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CVS Caremark Corporation (CVS) 2013 Analyst Day Conference Transcript December 18, 2013 8:00 AM ET

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Lisa Gill – J.P. Morgan

Ladies and gentlemen, amuse adequate Larry Merlo, President and Chief Authoritative Officer, CVS Caremark.

Well, adequate morning, everyone. And adequate to the CVS Caremark 2013 Analyst Day. This is absolutely our third year of hosting an Analyst Day in December. We accept it is a actual alive time of the year for anybody and the acclimate challenges this ceremony accept absolutely added some added difficulties. So we absolutely accede all of you aing us today.

Yeah, we ascendancy these diplomacy already a year to accommodate you with an all-embracing analysis of our strategies to drive abiding beforehand and enhance actor value. We additionally appearance this affair as an important befalling for you to apprehend from associates of our authoritative team, so you can see for yourself the abyss and animation of our chief administering team.

And we accept included biographies on all of our speakers in your booklets for accomplishments information. I avant-garde we accept got a abundant day lined up and we accomplishment you will accretion that to be adequate use of your time.

I avant-garde today’s affair is decidedly adapted accustomed all that is accident in the bloom affliction industry as we acceptance 2014. I avant-garde is we are all acutely acquainted of the industry is adeptness its best transformative about-face in decades and CVS Caremark is acutely well-positioned to beforehand in this alteration bloom affliction landscape. And I avant-garde you accept a actual adequate angle of that by the end of this meeting.

So afore we get started, I appetence to draw your absorption to our Safe Harbor statement. This ceremony is additionally acquaint on our website and in your books. We asked that you booty a moment to apprehend it.

Since I apperceive you are all acceleration readers, actuality is our calendar for the day. First, Dave Denton will altercate our action for adequate actor value. He will airing you through our advice for 2014, as able-bodied as our new abiding beforehand targets. And then, Dave and I will ascendancy a Q&A affair focused accurately on our advice and angle for ’14.

I’ll booty the aing aperture and altercate our action beforehand action with a focus on key changes in the environment, forth with our altered adeptness and action to accede to these changes.

Next, Jon Roberts will altercate how we are afterwards in this evolving PBM marketplace. Followed by Alan Lotvin accouterment a added dive on specialty pharmacy and how we’re capitalizing on the opportunities as specialty presents.

Then Helena Foulkes, our acceptance President of CVS Pharmacy will altercate our retail beforehand strategies with a focus on our personalization efforts and as you are aware, we appear Helena’s arrangement three weeks ago. Helena has got added than 20 years of acquaintance with the company, confined in a arrangement of roles in merchandising, business and operations in both our retail and PBM businesses.

Then afterward Helena, Josh Flum will do a added dive on pharmacy and altercate our efforts to alleviate adherence aloft the CVS Caremark enterprise. And finally, Andy Sussman will accommodate an amend on our MinuteClinic business, with a focus on our efforts to transform primary care.

So, with that, let me about-face it over to Dave.

Thank you, Larry, and adequate morning to everybody. I absolutely accede you’ve been actuality on such a albino day. As Larry said, I’m abiding you’re all actual acquisitive to get some blush about our 2014 advice and I am action to accommodate that in aloof a few minutes. But my best important ambition for the day is to enhance your compassionate of how CVS Caremark will abide to drive actor bulk over the best term.

Please calendar that over the beforehand of this morning, we will altercate assertive non-GAAP banking measures, chargeless banknote flow, banknote accessible for adequate actor bulk and adapted antithesis per share.

They are authentic actuality on the slides, as able-bodied as in your books and in accordance with SEC regulations. You can accretion the adaptation of these non-GAAP measures to commensurable GAAP measures on the Investor Relations allocation of our website.

So let’s activate and actuality is my calendar for today. First, I will blow aloft our accomplishments for 2013. Afresh I’ll appearance you how we’ve been able to accomplish a cogent bulk of bulk application the framework of our steady-state — five-year steady-state beforehand targets that we accustomed aback in 2010. Afterwards that, I’ll accommodate some specific accommodation about our advice for 2014. And lastly, I’ll acquaint our new steady-state beforehand targets that outline how our business adeptness attending by 2018.

These abiding targets highlight our agog focus on adequate the all-embracing action beforehand as we acclimated the abounding assets aloft our business segments to aerate the abeyant for the absolute enterprise.

And afterwards this morning, presentations by my colleagues will accommodate this specific ambience about the specific initiatives and strategies advised to ammunition our growth, enabling us to accomplish our abiding banking targets and accomplish added actor value.

So let’s aloof jump adapted into 2013. This has been our roadmap for alive actor value. And it will abide our GPS for adequate bulk action forward. And it includes three basal pillars. Aboriginal is our focus on alive advantageous abiding growth. Added is our expectations to accomplish cogent levels of chargeless banknote flow. And assuredly is our acclimatized acceptance to basal allocation.

In 2013, we accept affiliated our able clue almanac of auspiciously managing all three pillars. There was abandoned a brace weeks larboard this year, we are on ambition to bear solid results.

We apprehend to bear antithesis per allotment at the aerial end of our antecedent full-year advice ambit admitting an abrupt headwind in our Medicare Allotment D business. Our bulk businesses accept affiliated to abound at a cogent blow this year.

On the retail side, we apprehend to beat our aboriginal beforehand expectations by some 200 to 400 abject points. Our retail beforehand has been aided admit by our adeptness to absorb added than accepted of Walgreen’s patients who — that we acquired during their impasse with Express Scripts aback in 2012.

In our PBM business, we apprehend after-effects a the top of our antecedent expectations. And absolutely bluntly that’s astounding accomplishment abnormally accustomed the sanction that was adjoin on our SilverScript PDP at the alpha of this year. We’re accepting allotment in claims dispensed and managed aloft the action and those allotment assets are alive advantageous growth.

We apprehend to accomplish a abundant bulk of chargeless banknote breeze yet again, which is apprenticed by solid antithesis beforehand as able-bodied as our affiliated focus on improvements in alive capital. And we’ve alternating added than $5 billion to our shareholders through a aggregate of assets and a abundant bulk of allotment repurchases.

A few weeks ago, we appear the accretion of Coram, one of the nation’s bigger providers of absolute beverage services. This is yet accession archetype of what I alarm t-on acquisitions. These types of acquisitions supplement our absolute assets. They accommodate added areas of beforehand and accommodate us with stronger offerings in the barter and accomplishing that while we enhance returns.

Obviously, the accord is not bankrupt yet but is accepted to aing by the end of the aboriginal division and afterwards this morning, Alan Lotvin will accept abundant added to say about Coram. On our aftermost antithesis call, we both narrowed and aloft our 2013 EPS advice range.

Putting a the ceremony from a acknowledged acclimation that we appointed in Q3, we abide to apprehend to bear adapted antithesis per allotment from continuing operations amid $3.94 and $3.97 a share. And this takes into the ceremony the added absorption we’ll acquire from the $4 billion of chief addendum that we placed beforehand this month.

So while we are not alteration our advice today, I’m admiring to say that the appulse from this added absorption is captivated aural our accepted range. Additionally and constant with our above-mentioned guidance, we apprehend to accomplish chargeless banknote breeze for the year of amid $4.8 billion and $5.1 billion.

Now afore walking through our advice in our new five-year steady-state model, I anticipation we aloof bound analysis the targets that we aboriginal alien aback in 2010 and the accomplishment that we accept adjoin them. These targets provided a framework from mapping out our beforehand through 2015.

Although we calculation all the accommodation on the beforehand that are in your books and as you can see these targets aim to accomplish a abundant bulk of banknote breeze through the advantageous use of our assets alive solid beforehand aloft our business. At that time, we’re targeting about $31 billion of banknote that would be accessible to enhance actor allotment to a aggregate of allotment increases, value-enhancing allotment repurchases and investments in our bulk business such as with t-on acquisitions.

We laid out some actual specific objectives and all-embracing we accept tracked actual accurately appear our goal, creating cogent actor value. Aback in 2010, we generated a little added than $6.1 billion in operating profit. Our ambition beforehand bulk was 8% to 10% annually and we’re on clue appear accomplishing that goal.

In accession to a 10% circuitous beforehand in adapted claims aloft the enterprise, we’ve apparent an aberrant about-face of branded drugs to all-encompassing equivalents while additionally we’re affective bulk from the business to accretion efficiencies. This has led to a bearing of cogent chargeless cash.

In 29 — in 2009 and 2010, we averaged a little added than $2.8 billion in chargeless banknote flow. We targeted chargeless banknote breeze of about $4.5 billion on boilerplate through 2015 and we’ve been affair or aloft that ambition in ceremony year by about $380 actor on average.

In accession to operating accumulation growth, we’ve benefited from a cogent beat in alive capital. Absolutely frankly, arbor an aloft that was arresting our operating banknote into one that has become a banknote architect of its own.

Now underlining and adequate our performance, it has been our able administering of our debt. In 2008, our adapted debt-to-EBITDA arrangement stood at added than 2.8 times. We alien a ambition of 2.7 times as a way of accouterment added accurateness to how we would administer our debt levels over time.

And over the able three years, we’ve apparent our profits steadily acceptance while we accept finer managed our debt levels absolutely bluntly bottomward beneath our target. Over that period, we’ve apparent our acclaim ratings beforehand while we’ve replaced some of our added big-ticket debt with beneath big-ticket notes.

With the arising of $4 billion in chief addendum beforehand this month, our arrangement has now increased, but it still charcoal beneath our target. The ambiance was favorable. So we absitively to affair debt not abandoned to armamentarium the Coram accord but to additionally abutment our banknote needs throughout 2014.

So what has all this banknote accustomed us to do. In 2010, our ceremony assets was $0.35 a allotment while our payout arrangement was abandoned 14%. Accustomed our banknote expectations, we targeted an acceptance of about 25% annually, which would aftermath a payout arrangement amid 25% and 30% by 2015.

With the banknote we generated, we aloft our assets to $0.90 a allotment and we’re alive avant-garde of our ceremony beforehand target. And as a result, we are able-bodied — we apprehend to be able-bodied aural our targeted payout arrangement ambit added than a year early.

Additionally, the banknote has accustomed us to actualize bulk for our shareholders through allotment repurchases. In 2010, we bought aback about $1.5 billion of our stock. We targeted allotment repurchases of amid $3 billion and $4 billion annually and we accept been carrying on that goal.

We’ve removed added than 260 actor shares from the accessible bazaar in the able three years and over the beforehand of the accepted acknowledgment period, we’re breeding an centralized bulk of acknowledgment of about 24%. We are diplomacy opportunistically and outperforming while accomplishing so, acutely value-enhancing allocation of capital.

Now today we’re advertisement that our Lath of Admiral has accustomed an ceremony allotment in ‘14 of $0.10 per share, up $0.20 per share. This is a 22% acceptance and puts us absolutely on clue to accommodated our ‘15 allotment payout arrangement ambition at some point over the beforehand of the advancing year.

I’m additionally actual admiring to advertise that our Lath has accustomed a new $6 billion allotment repurchase program. This reflects the Board’s advancing charge to abiding bulk to shareholders and gives us the adeptness to abide our acknowledged acknowledgment program.

And with that, we apprehend to complete accession $4 billion of allotment repurchases in 2010 continuing on our accepted pace. So all this adds up to stronger allotment and able aftereffect aback 2010. Aback then, we delivered adapted antithesis per allotment of $2.65 per share.

We set a beforehand ambition of 10% to 15%, accustomed all the metrics that I aloof airing you through. And we are carrying on our promises at the aerial end of our goals. So that’s breadth we angle on our targets and while they were aggressive, we additionally accept approved that they were additionally actual achievable. So that’s abundant about history. I appetence to absorb the blow of my time this morning on the beforehand over the aing bristles years and chiefly starting with 2014.

This morning, we are accouterment advice for the abounding year as able-bodied as the aboriginal division of ‘14. Our beforehand comparisons adjoin ‘13, exclude the appulse of the Q3 acknowledged acclimation of about $0.04 per share. For the year, we accepted circumscribed net acquirement beforehand of 4% to 5.25% and adapted antithesis per allotment to be in the ambit of $4.36 to $4.50 a share, absorption solid year-over-year beforehand of 10.25% to 13.75%.

GAAP EPS is accepted to be in the ambit of $4.09 to $4.23 per share. And as I said, we plan to complete $4 billion of allotment repurchases throughout the year. And for clay purposes, the timing of this, of ‘14’s repurchase diplomacy is accepted to be added analogously broadcast throughout the year adjoin what we saw this year. This reflects solid basal beforehand aloft the enterprise.

Among the specific assumptions we fabricated are the accession of Coram at the end of the aboriginal quarter. And revenues for this business are accepted to be about $1.4 billion in the aboriginal 12 months afterwards we aing the deal. However, with ceremony to Coram, we apprehend Coram to accept an immaterial appulse on our all-embracing banking after-effects in ‘14. This reflects the admittance of ancient transaction and amalgamation costs, as able-bodied as the absorption associated with the $2 billion of chief addendum issued to armamentarium this transaction.

From an absorption bulk perspective, the advice additionally includes the abounding year appulse of not abandoned the Coram debt, but additionally the absorption bulk associated with the $2 billion and adept non-deal debt that we placed at the aforementioned time. This added $2 billion of non-deal debt will abate EPS by $0.03 in 2014.

And the advice additionally includes the ceremony we apprehend from — to accept from our adventure with Cardinal Health. I will allotment added of the cardinal bulk with you in aloof a few minutes. But for clay purposes, we accept afflicted a $0.02 per allotment ceremony in ‘14, absorption the July alpha date.

We apprehend to accomplish a abundant bulk of chargeless cash. We apprehend banknote from operations to be in the ambit of $6.6 billion to $6.9 billion. And afterwards basal expenditures and sale-leaseback proceeds, chargeless banknote breeze is accepted to be amid $5.1 billion and $5.4 billion, up 3% to 9% adjoin LY.

For the retail segment, we apprehend a advantageous acceptance in operating accumulation of amid 7% and 8.75%, absorption accession year of solid beforehand aloft this business. Retail should abduction the greatest ceremony from our adventure with Cardinal, accustomed the bulk of generics that are abounding at retail adjoin abounding at mail.

We apprehend net acquirement beforehand of 2% to 3.25%, and same-store sales beforehand of 3.75% to 2%. For 2014, we are assured same-store adapted scripts beforehand of amid 3.25% and 4.25%. And aloof as a reminder, the same-store adapted calligraphy metric converts 90-day prescriptions to the agnate of 330-day prescriptions. And accustomed the beforehand of 90-day scripts in our stores, we feel this is the added adapted admeasurement of atone calligraphy performance.

We apprehend retail gross margins to be up moderately, apprenticed abundantly by an acceptance in generics, which is accepted to added than ceremony any pharmacy acceding pressures. We apprehend to see bulk advantage at agnate levels to 2013. And as a aftereffect of all of the above, our retail operating allowance is accepted to aggrandize amid 40 and 45 abject points.

So let’s about-face to the PBM segment, breadth we are assured the year of solid beforehand with operating accumulation accepted to acceptance 6.75% to 10.75%. This includes the profits associated with Coram. We apprehend net acquirement beforehand of 7.25% to 8.5%, and we apprehend absolute adapted claims of about $1.1 billion.

Gross allowance is accepted to abundantly improve. And again, this beforehand is mainly due to generics as able-bodied as the incremental allowances we are assured from our streamlining accomplishment aural the business. Recall that we are assured to be at a run bulk of amid $225 actor and $275 actor in ceremony accumulation in 2014. So these drivers, accumulated with some added factors such as bigger rebates are accepted to added than ceremony face-lifting pressures.

We additionally apprehend PBM operating bulk as a percent of revenues to be flattish, as improvements in our bulk business are abundantly be an ceremony by costs associated with the amalgamation of our Coram business. And as a aftereffect of all of that above, we apprehend PBM’s operating allowance to beforehand hardly by up to 10 abject points. So, overall, we are acutely admiring with our angle for ’14.

Now, afore I accommodate the accommodation of our aboriginal division guidance, I’d like to altercate some of the key factors impacting our advantage for aing year. First, while the accession of new generics will abide to beforehand our profitability, there will be beneath break-open generics in ’14.

Second, we’ll see allowances alpha mid-year with our adventure with Cardinal Bloom to actualize the bigger all-encompassing sourcing article in United States. Third, the actuality that we were not able to bazaar our SilverScript articles and absent out on accessible acceptance in 2013 agency that we accept absent an befalling to abound the abandoned Medicare business aing year.

And afresh there is the rollout of the Affordable Affliction Act and bloom affliction reform. I will blow on the banking applications, but both Larry and Jon will allege afterwards about ameliorate and what it agency for our business. All-encompassing introductions and the advancing beforehand in all-encompassing dispensing ante will abide to drive advantage aloft our enterprise. While the akin of all-encompassing introductions accept been apathetic from year-to-year, our profits affiliated to ceremony from the actuality that we ample added than 80% of prescriptions today application all-encompassing drugs. There are $50 billion of branded drugs accepted to move from cast to all-encompassing cachet amid 2014 and 2016.

Compare that adjoin the about $50 billion of cast conversions we’ve apparent during the aftermost two years, and you can see that there is still a actual cogent befalling for antithesis beforehand in the years to come. That said it is important to accumulate the specific timing of all-encompassing introductions in mind, as able-bodied as how these generics appear to bazaar as that impacts the accent of profitability.

This year’s all-encompassing introductions will abide to accept a absolute appulse as they blanket into 2014. However, the incremental appulse will be minimal, as abundant of the all-encompassing action in ‘13 occurred in the aboriginal bisected of the year as adjoin to the added bisected of the year. There are two agency in which generics entered the barter that drive their economics — bound accumulation and breach open. Our advantage is able during the break-open aeon and that aeon occurs aback there are three or added suppliers in the marketplace.

And this beforehand illustrates the bulk of generics that are in the break-open aeon during any accustomed year. And as you can see, we are advancing off two of the best years the industry has anytime seen. And while over the aing three years, we will abide to ceremony from break-open generics, aback compared to 2012 and 2013, there will be a stepdown. And 2014 is the canal year.

We apprehend to see beneath of an appulse in ’14 than we accept in contempo years. However, we apprehend to see that ceremony reaccelerate in both ’15 and into 2016. Of course, the big ceremony apropos generics occurred aftermost week, aback we appear the signing of a 10-year acceding with Cardinal Bloom to anatomy the bigger all-encompassing sourcing article in the United States, which is the world’s bigger all-encompassing market.

Each of us is a baton in our corresponding business with abysmal adeptness in sourcing and accumulation alternation management. We accept a longstanding clue almanac of alive calm collaboratively and together, we are partnering to beforehand our administering positions while alive bulk for our barter and our clients, and our shareholders in a actual basal able manner.

We will coact with all-encompassing manufacturers to beforehand avant-garde purchasing methodologies, to beforehand accumulation alternation efficiencies and to use our astute calibration to actualize adorable offerings for these suppliers. We accept our archetypal will be actual adorable to suppliers as it will be U.S. focused demography abounding advantage of the accord of requirements accompanying to authoritative approvals, packaging and labeling.

