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2011 Changes to WMC Medical Benefit Plan

2011 Changes to WMC Medical Benefit Plan. Final Draft 10/14/2010. WMC Board of Pension, & Health & Welfare Benefits (“the Board”) is committed to maintaining a sustainable Medical Benefit Plan that will provide quality health care for active clergy and retirees of the WMC.

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2011 Changes to WMC Medical Benefit Plan

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  1. 2011 Changes to WMC Medical Benefit Plan Final Draft 10/14/2010

  2. WMC Board of Pension, & Health & Welfare Benefits (“the Board”) is committed to maintaining a sustainable Medical Benefit Plan that will provide quality health care for active clergy and retirees of the WMC.

  3. The primary objectives of the Medical Benefit Strategy are summarized as follows: • To maintain reasonable access to high quality medical service providers • To limit financial risk exposure and provide financial security in event of catastrophic medical conditions • To maintain a medical benefit plan which is financially stable and sustainable on a long-term basis

  4. The primary objectives of the Medical Benefit Strategy are summarized as follows: • To provide a reasonable balance in the Plan cost sharing between clergy and churches (direct and indirect cost sharing provisions) • To support a family focused premium cost sharing approach which keeps family medical coverage affordable for clergy and conference staff.

  5. After the 2011, changes, the WMC Medical Benefit Plan will still be a top tier program which • has higher Benefit Coverage Levels and • charges lower Participant Premium Cost Sharing Contribution Levels than most comparable medical benefit plans

  6. WMC Medical Benefit Plan will still rank within the top quartile when compared to medical benefit plans sponsored by other Methodist Conferences. • The average participant premium cost sharing level for other Methodist Conferences exceeds 20% of the premium expenses. • Annual Deductible and Copayment levels are generally higher under medical plans for most Methodist Conferences

  7. WMC Medical Benefit Plan would be ranked well above median market levels regardless of the comparison standard or benchmark which is applied • WMC Plan benefit coverage levels are higher and premium cost sharing levels are lower than most comparable medical plans

  8. The average 2011 premium cost of the WMC Preferred Provider (PPO) Medical Benefit Plan will exceed $14,000 per year. The total Funding Expense for the WMC Medical Benefit Plan exceeds $4.5 million in 2011.

  9. Medical Plan expenses are a major cost factor in the delivery of total compensation for clergy and conference staff. As the primary stakeholders involved, the clergy, churches and Conference all have a vested interest in more effectively managing the benefit delivery and the costs of the WMC Medical Plan.

  10. The Board is charged with the responsibility to proactively & effectively manage the benefit delivery and costs of the WMC Medical Plan to support the long-term financial stability and viability of this program. The 2011 Benefit changes are designed to respond to the actual 2009/2010 claims experience under the self-funded Plan and the changing dynamics of the medical benefit environment.

  11. Increase of the Surcharge for Nonparticipating Churches • The Medical Plan Surcharge for Churches with clergy who do not participate under the Medical Plan will be increased from $1,200 to $3,000 per year in January 2011. • The $3,000 Surcharge is 21% of the Blended Medical Premium Rate which is charged to Participating Churches • The Current Surcharge of $1,200 per year was initially implemented in January, 2004 and has not been increased since that time.

  12. Increase of the Surcharge for Nonparticipating Churches • If this Surcharge had been adjusted by an annual Medical Inflation Factor after implementation, the current Surcharge level would be in the range of $1,900 to $2,000 per year at this time. • Long-term Cost Allocation Target for this Surcharge is 40% to 50% of the Blended Medical Premium Rate which is in effect during future years. • To reach this Targeted Long-term Surcharge Objective, future adjustments will be phased in between 2012 & 2014

  13. Rationale for Increasing Medical Plan Surcharge to Nonparticipating Churches • To support the funding and long-term financial viability and sustainability of the Medical Benefit Plan • To allocate a larger portion of the funding for the Mandatory Medical Coverage for Clergy among all Churches (not just Participating Churches) • Total Surcharge Payments by Nonparticipating Churches will only amount to 5%-6% of Consolidated Premium Funding for Medical Plan

  14. Rationale for Increasing Medical Plan Surcharge to Nonparticipating Churches • To support the Clergy appointment process and reduce the compensation cost differentials between Clergy with medical benefit coverage and those without medical coverage. • To support the Connectional system of health care for clergy & Conference staff.

  15. Primary Reasons for Making Plan Changes 1. To maintain the long-term financial viability & sustainability of the Medical Benefit Plan 2. To control the overall Plan costs and slow the growth in the utilization trends in 2011 and beyond 3. To achieve immediate cost savings and reduce the cost of maintaining the Medical Plan in 2011 & 2012

  16. Primary Reasons for Making Plan Changes 4. To address the rising costs under specific components of the Medical Plan (i.e. particularly the benefit coverages for Prescription Drugs, Out-of-Network Medical services, Hospital Emergency Care, Physician Care, etc.) 5. To balance the higher Premium/ Funding Costs of the Medical Plan between Participants and the Churches/ Conference

  17. Primary Reasons for Making Plan Changes 6. To balance the increase in Plan Funding Costs between • Direct Participant Cost Sharing (i.e. premium contribution payments by participants); and, • Indirect Participant Cost Sharing (i.e. deductible, copayments, and coinsurance payments under the Medical Plan).

