1 / 55

Creative Solutions to the Health Care Crisis

Creative Solutions to the Health Care Crisis. Jim Miller Sales Manager-SET SEG MASA September 27,2006. How do you approach the crisis?. Dilemma- “a situation in which somebody must choose one of two or more unsatisfactory alternatives” Modify- “to change partially in character, form, etc”

agamemnon
Download Presentation

Creative Solutions to the Health Care Crisis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Creative Solutions to the Health Care Crisis Jim Miller Sales Manager-SET SEG MASA September 27,2006

  2. How do you approach the crisis? • Dilemma- “a situation in which somebody must choose one of two or more unsatisfactory alternatives” • Modify- “to change partially in character, form, etc” • Solve- “to find the answer to a problem”

  3. Dilemma • “Any situation requiring a choice between unpleasant alternatives” • Alternatives • Pay full health insurance with no financial control with rates increasing every year • Establish a cap on health insurance contributions • Cost shifting to employees • Does not address root cause of problem • Rates will increase every year

  4. Modify • “To change partially in character, form, etc” • Change the current plan: • $100 deductible to $200 • Super Care to Choices PPO • $5/10 Rx to $10/20 Rx • Partially addresses problem • Rates will continue to increase

  5. Solve • “To find an answer to the problem” • Identify the problem • Individual accountability for health care utilization. • Medical care treated as a free commodity • Employer accountability • MESSA’s large “Pooled rating” does not give school an incentive to lower medical cost • Strategy to lower actual claims amount • Wellness plans

  6. Individual accountability • Current MESSA plans have created an atmosphere of medical care as a free commodity • Super Care and Choices plans pay virtually every expense with little or no employee involvement • $5 co-pay for office calls • $5/10 co-pay for Rx • Paid in full benefit buys union loyalty

  7. Modify • “To change partially…………..” • To partially change the MESSA system • Change from $5/10 Rx to $10/20 Rx • Does help address the free Rx thinking • Change from Super Care to Choices PPO • Does help by directing employees to lower cost PPO providers • About 70% of all BCBSM is a PPO • MPSRS BCBSM is a PPO • Fails to address the root causes of the rising cost • Increased claims and utilization

  8. Solve • “To find an answer to a problem” • What is the problem? • Budget-rising cost • MESSA Super Care 1 • 10 years ago • Family $542/month, $6,504/year • Current • Family $1,435/month, $17,220/year

  9. Creative Solutions • What can schools do to “Solve” the problem of: • Individual accountability • Employer accountability • Lower health insurance claim totals • The problem will be “Solved” when the health insurance costs are manageable

  10. Individual Accountability • What can a school do to make the employees more accountable for their use of health care benefits? • Redesign the Rx benefits • Redesign Hospital and Doctor benefits • Introduce Consumer Driven Health Care

  11. Individual Accountability • Design health insurance benefits that direct employees to the lowest cost • Prescriptions-about 1/3rd of all health claims • Design a plan that encourages the lowest cost • $5 generic,$10 brand-No • $10 generic, $20 brand-Good • 80% $5 minimum, $20 maximum-Good • $5 generic $20 formulary $40 brand-Better • $0 OTC,$5 generic, $20 formulary, $40 Brand-Best • See yellow handout

  12. Individual Accountability • Prescriptions, other options • Maximum Allowable Cost (MAC) • Member must pay the difference between brand and generic + co-payment (MESSA $10/20) • Eliminate life style Rx (One or all) • Impotency Rx • Weight loss Rx • Stop smoking • 50% life style Rx allowance

  13. Individual Accountability • Redesign hospital and doctor benefits • Increase ER co-pay from $50 to $100 • Discourage ER abuse (20% of visits not required) • Increase office call co-pay • $10, $20 • Increase Chiropractic co-pay • $10, $20, $30 • Eliminate Massage Therapy • Can be over utilized

  14. Individual Accountability • Total benefit design that will encourage individual accountability with a standard plan • PPO plan • $100/200 deductible, $100 ER co-pay, $20 O/C co-pay, $30 Chiropractic co-pay • $0 OTC, $5 generic, $20 formulary, $40 brand Rx • This plan will reduce the current MESSA Choices rates plan by about 20% • Match “Community Standards”

  15. Individual Accountability • Did the re-designed plan achieve goal of encouraging individual accountability? • Plan design that utilizes deductible in areas that are vulnerable to over utilization will help achieve the goal • Re-design of the Rx plan with major emphasis on the employee selecting OTC and generic Rx will help achieve the goal • Goal is to get generic usage in the 60% range versus the 40% range and increase OTC

  16. Individual Accountability • Health Savings Accounts (HSA) • School purchases a High Deductible Health Plan (HDHP) • Common deductibles-$1,250 single, $2,500 family • School and/or employee funds the deductible claims with an HSA account at a bank • Any funds remaining in the HSA at years end remains with the employee • Each year the HSA is funded