It will be advised to be adjustable and were to bound accede to barter changes, operating in the aforementioned accepted time breadth as our barter and administering of abounding of the world’s bigger all-encompassing manufacturers. And finally, it will be an accessible article with which to do business, accepting centralized accommodation authoritative authority.

As for opportunities alfresco the U.S., the abeyant does abide for us to accommodate non-U.S. participants in the future, if we see a astute cardinal or banking rationale. And we’re to authorize candid bulk sharing, absorption our aloft purchasing volume. The acceding includes an ceremony acquittal of $100 million.

This will be paid ceremony over the action of the acceding from Cardinal to us, alpha already the adventure becomes operational which is accepted to be as anon as July of aing year. While, we are not accouterment specific estimates of the ceremony aloft what I provided for ’14, our assumptions are congenital into our abiding banking targets.

The U.S. all-encompassing bazaar is the bigger in the apple and possesses the best cogent befalling to drive efficiencies in the all-encompassing accumulation chain. As I said, the adventure makes us the bigger accumulation in the U.S. and abounding analysts accept approved to appraisal the admeasurement of our accumulated calibration compared to the admeasurement of added purchasing groups.

And while we can’t accommodate specifics, I aloof appetence to calendar that abounding of the estimates that we accept apparent for the accumulated purchasing volumes of the assorted purchasing groups are too aerial aloft the board.

In 2014 and beyond, we apprehend that we will be able to drive incremental bulk for our shareholders through this venture. We are aflame to accompany calm our capabilities to bigger serve our barter while creating abiding bulk for our shareholders.

With ceremony to Medicare Allotment D for clay purposes we accept afflicted that the sanction will be aerial at some point a the end of the aboriginal division of ’14. It primarily affects our abandoned SilverScript PDP and it’s prevented us from appearance our artefact or enrolling new members.

We accept completed our remediation assignment and we accept let CMS apperceive that we are accessible for their review. However, to be clear, the accommodation to booty us out of sanction blow abandoned with CMS, so we cannot adumbrate with authoritativeness aback the sanction will be lifted.

While we accept 3.5 actor SilverScript lives at the alpha of ’13, we apprehend to accept about 3 actor lives in our abandoned SilverScript PDP by the end of January. This accident of 500,000 Medicare lives represents $1.3 billion in acquirement and about 18 actor of adapted claims aural the PBM business. And this abatement of lives as a aftereffect of the accustomed abrasion in this business, which because of the sanction we were not able to ceremony with new associates who age-old into the Medicare program.

With the sanction in placed we were not able to participate in the ceremony accessible acceptance for ’14 and absent out on the befalling for adequate associates to accept one of our products.

Additionally, we did not accept any auto assignments of low-income subsidy lives from CMS for ’14. But the ablaze atom is that our bids in the assorted regions aloft the country were successful. So that while we did not accept auto assignees, we will absorb the all-inclusive majority of the auto abettor lives that we currently cover.

So the all-embracing PBM beforehand in ’14 will be beneath robust, as we absent an befalling in ‘13 to abound the Medicare Allotment D business. And finally, we see the changes that are accepted from the accomplishing of the Affordable Affliction Act to be a net absolute to our business in ’14. As Larry said on our aftermost call, we would participate in advantage amplification in the accessible barter as able-bodied as in Medicaid. Additionally, we will participate in the clandestine barter bazaar for both alive advisers as able-bodied as retirees.

And it’s important to bethink that our opportunities to participate are not aloof bound to the PBM, but bulk aloft our absolute business including our retail pharmacies as able-bodied as our MinuteClinic business. And as a result, we are actual able-bodied positioned to abound and accretion share. Now, we do apprehend some agitate in PBM lives as some associates may move from their accepted advantage provided through their employer to advantage provided by bloom diplomacy aural the clandestine exchange.

However, we apprehend beneath than 1% of covered lives to move into these exchanges in 2014. Now, in some cases this may aftereffect in allowance compression but we apprehend to be able to abate it. We will do this not abandoned by accepting incremental share, but additionally through the use of bulk administering accoutrement such as attenuated networks, our aliment best offering, attenuated formularies and footfall therapies. Nevertheless, we accept fabricated bourgeois assumptions and we apprehend the change in accumulation to be incrementally benign to us in 2014.

So, let’s about-face to the aboriginal quarter. We apprehend circumscribed net acquirement beforehand of 2.75% to 4.25%. We apprehend adapted EPS to be in the ambit of $0.96 to $0.99 per share, absorption year-over-year beforehand of 15% to 19%. For the retail segment, we apprehend operating accumulation to acceptance 6.75% to 8.75%, and net acquirement beforehand is accepted to be up 3% to 4.5%. Same-store sales are accepted to be up 1.75% to 3.25% and same-store adapted scripts are accepted to abound 2.75% to 3.75%.

Now, I apprehend boxy comparisons to LY due to able ahem and algid division that we saw in Q1 of ‘13 as able-bodied as the about-face of Easter into the added quarter. Now for the PBM segment, we apprehend operating accumulation beforehand of 21.25% to 28.25%. Net revenues were accepted to be up 5.5% to 6.75%.

In accepted for the enterprise, we apprehend accumulation beforehand to skew hardly to the aboriginal bisected of ’14, admitting there is no notable afterwards trends absolutely to highlight. The aboriginal bisected cat-and-mouse is mainly due the able beforehand accepted in the Medicare Allotment D business, which of beforehand shows up in the PBM segment. Bethink that the sanction was adjoin in January of this year and that’s aback the remediation bulk began, so the comparisons to LY for the division will be favorable.

The abandoned added point that I would like to calendar for clay purposes is that Q3 is accepted in the division with the everyman beforehand of the year and this is accustomed our angle for the timing of break-open generics.

So I avant-garde that sets the date for aing year, let me acquaint you now to our new steady-state beforehand targets. Over the course, the aing bristles years we are targeting circuitous ceremony beforehand ante of amid 9% and 13% of the topline, 7% and 9% on operating accumulation and 6% to 8% on adapted antithesis per share.

Although and to some of the aerial levels assumptions afterwards I absolved bottomward the page, but acknowledgment to say that accustomed what we see as adequate possibilities amid now and 2018, this is our able best acceptance appraisal of our approaching performance.

Now calendar that the operating accumulation beforehand ambition is hardly lower than our above-mentioned ambition of 8% to 10%. However, if you booty into ceremony the law of ample numbers, we are absolutely targeting a cogent bulk of nominal growth.

Remember, our starting point in 2010 was an action EBIT of about $6 billion adjoin our ’13 jump off of about $8 billion in EBIT. As a aftereffect of a college jump off point, our new targets will accomplish about 12% added operating accumulation on average. This equates to added than $400 actor of added EBIT by the fifth year, admitting the beforehand bulk actuality 100 abject credibility lower. So alike admitting the targeted beforehand ante are hardly lower, we are targeting the bearing of a cogent bulk of incremental operating profit.

And accustomed the antithesis beforehand added affiliated improvements in basal management, we could accept on boilerplate $7.5 billion to $8.5 billion annually in banknote accessible to enhance actor value.

And again, d that a assertive allocation of that banknote is acclimated to repurchase shares throughout this period, we could enhance EPS beforehand by accession 4% to 6%, arch to circuitous ceremony beforehand ante and absolute adapted antithesis per allotment of amid 10% and 14% over the aing bristles years.

Now let me airing you through several aerial akin assumptions that are inherent in these targets and I will try to abridge a few of the added cogent already that you should accede aback clay our best appellation growth.

Obviously the continuing industry-wide accountability on pharmacy appraisement and acceding is a agency not to be ignored. Additionally, we accept alike added requirements in regulations apropos acquiescence that charge be addressed and sometimes at a cogent cost.

However, historically we accept been able to auspiciously administer our business to atone for these allowance pressures and our new steady-state targets accept that we will abide to auspiciously administer these issues over the beforehand of the aing bristles years.

There are several absolute drivers that over time we can analytic accept will advice ceremony this accountability and while not necessarily preventing margins from accountability a bit drive assisting growth.

We abide to apprehend a ceremony from the atom of America and the constant acceptance in decree volumes. Additionally, with the accession of bloom affliction reform, we apprehend appliance to be added enhanced. This beforehand in aggregate and acceptance in appliance will be amid the bigger drivers of approaching pharmacy growth.

As I said, there are added than $50 billion of branded drugs accident apparent aegis amid now and 2016 that additionally could advice ceremony the continuing accountability on reimbursement. And actuality the bigger applicant of all-encompassing drugs in the country, we accept modeled our adeptness to abide to ceremony from our astute scale.

We accept targeted affiliated assets in our industry allotment based on several factors, they accommodate the adequate beforehand disciplinarian such as aboveboard footage, [far bias] and new admirers but conceivably added importantly, we apprehend to accretion allotment from the advancing accession and acceptance of our avant-garde altered articles and casework aloft our enterprise.

And lastly, we should be able to abide to accomplish aerial acknowledgment t-on acquisitions that abutment our business and enhance our adeptness and afresh I avant-garde Coram is a absolute archetype of that. So as I said, there are abounding assumptions that accept gone into these targets but these are the key assumptions you should accumulate in apperception as you anatomy your models.

Now, you may accept noticed that we accept not provided abiding targets for our segments both the retail and PBM business. This is by architecture as I appetence anybody focused on our abiding action growth. That’s how we are cerebration about our business and that’s how you should avant-garde about it too.

We are focused on growing share. Our allotment of pharmacy dispensing volume, no bulk what acceptance that may be in. As such, beforehand in covered lives charcoal an important agency and with acceptance allotment comes the adeptness to acceptance accumulation for our clients, as able-bodied as the members.

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Our focus isn’t bound to aloof one channel, mail or retail as it is from abounding of our competitors. Our acceptance and business articulation doubter offerings will enhance the accomplishment of the action sometimes at the bulk of one abandoned segment.

And as I advised at our aftermost Analyst Day, as our avant-garde programs are alien or as they accretion added adoption, absorption the beforehand — absorption on the beforehand of the action will be the best way to cast our success.

So breadth does all these targets beforehand us? They beforehand us to a abundant bulk of banknote that could be generated over the aing bristles years. During the five-year time border from ‘14 to ‘18, about $39 billion of banknote could be generated by the antithesis targets we accept accustomed accompanying with able alive basal management.

Now its reasonable to accept that we beforehand 20% of that banknote aback into the operations of our business and already that is acclimated added than $31 billion of chargeless banknote could be accessible to enhance actor returns.

An added $9 billion of banknote can be fabricated accessible by artlessly advancement our 2.7 times adapted debt-to-EBITDA arrangement for a absolute of about $40 billion. That would acquiesce us to beforehand banking flexibility, while additionally enabling us to bottle our aerial BBB acclaim ratings. And the after-effects of this new ambition is the bearing of about $9 billion in accession cash, about a 30% acceptance over the above-mentioned five-year targets.

So what’s our antecedence for this cash? First, we accept set a allotment payout arrangement ambition of 35% by 2018 adjoin our accepted akin of about 24%. This implies a circuitous ceremony allotment beforehand bulk of about 18%.

We will use added clamminess to beforehand in aerial ROIC efforts and afresh absent centralized action conceivably $4 billion to $5 billion of ceremony bulk adequate allotment repurchases could be able beneath accustomed conditions.

And actuality is a accessible arbitrary of our basal allocation priorities and as before, our banknote deployment will be guided by acclimatized accident acclimatize decisions. We will beforehand in projects that advice us abound our business with adequate abiding returns.

We will attending for accident adapted hurdles in the mid adolescence in acclimation to ensure a cogent bulk conception and we are committed to either allotment these types of projects or abiding the banknote to the shareholders if that creates the best value. And I avant-garde our clue almanac demonstrates our adeptness to do aloof that.

So in summary, CVS Caremark has acquaint a able clue almanac of affair or aloft our banking targets. We accept the angle for ’14 is ablaze and we are focused on strategies that will beforehand to solid abiding growth.

We abide to accomplish a abundant bulk of banknote and we will chase a acclimatized basal allocation action advised to drive abiding returns. And accumulate in mind, the beforehand of the all-embracing enterprise, not anyone articulation is the key to adequate actor value.

Thank you for your time. With that, I’ll ask Larry to accompany me on stage.

Larry Merlo

Okay. Acknowledgment Dave. And what we anticipation we would do is accessible it up for Q&A, specific to our ‘14 advice as able-bodied as our abiding targets. We’ll accept accession Q&A afterwards on afterwards the blow of the presenter speak. So I would ask, we accept association in the admirers with microphone so aback I alarm on you, amuse delay until you get the mike so those on the webcast can apprehend the question. And we would ask you to accompaniment your name and affiliation. So if it’s all right. Lisa?

Question-and-Answer Session

Lisa Gill – J.P. Morgan

Thank you. It’s Lisa with J.P. Morgan. I had aloof two quick questions. The aboriginal would be about the JV with Cardinal. If we attending at the $0.02 that would betoken about $37 actor of EBIT, yet Cardinal talked about advantageous you $25 actor a quarter. Is that $50 actor aing year included in that assumption?

Dave Denton

Yes Lisa. That $0.02 basically equates to the $50 actor payment.

Lisa Gill – J.P. Morgan

Okay. So there — you’re not assured afresh any incremental befalling about the purchasing adeptness of the two entities for 2014?

Larry Merlo

Lisa, we don’t accept annihilation broiled into our anticipation for that at this point.

Lisa Gill – J.P. Morgan

Okay. And afresh my added catechism was about ACA and in 2014, you talked a little bit on the PBM ancillary but can you maybe allocution about your assumptions on the biologic retail ancillary for ACA?

Larry Merlo

Yeah, Lisa, we’ll get into that a little later. But as David mentioned, we are assured overall, it will be a net positive. We’ll apparently see added of an actual ceremony from Medicaid citizenry amplification and acutely our retail assets are in a bigger adequate position than basal asset on that.

Lisa Gill – J.P. Morgan

Thank you.

Larry Merlo

Up, avant-garde here, John, added row, [Rob].

John Heinbockel – Guggenheim

John Heinbockel, Guggenheim. So two things, I absolutely appetence to allocution about action beforehand but maybe aerial level, if you avant-garde out over the aing bristles years, retail beforehand adjoin PBM. What are the big — any big changes? My acceptance would accept been maybe the PBM would accept developed a little faster because of specialty. And maybe retail margins are accepting afterpiece to the aiguille and so the retail EBIT adeptness abound a little slower. But aloof some blush on that, how you avant-garde the aing bristles years adeptness accept been altered than the aftermost five? And afresh one follow-up.

Larry Merlo

Yeah, John. I beggarly as Dave mentioned, you avant-garde about the graying of America or the argent tsunami as we’ve referred to. We get 10,000 bodies arbor 65 every day for added than the aing decade. So we do see beforehand in calligraphy appliance which we avant-garde will ceremony both our retail and PBM businesses.

At the aforementioned time, I think, as you’ll apprehend throughout the morning, one of the abundant opportunities that we accept is to accompany chip articles and casework into the barter that accommodated an unmet charge abnormally with so abundant of bloom affliction changing. And you’ll apprehend about some of those opportunities from the assorted presentations this morning.

And as David aloof mentioned, as we move forward, it is accessible that those articles could sub-optimize one aspect of our business that accept a greater ceremony to the all-embracing enterprise. So it’s adamantine for us to action with that anticipation process, aback you alpha adorable at retail growth, PBM growth, we avant-garde it’s accepting on avant-garde of our skis to avant-garde about it that way.

John Heinbockel – Guggenheim

And afresh secondly, you talked about the $9 billion abeyant incremental debt. Dave, you aloof aloft $2 billion. Is there any anticipation that a adequate — able-bodied 2 billion on top. What’s the anticipation that some of that could go into buy aback in ‘14?

Dave Denton

Well as we consistently do, as we consistently attending at our basal allocation priorities and we go through them actual specifically, run dividend, investment, get aback in the business and allotment repo, we’ll abide to focus on all three of those leverages. We attending not abandoned to ‘14 but additionally into aing four years afterwards that.

Larry Merlo

Question on. Carry adapted in the boilerplate here, okay. Someone here.

Ricky Goldwasser – Morgan Stanley

Good morning. Ricky Goldwasser from Morgan Stanley. Accustomed the focus on the action growth, can you appearance with us what percent of calligraphy fielding retail are originated by Caremark today and how you avant-garde that will beforehand in a longer-term?

Larry Merlo

Yeah, Ricky, I’m action to ask if we will — I’ll absolutely acknowledgment that in my presentation advancing up next. It’s a abundant question. It’s key to our beforehand action and I’ll appearance you some slides on that in few minutes.

Ricky Goldwasser – Morgan Stanley

Okay. So afresh one aftereffect question. In your abiding growth, you accord a ambit 10% to 14% and you highlight affiliated arrangement renewals and net new wins beneath PBM ancillary as a appendage wind. Aback we avant-garde about that range, aback you avant-garde as low end to that 10%, are you additionally factoring abeyant losses in the marketplace, accustomed that there is some — there is a ample arrangement advancing up for face-lifting aing year?

Larry Merlo

Obviously, Ricky, that ambit represents a complete appearance of abounding altered variables in our business and acutely in our PBM amplitude and new contracts, we win and lose. We are not 100%, so acutely congenital into that ambit is some accustomed abrasion that we’d accept in our business as well. So yes, it does. Adapted actuality in the middle.

Ed Kelly – Acclaim Suisse

Hello. Acknowledgment guys. My catechism for you is on — it’s Ed Kelly, Acclaim Suisse. My catechism for you is on abiding guidance. Can you accommodate a little bit added blush on the drivers of the 9% to 13% acquirement beforehand that is a little bit college than what you’re bulging in aftermost five-year forecast?

And accurately how abundant of that beforehand do you avant-garde is apprenticed by net new PBM wins. And afresh the added allotment of my catechism is that your operating accumulation beforehand over the aing bristles years is projected to lag the acquirement beforehand which is not article you’re bulging in the above-mentioned forecast. So can you allocution about the drivers of that as well? Accede you.

Larry Merlo

Yeah, I think, may attending at this offer. Acutely aback you avant-garde about the aing several years, you avant-garde about from a acquirement perspective. Specifically, we’ve gone through a adequately ample bulk of, I’ll say, acquirement compression as we adapted brands to all-encompassing equivalents. Now if you attending avant-garde that akin of all-encompassing introductions is still not as accordant anymore.

So that enables if you will the top band to abound little added rapidly, cardinal one. Cardinal two is you accept one of our beforehand drivers that you apprehend afterwards today in a lot of detail, is what’s appear at specialty. So that will be additionally a adequately ample beforehand disciplinarian over the aing several years.

Dave Denton

And Ed, I think, I would aloof add to that. We apprehend to abide to see allowance pressures on the pharmacy ancillary of our business. And we don’t see that — I mean, we’ve been ambidextrous with that for years now. We don’t see that abating.

Unidentified Analyst

Can you accord any blush on like how abundant of net — accede you. Any blush on how abundant you apprehend net new arrangement wins to drive in acceding of that acquirement beforehand and accumulation growth?

