Transcript Sustainable and Quality Health Care • Large institutional expenditure • NMU efforts to control costs o MUCH, Inc. o NMU Health Center o NMU Injury.

Sustainable and Quality
Health Care
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• Large institutional expenditure
• NMU efforts to control costs
o MUCH, Inc.
o NMU Health Center
o NMU Injury and Evaluation Center
o Wellness activities
• How we compare within State
• Federal Health Care Plan impact
• Retiree health care
• Emerging issues and future direction
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• Goal
o Northern’s employee health benefits program was
established to provide employees with competitive, quality,
and sustainable health care coverage at a reasonable cost
for both the employee and the employer. The plan will
promote a healthy status, quality of life, and environment
that positively impacts the employee’s ability to perform at
optimal productivity.
o A healthy environment will assist in meeting business
objectives
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Improved work culture and employee satisfaction
Improved retention and recruitment
Reduced injury rates resulting in costs savings
Decreased absenteeism and replacement costs
Reduced health care costs
Reduced disability costs
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• Large institutional expenditure
o Cover approximately 1,000 NMU faculty and staff
o Self-insured plan (pay actual claims) plus administrative
fees
o PPO coverage through Blue Cross Blue Shield
o Group plan guaranteed hospital and physician discounts
through collaborative agreement with MUCH, Inc.
o Provides health care, prescription drug coverage, case
management, wellness benefits
o Total health care costs have grown from $5.9 million to
$11.9 million over past ten years
o Employees average required contribution for health care
has grown from $750 per year to $1,358 per year over the
past eight years
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FY03
FY04
FY05
FY06
FY07
FY08
FY09
$1,358
$1,275
$1,175
$1,075
$1,000
$900
$767
FY02
$833
$750
Annual per Employee Health Care Contribution
FY10
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6.0%
FY08
7.0%
6.0%
FY07
6.7%
6.2%
8.5%
FY06
FY09
FY10
3.0%
7.6%
9.4%
Percent Increase in Employee Costs
FY02
FY03
FY04
FY05
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MUCH, Inc.
NMU Health Center
Injury and Evaluation Clinic
Wellness efforts
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• Mission
o To leverage the knowledge, resources, and influence of its
members to improve the value of employee benefit plans
and services through better quality and contained costs for
educational institutions, their employees, retirees, and
dependents.
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• Why was MUCH organized?
o Use the:
 combined strength
 purchasing power
 presence of the public universities in Michigan
 Partnerships with other coalitions and employer groups
throughout Michigan
to bring about constructive increases in the value of health
care benefit plans and services through better quality and
lower cost.
 Key: Group purchasing power to lower costs
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• Programs and Goals of MUCH - focus on market-driven
health reform initiatives (including some in partnership with
other purchasers and health coalitions)
o Value-Based Purchasing: (Utilize data and information, quality
management, incentives, collaboration, and education)
o Aggregate Buying Power
o Education/Communication (Learning about health care benefit
plans and services in a rapidly changing environment)
o Networking
o Data recovery and analysis
o Outcomes measurements
o Provider rate negotiations
o Plan Designs and Carve-Outs
o Public Policy
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• NMU’s medical facility provides high quality, on-campus
health care to students and staff, including an on-site
pharmacy
• The center offers a wide variety of services, similar to those
offered by a family doctor
• Health Center
Serve students, faculty, and staff
Leverage center to lower employee health costs
Enhances dispensing of generic prescriptions (over 70%)
Education to employees on cost of drugs and health procedures
Primary care services
Staff consists of 1.75 MDs; 0.84 PA; 2 RNs; 1 Pharmacist; 1 Lab tech
19,000 visits per year (students, faculty, staff, spouses, and older
dependents)
o 26,000 scrips filled
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• Services Available
Care is provided by
highly qualified board
certified physicians
specializing in internal
medicine and family
practice.
