6. Discussion and possible action to ratify the evaluation committee s decision to award contracts for Health Maintenance Organization administration

Transcription

1 6. 6. Discussion and possible action to ratify the evaluation committee s decision to award contracts for Health Maintenance Organization administration services to Hometown Health Plan and Health Plan of Nevada effective July 1, 2017 Request for Proposal (Damon Haycock, Executive Officer) (For Possible Action)

2 BRIAN SANDOVAL Governor DAMON HAYCOCK Executive Officer STATE OF NEVADA PUBLIC EMPLOYEES BENEFITS PROGRAM 901 S. Stewart Street, Suite 1001 Carson City, Nevada Telephone (775) (800) Fax (775) LEO M. DROZDOFF, P.E. Board Chairman AGENDA ITEM X Action Item Information Only Date: Item Number: 6 Title: Summary Ratification of Contract for Health Maintenance Organization (HMO) Services The purpose of this report is to request the Board s approval to approve a contract between PEBP and both Hometown Health and Health Plan of Nevada. Report On July 20, 2016 the Nevada State Purchasing Division released PEBP s Request for Proposal (RFP) for Statewide or Regional HMO Services. The RFP closed on September 13, 2016 and four proposals were received. The vendors who provided responses were Health Plan of Nevada, Hometown Health, Anthem and Aetna. The evaluation committee included two PEBP Board Members, three PEBP staff and one expert in medical insurance from another agency. The evaluation committee read and scored the technical proposals and each vendor was given time to provide a presentation and answer questions during a question and answer period before receiving the cost proposals and assigning final scores to select a winning vendor(s). The scoring criteria for this RFP included the following: Experience of the Vendor submitting the proposal Compliance with the terms of the RFP Expertise and availability of key personnel Statewide proposal for network providers Open Access Plan Outside of Nevada medical care Additional processes to improve healthcare in Nevada Reasonableness of cost

3 Page 2 Adherence to PEBP provided plan design Financial stability Presentations The evaluation committee met on November 1, 2016 and November 2, 2016 to consider each proposal. The evaluation consisted of an analysis and scoring of each technical proposal, presentations given by each vendor and the cost proposals. Of the four proposals received, the evaluation committee selected a dual award with the incumbents, Hometown Health Plan (HTH) and Health Plan of Nevada (HPN). Some of the reasons given by the individual evaluators for their scores were as follows: Incumbent vendors with proven ability to partner with PEBP and provide excellent service to PEBP and PEBP participants Compliance with PEBP s preferred plan Availability of providers and services in all Nevada counties No disruption to PEBP participants The proposed costs for combining these two regional vendors were less than one single statewide vendor for the same plan benefit design. PREFERRED PLAN BENEFIT DESIGN RFP 3265 included a Board approved Plan Benefit. This design was approved at the June 17, 2016 Board meeting and was intended to address the issue of inconsistency across the state in HMO offerings. Plan Feature HPN PY 2017 HTH PY 2017 PEBP Plan Benefit PCP Visit $15 $25 $25 Specialist Visit $25 $45 $45 Emergency Room Visit $150 $300 $300 Hospital In-Patient Services $300/admit $500/admit $500/admit Retail Pharmacy Generic Brand Non-Formulary Specialty $7 $35 $55 $55 Out-of-Pocket Limit $6,000 individual $12,000 family $7 $40 > of $75 / $6,600 individual $13,200 family $7 $40 $75 40 $7,150 individual $14,300 family

4 Page 3 Plan Feature HPN PY 2017 HTH PY 2017 PEBP Plan Benefit PCP Referral Requirement Yes No No Actuarial Value Key elements of the Plan Benefit include: 1. Same design across the state (benefits and actuarial value). 2. No Primary Care Physician (PCP) referral required to schedule and receive Specialist appointments and care. 3. Cost containment strategies in Specialty Pharmacy drugs (40 coinsurance versus a flat copay of $55). RATE INCREASES PREFERRED PLAN BENEFIT DESIGN PEBP and the Nevada Purchasing Division (Purchasing) held pre-rfp development meetings with every licensed HMO plan provider in the state to receive input and guidance in the RFP process in an effort to improve the HMO solicitation. PEBP and Purchasing were very purposeful in explaining the state budgeting issues with flat and 5 cut budget instructions for the next biennium. PEBP and Purchasing incorporated suggestions from the HMO vendors and developed the RFP with an opportunity to have the winning vendor(s) provide the Plan Benefit alongside an Alternate Plan Benefit. This alternate design was intended by PEBP and Purchasing to allow participants the ability to buy-up or pay more for a richer plan offering in response to Board meeting public comment over the last year. PEBP and Purchasing anticipated the less rich Plan Benefit (87 versus 93 in the south) would alleviate some (if not all) of any rate increase. This in practice was not the case. Every proposal submitted included cost increases (some in the double digit percentages) for the Plan Benefit in each region and across the state as a whole. When the committee selected the winning vendors, the following anticipated* rate increases will occur in PY 2018: Statewide Blended Rates Participant Share (After Employer Subsidy) State Employees Participant $ $ $ Participant + Spouse $ $ $ Participant + Child(ren) $ $ $ Participant + Family $ $ $

