healthcare group of arizona
DESCRIPTION
Healthcare Group of Arizona. Arizona’s Health Care and Policy Laboratory for Small Business Coverage Options. The Evolution of AHCCCS Health Care Coverage. - PowerPoint PPT PresentationTRANSCRIPT
1
Healthcare Group of ArizonaHealthcare Group of Arizona
Arizona’s Health Care and Policy Laboratory
for Small Business Coverage Options
2
The Evolution of AHCCCS Health Care Coverage
•Arizona Revised Statute gives AHCCCS broad authority to provide health care coverage to federally funded beneficiaries, small businesses, and public employees for acute and long term care.
•Started in October 1982, 3 year demonstration waiver approved by CMS for AHCCCS Acute program .
• In 1987, the Waiver request includes a proposal to include long Term Care and the Arizona Long Term Care System (ALTCS) is approved.
•In 1988, small employers in 4 counties are allowed to purchase medical coverage for their employees from AHCCCS Health Plans through Healthcare Group.
3
The Evolution of AHCCCS Health Care Coverage
• In 1990 there is Phase-in of behavioral health services for certain Title XIX members.
• In 1993 Healthcare Group services for small employers is expanded statewide.
• In 1997, AHCCCS submits an amendment to cover single adults and children up to 100% of the FPL.
• 1998 there was a 3 year pilot to provide coverage based on a sliding scale monthly premium to uninsured people who do not qualify for Medicaid – Premium Sharing.
• 1998 Arizona implemented it’s version of State Children’s Health Insurance Program (SCHIP) – KidsCare- Covers children under 150% of the FPL.
4
Voter Approved Proposition 204
• In 2001 Arizona voter approved proposition 204 which funded the expansion of AHCCCS and created the opportunity for the state to replace state and local funding for the medically needy population with federal funds.
•Prop 204 replaced a state-only program for the Medically Needy and Medically Indigent (MNMI), which cost $200 M per year from the General Fund and over $30 M in county funds.
5
FY 2006/2007 Legislative Changes
HB-2698 Small Businesses Exemptions
•Exempts small business health care coverage from specified insurance coverage requirements, including certain mandates for businesses that employ 2 to 25 persons and that have been uninsured for at least 6 months.
•Exemptions for small businesses health insurance plans include: any surgical services, maternity benefits, coverage of medical foods to treat metabolic disorders, and drug or devices for contraception or outpatient contraception services.
HB- 2177 Tax Credit for Small Businesses and Employees
• A tax credit for individual or a small business that is certified by Dept. of Revenue as meeting the requirements for tax credit.
6
FY 2006/2007 Legislative Changes
SB 1442 Temporary Medical Coverage
•Appropriates $6.5 million to AHCCCS to establish the Temporary Medical Coverage Program to provide health care coverage to persons who are citizens and residents and who have been enrolled in AHCCCS at any time within the last 24 months and became ineligible for coverage due to federal disability insurance benefit payment.
7
While the rate of uninsured in Arizona has declined significantly since 1997, 17.0% of Arizona residents remained uninsured in 2004.
15%
17%
19%
21%
23%
25%
Arizona 24.5% 17.0%
United States 16.1% 15.4%
1997 2004
Source: U.S. Census Bureau, Housing & Household Economic Statistics Division.
8
Assumptions About the Small Business Market
• The small business market is growing.• Extremely price sensitive.• Small business owners to do not see health benefits as
a necessary part of competitive employee compensation.
• Significant employee turn over.• What the small business owner wants in a health
benefit their employees cannot afford.• Small business employers prefer a defined
contribution for any employer participation in health benefit coverage.
9
• Designing benefit plans that the small business Market will buy
• Product and Pricing Strategy
• Product Differentiation
• Product Evaluation
Policy Question: Can the Market Work?
Will the small business market respond to differentiated benefits and health coverage products?
10
Administrative Administrative EaseEase
ChoiceChoiceBudgetabilityBudgetability
Healthcare Group Business Model
11
The ABCs of Healthcare Coverage for Small Businesses
• A = Administrative Ease • Easy to enroll• Easy to deal with
• B = Budget-ability• A health plan that fits into every employees budget
• C = Choice• Choice of health plan benefits• Choice of provider networks• Choice of providers
Our success equation is ……
A + B + C = Success
12
Design benefit plans that:
• Address varying health needs
• Address varying incomes
• Address varying consumer needs
• Can be reasonably-priced
• Are meaningful, provide utility and value
• Can be self-sufficient
Product Development Strategy
13
CLASSICCLASSIC
SECURE
ACTIVE
Intended for employees with limited health needs beyond routine and preventive care. Little or no co-pays for most physician office visits, diagnostic services and prescriptions. Maternity excluded.
