Considering a Transition to a Triple Option Student Health Program -- Updated, February 28, 2014

1. Considering a Transition to a Triple Option Student Health Program-- Updated, February 28, 2014 • Presentation Agenda • Introductory Notes • Consultation Objective and Major Observations/Key Questions • Transformational Change and Policy Debate Paradigm • Situation Assessment for College Health Programs and Insurance Status for UO Students • Triple Option Program • Summary Explanation • Two Permutations • Summary Comparison • FAQ

2. Triple Option ProgramIntroductory Notes Hodgkins Beckley Consulting, LLC Charge to Consultants: Business model that reduces reliance on student fees. Major Observation: University of Oregon Already Requires “Health Insurance” • Insurance is an indemnification of risk – a guarantee of the availability of benefits/services, contingent on need, in the future. Total mandatory fee funding = $11.8 million for FY14 (22,639 x $154 X 3.38) • Key Question: Is the existing health fee (i.e., mandatory insurance) most effectively configured? • Key Finding: An alternative not-for-profit funding system can be developed that better meets the needs of students, UO, University Health Center/Counseling, and community health care providers. The ACA individual mandate obviates the need for UO to require health insurance as a condition of enrollment with a 2015-16 implementation of the proposed program.

3. Triple Option ProgramIntroductory Notes A Transformational Crossroads For Higher Education • A unique intersection between health care and higher education. • Status quo policies often do not have presumption. Evaluations are sometimes initiated assuming that any change is good. • There is conflicting advice from higher education associations, consultants, and internal stakeholders for impact of health care reform, trends, emerging best practices, and permissible regulatory options. • HBC recommends maintaining policy debate paradigm: (1) presumption for status quo policy; (2) clear and compelling disadvantages; (3) unique advantages that cannot be obtained with minor repairs, and (4) workable plan that has realistic controls for disadvantages and implementation challenges. Hodgkins Beckley Consulting, LLC

4. Triple Option ProgramIntroductory Notes Situation Assessment for College Health Programs • Before Health Care Reform (2009) • Funding stagnation for most student health programs – increasing fee-for-service charges. • Major trend for adoption of health insurance requirements. • 2009: Less than 10% of students covered by high deductible health plans. • Dramatic trend for employers to shift cost of health insurance to employees. • Important trend for compliance with ACHA’s Insurance Standards (20%+). 2013-14 Estimated UO Insurance Status 2014-15 -- afterCover Oregon eligibility expansion and Insurance exchange premium subsidies-- 4,000 reduces to 1,500 to 2,000 (factors: Oregon residency status and access to employer coverage precludes insurance exchange premium subsidies) Hodgkins Beckley Consulting, LLC

5. Triple Option ProgramIntroductory Notes Situation Assessment for College Health Programs • Before Health Care Reform (2009) • Funding stagnation for most student health programs – increasing fee-for-service charges. • Major trend for adoption of health insurance requirements. • 2009: Less than 10% of students covered by high deductible health plans. • Dramatic trend for employers to shift cost of health insurance to employees. • Important trend for compliance with ACHA’s Insurance Standards (20%+). After Health Care Reform • Expansion of Medicaid eligibility reduces uninsured student population for resident, low income students. • More than 30% of students covered by high deductible health plans. • Employers eliminate coverage for spouses and have no mandate to fund coverage for children. Rate unbundling under defined benefit health plans: Employee + Spouse + Child + Child + Child(ren). • Mandates for new technology and evidence-based medicine/integrated care. • Three major student populations: • Exceptionally Well Insured • Under-Insured • Ineffectively Insured 2013-14 Estimated UO Insurance Status 2015-16 -- afterCover Oregon eligibility expansion and Insurance exchange premium subsidies-- 4,100 reduces to 1,500 to 2,000 (factors: Oregon residency status and access to employer coverage precludes insurance exchange premium subsidies) Hodgkins Beckley Consulting, LLC