5 Page 4 State Retirees (15 yrs of Service) Participant $ $ $ Participant + Spouse $ $ $ Participant + Child(ren) $ $ $ Participant + Family $ 1, $ 1, $ Non-State Retirees (15 yrs of Service) Participant $ $ $ Participant + Spouse $ $ 1, $ Participant + Child(ren) $ $ $ Participant + Family $ 1, $ 1, $ *These rate increases are a projection and final rates will not be available until the Board approves them in March 2017 and the Legislature approves the Subsidy Bill in May PEBP recognized the potential negative impact these rate increases would have on employees, retirees, and their families, so PEBP utilized the Alternate Plan Benefit provision in the RFP to develop a statewide alternate plan that was less expensive ( buy-down plan) to allow participants another option to have HMO services with a more affordable monthly premium. ALTERNATE PLAN BENEFIT DESIGN To alleviate the increase in monthly premiums for HMO participants on the Plan Benefit, PEBP negotiated the following Alternate Plan Benefit : Plan Feature Alternate Plan Benefit Out Of Pocket Maximum $7,150 Individual / $14,300 Family Deductible N/A Primary Care Physician $5 per visit Specialist $25 per visit Telemedicine Virtual Visit $0 Urgent Care $25 per visit ER $1,000 per visit Hospital Admission $1,000 per day not to exceed $,3000 Outpatient Surgery $1,000 per surgery Outpatient (ASC) $50 per surgery Pharmacy 1 (Generic) $25 Pharmacy 2 (Brand) $50

6 Page 5 Plan Feature Alternate Plan Benefit Pharmacy 3 (Non-Formulary) $75 Pharmacy 4 (Specialty) 40 Coinsurance Key elements of the Alternate Plan Benefit include: 1. Same design across most of the state (benefits and actuarial value) Narrow Network. 2. Primary Care Physician (PCP) referral is required to schedule and receive Specialist appointments and care. 3. Lower copays for Primary Care and Specialist Visits, however higher costs for Emergency Room visits, hospital in-patient services, and surgeries. Service Areas: In order to reduce the monthly premiums, both vendors (Hometown Health and Health Plan of Nevada) needed to control costs by utilizing their own primary care physicians. The service areas for Health Plan of Nevada remain the same for both the Benefit and the Alternate Benefit ; however, Hometown Health did not have primary care physicians within their parent company (Renown) in all rural areas and therefore can provide service on the Alternate Plan to some (not all) rural participants. A gap analysis was performed to determine how many existing participants of Hometown Health s HMO plan today would be impacted with this narrower service area if every participant were to switch over. The table below shows the covered lives impacted: Hometown Standard HMO ( Plan Benefit ) Hometown Premier HMO (Alternate Plan Benefit ) (Plan Year 2017) Members County Carson City X X 1,992 Churchill X X 198 Clark 0 Douglas X X 558 Elko X 265 Esmeralda 0 Eureka X 4 Humboldt X 97 Lander X 23 Lincoln X 0 Lyon X X 830 Mineral X 15 Nye 0 Pershing X 110 Storey X X 15 Washoe X X 4,466 White Pine X 77

7 Page 6 County Hometown Standard HMO ( Plan Benefit ) Hometown Premier HMO (Alternate Plan Benefit ) (Plan Year 2017) Members 8,650 8,059 8, The highlighted counties above (approximately 600 covered lives) will not have primary care providers available on the Alternate Plan. Those people will have only two plan choices for healthcare through PEBP in PY2018 (CDHP and Benefit HMO). However, this Alternate Plan will still be available to 93.2 of current Hometown Health HMO participants and their dependents. PEBP will ensure the appropriate plans show up as available selections for next open enrollment to mitigate confusion and reduce the opportunity to select a plan not offered in a given county. Additionally, PEBP will begin a robust communication campaign to present and remind participants multiple times before, during, and after open enrollment about the additional plan design and the changes to the existing PY2017 HMO design ( Plan Benefit ). RATE INCREASES ALTERNATE PLAN BENEFIT DESIGN Changing the benefit design and limiting primary care to those locations supported by vendor owned providers (narrow networking) presented an opportunity for reduced monthly premiums. The following anticipated* rates for the Alternate Plan will occur in PY 2018: Statewide Blended Rates Participant Share (After Employer Subsidy) State Employees Alternative Participant $ $ $ Participant + Spouse $ $ $ Participant + Child(ren) $ $ $ Participant + Family $ $ $ State Retirees (15 yrs of Service) Alternative Participant $ $ $ Participant + Spouse $ $ $ Participant + Child(ren) $ $ $ Participant + Family $ 1, $ 1, $ Non-State Retirees (15 yrs of Service)

8 Page 7 Alternative Participant $ $ $ Participant + Spouse $ $ $ Participant + Child(ren) $ $ $ Participant + Family $ 1, $ 1, $ *These rate increases are a projection and final rates will not be available until the Board approves them in March 2017 and the Legislature approves the Subsidy Bill in May Recommendation Ratify the evaluation committee s recommendation that contracts be approved with Hometown Health and Health Plan of Nevada to provide Health Maintenance Organization services beginning July 1, 2017.