pebb meeting - august 6, 20021 public employees benefits board meeting august 6, 2002 procurement...

PEBB Meeting - August 6, 2002 1

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

• 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


Value Based Purchasing 2003 Snap Shot

Evaluation

Weights

Access 30%

Quality 20%

Price 50%

0

10

20

30

40

50

60

70

80

90

100

HCA 2002Standard

Plan A Plan B Plan C Plan D Plan E Plan F Plan G

Perc

ent

Access

Quality

Price

1

54

3

6

2


Procurement Overview & Results

MaryAnne Lindeblad

Assistant Administrator,

Public Employees Benefits Plan


Summary of 2003 Renewals

• Key Facts from PEBB Renewals

• Surveys of other commercial renewals and trends

• Other Purchasers’ Experience


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...


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)


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%


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


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 UMP 11% 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 UMP 16% 11%


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


2003 Proposed Benefit Design Changes & Employee

Contributions

.


Proposed PEBB Medical Benefit Design Changes for 200310% Reduction in Prescription Drug Expenditures*

Three tier pharmacy benefit

Retail = 30 day supply Co-Pay GHC/Options Kaiser

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

Formulary brand name $ 25 $ 30 $ 25

Non Formulary brand $ 40

Mail Order = 90 day supply Co-Pay GHC/Options Kaiser

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


Employee Contributions CY03State Index Rate $262

Subscriber & Subscriber & Plan Name Subscriber Spouse Child(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


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.


2003 Medicare Retiree Contributions

(after subsidy)Estimated 2003

1st Tier Rate Increase Percent of Plan Name Retiree Pays from 2002 Enrollment

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%


Proposed UMP Benefit Design Changes for 2003

Presented to the Public Employees Benefits Board

August 6, 2002


Overview of Proposed Changes for 2003

• Out-of-state network

• Standard Coordination of Benefits (COB)

• Rx benefits cut 10% from current design


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


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


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


Coordination of BenefitsCurrent:

• 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)


Non-Duplication of BenefitsCurrent UMP COBMedicare 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 2003Allowed Charge $100.00

Medicare Payment 70.00

Balance $ 30.00

Normal UMP Payment $90.00

UMP COB Payment $30.00

Enrollee Responsibility $ 0


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


More Restrictive Pharmacy Network

Non-network pharmacies in Washington State include:

• Walgreen's• Albertson's• Some independent pharmacies


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 1 80%

Tier 2 70%

Tier 3 50%


Incentive Formulary Design(replaces current voluntary formulary)

Current (2002) Proposed for 2003

Tier 1 Generic drugs,insulin & disposable

diabetic supplies

Generic drugs,insulin & disposable

diabetic supplies

Tier 2 Single-sourcebrand name drugs

Formularysingle-source

brand name drugs

Tier 3 Multisourcebrand name drugs

Non-formulary brandand all multi-sourcebrand name drugs


Mail Order Copayments

Current (2002) Proposed for 2003

Tier 1 $5 $10

Tier 2 $30 $40

Tier 3 $40 $80


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 nonparticipating pharmacies


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


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


August 6, 2003 Voting Decisions

• Benefit Changes

• Employee Contributions

• UMP Changes

• Retiree Subsidy

pebb meeting - august 6, 20021 public employees benefits board meeting august 6, 2002 procurement...

Documents

value based equation

matrix2002 pebb value

value expectations

pebb access1010252525259

access total12082

unique access value255

access component subtotal20

planpebb pricemed