6. $154 = existing combined health and counseling fee • $38 = cost for new supplemental care benefits in community and limited Rx at Health Center. • $40 = $3.1 million base cost required to provide on-campus health and counseling Triple Option ProgramSummary Explanation KEEP Under-Insured* Supplemental Care $154 (6.3m ÷ 12,200 ÷ 3.38) + $38 + $40 = $232 Per Quarter ($78 increase) Projected 12,200 students • 22,600 Total Students projected for 2015-16 • FY13 Health and Counseling Budget = $15,266,000 • (not including budget transfers and intuitional allocations for Counseling Center) • Mandatory Fees = $11.8 million • ($154 x 22,600 x 3.38) OR OR • * Under-Insured: The health fee does not provide adequate benefits for students who have high deductibles with unfunded medical savings accounts Hodgkins Beckley Consulting, LLC

7. Triple Option ProgramSummary Explanation KEEP Under-Insured* Supplemental Care $154 (6.3m ÷ 12,200 ÷ 3.38) + $38 + $40 = $232 Per Quarter ($78 increase) Projected 12,200 students • 22,600 Total Students projected for 2015-16 • FY13 Health and Counseling Budget = $15,266,000 • (not including budget transfers and intuitional allocations for Counseling Center) • Mandatory Fees = $11.8 million • ($154 x 22,600 x 3.38) OR OR WAIVE Exceptionally Well-Insured** Student has Platinum Coverage or Oregon Health Plan Health Fee reduces to $40 Per Quarter ($114 reduction) Projected 1,200 Students with Platinum Coverage and 2,000 students with Oregon Health Plan (total = 3,200) • * Under-Insured: The health fee does not provide adequate benefits for students who have high deductibles with unfunded medical savings accounts and/or insurance plans that do not include health care providers in the Eugene/Springfield area. • ** Exceptionally Well-Insured: For a second group of students the health fee unnecessarily duplicates coverage provided by the Oregon Health Plan or other Platinum level coverage that has nominal copayments and participating providers in the Eugene/Springfield area. Hodgkins Beckley Consulting, LLC

8. Triple Option ProgramSummary Explanation KEEP Under-Insured* Supplemental Care $154 (6.3m ÷ 12,200 ÷ 3.38) + $38 + $40 = $232 Per Quarter ($78 increase) Projected 12,200 students University reported cost of attendance reduces from $11.8 ($154 x 22,600 x 3.38) to $3.1 million ($40 x 22,600 x 3.38). Savings = $8.7 (50% needed to fund reserves for SHIBP and Health and Counseling margin). OR OR UPGRADE Ineffectively Insured *** Comprehensive Student Health Benefits Program Projected 7,200 students Based on partially self-funded plan, copayment benefit design, without COBRA, and no subsidy for dependent coverage. WAIVE Exceptionally Well-Insured** Student has Platinum Coverage or Oregon Health Plan Health Fee reduces to $40 Per Quarter ($114 reduction) Projected 1,200 Students with Platinum Coverage and 2,000 students with Oregon Health Plan (total = 3,200) • * Under-Insured: The health fee does not provide adequate benefits for students who have high deductibles with unfunded medical savings accounts and/or insurance plans that do not include health care providers in the Eugene/Springfield area. • ** Exceptionally Well-Insured: For a second group of students the health fee unnecessarily duplicates coverage provided by the Oregon Health Plan or other Platinum level coverage that has nominal copayments and participating providers in the Eugene/Springfield area. • *** Ineffectively Insured: Increasing cost shifting for employer-sponsored plans means a growing third cohort of students need cost-effective comprehensive insurance rather than current health fee benefits. Hodgkins Beckley Consulting, LLC

