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Consumer-Driven Health Care: Medtronic?s Health Insurance Options/ Benefits Analysis and Presentation

In June, Dave Ness, vice president of Compensation and Benefits of Minneapolis-based
Medtronic, was wrestling with the decision about the health care insurance choices he should offer
employees next year. He had launched Definity Health, a new program, two years ago, on an
experimental basis. Definity Health, also Minnesota-based, was founded to offer a new kind of
consumer-driven health plan. Unlike many other health insurance plans, it was consistent with
Medtronic?s human resource and business strategy of encouraging consumer-driven health care.
Definity Health?s plan consisted of three elements.
?

A Personal Care Account, sometimes described as a health reimbursement account (HRA).
Employers contributed to the account and employees used the money to pay for health care
expenses from their chosen provider. Funds remaining in the HRA at the end of the year were
rolled over to the next year. Preventive care was 100% paid for by the plan and was not
charged against the employee?s HRA balance.

?

Comprehensive Health Coverage. The plan had three levels of deductibles from which
employees could choose, ranging from $1,500 (low) to $3,500 (high) for a single employee, and
$3,000 and $7,000 for family coverage.

?

Health Tools and Resources. A broad array of resources to support member health and
wellness decision-making available online and by phone. Members could research providers
across many criteria, review pricing for medical services or conditions, talk with nursing
professionals or a pharmacist 24/7, delve into medical information, and track their Personal
Care Account and Comprehensive Health Coverage activity.

The plan paid for all preventive care to encourage participants to receive periodic physical exams,
immunizations and other services designed to maintain health and to ensure early detection and
treatment as necessary. Because the plan had no ?gatekeepers? and allowed much broader types of
expenditures under its health account and preventive care policy, it permitted employees to make
more decisions about their health care.
HBS Professor Regina E. Herzlinger, Senior Research Associate John E. Hurwich, and Research Associate Seth Bokser (MD, MPH) prepared this
case. It was reviewed and approved before publication by a company designate. Funding for the development of this case was provided by
Harvard Business School and not by the company. HBS cases are developed solely as the basis for class discussion. Cases are not intended to
serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.
Copyright ? 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2010, 2012, 2014 President and Fellows of Harvard College. To order copies or request
permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to
www.hbsp.harvard.edu. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the
permission of Harvard Business School.

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

To date, Ness?s objective of being cost-neutral appeared to be realized. Medtronic self-insures the
majority of its health care plans and contributes from 75% to 80% of the cost of coverage, depending
upon the plan. Although costs were not the primary reason to offer the Definity Plan, they were an
important aspect and it was expected that over the long term, health care costs under this plan would
be lower than traditional plan offerings.
In the first year, approximately 10,500 employees were offered the Definity Health option and 13%
signed up. Although Ness anticipated that Definity would appeal to younger employees who were
less concerned about their health insurance, enrollment statistics were almost identical to Medtronic?s
other more established plans when comparing coverage levels, pay rates and job types. The
enrollment data did, however, indicate a higher than expected percentage of males enrolled during
the first year. During the second year, the distribution between males and females was as expected,
approaching 50% each.
Ness was quite pleased with initial enrollment because it showed that a significant number of
employees were interested in participating in an entirely different type of health care plan. He was
among the 1,300 employees who chose the Definity option and like the others, was well satisfied. Last
year?s enrollment was 4,040 participants,
The time had come to decide. What, if any, changes should be made in the Definity plan for next
year? Ness also wondered what additional metrics he should use to measure the plan?s success or
failure. He thought back to some of the first meetings about consumer-driven health plans and how
far they had come since then. He also wanted to revisit the decision not to include BHCAG among
Medtronic?s offerings. (See Exhibit 1 for more about Medtronic?s health insurance plans.)

Medtronic
Medtronic auspiciously entered the second 50 years of its history with best-ever results.1 The
company was a recognized leader in medical devices with a long line of therapeutic products used in
the cardiovascular, neurological, cardiac surgery and vascular arenas. Although the firm had grown
at a respectable rate for its first 35 years of existence, the last 15 years had brought it to the forefront
of the sector: the firm achieved an annual growth rate of 19% for revenues and 23.2% for earnings per
share. The stock price had grown 37.5% per year for the past 15 years, enriching the 90% of Medtronic
employees who, through stock ownership programs and 401(k) investments, owned 3% of the firm?s
outstanding common stock.

Medtronic?s Human Resource Philosophy
William (Bill) W. George, former chairman of the Board of Medtronic, had led many of the
changes that accounted for Medtronics? success. An important change was the added emphasis on
the role of human resources in supporting various business units around the world.
When George arrived, he valued the dedication of the people who had built the firm; but he
recognized that Medtronic must also attract new, multi-dimensional managers to achieve the growth
through acquisition and globalization that he envisioned. He recruited a new cadre of managers:
young talent from business schools, experienced managers from firms such as General Electric, and
others who could help broaden Medtronic?s managerial expertise. To encourage longevity and
1 See Regina E. Herzlinger and Mark Allyn, ?Medtronic: Patient Management Initiative,? HBS Case No. 302-005, Rev. 2012

(Boston: Harvard Business School Publishing, 2001).

2
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

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productivity, George?s human resource team focused on career development for all employees and
invested in many resources to support employees in the different career stages. For example, the
strategy recognized employee diversity and their needs with mentoring programs and career
development initiatives that included continuing education, leadership training, values and ethics
courses, flexible work hours, and on-site child care centers.
This strategy succeeded well, resulting in an employee turnover rate of 15.3%, lower than the
industry average and among the lowest in all industries. Medtronic?s competitive compensation
patterns, interesting work, and opportunities for advancement all contributed to employee retention.
Human Resources felt that the variety of health care insurance options, and the real choices they
offered, was also a critical factor. For that reason, Medtronic offered three employee health care plans.
The staff also wanted human resource programs consistent with Medtronic?s strategy that viewed
the patient as ?whole in mind, body, heart, and spirit.? To implement the strategy, Medtronic was
designing new medical devices that enabled consumers to take an active role in the management of
their chronic diseases.2 The human resource group was committed to helping support the strategy
with a philosophy to ?treat employees the way you would want the patients to be treated.? Noted
Ness: ?We want them to be fully present in their work, unencumbered by concerns about issues such
as child or health care that might otherwise be on their minds and therefore make them less capable
of performing their job as well as expected.?
Yet, Medtronic always balanced the benefits of these human resource policies against their costs.
When it came to health care, Medtronic?s costs had grown at a compounded annual rate of less than
5% annually over the past five years. But, Ness was concerned that the double-digit health care cost
increases that were affecting other companies would eventually affect Medtronic as well.