Richest benefit package, intended for:• employees with existing disease or chronic condition • employees wanting the added security of a wide range
of benefits
A variation of the Secure plan, with lower premium and higher co-pays and coinsurance. Maternity excluded.
HCG Healthstyles
HCG HealthstylesHCG HealthstylesHCG HealthstylesHCG HealthstylesDesigned for varying health needs, income, and lifestyles.Designed for varying health needs, income, and lifestyles.
14
Healthstyles™ Benefit Grid
Benefit Type(partial list)
Classic
Secure
Active
Physician Services (PCP) $20 copay $0 copay $10 copay
Specialist Services $ 20 copay $20 copay $30 copay
Preventive Care $20 copay $0 copay $10 copay
Maternity Services Included None/Rider None/Rider
Urgent Care $40 copay $20 copay $20 copay
Emergency Care $100/$150 copay $50 copay 20% coinsurance
Inpatient Hospitalization $100 admission 50% coinsurance* 20% coinsurance
Diagnostic Services $0 copay $0 copay 20% coinsurance
Rehabilitation Services $15 copay 20% coinsurance 20% coinsurance
Prescription Medicine $15/$30 copay $0/$20 copay $0/$20 copay
* 100% coverage for first 10 days, thereafter 50% coinsurance.
15
Product Evolution
11,6
10
11,5
31
11,4
25
11,3
99
11,2
46
11,3
54
11,2
49
11,2
50
11,0
61
11,0
86
11,1
02
11,0
87
11,0
53
11,0
77
11,1
67
11,3
45
11,5
64
11,2
18
10,000
10,250
10,500
10,750
11,000
11,250
11,500
11,750
12,000
HCG Enrollment21
,109
14,3
10
11,4
76
11,6
68
10,000
11,000
12,000
13,000
14,000
15,000
16,000
17,000
18,000
19,000
20,000
21,000
22,000
CY1998
CY1999
CY2000
CY2001
•Broker fees ends •To single plan•Rate increase
Loss of health plan
New HCG Administration
Subsidy
Starts
Product Evaluation
Begins
Healthstyles Benefit Plans Introduced
16
Historic Enrollment Trends(1999-2006)
HEALTHCARE GROUP OF ARIZONAHistoric Enrollment (1999-2006)
22,027
15,37615,968
16,451 16,624
17,85018,507
19,06219,552
20,11820,798
21,603
17,291
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
July
Augus
t
Septe
mbe
r
Octobe
r
Novem
ber
Decem
ber
Janu
ary
Febru
ary
Mar
chApr
ilM
ayJu
ne
Month
Mem
ber
s
SFYE 2007 SFYE 2006 SFYE 2005 SFYE 2004 SFYE 2003
SFYE 2002 SFYE 2001 SFYE 2000
17
HMO Enrollment by Benefit Plan and Deductible
Total Membership as of July 11, 2006: 22,027
HMO20,473 members
5%
5%
3%
3%
5%
7%
7%
18%
47%
Classic $0 deductible
Classic $500 deductible
Classic $1,000 deductible
Classic $2,000 deductible
Secure $0 deductible
Secure $500 deductible
Secure $1,000 deductible
Active $0 deductible
Active $500 deductible
Members electing a deductible option: 28%
18
PPO Enrollment by Benefit Plan
Total Membership as of July 11, 2006: 22,027
PPO1,554 members
12%
39%
7%
6%
23%
2%
6%
5%
Medallion Plus, Classic Plus and Platinum Plus meets federal requirements for pairing with an optional HSA.
