In the Company Health care plan we have about 85,000 eligible associates. The rest of our associates are represented under collective bargaining agreements and their benefit plans are provided through other funds. So where we innovate and where we try new things really within the company plan, and thats where the target Pricing Initiative is today. So thats where ill focus our discussion for this afternoon. Mainly, we operated Grocery Retail centers throughout the country, but we also have distribution centers, fuel centers, manufacturing centers, fine jewelry stores. Usually get a few eyebrows that raise a message or restores but we are one of the larger jewelry chains in the country as well. To talk a little bit about what our objectives are with on health care plan, we really focus on trying to keep it simple for 350,000 people to try to understand what we are trying to accomplish with the Health Care Benefits that we provide to them. We really focus on objective. The first one is to improve the health of our associates and Family Members. We truly believe that if we can improve the health of our associates and their Family Members, not only will be able to hold down the cost for the company and costs for our associates, we also think thats a better place to be as an organization, more productive associates, happier worklife balance so were focused on health improvement. Secondly, were very focused on reducing costs. The grocery business is not one of high margin so we are very focused on where we invest our dollar. We spend about 1. 5 billion on health care for all of our associates in all of the benefit plans. So we are very focused on health and reducing costs. As we are looking at to reduce cost, we are constantly looking at not just what Health Care Costs, but how people access the Health Care System and where theyre choosing to get care. So where are they making or where are they able to make decisions about quality and cost as their accessing health care when they need it. So a couple of initiatives, im going to focus most of my discussion today on our target Pricing Initiative but when implemented that in 2012, we took to initiative at the same time and focused on target pricing, which is our discussion today about putting a price in place for Certain Services. And we focus our services on hightech imaging. So cat scans and mris and the like. We also at the same time put in a very specific centers of Excellence Program to focus on hip or Knee Replacement and find fusion surgery. So that typical initiative is really focus on quality of care and cost of care. Target pricing as my other panelists today have talked about is not so much about quality because we are assuming that the majority of the quality in a hightech Imaging Service is relatively the same. The difference is in the variation and cost. So our two different initiatives are addressing those costs, and then on the centers of excellence peace around the quality of care. Our target Pricing Program we partnered with anthem, they are our claims administrator selfinsured plan so they are very instrumental in helping us design our target pricing and are centers for Excellence Program. So the target Pricing Program only has three levels were associates and providers get involved in making a choice about where to access a hightech Imaging Service. So the first thing that we put in place is that any hightech Imaging Service has to get prior authorization or precertification. So the provider or the associate would call into Blue Cross Blue Shield before a service is received. And that is where it really starts. Its on the slide, you can see the aim or hightech imaging. That is usually where a physician or provider would get some education about our target Pricing Program. To help them understand that the plan has a certain threshold of how much we will pay for hightech Imaging Services, and help the provider then understand where in the market can they go our way they can send the patient to stay at or below the target price. So that is the first level and use in some of the results thats usually where most of the services will get redirected them. The Second Public office Shopper Program and thats usually where a nurse from anthem will outrage to our associates or Family Member who is due to get an mri or ct scan, and help them in more educated on our target Pricing Program to let them know that the plan will pay up to a certain level and that there are a lot of choices in the market to help them understand what providers they can go to, if they want to be at or below the target price. Or if they choose to pay more and go someplace else, they can do that as well. So completely voluntary program that we do help educate both the provide and our associate as theyre making the choices on where to go to get their care. Then the third piece is implementing that target price. So in 2012 we started with five hightech Imaging Services, and we started only in 10 anthem states. So is technically a little pilot for us, and in terms of how we implemented it. So you see you on the slide five tests in 2012. We added a sixth hightech Imaging Service in 2013, and also in 2013 we expanded it to all of the u. S. States across the country. So we were able to capture a lot more of our associates in that initiative. A little bit about the results that we are seeing. You can see here from the three levels of the program the clinical review operational activities, so thats the first level where most of the services are getting redirected to a provider who is at or below the target price. You will see the 2012 total year savings, and remember thats just 