Microsoft’s Wellness & Weight Management Programs December 14, 2005 Tom McPherson Senior Benefits Manager

Wellness Mission and Program Overview Weight Management Program Description Measuring Success Lessons Learned/Next Steps Agenda

Self-Insured: Microsoft pays all employee/family member health care costs directly. First Dollar Coverage: Microsoft pays 100% of all employee/family member health care costs. With minor exceptions, we do not employ premiums, deductibles, co- insurance or co-pays of any kind. Microsoft benefits are designed to attract and retain a top- flight work force. ~25 physician groups in the Puget Sound provide care to ~20,000 enrollees. Microsoft is growing…8 ‘Microsoft’ babies are born every day! Microsoft Health Benefits

-Senior Management and CEO Support -Corporate Culture -Business Economic Climate -Healthcare Cost Claims Analysis -MSFT Population Demographics -Employee/Family Member Surveys -Benchmarking/Best Practices Creating the Business Case for Wellness

Wellness Mission Educate, support, and empower employees and family members to improve and sustain total health and well-being by rewarding healthy lifestyle choices Goals Empowerment: Empower Microsoft employees and their family members to make better healthcare decisions Cost Management: Effectively manage healthcare costs by rewarding individuals that practice healthy behaviors Quality: Improve healthcare quality and outcomes Mission and Primary Goals

Well Population Health Club benefitErgonomics program 24-Hour nurse lineMicrosoftHealth web portal Annual PhysicalsPeak Health program ImmunizationsOn-site health screenings/flu shots EAPWellness assessment On-site mammography screeningsRunning trails Sports Fields/locker rooms Healthy food choices in on-site cafes At Risk Population Weight management Smoking cessation Personal health coaching (CY07) Chronic Care Population Disease Management - Diabetes, Asthma, CAD, CHF Depression and Low Back Pain (CY07) Catastrophic Care (i.e., Cancer, AIDS) Case management Wellness Program Components

Source: Behavioral Risk Factor Surveillance System, CDC Obesity Trend U.S. Adults No Data<10%10%-14%15%-19%20%-24%  25%

Business Drivers Obesity is a major health issue impacting many employers 26% of health care costs are related to conditions preventable with lifestyle changes ~11% of total health care costs related to obesity Obesity trends – and cost trends -- are growing at a staggering rate Obesity is associated with a 55% - 78% increase in pharmaceutical costs Employers spend 36% more in healthcare costs for obese employees (vs. non- obese) Group of Microsoft employees approached Benefits group about weight loss program coverage Objectives Reduce health care costs associated with obesity Improve health and well-being, decrease time away from work Program Development

Comprehensive Design Physician Supervision Nutrition Counseling Supervised Exercise Program Behavioral Counseling Phased Approach Intensive Phase: 3-6 months of high intensity and frequency Maintenance Phase: 3-9 months at a reduced frequency Eligibility Criteria Employee or Spouse/SSDP BMI of 30 or greater BMI of or more co-morbid conditions CAD, CHF, Diabetes, Hyperlipidemia, Hypertension, and Depression Benefit Coverage Microsoft pays 80% of the program cost up to $6,000 lifetime Average out-of-pocket expense for a participant is ~$2,000 Weight loss Rx is not covered as part of the benefit Approved Program Providers 20 programs in 11 states Participants Over 1,500 people have completed the weight management program Weight Mgt Program Design

Post-Implementation Short Term: Drive awareness, utilization and provider expansion Long Term: Reach ROI target of 192% in five years ROI is based on reductions in the following areas: Prescription drug utilization Urgent care/ER visits, and hospital admits Avoidance of surgical and other major medical events Measuring Success

Total number of enrollees = 794 Employees = 590 Spouses = 204 Co-morbid Conditions Outcomes Data 2003/2004

Improvement in BMI Outcomes BMI

Weight Loss Total pounds lost by all participants = 25,891 pounds

Blood Pressure Systolic Blood Pressure Results Diastolic Blood Pressure Results

Cholesterol HDL Cholesterol LDL Cholesterol

Lessons Best to be conservative on ROI projections Executive buy-in critical to securing funding over multiple years Don’t disregard the secondary outcomes/benefits (productivity, morale, sense of being valued by company) Develop service level agreements to ensure consistency across all providers Next Steps Expand list of co-morbid conditions Implement Centers of Excellence for weight loss surgery Pilot web-based weight management program Continue to track ROI Lessons Learned/Next Steps

Summary Obesity is a rising health care problem Health care and productivity costs related to obesity continue to increase Employers are searching for solutions Employees must have a financial stake in a program Comprehensive physician-directed programs showing signs of success