1

Public Employees Benefits Board

June 22, 2004

SeaTac Holiday Inn

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2005 Medical Procurement Overview and Results

June 22, 2004

Richard Onizuka, Health Care Policy

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Summary of 2005 Medical Procurement

• Health Care Environment

• Purchasing Strategy

• Key Facts From PEBB Procurement• Procurement Results

4

Health Care Environment

• Hewitt Associates and Aon Consulting forecast that managed care plans will ask for 2005 premium increases in the range of 12.5% - 14.4%

• Marketplace moving towards:• Higher enrollee premiums & point of service

costs• Choice of lower premium plan designs• New tools, information and plan designs to help

employees be better health care consumers

5

Health Care Environment

• Trends in health care spending are moderating in all service categories

• Prescription drugs typically showing the largest trend reduction

• Utilization growth is slowing

6

2005 Purchasing Strategy

Build long-term partnerships with carriers to help us realize PEBB’s vision of providing affordable, quality health care.

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2005 Purchasing Strategy

• Quality and Access integral to purchasing, but cost continued to be a purchasing priority

• “Benchmark Rate” for Non-Medicare

• Non-Medicare and Medicare bids actuarially reviewed and negotiated in comparison with the overall program

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Key Facts --PEBB Procurement

• Unlike last year, financial statements to the OIC reflect all Bidders made a profit on PEBB business in 2003

• Insufficient data for 2004 conclusions

• Similar to the national health care market environment, PEBB trends and utilization appear to be moderating

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Procurement Results• Bids from all 6 current carriers

• Regence bid under Regence BlueShield license, rather than current RegenceCare license

• All carriers were notified of preliminary contract awards for 2005

• No service area reductions and one carrier expanded into a partial county

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PEBB 2005 MCO Service AreasWHITE = FULL MCO COVERAGE

RED = NO MCO COVERAGE PURPLE = PARTIAL MCO COVERAGE

Garfield

Pend OreilleCHP,GHC/OPT(Partial)

SpokaneCHP,GHC,OPT

Walla WallaCHP,GHC, OPT

Asotin

Columbia GHC, OPT

StevensCHP,GHC/OPT (Partial)

WhitmanGHC,OPT

FerryCHP

LincolnCHP,GHC/OPT (Partial)

FranklinCHP,GHC, OPT

AdamsCHP

DouglasCHP

GrantCHP

BentonCHP,GHC, OPT

YakimaCHP,GHC, OPT

KlickitatCHP

ChelanCHP

San JuanGHC, OPT

WhatcomCHP, GHC, OPT Okanogan

CHP

SkagitCHP, GHC, OPT, RBS

KittitasGHC, OPT

SnohomishCHP, GHC, OPT, PC, RBS

LewisCHP, GHC, OPT, PC, Kaiser (partial)

PierceCHP, GHC, OPT, PC, RBS

SkamaniaCHP,Kaiser (Partial)

ClallamRBS

Island GHC, OPT, CHP

ClarkKaiser, PC

CowlitzCHP, Kaiser

Thurston CHP, GHC, OPT, PC

KitsapCHP, GHC,OPT

MasonCHP, GHC, OPT, RBS,PC (partial)

Wahkiakum

Kaiser ((Partial)

PacificRBS, CHP (partial)

JeffersonRBS

Grays Harbor CHP, RBS, GHC/OPT/ PC (Partial)

23,313 RegenceCare members will need to choose a new plan (Regence BlueShield includes all RegenceCare service areas & providers)

CHP as Partial in Pacific new for 2005, 2 Counties with no MCO (815 members) & 1 County with partial coverage (approximately 299 members)

KingGHC, OPT, PC, RBS, CHP

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Procurement Results

Premium Increases, Active Non-Medicare:

• Budget Assumption 15.0%

• Procurement Results 11.1%– UMP= 13.2%, UMP Neighborhood=14%– MCOs=9.5%

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Procurement Results2005 Active Non-Medicare

Employee Contributions

Plan Name

2005 First Tier Emp

Contrib.

