San Francisco Health Service System Health Service Board

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Curtis Wilkinson
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1 San Francisco Health Service System Health Service Board Employee Access and Provider Disruption with the Elimination of Active City Plan (UHC) January 10, 2013 Prepared by Aon Hewitt Health and Benefits

2 Contents Executive Summary Purpose of Analysis Overview of Health Plan Delivery Models Analysis Methodology Summary of Findings Access to Care Provider Disruption High Impact Providers Alternative Solutions and Cost Estimates Observations and Alternative Solutions Recommendation 1

3 Purpose of Analysis As reported in the September dashboard report the City Plan (UHC) active plan costs 72% and 137% more than the Blue Shield and Kaiser plans respectively. Some of this difference can be explained by the fact that the average age of the City Plan (UHC) active population is more than 10 years older than the other two plans. The City Plan (UHC) risk adjustment study presented in November revealed that antiselection has been occurring during open enrollment as lower risk members migrate to the Blue Shield and Kaiser plans and higher risk members migrate into the City Plan (UHC). Current MOUs stipulate that employee only contributions to the City Plan (UHC) are $0 if the employee does not have access to one of the HMO plans. As HSS employers begin to subsidize family coverage less than employee only coverage the City Plan (UHC) will be come unaffordable to many families due to the adverseselection. Some employees, notably those located in Tuolumne county, live outside the Blue Shield and Kaiser HMO networks and therefore do not have another medical option. HSS is evaluating eliminating the City Plan (UHC) to active members due to adverse selection bias. The purpose of this analysis is to determine the impact of employee access and provider disruption if the City Plan (UHC) were no longer offered to active employees. 2

4 Overview of Health Plan Delivery Models Preferred Provider Organization (PPO) plans: Covered members can choose to either visit a provider participating in the carrier s network or any other provider Members are steered towards participating providers through lower copays and coinsurance for seeking care within the network Some plan designs, including the City Plan (UHC), will charge the member the in-network point of service fee (copay or coinsurance) regardless of the providers network participation if the care is sought in a location that does not have an appropriate access to participating providers Currently City Plan (UHC) members how live outside the UHC network, such as those in Tuolumne count, receive coverage at the in-network cost sharing level Health Maintenance Organization (HMO ) plans: The covered member must seek care within the network Non-emergency care provided outside the network is normally not covered Indemnity plans: The covered member can seek care from any provider in-network or out of network Point of service cost sharing is the same regardless of the providers network status Many of these plans limit the eligibility for enrollment to employees who live outside of the other network plans offered 3

5 Analysis Methodology Geo Access: Blue Shield compared the most recent census of the active employees enrolled in the City Plan (UHC) to their HMO network of physicians. Using the following criteria the home locations and number of employees who fall outside the network were identified: 2 adult primary care physicians (PCPs) within 10 miles 2 pediatricians within 10 miles 2 OB/GYNs within 10 miles 2 specialists within 10 miles 1 hospital within 10 miles Provider Disruption: Aon Hewitt provided Blue Shield with provider utilization information for the active members enrolled on July 1, 2012 who were not identified as living outside the Blue Shield HMO network. The data contained: Professional Services Providers with claim paid 10/1/2011 to 9/30/2012 Inpatient Facilities Providers with claim paid 10/1/2011 to 9/30/2012 Outpatient Facilities Providers with claim paid 10/1/2011 to 9/30/2012 Pharmacies with claim paid 10/1/2011 to 9/30/2012 4

6 Summary of Findings The Geo Access report determined that 90.1% (908) active employees enrolled in City Plan (UHC) have appropriate access to Blue Shield HMO providers 100 employees who do not have appropriate access would need to be enrolled in a PPO or indemnity plan Since the Geo Access report is based on an employee census we were not able to determine if there are covered dependents not residing with the covered employee who do not have appropriate access to the Blue Shield HMO network The provider disruption report for the active City Plan (UHC) population revealed that many members will need to change providers 63% of Professional Services Providers will still be in-network 86% of Inpatient Facilities Providers will still be in-network 57% of Outpatient Facilities Providers will still be in-network 100 out of 1,008 employee will not have appropriate access to Blue Shield HMO providers While 90.1% of active employees will have appropriate access to Blue Shield HMO providers, there will be disruption to their current providers they are using 88% of Pharmacies will still be in-network There are 25 providers with more than 4 utilizing members that will no longer be in-network and could result in significant employee disruption 5

