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UnitedHealthCare
A deep dive into United States’ largest health carrier

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: Guo F. Deng Jiarui Li Malavika Verma Srikanth S. Perinkulam : December’06, 2013

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United Health Care

Contents
Company Profile and History ........................................................................................................................ 3 Financial Statement Analysis ........................................................................................................................ 5 Major Acquisitions ...................................................................................................................................... 11 Major Litigations and Public News.............................................................................................................. 13 The Patient Protection and Affordable Care Act (PPACA) .......................................................................... 15 Strategies and Foresight ............................................................................................................................. 18 Bibliography ................................................................................................................................................ 20

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United Health Care

Company Profile and History
UnitedHealth Group is one of the largest health care companies in the United States. UnitedHealth Group is currently made of three entities which are UnitedHealthcare, OPTUM, and Amil. UnitedHealthcare is the entity in responsibility of providing health benefits. OPTUM is the entity that offers health services. Amil is the health care entity doing business in Brazil. According to the company’s 2012 annual report to shareholders, UnitedHealth Group has 133,000 employees working for 84 million customers worldwide. There are 780,000 physicians and care professionals in UnitedHealth’s network. Every year, UnitedHealth Group processes 900 million claims that worth more than $300 billion. A company as large as UnitedHealth Group is not formed overnight. UnitedHealth Group has a rich and colorful history1.

In 1974, a group of physicians and other health care professional formed Charter Med Incorporated to expand health coverage option for everyone. In 1977, the company reorganized and renamed itself as United HealthCare Corporation. Continuing to pursue its founding intention, United HealthCare Corporation introduced health care innovations such as drug formularies, hospital admission pre-certification processes, and mental health/chemical dependency intermediaries. In 1984 the company became a publicly traded company. Innovations played an important role throughout the company’s development history. United HealthCare created the modern pharmacy benefits management business in 1988, and patented artificial intelligence system AdjudiPro in 1996.

In 1998, the company launched a strategic realignment and became known as UnitedHealth Group. As time approach the 21st century, the company started to incorporate innovation with technology advancement such as the Internet. The company launched myuhc.com in the year 2000 allowing customers to order ID cards, check claims information, and other information online. Then in 2003, the company introduced the medical ID cards with magnetic stripes which reduced the time for verifying patient eligibility and benefits to seconds. The cards advanced again in 2006, the new cards made access to personal health benefit information and financial
1

(UnitedHealthCare, 2012)

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United Health Care

information much easier. Beside the improvements in ID cards, UnitedHealth Group also introduce health care innovations in response to the advancement in the cellphone industry. In 2009, the company introduced DocGPS App to allow iPhone users to locate in-network providers around the user. Because of the company’s constant innovation and initiation in the health care industry, UnitedHealth Group is now one of the leading companies in the health care market2. As one of the leading companies, UnitedHealthcare offers a wide spectrum of health benefit products to all the customers. UnitedHealthcare Employer & Individual is the commercial line of business. It serves large national employers, small businesses and individuals nationwide. Currently, about 27 million Americans are receiving benefits through UnitedHealthcare Employer & Individual. UnitedHealthcare is also a big player in the senior market. UnitedHealthcare Medicare & Retirement offers benefit plans for individuals over 50 years old. Costumers from anywhere in the U.S. territories can get their Medicare through UnitedHealthcare.

Currently UnitedHealthcare has 4.2 million members in the standalone Part D plans, 2.6 million in Medicare Advantage, and 4 million in Medicare Supplement plans. Besides Medicare program, the company also offers products for the Medicaid program. UnitedHealthcare Community & State is currently providing service for 3.8 million beneficiaries across 25 states and District of Columbia. In addition to providing services for eligible citizens through Medicare and Medicaid, UnitedHealthcare Military & Veterans manages health care for military personnel and their family in the TRICARE West region. There are more than 2.7 million beneficiaries in the UnitedHealthcare Military & Veterans. Besides domestic side of business, UnitedHealthcare Group expands its business to the international level. In 2012, UnitedHealthcare International expands into Brazilian market by acquired 65% outstanding share of a Brazilian company Amil. The financial details will be provided in the following section3.

