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Health Benefits at Benchmark Universities

Health Benefits at Benchmark Universities

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Health Benefits at Benchmark Universities

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  1. Health Benefits at Benchmark Universities Presented to Health Benefits Task Force September 5, 2001

  2. Vocabulary • Allowed charge: amount negotiated between health care provider and insurer or health plan as payment in full for service • Balance bill: amount that may be billed to patient by non-network provider in excess of allowed charge • Coinsurance: percentage of allowed charge paid by patient

  3. Vocabulary • Copayment: fixed amount paid by patient for service received • Premium: amount remitted by employer to insurer or health plan, generally monthly, for coverage of each enrolled employee or family

  4. Vocabulary • Primary Care Provider (PCP): physician or other plan-approved health practitioner responsible for primary care and sometimes referrals in a managed care plan • Tiering: system of grouping dependent coverage sets, e.g., parent plus child(ren), employee plus spouse

  5. Benchmark Analysis • Relevant characteristics of benchmarks’ health plans • Benefit designs offered • Analysis of specific benefits • Comparison with in-state public employers • Retiree participation • Total and employee costs • Market basket analyses

  6. Arizona California--Los Angeles Florida Georgia Illinois Iowa Maryland Michigan Minnesota North Carolina No. Carolina State Ohio State Penn State Purdue Texas Texas A&M Virginia Washington Wisconsin Benchmarks

  7. Benchmarks • 9 are integrated with state employee benefit system: Arizona, Florida, Illinois, Maryland, Minnesota (currently), North Carolina, NC State, Washington, Wisconsin • 3 others are part of statewide university system: Texas, UCLA, Georgia • Several of remaining are much larger than UK, e.g., Ohio State, Michigan • 14/19 have different plan years: major effect in period of high inflation

  8. Benchmarks • Effect of tiering: having fewer tiers tends to suppress full family premium. 6 different tiering systems: • 6 use only Employee and Family tiers • 4 use Employee, Employee + 1, and Family • 4 use same 4 tiers as UK • 2 use Employee, Employee + child(ren), Family • 2 use Employee, Employee + 1 child, Employee + spouse, and Family • Penn State uses 2 tiers for HMOs and 3 for PPO • 17/19 have at least one self-insured plan

  9. Benefit Designs Offered • 3 benchmarks offer only PPOs and fee-for-service plans: UNC, NC State, Georgia • 6 offer only HMOs and variants with FFS alternative for traveling faculty • Trend to smaller number of alternatives • Market consolidation • Administrative simplification • Innovations: triple option, risk corridor, HMO/PPO hybrid (end of presentation)

  10. Selection criteria for plan comparison • Design most comparable to UKHMO and UKPPO • Available in county of university’s main campus • Available to largest number of employees

  11. Benefit Comparison: Outpatient Physician Visit • UK: $0 PCP copay, $10 specialist • Benchmark range: • $0--2 • $5--4 (1 uses $5 PCP/$10 specialist) • $10--8 • $15--2

  12. Benefit Comparison:Emergency Department Visit • UK: $50 copay; waived if admitted • Benchmark range: • $25--4 • $50--6 • $75--3 • Other--3

  13. Benefit Comparison:Prescription Drug Copayment • Most use three levels: generic, formulary branded, non-formulary branded • UK: $8/$20/$40 • Only 2 benchmarks share a design ($5/$10/$25) • 3 do not appear to use formularies; UCLA covers only formulary drugs • 3 use coinsurance rather than copayments in HMOs

  14. Benefit Comparison:Prescription Drug Copayment • UK’s non-formulary copay is one of 2 highest (but note potential effect of coinsurance percentage) • New year designs likely to raise copay • Several require member choosing branded drug when generic available to pay difference • Kentucky law requires dispensing branded when prescriber notes “dispense as written”

  15. Benefit Comparison:Inpatient Hospitalization • UK: $100 copay • Benchmark range: • $0--9 • $75, $100, $150, $300--1 each • $200--2

  16. Benefit Comparison:Inpatient MH/SA • UK: 100% MH, 20% coinsurance SA, 31 day limit • Benchmark range: • 100% coverage--11 • Others have copay ranging $75-$200 • 4 others cover SA at lower level than MH • Day limits--8 others • Other restrictions--4 (lifetime limit, dollar limit, coinsurance)

  17. Benefit Comparison:Outpatient MH/SA • UK: 50% coinsurance; 20 visit limit/yr • 6 others have day limits • Most use copays ranging $5-$25 • Only other use of coinsurance is 10% with prior authorization, 50% without

  18. Benefit Comparison:Durable medical equipment • UK: 100% coverage • Only 5 others at this level • Most common charge: 20% coinsurance • Several have benefit ceilings

  19. Retiree participation • About half have some retiree participation • Confounding variable is participation in state employee plans • Several offer only Medicare supplementals • Several have varying contribution by length of service • UK among most generous • None contribute to surviving spouse coverage

  20. Cost comparison:Total plan cost • Single HMO mean = $238.77 vs. UK $230 • Single PPO mean = $273.70 vs. UK 253 • Family HMO mean = $608.76 vs. UK $641 • Family PPO mean = $676.32 vs. UK 706

  21. Cost comparison:Total plan cost • Effect of earlier starting plan year in time of rapid health inflation • Effect of tiering: only 4 others use 4-tier system • Several have relatively lower family premium and higher Employee + child(ren) • Most anticipate major increase in 2002

