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University of AlaskaMike Humphrey
Director of Benefits
April 2010Open Enrollment
July 1, 2010 Health Plan Changes Health plan costs Employee charges Health Care Reform
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Topics
University of Alaska’sHealth Plan
Starting July 1, 2010
Employees are typically no more concerned about wisely spending healthcare dollars than a teenager is when shopping with a parents credit card.
25% of our healthcare dollars are spent on preventable conditions - lifestyle issues. (Centers for Disease Control and Prevention).
Consumers can estimate the price of a Honda Accord within 3%, but are 56% off on a four day hospital stay (Harris Interactive survey).
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Our Problem
Joint Health Care Committee◦ Made up on management, staff governance and
union leadership
Staff Health Care Committee◦ Made up of governance staff
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Health Plan Committees
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What does 1% to 3% reduction in health plan costs mean to UA and its employees?
1% 2% 3%
(2,000,000.00)
(1,800,000.00)
(1,600,000.00)
(1,400,000.00)
(1,200,000.00)
(1,000,000.00)
(800,000.00)
(600,000.00)
(400,000.00)
(200,000.00)
-
UA and JHCC hired a consultant to review our health plan’s use and costs.
Focus of the review was on:◦ Medical Claims◦ Pharmacy Claims◦ Disease Management Program
The analysis done by Fall River, in conjunction with information from Blue Cross and Caremark, found a number of issues.
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Joint Health Care Committee
Unless there is prompt and substantial intervention, the cost of the UA Choice plan will double in the next 7 years from $60 million to $120 million annually
Such an outcome would be untenable for the University and all employees
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The Findings
Retain a consultant who can provide quarterly updates to the health committees about plan costs and utilization patterns.
Retain a consultant who can conduct a Return On Investment (ROI) analysis of the wellness programs.
Modify the eligibility provision of UA Choice to require a 30 day waiting period prior to the effective date of health coverage for all new employees
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The Final Recommendations
Increase the retail co-pay by $5 for preferred (Tier 2) and non-preferred (Tier 3) name brand prescription drugs (with corresponding increases in mail order co-pays),
Raise the Pharmacy Out of Pocket Limit from $800 to $1000
Eliminate the Dispense as Written provision and implement the Performance Step Therapy program.
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The Final Recommendations cont.
Implement Caremark’s expanded communication programs.
Implement Caremark’s Specialty Guideline Management program.
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The Final Recommendations cont.
FY09 plan changes yielded positive results: FY08 costs increase by 7.8% versus FY09 costs decrease by a negative 6.7%
The major result, more generic medications were dispensed
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Why Change Pharmacy?
There is still room for improvement: UA’s generic dispense rate – UA is at 55%, below industry average of 62%
Mail order utilization: 41% of scripts are maintenance drugs that are filled at retail instead of mail order
Medication adherence rate low
Each 1% increase in the use of generics will save the plan $75,000
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Why Change Pharmacy?
Implement a plan year maximum of 26 visits per year/per enrollee for Chiropractic care and 26 visits per year/per enrollee for Physical and Massage Therapy
With a recertification process for enrollees requiring additional treatments beyond this limit.
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The Final Recommendations cont.
UA’s average – 9 visits per member
62 members received 30 or more visits during the reporting period
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Why Change Chiropractic Services?
UA’s average –11.6 per member
174 members received 30 or more visits during the reporting period
77% of visits appear to be unrelated to surgical or inpatient follow-up
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Why Change Physical & Massage Therapy?
Review of the use/claims of the Deluxe, Standard and Economy plans were carrying a lot of the Deluxe Plans costs.
Adjust the employee contribution rate on the Deluxe Plan to more closely represent the value of the plan.
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The Final Recommendations cont.
The per person cost for the Deluxe plan is almost double that of the Standard plan and five times the Economy plan
48% of the claims on the Deluxe plan were in excess of $50,000 pointing to a catastrophic illness burden concentrated in the Deluxe plan.
