UA Choice Mike Humphrey Director of Benefits October 2007 Employer Responses Shifting Costs Changing Delivery Reducing Cost Employees Managed Care Plan Change & Wellness Programs.
Download ReportTranscript UA Choice Mike Humphrey Director of Benefits October 2007 Employer Responses Shifting Costs Changing Delivery Reducing Cost Employees Managed Care Plan Change & Wellness Programs.
UA Choice Mike Humphrey Director of Benefits October 2007 Employer Responses Shifting Costs Changing Delivery Reducing Cost Employees Managed Care Plan Change & Wellness Programs Employers Responses Shift the Cost (“squeezing the balloon”) Benefit cutbacks – higher deductibles Employers contribute less toward the plan cost Employee charges for coverage are increased Change the Delivery System Managed Care, Open & Closed Networks High Performance Networks Reduce the Cost (“deflating the balloon”) Contract with Medical Providers to take less Wellness initiatives Disease management Top Stories University Health Care Trends Beyond 2007 Are they sustainable? $21,000 Annual $20,000 $87 Million Per Employee Per Year Health Plan Costs $19,000 $78 Million $18,000 $17,000 $16,000 $70 Million $15,000 $14,000 $13,000 $12,000 Net Proj Costs FY08 Net Proj Costs FY09 7% Net Proj Costs FY10 11% Net Proj Costs FY11 15% $1,400 Employer and Employee Health Charges Standard Plan FY 08 Per Month $1,263.00 $1,200 $1,023.75 $1,000 $890.00 $915.00 $885.00 $879.78 $847.00 $847.00 $854.00 $851.00 $839.18 $800 $720.00 $560.00 $600 $366.00 $400 $200 ro up s ily A vg fo r E & al lg Fa m nl y O E el A Pe rs on n ni v U ni v Pe rs on n el A lic Pu b C ol le ge & U & ol le ge ss oc .E Sa fe ty ss oc .E (S ta te ) (S ta te ) ca l7 1 Lo C SU (S ta te ) (S ta te ) G U G Te ac Ju Se he ne le rs au ct N Be on ne -T fit ea s ch (w er ith s vi si on )( S ta te ) ea u ru st Ju n Te ac he rT is tr ic t D nc ho ra ge A Fb ks Fb Sc ho ks ol B U or ou gh A $0 Employer Contribution Employee Single Coverage Employee Family Coverage Number of Participants Having This Amount Of Claims Experience In A Year FY 07 Paid Claims Total Claims Experience For An Individual 6,000 5,286 5,000 4,000 3,000 2,000 1,462 1,000 640 327 482 210 158 91 95 72 41 $4,001$5,000 $5,001$6,000 $6,001$7,000 $7,000$8,000 $8,001$9,000 $9,001$10,000 0 <$1,000 $1,001$2,000 $2,000$3,000 $3,001$4,000 10,001.00+ What will the projected increases do to employee charges Projected 14.5% Health Care Trend $6,000 $5,636 $5,000 $3,847 Annual Charge $4,000 $3,000 $2,507 $2,013 $2,000 $1,374 $1,000 $914 $895 $605 $0 FY08 Charge EE FY09 $ 5 Mill Recovery Applied EE + SP FY10 $3.4 Mill Recovery Applied EE + CH FY11 $0 Recovery Applied (Exhausted) Family Projected 10% Health Care Trend $4,000 $3,506 $3,500 $3,075 Annual Charge $3,000 $2,500 $1,854 $2,000 $1,500 $1,252 $1,098 $914 $1,000 $662 $605 $500 $0 FY08 Charge EE FY09 $1 Mill Recovery Applied EE + SP FY10 $3.4 Mill Recovery Applied EE + CH FY11 $4 Mill Recovery Applied Family So What Can Be Done Current UA Support Programs In Place Health & Wellness UA’s Health Programs Case Management – for the seriously ill Disease Management – for the chronically ill Health Risk Assessment Wellness/Life Style Coaching On Site Wellness Programs Pharmacy Program Management Disease Management Principles and Goals • Improve the health and increase the quality of life of UA employees and dependents • Support the physician / patient relationship • Improve employee productivity • Reduce total health care costs UA’s Disease Management Program 2006 Program Diabetes Heart Failure Coronary Artery Disease 2007 Program Diabetes Heart Failure Coronary Artery Disease Low Back Pain Osteoporosis Osteoarthritis Hepatitis C Urinary Incontinence Pressure Ulcers Atrial Fibrillation Inflammatory Bowel Disease Irritable Bowel Syndrome Fibromyalgia Acid Related Disorders UA Disease Management Opportunity Analysis 2006 Program Number of participants – 431 Costs avoided – $493,000 2007 Program Number of participants – 2,100 est. Costs avoided – $723,000 est. Preventable claims cost Group Level health care expenditures 25% Depression Stress Blood Sugar Smoking Obesity Blood Pressure Sedentary Life Not Related 75% N = 46,026 X 6 years Source: Anderson, et. al., (2000, Sept/Oct). The Relationship Between Modifiable Health Risks and Group-Level Health Care Expenditures, AJHP, 15(1), p. 45-52. Preventable Health risks push costs up Yet preventable through lifestyle change $2,000 $1,931 $1,800 Average annual per capita excess health costs when risk is present. $1,600 $1,400 $1,160 $1,200 $955 $1,000 $955 $906 $800 $571 $600 $568 $520 $363 $400 $200 es te Ch ol Hi gh Pr d oo Bl Hi gh Goetzel, R et al. The Relationship Between Modifiable Health Risks and Health Care Expenditures, Journal of Occupational and Environmental Medicine. 