AGENDA ITEM X Action Item Information Only

Transcription

1 BRIAN SANDOVAL Governor PATRICK CATES Board Chairman STATE OF NEVADA PUBLIC EMPLOYEES BENEFITS PROGRAM 901 S. Stewart Street, Suite 1001 Carson City, Nevada Telephone Fax DAMON HAYCOCK Executive Officer AGENDA ITEM X Action Item Information Only Date: Item Number: Title: SUMMARY XI This report will provide the Board, participants, public, and other stakeholders information and recommendations for. REPORT At the September 27, 2018 Board meeting, PEBP provided the Board with opportunities for additional analysis regarding potential Plan Year 2020 (PY20) Benefit Design changes. Per the Board s direction, PEBP has conducted analysis and has made recommendations on the following: 1. Implementing additional cost containment activities 2. Utilizing excess reserves to renew and/or implement new programs and services EXCESS RESERVES Excess reserves are a constant moving target as projected experience and costs throughout the plan year often differ from actual results. PEBP reviews and revises excess reserve projections monthly and will continue to provide updates to the Board and public as new information becomes available. For the purposes of today s discussion, the same reserve reconciliation provided at the September 27, 2018 Board meeting is reprinted below: Excess Reserve Reconciliation Type Amount Comments PY19 Starting Cash on Hand $143,129,727 PY18 Ending Amount PY19 HRA Reserve Budget -$31,676,056 Legislatively Approved PY19 IBNR Reserve Budget -$37,200,000 Legislatively Approved PY19 Cat Reserve Budget -$20,600,000 Legislatively Approved Increased IBNR Reserve -$14,600,000 Aon projected increased IBNR for the

2 Page 2 Excess Reserve Reconciliation CDHP plus projected amount for new EPO plan totaling $51,800,000. Increased Cat Reserve -$19,300,000 Aon projected increased Catastrophic for CDHP plus projected amount for new EPO plan totaling $39,900,000. Remaining Available $19,753,671 PY 19 Approved Excess Reserve Spend -$14,231,925 Approved by the Board in March 2018 (includes enhanced life insurance, enhanced CDHP HSA/HRA funding, Medicare Exchange life insurance premiums and HRA fees, supplemental HRA funding to Medicare retirees, and 3D mammograms) PY 20 and PY 21 Budget -$376,864 Budget submission in August 2018 Enhancements Remaining Balance $5,144,882 Amount available for PY20+ Cost Saving Opportunities for PY20 The following table describes cost-saving activities PEBP can implement in PY20: Benefit Design Benefit Level Projected Population Projected PY20 Savings Disallow Patient Assistance Programs from Applying to Accumulators Drug manufacturer coupons/cash cards used to satisfy plan deductibles/out-ofpocket maximums 358 with Accredo Specialty Pharmacy copay assistance (PY18 CDHP members utilizing Variable PY18 utilization was $1.4 million Implement Mandatory Narrow Pharmacy Network 90 day drug fills at select retail/mail order these services) 8,905 $347,000 TOTAL Cost Saving Opportunities $347,000+ Plus Starting Excess Reserves $5,144,882 Amount Remaining $5,491,882+ Disallow Patient Assistance from Applying to Accumulators PEBP and Express Scripts performed initial analysis on implementing a copay accumulator program to control specialty drug costs. This program is not new and many large employers have implemented it across the nation. To simplify the program, a copay "accumulator" recognizes when an employee uses a drugmaker discount card and makes sure that money does not apply toward their annual out-of-pocket spending requirement. When the copay card runs out of money, a patient must either cover the