10 states for us, and in the Third Quarter 2012, or 2013 year to date slightly bigger but again a cross the u. S. The middle, the Shopper Program, not as much savings but we wouldnt expect as much there. We hope most of the services would get redirected, and they have, prior to getting the outreach call from a nurse to an associate. Actually implement the threshold of the target Pricing Program we have about 30 of our population that still chooses to go over the target price, and we think that comes down to education. So if you think about a lot of people when they go to the doctor still arent comfortable questioning costs or questioning quality, questioning whether doctor sends them for service. So celebrity and about 30 of the population chooses to still go to a facility that is at or above the private market price. To give you an example of the variation in cost, in ohio, where a ct scan of the abdomen, the cost ranges from about 260, to about 2600 depending on where you go. So that education alone both to the provider entity associate our associate is critical. Right now its all telephonicbased comments are getting them to really have that conversation with her provider is difficult but we are making progress, as you can see in her numbers and getting people educated. Early and 14 we will be implement in an online tool so that people can access, cost, and quality transparency, cost Information Online so they can start to make even better decisions. So what we actually saw with the unit cost, when the blue rose here, the 2012 results for the 10 states where we have had target pricing in 2012, and as you can see were actually able to reduce the unit cost through target pricing by redirecting people to a cost efficient provider. And by about 12 on both ct scans and mris. Compared to all other states in 2012 where we didnt have target pricing implemented, costs actually increased for both ct scans and mris in 2012. When you break that down by the five services, hightech Imaging Services that we had in 2012, you can see each of the individual services and into 10 states would target pricing in 2012. All of those went down. Summit in significant. If you look at the abdomen ct right in the middle, went down by 32 . In unit price in the states where we had target pricing. Compared to some of the increases in the other states for the same services. So i the same time we implemented target pricing for medical services, the hightech imaging, we also implemented on several Prescription Drug categories. So i wanted to give you a little bit of the results from the Prescription Drug side as well. Kroger has her own tv him, so we just kroger prescription plans to help us design a very similar target Pricing Initiative that we had in the medical world in the pharmacy world as well. So we took three categories of drugs in 2012 and thats the ppis and the blood glucose test strip. And 2013 we added another category. That really focuses on education at the pointofsale. When someone is in our store, the added from us and talking to a pharmacy tech or pharmacist, really being able to get that education about the choices that they have, because if you think that some the drug categories, that an act example, huge variation in cost or we are just starting to see that drug category kind of settle out with it going generic latch up with that huge variation in cost, and not a high variation ineffectiveness in that drug category. So weve seen some really Great Results on the pharmacy site as well. And here is just some statistics on what we saw in unit cost in the Prescription Drug side. See you can see some pretty significant cost reductions on all three of the drug categories in 2012. Utilization was not significantly impacted. I think initially what some people might think of is individuals might forgo a medication because of target pricing because some of that cost may end up with them if they choose a higher cost of drug. We saw a little bit of that in that in category but other than that the utilization in the ppi, the utilization was down on the bit but not significantly. We are watching that closely because what we dont want to happen is we dont want people to stop medications when you need but we want them to be better educated about the cost and the quality of the services that they are receiving. So just a brief moment on standard of excellence, and this is the service what we did is we looked at me replacement, hip replacement and spinal fusion surgeries, muscular skeletal decision for us has always been one of our highest categories in our medical plan. So we looked at how could we look at a cost and look at quality of care that people were receiving, and could we take a network and parents will be to be a little more and include travel expenses if someone was willing to go to a high quality cost efficient provider, or a particular joint replacement or spinal fusion surgery. And so we are able to do that. We have four tiers within the network, and we leveraged at Blue Cross Blue Shield centers for excellence or blue distinction network, and we went for the. We started with quality and added a cost component. So this is some of the results from 2012 and 2013 when we implemented that. So we had about 264 joint replacements are back using surgeries fusion surgeries in last 18 months or so. In the middle to embark you can see the impacts of the cost. Someone who chose to go to the highest quality, most cost efficient providers around the country, we saw about a 2830 reduction in cost. When you include travel, so we paid for travel and very similar to what calpers is doing. Again, about a 30 decrease in cost. And