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Public Employees Benefits Board Meeting. August 6, 2002 Procurement Overview & Medical Benefit Decisions for 2003. PEBB Value Based Purchasing. Jeff Thompson, M.D., M.P.A. Health Care Authority. Value Based Purchasing. Communicated our Value Expectations in the Request For Proposal

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Public employees benefits board meeting

Public Employees Benefits Board Meeting

August 6, 2002

Procurement Overview &

Medical Benefit Decisions for 2003

PEBB Meeting - August 6, 2002


Pebb value based purchasing

PEBB Value Based Purchasing

Jeff Thompson, M.D., M.P.A.

Health Care Authority

PEBB Meeting - August 6, 2002


Public employees benefits board meeting

Value Based Purchasing

  • Communicated our Value Expectations in the Request For Proposal

  • Improved Data Driven Metrics to Assure Quality and Access are Commensurate with Cost

  • Increased Emphasis on Access and Quality

  • Improved Affordability using the Value Based Equation

    Value = Quality, Access & Cost

  • Employed Measurable Performance Expectations in Contracts that Can Be Used to Evaluate Performance

PEBB Meeting - August 6, 2002


Public employees benefits board meeting

Value Based Purchasing 2003 Snap Shot

Evaluation

Weights

Access 30%

Quality 20%

Price 50%

PEBB Meeting - August 6, 2002


Procurement overview results

Procurement Overview & Results

MaryAnne Lindeblad

Assistant Administrator,

Public Employees Benefits Plan

PEBB Meeting - August 6, 2002


Summary of 2003 renewals

Summary of 2003 Renewals

  • Key Facts from PEBB Renewals

  • Surveys of other commercial renewals and trends

  • Other Purchasers’ Experience

PEBB Meeting - August 6, 2002


Key facts pebb renewals

Key Facts– PEBB Renewals

  • Plans’ Financial Position

    • 6 of 8 insured plans report 2001 loss ratios in excess of 100% (up from 2 of 9 in 2000)

  • Experience Trends and Rating Trends

    • Experience trends have exceeded the rating trends used in developing 2002 premiums, as a result...

PEBB Meeting - August 6, 2002


Key facts pebb renewals1

Key Facts– PEBB Renewals

  • Rating Trends Have Increased

    • Medical trends range from 7% to 25% (compare to 7.5% - 17% last year)

    • Prescription drug trends range from 16.1% to 30% (compare to 15% - 22% last year)

PEBB Meeting - August 6, 2002


Other renewals and trends

Other Renewals and Trends

  • Mercer survey of commercial renewals

    • as of 7/15: 312 renewals, avg. increase of 22.1%

  • Milliman survey of HMO’s serving the commercial market:

    • Average expected increase of 17% for 2003

  • Hewitt survey of initial 2003 premium increases:

    • Average increase of 22%

PEBB Meeting - August 6, 2002


Other purchaser s experiences

Other Purchaser’s Experiences

  • CalPERS 2003 Renewals

    • Average 25% increase (range of 15% to 40%)

    • Two plans dropped from program (350,000 members must switch plans)

    • Large self-insured increases (22% for PERSCare and 19% for PERSChoice)

  • Other states’ initial bid increases range from 14% to 19%, some with significant benefit reductions

PEBB Meeting - August 6, 2002


Procurement results

Procurement Results

Budget CY 2003

Non Medicare Non Medicare Premium Increase Non Medicare Premium Increase With Alternatives With Alternatives

Managed Care Organizations (MCOs)9%22%

UMP 13%15%

MCOs and UMP11%20%

Budget CY 2003

Medicare Medicare Premium Increase Medicare Premium Increase With Alternatives With Alternatives

Managed Care Organizations (MCOs)20%28%

UMP 11%-3%

MCOs and UMP16%11%

PEBB Meeting - August 6, 2002


Procurement results1

Procurement Results

  • Six managed care choices

  • At least one managed care plan and UMP in every county

  • One plan expanding into six additional counties

  • Five counties with one managed care plan - five in 2002

  • One plan with frozen enrollment

  • Eliminating one plan - fewer than 5% of members will have to change providers

PEBB Meeting - August 6, 2002


2003 proposed benefit design changes employee contributions

2003 Proposed Benefit Design Changes & Employee Contributions

.