  18. Primary Reasons for Making Plan Changes 7. To modify the PPO Plan Structure and make it a more consumer driven program • Maintain service delivery flexibility of PPO structure with service choices by participants • Encourage utilization of lower cost services under the In-Network coverage • Discourage utilization of higher cost services under Out-of-Network coverage

  19. Comparison of Expected Claims versus Actual Medical & Drug Expense Levels

  20. Primary Reasons for Higher Claims Cost Levels • Exceptionally high Drug Utilization Levels as well as Unusually high Utilization of & Cost Levels for Branded Prescription Medications • Large Number of Major Medical Claims- 19 Major Claims (Exceeding $35,000 per claim) totaling over $975,000 or approximately 24% of the total claims costs to-date. • None of the Major Claims exceeded the Deductible Limit of the Specific Stop Loss Insurance Coverage to qualify for reimbursement payment to the Plan

  21. 2011 Premium/ Funding Increases Determined by Claims Cost • The Funding Method has no impact on the Medical and Drug Claims Expense under the Plan • Claims Costs are determined by the utilization patterns of the participants and their families. • Claims cost level would be the same regardless of funding method (i.e. insured or self-funded) • The Premium or Funding Cost is determined by the medical and drug claims costs under the Plan • Approximately 90% of the Medical Plan Costs are directly claims related (i.e. medical & drug claims costs plus stop loss insurance premiums)

  22. 2011 Premium/ Funding Increases Determined by Claims Cost The 2011Medical Premium Rate increases are a direct result of higher than expected Medical and Drug utilization and claims cost levels. 2011 Premium Rate increases would be necessary regardless of the Plan Funding Method.

  23. 2011 Premium/ Funding Increases Determined by Claims Cost In fact, the Premium Rate increases would have been even higher under an insured funding approach. Based on a recent insurance proposal, the 2011 annual premium expense for a PPO Insurance Plan thru BC/BS with a comparable benefit structure to the current PPO Plan would be in $5.0 million range.

  24. Scope of 2011 Changes to Medical Benefit Coverages • The overall scope of the 2011 Plan Changes is more comprehensive/ broader because- • The higher claims costs have dictated this action, and • there is also a certain degree of catch-up involved with the 2011 revisions. • Benefit Coverage levels under the current PPO structure have not been revised since the implementation of the existing structure

  25. Scope of 2011 Changes to Medical Benefit Coverages • A commitment was made by the Board to retain the current PPO benefit structure thru 2010 as part of conversion to a self-funded program. • Some of the 2011 Changes would otherwise have been made in 2009 & 2010 if the Plan had not been converted to self-funded arrangement.

  26. Summary of 2011 Cost Reduction Estimate for Medical Benefit Plan

  27. Summary of 2011 Cost Reduction Estimate for Medical Benefit Plan

  28. Expected Overall 2011 Allocation of Funding or Cost Sharing for Medical Plan

  29. 2011 Participant Contribution Payment Schedule2011Blended Premium Rate is $1,192 per month or $14,304 annually (Blended Rate Includes Medical & Dental Premiums)

  30. Expected Average Participant Premium Contribution Payment is 12.4% based on Salary Distribution Churches & Conference Pay 87.6% of Annual Premium Expense or Approximately $12,400 per clergy

  31. Estimated 2011 Consolidated Medical Benefit Cost Sharing by Participants

  32. Plan Structure Remains Unchanged in 2011 Basic Plan Structure will continue to be a Preferred Provider (PPO) Plan with participants selecting their service providers. Plan Coverage will vary between In-Network and Out-of-Network Medical Services. • The Coverance variances will increase between In-Network and Out-of-Network Benefit levels.

  33. Plan Structure Remains Unchanged in 2011 • Self-funded Plan will continue to be administered by Professional Benefit Services (PBS) • PPO Provider Network will be provided thru Cofinity • Express Scripts remains the Prescription Drug Benefit Manager

  34. Maximum Plan Benefit Limitations are Unchanged for 2011 • Maximum Annual Benefit Limit remains unchanged at $2.0 million per year. • Maximum Benefit Limit for Organ Transplants is unchanged at $1.0 million per transplant surgery.