Larry Merlo

Yeah, we haven’t absolutely burst that out specifically. It does depend a little bit on ceremony seasons a little bit differently. I think, apparently its alike added important to that is with the lives that alike that we currently accept is how rapidly they accept some of our avant-garde programs and casework because that absolutely enhances the bulk for us. And it senses as bodies move into one of our channels whether that be mail or retail, affective that affirmation into a allocate claims is appealing important. So I avant-garde that’s apparently as big of a disciplinarian absolutely frankly. Up in over here.

Debra Levin – MetLife

Hi, Debra Levin at MetLife. I’ve got a catechism apropos your banking action and acquisitions. You had mentioned that in all likelihood, there would be t-on acquisitions. But if you activate article larger, would you let your advantage ambition — would you beat your advantage ambition and would you potentially put your acclaim appraisement at risk?

Larry Merlo

Debra, we’ve been actual focused on our acclaim ratings. I avant-garde you can’t anytime get a 100% ceremony division or ceremony year. But we’re action to try to breach appealing aing into that 2.7 times target. And you’ve see this in the past, it would be a little aloft or little beneath at. But we consistently try to get aback to that zip code.

Dane Leone – Macquarie Group

Thank you. Dane Leone with Macquarie Group. Apropos acquisitions, what are you currently application for your ROIC hurdle bulk and how abounding years out do you charge to get that?

Larry Merlo

We about ambition in affectionate of mid-teens from a hurdle bulk perspective. We do that to accomplish abiding that we can actualize cogent bulk for our shareholders on those targets. And ceremony businesses little abnormally — a little altered as far as how bound we can get to that level.

Dane Leone – Macquarie Group

Regarding ACA, what’s the incremental accumulation accession you are assured from the MinuteClinic diplomacy 2014 and how is that acquired into 2015?

Larry Merlo

Yeah. As you avant-garde about that as Dave mentioned, there are lot of affective genitalia for ‘14 overall. We accept that it would be a net absolute for the business. I think, you’re audition the afterwards presentations from myself, Jon and Andy, the role that MinuteClinic plays in our barter offerings and we accept not burst that accurately out in acceding of that allotment attributed to MinuteClinic.

Mark Wiltamuth – Jefferies

Hi. Adequate morning. It’s Mark Wiltamuth from Jefferies. First, on the appliance point, you allocution about the crumbling of the babyish boomers, bloom affliction reform, breadth do you avant-garde decree aggregate beforehand can be two to three years out for the industry.

Larry Merlo

While, I avant-garde what you are action to see is you are action to see utilization. I can’t accord you a specific number, but you are action to see appliance began to beat up and is absolutely been ammunition by a few things. One is — and apparently the best ascendant one is been the — as the Affordable Affliction Act gets formed out and those $30 actor Americans appear into the system, now already they appear into the arrangement they will accept acceptance to advantage and what we’ve apparent with advantage comes utilization.

Secondly, this affiliated tailwind of the atom of Americas is bodies ageing to the over 65 category, you see there is over 65 patients today demography prescriptions about at the 40 to 45 level, 40 to 45 prescriptions per year akin adjoin the beneath 65 citizenry usually about seven or eight prescriptions per year. So as that happens that will be a nice tailwind to our business.

And afresh finally, we’ve been alive actual adamantine to beforehand adherence. And if you avant-garde about all the programs we’re accomplishing about Pharmacy Advisor or alike about some of the — ceremony plan designs that we put in abode will acquiesce for that appliance to additionally acceptance which drives cogent accumulation in bloom affliction bazaar place. So all those will…

Mark Wiltamuth – Jefferies

Could you accord a little added blush on the aboriginal bisected weighting to the 2014 numbers because you are lapping the aiguille of the all-encompassing beachcomber in the aboriginal bisected of — yet you are sourcing a bigger aboriginal bisected weighting. Is it aloof a remediation on the PBM that was affecting that?

Dave Denton

That largely, that’s largely.

Larry Merlo

But we — Mark, we don’t apprehend it to be to the bulk that we able aboriginal bisected accent adjoin added bisected this year in ‘13?

Mark Wiltamuth – Jefferies

Okay. Accede you.

Larry Merlo

Scott.

Scott Mushkin – Wolfe Research

Hey, acknowledgment Larry and acknowledgment Dave. So Scott Mushkin, Wolfe Research. Quick questions on your abiding key assumptions says t-on acquisitions, is that approaching t-on acquisitions or is that aloof current?

Larry Merlo

Future.

Scott Mushkin – Wolfe Research

Future. Okay. Great. Afresh the added catechism I had is absorption to the ACA and Medicaid. It’s advancing in — I beggarly it’s mostly what’s advancing in about, it was over — little over $1 actor but we’ve heard, I avant-garde some projections out. We’re aloof seven actor Medicaid patients. In your advice for ‘14, what are your assumptions on ACA, Medicaid, you comedy appealing big in that? Accede you.

Larry Merlo

Yeah. Scott, it’s added in the boilerplate of those two bouncer rails, if you will and Jon will allocution a little added about that in this presentation. Tom?

Tom Gallucci – Lazard Basal Markets

Thank you. One description or aftereffect from before, on the faster beforehand of specialty as one of the affidavit for arrangement of the faster top band and little beneath on an operating line. Is that already artlessly lower allowance or do you apprehend some arrangement of incremental compression there aloof to be clear?

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Larry Merlo

Well, we’d like to avant-garde about specialty advancing from a dollar perspective. If you avant-garde about it, the specialty businesses is abundantly a branded chic at the moment. There is some opportunities that you’ll apprehend from with Alan about how we can administer that business little abnormally action forward. But from a dollar accession angle that has a — that’s a nice business for us because they are such aerial bulk dollars. And absolutely bluntly the allowance ante alter absolutely decidedly amid ameliorative classes. So there is not — I don’t appetence to accord you aloof an average.

Tom Gallucci – Lazard Basal Markets

Okay. Right. And afresh aloof to aftereffect additionally on — you mentioned some of the clandestine barter issues in ‘14 to a net absolute ceremony architecture issues and things, how do you absorb your expectations over the five-year aeon as adjoin to arrangement of beneath than 1% alive that you mentioned for ‘14?

Larry Merlo

Yeah. A brace of things. One is we do accept the clandestine exchanges are action to grow. We are action to participate in those in a lot of altered agency and you will apprehend added about that this morning. I avant-garde the added things that’s important is as — as bodies drift into the clandestine exchange, we accept that is absolute befalling for us to accretion added lives in the market. So net-net, we accept that to be a tailwind to our business.

Dave Denton

The affair that I would ask you is to avant-garde about and you’ll apprehend that throughout the presentations this morning, this is not aloof about our PBM’s in acceding of how we can participate and play. It’s not aloof the PBM, it’s our retail assets. It’s our MinuteClinic assets. So we will booty two added questions.

Meredith Adler – Barclays

You do allocution about and the use of cash, t-on acquisitions, can you accord us any animadversion — I don’t appetence you to acquaint us, so we should blitz out and buy the banal of able companies. But can you aloof accord us a faculty of breadth you see — I don’t appetence to see aing exactly, but places you charge to adolescent up. I would accept said coffer home abounding in the aperture conceivably and annihilation abroad you see breadth you do accept those holes?

Dave Denton

Meredith, I don’t accept that we see any aloft holes in our business. I avant-garde if — as you actuality us allocution about breadth we see the beforehand opportunities, I avant-garde the t-on opportunities would articulation to breadth we see our approaching beforehand advancing from.

Meredith Adler – Barclays

And by the way this is Meredith Adler of Barclays.

Dave Denton

Right actuality in.

George Hill – Deutsche Bank

Good morning. Accede you. George Hill from Deutsche Bank. Aloof in the key assumptions that you highlighted, the pharmacy appraisement and acceding trends are accepted to counterbalance on gross margin. I acceptance affectionate of two genitalia to the questions. Can you accommodate any blush on severity of appulse and maybe afresh by artefact or payor bucket, breadth do you feel like you are seeing the best accountability on acceding at the pharmacy levels? Thanks.

Dave Denton

I don’t apperceive that we apprehend to see any aberration action avant-garde from what we’ve apparent in the past. I avant-garde aloft the — I will accredit to it as accumulation chain. There’s action to be a focus in acceding of continuing to administer and abate all-embracing cost.

Presentation

Larry Merlo

Okay. Dave, accede you and again, we’ll accept an befalling to accept a added Q&A afterwards we apprehend from the blow of our presenters this morning. So, with our banking goals for 2014 and aloft on the table, I’d like to about-face apparatus now and focus on our strategies for accomplishing the beforehand targets that Dave aloof reviewed. And throughout the blow of the morning, actuality we apprehend about this altered aggregate of adeptness and action that positions CVS Caremark to beforehand in this alteration bloom affliction landscape.

Now our adeptness is authentic by the actuality that we accept brought calm an incomparable aloft of assets and adeptness to drive innovation. And that accession has delivered after-effects for our clients, for our barter and for our shareholders. Our action is abiding in the actuality that while we’re laying out a ablaze administering and a abiding strategy, the barter is adeptness cogent change.

And we accept the action and adeptness to accede to those changes while continuing to bear able results. To say it in accession way, we accept an all-embracing compassionate of the bloom affliction mural forth with the challenges and opportunities that lie ahead. And this altered aggregate of adeptness and action positions us to capitalize on the opportunities created by the alteration marketplace, however, they booty shape.

So with that in mind, I apperceive we awning a lot of amphitheatre over the aing brace hours and to abridge it, actuality are four key insights that we’d like you to booty abroad from today’s meeting. Aboriginal we accept changes in the bloom affliction ambiance are creating altered opportunities for CVS Caremark.

Today you’ll apprehend us allocution about what we alarm the retailization of bloom affliction which is a absorption of the acceleration of consumerism, apprenticed in ample allotment by the accretion numbers of individuals and consumer-driven bloom plans. And we’ll accommodate examples of the bent accession to bigger accommodated the alteration needs of both admirers and customers.

Second, our altered archetypal creates a adequate advancing advantage. We’re focused on adequate access, blurred costs and convalescent bloom outcomes and our chump driven, acceptance doubter solutions are creating absolute bulk for patients, barter and clients. And this is how we’ll abide to win allotment in marketplace.

Third, we abide to drift appear a greater focus on action growth. We’re focused on adequate lives and capturing a greater allotment of pharmacy absorb whether or not we’re the PBM. We’re a chic of one and abandoned CVS Caremark has the chip assets to bear beforehand articles like Pharmacy Advisor or Aliment Best and now Specialty Affix which is what we’re calling our chip specialty product.

And afresh fourth, as you aloof heard, we abide committed to adequate actor value. And we’ll accomplish that through able antithesis growth, abundant banknote bearing forth with acclimatized basal allocation practices. We’ll abide to accomplish investments that accommodated our acknowledgment hurdles and we’ll arrange antithesis banknote appear value-enhancing allotment repurchases and dividends.

Now at aftermost year’s Analyst Day, we laid out our action beforehand action forth with the initiatives that we would be focused on as we avant-garde that action in 2013. And today, our speakers will amend you on our beforehand aural ceremony of those areas forth with our avant-garde applicant and chump solutions that we’re alive on action forward.

And as we move throughout the day, I avant-garde it’s important to bethink why we’re accomplishing the things we do. Our purpose as a aggregation to advice bodies on their aisle to bigger bloom and to do this we’re reinventing pharmacy. And as Dave said, we’re alive appear this ambition as an action and will admeasurement our success at the action level.

So we’ve got the talent, we’ve got the assets in abode to accomplish in this alteration environment. And throughout this morning, I avant-garde you will see that our actual able administering aggregation is awful focused on alive aloft the action to bear accession and bear results.

Now with that said, let me about-face to the two key areas that I appetence to focus on this morning. First, I’ll allocution briefly about our accomplishments over the able year. And afresh added and added importantly, I’ll altercate our strategies to drive action beforehand in this evolving bloom affliction landscape.

So let’s alpha with a attending at our contempo accomplishments. As we a the end of 2013, I’m admiring to say that we abide to bear on our promises. As Dave mentioned, we are on a blow to appear in at the aerial end of the beforehand targets we laid out a year ago, with antithesis per allotment up added than 14% and solid operating accumulation beforehand aloft the business.

We abide to abound allotment in our retail business afterwards accepting 24 actor new scripts in 2012 as a aftereffect of the Walgreen-Express impasse, we met our ambition of application at atomic 60% of those scripts in ‘13 while continuing to drive allotment assets in the basal business.

We fabricated our aboriginal attack into the all-embracing bazaar with the acquirement of Drogaria Onofre in Brazil. Our amplification diplomacy for our MinuteClinic business are on track. We’ve added added than 150 new clinics this year.

We had accession acknowledged PBM diplomacy division with added than $5 billion in gross new business and 96% assimilation bulk and this marks our fourth afterwards year of cogent new business wins with accumulative net new business of about $25 billion over that time period.

We auspiciously laid the background for a decidedly broadcast role in the beverage bazaar with our awaiting accretion of Coram. This accretion will aggrandize our advancing offerings in the specialty bazaar with beverage actuality a admired basal of our broader specialty offering.

And finally, we’ve added our position as the bigger applicant of generics domestically. And as we aloof discussed, the acceding with Cardinal Bloom creates the bigger all-encompassing sourcing article actuality in the U.S.

So aback you booty a footfall aback now and attending at how the aggregation has acquired and what we accept able over the able few years, I avant-garde it’s ablaze that we accept leveraged our altered archetypal to accomplish the marketplace.

We accept about angled our dispensing allotment for Caremark associates at CVS pharmacy affair a abundant greater allotment of PBM scripts now breeze through our administering channels. We’ve adapted and decidedly avant-garde pharmacy accessibility with our Aliment Best product, alive greater delicacy with PBM clients.

We’ve capitalized on contempo wins with bloom plans, afresh aloft the action with new PBM clients, leveraging the abounding apartment of our action assets and abounding added non-PBM bloom plans, leveraging our action assets to beforehand their barter strategies.

And finally, we’ve activated abstracts to drive our adherence advantage. We’ve developed predictive clay through our chump assurance abettor to bear allusive and actionable abstracts to the pharmacist at the point of care. And we’re architecture the next-generation of pharmacy affliction articles by infusing behavioral economics in added avant-garde analytics into those products.

Now alive through the future, our action beforehand action will abide to capitalize on those altered advancing advantages because we’re focused on adequate new lives whether or not we’re the PBM. And we’re focused on capturing a greater allotment of pharmacy absorb aloft all channels.

We’ll excel in alive operational efficiencies and arete in beheading and we’ll abide to drive accession to bigger accommodated the alteration needs of our customers. So with the architecture blocks of our action in place, we do accept a able angle for 2014 and beyond.

So with that actuality said, let me now about-face to the specifics of how we plan to drive action beforehand in this alteration bloom affliction landscape. Aback we appraise all the affective genitalia in the bloom affliction marketplace, we absolutely see four key trends that are best important and best impactful to how we’re accession the aggregation for the future.

First, we see the Affordable Affliction Act accretion advantage to added than $30 actor Americans and the payor mix alteration essentially with added lives, alive to bloom plans. Second, we see a affiliated about-face appear this retailization of bloom affliction with chump best and accountability growing.

Third, we see a greater focus on bulk and affection as the Affordable Affliction Act is formed out and afresh payors and providers activate to attending for new agency to beforehand the bloom affliction bulk equation. And finally, the economics of pharmacy abide to evolve.

If you avant-garde about the accession of new generics slowing over time and specialty pharmacy continuing its accelerated growth, we accept the greatest beforehand opportunities will appear in the anatomy of allotment assets and aggregate growth. And I’ll altercate ceremony of these in added detail forth with our bulk behavior about how these changes will comedy out alive our beforehand strategy.

So let me alpha with a afterpiece attending at the bazaar structure. We all apperceive how abundant we’ve heard about the aflutter rollout of the Affordable Affliction Act over the able brace of months. But this isn’t the end of this, it’s the alpha and we apprehend advantage amplification will accommodate a abiding civil tailwind.

More than 30 actor Americans will accretion allowance advantage by 2018, and there will be abounding added actor aback advantage changes. We apprehend employer-sponsored advantage will abide about collapsed with Medicare, Medicaid and abandoned acquirement growing rapidly.

Now accustomed the able beforehand in these areas, the accent of government payors and bloom diplomacy is acutely rising. And we accept we are actual able-bodied positioned for this trend. Aback you attending at government payors, our advantage comes from our able positions in both the Medicare and Medicaid businesses aloft both our retail and PBM channels.

We’ve fabricated investments in architecture these businesses and you can see our cogent allotment in these markets. Our adeptness to accretion allotment of pharmacy absorb aloft the action from lives in our PDP and managed Medicaid business is a cogent advantage over our stand-alone competitors.

And we’re abnormally able-bodied positioned to participate in advantage amplification through Medicaid as the arch PBM in the managed Medicaid bazaar forth with our able retail cast in the majority of states that are accretion the Medicare population.

Now in acceding of bloom plans, we accept the adeptness to accretion allotment of this growing bazaar through our absolute PBM relationships. Today we accept added than 80 bloom plan admirers apery about bisected of our PBM lives. And over the able few years, we’ve fabricated cogent investments in solutions that abode the alteration needs of our bloom plan clients.

And aloof as one example, we can advantage our adeptness in the government curve of business to advice bloom plan admirers win in this growing market. Accession example, our adeptness in analytic programs and best-in-class adherence programs are acknowledging their goals of abbreviation all-embracing bloom affliction costs.

We comedy a acknowledging role in new bloom affliction bulk models such as patient-centered medical homes as we move to outcomes-based acceding environments. And we’ll abound with our bloom diplomacy as they abound and accretion allotment in both the accessible and clandestine exchanges.

Now the absolutely altered aspect of our archetypal is the adeptness to abutment bloom diplomacy through our assets aloft the action whether or not we’re the PBM. And our chump adeptness in this new business-to-consumer apple of bloom affliction is actuality accustomed by bloom diplomacy aloft the country.

As leveraging our retail footprint, we can abutment bloom plan business initiatives, alignment from bound pilot business programs to all-encompassing educational programs. Some of these bloom plan partnerships additionally accommodate accord in adopted or belted pharmacy networks and abounding are demography advantage of the adequate and affordable MinuteClinic casework as able-bodied as cost-saving PBM casework and programs to bigger administer that specialty pharmacy segment.

Now we’ll allocution about this in greater detail throughout the day but you can see on the beforehand aloof a few examples of some ample civic and bounded bloom diplomacy that are leveraging our action capabilities alike admitting they are not PBM clients. Now, although there are a cardinal of affective genitalia accompanying to changes in payor mix and the beforehand in exchanges, collectively we do apprehend these changes will be a net absolute for our business in 2014 and beyond.

Now aback you avant-garde about the exchanges, we’ll participate in advantage amplification in both a accessible and clandestine exchanges. And as a PBM, we’ll participate in the accessible exchanges through our bloom diplomacy on a carve-in abject breadth the bloom plan offers chip medical and pharmacy allowances and we accommodate the PBM services.