Medallion PPO
Medallion PPO Plus
Medallion Classic PPO
Medallion Classic PPO Plus
Medallion Platinum PPO
Medallion Platinum Plus PPO
Medallion Gold PPO
Medallion Silver PPO
19
Original Healthstyles design based on:
• Historical experience with previous HCG benefit plans
• Meetings with small business employers
• Experience of other states
• Characteristics of the working uninsured-Demographic from Kaiser -CAN initiative (St. Luke’s)
Product Evolution
20
December 2004Results from Employers and Employee Satisfaction Survey
(n=285)
HCG Product Evolution
Benefit Type YES NO
Wellness programs 78.9% 21.1%Preventive care postcards 41.8% 58.2%Online health information 69.5% 30.5%Mental health benefits 51.9% 48.1%Vision and Dental benefits 88.4% 11.6%Catastrophic benefit plan 87.4% 12.6%Medical discount card 87.0% 13.0%More choice of doctors 65.6% 34.4%More choice of benefit plans 71.9% 28.1%More medical drug coverage 87.7% 12.3%Materials in Spanish 8.4% 91.6%Healthcare Savings Account 44.6% 55.4%
Benefit Type YES NO
Wellness programs 78.9% 21.1%Preventive care postcards 41.8% 58.2%Online health information 69.5% 30.5%Mental health benefits 51.9% 48.1%Vision and Dental benefits 88.4% 11.6%Catastrophic benefit plan 87.4% 12.6%Medical discount card 87.0% 13.0%More choice of doctors 65.6% 34.4%More choice of benefit plans 71.9% 28.1%More medical drug coverage 87.7% 12.3%Materials in Spanish 8.4% 91.6%Healthcare Savings Account 44.6% 55.4%
21
Validation of Focus Group/Survey findings:
• Asked Brokers/Producers what they thought
• Actuarial pricing analysis
• Empirical research
• Experience of other states
Product Evolution
22
Product Evolution
HMO
Single Plan
1998-2003
April 2004
June-July 2004Employer Focus Groups
HMO
Active
HMO
Secure
Healthstyles HMO
Classic
SB1166
• Solidify relationships with HCG employer groups
• Evaluate employer satisfaction • Validate product design assumptions• Assess unmet need (benefits & services) • Validate future product ideas
23
Product Evolution
HMO
Single Plan DESIRED BENEFITS
•Deductible options•Mental Health benefits•Vision benefits•Dental benefits•Expanded provider network•PPO plans•HSA/HDHP option•Wellness
1998-2003
April 2004
June-July 2004Employer Focus Groups
Option
$2,000
Deductible Option
$1,000
Deductible Option
$500
October2004
PPO
Silver
PPO
Gold
Medallion PPO
Platinum, Platinum +
September2005
Vision(Avesis)
Dental(EDS)
January 2006
February2006
Rx
ExpandedFormulary
HMO
Active
HMO
Secure
Healthstyles HMO
Classic
SB1166
24
Product Differentiationas of May 2006
Comprehensive Preventive Active
HMO“Healthstyles”
ClassicClassic SecureSecure ActiveActive
PPO“Medallion”
Platinum Platinum Platinum Plus (HSA)Platinum Plus (HSA)
GoldGold SilverSilver
Products are differentiated by covered services, benefit plan features, provider networks, and availability
25
Benefit Comparison
Covered Services(partial list)
Healthstyles HMO Medallion PPO
Physician Services (PCP/Spec)
Inpatient - Medical
Outpatient - Medical
Maternity
Acute Ancillary (SNF, HH, Dialysis)
$0 Preventive Care
Inpatient - MH/SA
Outpatient - MH/SA
Formulary Tiers 3 3 3 4 3 3
Rx Benefit Limit None None None None $12,500 $7,500
Classic Secure Active Plat/+ Gold Silver
26
Benefit Comparison
Benefit PlanFeatures (Deductible)
Healthstyles HMO Medallion PPO
Number of Deductible Options 3 2 1 3 / 2 3 3
Zero Deductible Option Yes Yes Yes No / No No No
MD Office Visit (E&M) excluded* / -
Preventive Care excluded /
Mammography excluded /
Prescription Drugs excluded / -
Emergency/Urgent Care excluded
Prescription Drugs excluded / -
Out-of-Pocket Maximum No No No Yes Yes Yes
Out-of-Network Benefit (NPPN) None None None 50% 50% 50%
Classic Secure Active Plat/+ Gold Silver
* Health plan assumes first dollar liability for services excluded from deductible.
