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R-11-09-22-11C1 - 9/22/2011 RESOLUTION NO.R-11-09-22-11C1 WHEREAS, the City of Round Rock (the "City") has previously entered into an agreement with Aetna Life Insurance Company("Aetna") for Aetna to provide certain products to the City's self- funded elffunded employee health benefits plan (the "Plan"), said agreement being entitled "Master Services Agreement No. MSA-819919 (the"Agreement"); and WHEREAS, pursuant to the Plan, the City wishes to make available one or more products offered by Aetna; and WHEREAS, Aetna has submitted a Letter of Understanding regarding renewal for the 2011 policy period; and WHEREAS, the City Council desires to approve the Letter of Understanding with Aetna, Now Therefore BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF ROUND ROCK, TEXAS: That the Mayor is hereby authorized and directed to execute on behalf of the City a Letter of Understanding with Aetna Life Insurance Company, said Letter of Understanding covering the period January 1, 2011 through and including December 31, 2011, a copy of said Letter of Understanding being attached hereto as Exhibit"A" and incorporated herein for all purposes. The City Council hereby finds and declares that written notice of the date, hour, place and subject of the meeting at which this Resolution was adopted was posted and that such meeting was open to the public as required by law at all times during which this Resolution and the subject matter hereof were discussed, considered and formally acted upon, all as required by the Open Meetings Act, Chapter 551, Texas Government Code, as amended. O:\wdox\SCC1nts\0112\1104\N1 MCIPAL\00232938.D0C/jkg RESOLVED this 22nd day of September, 2011. rf A, AL MCGRAW, Mayor City of Round Rock, Texas ATTEST: SARA L. WHITE, City Secretary 2 p av f�L c .. - :' -. , w.�.. ; fir:�� �`� •L x�ti s,.. C -A s ) x ,a bor L\ W ; yn o 0C ss r \ $ .......... A JIM rtSSM a M p 5 Letter.of Understanding : January 1, 201 through December 31 2011 f r . 4 Contractholder Number 819919 f r �• 2 Group Number- N/A x. X. y II� � , I�.t^Ypp' Ex M.. »;Lf J Y ::F:ryT. I E)(141BIT *A ,' Kendra Hoduski "*kAet Senior Account Manager na© Great Hills Corporate Ctr.Bid 3 9050 Capital of Texas Highway North Suite 150 Austin,TX 78759 Phone:512/342-6903 November 12,2010 Fax:512/346-7406 HoduskiKO-aetna.com City Of Round Rock Linda Gunther 221 East Main Street Round Rock,TX 78664 Dear Ms.Gunther: Thank you for allowing us to serve your health insurance and health benefit needs over the past year. We are hopeful that this package will provide you with the information you need in order to develop your company's future benefits program. As we approach the January anniversary of your program with our company,we are pleased to present you with our renewal for the 2011 policy period. At Aetna*,we believe it is fundamental that you understand the full financial picture of your benefit plan.Therefore, the enclosed package provides the following important information about the cost of your current program,potential changes you may want to consider and the value that Aetna brings to you and your company. ■ Future Program Costs-This section illustrates the cost projections to operate your current benefit program for the period 01/01/2011 through 12/31/2011. This section contains the following: experience exhibits,illustrative administrative service fees,and a Stop Loss exhibit. For the 01/0 1/2011 through 12/31/2011 contract period,the fee will increase 5.6%for medical and 0.9%for dental. Also included in this section is renewal information regarding your Stop Loss coverage.Aetna's charge for maintaining your current Stop Loss protection levels will increase 16.2%over the current rate. Your aggregate trigger factor will decrease by 1.2%. ■ Program Services,Financial Assumptions,and Stop Loss Assumptions Program Services Included-This section includes additional services that have been included in our pricing or require an additional fee. Financial Assumptions-Our renewal offer is contingent upon the parameters outlined here. It is important to note that deviations from these assumptions may result in additional charges and/or adjustments on our Life,Medical and Dental quotations for conventional premiums,Service Fees,and Stop Loss rate(s)and factor(s). Customer Notifications of any Aetna initiated changes for the upcoming contract period are outlined here.Please review this section thoroughly. Stop Loss Assumptions-This section includes specific information regarding what's included and excluded from your Stop Loss quotation,plus there is a separate page explaining leveraged trend. ■ Guarantees-The guarantees described herein will be effective for a period of 12 months and will run from 01/01/2011 through 12/31/2011.Please refer to our attached Performance/Discount Guarantee document(s)for complete descriptions of each guarantee. This guarantee does not apply to non-Aetna benefits or networks. ■ The Aetna Difference-This section outlines the latest Aetna facts that we would like you to know about our company. We hope that by reading this information you will better understand the many ways we are striving to provide quality healthcare programs and services to companies like yours. In the absence of any changes impacting the conditions of this renewal as outlined in the Financial Assumptions section,the rates,fees,and factors presented here will remain in effect through December 31,2011. If you would like to make any plan changes,please contact me by December 1,2010. If you have any questions, please contact me at 512/342-6903. We are committed to working with you to provide quality products and services that reinforce your decision to do business with Aetna and help manage your current and future health care costs. Accepted for City of Round Rock By: Title: Date: Sincerely, Senior Account Manager Senior Underwriting Consultant «"Aetna"is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.The Aetna companies that offer,underwrite or administer benefit coverage include Aetna Health inc., Aetna Health of California Inc.,Aetna Health of the Carolinas Inc.,Aetna Health of Illinois Inc.,Aetna Dental Inc.,Aetna Dental of California Inc.,Aetna Life Insurance Company,Aetna Health Insurance Company of New York, Corporate Health Insurance Company and Aetna Health Administrators,LLC. These health benefit and health insurance pians contain limitations and exclusions. Policy form numbers include GR-29,GR-700-W.GR-88435. Administrative Service Fees ASC City of Round Rock Contractholder Number-819919 Renewal Period:1/1/11 through 12/31/11 • The below Administrative Service Fees will become effective 1/1/11. •The fees below exclude charges for items such as printing,special reports and late fees. These will be billed separately. •The below ASC fees assume that Aetna will be Claim Fiduciary for Level 1 and Level 2 appeals.City of Round Rock performs claim fiduciary for voluntary appeals after Levels 1 &2 are exhausted(Option 4). •Aetna Health Connections is included in the below ASC medical fees. • Simple Steps to a Healthier Life is included in the below ASC fees. • Beginning Rightsm Maternity Program is included in the below ASC fees. • The National Advantage with Facility Charge Review programs have been included in the renewal at a charge of 50%of any attained savings. • Rx rebate share is 0%. • Consulting Fee,if applicable,is subject to Plan Sponsor approval. Service Fee Comparison Projected Number of Enrolled Employees Choice II/APM 777 Dental 796 Vision 796 Current Period Projected Period 1/l/10-12/31/10 1/1/11-12/31/11 %Change Administrative Service Fees as Billed Choice II/APM(PEPM) 31.56 33.32 ** 5.6% ** no wellness allowance Wellness Allowance of$10,000 1.08 Waived for 2011 Dental(PEPM) 4.35 4.39 0.9% Vision(PEPM) 1.00 1.00 0.0% Administrative Service Fees as Total Contract Period Dollars Choice II/APM 2949265 310,676 Wellnes Allowance of$10,000 - none Dental 41,551 41,933 Vision 9,552 9,552 Total Service Fee $ 345,369 $ 362,161 4.9% "Includes$0.18 Health Care Reform Adjustment. Renewal Fee is$33.94 or a 5.0%increase without Health Care Reform Adjustment. 08/05/2010 www.aetna.com ASC Fees Stop Loss Exhibit ASC City of Round Rock Contractholder Number-819919 Renewal Period:1/1/11 through 12/31/11 •Minimum Stop Loss Aggregate Limit will be set using the first month enrollment x Stop Loss Aggregate Limit(PEPM)Composite Factor x number of contract months. •Premium rates are billed and Aggregate Factors are administered on a composite basis. •Please see the Stop Loss Caveats for additional information. •This is a firm quote Sold Proposed Current Option 2 Plan Characteristics Individual Limit $ 100,000 $ 100,000 Aggregate Limit 125% 125% Stop Loss Coinsurance Level 100% 100% Mental/Nervous Apply Yes Yes Contract Basis Paid Paid Terminal Liability Option No Extension(N/A) No Extension(N/A) Benefits applied to ISL Rx/Medical Rx/Medical Benefits applied to ASL Rx/Medical Rx/Medical Commissions 0% 0% Individual Lifetime Stop Loss Payment $ 1,000,000 Unlimited Maximum Annual ASL Payment $ 1,000,000 $ 1,000,000 Policy Period Length(months) 12 12 Cost&Factors Total Expected Non-pooled APM Claims $ 1,422,514 $ 1,583,229 Total Expected Non-pooled Medical Claims $ 4,028,764: $ 4,013,710 Pooling/Coinsurance Adjustment 167,480 - Attachment Point 7,023,448 6,996,174 Lives covered under Stop Loss 771 777 Rate Cost/ee/month $ 79.08 $ 91.90 Trigger Factor $ 759.13 $ 750.34 Comparisons Annual Stop Loss premium $ 737,342 $ 853,799 State Assessment Fee(NH,OR,TX) $ - $ 3,077 Total Stop Loss premium $ 737,342 $ 856,876 (at proposed lives of 777) Maximum Claim Liability $ 7,078,105 $ 6,996,170 (at proposed lives of 777) %Increase in Rate/ee/month 16.2% %Increase in Trigger Factor (1.2%) Aggregate Limit with Mature Claims $ - $ 6,996,170 08/05/2010 www.aetna.com ASC Stop Loss • Programs and Services City Of Round Rock Renewal Rate Period: 01/01/2011 through 12/31/2011 Contractholder Number-819919 Programs and Services We have provided a list,by product,of those programs and services that are included or available to City Of Round Rock. Programs and services that are optional are noted with a$sign and require an additional fee;for specific pricing please contact your Account Manager,Kendra Hoduski. Programs and services that are not available for particular products are identified as N/A. Choice®POS II Aetna PPO Pharmacy Dental Unmt General Administration Account Management Included Included Included Customer Team Services Included Included Included Banking Included Included Included -Alternate Stockpiling Included $ $ Communication Materials Included Included Included Eligibility(Standard) Included Included Included Customized Forms $ $ $ Printing of Booklets or Certificates $ $ $ Claim Fiduciary&External Review(Details on $ N/A N/A Financial Assumption Tab) HIPAA Administration $ N/A N/A Claims Subrogation Included N/A N/A Claim&Member Services Claim Administration Included Included Included Member Services Included Included Included Network Administration Network Management Included Included Included Provider Relations Included Included Included National Advantage Program Included N/A N/A -Facility Charge Review Included N/A N/A -Itemized Bill Review $ N/A N/A Rural PPO Network Program $ N/A N/A Dental Medical Integration(DMI) N/A N/A Included Network Access Services Dental Network Discount N/A N/A $ Patient Management Precertification Included Included Included High Tech Radiology Precertification and $ N/A N/A Steerage Case Management Included N/A Included Concurrent Review Included N/A N/A Discharge Planning Included N/A N/A Aetna Compassionate Care Program Included N/A N/A National Medical Excellence Included N/A N/A Rx Step Therapy N/A $ N/A Save-A-Copay N/A $ N/A Rx Check N/A $ N/A Therapeutic Class Management(TCM) Programs -Non Sedating Antihistamines(NSAs) N/A $ N/A -Antifungals N/A $ N/A -Proton Pump Inhibitors(PPIs) N/A $ N/A Wellness&Health Management Aetna Health Connections-Disease Included N/A N/A Management MedQuerysm with Standard Member Messaging Included N/A N/A -Enhanced Member Messaging $ N/A NIA Healthy Lifestyle Coaching $ N/A N/A Simple Steps To A Healthier Life® Included N/A N/A Simple Steps To A Healthier Life®Reward $ N/A N/A ECareEngine@ ackin Personal Health Record $ N/A N/A A4 Inc It)ne n ..r.A.1 d1efnn nnm Prnnram R RckrvinaQ A.q(: Programs and Services City Of Round Rock Renewal Rate Period: 01/01/2011 through 12/31/2011 Contractholder Number-819919 Programs and Services We have provided a list,by product,of those programs and services that are included or available to City Of Round Rock. Programs and services that are optional are noted with a$sign and require an additional fee;for specific pricing please contact your Account Manager,Kendra Hoduski. Programs and services that are not available for particular products are identified as N/A. Choice®POS II Aetna PPO Pharmacy Dental Wellness Counseling $ N/A N/A Healthy Body,Healthy Weight Program(1,000 $ N/A N/A Beginning Ri htsM former/ Mom-to-Babies Included N/A N/A Quit Tobacco Program $ N/A N/A Informed Health®Line-Nurseline 800# Included N/A N/A Informed Health®Line-Plus $ N/A N/A Value Add Programs Fitness Program(GlobalFit) Included N/A N/A Aetna Natural Products&Services Program Included N/A N/A EPIC Dental Discount Program Included Included Vision One®Discount Program Included N/A N/A Standard Behavioral Health Focused Psychiatric Review N/A N/A N/A Managed Behavioral Health Included N/A N/A -Med/Psych Program $ N/A N/A IlBehavioral Health Disease Management Programs -Alcohol Disease Management $ N/A N/A -Anxiety Disease Management $ N/A N/A -Depression Disease Management $ N/A N/A Case Management Behavioral Health Programs -Intensive Case Management Included N/A N/A Member Internet Services Public Sites DocFinde Included Included Included InteliHealthO Included $ Included Pharmacy Information N/A Included Included Learning Resources Included Included Included Secure Sites Staying Healthy Included Included Included Estimate the Cost of Care Tool Included included Included Claim Research/Forms/Contact us Included Included Included Spanish version Included Included Included Plan Sponsor Internet Services e.Plan Sponsor Monitor7rm Reporting Aetna Integrated Informatics -Level A Reporting Included Included Included -Level B Reporting Included Included Included -Level C Reporting $ $ $ -Level D Reporting $ $ $ -Disease Management Activity Report Included N/A N/A (DMAR) -Ad hoc Reporting(5 hrs/cal year for 100 to Included N/A N/A 2999 medical ees) Third Party Stop Loss Reporting $ N/A N/A Aetna Navigator Reporting Included N/A N/A nninrinn.4n .......__t-___.Y [7........... 0 C"--,....... ACI% Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Administrative Fees Parameters: • Services Agreement The contract period begins on the effective date of January 01,2011 and will be applicable for a 12-month period. Our contracts provide for automatic renewal upon the completion of each contract period unless either party invokes the termination provision,which requires 31 days advance written notice of termination to the other party.This provision may be invoked at any time during the continuance of the contract and is not limited to termination occurring on the renewal date. • Enrollment and Funding Assumptions Based on this census information and the subsequent access analysis,we have assumed that approximately 777 employees will be enrolled for medical or pharmacy coverage. Our renewal quote assumes that coverage will not be extended to additional employees without review of supplemental census information and other underwriting information for appropriate financial review.The following illustrates assumed enrollment in each coverage: Coverage Assumed Enrollment Choice POS II 777 Dental-PPO 796 Total Medical Enrollment 777 Aetna Pharmacy Management 777 ■ Self-Funded Fee Guarantee The mature fees are guaranteed according to the per employee per month fees as illustrated on the financial exhibits. • Financial Condition City Of Round Rock is a legitimate business and meets underwriting approval for acceptable financial strength.Aetna reserves the right to request additional supporting information in order to evaluate financial status. ■ Health Care Reform This renewal is intended to be compliant with healthcare reform and reflects the following changes to plans and fees: Disclosure Lifetime Maximums have been removed Dependent Age is now a minimum of up to age 26 Pre-existing condition limitations have been removed from members up to age 19 Preventive care as defined by regulations paid 100%on In Network services Removal of annual dollar maximums on essential benefits The cost associated with these changes is outlined in your renewal package.The cost associated with the change is based on your existing benefits prior to health care reform legislation and what we believe to be required under the legislation which is subject to change. Be aware that the Federal government recently released regulations related to grandfathering of health plans in existence on March 23,2010.Changes in your benefit design as well as your contribution strategy may affect grandfathering. This renewal offering assumes grandfathering is not being preserved. If,after reviewing the grandfathering rules with their benefit consultant or counsel,the plan sponsor determines that their coverage could be grandfathered,and they want to retain grandfathered status,they should contact Aetna for further instructions.Aetna reserves the right to treat an insured plan as non-grandfathered. The benefits and fees within this renewal are subject to change pending any required approvals from state or federal regulatory agencies.If you have any questions,please contact your account manager. Aetna reserves the right to modify its products,services,rates and fees,in response to legislation,regulation or requests of government authorities resulting in material changes to plan benefits and to recoup any fees,costs, assessments,or taxes due to changes in the law even if no benefit or plan changes are mandated. • Advance Notification of We will notify City Of Round Rock of any fee change at least 120 days prior-to the effective date of fee change. • Performance/Discount Guarantee We will put 10%of our Medical/Dental/Pharmacy annualized administrative service fees at risk through 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Performance Guarantees.The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees enrolled in the medical plans throughout the guarantee period.This guarantee does not apply to non-Aetna benefits or networks. • Guarantee Parameters Aetna reserves the right to recalculate the guaranteed fees to take effect on the date a contingent event described below occurs. In such case,City Of Round Rock will be required to pay any difference between the fees collected and the new fees calculated.Aetna may recalculate: 1. If,for any product: a. There is a 15%change in the number of employees from our enrollment assumptions by site or by product,or from any subsequently reset enrollment assumptions. The enclosed medical and dental fees assume Aetna is the administrator for the medical and dental products for the policy year. If Aetna is not the administrato for the medical and dental products,the enclose fees are subject to change. b. The change in member-to-employee ratio is greater than 15%.We have assumed a member-to-employee ratio of 1.99. c. The change in number of processed claim transactions(PCTs)per employee is greater than 15%.We have assumed 25.3 PCTs per employee per year. We define a PCT for medical or dental benefits as any transaction with respect to a benefit request or predetermination of dental benefits for expenses incurred or expected to be incurred by one claimant in any one calendar year for a major line of coverage,including but not limited to benefit payment,benefit denial,pended request or decision on an appeal of a denied benefit request. d. There is a 15%increase in the retiree percentage from that assumed or from any subsequently reset assumptions. We have assumed that 0.9%of the enrolled employees are over-65 retirees. 