1. Using an Integrated Incentive Solution as Part of an Effective Health Management Program

2. Integrated Incentive Solutions IncentOne provides integrated incentive solutions that combine the essential elements of a successful program:  Seamless integration of rewards, systems, guidance and services:  Rewards that appeal to all audiences  Proven systems that administer all activities and processes  Real-time tracking and reporting  Guidance on optimal program design, execution and improvement  Services to effectively implement, support, communicate and analyze  The industry’s most comprehensive reward portfolio including gift certificates/cards from hundreds of the nation’s finest retailers, brand-name merchandise, travel packages, personal services and phone cards. IncentOne provides its solutions to employers and partners including health plans and health IT, broker, benefits, wellness and disease management companies.

3. IncentOne Healthcare Solutions  Employee Power ™ : integrated points-based incentive solution designed to target multiple healthcare and wellness activities to drive cost reductions.  Healthy Choice Award ™ : incentive awards for completing individual health and wellness activities (e.g. Completion of a Health Risk Assessment).  Physician Rewards ™: integrated incentive solution specifically designed to target physician behaviors such as e-prescribing, online case management and adoption of online healthcare delivery. IncentOne offers a variety of incentive solutions specifically designed to target healthcare objectives through the healthcare delivery chain: IncentOne provides employers and partners with an integrated incentive solution to drive consumerism and healthcare cost reductions.

4. Healthcare Clients and Partners IncentOne provides solutions to employers and partners including health plans and health IT, broker, benefits, wellness and disease management companies:

5. Convergence of Factors Several factors have made it unlikely that employees will be better healthcare consumers because it benefits their health or their employer: Employee Increased Co-Pay Reduced Benefits Disconnect with Impact on Company Increased Corporate Profits Dependent Surcharges 62 percent of employers believe that the biggest hurdle to adopting change is employee resistance and entitlement to coverage. 1

6. The Challenge The lack of many “integrated” providers of health programs requires employer resources for sourcing multiple health vendors: Even though incentives are essential, employers lack the resources to implement integrated incentive solutions as they focus on the core health programs. Integrated Health Program Disease Management Wellness On-site Delivery Absence Management Data Collection Integrated Incentive Solution PBM Management Screening & Appraisal Healthcare Portal

7. The Consequences Nearly 61 percent of employers have less than 25 percent of employees participating in employer sponsored-wellness programs 1 : “Having many programs available to employees is helpful, but obviously has no impact if employees do not take advantage of them.” 1

8. Two Views of Incentives Incentives can be viewed as one component of an effective program or a core component required to drive activity in all program elements: Integrated Health Program Disease Management Wellness On-site Delivery Absence Management Data Collection Integrated Incentive Solution PBM Management Screening & Appraisal Healthcare Portal INTEGRATED INCENTIVE SOLUTION Integrated Health Program Disease Management Wellness On-site Delivery Absence Management Data Collection PBM Management Screening & Appraisal Healthcare Portal

9. Evolution of Incentives Incentives must evolve to provide employees with rewards that drive behavior – not that serve employers’ perceptions of consumerism: Employers often utilize cash due to two factors: the lack of an integrated solution to manage administration and data on the most compelling incentives. 2002 2003200420052006 Gym DiscountsGym Discounts Payroll Contrib. Health Rewards HRA Gym Discounts Payroll Contrib. Health Rewards HRA Condition Cost HSA Gift Cards Gym Discounts Payroll Contrib. Health Rewards HRA Condition Cost HSA Gym Discounts Payroll Contribution