  17. Individual Accountability • How HSA achieves Accountability • Encourages employees to use their health plan wisely because balances in the HSA remain with employee • It is in the best interest of the employee to use OTC or generic Rx instead of brand Rx • It is in the best interest of the employee to use an Urgent Care facility rather than an ER • Remaining balances can then pay future medical bill tax free (example in retirement)

  18. HSA Cost Example • Current family SC 1(Area 7) $1,435 • BCBSM family HDHP (Area 7) ($ 795) • Savings per month $ 640 • Annual savings $7,680 • School funded $2,500 deductible ($2,500) • Net annual savings per family $5,180 • See BCBSM HSA handout

  19. Individual Accountability • Has the HSA concept helped solve the problem of individual accountability? • It is in the best interest of the employee to use the lowest cost health care alternative • Health care is no longer considered a free commodity as it is under the current MESSA system

  20. Individual Accountability • Health Reimbursement Arrangement (HRA) • School purchases a High Deductible Health Coverage (HDHC) • Common HDHC plans are $1,000, $2,500, and $5,000 deductible plans • School owns the funds deposited in HRA used to fund deductible • Remaining funds may or may not be returned to employees HRA account

  21. HRA Self funding • Current family SC 1(Area 7) $1,435 • BCBSM family HDHP (Area 7) $ 795 • $2,500 family deductible plan • Savings per month $ 640 • Annual savings $7,680 • Est. deductible claim expense $1,250 • Estimated savings to school $6,430

  22. Individual Accountability • Has the HRA achieved the goal of individual accountability? • If entire balance remaining in employees HRA stay in the account then the employee is encouraged to use the plan wisely • If the school keeps the balances in the HRA then the individual accountability goal is not achieved • The school is simply self-funding high deductible health coverage

  23. Employer Accountability • Current “Pooled” rating system • All schools regardless of size or individual usage of benefits pay the same health insurance rate in a geographic region (7 rating areas for MESSA) • Health insurance loss information not available to any size MESSA group • No incentive for any one school to reduce their health insurance claims

  24. Employer Accountability • Standard health insurance practices • Smaller groups are combined for rating purposes • BCBSM combines groups with less than 100 enrolled into eight “Area Pools” throughout Michigan • Larger groups, over 100 enrolled have their rates determined by their own usage of benefits • Encourages wise use of benefits by each employer

  25. Employer Accountability • Groups over 100 utilize an Experience Rated System (ERS) for rate determination • A self-funded system is also available • Pending legislation would allow small districts to Pool together to meet minimum size to utilize ERS • Also would require MESSA to release claim data

  26. Employer Accountability • Advantages of the ERS system for a school • Transparency-the carrier must provide detail loss data • School can see what benefits are being used or abused and design plans to address the problem • School can identify the types of illnesses the employees have and address the problem • School can determine which Rx are being used and develop a Rx benefit to encourage wise use

  27. How ERS Works • Claims $2,500,000 • Provider discounts (30%) ($ 750,000) • Claims paid $1,750,000 • Claims over $50,000 ($ 100,000) • Net claims $1,650,000 • $50,000 stop loss and Adm. $ 300,000 • Total claims and administration $1,950,000 • Current premium (rates) $1,950,000 • Projected expenses +10% $2,145,000

  28. Why ERS? • If your school district can reduce their claim cost then they save • Can the school through benefit design reduce their benefit cost? • 10% to 15% reduction in claims is possible • School receives detail claim information to use to make good management decision • Individual employees names will not be disclosed

  29. Control Claim Cost • “Individual Accountability” • Well designed use of deductible and Rx co-pays • Introduction of HSA or HRA • Employer Accountability • ERS system • Claim information, “transparency” • Identify claim areas to be addressed

  30. Control Claim Cost • Disease Management programs • The carrier must be very aggressive and work with employees with major and chronic conditions. The school must demand accountability by the carrier for these plans • 30% of individuals account for 85% of claims • 15% of individuals with chronic conditions spend 40% of the total health care dollars

  31. Control Claim Cost • Conflict • MESSA plan buys union loyalty with paid in full benefits • Controlling claim cost can be a major conflict with MEA/MESSA philosophy • The goal of Controlling Claim Cost is to assure that health insurance will be available in the future for everyone

  32. Control Claim Cost • Wellness Plans • 50% of injury, disease, and premature death is preventable • 64% of Americans are overweight • Lifestyle risk factors account for 25% of medical costs • If a school has an ERS system they have an incentive to invest some dollars in a Wellness plan to reduce their claim cost

  33. Creative Benefit Designs • HRA-Significant savings versus MESSA • School purchases a Flexible Blue 2 plan from BCBSM (or other high ded. plan) • $1,250 single and $2,500 family deductible • Third Party Administrator administers deductible claims • Deductible balance left over remains with school • See HRA cost example

  34. HRA Cost Example • Current family SC 1(Area 7) $1,435 • BCBSM family HDHP (Area 7) $ 795 • $2,500 family deductible plan • Savings per month $ 640 • Annual savings $7,680 • Est. ded. claim expense(50%) $1,250 • Estimated savings to school $6,430

