Alaskans for Sustainable Healthcare Costs Coalition

1. Alaskans for Sustainable Healthcare Costs Coalition November 1, 2017 SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

2. ALASKANS FOR SUSTAINABLE HEALTHCARE COSTS WHO WE ARE: Alaskans for Sustainable Healthcare Costs (ASHC) is a group of Alaskan employers who are concerned about the current healthcare environment and are working together to help the community understand and find solutions to the drivers that are affecting these rising costs, which in turn, affect employee benefits expenses and individual premiums. Armed with credible information and data, the coalition gives employers a common voice. • THREE AREAS OF FOCUS: • Medevac • 80th Percentile • Transparency • RECENT ACCOMPLISHMENTS: • Legislative Input: • Several legislators have reached out to our supporters for comments/suggested edits to pieces of legislation they will be introducing related to healthcare • Several supporters of this group were invited to attend Alaska Comprehensive Healthcare Plan • Introductions of ASHC Coalition • 2017 Alaska Chamber Fall Forum; October 11, 2017 • Anchorage Chamber Make It Monday; December 18, 2017 • Downtown Anchorage Rotary; January 9, 2018 SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

3. AGENDA • Legislator Input on the 80th Percentile Regulation Senator Cathy Giessel • Health Care Authority Feasibility Study, a Summary Ralph Townsend • by Director of Institute of Social and Economic Research • Lobbyist Presentation Frank Bickford • Upcoming Events / Calls to Action SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

4. HEALTH CARE AUTHORITY STUDY The State of Alaska has released the findings of a report required by SB74. The study calls for the governmental creation of a Health Care Authority. The HCA would mandate consolidation of health coverage for all public employees to be purchased through the State of Alaska. A public comment period is now open. Are you curious or concerned about the idea of the State forming a large pool of ALL public sector entities in Alaska? If this pooling occurs, what impact do you think it would have on the small number of commercial or private health care plans that would be left in the market? GET INVOLVED If you have any interest, we invite you to join the workgroup convening on November 13th at 4:00 pm to formulate questions and/or feedback to submit during the public comment period. Please contact Ellen Izer for more information. SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

5. Presentation to Alaskans for Sustainable Healthcare Costs Ralph Townsend Director Institute of Social and Economic Research University of Alaska Anchorage Nov. 1, 2017 ISER publications and presentations are solely the work of individual authors and should be attributed to them, not to ISER, the University of Alaska Anchorage, or the research sponsors.

6. Four Reports • Consolidated Purchasing Strategies (PRM Consulting, “PRM-1”) • Analysis of Coordinated Health Plan Administration (PRM Consulting, “PRM-2”) • Medicaid Technical Assistance (Pacific Health Policy Group, “PHPG”) • Estimate of the Potential Value of Consolidating Alaska State, Local, and School District Employee Health Plans (Mark Foster and Associates, “MAFA”)

7. PRM-1 (Joint purchasing only) • Assume existing (separate) plans continue • 2 insurers (Aetna and Premera) provide 90% of coverage under the various plans • 91% of plans are Preferred Provider Organizations (PPOs) • 65-70% in-network (Outside, 90%-95%)

8. PRM-1 • Conclusion: Limited scope for savings with consolidated purchasing because of existing market scope of insurers and low in-network coverage.

9. PRM-1: Three areas of savings • Medicare Employer group waiver plan (EGWP) instead of Retiree Drug Subsidy (RDS): Save $61 m/year ($7 m “normal” cost and $54 reduction in amortization savings. • Centers of Excellence/Travel Benefit. Save $2.9 m to $3.5 m/year. • Pharmacy benefit carve-out. Save $3.5 m to $8.0 m/year (5-10% savings.)

10. PRM-1: Estimate of savings from consolidated purchasing $14.5 million/year by year 5 (1.2%)

11. PRM-2: Administration Recommendations: • Three pools: retirees, school employees, all other employees. • Coverage options within pools. • Require participation as CBAs expire. • Require uniform tiered pricing (individual vs. couple vs family)

12. PRM-2: Sources of administrative savings. • Biggest savings is on reinsurance premia for small self-insured employers. • Significant administrative costs require mandatory participation by all jurisdictions. • Reduced complexity and reduced costs of administration source of benefits. • Reductions in negotiated administrative fees.

13. PRM-2: Two large potential savings • Significant savings by “tiered” employee contributions based upon coverage of spouse and/or children. • Avoiding the Cadillac Tax via multiemployer pool.

14. PRM-2: Total savings $17.4 million by year 5 (1.3%)

15. PHPG: MedicaidBackground • Very different services: 50% for long-term care/support, ancillary services, and behavioral health. • Multiple eligible groups, each with distinct requirements. • Medicaid involves detailed federal approval of MIS support systems

16. PHPG: MedicaidBackground • Cost-sharing (deductibles, co-pays) have limited applicability to Medicaid clients • One or more Medicaid waiver provisions would be required to bring Medicaid into HCA. • Implementation must be aware of potential reductions in federal payments for services and for administrative functions.