9. Triple Option ProgramPermutation without Counseling KEEP Under-Insured* Supplemental Care $121 + $38 + $40 = $199 Per Quarter ($78 increase) Projected 12,200 students • 22,600 Total Students projected for 2015-16 • FY13 Health and Counseling Budget = $15,266,000 • (not including budget transfers and intuitional allocations for CC) OR OR UPGRADE Ineffectively Insured *** Comprehensive Student Health Benefits Program Projected 7,200 students Based on partially self-funded plan, copayment benefit design, without COBRA, and no subsidy for dependent coverage. WAIVE Exceptionally Well-Insured** Student has Platinum Coverage or Oregon Health Plan Health Fee reduces to $40 Per Quarter ($114 reduction) Projected 1,200 Students with Platinum Coverage and 2,000 students with Oregon Health Plan (total = 3,200) • * Under-Insured: The health fee does not provide adequate benefits for students who have high deductibles with unfunded medical savings accounts and/or insurance plans that do not include health care providers in the Eugene/Springfield area. • ** Exceptionally Well-Insured: For a second group of students the health fee unnecessarily duplicates coverage provided by the Oregon Health Plan or other Platinum level coverage that has nominal copayments and participating providers in the Eugene/Springfield area. • *** Ineffectively Insured: Increasing cost shifting for employer-sponsored plans means a growing third cohort of students need cost-effective comprehensive insurance rather than current health fee benefits. Hodgkins Beckley Consulting, LLC

10. Triple Option ProgramPermutation with Base Funding from UO • $154 = existing combined health and counseling fee • $38 = cost for new supplemental care benefits in community and limited Rx at Health Center. KEEP Supplemental Care $154 + $38 = $192 Per Quarter Projected 12,200 students University reported cost of attendance reduces from $11.8 (154 x 22,600 x 3.38) to $5.6 million. ($3.1 million in Services Sustaining Cost funded by UO) OR OR UPGRADE Ineffectively Insured *** Comprehensive Student Health Benefits Program Projected 7,200 students Based on partially self-funded plan, copayment benefit design, without COBRA, and no subsidy for dependent coverage. WAIVE Exceptionally Well-Insured** Student has Platinum Coverage or Oregon Health Plan Health Fee reduces to $0 ($154 reduction) Projected 1,200 Students with Platinum Coverage and 2,000 students with Oregon Health Plan (total = 3,200) Hodgkins Beckley Consulting, LLC

11. Triple Option ProgramFAQ for UO Proposed Triple Option 12 13 14 14 16 17 18 19 20 21 22 Hodgkins Beckley Consulting, LLC

12. Triple Option ProgramFAQ What is wrong with the current funding model for the University Health Center? Hodgkins Beckley Consulting, LLC

13. Triple Option ProgramFAQ Will UO be requiring health insurance as a condition of enrollment under the proposed Triple Option program? Given that the financial penalties for being uninsured increase to a minimum of $325 in 2015 and $695 in 2016, it is not necessary for UO to require health insurance as a condition of enrollment for US citizens or permanent residents. While there will be a small number of students who have exemptions from the mandate, or use a ministry sharing plan to meet their federal insurance mandate, there is no compelling reason to adopt an insurance requirement under the Triple Option program. If UO were to simply fund its Health Center with augmented insurance funding, an insurance requirement would be necessary to address students who have high deductible health plans or have health insurance that does not include access to providers in the Eugene area. Hodgkins Beckley Consulting, LLC

14. Triple Option ProgramFAQ • What are the alternatives to the Triple Option Program? Other than program termination or status quo program operation with increasingly significant disadvantages (e.g., UO has major competition disadvantages for out-of-state students), any alternative to the Triple Option Program would involve UO adopting a health insurance requirement that is much more restrictive than the individual mandate under the Affordable Care Act. For example, UO could adopt a strong health insurance requirement and then require students to submit Health Center and Counseling charges to their personal health insurance. The health fee funding would cover any remaining balanced not funded by students’ personal health insurance. Examples of this kind of secondary payor funding system may be found for Boynton Health Service at the University of Minnesota and University Health Services at the University of Massachusetts-Amherst. The maximum reduction in health fee funding from this kind of system usually ranges between 30% and 45% of fees, and there is a required significant increase in the cost of student health insurance plans. • What will happen if UO only makes minor changes to its current program? • UO will be at a competitive disadvantage for non-resident undergraduate students as the results of the ACA continue to mean that high quality, cost effective student health insurance programs (and high quality health and counseling services) become a major factor for college selection (refer to www.northeastern.edu/nushp). • UO will miss an opportunity to leverage community resources and develop a nationally prominent program that meets the unique needs of three major student groups. • No reduction in reported cost of attendance by significantly decreasing or eliminating current health fees. • <status for UO’s voluntary student health insurance program.> • Probably no opportunity to fully integrate with Oregon Health Plan. • Existing competitive health care environment, which facilitates favorable costs for Triple Option program, may not exist in three to five years. Hodgkins Beckley Consulting, LLC