2 3

(UnitedHealthCare, NA) (UnitedHealthCare, 2012)

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United Health Care

Financial Statement Analysis
Consolidated statements From year 2008, the revenues and net earing have been steadily growing. Net profit margin and Return on Equity remain stable. EPS and DOS maintain stable growth. Operating cash flows increased from four thousands to seven thousands in the past 5 years. The investing cash flows doubled in year 2012, mainly due to a major international merger with Amil. From the annual report, the cash paid for acquisitions in year 2012 was more than five times those in previous years. The company issued more common stocks, long term debts, and commercial paper to finance these investment activities. For the Financial conditions, the cash and investments, total assets, and shareholders’ equity have steady growth. The Debt ratio remained stable. (In millions, except percentages and per share data) Consolidated operating results Revenues Net earnings Net Profit Margin Return on Shareholders' equity Diluted earnings per share Dividends declared per share Consolidated cash flows Operating activities Investing activities Financing activities Consolidated financial condition Cash and investments Total assets Shareholders' equity 29,148 80,885 31,178 28,172 67,889 28,292 25,902 63,063 25,825 30.10% 24,350 59,045 23,606 32.10% 21,575 55,815 20,780 38.10% 7,155 (8649) 471 6,968 (4172) (2490) 6,273 (5339) (1611) 5,625 (976) (2275) 4,238 (5072) 605 110,618 5,526 5.00% 18.70% 5.28 0.80 101,862 5,142 5.05% 18.90% 4.73 0.61 94,155 4,634 4.92% 18.70% 4.10 0.41 87,138 3,822 4.39% 17.30% 3.24 0.03 81,186 2,977 3.67% 14.90% 2.40 0.03 For the Years Ended Dec. 31 2012 2011 2010 2009 2008

Debt to debt-plus-equity ratio 35.00% 29.10% Source: Official annual report of year 2010, 2011, and 2012

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United Health Care

Operating results breakdown The growth rates in each sector are shown in the table below. Revenues, premiums and operating costs have stable growth rate at a level of 8% approximately. (In millions, except percentages and per share data) Consolidated operating results Revenues Premiums Operating costs Operation earnings Net earnings Diluted EPS For the Years Ended Dec. 31 2012 2011 2010 Increase/(Decrease) 2012 vs. 2011 2011 vs. 2010

110,618 99,728 101,364 9,254 5,526 5.28

101,862 91,983 93,398 8,464 5,142 4.73

94,155 85,405 86,291 7,864 4,634 4.10

8,756 7,745 7,966 790 384 0.55

8.6% 8.4% 8.5% 9.3% 7.5% 11.6% 30.6%

7,707 6,578 7,107 600 508 0.63 0.21

8.2% 7.7% 8.2% 7.6% 11.0% 15.4% 51.2%

Dividend per share 0.80 0.61 0.41 0.19 Source: Official annual report of year 2010, 2011, and 2012 Operating cash flow vs. Operating earnings

Operating cash flow is generally more reliable than earnings because it is less subject to estimates and judgments. In the case of UnitedHealth Group, there is a fairly stable relationship between the growth of operating cash flows and earnings; leading to the conclusion that earnings growth is quit sustainable with the support of operating cash flows over the long run. For the Years Ended Dec. 31 2012 2011 2010 2009 2008 Increase/(Decrease) 2012 2011 2010 2009 vs. vs. vs. vs. 2011 2010 2009 2008 11% 8% 12% 24% 33% 21%

(In millions, except percentages)

Operating cash 7,155 6,968 6,273 5,625 4,238 3% flows Operating 9,254 8,464 7,864 6,359 5,263 9% earnings Source: Official annual report of year 2010, 2011, and 2012