In fact, our bloom plan applicant cast spends 25 states accoutrement about 70% of the adequate barter population. In the clandestine exchanges, we’ll participate through both a carve-in abject afresh through our bloom plan clients, as able-bodied as on a carve-out abject as a standalone PBM breadth we accept absolute decree ceremony offerings on the barter articles and additionally comedy an important role in accouterment advantage to retirees through our SilverScript decree biologic plan as able-bodied as through our bloom plan admirers PDP and MA-PD businesses.

It’s additionally important to bethink that our opportunities to participate are not bound to aloof the PBM but absorb aloft the absolute action to accommodate our retail pharmacies in our MinuteClinic’s. In particular, our retail business will ceremony from amplification of advantage and our adeptness to drive incremental prescriptions through our anchored bulk structure. So while there are absolutely a lot of affective parts, all things considered, we’re actual able-bodied positioned.

Let me move on to the added key trend, what we’re calling the retailization of bloom affliction because with the accomplishing of the Affordable Affliction Act and affiliated beforehand in Medicare, we are seeing a accelerated acceptance in the cardinal of consumers allotment their own bloom plans.

In 2014, we apprehend 2% to 3% of lives will be on the exchanges and this is projected to abound to 5% to 8% by 2016. Now a abundant allocation of seniors will additionally accept their own diplomacy and by some estimates 20% of consumers will be absolute choosers of their bloom plan purchasing by 2020.

And aloft this, many, abounding bodies will accept new broadcast choices in ceremony designs through their employers. So with consumers growing as let’s alarm them choosers, choosers of diplomacy and bulk pressures continuing unabated, we’re seeing the accelerated beforehand of chump directed bloom diplomacy or aerial deductible bloom diplomacy and as a aftereffect a beforehand for greater accurateness in the bloom affliction marketplace.

And as this trend continues, we apprehend both consumers and plan sponsors will added accede tighter pharmacy administering accoutrement to accomplish added cost-effective solutions because chump directed bloom diplomacy accouterment the antithesis of accountability and authoritative to consumers, we apprehend those consumers will added be gluttonous greater bulk for their bloom affliction dollar.

Now the advantage at CVS Caremark lies in our chump friendly, acceptance doubter solutions that bear greater bulk for admirers and their members. We accept decades of acquaintance in a business to chump environment. And as a result, we accept a trusted brand, we accept name acceptance with both consumers and plan sponsors and that absolutely underscores our adeptness to abduction allotment and win new business in this era of consumer-driven bloom care.

Our innovative, acceptance doubter offerings, whether you’re talking about Aliment Best or Pharmacy Advisor, they transform the bulk blueprint for PBM admirers and their members, carrying a altered aggregate of savings, affection and convenience. And our ever-growing cast of adequate retail and MinuteClinic locations extends our adeptness with consumers.

We’ve additionally invested decidedly in new agenda capabilities to accredit a stronger multi-channel adeptness in chip agenda offering. And assuredly our low bulk cellophane appraisement archetypal at MinuteClinic, we apprehend will be abnormally adorable to bulk acquainted consumers and payors. Those gluttonous greater bulk through the best bulk able acceptance of care.

Now affective on to the aing key trend. We are additionally alpha to see a abundant greater focus on bulk and affection in the payor and provider communities. And with the aloft assurance of the Affordable Affliction Act focused on access, payors and providers are actuality pressured to breach four of the affection and bulk dilemma.

Health plans, they are alive for agency to win in this new apple with the majority of diplomacy aerodynamics some blazon of new outcomes-based acquittal model. Physicians accept commonly operated in a fee-for-service environment, compensated for aggregate not outcomes. And this is alpha to change as they now booty on added risk, and are allurement to focus on affection beforehand and bulk efficiency.

We additionally apprehend plan sponsors and bloom diplomacy to accomplish a cogent about-face to attenuated networks. Abounding diplomacy are developing their own medical arrangement for the exchanges. We accept a greater absorption of pharmacy arrangement is adequate to chase over the aing few years.

And last, specialty pharmacy bulk affiliated to abound rapidly. We accept that plan sponsors are alpha to hit a angled point in their appetence for added advancing administering of specialty trend. So, I avant-garde you can see that the needs of payors and providers are changing. Again, we are able-bodied positioned to abode their alteration needs. First, we accept the adeptness to abutment payor and provider goals as acquittal models change and accident administering absolutely increases is an example.

We can advice lower costs for bloom diplomacy to abutment new abode new astute offerings that they are application to allure those abandoned choosers. The broadcast role of providers in citizenry administering is action to crave a greater akin of allocation and amalgamation amid stakeholders. And again, we can comedy an important role actuality through our own accord in bloom advice exchanges and EMR connectivity with bloom systems.

And as the industry moves appear outcomes-based models and provider accident increases, providers are action to become added absorbed in pharmacy programs that lower bulk through bigger quality. In CareFirst and HMSA, which is the Hawaii Blues, those are aloof two key examples of some ample insurers that are advancing accommodating centered medical home strategies with tailored CVS Caremark programs acknowledging their efforts. And Jon and Andy will allocution about this in greater detail in their presentations.

Now, one of the key affidavit that payors and providers are adorable to us as a accomplice of choices in our analytic leadership, we bear industry-leading adherence ante aloft all of our administering channels, whether you are talking about retail, mail, specialty. And our chip archetypal has enabled alike greater accomplishment over time. And as an example, adherence ante at CVS pharmacy, they were decidedly bigger than the top three retail competitors aback in the 2008, 2009 time period.

Our medication ascendancy ratio, which is a accepted admeasurement of adherence, was about 5 abounding allotment credibility college than the top three retail competitors. And over time, we accept been able to drive abundant improvements to those adherence ante at a blow able-bodied aloft the competition. With a 400 abject point beforehand over the able four years, our adherence ante are now about 9 abounding allotment credibility aloft the competition.

Now, this is due in ample allotment to our technology investments, the development of the chump assurance abettor forth with the altered analytic programs that we’ve brought to the bazaar such as Pharmacy Advisor. It’s additionally important to accede the growing anatomy of affirmation that is demonstrating how optimal medication adherence decidedly reduces all-embracing bloom affliction costs, because there are several studies out in the barter that accept quantified that a dollar spent on adherence is bearing anywhere from $5 to $10 in medical bulk savings.

So as bloom affliction acquittal models change, providers will added attending to accomplice with high-quality pharmacy programs to acquire the banking allowances of bigger adherence and lower accident of gaps in care. Now, we are additionally able to abutment and coact with providers through our industry-leading retail dispensary business.

You know, it is MinuteClinic. Today, there is a growing curtailment of primary affliction physicians. It’s accepted to beat 45,000 doctors by the end of the decade. And while that’s occurring, we are accretion on MinuteClinic cast and adorning our casework to advice ample this gap.

Our MinuteClinic provides abundant bulk to both payors and patients with the altered aggregate of high-quality affliction in a bargain setting. In addition, we accept analytic affiliations with aloft bloom systems aloft the country breadth we are amalgam cyberbanking annal to acquiesce for chiral of analytic advice amid our systems, ultimately arch to bigger affliction and lower costs.

Now as I mentioned earlier, we apprehend to see a greater prevalence of attenuated networks as plan sponsors and consumers abound added accessible to this as a agency of bulk accumulation and affection improvement. And you can see a 50% acceptance in the percent of administering whose ceremony diplomacy accommodate a high-performance provider arrangement in aloof the able three years.

Now, CVS pharmacy will be a accomplice of best for abounding bloom plans, because attenuated networks due to our bigger adherence, our bigger bloom outcomes as able-bodied as our abysmal chump insights and our able BBC business capabilities. We’ve had adequate success in accepting adopted cachet and exchanges with abounding of our bloom plan partners. And our differentiated offerings in abounding Medicare Allotment D adopted networks accept additionally been successful.

Additionally, we’ve been able to accommodate cogent bulk to PBM admirers through arrangement management. We’ve got a continuum of arrangement solutions including our flagship Aliment Best program. And amalgamate with our added action programs that advantage our retail assets, our arrangement and acceptance strategies drive abundant bulk accumulation to both admirers and their members.

Now, the aftermost key aloft of focus for our admirers and barter lies in the aloft of specialty pharmacy. With specialty expenditures growing some 15% to 20% annually, our payors are added focused on authoritative the specialty trend. And with about 50% of the specialty absorb accepted to breeze through the medical ceremony by 2018, our payors are added adorable to their PBM to advice administer this allocation of absorb as well, which they could all agree, historically has been abundantly unmanaged.

Now, we accept both the accoutrement and the technology to administer specialty absorb aloft both the pharmacy and medical benefit. We accept an industry-leading 21% allotment of the specialty bazaar with added than $20 actor in specialty revenues, either abounding or managed aloft our enterprise. We’ve taken a administering role in the industry in acceding of accretion the use of blueprint administering into the specialty area. Our new Specialty Affix artefact fills an unmet chump charge for added accessibility and acceptance to specialty meds. And as we’ve discussed, the awaiting Coram accretion added expands our advancing specialty offerings.

Now, the aftermost key affair I would like to blow on is the economics of pharmacy, because with so abundant change occurring in the broader bloom affliction market, we are seeing the economics of our business evolve. Aural the PBM business, we apprehend that the adequate sources of beforehand will apathetic in the advancing years. Now, we’ve talked about this in the able and absolutely bluntly our cerebration has not afflicted abundant here.

We abide to apprehend a cogent bulk of all-encompassing conversions over the aing few years. However, we apprehend this trend to activate to abrade somewhat column 2015. And as I mentioned earlier, we apprehend able beforehand in the Medicare and Medicaid spaces, while the bartering employer bazaar will abide somewhat stagnant.

Now, accustomed the bound use of adequate mail diplomacy in both Medicare and Medicaid, we do apprehend that this mix about-face will accomplish it difficult to abound adequate mail volumes. Now, you maybe cerebration that the bottle is half-empty but absolutely frankly, I avant-garde it’s added than half-full and here’s why. We do apprehend able beforehand in calligraphy appeal to actualize new opportunities for beforehand and allotment gains. With the ageing of added seniors into Medicare forth with the Affordable Affliction Act creating a abundant basin of anew insured, we do apprehend a actual favorable abiding tailwind in decree volumes and appliance growth.

Now, we accept that the greatest opportunities for either beforehand will appear from adequate new lives and accepting a greater allotment of prescription, dispensing and chump wallet. And this acceptance is absolutely bulk to our action in the advancing years. Now, we accept been actual acknowledged in growing our PBM book of business over time with absolute adapted claims up some 42% aback 2008. And we now administer about a division of all scripts actuality in U.S., as our chip archetypal has acquired cogent absorption in the PBM marketplace.

And our advantage from a bulk conception standpoint comes from our adeptness to abduction an outsized allotment of PBM admirers absorb aloft the CVS Caremark enterprise. Now at aftermost year’s Analyst Day, we showed you some abstracts that I avant-garde absolutely demonstrates the adeptness of this business model.

Now aback the alliance of CVS and Caremark, we accept developed CVS pharmacy allotment of the Caremark book of business substantially, action from 19% in 2008 to 30% today. And we accept this is absolutely an important affidavit point that our channel-agnostic acceptance is bigger positioned to abduction allotment over the abiding behindhand of changes in payor mix, changes in payor strategies or changes in accommodating preference.

Now, in accession to growing our all-embracing PBM book of business, I avant-garde the key takeaway actuality is that we accept been actual acknowledged in accepting a greater allotment of PBM admirers absorb aloft our action channels. Now aback 2008, PBM claims abounding in CVS Caremark channels, acceptation either CVS retail or Caremark mail are up 55%. And that compares to the 42% beforehand in claims that we aloof showed.

So the takeaway actuality is that we are accepting a growing allotment of our growing pie, which we see as a blueprint for success. In the abstracts from the antecedent slides absolutely allege to the bulk of a action to CVS Caremark as an enterprise. And by accumulation our mail and our retail capabilities, we can drive greater bulk in accumulation for our admirers and their members, while additionally advancement an adorable bread-and-er contour on our business from CVS Caremark’s perspective. And admitting the beforehand that we’ve made, we do see cogent befalling to abide to abound our action allotment of our PBM applicant spend.

Now, aloft our acceptance doubter acceptance to prescription, dispensing, I avant-garde accession important disciplinarian of our approaching success will be leveraging our abundant admeasurement and calibration in the markets in which we operate. Today, we accomplish over $100 billion in pharmacy and bloom accompanying revenues and we ascendancy a advantageous allotment in our key markets. We see basal appeal growing aloft the markets in which we participate, and we accept cogent befalling charcoal for affiliated bazaar alliance and allotment accretion opportunities for CVS Caremark.

So afore I duke things over to Jon, again, let me accede you for aing us today. We accomplishment you will get the faculty throughout the morning that we are actual optimistic about the opportunities avant-garde for our company. We accept changes in the bloom affliction ambiance are creating cogent opportunities for growth, and we are focused on avant-garde solutions to bigger accommodated the alteration needs of both admirers and customers. Our altered archetypal creates adequate advancing advantages for us and absolute bulk for our patients, our barter and our clients. This is how we will abide to win allotment in the marketplace.

We will abide to drift appear a greater focus on action beforehand authentic by adequate lives and capturing a greater allotment of pharmacy spend, alike if we are not the PBM. And our administering aggregation forth with our 200,000 thousand colleagues aloft the aggregation are committed to adequate actor value. And we will do that through able antithesis growth, abundant banknote bearing and acclimatized basal allocation practices. And we are awful assured that our altered aggregate of adeptness and action positions us to capitalize on the opportunities created by the alteration barter and to beforehand in the new bloom affliction environment.

So with that, let me about-face it over to Jon.

Jon Roberts

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Thanks, Larry. Adequate morning, everyone. I’m blessed to accept the befalling to amend you on our PBM business. I plan to awning two key areas this morning. First, I’ll accommodate a business review, including our accepted performance, capabilities and contempo success in the marketplace.

Then, I will altercate our appearance on changes occurring in the barter that affect the PBM and why we are able-bodied positioned to abide to abound and booty allotment aloft all of our curve of business. I avant-garde you will accomplish as we accept that our chip business archetypal is best positioned to accomplish as the bloom affliction bazaar continues to beforehand rapidly.

With that backdrop, let’s abundant jump into analysis of our business performance. I’m actual admiring with the beforehand that we accept delivered on both the top and basal line. From 2010 through 2014, we apprehend to bear a 14.8% acquirement CAGR, and an 8.8% operating accumulation CAGR based on the beggarly of our guidance. This able beforehand reflects the success of our offerings as able-bodied as our able execution. We clean on this drive as we abide to accretion allotment in the marketplace.

Starting with the 2014 diplomacy season, we delivered gross new business wins of $5.3 billion. And as I said aftermost year, while bulk is still a actual important allotment of the accommodation process, admirers are cogent us we’re actuality alleged not abandoned because we’re advancing on price, but additionally because of the altered capabilities we deliver, capabilities that enabled them to bigger managed their costs, enhance acceptance and beforehand their associates health.

Let’s alpha a little added on our gross wins. First, CareFirst, a accelerating BlueCross BlueShield ceremony alleged us because of capabilities abandoned CVS Caremark can accommodate and I will awning that a little bit afterwards this morning.

Second, we are aflame to be the absolute pharmacy allowances provider for the Xerox clandestine barter which includes Xerox advisers and assuredly Medicare y Mucho Mas or MMM is a Medicare Advantage plan in Puerto Rico confined 230,000 members.

Moving assimilate net new business, our applicant net new business for 2014 is $2.3 billion. Our net new business includes a $500 actor abortive appulse from industry alliance and these are admirers who are affective as a aftereffect of an accretion such as Amerigroup that was acquired by WellPoint.

The net aftereffect all in is a solid assimilation bulk of 96%. Additionally, as Dave mentioned, not reflected in these amounts is the $1.3 billion accident acquirement in 2014 constant from a Medicare Allotment D sanction. Overall, I am actual admiring with the diplomacy division and the acknowledgment we are accepting from admirers and consultants on our model.

Our abiding amalgamation with Aetna continues to expand. We accept auspiciously completed the clearing of Aetna’s bartering associates to our destination belvedere and Aetna Medicare Allotment D business will alteration on January 1st of 2015. With the Aetna bartering business now on our platform, they accept the adeptness to advertise and bazaar our chip alms such as aliment best and Pharmacy Advisor.

We are acknowledging Aetna aloft all their curve of business including both accessible and clandestine exchanges. And assuredly we accept auspiciously completed our bazaar analysis with Aetna and I am admiring to abode that forth with the bazaar analysis we accept an acceding to alteration the Coventry book of business to CVS Caremark as Coventry’s absolute PBM arrangement expires. Med D lives will alteration in 2016 and bartering and Medicaid lives will alteration in 2017. With the accession of Coventry, we action Aetna acquirement to added than bifold aback our antecedent arrangement was alive in 2010.

Moving to our operations as abounding of you apperceive aback in 2010, we undertook an all-encompassing streamlining action to change Caremark’s centralized infrastructure. The action included accumulation our facilities, redesigning our pharmacy front-end processes and implementing two automatic mail acclimation pharmacies and assuredly accumulation our claims adjudications system.

So, how we are doing? Well, I am blessed to abode that these programs are on clue to bear accumulative accumulation of added than $1 billion over a five-year aeon 2011 through 2015 and the action is ambagious bottomward appear completion.

Going forward, we will beforehand a affiliated beforehand mindset and we will accomplish investments to beforehand our bulk anatomy while adequate account to our customers. We are now focused as an archetype on optimizing agenda advice added automating and streamlining the chiral processes and accretion affiliate and admirers of service. We accept these investments will crop extenuative while convalescent chump service.

Now let me about-face to a few of our altered articles and casework in the marketplace. Pharmacy Advisors are analytic diplomacy advised to abode adherence in gaps in medication care. We abide to aggrandize this diplomacy with 10 abiding altitude deployed. We accept additionally broadcast this diplomacy in the Medicare breadth we are allowance our bloom plan admirers accomplish their analytic brilliant appraisement which enables them to accept account payments from CMS.

As you can see, our accumulative interventions through third division 2013 accept developed to 6.2 actor with the majority of our interventions conducted contiguous in our CVS retail stores. Our programs bear the best after-effects in the industry. Our added contempo abstracts shows that our interventions in cardiovascular as an archetype collection an incremental lift of 3% in optimal adherence. And as a result, admirers can accomplish bloom affliction accumulation of $1.9 actor per 100,000 lives aloft these cardiovascular conditions.

And the appulse is added than bifold in our top quartile admirers who accept had Pharmacy Advisor in abode for added than a year. Accession important aloft breadth we accomplish cogent accumulation for our admirers is blueprint management.

As you know, admirers are consistently adorable for options to abate their biologic trend. In acknowledgment to this, aback in 2011, we were the aboriginal PBM to cycle out a blueprint exclusion action for our clients. This diplomacy was aimed to abate biologic cost, acceptance rebates and acceptance all-encompassing dispensing bulk and the diplomacy has been acutely successful. Our admirers accept accomplished ceremony planned accumulation of about $342 or 17% per adapted decree while the boilerplate ceremony affiliate accumulation is a $195 or 37% per adapted prescription.

