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GIC Public Hearing. February 3, 2011. What’s the Problem?. Budget pressure on state revenues versus state expenditures continues despite some improvements in the economy We’re not out of the woods yet.

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Gic public hearing

GIC Public Hearing

February 3, 2011


What’s the Problem?

  • Budget pressure on state revenues versus state expenditures continues despite some improvements in the economy

  • We’re not out of the woods yet


Total health benefit cost per employee rises 6 9 in 2010 the sharpest increase since 2004
Total health benefit cost per employee rises 6.9% in 2010, the sharpest increase since 2004

*ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2010; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey(April to April) 1990-2010.


Disparities in provider costs
Disparities in Provider Costs the sharpest increase since 2004

Attorney General’s “Investigation of Health Care Cost Drivers” and Division of Health Care Finance and Policy hearings 3/16/10

  • Provider payment tied to market leverage and geographic isolation

  • 10 Massachusetts hospitals get 10% - 100% more than the other 55 for similar work

  • Price variations for hospitals and physicians offering similar services are NOT explained by quality of care, complexity of services/sickness of population or whether the hospital is an academic teaching or research facility


What have other employers done
What Have Other Employers Done? the sharpest increase since 2004

  • Shifted costs to employees

  • Implement high-deductible plans (example: $1,000-$5,000 deductibles before benefits begin)

  • Institute co-insurance (example: member pays 20% of the cost of services)

  • Eliminated retiree benefits


Among the sharpest increase since 2004Firms Offering Health Benefits, Percentage of Firms That Report They Made the Following Changes as a Result of the Economic Downturn, by Firm Size, 2010

*Estimate is statistically different between All Small Firms and All Large Firms within category (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2010.



Average Annual Worker and Employer Contributions to Premiums and Total Premiums for Family Coverage, 1999-2010

$5,791

$6,438*

$7,061*

$8,003*

$9,068*

$9,950*

$10,880*

$11,480*

$12,106*

$12,680*

$13,375*

$13,770*

* Estimate is statistically different from estimate for the previous year shown (p<.05).

Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010.


Among All Large Firms (200 or More Workers) Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

*Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2010; KPMG Survey of Employer-Sponsored Health Benefits, 1991, 1993, 1995, 1998; The Health Insurance Association of America (HIAA), 1988.


National health reform
National Health Reform Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

Added benefits and costs effective July 1, 2011

  • Dependent expansion to age 26, regardless of dependent’s status

  • No copays or deductibles for preventive services

  • Projected added premium costs of 1%-2%


What has the gic done to deal with the challenges
What Has the GIC Done to Deal with the Challenges? Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

2004 - Instituted Clinical Performance Improvement Initiative: members pay lower copays for providers with the highest quality and/or cost-efficiency scores:

Tier 1 (excellent)

Tier 2 (good)

Tier 3 (standard)

.

Physicians for whom there is not enough data and non-tiered specialists are assigned a plan’s Tier 2 level copay


Other gic initiatives
Other GIC Initiatives Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Kept premium increases as low as possible (7.91% for FY11 and 3.19% for FY10) – but, deficits caused mid-year deductibles and increased copays

  • Introduced additional limited network plans: Harvard Pilgrim Primary Choice Plan and Tufts Health Plan Spirit


The state s budget crisis
The State’s Budget Crisis Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • $1.2 – $2 billion structural deficit projected for FY12

  • Causes: loss of $2 billion in one time funds, including $1.5 billion from ARRA

  • Escalating health care costs

  • Tax revenues will increase slightly, but not enough to get us out of recession (and $1 billion less than FY09)


House 1 s requests to state agencies
House 1’s Requests to State Agencies Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • All agencies asked to be part of the solution

  • Charge to the GIC – Find solutions to preserve and protect current benefits with more enrollees and no additional dollars


House 1 released 1 26 11
House 1 – Released 1/26/11 Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • $1,662,466,938 for FY12

  • $1,645,669,744 for FY11

  • Variance $16,767,194

  • Doesn’t include modest rate increases – still in negotiation; or additional 1,800+ members from MBTA


The gic s philosophy
The GIC’s Philosophy Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Don’t choose a solution that just shifts all the extra costs to the enrollees

  • Try to lower costs instead


The gic s approach
The GIC’s Approach Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Share responsibility for reducing costs and improving quality– providers, members, health plans, and the GIC

  • Maintain comprehensive benefits and choice

  • Promote value of limited network plans

  • Adopt only modest employee share increases

  • Educate members about provider performance

  • Encourage healthy behavior

  • Maintain retiree health benefits


Option1 change premium contribution
Option1 – Change Premium Contribution Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Increase premium contribution ratios by 5% for all actives, retirees, and survivors = $82 million

  • Appropriation Act does not get done until June – therefore, we can’t change ratios until it is enacted

  • Legislature made a 5% increase last year. Not likely to do it again.