Emp Contrib. Change from

2004

2005 Projected % of Employee

Enrollment Subscriber Sub. & Spouse

Sub. & Child(ren) Full Family

CHPW 57$ 16$ 3% 57$ 123$ 99$ 166$ Group Health Coop. 20$ (23)$ 30% 20$ 51$ 36$ 66$ Kaiser Foundation 37$ 5$ 2% 37$ 84$ 65$ 112$ Options Health Care 48$ (13)$ 5% 48$ 107$ 85$ 143$ PacifiCare 108$ 28$ 8% 108$ 226$ 189$ 307$ Regence 102$ 21$ 7% 102$ 214$ 178$ 290$

Uniform Medical Plan 33$ 4$ 44% 33$ 76$ 58$ 101$ UMP Neighborhood 25$ 6$ 1% 25$ 59$ 43$ 78$

Average Employee Contribution 75$ Budgeted Avg EC. 79$

Variance (4)$

Resulting Employee ContributionBy Family Tier

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Procurement ResultsIncrease in Average Employee

Contributions

$13 $14 $14

$27

$37

$72$79 $75

$0

$10

$20

$30

$40

$50

$60

$70

$80

CY 1998 CY 1999 CY 2000 CY 2001 CY 2002 CY 2003 CY 2004 CY 2005

Year

Avg

Em

ploy

ee C

ontr

ibut

ion

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Procurement Results

Premium Increases, Medicare Retirees:

• Budget Assumption 21.5%• Procurement Results (UMP & MCOs) 21.8%

– UMP= 31.5%– MCOs= 11.4%

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Procurement Results2005 Estimated

Medicare Retiree Contribution

Plan Name2004 First Tier Retiree Pays

2005 Estimated First Tier Retiree

Pays

Retiree Pays Increase from

2004

2005 Projected Percent of

Retiree Enrollment

CHPW 208$ $ 211 3$ 1%

Group Health Coop. 137$ 152$ 15$ 28%

Kaiser Foundation 104$ 111$ 8$ 3%

Options Health Care 212$ 210$ (2)$ 1%

PacifiCare 140$ 174$ 34$ 10%

Regence 241$ 307$ 66$ 2%

Uniform Medical Plan 126$ 183$ 57$ 55%

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Procurement ResultsIncrease in Medicare Retiree Subsidies

$41.26 $43.16

$62.48$69.98

$85.84$92.74

$102.35

$116.19

$0

$20

$40

$60

$80

$100

$120

$140

CY1998

CY1999

CY2000

CY2001

CY2002

CY2003

CY2004

CY2005

Year

Su

bsi

dy

Per

Ret

iree

Per

Mon

th

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FUTUREDIRECTIONS

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Board Vote on 2005 Employee Contributions

Plan Name 2005 First Tier

Emp Contrib. Subscriber Sub. & Spouse

Sub. & Child(ren) Full Family

CHPW 57$ 57$ 123$ 99$ 166$ Group Health Coop. 20$ 20$ 51$ 36$ 66$ Kaiser Foundation 37$ 37$ 84$ 65$ 112$ Options Health Care 48$ 48$ 107$ 85$ 143$ PacifiCare 108$ 108$ 226$ 189$ 307$ Regence 102$ 102$ 214$ 178$ 290$

Uniform Medical Plan 33$ 33$ 76$ 58$ 101$ UMP Neighborhood 25$ 25$ 59$ 43$ 78$

Average Employee Contribution 75$

Resulting Employee ContributionBy Family Tier

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Board Vote on 2005 Retiree Subsidy

Plan Name2004 First Tier Retiree Pays

2005 Estimated First Tier Retiree

Pays

Retiree Pays Increase from

2004

2005 Projected Percent of

Retiree Enrollment

CHPW 208$ $ 211 3$ 1%

Group Health Coop.* 137$ 152$ 15$ 28%

Kaiser Foundation* 104$ 111$ 8$ 3%

Options Health Care 212$ 210$ (2)$ 1%

PacifiCare* 140$ 174$ 34$ 10%

Regence 241$ 307$ 66$ 2%

Uniform Medical Plan 126$ 183$ 57$ 55%

2005 Retiree Subsidy= $116.19

* Rates shown above for the Medicare Advantage Plans are subject to change based on CMS Medicare Advantage Rates.