ua choice mike humphrey director of benefits october 2007
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UA Choice
Mike HumphreyDirector of Benefits
October 2007
Employer ResponsesEmployer Responses
Shifting CostsShifting Costs EmployeesEmployees
Managed CareManaged Care
Reducing CostReducing Cost
Changing DeliveryChanging Delivery
Plan Change &Plan Change &Wellness ProgramsWellness Programs
Employers ResponsesEmployers Responses
Shift the Cost (“squeezing the balloon”)Shift the Cost (“squeezing the balloon”) Benefit cutbacks Benefit cutbacks – higher deductibles– higher deductibles Employers contribute less toward the plan cost Employers contribute less toward the plan cost Employee charges for coverage are increasedEmployee charges for coverage are increased
Change the Delivery SystemChange the Delivery System Managed Care, Open & Closed NetworksManaged Care, Open & Closed Networks High Performance NetworksHigh Performance Networks
Reduce the Cost (“deflating the balloon”)Reduce the Cost (“deflating the balloon”) Contract with Medical Providers to take lessContract with Medical Providers to take less Wellness initiativesWellness initiatives Disease managementDisease management
Top Top StoriesStories
Top Top StoriesStories
University Health Care Trends University Health Care Trends Beyond 2007Beyond 2007
Are they sustainable?Are they sustainable?
$12,000
$13,000
$14,000
$15,000
$16,000
$17,000
$18,000
$19,000
$20,000
$21,000
Net Proj Costs FY08 Net Proj Costs FY09 Net Proj Costs FY10 Net Proj Costs FY11
Per
Em
plo
yee
Per
Yea
r H
ealt
h P
lan
Co
sts
7% 11% 15%
Annual
$87 Million
$78 Million
$70 Million
Employer and Employee Health ChargesStandard Plan FY 08 Per Month
$1,023.75
$1,263.00
$560.00
$890.00 $915.00$885.00
$847.00$879.78
$847.00 $854.00 $851.00
$366.00
$720.00
$839.18
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
UA
Fbks B
oroug
h
Fbks S
chool D
istri
ct
Anchor
age T
eacher
Tru
st
Junea
u Teac
hers
Junea
u Non
-Tea
cher
s
Selec
t Bene
fits
(with
vis
ion) (
State
)
GGU (S
tate
)
SU (Sta
te)
Local 7
1 (S
tate
)
Public S
afety
(Sta
te)
College
& Univ
Per
sonnel
Ass
oc. E
E Onl
y
College
& Univ
Per
sonnel
Ass
oc. E
E & F
amily
Avg fo
r all
group
s
Employer Contribution Employee Single Coverage Employee Family Coverage
FY 07 Paid ClaimsTotal Claims Experience For An Individual
5,286
1,462
640
327210 158 91 95 72 41
482
0
1,000
2,000
3,000
4,000
5,000
6,000
<$1,000 $1,001-$2,000
$2,000-$3,000
$3,001-$4,000
$4,001-$5,000
$5,001-$6,000
$6,001-$7,000
$7,000-$8,000
$8,001-$9,000
$9,001-$10,000
10,001.00+Nu
mb
er o
f P
arti
cip
ants
Hav
ing
Th
is A
mo
un
t O
f C
laim
s E
xper
ien
ce I
n A
Yea
r
What will the projected
increases do to employee
charges
What will the projected
increases do to employee
charges
Projected 14.5% Health Care Trend
$605$895
$1,374
$2,013
$914
$2,507
$3,847
$5,636
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
FY08Charge
FY09 $ 5 Mill RecoveryApplied
FY10 $3.4 Mill RecoveryApplied
FY11 $0 Recovery Applied(Exhausted)
An
nu
al C
har
ge
EE EE + SP EE + CH Family
Projected 10% Health Care Trend
$605 $662
$1,098$1,252
$914
$1,854
$3,075
$3,506
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
FY08Charge
FY09 $1 Mill Recovery Applied FY10 $3.4 Mill RecoveryApplied
FY11 $4 Mill Recovery Applied
An
nu
al C
har
ge
EE EE + SP EE + CH Family
So What So What Can Be Can Be DoneDone
So What So What Can Be Can Be DoneDone
Health & Wellness
Current UA Support Programs In Place
UA’s Health ProgramsUA’s Health ProgramsCase Management – for the seriously illCase Management – for the seriously ill
