Nine Motions Aim To Improve Care, Control Rising Costs of UA Choice Health Plans
by Rachel Voris
If you’ve ever wanted to catch a glimpse of the future, it’s here in the form of healthcare reform. With costs rising seven to nine percent each of the past few years, changes are needed to the way people use healthcare. The Joint Health Care Committee (JHCC) has made nine motions which have been endorsed by Chief Human Resources Officer Donald Smith and are now being reviewed to determine whether or not they will be included in the UA Choice Plan (For a review of JHCC functions and process within the university go here).
The JHCC’s goal is to improve the plan and/or save costs, rather than to shift the full burden of rising costs onto employees. The recommendations include reforms tried by other institutions. Net cost of the UA healthcare plan for 2012 was $61.5 million.
The nine motions, each explained in depth, will be analyzed by the university to assess actual savings potential and employee impact.
Motion #1: Eliminate the 500 Plan; Move Orthodontia Benefit to the 750 Plan
The 500 Plan is not a popular one--with enrollment under four percent--because its cost exceeds the value. No university savings are projected from this proposal because loss of employee contributions offsets the move to higher deductible plans.
Because the 500 Plan was the only plan that offered orthodontia coverage, this benefit would be moved to the 750 Plan. UA Choice has traditionally offered three different plans. So when the 500 Plan is eliminated, a new high deductible plan with a health savings account will be offered in its place.
Motion #2: Add a Consumer-Directed Health Plan with a Health Savings Account (HSA)
A high deductible plan with a qualified health savings account (HSA) would be added. Pharmacy benefits would be changed to allow for the HSA. This plan is dependent on synchronization of claims processing between medical and pharmacy administrators. The cost of pharmaceuticals would be subject to the deductible and then coinsurance instead of the current tiered copay design. Once the individual and family deductible is met, pharmaceutical coverage would be 80 percent covered in-network and 60 percent covered out-of-network, as it is with the medical benefit.
Health savings accounts are portable, unlike the flexible spending accounts (FSA) currently offered by the university. The unused amount rolls over year to year and can even be used for qualifying medical expenses in retirement. HSA contribution limits are higher than those for an FSA ($3,250 for an individual and $6,450 for a family in 2013, verses $2,500 for the FSA regardless of family size).
Flexible spending accounts would still be available for employees with the 750 Plan or the current high deductible health plan.
The new high deductible plan is expected to have an individual deductible of $1,250 and a family deductible of $2,500. If more than one person is enrolled in the plan, the family deductible applies before any family member gets to coinsurance. The high deductible plan usually results in a lower payroll deduction but a higher deductible before the plan begins to pay. There are IRS restrictions on who can participate and contribute to the HSA. These will be identified and communicated prior to implementation.
The goal of a high deductible plan is to give employees a vested interest in their health care through greater awareness of health care costs, and is expected to result in controlling the overall cost increases for health care.
Motion #3: Provide Cost Transparency; Patient Advocacy
Cost transparency would provide cost comparisons for procedures and surgeries. Patient advocacy services assist employees with Explanation of Benefits issues, benefits questions and education, claims/billing issues and eligibility issues.
Currently there is a lack of available information in medical procedure costs and treatment options. Cost transparency is expected to help employees to make more informed decisions about healthcare procedures and providers, and to compare cost and quality as they would with any product.
Motion #4: Revise UA’s Wellness Program; Provide Incentives for Participation
In one of the most significant motions, the university would revise the wellness program to offer a wellness “rebate” or “credit” to employees (and spouses) who participate in it and meet certain requirements.
While enrollment in the program would be optional, the rebate or credit would only be available to those enrolled and could result in employee savings of up to 30 percent of the biweekly health care charges.
In the first year, as part of enrollment employees (and covered spouses) would complete a health risk assessment and have biometric screenings that would help identify those who need assistance in reducing risks and getting healthier. This information would be managed by a third party vendor to ensure privacy.
In the second year, participants would accumulate points for healthy behaviors, including completing a health risk assessment and biometric screening; getting a flu shot or annual exam; not using tobacco; or completing a tobacco cessation program.
In the third year, participants would need to demonstrate improvement in personal health status or maintenance of a low risk profile. Details of the program have yet to be finalized and would require a competitive request for proposal from a third party wellness program provider.