7 Access to Care in the Blue Shield HMO Network Blue Shield ran a GeoAccess report to determine how many City Plan (UHC) active enrollees live in locations with poor access to the Blue Shield Network The majority of enrollees have appropriate access to the Blue Shield HMO network Only 100 enrollees would not have appropriate access to the Blue Shield HMO network and should be offered a PPO option (89 in California + 11 out of state) Enrollees with Access Enrollees without Access Provider Type Access Criteria Percentage Number Percentage Number Adult Primary Care 2 in 8 miles 92% 914 8% 83 Pediatrician 2 in 8 miles 91% 910 9% 87 OB/GYN 2 in 8 miles 91% 908 9% 89 Specialist 2 in 8 miles 91% 911 9% 86 Hospital 1 in 8 miles 91% 912 9% 85 All Criteria Combined 91% 908 9% 89 Out of State Enrollees 11 6

8 Access to Care in the Blue Shield Network By Location The 100 enrollees without appropriate access to the Blue Shield HMO Network are spread through out California with 11 out of state 10 enrollees without appropriate access to the Blue Shield HMO Network live inside the Kaiser HMO service area The table below and the following slide illustrate the locations with enrollees without appropriate access to Blue Shield HMO Network Number Zipcodes Distance to 2 Providers Hospital Kaiser County City Employees Adult PCP Pediatrician OB/GYN Specialist Distance HMO Access Amador Pioneer Calaveras Cooperopolis Murphys El Dorado Garden Valley Lake Nice Mariposa Coulterville Mendocino Point Arena Monterey Marina Monterey Pebble Beach Napa Napa Saint Helena Nevada Truckee Siskiyou Mount Shasta Sonoma Bodega Gurneville Sebastopol

9 Access to Care in the Blue Shield Network By Location Continued The 100 enrollees without appropriate access to the Blue Shield HMO Network are spread through out CA with 11 out of state 10 enrollees without appropriate access to the Blue Shield HMO Network live inside the Kaiser HMO service area leaving 90 enrollees without access to either HMO Number Zipcodes Distance to 2 Providers Hospital Kaiser County City Employees Adult PCP Pediatrician OB/GYN Specialist Distance HMO Access Stanislaus Patterson Sutter Yuba City Tehama Corning Toulumne Big Oak Flat Columnbia Groveland Jamestown Mi Wuk Village Moccasin Sonora Soulsbyville Toulumne Total California Out of Network Out of State 11 N/A N/A N/A N/A N/A 11 Total Employees Outside of Network

10 Provider Disruption Shown below is a summary of the providers used by the City Plan (UHC) enrolled active employees and their dependents The largest disruption will be to other professional providers (mental health professionals, social workers, acupuncturists, etc.) and outpatient facilities that are in the City Plan (UHC) PPO network and not in the Blue Shield HMO Network Providers Outside of the Blue Shield HMO Network Number of Providers Percentage of Providers Unique Utilizers Services Eligible Charges Percentage of Charges PRIMARY CARE % $51,861 35% OBSTETRICS & GYNECOLOGY 9 13% 9 39 $4,989 12% SPECIALIST % 304 1,536 $211,052 33% OTHER PROFESSIONAL % 212 2,376 $140,150 63% TOTAL PROFESSIONAL % 688 4,354 $408,052 39% INPATIENT FACILITIES 2 14% 7 13 $19,986 2% OUTPATIENT FACILITIES 54 43% 277 1,371 $336,510 21% PHARMACIES 38 12% $195,138 41% 9

