Washington State Health Care Authority/PEBB1 Public Employees Benefits Board Meeting June 27, 2000

6/27/00 Washington State Health Care Authority/PEBB2 Overview l Roles and responsibilities l Purchasing context l Guiding Principles l July decision making preparation

6/27/00 Washington State Health Care Authority/PEBB3 Overview of Roles and Responsibilities l PEBB is responsible for designing benefits and determining the terms and conditions of employee participation and coverage, including eligibility criteria. (RCW )

6/27/00 Washington State Health Care Authority/PEBB4 Overview of Roles and Responsibilities l HCA is responsible for purchasing health services, administering benefits, studying state-purchased health care and exploring alternatives for cost- containment…. (RCW and 022)

6/27/00 Washington State Health Care Authority/PEBB5 Purchasing Context: l William Mercer’s National Survey of Employer sponsored health plans 1999 cost and prevalence data 10 selected states 33 state governments 179 government entities (500+ employees)

6/27/00 Washington State Health Care Authority/PEBB6 Selected States l Arizona l Colorado l Connecticut l Illinois l Iowa l Maryland l Michigan l Minnesota l New York l Pennsylvania

6/27/00 Washington State Health Care Authority/PEBB7 Per Capita Health Costs

6/27/00 Washington State Health Care Authority/PEBB8 Medical Contributions: Employee Only

6/27/00 Washington State Health Care Authority/PEBB9 Medical Contributions: Family

6/27/00 Washington State Health Care Authority/PEBB10 Dental Contributions: Employee Only

6/27/00 Washington State Health Care Authority/PEBB11 Dental Contributions: Family

6/27/00 Washington State Health Care Authority/PEBB12 High Level Comparisons l Similarities: Benefits are pretty standard Trends similar (‘99) l Differences: Per-capita premium cost on low end Employee contributions significantly lower Employee contributions for dental

6/27/00 Washington State Health Care Authority/PEBB13 Purchasing Goals for PEBB Coverage HCA authorizing statute (RCW 41.05) l Purchase most comprehensive coverage possible for employees and their dependents l Design benefit package that encourages preventive care/wellness care l Purchase coverage competitively l Offer self-insured PPO product

6/27/00 Washington State Health Care Authority/PEBB14 Purchasing Goals, cont. l Design package that minimizes the financial burden on employees and the state while providing the most comprehensive care possible l Design benefit package that encourages appropriate utilization l Develop reimbursement methodology that encourages cost containment

6/27/00 Washington State Health Care Authority/PEBB15 Additional Goals for 2001 Purchasing l Offer employees a choice of plans - offer two or more plans in every area if possible l Ensure equity in employee cost sharing l Offer a low or no cost plan in every area if possible l Increase market stability if and where possible l Allow/encourage innovative approaches to ensure access to care

6/27/00 Washington State Health Care Authority/PEBB16 Cost Sharing Options Options for who can pay: employer patient - when sick employee - premium contribution provider - charity care/uncompensated care/ write- off/ cost-shift

6/27/00 Washington State Health Care Authority/PEBB17 Current Monthly Cost Sharing l Employee premium contributions (avg $14) spouse charge yields about $5 other employee contributions about $9 l Patient cost sharing rough estimate about $25 for MCO roughly $70 for UMP l Employer premium about $350

6/27/00 Washington State Health Care Authority/PEBB18 Guiding Principles for Employee Contributions l Benefit dollars are appropriated for the entire PEBB pool (all lives covered in PEBB), not for individual employees. l Contributions reflect the incremental cost increases for covering more lives. l Premiums should reflect business costs and plan efficiency, not the makeup of membership in that plan. Employees should not pay more because their plan serves sicker people.

6/27/00 Washington State Health Care Authority/PEBB19 Guiding Principles, cont. l Contributions are established so that cost to employees for a particular plan does not vary by geographic location. l The structure for contributions should discourage double coverage of enrollees. l All employees should have access to a no cost or low cost plan.

6/27/00 Washington State Health Care Authority/PEBB20 Guiding Principles, cont. l Ensure employees have the information they need to make well-informed purchasing choices - as a principle of managed competition. information must cover quality and price. l The measurement of employee contributions should be based on percentage of employees with access to zero cost/low cost plans percentage of employees with no access to zero/low cost plans

6/27/00 Washington State Health Care Authority/PEBB21 Early Indications for 2001 Medical Program l Mid-negotiation with plans, no final rates, service areas, etc. l Process Review: Released RFP for managed care medical plans in April RFP incorporated streamlining suggestions; benefit alternatives for pricing ‘fall-back’; legislative changes; geographic incentive…

6/27/00 Washington State Health Care Authority/PEBB22 Early Indications, cont. RFP responses submitted May 31 - bids being fully evaluated Evaluation includes: access components efficiency indicator financial indicators (loss ratios) quality (customer experience; HEDIS measurements - delivery of preventive services and chronic care; clinical assessment - NCQA accreditation) price Negotiations still underway

6/27/00 Washington State Health Care Authority/PEBB23 Early Indications, cont. l Preliminary information: geographic incentive appears to have helped initial bids show managed care plans in every county, with some provider limitations

6/27/00 Washington State Health Care Authority/PEBB24 Early Indications, cont. l Budget challenges l Tradeoffs for cost-sharing benefit tradeoffs/alternative co-pays don’t bring much savings for MCO’s negative impact on employer-package and patients recommendation for balancing on the side of premium sharing

6/27/00 Washington State Health Care Authority/PEBB25 Overview of Decisions to be Made in July l Final benefit designs Managed Care Organizations (MCO’s) UMP l Employee Premium Contributions l Retiree subsidy/retiree premium sharing

6/27/00 Washington State Health Care Authority/PEBB26 Overview of Benefit Streamlining l MCO’s Streamlining of pharmacy benefit Exclusions clean ups Coverage Criteria for transplants Contraceptives (Legislative budget)