3 Page 3 full copay cost, get a new discount card, or stop filling the prescription. The program can apply to almost any drug coupon used at a pharmacy working with the pharmacy benefit manager. Estimates show there are more than 41 million Americans in plans that use an accumulator. A recent article in U.S. News describes how two large companies (Walmart and Home Depot) are adopting these programs moving forward. ( PEBP had numerous conversations with both our Third Party Administrator (HealthSCOPE Benefits) and Pharmacy Benefits Manager (Express Scripts), and we concur there is significant money available by the drug manufacturers that is being left on the table because of our lower out-of-pocket maximums. Pharmacy manufacturers set drug prices accounting for copay accumulator programs like this and therefore PEBP and its members are effectively paying more for these drugs than we should. Unfortunately, there is no way today to develop a cost savings amount as changes to copay assist cards and coupons will most assuredly change between now and July 1, 2019 when this program can go live. Savvy drug manufacturers can and will circumvent these types of programs, but doing nothing ensures PEBP pays too much for these high cost drugs. PEBP Recommendation: PEBP believes we can no longer sit by and allow the plan, the members, and the Nevada taxpayer pay more for high cost drugs than most employers with these programs allow. Therefore we recommend implementing a copay accumulator program next year. If approved, PEBP will come back to the plan in March with some current savings numbers and address additional opportunities for excess reserve expenditures to offset those savings at that time. Smart90 Mandatory Network Express Scripts (ESI) is recommending Smart90 Mandatory Network for the State of Nevada beginning 7/1/2019. Through this program, ESI would proactively reach out to members through an extensive communication campaign that includes s, letters and phone calls to notify them that they could save money by using a Smart90 participating pharmacy. Information will also be available on their website. Only clinically appropriate maintenance medications would be impacted by this program. This is a program that saves both the plan and the member money. The member will save money when they move to a Smart90 pharmacy or home delivery due to the improved pricing. 1. Approximately $282,000 savings come from channel shifts moving from Retail 30 to either Retail 90/Mail Order allows the plan to access steeper discounts: for brands, discounts improve almost 6%; for generics, discounts improve 0.25%. 2. Approximately $65,000 savings come from pricing changes. PEBP has Voluntary Retail 90 currently, but the rates under Mandatory Smart 90 are better: brand Retail 90 rates improve around 1.25%; generic Retail 90 rates improve 0.25%. 3. Approximately $48,000 member savings is a product of channel shifts and pricing changes. While members still pay their coinsurance (on generics and preferred brands),

4 Page 4 those who move from Retail 30 to a 90-day channel will be able to fill meds with a deeper discount. Total Projected Plan Savings: $347,000 Total Projected Member Savings: $48,000 This network excludes Walgreens and CVS but includes most of the other chains (Walmart, Costco, Smiths and other grocery store chains) and independent pharmacies. Members are also still able to obtain a 90-day supply through ESI s home delivery pharmacy if they so choose. 45.8% of Nevada s subscribers currently use a preferred pharmacy in the standard network. That means that 54.2% of subscribers would have to use a different pharmacy if they wished to fill a 90 day supply at retail. Only 0.2% (18) of those members would have to travel over 4 miles to reach a preferred pharmacy. Distance Summary Network Participation Locations % Locations Retail Claims % Retail Claims Eligible Members % Eligible Members Not Impacted % 38, % 36, % Impacted % 41, % 8, % Within 1 mile % 29, % 6, % 2 and 4 Miles % 11, % 2, % Over 4 Miles % % % Total 1, % 80, % 45, % PEBP Recommendation: Approve Smart90 Mandatory Network detailed above for PY20. Continuing Current / Implementing New Programs and Services Requiring Excess Reserves CDHP HSA / HRA Funding PEBP has provided a level of enhanced HSA/HRA funds to CDHP participants since the program incurred excess reserves. The following table shows current and proposed enhanced contributions to the HSA/HRA: Plan Year Individual Amount (Enhanced) Dependent Amount (Enhanced) 2019 (Current) $200: $0 $100 tied to preventive program $100 tied to Dr. on Demand and Healthcare Bluebook enrollment 2020 (Proposed) $100: $100 tied to enrolling in Dr. on Demand and Healthcare Bluebook $0