Definity Health
Founded by Tony Miller, chief executive officer and other senior personnel, its principals thought
Definity such a compelling concept that they worked without salary for one and one-half years before
receiving capital funding. Six years later, it had financing of $85 million, driven by the appeal of the
concept and the strength of its experienced management team. Its backers included Merrill Lynch,
Kohlberg Kravis Roberts, and Aon Corporation. Definity Health had more than 90 employer accounts
and 320,000 members, with revenues of $65 million and EBITDA of $5 million.
The significant price elasticity of health care expenditures had long been established. A study
noted: ?. . . the absence of cost-sharing results in significantly greater emergency department use than
does insurance with cost sharing. A disproportionate amount of the increased use involves less
serious conditions.?1 In early trials of concepts similar to Definity?s, two thirds of employees who
were given detailed price information, chose lower priced lab tests, physicians whose fees were
below the mean, and generic drug options in disproportionate numbers. Participants in Medtronic?s
consumer-driven health plan used the nurse line more than did those in traditional plans and had
higher use of generic substitutes for brand name drugs for analysis of survey results of changes in
price for CDHPs (See Exhibit 2).
In 1979, Flexible Spending Accounts (FSAs) were introduced as a way to encourage people to save
for health care expenses (and nonhealth care items such as dependent care, copayments, deductibles
2 See Regina E. Herzlinger and Mark Allyn, ?Medtronic: Patient Management Initiative,? HBS Case No. 302-005, Rev. 2012

(Boston: Harvard Business School Publishing, 2001).

3
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

and some dental and vision procedures and equipment no covered by insurance). The FSA balance
had to be used up by year end, or lost (the ?use it or lose it rule?). By 2000, Health Reimbursement
Accounts (HRAs), administered by employers, and, by 2004, Health Savings Accounts (HSAs), for
qualified medical and retiree health expenses were also offered by employers, financial institutions
and insurers. All these accounts were funded with pre-tax employee income.
In 2002, the Treasury Department and the Internal Revenue Service (IRS) upheld the tax-favored
status of unused HRA balances. Among other requirements to qualify for exclusion from gross
income, an HRA may provide only benefits that reimburse substantiated medical expenses and must
be funded solely by employers. Moreover, they were generally not subject to the complex design
requirements established for health care FSAs. The guidance specified that unused amounts in an
HRA may be carried over (rolled over) to subsequent years.
In 2004, Health Savings Accounts (HSAs) were legislatively introduced as savings accounts to
which both individuals and employers may contribute for present or future health expenses. The
funds may be used for qualified medical expenses for the individual, spouse, or dependent at the
discretion of the individual. Before creating an HSA, the participant or employers must purchase a
high-deductible insurance policy to cover major medical expenses. Payroll contributions and the
interest and earnings (and withdrawals) from complementary investment options for qualified
medical expenses were all tax-free. In addition, HSAs may be rolled over from year to year and,
because they belong to the participant, were portable from one employer to another.

Consumer-Driven Health Care
Some insurance industry analysts were predicting a shift in employer-based health
insurance away from paternalistic, uniform, cookie-cutter health plans to those that
could be tailored to the employees? individual needs and encourage their active
involvement. It was dubbed as ?consumer-driven health care? (CDHC) by Harvard
Business School Professor Regina E. Herzlinger in her 2004 book ?Consumer-Driven
Health Care: Implications for Providers, Payers, and Policymakers.?2 Tom Policelli of
UnitedHealth Group noted: ?The early adopters of CDHC plans could be characterized
as hard charging, with a hands-on CEO. Although their motivation and politics vary,
their actions were similar. For example, Forbes, Interstate Batteries, and Whole Foods all
had leaders with strong views who were used to cutting against the grain.?
This movement paralleled the shift in the pension area that occurred in the 1970s as employers
offered defined-contribution plans, in which employees could invest the monies they and their
employers contributed in a variety of mutual funds and other investment vehicles that reflected their
individual risk preferences and retirement needs. This shift away from defined-benefit plans, in
which employers managed the retirement funds on behalf of their employees, created a seismic
change in the financial community. The number of individuals who invested in the stock markets
increased dramatically, as did the variety of mutual funds and intermediaries that could help them to
invest. Important consumer-oriented firms such as the low-cost Vanguard family of mutual funds,
discount broker Charles Schwab, and Morningstar mutual fund rating service were all supported by
the shift to defined-contribution retirement plans.

4
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

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The shift to consumer-driven health care was spurred, in part, by the virtual collapse of the tight
managed-care movement.3 HMOs were not only disliked by their enrollees and health care providers,
because of their bureaucratic policies for referrals to specialty care, but some had also failed to
control health care costs. Employers were, once again, facing the health care cost increases that they
had hoped the managed-care movement would banish. Consumer-driven health care plans, in
contrast, enabled employees to choose from a larger and more diverse menu of plan options, thus
restoring their autonomy, and controlled cost through their direct management of health care
expenditures. The last impetus for consumer-driven health care was the growing power of health
care consumers who searched the Internet for health care information and spent more than $80 billion
out of their own pockets for alternative health care services, such as acupuncture. Combined, some
hoped that these consumer driven initiatives would help resolve complaints the traditional system
had failed to cure.

Buyers Health Care Action Group (BHCAG)
Medtronic had decided not to participate in Minneapolis-based BHCAG. Ness revisited his
decision by reviewing its background.
BHCAG (?Bee-Kag?), an employer coalition whose members comprised less than 15% of the
Minneapolis/St. Paul health care consumer market, including employees from Honeywell, Target,
General Mills, 3M, Pillsbury, and other Minnesota-based organizations, rolled out a unique program,
Patient Choice. This program featured competition at the provider organization level for patients,
based on provider cost and quality. The intent of the program was to create a retail market where
providers proved their value directly to their patients.
In the heavily consolidated Minnesota market, all health insurance plans featured the same
providers. As a result, differences among the plans were not based on differences in the cost and
quality of care, BHCAG essentially disintermediated the insurers to strengthen the connection
between providers and their patients. It contracted directly with integrated networks of physicians
and enabled consumers to choose providers, with the help of readily accessible out-of-pocket price
and satisfaction information.
Ann Robinow, its president, explained the motivation behind the program: ?BCHAG employers
realized that there were substantive performance differences among providers, but they were all
presented to consumers as one plan. There was no market incentive for good physicians to provide
efficient, high quality care because their performance went unrecognized in the market and
effectively subsidized the poor performers. The BCHAG experiment provides consumers with real
choice by presenting them with information on cost, satisfaction and other performance differences
among providers. For example, employees can pay more if they choose a provider group in a highcost category instead of a provider group in a low-cost category.?
?Employers feared that employees wouldn?t understand this consumer information,? said
Robinow. ?The reality was that they did and used the data to make purchasing decisions.? Initially,
70% of Patient Choice members sought care from high-cost provider groups. Four years after the
BHCAG initiative began, only 17% of members were enrolled in the high-cost care systems and 50%
3 See Regina E. Herzlinger and D. Scott Lurding, ?THG Management Services,? HBS Case No. 9-197-011, Rev. December 2012

and its companion reading Regina E. Herzlinger and Thomas Nagle, ?Note on Managed Care Reimbursement of Health Care
Providers: Case-Based, Per Diem, and Capitation Payments,? HBS Case No. 9-194-141, Rev. 2012 (Boston: Harvard Business
School Publishing, 2006).