Disease Management – for the chronically illDisease Management – for the chronically ill
Health Risk Assessment Health Risk Assessment
Wellness/Life Style CoachingWellness/Life Style Coaching
On Site Wellness ProgramsOn Site Wellness Programs
Pharmacy Program ManagementPharmacy Program Management
Disease Management Disease Management Principles and GoalsPrinciples 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 ProgramUA’s Disease Management Program
2006 Program2006 ProgramDiabetesDiabetesHeart FailureHeart FailureCoronary Artery DiseaseCoronary Artery Disease
2007 Program2007 ProgramDiabetesDiabetesHeart FailureHeart FailureCoronary Artery DiseaseCoronary Artery DiseaseLow Back PainLow Back PainOsteoporosisOsteoporosisOsteoarthritisOsteoarthritisHepatitis CHepatitis CUrinary IncontinenceUrinary IncontinencePressure UlcersPressure UlcersAtrial FibrillationAtrial FibrillationInflammatory Bowel DiseaseInflammatory Bowel DiseaseIrritable Bowel SyndromeIrritable Bowel SyndromeFibromyalgiaFibromyalgiaAcid Related DisordersAcid Related Disorders
UA Disease Management Opportunity Analysis
2006 Program2006 Program
Number of Number of participants – 431participants – 431
Costs avoided – Costs avoided – $493,000$493,000
2007 Program2007 Program
Number of Number of participants – 2,100 participants – 2,100 est.est.
Costs avoided – Costs avoided – $723,000 est.$723,000 est.
Preventable claims costPreventable claims costGroup Level health care expendituresGroup Level health care expenditures
75%
25%
Not Related
Preventable
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.
DepressionStressBlood SugarSmokingObesityBlood PressureSedentary Life
N = 46,026 X 6 years
$1,160
$955 $955 $906
$571 $568 $520
$363
$1,931
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
Health risks push costs upHealth risks push costs upYet preventable through lifestyle changeYet preventable through lifestyle change
Average annual per capita excess health costs when risk is present.
Average annual per capita excess health costs when risk is present.
Goetzel, R et al. The Relationship Between Modifiable Health Risks and Health Care Expenditures, Journal of Occupational and Environmental Medicine. 1998;10:843-854
Effect of Single Risk FactorsEffect of Single Risk Factors
10%
12%
20%
21%
35%
46%
70%
0% 20% 40% 60% 80%
No Exercise
High BP
Smoker
Obesity
Blood Sugar
Stressed
Depressed
Percent Higher Annual Health Plan Costs
Health Plan Cost
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 AbsenteeismEffects of Health Risks on Absenteeism
116%
118%
131%
140%
150%
0% 50% 100% 150% 200%
Mental Health
Back pain
Stressed
No Exercise
Obesity
Percent Higher AbsenteeismSource: Serxner, S., et al., (2001). The impact of behavioral health risks on worker absenteeism. JOEM, 43(4), 347-354
Sick Leave Absenteeism
UA’s Phase 1UA’s Phase 1“Virtual” Program With WebMD“Virtual” Program With WebMD
Referrals
WIN for AlaskaWIN for Alaska
Health In Action Health In Action Program Program
UA’s On Site Wellness ProgramUA’s On Site Wellness ProgramWith WIN For Alaska With WIN For Alaska –– Goals Goals
Increase Increase awareness of awareness of health riskshealth risks
Reduce the Reduce the number of health number of health risksrisks
Increase Increase participation in participation in healthy behaviorshealthy behaviors
Provide a supportive Provide a supportive environment for environment for lifestyle changeslifestyle changes
Increase employee Increase employee satisfaction and satisfaction and moralemorale
UA’s Phase 2 Program UA’s Phase 2 Program With WebMD & WIN For AlaskaWith WebMD & WIN For Alaska
VirtualVirtual
Site-basedSite-based