• Referrals to medical
specialists
• Medical Services
• Routine Acute Care:
Allergies
Minor injuries
Respiratory infections
Colds
Mononucleosis
Sore throats
Earache
Rashes
Sport injuries
• Primary Care for Medical
Illnesses:
Acne
Depression
Migraine headache
Asthma
Diabetes
Panic attacks
Back pain
Eating disorders
Urinary tract infection
Coronary Artery Disease
Hypertension
• Physical Examinations:
Annual adult medical
Pre-Employment
Travel abroad
Cholesterol checks
Sports physicals
• Gynecological Exams:
Contraceptive needs
Pap smears
Vaginal infections
Menstrual problems
Pregnancy
• Nursing Services
Allergy shots
Nurse consult
Travel clinic
Immunizations
TB skin tests
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• Other services include:
o Regular lab work to facilitate care and referral lab work
o Educate university population on health care, options, and
costs
o Health crisis prevention (e.g., meningitis)
o Travel visits/Student Study Abroad (assist in determining
necessary vaccines, medications, CDC cautions, region
specific information, and other)
o Housing exemption medical review
o CDL for employees
o Measles policy coordination
o TB screening for international students
o Animal labs - Student medical review; medical history
o Olympic athlete physicals
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• Injury Evaluation and Care Clinic
o Provides the university community with the evaluation and
primary treatment of sport and physical activity related
injuries
o Utilizes internal center to assist in controlling costs
o Provides experience to students in the program
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• Plan benefits provide for preventive care coverage and are
covered at 100%
• HR and Recreational services work to provide wellness
education and activities on campus for employees
• Looking to expand areas in wellness:
o Studies indicate organization can achieve significant returns on
investment (in the range of 3.5 – 5.8:1 for every dollar spent)
o Incentivize with potential decreased health contribution cost
for compliance in health maintenance plans
 integrated incentives for healthy behaviors can result in
significant increases in participation and thus, a more
sustainable return on investment
o Improved health status and quality of life leads to improved
work culture, satisfaction, improved productivity, and lower
health care costs
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Federal act impact on NMU
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• PPACA became law March 23, 2010
o Regulations are fluid and are changing regularly
• Imposes new mandates on self-insured and fully-insured
group health plans sponsored by private and public colleges
and universities
• Distinguishes between “grandfathered plans” and “nongrandfathered” plans
• NMU’s plan is “grandfathered” – exempt from some new
requirements unless plan changes are made
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• “Grandfathered” plans are plans that were in existence on or
before March 23, 2010
o The “grandfathered plans” protection applies where there is
no change to existing coverage
 This status will be difficult to maintain
o Changes to existing coverage include but are not limited to:
 elimination of benefits within the plan
 increase in percentage cost-sharing
 increase in fixed co-pays and deductibles
 decrease of employer contribution amount by more than 5%
below contribution on March 23, 2010
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• Several of these mandates must be made beginning with plan
years starting on or after September 23, 2010
o NMU plan year that begins January 1, 2011
o Referred to as “near-term” benefit requirements, and apply
to all plans (grandfathered and non-grandfathered plans)
o Third-party administrator (BCBSM) for health care is
implementing these near-term benefit requirements for our
health plan to ensure compliance
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• Near –term benefit changes must be made by NMU for our
plan year that begins January 1, 2011 such as:
o Extending dependent coverage up to age 26
 Dependent eligibility is no longer limited by financial
dependency, marital status, or enrollment in school
o Dependent eligibility (includes both married or unmarried
children – not spouse or child of eligible dependent)
 Removal of pre-existing condition exclusions for children up
to age 19
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• Required near–term benefit changes must be made by NMU
for our plan year that begins January 1, 2011 (continued):
o Removal of lifetime limits
 Plans may establish “restricted annual limits” on essential
health benefits until 1/1/14
 Annual limits allowed on non-essential health benefits
 Must allow those who have reached the limit to re-enroll in
the plan
o Prohibiting rescissions (retroactive cancellation of an
insurance policy) with limited exceptions
o No reimbursement from flexible spending accounts (FSAs)
for non-prescribed over-the-counter drugs
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• NMU’s health plan is considered to be “grandfathered” and is,
therefore, not subject to other “near-term” benefit changes
including:
o Covering newly eligible dependents that currently have their
own employer-sponsored coverage
o Cover emergency services without prior authorization and
as if services were provided in-network (NMU policy)
o Pediatrician as child’s primary care physician (NMU policy)
o New appeals process (BCBS first; Internal appeals process
needs to be modified – NMU policy)
o Permit choice of health care professionals (NMU policy)
o Cover immunization and preventive services without costsharing (NMU policy)
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• Year 2011:
o W-2 Reporting
 Aggregate cost of employer-provided health care for plan year
must be included on employees’ W-2 forms (voluntary in 2011;
mandatory in 2012)
 Aggregate cost of employer provided health care to be reported
each year going forward
 The reporting value (under current rules) is for informational
purposes only and will not be taxable
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• Year 2012:
o 1099 forms must be filed for most vendors paid more than
$600
o Communication and standardization—
 Uniform Summary: prior to early 2012, federal regulations will
develop standardized processes and formats for compiling and
communicating benefits, plan changes, and rights
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• Year 2013:
o Exchange notification: active and retired employees must be notified of the
existence of their state health care exchanges (eligible in 2014 – provide
employees and retirees)
 Exchange established by State to permit individuals and small employers (100 or fewer)
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to purchase qualified health insurance coverage
Only includes qualified health plans; must provide essential health benefits package; only
qualified individuals can purchase through the exchange. Individuals may receive a
premium tax credit (employees who are offered coverage through employer are not
eligible for premium tax credit, unless employer plan does not provide coverage
equivalent to essential benefits package).