PEBB Meeting - August 6, 2002


Proposed pebb medical benefit design changes for 2003

Proposed PEBB Medical Benefit Design Changes for 2003

10% Reduction in Prescription Drug Expenditures*

Three tier pharmacy benefit

Retail = 30 day supplyCo-PayGHC/OptionsKaiser

Formulary generic, all insulin and diabetic supplies $ 10 $ 10$ 10

Formulary brand name $ 25 $ 30$ 25

Non Formulary brand $ 40

Mail Order = 90 day supplyCo-PayGHC/OptionsKaiser

Formulary generic, all insulin and diabetic supplies $ 20 $ 20$ 20

Formulary brand name $ 50 $ 40$ 50

Non Formulary brand $ 80

*Group Health/Options & Kaiser proposed optional benefit designs to achieve a 10% expenditure reduction

PEBB Meeting - August 6, 2002


Employee contributions cy03

Employee Contributions CY03

State Index Rate$262

Subscriber & Subscriber & Plan NameSubscriber SpouseChild(ren) Full Family

Kaiser Foundation$12$33$21$42

Group Health Coop.$30$69$52$91

PacifiCare$40$91$71$121

Options Health Care$44$98$77$131

Regence Care$54$118$94$158

Premera Foundation$67$144$117$194

Uniform Medical Plan$36$82$63$109

Average Employee Contribution: $74

PEBB Meeting - August 6, 2002


Medicare retiree subsidy cy03

Medicare Retiree Subsidy CY03

  • Medicare retiree explicit subsidy $92.74 per member per month

    • Established in Legislative Budget

    • CY02 subsidy $85.84 per member per month

    • RCW 41.05.085 established subsidy, limits subsidy to no more than 50% of the premium; Board authority to establish amount of any subsidy for spouses and dependents.

PEBB Meeting - August 6, 2002


2003 medicare retiree contributions after subsidy

2003 Medicare Retiree Contributions (after subsidy)

Estimated 2003 1st Tier Rate Increase Percent of Plan NameRetiree Paysfrom 2002Enrollment

PacifiCare $84.14 10% 11%

Kaiser Foundation $89.25 16% 4%

Group Health Coop.$113.53 40% 29%

Options Health Care$125.41 20% 1%

Regence Care $182.53 16% 2%

Premera Foundation$275.38 42% 7%

Uniform Medical Plan $132.62 -10% 46%

PEBB Meeting - August 6, 2002


Proposed ump benefit design changes for 2003

Proposed UMP Benefit Design Changes for 2003

Presented to the Public Employees Benefits Board

August 6, 2002

PEBB Meeting - August 6, 2002


Overview of proposed changes for 2003

Overview of Proposed Changes for 2003

  • Out-of-state network

  • Standard Coordination of Benefits (COB)

  • Rx benefits cut 10% from current design

PEBB Meeting - August 6, 2002


Out of state care current benefits

Out-of-State Care: Current Benefits

Providence Preferred network in parts of Oregon (most Oregon claims)

Elsewhere:

  • Services are covered at 80% of the UMP allowed charge (based on regionally-adjusted fees)

  • Providers may balance bill patients for charges above the UMP allowed amount

  • Enrollees pay 20% coinsurance for preventive care services

PEBB Meeting - August 6, 2002


Out of state care proposed for 2003

Out-of-State Care: Proposed for 2003

Beech Street network to be offered outside of Washington and Oregon

  • Large national PPO

    3,300 hospitals

    345,000 professional providers

    50,000 ancillary providers

  • Providers reimbursed based on Beech Street contracted rates; UMP pays 80% benefit

  • May not balance bill UMP patients

  • Preventive services (as listed in the UMP Certificate of Coverage) covered in full

