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