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United Health Care

Medical loss ratio Under the Health Reform Legislation, companies with medical loss ratios below the minimum medical loss ratios are required to rebate portions of premiums to their customers annually. The target ratios are: 85% for large employer groups, 80% for small employer groups and for individuals. The cells with MLR above the minimum level are highlighted in the tables. For the group business, in year 2011, there were 9/74 which met the requirement; in year 2012, the number increased to 20/74. For individual business, the ratio increased from 3/36 to 7/36. 2012 & 2011 MLR Summary - Group Business MLR (%) Group MLR (%) Group Group ST ST ST Size 2012 2011 Size Size 2012 2011 AL S 83.2 73.5 IL L 85.3 84.9 NC L AK S 78.7 N/C IN S 79.1 82.5 OH S AZ L 83.0 84.6 IA S 80.9 78.3 OK S AZ S 79.7 79.9 KY L 102.7 80.5 OK L AR L 84.2 82.9 LA L 84.6 84.4 RI L AR S 79.5 79.2 LA S 72.9 N/C SC S AR L 80.9 84.0 MD L 81.4 79.6 SD L AR S 75.4 81.0 MD S 81.1 78.2 TN S CA S 78.1 77.7 MD L 82.9 84.0 TN L CA L 90.2 81.0 MD L 84.6 85.8 TX L CO L 82.8 79.6 MA S 86.7 N/C TX S CT L 86.7 82.9 MI S 70.4 N/C UT L DC L 84.7 83.8 MS L 83.5 80.9 VI S DC S 77.2 77.2 MS S 76.8 74.8 VA L DC S 71.4 71.1 MS L 79.2 N/C VA S DC L 84.5 81.8 MO S 78.6 76.8 VA L DC L 78.7 82.7 MO L 84.4 84.0 VA S FL S 78.7 77.9 NE S 79.8 79.4 VA S FL L 86.7 83.9 NE L 84.9 87.5 VA L FL L 84.1 81.0 NV S 76.3 80.3 WA L FL S 79.5 81.6 NV S 79.7 81.9 WV S GA L 87.0 83.4 NK L 83.2 83.1 WI S HI L 62.8 N/C NY L 84.3 82.7 WI L IL S 80.1 77.2 NC L 83.8 81.9 WI S IL L 84.5 83.4 NC S 78.9 79.8

MLR (%) 2012 2011 85.8 82.2 81.7 75.0 77.1 73.8 82.5 84.7 84.7 85.0 79.9 78.4 75.6 N/C 80.4 78.6 84.9 86.3 87.4 83.9 81.6 79.8 84.5 84.1 79.8 72.5 85.2 83.7 77.5 77.4 85.9 81.9 79.3 73.3 79.4 79.8 80.1 N/C 87.1 83.7 77.2 76.1 81.3 79.0 84.3 84.1 80.6 79.3

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United Health Care

2012 & 2011 MLR Summary - Individual Business MLR (%) MLR (%) MLR (%) ST ST ST 2012 2011 2012 2011 2012 2011 AL 80.9 58.5 KS 72.2 74.8 OK 74.5 73.7 AZ 79.2 76.7 KY 72.9 70.4 PA 77.4 69.1 AR 75.9 79.9 LA 68.6 69.3 PA 75.2 78.6 CT 80.1 78.6 LA 81.6 75.0 SC 77.8 72.0 DC 73.8 N/C MD 72.6 66.4 TN 76.7 70.9 FL 73.2 72.5 MI 75.0 72.6 TN 65.1 N/C FL 78.3 67.5 MS 72.3 57.8 TX 77.7 72.6 GA 71.8 71.2 MO 77.4 73.3 UT 89.3 53.9 IL 78.7 75.7 NE 83.5 75.3 VA 77.5 77.5 IL 76.1 83.1 NV 78.7 81.1 WV 77.4 70.8 IN 80.2 76.4 NV 78.9 75.2 WI 79.8 82.7 IN 92.8 79.6 NC 76.9 77.1 WY 78.3 75.4 Source: http://www.uhc.com/live/uhc_com/Assets/Documents/mlr_rebate_summary.pdf Stock price and dividend UnitedHealth Group recovered well from the financial crisis. The highest price was 75.19, on Oct 16th, occurred a month ago. Before 2009, UnitedHealth Group had a relatively low level of dividend payout, basically due to their goal of business-growing. From year 2009, the company gradually moved to the stage of mature, and the dividend per share tripled from 3 cents to 1 dollar. They began to pay out their earnings to shareholders. The historical returns of UNH and S&P 500 Index are graphed in the chart below. They moved in the same direction most of the time. The correlation between the UnitedHealth Group’s historical returns and the Market returns is not so strong. The Beta calculated from the data of the past three years is 0.5.

