1 Public Employees Benefits Board 2006 Medical Procurement July 12, 2005 Richard Onizuka, Health...
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Transcript of 1 Public Employees Benefits Board 2006 Medical Procurement July 12, 2005 Richard Onizuka, Health...
11
Public Employees Benefits BoardPublic Employees Benefits Board
2006 Medical Procurement2006 Medical Procurement
July 12, 2005July 12, 2005
Richard Onizuka, Health Care PolicyRichard Onizuka, Health Care PolicyWashington State Health Care AuthorityWashington State Health Care Authority
22
2006 Purchasing Environment2006 Purchasing EnvironmentGoalsGoals
Stay within fiscal limits set by the Stay within fiscal limits set by the Legislature in the budgetLegislature in the budget
Provide health plans that compare well Provide health plans that compare well with other quality employerswith other quality employers
Ensure adequate access to providers and Ensure adequate access to providers and hospitals for employees and retirees in all hospitals for employees and retirees in all countiescounties
Encourage the use of quality providers and Encourage the use of quality providers and evidence-based medicineevidence-based medicine
33
2006 Purchasing Environment2006 Purchasing EnvironmentBudget AssumptionBudget Assumption
Washington State Fiscal GrowthWashington State Fiscal Growth
2005/2009 Projection: 3.8%2005/2009 Projection: 3.8%
Budgeted Health Care Bid Rate Trend Budgeted Health Care Bid Rate Trend
8.5% 8.5%
Employee Contributions Employee Contributions
12% Weighted Average12% Weighted Average
44
2006 Purchasing Environment2006 Purchasing Environment
13.9%
11.9%
8.0%
3.8%
6.8%
13.2%
16.1%
10.8%
19.9%
13.2%9.8%
14.8%
4.2%3.3% 2.9% 2.8% 3.3% 3.2%
4.1%
15.1%15.4%
12.2%14.4%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1998 1999 2000 2001 2002 2003 2004 2005
PEBB Non-Medicare Premium Increases WA State Fiscal Growth HCA Medical Cost Increases
55
2006 Purchasing Environment2006 Purchasing Environment
CalPERS 2006 Non-Medicare CalPERS 2006 Non-Medicare Premium Increase: 8.9% Overall Premium Increase: 8.9% Overall AverageAverage
Hewitt Association 2006 prediction:Hewitt Association 2006 prediction:Nationally, 12.4% MCO rate increase Nationally, 12.4% MCO rate increase
66
Overview and Board ActionOverview and Board Action
EligibilityEligibility
BenefitsBenefits
Non-Medicare PremiumNon-Medicare Premium
Medicare Explicit SubsidyMedicare Explicit Subsidy
77
Eligibility RulesEligibility Rules(Requires Board Action)(Requires Board Action)
HCA Recommends Adoption of the HCA Recommends Adoption of the Proposed Eligibility Rules under WAC Proposed Eligibility Rules under WAC 182-08 and WAC 182-12. 182-08 and WAC 182-12.
88
Benefit RecommendationsBenefit Recommendations
UMP PPO & UMP NeighborhoodUMP PPO & UMP Neighborhood
Bariatric SurgeryBariatric Surgery
99
Description of Benefit Changes UMP PPO
UMP Neighborhood
$30 premium rebate (one-time) for healthy lifestyle and use of preventive care services (NEW)
√ √
Cover routine eye exams once per year (now once every 2 years) √ √Same network benefits in other states as currently provided for services in Washington/Oregon (now 80% for network services in other states)
√ no
Increase the annual out-of-pocket maximum to $1,500 per individual / $3,000 per family (now $1,125 per individual / $2,250 per family)
√ √
Separate 16-visit massage therapy benefit (now included with Physical, Occupational and Speech Therapy in 60-visit benefit)
√ √
Pay 90% for Tier 1 (generic) prescriptions filled at retail pharmacies(now paid at 80%)
√ √
Enrollee coinsurance cap @ $75 per 30-day supply for Tier 1 and 2 (generic and preferred brand name) prescriptions filled at network retail pharmacies (now capped at $50 per 30-day supply)
√ √
$100 enrollee co-payment for up to 90-day supply of a Tier 3 (non-preferred brand name) prescription filled through mail order(now $80 enrollee co-payment)
√ √
Eliminate annual medical / surgical deductible (now $200 per individual or up to $600 per family)
no √
UMP Benefit Recommendation (Requires Board Action on Overall Benefit Package)
Overall package is cost neutral.