11 High Impact Providers Only 25 of the 1,413 Medical providers included in the disruption analysis had 4 or more unique claimants between10/1/2011 and 9/30/2012 A list of the providers with the most utilization is shown below Provider Name City Name State Provider Category # of Claimants # of Services # of Visits Eligible Amount HUNTER LABORATORIES INC CAMPBELL CA OUTPATIENT FACILITY $ 2, MILLS PENINSULA EMRG MED ASC INC SAN MATEO CA SPECIALIST $ 2, OPTIMUS MEDICAL SAN FRANCISCO CA PRIMARY CARE $ 1, POTRERO PHYSICAL THERAPY SAN FRANCISCO CA THERAPY PROVIDER $ 5, RADNET MEDICAL IMAGING SAN FRANCISCO SAN FRANCISCO CA OUTPATIENT FACILITY $ 2, UCSF DERMATOPATHOLOGY SVCS SAN FRANCISCO CA SPECIALIST $ CA EMER PHYS MED GRP FEATHER RIVER PARADISE CA SPECIALIST $ 2, EDWIN J HASSID SAN FRANCISCO CA PRIMARY CARE $ FRANCIS J CHARLTON JR SAN FRANCISCO CA PRIMARY CARE $ JON L KELLER MILTON MA SPECIALIST $ 1, PALO ALTO PATHOLOGY INC PALO ALTO CA OUTPATIENT FACILITY $ GREENLEY PRIMARY CARE SONORA CA PRIMARY CARE $ 3, VAIL C REESE SAN FRANCISCO CA SPECIALIST $ 3, LISA CAPALDINI SAN FRANCISCO CA PRIMARY CARE $ 1, APRIA DME WEST COLUMBIA SC PHARMACY/MEDICAL SUPPLY HOUSE $ 5, BAY IMAGING CONSULTANTS MED GRP INC WALNUT CREEK CA OUTPATIENT FACILITY $ 2, WILLIAM F OWEN JR SAN FRANCISCO CA PRIMARY CARE $ 2, NCAP MEDICAL GROUP SAN FRANCISCO CA SPECIALIST $ 14, SAN FRANCISCO EMERGENCY MEDICAL ASSOCIAT SAN FRANCISCO CA SPECIALIST $ 3, CALIFORNIA PACIFIC PTH MED GROUP SAN FRANCISCO CA SPECIALIST $ 7, AFFILIATES IN IMAGING A MED GRP OAKLAND CA SPECIALIST $ 1, IMAGE GUIDED THERAPEUTICS INC SAN FRANCISCO CA SPECIALIST $ 4, SONORA REGIONAL MEDICAL CENTER SONORA CA ACUTE-CARE HOSPITALS $ 34, CALIFORNIA ADVANCED IMAG MED ASSOC INC GREENBRAE CA OUTPATIENT FACILITY $ 14, LABORATORY CORPORATION OF AMERICA BURLINGTON NC OUTPATIENT FACILITY $ 73,

12 Alternative #1 Move OOA into Early Retiree City Plan Eliminate the City Plan (UHC) active plan would be to combine the City Plan (UHC) Out of Area members with the Early Retiree City Plan (UHC) enrollment and move all City Plan (UHC) members who have access to the Blue Shield network into the Blue Shield HMO plan By adjusting the 2013 Blue Shield HMO premiums for the risk of the City Plan (UHC) active population we estimate the total gross savings under this scenario at $2.40M 2013 Annual Costs -All Enrolled in City Plan (UHC) Employees Enrolled Total Cost Employee Cost Employer Cost Employees Out of Area 100 $1,950,000 $440,000 $1,510,000 Employees Inside Blue Shield Network 908 $17,750,000 $4,000,000 $13,750,000 Total Costs 1,008 $19,700,000 $4,440,000 $15,260, Annual Costs -With Out City Plan (UHC) Move Out of Area Employees Into the Pre-65 Retiree City Plan (UHC) Employees Enrolled Total Cost Employee Cost Employer Cost Employees Out of Area (UHC Pre-65 Plan) 100 $2,270,000 $570,000 $1,700,000 Risk Adjusted Blue Shield HMO Costs 908 $15,030,000 $2,840,000 $12,190,000 Total Costs 1,008 $17,300,000 $3,410,000 $13,890,000 Change From Current Costs (2,400,000) (1,030,000) (1,370,000) Percentage Savings from Current -13.9% -30.2% -9.9% Notes: All City Plan (UHC) members are assumed to be bargained employees Census by rate tier was not available. Employees are assumed to be enrolled 75%, 18.5%, and 16.5% uniformly as EE only, EE + 1, an EE + 2 or more Blue Shield HMO plan total costs are based on 2013 Blue Shield projected costs risk adjusted for the City Plan (UHC) Active population Blue Shield HMO Employee Contributions are risk adjusted 11

