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09/06/2011 09 2010 Year-End Medical Insurance Report
BUSINESS OF THE CITY COUNCIL a YAKIMA, WASHINGTON AGENDA STATEMENT .Item - No. .- For Meeting Of September 6, 2011 ITEM TITLE: 2010 Year -End Medical Insurance Report SUBMITTED BY: David Brush, Chair, Employees' Welfare Benefit Program Board Cheryl Ann Mattia, Deputy Human Resources Manager CONTACT PERSON /TELEPHONE: Cheryl Ann Mattia, 249.6868 SUMMARY EXPLANATION: Attached is the 2010 Year -End Report for the City of Yakima's Self- Insured Health Care Plan. In reviewing this report, it is important to note that Healthcare Management Administrators utilizes a paid claims system of reporting expenditures. This differs from Generally Accepted Accounting Principles (GAAP), used by the City of Yakima for its records. The City recognizes ® expenditures on a claims incurred basis. Further, the report does not include any revenues or expenditures for City personnel and administrative costs, which are attributable to the City's Health Benefit Reserve Fund. Resolution Ordinance Contract Other (Specify) Report • Funding Source APPROVED FOR SUBMITTAL: • City Manager STAFF RECOMMENDATION: Accept report. BOARD /COMMISSION RECOMMENDATION: COUNCIL ACTION: 411 • August 5, 2011 City Council Members CITY OF YAKIMA 129 North 2nd Street Yakima, WA 98901 Re: Year 2010 Healthcare Plan Report 2011 Renewal and Current Status of Plan Dear Council Members: Attached are the Financial Summaries and related reports of the City's Employee Health Plan for the calendar year 2010. These reports are produced by Healthcare Management Administrators, Inc. (HMA) of Bellevue, Washington, and record actual claims and direct plan expenses on a cash basis of accounting. This Plan continues to be well monitored and managed by a cooperative relationship between the City Manager's Office, the Human Resource and Finance Divisions and a voluntary Board representing all employees and bargaining units. Except for Police, all Board representatives actively participate. Executive Summary - Health Care Reform The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. A week later, the Health Care and Education Reconciliation Act of 2010 (H.R. 4872) was added and we now refer to both simply as federal health care reform or PPACA. Since passage, there has been a steady stream of new regulations published by Health and Human Services, the Department of Labor and the IRS that we are monitoring closely. While there are only a few requirements affecting the City's Plan in 2011, it is a safe assumption that the Plan and the City's role as the Plan Sponsor will change dramatically in the years ahead. Please see the attached Health Reform Timeline. This report is not intended to offer a political discussion of health care reform. We are focused exclusively on protecting the current and future interests of the City and the Plan participants. Since reform will be implemented over a period of years, our first and foremost attention is given to the status of the Plan today and the significant fiscal challenges faced for the rest of 2011 and through 2012. Healthcare Plan Report August 5, 2011 Paae 2 Overview: What is the Plan? The current City of Yakima Employees' Welfare Benefit Program (the "Plan ") became effective April 1, 1994 when the seven separate benefit programs for each collectively bargained group of employees consolidated into one Plan Document. At that time, a Board with representatives from all employee groups was formed and became responsible for defining eligibility and covered benefits, monitoring monthly Plan financial reports and the annual renewal, and making Plan recommendations to the City Manager. This Board meets every month and has been chaired by I.A.F.F. representative Dave Brush for several years. Employee and employer premium contribution levels are outside of this Board's responsibilities and remain subject to the collective bargaining process. In February 2010 the City of Yakima divided the benefit plan. There are now two different sets of benefits and two separate benefit booklets, the second being the City of Yakima Police Patrolmans Association Health Care Plan. The purpose of these Plans to attract and retain a productive workforce by financing the collective health • needs of City employees and their eligible dependents. The Plan has been self - funded with stop -loss insurance since the early 1980's. In recent years, the Plan has expanded its scope to include wellness services designed to encourage healthy lifestyles with modest quantifiable results. Administration: What is a Self - Funded Health Plan? The City of Yakima assumes the financial risk for providing covered medical, prescription and dental benefits to eligible and participating employees and their dependents. Rather than paying a monthly premium to an insurance company, a self - funded employer pays claims as they are incurred out of general assets. The City of Yakima retains HMA (the third party administrator - not the owner of Yakima Regional Hospital) to manage the Plan and process medical claims. Washington Dental Service (WDS), though an insurer, acts only as a third party administrator for the City's dental claims. Both HMA and WDS are paid a flat monthly fee per employee and assume no financial risk for claims. It is the City's money combined with employee payroll contributions that pay for all Plan claims and expenses. In 2010, 15% of the net Plan costs were paid with employee contributions through payroll deduction. While there is great variation in employee contributions among bargaining groups, many benchmarks show that most employers require ever increasing payroll contributions from employees. Payroll contributions are bargained for and vary by bargaining unit. Below is an outline of what each employee group • contributes to participate in the health plan: Healthcare Plan Report August 5, 2011 Page 3 AFSCME 0 25.82% AFSCME Transit 0 25.82% IAFF Firefighters LEOFF I 0 9.85% IAFF Firefighters LEOFF II 0 11.76% IAFF Battalion Chiefs LEOFF 1 0 21.61% IAFF Battalion Chiefs LEOFF II 0 25.82% IAFF Fire PERS 0 12.94% IAFF Communications 0 12.94% YPPA LEOFF 1 0 6.53% YPPA LEOFF II 0 7.80% City Management $50.00 27.39% Teamsters #760 Captains Et Lieutenants LEOFF 1 0 21.61% Teamsters #760 Captains Et Lieutenants LEOFF 11 0 25.82% Teamsters #760 Deputy Fire Chiefs LEOFF 1 0 15.25% Teamsters #760 Deputy Fire Chiefs LEOFF 11 0 18.22% Teamsters #760 Public Works Division Manager 0 27.39% Teamsters #760 Public Works Supervisors 0 27.39 To fund very large claims, the City purchases stop -loss insurance. This policy reimburses only for catastrophic claims that exceed a certain amount. That amount, called a stop -loss deductible, was renewed with Sun Life at $225,000 effective January 1, 2011. Since this policy reimburses the City and not the plan participant, this is not considered health insurance under Washington State Law or Federal ERISA. The City self -funds this Plan for several reasons. First, there are no prepayment requirements as claims are not paid with a monthly premium. The City also maintains its own Plan reserves and keeps any investment income. In addition to having more control over cash flow, the City has ultimate control over the Plan's benefits and can negotiate more favorable administrative fees. For example, administrative and consulting expenses for the Plan in 2010 were 5% of Plan costs; a comparable fully - insured employer can easily pay from three to four times as much in their premium for administration and brokerage. With full PPACA implementation looming in 2014, there has been a substantial resurgence in the interest from employers in self - funded health plans. Healthcare Plan Report August 5, 2011 Page 4 • Actuaries commonly analyze three components of healthcare plans to project future costs: census (who is covered), benefits (what is covered) and administration (how is it funded). Of the three components, who is covered is by far the biggest factor in determining the cost of any healthcare plan. Therein lies our biggest challenge. Census: Who is on the Plan? In 2010, the Plan covered an average of 893 City employees: 143 are LEOFF 1 active and retirees, 41 are non -LEOFF 1 retirees, and the remaining are active employees, Council Members and self -pay COBRA participants. Counting all dependents, the Plan covered a monthly average of 2,565 total participants - virtually no change compared to last year. Of the 893 employees, 665 are men and 228 are women. For the first time in history, the Plan has covered FIVE times the number of employees (active and retired) over the age of sixty (235) than under the age of thirty (45). Just in the past 12 months, 6 more employees joined the over age 60 category, while we reduced the number of younger employees by 16. Unfortunately, advancing age and increasing medical care costs are directly correlated. How this Plan can • consistently keep its schedule of benefits intact at costs below most benchmarks is truly remarkable. Our average age should look better by the end of 2011 due to moving over age 65 LEOFF 1 participants to Medicare Supplemental plans. Historically the City of Yakima Plan has had the highest ratio of LEOFF 1 to non -LEOFF 1 employees in the state. Benefits: What is covered under the Plan? All terms, conditions and benefits are detailed in the Plan Document (also called a Summary Plan Description). The Plan Document was rewritten by HMA and reviewed by your Benefits Board to include all amendments, and facilitate compliance with the latest federal and State regulations. Compliance isn't optional. Effective January 1, 2011, a Plan Amendment was adopted that updated both of the schedules of benefits to comply with the Patient Protection and Affordable Care Act (PPACA) requirements. The act includes the following: • Extended dependent coverage for adult children up to age 26 • Restrictions on annual benefit limits and elimination of lifetime limits • Elimination of pre - existing condition exclusions for children • Prohibitions on rescission of health care coverage • Healthcare Plan Report August 5, 2011 Page 5 The City Benefits Board elected to comply with PPACA while keeping Grandfathered Status for both of the City of Yakima health plans (City and Police employee) and agreed only to make the minimum necessary changes: • Flu shots now covered at 100 %, deductible waived • Removed the Medical Lifetime Maximum and replaced it with a Calendar Year Maximum. • Calendar Limits were removed on the following benefits: Dietary Education Infusion Therapy Neurodevelopmental Therapy Outpatient Rehabilitation Services Tobacco Use Deterrent Classes • Lifetime Limits were removed on the following benefits: Smoking Cessation Major Medical Et Prescription • Increased the Dependent Child Eligibility to age 26, regardless of marriage, student status, or whether or not dependent upon the employee for support. • Removed all pre- existing condition limitations on participants under the age of 19. A "Grandfathered Plan" is one that was in existence on March 23, 2010, the day the main legislation was passed. Certain health care reform provisions do not apply to grandfathered plans. See attached Legislative Briefs: Health Care Reform: FAQs on Grandfathered Plans and Essential Health Benefits and Health Care Reform: General Questions Et Answers for Employers. In my opinion, there is little to no advantage to the City or the Police Plan to remain grandfathered. There continues to be a free choice of providers, though the City's Plan includes "HMA Preferred / Regence Blue Shield" - a preferred network of physicians and hospitals that offers discounts and direct billing. Healthcare Plan Report August 5, 2011 Page 6 • • •. How much did the Plan cost in 2010? Medical Paid Claims $6,679,477 64% Stop -Loss Reimbursement - $191,736 -2% 5 4y Stop -Loss Premium $478,119 Dental Paid Claims 4% Vision Paid Claims $728,464 Administrative Fees Prescription Paid 7% • $501,285 Claims $116,843 5% $1,803,992 1% 17% 5/18/11 Total 2010 Plan Cost: $10,116,444 SPRING Total 2010 Plan cost, as shown on the pie chart above, was $10,116,444 versus $9,465,517 in 2009. This represents a 3.5% increase. Like most employer plans, a disproportionate share of the Plan's money is spent on individuals with the highest claims. $2,491,093 of the total cost above was incurred by 31 individuals. The attached Benefit Analysis Report for 2010 provides detail by diagnostic category and shows how every dollar was spent. The Plan includes coordinated disease management, case management, utilization review procedures, the best PPO network for medical (Regence) and dental (WDS) in the State, and aggressive hospital bill audits. From an administrative standpoint, there isn't anything else to squeeze unless we replace HMA with a less expensive third party administrator and incentivize wellness - both of which have been our recommendation for the last three years. As in previous years, we continue to recommend additional benefit design changes, • retiree eligibility restrictions and the formal adoption of financial incentives to Healthcare Plan Report August 5, 2011 Page 7 promote wellness. With this much money at stake, it is simply unwise to sit back and wait for health reform to change things on our behalf. In fact, I believe that neither the City Plan nor the Police Plan will survive as is beyond 2013 without significant changes. If we divide total annual plan costs by the number of employee participants (which include retirees, LEOFF 1, and COBRA participants), and divide again by 12 months, we get the Total Average Monthly Cost per Employee of $943.26 for 2010. CITY OF YAKIMA Health Care Plan Total Average Monthly Cost Per Employee 2011 - First 6 Months $1,066.60 2010 $94316 2009 —�— $868.00 2008 1839.50 2007 $797 ._ -- - -- - -- - - _ - -- .92 $797. 2 2006 $689.45. 2005 7 x.72 2002 634.16, 1994 S313.48 $0 $200 $400 $600 $800 $1,000 $1,200 SPRING Through the first half of 2011, we have 16 individuals considered a large claimant . with a total of $1,561,000 already paid. Unfortunately, there are 6 individuals with claims over $100,000, two of which are over the $200,000 mark. The return to a projected trend increase of 7 -9% by the end of 2011 is almost certain. Healthcare Plan Report August 5, 2011 Page 8 • Consultants like to spend an inordinate amount of time projecting trend increases and analyzing return on investment of various cost control methods. I prefer to look at real dollars and take action accordingly. Here is my point: the average Plan "trend" increase over the last several years has been just over 6 %. That is better than just about every conceivable health benefits benchmark over the same period. Yet even at 6 %, the Plan will drain an additional $600,000 from City cash and Plan reserves in 2011. That's not sustainable no matter what the ROI numbers on alternatives or reform laws promise. Benefit changes are needed (please refer to the attached 2012 Suggested Health Plan Changes). Unless the Participants get substantially younger (from normal turnover and hiring) or the schedule of benefits makes further dramatic changes, the City should consider adopting whatever health plan alternatives the reform law brings in 2014, and prepare bargaining agreements for the state insurance exchange and /or its taxes /penalties instead of supporting the cost of your own Plan. If the City had incentive wellness and a younger group, my advice would be different. Benchmarking: How do our costs compare to others? Over the last few years, national and regional surveys by Watson Wyatt and Hewitt Associates report average annual increases anywhere from 5% to 12 %, though all agree that cost increases jumped in 2010 and are expected to rise further in 2011. 12.3% 111 .0 1 0 °°'` 9 . 2c/0 8.8% 5 Ora 7.9% 6.9% 6.D% 6.0 °/u 6.0 °a 5.3% 20 °a. 20 3 -04 203 -05 2 31)5,-06 2306 20:'_ -08 2005 - 2009 1) 7010._ Source: Hewitt Health Value Initiative • Healthcare Plan Report August 5, 2011 Page 9 Our most relevant benchmark - the Association of Washington Cities - increased their fully- insured premiums an average of 11% for their most comparable plans effective January 1, 2011. Their trend increases have been higher than the City of Yakima's for several years now. The Washington Counties Insurance Pool (WCIP) went under last year and is no longer a viable benchmark. What changed in the last Plan renewal? The 2011 Renewal was presented to the City Manager and Benefits Board on November 23, 2010. The City's stop -loss deductible with Sun Life was increased this year to $225,000 with a 2% increase. Sun Life is one of the largest and highest -rated stop -loss insurers in North America, and this policy includes a future renewal increase cap and a "no- laser" agreement (a provision hidden in many contracts that allows the insurer to exclude, or laser, a high cost individual upon renewal). What has been done to control costs? Since the last report to council: • Filed and received approval to participate in the Federal Government's Early Retiree Reimbursement Program (ERRP). • Effective July 1, 2011 successfully moved 89 Medicare Supplement eligible LEOFF 1's to a Medicare Part D and Medicare Supplement Plan F for primary coverage. The City of Yakima self - funded plan will reimburse eligible claims resulting in Part D prescription copays. • Performed a full LEOFF 1 eligibility audit that resulted in termination of coverage for 10 ineligible LEOFF 1 retirees, spouses and children. What can be done to control future cost increases to the Plan? • Perform a full eligibility audit. • Consider