1010
Bariatric SurgeryBariatric Surgery
HCA does not recommend inclusion of HCA does not recommend inclusion of Bariatric Surgery for 2006Bariatric Surgery for 2006
Legislative Directive: Legislative Directive: No Benefit Enhancements if at, or above, budgetNo Benefit Enhancements if at, or above, budget
Bids reflected significant variabilityBids reflected significant variability
Medical evidence is not conclusiveMedical evidence is not conclusive
Benefit not commonly offered by other Benefit not commonly offered by other employersemployers
1111
2006 Non-Medicare Bid Rate2006 Non-Medicare Bid RateOverviewOverview
Budget Assumption Budget Assumption 8.5%8.5%
Initial Procurement Results: 11.8%Initial Procurement Results: 11.8%
Final Procurement Results: Final Procurement Results: 8.0% 8.0%UMP PPO with Alternatives = .8% UMP PPO with Alternatives = .8% UMP NBR with Alternatives = 2.6%UMP NBR with Alternatives = 2.6%MCOs= 14.2%MCOs= 14.2%
1212
Non-Medicare Average Bid Rate Non-Medicare Average Bid Rate IncreasesIncreases
Plan Name
1-Year Bid Rate Avg. I ncrease
(2005-2006)
3-Year Bid Rate Avg. I ncrease
(2004-2006)
5-Year Bid Rate Avg. I ncrease
(2002-2006)
CHPWA 9.8% 19.0% 15.3%Group Health Coop. 15.2% 11.3% 13.9%Kaiser Foundation 10.9% 14.0% 12.9%Options Health Care 18.9% 13.6% 15.3%PacifiCare 10.3% 16.8% 16.4%Regence 13.1% 15.5% 16.3%UMP PPO 0.8% 7.0% 10.1%UMP Neighborhood 2.6% n/a n/a
Notes: 1) Increases shown are average increases in normalized bid rates after implemented benefit changes. 2) Average increases are simple unweighted averages and do not reflect enrollment shifts. 3) UMP Neighborhood first offered January 1, 2004. 2005 increase was 14.0%
1313
Increase in Average Non-Medicare Increase in Average Non-Medicare ContributionsContributions
$13 $14 $14
$27$37
$72$79
$68
$81
$-$10$20$30$40$50$60$70$80$90
CY1998
CY1999
CY2000
CY2001
CY2002
CY2003
CY2004
CY2005
CY2006
Year
Avg E
mplo
yee
Contr
ibuti
on
2006 Contribution does not include “switching assumptions”
1414
Change in Non-Medicare Bid RateChange in Non-Medicare Bid RateSubscriber Only (First Tier)Subscriber Only (First Tier)
Plan Name 2005 First Tier
Normalized Bid Rate 2006 First Tier
Normalized Bid Rate
Employee Contribution change from 2005 1st Tier
CHPWA $ 384.73 $ 422.62 $ 16
Group Health Coop. $ 348.43 $ 401.41 $ 31
Kaiser Foundation $ 364.95 $ 404.89 $ 18
Options Health Care $ 376.40 $ 447.54 $ 50
PacifiCare $ 436.18 $ 481.18 $ 23
Regence $ 429.80 $ 486.23 $ 34
UMP PPO $ 361.10 $ 364.05 $ (19)
UMP Neighborhood $ 352.60 $ 361.87 $ (13)
1515
Employee ContributionsEmployee Contributions(Requires Board Action)(Requires Board Action)
CY 2005 CY 2006 CY 2005 CY 2006 CY 2005 CY 2006 CY 2005 CY 2006
Plan Name Subscriber Subscriber Sub. & Spouse
Sub. & Spouse
Sub. & Child(ren)
Sub. & Child(ren) Full Family Full Family
CHPWA 57$ 73$ 123$ 155$ 99$ 127$ 166$ 210$ Group Health Coop. 20$ 51$ 51$ 113$ 36$ 90$ 66$ 151$ Kaiser Foundation 37$ 55$ 84$ 120$ 65$ 96$ 112$ 161$ Options Health Care 48$ 98$ 107$ 205$ 85$ 171$ 143$ 278$ PacifiCare 108$ 131$ 226$ 272$ 189$ 230$ 307$ 371$ Regence 102$ 136$ 214$ 282$ 178$ 238$ 290$ 385$ UMP PPO 33$ 14$ 76$ 38$ 58$ 25$ 101$ 49$ UMP Neighborhood 25$ 12$ 59$ 34$ 43$ 21$ 78$ 43$
CY 2006 Estimated Required Premium pspm $676CY 2006 Estimated Employer Contribution pspm $595Average Employee Contribution $81% Employee Contribution of Required Premium 12.0%
Budget Assumption 12.0%Variance 0.0%
1st Tier 2nd Tier 3rd Tier 4th Tier
