Edison HealthCare

Note: Benefts are assumed to be "waive all cost-sharing" for using an Edison Network provider if not in a qualifying high-deductible health plan. No savings are anticipated through benefit reductions (i.e. non-network benefits, special deductible or ineligible) for eligible surgeries performed outside of the program.

Baseline Assumptions/Background Calculations:

• Number of plan members: default is two 2.3 times the number of employees; modifiable.
• prev data:
  • Spine Surgeries: Based on CDC 2010 Data (Inpatient Survey: 2010 US Population ages 25-64); modifiable.
  • Heart/Valve Surgeries: Based on CDC 2010 Data (Inpatient Survey: 2010 US Population ages 25-64); modifiable.
  • Transplants: Based on Milliman's 2011 U.S. organ and tissue transplant report; modifiable.
  • Hip Replacements: Based on Blue Cross Blue Shield claims data including 64 markets; modifiable.
  • Knee Replacements: Based on Blue Cross Blue Shield claims data including 64 markets; modifiable.
  • Cancer: Based on North American Association of Central Cancer Registries, population age 20 through 64; modifiable.
• Surgical cost data: the market average cost of spine, heart, valve and cancer surgeries based upon Edison market data; loaded by 70% to consider the cost of typical follow-up therapy, complications and readmission rates. Hip and knee surgeries by 40%, and transplants by a factor of four (4) times (based on Tom Emerick's experience with Walmart Stores).
• Percentage of surgeries in Edison Network: Expected number of surgeries in each category that will be performed within the Edison program; modifiable.
• Percentage of plan members enrolled in a qualifying high deductible health plan (HDHP) with a Health Savings Account.

Estimated Impact Calculations:

1. Expected cost of claimants: Sum of total plan cost for all eligible surgeries performed in a year (inside and outside of Edison Network).
2. Expected pre-program treatment cost for plan participants: The portion of pre-program claims cost (A) associated with plan members that pursue care through Edison.
3. Expected savings on treatment costs: (B) adjusted for Edison's negotiated pricing and the expected percent of surgeries avoided, less expected alternative treatment costs (which are assumed to average 10% of pre-program treatment costs for avoided surgeries). No savings are anticipated through benefit reductions (i.e. non-network benefits, special deductible or ineligible) for eligible surgeries performed outside of the program.
4. Expected travel and benefit enhancement cost:
   • Travel cost for spines, heart and valve surgeries: estimated to be $200 per day for lodging, food and and approved incidentals; estimated travel days vary by procedure; and $1,200 per roundtrip flight per person (patient and companion).
   • Travel costs for transplants: estimated to be $150 per day for lodging, food and and approved incidentals; estimated travel days for assessment, treatment and recovery/observation vary by condition and transplant type and are based on the experience of Edison network medical centers and Milliman's 2011 report on transplants; and $1,200 per roundtrip flight per person (assuming two trips for patient and companion).
   • Travel costs for hip and knee replacements: estimated to be $200 per day for lodging, food and and approved incidentals; estimated seven travel days per patient; and $500 average transportation cost per trip per patient.
   • Benefit Enhancement: estimated to be "waive all deductibles and coinsurance" (unless a qualifying HDHP) and to average $2,000 per patient.
5. Expected Edison fees: Expected number of cases times Edison's case-specific fees. Edison charges $250 more per case for plan members enrolled in a qualified HDHP for additional claim handling.
6. Expected Net Savings per year: Expected savings on treatment costs (C) less estimated travel expenses and benefit enhancements (D) less Edison case-specific fees.
7. Estimated return on investment: Net savings divided by Edison case-specific fees (one time set-up fee not included).
8. Estimated number of plan members impacted: Total of surgical patients that participate in the program (travel to a medical center).