public employees’ benefits board benefits boardmeeting march 8, 2005

Public Employees’Public Employees’

Benefits BoardBenefits Board

MeetingMeeting

March 8, 2005March 8, 2005

PEBB Budget UpdatePEBB Budget Update

March 8, 2005March 8, 2005

Presented by Connie RobinsPresented by Connie RobinsDeputy AdministratorDeputy Administrator

Budget UpdateBudget Update

Biennial ProjectionBiennial Projection First Quarter FY 05First Quarter FY 05 Data through September 2004Data through September 2004


RevenueRevenue FY 05FY 05

State Agency RevenueState Agency Revenue $ 760,946,617$ 760,946,617State Employee ContributionState Employee Contribution 95,611,862 95,611,862K-12, Political Subdivisions K-12, Political Subdivisions 94,675,398 94,675,398Retiree PremiumsRetiree Premiums 187,643,951 187,643,951 Other Self Pay Other Self Pay (COBRA etc)(COBRA etc) 8,570,960 8,570,960Other RevenueOther Revenue 55,603,555 55,603,555

$1,203,052,344 $1,203,052,344

Funding RateFunding Rate $584.58 $584.58


ExpendituresExpenditures FY 05FY 05

Insured PremiumInsured Premium $ 612,255,403 $ 612,255,403

Uniform Medical PlanUniform Medical Plan 482,631,843 482,631,843Prescription Drug Program 124,000 Prescription Drug Program 124,000 Uniform Dental PlanUniform Dental Plan 90,858,335 90,858,335Other ExpendituresOther Expenditures 7,424,853 7,424,853

$1,193,294,434$1,193,294,434

Excess/(Deficit) of Revenues Over ExpendituresExcess/(Deficit) of Revenues Over Expenditures

$ 9,757,909$ 9,757,909


Fund BalanceFund Balance

FY 05FY 05 Beginning BalanceBeginning Balance $ 74,534,127 $ 74,534,127 AdjustmentsAdjustments -0- -0- Premium Stabilization Reserve Premium Stabilization Reserve 8,867,9968,867,996 Excess/ (Deficit)Excess/ (Deficit) 9,757,9099,757,909

Ending BalanceEnding Balance $ 93,160,032$ 93,160,032


Components of Fund BalanceComponents of Fund Balance FY 05FY 05

Employee Contribution Buy DownEmployee Contribution Buy Down $ 4,924,418 $ 4,924,418 Quality InitiativesQuality Initiatives 500,000 500,000 Life Insurance at $25,000 Life Insurance at $25,000 13,417,129 13,417,129 Fund Bal RetentionFund Bal Retention -0- -0- FSA Reserve & StartupFSA Reserve & Startup 1,135,647 1,135,647 Contingency Contingency 7,200,000 7,200,000

Restricted/DesignatedRestricted/Designated $ 27,177,194 $ 27,177,194

Premium Stabilization Rsv Premium Stabilization Rsv $ 39,906,679 $ 39,906,679

Unrestricted BalanceUnrestricted Balance $ 26,076,159 $ 26,076,159

Total Fund BalanceTotal Fund Balance $ 93,160,032 $ 93,160,032

Legislative UpdateLegislative Update

March 8, 2005March 8, 2005

Presented by Richard OnizukaPresented by Richard OnizukaDirector, Health Care PolicyDirector, Health Care Policy

2005 HCA (PEBB) High Priority Bills2005 HCA (PEBB) High Priority Bills 3/4/05 3/4/05

(After 1st Cutoff)(After 1st Cutoff)

Public Employees Benefits BoardPublic Employees Benefits Board Bill #Bill # Bill Description / Sponsor Bill Description / Sponsor StatusStatus

HB 1286HB 1286 Medical flexible spending account - Rep. Cody Medical flexible spending account - Rep. Cody Creates a PEBB Creates a PEBB medical flexible spending account. Governor request legislation.medical flexible spending account. Governor request legislation.