consumer - driven programs (HRAs and HSAs) as options to the current plan. • Adopt financial incentives to support full participation in wellness and integrated disease management programs. • Increase the out -of- pocket maximum from $1,200 to $5,000 or more (industry standard is $5,000 per employee, $10,000 for family). • Increase the annual deductible from $200 to $500 or more. • Eliminate the two different benefit Plans and cover all City of Yakima Employees identically. Healthcare Plan Report August 5, 2011 Page 10 • •• • Increase the Emergency Room copay from $25 (Police Plan) or $100 (City Plan) to $150. • Eliminate all Cost - Sharing of the Preventive health benefit to encourage Preventive care. • Add a waiting period of 30 to 60 days for new hire eligibility. • Cover in- network providers at 80% and out of network providers at 60 %. • Carve -out transplant coverage and fully- insure risk for these potential claims. • Eliminate early retiree eligibility. Conclusion The current economy has brought unprecedented financial pressure on the City of Yakima. Federal health care reform will not alleviate any of these cost pressures in the near future, and I would add that they are far more likely to exacerbate them. Regardless of our personal views of health reform, there is a huge "expectation gap" between what it actually offers and what people are expecting from it. 1111 These conditions have made the City's Health Plan even more valuable to employees. As jobs are lost and many local employers cut benefits and increase payroll deductions, it's easy to consider the City of Yakima's Health Plan a community asset protecting those who serve the public interest. Fortunately, the Plan is well managed and reserves are adequate. However, as the Washington County Insurance Pool discovered last year, reserves can evaporate very quickly. The mission of my firm, your Benefits Board and the City's Management team is to balance cost containment with meeting the long -term needs of the people whose financial security depend on this Plan. We've adopted an aggressive negotiating position with our vendors, but there really is no more to squeeze from the administrative costs. Claims cost will continue to climb at rates well above the Consumer Price Index. The affordability gap continues to widen as health care costs outpace wage increases. The next steps have to include building a culture of wellness and employee engagement with a continuation of performance measurements for all Plan functions. Unfortunately, this means adding financial incentives to participate in wellness and that requires bargaining. In addition, we will continue to analyze alternatives and prepare for the implementation of full health reform by January 1, 2014. Every year, I reflect on why the City has a health plan and what it means to those who are covered. EmSpring is committed to promoting additional changes, but we need • everyone's help. Bargaining units will have to buy into the long term benefits of wellness. Management will have to continue to seek ways to engage all employees and Healthcare Plan Report August 5, 2011 Page 11 quantify success with measurable outcomes. The tools are in place, just not the incentives to use them. We are all in this together. I appreciate very much the opportunity to work for the City of Yakima and to present this report to the Council. I take great pride in being the advisor to this Plan, and I look forward to any questions or instructions you may have. Sincerely, Dan Fisher, CEO Attachments 2010 Financial Summary (Jan -Dec) 2010 Benefit Analysis Report (Jan -Dec) 2011 Financial Summary (Jan -Jun) 2011 Benefit Analysis Report (Jan-Jun) Health Care Reform Timeline Legislative Brief: Health Care Reform: FAQs on Grandfathered Plans and Essential Health Benefits Legislative Brief: Health Care Reform: General Questions a Answers for Employers 2012 Suggested Health Plan Changes Article: Perspectives 2011 Survey Results; Health Plans Survey CITY OF YAKIMA Financial Summary 1/1/10 to 12/31/10 Current Total Aggregate Total Avg Cost Month Balance Cost Deduct Med Emp Per Emp Jars $171,476 $652,031 $1,025,825 894 $729.34 F eb $54,376 $777,629 51.028.739 897 $866.92 Mar $857,521 $1,022.526 891 $962.43 Apr $83,467 8752,048 $1,030,191 898 $837.47 May $928,366 $1,031,066 899 $1,032.67 Jun $44,355 8767,320 $1,030.778 899 $875.77 Jul $59,439 $764.984 $1.028,931 897 $852.83 Aug $1,219,916 $1.026,508 895 $1.363.03 Sep $865.684 81.024,086 893 $969.41 Oct $12,581 $807,652 $1,020,008 889 $908.49 Nov $820,649 $1,016.325 886 $926.24 Dec $1,074,381 $1,016,913 887 $1,211.25 Total $9,917,287 8478,118 $501,285 $728,464 $116,843 $1,803,992 $6,679,479 $10,308,180 $12,301,896 4,464 6,261 3,165 5,725 10,725 $943.26 Avg Claims Per Emp Per Month - 2010 $81.94 $10.89 $168.20 $622.80 Last Year Average Total Cost $868.00 Avg Claims Per Emp Per Month - 2009 $77.59 $8.99 $157.47 $588.27 Percentage Change in Cost 8.67% Percentage Change 5.61% 21.18% 6.82% 5.87% Total paid claims all coverages $9,328,777 Coverage Effective 1/1/2010 Less claims excess of 5175,000 individual excess deductible Net total claims $9,137.042 Aggregate Claim Factors Accruals Factors include M/D/V/Rx Med /Den Employee $618.87 Contract Basis: Paid All Dependents $466.74 Net total claims $9,137,042 MN /Rx Composite $1,067.48 Less claims not covered under aggregate excess loss policy $0 Dental Composite $95.97 Net claims covered by aggregate excess loss $9.137.042 LEOFF I Aggregate Premiums Med. Employee $802.65 Net Claims to Aggregate Deductible Loss Ratio 74.27% Employee per month $3.60 All Dependents $466.74 Reserves needed (15% of annual paid claims) $2,055,834 $175,000 lndiv Ex Loss Rates Average claims covered by aggregate per employee per month $851,94 Contract Basis: Paid Med /Rx (Carrier: Sun Life I Average total claim cost per employee per month $851.94 Single $20.57 Last year average total claim cost per employee per month $784.40 Family $55.56 IGroup 130101 Percentage change in average cost per employee 8.61% * *Information on this Financial Summary is for illustrative purposes only. Actual claims and enrollment figures covered by the Excess Loss contract may be different.