PA 152 Compliance Plan Design Strategic Initiative Presented by: Brenda White, Assistant Vice President Leslie Foster, Senior Account Specialist Aon 171 Monroe Avenue NW, Suite 525 Grand Rapids, MI 49503
Overview of PA 152 Michigan Publically Funded Health Insurance Contribution Act Requires a hard cap on employer contributions to the cost of medical & prescription coverage $5,500 x number of employees with Single coverage $11,000 x number of employees with Double coverage $15,000 x number of employees with Family coverage Payments can then be allocated among employees and plans as the County sees fit Hard cap is adjusted annually based on U.S. CPI
Overview of PA 152 By majority vote of the Board, the County can pay up to 80% of the cost of coverage Includes premium or illustrative rate and employer reimbursements for deductibles, copays, & coinsurance; also includes employer contributions to FSA, HSA or similar accounts Elected officials must pay 20% of the cost of coverage The remainder of the cost can then be allocated among employees and plans as the County sees fit By 2/3 majority vote of the Board, the County can be exempted from the requirements for the next succeeding year On December 22, Allegan County s Board opted to exempt the County from the requirements in 2012 so that alternative plan options could be implemented effective January 1, 2013
2012 PA 152 Impact (absent Board action to exempt Allegan County) 100% PPO New Traditional High Deductible Single Double Family Single Double Family Single Double Family Enrollment 52 51 98 16 34 59 0 2 0 Renewal Monthly Illustrative Rate $615.90 $1,478.15 $1,847.70 $541.34 $1,299.22 $1,624.03 $407.31 $977.52 $1,221.91 Impact on EMPLOYEE Payroll Contribution Rate Single Double Family Single Double Family Single Double Family Current Contribution Strategy $61.59 $147.82 $184.77 $13.53 $32.48 $40.60 $10.18 $24.44 $30.55 Remainder of Annual Hard Cap Costs $78.78 $280.74 $298.85 $41.50 $191.28 $187.02 $0.00 $30.43 $0.00 Note: Includes medical, prescription, dental, and vision.
Projected Costs 2012-2016 2012 2013 2014 2015 2016 Medical/Rx/ Dental/Vision Medical/Rx/ Dental/Vision Medical/Rx/ Dental/Vision Medical/Rx/ Dental/Vision Medical/Rx/ Dental/Vision Projected Claims PEPM $1,182.71 $1,300.98 $1,431.08 $1,574.18 $1,731.60 Estimated ASO Admin $73.56 $75.77 $78.04 $80.38 $82.79 Estimated Stop Loss Admin $55.18 $68.98 $86.22 $107.77 $134.72 Projected Total Cost PEPM $1,311.45 $1,445.72 $1,595.34 $1,762.34 $1,949.11 Projected Total Claims $4,910,061.71 $5,412,778.37 $5,972,935.60 $6,598,196.94 $7,297,475.94 % Change Over 2012 -- 10% 22% 34% 49% Hard Cap Budget $3,686,000.00 $3,686,000.00 $3,686,000.00 $3,686,000.00 $3,686,000.00 Employee Contribution $1,224,061.71 $1,726,778.37 $2,286,935.60 $2,912,196.94 $3,611,475.94 % Change Over 2012 -- 41% 87% 138% 195% Note: Assumed 3% annual increase for ASO Admin and 25% annual increase for stop loss. Experience is pooled with Allegan County Road Commission & Medical Care Facility for purposes of per employee per month projected costs; Projected Total Claims considers only Allegan County Active enrollment. Per PA 152, the hard cap will be adjusted annually based on CPI. For purposes of this analysis, we assumed no change to the hard cap.
Building a Healthcare Strategy Manage the Benefit Manage the Risk Manage the Overall Spend
Impacting Cost Wellness/Disease Management managing health to avoid chronic conditions and associated cost and managing disease to ensure appropriate care is received Plan Design managing coverage levels purchased to balance cost and coverage Contributions balance of employer and employee cost share Value Based Design providing enhanced coverage for the most appropriate level of care (i.e. covering preventive care 100% or lower copay for generic drugs)
Wellness Most Common Short-Term ROI Longer Term ROI Ad-hoc Wellness More Focused Efforts Culture of Wellness Health and Productivity Locally Managed Examples Weight watchers Lunch n learns Flu shots Health fairs Onsite biometric screening Onsite fitness centers or discounts Tobacco cessation Disease management interventions Ongoing communication Wellness topics such as nutrition, self-care, fitness Focus on preventive care and its value Value of medication compliance Reinforcement of HIPAA Privacy Rule Stronger, more comprehensive effort Leadership commitment Stakeholder buy-in Environment and work policy changes Employee given more responsibility for personal health Strategic Wellness Mandatory health assessments Self-paced lifestyle modules Tools, trackers, resources Absence management includes healthcare, disability, sick days and Worker s Comp. Measured and monitored program performance Vendor integration for better coordination of care Data sharing Onsite Rx and clinics Focus on Provider Quality Participate in collaboratives (i.e., Leapfrog, Bridges to Excellence) Wellness champions Health coaching Onsite group and individual counseling
Plan Design Benchmarking Consumer Driven Plan Design High Deductible with Account Based Funding (FSA, HRA or HSA) Copay to Coinsurance Gentle to Dramatic Plan Changes tweaks to overhaul Pharmacy Changes generic, mail order, step therapy, exclusions, OTC, DAW Rules
Contributions Benchmarking Requirements of PA 152 Same employer contribution for each plan Incentives for employees who opt to take lower cost plan Base / Buy-Up, Employee vs. Family Funding, Spousal Mandates/Surcharges