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United Health Care

Stock price
80 60 40 20 0 3/26/1990

3/26/1995

3/26/2000

3/26/2005

3/26/2010

Dividends
1.5 1 0.5 0 1990

1995

2000

2005

2010

Historical returns
15% 10% 5% 0% 11/1/2010 -5% -10% 11/1/2011 11/1/2012 11/1/2013 UNH S&P

Peers and industry Comparison UNH 74.2B 120.1B 10.3B 5.4B 7.7% 4.5% 5.3 14.0 1.8 ESRX 53.5B 105.8B 6.6B 1.9B 4.0% 1.8% 2.2 29.9 1.0 WLP 27.5B 69.0B 5.5B 2.81B 7.1% 4.1% 9.2 10.1 1.3 AET 24.9B 44.0B 3.9B 1.73B 7.7% 3.9% 5.0 13.7 1.1 C 23.9B 31.9B 3.7B 1.52B 10.5% 4.8% 5.3 16.3 1.2 HUM 15.8B 40.7B 2.6B 1.45B 5.9% 3.6% 9.1 11.2 1.4 CNC 3.2B 10.6B 274.6M 120.9M 2.1% 1.1% 2.1 27.7 0.9

Market Cap Revenue EBITDA Net Income Operating Margin Profit Margin EPS Trailing P/E 5-yr PEG

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United Health Care

0.6 0.5 0.4 0.6 0.7 0.4 0.3 WCG HNT MGLN MOH UAM HIIQ Industry Market Cap 3.2B 2.4B 1.6B 1.5B 633.0M 60.8M 17.9B Revenue 9.1B 11.2B 3.4B 6.6B 2.2B 52.7M 35.0B EBITDA 325.3M 343.4M 242.6M 234.9M 72.6M 788.0K 2.6B Net Income 181.2M 158.5M 143.8M 77.0M (75.6M) (3.0M) 1.2B Operating Margin 3.3% 2.8% 6.1% 2.8% 2.4% (21.6%) 3.1% Profit Margin 2.0% 1.4% 4.3% 1.3% (3.5%) (5.7%) 1.8% EPS 4.1 1.9 5.2 1.9 (0.9) (0.6) 3.8 Trailing P/E 17.7 15.4 11.7 17.7 N/A N/A N/A 5-yr PEG 1.4 0.5 2.5 0.5 -7.3 1.5 0.6 P/S 0.3 0.2 0.5 0.2 0.3 1.2 0.5 Source: Yahoo! Finance The comparison covers most of the companies in the health care plans industry, including UnitedHealth Group (UNH), Express Scripts Holding Company (ESRX), WellPoint (WLP), Aetna (AET), Cigna (CI), Humana (HUM), Centene (CNC), WellCare Health Plans (WCG), Health Net (HNT), Magellan Health Services (MGLN), Molina Healthcare (MOH), Universal American Corp (UAM), and Health Insurance Innovations (HIIQ). UHG is the largest player in the industry, based on the market capitalization. And it has the highest revenue, EBITDA, and net income without doubt. The problem is, the HerfindahlHirschman Index (HHI) calculated from the table is 1908, which is greater than 1800, thus implies a highly concentrated industry. As a general rule, regulators will compare the pre-merger and post-merger HHI calculations, if the change is greater than 50 points, the merger is likely to raise antitrust concerns.