Beginning in 2017, a State may permit large employers (with more than 100 employees)
to purchase health insurance through an Exchange
o Flexible spending accounts (FSAs): employee contributions are limited to
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$2,500
Long-term care program enrollment: employees may be auto-enrolled in a
new federal long-term care plan
Payroll taxes: employee share of the Medicare hospital tax will increase by 0.9
percent for individuals with incomes greater than $250,000 (joint filers) or
$200,000 (single filers)
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• Year 2013 (continued):
o Comparative effectiveness fee:
 $1 fee per covered life to pay for comparative effectiveness
research
 pay for research to improve health care outcomes by developing and
disseminating evidence-based information to patients, providers,
and decision-makers about effectiveness of treatments relative to
other options – goal to help lower costs
 For self-insured groups, this fee is remitted by the plan
sponsor, which in most cases is the employer
 The fee goes up to $2 per covered life for policy years ending
during the 2014 fiscal year
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• Year 2014:
o Exchange eligibility: exchanges open to small employers.
States may open to large employers beginning 2017.
o “Early retirees” (pre-age 65) will have the ability to purchase
on the exchange as an alternative to employer-sponsored
retiree health
o Individual Mandate: Individuals required to maintain
“minimum essential coverage” or pay a penalty. “Minimum
essential coverage” would include enrollment in an
employer-sponsored plan.
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• Year 2014 (continued):
o Free choice vouchers:
 All employers offering health care coverage will be required to
provide “free choice vouchers” to qualified employees to
purchase insurance through the State health care exchange.
 Employees qualify for free choice vouchers if employee premium
contributions are at least 8 percent but less than 9.8 percent of
income and the employee’s income is at or below 400 percent of the
federal poverty level
• Year 2018
o Excise tax (“penalty”) on employers if annual value of health
employer plan values exceed federal thresholds
(nondeductible tax is 40% of the annual value of health
employer plan value that exceeds the threshold)
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• Employer Penalties:
o PPACA does not mandate an employer to offer health
insurance to employees
o Penalties may apply to an employer with at least 50 fulltime equivalents (FTEs) (Defined as 30+ hours per week)
o Penalties apply depending on whether or not an employer
offers coverage and if employer is giving premium credits
to at least one full-time employee
o No penalties imposed on employer with respect to an
employee who is provided a free choice voucher
• Reporting to IRS: reporting is required to identify employees
with coverage through their employers
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• Probable increase in employer and employee cost due to
mandated benefits, eligibility, and taxes on services such as
medical devices and some services
• Eliminates flexibility to design/manage your own plan by
imposing one-size fits all requirements on all employersponsored plans
• Imposes regulatory requirements that will add administrative
burden and expense
• Excise tax could be big cost impact
• Workload on Human Resources, IT, Accounting, and legal
departments for legal and regulatory compliance
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• Mandates that employers become “agents” of the government
to administer new federal voucher program by having to
report to government monthly and annually
• Required distribution of uniform plan summary with specific
information – this is to be determined by HHS – fines will be
imposed for failure to comply
• A loss of “grandfathered” plan status imposes additional
mandates
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NMU summary of coverage
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• MPSERS retirees are covered through State plan
• Non-MPSERS employees (all employees hired after 1995) do
not receive a retiree health care benefit from NMU
o Have option to purchase at actual cost of group plan
o Due to changes in accounting, this may not be feasible into
the future
• Health insurance exchanges will provide retirees more
options to purchase coverage beginning in January 2014
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• Recent cost history
o Health care costs continue to escalate faster than rate of
inflation
o Employer costs have increased at 6% to 9% per year
o Required employee contributions have continued to climb
(from $750 average in 2002 to $1,358 average in 2010)
o Employee share is now at approximately 11% “premium”
cost and 14% of total health costs
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• Current labor contracts
o Negotiated employer/employee contribution rate
o Average co-pay employee “premium” contribution is
approximately 11.2%
o Contribution, including co-pays, is approximately 14% of
total costs on an annual basis
o Prescription drug co-pays $10/$20
• Current Plan
o Self-insured
o Stop loss agreement for excess claims
o Guaranteed discount rate on medical claims through MUCH
agreement
o Discounted administrative and network access fees through
MUCH
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Plan benefits
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• Health benefit plan features, particularly deductibles, office
visit co-pays, and prescription drug co-pays varied from plan
to plan and institution to institution. However, they generally
fell within certain ranges.
