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Pensions and Benefits
SCHOOL EMPLOYEES' HEALTH BENEFITS PROGRAM PLAN DESIGN COMMITTEE
MEETING MINUTES 2014

 

SCHOOL EMPLOYEES' HEALTH BENEFITS PROGRAM (SEHBP)
PLAN DESIGN COMMITTEE MINUTES, BY DATE

 


Meeting No. 23 Minutes
March 17, 2014, 10:00 AM
School Employees’ Health Benefits Program (SEHBP)
Plan Design Committee

Adequate notice of this meeting has been provided and filed with and prominently posted in the offices of the Secretary of State. The meeting notice was mailed to the Secretary of State, Star-Ledger and Trenton Times on December 31, 2013. The meeting of the SEHBP Plan Design Committee was called to order on Monday, March 17, 2014 at 10:07 AM. The meeting was held at the Division of Pensions and Benefits, 50 West State Street, Trenton, New Jersey, and was attended by the following:

Present:

Kevin Kelleher, NJEA
David Ridolfino, Department of Treasury
Jean Pierce, AFT AFL/CIO
Wendell Steinhauer, NJEA (via teleconference)

Absent:

Ken Kobylowski, Department of Banking and Insurance

Also in Attendance:

Diane Weeden, Deputy Attorney General
David Pointer, Division of Pension and Benefits
Mark Cipriano, Division of Pension and Benefits
Doug Martucci, Acting Secretary
Dave Perry, Horizon
Katherine Impellizzeri, Aetna
Bart Gerber, Express Scripts
Kristen Plauschinat, Express Scripts

Sunshine Act Statement: The Sunshine Act Statement and the Executive Session Resolution were read by Mr. Martucci.

Minutes: Mr. Martucci advised that the minutes from the last meeting were not yet available for review.

Naming of Chairperson: Committee Member Ridolfino made a motion to nominate Committee Member Kelleher to be Chairperson for the day. The motion was seconded by Committee Member Jean Pierce, approved (4:0:0).

Committee Member Ridolfino made a motion to nominate Committee Member Kobylowski to be Chairperson for the Year. The motion was seconded by Committee Member Jean Pierce, approved (4:0:0).

Maximizing In-Network Benefits: Currently, 80% of enrolled members have out-of-network benefits. For NJ Direct, 21% of members account for 79% of out-of-network claims. Mr. Perry from Horizon spoke on the financial consequences in choosing out-of-network providers instead of utilizing the preferred in-network providers. Ms. Impellizzeri from Aetna spoke on provider networks and the balance of size, scope, the right amount of specialties, access, and the cost. Also discussed was the value proposition to the networks (Horizon, Aetna), volume of members, and incentives to providers to promote steerage to their practice. Committee Member Kelleher asked for the percentage of physicians in New Jersey within both the Horizon and Aetna networks to be available for the next meeting since the estimate is approximately 75 – 80%.

The merits of in-network providers were discussed including credentialing, licensure validation, evaluating malpractice history and the quality of care that is delivered. Continued in-network utilization stabilizes the network and the providers handle all requirements, i.e. pre-certifications and prior authorizations. On average, the unit cost is half when using in-network providers. By increasing in-network utilization by 1%, there is a potential to reduce annual claim costs by approximately $10 million for both SEHBP and SHBP membership. Current in-network utilization for Horizon in 2012 for NJDirect10 was: 79%; NJDirect15: 83%; NJDirect1525: 86%. If upfront deductibles for out-of-network services were increased, in-network utilization would be expected to increase while members out-of-pocket costs decreased, and the cost of the plan would also be expected to decrease.

Mr. Perry explained how out-of-network allowances are calculated and paid. Reasonable and customary charges are based on the 90th percentile of the FairHealth database. If a physician charges more than the 90th doctor ranking in the array, the payment will be the allowed amount minus the member’s responsibilty; if the physician charges less, they will be reimbursed at their submitted charges minus the member’s responsibility.

Ms. Impellizzeri spoke about improving the utilization of in-network physicians. One option is to continue to allow the in-network plan ease in operation but to redesign the out-of-network plan to not allow as generous a design with a low deductible to be met by the member. Another way is to ensure that the in-network alternative is always more favorable. The reimbursement schedule may need to be changed for in-network physicians, or the cost for members may increase to go out-of-network by changing the out-of-network deductible, coinsurance, and out- of- pocket maximum. Introducing reference based pricing, a fixed allowance for certain very specific services on an in-network and out-of-network basis, could be another avenue for plan savings. Reference based pricing has no difference in quality or outcome of service that is being provided. Further savings could be achieved through expanding the preauthorization requirements for out-of-network services by introducing financial penalties for non- pre-certifications.

Ms. Impellizzeri continued her discussion on how to grow the in-network participation of members. The first item would be to communicate the limited out-of-pocket expenses of using in-network physicians compared to out-of-network providers who could balance bill deductibles and any amounts above the allowed charges. Both Horizon and Aetna work to fill any gaps of coverage to ensure members have adequate access to providers in the network. Committee Member Kelleher asked how members were going to be educated if any of the discussed changes were adopted. It was discussed that a communication plan, coupled with a plan change could drive migration to help achieve the 1% shift realization.