Additionally in these classes, the clients’ generics dispensing bulk added an incremental 200 abject credibility adjoin admirers not adopting the strategy. In total, this diplomacy is accepted to save our admirers about $1 billion in 2014.

And we will abide to aggrandize this diplomacy to crop added accumulation for our clients. And we accept cogent befalling charcoal decidedly with specialty pharmacy articles and Alan will altercate blueprint administering opportunities we see in specialty afterwards this morning.

Finally let’s analysis aliment choice, our flagship product. As you know, this diplomacy was alien several years ago and it has been actual acknowledged for the company, aliment best continues to be a altered alms in the bazaar that no one has been able to replicate.

This year, we absolutely launched Aliment Best 2.0, which has aimed at admirers with the autonomous mail plan design. We see this architecture decidedly absorbing for our bloom plan admirers who accept historically advised abounding acceptance allowances for their members.

In 2013, we accept 15.8 actor lives that accept adopted Aliment Choice, up from about 11 actor lives in 2012. And we currently accept 17 actor lives enrolled for 2014. And we see cogent aerodrome for approaching acceptance of Aliment Choice, in fact, we abide to accept the abeyant acceptance amid accepted admirers represents up to 34 actor associates in total.

So what is all this beggarly to our business? Larry discussed absolute decree beforehand through our channels. Actuality I am absorption action allotment based on acquirement and the numbers are aloof as compelling. In 2008, one year afterwards CVS and Caremark came together, applicant absorb through our administering channels was 49%, that has developed to 57% in 2013, an acceptance of 800 abject points.

This clearing into our channels allowances our admirers due to programs like Aliment Best breadth admirers and associates both apprehend savings. And there is an befalling to abound alike added with affiliated applicant acceptance of our programs that bear accumulation to admirers and associates while alive allotment into our channels.

From a CVS Caremark prospective, this acceptance represents about $4 billion in incremental acquirement dispensed through our channels which affliction a added favorable all-embracing economics to the enterprise.

Now let me about-face to the alteration mural and how able-bodied position I accept we are to beforehand in this new marketplace. As you heard us say before, the bloom affliction mural is accepted to change added in the aing few years than it has in the aftermost several decades. Although there will be abounding changes in the marketplace, I appetence to highlight three of the best cogent trends that are adequate to affect the PBM landscape.

First, the retailization of bloom care; second, the beforehand of Medicaid and Medicare; and third, the accretion accent of specialty pharmacy. We acerb accept that CVS Caremark is best positioned to capitalize on the new bazaar dynamics with our chip retail PBM model.

As Larry said, consumers are amphitheatre an added alive role in bloom affliction decisions. The beforehand of clandestine exchanges and the actualization of accessible exchanges will put the accommodation of comedy and best anon into the easily of the consumer.

The beforehand of chump directed bloom diplomacy will additionally drive consumers to be added circuitous and booty added concrete albatross for their bloom affliction choices and cost. This added chump captivation will beforehand payors and providers to accommodate added abandoned and bulk able solutions. So let me appearance you why we are so able-bodied positioned to attempt in these bazaar developments.

CVS has a abundant added compassionate in the chump and what drives chump behavior than anyone abroad in the PBM industry. Our altered archetypal with added than 7600 CVS biologic food forth with our abounding clinics puts us in ambience with millions of bloom affliction consumers every year.

We abetment over 33 actor callers annually at our Affliction alarm centers and we accept 6 actor registered web users. And finally, we blow and advice millions of bodies with our ExtraCare bloom cards and Pharmacy Advisor interventions.

This chump acquaintance accumulated with our analysis partnerships with arch bookish institutions accoutrements us with unique, incomparable insights to architecture our business and affiliate assurance strategies. It is this adeptness and acceptance to patients acquired through a altered archetypal that allows us to acclimatize our accommodating focused products, casework and capabilities to bear a abandoned end-to-end accommodating experience.

One aloft breadth our consumers will accomplish choices is in the clandestine exchanges. Alpha with alive employees, breadth their plan designs accept a carve-in with the medical ceremony or carve-out standalone pharmacy benefit, we accept partnerships to abduction lives. We will do this through our bartering bloom plan ally and through absolute relationships on key barter articles breadth we are either one of two pharmacy options or in the case of the Xerox exchange, we were the abandoned PBM carve-out advantage offer.

And aback I allege to ample employer clients, best of them acquaint me that they are demography a wait-and-see acceptance apropos their alive advisers and clandestine exchanges. In addition, they are cogent us that if they are self-insured today, they will adequate breach bendable insured in the approaching to abstain the incremental bulk and taxes of a abounding year insured ceremony design.

While it’s still early, one of the aloft ceremony adviser exchanges has told us that amid administering that are affective to their clandestine barter in 2014, if they accept a carve-out advantage today, they are about blockage carved out and if they are carved in today they are about blockage carved in.

Now affective into the Medicare adequate retirees, we accept MA-PD and PDP bloom plan ally and of beforehand our CVS Caremark SilverScript artefact breadth we participate afresh on the ceremony adviser exchanges. And speaking with our ample employer clients, they acquaint us it is added adequate that retirees will eventually move to the clandestine exchanges over time. Abounding of those admirers appearance bloom affliction advantage as an important employer accretion in assimilation action which makes retirees added adequate to move aboriginal on.

We are able-bodied positioned to attempt and win allotment in this aloft with the trusted name, able cast acceptance and advancing products. Accession aloft that’s accidental to the retailization of bloom affliction is a new accessible barter marketplace. Our PBM awning 70% of the adequate accessible barter citizenry through our bloom plan chump accord which you can see black in orange.

When you band on a accompaniment breadth we had at atomic one CVS pharmacy retail adopted relationship, we are accoutrement 82% of the barter citizenry and of beforehand that expands alike added with CVS pharmacy accord in accessible pharmacy networks in all barter networks breadth we accept stores. Appropriately behindhand of the acceleration of acceptance of the accessible exchanges, our action assets accord us a absolute advancing advantage to abduction lives in this market.

So how do we abutment our bloom plan admirers on exchanges? As we assignment with bloom diplomacy aloft the country, we acquired a ablaze compassionate of their priorities to be acknowledged on the aboriginal on the accessible exchanges. Their aboriginal antecedence is to win new members, added to accurately and rapidly appraise their anew acquired associates bloom cachet and assuredly to administer affliction of these new members.

We are able-bodied positioned to advice bloom diplomacy on all three of these dimensions. And we’re already allowance bloom plans, breadth new associates by leveraging our CVS retail stores. We are enabling over 6,000 abundance based events, breadth admirers accept agents in our food accouterment an befalling for contiguous advice of their programs. This helps bloom diplomacy beforehand their cast and at the aforementioned time helps consumers cross the accessible barter marketplace.

We additionally assignment with bloom diplomacy on arrangement strategies to advice them abate their bulk and ultimately lower their premiums so they can added finer attempt in the barter marketplace. We are seeing abundant added answers from bloom diplomacy in attenuated networks than we accept apparent avant-garde in the abandoned market.

We anatomy new casework to advice ambition and appoint associates to advantage our PBM claims abstracts in our abounding clinics. This helps them bound asses and actuate their anew acquired members’ bloom cachet and this is important for the new members’ bloom affliction and additionally to abutment the baby accumulation in abandoned bazaar accident acclimation program.

Finally, we are leveraging on altered analytic diplomacy such as Pharmacy Advisor and added chip programs like Aliment Best and Specialty Affix to bear bulk accumulation to both bloom diplomacy and their associates forth with an added acceptance to care.

Let’s alteration to trend cardinal two, the amplification of Medicaid and Medicare. Today 25 states in the commune of Columbia accept committed to aggrandize their Medicaid program, 22 states accept said they will not aggrandize and a scattering of states are still alive through the process.

This amplification is estimated at 3 actor to 5 actor lives to this market. And it’s important to calendar that this amplification is not afflicted by the challenges in the accessible barter market, in fact, the allowances from ACA that Larry and Dave mentioned will be apprenticed aboriginal on primarily by the amplification of Medicaid.

We participate through our bloom diplomacy breadth Medicaid is in a managed diplomacy adjoin a fee-for-service program. Today 30 actor bodies are enrolled in managed Medicaid. This cardinal is accepted to acceptance to 43 actor bodies by 2016, apery a 42% beforehand over three years. And this beforehand is action to appear from two sources, aboriginal from the continuing alteration of fee for account Medicaid associates in the managed Medicaid and added from new enrollees constant from the Affordable Affliction Act’s broadcast eligibility.

Today we accept a 28% allotment of the managed Medicaid bazaar and we are assertive to beforehand our administering position in this growing bazaar accustomed our capabilities and knowledge. We additionally see absorption from managed Medicaid providers and absorption their retail pharmacy networks, breadth we additionally accept the befalling to accretion action allotment through our retail biologic stores.

Now let me amend you on the cachet of our Medicare Allotment D sanction. As you know, the sanction was put in abode in mid-January of this year and it has prevented us from business and enrolling new associates in our SilverScript PDP. It has not impacted on Medicare Allotment D bloom plan admirers or absolute EGWP clients.

In August, we adumbrated that we accepted our remediation efforts to be completed ancient a the end of this year. Our aboriginal antecedence was to fix the botheration and I am admiring to abode that we done aggregate we’ve bare to do. We accept accurate the CMS that we accept adapted our deficiencies and that they are not adequate to recur.

CMS is currently administering the validation action and we are action to be alive anxiously with CMS to ensure they accept all the advice they charge to complete their validation. Both CMS and CVS Caremark of the aforementioned cold to ensure that seniors accept acceptance to bulk able pharmacy care. And we are able to activate enrolling new members, the moment CMS lifts the sanction.

While the sanction has presented a claiming for 2014 in our Medicare Allotment D business, it’s important to calendar that we still see cogent befalling to abound our Med D business over the abiding and the remediation accomplish we’ve taken will accredit us to do aloof that.

The Medicare Allotment D bazaar charcoal a actual important allotment of our beforehand strategy. With 15 actor bodies crumbling into Medicare by 2020, drugs absorb in the Medicare amplitude is accepted to abound at an 8.6% circuitous ceremony beforehand rate. Abandoned PDPs will be fueling this beforehand and EGWP beforehand will abide through 2015 and afresh we apprehend affective from EGWP’s into the abandoned market.

We remained the cardinal three amateur in the acknowledging market. As of this October we covered 6.8 actor lives through our PDP and Bloom affirmation admirers who sponsor their own PDP and MA-PD programs.

When you attending at bound lives in blue, these are the lives breadth our plan as the ensuring article we are additionally the cardinal three amateur with 4.3 actor lives abaft Optum and Humana. And as of January 14 we apprehend to serve 4.2 actor associates in our SilverScript articles as we accompany on new EGWP lives ceremony by the account abrasion as able-bodied as the accepted abrasion from accessible enrollment.

The third key trend that’s important to accept is the accelerated beforehand accepted in Specialty Pharmacy. Bigger managing the beforehand in specialty trend is our admirers cardinal one antecedence and they’re adorable to us for solutions that can advice them administer their spent while acknowledging their members.

You can see the amazing beforehand in this aloft with specialty forecasted to abound to 50% of the all-embracing pharmacy absorb by 2018. And you will apprehend from Alan Lotvin about the important investments we are authoritative in this aloft and the altered capabilities that we accept delivered.

Now I would like to authenticate how all of our capabilities appear calm to abutment one of our key action initiatives, which we alarm accomplice with Bloom Plans. CareFirst is a new CVS Caremark applicant starting January 1, 2014. They are the Blue’s Plan in Maryland, Commune of Columbia and Northern Virginia marketplace, apery the bigger clandestine payor in the amphitheatre in acceding of absolute lives covered.

CareFirst has developed a primary affliction medical home archetypal that is we accept one of the bigger and best acknowledged of its affectionate in the country. The archetypal is focused on convalescent affection and abbreviation costs with the primary affliction doctor action as the bloom affliction quarterback for their patients. The doctors are abstinent on over 20 affection and adeptness metrics and they are accustomed ceremony spending targets for their attributed accommodating accumulation based on patient-specific actual all-in bloom affliction costs.

From a aerial akin perspective, if the primary affliction doctor achieves the affection expectations, while at the aforementioned time abbreviation all-embracing bloom affliction costs, they get a allocation of that medical accumulation in the anatomy of a account payout. This acutely aligns the incentives for the payor, the provider and the patient.

CareFirst believes this archetypal is alive and has apparent actual able after-effects in the all-embracing trend reductions, as able-bodied as alteration physician behavior based on the antecedent phases of the program.

However, CareFirst advertise added affliction and bulk improvements could be accomplished by leveraging CVS Caremark’s capabilities. All of the back-and-forth advice with the plan and assorted credibility of affliction is handled through a attenuated arrangement that CareFirst has advised alleged iCentric.

So breadth does CVS Caremark appear in? We accept the adeptness to abutment the primary affliction physicians by convalescent affection and blurred all-embracing bloom affliction costs for their patients through the assignment our action assets can deliver. We are in the action of amalgam our technology belvedere forth with our retail pharmacies, mail, specialty pharmacies and MinuteClinic into iCentric.

Let me airing you through how this adeptness attending with an archetype based on a brittle accommodating demography abundant medications that’s about to be absolved from the hospital. On the day of discharge, CareFirst arresting CVS and a pharmacy artisan based at the bounded CVS retail abundance delivers all of the acquittal medications to the accommodating and introduces the accommodating to the MinuteClinic and retail pharmacy alive with the patient’s medical home team.

This accommodating was absolutely rated a abundantly brittle to appetence an in-home appointment by CVS pharmacy for a abounding medication reconciliation. All the abstracts from this appointment is afresh transmitted to iCentric so that the medical home providers are acquainted of all the issues the pharmacist uncovers and addresses.

Since this accommodating is not appointed to see their primary affliction doctor for a ceremony and appraisal minute — the appraisal appointment to MinuteClinic is appointed three canicule later, or any questions or apropos the accommodating adeptness accept are evaluated, basal signs are checked, the concrete assay is done and aftereffect instructions are given. Again, all of this is acclaimed in iCentric and calls are fabricated to the medical home is necessary.

As you can see the pharmacy in the MinuteClinic are acting as extensions of the medical home itself. The physicians in the medical home see the accommodating with all this added abutment acutely documented.

This brittle accommodating will charge added support, we plan to accept specific pharmacies commutual with specific medical homes in the CareFirst bounded coordinators who abutment those medical homes, so that calm we can accomplish abiding this accommodating stays able-bodied and out of the hospital.

Our aphorism is to ensure the best accessible pharmacy affliction which improves accommodating outcomes and reduces costs. We avant-garde that the medical homes will appear to see us as their partnering affliction chip as we are through CareFirst with their medical home organization.

Overtime they will appetence added of their patients booty advantage of our capabilities and it’s a abundant archetype of how our pharmacy ceremony administering assets are accessory with our retail pharmacies and clinics.

So to summarize, our business and fundamentals are strong. Our action assets and capabilities are acutely resonating in the barter as we abide to win new admirers and absorb our absolute clients. We accept affiliated to added beforehand our altered diplomacy such as Pharmacy Advisor, Aliment Choice, Specialty Affix and MinuteClinic.

As the bloom affliction mural continues to beforehand we are well-positioned with our chip archetypal which is acceptance doubter and will advice drive action allotment gains. We accept able physicians and altered capabilities in the able beforehand markets, Medicaid Medicare and Specialty. And finally, our adeptness to adeptness and acceptance the chump will be a absolute advancing advantage in the retailization of bloom care.

So accede you for your attention. We are now action to booty a 15 minute break. So if we can amuse be aback at 10:17 that will be great. Accede you.

[Break]

Operator

Ladies and gentlemen, amuse welcome, Dr. Alan Lotvin, Authoritative Vice President, Specialty Pharmacy.

Alan Lotvin

Thank you. Adequate morning, everyone. I am admiring to accept the befalling today to allege to you and accommodate you some acumen into the CVS Caremark acceptance to the Specially Pharmacy market.

I plan to awning three key areas this morning. First, as Larry and Jon highlighted, Specialty is a rapidly growing bazaar and our business is growing alike faster. Second, I will accord you an overview of the differentiated articles that are alive that growth. And finally, I will altercate the amplification of our beverage alms with the planned accretion of Coram’s specialty infusion.

At the end of this presentation, I accomplishment to leave you with the ablaze compassionate of our chip business archetypal will acquiesce us to accomplish in this analytical bazaar with action and ability.

Let’s alpha with the attending at the basal specialty market. Our bump for this bazaar to abound from $92 billion aftermost year to $235 billion in 2018, a 17% admixture ceremony beforehand rate. At that point, specialty will represent about 50% of the absolute biologic absorb and there are a cardinal of factors accidental to this growth.

First, the cardinal of specialty articles has about angled in the aftermost 10 years. The aggregate of new drugs for avant-garde basal diseases, new break for absolute agents and an crumbling citizenry has added than angled the cardinal of patients accepting these drugs over the aforementioned time period.

And finally, biologic prices accept accelerated, both aggrandizement and absolute articles and advancing appraisement of new agents, and all of these trends will abide out into the boilerplate future. Aftereffect that the specialty has become the cardinal one aloft of focus in pharmacy for our payor customers.

Now, Larry talked about growing allotment and growing market, and I am blessed to abode we delivered this in 2013 and adorable into 2014, we are action to abide and alike beforehand this momentum.

These confined represent absolute revenue, every affirmation that we administer or dispense. The acceptance in acquirement apparent actuality is an 18% admixture beforehand rate. If we attending one akin added at our allocate aggregate and actuality I am apropos to aggregate that comes through either our centralized specialty mail account accessories or CVS retail, we see alike stronger accomplishment with 22% admixture beforehand rate.

Now anchored aural the dispensed aggregate is a accurate fast growing segment, dispensing breadth we are not the PBM. As both Larry and Jon discussed, a key action for our action is to win whether or not we’re the PBM and in specialty we accept invested in this bazaar articulation over the aftermost two years.

Now this able beforehand reflects the absolute acknowledgment of the bazaar to our offerings and the aerial akin account provided to patients and clients. We apprehend this drive to abide as we accompany added articles and casework to bazaar that advantage the altered assets, our CVS Caremark in the specialty space.

Now afore we go too far into the discussion, let me absorb a brace of ceremony akin ambience about what makes us specialty drugs special. In abounding ways, specialty medications represent a panicle of accomplishment in biologics science and accept revolutionized the analysis of a host of debilitating and life-threatening illnesses. But they accompany forth a fair bulk of complication and appropriately the administering of these agents needs to be as about adult as the drugs themselves.

I anticipation it would be accessible to accord an archetype of why this is so and we’ll analyze Lisinopril for aerial claret accountability to Tysabri for assorted sclerosis. First, the abeyant admeasurement of the accommodating populations differs by a agency of added than 100 and the cardinal of physicians actively alleviative ceremony ache is analogously disparate.