P/S

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United Health Care

Major Acquisitions

In 1974, Richard T. Burke founded Charter Med Incorporated; a Minnetonka, Minnesota-based privately held company. In 1977, UnitedHealthCare Corporation was created to reorganize the company and become the parent company of Charter Med. UnitedHealthCare’s charter was to manage the newly created Physicians Health Plan of Minnesota, an early health management organization. In 1995, the company acquired The MetraHealth Companies Inc. for $1.65 billion. MetraHealth was a privately held company formed by combining the group health care operations of The Travelers Insurance Company and Metropolitan Life Insurance Company also known as MetLife.4 In July 2004, UnitedHealth Group acquired Oxford Health Plans and UnitedHealthcare’s entire New York-based small group contracts are now Oxford Health Plans products.5 With this merger UnitedHealthcare had an additional 1.5million people principally in New York, northern New Jersey and southern Connecticut. In December 2005, the company received final regulatory approval for its $9.2 billion purchase of PacifiCare Health Systems. It agreed to divest parts of PacifiCare's commercial health insurance business in Tucson, Arizona and Boulder, Colorado to satisfy antitrust regulator concerns, and also agreed to end its network access agreement with Blue Shield of California6. In March 2007, UnitedHealth Group signed a definitive agreement to acquire Sierra Health Services Inc. for $2.6 billion. Sierra provided health benefits and services to 310,000 members in Nevada and another 320,000 people in senior and government programs throughout the United States. As a condition of approval from the Department of Justice, UnitedHealth Group was required to divest its individual SecureHorizons Medicare Advantage HMO plans in Clark and Nye Counties, which represent approximately 25,000 members. UnitedHealth Group reached an agreement to transition these members to Humana Inc., subject to customary closing conditions7.

4 5

(Rosland Briggs, 1995) (Tribune Business services, 2004) 6 (Freudenheim, 2005) 7 (CNBC, 2007)

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In June 2009, Ingenix, a UHG subsidiary, acquired AIM Healthcare. AIM is a data mining and insurance claim auditing service in the US. In July 2009, UnitedHealth Group Inc. agreed to acquire Health Net Inc.'s (HNT) Northeast licensed subsidiaries for up to $570 million in payments spread out over a two-year period 8. In July 2010, Ingenix acquired Picis Inc. Picis is a provider of health information solutions for the high-acuity areas of hospitals. In Nov 2011, UnitedHealth Group Inc. signed to acquire Health Corporation. In Feb 2012, UnitedHealth Group Inc. completed the XLHealth acquisition. XLHealth Corporation is a sponsor of Medicare Advantage health plans with a primary focus on medicare recipients with special needs such as those with chronic illness and those eligible for Medicaid (“dual eligibles”)9. On September 24, 2012, UnitedHealth Group replaced Kraft Foods in the Dow Jones Industrial Average. In October 2012, UnitedHealth Group and Amil Participações S.A. completed the first phase of their combination. The combination is expected to create a new growth platform for UnitedHealth Group’s benefits and services companies and will enable Amil to bring advanced technology, a tradition of consumer-focused innovation, modern service and clinical programs to further advance health care in Brazil10.

8 9

(Street Insider, 2005) (Wechsler, 2011) 10 (Anna Wilde Mathews, 2012)

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United Health Care

Major Litigations and Public News
2007: Use of Ingenix Databases In 2007, the then Attorney General of New York, Andrew M. Cuomo initiated an Industry-wide investigation into allegations that health insurers unfairly saddle customers with too much of the cost of Out of network [ONET] healthcare 11 . Fingers were pointed towards the use of the allegedly flawed databases licensed from Ingenix, Inc., a wholly owned subsidiary of United Health. The class action lawsuit was settled by UHC for $350 million by both monetary and nonmonetary benefits. UHC also agreed to scrap the Ingenix database in 200912. 2008: Backdating of stock options [SEC vs UNH ] Late 2008, many companies were accused of pretending that options were released much earlier than they actually were. Companies seemed to have picked dates when the market was trading low hence allowing their executives to reap huge benefits. The Securities and Exchange Commission accused United Health of concealing more than 1$ billion in stock-option compensation between 1994 and 2005 13. United Health Group Inc. settled the civil lawsuit in Dec’2008 by agreeing to pay a penalty of $575,000. 2011: Violation of ERISA [ACA vs UNH ] A nationwide class of healthcare providers who claimed to be subject to United’s improper recoupment of payment for services provided to United subscribers filed a class action lawsuit against United in Jan’2011. ACA joined the litigation in April’2011 to challenge the firms’ unfair practices14. The amended complaint outlines allegations in violation of ERISA and Optum’s refusal to allow providers to request additional clinical information necessary for utilization review. There have been substantial claims that providers were subjected to threatening communications in an effort
11 12