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

in the low-cost systems. The data also influenced provider behavior. Noted Ann Robinow, ?While
there certainly has been significant consumer migration to low-cost plans, some of the care systems
have also changed cost categories over the four-year period.? Roger Feldman, a professor of Health
Economics at the University of Minnesota, studied the BHCAG initiative extensively. He said, ?The
bottom line is that employees are sensitive to price differences in health care.? 3 Provider groups could
expect a 16% drop in market share for every 10% increase in out-of-pocket premium. Feldman noted
that consumers with chronic diseases were as sensitive to price as others. Ann Robinow qualified this
price sensitivity: ?We?ve seen patients migrating from higher-cost to lower-cost provider groups, but
less so for the high-cost groups that have a strong quality ratings.? In a four year period, health care
costs for Patient Choice grew at an annual rate of approximately 7%, while health care costs for other
BCHAG-affiliated health plans grew by over 10%.

BHCAG provider reimbursement system

Patient Choice contracted with integrated
provider groups, akin to Accountable Care Organizations (ACOs), comprised of primary care
physicians, specialists, hospitals, and other health care professionals. Each provider group
determined its own policies (i.e., requirements for specialist referrals) and independently governed
the delivery of health care. BHCAG combined provider fee levels and resource use, adjusted for the
illness level of the group?s patients, to place them in a cost tier. Consumer premiums for provider
groups were based on the cost tier placement of the provider group. The providers were held
accountable for quality and resource utilization, not through the top-down controls that characterized
the culture of managed care, but through a competitive market based on informed consumer choice
and the providers? organic decisions about how to provide health care.
For example, consider two Minneapolis/St. Paul multidisciplinary provider networks?Group A
and Group B. Group A bids $100 per patient per month to take care of patients (the estimated total
cost for all services needed to manage their patients assuming their illnesses are of average severity).
Group B bids $150 per patient per month. Group A will be assigned to the low-out-of-pocket cost
category and Group B the high-out-of-pocket cost category. Based on the evidence presented above,
Group A will likely attract more patients because of its lower out-of-pocket cost.
BCHAG also held the provider groups accountable for the bids. In the initial years, provider
groups were held accountable to their bid on a quarterly basis, by adjusting their fee levels based on
each quarter?s performance against their bid. Each quarter, the most recent 12 months of total cost
performance of each group was analyzed as adjusted for the severity of illness of their patients, using
a risk-adjusting algorithm. For example, if Group A treated patients at an average monthly total cost
of $100, but its patients were 20% healthier than average, their risk adjusted cost performance would
be $80. In this case, reimbursement levels for the next quarter would be adjusted downward, because
Group A had bid $100 to care for its patients. Similarly, if Group B cared for patients 30% sicker than
average at a monthly cost of $130, its risk adjusted reimbursement level would be raised.
As a result of the risk adjustment process, providers attracting sicker patient populations were
judged on their ability to manage those patients effectively. There was no market advantage for
providers who attracted healthier patients. Unlike most insurance-based reimbursement schemes, the
BCHAG system financially rewarded provider groups who took on the high-risk patients and
managed them efficiently.

BCHAG employers? experience Fred Hamacher, retired vice president of Compensation and
Benefits at Target Corporation noted: ?It?s not an experiment; it?s the answer. I?ve been in this
business for 27 years and it?s the only system that feels right, smells right, and has the incentives
lined up. We can give our employees the information they need to make rationale decisions.? 4 But
6
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

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his sentiment is not universal: the program lost 20,000 employees when Wells Fargo Company and
American Express withdrew to accept aggressive offers from traditional health plans.

Providers? experience5

Tom Luchi, CEO of Family Health Services of Minnesota, an
Excellence in Quality Award recipient, described the balanced reactions of his multi-specialty
provider network: ?The physicians are excited about the ability to shape their own destiny – the
opportunity to set prices and fulfill their patients? goals under that price.? Yet, Luchi noted that
physicians, especially primary care doctors, were frustrated by the lack of true integration among
specialties in provider networks: ?We are trying to manage contracts with other providers when
there really is not a partnership.?

Current status Over time, a combination of service issues with a previous claim administrator,
changes in employer leadership with a shorter term focus, and competition from very large, well
funded plans in the consolidated Minnesota market eroded enrollment. Ultimately, Patient Choice
sold the Minnesota program to a regional HMO, hoping to become a more mainstream product with
greater sales and marketing resources.

Consumer-Driven Health Care from the Eyes of a Consumer
To help him think through the issues, Ness analyzed the situation of Judith Barnes, a long-term
Medtronic employee.6 Barnes was a healthy 41-year-old woman whose health insurance also covered
her 44 year-old husband and two children, a daughter, age 17, and a son, age 13. Judith had been
enrolled in the Medica Health Plan for some time now, but she was intrigued by the plan that would
allow her and her husband to participate more directly in the management of their health care. And,
it seemed as if it might save her money.
Judith could choose from three different health insurance plans offered by Medtronic (see
Exhibit 3).
1. HealthPartners. A standard gatekeeper model health care plan that provided full coverage, in
most cases, after a co-payment ranging from $15 for office visits to $100 for inpatient hospital care.
The annual cost to the employee ranged from a maximum out-of-pocket cost of $1,500 for a single
employee to $3,000 for a family, depending on the services required. This plan required Judith to
receive care with one of Health Partners? network of clinic-based providers. If she paid significantly
more, however, she could select any doctor outside of the network. For Judith, family coverage for an
in-network policy would cost $146 per month.
2. Medica Choice. A standard health care plan, with the same co-payment for an office visit as
HealthPartners ($15) with 90%/10% coinsurance after deductible for emergency room and hospital.
Medica?s maximum out-of-pocket costs were lower than HeathPartners. Medica Choice emphasized
employee choice but from a network of providers; no referrals were needed to see a specialist in the
network. As a result, Medica Choice would cost Judith more than Health Partners? $146 per month.
The Medica Choice plan enabled Judith and her family the choice to receive health care either
through network providers or, if she preferred, to use out-of-network providers and pay more of the
total cost herself.
3. Definity Health. The monthly payments varied with the deductible amount the employee chose.
The deductible varied from $1,500 for a single employee with a low deductible option to $7,000 for
family coverage with the high deductible option.

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

As Judith studied the options, she noted that each plan allowed her to choose her own doctor but
out-of-network doctors were not fully covered. But the similarities stopped here. Not only did each
plan charge different amounts but they also differed in the deductible that Judith and her family would
have to pay before the insurance coverage began; the maximum out-of-pocket payments; and in the
ability to access providers for primary care. One plan used the gatekeeper model while the other was
more flexible by allowing self-referrals to specialists and other providers as long as they were in the
provider network.
In considering her decision, Judith assessed her family?s situation. All in all, they were fortunate,
both personally and economically. They were healthy and earned a family income of $200,000 a year.
Their assets were mostly tied up in their homes and retirement funds but they did have about
$300,000 in liquid assets, set aside for the children?s educational needs. Yet, Judith knew that they had
a number of medical needs that would have to be met out of these savings or out of their current
income, paid for with after-tax money. For one, the college football injury to her husband?s knee was
bothering him. Sooner rather than later, he would need surgery. He wanted to have surgery in what
he jokingly referred to as the ?old jocks knee hospital,? a ?focused factory? for orthopedic surgery;
but that hospital was not included in her current plan?s network. It was included under the Definity
Health option, however, which encouraged the use of centers of excellence. She also liked the idea
that the amount credited to her PCA was done in a tax effective manner and that the balance
remaining at the end of the year could be carried over to the following year. , But while she
wondered if the Definity plan would require more of her time in managing her and her family?s
health care needs, she liked the freedom it offered.
She knew the enrollment deadline was near and that she needed to make a decision soon.