The illness burden for the Deluxe plan outpaces its age & gender and plan differences
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Why Change the Deluxe Plan?
Implement a Value Based Benefit program that coordinates with the disease management vendor’s programs.
Authorize WIN for Alaska to share Health Risk Assessment and biometric data collected by WIN with the disease management vendor. With employee knowledge and consent. Confidentiality and security of this information would be strictly maintained.
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The Final Recommendations cont.
The University needs to boost its leaders’ involvement in and support for Wellness activities.
A leadership conference is recommended, along with periodic meetings of leaders that would focus on the importance of Wellness efforts and their role in supporting this UA system initiative.
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The Final Recommendations cont.
Open up IHPs to employees located at rural campuses (if sessions at the main campuses are not filled).
Contract with a vendor for a bi-monthly healthcare/wellness newsletter that can be posted on the web, emailed to employees and sent home.
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The Final Recommendations cont.
Conduct further analysis of the concept of “domestic medical tourism.”
Send an annual mailing to each employee containing a list of currently enrolled dependents on the health plan.
Require proof of a dependent’s eligibility as of July 1, 2010 for all new employees, re-hires employees coming back on the plan and when life events occur that cause dependents to be added to the plan.
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The Final Recommendations cont.
Switch Disease Management vendors from Premera/Healthways to Caremark/ALERE effective 7/1/2010.
Expand the requirements for the $100 Wellness Incentive.
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The Final Recommendations cont.
$1.2 to $1.5 Million
Estimated cost reductions have been factored into FY 2011 employee charges
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Estimated Cost Reduction
University of Alaska’sHealth Plan
Employee Rate Setting For FY11
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$0
$10,000,000
$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10
13,887,609.6517,891,969.36
39,434,927.22
60,930,583.15
Total Health Plan Costs
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-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
92 93 94 95 96 97 98 99 2000 01 02 03 04 05 06 07 08 09 10
1.16%
8.71%
-8.22%
14.11%
-4.02%
5.11%
20.50%
15.56%
4.90%
10.63%
13.72%
9.23%
Total FY Percentage Inc(dec) claims
Aetna Premera
UA ChoiceWellness Programs
UA 2000
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UA Health Care ProjectionsMarch 2010Projections
If the plan costs continues to grow at XX% what will
the total plan costs at the end of
the fiscal year ?June 30 2011
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FY12-FY14 Claims Projection
FY10 Proj FY11 Proj FY12 Proj FY13 Proj FY14 Proj$20,000,000
$30,000,000
$40,000,000
$50,000,000
$60,000,000
$70,000,000
$80,000,000
$90,000,000
$100,000,000
If UA should use any over recovery
If UA should use all of the over recovery
If UA should reallocate some costs to the Deluxe plan because of its claims experience
If UA should change the deductibles and out of pockets for the plan
If UA should delete the Deluxe plan30
What JHCC Discussed for Rates
If UA should use all of the over recovery - YES $2.4 million
If UA should reallocate some costs to the Deluxe plan because of its claims experience – YES
If UA should change the deductibles and out of pockets for the plan – YES for the Deluxe plan only
If UA should delete the Deluxe plan – NO not at this time
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What JHCC Recommended
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$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY 05 Annual Charge
FY 06 Annual Charge
FY07 Annual Charge
FY08 Annual Charge
FY09 Annual Charge
FY10 Annual Charge
FY11 Annual Charge
$768
$1,424
$672 $605
$672 $768
$1,116
$2,148
$3,431
$1,016 $914
$1,016
$2,150
$3,125
UA Choice Standard PlanAnnual Employee Charges
Employee Employee + Spouse Employee + Child(ren) Employee + Family
Health Care ReformWhat a Rollercoaster
Implications of Health Reform
President signed Senate bill signed into law March 23, 2010.
President signs reconciliation bill into law March 30, 2010.