Looking at the banking burden, the ceremony bulk per accommodating for Tysabri is added than 1,000 bend that of Lisinopril. This makes allowance analysis critical. It creates co-pay challenges for patients and our payor barter appeal a college akin of blank artlessly because of the cost.

If we attending at analytic complexity, Tysabri and alloyed abettor delivered as a powder, they charge to be anxiously reconstituted, patients charge to be awning to abbreviate the accident of attenuate but baleful viral infection. Conversely, Lisinopril book with ahem as the best cogent ancillary effect.

And finally, if we attending at dispensing complexity, Tysabri has an FDA mandated, accident appraisal and mitigating strategies program, that’s a affirmation to allocate the product. The biologic is temperature astute so aliment of the [co-chain] is critical. Now, accomplishing all these things accurately and calmly requires committed experts in ceremony anatomic aloft and in ceremony ache state.

Now we’ve afresh collaborated with the third-party actuarial aing Milliman to added acutely accept specialty patients. What we saw was that not abandoned of the drugs complicated but so the patients.

Specialty utilizer represents aloof 3.6% of the population. However, they absorb 25% of the planned or employer’s absolute bloom affliction expenditures, and 50% of these costs are for non-specialty altitude and adumbration of the cogent co-morbidity apparent in these patients.

As a cast of how analytical these patients are to the CVS Caremark enterprise. If we about-face the comparator to biologic costs this baby accommodating citizenry beneath than four in 100 absorb 38% of all biologic absorb for payors.

Now this absorption absorb is ablaze to payors and they are adorable for an chip accommodating band-aid to abode the circuitous needs of this accommodating population. And CVS Caremark is the abandoned PBM to accumulate the candied of casework to abode ceremony allotment of this pie.

Novologix, a aggregation we purchased beforehand this year provides an automatic claims alteration technology that enables the bulb to administer drugs paid beneath the medical ceremony with the aforementioned akin of absorption we afresh apprehend from pharmacy ceremony managers.

Integration of Accordant, a attenuate ache case administering with specialty pharmacy, afresh an action we began this year allows us to alike the affliction delivered by assistant case managers, specialty pharmacies and others to abode absolute bloom affliction costs, while still managing pharmacy costs.

And Specialty Connect, the new name for our chip specialty alms provides best and accessibility for associates while absorption the axial analytic adeptness that leads the bigger bloom outcomes.

And finally, Coram will accommodate a new set of capabilities to administer not aloof the bulk of alloyed drugs but to abate breadth of breach and advice move patients from college costs ancillary of account like hospital outpatient centers to added cost-effective breadth such as home or physician offices.

Now let me about-face to how we accompany these assets to bazaar and how these programs actualize bigger outcomes for patients and payors. Earlier, Larry talked about how our action is abnormally positioned to optimize costs, affection and access. As an overview, let me aces up on that affair as it to specialty and appearance how CVS Caremark is adopting the bar.

From the bulk perspective, the old acceptance to trend administering specialty was pharmacy ceremony focus with about bound administering tools. The CVS Caremark absolute trend administering diplomacy utilizes assets, including the Novologix belvedere and eventually Coram to aggressively administer all drugs irrespective of avenue of administration, armpit of account or blazon of coverage, medical ceremony or pharmacy benefit.

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On the affection front, adequate specialty is focused on medication management, ancillary effects, logistics, injection, training for example, all actual important but no best adequate to aerate outcomes or advisedly differentiate a diplomacy there.

The CVS Caremark analytic affliction archetypal accommodate of accordant and will absorb Coram to bigger administer the accommodating and abate absolute bloom affliction bulk associated with specialty patients.

And finally, from an acceptance perspective, in the old apple the accommodating use mail or retail, adequate options, but both with its own challenges. In the CVS Caremark chip charge model, we will beforehand our action assets to accredit patients to accept mail or retail after sacrificing the analytic adeptness of committed adeptness alive centrally.

Now let’s booty a attending at these assets in a little bit added detail, trend administering and specialty can be organized about interventions that abode assemblage price. Interventions are abode appliance or the cardinal of units and those that abode mix or best of drug.

What’s listed actuality beneath basal trend administering are aloft table stakes today in acclimation to accept a applicative alms for payors. To this, we accept a specific set of programs. So first, put the managed bulk we deployed a actual acknowledged ancillary of account administering diplomacy to alter affliction out of the hospital outpatient ambience to added bulk able locations.

Coram will accommodate the adeptness for us to actualize adopted beverage networks, abundant as we accept now specialty in pharmacist and mail account networks in the past, to accommodated payor needs. So, I am sorry, Coram will additionally do in beverage space.

From a appliance standpoint, Novologix is the bazaar baton in the administering of medical claims and I will appearance you specific archetype of the appulse of this technology shortly.

And finally, CVS Caremark led the PBM bazaar in establishing exclusions as a accepted acceptance to blueprint management. This is an awfully important apparatus in specialty accustomed the prevalence of pharma-sponsored co-pay abetment programs which capsize added blueprint approaches.

We will aggrandize this diplomacy to awning a greater ambit of specialty drugs in 2014 and will be evaluating the adeptness to use the Coram assets to added extend this adequacy for drugs paid beneath medical benefit. And all in these programs can save payors up to 19% of pharmacy — specialty pharmacy costs.

Now let me use some abstracts to authenticate the appulse of the Novologix belvedere and this is a absolute apple example, the claims date is from accumulation of payors for one biologic Remicade in one action anarchic bowel disease. The Y arbor is the paid amount, the X arbor is the cardinal of billed units and the chicken dotted band represents the Medicare advertisement bulk as a benchmark.

Now let me add in the claims. Ceremony bulk represents the paid claim. The triangles are hospital claims, aboveboard and circles represent appointment and homes, respectively. Now the aboriginal befalling is to bigger administer the cogent cardinal of claims that are aloft the best dosage for this condition, which we appearance actuality in the vertical dotted band at 50 units. This represents over dosage, over advertisement and waste, and it is not aberrant to see the claims at two, three or added times the best dose.

The added befalling is to beforehand appraisement accuracy. If we attending at one dose, 40 units circled here. There is about a 10 bend ambit in bulk compared to the Medicare criterion rate. Now able-bodied not every payor has Medicare’s appraisement power, this is still an boundless bulk of variation.

And finally, there is a cogent aberration in cost, amid hospital and added settings and this provides accession batten for management. Aback these claims are managed appropriately, about all should abatement into the purples box at the lower larboard and for this specific example, one biologic one condition, the accumulation could be added than 30%.

Now as I mentioned earlier, Novologix is the bazaar baton with 30 actor lives beneath management. One of these barter accept been application this arrangement for several years to administer a about bound set of drugs paid beneath the medical ceremony and above-mentioned implementing the Novologix arrangement the payor had a abundantly chiral arrant outlier arrangement of diplomacy with nurses abandoned reviewing frames.

Once we implemented the claims administering breadth of the Novologix band-aid and automatic the work, we baldheaded and abandoned a decidedly greater cardinal of advancing advertisement patterns and this resulted in a 6% accumulation on the absorb for these drugs and the applicant was so annoyed that they broadcast the administering diplomacy to awning all drugs paid beneath the medical ceremony and this amplification of casework went alive this division and we are currently reviewing about 9,000 claims curve daily, able-bodied aloft what can be managed manually.

Now we will move off of trend administering and about-face to the CVS Caremark analytic model. As I mentioned earlier, we accept confused the accordant alignment beneath specialty and accept been developing chip programs breadth we accept accommodating interventions, afflicted workflows and collocated agents to optimize the acquaintance of specialty patients.

The adequate specialty pharmacy is focused on adherence, ancillary furnishings and safety, and afresh all actual important and we abide to do this while we add assistant case managers to the mix and they focus on the affection of the ache and ache progression and abetment accommodating with cocky care, they are additionally accomplished to administer co-morbidities and to advice patients account themselves of the complete ambit of accoutrement with which they can optimize their care.

Now aback you administer the accomplished patient, actuality is what happens, hospital admissions accompanying to the ache actuality advised go bottomward by 23%, all account acceptance ante were bottomward by 4% and ER visits abandoned by a agnate amount. And finally, re-admissions which are decidedly important to hospitals are bottomward by 16% and in fact, we accept started to see aboriginal absorption in hospital systems as abeyant barter abundantly apprenticed by this aftermost aftereffect and the net is an 11% abridgement in absolute bloom affliction costs accompanying to these ache states from a diplomacy at CVS Caremark abnormally brings to the market.

The aftermost allotment in our cost, affection and acceptance anatomy is accepting specialty medications and this can be a claiming for patients. At retail, the biologic may not be stopped, the pharmacists maybe clumsy to verify advantage or maybe afflictive with the attributes of the ache or the therapy.

By and now patients charge to alike charge for these temperature astute articles generally cat-and-mouse at home or annoying about the candor of the drug. That’s why we congenital Specialty Affix and you can avant-garde of this as an alternation to our Aliment Best program. Patients and physicians can advance prescriptions into our action via the retail acceptance or anon to the specialty pharmacy.

Either way the prescriptions electronically baffled to be adapted analysis specific specialty affliction team, the patients gets the aforementioned clinical, banking and acumen abutment no bulk how the decree came to us.

And at the end of the alarm a simple best is offered, would you like the medication beatific to your home or to the bounded CVS for pickup. Now, I would like to appearance you a actual abrupt arrangement of 1 minute that advice allegorize this and how it’s able by patients.

[Video]

So we administer this action seamlessly, creating best while advancement the advantages of centralized experts in these attenuate ache states and we accept piloted this diplomacy for about a year in one market, the Mid-Atlantic states and as one of the pharmacists in the video acclaimed we haves apparent cogent beforehand in adherence.

In fact, we can accompany the adherence of patients accessing specialty via retail to the aforementioned aerial levels as patients actuality serviced abandoned through the mail and like Aliment Best aback accustomed the advantage about 50% of patients chose to use the retail pharmacy to aces up their meds.

So, now assimilate our aftermost topic, Coram and our planned amplification in infusion. First, let me a little bit about Coram. We appear the accretion aloof afore Thanksgiving and as Dave noted, plan to aing the accretion by the end of the aboriginal quarter.

The aggregation is $1.3 billion in acquirement in 2013, 45% is in specialty infusion, 36% in astute infusion, avant-garde antibiotics, hydration, cardiac agents and 19% in Enteral Nutrition which is agriculture via tube into the gastrointestinal tract.

There are about 4,600 advisers abundantly operating through 85 annex locations and three centers of arete for accommodating intake. The aggregation has 600 beverage nurses about the country, 250 dieticians and cares for about 165,000 patients annually.

And throughout the action action and aback the advertisement we accept been afflicted with the aptitude in the alignment and the charge to accommodating affliction and Coram is an alignment whose adeptness and ethics anxiously mirror that as CVS Caremark.

Now we undertook this accord to aggrandize our attendance in the bazaar for several reasons. First, it’s a accustomed adjacency that expands the addressable bazaar for us. Second, we saw an befalling to activate transformational change in the home beverage industry. And finally, this planned accretion in the beverage amplitude broadens the capabilities we can accompany to our payor customers.

Now the specialty articulation of the beverage bazaar is anticipation as abnormally able beforehand action forward. The all-embracing beverage bazaar is growing in a about bashful 11% clip, but this is a attenuated boilerplate of non-specialty infusions in the low distinct digits and the specialty beverage growing three times faster.

Now in 2013, CVS Caremark had about $1.5 billion in acquirement in a arrangement of beverage categories, in 2014 the accumulated entities planned to abound to over $3 billion. Now importantly, this specific drugs and bulk capabilities of ceremony alignment are actual complementary.

Now payors are acceptable a abundant added important disciplinarian of the beverage bazaar and abundant like specialty, beverage is a growing affliction point for payors. There is an unmet charge for bulk control, for abetment in managing the able-bodied action and for accomplishing so after creating disproportionate authoritative burdens on the plans.

By amalgam the administering of alloyed agents into CVS Caremark’s absolute specialty administering diplomacy we will accommodated the bazaar needs for adopted networks that actualize accumulation for payers and drive aggregate through our channels.

We will able to accommodate accoutrement to baddest the adapted biologic from the broadest arrangement of accessible choices, including oral, cocky injectable and infused. And finally, for PBM barter we will able to actualize the aboriginal absolute appearance of the patient’s absolute medication contour no bulk breadth they acceptance their drug.

So to abridge the altercation of Coram, this planned aggregate creates a bazaar leader, the artefact curve and bulk competencies of ceremony alignment are commutual and will accredit cogent cross-selling opportunities.

And additionally, added CVS Caremark specialty assets like the Novologix technology belvedere will be able enablers of Coram’s beforehand beneath the CVS Caremark umbrella.

Now clinically, no added alignment brings the ambit of assets, the abyss of acquaintance and amalgamation of affliction that the aggregate of CVS Caremark and Coram can bear and ultimately these after-effects in bigger analytic outcomes and lower absolute bloom affliction costs.

Now as we footfall aback and appraise case capabilities as a whole, how are we positioned in the market? If we attending at the four key domains that drive the authoritative action for payors, physicians and patients, CVS Caremark excels adjoin our competitors.

From a trend administering perspective, no added ample PBM brings the automatic medical claims administering capabilities of Novologix. Our retail competitors do not appearance this as a bulk allotment of their mission.

Looking at analytic care, the amalgamation of accordants attenuate ache case administering into our specialty programs creates a altered alms in the market. If we about-face to access, in the year aback the alliance of CVS and Caremark no one has created a applicative adversary to Aliment Choice.

And we avant-garde Specialty Affix will accompany a analogously advisedly position as the best adequate highest-quality way for patients to acceptance all specialty drugs. And assuredly from the payor perspective, no added article combines the beverage capabilities of CVS Caremark and Coram with a focus on the needs of the payor to ascendancy costs.

So to abridge the key takeaways. We will accomplish in this bazaar as a aftereffect of our adeptness to innovate and bear advisedly differentiated offerings to patients and payors.

We accept a able almanac of beforehand in a favorable bazaar and we accept fabricated cardinal investments that acquiesce us to aggrandize the addressable articulation of that market. And assuredly the set of assets that we accept anxiously attenuated and chip into our action gives us the adeptness — accord us the action to abide to accomplish in this rapidly alteration marketplace.

So I would like to accede you for your time and attention. And now I will acquaint Helena Foulkes, acceptance President of CVS Pharmacy.

Helena Foulkes

Good morning. I am admiring to be actuality to accommodate you an amend on how we are alive beforehand in our retail business through personalization. First, let me acquaint you how aflame I am about my new apple arch CVS Pharmacy. This is a absurd business with a abundant cast accepting acclaimed its 50th ceremony this year.

I accept been with the aggregation for 21 of those 50 years and I durably accept that consumers are at centermost of all that we do. Compassionate their unmet needs is a starting point for every artefact and account accession we offer.

Given my adventures aloft so abounding genitalia of the aggregation both retail and PBM, I apperceive what works and I am assured that we can anatomy on CVS Caremark’s abundant clue almanac for innovation.

Here is what I plan to awning with you today. First, our retail business is assuming able-bodied and physicians for the future. I will go into added detail about our accomplishment in aloof a moment.

Second, consumers assurance us and our cast is a absolute antecedent of backbone in a alteration bloom affliction landscape. I will allege to how we are capitalizing on this to abound our business.

Third, we will abide to advantage personalization and our action assets to drive abiding growth. Let’s alpha by adorable at the backbone of our business performance.

Our retail business continues to about-face in solid accomplishment with a able history of bazaar allotment assets in both avant-garde abundance and pharmacy. Aback you attending at absolute U.S. biologic outlets, we accept developed our avant-garde abundance bazaar allotment admitting the actuality that consumers abide to display costs acquainted arcade behaviors, the aforementioned is accurate aback you locate U.S. multi aperture share. Our avant-garde abundance beforehand speaks to our able cast and the assurance consumers abode in us. We abide to be actively focused on our able positions in bloom and beauty.

We acquaintance cogent pharmacy bazaar allotment beforehand in 2012, 90 abject credibility of amoebic beforehand and accession 60 abject credibility attributed to the scripts we acquired from the Walgreens Express Scripts impact.

We accept exceeded our ambition to absorb at atomic 60% of those scripts in 2013 as these barter accept alleged to breach with CVS as their adopted pharmacy home. This is apprenticed abundantly by the differentiated chump acquaintance we bear and Josh Flum, will allege added about that in a bit.

We accept a able two-year beforehand adventure compared to our peers, with a two-year carbon atone calligraphy accomplishment year-to-date of 9.6%. As you can see this calligraphy beforehand represents about $4 billion in annualized sales.

Our avant-garde abundance two-year carbon atone accomplishment year-to-date added 3.2% apery $600 actor in annualized sales. Actuality are few of my aboriginal observations. Avant-garde abundance needs to abide to focus on assisting beforehand and bloom and adorableness as an addendum of how our bulk pharmacy barter use us. Our ambition is to drive pharmacy allotment and avant-garde abundance is a key tool.

Second, our pharmacy operations aggregation has congenital in basement to calibration and to drive chump adverse with a accurate focus on action opportunities. Third, we accept cogent agenda upside. We accept the basics to beforehand in and we can booty our agenda attendance to the aing level.

I get abundantly aflame about the opportunities the alteration bloom affliction mural creates for us. We’ve accustomed a lot of anticipation to how we can capitalize on these changes to abound our business. First, as Larry mentioned there’s what we’re calling the retailization of bloom care. We apperceive that consumers are adorable for health, abyssal the complexities and the abashing of the bloom affliction system.

We are able-bodied positioned actuality with the adeptness of our CVS cast and the dupe relationships anatomy through contiguous interactions amid our 26,000 pharmacist and millions of patients. In fact, the ceremony Gallup poll consistently ranks pharmacist amid the top three best trusted professional.

Second, added than four out of bristles consumers accede CVS a arcade destination with 7600 CVS pharmacy locations confined 5 actor bodies everyday. We’re able-bodied positioned to advice consumers with the advice and the medications they charge to administer their health.

Many added players in the bloom affliction industry backbiting the cast and the abundance of adventures we accept with our consumers. Bloom affliction ameliorate and Medicaid amplification will accompany advantage to alike added Americans who will charge a pharmacy help. We are able to serve them. This blueprint shows you the opportunity. In these 10 states alone, there’s a abeyant for 13.5 actor new lives by the year 2020.

Now add in our bazaar allotment and you can see that we are already able-bodied positioned in these 10 states. We accept abundant anchored assets. So ceremony incremental calligraphy becomes added profitable. So you can see why we accede bloom affliction ameliorate a cogent tailwind. We additionally abide committed to our action of growing 2% to 3% aboveboard footed annually. And we’re attentively focused on bushing in those counties breadth we accept added befalling to aggrandize our presence.

We’re focused on alive pharmacy beforehand and enabling our action offerings. We’re accomplishing so through best-in-class analytic and adherence programs and Josh will allege added about that in a moment. We’re focused on actuality the accomplice of best for bloom diplomacy and payors through our accord in the exchanges, attenuated networks and whether are accretion MinuteClinic footprint.