Assignment
Dave Ness must resolve these issues before the Executive Committee meeting next week, when he
would present his recommendation on the health care plans. To help him,
1.

Conduct a Six Factors analysis of Medtronic (i.e. its alignment with the Structure, Financing,
Consumers, Technology, Public Policy, and Accountability of the U.S. health care system).
What are the implications of your analysis for David Ness? decision? 4

2.

What kind of innovation is Definitity: consumer-forcing, integrator, or technology?

3.

Use the detailed explanation of benefits in Exhibit 1 and the analysis of the changes caused by
consumer-driven plans in Exhibit 2 to evaluate the pros and cons of the three health plan
options from Judith Barnes? point of view.

4.

Evaluate Definity and BHCAG?the other consumer-driven health care venture that might
meet the company?s needs in terms of their alignment with the Six Factors, business models,
and viability.

5.

Prepare a recommendation for Dave Ness.

4 Regina E. Herzlinger, ?Innovating in Health Care?Framework,? HBS Case No. 314-017, Rev. 2014 (Boston: Harvard Business

School Publishing, 2005).

8
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

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Exhibit 1 Medical Insurance Premiums?Consumer-Driven Health Care: Medtronic and Plan
Design Comparison?Minnesota Employees

Medical Insurance Premiums ? MN Employees
January 2004 – December 2004

Full-Time or Part-Time 32
Part-Time Scheduled
Full-Time or Part-Time
32 or More/Week
Part-Time scheduled
Hours
under 32 Hours/Week
hours or more / week Employee
under
Cost32 hours / week
Employee Cost

Medical Plan and
LevelPlan
of Coverage
Medical
and
Level of Coverage

Employee Cost
Monthly Cost

HealthPartners
Employee only
HealthPartners
Employee
plus one
Employeeplus
only
Employee
two or more

$49.00
$99.00
$146.00

Employee plus one
Employee plus two or more

$22.62
$45.69
$67.38

Monthly Cost

Bi-Weekly
Deduction

$78.25
$156.75
$242.75

$36.12
$72.35
$112.04

Monthly Cost

Bi-Weekly
Deduction

Medica
Medica only
Employee
Employeeplus
only
Employee
one
Employeeplus
plus
Employee
twoone
or more

Employee Cost

Bi-Weekly
Monthly Cost
Deduction
Monthly Cost

Employee plus two or more

$153.13
$310.00
$ 49.00
$456.25

$ 99.00
$146.00

Bi-Weekly
Monthly Cost
Deduction
$70.67
$143.08
$210.58

$153.13
$310.00
Bi-Weekly $458.25

Monthly Cost

Deduction

$195.63

$90.29
$180.87
$280.10

$ 78.25
$391.88
$156.75
$606.88
$242.75

$195.63
$391.88
$606.88

Definity Health

Definity Health

Employee only – $1,000 PCA

Monthly Cost

Bi-Weekly
Deduction

Employee only?$1,000 PCA
Low
$1,500
$44.00
LowDeductible
Deductible $1,500
Medium Deductible
$2,500
$28.00
Medium Deductible $3,500 $2,500 $11.45
High Deductible

High Deductible $3,500

$20.31
$12.92
$5.28

$165.63
$ 44.00
$151.88
$ 28.00
$143.13
$ 11.45

$76.44
$70.10
$66.06

$165.63
$151.88
$143.13

Definity Health

Employee plus one?$1,500 PCA
Employee
plus 1 – $1,500
Low Deductible
$2,250PCA

Medium Deductible

Low Deductible
$2,250
High Deductible
Medium
Deductible $5,250
$3,750
High Deductible
$5,250

Monthly Cost

$3,750

$83.40
$51.10
$24.05

Employee plus two or more?$2,000 PCA
Definity
Health
Low Deductible
$3,000
Medium Deductible
$5,000
Employee and 2+ – $2,000 PCA
Monthly Cost
High Deductible $7,000

Bi-Weekly
Deduction
$38.49
$23.58
$11.10

Bi-Weekly
Deduction

$ Monthly
83.40 Cost
$ 51.10
$347.50
$ 24.05
$319.38
$300.63

$115.20
$ 70.60
Monthly Cost
$ 33.20

Bi-Weekly
Deduction $347.50
$160.38
$147.40
$138.75

$319.38
$300.63

$480.00

Bi-Weekly
$441.25
Deduction

$415.00

Low Deductible
$3,000
$115.20
$53.17
$480.00
$221.54
Medium Deductible
$5,000
$70.60
$32.58
$441.25
$203.65
Directories:
For a provider
directory, access
the HealthPartners,
Definity Health website
or call them directly for a
High Deductible
$7,000
$33.20
$15.32 Medica or $415.00
$191.54
listing of providers.
Directories:
a provider
directory, access
theselect
HealthPartners,
or Definity
Healthyou
website
or call them
Medical
Plans:ForWith
HealthPartners,
you must
a primary Medica
care clinic,
from which
will receive
most of your care.
directly for
a listing
providers.
Under
the ofDefinity
Health and Medica plans, you can choose, at the time of service, to receive care from either a
Health
866-833-3463provider. www.definityhealth.com
networkDefinity
provider
or from an out-of-network
HealthPartners
800-883-2177
www.healthpartners.com
Medica
800-952-3455
www.medica.com
Premiums: Medical
premiums are deducted
as a pre-tax payroll deduction.
Medical Dave
Plans:Ness,
WithMedtronic.
HealthPartners, you must select a primary care clinic, from which you will receive most of
Source:
your care. Under the Definity Health and Medica plans, you can choose, at the time of service, to receive care from
either a network provider or from an out-of-network provider.
Premiums: Medical premiums are deducted as a pre-tax payroll deduction.

