1 Aon Risk Services 1999 CAS Seminar on Health and Managed Care Provider Excess Insurance Overview Presented By: Riggs Stephenson Aon Risk Services Franklin, Tn October 18, 1999

2 Aon Risk Services Definition/Description n Provider Excess Insurance protects capitated hospitals and physicians against the cost of individual catastrophic claims

3 Aon Risk Services ER Facility ER Facility Outpatient Surgery Outpatient Surgery Other Outpatient Other Outpatient Inpatient Services Inpatient Services ER Professional ER Professional Primary Physicians Primary Physicians Referral Physicians Referral Physicians Employer HMO Capitated PHO Reinsurance Administration Contracting UM/QA Marketing Administrative Direct/MedReins Profit Premium Distribution in Typical Full Risk Model $120 per enrollee 17% 83%$10011% $4 $10 - $12 6% $7.20 5% $6.00 6% $7.20

4 Aon Risk Services COVERAGE SOURCES n Health Plan n Commercial Provider Excess Insurer

5 Aon Risk Services SPECIFIC STOP LOSS n Per member, Per Policy Period n Protects against large, catastrophic, individual cases * Neonates * Burns * Transplants * Cardio * Traumas, etc.

6 Aon Risk Services COVERAGE FEATURES n Deductible (per member per year) n Coinsurance (excess of deductible) n Limit of Liability n Maximum Allowable Charges n Covered Eligible Expenses n Hospital and/or Physician Expenses

7 Aon Risk Services CLAIM ADJUDICATION

8 Aon Risk Services UNDERWRITING ISSUES n Completed Questionnaire/Application n Utilization Management Issues n Claims Experience Availability n Projected Enrollment n Start-up Risk Contracts

9 Aon Risk Services UNDERWRITING PROCESS n Start-Up Opportunity * No Claims Experience; Manual Rate n Large Membership (i.e.50,000 members, low deductible, etc.) * Claims Experience Available; Experience Rated n Smaller Opportunity * Claims Experience Available * Too Small for Experience Rating; Blended Rate

10 Aon Risk Services RISK VARIABLES n Location n Membership type n Covered services n List of services not provided In-Network n Tertiary referral contracted rates n Inpatient days/1,000 n Excess experience n Coverage Structure n Average inpatient billed charge per day

11 Aon Risk Services TYPES OF MEMBERS n Commercial n Medicare n Medicaid

12 Aon Risk Services OTHER STOP LOSS PROGRAMS n Aggregate Stop Loss n Carve Outs

13 Aon Risk Services QUESTIONS?