2. If there is a material change in the plan of benefits initiated by City Of Round Rock or by legislative or regulatory action. 3. If there is a material change initiated by City Of Round Rock or by legislative or regulatory action in the claim payment requirements or procedures,account structure,or any change materially affecting the manner or cost of paying benefits and/or administering the plan. • Run-Off Claims Your administrative service fees are mature;we have included the cost of processing self-funded run-off claims Processing for 12 months following the termination of our administrative services agreement. ■ Late Fee Payment If City Of Round Rock does not cover benefit payments in a timely manner as provided in the agreement, and/or fails to pay service fees in a timely basis as provided in such Agreement,Aetna will assess a late payment charge.The current charges are: -late funds to cover benefit payments(for example,late wire transfers after 24-hour request): 12.0%annual rate -late payments of service fees after 31-day grace period: 12.0%annual rate Aetna will provide written notice to City Of Round Rock of any change in late payment charges. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the agreement or at law or in equity for failure to pay. Aetna Standards: • ALIC.Rewrite Aetna rewrote our standard description of benefits. We began using the revised version in 2008. The revisions affect documents that support Aetna's Traditional Medical(including Traditional Choice,Open Choice,Managed Choice and Open Access Managed Choice),Dental,Group Insurance and Pharmacy product lines. New customers receive documents on the new forms as they are implemented into Aetna's e.Publishing system.Renewing customers will receive updated contracts on renewal,as they have revisions,over a two-year contract renewal.cycle.Please contact your account manager for further information on the changes. ■ Seed Money Aetna will periodically assess the need for and sufficiency of any payment fund and may require a plan sponsor to deposit additional amounts to an existing payment fund or,if none exists,establish a payment fund/seed money or letter of credit. ■ Broker/Consultant The quoted fees do not include broker/consultant compensation. Compensation 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Prescription Drug Benefits: Our renewal quote assumes that prescription drug benefits are included and integrated with the medical benefits. • Direct Member DMR claims are Pharmacy claims(incurred in or out-of-network)submitted by eligible members to Reimbursement(DMR) APM and processed in APM's DMR unit.These claims are not adjudicated online at point of service subject to the copay.They are paid in full by the member.A surcharge is necessary to recoup the additional cost of processing DMR claims and to provide an additional incentive to plan sponsors to educate their employees on how to use their APM program to minimize the occurrence of DMR claims.For 2010 or 2011,the charge for processing DMR are$3.25 per script for Non-Off-Shore plan sponsor and$2.10 per script for Off-Shore plan sponsor. • Management Formulary In this renewal,Aetna retains all rebates received from pharmaceutical manufacturers. • Pharmacy Discount Disclaimer The retail brand and generic discounts and dispensing fees may or may not be equal to the actual discounts and fees negotiated and paid by Aetna to the participating pharmacies.The retail brand and generic discounts and dispensing fees may result in either a positive or negative margin for Aetna.Any positive margin may be retained by Aetna.Any negative margin will not be recouped by Aetna from City Of Round Rock. Programs and Services: • Claim Fiduciary(Opt.4) Our quoted administrative fees assume Aetna provides mandatory Levels 1 and 2 appeals,writes the letter to the employee to communicate the uphold or overturn prior decision.Aetna is claim fiduciary on Levels 1 and 2 appeals and External Review Options,if applicable.Aetna defends any lawsuit originating or after completion of the first two levels of appeal.The City Of Round Rock provides a voluntary appeals process after Aetna completes the mandatory two levels of appeal.The City Of Round Rock assumes fiduciary responsibility for appeals that go through this final voluntary level of appeal.The City Of Round Rock defends litigation for any claims going through this voluntary appeals process. • Aetna Health Connections Disease Management Our Aetna Health Connectionssm disease management program provides innovative and individualized clinical programs,information and support for total,integrated health management to help members achieve their optimal state of health.Aetna Health Connections disease management integrates a full suite of 34 chronic conditions and common comorbidities in a holistic fashion,with an Aetna nurse acting as a generalist to address the total health of those members who will benefit most from disease management services. Our program also includes MedQuery®,which uses member data such as medical claims,pharmacy claims, laboratory reports,self-reported data,and demographic information to identify potential gaps in care.This information is shared with physicians to help improve clinical quality and patient safety. Our Aetna Health Connections Disease Management with MedQuery program is included in your self-funded medical fees. • MedQuery MedQuery is a program that uses member data such as medical claims,pharmacy claims,laboratory reports, and demographic information to identify potential gaps in care. This information is shared with physicians to help improve clinical quality and patient safety. MedQuery is included in the self-funded medical fees. Our MedQuery Standard Member Messaging program is included as part of our MedQuery program. Our MedQuery Member Messaging program includes sending a consumer version of the-care consideration by letter to the member. The letter encourages the member to call his or her doctor to discuss the care consideration and is sent only after the care consideration is communicated to the treating physician,to allow the physician time to evaluate the issue.Our Standard Member Messaging option is included. Our MedQuery Enhanced Member Messaging program is also available as an option to our MedQuery program.Our MedQuery Enhanced Member Messaging program is offered to those members who are not participating in Aetna Health Connections Disease Management program. MedQuery Enhanced Member Messaging can be included for an additional$0.20 per employee per month for our self-funded medical products. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial t Assumpons City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 ■ Personal Health Record (PHR) Powered by the patented Aetna Care Engine°,provides members with online access to personal information, including health alerts,detailed health summary,and integrated information and tools to help members make informed decisions about their health care. Aetna's Care Engine-powered PHR combines detailed,claims-driven information gathered from across the health care spectrum,such as physician offices and hospitals,labs,diagnostic treatment and pharmacies,and adds member-reported health information to build a comprehensive health profile that the member can share with his or her doctor. Aetna's Care Engine-powered PHR applies to all Funding Arrangements and all medical products.MedQuery and the Informed Health Line 1-800#are required when implementing PHR. Our PHR program is available as an option and can be included for an additional$0.50 PEPM. ■ National Advantage Program Aetna's National Advantage T""Program allows plan sponsors access to contracted rates for many medical claims that otherwise would be paid at billed charges under indemnity plans,the out-of-network portion of managed care plans,or for emergency/medically necessary services not provided within the standard network. The NAP network consists of many of Aetna's directly-contracted hospitals,ancillary providers,and physicians as well as hospitals,ancillary providers,and physicians accessed through vendor arrangements where Aetna does not have direct contractual arrangements.The average savings to our customers from NAP--before NAP fees--range from 15 percent to 25 percent of billed charges,depending on product.Discounts vary by geographic region. The NAP fee is not a part of the overall per employee per month(PEPM)administrative service fee calculation for City Of Round Rock.Instead,the fee for NAP is a percentage of savings.It is automatically charged to City Of Round Rock as part of their claim charges.The fee is charged only if savings are achieved. For City Of Round Rock,the NAP fee is 50 percent and has been assumed for this proposal. ■ Facility Charge Review Program The Facility Charge Review program(FCR)is an additional feature of the National Advantage Program(NAP)for self-funded plans that has been included as part of this proposal.It provides reasonable charge allowance review for most inpatient and outpatient facility claims under indemnity plans,the out-of-network portion of managed care plans,or for emergency/medically necessary services not provided within the network,where a NAP-contracted rate is not available. FCR is available only in conjunction with NAP and is not available separately. The fee for the Facility Charge Review feature is 50 percent of savings and is not included in the per employee per month fee. A listing of participating NAP health care professionals and facilities is available through our DocFindo,online directory at www.aetna.com. We will recalculate City Of Round Rock's administrative service fee if either of the following changes are made: group discontinues the National Advantage.Program or group changes the Facility Charge Review program. ■ Mental Health/Substance Abuse Benefits Our renewal quote assumes that mental health/chemical dependency benefits are included. The Federal Mental Health Parity and Addiction Equity Act of 2008 applies to fully insured traditional and HMO Middle Market(MM)&National Accounts(NA)commercial plans as well as self-funded Traditional and HMO MM&NA commercial plans for plan years beginning on or after October 3,2009.This means many calendar year plans were required to comply with the Act by Jan.1,2010.The new Interim Final Regulations apply to plan years beginning on or after July 1,2010,so calendar year plans must comply with the regulations by January 1,2011. However,given that this is a self funded plan,it is ultimately up to the plan sponsor to comply with federal Mental Health Parity. We can continue to make our recommendation regarding application and how we think their plan should be designed in order to comply but we are not in the position to provide self funded plan sponsors legal advice.Therefore,the plan sponsor should speak to their own legal counsel and make the final determination related to compliance with Federal Mental Health Parity. ■ External Review External Review is offered as an option to self-funded customers.External Review uses outside vendors who coordinate a medical review through their network of outside physician reviewers. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptiolls City Of Round Rock Contractholder Number-819919 Renewal Rate Period; 01/01/2011 through 12/31/2011 Customers who ask Aetna to assume claim fiduciary responsibility will have this service included at no additional charge. Customers who retain claim fiduciary responsibility may choose to include this service and Aetna will pass the actual vendor charges through on a direct charge basis. • Claims Subrogation Aetna has entered into an agreement with The Rawlings Company to provide comprehensive subrogation services. There is no administration charge from Aetna to use the subrogation program.However, a contingency fee is collected upon recovery for self-funded.customers. Effective January 1,2011,the fee in place with The Rawlings Company is 30%. • Data Transfer at Termination Upon contract termination,we agree to cooperate with succeeding administrators in producing and transferring required claim and enrollment data. Data will be transferred within 30 days after determination of City Of Round Rock's specific format and content requirements,subject to a charge that is based on direct labor cost and data processing time. • Third-Party Audits While in most cases we do not request reimbursement for internal costs associated with a third-party audit,we reserve the right to recoup these expenses if significant time and materials are required. A complete description of the terms and conditions of our audit policies is outlined in our Services Agreement. • Health Insurance Portability and Accountability Act Accountability Our proposal assumes that Aetna will not be providing HIPAA certifications of coverage for terminated (HIPAAemployees. We would be willing to provide HIPAA certifications for an additional charge of$0.26 per employee per month. • Medical EOB Suppression Unless required by state law,we do not produce EOBs for claims when there is no member liability. Additionally,EOBs are always available electronically through Aetna Navigator on our website www.aetna.com. • Additional Products and Services Costs for special services rendered which are not included or assumed in the pricing guarantee will be direct billed. For example,City Of Round Rock would be subject to additional charges for customized communication materials, as well as costs associated with custom reporting,booklet and SPD printing,etc.The costs for these types of services would depend upon the actual services performed and would be determined at the time the service is requested. A list of these special services can be found on the Programs and Services sheet. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Administrative Fees Parameters • Services Agreement The contract period begins on the effective date of January 01,2011 and will be applicable for a 12 month period. ("Contract")Period Our contracts provide for automatic renewal upon the completion of each contract period unless either party invokes the termination provision,which requires 31 days advance written notice of termination to the other party.This provision may be invoked at any time during the continuance of the contract and is not limited to termination occurring on the renewal date. • Enrollment and Funding. Based on this census information and the subsequent access analysis,we have assumed that approximately 796 Assumptions employees will be enrolled for dental coverage. Our renewal quote assumes that coverage will not be extended to additional employees without review of supplemental census information and other underwriting information for appropriate financial review.The following illustrates assumed enrollment in each coverage: Coverage Assumed Enrollment PPO Dental 796 Total Dental Enrollment 796 • Self-Funded Fee The mature fees are guaranteed according to the per employee per month fees as illustrated on the financial Guarantee exhibits. • Advance Notification of We will notify City Of Round Rock of any fee change at least 31 days prior to the effective date of fee change. Fee Change • Guarantee Parameters Aetna reserves the right to recalculate the guaranteed fees to take effect on the date a contingent event described below occurs. In such case,City Of Round Rock will be required to pay any difference between the fees collected and the new fees calculated.Aetna may recalculate: 1. If,for any product: a. There is a 15%change in the number of employees from our enrollment assumptions by site or by product,or from any subsequently reset enrollment assumptions. b. The change in member-to-employee ratio is greater than 15%.We have assumed a member-to-employee ratio of 2.12. c. The change in number of processed claim transactions(PCTs)per employee is greater than 15%.We have assumed 3.46 PCTs per employee per year. We define a PCT for dental benefits as any transaction transaction with respect to a benefit request or predetermination of dental benefits for expenses incurred or expected to be incurred by one claimant in any one calendar year for a major line of coverage,including but not limited to benefit payment,benefit denial,pended request or decision on an appeal of a denied benefit request. 2. If there is a material change in the plan of benefits initiated by City Of Round Rock or by legislative or regulatory action. 3. If there is a material change initiated by City Of Round Rock or by legislative or regulatory action in the claim payment requirements or procedures,account structure,or any change materially affecting the manner or cost of paying benefits and/or administering the plan. • Run-Off Claims Your administrative service fees are mature;we have included the cost of processing self-funded run-off claims Processing for 12 months following the termination of our administrative service agreement. • Late Fee Payment If City Of Round Rock does not cover benefit payments in a timely manner as provided in the Agreement, to pay service fees in a timely basis as provided in such Agreement,Aetna will assess a late payment charge. The current charges are: -late funds to cover benefit payments(e.g.,late wire transfers after 24-hour request):12.0%annual rate -late payments of service fees after 31 day grace period: 12.0%annual rate Aetna will provide written notice to City Of Round Rock of any change in late payment charges. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. 08/05/2010 www.aetna.com Dental Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Aetna Standards • Seed Money Aetna will periodically assess the need for and sufficiency of any Payment Fund and may direct a plan sponsor to deposit additional amounts to an existing Payment Fund or,if none exists,establish a Payment Fund/Seed Money or Letter of Credit. • Broker/Consultant The quoted fees do not include broker/consultant compensation. Compensation Programs and Services: • Data Transfer at Upon contract termination,we agree to cooperate with succeeding administrators in producing and transferring Termination required claim and enrollment data. Data will be transferred within 30 days after determination of City Of Round Rock's specific format and content requirements,subject to a charge that is based on direct labor cost and data processing time. • Third-Party Audits While in most cases we do not request reimbursement for internal costs associated with a third-party audit,we reserve the right to recoup these expenses if significant time and materials are required. A complete description of the terms and conditions of our audit policies is outlined in our Services Agreement. • Additional Products and Costs for special services rendered,which are not included or assumed in the pricing guarantee will be direct Services billed. For example,City Of Round Rock would be subject to additional charges for customized communication materials, as well as costs associated with custom reporting,booklet and SPD printing,etc.The costs for these types of services would depend upon the actual services performed and would be determined at the time the service is requested. A list of these special services can be found on the Programs and Services Sheet. 