Health Service System Board

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1 Health Service System Board Q Dashboard Summary Report A Review of City Plan Inpatient, Outpatient, and Rx Trends November 14, 2013 Prepared by Aon Hewitt Health and Benefits

2 Introduction This report is a summary of emerging cost and utilization trends for the Health Service System s Active and Early Retiree City Plan. Experience through Q demonstrates that the majority of participants are in the retiree program. Membership has decreased in the Active and Early Retiree pool. Remaining members include those with catastrophic illnesses or those with no other health plan options (i.e. Hetch Hetchy). Additional analysis was conducted on the Hetch Hetchy population in order to quantify the cost and utilization incurred specifically by this group. Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 1

3 Report Contents This report details claims and utilization information for inpatient, outpatient, and pharmacy. Data is reported on a paid basis. Additional details of data include high cost claimants A separate analysis of inpatient and outpatient utilization and cost was conducted on Hetch Hetchy members All per 1000 metrics are being reported on an annualized basis. This is done by taking a quarterly data point, dividing by the member months, and then multiplying by 12,000 (per 1000 expanded to one year) Annual increase / decrease percentages are calculated with the geometric mean. Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 2

4 City Plan Actives: Enrollment & Membership Census Average Age Relative Risk (age/sex) 2008-Q Q Q Q Q Q Active Membership has decreased at 20.2% annually Active Membership is projected to be less than 100 members by 2015 The average age of the population has increased by 12% in five years The combined effect of decreased enrollment and increased average age has led to higher than expected claim cost, making the City Plan unaffordable Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 3

5 City Plan Actives: PMPM Paid Claims City Plan Blue Shield Average Age % Female % % Kaiser % Average Age Demographic Factor City Plan Blue Shield Kaiser City Plan Active PMPM costs increased from $822 to $932 (13.4%) in one year driven by increased age and decreased membership City Plan Actives average age is years older than Kaiser and Blue Shield actives. Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 4

6 City Plan Actives: Total Costs PMPM Hetch Hetchy active members Medical PMPM for Q (inpatient and outpatient only) is $248 (vs. 727 for all) City Plan Active PMPMs increased 7.5% annually from 2008 to 2013 (from $651- $936) Rx Drug PMPM for City Plan is $204 in Q This is over 100% change since 2008 Industry average of Rx spend for an active population is between 15% and 17% of total cost. The City Plan, at 22%, is 37.5% higher than expected Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 5

7 City Plan Actives: Admits Per 1000 Members Admits per 1000 for Hetch Hetchy active members was 5.54 (vs. 5.2 for all) These members had no admissions in 3 of the last 4 quarters Overall, admission rates have decreased 21.6% from 83.2 in Q to 65.2 Due to the low membership level, admission rates could vary significantly between reporting periods Standard admission rates for a similar population are admissions per 1,000 Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 6

8 City Plan Actives: Inpatient Days Per 1000 Members Comparison of Inpatient Days / 1000 on a Risk Adjusted Basis Adjusted by Blue Shield Kaiser Factor Adj. UHC BS/Kaiser Difference % 51.8% Overall inpatient days per 1000 decreased 26.4% since Q (from to 414.9) This is very reflective of the small enrollment and high variability with the population Blue Shield s average over the last year was 169 days per 1,000 Kaiser s average over the last year was 185 days per 1,000 Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 7

9 City Plan Actives: Inpatient Average Length of Stay Hetch Hetchy active members ALOS is under 1 day (vs.6.5 for all) As of Q2 2013, ALOS is 6.5. ALOS is at a level that exceeds standard expectations indicating a deteriorating risk profile Maternity ALOS has decreased to 1.8. This is a surprising finding given the average age of the population is 48, which would lead to higher risk pregnancies Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 8

10 City Plan Actives: Inpatient Cost Per Day Total Inpatient Cost per Day for Hetch Hetchy members is $2581 (vs. $9630 for all) Total Cost per day has accelerated since Q at the rate of 42.0% per year This corresponds to a 75.9% increase in surgical cost per day due to several high cost claimants: Endovascular Embolization ($496,715) Replacement Aortic Valve ($317,147) Replacement Mitral Valve ($270,995) Endotracheal Tube ($119,040) Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 9

