RD362 - Review of the Public Employee Health Programs in the Commonwealth - November 2, 2015


Executive Summary:
*This report was replaced in its entirety by the Department of Human Resource Management on November 18, 2015.

The following changes were made to Section A of this amended version:

• Replaced the paragraph immediately above Table 2 on page 10.

• Replaced Table 2 on page 10 with a change in the dollar amounts for schools vs. government as described above.

• Replaced Table 7 on page 14 to provide additional clarification.

• Replaced Table 15B on page 22.

This report pursuant to the Act is comprised of five sections:

• Report Request, which contains the provisions of the Act authorizing this report.

• Executive Summary, which addresses both actuarial findings and The Local Choice (TLC) Stakeholder meeting results.

• Section A, which addresses Item 82.H.2 of the Act.

• Section B, which addresses Item 82.H.4 of the Act.

• Section C, Appendix, which provides lengthy supporting documentation and detail referenced in Sections A and B.

Scope

The scope of the report, which included extensive data gathering from over 500 entities, data verification, actuarial analysis, garnering of TLC stakeholder feedback, and synthesis of collected data, required a tight timeline and a rigorously managed process.

• Section A preparation required localities to provide a complete data set which was necessary for actuarial analysis by a clearly defined deadline. Deadlines were extended to maximize the response rate. Not all localities responded and not all data submitted was complete. Follow-ups were conducted in the time available to increase the amount of usable data and credibility of findings. The report is based on the usable data submitted as described in the section detail.

• Section B preparation required holding stakeholder feedback meetings. These were held in July 2015 at eight locations. Although attendance by non-TLC entities was encouraged by stakeholder associations, relatively few non-TLC entities attended. Participant feedback was valuable.

Findings

The findings of this report identify:

• Local entities’ budget and benefit structures vary widely.

• Localities currently have a range of stand-alone and TLC options.

• Decisions to join the state or TLC plans are local ones with varying fiscal impacts.

Summary of Actuarial Analysis

Data for 336 state and local government entities was used in the development of this report, representing 47% of total entities. Another 184 entities submitted data that was not used, representing 26% of total entities.

Actual claim experience adjusted for benefit differences, enrollment, premium, and contribution data for a sample of the school and local government population, including TLC and non-TLC entities, were compared against both State and TLC plans. The results of that comparison under a confidence level of 95% as detailed in the report are as follows:

Findings

State Plan Comparison Basis (COVA Care Basic and Expanded Dental)

• The expected medical and prescription drug claim cost is slightly lower than the state plan cost

• The expected dental claim cost is lower than the state plan cost

• A majority of the sample entities’ employer costs would increase and employee cost would decrease under the state plan based upon current (lower) employer contribution levels

• Separate rating pools may provide different rates for the state plan than for the local subdivisions

TLC Plan Comparison Basis (Key Advantage (KA) Expanded with Expanded Dental)

• The expected medical and prescription drug claim cost for non-TLC entities is lower than the current TLC population plan cost

• The expected dental claims cost for non-TLC entities is higher than the current TLC population plan cost

Summary of TLC Program Review

Eight stakeholder meetings were held in July 2015 throughout the state. A total of 108 entities were represented in these meetings, 75 of which were TLC groups and 33 of which were not. Out of the discussions at these meetings, the following recommendations are proposed.

DHRM recommends:

1. That it follow up with Anthem on wait times in Tidewater with potential subsequent communication with TLC participants in that region—in response to a concern about specialist office visit wait times

2. That it provide reports to groups to ensure accuracy of data before the Affordable Care Act (ACA) mandate reports are filed—in response to requests from TLC groups to be able to review the accuracy of data

3. That it communicate to TLC groups on the impact of the ACA excise tax as guidelines are developed—in response to concerns about the impact of the excise tax on TLC plan design

4. Maintaining the level of the existing TLC High Deductible Health Plan (HDHP) deductible—in response to discussion about lowering the HDHP deductible