• Employer Health Plan “Premium” Contributions (Michigan,
Wisconsin, and Minnesota) – (single coverage):
o Minimum contribution percentage: 43%
o Maximum contribution percentage: 100%
o Mean contribution percentage: 87%
o Median contribution percentage: 93%
o Michigan average contribution percentage: 89%
 NMU is at 89%
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• Deductibles:
o Ranged from $0 to $7,000 (in-network and out-ofnetwork)
o Individual coverage deductibles were generally $500 or less
o Family deductibles were generally $1,000 or less
• Fixed-dollar co-pays for office visits ranged from $0 to $42
• Prescription drugs:
o Co-pays for generic drugs ranged from $4 to $10 for a 30day supply
o Co-pays for Tier 2 and 3 drugs ranged from $0 to $50
• Many university’s have multiple plans and some vary based
on employee group
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• Co-pays Office Visits
o Range from $10 to $25 and 10% to 25%
o Majority at $10 to $15
• Lifetime maximums
o Range from $2 million to no maximum
o Majority at $2million to $5 million
o Note: Maximums go away with health care reform near-term change – NMU was at
$5 million)
• Co-pay Emergency Room
o Range from $50 to $100
o Majority at $50
• In-network deductibles
o Range from $0/$0 to $1,500/$3,000
o Majority are $50 to $250 for single plans and $100 to $500 for family plans
o Universities that had $0 deductible plans also offered plans at lower cost with higher
deductibles
• In-network Coinsurance
o Range from 0% to 10%
o Universities also offer other plans that have % co-pays > 0%
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• In-network out-of-pocket maximums:
o Range from $0 to $5,000
o Majority at $500 to $1,000 for single plans and $1,000 to $2,000
for family plans
• Employer required contributions (“premium”) percentage:
o Average at 10.9%
o Range from 0% to 29.6% (most at 0% is for a lower cost plan and
have higher % for higher cost plans)
• Prescription co-pays:
o Range from $5 to $15 for generic and R$20 to $30 for brand; also
two universities 10% for generic and 20% for brand
o Majority at $10 for generic and $20 for brand
o Some have third tier non-formulary co-pay
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Plan benefits
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• Future–Shared Responsibility: The University and employees
have a shared responsibility
o The University to provide a quality health program at a
reasonable cost to the employer and employee – high
productivity; quality of work and personal life
o Employees to work with University to implement measures
that contain costs to ensure the long-term sustainability
and integrity of quality health care
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• Constraints on funding – declining State support
• Growth in the cost of health care at a rate several times the
rate of increase in the cost of living
• Public and political pressure to reduce public sector employee
benefits and/or greater sharing of costs between
employer/employee is widespread
• Pressure to control costs as funding continues to decline
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• The combination of these conditions has raised the question
about the long-term sustainability of the employer funded
health care benefit plans
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• Structure needed that allows for greater flexibility to change
program on regular basis:
o Move towards contract language that allows for plan changes to
adapt to changing market conditions, trends in health care, and
long-term sustainability of quality health care for employees
o Move towards 20% employee contribution on plans that are being
pushed publicly and politically (subject to regulatory constraint)
o Adjust co-pays to create incentive to control costs
o Offer plans that allow benefits and incentives for healthier
lifestyles
o Enhance wellness programs
o Adjust deductibles to match market trends and to allocate greater
costs to those who utilize the benefit the most
o Any changes could result in loss of “grandfathered” status
o PPACA phased-in requirements will add costs to plan and
administration of plan
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NMU Health Plan
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