10. Cash vs. Non-cash Incentives Cash can be employed for single, significant events but often fails to provide meaningful incentives to drive daily behaviors: With chronic conditions driving 70 percent of costs, incentives that can be applied to ongoing activities are critical to driving cost reductions. ISSUECASHNON-CASHSTATISTIC/COMMENT SINGLE EVENTXXSingle events (e.g., HRA Completion) can use cash or non- cash if values are significant. ONGOING BEHAVIORSXRewarding with small cash values for ongoing activities (i.e., chronic condition activities) is ineffective and often harmful. MEMORABILITYX1,000 people asked how they spent their cash incentive: 5 o29% paid bills o10% did not remember o15% said they never received the cash IMPACT ON BEHAVIORX84% of respondents say non-cash awards are remembered longer than cash. 3 SOCIAL REINFORCEMENTXCash lacks the trophy value and social reinforcement attributes that increase the perceived value of the award over cash. SEPARATE FROM COMPENSATION X60% of employees view cash incentives and awards as a part of their annual compensation. 3

11. What are the best incentives? Studies indicate that gift cards are the most popular incentive:  80 percent of consumers would rather receive a gift card than any other gift (Ceridian/Comdata) 6  Gift cards are the most popular incentives in wellness programs (International Foundation of Employee Benefit Plans) 4  48 percent of 365 large employers indicated that gift cards are the most popular incentives for wellness programs (Deloitte Center for Health Solutions) 1  Gift Cards are the most popular incentive in consumer directed loyalty and promotion programs – nearly three times more popular than any other item (Incentive Federation Study of Motivation and Incentive Applications) 1  Gift cards are the cornerstone of all major credit card and hotel consumer loyalty programs including Citibank, American Express, Marriott, Capital One, and MBNA In programs that utilize gift cards and all other traditional reward categories, gift cards are selected over 74 percent of the time (IncentOne). 7

12. Why an Integrated Solution? An “integrated” approach to incentives is required to address the core cost drivers across an employee population: The need for an integrated incentive solution mimics the need for an integrated suite of health promotion programs to truly address cost drivers. COST DRIVERS Chronic Conditions Dependents Increased Utilization Retirees Catastrophic Claims Plan Design & Selection Prescription

13. Integrated Incentive Solution Elements An “integrated incentive solution” delivers the seamless integration of elements in an “engine” for multiple/changing health activities: Employers require a single solution that can be applied to multiple activities, populations, program stages, health partner programs and data sources.

14. Rewards Key to Success: rewards that appeal to all audiences regardless of location or demographic – with customization as an added benefit:  Single Event or Ongoing Incentive Solution  Rewards Appeal to All Audiences  Physical or Electronic Award Delivery  Flexibility to Modify Reward Portfolio  Interactive Redemption Experience  Online and Telephone Reward Support  Integration of Payroll Contributions and HRA/HSA  Healthy Rewards Selection  Management of Non-cash and Cash Rewards

15. Systems Key to Success: proven systems that track and administer all health activities and associated processes:  Employer-specific Customization  Data Integration  Integration with Health Partners  Real-time Tracking and Reporting  Payroll Integration  Systematic Enforcement of Rules  Tracking of Self-Reporting Activities  Dependent/Retiree Auto Enrollment  Integrated Communications Tools

16. Guidance Key to Success: guidance on optimal program design, execution and improvement:  Incentive Structure Design  Best Practices  Program Improvement  Industry-Specific Considerations  Activity-based ROI TM  Dependent and Retiree Application  Data Integration Practices  Tax Policies  Incentive Program Policies

17. Services Key to Success: services to effectively implement, support, communicate and analyze the program to maximize effectiveness  Employer/Employee Support  Implementation  Communications  Training  ROI Analysis  Database Mining and Targeted Communications  Customizable Fulfillment

