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HomeMy WebLinkAbout2004-12-15-HBRC-min Town of Lexington Health Benefits Review Committee 12/15/04 Minutes Attending. Bob Beckwitt, Tom Goodwin, Tom Griffiths, Paul Hamburger, William Kennedy, Linda Roemer, Claudia Sheffield, Evelyn Silber, Deborah Strod (Co-Chair) The meeting was called to order at 8 35 AM. The minutes from the December 1, 2004 meeting were discussed and approved unanimously with four changes to the minutes and proposed outline, as outlined below. • Section 5 3 should be changed to limit entry or reduce the employer contribution to the high cost plan option - Blue Choice, the option cannot be eliminated because it is the only realistic option for retirees living outside of Massachusetts • Section 5 5 should include considering premiums based on salary and/or three tiered rate structure • Remove "Three tiered structure" from Section 5 8 5 • Revise the date of the next meeting at the end of the minutes to December 15 The following members have volunteered to take minutes at future meetings January 5 Paul Hamburger January 19 Tom Goodwin February 2 Linda Roemer Volunteers were requested to draft sections of the committee report for review at future meetings Assignments are indicated on the attached outline One goal of the report is to present in one place a summary of what has been done in the past with alternatives to be considered in the future The report should emphasize that plan changes are subject to collective bargaining. The committee hopes to identify both"win-win" alternatives, where costs to the town are reduced without increasing costs or reducing benefits for employees and retirees, and possible trade-offs between cost reductions for the town and benefit or cost changes for participants The committee discussed the possibility of having a short report with detailed contained in appendices The first appendix, containing definitions of terms used in the report, would be written by Deborah Stroud. Committee members were requested to complete as much of the first draft as possible for the next meeting, leaving blank spaces for information not yet available The committee also discussed information to be contained in the discussion of some of the options outlined in Section 5 of the outline HBRC Minutes 121504 1 • Section 3 —Rate Comparisons Vito , representative of the Teachers Union who was present at the meeting, offered to contact John Brouder of Boston Benefit Partners for information on comparative rates • Sections 5 3 and 5 5 —High cost option/Premium contributions o Participants are willing to pay more for the Blue Choice Plan because they think they are getting a better benefit Many of those who choose the high cost plan are either retirees living or frequently traveling out of state or families with children attending college out of state The HMO plans may not be feasible options for this population. o We cannot determine from the information available whether there is adverse selection or whether or not it is costing the town more when employees elect the Blue Choice Plan. It would be interesting to review the demographics of the employees selecting Blue Choice with those selecting HMO Blue Rose has indicated in the past that in-state employees who selected Blue Choice do not often go out of the HMO network for care They are paying a higher premium to reserve the right to go out of network, however If incenting them to move to the HMO plan does not change their utilization of health care, the cost to the town might actually increase, since claims would remain the same and employee contributions would decrease The town should review the rate structure each year to be sure that relative employee contributions for the Blue Choice and HMO programs reflect the perceived value of the availability of out of network care o The Blue Choice Plan does not require participants to have a primary care physician. Members of the committee believe that gate-keepers do help to keep medical costs down. o The current structure, with two Blue Cross alternatives and one Harvard Pilgrim alternative, was established in 1994 and participants selected plans at that time There has not been significant movement between plans since that date, enrollment changes have been due to new employees selecting plans It is possible that a different premium or benefit structure could result in significant changes in the distribution between plans • Section 5 4 - Plan design. o There may be an opportunity to significantly change behavior by changing plan design. Under the current structure, with $5 copays for most services, there is limited consumerism. Participants do not have the information to make choices based on cost because the amounts they are paying do not relate to the true cost of the services The cost to the participant of using a high cost or inefficient provider is the same as the cost of using a more efficient provider There is no incentive, for example to avoid high cost teaching hospitals for routine tests and services which