11 City Plan Actives: Cost of Outpatient Services Total Outpatient Cost per Procedure for Hetch Hetchy members is $424 (vs. $166 for all) Emergency Room outpatient cost per procedure has increased 12.6% annually ($ $2917) Office Visit cost per procedure increased 8.5% in the past 5 years($69 - $96) Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 10

12 City Plan Actives: Professional Procedures Per 1000 Standard professional procedure rates for a similar population are approximately 15,000 per thousand City Plan s rate of 29,283 in Q nearly doubled the standard Over 19,000 of these services were coded as other for a $5 PMPM Other services include things such as supplies and DME provided at home Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 11

13 City Plan Actives: Generic Drug Dispensing Rate Drug Cost /Script (City Plan Actives) % Generic 74% Generic Cost $30 % Non Generic 26% Non Generic Cost $448 Total Cost $ For each 1% increase in generic utilization, City Plan expects a 2.5% decrease in pharmacy spend In the past five years, the generic dispensing rate has increased 22% The generic substitution rate in excess of 70% is excellent for a PPO Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 12

14 City Plan Actives: Rx PMPM & Cost Per Script Drug Cost /Script Q City Plan $ Blue Shield $72 Kaiser $85.94 RX PMPM Costs Q City Plan $204 Blue Shield $69 Kaiser $39 Rx PMPM costs increased 27.7% in the last year. The industry trend lies between 4% and 5% over the past 3 years The top 4 Brand drugs classes are Antivirals, other Hormones, Antineoplastic, and Narcotic Analgesics which represent an estimated 27% of the drug spend Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 13

15 Early Retirees 14

16 City Plan Early Retiree: Enrollment & Membership Census Average Age Relative Risk 2008-Q Q Q Q Q Q Membership has decreased at 15.6% annually The average age has only increased 2.14 years over a five year period. This is due to new entrants and more persons at older ages migrating into the retiree plans Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 15

17 City Plan Early Retiree: PMPM Paid Claims Average Age % Female City Plan % Blue Shield % Kaiser % City Plan Early Retiree costs have decreased from $1,074 to $1,009 or 6.1% The PMPM cost for City Plan is approximately 26% higher than the PMPM cost for Blue Shield Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 16

18 City Plan Early Retirees: Total Costs PMPM Hetch Hetchy Early Retiree members Medical PMPM for Q (inpatient and outpatient only) is $184 (vs. $801 for all) Total PMPM increased 8.5% annually from ($676-$1016) Since Q2 2011, PMPM decreased $53 for a two year average of 2.5% per year RX PMPM for City Plan is $212 in Q Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 17

19 City Plan Early Retirees: Medical Cost Distribution By Service Type July 11 - July 12 - Service Wt. % % Change% June 12 June 13 Type Change Facility Inpatient PMPM % 39% 3.4% Facility Outpatient PMPM % 61% -6.7% Other PMPM % 0% -0.1% Medical PMPM % 100% -4.2% The inpatient PMPM costs have increased 8.9% The Facility Inpatient component increased 5% over the previous year to 39% Inpatient costs continue to rise as a result of the cost per day and average length of stay Outpatient and professional costs have decreased leading to an overall decrease in cost Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 18

20 City Plan Early Retirees: Admits Per 1000 Members Q Admission Rates City Plan 109 Blue Shield 74 Kaiser 75 Hetch Hetchy Early Retiree Admissions Per 1000 is 20 (vs. 109 for all) Overall, admission rates have decreased since Q to 109, or 13.5% Standard admission rates for a similar population are admissions per 1,000 On a risk adjusted basis, City Plan is 36.3% higher than Blue Shield, and 37.6% higher than Kaiser Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 19

21 City Plan Early Retirees: Inpatient Days Per 1000 Members Comparison of Inpatient Days/1000 on a Risk Adjusted Basis Adjusted by Blue Shield Kaiser Factor Adj. UHC BS/Kaiser Difference % 27.3% Hetch Hetchy Early Retiree Inpatient days per 1000 is 48.9 (vs for all) Overall, inpatient days per 1,000 have decreased 10.3% since Q (from to 662.7) Blue Shield s average over the last year was 396 days per 1,000 Kaiser s average over the last year was 454 days per 1,000 Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 20

22 City Plan Early Retirees: Inpatient Average Length of Stay Hetch Hetchy Early Retiree ALOS is under 1 day (vs.5.9 for all) The total ALOS as of Q is at 5.9 The 1.75 ALOS spread between the low and high points indicates that the risk pool is stable and is not deteriorating Skilled nursing ALOS is highly variable due to the size of the population Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 21