08/05/2010 www.aetna.com Dental Assumptions ASC • StopAssumptionsLoss City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 This caveat document outlines specific information for the quotation provided on 08/05/2010. Stop Loss is available to cover claims for all of the Plan Sponsor's eligible employees and their dependents who are enrolled on a timely basis and are covered under the ASC plan,provided the employees satisfies the following definition:an employee means an employee of the Insured who Aetna determines is physically able to perform all the regular duties of employment,is regularly working at least 25 hours per week and for whom the Insured is deducting any required U.S.FICA taxes. Stop Loss Policy Year-The Stop Loss policy year must agree with the ASC contract year,both of which must end on the customer's standard renewal date. Rate/Factor Adjustments-We reserve the right to adjust the premium rate and Aggregate factor during the policy year if there are a)changes to the medical plan,b)deviations from any of our quote assumptions(e.g.policy period,type of Stop Loss coverage,runoff coverage for employees who terminated prior to the renewal date,etc.),or c)changes in other factors bearing on the Stop Loss risk that result in a combined manual change of 10%or more(e.g.,single/ family split,age/gender mix,etc.). However,we will not change the rate or factor based on changes in the make-up of the group unless the number of covered employees(either in total,by type of medical plan,by single/family split,by age/ gender or by location)changes by more than 10%from the number assumed in the quote. We also will not change the rate or Aggregate factor based on actual Stop Loss experience after the effective date. Family Participation-This quotation assumes 47.4%family participation. Large Group Acquisition-In the event that a large group(in excess of 10%of total covered lives)is acquired after the original effective date and is covered under the Stop Loss policy,we reserve the right to underwrite the individuals within this group based on current large claim data provided by the customer. If this information is not forthcoming,we will apply the Actively-at-Work and Dependent Non-Confinement underwriting rules to those in the new group on the effective date of their coverage under Stop Loss. Coverages Excluded from Individual Stop Loss-Non-integrated(APM,PCS)drug benefits will apply to the Individual Stop Loss limit while separate ancillary benefits such as:Dental,Vision and Temporary Disability will not apply to the Individual Stop Loss limit. Coverages Included under Aggregate Stop Loss-Aggregate Stop Loss coverage includes the following benefits: Medical and Pharmacy Mental/Nervous and Substance Abuse-Mental/Nervous and Substance Abuse claims will be covered by Individual and Aggregate Stop Loss only when Aetna's vendor provides these benefits. If these benefits are provided by an outside vendor,the claims resulting from these services will be excluded from Individual and Aggregate Stop Loss. HIPAA—Stop Loss coverage for new entrants(those who become covered after the Stop Loss effective date)are subject to HIPAA's pre-existing conditions limitation in accordance with Aetna Life Insurance Company's then current standard underwriting practices established for applying pre-existing condition limitations to group accident and health insured plans in accordance with HIPAA, Public Law No.104-191. Reimbursement for Aggregate Stop Loss Claims-The monthly budget feature standardly applies to Aggregate Stop Loss claims as long as the Stop Loss policy remains in effect;however,this feature is not available under the following conditions:1)when customers choose to fund claims through multiple primary wire lines or 2)when customers choose to fund claims through one primary wire line and report through one or more internal wire lines. For these plans, reimbursement will be made within 120 days after the policy year end. The Aggregate liability limit will equal the sold trigger factor times the number of months in the policy year times the total number of covered Stop Loss lives reported for that policy year(exception:when a customer drops in size during the 08/05/2010 www.aetna.com Stop Loss Assumptions ASC StopAssumptionsLoss City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 policy year,the actual enrolled lives at the start of the policy year will be utilized to determine the liability limit for that policy year). Maximum Annual Aggregate Stop Loss Payment Amount-This quote assumes$1,000,000 Maximum Annual Aggregate Stop Loss Payment Amount. Individual Lifetime Stop Loss Payment Amount-This quote assumes an unlimited Individual Lifetime Stop Loss Payment Amount. The Individual Lifetime Stop Loss Payment Amount will be capped to be no greater than the underlying lifetime medical plan maximum,for a given Participant,minus the Individual Stop Loss Amount in effect for each policy period. Important Information regarding your coverage options: We have provided you with multiple coverage options that reflect various Individual Stop Loss Lifetime Maximum Payment Amounts. Should you elect coverage that provides an Individual Lifetime Stop Loss Payment Amount that is less than the unlimited lifetime maximum of your underlying Plan, please be aware that you will create a gap in coverage between your plan and the Stop Loss Insurance you are obtaining.In the event that Eligible Claim Expenses funded by Individual Stop Loss reach the Individual Lifetime Stop Loss Payment Amount,all subsequent Eligible Claim Expenses for that individual must be funded by the Plan Sponsor. Producer Commissions-There are no producer commissions included for Stop loss 08/05/2010 www.aetna.com Stop Loss Assumptions ASC �kAetna August 5, 2010 City Of Round Rock Linda Gunther 221 East Main Street Round Rock, TX 78664 ADMINISTRATIVE SERVICES AGREEMENT NO. /ASC POLICYHOLDER NO. —819919 Dear Ms. Gunther: This letter agreement between City Of Round Rock (hereinafter"City Of Round Rock") and Aetna Life Insurance (hereinafter"Aetna") amends the above captioned Administrative Services Agreement(Agreement). The Performance Guarantees attached to this letter agreement replace any Performance Guarantees in the Agreement for the Guarantee Period 01/01/2011 through 12/31/2011 (hereinafter"Guarantee Period"), effective 01/01/2011. Aetna is committed to providing quality administrative services to City Of Round Rock, and we would like to emphasize our degree of commitment through the attached Performance Guarantees. The attached Performance Guarantee agreement describes the Performance Guarantees in detail. Please sign this letter agreement and return it to us by 11/01/2010, indicating your acceptance of the Guarantees. If this letter is not signed and returned by 10/03/2010, it is assumed that City Of Round Rock is in agreement with the Performance Guarantee offerings, Performance Objectives, and amounts at risk if the Performance Objectives are not met. Guarantee Measure Performance Objective Maximum at Risk Turnaround Time 90% in 14 days 2.00% Financial Accuracy 99.0% or higher 2.00% Total Claim Accuracy 92% or higher 2.00% Average Speed of Answer(ASA) 30 seconds 2.00% Abandonment Rate 3.50% 2.00% Total at Risk 10.00% IN WITNESS WHEREOF,AETNA has signed this amendment to become effective 01/01/2011. Signed by Aetna on 08/09/2010 Underwriter Signed by City Of Round Rock on Signature Official Title 08/05/2010 www.aetna.com Performance Guarantee Letter -Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/3112011 General Performance Guarantee Provisions Aetna Life Insurance Company(ALIC)provides health benefits administration and other services for the self-funded Aetna Choice 11 Medical plans.The services set forth in this document will be provided by ALIC (hereinafter"Aetna"). Performance Objectives Aetna believes that measuring the activities described below are important indicators of how well it services City Of Round Rock. Aetna is confident that the Plan Administration,Claim Administration and Member Services provided to City Of Round Rock will meet their high standards of performance.To reinforce City Of Round Rock's confidence in Aetna's ability to administer their program,Aetna is offering guarantees in the following areas: Claim Administration Turnaround Time Financial Accuracy Total Claim Accuracy Member Services Average Speed of Answer(ASA) Abandonment Rate Guarantee Period The guarantees described herein will be effective for a period of 12 months and will run from January 1,2011 to December 31,2011(hereinafter"guarantee period"). The performance guarantees shown below will apply to the self-funded Aetna Choice POS II Medical plans administered under the Administrative Services Only Agreement("Services Agreement").These guarantees do not apply to non-Aetna benefits or networks. If Aetna processes runoff claims upon termination of the Services Agreement, performance guarantees of Turnaround Time, Financial Accuracy, Payment Incidence Accuracy, and/or Total Claim Accuracy will not apply to such claims. Further, performance guarantees described herein will not apply to the guarantee period claims if termination is prior to the end of the guarantee period. Aggregate Maximum In total,Aetna agrees to place 10%of its applicable guarantee period administrative service fees at risk(hereinafter "guarantee period administrative service fees at risk or fees at risk")through the Performance Guarantees outlined in this document. The guarantee period administrative service fees will be based on Aetna-only services(excludes services such as outside vendor services, commissions,etc.)calculated at the end of the guarantee period and will be based on the total number of employees actually enrolled in the Aetna Choice POS II Medical plans throughout the guarantee period. In no event will fees be adjusted by more than 10%due to the results of this guarantee and all other guarantees combined. Termination Provisions Termination of the guarantee obligations shall become effective upon written notice by Aetna in the event of the occurrence of(i), (ii)or(iii)below: (i)a material change in the plan initiated by City Of Round Rock or by legislative action that impacts the claim adjudication process, member service functions or network management; (ii)failure of City Of Round Rock to meet its obligations to remit administrative service fees or fund the City Of Round Rock bank account as stipulated in the General Conditions Addendum of the 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Services Agreement; (iii) failure of City Of Round Rock to meet their administrative responsibilities(e.g.,a submission of incorrect or incomplete eligibility information). No guarantees shall apply for a guarantee period during which the Services Agreement is terminated by City Of Round Rock or by Aetna. Refund Process At the end of each guarantee period,Aetna will compile its Performance Guarantees results. If necessary,Aetna will provide a"lump sum"refund for any penalties incurred by Aetna. Measurement Criteria Aetna's internal quality results for the unit(s)processing City Of Round Rock's claims will be used to to determine guarantee compliance for any Financial Accuracy, Payment Incidence Accuracy,and/or Total Claim Accuracy Guarantees. Claim Administration Turnaround Time Guarantee:Aetna will guarantee that the claim turnaround time during the guarantee period will not exceed 14 calendar days for 90%or the processed claims on a cumulative basis each year. Definition:Aetna measures turnaround time from the claimant's viewpoint;that is,from the date the claim is received in the service center to the date that it is processed(paid,denied or pended). Weekends and holidays are included in turnaround time. Penalty and Measurement Criteria: If the cumulative year turnaround time(TAT)exceeds the day guarantee as stated above,Aetna will reduce its compensation by an amount equal to 0.2%of the guarantee period administrative service fees for each full day that Turnaround Time exceeds 10 calendar days for 90%of all claims.There will be a maximum reduction of 2%of the guarantee period administrative service fees. Results for the HMO,QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. A computer generated turnaround time report for the processing site that handles City Of Round Rock's specific claims will be provided on a quarterly basis. Financial Accuracy Guarantee:Aetna will guarantee that the guarantee period dollar accuracy of the claim payment dollars will be 99.0%or higher Definition:Financial accuracy is measured by the dollar amount of claims paid accurately divided by the total dollars paid. Aetna considers each underpayment and overpayment an error;Aetna does not offset one by the other. Penalty and Measurement Criteria:Aetna will reduce its compensation by an amount equal to 0.2%of the guaranteed period administrative service fees for each 1%that financial accuracy drops below 99.0%. There will be a maximum reduction of 2%of the guarantee period administrative service fees. Aetna's audit results for the unit(s)processing City Of Round Rock's claims will be used. The results will be based on Aetna's applicable Quality Assessment Policy in effect at the time of the audit. 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Total Claim Accuracy Guarantee: Aetna will guarantee that the guarantee period overall accuracy of the claim payments will not be less than than 92.0%. Definition:Total claim accuracy is measured as the number of claims with no errors(financial and non-financial)divided by the total number of claims audited. Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each 1%that total claim accuracy drops below 92.0%. There will be a maximum reduction of 2%of the guarantee period administrative service fees. Aetna's audit results for the unit(s)processing City Of Round Rock's claims will be used. The results will be based on Aetna's applicable Quality Assessment Policy in effect at the time of the audit. Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Member Services Average Speed of Answer Guarantee:Aetna will guarantee that the average speed of answer for the site(s)providing City Of Round Rock's member services will not exceed 30 seconds. Definition: On an ongoing basis,Aetna measures telephone response time through monitoring equipment that produces a report on the average speed of answer. Average speed of answer is defined as the amount of time that elapses between the time a call is received into the telephone system and the time a representative responds to the call. The result expresses the sum of all waiting times for all calls answered by the queue divided by the number of incoming calls answered. ASA measures the average speed of answer for all callers answered. Interactive Voice Response (IVR)system calls are not included in the measurement of ASA. Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each full second that the average speed of answer exceeds 30 seconds.There will be a maximum reduction of 2%of the guarantee period administrative service fees.Aetna's results for the site(s)providing member services for City Of Round Rock will be used. Results for the HMO,QPOS, USAccess plans will be tracked and reported separately from the.PPO, EPO, POS and Indemnity plans. Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Abandonment Rate Guarantee:Aetna will guarantee that the average rate of telephone abandonment for the site(s)providing City Of Round Rock's member services will not exceed 3.5%. Definition:On an ongoing basis,Aetna measures telephone response time through monitoring equipment that produces a report on the average abandonment rate. The abandonment rate measures the total number of calls abandoned divided by the number of calls accepted into the site Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each 1%that the average abandonment rate exceeds 3.5%. There will be a maximum reduction of 2% of the guarantee period administrative service fees.Aetna's results for the site(s)providing member services for City Of Round Rock will be used. Results for the HMO,QPOS, USAccess plas will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans. Therefore, results and penalties will be 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Please have an authorized individual sign the performance guarantee ASC amendment letter, signifying your acceptance of the arrangement, and return the original to us for our files. 