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University of Alaska

University of Alaska. Mike Humphrey Director of Benefits April 2010 Open Enrollment. Topics. July 1, 2010 Health Plan Changes Health plan costs Employee charges Health Care Reform. University of Alaska’s Health Plan . Starting July 1, 2010. Our Problem.

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University of Alaska

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  1. University of Alaska

    Mike Humphrey Director of Benefits April 2010 Open Enrollment
  2. Topics July 1, 2010 Health Plan Changes Health plan costs Employee charges Health Care Reform

  3. University of Alaska’sHealth Plan

    Starting July 1, 2010
  4. Our Problem 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).
  5. Health Plan Committees Joint Health Care Committee Made up on management, staff governance and union leadership Staff Health Care Committee Made up of governance staff
  6. What does 1% to 3% reduction in health plan costs mean to UA and its employees?
  7. Joint Health Care Committee 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.
  8. The Findings 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
  9. The Final Recommendations 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
  10. The Final Recommendations cont. 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.
  11. The Final Recommendations cont. Implement Caremark’s expanded communication programs. Implement Caremark’s Specialty Guideline Management program.
  12. Why Change Pharmacy? 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
  13. 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
  14. The Final Recommendations cont. 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.
  15. Why Change Chiropractic Services? UA’s average – 9 visits per member 62 members received 30 or more visits during the reporting period
  16. Why Change Physical & Massage Therapy? 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
  17. The Final Recommendations cont. 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.
  18. Why Change the Deluxe Plan? 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
  19. The Final Recommendations cont. 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.
  20. 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.
  21. 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.
  22. 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.
  23. 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.
  24. Estimated Cost Reduction $1.2 to $1.5 Million Estimated cost reductions have been factored into FY 2011 employee charges

  25. University of Alaska’sHealth Plan

    Employee Rate SettingFor FY11
  26. Aetna Premera UA Choice UA 2000 Wellness Programs
  27. UA Health Care Projections March 2010 Projections 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
  28. FY12-FY14 Claims Projection
  29. What JHCC Discussed for Rates 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 plan
  30. What JHCC Recommended 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

  31. Health Care ReformWhat a Rollercoaster

  32. 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
  33. Health Reform Issues 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 Dependent Coverage Annual & Lifetime Max
  34. Health Reform Issues 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. Waiting Periods Comparative Effectiveness Research Fee
  35. Health Reform Issues 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 ??? Pre-existing Conditions Preventive Benefits
  36. Health Reform Issues 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 Health Flexible Spending W-2 Reporting
  37. Health Reform Issues 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 Annual distribution of coverage notice Appeals Process
  38. Health Reform Issues 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 Cost Sharing High Cost Plan Tax
  39. Health Reform Issues 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.  Long-Term Care Provider Fees
  40. The Future 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
  41. Questions

  42. Mike Humphreymjhumphrey@alaska.edu907.450.8226

    Erika Van Flein ervanflein@alaska.edu 907.450.8227
  43. UA Choice Plan Rates Effective July 1, 2010
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