PEBB Meeting - August 6, 2002


Out of state care proposed for 20031

Out-of-State Care: Proposed for 2003

Services from non-Beech Street providers will be paid at the non-network rate (60% of UMP allowed charge)

Exceptions (to be paid at 80%):

  • Emergency care

  • Areas in U. S. where Beech Street network isn’t adequate

  • Foreign providers

    Medicare retirees’ services are subject to Medicare’s maximum fees, so won’t be enrolled in Beech Street

    Oregon (whole state) will be served by Prov Preferred network; non-network claims will be paid at 60% except where there are access problems

PEBB Meeting - August 6, 2002


Coordination of benefits

Coordination of Benefits

Current:

  • Nonduplication of benefits

  • Frequently results in little or no UMP payment on medical claims with Medicare primary

    Proposed for 2003:

  • Standard Coordination of Benefits (consistent with COB approach used by PEBB MCOs)

PEBB Meeting - August 6, 2002


Non duplication of benefits

Non-Duplication ofBenefits

Current UMP COB

Medicare Allowed Charge$100.00

Medicare Payment 70.00

Balance $ 30.00

UMP Allowed Charge$100.00

Normal UMP Payment 90.00

UMP Payment$ 20.00 Normal UMP Benefit minus Medicare Payment

Enrollee Responsibility$ 10.00

Standard COB – UMP Proposal 2003

Allowed Charge$100.00

Medicare Payment 70.00

Balance$ 30.00

Normal UMP Payment$90.00

UMP COB Payment$30.00

Enrollee Responsibility$ 0

PEBB Meeting - August 6, 2002


Overview of proposed changes to ump prescription drug benefit

Overview of Proposed Changes to UMP Prescription Drug Benefit

  • More restrictive pharmacy network

  • Incentive formulary design

  • Higher mail order copays

  • Changes to cost-sharing cap per retail prescription

PEBB Meeting - August 6, 2002


More restrictive pharmacy network

More Restrictive Pharmacy Network

Non-network pharmacies in Washington State include:

  • Walgreen's

  • Albertson's

  • Some independent pharmacies

PEBB Meeting - August 6, 2002


Mail order and retail prescription benefits

Mail Order and Retail Prescription Benefits

  • Up to a 90-day supply per prescription

  • Subject to annual prescription drug deductible of $100 per individual or $300 per family (no change)

  • Retail coinsurance percentages (no change):

    Tier 180%

    Tier 270%

    Tier 350%

PEBB Meeting - August 6, 2002


Incentive formulary design replaces current voluntary formulary

Incentive Formulary Design(replaces current voluntary formulary)

PEBB Meeting - August 6, 2002


Mail order copayments

Mail Order Copayments

PEBB Meeting - August 6, 2002


Cap on enrollee cost share for retail prescriptions

Current:

$75 maximum for up to a 90-day supply

Applies to all drug tiers

Proposed for 2003:

$50 maximum for up to a 30-day supply

$100 maximum for up to a 60-day supply

$150 maximum for up to a 90-day supply

No cap for Tier 3 drugs or prescriptions filled at nonparticipatingpharmacies

Cap on Enrollee Cost-share for Retail Prescriptions

PEBB Meeting - August 6, 2002


Other proposed changes in prescription drug coverage

Other Proposed Changes in Prescription Drug Coverage

  • Elimination of coverage for over-the-counter drugs

  • Brand name antihistamines (and antihistamine/decongestant compounds) will be covered in Tier 3; generic antihistamines will be covered in Tier 1

PEBB Meeting - August 6, 2002


Next steps

Next Steps

  • 2003 Open Enrollment is October 21st through November 30th

  • 16 benefit fairs - extending hours 11 a.m. to 6 p.m.

  • On-line enrollment

  • Decision support tool updated for 2003

  • All materials for actives available via web

PEBB Meeting - August 6, 2002


August 6 2003 voting decisions

August 6, 2003 Voting Decisions

  • Benefit Changes

  • Employee Contributions

  • UMP Changes

  • Retiree Subsidy

PEBB Meeting - August 6, 2002


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