H 2nd ReadingH 2nd Reading

HB 1287HB 1287 Pharmacy Employer Subsidy - Rep. Cody Authorizes the health care Pharmacy Employer Subsidy - Rep. Cody Authorizes the health care authority to receive a federal employer subsidy for continuing to provide a authority to receive a federal employer subsidy for continuing to provide a pharmacy benefit to retirees. Governor request legislation. pharmacy benefit to retirees. Governor request legislation.


HB 1383HB 1383

SSB 5202SSB 5202

Health savings account – Rep. Condotta / Sen. Parlette Health savings account – Rep. Condotta / Sen. Parlette Directs the Directs the PEBB to develop a health savings account option for employees that PEBB to develop a health savings account option for employees that conforms to section 223 of the internal revenue code of 1986. conforms to section 223 of the internal revenue code of 1986.

H AppropriationsH Appropriations

S Ways & MeansS Ways & Means

HB 1443HB 1443

SSB 5406SSB 5406

PEBB Medicare Supplement Insurance – Rep. Appleton / Sen. PEBB Medicare Supplement Insurance – Rep. Appleton / Sen. Franklin Franklin Modifying medicare supplemental insurance policy provisions to Modifying medicare supplemental insurance policy provisions to conform to federal law. HCA request legislation. conform to federal law. HCA request legislation.


S Rules 2G S Rules 2G

SB 5391SB 5391 Tricare sup insurance policy – Sen. Keiser Tricare sup insurance policy – Sen. Keiser HCA may make available HCA may make available a tricare supplemental insurance policy to employees who are eligible as a tricare supplemental insurance policy to employees who are eligible as one of the board's health coverage options. one of the board's health coverage options.

S 2nd ReadingS 2nd Reading

2005 HCA (PEBB) High Priority Bills2005 HCA (PEBB) High Priority Bills 3/4/05 3/4/05

(After 1st Cutoff)(After 1st Cutoff)Public Employees Benefits BoardPublic Employees Benefits Board

Bill #Bill # Bill Description / Sponsor Bill Description / Sponsor Status Status

SHB 1219SHB 1219

SB 5471SB 5471

Prescription drug purchasing consortium – Rep. Cody / Sen. Thibadeau Prescription drug purchasing consortium – Rep. Cody / Sen. Thibadeau Authorizes a Authorizes a prescription drug purchasing consortium based on the evidence-based prescription drug program. prescription drug purchasing consortium based on the evidence-based prescription drug program. Governor request legislation. Governor request legislation.

S Health & LTCS Health & LTC

S Ways & Means S Ways & Means

2SHB 13162SHB 1316

SSB 5470SSB 5470

Prescription importation – Rep. Schual-Berke / Sen. Franklin Prescription importation – Rep. Schual-Berke / Sen. Franklin Provides for the submission of a Provides for the submission of a waiver to authorize the importation of certain prescription drugs from Canadian wholesalers. waiver to authorize the importation of certain prescription drugs from Canadian wholesalers. Governor request legislation. Governor request legislation.

S Health & LTCS Health & LTC

S Rules 2 S Rules 2

SSB 5558SSB 5558 Prescription drug foundation – Sen. Brown / Rep. Kessler Prescription drug foundation – Sen. Brown / Rep. Kessler Establishes a prescription drug Establishes a prescription drug foundation for WA residents below 300% FPL. foundation for WA residents below 300% FPL.

S Rules 2G S Rules 2G

SSB 5064SSB 5064 Electronic medical records – Sen. Thibadeau Electronic medical records – Sen. Thibadeau HCA to appoint advisory board & develop / HCA to appoint advisory board & develop / implement an electronic medical records & health information systems strategy. Interim report implement an electronic medical records & health information systems strategy. Interim report 12/01/05, final report 12/01/06. 12/01/05, final report 12/01/06.


