Public Employees Benefits Board

1. Public Employees Benefits Board April 23, 2002

2. 2003 PEBB Procurement Bid Alternatives

3. Legislative Budget Assumptions • Office visit copayment increase to $15 • 10% reduction in drug benefit

4. 2003 PEBB Bid Alternatives Pharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order Option 1: Tiers Retail Cost ShareMail Order Cost Share Formulary generic, all insulin & disposable diabetic supplies $10 $20 Formulary brand $25 $50 Non-formulary brand $40 $80

5. 2003 PEBB Bid Alternatives Pharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order Option 2: Includes $50/individual deductible Tiers Retail Cost ShareMail Order Cost Share Formulary generic, all insulin & disposable diabetic supplies $10 $20 Formulary brand $25 $50 Non-formulary brand $40 $80

6. 2003 PEBB Bid Alternatives Pharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order Option 4: Bidders are invited to submit a proposal of their own design that aligns with the PEBB philosophy of providing pharmacy benefits as well as producing the necessary 10% cost savings.

7. Additional 2003 PEBB Bid Alternatives Option 1: Out-of-Pocket Maximum • Current design = $750/person, $1500 family • Bid Alternative B = $1500/person, $3000/family Option 2: Hospital Inpatient Co-Pay • Current design = $200/day, max $600/year • Bid Alternative = $250/day, max $750/year

8. Additional 2003 PEBB Bid Alternatives Option 3: Ambulatory Surgical Center Copay • Current design = $100 copay • Bid Alternative = $150 copay Option 4: Ambulance Service • Current design = Air Ambulance $100 • Bid Alternative = Air Ambulance $200

9. Additional 2003 PEBB Bid Alternatives Pharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order Option 3: Includes $100/individual deductible Tiers Retail Cost ShareMail Order Cost Share Formulary generic, all insulin & disposable diabetic supplies $10 $20 Formulary brand $25 $50 Non-formulary brand $40 $80

10. Uniform Medical Plan

11. 2003 UMP Benefit Changes • Medical • Developing three alternative approaches, all with the same overall employee impact • Pharmacy • Legislative budget targets 10% reduction in prescription costs

12. 2003 UMP Benefit Changes • Approach #1 based on legislative budget notes • 85% coinsurance for most services from preferred providers (currently 90%) • Enrollee out-of-pocket limit is also increased proportionally (currently $1,125 per year) • Concerns • Higher coinsurance may discourage needed care

13. UMP Benefit Changes • Approach #2 - Leave coinsurance at 90% but make other changes to achieve same premium impact • Evaluate possible out-of-state networks • Increase annual out-of-pocket limit, hospital copayments, deductible, or other enrollee cost-sharing • Consider expanding services covered in full (i.e. maintain or increase access to preventive care) • Concerns • Impact on particular categoreis of enrollees, such as those with high medical costs

14. 2003 UMP Benefit Changes • Approach #3 - Offer enrollees choice of two UMP benefit designs • Higher premium choice would maintain current UMP benefits • Lower premium choice would have higher deductible, coinsurance, and other enrollee cost-sharing • Current PEBB risk adjustment process would be used to mitigate “adverse selection” • Concerns • Communication challenges • Enrollee understanding of plan choices

15. Quality, Access, and Affordability

16. Plan Report Card • Access • Network Value • Statewide Coverage • Unique Coverage • Capacity/Stability • Consumer Assessments • Quality • Prevention standards (HEDIS) • Consumer Satisfaction (CAHPS) • TEAMonitor Audits • Affordability • Medicare and non-Medicare employee contribution • Overall Performance

17. Non-Financial Incentives • Publicize outcomes by plans, providers and facilities • Use consumer data and performance measures • Produce support tools and educational materials • Use quality data and consumer surveys • Use information to make choices • Use information to demand quality care

18. Leapfrog Seattle-Tacoma-Everett • 100% of invited hospitals responded to the survey (25 hospitals out of 25) • 13 (57%) have at least one Leapfrog patient safety practice • Specifics: • Computer Order Entry: None have fully implemented CPOE • 12 say they plan to implement CPOE by 2004 • ICU Staffing: 3 have fully implemented the IPS practice • 12 say they plan to staff intensivists by 2004

19. Leapfrog Seattle-Tacoma-Everett • Evidence-based Hospital Referral: • 4 meet the coronary artery bypass recommended annual volume • 9 meet the coronary angioplasty volume recommendation • 8 meet the abdominal aortic aneurysm repair volume recommendation • 5 meet the carotid endarterectomy volume recommendation • 3 meet the esophageal cancer surgery volume recommendation • 5 meet Leapfrog specifications for the Neonatal ICU

20. Incentive Systems • Dimensions • Financial vs. non-financial • Informational vs. market-driven • Incentive Models • Success • Incentives based on risks • Limited number of reliable, acceptable, & meaningful metrics

21. Post Award Contract compliance Negotiations Link measures to value Pre-Bid and RFP Entrance Standards Auditing standards Performance Standards Comparative rankings Trending reports Benchmarks Link to purchasing standards RFP, Contracting & Auditing

22. 2003 PEBB Procurement Next Steps: RFP: • Scheduled for release May 3rd • Bids due to HCA by June 12th • Bid evaluation through end of July • Board meeting July 30, 2002 Materials Review: • On-line enrollment • Actives - all materials on PEBB website • Decision Support Tool (Select-A-Plan)