The revamped wellness program would reward individuals for being involved participants in their health and ultimately reduce health risk factors year to year.
Motion #5: Establish a Spousal Surcharge
The spousal surcharge would assess an additional fee for a spouse who has access to coverage through his/her own employer but waives that coverage or elects a low option plan (such as a plan only covering 20% of costs), thereby requiring the University of Alaska to be the primary payer on claims.
The surcharge is estimated at approximately $100 a month.
The spousal surcharge does not apply to employees and spouses who both work at the university, or to spouses who are unemployed, retired, or do not have access to coverage elsewhere.
In order to implement this charge, employees will be required to sign an affidavit stating whether their spouse has access to other insurance coverage. Failure to disclose waived status could affect benefits received by the plan, including a potential penalty for not reporting information accurately.
Motion #6: Elimination of Opt Outs
Approximately 10 percent of eligible employees waive UA coverage, leaving the remaining 90 percent to cover the total employee contribution obligation. This proposal would eliminate the choice to opt out. Having more employees in the plan will increase overall claims costs. However, the additional employee contributions are expected to reduce contributions for all employees, and the university is working to estimate how much.
It might seem that the spousal surcharge and eliminating the opt out are conflicting proposals. The spousal surcharge is not intended to drive spouses off the UA Choice Plan but to make the spouse’s employer their primary payer, not UA. Plan costs are spread among the employees, not spouses.
Again, this opt out does not apply to an employee and spouse who have dual employment at the university; one of whom may continue to opt out to be on the other employee's coverage, but cannot opt out to go to another plan, like retiree coverage.
Motion #7: Expand Coverage Tiers for Dependents
Many employees have asked the university to review how employees are charged for dependents. The current dependent tiers don’t take family size into account. While this is a typical plan design (currently 48 percent of employers have a similar structure), it does not reflect the increased costs that larger families can bring to the plan.
Health care reform is another factor causing employers to revisit the issue. Under the Affordable Care Act , dependent children can now be covered up to age 26, and they don’t have to meet the standard definition of dependent (unmarried, no other coverage, dependent on employee for support, etc). Employers are not allowed to charge more for over-age children than for younger children. Because of this, more employers are looking at increasing the “tiers” of coverage for larger families.
UA is looking at continuing to charge the same rates for a spouse as is charged for the employee but changing the tiers for dependent children to “one child,” “two children,” and “three or more children.” The number of employees with more than three children is not significant enough to warrant additional tiers. This change would apply to a single employee with a child or children, as well as to couples with children.
Motion #8: Offer Telemedicine
Telemedicine service would complement the current plan. More than a traditional “nurse line,” doctors licensed in the state in which the caller lives or is visiting could diagnose, treat and prescribe medications for minor illnesses and simple conditions. These consultations could help avoid unnecessary office visits or delays in getting care and could be a tremendous benefit for rural locations or anyone while traveling. Telemedicine is growing in popularity with expanded use of smartphones with cameras and video capabilities. Telemedicine is also viewed as a way to cut down on emergency room visits and minor care episodes.
A request for proposal for telemedicine services will be prepared, but the timeline for implementation has not yet been determined. Members using this service would pay a small consultation fee (estimated to be $38-$40 per consult), which could be submitted to a flexible spending account for reimbursement. The consultation fee does not count towards the deductible.
Motion #9 Continue “Get the Point” Program:
Results of a survey by WIN for Alaska showed strong employee support for the Get the Point (GTP) program. This proposal would continue the FY13 program at the same level. (full survey results here GTP Survey Comments 2012)
Everyone employed by the University would be affected by these proposals. It is clear some of these motions are about equity and shifting the cost burden across all users. These motions are intended to put UA in line with industry practices and strengthen our plan for benefit of all employees.
The motions relating to potential rate changes or surcharges are important to note. Equally important are the motions that deliver on health care education and further behavioral shifts. Employees are being asked to transform their thinking about health care and consider changes in individual behaviors and choices to help make UA healthcare more affordable for all.
Discussions with employees on these motions will continue through a series of JHCC "town hall" meetings. Feedback is solicited and should be directed to governance leaders and members of the Joint Health Care Committee.