08/05/2010 www.aetna.com Performance Guarantee The Aetna Difference ""'NK, Aet.n a Aetna*is one of the nation's leading providers of health care benefits. Our resources include one of the largest networks of physicians,dentists,hospitals, pharmacies, and health professionals;extensive experience in claims payment and administration of innovative health benefits and health insurance;and powerful online resources and self-service tools. Aetna is a leader,cooperating with doctors and hospitals,employers,patients,public officials,and others to build a stronger,more effective health care system. Aetna Can Make Your Job Easier... ■ Aetna's Broad Choice of Products and Services Helps Provide Comprehensive Coverage You know Aetna as a leader in medical insurance. But we also offer a full range of insurance policies, including dental, pharmacy,group life,and disability, each of which provides the high level of quality and service you demand. Whether taken individually, or as a complete package, any of Aetna's programs will enhance the heath coverage you provide for your employees. Aetna harnesses the power of information to help you and your employees make better, more informed decisions. This helps control costs and helps keep your employees healthy and productive. Aetna offers a product portfolio aimed at balancing the needs of both employers and employees. We strive to maintain a competitive and comprehensive health portfolio of HMO and PPO-based products,as well as consumer-directed health plans.Aetna is committed to help facilitate access to high-quality,cost- effective care to produce healthier outcomes. ■ Plan Sponsor Services—Aetna Delivers a Total Service Experience We provide plan sponsors with customer-specific services so the plan functions smoothly. We designate a specific field office and account manager as the primary contact. Through ongoing communication with the Plan Sponsor, the account manager provides recommendations as employer needs grow or change. The account manager provides support for plan sponsors regarding their health coverage issues and benefits concerns. ■ Online Tools—Easy-To-Use Technology For Benefits Planning,Eligi�,Enrollment And Billing Aetna offers an array of Internet-based applications that are designed to make it easier for Plan Sponsors to do business with us. • Aetna's e.Plan Sponsor MonitorTm is an easy-to-use online reporting tool that helps customers identify their health care spending patterns by providing access to standard reports as well as the ability to customize and create ad hoc reports.If you are an e.Plan Sponsor MonitorTm customer, you can easily access the program online with a secure username and password.Plan sponsors who cannot access e.Plan Sponsor MonitorTM and who have 100 eligible enrolled subscribers will receive quarterly reports from Aetna's reporting tool that provide comprehensive statistics related to their plan and Aetna's book of business.If you are not yet an e.Plan Sponsor MonitorTM customer,please feel free to contact us to learn more about our capabilities. • Aetna Integrated Informatics and Medical Management Programs—Healthier Outcomes and Cost Reduction One of Aetna's goals is to help members maintain their health as well as to identify the need for care in the early stages of a disease. Aetna Integrated Informatics, our data analysis subsidiary, uses predictive modeling and risk stratification to identify members for early outreach. By increasing the reach and impact of our proven medical services.programs,Aetna continuously strives to connect care with individual needs. We are making it easier for employers to control costs while providing quality coverage. We offer innovative case and disease management programs as regular components of our plans. The intention is to proactively identify members who have chronic illnesses and intercede to provide them with educational resources to help them better manage their conditions. • Enrollment and Billing Solutions Customers with an HR system can use SecureTransportT"" to quickly and efficiently transmit eligibility information from their system to Aetna. Customers who do not have an HR system,can use EZenroll to process new hire enrollments,changes,and terminations or EZLinkTm for online enrollment,billing and electronic premium payment. Programs/Services Included in your Renewal- ■ Aetna NavigatorTm-We Support Members 2417 Aetna Navigator TM is a self-service website that provides members with a single source for online health and benefits information 24 hours a day,7 days a week. Through Aetna Navigator,members can change their Primary Care Physician(PCP),replace an ID card,research Aetna's products and programs,contact-Aetna directly, and access a vast amount of health and wellness information. Aetna Navigator also includes secure,personalized features for registered members including access to claims and benefits status. ■ MedQueryo-Information Sharing Helps Improve Quality And Safety Of Care nomc►e)nIt n ILAAAAA1#'5^+r»~%rm �Ctn7 r)iffaranrra The Aetna Difference 'kAet Aetna's MedQuery`R'program is a data-mining initiative that turns Aetna's member health data into information that physicians can use to improve clinical quality and patient safety. Through the MedQueryo program,Aetna's data is analyzed and the resulting information provides physicians with access to a broader view of a patient's clinical profile. The data that fuels this program includes claims history, current medical claims, pharmacy claims,physician encounter reports,patient demographics and evidence-based treatment recommendations. Additional Products &Service Offerings ■ Aetna Health Connections Get Active!sm • Aetna Health Connections Get Active!sm:Shape Up Challenge plus Stay in Shape Fitness and Nutrition Tracking Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being. It features an online fitness and nutrition tracker,team-based competition,social networking,emails&newsletters,activity tracking reports,and the option to buy-up for a pedometer. Employees can select any or all program activity tracking categories:exercise hours,pedometer steps,or weight Foss. The recommended team competition is 12 or 16 weeks in length.Additionally,the program includes the fitness and nutrition tracking program which provides members with an ongoing maintenance program following the challenge. • Aetna Health Connections Get Active!sm:Shape Up Challenge Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being. It features an online team-based competition,social networking, emails&newsletters,activity tracking reports,and the option to buy-up for a pedometer. Employees can select any or all program activity tracking categories:exercise hours,pedometer steps,or weight loss. The recommended team competition is 12 or 16 weeks in length. • Aetna Health Connections Get ActivelsM'Stay in Shape Fitness and Nutrition Tracking Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being.The program features an online application that makes it easy for participants to track fitness and nutrition information. The social networking capability allows participants to communicate with fellow members and schedule group exercise activities,if desired. The social networking feature encourages team-building,program camaraderie,and most importantly-program engagement. ■ Aetna Affordable Health ChoicessM—Provides Benefits To Non-Traditional Employees In August 2004,Aetna announced the acquisition of Strategic Resource Company(SRC), the latest in a series of targeted acquisitions designed to enhance the scope of our product and service offerings and increase our ability to serve new market segments. SRC,An Aetna CompanYsm offers an innovative solution for non-benefited employees(i.e.Part-time,waiting period,seasonal,temporary,per diem,etc). Through SRC,we can offer quality, affordable coverage to this important segment of the workforce,which provides significant value to these individuals and plan sponsors as well. SRC offers affordable medical,dental, life, disability, vision and pharmacy insurance administered through payroll deductions. Our experience shows that offering these benefits reduces turnover in this population and therefore, positively impacts acquisition,hiring and training costs. Please contact your Account Manager if you would like more details. ■ Aetna HealthFund®—Innovative Consumer-Directed Plan Designs Help To Lower Medical Costs Our accumulated information allows us to create innovative solutions like the Aetna HealthFund` integrated suite of health,dental,and pharmacy. Did you ever think your employees could help you control health care costs? They can with Aetna HealthFund®. These consumer-directed plans give employees responsibility for managing their own spending, and we'll give them the information they need to spend wisely. it's the first integrated benefits suite of its kind,and it's only from Aetna,the pioneer in consumer-directed plans. ■ Aetna Integrated Programs—Benefits Work Better... Together • Aetna Integrated Health&Disability OHM nRm-c;/gnl n www aPtna mm Aetna Difference The Aetna Difference �G -na When Aetna's Medical and Disability benefits are taken together,they can be coordinated to provide a more efficient health care program. Aetna Integrated Health&Disability(IHD)is a concrete and compelling example of Aetna's strengths:innovation,information and integration. IHD links medical and disability case management together by utilizing Aetna's rich data management tools.This allows the right connections to be made at the right time to create a better outcome for our members,plan sponsors and providers.Aetna gathers aggregated data and integrates it across our areas of service—medical management,disability,Aetna Behavioral Health and Aetna Integrated Informatics®--to help improve the overall health of our members, while potentially reducing medical costs for you and your employees. IHD may uncover concerns earlier, which can help employees recover faster and return to work sooner.We combine predictive modeling,.patient information,early outreach,condition management and care coordination with our rehabilitation and return-to-work experience.The end result is a holistic approach to the individual's health and ability to remain productive. • Aetna Integrated Health Solutions""(IHS) IHS is another innovative program that connects clinical services,claims data,and wellness resources across multiple products to positively impact members'health,improve workforce productivity,and manage healthcare as well as disability costs. Why is IHS needed?"Presenteeism",or on-the-job productivity loss that is illness related,is costing plan sponsors money.Research on employee health and wellness shows that presenteeism costs businesses$150 billion a year.Lost productivity is 7.5 times higher due to presenteeism than for absenteeism. IHS is uniquely aimed at addressing this need.The IHS continuum of fully-integrated services provides our medical,behavioral health,pharmacy, wellness and disability clinicians with a single, comprehensive view of each member's health and health needs. Customers receive integrated reports that pinpoint the health issues of greatest need and track the engagement and progress of employees toward better health. And because IHS helps members and health care professionals identify conditions at the earliest stages.-when they are most treatable-recovery times improve, presenteeism and work-related absenteeism are addressed,and medical and disability costs are managed more effectively. Aetna has achieved remarkable results from its integrated programs initiated to date -- medical and psychiatric case management, health and disability management,and medical and pharmacy management. Ultimately,showing the value of integrated care results in expected reduction in medical claim costs of 4%in year 1,5%in year 2,and 6%in year 3. • Aetna Dental/Medical Integration(DMI)Program Plan Sponsors with both medical and dental coverages under Aetna receive the DMI program at no additional charge.This program utilizes Aetna's unique data integration tools to identify at-risk members whose conditions have high cost/risk characteristics that could result in adverse health outcomes.The program focuses on members who have not had a recent dental visit and creates a complete health history for these members. By combining outreach programs,education materials and enhanced dental benefits,Aetna encourages these members to obtain dental care for an improved overall health outcome. At-risk members could include those with diabetes, coronary artery disease, cerebrovascular disease or pregnancy. ■ Life and Disability Programs&Services Life and disability insurance are important components in a comprehensive employee benefits package, providing peace of mind for employees and family members.Aetna's core offering of high-quality disability products and services--Short Term Disability(STD),Long Term Disability(LTD),and Absence Management including Family and Medical Leave Act(FMLA)--can be offered alone or in any combination. Within this core model are a variety of plan design options,service features and system capabilities that enable you to customize the plan to meet your needs. Included with Aetna's Basic,Voluntary, Supplemental or Dependents'Group Term Life Insurance plans is a new package of programs and services designed to enhance the value of our products for both employees and their family members by leveraging programs from Aetna's innovative health business.With,Aetna Life Essentials,active employees and their families have access--at no additional cost--to programs that help promote healthy, fulfilling lifestyles. In addition,Aetna Life Essentials provides critical support resources for often-overlooked needs at the end of life.These programs provide value for beneficiaries and their loved ones beyond the financial support from a death benefit. Here are highlights of Aetna's Life and Disability programs: • Discounts-If your employees enroll in an Aetna Disability and/or Life Insurance Plan our discount programs can be their ticket to the small luxuries that help keep them healthy and happy. • Aetna"s differentiation in disability claim management-We view disabilities as health events,not just absences from work.As such,we have developed a market-leading approach that will return your employees to health--and to work--sooner. 11S2It1tiI7f1'I n %AAAAA/91Mf'n!n rnm AAtnn niff=mnna The Aetna Difference 'kAet.n • Workability°-Workability is our state-of-the-art integrated disability system.It is task,clinical outcome based system with smart logic.Workability is a single platform generating communications across your FML,STD and LTD claimants • An Employee Assistance Program(EAP)for Long Term Disability members-We are pleased to offer,as a value-added service in conjunction with our insured Group Long Term Disability policies,an EAP serviced and managed by Aetna Behavioral Health.It includes access for employees and immediate household members to unlimited phone consultations with EAP counselors • Aetna Life Essentialssm-Included with Aetna's Basic,Voluntary,Supplemental or Dependent's Group Term Life insurance plans is a package of programs and services designed to enhance the value of our products for both employer-and employee-paid coverage.This program includes such valuable services as expert financial advice,access to legal services,and healthy lifestyle programs. Travel Assistance Program-To help minimize the stress of emergency situations you may encounter while traveling overseas on business or pleasure,we offer you and your dependents access to medical,travel,legal and financial assistance services through this program Coordination of Premium Waiver-If Aetna covers both Life and long-term disability,we send premium waiver notification to the Premium Waiver Unit once an LTD claimant has met the predetermined qualifying period. ■ Medicare Advantage Plans Aetna has a wide range of health plan choices for plan sponsors to offer their Medicare retirees.Below are some of the plan options you may want to consider: • Medicare Advantage HMO Offers a large national provider network, worldwide emergency care, preventive health and wellness programs, optional dental benefits, online resources,value added services such as eyewear discounts and fitness club memberships. • Medicare Advantage PPO Offers flexibility to visit providers in-network or out-of-network,no annual or lifetime dollar maximums for in-network services,no copays for select in network preventive services. • Medicare Private Fee-For-Service(PFFS)Plan Offers the most provider flexibility.Members can receive coverage from any provider who is licensed and eligible to receive Medicare payments and who accepts the PFFS Plan's Terms and Conditions of Participation. PFFS plans offer all the benefits covered by Original Medicare as well as unlimited hospitalization and full coverage for preventive services. • Medicare Prescription Drug Plans(PDP) A wide range of standalone PDPs are available under Aetna Medicare Rx.They range from plans that provide Standard PDP benefits to enhanced plans that fill in the Medicare PDP coverage gap.These plans are available nationwide. • Medicare Advantage Prescription Drug Plans(MA-PD) Aetna's MA-PD Plans integrate our Medicare Advantage plans with our Prescription Drug plans in order to provide a complete health solution for members.MA-PDs also help simplify enrollment,billing and administration for both the plan sponsor and the member. For more information about Aetna's Medicare options,please contact your account manager. ■ Vital Savings by Aetna sort-Dental Discount Card Program and Other Discounts Vital Savings by Aetna sM is a program that provides access to discounts for dental services from participating dental providers,as well as access to discounted fees for vision services and supplies through the Vision One discount program. Discounts on other services are also available. This program is NOT an insurance plan. Participants simply present their Vital Savings ID card when they visit a participating dental office or other participating provider.Participants are responsible for payment of 100%of the fee directly to the provider at the time services are rendered.There are no claims submitted under this program. • Discounts are the same as Aetna's Dental PPO discounts(average 30%nationally).Vital Savings provides access to a network of 64,700+dental office locations nationwide and it targets the 40 percent of Americans who currently lack dental insurance. • Vision—Participants can receive discounts on exams,eyeglasses,contact lenses and LASIK eye surgery through the Aetna Vision DiscountsTM program. • Other Health Care Products and Services—Through Aetna's Vital Savings Program,discounts are available on many other health care services including chiropractic services,acupuncture,massage therapy,and nutritional counseling. nQ�ncinn�n %anAnAi 1%afn15 nim Aimfnn rWanont-a The Aetna Difference �kAetna: 0 Fitness—Participants can save on membership rates through independent health clubs contracted within the GlobalFitTm network as well as save on certain home exercise equipment. • Hearing Services—Discounts are available on exams and hearing aids. The Vital Savings Program is currently available to plan sponsors with 51+employees who perform traditional benefit administration functions such as collection of enrollments, payroll deduction of fees and remittance of fees via Service Fee Billing.There is a monthly fee to purchase the Aetna Vital Savings program.Two billing options are available-a group billing option and an individual billing option.Vital Savings monthly fees may be eligible for pre-tax payroll deductions for employees/retirees under age 65 if the program is under the group billing option. For more. information on discounts available or participating providers, please contact your account manager or visit online at www.vitalsavingsbyaetna.com. ■ Wellness Programs Implementing a solid and well-thought-out Wellness Strategy is key to infusing a supportive culture for plan sponsors.At Aetna,we are committed to taking steps to ensure that this future in health care strategy is realized. We are ready TODAY for this journey and we invite our customers to join us. Aetna's Roadmap to Wellness Packages are simple, easy-to-implement wellness solutions for plan sponsors to ensure a successful and effective wellness strategy for their employees. In addition, the Roadmap is supported by a turn-key communications toolkit that enables a streamlined implementation and ongoing support for the plan sponsor's wellness strategy. To help plan sponsors choose the right wellness programs for their employees,we have grouped the Aetna Wellness offerings into three levels: Core, Enhanced and Premier. For specific pricing,please contact your account manager. *"Aetna"is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.The Aetna companies that offer,underwrite or administer benefit coverage include Aetna Health Inc.,Aetna Health of California Inc.,Aetna Health of the Carolinas Inc.,Aetna Health of Illinois Inc.,Aetna Dental Inc.,Aetna Dental of California Inc.,Aetna Life Insurance Company,Aetna Health Insurance Company of New York,Corporate Health Insurance Company and Aetna Health Administrators,LLC. These health benefit and health insurance plans contain limitations and exclusions. Policy form numbers include GR-29,GR-700-W,GR-88435. AA Mr InA4 A Iinanis A mfnm 1 ifforAnt-Q City Cound Agenda Summary Sheet,,7,. PURPOSE PASSION?ROSPERITY. Agenda Item No. 11C1 Consider a resolution authorizing the Mayor to execute a Letter of Understanding with Agenda Caption: Aetna Health,. Inc.for the extension ofhealth benefits. Meeting DateSeptember 22 2011 Department: Human Resources Staff Person makiresertetion^ Teresa Bledsoe Human Resources Director Item Summary: After going out for proposals, Aetna was selected to continue as our Third Party Administrator(TPA)for the Plan Year beginning January 1, 2U1O. The contract allowed for 4additional renewals of12months each. After the selection process and during the review of Aetna's Master Service Agreement we advised Aetna of changes that were needed inorder toapprove the Agreement. Realizing that there could beasignificant delay,vveagreed to aLetter ofUnderstanding toensure that vvehad coverage. The Master Service Agreement was in Aetna's Legal Department for well over a year. VVecontinued tohave Coverage and Aetna paid claims consistent with our Plan Design and the proposed Administrative Service Agreement. When we entered Plan Year 2O1l, Aetna sent the First year renewal. VVechose not tosign that document until both parties were satisfied with the Master Service Agreement. Atnotime were vvewithout coverage. Cost: N/A Source of Funds: N/A Date of Public Hearing(if required): N/A Recommended Action: Approval e ' 'F e 0 C ------------ ........................................ I , r [ ati' �Jfl, , N , v r �` , f>+ Cq U n.. .I ■ db L s�Ya ......................NO Dix: Letter.of Understanding : January 1, 2011 through December 31, 2011 ¢� } Contractholder Number- 819919 Group Number N/A k x y $ � 44 �y. rYfY✓ c f s� Vis. Kendra Hoduski 10 Senior Account Manager na© Great Hills Corporate Ctr.Bid 3 9050 Capital of Texas Highway North Suite 150 Austin,TX 78759 Phone:512/342-6903 November 12,2010 Fax:512/346-7406 HoduskiKCcD-aetna.com City Of Round Rock Linda Gunther 221 East Main Street Round Rock,TX 78664 Dear Ms.Gunther: Thank you for allowing us to serve your health insurance and health benefit needs over the past year. We are hopeful that this package will provide you with the information you need in order to develop your company's future benefits program. As we approach the January anniversary of your program with our company,we are pleased to present you with our renewal for the 2011 policy period. At Aetna*,we believe it is fundamental that you understand the full financial picture of your benefit plan.Therefore, the enclosed package provides the following important information about the cost of your current program,potential changes you may want to consider and the value that Aetna brings to you and your company. ■ Future Program Costs-This section illustrates the cost projections to operate your current benefit program for the period 01/01/2011 through 12/31/2011. This section contains the following: experience exhibits,illustrative administrative service fees,and a Stop Loss exhibit. For the 01/01/2011 through 12/31/2011 contract period,the fee will increase 5.6%for medical and 0.9%for dental. Also included in this section is renewal information regarding your Stop Loss coverage.Aetna's charge for maintaining your current Stop Loss protection levels will increase 16.2%over the current rate. Your aggregate trigger factor will decrease by 1.2%. ■ Program Services Financial Assumptions and Stop Loss Assumptions Program Services Included-This section includes additional services that have been included in our pricing or require an additional fee. Financial Assumptions-Our renewal offer is contingent upon the parameters outlined here. It is important to note that deviations from these assumptions may result in additional charges and/or adjustments on our Life,Medical and Dental quotations for conventional premiums,Service Fees,and Stop Loss rate(s)and factor(s). Customer Notifications of any Aetna initiated changes for the upcoming contract period are outlined here.Please review this section thoroughly. Stop Loss Assumptions-This section includes specific information regarding what's included and excluded from your Stop Loss quotation,plus there is a separate page explaining leveraged trend. ■ Guarantees-The guarantees described herein will be effective for a period of 12 months and will run from 01/01/2011 through 12/31/2011.Please refer to our attached Performance/Discount Guarantee document(s)for complete descriptions of each guarantee. This guarantee does not apply to non-Aetna benefits or networks. ■ The Aetna Difference-This section outlines the latest Aetna facts that we would like you to know about our company. We hope that by reading this information you will better understand the many ways we are striving to provide quality healthcare programs and services to companies like yours. In the absence of any changes impacting the conditions of this renewal as outlined in the Financial Assumptions section,the rates,fees,and factors presented here will remain in effect through December 31,2011. If you would like to make any plan changes,please contact me by December 1,2010. If you have any questions, please contact me at 512/342-6903. We are committed to working with you to provide quality products and services that reinforce your decision to do business with Aetna and help manage your current and future health care costs. Accep r City of R nd Rock By: dgef Title: j Date: 1� Sincerely, Senior Account.Manager Senior Underwriting Consultant "Aetna"is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.The Aetna companies that offer,underwrite or administer benefit coverage include Aetna Health Inc., Aetna Health of California Inc.,Aetna Health of the Carolinas Inc.,Aetna Health of Illinois Inc.,Aetna Dental Inc.,Aetna Dental of California Inc.,Aetna Life Insurance Company,Aetna Health Insurance Company of New York, Corporate Health Insurance Company and Aetna Health Administrators,LLC. These health benefit and health insurance plans contain limitations and exclusions. Policy form numbers include GR-29,GR-700-W.GR-88435. Administrative Service Fees ASC City of Round Rock Contractholder Number-819919 Renewal Period:1/1/11 through 12/31/11 •The below Administrative Service Fees will become effective 1/1/11. •The fees below exclude charges for items such as printing,special reports and late fees. These will be billed separately. •The below ASC fees assume that Aetna will be Claim Fiduciary for Level 1 and Level 2 appeals.City of Round Rock performs claim fiduciary for voluntary appeals after Levels 1 &2 are exhausted(Option 4). •Aetna Health Connections is included in the below ASC medical fees. • Simple Steps to a Healthier Life is included in the below ASC fees. • Beginning Rightsm Maternity Program is included in the below ASC fees. •The National Advantage with Facility Charge Review programs have been included in the renewal at a charge of 50%of any attained savings. • Rx rebate share is 0%. • Consulting Fee,if applicable,is subject to Plan Sponsor approval. Service Fee Comparison Projected Number of Enrolled Employees Choice II/APM 777 Dental 796 Vision 796 Current Period Projected Period 1/1/10-12/31/10 1/1/11-12/31/11 %Change Administrative Service Fees as Billed Choice II/APM(PEPM) 31.56 33.32 ** 5.6% ** no wellness allowance Wellness Allowance of$10,000 1.08 Waived for 2011 Dental(PEPM) 4.35 4.39 0.9% Vision(PEPM) 1.00 1.00 0.0% Administrative Service Fees as Total Contract Period Dollars Choice II/APM 2941265 310,676 Wellnes Allowance of$10,000 - none Dental 41,551 41,933 Vision 9,552 9,552 Total Service Fee $ 345,369 $ 362,161 4.9% "Includes$0.18 Health Care Reform Adjustment. Renewal Fee is$33.14 or a 5.0%increase without Health Care Reform Adjustment. 08/05/2010 www.aetna.com ASC Fees Stop Loss Exhibit ASC City of Round Rock Contractholder Number-819919 Renewal Period:1/1/11 through 12/31/11 •Minimum Stop Loss Aggregate Limit will be set using the first month enrollment x Stop Loss Aggregate Limit(PEPM)Composite Factor x number of contract months. •Premium rates are billed and Aggregate Factors are administered on a composite basis. •Please see the Stop Loss Caveats for additional information. •This is a firm quote Sold Proposed Current Option 2 Plan Characteristics Individual Limit $ 100,000 $ 100,000 Aggregate Limit 125% 125% Stop Loss Coinsurance Level 100% 100% Mental/Nervous Apply Yes Yes Contract Basis Paid Paid Terminal Liability Option No Extension(N/A) No Extension(N/A) Benefits applied to ISL Rx/Medical Rx/Medical Benefits applied to ASL Rx/Medical Rx/Medical Commissions 0% 0% Individual Lifetime Stop Loss Payment $ 1,000,000 Unlimited Maximum Annual ASL Payment $ 1,000,000 $ 1,000,000 Policy Period Length(months) 12 12 Cost&Factors Total Expected Non-pooled APM Claims $ 1,422,514 $ 1,583,229 Total Expected Non-pooled Medical Claims $ 4,028,764. $ 4,013,710 Pooling/Coinsurance Adjustment 167,480 - Attachment Point 7,023,448 6,996,174 Lives covered under Stop Loss 771 777 Rate Cost/ee/month $ 79.08 $ 91.90 Trigger Factor $ 759.13 $ 750.34 Comparisons Annual Stop Loss premium $ 737,342 $ 853,799 State Assessment Fee(NH,OR,TX) $ - $ 3,077 Total Stop Loss premium $ 737,342 $ 856,876 (at proposed lives of 777) Maximum Claim Liability $ 7,078,105 $ 6,996,170 (at proposed lives of 777) %Increase in Rate/ee/month 16.2% %Increase in Trigger Factor (1.2%) Aggregate Limit with Mature Claims $ - $ 6,996,170 08/05/2010 www.aetna.com ASC Stop Loss Programs and Services City Of Round Rock Renewal Rate Period: 01/01/2011 through 12/31/2011 Contractholder Number-819919 Programs and Services We have provided a list,by product,of those programs and services that are included or available to City Of Round Rock. Programs and services that are optional are noted with a$sign and require an additional fee;for specific pricing please contact your Account Manager,Kendra Hoduski. Programs and services that are not available for particular products are identified as NIA. Choice®POS II Aetna PPO Pharmacy Dental General Administration Account Management Included Included Included Customer Team Services Included Included Included Banking Included Included Included -Alternate Stockpiling Included $ $ Communication Materials Included Included Included Eligibility(Standard) Included Included Included Customized Forms $ $ $ Printing of Booklets or Certificates $ $ $ Claim Fiduciary&External Review(Details on $ N/A N/A Financial Assumption Tab) HIPAA Administration $ N/A N/A Claims Subrogation Included N/A N/A Claim&Member Services Claim Administration Included Included Included Member Services Included Included Included Network Administration Network Management Included Included Included Provider Relations Included Included Included National Advantage Program Included N/A N/A -Facility Charge Review Included N/A N/A -Itemized Bill Review $ N/A N/A Rural PPO Network Program $ N/A N/A Dental Medical Integration(DMI) N/A N/A Included Network Access Services Dental Network Discount N/A N/A $ Patient Management Precertification Included Included Included High Tech Radiology Precertification and $ N/A N/A Steerage Case Management Included N/A Included Concurrent Review Included N/A N/A Discharge Planning Included N/A N/A Aetna Compassionate Care Program Included N/A N/A National Medical Excellence Included N/A N/A Rx Step Therapy N/A $ N/A Save-A-Copay N/A $ N/A Rx Check N/A $ N/A Therapeutic Class Management(TCM) Programs -Non Sedating Antihistamines(NSAs) N/A $ N/A -Antifungals N/A $ N/A -Proton Pump Inhibitors(PPIs) I N/A $ N/A Wellness&Health Management Aetna Health Connections-Disease Included N/A N/A Management MedQuerysM with Standard Member Messaging Included N/A N/A -Enhanced Member Messaging $ N/A N/A Healthy Lifestyle Coaching $ N/A N/A Simple Steps To A Healthier Life® Included N/A N/A Simple Steps To A Healthier Life®Reward $ N/A N/A Tracking CareEngineO Personal Health Record $ N/A I N/A 08/05/2010 www.aetna.com Program&Services ASC Programs and Services City Of Round Rock Renewal Rate Period: 01/01/2011 through 12/31/2011 Contractholder Number-819919 Programs and Services We have provided a list,by product,of those programs and services that are included or available to City Of Round Rock. Programs and services that are optional are noted with a$sign and require an additional fee;for specific pricing please contact your Account Manager,Kendra Hoduski. Programs and services that are not available for particular products are identified as N/A. Choice®POS II Aetna PPO Pharmacy Dental Wellness Counseling $ N/A N/A Healthy Body,Healthy Weight Program(1,000 $ N/A N/A Beginning Ri htsM former) Mom-to-Babies)- Included N/A N/A Quit Tobacco Program $ N/A N/A Informed Health®Line-Nurseline 800# Included N/A N/A Informed Health®Line-Plus $ N/A N/A Value Add Programs Fitness Program(GlobalFit) Included N/A N/A Aetna Natural Products&Services Program Included N/A N/A EPIC Dental Discount Program Included Included Vision One®Discount Program Included N/A N/A Standard Behavioral Health Focused Psychiatric Review N/A N/A N/A Managed Behavioral Health Included N/A N/A -Med/Psych Program $ N/A N/A IlBehavioral Health Disease Management Programs -Alcohol Disease Management $ N/A N/A -Anxiety Disease Management $ N/A N/A -Depression Disease Management $ N/A N/A Case Management Behavioral Health Programs .-Intensive Case Management Included N/A N/A Member Internet Services Public Sites DocFinde Included Included Included InteliHealthO Included $ Included Pharmacy Information N/A Included Included Learning Resources Included Included Included Secure Sites Staying Healthy Included Included Included Estimate the Cost of Care Tool Included Included Included Claim Research/Forms/Contact us Included Included Included Spanish version I Included Included I Included Plan Sponsor Internet Services e.Plan Sponsor MonitorTm Reporting Aetna Integrated Informatics -Level A Reporting Included Included Included -Level B Reporting Included Included Included -Level C Reporting $ $ $ -Level D Reporting $ $ $ -Disease Management Activity Report Included N/A N/A (DMAR) -Ad hoc Reporting(5 hrs/cal year for 100 to Included N/A N/A 2999 medical ees) Third Party Stop Loss Reporting $ N/A N/A Aetna Navigator Reporting Included N/A N/A 08/05/2010 www.aetna.com Program&Services ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Administrative Fees Parameters: • Services Agreement The contract period begins on the effective date of January 01,2011 and will be applicable for a 12-month period. Our contracts provide for automatic renewal upon the completion of each contract period unless either party invokes the termination provision,which requires 31 days advance written notice of termination to the other party.This provision may be invoked at any time during the continuance of the contract and is not limited to termination occurring on the renewal date. ■ Enrollment and Funding Assumptions Based on this census information and the subsequent access analysis,we have assumed that approximately 777 employees will be enrolled for medical or pharmacy coverage. Our renewal quote assumes that coverage will not be extended to additional employees without review of supplemental census information and other underwriting information for appropriate financial review.The following illustrates assumed enrollment in each coverage: Coverage Assumed Enrollment a Choice POS II 777 Dental-PPO 796 Total Medical Enrollment 777 Aetna Pharmacy Management 777 ■ Self-Funded Fee Guarantee The mature fees are guaranteed according to the per employee per month fees as illustrated on the financial exhibits. • Financial Condition City Of Round Rock is a legitimate business and meets underwriting approval for acceptable financial strength.Aetna reserves the right to request additional supporting information in order to evaluate financial status. ■ Health Care Reform This renewal is intended to be compliant with healthcare reform and reflects the following changes to plans and fees: Disclosure Lifetime Maximums have been removed Dependent Age is now a minimum of up to age 26 Pre-existing condition limitations have been removed from members up to age 19 Preventive care as defined by regulations paid 100%on In Network services Removal of annual dollar maximums on essential benefits The cost associated with these changes is outlined in your renewal package.The cost associated with the change is based on your existing benefits prior to health care reform legislation and what we believe to be required under the legislation which is subject to change. Be aware that the Federal government recently released regulations related to grandfathering of health plans in existence on March 23,2010.Changes in your benefit design as well as your contribution strategy may affect grandfathering. This renewal offering assumes grandfathering is not being preserved. If,after reviewing the grandfathering rules with their benefit consultant or counsel,the plan sponsor determines that their coverage could be grandfathered,and they want to retain grandfathered status,they should contact Aetna for further instructions.Aetna reserves the right to treat an insured plan as non-grandfathered. The benefits and fees within this renewal are subject to change pending any required approvals from state or federal regulatory agencies.If you have any questions,please contact your account manager. Aetna reserves the right to modify its products,services,rates and fees,in response to legislation,regulation or requests of government authorities resulting in material changes to plan benefits and to recoup any fees,costs, assessments,or taxes due to changes in the law even if no benefit or plan changes are mandated. ■ Advance Notification of We will notify City Of Round Rock of any fee change at least 120 days prior to the effective date of fee change. ■ Performance/Discount Guarantee We will put 10%of our Medical/Dental/Pharmacy annualized administrative service fees at risk through 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Performance Guarantees.The annualized administrative service fee will be calculated at the beginning of the contract period and will be based on the total number of employees enrolled in the medical plans throughout the guarantee period.This guarantee does not apply to non-Aetna benefits or networks. ■ Guarantee Parameters Aetna reserves the right to recalculate the guaranteed fees to take effect on the date a contingent event described below occurs. In such case,City Of Round Rock will be required to pay any difference between the fees collected and the new fees calculated.Aetna may recalculate: 1. If,for any product: a. There is a 15%change in the number of employees from our enrollment assumptions by site or by product,or from any subsequently reset enrollment assumptions. The enclosed medical and dental fees assume Aetna is the administrator for the medical and dental products for the policy year. If Aetna is not the administrato for the medical and dental products,the enclose fees are subject to change. b. The change in member-to-employee ratio is greater than 15%.We have assumed a member-to-employee ratio of 1.99. c. The change in number of processed claim transactions(PCTs)per employee is greater than 15%.We have assumed 25.3 PCTs per employee per year. We define a PCT for medical or dental benefits as any transaction with respect to a benefit request or predetermination of dental benefits for expenses incurred or expected to be incurred by one claimant in any one calendar year for a major line of coverage,including but not limited to benefit payment,benefit denial,pended request or decision on an appeal of a denied benefit request. d. There is a 15%increase in the retiree percentage from that assumed or from any subsequently reset assumptions. We have assumed that 0.9%of the enrolled employees are over-65 retirees. 