13 Alternative #2 Move OOA into Fully-Insured Indemnity Plan Eliminate the City Plan (UHC) active plan would be to offer City Plan (UHC) Out of Area members a fully-insured indemnity plan and move all City Plan (UHC) members who have access to the Blue Shield network into the Blue Shield HMO plan By adjusting the 2013 Blue Shield HMO premiums for the risk of the City Plan (UHC) active population and estimated fully-insured indemnity costs to be 10% higher than selffunded City Plan (UHC) costs we estimate the total gross savings under this scenario at $2.53M 2013 Annual Costs -All Enrolled in City Plan (UHC) Employees Enrolled Total Cost Employee Cost Employer Cost Employees Out of Area 100 $1,950,000 $440,000 $1,510,000 Employees Inside Blue Shield Network 908 $17,750,000 $4,000,000 $13,750,000 Total Costs 1,008 $19,700,000 $4,440,000 $15,260, Annual Costs -With Out City Plan (UHC) Move Out of Area Employees Into a Fully-Insured Out of Area Plan Employees Enrolled Total Cost Employee Cost Employer Cost Employees Out of Area (Fully-Insured Plan) 100 $2,140,000 $520,000 $1,620,000 Risk Adjusted Blue Shield HMO Costs 908 $15,030,000 $2,840,000 $12,190,000 Total Costs 1,008 $17,170,000 $3,360,000 $13,810,000 Change From Current Costs (2,530,000) (1,080,000) (1,450,000) Percentage Savings from Current -14.7% -32.1% -10.5% Notes: All City Plan (UHC) members are assumed to be bargained employees Census by rate tier was not available. Employees are assumed to be enrolled 75%, 18.5%, and 16.5% uniformly as EE only, EE + 1, an EE + 2 or more Blue Shield HMO plan total costs are based on 2013 Blue Shield projected costs risk adjusted for the City Plan (UHC) Active population Blue Shield HMO Employee Contributions are risk adjusted Fully-Insured Out of Area costs are assumed to be 10% higher than current Active City Plan (UHC) costs 12

14 Observations and Alternative Solutions Observations City Plan (UHC) active premiums are significantly higher than all other active plans. This cost differential is largely due to the higher risk population enrolled in the City Plan (UHC) Moving these risk members into the Blue Shield HMO would increase the average Blue Shield HMO premium equivalent eliminating the perceived savings Eliminating the Active City Plan (UHC) would result in significant member disruption, 37% of professional providers utilized are not in the Blue Shield HMO network, and could produce some savings. The level of savings may not be commensurate with the member disruption it would cause Alternative Solutions Two alternatives were explored that would close down the City Plan (UHC) to active employees and ensure that employees who live in rural areas have an affordable medical plan option: 1. Move Out of Area (OOA) City Plan (UHC) members into the City Plan (UHC) Pre-65 plan. Gross savings is estimated at $2.40M 2. Move Out of Area (OOA) City Plan (UHC) members into a fully-insured indemnity plan. Gross savings is estimated at $2.53M 13

15 Recommendation As long as the contribution strategy for employees who do not have access to an HMO networks remains at $0 for employee only coverage we do not recommend closing the plan due to the disruption it would create to the members currently enrolled 14

Enrollment Statistics Northern Counties Region 1

Enrollment Statistics Northern Counties Region 1 Alpine, Amador, Butte, Calaveras, Colusa, Del Norte, Glenn, Humboldt, Lake, Lassen, Mendocino, Modoc, Nevada, Plumas, Shasta, Sierra, Siskiyou, Sutter,