1998;10:843-854 ro l es su re ci se Ex er No ba cc o To St re ss > 25 BM I > 30 BM I uc os e Gl Hi gh De pr es si on $- Effect of Single Risk Factors 70% Depressed 46% Stressed 35% Blood Sugar 21% Obesity High BP No Exercise 0% Health Plan Cost 20% Smoker 12% 10% 20% 40% 60% 80% Percent Higher Annual Health Plan Costs Source: Goetzel RZ, et. al. (1998, October). The relationship between modifiable health risks and health care expenditures: An analysis of the multi-employer HERO health risk and cost database. JOEM, 40(10):843-54. Effects of Health Risks on Absenteeism Sick Leave Absenteeism Mental Health 150% Back pain 140% Stressed 131% No Exercise 118% Obesity 116% 0% 50% 100% 150% Percent Higher Absenteeism Source: Serxner, S., et al., (2001). The impact of behavioral health risks on worker absenteeism. JOEM, 43(4), 347-354 200% UA’s Phase 1 “Virtual” Program With WebMD Referrals WIN for Alaska Health In Action Program UA’s On Site Wellness Program With WIN For Alaska – Goals Increase awareness of health risks Reduce the number of health risks Increase participation in healthy behaviors Provide a supportive environment for lifestyle changes Increase employee satisfaction and morale UA’s Phase 2 Program With WebMD & WIN For Alaska Virtual Site-based UA Choice Pharmacy Program Current UA Choice Standard Plan Copays Generic Brand (w/no generic) Brand (w/generic) Maximum Days Supply Deductibles Out-of-Pocket Maximum Retail $7 Mail $7 Specialty Meds $7 per 30 DS $10 $10 $10 per 30 DS $10 $10 $10 per 30 DS 30 na na 100 na na 90 na na PharmaCare’s Observations PharmaCare (Caremark) reviewed last years prescription drug utilization and performance The factors most impacting plan cost are Member Utilization – the number of medications Product Mix – name brand vs. generic Plan Design – name brand vs. generic cost Of these three key areas, plan design offers the greatest opportunity for impact. PharmaCare Summary 44% of participants are utilizing the plan PharmaCare standard book of business approximately 33% take advantage of the plan. This high utilization is reflective of the rich benefit offered. Within the Standard plan, 84% of UA’s utilizing population can be found. They process 70% of total Rx’s and account for almost 75% of the total plan cost. UA Choice Utilization – Fiscal Year 07 UA Choice Plan Eligible Members DELUXE PLAN STANDARD PLAN ECONOMY PLAN 1,235 7,181 975 # of People Utilizing the Plan 334 3,302 317 Totals 9,391 3,953 % Using the Plan Total # of Rx's 27% 46% 33% 9,580 28,380 1,615 # of Rx's per Person 28.7 8.6 5.1 42% 39,575 10.0 UA Choice Utilization – Fiscal Year 07 UA Choice Plan DELUXE PLAN STANDARD PLAN ECONOMY PLAN $121,826.82 $233,995.99 $27,528.17 UA's % of Total $710,380.60 $832,207.42 85% $2,152,719.34 $2,386,715.33 90% $74,197.87 $101,726.04 73% $383,350.98 $2,937,297.81 $3,320,648.79 Member Paid UA Paid Total Paid 88% July 1, 2007 to June 30, 2007 Product Mix Univ. BoB: Retail: $61.55 Mail: $191.41 Univ. of Alaska: Retail: $63.72 Mail: $249.05 Univ. BoB: Brand Rx: $138.19 Generic Rx: $24.07 Univ. of Alaska: Brand Rx: $131.88 Generic Rx: $25.59 PharmaCare Recommendations Increase the promotion of generics Move to a uniform three tier plan design for all plans (Deluxe, Standard and Economy) Update the plan copays and coinsurance Implement 30 day supply limit for specialty med to prevent waste Add standard prior authorization and quantity limits Addition of a member educations program designed to highlight the true cost of the prescription program (Script Summary) PharmaCare Recommendations Expand Brand / Generic copay differential 3,200 Brands w/gen alternatives Avg cost savings $100 per generic Change preferred name brands to a coinsurance percentages to help plans keep pace with inflation Addition of 3rd tier non formulary brand to increase generic and preferred name brand use Recommendations Plan Design Generic $5.00 Lower generic copay results in direct cost, but should encourage more generic use Preferred Name Brand 80/20% Help increase the use of name brands with the best discounts Non-Preferred Name Brand 70/30% Steer participants away from medications with little discount Combined savings to the Pharmacy Plan $578,000 -- over 12.3% PharmaCare Recommendations Implement 30 day supply (DS) limits for specialty medications to prevent waste Relocate distribution center to Seattle Estimated waste = $160,000 PharmaCare reports – 42% of patients using the specialty pharmacy say they are better able to manage their condition and their medications PharmaCare Recommendations Adjust $500 individual pharmacy out-of-pocket maximum to $1,000 for specialty medications 1% to 5% reduction plan cost = $66,000 - $330,000 annually PharmaCare Recommendations Implement Industry Standard Prior Authorizations and Quantity Limits Over a dozen eligible Prior Authorization classes Cosmetic Acne/Skin/Dermatological – YTD Spend $83,000 1% to 3% savings opportunity = $66,000 to $199,000 total plan cost Quantity Limit options for three growing classes of meds = savings @ $.10 pmpm Implement without the option to grandfather existing patients $.10 pmpm x 9500 mbrs = $950 month x 12 = $11,400 savings opportunity PharmaCare Recommendations Total annual pharmacy plan costs avoided (saved) $950,000 Proposed FY 09 Health Plan Changes This is a link to an Excel file named FY 09 health plan Questions