1616
2006 Medicare Bid Rate2006 Medicare Bid RateOverviewOverview
Budget Assumption: 13.5%Budget Assumption: 13.5%
Procurement Results: 10.2%Procurement Results: 10.2%
MCOs= 13.4%MCOs= 13.4%
UMP= 7.8%UMP= 7.8%
1717
Medicare Average Bid Rate Medicare Average Bid Rate IncreasesIncreases
Plan Name
1-Year Bid Rate Avg. I ncrease
(2005-2006)
3-Year Bid Rate Avg. I ncrease
(2004-2006)
5-Year Bid Rate Avg. I ncrease
(2002-2006)
CHPWA 9.3% 19.4% 15.7%Group Health Coop. 17.1% 15.7% 19.1%Kaiser Foundation 21.3% 16.0% 16.0%Options Health Care 25.1% 24.9% 20.8%PacifiCare 1.4% 24.4% 22.5%Regence 3.3% 17.5% 14.0%UMP PPO 7.8% 13.8% 7.5%
Notes: 1) Increases shown are average increases in normalized bid rates after implemented benefit changes. 2) Average increases are simple unweighted averages and do not reflect enrollment shifts. 3) UMP Neighborhood is not offered to the Medicare risk pool.
1818
2006 Estimated 2006 Estimated Medicare Retiree ContributionMedicare Retiree Contribution
Plan Name2005 First Tier Retiree Pays
2006 Estimated First Tier
Retiree Pays
Dollar Increase
Retiree Pays Since 2005
2006 Projected Percent of
Retiree Enrollment
CHPWA 210.75$ 228.56$ 18$ 0.7%Group Health Coop. 152.41$ 185.48$ 33$ 27.8%Kaiser Foundation 111.26$ 137.42$ 26$ 3.5%Options Health Care 209.83$ 278.19$ 68$ 1.1%PacifiCare 173.84$ 165.46$ (8)$ 9.1%Regence 306.85$ 308.48$ 2$ 1.4%UMP PPO 183.20$ 194.07$ 11$ 56.3%
1919
Increase in Medicare Retiree Increase in Medicare Retiree SubsidiesSubsidies
$41.26 $43.16
$62.48$69.98
$85.84$92.74
$102.35
$116.19
$131.84
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
CY1998
CY1999
CY2000
CY2001
CY2002
CY2003
CY2004
CY2005
CY2006
Year
Su
bs
idy
pe
r R
eti
ree
Pe
r M
on
th
2020
2006 Medicare Retiree Subsidy2006 Medicare Retiree Subsidy(Requires Board Action)(Requires Board Action)
Retiree Subsidy: $131.84Retiree Subsidy: $131.84
2121
2007 and Beyond2007 and Beyond
2222
Data Analysis and DiagnosisBusiness and HR Priorities
Enrollment, costs and demographics Cost drivers and savings opportunities
Traditional Tactics Advanced Strategies
Large Employer Health Care Strategies
Plan Design• Types of plans• Number of choices• Cost Sharing• Service-related offerings• Pay-related designs• Pharmacy• Savings/spending
accounts
Contributions• Percentage of cost• Salary stratified• Indexed to plan costs• Tiered for family size• Risk-related• Opt-out credits (cash)
Financing• Funding decision –
insured, self-insured, minimum premium
• Gain sharing• Employee self-funding –
FSA, HRA
Vendors• Vendor selection• Performance measures• Clinical capability• Operational audits• Network strategy• Renewal negotiation
Maintain a healthy workforce• Identification of health
risks• Health promotion
programs• Self-care assistance• Health risk management• Incentives for health
awareness – risk appraisal participation
Engage employees in behavior change• Raise cost awareness
through education and cost sharing
• Education about cost and health conditions
• Tools about provider cost and quality
• Availability of savings accounts
Focus on high costpopulation• Disease management• Case management• Maternity programs
•Advocacy programs• Incentives for care
management compliance• Integrate information
and/or care management with disability and worker’s compensation
Purchase Highest Quality and MostCost Effective Care• High performance
network• Collective purchasing• Supply chain purchasing• National initiatives for
quality improvement