5 Page 5 In Plan Year 2018, PEBP introduced enhanced HSA/HRA funding ($200) tying it to required completion of preventive activities. In Plan Year 2019, PEBP continued this incentive policy by expanding the requirements for the $200 enhanced funding to both preventive activities and enrollment in member online tools. In Plan Year 2018, some members reported difficulties in meeting the preventive activities requirements. They reported completion of these activities but the provider s billing did not show the actions required when coding visits as diagnostic versus prevention. PEBP and HealthSCOPE staff spent significant effort and time researching and requesting rebilling from numerous providers to ensure members received credit for their actions. We believe these hurdles prevented some members from earning what was supposed to be a simple and transparent process for enhanced funding. With this history, PEBP is no longer recommending incentivizing preventive activities starting Plan Year 2020, however, there was increased utilization during the Plan Year 2018 time period. If the Board wishes to increase the HSA/HRA funding, the table below reflects the estimated costs: Participant Count Enhanced Benefit Plan Cost 23,636 $ 400 $ 9,454,400 23,636 $ 300 $ 7,090,800 23,636 $ 200 $ 4,727,200 23,636 $ 100 $ 2,363,600 Dependent Count Enhanced Benefit Plan Cost 17,837 $ 100 $ 1,783,700 PEBP Recommendation: Since excess reserve levels are dwindling, PEBP recommends $100 be provided initially to primary participants for enrolling in Dr. on Demand and Healthcare Bluebook for PY20. Both programs saw significant increases in utilization due to the requirement in PY19, and all of the members who are already enrolled will by default receive the funding in July PEBP will keep a close eye on excess reserves and may come back to the Board in March 2019 with a recommendation to increase this funding. Medicare Exchange Life Insurance Premiums and HRA Administrative Fees Since 2011, PEBP has included the costs of Medicare Exchange retiree life insurance premiums and HRA administration fees in the administrative costs within the CDHP and HMO premiums. Enhanced life insurance premiums were paid for out of excess reserves. Conversely, dental premiums are paid directly by Medicare Exchange retirees since 2011, creating an inconsistency in who pays for certain benefits. PEBP developed the Agency Request Budget for Fiscal Year 2020/2021 which included the previously earmarked enhanced life insurance levels to become the standard amount provided

6 Page 6 regardless of excess reserves (restoration of these benefits). However, PEBP did not build into its biennial budget employees paying the costs of Medicare Exchange retiree fees and life insurance premiums. These costs will either need to be paid for out of reserves, paid for by retirees, or built into the PEBP budget in a budget amendment during session next year. The projected costs are as follows: Benefit Design Benefit Level Projected Population Projected PY19 Cost Medicare Exchange $1.50 per Retiree per 12,523 $225,414 HRA Admin Fees* Month Life Insurance $12,500 / Retiree ($0.539/$1,000x12.5 = $6.74 per month) 12,523 $1,012,860 Total Amount $1,238,274 *HRA fees were recently negotiated from $2.74 to $1.50 per retiree per month and these cost savings are reflected above. PEBP looked up the premiums for individual life insurance utilizing the following inputs: 1. Female years old 3. Perfect health (never used any tobacco product) 4. Perfect family health history 5. Perfect driving record 6. $12,000 of coverage The lowest cost that we found was $48 per month (7 times higher than PEBP s life insurance premiums). Changing from female to male increased the costs to $66 per month (almost 10 times higher). Many members don t have perfect health, perfect family history, or a perfect driving record, so those members costs would increase. Many members are older than 65. If PEBP s Medicare Exchange retirees purchased individual life insurance plans on the commercial market, they would be subject to vigorous underwriting and may not even qualify for a life insurance policy. PEBP Recommendation: PEBP believes asking the Medicare Exchange retirees to pay for their administrative costs and life insurance premiums is fair. The market alternatives are potentially unaffordable or inaccessible, and the total costs per month are low ($8.24 combined). Additionally, PEBP included $1 per month/per year-of-service increased funding in the Agency Request Budget each year of the next biennium, so a retiree with 9 or more years of service has this cost covered by the increase year 1 and retirees with 5 years of service (minimum) or more have this cost covered completely in year 2 increased funding. The average years-of-service our Medicare retirees have is around 18. Eliminating $25 Copay for Annual Vision Exams In November 2016, the PEBP Board approved implementing a $25 copay for annual vision exams starting Plan Year 2018 to help offset the costs of other enhanced benefits. At the time,