HBRC Minutes 121504 2 could be performed more efficiently and with equal quality in a community setting. The optimum plan structure would include rewards for wise behavior as a health care consumer Participants generally do not receive explanation of benefits forms from Blue Cross Blue Shield when claims are paid, so they are totally isolated from the real cost of medical care o We need to understand how much flexibility there is in determining plan design. For example, if Lexington requests a different benefit structure than the standard programs offered by Blue Cross or Harvard Pilgrim in order to influence participant behavior, will Blue Cross or Harvard Pilgrim be able to administer that program. Some design decisions are tied to each other; for example, some vendors may refuse to offer high deductible programs with Health Reimbursement Accounts or Health Savings Accounts if the Blue Choice program is also a plan option. • Section 5 4 and 5 5 —Plan Design and Premiums It is important that the town continue to offer a total compensation package that attracts the best employees In past years, employees have in effect made wage concessions in order to maintain the current benefit programs One option is to reduce benefit levels or increase employee premiums enough so that those with working spouses will elect to participate in those plans instead of the plans offered by the town. However, this action could detract from the town's ability to attract new employees, unless wage structures were revised upwards to compensate • Section 5 5 —Premiums There was some discussion about whether or not it would be possible to charge higher premiums to smokers, as is done with life insurance This would be difficult to administer How would the town treat a family where the employee did not smoke, but the spouse or dependent child did9 • Section 5 8 5 —Pharmacy Benefit o The current plan has a $5 copay for generic drugs, $10 for preferred brands, and $15 for non-preferred brands It is unclear whether generic substitution is mandatory if the doctor does not specify that a brand drug must be used, generic substitution should be encouraged whenever appropriate The committee would like more information on how aggressively the mail order program has been promoted for chronic conditions Discounts on mail order prescriptions are often much higher than on those filled by local pharmacies Under the current plan design, participants pay the same amount for a 90 day supply through mail order as they would pay for a 30 day supply purchased from a local pharmacy Some employers have made mail order mandatory, once a chronic medication has been tried and the appropriate continuing dosage has been determined. An alternative to mandating mail order would be to change the Plan design to increase the incentives to use mail order There are trade-offs here, the town does not want to hurt local pharmacy businesses HBRC Minutes 121504 3 Another possibility is to approach local pharmacies and ask them to increase discounts for town employees and retirees, this may be complicated since the Plan administrators (Blue Cross and Harvard Pilgrim) may not be able to administer different payment schedules for Lexington. A review of this alternative should include estimates of savings for the town and business losses for the local pharmacies o The information provided concerning prescription usage was not enough to determine whether plan participants are using the plan wisely One member of the committee expressed concern that medications to control blood pressure were not included in the most commonly filled prescriptions, however, it is possible that no one blood pressure medication made the list because there are so many different generic versions of some of the drugs It would be useful to review a listing of prescriptions by diagnosis • Section 5 8 1 Health Promotion. The committee previously requested information on medical plan costs by diagnosis This information would be helpful to determine whether there are any particular health promotion/health education programs appropriate for the Lexington group population. Many believe that the only way to contain costs in the long run is to provide extensive education and preventative care to those in high risk categories— smokers, the obese, and those with high blood pressure or diabetes, for example There was some discussion about whether it would be better for the town to increase premiums and compensate by increasing employees wages at the same time Since health care costs and premiums are increasing faster than wages, this could save the town money in the long run. There was also some discussion about retiree health care The article about Brookline recently circulated to the committee outlined the impact of rising retiree health care costs on municipalities Costs for retirees over age 65 were 25% higher than the prior year In industry, retirees are being required to bear a higher proportion of the cost of health care than in prior years Should towns also be following that trend9 If we