Profile: Coventry Health Care, Inc. (CVH)

Coventry Health Care, Inc., incorporated on December 17, 1997, is a diversified national managed healthcare company based in Bethesda, Maryland, operating health plans, insurance companies, network rental and workers’ compensation services companies. Through the Company’s Commercial Business, Individual Consumer and Government Business, and Specialty Business divisions, it provides a range of risk and fee-based managed care products and services to a range of individuals, employer and government-funded groups, government agencies, and other insurance carriers and administrators. On February 13, 2008, the Company completed its acquisition of Mental Health Network Institutional Services, Inc. (MHNet), a mental-behavioral health company based in Austin, Texas. On May 14, 2008, the Company completed its acquisition of a majority ownership interest in Group Dental Services (GDS), a dental company based in Rockville, Maryland. In July 2009, the Company announced that it has completed its previously announced divestiture of First Health Services Corporation (FHSC) to Magellan Health Services, Inc. In February 2010, the Company announced that it has completed its previously announced acquisition of Preferred Health Systems, Inc., a wholly owned subsidiary of Via Christi Health System, Inc.

The Commercial Business Division provides products to a cross section of employer groups of all sizes, including health maintenance organization (HMO), preferred provider organizations (PPO), and point of service (POS) products. The Company also offers commercial management services products on a self-funded basis where it performs administrative services only (ASO) for a fee. It offers consumer-directed benefit options, including health reimbursement accounts (HRA) and health savings accounts (HSA).

The Individual Consumer and Government Division provides health benefits to members participating in the Medicare Advantage HMO, Medicare Advantage PPO, Medicare Advantage Private-Fee-For-Service (PFFS), Medicare Prescription Drug, and Medicaid programs and receives payments from federal and state governments. The Medicare Advantage and Medicaid products offered through its health plans are risk products. This division also provides fully-insured managed care services on an individual basis and also offers products and services more specialized to the needs of state governments, such as pharmacy benefit management and clinical management.

The Specialty Business Division provides workers compensation managed care services on a fee-based basis, with products including access to its provider network, pharmacy benefits management, field case management, telephonic case management, independent medical exam and bill review capabilities. Additionally, this division offers provider network rental services through a national PPO network to national, regional and local third party administrators (TPA) and insurance carriers. This division also includes the Company’s mental-behavioral health benefits business and its dental benefits business. The Company also operates local health plans that serve 23 markets, primarily in the Mid-Atlantic, Midwest and Southeast United States. Its health plans are operated under the names Altius Health Plans, Carelink Health Plans, Coventry Health Care, Coventry Health and Life, Group Health Plan, HealthAmerica, HealthAssurance, HealthCare USA, OmniCare, PersonalCare, Southern Health, Vista and WellPath.

The Company’s health plans offer a range of managed care products that fall into both the Commercial Business Division, and the Individual Consumer and Government Business Division. Its health plan Commercial products include traditional HMO, PPO, and POS risk products, as well as self-funded products. In selected markets, its health plans participate in Medicaid and Medicare Advantage programs. The Medicare Advantage and Medicaid products offered through its health plans are risk products.

Commercial Business Division

The Company’s health plans offer employer groups a range of commercial risk products, designed to meet the needs and objectives of a range of employers and members, as well as to comply with the regulatory requirements in the markets where they operate. Its health plan HMO products provide health care benefits to members, including ambulatory and inpatient physician services, hospitalization, pharmacy, mental health, ancillary diagnostic and therapeutic services. Its health plan risk-based PPO and POS products also provide managed health care benefits to members, but allow members to choose their health care providers at the time medical services are required.

The Company offers stop-loss insurance to enable it to serve as an integrated, single source for the managed care needs of its self-insured clients. Stop-loss policies are written through its wholly owned insurance subsidiaries and can be written for specific and/or aggregate stop-loss insurance.

The Company’s health plans offer management services and access to their provider networks to employers that self-insure their employee health benefits. The management services provided under these ASO arrangements typically include medical claims administration, pharmacy benefits management, utilization management and quality assurance. Other features provided to fully insured customers (such as value-added wellness benefits) are most commonly also extended to ASO customers. It also offers its managed care and administrative products to businesses with locations in several states that self-insure the health care benefits of their employees.

The Company provides services to plans in the Federal Employee Health Benefits Program (FEHB Program), which is an employer-sponsored group health program in the United States. It provides claims administration to group health clients who purchase its managed care services. The Company offers a pharmacy benefit management program through the use of a third-party administrator. It provides clinical programs, including utilization review, case management and disease management through an internal staff consisting primarily of allied health professionals, registered nurses and physicians.

Individual Consumer and Governmental Business Division

As of December 31, 2008, the Company’s health plans operated 10 Medicare Advantage coordinated care plans in 10 states. The Centers for Medicare and Medicaid Services (CMS) pays a county-specific fixed premium per member per month (PMPM) under its health plan Medicare contracts. Its Medicare Advantage line of business covered 380,000 members as of December 31, 2008. The Company also offers PFFS plans in 50 states plus Washington, D.C. and Puerto Rico under the name Advantra Freedom.

The Company’s Medicare Part D plans are marketed under the brand names of Advantra Rx, First Health Premier and First Health Secure. Certain health plans of the Company offers health care coverage to Medicaid recipients in eight states which, as of December 31, 2008, covered 371,000 members. The individual health plans offer long-term major medical and high-deductible products to individual consumers.

The Company’s Medicaid/Public entity (Public Sector), provides state Medicaid agencies and other government funded programs with the clinical, administrative and technological tools needed to manage their health care, pharmacy, mental health and long-term care programs. Public Sector pharmacy benefit management (PBM) program manages pharmacy benefit plans for Medicaid programs, state senior drug programs and state-funded specialty programs. Its Public Sector Health Care Management program provides quality of care evaluation, utilization review and long-term care review services to Medicaid programs, state mental health agencies and other public sector health care programs.

Specialty Business Division

The Specialty Business Division offers Workers’ bill review, Care management services, field case management, telephone case management independent medical examinations, and pharmacy bebefir management . The bill review system provides national and multi-regional workers’ compensation clients with a system to integrate and manage their workers compensation medical data. The care management services segment focuses to promote appropriate healthcare access and utilization by performing services designed to monitor cases and facilitate the return to work of injured or ill employees who have been out of work, receiving healthcare, or both, for an extended period of time due to a work-related or auto incident or disability.

The Company provides field case management services for workers’ compensation cases through case managers working on a one-on-one basis with injured employees and their healthcare professional, employers, and insurance company adjusters. The telephonic case management services consist of telephonic management of workers’ compensation and auto injury claims, as well as short-term disability, long-term disability, and employee absences covered under the Family and Medical Leave Act. It also provides its customers with access to healthcare professionals who perform independent medical examinations to evaluate the medical condition and treatment plan of patients. It also provides independent medical examination services primarily for the occupational healthcare, disability and auto industries.

The Company’s offers its national PPO network and other managed care products to national, regional and local TPAs and insurance carriers. It also operates in the managed behavioral healthcare industry and provide mental health and substance abuse treatment to enrollees of health insurance companies, HMOs, PPOs and employer groups throughout the United States. These services are provided through MHNet, a company based in Austin, Texas. The dental services include insured plans for all size groups, a full-service dental third-party administrator specializing in private-label programs and a full suite of discount products. These services are offered through Group Dental Services (GDS), a company based in Rockville, Maryland.