Option 2 limit plan offerings
Option 2 – Limit Plan Offerings Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Limit plan offerings, such as:

    • Drop all broad network plans

    • Drop all but one state-wide plan

  • Disruption and opposition from plans, providers, and enrollees (including legislators) would be extreme

  • Some plans could go under


Option 3 increase copays and or deductibles
Option 3 – Increase copays and/or deductibles Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Increase upfront deductible or go to high deductible plan designs

  • Eliminate the fourth quarter carry-over of the deductible

    • Could save up to $20 million

      However,

  • Deductibles very unpopular

  • Hurts sicker patients

  • Doesn’t fit GIC principles


Option 4 make the buy out program more attractive
Option 4 – Make the Buy-Out Program More Attractive Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2010*

  • Proposed legislation to add a mid-year buy out enrollment


Option 5 re enrollment with incentives to choose limited network less expensive plans
Option 5: Re-Enrollment with Incentives to Choose Limited Network, Less Expensive Plans

  • Counteracts inertia – most employees do not change plans – 2%-3% per year

  • Focuses attention on costs and savings

  • Rewards state employees who become part of solution

  • Puts market pressure on high cost providers

  • Savings depend on migration patterns


Option 5 re enrollment continued
Option 5 – Network, Less Expensive PlansRe-enrollment Continued

Some negatives:

  • Minor inconvenience for enrollees

  • Major work effort for GIC and GIC Coordinators


Commission vote of 1 27 11
Commission Vote of 1/27/11 Network, Less Expensive Plans

  • All state employees required to re-enroll in health insurance

  • Overcomes inertia – most employees do not change plans – 2%-3% per year

  • Employees may be more likely to consider limited network place

  • Incentive offered to join limited network plans


Who will be required to re enroll
Who Will be Required to Re-enroll? Network, Less Expensive Plans

  • All active state employees who reside in Massachusetts and are covered by GIC health insurance

  • The GIC will choose a plan for you if you do not re-enroll: Be proactive!

  • Municipal members and state retirees and survivors will not need to re-enroll


State employees who enroll in limited network plans
State Employees Who Enroll in Limited Network Plans Network, Less Expensive Plans

Will receive a three-month premium holiday if you enroll in:

  • Fallon Community Health Plan Direct

  • Harvard Pilgrim Primary Choice Plan

  • Health New England

  • Neighborhood Health Plan - NHP Care

  • Tufts Health Plan Spirit

  • UniCare State Indemnity Plan/Community Choice


Provider access and plan cost
Provider Access and Plan Cost Network, Less Expensive Plans



Premium differences from last year continued
Premium Differences From Last Year Year’s Yet(continued)


Weigh your options
Weigh Your Options Year’s Yet

  • Find out if you are eligible for the health plan (See your Benefit Decision Guide)

  • For the plans you are eligible to join and interested in…

    • Review their benefit summaries and monthly rates

    • Weigh features that are important to you

  • Determine if your doctors and hospitals are in the plan’s network and which copay tiers they are in

    • Be sure to specify the health plan (e.g., Tufts Health Plan Spirit or Tufts Health Plan Navigator)

    • Note that if your doctor or hospital leaves the plan in which you have enrolled, you must select a new doctor or hospital that participates in your current plan for your care.