** Ill ill 1111 HEALTHCARE MANAGEME 111111 I • Date: 05/19/2011 B e n e f i t A n a 1i is Page: 1 Thursday May 19, 2011 rbal Group: BO101 CITY OF YAKIMA Period: 01/2010 - 12/2010 Mem Total copay * - -- Deductibles - - -* C.O.B. Inel Total Code Description Type Days Charge Amount Co -ins Benefit Savings Amount Paid AAMB AIR AMBULANCE 246.00 41870.62 0.00 0.00 0.00 6346.82 8321.11 27202.69 ACUP ACUPUNCTURE 53.00 3346.59 0.00 0.00 0.00 0.00 3346.59 0.00 ALLI ALLERGY INJECTIONS 1619.00 31910.00 0.00 1726.48 0.00 779.50 5726.37 20135.92 ALLT ALLERGY TESTING 851.00 9185.12 0.00 477.76 0.00 0.00 2685.08 5038.13 AMB AMBULANCE 764.00 78583.73 0.00 117.95 0.00 8450.18 31649.06 35157.59 ANES ANESTHESIA SERVICES 12436.00 368727.58 0.00 45.83 0.00 16616.08 151311.61 188656.85 ASST ASSISTANT SURGEON 80.00 115368.30 0.00 0.00 0.00 810.94 91081.76 22894.35 CHEM CHEMOTHERAPY 1340.00 124960.89 0.00 168.37 0.00 35096.21 72699.68 16469.43 CHIR CHIROPRACTIC SERVICES 3147.00 158918.22 26740.00 7386.18 0.00 3104.73 46808.72 70081.72 CNR MEDICAL - INELIGIBLE SERVICES 213.00 60108.99 0.00 0.00 0.00 0.00 60108.99 0.00 COLO COLONOSCOPY 144.00 154023.28 1475.00 6.95 0.00 5709.15 90530.11 55779.50 CONS CONTRACEPTIVE MGMT SURGERY 14.00 4870.33 0.00 0.00 0.00 0.00 4870.33 0.00 COSM COSMETIC INEL SERVICES 4.00 177.20 0.00 0.00 0.00 0.00 177.20 0.00 D&A DRUG /ALCOHOL INPT R &B PREAUT 329.00 125410.42 0.00 255.86 0.00 58875.23 11863.35 52631.94 D&A1 6TH &+ DRUG & ALCOHOL OUTPT 34.00 5533.75 405.00 0.00 0.00 275.00 0.00 4853.75 D&AO DRUG & ALCOHOL OUTPT 347.00 18061.80 2760.00 80.00 0.00 2862.71 4230.62 7746.06 DANE LOCAL /BLOCK /I.V. ANESTHESIA 1.00 220.00 0.00 0.00 0.00 0.00 220.00 0.00 DEN2 DENTAL TYPE II SERVICES 9.00 195.00 0.00 0.00 0.00 0.00 716.25 417.00 - DEP EMERGENCY /PALLIATIVE TREATME 2.00 0.00 0.00 0.00 0.00 0.00 54.00 43.20 - DIA1 KIDNEY DIALYSIS (1ST 42) 5.00 117742.35 0.00 0.00 0.00 6211.20 109983.40 1547.75 DIAB DIETARY /DIABETIC EDUCATION 18.00 219.60 0.00 0.00 0.00 58.56 84.18 76.86 DIAL KIDNEY DIALYSIS 1449.00 720491.89 0.00 100.00 0.00 29534.90 574953.43 115064.06 DIET DIETARY EDUCATION 145.00 3483.80 320.00 62.22 0.00 58.56 861.01 2083.07 DME DURABLE MEDICAL EQUIPMENT 2164.00 278895.61 0.00 5449.51 0.00 16058.49 154695.98 92666.33 DOMS DOCTORS OFFICE MISCELLANEOUS 203.00 78636.01 0.00 0.00 0.00 23533.85 45551.56 9514.20 DORX DOCTORS OFFICE PRESCRIPTION 14.00 79.00 0.00 0.15 0.00 0.00 78.37 0.47 DOSG DOCTORS OFFICE SURGERY 1122.00 254740.08 0.00 3512.28 0.00 14538.40 105259.70 124900.25 DOSP DOCTORS OFFICE SUPPLY 887.00 21680.13 0.00 37.98 0.00 1530.59 15134.42 4903.37 DOV DOCTORS OFFICE VISIT 8146.00 1056614.32 89400.00 4889.10 0.00 75896.61 270175.44 612155.35 DOV1 DOCTORS OFFICE VISIT 876.00 111008.34 12420.00 0.00 0.00 5595.67 22257.98 70734.69 DOVP ROUTINE GYNECOLOGICAL EXAM 181.00 30288.78 3025.00 200.00 0.00 1895.52 5710.01 19398.97 DPX PERIAPICAL XRAY 2.00 0.00 0.00 0.00 0.00 0.00 26.00 20.80 - DRG HOSPITAL PPO DRG AMOUNT 1.00 255.50 0.00 0.00 0.00 0.00 0.00 255.50 DXT DIAGNOSTIC TESTING 2592.00 545028.09 0.00 16944.28 0.00 22531.41 268308.93 209134.03 EMER EMERGENCY ROOM SERVICES 456.00 686862.77 25725.00 10296.45 0.00 26493.92 350718.19 235025.49 HEAR ROUTINE HEARING SERV INEL 35.00 1085.00 0.00 0.00 0.00 0.00 1085.00 0.00 HH NURSING VISITS IN HOME 61.00 13319.59 0.00 0.00 0.00 0.00 5173.17 8146.42 HH1 NURSING VISITS IN HOME 7.00 646.59 0.00 0.00 0.00 0.00 0.00 646.59 HOME HOME HEALTH MISC SERVICES 14498.00 91240.63 0.00 4167.81 0.00 8158.77 40167.81 34954.66 HRB HOSPITAL ROOM & BOARD PREAUT 681.00 705001.42 0.00 1803.07 0.00 160407.27 153316.59 368125.95 HSPC HOSPICE CARE /TERMINAL ILLNES 6.00 1026.00 0.00 0.00 0.00 0.00 682.95 343.05 ICU INTENSIVE CARE UNIT PREAUTH 64.00 237304.02 0.00 100.00 0.00 42484.32 17516.62 173421.64 IMX IMMUNIZATION SERVICES 1569.00 43419.97 0.00 26.99 0.00 883.60 7783.57 34685.81 INEL MEDICAL - INELIGIBLE SERVICES 1345.00 98644.75 0.00 0.00 0.00 0.00 98644.75 0.00 INFR INFERTILITY INELIGIBLE 174.00 10586.94 0.00 0.00 0.00 0.00 10586.94 0.00 INFT INFUSION THERAPY 188.00 13483.55 0.00 0.00 0.00 491.30 7924.64 4973.76 INJT INJECTIONS 5834.00 71207.73 0.00 447.86 0.00 5001.13 36282.10 27974.52 IPD1 INPATIENT DOCTORS VISIT 1.00 104.00- 0.00 0.00 0.00 0.00 104.00- 0.00 IPDV INPATIENT DOCTORS VISIT 693.00 188997.38 4960.00 0.00 0.00 15438.92 90722.65 77420.65 HEALTHCARE MANAGEMENT ADM Date: 05/19/2011 B e n e f i t A n a l y s i s Page: 2 Thursday May 19, 2011 rbal Group: BO101 CITY OF YAKIMA Period: 01/2010- 12/2010 • Mem Total copay * - -- Deductibles - - -* C.O.B. Inel Total Code Description Type Days Charge Amount Co -ins Benefit Savings Amount Paid IPMM MENT /NERV INPT MISC PREAUTH 72.00 24166.99 0.00 200.00 0.00 0.00 4386.67 18634.80 IPMN MENT /NERV INPT R &B PREAUTH 17.00 20541.00 0.00 0.00 0.00 0.00 4341.52 14890.44 IPMS INPATIENT MISC PREAUTH 213.00 2740120.59 0.00 0.00 0.00 244394.81 1531959.63 953435.36 IPNP INPATIENT MISC NO PREAUTH 15.00 213819.31 2000.00 0.00 0.00 34862.77 169284.93 7671.61 IPRH INPATIENT REHABILITATION 1.00 1190.90 0.00 0.00 0.00 166.75 785.97 238.18 IPSG INPATIENT SURGERY 265.00 577643.09 0.00 371.51 0.00 36468.19 342262.32 183620.63 LAB LABORATORY 13703.00 670407.88 0.00 50270.42 0.00 20712.11 374765.89 198717.34 MAM ROUTINE MAMMOGRAMS AGE 0 -35 657.00 38904.94 2160.00 83.00 0.00 884.93 16799.46 18889.15 MASS MASSAGE THERAPY 205.00 6010.50 0.00 0.00 0.00 0.00 6010.50 0.00 MATD MATERNITY DEPENDENTS 124.00 30527.44 0.00 0.00 0.00 0.00 30527.44 0.00 MRCT MRI OR CT -SCAN 532.00 426584.37 0.00 5581.30 0.00 13269.92 266505.37 119980.20 MRX PRESCRIPTION INVOICES 