords members the opportunity to receive covered services from any provider that is licensed and eligible to receive Medicare payment and meets and accepts the PFFS plan's Terms and Conditions of participation.

– Provides a “national” fully insured solution with consistent plan designs from state to state.

– Provides seamless integration of Parts A, B, and/or D plan design and ease of administration

– Plan pays Medicare allowable charge, or contracted rate if no Medicare rate available; plan receives Medicare Advantage payment

What is Private-Fee-For-Service (PFFS)?

Overview

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Medicare Supplement• Plans pay secondary to Medicare

• Major carriers with outsourced admin

• Limited to Medicare-eligible expenses (no preventive care)

• Medical Management at member level

• Must pair with a third-party Medicare D plan for Rx coverage

Medicare Advantage • Plans contract with CMS to

replace Medicare & supps

• Benefits look more like regular insurance with a deductible and coinsurance

• Preventive care is covered

• Medical management is involved to coordinate care

• Can be purchased with or without Rx

Comparison

Medicare Advantage Plans

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Aetna PFFS simplifies the transition process

• Those accustomed to the freedom of Medicare Supplement coverage can still continue to see any doctor eligible to accept Medicare

• Referrals to specialists are not necessary

• A single ID card is all members need

• More covered benefits offered under Aetna Medicare Open Plan than under Original Medicare

• Increased emphasis on disease and case management

Member Perspective

Benefits to the Member

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Plan Sponsor:• Select one Medicare plan to offer Retirees

• High plan 90% with or without Rx OR

• Low plan 80% with or without RX

• Billing Options• Direct to Plan Sponsor on list bill• Direct bill to Retiree• Split bill to Plan Sponsor and Retiree

Retiree:• Can elect to have Rx included or excluded

from Medicare plan selected by Plan Sponsor

Billing & Medical Options

Benefits to the Member & Plan Sponsor

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What’s Required

Provider Perspective

• PFFS physicians must be state licensed and able to receive payments under Medicare (whether they intend to accept assignment or not)

• Contract not required with Aetna

• PFFS organization must make terms and conditions (T&C) of participation reasonably available

• If providers accept T&C, they are ‘Deemed” to be contracted

• Deemed providers agree to accept plan payment rate

• Ease of billing and claims payments - One claim, one remittance vs. Med Supp carriers and CMS

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Provider Payments

Advantages to Providers

• Timely payments – ability to collect member cost share at the point of service (less “bad debt”)

• Providers that do not take assignment are permitted to balance bill up to limiting charge – no decrease in payment

• Providers bill Aetna directly

- Electronic submissions

- Paper claims

• EOB sent for each claim

• Medicare prompt payment rules apply

• Provider appeal process

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Provider Education

Communications: Providers

Aetna will make terms and conditions ofparticipation available

• Web portal• Newsletters• Provider specific mailings• Toll free number

Additional Communications

• Provider Q & A’s• Provider Training Module• Secured Website for Remittance forms

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2007 Aetna Medicare Open Plans

Aetna Medicare Open PFFS Plans

Category PFFS-Option 1 80% plan PFFS-Option 2 90% plan

PCP Member pays 20% Member pays 10%

Specialist Member pays 20% Member pays 10%

Hospital 20% 10%

Deductible $300 $100

OOP Maximum $5,000 $2,500

Skilled Nursing Facility$0 1-20 days

20% 21-100 days

$0 1-20 days

10% 21-100 days

Home Health 0% 0%

Emergency/Urgent Care$50 Member copay $50 Member copay

DME Member pays 20% Member pays 10%

Eyewear Discounts, Vision One Discounts, Vision One

Routine physical 0% 0%

RX $10/25/50, $250 ded. $10/25/50 $0 ded.