15. Triple Option ProgramFAQ If insurance is required under the Affordable Care Act, will some universities simply discontinue providing health and counseling services and let students access care in the community through their personal health insurance? As of today, we do not know of any major public university that thinks this is a viable strategy. Many are losing their voluntary health insurance plans for the fall of 2014-15 because they are not subsidized by international students or other student groups that are subject to a mandate. Some feel these programs will return to viability in 2015-16 as the ACA individual mandate achieves significance. We are aware that some commuter institutions and/or institutions with almost no out-of-state students are looking at program termination. A key component is that the student population is relatively small and existing health and counseling services are providing fairly limited services. Hodgkins Beckley Consulting, LLC

16. Triple Option ProgramFAQ What are the major challenges for implementation and long-term success? • Need to persuade existing Health Center and Counseling Center staff to support the roll-out of the program or its initial operation. • Pricing is set and/or other factors induce students to demand the option of waiving the Supplemental Care Program if they have Gold or Silver coverage (e.g., copayment for medical office visits and deductibles of $500 to $750) resulting in insufficient funding if there is low utilization of services. • Complex RFP process may not be conducive to standard purchasing processes/formats and timelines. • Commitment to confidentiality of vendor agreements and credibility of promise not to try leverage agreements for employee health plan. • Effective program communication – requires high quality streaming video, integrated web site , and social media through comprehensive marketing plan and campaign. Major $$$ required. • Security of reserve funds, fair market value for interest income for reserves and charges to program, and planned external audits/programmatic reviews. • Irrational exuberance in counting savings. • Having a clear understanding of fiduciary responsibility and commitment to following best practices. Hodgkins Beckley Consulting, LLC

17. Triple Option ProgramFAQ What does the Triple Option Program look like five and 10 years after implementation? • The Triple Option Program has a proven record of success in providing outstanding services and is a student recruitment asset. • UO has substantial cost advantages over peer institutions that maintained traditional college health programs and/or did not develop community partnerships to provide outstanding health insurance options. • Most of the students will be covered by the comprehensive self-funded student health benefits plan due to continued employer cost shifting. We are also hopeful of following the lead of other states in having Oregon Health Plan pay for the cost of enrollment in the comprehensive insurance plan rather than covering students through Medicaid. • The integrity of reserve funds remains secured. • Interest income on substantial reserves (approximating 30% to 50% of annual plan expenditures) should be used to pay for some of the administrative cost of the plan. Accordingly, the annual cost of coverage will be less than total plan expenditures. • The Triple Option Program facilitates consideration of innovative practices (e.g., biometric individualized health coaching, with success incentives, moving away from community-based health promotion). Hodgkins Beckley Consulting, LLC

18. Triple Option ProgramFAQ • Will both self-funded and fully insured options be considered? • Yes. Both self-funding and fully insured options will be considered. There are claims administrators that can work with both fully insured and self-funding arrangements, providing a national wrap-around provider network over a local area network. • We anticipate that costs will be approximately 10% to 15% greater for fully insured options (assuming start-up contingency reserves are funded by UO). Over the long-term, self-funding will have major cost advantages as almost all fully insured vendors believe that any surplus funds must be returned to individual student participants rather than being retained for the future operation of the program. • How much risk is UO taking under the Triple Option program? • For the comprehensive self-funded student health benefits plan, standard risks associated with self-funding would be anticipated . For the Supplemental Care Program, most of the risk would be capitated to the health care provider(s). Long-term counseling and pharmacy at the Student Health Center would probably be the only risks held by UO. Hodgkins Beckley Consulting, LLC