UA Choice Pharmacy Program
UA Choice Pharmacy Program
Current UA Choice Current UA Choice Standard PlanStandard Plan
Copays Retail MailSpecialty
Meds
Generic $7 $7 $7
per 30 DS
Brand (w/no generic) $10 $10 $10
per 30 DS
Brand (w/generic) $10 $10 $10
per 30 DS
Maximum Days Supply 30 100 90Deductibles na na naOut-of-Pocket Maximum na na na
PharmaCare’s ObservationsPharmaCare’s Observations
PharmaCare (Caremark) reviewed last years PharmaCare (Caremark) reviewed last years prescription drug utilization and performanceprescription drug utilization and performance
The factors most impacting plan cost are The factors most impacting plan cost are Member Utilization – the number of medicationsMember Utilization – the number of medicationsProduct Mix – name brand vs. genericProduct Mix – name brand vs. genericPlan Design – name brand vs. generic costPlan Design – name brand vs. generic cost
Of these three key areas, plan design offers the Of these three key areas, plan design offers the greatest opportunity for impact.greatest opportunity for impact.
PharmaCare SummaryPharmaCare Summary
44% of participants are utilizing the plan 44% of participants are utilizing the plan PharmaCare standard book of business PharmaCare standard book of business approximately 33% take advantage of the plan. approximately 33% take advantage of the plan. This high utilization is reflective of the rich benefit This high utilization is reflective of the rich benefit offered. offered.
Within the Standard plan, 84% of UA’s utilizing Within the Standard plan, 84% of UA’s utilizing population can be found. population can be found. They process 70% of total Rx’s and account for They process 70% of total Rx’s and account for
almost 75% of the total plan cost.almost 75% of the total plan cost.
UA Choice Utilization – Fiscal Year 07UA Choice Utilization – Fiscal Year 07
UA Choice PlanEligible
Members
# of People Utilizing the
Plan
% Using the Plan
Total # of Rx's
# of Rx's per
Person
DELUXE PLAN 1,235 334 27% 9,580 28.7STANDARD PLAN 7,181 3,302 46% 28,380 8.6ECONOMY PLAN 975 317 33% 1,615 5.1
Totals 9,391 3,953 42% 39,575 10.0
UA Choice Utilization – Fiscal Year 07UA Choice Utilization – Fiscal Year 07
UA Choice Plan Member Paid UA Paid Total PaidUA's % of Total
DELUXE PLAN $121,826.82 $710,380.60 $832,207.42 85%STANDARD PLAN $233,995.99 $2,152,719.34 $2,386,715.33 90%ECONOMY PLAN $27,528.17 $74,197.87 $101,726.04 73%
$383,350.98 $2,937,297.81 $3,320,648.79 88%
July 1, 2007 to June 30, 2007 July 1, 2007 to June 30, 2007 Product MixProduct Mix
Univ. BoB: Retail: $61.55 Mail: $191.41Univ. of Alaska: Retail: $63.72 Mail: $249.05
Univ. BoB: Brand Rx: $138.19 Generic Rx: $24.07Univ. of Alaska: Brand Rx: $131.88 Generic Rx: $25.59
PharmaCare RecommendationsPharmaCare Recommendations
Increase the promotion of generics Increase the promotion of generics Move to a uniform three tier plan design for all Move to a uniform three tier plan design for all plans (Deluxe, Standard and Economy)plans (Deluxe, Standard and Economy)Update the plan copays and coinsuranceUpdate the plan copays and coinsuranceImplement 30 day supply limit for specialty Implement 30 day supply limit for specialty med to prevent wastemed to prevent wasteAdd standard prior authorization and quantity Add standard prior authorization and quantity limits limits Addition of a member educations program Addition of a member educations program designed to highlight the true cost of the designed to highlight the true cost of the prescription program (Script Summary)prescription program (Script Summary)
PharmaCare RecommendationsPharmaCare Recommendations