7 Page 7 the projected savings were approximately $298,000 in PY18. The following data showcases actual savings in PY18 and projected savings/costs in PY19 and PY20: Plan Year * 2020* Eye Exams 10,858 10,905 10,952 10,999 Copay $25 $25 $25 $25 Cost Savings $271,450 $272,625 $273,805 $274,990 *2019 and 2020 are projected based on 2017 and 2018 data (increasing 0.4% each year). Additionally, PEBP approved the implementation of a voluntary vision plan (buy-up) for members who need additional vision benefits. All voluntary vision plans evaluated and the plans the Board approved have a $10 copay for annual eye exams. PEBP Recommendation: Retain the $25 copay to maximize remaining reserves for CDHP HSA/HRA funding and other Board approved enhanced benefits for PY20/21. Increasing the Dental Benefit Annual Maximum In 2011, PEBP developed the Consumer Driven Health Plan (CDHP) and changed the dental offering from an annual $1,500 maximum per individual to $1,000. In 2014, PEBP developed a 3-year plan to spend down excess reserves which included increasing the annual maximum dental benefit back to $1,500. In 2017, PEBP was able to restore this temporary enhanced dental benefit back to the base plan moving forward. PEBP s actuaries (Aon) analyzed the projected costs if the Board chose to increase this benefit again utilizing $100 increments to a maximum of $2,000: Plan Design Projected PY2020 $26,721,000 % Increase in Cost $ Increase in Current Dental PPO Design $1,500 Annual Max* Increase Annual Max to $1,600 $27,065, % $344,000 Increase Annual Max to $1,700 $27,308, % $587,000 Increase Annual Max to $1,800 $27,478, % $757,000 Increase Annual Max to $1,900 $27,598, % $877,000 Increase Annual Max to $2,000 $27,654, % $933,000 *Current projected PY2020 claims cost is based on PY2018 claims trended by 4% annually to PY2020 ** All numbers are rounded to the nearest thousand. Prior to 2011, the dental maximum had been $1,500, and PEBP has managed to restore this benefit to the pre-cdhp implementation level already. Comparing the plan benefit design with other government offerings, PEBP believes the current levels are sufficient. Additionally, PEBP