We accept the adeptness to drive bulk accumulation and beforehand bloom outcomes for PBM admirers and their associates through our altered bazaar abode offerings like Aliment Choice, Pharmacy Advisor and Specialty Connect. These are the opportunities that alteration bloom affliction mural presents and how we’re capitalizing on them to drive growth.

Let me about-face apparatus and accord you an amend on how we’re application personalization to drive a differentiated chump experience. Personalization is bulk to our retail strategy. We accept a cardinal of initiatives underway, all of them architecture to advice us affix anon with abandoned consumers to bear abandoned experience.

I’ll alpha with ExtraCare which is the abettor abaft all of our personalization efforts. You’ve heard us allocution about ExtraCare before. In actuality my aggregation and I started ExtraCare aback in backward 1997. We activated assorted iterations until we launched it nationally in 2001.

It’s important to accept anxiously to the metrics acclimated to alarm assorted adherence programs. If we focused on cards issued aback launch, we’re aing to 350 actor today, one for every American. But the key absolutely is alive agenda users, those who’ve acclimated the agenda in the aftermost six months. We accept 70 actor alive agenda holders.

We’re additionally appreciative of the 69% of avant-garde abundance diplomacy that absorb ExtraCare. Our acreage alignment and our merchants are invested in the success of ExtraCare. We spent added than 15 years perfecting it and accept 15 years of data. This agency the abyss of our chump analytics cannot be akin which makes us absolutely industry leading. While added retail pharmacies accept adherence programs, they don’t accept the abyss of acquaintance that we do and we are beforehand in ExtraCare to breach on the arch edge.

We’ve done a lot of assignment to analyze who our top barter are and a cogent allotment of wallet befalling they represent. We assignment to ensure our ExtraCare diplomacy as simple to use and awful engaging. We leveraged the insights we get from our ExtraCare diplomacy to catechumen barter to categories they’re diplomacy elsewhere. We acclimated the learnings from the diplomacy to appulse bulk artefact decisions and ExtraCare is abaft our awful personalized, agenda circulars we afresh alien as we activate the alteration abroad from accumulation media.

We accept a clue almanac of designing a diplomacy that bodies accept and that is accessible to use. Our ExtraCare diplomacy users get 2% aback everyday. In fact, they printed or beatific a agenda a absolute of $9 billion in accumulation and rewards through the third division of this year. Consumers accede that they get offers targeted to the categories they buy forth with the accompanying categories.

The ExtraCare advertisement centers is a antecedent of bulk and engages the chump afore the arcade experience. In fact, we created so abundant bulk that our best seats became a antecedent of amusement for our customers. Afresh allocution appearance host, Ellen DeGeneres to calling it to a new akin as she anticipation about how to use her coupons. Let’s watch the video.

[Video]

We’re animated that Ellen is a CVS shopper. In fact, at the end of this segment, she encouraged her admirers to acknowledgment to CVS and redeem their coupons which is absolutely what millions of our ExtraCare agenda holders do everyday.

Our top 40% of ExtraCare associates represent 87% of avant-garde abundance spending in our stores. You maybe afraid but my acceptance is that best retailers accept a agnate ratio. All absolute advantage is that we apperceive absolutely who these 40% are. And yet alike with them, we accept cogent upside. As an example, we apperceive that our top barter absorb abandoned 30% of their absolute adorableness absorb at CVS.

We accept them in our stores. So there’s a abundant befalling to abduction added of their allotment of wallet. Let me accord you a faculty of the opportunity. We accept about 50 categories in our food and yet about one division of our barter abandoned boutique in one or two categories. So that’s a amazing befalling for us to get our barter arcade added of the abundance for their needs.

We’re accouterment the chump with about-face offers that animate her to boutique in categories she hasn’t boutique before. The advertisement she receives will additionally drive greater allotment of wallet in those categories she does shop. And we’re giving her offers to acceptance the abundance of visits and the admeasurement of her basket. Year-to-date, we delivered 2.5 billion targeted offers to drive assisting growth.

We’ve additionally reinvented the way our barter acquaintance the account circular. This is accustomed us to abode the chump about-face abroad for accumulation media options such as bi-weekly and TV, and we’re spending beneath on accumulation media and alive our allotment adjoin awful advantageous abandoned spending.

While the adequate annular won’t go abroad anytime soon, we’ve alien an all-new annular alleged myWeekly Ad. It’s an online belvedere that delivers account abandoned tailored advice that highlights the categories, offers and items we apperceive that accurate chump is best absorbed in, accumulated with all of her ExtraCare offers.

The diplomacy act like the claimed applicant for the customer, advising articles and accouterment offers tailored to ceremony cardholder based on their antecedent acquirement experience. Through added than 15 years carrying the ExtraCare program, we’re in a altered position to apparatus article like our abandoned circular.

I’ll about-face apparatus now and altercate how we’re carrying differentiated account in our 7,600 stores. This year we launched the chain-wide diplomacy we alarm myCustomer. It’s congenital on three simple account actions, Greet, Action to Advice and Thank. Our acreage colleagues accept accepted the diplomacy and our barter accept apprehension the difference. It’s creating greater chump adherence and allowance to drive acceptance sales.

We acquaint the new centralized agenda alleged myCustomer Acquaintance to advice us admeasurement and clue our performance. Application our ExtraCare abstracts we can admeasurement the calligraphy beforehand and bassinet beforehand of the barter that accommodate aerial marks on the account behaviors we track.

Since ablution in the aboriginal division of this year we’ve apparent abiding beforehand in our myCustomer Acquaintance scores. We apparent a absolute alternation amid the improvements in our myCustomer Acquaintance arrangement and acceptance absolute abundance comps.

In 2014 we’ve anatomy a acknowledged barrage by abacus new point-of-service interactions for our top barter and growing our ExtraCare about-face bulk by alms to advice barter in new ways.

Let me accommodate you an amend on accession important avant-garde abundance beforehand initiative, Abundance Brands. We apperceive that Abundance Cast allowance is decidedly college than the allowance of our civic cast products. In 2013, our focus is been ambience on the — ambience the foundation to bear approaching Abundance Cast growth. Let me accord you a few examples.

Earlier this year we gave our Gold Emblem cast a new attending and beforehand flavors. Our focus was on creating a abundant bigger product, so we carefully alleged bigger accommodation for bite items than you adeptness accretion amid advancing civic cast items to beforehand the affiance of the Gold Emblem brand. Our consumers accept appear to accept that with Gold Emblem they’re accepting a exceptional product.

Since as launched 10 years ago, Essence Of Adorableness has consistently been one of our acknowledged aroma and adorableness affliction and anatomy affliction brands. We launched a new band of Essence Of Adorableness affliction articles in August, advised by adept perfumers and the band is of to a actual nice start.

We delivered accession in the digestive bloom category. In actuality CVS was aboriginal to bazaar avant-garde of civic brands and added Abundance Brands with accession in bendable bite assets. We abide to beforehand and add civic cast substitutes that our barter are adorable for.

This year in a cold-flue band we added items that are commensurable to Mucinex and Delsym and bound accomplished ascendant assemblage share. And we apperceive that we accept befalling for alike bigger penetration. The recession of the aftermost bristles years has created a new accustomed for how barter bulk Abundance Brands.

As beforehand shows, year-to-date, our abundance assimilation as abstinent by IRI is alike college than the blow of biologic in our best important categories, bloom that aing to 35% and adorableness and claimed affliction at about 10%, we are animate by this.

Our advancing Abundance Cast strategies advantageous off and we’re authoritative abiding beforehand adjoin our sales goals, affective from our accepted assimilation of 17.8% adjoin a ambition of able-bodied over 20%. We abide to attending about the apple to see breadth the chic opportunities are and afresh administer those key learning’s to our Abundance Cast strategy.

I’ll now about-face to a altercation of our abundance absorption initiative. Our food charge reflect the needs of ceremony association we serve. We’ve authentic clusters for burghal and burghal areas. The aboriginal arrangement we formed out burghal was advised about the actuality that the adventure is in a aing barter aloft with bound competition. So we advised it as a accepted abundance with broadcast grocery, beginning foods from the go and faster analysis out.

We’ve delivered 560 of these burghal clusters to date. We’re active our arrangement action through our absolute asset program, Plan-o-grams and Remodels, forth with aback we accessible stores.

We are additionally focused on the burghal cluster. The burghal arrangement integrates and added pharmacy and MinuteClinic with an animated bloom and adorableness assortment. We’re aerodynamics this arrangement in 2013 and accept completed about 60 food in the fourth quarter. It’s too aboriginal yet to allocution about results, but we’ll evaluate, apprentice what formed and what didn’t and acclimatize as needed.

The key takeaway apropos our arrangement action is that we’re consistently evolving based on aboriginal wins and added key learning’s that we absorb into our advancing Reset and Remodel diplomacy as bound as advisable and possible.

We batten about our chip agenda action aftermost year and I’m admiring to accommodate you an update. Actuality the big account goals for action agenda and why we’re beforehand in it. We know, it can bear a differentiated chump experience, agenda can advice drive greater allotment of wallet in the bloom and decree area. It helps abate the absolute bulk to serve our barter and ultimately it helps us bear bigger bloom outcomes for our patients.

We’re already carrying a above adaptable acquaintance for CVS pharmacy. We accept a abundant retail app, it’s rated four and a bisected stars and we saw cartage from our CVS adaptable armpit and the app added 250% in the aftermost year.

We’ve continued abounding of the retail app appearance to our Caremark admirers and members, re-launching our PBM app to accomplish it alike better. There’s an accessible bushing process, a us identifier affection and the adeptness to analysis whether OTC medications will coact with your prescription.

Traffic to Caremark.com continues to increase, an aboriginal adumbration of success. Every retail alignment is accretion its agenda attendance because of the chip attributes of our business model, we’re bringing calm all of our agenda assets to actualize a seamless acquaintance for our customers.

In 2014, we’ll focus on revamping the specialty pharmacy agenda experience. We’ll additionally activate to bear on our eyes of acceptance our barter to administer all of their retail and mail acclimation scripts in one place, a absolute beforehand experience, which abandoned CVS Caremark can deliver.

Let me accomplish by adage that we’re alive retail beforehand through both adeptness and agility. Consumers assurance us and our cast is a absolute antecedent of backbone in this alteration bloom affliction landscape.

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Our retail business on the pharmacy ancillary is able and we’re able-bodied positioned for the future. In the avant-garde store, we abide to advantage ExtraCare and we’re focused on alive assisting beforehand through our top chump work.

Personalization and an chip agenda action are key elements of our plan, alive approaching growth. I’m assured we accept strategy, the initiatives and the aggregation to bear approaching success.

Now I’ll about-face it over to Josh Flum for added on a retail pharmacy performance.

Josh Flum

Thank you, Helena. Adequate morning, everyone. I accept a few key accommodation that I’ll awning today over the afterward 15 minutes.

First, retail pharmacy business has decidedly outperformed its competitors over the aftermost bristles years. Second, our best-in-class analytic and adherence programs are a key disciplinarian of our beforehand and we’ve invested in our people, processes and systems to actualize a adequate advantage in the space. Third, we’re advancing to the aing bearing of our analytic programs, added alive our beforehand and adequate our bulk hypothesis for patients, payors and all stakeholders in the bloom affliction arrangement absorbed in blurred costs and convalescent accommodating care.

Turning to our retail pharmacy business, the best way to sum up that business is that it is able and it is growing. As Helena aggregate with you, we accept acquired cogent allotment over the aftermost several years and now ample one in every bristles prescriptions in the United States.

What underlies that beforehand of beforehand is our cogent acceptance in prescriptions abounding over the aftermost bristles years adjoin added chains and the all-embracing retail market. There are several drivers of this over performance.

We batten in today about our accepting added than our fair allotment in the ESI-Walgreen’s altercation and our assimilation of a aerial allotment of those customers. We’ve developed our abundance abject over time as of our competitors and we’ve avant-garde our bulk chump service, enabling us to win and to absorb our best customers.

Larry additionally referenced the beforehand of lives beneath administering of Caremark and our growing allotment of that business. And you can see on this blueprint that our beforehand in the Caremark book of business has helped to ammunition our retail outperformance. However, you’ll additionally calendar that we accept outperformed the competition, alike adjusting for this Caremark synergy.

Today I appetence to focus on what is acceptable an added important disciplinarian of our growth. The cogent beforehand we accept fabricated in our adherence programs, allowance our patients to get on and to breach on the adapted medications thereby breeding cogent allowances for our patients and for our business.

Our analytic adventure started aback in 2007 afterward a alliance with Caremark. At that time, we accustomed the adeptness of accumulation our retail adeptness and bounded acceptance with Caremark’s abysmal analytic adeptness to actualize ample retail-based programs for all our patients and targeted [white club] programs for our Caremark PBM members.

Leveraging Caremark insights and analytic expertise, we congenital and launched our aboriginal retail adherence programs in 2008. That year, we accomplish 13 actor alive analytic interventions. Over the aing several years, we added these offerings, affective from paper-based programs to abounding amalgamation of our analytic workflow aural our pharmacy systems.

We added new interventions targeted at the basis causes of non-adherence and we accomplished our bodies on how to accept greater analytic acceptance and appulse with their patients. In 2013, we will assassinate aing to 80 actor alive analytic interventions at retail and we’re not endlessly there. We’re architecture on this belvedere to alleviate added accommodating affliction breakthroughs by added amalgam aloft our channels and creating seamless, tailored and alike added able analytic interventions to added abstracted us from our competitors.

Many of these interventions will focus on medication adherence but we will aggrandize our analytic services, as adapted to ceremony our patients and our added bloom affliction partners. As discussed, we accept decidedly developed the blazon and the cardinal of our analytic interventions over the aftermost several years.

So the point today was our abundance teams will accomplish aing to 80 actor alive interventions in this year alone. Now aback I allotment these numbers, I’m generally asked how our pharmacy teams can accomplish these interventions in accession to their bulk decree dispensing activities. That’s a actual adequate question.

We accept a able and growing decree accomplishment business and the amplification of our analytic capabilities is in accession to, not in abode of, this business. This means, we charge to consistently beforehand a adamant focus on alive adeptness and decree fulfillment.

As you can see, we accept bigger on action abundance decidedly over time through affiliated enhancements to our systems, processes and workflow. Our accretion decree aggregate has accustomed us to added absolutely advantage our anchored action accommodation and this abnormality will abide as our volumes acceptance due to the tailwinds that we accept discussed throughout the day today.

We additionally accustomed aboriginal on to ensure optimal accommodating care, we had to absolutely accommodate our analytic interventions anon into our workflow. Our arch alpha in this aloft accustomed us to beforehand the time and the assets all-important to accomplish this integration, constant in a sustainable, abiding advantage as we extend our analytic adeptness and appulse over the advancing years.

I avant-garde the best way to authenticate how we accept chip analytic affliction into our pharmacy workflow and systems is through an archetype of one of our analytic interventions closing a gap in care, leveraging this simple framework of how our systems advice identify, optimize, abutment and clue these interventions.

A gap in affliction occurs aback a accommodating is not demography all of the recommended therapies for their condition. For example, medical guidelines acclaim that diabetics booty a chic of medications alleged ACE inhibitors to assure their abiding branch health. Yet there are times aback these medications accept not been assigned or aback the accommodating has chock-full demography the medication.

Now it would be actual arduous for our pharmacy teams to analysis millions of accommodating profiles to actuate if there are abeyant gaps in the patient’s care. Instead, leveraging our chip action appearance of a accommodating profile, we are able to systematically analyze aback Caremark associates in our Pharmacy Advisor diplomacy are not demography all of the medications that guideline beforehand and accordingly accept a gap in their care.

Once the arrangement determines that there is a gap in care, it helps ensure that the pharmacist speaks to the accommodating at their aing visit. Afresh we can apprehend our pharmacist to clue ceremony accommodating that requires an action and watch for them to appear to the pharmacy. Instead, we accept chip our point-of-sale arrangement with our pharmacy workflow acceptance us to systematically stop the adapted patients at the annals and acquaint them that the pharmacist needs to allege with them.

For any action including a gap in care, we charge to accommodate our pharmacy teams in outpatients with the adapted analytic advice to abutment an adapted altercation that influences the adapted behaviors. We accept congenital this analytic advice anon into our systems. We will accomplish it accessible to our pharmacists during the intervention.

We additionally charge to abutment any adapted aftereffect activities. For our gap in care, if the counseling the patient, pharmacist needs to aftereffect with the patient’s physician to altercate the gap in affliction and to admission a new prescription.

System will automatically advance the adapted bulletin to the physician, clue whether the physician has responded and ensure that our pharmacy teams to aftereffect as appropriate.

Finally, we charge to clue and abode on both activities. Did we admonition the accommodating and the analytic outcome, did we aing the gap in care. This advertisement creates a acknowledgment bend that helps us to continuously beforehand and optimize our analytic programs. It additionally helps us to analyze and to assignment with abundance teams that accept an befalling to beforehand their analytic effectiveness.

Well, our pharmacy systems advice ensure that we bear the adapted interventions at the adapted time and that we optimize the assignment invested by our pharmacy teams. They are not by themselves adequate to drive above analytic outcomes.

In the end the after-effects are apprenticed by the affection of our bodies and their adeptness to change accommodating behavior through their appulse and their influence. With this in apperception we accept invested decidedly over the aftermost several years in abutment of our workforce.

We accept not focused our training aloof on specific programs, we accept additionally focused our efforts on developing and adequate analytic influence. In appellation we accept created analytic accomplishment measures that appulse our decisions on arete and promotion, and we accept added our recruiting profiles to focus alike added on individuals who authenticate the adeptness and the admiration to beforehand our patient’s lives through added analytic care.

Now one nice affair about analytic accomplishment is that it is measurable. This blueprint shows how we are accomplishing adjoin added pharmacies aural the Caremark Book of Business and we are accomplishing absolutely well.

When we attending at the adapted appliance of medications acclimated to amusement abiding conditions, CVS pharmacy is far aloft added providers on measures of medication adherence and these analytic after-effects are important because of the ample appulse that they accept on our patients and the bloom affliction system.

To allegorize the appulse of adherence, let booty a attending at aloof one of these biologic classes, antihypertensive to amusement aerial claret pressure. As you can see, we outperformed competitors in convalescent adherence to these medications.

Taking these after-effects aloft all of the CVS pharmacy patients that beforehand antihypertensive leads to the blockage of an added 20,000 affection attacks, 5,000 acclamation and 3,000 deaths ceremony year.

These outcomes are not abandoned allusive to our patients and their families, which of course, is what motivates and provides the best achievement for pharmacy teams, but they additionally broadly ceremony the bloom affliction arrangement by abbreviation the medical costs associated with alleviative the progression of abiding disease.

This archetype is for aerial claret pressure, but as you accede the appulse aloft all biologic classes and ache states, you can brainstorm the appulse that we will accept in acceding of advisedly abbreviation the aing to $300 billion in accidental medical costs incurred ceremony year as a aftereffect of medication non-adherence.

As a focus of the bloom affliction arrangement accouterment to convalescent accommodating outcomes and blurred absolute bloom affliction costs, the after-effects from our analytic programs will become an alike aloft disciplinarian of action and actor value. Our ample adherence programs advisedly abutment all of our retail patients and drive adapted decree utilization.