9
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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

Exhibit 2

Summary of First-Year CDH versus Traditional Plan Price Trend Results

Study
CIGNA
Aetna
Uniprise

CDH Trend (1) Traditional Trend (1)
-4%
9%
-10%
8%
-15%
7%

Reported Indicators of Consumer Behavior Change/Effect on Quality of Care
CDH over Traditional Plans
Study

Preventive
Care

Recommended Chronic Care

Cigna

+12% – 14%

Increased use of maintenance
medications

Aetna

+23%

Similar diabetic testing and chronic
care script utilization

Uniprise

Higher

Better compliance for chronically ill

Prescription
Drug
Utilization
92% of 300 rules for
Cost and
evidence-based care
utilization
same or higher
slightly higher*
Generic
utilization and
N/A
substitution
higher
Better compliance
Prescription
with evidence-based
trends 3%
care
higher
Evidence-Based
Care

*Second CDH year
(1) % Difference is calculated as [1 + CDH trend)/(1 + traditional trend) – 1] x 100%

Source:

American Academy of Actuaries, Emerging Data on Consumer-Driven Health Plans, May 2009, pp. 9, 11,
http://www.actuary.org/pdf/health/cdhp_may09.pdf, accessed November 15, 2011

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

302-006

Exhibit 2 (continued)

Distribution of Health Plan Enrollment for Covered Workers, by Firm Size, Region, and Industry, 2011
FIRM SIZE
3-24 Workers
25-49 Workers
50-199 Workers
200-999 Workers
1,000-4,999 Workers
5,000 or More Workers

HMO
13%
16%
12%
21%
14%
20%

PPO
43%
42%
47%
52%
66%
60%

POS
18%
22%
16%
13%
6%
3%

CDH
24%
20%
24%
14%
14%
16%

All Small Firms (3-199 Workers)
1%
All Large Firms (200 or More Workers) 1%

13%
19%

45%
60%

18%
6%

23%
15%

REGION
Northwest
Midwest
South
West

2%
1%
1%
< 1%

18%
9%
12%
31%

55%
56%
64%
40%

9%
9%
8%
13%

15%
25%
15%
16%

INDUSTRY
Agriculture/Mining/Construction
2%
Manufacturing
1%
Transportation/Communications/Utilities 2%
Wholesale
1%
Retail
< 1%
Finance
< 1%
Service
1%
State/Local Government
4%
Health Care
1%
ALL FIRMS
1%

12%
12%
20%
13%
15%
15%
21%
23%
15%
17%

62%
52%
54%
60%
56%
55%
53%
54%
58%
55%

13%
10%
11%
6%
13%
7%
9%
10%
10%
10%

11%
25%
14%
20%
16%
23%
18%
8%
16%
17%

Source:

Conventional
3%
1%
1%
1%
< 1%
1%

Kaiser/HRET Employer Health Benefits: 2011 Annual Survey, p. 62, www.kff.org, accessed November 16, 2011.

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The Definity
Health PCA is an
account provided
by Medtronic for
you to use for
traditional, as well
as a few
nontraditional
medical
expenses. This
account works
together with your
deductible, as
eligible expenses
paid out of the
PCA account
reduce your
deductible.
Unused balances
remaining at the
end of the year
can be carried
over for future
health care
needs.
$1,500
-1,000
$ 500

$2,250
-1,500
$ 750

$3,000
-2,000
$1,000

Employee
Deductible
Personal Care Account (PCA)
Deductible Not Covered by PCA
Employee + 1
Deductible
Personal Care Account (PCA)
Deductible Not Covered by PCAa
Family
Deductible
Personal Care Account (PCA)
Deductible Not Covered by PCAa

assumes that all
services are eligible
expenses under the health
plan.

aThis

Low

Deductible Options

In Network

Definity Health

$5,000
-2,000
$3,000

$3,750
-1,500
$2,250

$2,500
-1,000
$1,500

Medium

$7,000
-2,000
$5,000

$5,250
-1,500
$3,750

$3,500
-1,000
$2,500

High

Out of Network
None

In Network
None

Out of Network

HealthPartners

Medtronic Plan Design Comparison: Definity Health Plan, HealthPartners and Medica

Annual Deductible
and Personal Care
Account (PCA)

Exhibit 3

None

In Network

-12-

Maximum of $600
deductible per family,
per calendar year

Maximum of $300
deductible per
calendar year

Out of Network

Medica

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$1,500 Single
$3,000
Family

$3,000 Single
$6,000 Family

These services are not
charged against your PCA
account

No coverage

Plan pays 100%
after $10 copay

Plan pays 80% after PCA
and deductible up to Usual &
Customary

$4,000
$8,000

High

Plan pays 100%

$3,000
$6,000

Medium

$1,000,000 (combined network/nonnetwork)

$2,000
$4,000

Low

70% after $30
copay
$75
$100

$2,000,000 (combined network/nonnetwork)

$2,500
$5,000

High

$10
$75
$100

Out of Network

Lifetime Maximum
Preventive Care?
This benefit can be
used toward the cost
of any preventive
medical service, such
as annual
mammogram, prostate
exam, cholesterol
screenings, immunizations, blood pressure
screenings, etc.
Preventive Care
cannot be used for
such things as health
club memberships,
exercise equipment, or
any other service or
equipment which is
not consistent with a
standard regimen.

$1,500
$3,000

Medium

No Copays?Charges paid out of
your PCA Account if available.
Plan pays 80% coverage after PCA
and deductible to Usual &
Customary.

In Network

$500
$1,000

Low

No Copays?Charges paid out of
your PCA Account if available.
Plan pays 100% coverage after PCA
and deductible.

Out of Network

HealthPartners

Employee + 1
Family

Calendar Year Out-ofPocket Maximum?
(including Deductible
not covered by PCA)

Office Visit
Emergency Room
Inpatient Hospital

Copays

In Network

Definity Health

$2,500
$6,000

$10
$50
$100

Out of Network

-13-

$10 copay

$250 per
maximum for
routine physical
and eye exams

Plan pays 70% of
usual charges
after deductible is
met

$1,000,000 (combined network/nonnetwork)

$1,000
$3,000

NA

In Network

Medica

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Exams covered under the Preventive
Care Benefit

No coverage for eyewear

Exams covered under the Preventive
Care Benefit

No coverage for eyewear

Out of Network

No coverage for
hearing aids or
eyewear

Plan pays 100% after
$10 copay

In Network
No coverage

Out of Network

HealthPartners

No coverage for
hearing aids or
eyewear

Plan pays 100%
after $10 copay

In Network

No Coverage

Out of Network

Medica

-14-

Source:

Medtronic.

The Definity Health Plan does not require any referral authorizations or approvals for services. A notification process is in place for all inpatient confinements and some limited
outpatient procedures. The HealthPartners and Medica plans require referral authorizations for certain services.

Vision/Hearing

In Network

Definity Health

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

302-006

Appendix
Key
Characteristics
Funding
Mechanism

HSA

-Funded accounts (asset)
-Contributions by
employer, employee, or both
-Contributions cannot
exceed deductibles?limit of
$3,000 for individuals and
$5.950 for families

Employee
Eligibility and
Health Plan
Requirements

HRA
-Notional accounts
(liability)
-Contributions by
employer only
-No contribution
limit?limit is set by
employers

FSA

-Funded accounts
(asset)
-Contributions by
employer, employee, or
both-usually employee
-No contribution
limit

-Employees covered by
qualified, high deductible
plans
-Deductibles of less than
$1,000 for individuals and
$2,000 for families
-Maximum of out-of-pocket
of $5,000 for individuals and
$10,000 for families
-Preventive care can be
excluded from deductibles

-All employees
-No specific health
plan requirements

-All employees
except self-employed
-No specific health
plan requirements

-Overlapping coverage for
the same medical expense is
not permitted, necessitating
other plans to cover only those
expenses not qualified under
the high deductible plans such
as dental care and vision care
Qualified
Medical Expenses