8 Page 8 is looking to offer a buy-up voluntary dental plan for members who desire more coverage and believe this mechanism will meet their needs. PEBP Recommendation: PEBP recommends no changes to the current benefit levels. Developing Pilot Program with UNLV for Enhanced Nutrition Services PEBP and a Board member reached out to UNLV to ascertain the feasibility and probability of a partnership with their Registered Dietician program. PEBP currently provides preventive/wellness benefits that correspond to the Affordable Care Act (ACA) and United States Preventive Services Task Force (USPSTF) recommendations. These recommendations include vaccinations, annual exams, etc. PEBP has expanded these recommendations to include a preventive drug list and 3-Dimensional Mammography in recent years. PEBP proposes a partnership among PEBP and two UNLV entities the Dietetic Internship and Nutrition Center and the UNLV Student Health Center (SHC) and Faculty and Staff Treatment Center (FAST) which will allow the piloting of a nutrition education program targeted at highrisk PEBP members in Southern and rural Nevada, while facilitating the internship/patient experience component of UNLV dietetic students preparing for their board exam to obtain Registered Dietician Nutritionist (RDN) licensing in the State of Nevada. PEBP has received a draft proposal from UNLV and summarized key elements below: 1. Initial pilot of 500 members who have diabetes or renal disease. 2. Targeted participants will ideally live in Southern Nevada and obtain face-to-face services on the UNLV campus, or be rural Nevadans and participate via the telemedicine model. 3. Program Launch and Duration: 12 months, launching 7/1/19 4. Initial and follow-up consultation (in-person at the UNLV Student Health Center/FAST Center or via webcam) with UNLV dietetic internship students, supervised by a Registered Dietitian, will review members 3-day food journals and provide nutrition education for diabetics or renal patients, as well as provide guidance on healthy eating, including shopping tips, meal planning, and caloric intake. Members will have option to participate in program over 12 months with an initial consultation, and follow-up consultations at recommended prescribed intervals depending on diagnosis and disease stage, as follows: a. Newly diagnosed (Day 1, Day 22, quarterly) b. Maintenance mode/well-managed (quarterly) c. High-risk/non-compliant patients (monthly) 5. Location: UNLV Student Health Center/Faculty and Staff Treatment (FAST) Center (located within Student Recreation and Wellness Center), 4505 S. Maryland Pkwy, Las Vegas, NV Scheduling: by appointment, Monday Friday; 9 am- 4 pm 7. Patients are given the option to participate in sessions remotely due to rural location, limited mobility, etc. Schedulers will send patient a web link in advance of the session and members can join from their chosen device.

9 Page 9 8. Pilot program costs estimated at $77,000. Contingency costs of $23,000 are proposed, resulting in a total annual budget for fiscal 2020 year of $100,000. PEBP is still working out logistical details and payment methods to ensure the pilot program meets the requirements outlined above. UNLV researchers will evaluate and potentially publish the pilot data and outcome measurements and reporting to ensure a transparent program is implemented and results provided to the Board at meetings during and after the pilot ends. A successful pilot, based on positive patient and financial outcomes may initiate a proposal for expansion of services to a broader member population on a longer term basis. PEBP s Recommendation: PEBP recommends earmarking $100,000 for this pilot with UNLV and implementing the program July 1, Increase Medicare Part B Credit for Retirees on CDHP, EPO, and HMO plans Currently, PEBP provides a $134 credit (minimum Medicare Part B premium) to retiree premiums on the CDHP, EPO, and HMO plans to save the plan under coordination of benefits rules. If the retiree s CDHP, EPO, or HMO monthly premium is less than $134, the retiree s monthly premium is reduced to $0 (with no additional credit). The Centers for Medicare and Medicaid Services (CMS) has announced the minimum Medicare Part B premium in 2019 is increasing $1.50 to $ PEBP analyzed the enrollment and costs and as of October 2018, there are 1,113 retirees with Part B on the CDHP, EPO, and HMO plans: Type CDHP EPO HMO Total State Part A+B Part B Only Non-State Part A+B Part B Only Total 1,113 Monthly Cost $1, Annual Cost $20, PEBP Recommendation: Since the cost is minimal and PEBP benefits from Medicare paying primary on these participants, PEBP recommends paying the approximate $20,000 a year to increase the Medicare Part B premium credit to $ HMO/EPO Plan Design Opportunities In 2016, PEBP signed a contract with both Health Plan of Nevada (HPN) and Hometown Health to provide a combined statewide HMO plan to eligible plan members. Last November, the Board approved the termination of the Hometown Health northern Nevada HMO plan and replaced it with a Exclusive Provider Organization (EPO) plan starting July 1, Although we have recently finished the first quarter (July September), PEBP reached out to HPN to discuss any recommended changes to the plan design statewide. HPN proposed and PEBP analyzed the following changes:

