Public Employees Benefits Board 2006 Medical Procurement

1
Public Employees Benefits Board2006 Medical
Procurement

• July 12, 2005
• Richard Onizuka, Health Care Policy
• Washington State Health Care Authority

2
2006 Purchasing EnvironmentGoals

• Stay within fiscal limits set by the Legislature
  in the budget
• Provide health plans that compare well with other
  quality employers
• Ensure adequate access to providers and hospitals
  for employees and retirees in all counties
• Encourage the use of quality providers and
  evidence-based medicine

3
2006 Purchasing EnvironmentBudget Assumption

• Washington State Fiscal Growth
• 2005/2009 Projection 3.8
• Budgeted Health Care Bid Rate Trend
• 8.5
• Employee Contributions
• 12 Weighted Average

4
2006 Purchasing Environment
5
2006 Purchasing Environment

• CalPERS 2006 Non-Medicare Premium Increase 8.9
  Overall Average
• Hewitt Association 2006 prediction
• Nationally, 12.4 MCO rate increase

6
Overview and Board Action

• Eligibility
• Benefits
• Non-Medicare Premium
• Medicare Explicit Subsidy

7
Eligibility Rules(Requires Board Action)

• HCA Recommends Adoption of the Proposed
  Eligibility Rules under WAC 182-08 and WAC
  182-12.

8
Benefit Recommendations

• UMP PPO UMP Neighborhood
• Bariatric Surgery

9
UMP Benefit Recommendation (Requires Board
Action on Overall Benefit Package)Overall
package is cost neutral.
10
Bariatric Surgery

• HCA does not recommend inclusion of Bariatric
  Surgery for 2006
• Legislative Directive
• No Benefit Enhancements if at, or above, budget
• Bids reflected significant variability
• Medical evidence is not conclusive
• Benefit not commonly offered by other employers

11
2006 Non-Medicare Bid RateOverview

• Budget Assumption 8.5
• Initial Procurement Results 11.8
• Final Procurement Results 8.0
• UMP PPO with Alternatives .8
• UMP NBR with Alternatives 2.6
• MCOs 14.2

12
Non-Medicare Average Bid Rate Increases
13
Increase in Average Non-Medicare Contributions
2006 Contribution does not include switching
assumptions
14
Change in Non-Medicare Bid RateSubscriber Only
(First Tier)
15
Employee Contributions(Requires Board Action)
16
2006 Medicare Bid RateOverview

• Budget Assumption 13.5
• Procurement Results 10.2
• MCOs 13.4
• UMP 7.8

17
Medicare Average Bid Rate Increases
18
2006 Estimated Medicare Retiree Contribution
19
Increase in Medicare Retiree Subsidies
20
2006 Medicare Retiree Subsidy(Requires Board
Action)

• Retiree Subsidy 131.84

21
2007 and Beyond
22
Large Employer Health Care Strategies
Data Analysis and Diagnosis Business and HR
Priorities Enrollment, costs and demographics
Cost drivers and savings opportunities
Traditional Tactics
Advanced Strategies

• Plan Design
• Types of plans
• Number of choices
• Cost Sharing
• Service-related offerings
• Pay-related designs
• Pharmacy
• Savings/spending accounts

• Contributions
• Percentage of cost
• Salary stratified
• Indexed to plan costs
• Tiered for family size
• Risk-related
• Opt-out credits (cash)

• Maintain a
• healthy workforce
• Identification of health risks
• Health promotion programs
• Self-care assistance
• Health risk management
• Incentives for health awareness risk appraisal
  participation

• Engage
• employees in
• behavior change
• Raise cost awareness through education and cost
  sharing
• Education about cost and health conditions
• Tools about provider cost and quality
• Availability of savings accounts

• Financing
• Funding decision insured, self-insured, minimum
  premium
• Gain sharing
• Employee self-funding FSA, HRA

• Vendors
• Vendor selection
• Performance measures
• Clinical capability
• Operational audits
• Network strategy
• Renewal negotiation

• Focus on high cost
• population
• Disease management
• Case management
• Maternity programs
• Advocacy programs
• Incentives for care management compliance
• Integrate information and/or care management with
  disability and workers compensation

• Purchase Highest
• Quality and Most
• Cost Effective Care
• High performance network
• Collective purchasing
• Supply chain purchasing
• National initiatives for quality improvement