-Un-reimbursed Code
213(d) medical expenses
-Cannot reimburse
insurance other than premiums
for COBRA, a qualified longterm care contract, or for a
health plan while the
individual is either receiving
unemployment compensation
or is over the age of 65 (other

– Un-reimbursed
Code 213(d) medical
expenses

– Un-reimbursed
Code 213(d) medical
expenses

-Premiums for
eligible health insurance
and long-term insurance

-Cannot reimburse
insurance premiums and
long-term care services

-Further limitations
subject to employers?
discretion

-Further limitations
subject to employers?
discretion

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302-006

Consumer-Driven Health Care: Medtronic?s Health Insurance Options

than a Medicare supplement
policy)

Roll Over of
Balances to Next
Year

-Yes- tax free roll over
-No limit on amount

Portability of
Account to
another
Employer
-Yes

Returns on
Funds
-Choices of interest-bearing
savings accounts and mutual
funds

Tax
Treatments

-Employer and employee
contributions are pre-tax
-Tax-free accumulation
-Tax-free withdrawal for
qualified medical expenses
-Withdrawals for nonmedical expenses are subject to
income tax and a 10% penalty

Source:

-Further limitations
may apply for
employees with a
qualified HSA?no
duplicate coverage of
same benefits

-Further limitations
may apply for
employees with a
qualified HSA?no
duplicate coverage of
same benefits

-Yes?tax free roll
over
-Amount of roll over
subject to employers?
discretion
-Generally not
portable but
theoretically could
transfer to another
employer?s HRA?not
single account
portability and amount
is subject to employers?
discretion
-Notional interests
benchmarked to
government securities
-Notional interests
may not be granted
subject to employers?
discretion

-Employer
contributions are pre-tax
-Tax-free
withdrawal- only
allowed for qualified
medical expenses

-No?use it or leave it

-No

-Not applicable?no
roll over balances

-Employer and
employee contributions
are pre tax
-Tax free withdrawalonly allowed for
qualified medical
expenses

Casewriters.

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Consumer-Driven Health Care: Medtronic?s Health Insurance Options

302-006

Endnotes
1 See Kevin F. O?Grady et al., ?The Impact of Cost Sharing on Emergency Department Use,? The New England Journal of

Medicine, 313 (8), August 1985.
2 Regina E. Herzlinger, Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers, San Francisco: Jossey-

Bass Publishers, 2004.
3 Personal communication, Seth Bokser with Roger Feldman, June 8, 2001.
4 Personal communication, Seth Bokser with Fred Hamacher, June 5, 2001.
5 Personal communication, Seth Bokser with Tom Luchi, May 30, 2001.
6 Fictional character.

17
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Benefits Analysis and Presentation

III. Presentation: In this part of the assessment, you will develop a presentation to stakeholders that describes your recommended changes and provides both context and rationale for why you believe they should occur. This presentation must be developed in such a way that it is accessible for all stakeholders (leadership, management, employees, and so on). A. Provide an overview of the qualitative input data, quantitative benchmarking data, and the gap analysis that was conducted. B. Provide a rationale for proposed changes and explain how the proposed changes will achieve targeted organizational goals and address stakeholder concerns. C. Explain the implications of implementing the new system for the organization and for different employee populations. Final Submission: Benefits and Compensation Analysis and Revisions with Stakeholder Presentation In Module Nine, you will submit the completed benefits and compensation analysis (with revisions) and stakeholder presentation. You will appropriately communicate your proposed changes to the internal stakeholders (leadership, management, employees, etc.) identified in the Harvard Business Review case study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options? and provide both context and rationale for why you believe they should occur. This presentation should be a complete, polished artifact containing all of the critical elements of the final project. This submission will be graded with the Final Project Rubric.