17. PHPG: Medicaid forAlaska Native clients • 40% American Indian/Alaska Native clients • 20% of all services and 33% of health care for AI/AN clients from Tribal health providers • Medicaid pays 100% of costs for AI/AN clients at Tribal health providers • Changes to State Plan require consultation with Tribal entities

18. PHPG: Themes • Even without Medicaid, HCA will be challenging. Thoughtful details on administrative structure, pp. 84-87. • Three-part system: Operations, Finance and Health Care Transformation. • Ultimately, the big benefits are in Health Care Transformation

19. PHPG: Themes • Strongly recommends launching HCA without Medicaid and then adding Medicaid • Some Medicaid functions likely to remain with DHSS (e.g., eligibility) • Serious administrative and technical challenges, including MIS. • Underlying philosophical/cultural differences in Medicaid and employee health programs.

20. PHPG: Themes • Unique issues with Alaska Native clients and Tribal health providers. • Some states have struggled to incorporate Medicaid into HCA. Oregon and Washington are examples of successful integration. • A lot more homework required before action.

21. PHPG: Not discussed • Evidence of advantages in joint purchasing? • Differential payment structures for Medicaid and for employees.

22. MAFA • Much more critical of monopolistic power of both providers and insurers in Alaska than PRM. • Sees large possible gains by leveraging purchasing power into discounts from providers

23. MAFA • Not clear if MAFA envisions still using insurance companies as benefit administrators. • Does envision direct state involvement in discount negotiation. • Does envision state driving “value based insurance.”

24. MAFA: Total Savings • Projects annual savings of 8.8% by 2025. • 2.4% from PRM-1 and PRM-2 • 1% from tiered pricing of premiums • 2.7% by negotiating “benchmark pricing” of 1.5 to 3.0 times Medicare. Assumes holding medical inflation 1% below national average. • 2.6% from switch to value based insurance.

25. Some take-aways • PRM-1 sees modest gains from coordinated purchasing (1.2%.) and from consolidated administration (1.3%.) • PRM-2 and MAFA both identified tiered pricing of premiums as desirable. MAFA estimates savings at 1%.

26. Some take-aways • PHPG identified significant administration challenges to incorporate Medicaid, including unique Alaska Native aspects. (PRM and MAFA do not assume Medicaid integration.) • At a minimum, PHPG recommends initial launch of HCA without Medicaid

27. Some take-aways 5. MAFA estimates total savings by 2025 at 8.8% per year. In addition to PRM-1 and PRM-2 gains and gains from tiered pricing, MAFA predicts: • 2.7% saving by using Medicare reference pricing. • 2.6% from value-based insurance. (Some double counting of purchase pooling savings by PRM-1 and MAFA?)

28. Some take-aways • Both MAFA and PRM estimates assume complete integration of local government and local school districts. PRM sees larger benefits for these units (relative to benefits to state government.) • Both PHPG and MAFA emphasize importance of transformation of health care delivery and finance to meaningful results.

29. Presentation to Alaskans for Sustainable Healthcare Costs Ralph Townsend Director Institute of Social and Economic Research University of Alaska Anchorage Nov. 1, 2017 ISER publications and presentations are solely the work of individual authors and should be attributed to them, not to ISER, the University of Alaska Anchorage, or the research sponsors.

30. THE NEED FOR A PRESENCE IN JUNEAU – LOBBYIST SCOPE: BICKFORD PACIFIC GROUP Scope of Work Scope of work on behalf of ASHC will be lobbying on the issues of Transparency, 80th Percentile and Medavac. In addition, will monitor and work on specific issues of interest. Length of contract is 1 year from 1/1/18 thru 12/31/18, effective 11/1/17 in which Bickford Pacific Group, will provide the proposed list of services see below. SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

31. THE NEED FOR A PRESENCE IN JUNEAU – LOBBYIST SCOPE: BICKFORD PACIFIC GROUP • Proposed list of services: • Lobbying, counsel, monitoring and strategic analysis with Legislature, State Agencies, Administration, Industry Stakeholders and any others of interest. • Briefings and material preparations for ASHC during Legislative Session, as well as any interactions with Administration and State Agencies. • Introduction and meeting coordination for client with elected officials, state agencies, Administration, and any others of interest. • Coordinate a Legislative fly in for key members of ASHC. • Coordinate Lunch and Learn at Legislature for ASHC • Building a statewide coalition of support via allies, vendors and organizations. • Research and Analysis • Political counsel on statewide and local elections. • Other issues outside this scope as agreed by both employer of lobbyist and lobbyist. SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com

32. CALL TO ACTION • WORKGROUP • Join the workgroup convening on November 13th to formulate questions and/or feedback to submit during the public comment period. Please contact Ellen Izer for more information. • November 13, 4:00 pm • COALTION PRESENTATIONS • December 18, 2017; Make It Monday • January 9, 2018; Downtown Rotary • COALITION MEETINGS • December 6, 2017 • JL Tower, 2nd Floor Conference Room • 3800 Centerpoint Drive • Anchorage, Alaska • Regular meeting from 3:00 to 5:00pm • Reception with legislators from 5:00 to 6:00pm • January 2018 (exact date to come) • Willis Towers Watson to present more on healthcare costs impact in Alaska SustainableHealthcareForAlaska.com | SustainableHealthcareAK@gmail.com