(OnPoint, Vol.1, Issue 3) (Berry, 2009) 13 (SHWIFF, 2008) 14 (Caitlin Lukacs, 2011)

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to pressure them to reduce utilization rates. Currently the court has ruled the plaintiffs to move forward to class certification. 2013: Civil negligence lawsuit Two subsidies of United Health Group Inc. were ordered to pay $500 million in punitive damage to three plaintiffs in a civil negligence lawsuit stemming from a Las Vegas hepatitis outbreak15.Dr. Desai in HPN’s network apparently caused the plaintiffs to contract Hepatitis C because of his malpractice. HPN was sued reasoning out that state law required that the insurers annually review the quality of health care providers they reimburse.

15

(Ritter, 2013)

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United Health Care

The Patient Protection and Affordable Care Act (PPACA)
In March 2010, President Barack Obama signed into law the Patient Protection and Affordable Care Act (PPACA), here-forth referred to as the ‘Affordable Care Act’, ‘ACA’ or ‘Obamacare’, in an effort to bring comprehensive changes to the way healthcare is accessed and paid for in the country. A vast majority of the act was upheld by the U.S. Supreme Court on June 28, 2012. While many of the provisions of the effect have come into effect since its inception, it wouldn’t be until year 2014 that the more substantive requirements will be implemented. Compliance with ACA: The Outline UnitedHealth Group understands the need for fundamental change to the American Health-care system, and to that end, has developed a detailed and comprehensive roll-out plan in conformance with the mandates of the Affordable Care Act. Year 2010 Institute adult child coverage until age 26 Restrict annual dollar limits Set-up the Early Retiree Reinsurance Program (ERRP) Apply ER coverage as in-network with no prior authorization Review Initial appeals standards Prohibit lifetime dollar limits Institute Medicare Part D rebate for beneficiaries in the gap Remove pre-existing conditions for kids until age 19 Supply online consumer information at healthcare.gov Set-up pediatricians as PCPs along with direct access to OB/GYNs Institute preventive services with no cost sharing Prohibit rescissions except in cases of fraud or nonpayment Levy small business tax credit Set-up temporary high-risk pool Year 2011 Begin annual fee on pharmaceutical manufacturers Review the annual rate process Institute appeals ombudsmen and process documentation Set-up auto-enrollment for groups with 200+ full time employees.

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Apply discounts on the Medicare Part D “donut hole” Set up limitations for OTC medications HSAs/HRAs/FSAs Increase penalty for non-qualified HAS withdrawals Institute minimum medical loss ratio (MLR): 85% for large group; 80% for small group Set-up small business wellness grants Year 2012 Offer 60-day advance notice of material modifications Set-up Accountable Care Organization requirements Fully implement Appeals provision Pay first medical loss ratio rebates by August Set-up new women’s preventive services with no cost sharing Require Patient-centered Outcomes Research Institute (PCORI) fee ($1 per member/year) Begin quality bonus for Medicare Advantage plans Institute Quality of Care Reporting requirements Year 2013 Begin annual fee on medical device sales Eliminate deduction for expenses allocable to the Part D subsidy for “qualified prescription drug plans” Require employee notification of access to Exchanges Limit FSA contributions to $2,500 Begin high-earner individual tax Increase PCORI fees to $2 per member/year PCORI fee increases to $2 per member/year Year 2014 Provide clinical trials coverage Require coverage for all adult children until age 26 including those that have employer coverage (formerly not covered for grandfathered plans) Ensure deductible caps not exceed $2k for individual and $4k for family Require essential health benefits for small employers Guarantee issue and renewability Ensure no pre-existing condition exclusions Adopt ICD-10 code Make Insurer fee permanent