Once you choose a plan
Once You Choose a Plan Year’s Yet

Your choice of plans is for a full year:

July 1, 2011 – June 30, 2012

You cannot change plans until the next annual enrollment period unless:

  • You move out of the plan’s service area

  • You become eligible for Medicare, in which case you must enroll in a Medicare plan


Open enrollment
Open Enrollment Year’s Yet

  • April 8 – May 9, 2011

  • Changes Effective

    July 1, 2011


State employees who must re enroll
State Employees Who Must Year’s YetRe-enroll

  • Will be mailed notice beginning of March at home

  • Plans will market to you during March

  • Will receive a guide at home this year instead of through your benefits office with a special health plan enrollment form

  • Other enrollment changes (dependents, buyout, LTD, optional life) on regular forms

  • Return forms early to your Coordinator – no later than May 9


Unicare indemnity plan community choice
UniCare Indemnity Plan/Community Choice Year’s Yet

Benefit Changes Effective 7/1/11 - $5,000 out-of-pocket per person calendar year maximum unchanged:

  • Co-insurance for non Community Choice (out-of-network) hospitals: pay 20% of allowable charges plus copay

    • Inpatient admissions

    • Outpatient surgery

    • Laboratory services

    • Facility charges

  • Hi-Tech imaging copay at non-Community Choice hospital will increase to $200


Prescription drug benefit changes effective 7 1 11
Prescription Drug Benefit Changes Effective 7/1/11 Year’s Yet

  • UniCare members: Nexium and Aciphex Proton Pump Inhibitors (PPIs) for heartburn no longer covered; covered options include over-the-counter PPIs, generics, and a brand alternative

  • Tufts Navigator and Tufts Spirit members:

    • Members who receive their maintenance medications at a retail pharmacy must tell CVS Caremark whether or not they wish to switch to a 90-day supply through either mail order or a CVS pharmacy

    • All specialty medications will be provided through CVS Caremark’s specialty drug pharmacy


Open enrollment for dependents ages 19 26
Open Enrollment for Dependents Ages 19-26 Year’s Yet

  • Definition of dependent under federal health reform: son, daughter, stepson, stepdaughter, adopted child, or eligible foster child

  • Dependent must live in health plan’s service area unless enrolled in full time student coverage. Or, family needs to select UniCare State Indemnity Plan/Basic.

  • New form – available during open enrollment


Other federal health reform changes effective 7 1 11
Other Federal Health Reform Changes Effective 7/1/11 Year’s Yet

  • $0 copay for preventive services, such as mammograms, scheduled immunizations, routine physical and OB/GYN visits, colorectal cancer screening, and cholesterol screening for adults

  • Calendar year deductible will no longer apply to these services


Life insurance for state enrollees effective 7 1 11
Life Insurance for State Enrollees Year’s Yet Effective 7/1/11

  • The Hartford awarded new contract as life insurance carrier

  • Basic life rates will go down

  • Optional life rates will change:

    • most active employee rates will stay the same or go down

    • many retirees’ premiums will increase – evaluate whether optional life makes sense


Long term disability for state employees effective 7 1 11
Long Term Disability for State Employees Effective 7/1/11 Year’s Yet

  • Benefit Enhancement for disabilities occurring on or after 7/1/11:

  • Benefit increasing to 55% of your gross monthly salary - was 50%


Vision carrier for dental vision program
Vision Carrier for Dental/Vision Program Year’s Yet

  • Program for Executive Office managers, legislators, and legislative staff

  • Carrier selected at 2/11/11 Commission meeting

  • Possible benefit changes


Benefit decision guides
Benefit Decision Guides Year’s Yet

  • Mailed to active state employees and all retiree/survivor homes week of April 4

  • Municipal employees will receive through their benefit office

  • Guides will be on the GIC’s website by April 1


Do your homework
Do Your Homework Year’s Yet

  • Plans will have provider network details on their websites before open enrollment

  • Or, call the plans for provider details


No frills health fairs
No Frills Health Fairs Year’s Yet

  • Because of re-enrollment for state employees – large crowds expected

  • Scheduled in large facilities near state employee worksites

  • No wellness exhibits – focus on information to help members choose a plan


Gic website resource www mass gov gic
GIC Website Resource Year’s Yetwww.mass.gov/gic

  • Benefit Decision Guides, newsletters and other publications

  • Latest open enrollment news

  • Information about and links to plans and their provider directories

  • Answers to frequently asked questions

  • Forms to expedite your enrollment decisions


Please be patient
Please Be Patient Year’s Yet

  • May be difficult to get through to the GIC by phone during open enrollment

  • 50 staff – processing over 100,000 forms, working the fairs, and answering calls


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