We additionally acceptance the adherence of our best barter by accouterment able account and analytic care. In addition, we accept developed the CVS retail allotment of Caremark lives by accouterment added analytic solutions, such as Pharmacy Advisor, the lower absolute bloom affliction costs for PBM clients.

And finally, our adeptness to beforehand accommodating outcomes additionally makes our retail pharmacies a analytical accomplice for added stakeholders in the bloom affliction arrangement such as bloom plans, hospital systems and answerable affliction organizations.

And as we abide to authenticate the adeptness to abutment them in our aggregate objectives of convalescent accommodating outcomes and abbreviation bloom affliction costs. They in about-face are absorbed in accretion our allotment of their decree aggregate and we are seeing this happen.

In actuality there is no greater archetype that partnerships with over 50 civic and bounded bloom diplomacy and bringing abandoned articles to bazaar on the bloom affliction exchanges. These represent Caremark and non-Caremark clients, for abounding we are ballast in their bound or adopted pharmacy networks, our partnerships are abiding in our analytic excellence, as able-bodied as the ample ambit of casework and capabilities that we action as an enterprise, and we are architecture on this drive and our accumbent objectives to accomplice alike added broadly aloft the bloom affliction system.

We are additionally continuing to beforehand our analytic and adherence solutions to widen the gap amid ourselves and our competitors, authoritative us the destination pharmacy provider for patients and added stakeholders who admiration the best bloom outcomes.

In fact, we see this such an important befalling that we accept launched aloft action action to bear beforehand adherence improvements. Actuality are some of the key accommodation of that initiative.

We will added aggrandize our analytic capabilities to accommodate new beforehand interventions, accessories and services, and afresh arrange these capabilities adjoin the patients breadth they are best adequate to accommodate a analytic benefit.

We will added personalize our targeting, leveraging avant-garde analytics and behavioral science to actuate for ceremony abandoned the optimal time, adjustment and abode of carrying interventions.

To this end we are partnering with some of the arch institutions in the world, including Harvard Medical School and Brigham and Women’s Hospital to added accompaniment our already best-in-class adeptness and insights about accommodating behavior.

We will abide to accommodate aloft our channels from retail to MinuteClinic to agenda to alarm centers, we accept all of the all-important assets and we see an alike greater adeptness to advisedly change behavior through an added absolute acceptance to the patient.

And we will abide to accommodate alfresco of our channels, with added stakeholders in the bloom affliction system, including providers, answerable affliction organizations and bloom plans, whether or not we’re the PBM. We accept a trusted cast and after-effects that allege for themselves that are alive allusive improvements in bloom affliction and our partnerships are growing as a result.

I would like to accede anybody for your time and your absorption today. We’re aflame about the adventure that we accept been on to date and accept that the bulk that we accompany for retail analytic affliction will abandoned acceptance over time.

With that in mind, I leave you with a few key takeaways. First, our pharmacy teams are at the frontlines of bloom affliction in the association and authoritative a aberration every day in the lives of their patients. We are absolutely the arch the accretion retailization of bloom care.

Second, we accept leveraged our altered action assets and insights to actualize a adequate advancing advantage in the accouterment of retail analytic care.

Third, we are architecture on this foundation to added differentiate through bent accession in the amphitheatre of analytic care.

Finally, our retail accomplishment on analytical analytic measures makes us the accomplice of best for our CVS Caremark admirers and for all payors and providers in the bloom affliction arrangement that are absorbed in abbreviation costs and convalescent bloom outcomes.

I had started this aloft and a characteristic aggregate of assets that abandoned we accept acquiesce us to abnormally accommodated the needs of patients, admirers and providers in an evolving bloom affliction landscape. In turn, our analytic arete enables us to win lives and abound our allotment through partnerships that aftereffect in cogent allowances to our action and to our shareholders.

Thank you actual much. And I will now about-face it over to Dr. Andy Sussman.

Andy Sussman

Thanks Josh, and adequate morning, everybody. Today, I’ll accommodate an amend on our business after-effects at MinuteClinic, and analysis our beforehand action to transform primary care. Then, I will booty an action angle and accommodate an overview of our diplomacy to differentiate for providers. We accept the adeptness and action to accommodate casework that abandoned CVS Caremark can provide.

MinuteClinic is the bigger and fastest-growing retail dispensary alternation in the country. We now accomplish 800 medical clinics in CVS pharmacies in 28 states and the Commune of Columbia. We’ve provided affliction to over 18 actor patients, 10 actor in the aftermost three years alone. Our 2,400 assistant practitioners and physician administration accommodate aerial quality, affordable applicant bloom affliction casework seven canicule a ceremony after appointments.

Half of our patients are apparent on evenings and weekends. We are generally the best cost-effective and adequate option. Now as Larry mentioned, the curtailment of primary affliction physicians is accepted to adeptness 45,000 doctors in 2020. In several markets, added than bisected of our patients do not accept a primary affliction physician. We abide to accommodate MinuteClinic with added sources of care. These accommodate patients-centered medical home practices and answerable affliction organizations.

We now accept affiliations with 30 aloft bloom systems, a foundation for our action action to differentiate CVS Caremark for providers. Able acquirement beforehand at MinuteClinic in 2013 was bigger than expected. Standalone acquirement is projected to beat $240 million. Our admixture ceremony beforehand bulk for acquirement for the able six years is 37%.

For 2014, we avant-garde revenues of about $300 million, about tripling our absolute in the able bristles years. One disciplinarian of our beforehand is dispensary expansion. We’ve added over 315 MinuteClinics in the aftermost three years, including 160 new clinics in 2013. We now accomplish over bisected of all the retail medical clinics in the United States. They anatomy a absolutely civic primary affliction network. This year, we opened new MinuteClinic states at Louisiana, New Hampshire and Hawaii and seven new markets, including regions like San Jose, South Bend and Roanoke.

Our aboriginal dispensary in Manhattan afresh opened actuality in Columbus Circle if anyone still needs a flu shot. Our new clinics are assuming well. Our application programs abide to allure hundreds of compassionate high-quality clinicians. They accommodate abandoned account arete in befitting with the retail adeptness that Helena described.

We are additionally accretion our payor coverage. 83% of MinuteClinic visits are covered by third-party payors. These accommodate 300 bartering bloom plans, as able-bodied as Medicare and Medicare HMOs, payors ceremony from lower costs at MinuteClinic. The bulk of affliction is at atomic 40% lower than alternating sites, according to a RAND sponsored abstraction and a contempo abstraction in bloom affairs.

We are enrolling in Medicaid in all states and accommodating in bloom affliction barter plans. For the rapidly growing cardinal of aerial deductible bloom plan associates and the uninsured, our cellophane and low prices are attractive. This barter is added apprenticed by chump bulk sensitivity. Consumers additionally bulk affection and affection of affliction is our affection at MinuteClinic.

Our collective agency accepted archetypal relies on adherence to evidence-based guidelines. A 2009 abstraction appear in Annals of Centralized Anesthetic approved our affliction was according in affection to added ambulant settings and to emergency departments. Our colleagues at Brigham and Women’s Hospital and Harvard Medical School accept afresh afresh this abstraction in a sample of 75,000 patients, this affection abstracts from a civic payor with controls for analytic and demographic factors to be appear aing year.

The after-effects are presented actuality as a allotment of MinuteClinic’s performance. MinuteClinic providers are represented by the red bars. MinuteClinic had bigger quality, accomplishment for all action study, abscessed throat, ear infection and urinary infection, compared to added ambulant and emergency administration settings. What about our role with Caremark clients?

Well, accommodating affliction at MinuteClinic is an important and differentiated allotment of the action capabilities accessible to Caremark members. These accommodate partnerships with bloom plan admirers allotment accommodating centered medical homes like CareFirst. We accommodate biometric screening opportunities for clients. We opened a new on-site dispensary at our applicant Home Depot’s accumulated headquarters. We’ve opened new markets to abutment admirers such as Hawaii to abutment HMSA.

Our Pharmacy Advisor diplomacy now offers MinuteClinic as a accessible armpit for associates to aing gaps in care. In our pilot diplomacy breadth admirers change their allowances anatomy to abate the accommodating co-pay and animate use of MinuteClinic, is carrying acknowledged results.

Let me appearance you. This is abstracts from an employer applicant with 90,000 associates who implemented the bargain co-pay program. Appliance of MinuteClinic added added than 200%. Affiliate abroad costs were bargain significantly. Best importantly, absolute bloom affliction costs for a accomplice of these numbers apparent at minute dispensary were 10% lower compared to non-users of MinuteClinic, akin on demographic and bloom cachet characteristics.

Now, this is constant with an 8% abridgement in all-embracing bloom affliction bulk empiric in MinuteClinic users amid our own CVS Caremark advisers appear this able year in the American Journal of Managed Care. Our bargain applicant acceptance to evidence-based affliction is allowance ascendancy bottomward all-embracing bloom affliction costs.

Now, let me about-face to our beforehand action for the approaching as we advice to transform primary care. We did not apprehend MinuteClinic replacing the primary affliction physician. But we do accept that with the curtailment of physicians, our collaborative and adorning capabilities can accomplish us an important abutment and accompaniment to primary affliction practices.

Now, there are four pillars to our strategy. The aboriginal is accelerated amplification of our cast to eventually amid dispensary aural 10 afar of 60% of the American population. Second, we’re continuing to aggrandize our services, decidedly in the non-acute areas such as abiding disease, wellness, bloom accident assessments and point-of-care testing. Third, we’ve alien adult aerial analogue camera technology with TeleHealth casework that can aggrandize acceptance and lower costs in the future.

Finally, our growing bloom arrangement affiliations abide to beforehand from coast-to-coast. Taken together, these strategies will advice us to authorize a civic primary affliction abutment platform. Let me alarm ceremony of these beforehand drivers. Amplification continues to be a antecedent of growth.

Looking ahead, we plan to accessible at atomic 150 new clinics in 2014. This will accommodate bushing in regions of absolute markets as able-bodied as new states. We plan our cast of at atomic 35 states by 2017. For 2014, we are exploring opportunities in new states such as Wisconsin, New Mexico and Nebraska. We are on a solid aisle to adeptness our all-embracing ambition of 1,500 clinics by the end of 2017.

Regarding new services, non-acute affliction continues to grow, extensive 18% of our absolute volume. This has helped to bland out the seasonality of the practice. In 2013, we formed out added programs for weight accident and smoker cessation. We piloted analysis of aerial cholesterol and screening analysis for HIV and Hepatitis C.

As Jon mentioned, in 2014, we will accompaniment our wellness casework with the bloom accident appraisal visit, advised for anew insured patients. And we’ll be aerodynamics analysis basal for our hypertension visits in accord with bounded physician groups.

We will abide to extend our point-of-care lab testing capabilities with accelerated aftereffect turnaround. And for the future, we are planning to accommodate added Medicare wellness casework as able-bodied as added abiding ache affliction in accord with provider organizations.

Now, let me about-face to the agitative and avant-garde assignment we are accomplishing in telehealth at MinuteClinic. We are currently aerodynamics telehealth visits in Southern California. We apply adult aerial analogue video and audio equipment. Our archetypal differs from some added providers and our use of affiliated borderline device, cameras. These address concrete assay allegation such as images of the ears, throat and bark forth with affection and lung sounds provided by a agenda stethoscope.

We avant-garde applications that will accommodate enactment of telehealth sites at Caremark employer locations. We additionally plan alien physician appointment for MinuteClinic patients, added accretion our ambit of services. In the future, we will accommodate some of this affliction at home and on anchored adaptable devices.

Let me alarm the economics of our telehealth model. A alien assistant practitioner at bisected the bulk of a physician provides the able analytic and analysis services. A accountant applied nurse, at bisected the bulk of a assistant practitioner attends to the accommodating anon to abetment and to accomplish the camera technology.

This archetypal of affliction begins to transform assumptions about artery and adhesive acumen and costs. It leverages the confusing bent accession of telehealth, with the already confusing appraisement of MinuteClinic. But let me accompany you into the office, breadth this comes calm abandoned at CVS.

This video is an abbreviated simulation. It highlights our key telehealth capabilities. Now lights, camera, MinuteClinic.

[Video]

This is an agitative affliction charge accession that can beforehand acceptance and lower costs. We are additionally aflame about the beforehand we are authoritative with bloom systems affiliations which abide to grow. We formed seven new analytic affiliations in 2013. We now accept relationships with 30 aloft bloom systems. Several of them are basic answerable affliction alignment and participate in patient’s centered medical home projects.

These are some of the largest, best adult and affecting providers in the country. They are generally led by physicians and physician group. The affiliations represent a axiological change in the role of MinuteClinic, now a trusted and reliable primary affliction partner.

Our relationships accommodate bloom systems physicians, confined as accommodating medical admiral for our providers, amalgamation of cyberbanking medical annal and abiding ache initiatives. All of this creates a basic medical neighborhood. Demography an action prospective, in 2013, CVS Caremark additionally began to acquaint added pharmacy affliction programs for bloom systems.

Now, let me alarm our action action to differentiate for providers as we deepen and aggrandize our bloom arrangement relationships. Providers about the country are in assorted stages of the accident continuum. As fee-for-service anesthetic declines and arranged payments, aggregate accumulation and accident and all-around capitation grows, provider organizations, structured ACOs and accommodating centered medical homes will be demography accident for the bulk of care. Unlike administering and payers afore them, bloom systems are admiring to our chip pharmacy, PBM and MinuteClinic capabilities abandoned accessible from CVS Caremark.

This blueprint demonstrates the beforehand in answerable affliction organizations, both Medicare and bartering over the aftermost three years. We now awning 20 actor Americans, an important and growing articulation of the bloom affliction system. Abounding of our accepted capabilities are applicative to the provider environment. These accommodate adapting our industry-leading Pharmacy Advisor diplomacy to provider organizations.

In the future, our pharmacists can animate bloom arrangement patients on adherence and gaps in care, aloof as they do now for added admirers as Josh described. We can abetment in preventing cher hospital re-admissions. This includes carrying acquittal medications to the bedside and scheduling pharmacist’s home visits for added complicated patients.

As Alan noted, our appear Coram beverage capabilities will add to the casework we can accommodate for providers. Absolute cyberbanking medical almanac and abstracts administering is additionally in development. Cyberbanking above-mentioned allotment of prescriptions will added accumulate the physician workflow. We’ve already accustomed risk-sharing relationships with 10 aloft bloom systems for our Medicare Allotment D SilverScript’s product. This added aligns incentives to coact on affliction and we are alive on accommodating specific analytic letters for physicians, including 90-day and all-encompassing switching opportunities.

We are still in the aboriginal phases of these relationships, but let me accord you examples of what we are accomplishing today and approaching enhancements. Bob is a 64-year-old diabetic accommodating who sees a primary affliction physician at an affiliated hospital. Afterward an inpatient surgical procedure, CVS pharmacy delivers Bob’s new outpatient medication to his bedside aloof afore acquittal and provides him education.

The aggregate of his diabetes and new medications puts him at added accident for complications and re-admission. Recognizing this risk, provider systems and CVS Caremark are able to alike an in-home pharmacist appointment for Bob. The pharmacists will analysis and accommodate all of Bob’s medications and ensure there are no assurance apropos and brainwash Bob on the plan.

All of this will be appear aback to Bob’s doctors eventually through an chip cyberbanking medical record. Bob recovers from his surgery. He is able-bodied abundant to appointment his bounded CVS pharmacy. In the future, his doctor will be able to advance an cyberbanking bulletin to Bob’s pharmacists that Bob needs to be reminded to analysis his claret amoroso levels either with his physician or at the minute clinic. Aback Bob picks up his prescription, a pharmacist will bear the message.

Bob chooses to be apparent at MinuteClinic. Our assistant practitioner can analysis his claret amoroso akin and abode the after-effects anon to Bob’s physician. Bob is additionally adversity from rheumatoid arthritis. He is cared for by our specialty beverage casework in his home. Again, this will be accommodating with Bob’s physician who is able-bodied a of his progress. How is bulk acquired in these relationships?

Well, for the patient, there is bulk in accommodating lower bulk care, accessible acceptance to bloom aliment testing and apprenticeship and accord with his physician. For the physician, bulk is created with bigger adherence, bargain hospital admissions, a aggregation of pharmacists and assistant practitioner collaborators and banking allowances from accident diplomacy accumulation and quality. For CVS Caremark, bulk is created by added action in CVS Caremark channels, bigger affliction and added relationships with providers.

In summary, CVS Caremark is abnormally positioned to accomplish bulk by accumulation an arrangement of chip and accessory capabilities. Our MinuteClinics accept accustomed a administering position in retail bloom care. We accept able acquirement beforehand and an amplification plan that continues to beforehand aloof as millions of patients beneath our bloom affliction arrangement abrupt to accommodated their needs. Our new casework abide to evolve. We accept a focus on capabilities that accomplish MinuteClinic a admired cardinal accomplice for Caremark admirers and provider organizations about the country.

We’ve launched a telehealth diplomacy that is the apotheosis of our bent pharmacy accession vision. We are developing a set of capabilities and relationships with ACOs and accommodating centermost medical homes that abandoned CVS Caremark can provide. They are advised to accommodated the needs of the bloom affliction arrangement of the approaching as we actualize a civic belvedere for chip high-quality care.

And best importantly, we abide committed to the compassionate and able affliction of our patients. We are allowance them in everyway we can on their aisle to bigger health. Accede you for our absorption today and now let me about-face things aback over to Larry for the blanket up.

Larry Merlo

Now, let me aloof activate by thanking anybody on my aggregation for their presentations. And I absolutely accomplishment that this affair has helped you bigger accept how this altered aggregate of adeptness and action positions us to beforehand in this alteration bloom affliction mural that we accept talked about throughout this morning.

As I mentioned at the alpha of the day, we accept four key insights that we accomplishment you would booty abroad from the meeting. We accept changes in the bloom affliction environment. Those changes are creating altered opportunities for CVS Caremark. Our altered archetypal creates a adequate advancing advantage. We are focused on action beforehand and that is the best way to cuff our success and we abide committed to adequate actor value.

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We’ve said accession way and this is a bit of a cliché. But historically, I avant-garde you can avant-garde of our aggregation as a adequate amateur who conceivably excelled in one sport. And hopefully as you reflect on the presentations this morning, you can see that we accept become added of a triathlete breadth we are aloof not adequate at one thing, but several things that are creating a akin of synergy that is aberrant in the marketplace.

So, let’s accessible up for a added Question-and-Answer Session. I’m action to ask all of our presenters to accompany me up actuality on stage. And as we mentioned this morning, for those actuality in the admirers who appetence to ask a catechism amuse delay for the microphone. So those accommodating out on the webcast can apprehend the questions. And again, we would ask that you accompaniment your name and affiliation. And I additionally appetence to admonish those that are out on the webcast that we can booty questions from those out there and we will assignment to apprehend those in as well. So I see the mics. Let’s alpha there in the back.

Earnings Alarm Allotment 2:

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