This is a complex & challenging new law with many unique requirements
Health and Human Services (HHS) on point for implementation and writing the final regulations
First set of changes for UA’s plans on July 1, 2011.◦ The start of our plan year
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Health Reform IssuesDependent Coverage Annual & Lifetime Max
Coverage for adult children to age 26, regardless of marital or student status.◦ If not eligible for other
group coverage◦ Applies even if the child
is not a tax dependent◦ Effective 7/1/2011
No lifetime plan maximums◦ Effective 7/1/2011
Complete elimination of annual plan limits◦ Effective 7/1/2014
HHS will establish rules permitting certain restrictions on annual dollar limits prior to 2014
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Health Reform IssuesWaiting Periods Comparative Effectiveness
Research Fee
Waiting periods for health care coverage of more than 90 days will be prohibited◦ Starting July 1, 2010 UA
Choice will have a 30 day waiting period.
◦ Effective 7/1/2014
Beginning in 2012, the Act imposes a fee of $2.00 per covered life per calendar year to fund comparative effectiveness research.
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Health Reform Issues
Pre-existing Conditions Preventive Benefits
Not permitted for children under 19◦ Effective 7/1/2011
No pre-existing conditions permitted for all plan enrollees◦ Effective 7/1/2014
Must provide first dollar coverage for evidence based preventive care◦ Evidence based services
that have a rating of ‘A’ or ‘B’ in the current recommendations of the United States Preventive Task Force
◦ Effective ???
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Health Reform IssuesHealth Flexible Spending
W-2 Reporting
Over the counter drugs no longer reimbursable under a medical FSA◦ Unless your physician
writes you a prescription◦ Effective 1/1/2011
Annual contributions to a medical FSA limited to $2,500◦ Effective 1/1/2013
Employers required to report the “value” of the health benefits provided to each employee on their W-2◦ Value defined as COBRA
cost◦ Effective 1/1/2011
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Health Reform IssuesAnnual distribution of coverage notice
Appeals Process
Annual distribution of summary of benefits coverage◦ Not to exceed 4 pages;
12 point font◦ Culturally and
linguistically appropriate◦ Effective 3/23/2011
Employer plans must have HHS approved external review process◦ Effective 7/1/2011
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Health Reform Issues
Cost Sharing High Cost Plan Tax
Deductibles cannot exceed $2,000 single & $4,000 family◦ Effective 7/1/2014
High cost excise tax for “Cadillac” plans ◦ Single coverage $10,200◦ Family coverage $27,500◦ Effective 7/1/2018
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Health Reform Issues
Long-Term Care Provider Fees
The Act creates a new, voluntary, public long-term care insurance program beginning in 2011.
The Act imposes annual fees on various health care providers, including pharmaceutical manufacturers, medical device manufacturers, and health insurers.
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We have national health reform to implement over the next 8 years
UA and its health committees will need to take a closer look at:◦ Plan Costs◦ Plan Design
Hard decisions will have to be made but quick fixes often backfire
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The Future
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Questions
Deluxe Plan26 Pay Periods Bi-
weekly19 Pay Periods Bi-
weeklyFY11 Annual
ChargeEmployee Only $ 97.97 $ 134.06 $ 2,547Employee + Spouse $195.94 $ 268.12 $ 5,094Employee + Child(ren) $176.32 $ 241.28 $ 4,584Employee + Family $274.28 $ 375.33 $ 7,131
Standard PlanEmployee Only $ 42.93 $ 58.74 $ 1,116Employee + Spouse $ 85.86 $ 117.48 $ 2,232Employee + Child(ren) $ 77.28 $ 105.74 $ 2,009Employee + Family $120.20 $ 164.48 $ 3,125
Economy PlanEmployee Only $ 15.20 $ 20.79 $ 395Employee + Spouse $ 30.40 $ 41.58 $ 790Employee + Child(ren) $ 27.36 $ 37.43 $ 711Employee + Family $ 42.55 $ 58.22 $ 1,106
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UA Choice Plan Rates Effective July 1, 2010