2. If there is a material change in the plan of benefits initiated by City Of Round Rock or by legislative or regulatory action. 3. If there is a material change initiated by City Of Round Rock or by legislative or regulatory action in the claim payment requirements or procedures,account structure,or any change materially affecting the manner or cost of paying benefits and/or administering the plan. ■ Run-Off Claims Your administrative service fees are mature;we have included the cost of processing self-funded run-off claims Processing for 12 months following the termination of our administrative services agreement. Late Fee Payment If City Of Round Rock does not cover benefit payments in a timely manner as provided in the agreement, and/or fails to pay service fees in a timely basis as provided in such Agreement,Aetna will assess a late payment charge.The current charges are: -late funds to cover benefit payments(for example,late wire transfers after 24-hour request): 12.0%annual rate -late payments of service fees after 31-day grace period: 12.0%annual rate Aetna will provide written notice to City Of Round Rock of any change in late payment charges. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the agreement or at law or in equity for failure to pay. Aetna Standards: • ALIC.Rewrite Aetna rewrote our standard description of benefits. We began using the revised version in 2008. The revisions affect documents that support Aetna's Traditional Medical(including Traditional Choice,Open Choice,Managed Choice and Open Access Managed Choice),Dental,Group Insurance and Pharmacy product lines. New customers receive documents on the new forms as they are implemented into Aetna's e.Publishing system.Renewing customers will receive updated contracts on renewal,as they have revisions,over a two-year contract renewal.cycle.Please contact your account manager for further information on the changes. ■ Seed Money Aetna will periodically assess the need for and sufficiency of any payment fund and may require a plan sponsor to deposit additional amounts to an existing payment fund or,if none exists,establish a payment fund/seed money or letter of credit. • Broker/Consultant The quoted fees do not include broker/consultant compensation. Compensation 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Prescription Drug Benefits: Our renewal quote assumes that prescription drug benefits are included and integrated with the medical benefits. • Direct Member DMR claims are Pharmacy claims(incurred in or out-of-network)submitted by eligible members to Reimbursement(DMR) APM and processed in APM's DMR unit.These claims are not adjudicated online at point of service subject to the copay.They are paid in full by the member.A surcharge is necessary to recoup the additional cost of processing DMR claims and to provide an additional incentive to plan sponsors to educate their employees on how to use their APM program to minimize the occurrence of DMR claims.For 2010 or 2011,the charge for processing DMR are$3.25 per script for Non-Off-Shore plan sponsor and$2.10 per script for Off-Shore plan sponsor. • Management Formulary In this renewal,Aetna retains all rebates received from pharmaceutical manufacturers. ■ Pharmacy Discount Disclaimer The retail brand and generic discounts and dispensing fees may or may not be equal to the actual discounts and fees negotiated and paid by Aetna to the participating pharmacies.The retail brand and generic discounts and dispensing fees may result in either a positive or negative margin for Aetna.Any positive margin may be retained by Aetna.Any negative margin will not be recouped by Aetna from City Of Round Rock. Programs and Services: ■ Claim Fiduciary(Opt.4) Our quoted administrative fees assume Aetna provides mandatory Levels 1 and 2 appeals,writes the letter to the employee to communicate the uphold or overturn prior decision.Aetna is claim fiduciary on Levels 1 and 2 appeals and External Review Options,if applicable.Aetna defends any lawsuit originating or after completion of the first two levels of appeal.The City Of Round Rock provides a voluntary appeals process after Aetna completes the mandatory two levels of appeal.The City Of Round Rock assumes fiduciary responsibility for appeals that go through this final voluntary level of appeal.The City Of Round Rock defends litigation for any claims going through this voluntary appeals process. ■ Aetna Health Connections Disease Management Our Aetna Health Connectionssm disease management program provides innovative and individualized clinical programs,information and support for total,integrated health management to help members achieve their optimal state of health.Aetna Health Connections disease management integrates a full suite of 34 chronic conditions and common comorbidities in a holistic fashion,with an Aetna nurse acting as a generalist to address the total health of those members who will benefit most from disease management services. Our program also includes MedQuery®,which uses member data such as medical claims,pharmacy claims, laboratory reports,self-reported data,and demographic information to identify potential gaps in care.This information is shared with physicians to help improve clinical quality and patient safety. Our Aetna Health Connections Disease Management with MedQuery program is included in your self-funded medical fees. ■ MedQuery MedQuery is a program that uses member data such as medical claims,pharmacy claims,laboratory reports, and demographic information to identify potential gaps in care. This information is shared with physicians to help improve clinical quality and patient safety. MedQuery is included in the self-funded medical fees. Our MedQuery Standard Member Messaging program is included as part of our MedQuery program. Our MedQuery Member Messaging program includes sending a consumer version of the care consideration by letter to the member. The letter encourages the member to call his or her doctor to discuss the care consideration and is sent only after the care consideration is communicated to the treating physician,to allow the physician time to evaluate the issue.Our Standard Member Messaging option is included. Our MedQuery Enhanced Member Messaging program is also available as an option to our MedQuery program.Our MedQuery Enhanced Member Messaging program is offered to those members who are not participating in Aetna Health Connections Disease Management program. MedQuery Enhanced Member Messaging can be included for an additional$0.20 per employee per month for our self-funded medical products. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 ■ Personal Health Record (PHR) Powered by the patented Aetna Care Engine®,provides members with online access to personal information, including health alerts,detailed health summary,and integrated information and tools to help members make informed decisions about their health care. Aetna's Care Engine-powered PHR combines detailed,claims-driven information gathered from across the health care spectrum,such as physician offices and hospitals,labs,diagnostic treatment and pharmacies,and adds member-reported health information to build a comprehensive health profile that the member can share with his or her doctor. Aetna's Care Engine-powered PHR applies to all Funding Arrangements and all medical products.MedQuery and the Informed Health Line 1-800#are required when implementing PHR. Our PHR program is available as an option and can be included for an additional$0.50 PEPM. ■ National Advantage Program Aetna's National AdvantageTM Program allows plan sponsors access to contracted rates for many medical claims that otherwise would be paid at billed charges under indemnity plans,the out-of-network portion of managed care plans,or for emergency/medically necessary services not provided within the standard network. The NAP network consists of many of Aetna's directly-contracted hospitals,ancillary providers,and physicians as well as hospitals,ancillary providers,and physicians accessed through vendor arrangements where Aetna does not have direct contractual arrangements.The average savings to our customers from NAP--before NAP fees--range from 15 percent to 25 percent of billed charges,depending on product.Discounts vary by geographic region. The NAP fee is not a part of the overall per employee per month(PEPM)administrative service fee calculation for City Of Round Rock. Instead,the fee for NAP is a percentage of savings.It is automatically charged to City Of Round Rock as part of their claim charges.The fee is charged only if savings are achieved. For City Of Round Rock,the NAP fee is 50 percent and has been assumed for this proposal. • Facility Charge Review Program The Facility Charge Review program(FCR)is an additional feature of the National Advantage Program(NAP)for self-funded plans that has been included as part of this proposal.It provides reasonable charge allowance review for most inpatient and outpatient facility claims under indemnity plans,the out-of-network portion of managed care plans,or for emergency/medically necessary services not provided within the network,where a NAP-contracted rate is not available. FCR is available only in conjunction with NAP and is not available separately. The fee for the Facility Charge Review feature is 50 percent of savings and is not included in the per employee per month fee. A listing of participating NAP health care professionals and facilities is available through our DocFinde,online directory at www.aetna.com. We will recalculate City Of Round Rock's administrative service fee if either of the following changes are made: group discontinues the National Advantage Program or group changes the Facility Charge Review program. • Mental Health/Substance Abuse Benefits Our renewal quote assumes that mental health/chemical dependency benefits are included. The Federal Mental Health Parity and Addiction Equity Act of 2008 applies to fully insured traditional and HMO Middle Market(MM)&National Accounts(NA)commercial plans as well as self-funded Traditional and HMO MM&NA commercial plans for plan years beginning on or after October 3,2009.This means many calendar year plans were required to comply with the Act by Jan. 1,2010.The new Interim Final Regulations apply to plan years beginning on or after July 1,2010,so calendar year plans must comply with the regulations by January 1,2011. However,given that this is a self funded plan,it is ultimately up to the plan sponsor to comply with federal Mental Health Parity. We can continue to make our recommendation regarding application and how r we think their plan should be designed in order to comply but we are not in the position to provide self funded plan sponsors legal advice.Therefore,the plan sponsor should speak to their own legal counsel and make the final determination related to compliance with Federal Mental Health Parity. ■ External Review External Review is offered as an option to self-funded customers.External Review uses outside vendors who coordinate a medical review through their network of outside physician reviewers. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Customers who ask Aetna to assume claim fiduciary responsibility will have this service included at no additional charge. Customers who retain claim fiduciary responsibility may choose to include this service and Aetna will pass the actual vendor charges through on a direct charge basis. ■ Claims Subrogation Aetna has entered into an agreement with The Rawlings Company to provide comprehensive subrogation services. There is no administration charge from Aetna to use the subrogation program.However, a contingency fee is collected upon recovery for self-funded customers. Effective January 1,2011,the fee in place with The Rawlings Company is 30%. ■ Data Transfer at Termination Upon contract termination,we agree to cooperate with succeeding administrators in producing and transferring required claim and enrollment data. Data will be transferred within 30 days after determination of City Of Round Rock's specific format and content requirements,subject to a charge that is based on direct labor cost and data processing time. ■ Third-Party Audits While in most cases we do not request reimbursement for internal costs associated with a third-party audit,we reserve the right to recoup these expenses if significant time and materials are required. A complete description of the terms and conditions of our audit policies is outlined in our Services Agreement. ■ Health Insurance Portability and Accountability Act (HIPAA) Our proposal assumes that Aetna will not be providing HIPAA certifications of coverage for terminated employees. We would be willing to provide HIPAA certifications for an additional charge of$0.26 per employee per month. ■ Medical EOB Suppression Unless required by state law,we do not produce EOBs for claims when there is no member liability. Additionally,EOBs are always available electronically through Aetna Navigator on our website www.aetna.com. ■ Additional Products and Services Costs for special services rendered which are not included or assumed in the pricing guarantee will be direct billed. For example,City Of Round Rock would be subject to additional charges for customized communication materials, as well as costs associated with custom reporting,booklet and SPD printing,etc.The costs for these types of services would depend upon the actual services performed and would be determined at the time the service is requested. A list of these special services can be found on the Programs and Services sheet. 08/05/2010 www.aetna.com Financial Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Administrative Fees Parameters • Services Agreement The contract period begins on the effective date of January 01,2011 and will be applicable for a 12 month period. ("Contract")Period Our contracts provide for automatic renewal upon the completion of each contract period unless either party invokes the termination provision,which requires 31 days advance written notice of termination to the other party.This provision may be invoked at any time during the continuance of the contract and is not limited to termination occurring on the renewal date. • Enrollment and Funding Based on this census information and the subsequent access analysis,we have assumed that approximately 796 Assumptions employees will be enrolled for dental coverage. Our renewal quote assumes that coverage will not be extended to additional employees without review of supplemental census information and other underwriting information for appropriate financial review.The following illustrates assumed enrollment in each coverage: Coverage Assumed Enrollment PPO Dental 796 Total Dental Enrollment 796 • Self-Funded Fee The mature fees are guaranteed according to the per employee per month fees as illustrated on the financial Guarantee exhibits. • Advance Notification of We will notify City Of Round Rock of any fee change at least 31 days prior to the effective date of fee change. Fee Change • Guarantee Parameters Aetna reserves the right to recalculate the guaranteed fees to take effect on the date a contingent event described below occurs. In such case,City Of Round Rock will be required to pay any difference between the fees collected and the new fees calculated.Aetna may recalculate: 1. If,for any product: a. There is a 15%change in the number of employees from our enrollment assumptions by site or by product,or from any subsequently reset enrollment assumptions. b. The change in member-to-employee ratio is greater than 15%.We have assumed a member-to-employee ratio of 2.12. c. The change in number of processed claim transactions(PCTs)per employee is greater than 15%.We have assumed 3.46 PCTs per employee per year. We define a PCT for dental benefits as any transaction transaction with respect to a benefit request or predetermination of dental benefits for expenses incurred or expected to be incurred by one claimant in any one calendar year for a major line of coverage,including but not limited to benefit payment,benefit denial,pended request or decision on an appeal of a denied benefit request. 2. If there is a material change in the plan of benefits initiated by City Of Round Rock or by legislative or regulatory action. 3. If there is a material change initiated by City Of Round Rock or by legislative or regulatory action in the claim payment requirements or procedures,account structure,or any change materially affecting the manner or cost of paying benefits and/or administering the plan. ■ Run-Off Claims Your administrative service fees are mature;we have included the cost of processing self-funded run-off claims Processing for 12 months following the termination of our administrative service agreement. • Late Fee Payment If City Of Round Rock does not cover benefit payments in a timely manner as provided in the Agreement, to pay service fees in a timely basis as provided in such Agreement,Aetna will assess a late payment charge. The current charges are: -late funds to cover benefit payments(e.g.,late wire transfers after 24-hour request):12.0%annual rate -late payments of service fees after 31 day grace period: 12.0%annual rate Aetna will provide written notice to City Of Round Rock of any change in late payment charges. The late payment charges described in this section are without limitation to any other rights or remedies available to Aetna under the Agreement or at law or in equity for failure to pay. 08/05/2010 www.aetna.com Dental Assumptions ASC Financial Assumptions City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Aetna Standards • Seed Money Aetna will periodically assess the need for and sufficiency of any Payment Fund and may direct a plan sponsor to deposit additional amounts to an existing Payment Fund or,if none exists,establish a Payment Fund/Seed Money or Letter of Credit. • Broker/Consultant The quoted fees do not include broker/consultant compensation. Compensation Programs and Services: a Data Transfer at Upon contract termination,we agree to cooperate with succeeding administrators in producing and transferring Termination required claim and enrollment data. Data will be transferred within 30 days after determination of City Of Round Rock's specific format and content requirements,subject to a charge that is based on direct labor cost and data processing time. N Third-Party Audits While in most cases we do not request reimbursement for internal costs associated with a third-party audit,we reserve the right to recoup these expenses if significant time and materials are required. A complete description of the terms and conditions of our audit policies is outlined in our Services Agreement. 0 Additional Products and Costs for special services rendered,which are not included or assumed in the pricing guarantee will be direct Services billed. For example,City Of Round Rock would be subject to additional charges for customized communication materials, as well as costs associated with custom reporting,booklet and SPD printing,etc.The costs for these types of services would depend upon the actual services performed and would be determined at the time the service is requested. A list of these special services can be found on the Programs and Services Sheet. 