5. That gap plans not be included in the TLC plan offerings—in response to a request to gap plans

6. That it inform regional plans of the opportunity during the next TLC procurement process—in response to a concern about the lack of regional alternatives to the statewide plan offerings

7. No change to current plan provisions regarding hearing aids and laboratory charges, meaning that TLC should not include coverage for hearing aids and should continue to include laboratory charges in deductible requirements—in response to a request for these changes

8. Maintaining the current TLC coverage options for retirees not eligible for Medicare, which do not include a separate plan—in response to discussion about implementing a separate plan for non-Medicare retirees only

9. Maintaining the current TLC Medicare retiree offerings, which do not include coverage for Medicare Part D—in response to discussion about adding prescription drug coverage for Medicare retirees

10. Maintaining the current process for TLC extended coverage, in which each group administers its own extended coverage—in response to requests that TLC administer extended coverage, which is similar to COBRA coverage

11. That TLC implement extended coverage training sessions for TLC group benefits administrators—in response to requests that TLC administer extended coverage, which is similar to COBRA coverage

12. That additional cost and benefit analysis be conducted before further consideration is given to designing and implementing a TLC shared service center—in response to discussion about whether to implement a shared service center that would provide administrative support for TLC groups

13. Providing additional utilization reporting to TLC groups—in response to requests for this reporting

14. That it will complete enhancements allowing TLC benefits administrators access to the eligibility system by the end of February 2016 and allowing employees to make elections directly after June 2016—in response to questions about when these enhancements will be completed

15. That at the next scheduled procurement, DHRM will solicit bids for a second tier of coverage options to include an unbundled approach, and subsequently implement an option to include unbundling if it is found to be practical—in response to discussions about unbundling medical, dental and vision plans

16. That TLC provide ongoing education to current and prospective groups on TLC premium rate development—in response to questions about how the premium rates are developed

17. Implementing the following requirements in FY 2018:

• Reduce the minimum 80% employer contributions to employee only coverage to 70%. This relaxation will provide relief, but still provide protection against an adverse impact upon financial results

• Maintain the 75% of eligible employees’ participation level, but exclude those participating in other TLC or state employee plans from the participation percentage calculation

• Modify the Virginia Administrative Code as necessary—in response to discussion about relaxing current minimum employer contributions and participation requirements

18. That individual groups be permitted to limit spousal coverage for their employees—in response to discussion about limiting spousal coverage

19. That individual groups be allowed to require higher contributions for working spouses beginning after the next procurement ends, assuming that the successful bidder is capable of administering this function—in response to discussion about limiting spousal coverage

20. That the Adverse Experience Adjustment (AEA) protection be maintained without modification—in response to questions to better understand AEA provisions

21. Having the actuaries develop an alternate rate structure for review—in response to questions about the number of rate tiers

22. Educating groups on the annual review process of stop loss levels—in response to a question about how stop loss coverage works

23. Applying the one-plan restriction to groups of 15 or fewer employees, which is lower than the current threshold of 25 or fewer employees—in response to discussion about allowing groups with 25 employees or less to offer more than one plan option

24. Marketing the opportunity for feedback at the annual open forum TLC regional review meetings to encourage attendance—in response to interest in implementing opportunities to provide feedback on TLC

25. Maintaining the current quote practice, which is to only provide quotes to groups that explicitly request them—in response to a question about whether responding to the data request in the actuarial portion of this study would result in an unsolicited bid from TLC

26. Allowing individual groups to implement their own incentive programs apart from TLC—in response to interest about developing wellness programs for TLC

27. Continuing the current CommonHealth discount program, and working with current vendor partners to communicate available discount programs to TLC groups and participants—in response to discussion about discounts for health-related services and activities

28. Implementing a pilot TLC diabetes Value-Based Insurance Design (VBID) program in FY 2018—in response to discussion about VBID programs