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United Health Care

Ensure no annual dollar limits Ensure that OOP limits comply with OOP limits for HAS qualified plans Implement rating restrictions / Adjusted community rating Apply transitional reinsurance fee (2014-2016) Set-up waiting period limits Institute Wellness programs Year 2015 and beyond Implement employer mandate (2015) Begin high-value plan excise tax (2018) Close the Medicare Part D “donut hole” by 2020 States to open Exchanges to CHIP eligible (2015) and all employers (2017) Source: UHC Website

UnitedHealth Group remains committed to working with the federal and the state governments in helping to improve the availability and delivery of healthcare while managing costs for its customers.

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United Health Care

Strategies and Foresight

Strengthen and Improve Public Programs UnitedHealth Group seeks to institute innovative, cost-saving programs that offer both preventative and remedial services.

One such example is its support for The National Diabetes Prevention program which targets pre-diabetes in adults. Diabetes continues to remain one of the leading causes of death in the country while 79 million adults aged 20 and over are estimated to suffer from pre-diabetes16. The program also allows for managing the ever-rising Medicare costs.

The Sustainable Growth Rate, or SGR, is a significant component of the formula used by Medicare to calculate the annual updates to physician re-imbursements for the services offered. The parameters that determine SGR are independent of the real cost of practice. UHG hopes to put in place a solution to the discrepancy such that the physicians are compensated for the true expenditures incurred17.

Modernize Medicaid UnitedHealth Group believes that particular attention needs to be paid to Medicaid, and finds that a reasonable solution would be to model the program into a ‘single managed care structure’18.UHG is the country’s largest Medicaid managed care organization, serving over 3 million customers.

Medicaid, however, continues to be under the threat of future federal and state funding cuts, which result in reduced provider participation, limiting program access while running counter to the program’s sustainability. In an effort to offer more efficient, cost-saving and standardized services, UHC supports alternative payment models that are tied to physician performance,
16 17

(US Dept. of Health and Human Services, NA) (American Medical Association, NA) 18 (United HealthCare, NA)

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United Health Care

offering capitated, shared savings or bundled payment arrangements such that they ensure quality care. It hopes that the states can be incentivized to adopt the plan with the help of federal rewards and penalties.

Adopt Value-Based Contracting UnitedHealth Group strives to provide easily accessible, quality delivery of care that increases patient outcomes at the lowest costs to its customers. To that end, UHG is moving toward valuebased contracting while phasing out the Fee-for-Service model, such that the health-care providers take on more risk while being responsible for delivering defined services to a specific population at predetermined rates and quality level19.

This method, a multi-year strategy, transforms how providers deliver, and are paid for services. UHG understands that this undertaking entails significant operational and financial considerations, including implementing a robust data infrastructure.

Strengthen the Employer-Based System While UHG has outlined a detailed and comprehensive plan to adopt and institute the Affordable Care Act, it also recognizes its gaps and areas of improvement. As an example, the group seeks to repeal the ACA Health Insurance Tax which could help prevent higher premiums for employers along with higher state and federal costs of Medicaid and Medicare Advantage coverage. UHG links this tax to job cuts20.

UnitedHealth Group values a fair and equitable marketplace, and believes in providing its customers a wide array of options and solutions. To that end, it encourages states to set-up their own Exchanges, while keeping the solutions consistent both inside and outside the exchanges.

