2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Session ID: FIN14 Session Title: Health Care Savings In Tight Budget Times APRIL 3-6, 2013, LONG BEACH, CA These materials have been prepared by Kelly Porterfield, Eric Fiedler and Doug Richesin. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Agenda: Who has the greatest impact on health insurance cost? How can we implement cost containment strategies? What are the common areas that have the greatest impact on health insurance cost? Q&A

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO © 2013 Blue Cross and Blue Shield of North Carolina is an independent licensee of Blue Cross and Blue Shield Association. All rights reservedBlue Cross and Blue Shield of North Carolina Let’s Engage in Conversation Who’s Responsible? Doctors Attorneys Hospitals Drug Companies Insurance Companies Individuals

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Who has the greatest impact on the health insurance cost? $700B in waste across U.S. system 2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO % of total medical cost Key sources of waste 1 that is waste Admin and system inefficiencies4-6% Provider inefficiencies and errors3-4% Lack of care coordination1-2% Unwarranted use11-21% Preventable conditions and avoidable care1-2% Fraud and abuse5-8% -30% 1 Thomson Reuters, 2009 White Paper, Where Can $700 Billion In Waste Be Cut From the US Healthcare System

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO First Step to Cost Containment Water meter effect! Must have accountability Must have buy in by all stakeholders Best mechanism is by implementing a Health Insurance Committee Must include mgmt., collective bargaining leadership, retirees and health insurance expert.

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Plan Modification (Cost Shift?) Changes to Benefit Plan Design –Increasing Deductibles –Increasing Coinsurance –Copay Adjustments –Carve outs Employer Medical Professionals Employee

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Rate Tier Options Composite One rate billed for everyone Families are partially subsidized by Singles No incentive to enroll in secondary coverage and make wise decisions 4-Tiered Employee Only Employee + Children or Children Employee + Spouse Employee + Family Significant flexibility 3-Tiered Employee Only Employee + 1 Employee + Family Creates Consumer Decisions Offers more cost effective approach for single coverage

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Cost Containment Eligibility Audits (Children, Ex’s, Grandchildren) Routine Examination of Medical Trends Referenced based pricing Multi-year Agreements Separate costs for Actives vs. Retirees

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Cost Containment Referenced based pricing Narrow Networks –Anthem Select Network Prescription Formulary tightening Case Management –Chronic/Rare Disease Management Programs

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Controlling Pharmacy Costs Focus on Generics –DAW (Dispense as Written Penalties) –Step Therapy –Maintenance Medication Savings Tiered Copayments Mail Order Savings Strict Quantity Oversight Specialty Drug Management Coordination with Disease Management

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Cost Containment Wellness Strategies PPO/HMO Wellness Plans Preventive Screenings Health Risk Assessments Coaching Programs Maternity Management Focus on Chronic Conditions Generic Copay Reductions

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Cost Containment Wellness Strategies Walking Campaigns On-site Flu Clinics Biometric Screenings Health Fairs Guest Speakers

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Consumer Decisions The largest ability to impact costs Influencing these decisions are critical to managing costs Education of Employees and Family How to use their PPO Plan Where are the lowest costing services Analyzing their EOB’s Prevention measures Promoting Wellness at work Tools (Anthem Compare)

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Value of a Large Risk Pool Reinsurance Pooled Large Claims Admin Fee Leverage with Carriers Rate Stabilization Professionally Managed Oversight Lower Administration Fees

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Detailed Claims –Diagnosis & Prognosis of Plan participants Tailor Benefits Specific to Your Employees Reduced Plan Fixed Costs Limit Risk through Specific & Aggregate Contracts Flexible Cash Flow –Pay Claims as they are incurred Instant Savings by implementing Specialty Programs –Wellness, Disease & Case Management Programs Pharmacy Rebates paid directly to the District’s Plan Retail, Mail & Specialty Drugs No Renewal Surprises –Monthly Executive Summary Claims Reports Establish an Insurance Committee to communicate how the plan is performing –Reduces District vs Union benefit issues Value of Self Insurance

2013 CASBO ANNUAL CONFERENCE & SCHOOL BUSINESS EXPO Q&A