OL 620 Final Project Guidelines and Rubric
Overview
The final project for this course is the creation of a benefits and compensation analysis (with revisions) and a stakeholder presentation.
Professionals in the human resources field are often tasked with overseeing the benefits and compensation functions within any given organization. Human
resource professionals often have to examine specific compensation and benefit elements of a total rewards system and compare them with qualitative and
quantitative data collected internally, to determine how to fairly and appropriately reward employees for their work.
For the summative assessment, imagine you have been tasked with evaluating and revising the current benefits and compensation package of an organization.
You will utilize information from a case study to compare and contrast the organization?s total reward system with external benchmarking data, analyze data for
gaps, and make revisions to the existing compensation and benefit package. The information you are provided will be based on a specific aspect of a benefits and
compensation package (retirement benefits, medical benefits, etc.). You must also create a presentation to stakeholders that explains the proposed changes,
your rationale, and the implications of the changes for the organization.
The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure a quality final
submission. These milestones will be submitted in Modules Three, Five, and Seven. The final project will be submitted in Module Nine.
In this assignment, you will demonstrate your mastery of the following course outcomes:
? Analyze qualitative input from stakeholders for prioritizing employee concerns regarding existing organizational total rewards systems
? Compare existing internal quantitative data regarding benefits and compensation structures to external benchmarking data for determining key areas of
concern in organizational total rewards systems
? Evaluate strengths and weaknesses of organizational benefits and compensation structures for informing the revision of benefits and compensation
systems
? Design revised benefits and compensation packages that address key stakeholder concerns and align with established financial, organizational, and legal
constraints
? Appropriately communicate proposed changes of organizational benefits and compensations structures to various internal stakeholder populations
Prompt
In your role as a human resources professional, you have been asked to revise aspects of the current benefits and compensation package illustrated in the
Harvard Business Review case study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options? and make revisions to the package to accommodate
issues and concerns. You have also been asked to prepare a presentation to stakeholders regarding your proposed revisions. You will begin with an analysis of
quantitative and qualitative information about the current rewards system. Use this information to identify strengths and weaknesses of the current package and
make recommendations, while addressing stakeholder concerns and previously identified weaknesses. You will communicate these proposed changes in a
presentation to stakeholders of the organization.
Specifically, the following critical elements must be addressed:
I. Benefits and Compensation Analysis: For this part of the assessment, you will analyze given aspects of a benefits and compensation package from the
provided case study. You will analyze qualitative and quantitative data regarding the current system and determine gaps in that system that will inform
your future recommendations and revisions.
A. Analyze the issues or concerns of employees through a review of the qualitative data presented in the case study, for their validity and
importance. Be sure to consider the needs of different demographics of employees within the organization.
B. Determine which issues within the qualitative input data from employees were the most consistent and the most prominent. You may consider
also representing your response visually.
C. Determine the key issues or concerns of employees that should be targeted and addressed, based on the provided qualitative data. Justify your
response. What issues or concerns should be targeted and why? Why should other concerns be made less of a priority? You could consider the
underlying reasons behind the issues voiced by employees.
D. Compare and contrast the provided quantitative data regarding the current benefits and compensation system with external benchmarking
data from organizations within the same industry. Be sure to use the provided table to complete your response. What does the current system
have that other organizations do not? What do other organizations offer that the current system does not? Be sure to justify your response.
E. Determine areas of misalignment, differences, and gaps present in the current benefits and compensation system, based on the external
benchmarking data. What are the key areas of the current system that are misaligned with the industry standard?
F. Compare qualitative input data and quantitative analysis with the organization?s employee demographic data to determine the degree of the
existing population that will be affected by the proposed changes. In other words, what is the overall impact of a proposed change?
G. Based on your analysis of the provided qualitative and quantitative data, determine strengths and weaknesses present in the current benefits
and compensation system. What are the strong suits of the system? What are the weak areas? Be sure to justify your response.
H. Determine rewards components that should be increased or stay the same, and provide your rationale. What in the current package should be
emphasized or left alone?
I. Determine rewards components that should be reduced, and provide your rationale. What in the current package should be addressed?
II. Revisions: In this part of the assessment, you will make recommendations and revisions to the current benefits and compensation package to address
any concerns and gaps previously identified.
A. Make recommendations for accommodating potential financial, procedural, and legal constraints regarding the revised benefits and
compensation package.
B. Make revisions to the current benefits and compensation package that address concerns related to your previous analysis of the quantitative
and qualitative data. In other words, what changes would you make to the current benefits and compensation package in order to address any
concerns you previously identified?
C. Explain the financial cost of proposed changes to both direct and indirect compensation. Be sure to address fully funded organizational changes,
partially funded changes (and by what percentage), and fully employee-funded benefits.
D. Explain the cost of each benefit and compensation element as a cost per employee. You may want to show cost increases or decreases per
benefit item, with a total roll up cost to the employee and the organization.
III. Presentation: In this part of the assessment, you will develop a presentation to stakeholders that describes your recommended changes and provides
both context and rationale for why you believe they should occur. This presentation must be developed in such a way that it is accessible for all
stakeholders (leadership, management, employees, and so on).
A. Provide an overview of the qualitative input data, quantitative benchmarking data, and the gap analysis that was conducted.
B. Provide a rationale for proposed changes and explain how the proposed changes will achieve targeted organizational goals and address
stakeholder concerns.
C. Explain the implications of implementing the new system for the organization and for different employee populations.
Milestones
Milestone One: Benefits and Compensation Analysis (Section I, Parts A?D)
In Module Three, you will submit a draft of Parts A?D of your benefits and compensation analysis. You will analyze qualitative and quantitative data regarding
the current system identified in the Harvard Business Review case study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options.? You will also
compare and contrast the provided quantitative data regarding the current benefits and compensation system with external benchmarking data from
organizations within the same industry. The submission will have the major heading ?Benefits and Compensation Analysis: Parts A?D.? This milestone will be
graded with the Milestone One Rubric.
Milestone Two: Benefits and Compensation Analysis (Section I, Parts E?I)
In Module Five, you will submit a draft of Parts E?I of your benefits and compensation analysis. You will determine key areas of concern regarding the current
system identified in the Harvard Business Review case study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options? that will inform your future
recommendations and revisions. The submission will have the major heading ?Benefits and Compensation Analysis: Parts E?I.? This milestone will be graded
with the Milestone Two Rubric.
Milestone Three: Revisions (Section II)
In Module Seven, you will submit a draft of Section II (Revisions). You will make recommendations and revisions to the current benefits and compensation
package described in the Harvard Business Review case study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options? to address concerns and
gaps previously identified. The submission will include all parts of Section II with the major heading ?Revisions.? This milestone will be graded with the
Milestone Three Rubric.
Final Submission: Benefits and Compensation Analysis and Revisions with Stakeholder Presentation
In Module Nine, you will submit the completed benefits and compensation analysis (with revisions) and stakeholder presentation. You will appropriately
communicate your proposed changes to the internal stakeholders (leadership, management, employees, etc.) identified in the Harvard Business Review case
study ?Consumer-Driven Health Care: Medtronic?s Health Insurance Options? and provide both context and rationale for why you believe they should occur. This
presentation should be a complete, polished artifact containing all of the critical elements of the final project. This submission will be graded with the Final
Project Rubric.
Deliverables
Milestone Deliverable Module Due Grading
One Section I, Parts A?D, Benefits and
Compensation Analysis
Three Graded separately; Milestone One Rubric
Two Section I, Parts E?I, Benefits and
Compensation Analysis
Five Graded separately; Milestone Two Rubric
Three Section II, Revisions Seven Graded separately; Milestone Three Rubric
Final Submission: Benefits and
Compensation Analysis (With Revisions)
and Stakeholder Presentation
Nine Graded separately; Final Project Rubric
Final Project Rubric
Guidelines for Submission: Your benefits and compensation analysis must be 10 to 12 pages in length (plus a cover page and references) and must be written in
APA format. Use double spacing, 12-point Times New Roman font, and one-inch margins. Include at least seven references. The presentation must consist of 5 to
10 slides. Use a product such as PowerPoint or Prezi to create your presentation. Sources should be cited according to APA style.
Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information,
review these instructions.
Critical Elements Exemplary (100%) Proficient (90%) Needs Improvement (70%) Not Evident (0%) Value
Benefits and
Compensation
Analysis: Issues or
Concerns
Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of the