19 20

(United Health Care, NA) (United HealthCare, NA)

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Bibliography
American Medical Association. (NA, NA NA). Medicare and the Sustainable Growth Rate. Retrieved Nov 11, 2013, from American Medical Association: http://www.amaassn.org/resources/doc/mss/cola_medicare_pres.pdf Anna Wilde Mathews, J. K. (2012, October 08). UnitedHealth to Buy 90% of Brazil's Amil for $4.3 Billion. Retrieved November 04, 2013, from The Wall Street Journal: http://online.wsj.com/news/articles/SB10000872396390444897304578044390351511894 Berry, E. (2009, January 26). United agrees to pay $350 million, scrap system that undercut fees. Retrieved November 04, 2013, from Amednews: http://www.amednews.com/article/20090126/business/301269997/1/ Caitlin Lukacs, M. L. (2011, April 22). http://www.acatoday.org/press_css.cfm?CID=4386. Retrieved November 04, 2013, from American Chiropractic Association: http://www.acatoday.org/press_css.cfm?CID=4386 CNBC. (2007, March 12). UnitedHealth to Buy Sierra Health Services for $2.6 Billion. Retrieved November 4, 2013, from CNBC: http://www.cnbc.com/id/17576763 Freudenheim, M. (2005, July 07). UnitedHealth to Buy PacifiCare in Push Into Medicare. Retrieved November 04, 2013, from New York Times: http://www.nytimes.com/2005/07/07/business/07health.html?pagewanted=all&_r=0 OnPoint. ( Vol.1, Issue 3). Ingenix Regulatory and Class action law suits. IronHealth. Ritter, K. (2013, April 09). UnitedHealth Group Ordered To Pay $500 Million Over Las Vegas Hepatitis Outbreak. Retrieved November 04, 2013, from HuffingtonPost: http://www.huffingtonpost.com/2013/04/10/unitedhelath-las-vegas-hepatitis_n_3052785.html Rosland Briggs. (1995, June 27). United Healthcare Buying Metrahealth. Retrieved November 04, 2013, from Chicago Tribune: http://articles.chicagotribune.com/1995-0627/business/9506270283_1_metrahealth-cos-hmo-operators-metlife SHWIFF, K. (2008, December 23). UnitedHealth Settles SEC Options Suit. Retrieved November 04, 2013, from Wall Street Journal: http://online.wsj.com/news/articles/SB122999241288028585 Street Insider. (2005, July 25). http://www.streetinsider.com/Corporate+News/UnitedHealthcare+(UNH)+to+Acquire+Health+N ets+(HNT)+Northeast+Licenses+and+Rights+to+Renew+Membership+For+$290M/4805557.html. Retrieved November 04, 2013, from Street Insider: http://www.streetinsider.com/Corporate+News/UnitedHealthcare+(UNH)+to+Acquire+Health+ Nets+(HNT)+Northeast+Licenses+and+Rights+to+Renew+Membership+For+$290M/4805557.ht ml

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United Health Care Tribune Business services. (2004, April 27). UnitedHealth to buy Oxford Health. Retrieved November 04, 2013, from Chicago Tribune: http://articles.chicagotribune.com/2004-0427/business/0404270039_1_unitedhealth-shares-unitedhealth-group-oxford-health-plans United Health Care. (NA, NA NA). Value-Based Contracting and Accountable Care Organizations. Retrieved Nov 11, 2013, from United Health Care: http://www.uhc.com/united_for_reform_resource_center/health_reform_provisions/accounta ble_care_organizations/value_based_contracting_and_acos.htm United HealthCare. (NA, NA NA). Medicaid and Medicare. Retrieved Nov 19, 2013, from United Health Care: http://www.uhc.com/individuals_families/medicare_medicaid/medicaid.htm UnitedHealthCare. (2012). 2012 Annual Report to Shareholders. NY: UnitedHealthCare. UnitedHealthCare. (NA, NA NA). Our History. Retrieved Nov 19, 2013, from United HealthCare: http://www.unitedhealthgroup.com/About/OurHistory.aspx US Dept. of Health and Human Services. (NA, NA NA). The Facts About Diabetes: A Leading Cause of Death in the U.S. Retrieved Nov 19, 2013, from National Diabetes Education Program: http://ndep.nih.gov/diabetes-facts/ Wechsler, P. (2011, November 22). UnitedHealth Agrees to Acquire Medicare Managed-Care Insurer XLHealth. Retrieved November 04, 2013, from Bloomberg: http://www.bloomberg.com/news/2011-11-22/unitedhealth-agrees-to-acquire-medicaremanaged-care-insurer-xlhealth.html

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