18. Designing Your Program

19. Program Design Methodology With an integrated solution in place, incentives can be used to EMPOWER TM employees to be better healthcare consumers: STAGEEVENTSVALUEGOALEXAMPLE E NGAGEMENT SingleHighest1.Provide employee with significant incentives for a specific activity 2.Simplicity of communication 3.Foundation for ongoing participation $50 in points for completing a Health Risk Assessment P ARTICIPATION Increased but limited number of activities (3 to 5) Significant for each event but reduced 1.Provide significant follow-on incentive to drive participation and learning 2.Provide large enough incentives to keep employee engaged 3.Foundation for concept of “if I take healthy actions I will be rewarded.” $25 in points for: Enroll in Wellness Program Attending Health Fair Annual Checkup Program Completion W EAVE ManySmall amounts for each activity 1.Integrate rewards into daily behavior 2.Culturize participation and learning 3.Clear communication – “you will be rewarded for healthy behaviors.” $5 in points for: Screenings Attend Gym Seat Belt Use R EADJUST Add and adjust values and activities Adjust for existing and add for new events 1.Adjust values/activities to meet goals 2.Target specific program conditions 3.Trend analysis to determine focus and incentive value adjustment Increase incentive for Health Risk Assessment

20. Single Event vs. Ongoing Incentives Single event incentives can drive “Engagement” stage but must be woven into an integrated solution that impacts chronic behavior: With chronic conditions driving 70 percent of costs, single event incentives act only as a starting point to impacting the behaviors that drive cost.  Staged approach can allow focus on a specific activity (e.g., HRA Completion) but must be done in view of larger integrated program  Risk of single event incentive being “disjointed” from communications strategy  Integrating cultural value of healthy employees requires ongoing branding and “employer of choice” messaging  Larger incentive values associated with single events can undermine lower values required for later-stage activities and participation  Ongoing program enables more efficient budget use if incentives are culturized

21. Incentive Values Results for completion of Health Risk Assessments show a correlation between incentive value and participation:

22. Taxation Issues Real-time tracking and reporting of incentive issuance is critical to tax, legal and related compliance issues: Regardless of the incentives used, real-time tracking and reporting is essential in any integrated health promotion program utilizing incentives.  Compensation  Gross-up Calculations  Sarbanes-Oxley Compliance  HIPAA Compliance  Health Savings Account Contribution Limits  Union Worker Compensation Issues

23. Incentive Value Talking to CFOs: Activity-Based ROI TM By aligning incentives with specific activities and associated cost benefits, the message focuses on the “Activity-based ROI TM ” that appeals to CFOs: Because incentives are only distributed when an employee has completed a desired activity, there is ROI on an activity-by-activity basis. Activity-based ROI Desired Activity Cost Benefit of Activity

24. Other Benefits: Total Rewards Strategy By rewarding employees for healthy behavior, incentives provide a positive link between activities that benefit the employee and employer: Corporate strategy Personal motivations Employer Rewards Dialogue Business value Total Rewards Employee

25. Sources 1.“2005 Wellness Survey," conducted by the Deloitte Center for Health Solutions, a part of Deloitte & Touche USA LLP, and the ERISA Industry Committee (ERIC). Copyright © 2005 Deloitte Development LLC. All rights reserved. 2."Reducing Corporate Health Care Costs 2006 Survey," conducted by the Human Capital Practice of Deloitte Consulting LLP and the Deloitte Center for Health Solutions, a part of Deloitte & Touche USA LLP. Copyright © 2006 Deloitte Development LLC. All rights reserved. 3.“2005 Incentive Federation Study of Motivation/Incentive Applications” conducted by the Incentive Federation. Copyright © 2005 Incentive Federation Inc. All rights reserved. 4.“Wellness Programs” conducted by the International Foundation of Employee Benefit Plans as part of the tenth publication in the Survey & Sample Series developed by the International Foundation. Copyright © 2006 International Foundation of Employee Benefit Plans. All rights reserved. 5.“American Express Incentive Services Study” conducted by American Express Incentive Services LLC. Copyright © 2006 American Express Incentive Services LLC. All rights reserved. 6.“2006 Study on the Use of Gift Cards” conducted by Stored Value Systems, a division of Comdata Corporation and Ceridian Corporation. Copyright © 2006 Stored Value Systems. All rights reserved. 7.“IncentOne Incentive Trend Analysis 2005” conducted by IncentOne. Copyright © 2006 IncentOne. All rights reserved.

26. Questions Copyright © 2006 IncentOne. All rights reserved.