27
HMO Provider Networks
MohaveMohave
CoconinoCoconino
NavajoNavajo
ApacheApache
LaPazLaPaz
YumaYuma
YavapaiYavapai
MaricopaMaricopa
PimaPima
PinalPinal
GilaGila
GrahamGraham
CochiseCochise
Green-Green-leelee
Santa Santa CruzCruz
MohaveMohave
CoconinoCoconino
NavajoNavajo
ApacheApache
LaPazLaPaz
YumaYuma
YavapaiYavapai
MaricopaMaricopa
PimaPima
PinalPinal
GilaGila
GrahamGraham
CochiseCochise
Green-Green-leelee
Santa Santa CruzCruz
MohaveMohave
CoconinoCoconino
NavajoNavajo
ApacheApache
LaPazLaPaz
YumaYuma
YavapaiYavapai
MaricopaMaricopa
PimaPima
PinalPinal
GilaGila
GrahamGraham
CochiseCochise
Green-Green-leelee
Santa Santa CruzCruz
Geographic differentiation: HMO benefit plans are not available statewide
28
PPO Provider Network
MohaveMohave
CoconinoCoconino
NavajoNavajo
ApacheApache
LaPazLaPaz
YumaYuma
YavapaiYavapai
MaricopaMaricopa
PimaPima
PinalPinal
GilaGila
GrahamGraham
CochiseCochise
Green-Green-leelee
Santa Santa CruzCruz
AFMC
Medallion Series Benefit PlansMedallion Series Benefit Plans
Platinum Plus (HSA)
Gold
Silver
Platinum
Geographic differentiation: PPO availability varies by county
29
Product Month EnrollmentAverage
Income*
Average
EE Age
Percent
Male
Tier 1
EE
Tier 2
EE+S
Tier 3
EE+F
Tier 4
EE+C
December 2004
11,224 $53,743 46.2 53% 58% 23% 16% 4%
April2006 12,215 $53,344 48.1 55% 57% 23% 16% 4%
December 2004
800 $53,397 49.9 48% 72% 23% 3% 3%
April 2006 5,052 $45,458 49.5 51% 61% 25% 9% 5%
December 2004
415 73,864 42.1 51% 72% 17% 7% 5%
April 2006 1,990 $42,835 46.8 53% 61% 22% 11% 6%
ClassicClassic
SecureSecure
ActiveActive
HMO Product DemographicsDecember 2004 to April 2006
*Represents stated income from subscribers on enrollment forms. Not all subscribers supply these data.
30
Product Growth (2005-2006)
1%
4%6%
27%
21%
2%
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
J-05 F-05 M-05 A-05 M-05 J-05 J-05 A-05 S-05 O-05 N-05 D-05 J-06 F-06 M-06 A-06 M-06
Classic Secure Active PPO HSA Overall Growth
Healthcare Group Growth by Product
31
HCG Enrollment by Product
December 2006*25,000 members
anticipated
December 200412,438 members
Classic91%
Secure6%
Active3%
Classic70%
Secure21%
Active9%
PPO0%
Classic60%
Secure25%
Active10%
PPO5%
September 200516,451 members
May 200620,798 members
Classic50%
Secure26%
Active11%
PPO13%
* Expected
32
HCG Enrollment by Product and Provider Network
Total Membership as of July 11, 2006: 22,027
HCG Products22,027 members
Classic57%
Secure26%
Active10%
PPO7%
HCG Networks22,027 members
AFMC7%
Care 1st9%
UPH38%
Mercy46%
33
HMO Product MigrationDecember 2004 to April 2006*
100%
87%
80%75%
0%13%
20%25%
0%
20%
40%
60%
80%
100%
Remained in $0 deductible plan Switched to deductible option
December-06 July-05 October-05 April-06
Deductible options were first introduced in October 2004.
By April 2006, 25% of members had switched to a deductible option.
*This period represents the migration behavior of 100% of membership following a complete contract renewal cycle.
34
Evaluation Tools:• Financials
• Actuarial Analysis (COG)
• Analytic Dashboard (Rates and Measures)
• Enrollment Reports
• Ad-hoc Analysis
• Risk Profiling (Medical Intelligence)
• Satisfaction Surveys
• Focus Groups
Product Evaluation
35
• Actuarial Tool Box» Milliman Health Cost Guidelines (Industry
standard)
» Pricing Models
» Reserving Models
» Ad-Hoc Studies
» National Studies (CMS, Kaiser Family Foundation, etc.)
» Financial and Actuarial Education
» External Actuarial Services
Rate Analysis Tools
36
Pricing Strategies
• Small groups are subject to significant fluctuations in premium rates– Community Rated Premiums
• Medical cost risk is spread across a larger group
– Member “Out of Pocket” Costs• Co-pay and co-insurance is used to pass on financial
responsibility and mitigate premium rate increases
37
51%40%
59%44%
82%68%
86%68%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Premium Options
Drug Coverage
Co-pays / Coinsurance
Benefit Plans
2005 2004
HCG Member Satisfaction
Member satisfaction with choice of …
38
93%
86%
82%
77%
84%
78%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Pharmacies
Hospitals
Physicians
2005 2004
HCG Member Satisfaction
Member satisfaction with choice of …
39
80%
73%
87%
88%
84%
87%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
HCG Program
Medical Care
Personal MD
2005 2004
HCG Member Satisfaction
Overall member satisfaction with …
40
Our first care is your healthcare