SSB 5390SSB 5390

SHB 1512SHB 1512

Coordination of health quality – Sen. Keiser / Rep. Morrell Coordination of health quality – Sen. Keiser / Rep. Morrell Directs HCA to coordinate Directs HCA to coordinate improving the quality of care in state-purchased health care programs and private coverage improving the quality of care in state-purchased health care programs and private coverage through coordination with public and private purchasers. through coordination with public and private purchasers.

H Health Care H Health Care

H 2nd Reading H 2nd Reading

SSB 5392SSB 5392 Medical Technology – Sen. Keiser Medical Technology – Sen. Keiser Improving the quality of health care through the use of Improving the quality of health care through the use of clinical information technologies. clinical information technologies.


SSB 5751SSB 5751 Worksite health promotion – Sen. Brown Worksite health promotion – Sen. Brown Developing a worksite health promotion program Developing a worksite health promotion program among state agencies. among state agencies.

S Ways & Means S Ways & Means

SSB 5607SSB 5607 Uniform Grievance and Appeals – Sen. Deccio / Rep. Schual-Berke Uniform Grievance and Appeals – Sen. Deccio / Rep. Schual-Berke Modifies the current Modifies the current Patient Bill of Rights provisions primarily utilizing ERISA / DOL standards. OIC Request Patient Bill of Rights provisions primarily utilizing ERISA / DOL standards. OIC Request Legislation. Legislation.

S Rules 2 S Rules 2

SHB 1154SHB 1154 Mental health parity – Rep. Schual-Berke / Sen. Thibadeau Mental health parity – Rep. Schual-Berke / Sen. Thibadeau Requires insurance coverage be at Requires insurance coverage be at parity for mental health services, i.e. coverage be delivered under the same terms and conditions parity for mental health services, i.e. coverage be delivered under the same terms and conditions as medical and surgical services. as medical and surgical services.

S Pres Signed S Pres Signed

2006 Procurement2006 Procurement

March 8, 2005March 8, 2005

Presented by Richard OnizukaPresented by Richard OnizukaDirector, Health Care PolicyDirector, Health Care Policy

2006 PEBB Medical2006 PEBB MedicalProcurementProcurement

April 8, 2005: Request For Renewal ReleasedApril 8, 2005: Request For Renewal Released

May 18, 2005: Proposals DueMay 18, 2005: Proposals Due

June 28, 2005: Board VotesJune 28, 2005: Board Votes• BenefitsBenefits• Non-Medicare Enrollee PremiumsNon-Medicare Enrollee Premiums• Medicare SubsidyMedicare Subsidy

UMP Plan & Benefit UMP Plan & Benefit Alternatives UpdateAlternatives Update

March 8, 2005March 8, 2005

Presented by Janet PetersonPresented by Janet PetersonDirector, Uniform Medical PlanDirector, Uniform Medical Plan

Major GoalsMajor Goals

Simplify or standardize UMP benefit Simplify or standardize UMP benefit designdesign

Promote appropriate use of Promote appropriate use of preventive services and healthy preventive services and healthy lifestylelifestyle

Target resources to clinically effective Target resources to clinically effective servicesservices

Summary of Benefit Alternatives for Summary of Benefit Alternatives for 2006 Estimated First Tier Premium 2006 Estimated First Tier Premium

Impacts (2005 $$$)Impacts (2005 $$$)

DescriptionDescription NonMedicare NonMedicare UMP PPOUMP PPO

Medicare Medicare UMP PPOUMP PPO

Eliminate Rx deductibleEliminate Rx deductible $4.15$4.15 $6.35$6.35

Three-month carryover of payments Three-month carryover of payments towards medical/surgical deductibletowards medical/surgical deductible

$1.45$1.45 $0.00$0.00

Increase UMP share of costs for network Increase UMP share of costs for network services out-of-stateservices out-of-state

$0.75$0.75 n/an/a

Increase routine vision coverage to one Increase routine vision coverage to one exam per yearexam per year