0.00 1804305.78 0.00 0.00 0.00 0.00 218.16 1804087.62 NEUR NEURODEVELOPMENTAL THERAPY 334.00 22427.90 0.00 1030.60 0.00 0.00 9397.92 9923.28 NOPM SURGICAL FACILITY - NO PREAU 6.00 19916.11 1957.27 136.17 0.00 0.00 8903.01 8295.58 NOTC NOT COVERED 458.00 3809.79 0.00 0.00 0.00 0.00 3809.79 0.00 OBES OBESITY 197.00 87684.37 0.00 100.00 0.00 298.22 47520.02 38631.57 OONS OUT OF NETWORK SAVINGS 0.00 44142.25 0.00 0.00 0.00 0.00 30.16 44112.09 OPDV OUTPATIENT DOCTORS VISIT 493.00 144501.97 0.00 8945.04 0.00 5330.45 77350.82 45367.69 OPM1 6TH &+ OP MENTAL /NERVOUS 210.00 26110.80 3075.00 0.00 0.00 294.03 4615.44 18126.33 OPMN OUTPATIENT MENTAL & NERVOUS 1226.00 153399.37 10440.00 2899.84 0.00 5257.38 47030.66 80810.79 OPMS OUTPATIENT MISCELLANEOUS 12028.00 2850790.86 0.00 6959.17 0.00 189531.06 1275179.81 1318769.29 OPRH OUTPATIENT REHABILITATION 7088.00 419064.99 0.00 8442.04 0.00 27742.02 197770.00 165081.45 OPRM OUTPATIENT REHAB - MULT SVCS 504.00 27917.11 0.00 0.00 0.00 2385.19 13342.10 11443.01 OPSG OUTPATIENT SURGERY 693.00 579773.66 0.00 3717.54 0.00 32321.71 316919.73 199239.00 PAP ROUTINE PAP SMEAR LAB TEST 231.00 11944.80 0.00 72.98 0.00 507.79 3396.52 7957.51 PROS PROSTHETICS 3.00 308.58 0.00 0.00 0.00 0.00 16.02 292.56 RADT RADIATION THERAPY 150.00 41747.00 0.00 200.00 0.00 0.00 21822.17 19175.15 SACC SUPPLEMENTAL ACCIDENT 3.00 1187.00 0.00 0.00 0.00 0.00 366.55 820.45 SGCT SURGICAL FACILITY FEE PREAUT 282.00 437609.99 0.00 1616.27 0.00 14558.53 216559.14 184732.17 SMOK SMOKING CESSATION 4.00 302.92 0.00 0.00 0.00 0.00 18.01 266.46 SPEC OUT OF PLAN PAYMENT 0.00 150.00 0.00 0.00 0.00 0.00 122.41 27.59 SUP MEDICAL SUPPLY 203.00 3009.92 0.00 0.00 0.00 52.04 436.08- 3246.86 TMJ MEDICAL TMJ SERVICES 2.00 200.00 0.00 0.00 0.00 0.00 200.00 0.00 TRAN TRANSPLANTS 132.00 6041.15 0.00 0.00 0.00 374.56 3609.97 1704.38 VEXM ROUTINE VISION EXAM 71.00 7277.87 0.00 0.00 0.00 0.00 7277.87 0.00 VHDW VISION HARDWARE 2.00 9983.82 0.00 0.00 0.00 0.00 9983.82 0.00 VINL VISION- INELIGIBLE SERVICES 14.00 857.78 0.00 0.00 0.00 0.00 857.78 0.00 WELC PREVENTIVE WELLNESS - COPAY 656.00 94238.90 10205.00 74.00 0.00 2288.94 25772.82 55881.30 WELL ROUTINE /WELLNESS SERVICES 888.00 61257.63 0.00 0.00 0.00 626.33 25950.59 34680.71 WELO ROUTINE /WELLNESS OFFICE VISI 36.00 6413.99 0.00 0.00 0.00 311.34 1254.97 4847.68 WORK WORKMANS COMPENSATION CLAIMS 1.00 117.50 0.00 0.00 0.00 0.00 117.50 0.00 XRAY X -RAY SERVICES 3119.00 777276.22 0.00 27377.73 0.00 25633.12 530378.61 170682.61 cobr not on file 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3676.28 *Totals 92 Benefit codes 109888.00 197067.27 0.00 8576968.21 19077044.70 176380.69 1254001.73 8482277.49 1 1111 1 1 1111 11111/ Group Name: Experience Report Ill Carrier: 11 • Group Number: Contract Period: . Excess Medical Pd Rx Pd Vision Pd Dental Pd Total Paid Avg Cost Single Family Single Family Total Aggregate Current Month Loss Pram Admin Fees Claims Claims Claims Claims Claims Total Cost Per Emp Medical Medical Dental Dental Mad Emp Deductible Accrual Balance Jan -11 1.' ,- 31,190,164 51,265,614 81,437 - 881 31,056,997 - 8405,225 Feb•11 5752,347 8827234 5944 876 51,050,999 530,871 Mar -11 - , . •° 8806.637 8881,148 81,009 873 51,047,399 - 827,772 Apr -11 5680,884 3756,076 8865 874 51.048,599 5103,128 May -11 5871,202 8947,188 31.079 878 31,053,396 - 382,8 Jun -11 5857,920 3933,055 51,063 878 01,053,398 - $75,853 Jul -11 $0 30 50 - $0 $0 Aug -1t $0 00 $0 - 00 $0 Se -11 $0 $0 30 - $0 $0 Oct -11 $0 50 $0 - $0 30 Nov -11 30 30 30 - 30 50 Dec-ti $0 80 $0 - 30 50 Total YTD 8203,119 3248,042 83,707,288 3966,606 559,556 3425,705 55,159,155 $5,610,315 $1,067 2,160 3,100 1,522 2,846 5,260 36,310,790 55,152,619 -$457,696 Less Stop Loss Claims 35,610,315 PEPM Current Contract YTD $704.81 $183.77 $11.32 $80,93 $980.83 $1,066.60 61,067 PEPM Prior Contract Year $622.80 3168.20 $10.89 $81.94 $883.83 $943.26 0961.20 Percentage Change 112% 9.3% 4.0% -1.2% 11.0% 13.1% 11.0% Individual Excess Lose Coverage Aggregate Excess Loss Coverage Aggregate Calculation Optional DatWpates Deductible: $225,000 Aggregate Attachment Factors: YTD Deductible: $6,310,790 Annual Maximum: $1,000,000 Single 31,199.77 Covered Claims: . . i•. Aggregating Specific: NA Family 31,199.77 Medical 33,707,288 Med /Den Employee $575.45 Contract Basis' Paid Minimum Attachment: $11,545 147 Re 3966,606 All dependents $614.68 Pre- Funding: Yes Annual Maximum: $1,000.000 Vision 059,556 Covered Benefit: Contract Basis' Paid Dental 5425,705 Medical Yes Premium (PEPM): 32,80 Total $5.159,155 Med Employee 3807.31 Rx Yes Covered Benefits: Spec8lo Claim Adjustment All Dependents 3614.68 Vision NA Medical Yes Claims Above Ind Ded: Dental NA Rx Yes Less Agg Spec' NA Rates: Vision Yes Net Specific Claims: 50 Single 018.03 Dental Yes Net Total Claims: 55,159,155 Family 048.71 Monthly Accomodation: NA Aggregate Ded Loss Ratio' 81.8% Lasers: NA Terminal Liability: NAI Information on this Experience Report is for illustrative purposes only. Actual claims and enrollnment figures covered by the excess loss contract may be different. HEALTHCARE MANAGEMENT ADM Date: 08/04/2011 B e n e f i t A n a l y s i s Page: 1 Thursday August 04, 2011 rbal Group: B0101 CITY OF YAKIMA Period: 01/2011- 06/2011 Mem Total copay * - -- Deductibles - - -* C.O.B. Inel Total Code Description Type Days Charge Amount Co -ins Benefit Savings Amount Paid ABOR ABORTION SERVICES (VOLUNTARY 36.00 1855.00 0.00 0.00 0.00 0.00 1855.00 0.00 ACUP ACUPUNCTURE 18.00 751.00 0.00 0.00 0.00 0.00 751.00 0.00 ALLI ALLERGY INJECTIONS 502.00 10539.00 0.00 1801.70 0.00 105.98 3661.60 4269.57 ALLT ALLERGY TESTING 233.00 3030.20 0.00 0.00 0.00 0.00 2003.92 874.81 AMB AMBULANCE 785.00 67531.04 0.00 73.32 0.00 10270.45 43520.79 13274.60 ANES ANESTHESIA SERVICES 6942.00 117736.30 0.00 479.19 0.00 5545.21 40099.91 63361.38 ASST ASSISTANT SURGEON 40.00 47255.51 0.00 84.07 0.00 84.85 40100.83 6370.27 