Washington State Health Benefits Board Meeting Highlights 2001 Procurement Results

1. Public Employees Benefits Board Meeting July 18, 2000 Medical Benefit Decisions for 2001 Washington State Health Care Authority/PEBB

2. Overview • Medical Procurement Process, Planning • Decisions Needed Today • Final benefit changes for 2001 • Employee contributions • Retiree subsidy Washington State Health Care Authority/PEBB

3. Prep for Procurement • Multiple plan and provider meetings - administrative efficiencies, streamlined approaches • Advisory Task Force meetings - purchasing approach, employee cost-sharing • Research, review of other experiences Washington State Health Care Authority/PEBB

4. Experience in Other States for 2001 • CalPERS • approved 9.2% premium increase for HMOs • 2 PPO plans will increase 18% and 22% • Minnesota announced 19% increase in premiums Washington State Health Care Authority/PEBB

5. Procurement results • Bids from all current medical plans • Expanded service areas - managed care plan in every county • 2 plans expanding to serve 4 more counties • only 5 counties with one managed care plan - down from 6 in 2000 • only 4 counties with two managed care plans - down from 6 in 2000 • only 1 plan with a net reduction in service area, dropping 1 county Washington State Health Care Authority/PEBB

6. Procurement results, cont. • Overall, appears to be adequate access to providers (PCPs within 25 miles or less) • Other changes: • Aetna’s national withdrawal from Medicare+Choice plans - Aetna will still offer a PEBB retiree plan, but not Medicare+Choice Washington State Health Care Authority/PEBB

7. Benefit Changes • Pharmacy Benefit Streamlining-Package • eliminate requirement for over the counter drugs • clarify expectation for retail dispense of 3 month supply, with 3 copays • formulary insulin at $10 copay • mail order clean up: 90 days vs. 100 (MCOs and UMP) • UMP Pharmacy change Washington State Health Care Authority/PEBB

8. Benefit Changes, cont. • Modification of exclusion language: clarify refractive surgery not covered • (Exclusion #19 Orthoptic therapy (eye training) and vision services including refractive surgery, except as specified for vision care.) • Expansion of contraceptive benefits (Legislative Budget - all FDA approved drugs and devices) • (Modify exclusion #22 in MCOs regarding implants; #21 in UMP regarding devices and implants) Washington State Health Care Authority/PEBB

9. Benefit Changes, cont. • Coverage criteria related to transplants (replacing reference to “experimental or investigational”) Washington State Health Care Authority/PEBB

10. Background on UMP Pharmacy Change • Simplifies claims adjudication for retail pharmacies; members won’t have to pay full cost and wait for reimbursement • Cost-sharing impact of changes: • Approximately half of UMP members will have slight decrease or no change in overall cost-sharing • Others have slight increase in cost-sharing (averages $5 per month for non-Medicare) • Reduces premium $4 for first tier rate Washington State Health Care Authority/PEBB

11. Background on UMP Pharmacy, cont. • Separate deductibles: • $200 per member/$600 per family for medical • $100 per member/$300 per family for retail and mail order Rx • Out-of-pocket costs limited to: • $1,125 per member/$2,250 per family for medical services from preferred providers (or out-of-area) • Maximum of $75 per script Washington State Health Care Authority/PEBB

12. CY 2000 Enrollment 91.7% of employees have access to $0-$5 plan 8.3% have access to $6-$20 plan CY 2001 Projection 93.5% of employees with access to $0-$5 plan 2.9% with access to $6-$20 plan 3.7% with access to $20-$25 plan Employee Contributions Washington State Health Care Authority/PEBB

13. Employee Contributions CY01 Washington State Health Care Authority/PEBB

14. Employee Contributions CY00 Washington State Health Care Authority/PEBB

15. Medicare Retiree Subsidy - CY01 • Medicare retiree explicit subsidy $69.98 per member per month • Established in Legislative Budget, ESSB 5180, Laws of 1999, Section 719 • CY 00 subsidy is $62.48 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. Washington State Health Care Authority/PEBB

16. Medicare Retiree Contributions(after subsidy) Washington State Health Care Authority/PEBB

17. Non-Medicare retiree subsidy • Non-Medicare retirees subsidized through pooling mechanism established in RCW 41.05.022 (single community-rated risk pool) • Implicit subsidy estimated at $143.77 per member per month for CY01 • CY00 subsidy estimated at $134.37 per member per month Washington State Health Care Authority/PEBB

18. Summary - Voting • Pharmacy Benefit Streamlining Package • Exclusion modification • Contraceptive Benefits • Coverage Criteria • Employee Contributions • Retiree Subsidy Washington State Health Care Authority/PEBB