23 City Plan Early Retirees: Inpatient Cost Per Day Inpatient Cost Per Day for Surgical has increased 15.17% per year in the last two years Current value for cost per day is $6,243 in Q The annual increase in cost per day over the five year period is 2.9% The overall cost increase has been very reasonable. It is not the norm for an Early Retiree population to exhibit such a flat trend Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 22

24 City Plan Early Retirees: Cost of Outpatient Services Hetch Hetchy Early Retiree outpatient cost per procedure is $234 (vs. $163 for all) The total outpatient cost per procedure has remained relatively stable with an annual rate increase of 1.3% This is below the expected trend of 6.5% Emergency room increased on an annual rate of 6.4%, or $ per year Surgical increased on an annual rate of 5.9%, or $271.2 per year Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 23

25 City Plan Early Retirees: Professional Procedures Per 1000 The standard professional procedures rate for a similar population is approximately 19,500 per thousand. City Plan s rate of 33,778 in Q is nearly 73.2% higher than standard Over 21,000 of these services were coded as other for an impact of $4 PMPM Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 24

26 City Plan Early Retirees: Generic Drug Dispensing Rate For each 1% increase in generic utilization, City Plan expects a 2.5% decrease in pharmacy spend In the past five years, the generic dispensing rate has increased 48.1% The generic substitution is in excess of 75% and is a contributing factor to the decrease in overall PMPM cost Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 25

27 City Plan Early Retirees: Rx PMPM & Cost Per Script Rx PMPM costs decreased 7.4% in the last year Cost/script has decreased 14.9% in the last year, ending with $ in Q The top 4 Brand drugs classes are Antivirals, other Hormones, Antineoplastic, and Narcotic Analgesics. Diabetic therapy also is impacting costs Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 26

28 Summary and Considerations City Plan is healthy and sustainable for our Medicare Retirees. The Active/Early Retiree pool is not sustainable as is. Aon Hewitt recommends the HS Board consider these options for the future of the Active/Early Retiree pool: 1. Move or Pool the Early Retirees with the Medicare Retirees 2. Close the Active City Plan to all employees other than those outside of Kaiser and Blue Shield service areas the Hetch Hetchy membership is a small but healthy membership 3. Ask Aon-Hewitt to investigate the possibility of making changes to the Active City Plan that will draw in additional active membership and make the plan affordable again this might potentially disrupt the Blue Shield and Kaiser membership pools. Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 27

29 Appendix

30 Glossary Fee For Service - Payment is made each time service is rendered Formulary Compliance - Adhering to prescription formulary drugs that have been selected and approved for their safety, quality, and cost effectiveness Generic Dispensing Rate - Measures the number of drugs dispensed as generic divided by the total number of drugs dispensed Generic Substitution Rate - Measures what percentage of drugs are dispensed as a generic when there is a chemically equivalent brand name drug available IDC-9-CM - A standardized classification of disease, injuries, and causes of death, by etiology and anatomic localization and codified into a 6-digit number Inpatient - Admittance to a hospital or clinic for treatment that requires at least one overnight stay Loss Ratio - The total amount of dollars paid out in claims divided by the amount collected in premiums Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 29

31 Glossary MDC - Major Diagnostic Categories are formed by dividing all possible principal diagnoses (from ICD-9-CM) into 25 mutually exclusive diagnosis areas Members - A person enrolled in and eligible for benefits under a health care plan Member Share - The portion of health care costs (copayments, deductibles, and coinsurance) that the member enrolled in a health plan is responsible for Outpatient - Admittance to a hospital or clinic for treatment that does not require an overnight stay. This includes emergency room visits, dialysis, group therapy at the facility setting, lab work, observation room, surgeries, radiology, and medical supplies and services PMPM - Per member per month Professional Procedures All services not provided in an inpatient setting Specialty drug - High-cost injectable, infused, oral, or inhaled drugs that generally require special storage or handling and close monitoring of the patient's drug therapy Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 30

32 Glossary Total Paid Claims - Total dollar amount paid for services and costs from health care providers and facilities submitted to the insured for payment Utilization - The extent to which an insured group uses a particular health care service in a specified period, typically expressed as the number of services used per year per 100 or per 1000 persons Health & Benefits Consulting November 14, 2013 Health Service Board Presentation City Plan Dashboard 31