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2007 Pharmacy Benefit

Aetna PDP Options Integrated with PFFS Plans

Plan FeaturesAvailable only with 80%

PFFS PlanAvailable only with 90%

PFFS plan

2006 Plan Number Custom Custom

Deductible $250 $0

ICL Copays $10/$25/$50 $10/$25/$50

Catastrophic CopaysGeneric/Multi

all othergreater of

$2.15$5.35or 5%

$2.15$5.35or 5%

MOD 2x 2X

ICL $2,400 $2,400

Gap Coverage None Yes $10/$25/$50

TrOOP $3,850 $3,850

Formulary Type Open Open

Utilization Mgmt. - Step Therapy

- Mandatory Generics - Prior Authorization

YesYesYes

YesYesYes

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What’s Covered

Part D Drug Rider• Non Covered drugs on any Aetna

Medicare Part D plans• Agents when used for anorexia: Serostim• Agents when used to promote fertility:

Clomid, Serophene, Gonal-F, Follistim• Agents when used for cosmetic purposes or

hair growth: Propecia, Solaquin (hydroquinone), Renova, Vaniqa

• Agents when used for the symptomatic relief of cough and colds: Robitussin A-C, Tessalon Per, Tussionex

• Nonprescription drugs: Rogaine, Pseudafed, Actifed, Benadryl, Claritin, Prilosec OTC

• Covered outpatient drugs which the manufacturer seeks to require as a condition of sale that associated tests or monitoring services be purchased exclusively from the manufacturer or its designee

• Part D Drug Coverage, Covered with Prescription Rider

• Agents when used for weight loss: Meridia, Xenical, Lonamin

• Prescription vitamins and mineral products, except prenatal vitamins and fluoride preparations: Folic Acid 1MG, Chromagen, Trinisicon

• Barbituates: Phenobarbitol, Nembutal, Seconal

• Benzodiazepines: Xanax (Alprazolam), Valium (Diazepam), Restoril (Temazepam)

• Erectile Dysfunction: Viagra, Levitra, Cialis, Edex, Caverject, Muse

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Patient Care Integrated into PFFS

PFFS Advantage: Patient Management• Dedicated intensive case management for older adults

• Case managers with specialized training in geriatrics

• Deeper evaluation of co-morbidities and psychosocial barriers

• Case management activities can remain open beyond 90 days

• Includes behavioral health and disease management case managers

• Health Risk Assessment (HRA) conducted via telephone upon enrollment

(82% response)

• MedQuerySM performs reviews for all members of the program, focusing

on clinical issues, such as potential errors and compliance issues

• Aetna Navigator, Online tool to manage your Aetna Medicare plan such

as review claims status, order a new i.d. card

• Informed Health Line® provides toll-free 24/7 access to registered nurses

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Who’s Eligible

Eligibility

• Retirees must be Medicare eligible - entitled to Part A and enrolled in Part B

• Continue to pay Part B Premiums into 2007 (based on income level as

determined by Medicare)

• For those who have not participated in or worked enough quarters to receive

Part A, the retiree should contact Social Security office to enroll

• Enrollment cost for Part A varies depending on number of quarters worked

<20 or >20- 39 quarters

• Aetna has filed a waiver with CMS to offer group coverage for ESRD members

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Aetna Medicare Open Plans

Enrollment Eligibility• Retirees are effective the first of the month after they sign and Aetna receives their

enrollment application

• New entities should allow 45 days prior to the expected effective date to begin the

enrollment process

• All enrollees must be approved by CMS’ time frame (can vary depending on time of year

for enrollment)

• Each person enrolls separately, i.e. retiree and spouse both fill out separate applications

• Members can enroll at any time they become eligible for Medicare or during the open

enrollment periods set by their employer

Please note: If retirees are on a Med-Supp plan their enrollment into the MA PFFS plan will not automatically disenroll them from the Med-Supp plan. If retirees are enrolled in group Med-Supp look-alike plan the group should confirm what is required to terminate retirees’ coverage. If retirees are direct bill with the Med-Supp plan, each retiree will need to submit a termination request in writing to the carrier.