don't either change the benefit design or increase premiums for retirees, how can we influence their behavior and make them wiser consumers of health care9 Early retirement programs have a double impact on health care costs In addition to paying for the retiree medical costs of the new early retiree, the town has to pay for the health care costs of the retiree's replacement in the active work force New hires often have lower wages than those they replace, but the full costs of the early retirement incentive program may not have been anticipated by the town. It was noted that there are a large number of retirements anticipated in the schools over the next five years, and the town needs to plan for the added expense HBRC Minutes 121504 4 It was noted that the growing retiree medical liability has an impact on the bond rating of the town. Wellesley has started to pre-fund its retiree medical obligation in order to ensure that it can maintain its favorable bond rating. Currently, the perception is that the benefits offered to town employees are better than those offered by local industry Unless it can be clearly shown and widely communicated that employees have made wage concessions in order to have these better plans, it may become difficult to pass overrides to fund programs which citizens feel are better than those offered by their own employers There was some discussion about requiring part time employees to pay a higher pro rata share of the premium, in order to encourage those with working spouses to get their medical coverage from the spouse's plan. However, this would make it very difficult to fill part time positions since access to health care is a major hiring incentive In addition, many part time jobs within the schools don't work well as full time positions There has been some effort to keep as many part time jobs as possible below the 17 hours that qualifies the individuals for benefits, but that is often not feasible For many, the availability of the town's health care program is the reason they are willing to take the jobs at relatively low wage levels The meeting was adjourned at 10 05 AM. Submitted by Evelyn Silber HBRC Minutes 121504 5 Lexington Health Benefits Review Committee Proposed Outline of Report Revised 12/20/04 EXECUTIVE SUMMARY— To be determined after draft report is complete. 1 History. (brief, key issues and points on the timeline) -Deborah Stroud 1 1 Health Insurance trends in Greater Boston 1.2. Benefit Changes for Lexington employees in recent years 1.3 Premium Changes for Lexington 1 4 Town cost and status of Medical Trust Fund 1.5. Discussion of the Opt-Out Program 2. Plan Descriptions—Evelyn Silber 2.1 Groups—Discussion of the size and requirements of each of these groups 2.11. Employees 2.1.2. Dependants 2.1.3. Retirees and Medicare 2.1 4 Out of state residents/retirees Need for plan to cover them. 2.1.5. Others— COBRA, Eligibility rules (e.g. hours per week) 2.1 6. Length of Employment 2.2. Deductibles— Out of Pocket Maximum 2.3 Role and costs of Group Benefit Strategies 3. Rate Comparisons with other Towns and where available local industry—Dick Dougherty 3 1 Table showing plans and rates for individual, family, senior, and dental 4 What the town has done recently to control costs—Deborah Stroud 5. Options for Review. Each option needs to be reviewed for cost and benefits, including town savings, employee benefits, costs of administration, other consequences and long term impact. Options should include: 5.1 Alternative, perhaps more competitively priced health plans, e.g. Tufts, United, Cigna, etc. —Evelyn Silber 5.2. Discussion of self-insured vs. fully insured plans —Evelyn Silber 5.3 Limit entry or reduce employer contribution to high cost plan option—Blue Choice—Evelyn Silber 5.4 Change plan design Increase co-pays and/or deductibles - $5 co-pay is relatively low; Need information on total deductibles and total out of pocket maximum. Evelyn Silber 5.5. Reduce town contribution to premiums Current contributions are inequitable. Either change the percentages or cap the contribution by the town. Consider basing premium contributions on salary —Evelyn Silber 5.6. Join a group purchasing effort if it can reduce premiums—West Suburban, MITA? —Evelyn Silber 5.7 Review various options in Consumer Directed Health Care plans for potential cost savings—HSA's, FSA's (expanded use) and HRA's—Bob Beckivitt HBRC Minutes 121504 6 5.8. Other issues 5.8.1. Long term importance of Health promotion and health education— Linda Roemer 5.8.2. Review and adjust reinsurance? Change stop loss levels for individual and aggregate— Ton, Goodwin 5.8.3. Implement more aggressive medical case management/disease management—Linda Roemer 5.8.4 Issues involved with buying drugs from Canada or the European Union—Bob Beckivitt 5.8.5. Change pharmacy management rules—Bob Beckivitt 5.8.6. Audits for accuracy of claims and enrollment— Toni Goodwin 5.9 Recommendations— To be determined after other sections drafted and discussed 5.9 1. FY 2006 Budget 5.9.2. Long term HBRC Minutes 121504 7