  35. Reasons for Changes to Primary Benefit Features (Deductible Limits, Copayment Levels & Out-of-Pocket Maximum Limits) 1. To produce immediate cost savings for the Plan in 2011 2. To increase the Indirect Cost Sharing features of the Plan towards Median/ Average Market Levels (i.e. Deductible, Copayments, Maximum Out-of-Pocket Payment Limits)

  36. Reasons for Changes to Primary Benefit Features (Deductible Limits, Copayment Levels & Out-of-Pocket Maximum Limits) 3. To balance the increase in the Participant costs resulting from the higher claims cost between Direct Cost Sharing (i.e. higher participant premium payment levels) and Indirect Cost Sharing under the Plan Coverage features (i.e. higher Deductible, Copayment level and Maximum Out-of-Pocket Payment Levels). 4. To shift a larger share of the Overall Plan Costs to Participants utilizing the Medical Coverage by increasing the Indirect Cost Sharing Features of the Plan (i.e. higher deductibles, Copayments, & Maximum Out-of-Pocket Expense/ Payment levels.

  37. Changes to Primary Benefit Features of Medical Coverage In-Network Benefit Coverage • A Graduated, Salary based In-Network Deductible Schedule will be maintained in 2011 • In-Network Annual Individual Deductible Expense Levels: • Tier #1 Under $35,000- Deductible increased to $150 from $100 • Tier #2 $35,001-$55,000- Deductible increased to $225 from $150 • Tier #3 Over $55,000- Deductible increased from $300 from $200

  38. Changes to Primary Benefit Features of Medical Coverage In-Network Benefit Coverage • In-Network Annual Family Deductible Expense Levels: • Tier #1- Under $35,000- Family Deductible increased to $300 from $200 • Tier #2- $35,001- $55,000- Family Deductible increased to $450 from $300 • Tier #3- Over $55,000- Family Deductible increased to $600 from $400

  39. Changes to Primary Benefit Features of Medical Coverage Out-of-Network Benefit Coverage • Out-of-Network Coverage changes are targeted to reduce the out-of-network utilization patterns under the Plan. • Out-of-Network Annual Individual Deductible Expense Level increased to $800 from $400 • Out-of-Network Annual Family Deductible Expense Level increased to $1600 from $800

  40. Changes to Primary Benefit Features of Medical Coverage In-Network Benefit Coverage • In-Network Coinsurance Payment Level remains unchanged at Plan-90% & Participant- 10% • In-Network Individual Maximum Out-of-Pocket Expense Limit is increased to $650 per year from $500 • In-Network Family Maximum Out-of-Pocket Expense Limit is increased to $1,300 per year from $1,000

  41. Changes to Primary Benefit Features of Medical Coverage Out-of-Network Benefit Coverage • Out-of-Network Coinsurance Payment Level is revised to Plan-60% & Participant 40% from Plan- 70% & Participant- 30% • Out-of-Network Individual Maximum Out-of-Pocket Expense Limit is increased to $3,000 per year from $2,000 • Out-of-Network Family Maximum Out-of-Pocket Expense Limit is increased to $6,000 per year from $3,000

  42. Reasons for Physician Care Benefit Changes Participant Copayment levels for Physician Care Benefit Coverage were increased for the following reasons: • To adjust for medical cost inflation since the original implementation of the PPO Insurance Plan • To reflect median market levels in physician care benefit coverage levels among other medical benefit plan • To reflect the cost differential between primary physician care and specialist physician care and to adjust for the higher cost of specialist care

  43. Reasons for Physician Care Benefit Changes • To adjust for the actual cost differential to the Plan between in-network physician care and out-of-network physician care Reminder: Copayments for Physician Care Benefits are not applied towards Annual Deductible & Maximum Out-of-Pocket Expense Limits.

  44. Coverage Changes to Physician Care Benefit • Routine/ Primary Care Physician Office Visits (General Practitioner) • In-Network Benefit- Copayment increased from $15 to $20 per visit Plan pays100% after $20 Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charge per visit Plan Pays 80% after $35 Copayment

  45. Coverage Changes to Physician Care Benefit • Specialist Physician Care/ Office Visits (Specialist Only) • In-Network Benefit- Copayment increased from $15 to $30 per visit Plan Pays100% after $30 Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $45 Copayment plus 20% of charge Plan Pays 80% after $45 Copayment

  46. Changes to Physician Care Benefits for Allergy Testing & Treatment • Physician Care/ Services for Allergy Testing & Diagnosis • In-Network Benefit- Copayment increased from $15 to 20 per visit Plan Pays 100% of charges after Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charge Plan Pays 80% after $35 Copayment

  47. Changes to Physician Care Benefits for Allergy Testing & Treatment • Physician Care/Services for Allergy Treatment (Serum & Injections) • In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charges to $35 Copayment plus 20% of charges Plan Pays 80% after $35 Copayment

  48. Changes to Physician Care Benefits for Pregnancy & Well Child Care • Physician Care for Pregnancy- Prenatal & Postnatal Care Only (Excludes Delivery & In-Hospital Nursery Care Charges) • In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charges Plan Pays 80% of charges after $35 Copayment

  49. Changes to Physician Care Benefits for Pregnancy & Well Child Care • Physician Services for Routine/ Well Child Care • In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment • Out-of-Network Benefit- Copayment increased from $15 plus 20% of charges to $35 Copayment plus 20% of charges after Copayment Plan Pays 80% of charges after $35 Copayment

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