Ms. Impellizzeri went on to discuss that Horizon and Aetna have many tools to assist members make informed choices regarding: quality, feedback on physicians, information on hospitals, education, and other things. There are also estimates for pricing and cost comparison tools. The last member implication would be that there will be less out-of-pocket for in-network services.

Mr. Perry explained the reimbursement schedules currently in place for out-of-network providers, how it relates to the previously discussed FairHealth model and how this reimbursement is dependent on number of physicians and geographical location. Fewer specialists in a given area can drive up reimbursements. Physicians can increase charges by medical inflation; it builds their ability to get a greater reasonable and customary amount with the FairHealth model in place. The last thing is that FairHealth contains gaps where it does not have allowed amounts for 100% out-of-network care, ambulatory services, home health care, or medical equipment. The private sector is moving to a more Resource Based Relative Value Scale (RBRVS) which is currently utilized by Center for Medicare and Medicaid Services (CMS). RBRVS is based on practice expense, physician work, and malpractice insurance. Committee Member Kelleher voiced concern that even if 250% of the CMS pricing is adopted, it doesn't go up with medical inflation and could result in an increased amount of subscriber liability. The discussion ended with Committee Member Ridolfino asking for a more detailed proposal of the communication plan that can be presented to members.

Increasing Generic Utilization: Mr. Gerber and Ms. Plauschinat from Express Scripts spoke on increasing the utilization of generic prescriptions and patient consent. Mr. Gerber explained that many generic drugs are made in the same manufacturing plants as their brand name drugs, all under FDA monitors, and the generic costs were approximately 80-85% less than brand names. There are three different categories of generics: 1) Single source brand: a brand that is still under patent protection, no generic is available, and there is only one manufacturer; 2) Multi-source brand: a brand that no longer has patent protection for its active ingredient, resulting in multiple manufacturers that make that drug; 3) Generic brand: a drug that has the same exact active ingredient as the brand drug, and it’s interchangeable by the FDA with its brand name counterpart. Generics enter the market once the brand’s patent protection has expired.

Widening the copay difference between brands and generics will help drive members towards generic utilization. An increase of 1% in the generic fill rate for active members could result in plan savings of up to $2.5 million.

Mr. Gerber offered strategies to increase generic usage with Member Pay the Difference Program (MPD) or Increase Brand Copays. In the MPD model, the member will have the choice of filling a generic when suitable generic equivalents are available, paying the generic copay (MPD-Managed ), or if they fill the multi-source brand, will pay the generic copay plus the gross cost difference between the brand and generic equivalent (MPD–Sensitive). MPD-Sensitive can also be if a member fills a Dispense as Written prescription with the brand and that would carry no penalty. MPD-Managed affects 6,300 active members with a plan savings of $7.6 million while MPD-Sensitive affects 2,900 active members and has a plan savings of $3.1 million. In addition, if the member switches from the multi-source brand to the generic, they will save on average $10.35. Total estimated annual aggregate patient savings if all multi-source brands were replaced with generics: $445,000 for MPD-Managed and $175,000 MPD-Sensitive. Committee Member Kelleher asked if the under age 65 Retiree population could also be addressed in these cost savings.

The three options that were presented to Increase Brand Copays were to establish a larger differential between brand copays and generics. Mr. Gerber suggested a multi-source brand copay for each of the three options that may drive more usage of generics.

Patient Consent guidance was released by CMS on January 1, 2014, and indicated that patient consent is required for all new prescriptions not received directly from the patient. Committee Member Kelleher asked for a summary of this guideline that can be passed out to members so that they may be made aware to answer telephone calls or return messages left regarding their prescriptions.

There being no further business, Committee Member Pierce made a motion to adjourn. Committee Member Ridolfino seconded the motion; all were in favor. The meeting adjourned at 12:07 PM.

  Respectfully submitted,
 

 

 

  Kathleen Ormsby
State Health Benefits
Policy and Planning

 


Meeting No. 24 Minutes
June 23, 2014, 1:00 PM
School Employees’ Health Benefits Program (SEHBP)
Plan Design Committee

Adequate notice of this meeting has been provided and filed with and prominently posted in the offices of the Secretary of State. The meeting notice was mailed to the Secretary of State, Star-Ledger and Trenton Times on December 31, 2013. The meeting of the SEHBP Plan Design Committee was called to order on Monday, June 23, 2014 at 1:01 PM. The meeting was held at the Division of Pensions and Benefits, 50 West State Street, Trenton, New Jersey, and was attended by the following:

Present:

Jennifer Duffy, Department of the Treasury
Kevin Kelleher, NJEA
Jean Pierce, AFT AFL/CIO
David Ridolfino, Department of Treasury
Wendell Steinhauer, NJEA

Absent:

Ken Kobylowski, Department of Banking and Insurance

Also in Attendance:

Diane Weeden, Deputy Attorney General
Florence Sheppard, Division of Pension and Benefits
Mark Cipriano, Division of Pension and Benefits
Kathleen Ormsby, Acting Secretary
Susan March, Aon Hewitt

Sunshine Act Statement: The Sunshine Act Statement and the Executive Session Resolution were read by Ms. Ormsby.
Minutes: Ms. Ormsby advised that the minutes from the last meeting were not yet available for review.

