Public Employees Benefits Board

April 23, 2002

2003 PEBB Procurement Bid Alternatives

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Legislative Budget Assumptions• Office visit copayment increase to $15

• 10% reduction in drug benefit

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2003 PEBB Bid AlternativesPharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail

order

Option 1:

Tiers Retail Cost Share Mail Order Cost Share

Formulary generic, all insulin &disposable diabetic supplies $10 $20

Formulary brand $25 $50

Non-formulary brand $40 $80

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2003 PEBB Bid AlternativesPharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order

Option 2: Includes $50/individual deductible

Tiers Retail Cost Share Mail Order Cost ShareFormulary generic, all insulin &disposable diabetic supplies $10 $20

Formulary brand $25 $50

Non-formulary brand $40 $80

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2003 PEBB Bid AlternativesPharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail

order

Option 4:

Bidders are invited to submit a proposal of their own design that aligns with the PEBB philosophy of providing pharmacy benefits as well as producing the necessary 10% cost savings.

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Additional 2003 PEBB Bid Alternatives

Option 1: Out-of-Pocket Maximum• Current design = $750/person, $1500 family• Bid Alternative B = $1500/person, $3000/family

Option 2: Hospital Inpatient Co-Pay• Current design = $200/day, max $600/year• Bid Alternative = $250/day, max $750/year

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Additional 2003 PEBB Bid Alternatives

Option 3: Ambulatory Surgical Center Copay• Current design = $100 copay• Bid Alternative = $150 copay

Option 4: Ambulance Service• Current design = Air Ambulance $100• Bid Alternative = Air Ambulance $200

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Additional 2003 PEBB Bid AlternativesPharmacy Benefit Alternatives assumes a 30-day supply at retail & 90-day supply with mail order

Option 3: Includes $100/individual deductible

Tiers Retail Cost Share Mail Order Cost ShareFormulary generic, all insulin &disposable diabetic supplies $10 $20

Formulary brand $25 $50

Non-formulary brand $40 $80

Uniform Medical Plan

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2003 UMP Benefit Changes• Medical

– Developing three alternative approaches, all with the same overall employee impact

• Pharmacy– Legislative budget targets 10% reduction in

prescription costs

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2003 UMP Benefit Changes• Approach #1 based on legislative budget

notes– 85% coinsurance for most services from preferred

providers (currently 90%)– Enrollee out-of-pocket limit is also increased

proportionally (currently $1,125 per year)• Concerns

– Higher coinsurance may discourage needed care

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UMP Benefit Changes• Approach #2 - Leave coinsurance at 90% but

make other changes to achieve same premium impact– Evaluate possible out-of-state networks– Increase annual out-of-pocket limit, hospital

copayments, deductible, or other enrollee cost-sharing– Consider expanding services covered in full (i.e.

maintain or increase access to preventive care)• Concerns

– Impact on particular categoreis of enrollees, such as those with high medical costs

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2003 UMP Benefit Changes• Approach #3 - Offer enrollees choice of two

UMP benefit designs– Higher premium choice would maintain current UMP

benefits– Lower premium choice would have higher deductible,

coinsurance, and other enrollee cost-sharing– Current PEBB risk adjustment process would be used

to mitigate “adverse selection”• Concerns

– Communication challenges– Enrollee understanding of plan choices

Quality, Access, and Affordability

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Plan Report Card• Access

– Network Value– Statewide Coverage– Unique Coverage– Capacity/Stability– Consumer Assessments

• Quality– Prevention standards (HEDIS)– Consumer Satisfaction (CAHPS)– TEAMonitor Audits

• Affordability– Medicare and non-Medicare employee contribution

• Overall Performance

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Non-Financial Incentives

• Publicize outcomes by plans, providers and facilities

• Use consumer data and performance measures• Produce support tools and educational materials• Use quality data and consumer surveys• Use information to make choices• Use information to demand quality care

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LeapfrogSeattle-Tacoma-Everett 100% of invited hospitals responded to the survey (25 hospitals

out of 25)

13 (57%) have at least one Leapfrog patient safety practice

• Specifics:– Computer Order Entry: None have fully implemented CPOE

12 say they plan to implement CPOE by 2004

– ICU Staffing: 3 have fully implemented the IPS practice 12 say they plan to staff intensivists by 2004

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LeapfrogSeattle-Tacoma-Everett Evidence-based Hospital Referral:

- 4 meet the coronary artery bypass recommended annual volume

- 9 meet the coronary angioplasty volume recommendation

- 8 meet the abdominal aortic aneurysm repair volume recommendation

- 5 meet the carotid endarterectomy volume recommendation

- 3 meet the esophageal cancer surgery volume recommendation

- 5 meet Leapfrog specifications for the Neonatal ICU

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Incentive Systems• Dimensions

– Financial vs. non-financial– Informational vs. market-driven

• Incentive Models• Success

– Incentives based on risks– Limited number of reliable, acceptable, & meaningful

metrics

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RFP, Contracting & Auditing

• Post Award– Contract compliance

• Negotiations– Link measures to value

• Pre-Bid and RFP– Entrance Standards

• Auditing standards• Performance Standards

• Comparative rankings• Trending reports

• Benchmarks• Link to purchasing

standards

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2003 PEBB ProcurementNext Steps:RFP:

– Scheduled for release May 3rd– Bids due to HCA by June 12th– Bid evaluation through end of July– Board meeting July 30, 2002

Materials Review:– On-line enrollment– Actives - all materials on PEBB website– Decision Support Tool (Select-A-Plan)