19. Triple Option ProgramFAQ Will some groups of students be disadvantaged by the Triple Option Program? Cost subsidies are inherent to almost all group health insurance programs. We do not regard these subsidies as major disadvantages. From a legal compliance perspective, HBC suggests that it is important to separate the costs for the GTF program from other insurance components. Otherwise, there are no major concerns or limitations for cost sharing or cost subsidies. Self-funded programs have more flexibility for cost allocation than fully insured programs in that age rating is permissible. Shown below is an example age rating system used by Duke University. Duke University - 2013-14 Cost of Coverage Under 24, the annual charge is $1,895. 24 to 34, the annual charge is $2,280. 35 to 44, the annual charge is $3,200. 45 to 54, the annual charge is $4,695. 55+, the annual charge is $6,510. Hodgkins Beckley Consulting, LLC

20. Triple Option ProgramFAQ What are the start-up costs for the Triple Option program? • The RFP process could range between $70,000 and $160,000 depending upon the extent external consultants are used and the need for actuarial consultants for self-funding arrangements. • Program marketing, if well-conceived and implemented, could cost $100,000 to $200,000. • Loans for contingency reserves for self-funding could range between $1.5 and $2 million. Worst-case scenario funding shortfalls for Health Center and Counseling Center would suggest an additional $2 million in contingency costs. Hodgkins Beckley Consulting, LLC

21. Triple Option ProgramFAQ Can the Triple Option be phased in? Generally, the program components must be implemented at the same time to provide a meaningful choice to students and to obtain the lowest possible costs from directly contracted health care providers. It could be possible to develop direct contracts with health care providers for the 2014-15 plan year for operation of a self-funded or fully insured GTF plan and have the costs from the health care providers be predicated on full adoption of the Triple Option Program for 2015-16. The health care providers would not be allowed to change their cost structure retroactively for the GTF program for 2014-15, but they could revise it for following years if the Triple Option Program is not implemented. Other options for phasing in the Triple Option Program would be to keep the Counseling Center operating as is and to begin with a fully insured program and develop transitional reserves . Hodgkins Beckley Consulting, LLC

22. Triple Option ProgramFAQ Can you provide a summary of the current situation compared to the Triple Option Program? Hodgkins Beckley Consulting, LLC

23. Reference Slides

24. Triple Option ProgramAnnual Cost Comparison Mandatory health fee is calculated at $154 x 3.38 = $521 Hodgkins Beckley Consulting, LLC

25. Triple Option ProgramHealth and Counseling Center Budget Comparison Hodgkins Beckley Consulting, LLC

26. Triple Option ProgramAction Steps KEEP Supplemental Care $158 + $80 = 238 Per Quarter Projected 11,800 students Hodgkins Beckley Consulting, LLC • Requirements • Ability to keep confidential direct health care provider contracts (both internal and external to UO) or RFP process to contract for development and maintenance of provider network for Student Health Program. • Primary relationship to UO is student status – Student Health Insurance/Benefit Program v. employer-sponsored/Taft-Hartley plan. • Private contracting for health care provider contracts (hospital, physicians, mental health care providers, urgent care clinics, etc.) and • RFP processes for partially self-funded versus fully insured program with unbundled vendors (stop-loss carrier/insurance carrier, claims administrator, wrap-around provider network). • Complete independent actuarial assessment. • Ability to fully secure reserve funds and operate under ERISA fiduciary responsibility standard. • Next Steps for UO • Schedule for processes for summer of 2014 should be initiated. • April: Appointment of Consultant and Subcontractor for Provider Contracting and/or Management Services Only (MSO) • April-May: Provider Network and MSO Developed by Contractor/Subcontractor on Behalf of UO • June: elect Claims Administrator (mutually selected with Health Care Provider) • June-July: Modeling for Unbundled Vendors for (1) Fully Insured SHIP or (2) Partially Self-Funded Student Health Benefits Plan • April-Fall, 2014: Marketing Assistance • June: Phase One – Implementation for GTF Program for 2014-15 Plan Year (fee schedule modification for 2015-15 if full TO is not adopted) • RFP results in September – Independent actuarial review, August, 2014. • Oregon Health Plan – request approval for paying for Student Health Benefits Plan – September, 2014. • Decision by UO, October, 2014, for Triple Option implementation for Fall, 2015. • HHS Certification for Self-Funded Student Health Benefits Plan, October, 2014. • If moving forward -- Communication roll-out January, 2015.