08/05/2010 www.aetna.com Dental Assumptions ASC StopAssumptionsLoss City Of Round Rock Contractholder Number-819919 Renewal Rate_Period: 01/01/2011 through 12/31/2011 This caveat document outlines specific information for the quotation provided on 08/05/2010. Stop Loss is available to cover claims for all of the Plan Sponsor's eligible employees and their dependents who are enrolled on a timely basis and are covered under the ASC plan,provided the employees satisfies the following definition:an employee means an employee of the Insured who Aetna determines is physically able to perform all the regular duties of employment,is regularly working at least 25 hours per week and for whom the Insured is deducting any required U.S.FICA taxes. Stop Loss Policy Year-The Stop Loss policy year must agree with the ASC contract year,both of which must end on the customer's standard renewal date. Rate/Factor Adjustments-We reserve the right to adjust the premium rate and Aggregate factor during the policy year if there are a)changes to the medical plan,b)deviations from any of our quote assumptions(e.g.policy period,type of Stop Loss coverage,runoff coverage for employees who terminated prior to the renewal date,etc.),or c)changes in other factors bearing on the Stop Loss risk that result in a combined manual change of 10%or more(e.g.,single/ family split,age/gender mix,etc.). However,we will not change the rate or factor based on changes in the make-up of the group unless the number of covered employees(either in total,by type of medical plan,by single/family split,by age/ gender or by location)changes by more than 10%from the number assumed in the quote. We also will not change the rate or Aggregate factor based on actual Stop Loss experience after the effective date. Family Participation-This quotation assumes 47.4%family participation. Large Group Acquisition-In the event that a large group(in excess of 10%of total covered lives)is acquired after the original effective date and is covered under the Stop Loss policy,we reserve the right to underwrite the individuals within this group based on current large claim data provided by the customer. If this information is not forthcoming,we will apply the Actively-at-Work and Dependent Non-Confinement underwriting rules to those in the new group on the effective date of their coverage under Stop Loss. Coverages Excluded from Individual Stop Loss-Non-integrated(APM,PCS)drug benefits will apply to the Individual Stop Loss limit while separate ancillary benefits such as:Dental,Vision and Temporary Disability will not apply to the Individual Stop Loss limit. Coverages Included under Aggregate Stop Loss-Aggregate Stop Loss coverage includes the following benefits: Medical and Pharmacy Mental/Nervous and Substance Abuse-Mental/Nervous and Substance Abuse claims will be covered by Individual and Aggregate Stop Loss only when Aetna's vendor provides these benefits. If these benefits are provided by an outside vendor,the claims resulting from these services will be excluded from Individual and Aggregate Stop Loss. HIPAA—Stop Loss coverage for new entrants(those who become covered after the Stop Loss effective date)are subject to HIPAA's pre-existing conditions limitation in accordance with Aetna Life Insurance Company's then current standard underwriting practices established for applying pre-existing condition limitations to group accident and health insured plans in accordance with HIPAA, Public Law No.104-191. Reimbursement for Aggregate Stop Loss Claims-The monthly budget feature standardly applies to Aggregate Stop Loss claims as long as the Stop Loss policy remains in effect;however,this feature is not available under the following conditions: 1)when customers choose to fund claims through multiple primary wire lines or 2)when customers choose to fund claims through one primary wire line and report through one or more internal wire lines. For these plans, reimbursement will be made within 120 days after the policy year end. The Aggregate liability limit will equal the sold trigger factor times the number of months in the policy year times the total number of covered Stop Loss lives reported for that policy year(exception:when a customer drops in size during the 08/05/2010 www.aetna.com Stop Loss Assumptions ASC StopAssumptionsLoss City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 policy year,the actual enrolled lives at the start of the policy year will be utilized to determine the liability limit for that policy year). Maximum Annual Aggregate Stop Loss Payment Amount-This quote assumes$1,000,000 Maximum Annual Aggregate Stop Loss Payment Amount. Individual Lifetime Stop Loss Payment Amount-This quote assumes an unlimited Individual Lifetime Stop Loss Payment Amount. The Individual Lifetime Stop Loss Payment Amount will be capped to be no greater than the underlying lifetime medical plan maximum,for a given Participant,minus the Individual Stop Loss Amount in effect for each policy period. Important Information regarding your coverage options: We have provided you with multiple coverage options that reflect various Individual Stop Loss Lifetime Maximum Payment Amounts. Should you elect coverage that provides an Individual Lifetime Stop Loss Payment Amount that is less than the unlimited lifetime maximum of your underlying Plan, please be aware that you will create a gap in coverage between your plan and the Stop Loss Insurance you are obtaining.In the event that Eligible Claim Expenses funded by Individual Stop Loss reach the Individual Lifetime Stop Loss Payment Amount,all subsequent Eligible Claim Expenses for that individual must be funded by the Plan Sponsor. Producer Commissions-There are no producer commissions included for Stop loss 08/05/2010 www.aetna.com Stop Loss Assumptions ASC �d C7 August 5, 2010 City Of Round Rock Linda Gunther 221 East Main Street Round Rock, TX 78664 ADMINISTRATIVE SERVICES AGREEMENT NO. /ASC POLICYHOLDER NO. —819919 Dear Ms. Gunther: This letter agreement between City Of Round Rock(hereinafter"City Of Round Rock") and Aetna Life Insurance (hereinafter"Aetna") amends the above captioned Administrative Services Agreement(Agreement). The Performance Guarantees attached to this letter agreement replace any Performance Guarantees in the Agreement for the Guarantee Period 01/01/2011 through 12/31/2011 (hereinafter"Guarantee Period"), effective 01/01/2011. Aetna is committed to providing quality administrative services to City Of Round Rock, and we would like to emphasize our degree of commitment through the attached Performance Guarantees. The attached Performance Guarantee agreement describes the Performance Guarantees in detail. Please sign this letter agreement and return it to us by 11/01/2010, indicating your acceptance of the Guarantees. If this letter is not signed and returned by 10/03/2010, it is assumed that City Of Round Rock is in agreement with the Performance Guarantee offerings, Performance Objectives, and amounts at risk if the Performance Objectives are not met. Guarantee Measure Performance Objective Maximum at Risk Turnaround Time 90% in 14 days 2.00% Financial Accuracy 99.0% or higher 2.00% Total Claim Accuracy 92% or higher 2.00% Average Speed of Answer(ASA) 30 seconds 2.00% Abandonment Rate 3.50% 2.00% Total at Risk 10.00% IN WITNESS WHEREOF, AETNA has signed this amendment to become effective 01/01/2011. Signed by Aetna on 08/09/2010 Underwriter Signed by City Of Round Rock on ' Signature Official Title 08/05/2010 www.aetna.com Performance Guarantee Letter Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 General Performance Guarantee Provisions Aetna Life Insurance Company(ALIC)provides health benefits administration and other services for the self-funded Aetna Choice II Medical plans.The services set forth in this document will be provided by ALIC (hereinafter"Aetna"). Performance Objectives Aetna believes that measuring the activities described below are important indicators of how well it services City Of Round Rock. Aetna is confident that the Plan Administration,Claim Administration and Member Services provided to City Of Round Rock will meet their high standards of performance.To reinforce City Of Round Rock's confidence in Aetna's ability to administer their program,Aetna is offering guarantees in the following areas: Claim Administration Turnaround Time Financial Accuracy Total Claim Accuracy Member Services Average Speed of Answer(ASA) Abandonment Rate Guarantee Period The guarantees described herein will be effective for a period of 12 months and will run from January 1,2011 to December 31,2011 (hereinafter"guarantee period"). The performance guarantees shown below will apply to the self-funded Aetna Choice POS II Medical plans administered under the Administrative Services Only Agreement("Services Agreement").These guarantees do not apply to non-Aetna benefits or networks. If Aetna processes runoff claims upon termination of the Services Agreement, performance guarantees of Turnaround Time, Financial Accuracy, Payment Incidence Accuracy, and/or Total Claim Accuracy will not apply to such claims. Further, performance guarantees described herein will not apply to the guarantee period claims if termination is prior to the end of the guarantee period. Aggregate Maximum In total,Aetna agrees to place 10%of its applicable guarantee period administrative service fees at risk(hereinafter "guarantee period administrative service fees at risk or fees at risk")through the Performance Guarantees outlined in this document. The guarantee period administrative service fees will be based on Aetna-only services(excludes services such as outside vendor services, commissions,etc.)calculated at the end of the guarantee period and will be based on the total number of employees actually enrolled in the Aetna Choice POS II Medical plans throughout the guarantee period. In no event will fees be adjusted by more than 10%due to the results of this guarantee and all other guarantees combined. Termination Provisions Termination of the guarantee obligations shall become effective upon written notice by Aetna in the event of the occurrence of(i), (ii)or(iii)below: (i)a material change in the plan initiated by City Of Round Rock or by legislative action that impacts the claim adjudication process, member service functions or network management; (ii)failure of City Of Round Rock to meet its obligations to remit administrative service fees or fund the City Of Round Rock bank account as stipulated in the General Conditions Addendum of the 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 Services Agreement; (iii) failure of City Of Round Rock to meet their administrative responsibilities(e.g., a submission of incorrect or incomplete eligibility information). No guarantees shall apply for a guarantee period during which the Services Agreement is terminated by City Of Round Rock or by Aetna. Refund Process At the end of each guarantee period,Aetna will compile its Performance Guarantees results. If necessary,Aetna will provide a"lump sum"refund for any penalties incurred by Aetna. Measurement Criteria Aetna's internal quality results for the unit(s)processing City Of Round Rock's claims will be used to to determine guarantee compliance for any Financial Accuracy, Payment Incidence Accuracy, and/or Total Claim Accuracy Guarantees. Claim Administration Turnaround Time Guarantee:Aetna will guarantee that the claim turnaround time during the guarantee period will not exceed 14 calendar days for 90%or the processed claims on a cumulative basis each year. Definition:Aetna measures turnaround time from the claimant's viewpoint;that is,from the date the claim is received in the service center to the date that it is processed(paid,denied or pended). Weekends and holidays are included in turnaround time. Penalty and Measurement Criteria: If the cumulative year turnaround time(TAT)exceeds the day guarantee as stated above,Aetna will reduce its compensation by an amount equal to 0.2%of the guarantee period administrative service fees for each full day that Turnaround Time exceeds 10 calendar days for 90%of all claims.There will be a maximum reduction of 2%of the guarantee period administrative service fees. Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. A computer generated turnaround time report for the processing site that handles City Of Round Rock's specific claims will be provided on a quarterly basis. Financial Accuracy Guarantee:Aetna will guarantee that the guarantee period dollar accuracy of the claim payment dollars will be 99.0%or higher Definition: Financial accuracy is measured by the dollar amount of claims paid accurately divided by the total dollars paid. Aetna considers each underpayment and overpayment an error;Aetna does not offset one by the other. Penalty and Measurement Criteria:Aetna will reduce its compensation by an amount equal to 0.2%of the guaranteed period administrative service fees for each 1%that financial accuracy drops below 99.0%. There will be a maximum reduction of 2%of the guarantee period administrative service fees. Aetna's audit results for the unit(s)processing City Of Round Rock's claims will be used. The results will be based on Aetna's applicable Quality Assessment Policy in effect at the time of the audit. 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate,Period: 01/01/2011 through 12/31/2011 Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Total Claim Accuracy Guarantee: Aetna will guarantee thafthe guarantee period overall accuracy of the claim payments will not be less than than 92.0%. Definition:Total claim accuracy is measured as the number of claims with no errors(financial and non-financial)divided by the total number of claims audited. Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each 1%that total claim accuracy drops below 92.0%. There will be a maximum reduction of 2%of the guarantee period administrative service fees. Aetna's audit results for the unit(s)processing City Of Round Rock's claims will be used. The results will be based on Aetna's applicable Quality Assessment Policy in effect at the time of the audit. Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans.Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Member Services Average Speed of Answer Guarantee:Aetna will guarantee that the average speed of answer for the site(s)providing City Of Round Rock's member services will not exceed 30 seconds. Definition: On an ongoing basis,Aetna measures telephone response time through monitoring equipment that produces a report on the average speed of answer. Average speed of answer is defined as the amount of time that elapses between the time a call is received into the telephone system and the time a representative responds to the call. The result expresses the sum of all waiting times for all calls answered by the queue divided by the number of incoming calls answered. ASA measures the average speed of answer for all callers answered. Interactive Voice Response (IVR)system calls are not included in the measurement of ASA. Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each full second that the average speed of answer exceeds 30 seconds.There will be a maximum reduction of 2%of the guarantee period administrative service fees.Aetna's results for the site(s)providing member services for City Of Round Rock will be used. Results for the HMO, QPOS, USAccess plans will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans. Therefore, results and penalties will be reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Abandonment Rate Guarantee:Aetna will guarantee that the average rate of telephone abandonment for the site(s)providing City Of Round Rock's member services will not exceed 3.5%. Definition:On an ongoing basis,Aetna measures telephone response time through monitoring equipment that produces a report on the average abandonment rate. The abandonment rate measures the total number of calls abandoned divided by the number of calls accepted into the site Penalty and Measurement Criteria:Aetna will reduce its compensation by 0.2%of the guarantee period administrative service fees for each 1%that the average abandonment rate exceeds 3.5%. There will be a maximum reduction of 2% of the guarantee period administrative service fees.Aetna's results for the site(s)providing member services for City Of Round Rock will be used. Results for the HMO, QPOS, USAccess plas will be tracked and reported separately from the PPO, EPO, POS and Indemnity plans. Therefore, results and penalties will be 08/05/2010 www.aetna.com Performance Guarantee Medical Performance Guarantees City Of Round Rock Contractholder Number-819919 Renewal Rate Period: 01/01/2011 through 12/31/2011 reconciled separately based upon the applicable coverage level guarantee period administrative service fees. Please have an authorized individual sign the performance guarantee ASC amendment letter, signifying your acceptance of the arrangement, and return the original to us for our files. 