Washington State Health Care Authority/PEBB1 Public Employees Benefits Board Meeting July 18, 2000 Medical Benefit Decisions for 2001

7/18/00 Washington State Health Care Authority/PEBB2 Overview l Medical Procurement Process, Planning l Decisions Needed Today Final benefit changes for 2001 Employee contributions Retiree subsidy

7/18/00 Washington State Health Care Authority/PEBB3 Prep for Procurement l Multiple plan and provider meetings - administrative efficiencies, streamlined approaches l Advisory Task Force meetings - purchasing approach, employee cost- sharing l Research, review of other experiences

7/18/00 Washington State Health Care Authority/PEBB4 Experience in Other States for 2001 l CalPERS approved 9.2% premium increase for HMOs 2 PPO plans will increase 18% and 22% l Minnesota announced 19% increase in premiums

7/18/00 Washington State Health Care Authority/PEBB5 Procurement results l Bids from all current medical plans l Expanded service areas - managed care plan in every county l 2 plans expanding to serve 4 more counties only 5 counties with one managed care plan - down from 6 in 2000 only 4 counties with two managed care plans - down from 6 in 2000 l only 1 plan with a net reduction in service area, dropping 1 county

7/18/00 Washington State Health Care Authority/PEBB6 Procurement results, cont. l Overall, appears to be adequate access to providers (PCPs within 25 miles or less) l Other changes: Aetna’s national withdrawal from Medicare+Choice plans - Aetna will still offer a PEBB retiree plan, but not Medicare+Choice

7/18/00 Washington State Health Care Authority/PEBB7 Benefit Changes l Pharmacy Benefit Streamlining- Package eliminate requirement for over the counter drugs clarify expectation for retail dispense of 3 month supply, with 3 copays formulary insulin at $10 copay mail order clean up: 90 days vs. 100 (MCOs and UMP) UMP Pharmacy change

7/18/00 Washington State Health Care Authority/PEBB8 Benefit Changes, cont. l Modification of exclusion language: clarify refractive surgery not covered (Exclusion #19 Orthoptic therapy (eye training) and vision services including refractive surgery, except as specified for vision care.) l Expansion of contraceptive benefits (Legislative Budget - all FDA approved drugs and devices) (Modify exclusion #22 in MCOs regarding implants; #21 in UMP regarding devices and implants)

7/18/00 Washington State Health Care Authority/PEBB9 Benefit Changes, cont. l Coverage criteria related to transplants (replacing reference to “experimental or investigational”)

7/18/00 Washington State Health Care Authority/PEBB10 Background on UMP Pharmacy Change l Simplifies claims adjudication for retail pharmacies; members won’t have to pay full cost and wait for reimbursement l Cost-sharing impact of changes: Approximately half of UMP members will have slight decrease or no change in overall cost- sharing Others have slight increase in cost-sharing (averages $5 per month for non-Medicare) Reduces premium $4 for first tier rate

7/18/00 Washington State Health Care Authority/PEBB11 Background on UMP Pharmacy, cont. l Separate deductibles: $200 per member/$600 per family for medical $100 per member/$300 per family for retail and mail order Rx l Out-of-pocket costs limited to: $1,125 per member/$2,250 per family for medical services from preferred providers (or out-of-area) Maximum of $75 per script

7/18/00 Washington State Health Care Authority/PEBB12 Employee Contributions CY 2000 Enrollment l 91.7% of employees have access to $0- $5 plan l 8.3% have access to $6-$20 plan CY 2001 Projection l 93.5% of employees with access to $0-$5 plan l 2.9% with access to $6-$20 plan l 3.7% with access to $20-$25 plan

7/18/00 Washington State Health Care Authority/PEBB13 Employee Contributions CY01

7/18/00 Washington State Health Care Authority/PEBB14 Employee Contributions CY00

7/18/00 Washington State Health Care Authority/PEBB15 Medicare Retiree Subsidy - CY01 l Medicare retiree explicit subsidy $69.98 per member per month Established in Legislative Budget, ESSB 5180, Laws of 1999, Section 719 CY 00 subsidy is $62.48 per member per month RCW established subsidy, limits subsidy to no more than 50% of the premium; Board authority to establish amount of any subsidy for spouses and dependents.

7/18/00 Washington State Health Care Authority/PEBB16 Medicare Retiree Contributions (after subsidy)

7/18/00 Washington State Health Care Authority/PEBB17 Non-Medicare retiree subsidy l Non-Medicare retirees subsidized through pooling mechanism established in RCW (single community-rated risk pool) Implicit subsidy estimated at $ per member per month for CY01 CY00 subsidy estimated at $ per member per month

7/18/00 Washington State Health Care Authority/PEBB18 Summary - Voting l Pharmacy Benefit Streamlining Package l Exclusion modification l Contraceptive Benefits l Coverage Criteria l Employee Contributions l Retiree Subsidy