AUDR BILL AUDIT REVENUE 0.00 1393.29 0.00 0.00 0.00 0.00 0.00 1393.29 CHEM CHEMOTHERAPY 115.00 63064.89 0.00 70.70 0.00 23589.83 33142.31 6240.51 CHIM CHIROPRACTIC - MULT SERVICES 259.00 10665.46 202.81 364.93 0.00 359.36 3495.07 6025.12 CHIR CHIROPRACTIC SERVICES 1087.00 56398.95 13747.20 2354.74 0.00 1493.60 16213.19 21402.75 CNR MEDICAL- INELIGIBLE SERVICES 240.00 429228.39 0.00 0.00 0.00 0.00 429228.39 0.00 COLO COLONOSCOPY 82.00 87141.81 680.00 0.00 0.00 2994.26 51690.99 31776.56 CONS CONTRACEPTIVE MGMT SURGERY 7.00 2821.00 0.00 0.00 0.00 0.00 2821.00 0.00 D&A DRUG /ALCOHOL INPT R &B PREAUT 28.00 8120.00 0.00 200.00 0.00 0.00 1701.00 5019.00 D&A1 6TH &+ DRUG & ALCOHOL OUTPT 72.00 5948.00 1020.00 0.00 0.00 1366.00 1160.00 2402.00 D &AO DRUG & ALCOHOL OUTPT 129.00 4402.71 820.00 200.00 0.00 279.00 504.23 2328.69 DIA1 KIDNEY DIALYSIS (1ST 42) 10.00 293665.84 0.00 0.00 0.00 13538.42 276736.73 3390.69 DIA2 KIDNEY DIALYSIS (43 +) 1.00 367.00 0.00 0.00 0.00 170.65 136.04 175.79 DIAL KIDNEY DIALYSIS 4.00 12362.50 0.00 0.00 0.00 813.10 11345.85 203.55 DIET DIETARY EDUCATION 43.00 1518.40 140.00 0.00 0.00 319.37 619.73 439.30 DME DURABLE MEDICAL EQUIPMENT 2000.00 103176.39 0.00 3856.12 0.00 5424.80 63276.27 26701.72 DONS DOCTORS OFFICE MISCELLANEOUS 104.00 26762.94 0.00 33.47 0.00 6073.11 15744.06 4861.62 DORX DOCTORS OFFICE PRESCRIPTION 34.00 80.00 0.00 0.06 0.00 0.00 70.22 9.69 DOSG DOCTORS OFFICE SURGERY 516.00 100301.18 0.00 2045.51 0.00 11371.22 36795.47 46971.31 DOSP DOCTORS OFFICE SUPPLY 86.00 11010.95 0.00 0.64 0.00 499.80 7427.84 3042.61 DOV DOCTORS OFFICE VISIT 4164.00 547143.16 50213.50 3789.73 0.00 31610.77 136073.48 323088.36 D0V1 DOCTORS OFFICE VISIT 156.00 20636.46 2010.00 0.00 0.00 915.40 4842.10 12868.96 DOVP ROUTINE GYNECOLOGICAL EXAM 78.00 12786.90 1390.00 0.00 0.00 667.49 2070.78 8549.43 DXT DIAGNOSTIC TESTING 1087.00 222590.63 0.00 14572.91 0.00 6985.36 115529.51 74149.74 EMER EMERGENCY ROOM SERVICES 266.00 544504.70 17613.00 8332.38 0.00 17497.02 311043.94 167034.85 FLU FLU SHOTS 11.00 187.12 0.00 0.00 0.00 0.00 39.85 147.27 HEAR ROUTINE HEARING SERV INEL 7.00 217.00 0.00 0.00 0.00 0.00 217.00 0.00 HH NURSING VISITS IN HOME 60.00 15212.86 0.00 0.00 0.00 83.30 7799.97 7329.59 HH1 NURSING VISITS IN HOME 3.00 864.30 0.00 0.00 0.00 0.00 0.00 864.30 HMAU BILL AUDIT SAVINGS 0.00 10580.31 0.00 0.00 0.00 0.00 10580.31 0.00 HOME HOME HEALTH MISC SERVICES 10480.00 53398.86 0.00 3313.78 0.00 3803.46 24741.31 19070.55 HRB HOSPITAL ROOM & BOARD PREAUT 449.00 408412.39 0.00 959.67 0.00 69570.54 154179.40 174045.00 HSPC HOSPICE CARE /TERMINAL ILLNES 15.00 2835.00 0.00 0.00 0.00 0.00 888.25 1718.05 ICU INTENSIVE CARE UNIT PREAUTH 69.00 140811.36 0.00 0.00 0.00 24534.26 45261.20 70410.15 IMX IMMUNIZATION SERVICES 647.00 24813.93 0.00 44.34 0.00 474.05 3492.12 20571.16 INEL MEDICAL - INELIGIBLE SERVICES 445.00 83214.92 0.00 0.00 0.00 0.00 83214.92 0.00 INFR INFERTILITY INELIGIBLE 31.00 1957.26 0.00 0.00 0.00 0.00 1957.26 0.00 INFT INFUSION THERAPY 421.00 65469.89 0.00 332.14 0.00 156.28 34377.05 29433.88 INJT INJECTIONS 2334.00 28191.81 0.00 321.40 0.00 4067.46 16717.50 6913.65 IPD1 INPATIENT DOCTORS VISIT 4.00 790.00 0.00 0.00 0.00 0.00 216.00 574.00 IPDV INPATIETORS VISIT 443.00 82746.53 2900.00 00 0.00 13954.41 39649.54 26242.58 • HEALTHCARE MANAGEMENT ADM D 8/04/2011 B e n e f i t A n a l Y Page: Pa e: 2 Thursday August 04, 201 rbal Gro 80101 CITY OF YAKIMA Period: 01/2011- 06/2011 Mem Total copay * - -- Deductibles - - -* C.O.B. Inel Total Code Description Type Days Charge Amount Co -ins Benefit Savings Amount Paid IPMS INPATIENT MISC PREAUTH 163.00 2516208.34 0.00 0.00 0.00 108779.20 1532416.75 868853.48 IPNP INPATIENT MISC NO PREAUTH 5.00 41386.53 500.00 0.00 0.00 5793.56 33862.83 200.00 IPRH INPATIENT REHABILITATION 20.00 859.44 0.00 0.00 0.00 0.00 859.44 0.00 IPSG INPATIENT SURGERY 116.00 301607.07 0.00 224.54 0.00 7655.60 143425.11 145598.91 LAB LABORATORY 6876.00 332177.94 0.00 31717.45 0.00 6374.35 181736.96 98675.53 MAM ROUTINE MAMMOGRAMS AGE 0 -35 307.00 18710.75 1300.00 0.00 0.00 578.97 7762.16 9069.62 MASS MASSAGE THERAPY 18.00 760.00 0.00 0.00 0.00 0.00 760.00 0.00 MATD MATERNITY DEPENDENTS 17.00 4136.13 0.00 0.00 0.00 0.00 4136.13 0.00 MRCT MRI OR CT -SCAN 199.00 218206.74 0.00 4815.58 0.00 10049.60 150142.71 43619.91 MRX PRESCRIPTION INVOICES 0.00 966657.40 0.00 0.00 0.00 0.00 20.00 966637.40 NEUR NEURODEVELOPMENTAL THERAPY 111.00 8901.60 0.00 500.00 0.00 0.00 1961.75 5151.90 NOPM SURGICAL FACILITY - NO PREAU 2.00 5200.00 500.00 166.24 0.00 0.00 2352.00 1745.41 NOTC NOT COVERED 17.00 804.83 0.00 0.00 0.00 0.00 804.83 0.00 OBES OBESITY 97.00 28875.13 0.00 200.00 0.00 0.00 9801.00 17447.48 OONS OUT OF NETWORK SAVINGS 0.00 16007.61 0.00 0.00 0.00 0.00 0.00 16007.61 OPDV OUTPATIENT DOCTORS VISIT 289.00 102799.47 0.00 5873.31 0.00 4426.48 45086.77 37193.05 OPM1 6TH &+ OP MENTAL /NERVOUS 119.00 15341.50 1680.00 0.00 0.00 470.15 4032.04 9159.31 OPMN OUTPATIENT MENTAL & NERVOUS 570.00 70158.56 5460.00 1116.12 0.00 1850.06 22687.86 37320.17 OPMS OUTPATIENT MISCELLANEOUS 7162.00 1570171.16 0.00 8130.23 0.00 174627.34 608743.42 749864.88 OPRH OUTPATIENT REHABILITATION 4992.00 305761.13 0.00 7764.82 ' 0.00 18856.78 154685.90 107808.76 OPRM OUTPATIENT REHAB - MULT SVCS 2.00 84.00- 0.00 0.00 0.00 0.00 27.20- 56.80 - OPSG OUTPATIENT SURGERY 325.00 345651.63 0.00 3062.67 0.00 12698.70 209532.69 104999.83 PAP ROUTINE PAP SMEAR LAB TEST 100.00 5806.30 0.00 37.50 0.00 204.59 2054.18 3500.03 RADT RADIATION THERAPY 45.00 16893.00 0.00 0.00 0.00 0.00 9930.95 6822.75 SGCT SURGICAL FACILITY FEE PREAUT 139.00 256346.13 0.00 883.86 0.00 6181.48 137070.64 103526.30 SMOK SMOKING CESSATION 4.00 429.04 0.00 0.00 0.00 0.00 33.01 347.30 SNF SKILLED NURSING FACILITY 45.00 20772.28 0.00 0.00 0.00 7659.44 0.00 13112.84 SUP MEDICAL SUPPLY 39.00 4263.49 0.00 36.42 0.00 0.00 489.50 3602.70 TRAN TRANSPLANTS 6.00 509.00 0.00 