  22. Cost comparison:Employee contribution • Single HMO: • range $0-$49.75 • mean $15.16 • median $10.42 • UK = $21 • Single PPO: • range $0-114.18 • mean $40.98 • median $39.82 • UK = $44

  23. Cost comparison:Employee contribution • Family HMO: • range $0-$432 • mean $90.56 • median $67.38 • UK = $432 • Family PPO: • range $0-$497 • mean $221.52 • median $187.25 • UK = $497

  24. Cost comparison:Employee contribution • UK within benchmark range for single employee contribution but far higher for employee contribution to family coverage • Note effect of 3-tier plans: lower family premium but higher for parent with 2+ children • UKHMO employee plus child(ren) still higher than next highest full family HMO premium

  25. Cost comparison:Employee contribution • Problem: reducing family premium to $250 for current enrollees would cost $3.2 million • Likely higher enrollment if lower premium (estimated 1,000) • Would add $2,184,000 to total cost: with probable overall inflation, total of at least $5.5 million recurring • Does not address cost for single parents or couples

  26. Cost comparison:Higher subsidy for dependent tiers • All benchmarks subsidize dependent tiers at substantially higher rates than employee-only coverage. Following HMO computations exclude UK. • Range of single subsidies: $168-$285 • Range of family subsidies: $387-$697 • Mean of single subsidies: $224.52 • Mean of family subsidies: $526.26 • Family:single ratio range: 1.93:1 - 3.13:1 • Family:single ratio mean: 2.34:1

  27. Cost comparison:Higher subsidy for dependent tiers • Cost of increasing dependent subsidy to lowest of benchmark levels (family=1.93:1) • $209 X 1.93 = $403.37 X 1465 enrolled at Family level=$7,091,245

  28. In-State Public Employers • Regional universities • Louisville • EKU • NKU • WKU • Morehead • Murray • State • Federal Employee Health Benefit • LFUCG

  29. In-State Public Employers:Benefits Comparison • Office visit: UK is alone in not charging copay/coinsurance • Emergency Department: 4/10 charge $50 copay; others lower or coinsurance • Inpatient hospital: 6/10 charge $100 copay • Inpatient MH/SA: 3rd most generous • Outpatient MH/SA: least generous

  30. In-State Public Employers:Benefits Comparison • Prescription drugs: ranks 6th of 10 (most to least generous) based on copays • Durable medical equipment: tied with Louisville as most generous • Balance of analysis is incomplete because new year data arriving daily

  31. In-State Public Employers:Cost Comparison • Single employee premium: • mean $14.94 • median $6.96 • range $0-$75.49 (FEHBP) • UK $21 • Family employee premium: • mean $314.13 • median $259.76 • range $207-$432 • UK $432

  32. Market basket analysis--healthy • Reasonably healthy family of four on Family tier coverage • Market basket composition • 4 well visits • 4 sick visits • 1 ED visit • 2 maintenance prescriptions • 6 other prescriptions

  33. Market basket analysis--healthy • Total out-of-pocket plus family premiums • UK: $5,442 • Next highest (Texas): $2,601.88 • Mean = $1592.44 • Median = $1505.44

  34. Market basket analysis--healthy • Total cost of services only • Range $125-$430 • Mean: $272.50 • Median: $274.11 • UK: $258 (in middle of range)

  35. Market basket analysis--unhealthy • Family of four on Family tier coverage with significant health problems • Market basket composition • 4 well visits • 20 sick visits • 2 ED visits (one leading to admission) • 1 hospitalization • 2 maintenance prescriptions • 24 other prescriptions • $500 worth of durable medical equipment

  36. Market basket analysis--unhealthy • Total cost (including premium) • Range: $612-$5,846 • Median: $2,330.00 • Mean: $2,384.24 • UK: $5,846 (highest)

  37. Market basket analysis--unhealthy • Total out-of-pocket for services only • Range: $612-$1465.00 • Mean: $1064.41 • Median: $1000.00 • UK: $662 (2nd lowest)

  38. Innovations in benefit design • Triple option (typically) • In-network with referral • In-network without referral • Out-of-network • Triple option appeal: uniform premium, pay more for added options at time of service • Disadvantage: assumes uniform access to network providers

  39. Innovations in benefit design • Risk corridor plan (Minnesota 2002) • Somewhat like MSA without rollover feature (due to federal limits on group size) • High-deductible insured coverage plus • Employer contribution of about 1/2 deductible level • Advantages: greater employee control of provider selection

  40. Innovations in benefit design • Risk corridor plan (Minnesota 2002) • Advantages: potential total cost savings if • Unnecessary utilization in prior design • New design motivates more prudent use • Disadvantages: • Uncertain access to group discounts • If premium is lower, potential exposure of enrollees to serious financial problems

  41. Innovations in benefit design • HMO/PPO hybrid • Deductibles and coinsurance percentages for some benefits • Other benefits not subject to deductible and require flat dollar copayments • Typically favors preventive services

  42. Innovations in benefit design • HMO/PPO hybrid • Advantages: • May reduce costs without much administrative cost for medical management • Lower expenditures for low users, higher for high users • Disadvantages: • Complexity may confuse members • Shifting more of out-of-pocket expense to less healthy may be perceived as inequitable