  35. Creative Benefit Designs • HSA-Significant savings versus MESSA • School purchases a Flexible Blue 2 plan from BCBSM • $1,250 single and $2,500 family deductible • HSA established • Balances remain with employee • Major emphasis on employees using the plan wisely • See HSA cost example

  36. HSA Cost Example • Current family SC 1(Area 7) $1,435 • BCBSM family HDHP (Area 7) $ 795 • Savings per month $ 640 • Annual savings $7,680 • School funded $2,500 deductible $2,500 • Net annual savings per family $5,180

  37. Creative Benefit Design • WRAP Concept • School purchases a higher deductible health plan, BCBSM Flexible Blue or a Community Blue plan at a much lower rate • School selects a Third Party Administrator to administer claims within the deductible to bring plan benefits up to selected level • SET SEG has partnered with EHIM because they receive BCBSM EOBs direct from BCBSM and can adjudicate the claim to the pre-arranged level, example- MESSA Choices or any other level

  38. Creative Benefit Design • WRAP Concept • The school is self-funding the deductible • The school’s risk is limited to the deductible amount • If the employees do not use the entire deductible then the balance remains with the school • Experience indicates that about 50%-60% of the deductible is used by employees

  39. Creative Benefit Designs • WRAP a Flexible Blue 2 plan with a self-funded Rx plan • School purchases a BCBSM Flexible Blue 2 plan • Single deductible-$1,250, Family-$2,500 • Deductible claims administered by TPA • Balances remain with school • School self-funds the Rx plan with a co-pay such as the $0-OTC, $5/20/40 plan

  40. Creative Benefit DesignWRAP Cost Example • $2,500 ded. plan, family, Area 2 $ 675 • 50% ded. usage (estimate) $ 104 • Adm. fee for deductible claims $ 15 • Self-funded Rx $0 OTC,$5/20/40 $ 200 • Total $ 994 • MESSA Choices, family Area 2 $1,355 • Saving per year $4,332

  41. Creative Benefit Design • WRAP a BCBSM Community Blue 4 PPO plan with self funded Rx • School purchases a BCBSM Community Blue 4 plan • Single deductible- $500, Family-$1,000 • Deductible claims administered by TPA • Balances remain with school • School self-funds the Rx plan with a co-pay such as $0 OTC/ $5/$20/$40

  42. Creative Benefit Design • WRAP a BCBSM Community Blue 4 PPO plan with an insured BCBSM Rx • School purchases a BCBSM Community Blue 4 plan • Single deductible- $500, Family-$1,000 • Deductible claims administered by TPA • Balances remain with school • School purchases an insured Rx plan from BCBSM • Very limited self-funded risk

  43. Creative Benefit Design • WRAP a higher deductible Community Blue 14 plan with an insured Rx or self-funded Rx • School purchases a BCBSM Community Blue 14 plan • Single deductible- $1,500, Family-$3,000 • Deductible claims administered by TPA • Balances remain with school • Rx insured or self-funded • See blue handout-WRAP choices

  44. Creative Benefit Design • Cafeteria plan format • Instead of making a shift for all employees to a new concept, establish a cafeteria plan • Each employee can select from one of two or three choices, example: • Plan 1- Community Blue 1 no deductible $5/10 Rx • Contribution required • Plan 2- Community Blue 2, $100/200 deductible $10/20 Rx- • Paid in full • Plan 3- HSA, School funded deductible, • Paid in full • See Cafeteria Plan handout

  45. Cafeteria Plan Example Health Insurance Core Plan Option 1 Option 2 Option 3 BCBSM PPO Plan 2 w/$10/20 Rx BCBSM PPO Plan 1 w/$5/10 Rx BCBSM Flexible Blue HSA No Health Insurance Core Plan Paid in Full Available Buy-up Employer Contributes $2,500 to HSA Cash Payment $__________ Other Benefits Self-funded Dental Plan Self-funded Vision Plan Life Insurance (Insured) Long-term Disability (Insured) Note: 2 health plans can be offered to groups of 11 to 24 enrolled. 3 health plans can be offered to groups with more than 25 enrolled.

  46. Creative Benefit Design • Investigate other health insurance carriers • Aetna • United Health Care • Self-funded TPA • These new carriers can match the Creative Benefit Designs offered by BCBSM

  47. A Strategic Plan • Incorporate the three main components of “Solving” the health care crisis • Individual accountability • Employer accountability • Reduce health insurance claims • Use the Creative Benefit Designs to work towards a solution

  48. Example of a Strategic Plan(Abbreviated) • Goal of the plan • Over a 3-5 year period to move away from MESSA to a health plan that will: • Create more individual accountability by having individuals more involved in health care decisions • Change RX plan to encourage lowest cost alternative • Introduce Consumer Directed Health Care • Start an Experience Rated System • Years 4-5 investigate self-funding health and Rx

  49. Strategic Plan • Introduce Wellness plan year one • Each year further develop plan to help reduce claims • Create incentives to encourage participation • Work with insurance partner to develop meaningful reports to be able to monitor progress • Very important issue in selecting insurance partner

More Related