08/05/2010 www.aetna.com Performance Guarantee The Aetna Difference 'kAet,na Aetna*is one of the nation's leading providers of health care benefits. Our resources include one of the largest networks of physicians,dentists,hospitals, pharmacies,and health professionals;extensive experience in claims payment and administration of innovative health benefits and health insurance;and powerful online resources and self-service tools. Aetna is a leader,cooperating with doctors and hospitals,employers,patients,public officials,and others to build a stronger,more effective health care system. Aetna Can Make Your Job Easier... ■ Aetna's Broad Choice of Products and Services Helps Provide Comprehensive Coverage You know Aetna as a leader in medical insurance. But we also offer a full range of insurance policies, including dental, pharmacy,group life,and disability, each of which provides the high level of quality and service you demand. Whether taken individually, or as a complete package, any of Aetna's programs will enhance the heath coverage you provide for your employees. Aetna harnesses the power of information to help you and your employees make better, more informed decisions. This helps control costs and helps keep your employees healthy and productive. Aetna offers a product portfolio aimed at balancing the needs of both employers and employees. We strive to maintain a competitive and comprehensive health portfolio of HMO and PPO-based products,as well as consumer-directed health plans.Aetna is committed to help facilitate access to high-quality,cost- effective care to produce healthier outcomes. ■ Plan Sponsor Services—Aetna Delivers a Total Service Experience We provide plan sponsors with customer-specific services so the plan functions smoothly. We designate a specific field office and account manager as the primary contact. Through ongoing communication with the Plan Sponsor,the account manager provides recommendations as employer needs grow or change. The account manager provides support for plan sponsors regarding their health coverage issues and benefits concerns. ■ Online Tools—Easy-To-Use Technology For Benefits Planning_,Eligibility,Enrollment And Billing Aetna offers an array of Internet-based applications that are designed to make it easier for Plan Sponsors to do business with us. • Aetna's e.Plan Sponsor MonitorTM is an easy-to-use online reporting tool that helps customers identify their health care spending patterns by providing access to standard reports as well as the ability to customize and create ad hoc reports.If you are an e.Plan Sponsor Monitor TM customer, you can easily access the program online with a secure username and password.Plan sponsors who cannot access e.Plan Sponsor MonitorTM and who have 100 eligible enrolled subscribers will receive quarterly reports from Aetna's reporting tool that provide comprehensive statistics related to their plan and Aetna's book of business.If you are not yet an e.Plan Sponsor Monitor TM customer,please feel free to contact us to learn more about our capabilities. • Aetna Integrated Informatics and Medical Management Programs—Healthier Outcomes and Cost Reduction One of Aetna's goals is to help members maintain their health as well as to identify the need for care in the early stages of a disease. Aetna Integrated Informatics, our data analysis subsidiary, uses predictive modeling and risk stratification to identify members for early outreach. By increasing the reach and impact of our proven medical services.programs,Aetna continuously strives to connect care with individual needs. We are making it easier for employers to control costs while providing quality coverage. We offer innovative case and disease management programs as regular components of our plans. The intention is to proactively identify members who have chronic illnesses and intercede to provide them with educational resources to help them better manage their conditions. • Enrollment and Billing Solutions Customers with an HR system can use SecureTransportTM to quickly and efficiently transmit eligibility information from their system to Aetna. Customers who do not have an HR system,can use EZenroll to process new hire enrollments,changes,and terminations or EZLinkTM for online enrollment,billing and electronic premium payment. Programs/Services Included in your Renewal ■ Aetna Navigator TM-We Support Members 24/7 Aetna Navigator TM is a self-service website that provides members with a single source for online health and benefits information 24 hours a day,7 days a week. Through Aetna Navigator,members can change their Primary Care Physician(PCP),replace an ID card,research Aetna's products and programs, contact Aetna directly, and access a vast amount of health and wellness information. Aetna Navigator also includes secure, personalized features for registered members including access to claims and benefits status. ■ MedQuery®-Information Sharing Helps Improve Quality And Safety Of Care 08/05/2010 www.aetna.com Aetna Difference The Aetna Difference 'kAet,na Aetna's MedQuery`R'program is a data-mining initiative that turns Aetna's member health data into information that physicians can use to improve clinical quality and patient safety. Through the MedQuery®program,Aetna's data is analyzed and the resulting information provides physicians with access to a broader view of a patient's clinical profile. The data that fuels this program includes claims history, current medical claims, pharmacy claims,physician encounter reports,patient demographics and evidence-based treatment recommendations. Additional Products&Service Offerings ■ Aetna Health Connections Get ActiveISM . • Aetna Health Connections Get Active!sm:Shape Up Challenge plus Stay in Shape Fitness and Nutrition Tracking Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being. It features an online fitness and nutrition tracker,team-based competition,social networking,emails&newsletters,activity tracking reports,and the option to buy-up for a pedometer. Employees can select any or all program activity tracking categories:exercise hours,pedometer steps,or weight loss. The recommended team competition is 12 or 16 weeks in length.Additionally,the program includes the fitness and nutrition tracking program which provides members with an ongoing maintenance program following the challenge. • Aetna Health Connections Get Active!sm:Shape Up Challenge Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being. It features an online team-based competition,social networking, emails&newsletters,activity tracking reports,and the option to buy-up for a pedometer. Employees can select any or all program activity tracking categories:exercise hours, pedometer steps,or weight loss. The recommended team competition is 12 or 16 weeks in length. • Aetna Health Connections Get Active!sm:Stay in Shape Fitness and Nutrition Tracking Program Aetna Health Connections Get Active!sm provides a great way for plan sponsors to help employees of all health and fitness levels to get and stay motivated to improve their fitness and well-being.The program features an online application that makes it easy for participants to track fitness and nutrition information. The social networking capability allows participants to communicate with fellow members and schedule group exercise activities,if desired. The social networking feature encourages team-building,program camaraderie,and most importantly-program engagement. ■ Aetna Affordable Health Choicessm—Provides Benefits To Non-Traditional Employees In August 2004,Aetna announced the acquisition of Strategic Resource Company(SRC), the latest in a series of targeted acquisitions designed to enhance the scope of our product and service offerings and increase our ability to serve new market segments. SRC,An Aetna Companysm offers an innovative solution for non-benefited employees(i.e.Part-time,waiting period,seasonal,temporary,per diem,etc). Through SRC,we can offer quality, affordable coverage to this important segment of the workforce,which provides significant value to these individuals and plan sponsors as well. SRC offers affordable medical, dental, life, disability, vision and pharmacy insurance administered through payroll deductions. Our experience shows that offering these benefits reduces turnover in this population and therefore, positively impacts acquisition, hiring and training costs. Please contact your Account Manager if you would like more details. ■ Aetna HealthFund®—Innovative Consumer-Directed Plan Designs Help To Lower Medical Costs Our accumulated information allows us to create innovative solutions like the Aetna HealthFund' integrated suite of health,dental,and pharmacy. Did you ever think your employees could help you control health care costs? They can with Aetna HealthFund®. These consumer-directed plans give employees responsibility for managing their own spending, and we'll give them the information they need to spend wisely. It's the first integrated benefits suite of its kind,and it's only from Aetna,the pioneer in consumer-directed plans. ■ Aetna Integrated Programs—Benefits Work Better... Together • Aetna Integrated Health&Disability QHD) 08/05/2010 www.aetna.com Aetna Difference TheDifference Aetn �a When Aetna's Medical and Disability benefits are taken together,they can be coordinated to provide a more efficient health care program. Aetna Integrated Health&Disability(IHD)is a concrete and compelling example of Aetna's strengths:innovation,information and integration. IHD links medical and disability case management together by utilizing Aetna's rich data management tools.This allows the right connections to be made at the right time to create a better outcome for our members,plan sponsors and providers.Aetna gathers aggregated data and integrates it across our areas of service—medical management,disability,Aetna Behavioral Health and Aetna Integrated Informatics®--to help improve the overall health of our members, while potentially reducing medical costs for you and your employees. IHD may uncover concerns earlier, which can help employees recover faster and return to work sooner.We combine predictive modeling,.patient information,early outreach,condition management and care coordination with our rehabilitation and return-to-work experience.The end result is a holistic approach to the individual's health and ability to remain productive. • Aetna Integrated Health SolutionSM(IHS) IHS is another innovative program that connects clinical services,claims data,and wellness resources across multiple products to positively impact members'health,improve workforce productivity,and manage healthcare as well as disability costs. Why is IHS needed?"Presenteeism",or on-the-job productivity loss that is illness related,is costing plan sponsors money. Research on employee health and wellness shows that presenteeism costs businesses$150 billion a year. Lost productivity is 7.5 times higher due to presenteeism than for absenteeism. IHS is uniquely aimed at addressing this need.The IHS continuum of fully-integrated services provides our medical,behavioral health,pharmacy, wellness and disability clinicians with a single, comprehensive view of each member's health and health needs. Customers receive integrated reports that pinpoint the health issues of greatest need and track the engagement and progress of employees toward better health. And because IHS helps members and health care professionals identify conditions at the earliest stages.-when they are most treatable-recovery times improve, presenteeism and work-related absenteeism are addressed,and medical and disability costs are managed more effectively. Aetna has achieved remarkable results from its integrated programs initiated to date -- medical and psychiatric case management, health and disability management,and medical and pharmacy management. Ultimately,showing the value of integrated care results in expected reduction in medical claim costs of 4%in year 1,5%in year 2,and 6%in year 3. • Aetna Dental/Medical Integration(DMI)Program Plan Sponsors with both medical and dental coverages under Aetna receive the DMI program at no additional charge.This program utilizes Aetna's unique data integration tools to identify at-risk members whose conditions have high cost/risk characteristics that could result in adverse health outcomes.The program focuses on members who have not had a recent dental visit and creates a complete health history for these members. By combining outreach programs,education materials and enhanced dental benefits,Aetna encourages these members to obtain dental care for an improved overall health outcome. At-risk members could include those with diabetes, coronary artery disease, cerebrovascular disease or pregnancy. ■ Life and Disability Programs&Services Life and disability insurance are important components in a comprehensive employee benefits package, providing peace of mind for employees and family members.Aetna's core offering of high-quality disability products and services--Short Term Disability(STD), Long Term Disability(LTD),and Absence Management including Family and Medical Leave Act(FMLA) -- can be offered alone or in any combination. Within this core model are a variety of plan design options,service features and system capabilities that enable you to customize the plan to meet your needs. Included with Aetna's Basic, Voluntary, Supplemental or Dependents'Group Term Life Insurance plans is a new package of programs and services designed to enhance the value of our products for both employees and their family members by leveraging programs from Aetna's innovative health business.With Aetna Life Essentials,active employees and their families have access--at no additional cost--to programs that help promote healthy, fulfilling lifestyles. In addition,Aetna Life Essentials provides critical support resources for often-overlooked needs at the end of life.These programs provide value for beneficiaries and their loved ones beyond the financial support from a death benefit. Here are highlights of Aetna's Life and Disability programs: • Discounts-If your employees enroll in an Aetna Disability and/or Life Insurance Plan our discount programs can be their ticket to the small luxuries that help keep them healthy and happy. • Aetna's differentiation in disability claim management-We view disabilities as health events,not just absences from work.As such,we have developed a market-leading approach that will return your employees to health--and to work--sooner. 08/05/2010 www.aetna.com Aetna Difference The Aetna Difference Aetn �a • Workability®-Workability is our state-of-the-art integrated disability system.It is task,clinical outcome based system with smart logic.Workability is a single platform generating communications across your FML,STD and LTD claimants • An Employee Assistance Program(EAP)for Long Term Disability members-We are pleased to offer,as a value-added service in conjunction with our insured Group Long Term Disability policies,an EAP serviced and managed by Aetna Behavioral Health.It includes access for employees and immediate household members to unlimited phone consultations with EAP counselors • Aetna Life EssentialssM-Included with Aetna's Basic,Voluntary,Supplemental or Dependent's Group Term Life insurance plans is a package of programs and services designed to enhance the value of our products for both employer-and employee-paid coverage.This program includes such valuable services as expert financial advice,access to legal services,and healthy lifestyle programs. Travel Assistance Program-To help minimize the stress of emergency situations you may encounter while traveling overseas on business or pleasure,we offer you and your dependents access to medical,travel,legal and financial assistance services through this program Coordination of Premium Waiver-If Aetna covers both Life and long-term disability,we send premium waiver notification to the Premium Waiver Unit once an LTD claimant has met the predetermined qualifying period. ■ Medicare Advantage Plans Aetna has a wide range of health plan choices for plan sponsors to offer their Medicare retirees.Below are some of the plan options you may want to consider: Medicare Advantage HMO Offers a large national provider network, worldwide emergency care, preventive health and wellness programs, optional dental benefits, online resources,value added services such as eyewear discounts and fitness club memberships. • Medicare Advantage PPO Offers flexibility to visit providers in-network or out-of-network,no annual or lifetime dollar maximums for in-network services,no copays for select in network preventive services. Medicare Private Fee-For-Service(PFFS)Plan Offers the most provider flexibility.Members can receive coverage from any provider who is licensed and eligible to receive Medicare payments and who accepts the PFFS Plan's Terms and Conditions of Participation. PFFS plans offer all the benefits covered by Original Medicare as well as unlimited hospitalization and full coverage for preventive services. • Medicare Prescription Drug Plans(PDP) A wide range of standalone PDPs are available under Aetna Medicare Rx.They range from plans that provide Standard PDP benefits to enhanced plans that fill in the Medicare PDP coverage gap.These plans are available nationwide. • Medicare Advantage Prescription Drug Plans(MA-PD) Aetna's MA-PD Plans integrate our Medicare Advantage plans with our Prescription Drug plans in order to provide a complete health solution for members.MA-PDs also help simplify enrollment,billing and administration for both the plan sponsor and the member. For more information about Aetna's Medicare options,please contact your account manager. ■ Vital Savings by Aetna sM-Dental Discount Card Program and Other Discounts Vital Savings by Aetna sM is a program that provides access to discounts for dental services from participating dental providers,as well as access to discounted fees for vision services and supplies through the Vision One discount program. Discounts on other services are also available. This program is NOT an insurance plan. Participants simply present their Vital Savings ID card when they visit a participating dental office or other participating provider.Participants are responsible for payment of 100%of the fee directly to the provider at the time services are rendered.There are no claims submitted under this program. Discounts are the same as Aetna's Dental PPO discounts(average 30%nationally).Vital Savings provides access to a network of 64,700+dental office locations nationwide and it targets the 40 percent of Americans who currently lack dental insurance. Vision—Participants can receive discounts on exams, eyeglasses, contact lenses and LASIK eye surgery through the Aetna Vision DiscountsTM program. µ • Other Health Care Products and Services—Through Aetna's Vital Savings Program,discounts are available on many other health care services including chiropractic services,acupuncture,massage therapy,and nutritional counseling. 08/05/2010 www.aetna.com Aetna Difference The Aetna Difference Ae a tn 1� • Fitness—Participants can save on membership rates through independent health clubs contracted within the GlobalFitTm network as well as save on certain home exercise equipment. • Hearing Services—Discounts are available on exams and hearing aids. The Vital Savings Program is currently available to plan sponsors with 51+employees who perform traditional benefit administration functions such as collection of enrollments, payroll deduction of fees and remittance of fees via Service Fee Billing.There is a monthly fee to purchase the Aetna Vital Savings program.Two billing options are available-a group billing option and an individual billing option.Vital Savings monthly fees may be eligible for pre-tax payroll deductions for employees/retirees under age 65 if the program is under the group billing option. For more. information on discounts available or participating providers, please contact your account manager or visit online at www.vitaisavingsbyaetna.com. ■ Wellness Programs Implementing a solid and well-thought-out Wellness Strategy is key to infusing a supportive culture for plan sponsors.At Aetna,we are committed to taking steps to ensure that this future in health care strategy is realized. We are ready TODAY for this journey and we invite our customers to join us. Aetna's Roadmap to Wellness Packages are simple, easy-to-implement wellness solutions for plan sponsors to ensure a successful and effective wellness strategy for their employees. In addition, the Roadmap is supported by a turn-key communications toolkit that enables a streamlined implementation and ongoing support for the plan sponsor's wellness strategy. To help plan sponsors choose the right wellness programs for their employees,we have grouped the Aetna Wellness offerings into three levels: Core, Enhanced and Premier. For specific pricing, please contact your account manager. *"Aetna"is the brand name used for products and services provided by one or more of the Aetna group of subsidiary companies.The Aetna companies that offer,underwrite or administer benefit coverage include Aetna Health Inc.,Aetna Health of California Inc.,Aetna Health of the Carolinas Inc.,Aetna Health of Illinois Inc.,Aetna Dental Inc.,Aetna Dental of California Inc.,Aetna Life Insurance Company,Aetna Health Insurance Company of New York,Corporate Health Insurance Company and Aetna Health Administrators,LLC. These health benefit and health insurance plans contain limitations and exclusions. Policy form numbers include GR-29,GR-700-W,GR-88435. 08/05/2010 www.aetna.com Aetna Difference