Expand Brand / Generic copay differentialExpand Brand / Generic copay differential 3,200 Brands w/gen alternatives 3,200 Brands w/gen alternatives Avg cost savings $100 per genericAvg cost savings $100 per generic
Change preferred name brands to a Change preferred name brands to a coinsurance percentages to help plans keep coinsurance percentages to help plans keep pace with inflationpace with inflation
Addition of 3Addition of 3rdrd tier non formulary brand to tier non formulary brand to increase generic and preferred name brand increase generic and preferred name brand useuse
RecommendationsRecommendationsPlan DesignPlan Design
Generic $5.00Generic $5.00 Lower generic copay results in direct cost, but Lower generic copay results in direct cost, but
should encourage more generic useshould encourage more generic use
Preferred Name Brand 80/20%Preferred Name Brand 80/20% Help increase the use of name brands with the Help increase the use of name brands with the
best discountsbest discounts
Non-Preferred Name Brand 70/30%Non-Preferred Name Brand 70/30% Steer participants away from medications with little Steer participants away from medications with little
discountdiscount
Combined savings to the Pharmacy PlanCombined savings to the Pharmacy Plan $578,000 -- over 12.3%$578,000 -- over 12.3%
PharmaCare RecommendationsPharmaCare Recommendations
Implement 30 day supply (DS) limits for specialty Implement 30 day supply (DS) limits for specialty medications to prevent waste medications to prevent waste Relocate distribution center to SeattleRelocate distribution center to Seattle
Estimated waste = $160,000Estimated waste = $160,000
PharmaCare reports – 42% of patients using the PharmaCare reports – 42% of patients using the specialty pharmacy say they are better able to specialty pharmacy say they are better able to manage their condition and their medicationsmanage their condition and their medications
PharmaCare RecommendationsPharmaCare Recommendations
Adjust $500 individual pharmacy out-of-pocket Adjust $500 individual pharmacy out-of-pocket maximum to $1,000 for specialty medicationsmaximum to $1,000 for specialty medications
1% to 5% reduction plan cost = $66,000 - $330,000 1% to 5% reduction plan cost = $66,000 - $330,000 annuallyannually
PharmaCare RecommendationsPharmaCare Recommendations
Implement Industry Standard Prior Authorizations Implement Industry Standard Prior Authorizations and Quantity Limitsand Quantity Limits
Over a dozen eligible Prior Authorization classes Over a dozen eligible Prior Authorization classes Cosmetic Acne/Skin/Dermatological – YTD Spend $83,000Cosmetic Acne/Skin/Dermatological – YTD Spend $83,000 1% to 3% savings opportunity = $66,000 to $199,000 total plan 1% to 3% savings opportunity = $66,000 to $199,000 total plan
costcost
Quantity Limit options for three growing classes of meds = Quantity Limit options for three growing classes of meds = savings @ $.10 pmpmsavings @ $.10 pmpm
Implement without the option to grandfather existing patientsImplement without the option to grandfather existing patients $.10 pmpm x 9500 mbrs = $950 month x 12 = $11,400 savings $.10 pmpm x 9500 mbrs = $950 month x 12 = $11,400 savings
opportunityopportunity
PharmaCare RecommendationsPharmaCare Recommendations
Total annual pharmacy plan costsTotal annual pharmacy plan costs
avoided (saved)avoided (saved)
$950,000$950,000
Proposed FY 09 Health Plan Changes
This is a link to an Excel file This is a link to an Excel file namednamed
FY 09 health planFY 09 health plan
QuestionsQuestions
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