10 Page 10 Plan Feature Benefit Design PY19 Benefit Design PY20 Primary Care Physician (PCP) $25 Copay $20 Copay Visit Specialist Visit $45 Copay $40 Copay Emergency Room Visit $300 Copay $500 Copay Hospital In-Patient Services $500 per Admit $500 per Admit Retail Pharmacy 1. Preferred Generic 2. Preferred Brand 3. Non-Formulary 4. Specialty Out-of-Pocket Limit PCP Referral Requirement to Specialists $7 Copay $40 Copay $75 Copay 30% Coinsurance $7,150 Individual $14,300 Family No $10 Copay $40 Copay $75 Copay 20% Coinsurance $7,150 Individual $14,300 Family No The shaded areas in green showcase proposed changes to copays/coinsurance. PEBP asked our actuaries (Aon) to analyze the potential impacts for both the HMO and EPO plans if the recommendations were implemented. The following projections are summarized below: HPN Plan Design Scenarios Projected PY2020 % Increase in Cost $ Increase in HPN Current Design* $40,069,000 Enhance Specialty Coinsurance to 20% $40,311, % $242,000 Proposed PCP, Specialist, ER, Generic Copay Changes $39,792, % -$277,000 EPO Plan Design Scenarios Projected PY2020 % Increase in Cost $ Increase in Premier Current Design* $63,299,000 Enhance Specialty Coinsurance to 20% $63,666, % $367,000 Proposed PCP, Specialist, ER, Generic Copay Changes $62,862, % -$437,000 Projected PY2020 % Increase in Cost $ Increase in HPN and EPO Total HPN and EPO Current Design * $103,368,000 Enhance Specialty Coinsurance to 20% $103,977, % $609,000 Proposed PCP, Specialist, ER, Generic Copay Changes $102,654, % -$714,000 NET TOTAL $105,000

11 Page 11 *Current projected PY2020 claims cost is based on PY2018 claims trended by 8% annually to PY2020 ** All numbers are rounded to the nearest thousand. PEBP Recommendation: With an increase to costs for lowering the specialty drug coinsurance from 30% to 20% offset by the decrease to costs adjusting copays for primary care, specialists, emergency room visits and generic drugs, the net difference is approximately a $105,000 overall savings. Therefore PEBP recommends all outlined changes to the HMO/EPO plan design above be implemented for PY Summary of Recommendation PEBP developed analysis and makes recommendations above predicated on the availability of projected excess reserves. As we get closer to the March 2019 rate setting meeting, PEBP may discover increased excess reserves and will come back to the Board to recommend additional expenditures (if appropriate). A summary of all recommendations for PY19 is below: 1. Do implement a copay accumulator cost containment program. 2. Do implement mandatory Smart90 pharmacy network cost containment program. 3. Do approve $100 CDHP HSA/HRA enhanced funding tied to Dr. on Demand and Healthcare Bluebook enrollment, and revisit in March at rate setting for additional available funds. 4. Do require Medicare Exchange retirees directly pay for their HRA administration fees and Life Insurance premiums. 5. Do not eliminate the $25 copay for CDHP annual vision exams. 6. Do not increase the program-wide dental benefit maximum. 7. Do approve a one-year pilot nutrition program partnering with UNLV. 8. Do increase CDHP/EPO/HMO Medicare Part B premium credits from $134 to $ Do approve revised EPO/HMO plan design PCP, specialists, and generic drug copays and coinsurance for specialty drugs as described above. The funding result from the above recommendations are as follows: Activity Amount Starting Excess Reserves $5,144,882 Recommended Cost Containment +$374,000* $100 CDHP HSA/HRA Funding -$2,363,600 UNLV Pilot Enhanced Nutrition -$100,000 Increased Medicare Part B Premium Credits for CDHP/EPO/HMO Members -$20,034 Revise HMO/EPO PCP, Specialist, Generic Copays and Specialty - Coinsurance *Remaining for PY2021+ $3,035,248 *PEBP will revisit and make recommendations pending additional available funding at the March 2019 Board meeting (similar to the March 2018 Board meeting).