Nominating an Acting Chairperson of the Day: Committee Member Ridolfino made a motion to nominate Committee Member Kelleher to be the Acting Chairperson for the day. The motion was seconded by Committee Member Duffy, approved (5:0:0).

Retiree Prescription Drug Copays: Ms. Marsh from Aon Hewitt explained that the retiree copay increase is formulated by looking at the gross cost per prescription based on the actual experience of the State Health Benefit Plan (SHBP) and School Employees Health Benefit Plan (SEHBP) combined, for the most recent plan years available which are 2013 versus 2012. Calculations show the average gross cost per prescription increased by eight point nine percent. This percent is then rounded to the nearest dollar and added to the copays from the prior year. The out-of-pocket maximum is calculated on the average claim cost per retiree from 2013 versus 2012, which was an eight point seven percent increase. This increase is then added to the prior year value to get the out-of-pocket maximum for plan year 2015. The retiree copays proposed for 2015 are:

SEHBP Retirees

 

PPO 10+15

HMO 10
1525
2030
2014
2015
2014
2015
2014
2015
2014
2015
Retail Generic Copay
$10
$11
$7
$7
$7
$8
$3
$3
Retail Preferred Brand Copay
$21
$23
$14
$17
$17
$19
$19
$21
Retail Non-preferred Brand Copay
$42
$46
$28
$28
$36
$39
$48
$52
Mail Generic Copay
$5
$5
$6
$6
$5
$6
$5
$6
Mail Preferred Brand Copay
$31
$19
$21
$21
$41
$45
$37
$40
Mail Non-preferred Brand Copay
$52
$31
$34
$34
$91
$99
$95
$103
Out-of-Pocket Maximum
$1,411
$1,533
$1,411
$1,533
$1,411
$1,533
$1,411
$1,533


Committee Member Kelleher made a motion to go in Executive Session to seek counsel from the Attorney General’s Office, all were in favor.
Upon returning to Open Session, Committee Member Kelleher asked Ms. Marsh if she could provide information regarding the trend of actual rate increases, for both the premium tables and claim costs, of the retiree medical and prescription plans over the last several years the Committee has been in place. Ms. Marsh agreed to provide that information.

Committee Member Kelleher made a motion to alter the recommended plan year 2015 retiree prescription drug copays as follows:

Recommended Revision to SEHBP Retiree Copays

 

PPO 10+15

HMO 10
1525
2030
2014
2015
2014
2015
2014
2015
2014
2015
Retail Generic Copay
$10
$10
$6
$6
$7
$7
$3
$3
Retail Preferred Brand Copay
$21
$22
$13
$14
$18
$18
$19
$20
Retail Non-preferred Brand Copay
$42
$44
$26
$27
$36
$37
$48
$50
Mail Generic Copay
$5
$5
$5
$5
$5
$5
$5
$5
Mail Preferred Brand Copay
$31
$33
$19
$20
$41
$43
$37
$38
Mail Non-preferred Brand Copay
$52
$54
$31
$32
$91
$95
$95
$99
Out-of-Pocket Maximum
$1,411
$1,472
$1,411
$1,472
$1,411
$1,472
$1,411
$1,472

Committee Member Steinhauer seconded the motion. Committee Member Kelleher spoke to his motion of leaving the generic copayments as is to try to encourage utilization of generics by keeping a disparity between generic and brand pricing. In discussion, Ms. Marsh advised that she had priced out a scenario similar to the recommended retiree copays just presented. The copays proposed to the Committee represented $10.6 million savings while the newly proposed copays from Committee Member Kelleher only represented about $4.5 million in savings. Committee Member Ridolfino advised that there is a 60 day waiting period if no agreement could be reached, at which time a mediator (referral to a superconcilator) could be utilized. He also recommended that during that time the Committee could explore other discussions about some of the proposals that had been presented prior, as well as today’s proposed adjustments to the copays. The adjusted copay motion proposed this day by Committee Member Kelleher failed (3:2:0, Committee Members Duffy and Ridolfino voted nay, and Kobylowski absent).

Committee Member Steinhauer made a motion to approve the original Plan Year 2015 Retiree Prescription Drug Copays as recommended and presented. The motion failed 2:3:0, (Committee Members Kelleher, Pierce and Steinhauer voted nay, Kobylowski, absent).

There being no further business, Committee Member Steinhauer made a motion to adjourn. Committee Member Ridolfino seconded the motion; all were in favor. The meeting adjourned at 1:43 PM.

  Respectfully submitted,
 

 

 

  Kathleen Ormsby
State Health Benefits
Policy and Planning

 

 

 

 

 
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