from a quality perspective, no adverse side effects. So potentially avoidable complications, there were none in the first year by someone going to a facility that may not be in their hometown where they had to travel for that hip replacement in the first year in 2012 we had about 20 facilities in the network so we people traveling around the country for this surgeries and had really great feedback and great experiences. And as you can see, great quality and low cost for our members, or for our associates. Over all, i was in our associates are very pleased with the program. One of the things we thought wed hear a special on target pricing and implemented it was a lot of pushback. You are just shifting the cost to me. Instead what were hearing is thank you. Thank you for letting me know that theres such a big difference in cost in my community but and if i know i can go someplace else and do the same quality at a less cost, thats good for them and its good for the company. And so we have seen a lot of positive results and a lot of positive feedback from our associates by doing things like target pricing and centers of excellence. So thank you for your time today. Well, thank you, theresa. Very interesting. Finally, we are going to from dr. Michael belman. Is the regional Vice President and medical director for programs and innovations for Anthem Blue Cross in california. Anthem and shivered as a part of wellpoint. Hes been trained as an internist, specialized in pulmonary medicine. Hes been with anthem since 96, and hes in a great position to discuss with us the role of insurers in reference pricing and their various partnerships with employers. And by the way, dr. Belman made a couple of changes in this life back from the version you have in your kids. Kits. You can get the latest version on the Alliance Website after you get out of here. Thank you, ed. I live in West Los Angeles where its not only important to look healthy, you have to look good as well. [laughter] so one of the striking features was that a freestanding Surgical Center in 90210, just around the corner from the gucci store, in fact, was a total price of 3500 for the cataract whereas the two largest West Los Angeles facilities one an Academic Institution and the other a very Large Community hospital the Academic Institution was about 6,000, the Large Community hospital was 11,000. For me as a individual who paid a 20 coinsurance, the benefit was direct to me in the sense that the coinsurance on the 3500 saved me 2 3,000 out of pocket and it also saved them money in the sense that they paid the 3500 and not the expanded fee. So im telling you this because my experience, although it was relevant for me, doesnt make much of a dent in these two highpriced institutions, and it didnt save that much money for anthem. But now what were seeing unfolding and what youve heard today from kroger and from calpers is the realization or the actualization of these differences that make a big impact in terms of the price that everybody pays because, in fact, once these expenditures from these employers starts trending down and in some cases it is trending down that makes a difference to the premiums that they charge the following year. And thats the premiums that you pay. So this is a direct impact for all of us. So i just wanted to emphasize that because it, obviously, has relevance. Im also using my ipad because as good as the cataract surgery was, there is no way that i can read that screen over there. [laughter] so the point that i wanted to make at the beginning is that the costs outside of premiums, copays and deductibles are typically unknown to the average consumer and i might say, also, to the average physician. And thats why this is an education for physicians, and i commend kroger, in fact, on making sure that the physicians know about that. Because physicians are totally oblivious to what the charges are. They know what they receive, but they do not know what facilities receive, what drugs cost, etc. And, in fact, a recent article in the new england journal of medicine highlighted this dilemma and actually called the coinsurance and deductibles an avoidable side effect of treatment or harmful effect. In other words, people undergo treatments and or receive medications and then have the unpleasantness of finding that the charges that result or the outofpocket expenses are so extreme as to make it extremely difficult to actually pay for these. So this becomes very relevant in this setting. So we also know that in california the hip and Knee Replacements vary between 20,000 to 110,000 across the network. So you saw a similar diagram to this where we talked i think when we had the talk for the, from from cpr. And, essentially, this shows the range of pricing in california of the 110 or so institutions that provide hip and knee surgery. So it was noted that when you choose a value of 30,000, that you encompass a significant number of institutions within the network. It also included a wide geographic distribution, so if there was travel involved, it was a reasonable amount of travel and p didnt require long distances. And this was really, i think, the basis for the number. The other point that i think was important is that we did look at at am i going the right way . Im going to wrong way. There we go. We did hook at the quality, and im going to come to that in a moment, but essentially, the valuebased purchasing design establishes the payment for elective procedures. It limits the obligation of the payer and guarantees members the ability to choose a facility that will provide Services Within an appropriate cost range. One interesting