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Customer Service

Pre-Member Call Support• Call agents undergoing extensive training to handle both MAPD & PDP calls for Open

Enrollment 2006

• Holistic customer experience versus transfers

• Staffed with licensed and certified sales representatives

• Trained in all Medicare Advantage Products (HMO, PPO, PFFS, PDP)

• Available for Open Enrollment questions or requesting group Medicare Advantage

enrollment kits

• Pre-Member Call Center hours of operation: 8AM-6PM (local time), Monday - Friday

Pre-Member Call Center: 1-800-307-4830

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Customer Service

Post-Member Call SupportMember Services Staffing Ramp Plan:

Call Current FTE

Call New Hires

Full-Time 388 +142

Summary:• Member Services are hiring 142 FTEs to support OE 2006 and planned membership growth

• Focus on core business transactions calls– ANOC, Enrollment, Claims, etc

• Add FTEs for value-added services based on business models (membership)

• Expanded Member Call Center hours of operation: 8AM-8PM (local time), 7 days a week including holidays

Post-Member Call Center: 1-800-282-5366

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Retiree Education

Communications to Retirees

Effective communication and successful implementation can help assure retiree satisfaction and minimize administrative burden

• Aetna Medicare Plan Announcement Mailing

• Enrollment Kits

• Open-Enrollment Meetings

• Communication with Employees/Retirees nearing

Medicare eligibility

• Post-Enrollment Member Communication

• Customized Communications Solutions

• Medicare Point of Contact

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Implementation

Implementation Schedule

• November 1st – Entities make plan selections

• November 3rd – Target date to mail pre-enrollment kits

• December 6th – Aetna receives retiree enrollment forms

• January 1st – Plan becomes effective

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Key Implementation ActivitiesEntity provides Aetna with an announcement letter and mailing labels or list of retiree names and addresses

Entity sends retirees announcement of open enrollment

Aetna mails enrollment materials to retirees or entity.Materials include:

•  Announcement memo

•  Schedule of meeting dates and times

• Application and Aetna Medicare Plan packet

• Business reply envelope for direct return to Aetna

• Pre member call center 1-800-307-4830 for retiree questions (M-F 8am – 6pm local time)

Implementation

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National PDP National PFFS • Affordable plans that cover

preventive care, mental illness, and other benefits excluded by traditional Medicare

• MA plans include geriatric care/disease management

Account-based solutions (RRA)

Retiree billing & administration

Retiree communications/fulfillment

Retiree focused customer service

Outbound telephonic support/National Call Center

Superior account teams

Aetna Navigator™•Price-A-DrugSM•Hospital Comparison Tool

• InteliHealth®

aetnamedicare.com – link to CMS website to locate Medicare providers.

150 years servicing clients

Paid the 1st Medicare claim 40 years ago

Provide services to over 1 million seniors today

Product Experience Member Tools Service

Tying it all together

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Retiree Reimbursement Accounts

Solutions for Active & Retired Employees

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• Employer provides RRA funding but account balances are “notional”

• Aetna manages record keeping of accounts

• Amounts credited to accounts are not taxable to employees

• Employer determines accumulation rules for actives and/or retirees

• Account balance available upon retirement for qualified medical expenses

• Aetna determines if request is for qualified medical expense and reimburses accordingly

How RRAs Work

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• No underlying medical plan requirement

• Employees cannot contribute to accounts

• Distributions for qualified medical expenses, including– Prescription drug– Qualified LTC insurance premiums– Other medical insurance premiums including Medicare supplement

plans

• Member statements received– Semiannually while in accumulation mode – Upon disbursement

• On-line Account Access– Participants can view claim and balance details via Aetna Navigator

RRA Product Features

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Health Reimbursement Arrangement (HRA)

Aetna Retiree Reimbursement Account (RRA)

Health Savings Account (HSA)

Flexible Spending Account (FSA)

Eligibility All employees (current, former, retiree, COBRA); balances available upon retirement

Any individual covered by HDHP

All employees

Contributor Employer only Anyone Employer and/or employee

Balance carried over

Amounts not distributed carry over

Amounts not distributed carry over

Balances not carried over; use it or lose it

Rollovers Rollovers permitted between HRAs and RRAs, not permitted from HSAs

Rollovers permitted from MSAs and HSAs

Rollovers not permitted

Portability Employer can make funds available to former employees

Portable, owned by individual Not portable

Qualified expenses

IRS Code Section 213(d) plus long-term care & COBRA premiums and other health premiums, including Medicare supplement plans

IRS Code Section 213(d) plus long-term care & COBRA premiums, premiums during unemployment, some retiree plans, excludes Medicare supplement plans

IRS Code Section 213(d) except premium

RRA Product Comparison

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Q & A

Questions???