Value Based Plans Enhanced coverage for most appropriate care Current examples: Office Visit copay is lower than Emergency Room copay Generic drug copay is lower than Brand name Preventive care is covered 100% Additional options may include: Lower office visit, lab, and prescription drug copays for members with chronic conditions Discounts for trying OTC or copay waiver for trying a new generic
Design and Pricing Scenarios - Option 1 Proposed Design/Contribution Approach Eliminate current benefit plan designs in favor of a wellness based alternative Healthy Blue Outcomes Requirements first 90 days Complete Health Assessment Submit the Qualification Form Meet Health Measures Requirements Category 1 Must meet both standards Category 2 Must meet two out of three standards Health Measure BMI <30 Tobacco Use Required Standard Criteria No Cholesterol (LDL) <=160 Blood Pressure <=140/90 Blood Sugar Normal Fasting A1C <8%
Design and Pricing Scenarios Option 1 Plan Design In Network Out of Network Individual Deductible Benefit Plan: $2,200 Benefit Plan: $4,400 Healthy Reward: $500 Healthy Reward: $1,000 Family Deductible Benefit Plan: $4,400 Benefit Plan: $8,800 Healthy Reward: $1,000 Healthy Reward: $2,000 Individual Out of Pocket Max $1,000 $2,000 Family Out of Pocket Max $2,000 $4,000 Coinsurance 90% 80% Physician Office Visits 90% after deductible 80% after deductible Preventive Care 100%, visit limits Not covered Hospital Emergency Room 90% after deductible Generic $10 after deductible Rx Brand Formulary $40 after deductible 25% sanction plus applicable copay Brand Nonformulary $80 after deductible 12
Design and Pricing Scenarios - Option 1 Potential Impact Cost based on 2012 BCBSM illustrative rates Requires increased administrative fees of $5 per employee per month Assumes total replacement of existing medical plans Healthy Blue Outcomes Single Double Family Enrollment 68 87 157 Monthly Illustrative Rate $407.01 $976.81 $1,221.02 Payroll Contribution - Hard Cap Cost $0.00 $30.07 $0.00
Design and Pricing Scenarios - Option 2 Proposed Design/Contribution Approach Plan Design Rx Add Health Savings Account as an option to existing benefit plans PPO, AC Traditional CMM, AC SB HSA OFFERING Out of Out of Out of In Network In Network In Network Network Network Network Individual Deductible $0 $250 $250 $1,250 $2,500 Family Deductible $0 $500 $500 $2,500 $5,000 Individual Out of Pocket Max N/A $2,000 $1,000/contract $1,000 $2,000 Family Out of Pocket Max N/A $4,000 $1,000/contract $2,000 $4,000 Coinsurance 100% 80% 80% 100% 80% 80% after 100% after Physician Office Visits $20 Copay $20 Copay deductible deductible 100%, visit Preventive Care 100%, visit limits Not Covered 100%, visit limits limits Hospital Emergency Room $50 Copay, waived if admitted, acc injury Generic $10 Copay $10 Copay Brand Formulary $15 Copay 25% sanction plus applicable copay $40 Copay Brand Nonformulary $20 Copay $40 Copay 80% after deductible Not Covered 80% after deductible 100% after deductible 25% sanction plus applicable copay $10 after deductible $40 after deductible $80 after deductible 20% sanction plus applicable copay
Design and Pricing Scenarios - Option 2 Potential Impact Health Savings Account provides employees with information about the true cost of medical services and provides a savings vehicle for future retiree medical expenses Assumes employees currently enrolled in high deductible move to HSA; actual enrollment impacts annual costs HSA can be offered as total replacement to current plans 100% PPO New Traditional HSA Single Double Family Single Double Family Single Double Family Enrollment 52 51 98 16 34 59 0 2 0 Monthly Illustrative Rate $615.90 $1,478.15 $1,847.70 $541.34 $1,299.22 $1,624.03 $358.81 $861.13 $1,076.42 Payroll Contribution Hard Cap Cost $78.78 $280.74 $298.85 $41.50 $191.28 $187.02 $0.00 $0.00 $0.00
Design and Pricing Scenarios - Option 3 Proposed Design/Contribution Approach Move to benchmark plan designs, as currently offered by Medical Care Community Maintains consistency in plan designs across organization Plan Design Rx PPO 1 PPO 2 In Network Out of Network In Network Out of Network Individual Deductible $100 $500 $500 $1,000 Family Deductible $200 $1,000 $1,000 $2,000 Individual Out of Pocket Max $500 $2,500 $1,000 $2,000 Family Out of Pocket Max $1,000 $5,000 $2,000 $4,000 Coinsurance 90% 70% 70% 50% Physician Office Visits $10 Copay 70% after 50% after $20 Copay deductible deductible Preventive Care 100%, visit limits Not Covered 100%, visit limits Not covered Hospital Emergency Room $75 Copay, waived if admitted, acc injury $100 Copay, waived if admitted, acc injury Generic $15 Copay $10 Copay 25% sanction plus Brand Formulary $25 Copay $40 Copay applicable copay Brand Nonformulary $35 Copay $40 Copay 25% sanction plus applicable copay
Design and Pricing Scenarios Option 3 Potential Impact Assumes members currently enrolled in 100% PPO enroll in PPO 1 and members currently enrolled in New Traditional or High Deductible enroll in PPO 2 PPO1 PPO2 Single Double Family Single Double Family Enrollment 52 51 98 16 36 59 Monthly Illustrative Rate $543.73 $1,304.92 $1,631.17 $442.66 $1,062.37 $1,327.98 Payroll Contribution - Hard Cap Cost $42.70 $194.13 $190.59 $0.00 $72.85 $38.99 17
PA 152 Compliance Plan Design Strategic Initiative Timeline, Discussion, Q/A