$1.25$1.25 $3.85$3.85

$30 annual premium rebate for $30 annual premium rebate for prevention and healthy lifestyleprevention and healthy lifestyle

$0.45$0.45 $0.55$0.55

Separate 16-visit massage therapy Separate 16-visit massage therapy benefitbenefit

($0.90)($0.90) ($0.45)($0.45)

Eliminate Prescription Eliminate Prescription Drug DeductibleDrug Deductible

Current $100 Rx deductible is not a Current $100 Rx deductible is not a standard benefit designstandard benefit design

Many enrollees are confused about how Many enrollees are confused about how the deductible applies, especially for mail the deductible applies, especially for mail order prescriptionsorder prescriptions

Three Month Carryover of Three Month Carryover of Payments Toward the Payments Toward the

Medical/Surgical DeductibleMedical/Surgical Deductible

For health plans with annual deductibles, this carryover For health plans with annual deductibles, this carryover design is quite common – becoming standarddesign is quite common – becoming standard

Any payment toward the deductible for services in the Any payment toward the deductible for services in the last quarter of the year (i.e. October – December) would last quarter of the year (i.e. October – December) would alsoalso apply towards the next year’s deductible apply towards the next year’s deductible

Currently, enrollees joining UMP mid-year often barely Currently, enrollees joining UMP mid-year often barely meet their $200 deductible before the deductible starts meet their $200 deductible before the deductible starts over again for the next calendar yearover again for the next calendar year

This change will be particularly helpful to K-12 school This change will be particularly helpful to K-12 school district employees and retirees who join in early fall district employees and retirees who join in early fall

Increase UMP’s ShareIncrease UMP’s Share of Cost or Network of Cost or Network

Services Out-of-StateServices Out-of-State

Outside Washington and Oregon, nonMedicare UMP Outside Washington and Oregon, nonMedicare UMP PPO enrollees currently pay 20% coinsurance for most PPO enrollees currently pay 20% coinsurance for most services from network providersservices from network providers

Inside Washington and Oregon, enrollees pay 10% Inside Washington and Oregon, enrollees pay 10% coinsurance for network professional services, and $200 coinsurance for network professional services, and $200 per day (up to max $600 per year) for inpatient stays at per day (up to max $600 per year) for inpatient stays at network hospitalsnetwork hospitals

The proposal would change the cost-sharing provisions The proposal would change the cost-sharing provisions in all states to match the current cost-sharing in in all states to match the current cost-sharing in Washington and OregonWashington and Oregon

Increase Routine Vision Increase Routine Vision Coverage to One Exam Coverage to One Exam

Per YearPer Year Currently, UMP covers a routine eye exam every two yearsCurrently, UMP covers a routine eye exam every two years Clinical studies recommend more frequent screening exams Clinical studies recommend more frequent screening exams

for early detection and treatment of serious eye diseases, for early detection and treatment of serious eye diseases, particularly as patients get older (examples: glaucoma and particularly as patients get older (examples: glaucoma and diabetic eye disease)diabetic eye disease)

The proposed change would cover up to one routine eye The proposed change would cover up to one routine eye exam per calendar yearexam per calendar year

PEBB enrollees in PacifiCare and Regence currently have PEBB enrollees in PacifiCare and Regence currently have coverage for annual eye examscoverage for annual eye exams

The proposed change does not affect UMP coverage for The proposed change does not affect UMP coverage for vision hardware (still capped at $100 payment every two vision hardware (still capped at $100 payment every two calendar years) calendar years)

$30 Annual Premium Rebate $30 Annual Premium Rebate for Healthy Lifestyle and Use for Healthy Lifestyle and Use

of Preventive Servicesof Preventive Services

Still developing specific criteria and process (not finalized)Still developing specific criteria and process (not finalized) To qualify for the $30 incentive, enrollees will answer To qualify for the $30 incentive, enrollees will answer

questions on a secure web sitequestions on a secure web site Separate questions for 4 demographic groups: Men Under 40, Separate questions for 4 demographic groups: Men Under 40,

Women Under 40, Men Age 40+, and Women Age 40+Women Under 40, Men Age 40+, and Women Age 40+ $30 rebate is $30 rebate is per qualifying adultper qualifying adult (subscribers and spouses). (subscribers and spouses).