value of key issues, from the
employee?s perspective
Analyzes the issues or concerns
of employees, reviewed through
the qualitative data, for their
validity and importance for
organizational review,
considering the needs of
different employee
demographics within the
organization
Analyzes the issues or concerns
of employees, reviewed through
the qualitative data, for their
validity and importance for
organizational review,
considering the needs of
different employee
demographics within the
organization, but analysis is
cursory
Does not analyze the issues or
concerns of employees, reviewed
through the qualitative data, for
their validity and importance for
organizational review
6.3
Benefits and
Compensation
Analysis: Consistent
and Prominent
Meets ?Proficient? criteria and
response demonstrates keen
insight into the differences
between prominent and less
prominent issues
Determines which issues within
the qualitative input data from
employees were the most
consistent and the most
prominent
Determines which issues within
the qualitative input data from
employees were the most
consistent and the most
prominent, but determination is
cursory or illogical
Does not determine which issues
within the qualitative input data
from employees were the most
consistent and the most
prominent
6.3
Benefits and
Compensation
Analysis: Targeted and
Addressed
Meets ?Proficient? criteria and
response demonstrates keen
insight on the underlying reasons
the issues voiced by employees
have arisen
Determines key issues or
concerns of employees that
should be targeted and
addressed, based on the
provided qualitative data,
justifying response
Determines key issues or
concerns of employees that
should be targeted and
addressed, based on the
provided qualitative data,
justifying response, but
determination is cursory, illogical,
or there are gaps in the
justification
Does not determine key issues or
concerns of employees that
should be targeted and
addressed
6.3
Benefits and
Compensation
Analysis: External
Benchmarking Data
Meets ?Proficient? criteria and
response demonstrates keen
insight into the position of the
current benefits and
compensation system compared
with systems at other
organizations
Compares and contrasts provided
quantitative data regarding the
current benefits and
compensation system with
external benchmarking data from
organizations within the same
industry, using the provided
table, justifying response
Compares and contrasts provided
quantitative data regarding the
current benefits and
compensation system with
external benchmarking data from
organizations within the same
industry, using the provided
table, justifying response, but
analysis is cursory, illogical,
contains inaccuracies, or there
are gaps in the justification
Does not compare and contrast
provided quantitative data
regarding the current benefits
and compensation system with
external benchmarking data
6.3
Benefits and
Compensation
Analysis: Misalignment,
Differences, and Gaps
Meets ?Proficient? criteria and
response demonstrates the
ability to discern key differences
from the provided information
Determines areas of
misalignment, differences, and
gaps present in the current
benefits and compensation
system, based on the external
benchmarking data
Determines areas of
misalignment, differences, and
gaps present in the current
benefits and compensation
system, but determination is
cursory or illogical
Does not determine areas of
misalignment, differences, and
gaps present in the current
benefits and compensation
6.3
Benefits and
Compensation
Analysis: Degree of the
Existing Population
Meets ?Proficient? criteria and
response demonstrates keen
insight into how both qualitative
and quantitative analysis will
affect employee populations
Compares qualitative input data
and quantitative analysis with the
organization?s employee
demographic data to determine
the degree of the existing
population that will be affected
by the proposed changes
Compares qualitative input data
and quantitative analysis with the
organization?s employee
demographic data to determine
the degree of the existing
population that will be affected
by the proposed changes, but
analysis or is cursory or illogical,
or there are gaps in
determination
Does not compare qualitative
input data and quantitative
analysis with the organization?s
employee demographic data
6.3
Benefits and
Compensation
Analysis: Strengths and
Weaknesses
Meets ?Proficient? criteria and
response demonstrates keen
insight into the gaps in the
benefits and compensation
system as compared to gaps in
employee perception in
comparable industries
Determines strengths and
weaknesses present in the
current benefits and
compensation system, based on
previous analysis, justifying
response
Determines strengths and
weaknesses present in the
current benefits and
compensation system, based on
previous analysis, justifying
response, but determination is
cursory or illogical
Does not determine strengths
and weaknesses present in the
current benefits and
compensation system based on
previous analysis
6.3
Benefits and
Compensation
Analysis: Increased or
Stay the Same
Meets ?Proficient? criteria and
response demonstrates keen
insight regarding reasons for
maintaining status quo or
improving specific components
Determines rewards components
that should be increased or stay
the same, providing rationale
Determines rewards components
that should be increased or stay
the same, providing rationale,
but determination is cursory,
illogical, or there are gaps in
rationale
Does not determine rewards
components that should be
increased or stay the same
6.3
Benefits and
Compensation
Analysis: Reduced
Meets ?Proficient? criteria and
response demonstrates keen
insight in reflecting market or
cost rationale behind the
recommended reductions
Determines rewards components
that should be reduced, providing
rationale
Determines rewards components
that should be reduced, providing
rationale, but determination is
cursory, illogical, or there are
gaps in rationale
Does not determine rewards
components that should be
reduced
6.3
Revisions: Constraints Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of the
constraints regarding revising
benefits and compensation
packages
Makes recommendations for
accommodating potential
financial, procedural, and legal
constraints regarding the revised
benefits and compensation
package
Makes recommendations for
accommodating potential
financial, procedural, and legal
constraints regarding the revised
benefits and compensation
package, but explanation is
cursory or illogical
Does not make recommendations
for accommodating potential
financial, procedural, and legal
constraints regarding the revised
benefits and compensation
package
4.72
Revisions: Current
Benefits and
Compensation
Meets ?Proficient? criteria and
response demonstrates a balance
between employee input and
organizational objectives
Makes revisions to the current
benefits and compensation
package that address concerns
related to the previous analysis
of the quantitative and
qualitative data
Makes revisions to the current
benefits and compensation
package that address concerns
related to the previous analysis
of the quantitative and
qualitative data but revisions are
cursory, illogical, or contain
inaccuracies
Does not make revisions to the
current benefits and
compensation package that
address concerns related to the
previous analysis of the
quantitative and qualitative data
4.72
Revisions: Financial
Cost
Meets ?Proficient? criteria and
response demonstrates a balance
between addressing expressed
employee needs and
organizational cost targets
Comprehensively explains the
financial cost of proposed
changes to both direct and
indirect compensation
Explains the financial cost of
proposed changes to both direct
and indirect compensation, but
explanation is cursory, illogical, or
not comprehensive
Does not explain the financial
cost of proposed changes to both
direct and indirect compensation
4.72
Revisions: Benefit and
Compensation Element
Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of each
benefit and compensation
element regarding cost increases
or decreases and total roll-up
cost to the employee and the
organization
Comprehensively explains the
cost of each benefit and
compensation element as a cost
per employee
Explains the cost of each benefit
and compensation element as a
cost per employee, but
explanation is cursory, illogical, or
not comprehensive
Does not explain the cost of each
benefit and compensation
element as a cost per employee
4.72
Presentation: Overview Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of how
to communicate appropriate and
relevant information for all
stakeholders
Provides an overview of the
qualitative input data,
quantitative benchmarking data,
and the gap analysis that was
conducted, conveyed
appropriately for all stakeholders
Provides an overview of the
qualitative input data,
quantitative benchmarking data,
and the gap analysis that was
conducted, but overview is
cursory or is not conveyed
appropriately for all stakeholders
Does not provide an overview of
the qualitative input data,
quantitative benchmarking data,
and the gap analysis that was
conducted
6.3
Presentation:
Organizational Goals
Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of how
to communicate appropriate and
relevant information for all
stakeholders
Provides a rationale for proposed
changes and explains how the
proposed changes will achieve
targeted organizational goals and
address stakeholder concerns,
conveyed appropriately for all
stakeholders
Provides a rationale for proposed
changes and explains how the
proposed changes will achieve
targeted organizational goals and
address stakeholder concerns but
response is cursory, illogical, or
not appropriately conveyed to all
stakeholders
Does not provide a rationale for
proposed changes or explain how
the proposed changes will
achieve targeted organizational
goals and address stakeholder
concerns
6.3
Presentation:
Implications
Meets ?Proficient? criteria and
response demonstrates a
sophisticated awareness of how
to communicate appropriate and
relevant information for all
stakeholders
Explains the implications of
implementing the new system for
the organization and for different
employee populations in a
manner such that each key
stakeholder understands why the
changes are being implemented,
conveyed appropriately for all
stakeholders
Explains the implications of
implementing the new system for
the organization and for different
employee populations in a
manner such that each key
stakeholder understands why the
changes are being implemented,
but explanation is cursory,
illogical, or is not conveyed
appropriately to all stakeholders
Does not explain the implications
of implementing the new system
for the organization and for
different employee populations
in a manner such that each key
stakeholder understands why the
changes are being implemented
6.3
Articulation of
Response
Submission is free of errors
related to citations, grammar,
spelling, syntax, and organization,
and is presented in a professional
and easy to read format
Submission has no major errors
related to citations, grammar,
spelling, syntax, or organization
Submission has major errors
related to citations, grammar,
spelling, syntax, or organization
that negatively impact readability
and articulation of main ideas
Submission has critical errors
related to citations, grammar,
spelling, syntax, or organization
that prevent understanding of
ideas
5.52
Total 100%

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