Public Employees Benefits Board

1. April 20, 2004 AG Office Training Center Rowe 6, Bldg. 1 4224 6th Ave SE Lacey, Washington Public Employees Benefits Board

2. 2005 PEBB Procurement • April 8, 2004: Release of RFP • April 19, 2004: Final Bidders List • May 13, 2004: Proposals Due • June 22, 2004: Board Vote & Award Contracts

3. Final 2004 supplemental budget – PEBB February 2004 PEBB fund projection • $36 M projected surplus (up from $25 M projected in Governor’s budget) • Major drivers of surplus • Better UMP 2003 experience • Expected to continue for 2004 and 05 • An increase in employees waiving medical coverage currently 4,184

4. Final 2004 supplemental budget – PEBB Use of projected $36 M surplus • $ 3 M Ending fund balance • $ 4 M Reduce FY 05 K-12 remittance to projected level ($45.50) • $ 1 M Fund administrative budget supplemental requests • $23 M Reduce FY 05 state agency funding rate by $18.12 pspm • $ 5 M Reduce CY 05 employee contribution by $3.59 pspm

5. Final 2004 supplemental budget – PEBB Other changes in the conference budget • Different CY 05 trends • Maintain est. average employee contribution @ $79 in CY 05 • Net additional CY 05 cost of $26.8 M • Half funded in FY 05 by increasing FY 05 funding rate • Half will need to be funded in 05-07 biennium

6. Final 2004 supplemental budget – PEBB Summary of supplemental budget changes

7. Prescription Drug ProgramPEBB Board Meeting April 20, 2004 Duane Thurman, Program Manager

8. Evidence-based Prescription Drug Program • Components of the Program • Washington Preferred Drug List • Pharmacy & Therapeutics Committee • Endorsing Practitioner – Therapeutic Interchange Program

9. Therapeutic Interchange Program Status • UMP and L&I will implement TIP for the entire PDL the week of May 1, 2004. • MAA will phase in the implementation of drug classes on the PDL subject to TIP beginning May 5, 2004. • We have completed 10 training sessions for pharmacists across the state. • We are meeting with various medical groups to explain the program and encourage participation. • We currently have approx. 3,500 endorsing practitioners. There are approx. 27,000 prescribers in the state, of which we estimate 15,000 will write the bulk of Rx’s affected.

10. Next Steps • The agencies are working with stakeholders to develop dose conversion guidelines for pharmacists to use when making a therapeutic interchange. • The agencies are preparing for a rush of new endorsing practitioners and questions about the program beginning May 1, 2004. Questions?

11. Uniform Medical Plan UpdatePEBB Board Meeting April 20, 2004 Janet Peterson, Director

12. Current UMP Activities • Enrollment growth • Express Scripts transition • Quality Improvement program • Tobacco cessation and flu shot promotions • UMP Neighborhood pilot

13. Enrollment Growth UMP PPO only. Does not include UMP Neighborhood.

14. Express Scripts Transition • Mail order issues • State Preferred Drug List (January 1, 2004) • Therapeutic Interchange Program (May 1, 2004)

15. Quality Improvement Program • Effective January 1, 2002: Changes to appeals and other procedures to meet Patients Bill of Rights requirements • 18 appeals sent to IRO from 1/2002 through 3/2004 • All upheld • Nearly all are contractual (not clinical) issues • New Utilization Management and Credentialing Committees

16. Tobacco Cessation Promotion • 2003: First place award for Achievements in Tobacco Control from American Association of Health Plans (with Center for Health Promotion) • UMP participation increased from 163 in CY 2000 to 756 in CY 2001 • Good response continued in 2002 and 2003 (400-500 per year)

17. Flu Shot Promotion • Flu shot promotion 2002/2003 • Enrollees can receive flu shots at pharmacies, etc., without appointment • Claims more than doubled (approximately 12,000 active employees received flu shots in 2003)

18. UMP Neighborhood Pilot • Enrollment: • Approximately 800 subscribers • 1,640 members • About 13% came from UMP; 87% from managed care organizations • Survey to PEBB members in King, Pierce, and Snohomish counties • Results due end of April

19. UMP Neighborhood Pilot (cont.) • Two-year pilot • No major changes expected for 2005 (depending on survey results) • Quality projects developed by participating care systems • Quality measures also being developed

20. Looking Towards 2005 UMP Benefit Changes • Growing gap between actuarial value of current MCO and UMP benefits (estimated at 14%) • Themes: • Simplify or standardize benefit design • Promote appropriate use of preventive services

21. Simplify or Standardize Benefit Design (preliminary recommendations) • Eliminate prescription drug deductible • Implement 3-month carry-over of payments towards the annual medical/surgical deductible • Make enrollee cost-sharing for out-of-state network providers (Beech Street) equivalent to cost-sharing for in-state network Combined premium impact of above recommendations is approximately + 2-2.5 percent.

22. Promote Appropriate Use of Preventive Services (preliminary recommendations) • Routine eye exam every year (instead of every two years) • 100% payment for enrollee’s first colonoscopy • Incentives based on healthy lifestyle and use of preventive services