Children are not eligible; however, parents may earn points if Children are not eligible; however, parents may earn points if children’s immunizations are up to datechildren’s immunizations are up to date

Enrollees earn points based on categories of preventive Enrollees earn points based on categories of preventive services or healthy behaviorsservices or healthy behaviors

Each adult with enough points earns a $30 premium rebate Each adult with enough points earns a $30 premium rebate (once per year)(once per year)

Separate 16-Visit MassageSeparate 16-Visit Massage Therapy Benefit Therapy Benefit

Massage therapy is currently included in the same Massage therapy is currently included in the same benefit as physical, occupational and speech therapy. benefit as physical, occupational and speech therapy. UMP covers a maximum of 60 visits per year for any UMP covers a maximum of 60 visits per year for any combination of these therapiescombination of these therapies

Utilization of massage therapy has been increasing Utilization of massage therapy has been increasing dramatically. PMPM costs rose 30% per year for non-dramatically. PMPM costs rose 30% per year for non-Medicare and 38% per year for Medicare enrollees from Medicare and 38% per year for Medicare enrollees from CY2002 to CY2004CY2002 to CY2004

In some cases, current utilization of massage therapy In some cases, current utilization of massage therapy may exceed treatments that are medically necessarymay exceed treatments that are medically necessary

When justified as medically necessary based on unique When justified as medically necessary based on unique circumstances (i.e. severe illness), UMP may exceed circumstances (i.e. severe illness), UMP may exceed benefit limits when covered under case management benefit limits when covered under case management

Separating physical, occupational and speech therapy Separating physical, occupational and speech therapy into a different benefit will preserve enrollee access to into a different benefit will preserve enrollee access to these services in case of injury or diseasethese services in case of injury or disease

Carrier P&T CommitteesCarrier P&T Committees& Formulary Development& Formulary Development

March 8, 2005March 8, 2005

Presented by Richard OnizukaPresented by Richard OnizukaDirector, Health Care PlanningDirector, Health Care Planning

Mader vs. HCAMader vs. HCA Update Update

March 8, 2005March 8, 2005

Presented by Mary FlissPresented by Mary FlissAssist. Administrator, PEBB ProgramAssist. Administrator, PEBB Program

Mader vs. HCAMader vs. HCA

CASE SUMMARYCASE SUMMARY

BackgroundBackground

WA State Supreme Court FindingsWA State Supreme Court Findings

Settlement AgreementSettlement Agreement

IssuesIssues

Extrapolating to all state employeesExtrapolating to all state employees

“ “Averagers”Averagers”

“ “Stackers”Stackers”

Proposed ProcessProposed Process

1. Emergency Rule Making1. Emergency Rule Makinga) Draft languagea) Draft languageb) Stakeholder the Emergency Rulesb) Stakeholder the Emergency Rulesc) Board Vote April 12c) Board Vote April 12thth Meeting Meetingd) File CR103 5/4/05 (emergency rule takes effect when d) File CR103 5/4/05 (emergency rule takes effect when filed)filed)

2.2. Permanent Rule MakingPermanent Rule Makinga) Stakeholdera) Stakeholderb) Policy decision on issuesb) Policy decision on issuesc) Draft languagec) Draft languaged) Board Meeting and Open Public Hearing 7/26/05d) Board Meeting and Open Public Hearing 7/26/05e) File CR102 6/22/05 (proposed rule); e) File CR102 6/22/05 (proposed rule); CR103 7/27/05 (final rule, as adopted)CR103 7/27/05 (final rule, as adopted)

Public TestimonyPublic Testimony

March 8, 2005March 8, 2005

public employees’ benefits board benefits boardmeeting march 8, 2005

Documents