0.00 0.00 0.00 162.58 306.34 VEXM ROUTINE VISION EXAM 51.00 5742.06 0.00 0.00 0.00 0.00 5742.06 0.00 VHDW VISION HARDWARE 5.00 3248.94 0.00 0.00 0.00 0.00 3248.94 0.00 VINL VISION- INELIGIBLE SERVICES 21.00 599.00 0.00 0.00 0.00 0.00 599.00 0.00 WELC PREVENTIVE WELLNESS - COPAY 264.00 38262.29 4365.00 90.00 0.00 643.22 8491.44 24644.55 WELL ROUTINE /WELLNESS SERVICES 349.00 41983.09 0.00 49.50 0.00 882.44 12700.59 28350.56 WELO ROUTINE /WELLNESS OFFICE VISI 12.00 1961.30 0.00 0.00 0.00 0.00 343.19 1618.11 XRAY X -RAY SERVICES 1268.00 349609.30 0.00 17247.44 0.00 8005.04 253074.86 60964.26 cobr not on file 0.00 0.00 0.00 0.00 0.00 0.00 0.00 856.67 *Totals 84 Benefit codes 58298.00 104541.51 0.00 5625717.02 11351217.32 125146.48 634355.81 4660495.21 • � 20 -2071 Zywrav reser „eJ SP .G I 1 i 1 I Ili t I 1 - -' ,, -1 ; - ''''' it ,. .i,_ s. t 414 : / i.. H ealth Care Reform: N.IQs on Crandfathered Plans and Essential Health Benefits ?he Patient Protection and Affordable (.ar,• Act (PPACA) ,Nas enacted on March 2J, 2010, and amended by the ttrsalth Care and Education Pecnnclliatlnrl Act of 2010 on March 30, 2010. The health care reform legislation .n(.ludes many changes mlated to health care coverage and raises a number of questions for employers. The Department of Labor (DOL ) ha previously Issued three sets of Frequently Asked Questions to assist In mplernenting these changes. On November 1, 2010, the DOL issued additional FAQs.. regarding grandfathered Hans and essential health benefits. ?his EmSpring Legislative Brof tint., not „• ino recant FAQ issued by the [)OI . i or a copy of the quiclan e www.dot_gov /ebsa]fags /fag- aca4.html AFFORDABLE CARE ACT IMPLEMENTATION FAQs - PART IV AI/ e Departments' interim final grandfather regulations provide that, to maintain status as a grandfathered health plan, a group health plan or health insurance coverage must include a statement, in any plan materials provided to a participant or beneficiary describing the benefits provided under the plan or health insurance coverage, that the plan or coverage believes it is a grandfathered health plan. Must a grandfathered health plan provide the disclosure statement every time it sends out a communication, such as an EOB (explanation of benefits), to a participant or beneficiary? If not, how does a grandfathered health plan comply with this disclosure requirement? grandfathered i Mal , ... , ill cohy;lV ‘,•:Itn this cli clo,,ulc requirement it It Includes tn!_r model dlsclosiirc incue-Fte pi ovide in itle Dt part'nt'I)t,' I.' terim final r, rdndrath('r regtilat.ion' -. (Lil a tiomrlar statement) ';Vhenever a lminary of the Leneftts undo the 0,--iii r, OrOVl(1e(1 t0 1)alti(.It) Into and b ee ticlat "1 5. f or example, many plans distribute summary plan descriptions upon rnttlal eltclibilry to !rye,: ivc' hennntr, under the plan or coverage, during I: ut;en enrollment peru)d, or upon otil�'r ()pportunitier- tt 0 brill .r, r _fw.... :,' charlg:= coverage. While it 1s not -.' i.essary to indocile the dis(l:.oure tat i . ec?Cl- Or r 1 r ,_ Ot nrruinicatkkn to participants and r)r'itHi i,arif'R ic,t Rio di ! ()P rii er, ,rtt»r.nR r' 1 r t'! it='.n.orS =irld ,-:,cu ' r , to Identify other r �r c iri!'_. ..: L 1 i 1 r O door r mate dnil corisi ste ':."Ith the goal o f -, . -' 1 cin i , ndkr, InfOrll (hoi(c- reaar(11no Q2: If an individual health insurance policy that was in place on March 23, 2010, included a feature that allowed a policy holder to elect an option under which he or she would pay a reduced premium in exchange for higher cost sharing, could such an election be made after March 23 without affecting the SPRING Health (are Reforni: E .\Qs 011 (;randfathered Plans and Essential Health Benefits • policy's grandfather status even if the increase in cost shar ing for the individual would exceed the limits under the grandfather rule on increases in cost sharing? . Q3: An employer has maintained a plan since before enactment of the Affordable Care Act that reimburses expenses for special treatment and therapy of eligible employees' children with physical, mental or developmental disabilities. The treatment or therapy is not covered by the employer's primary medical plan or plans. Reimbursable expenses may include expenses for special treatment or therapy from licensed clinics or practitioners, day or residential special care facilities, special education facilities for learning- disabled children, or camps offering medically oriented programs that are part of a child's continued treatment, or for special devices. The plan is operated separately from the employer's primary medical plans; employees who are otherwise eligible may participate in the plan without participating in those primary medical plans. The plan limits the total benefits for any eligible child to a specified lifetime dollar limit. Would it be a reasonable good faith interpretation of the Affordable Care Act and the regulations thereunder for the plan sponsor to take the position that the plan does not violate the prohibition, under section 2711 of the Public Health Service Act (PHS Act) and the related interim final regulations on imposing a lifetime dollar limit on "essential health benefits," as defined in section 1302(b) of the Affordable Care Act (the lifetime limit prohibition)? "„ ti?I n.��ltli i 'Ot h , il ' ,Ode niir pre'.it„r1 S - fc'rr? :1'' , I I • ` � g . = ."1 ���� ^�� � N �� � 8� Y � �� r ~ ��m�' � ��� ��� �� /]| � � »� '` Health Care Ref=i Geller Questions & Ans■Ne.i for E00D�UKVve�s . I've heard about anunnbe. of different health care proposals over the last year. Which one did Congress pass? ' '~� 1 ;,--i'c ''(nn/` m`i .� combination of tn.,|vU• Hie Pat/,"|prma/"p'm'| Affordable ( ale Act (H.R. - �9U).�hnh*a-,vq."`/oxn|^000 Mat( hD./0lO'n"./ 'h, Hrukh ( are and [do�amm Pc- on( Act ofZUlO (H.P. 4871}, nh/'|` v.a��/qn.`d into |ar:nn Ma'O. x/ /d}0 Does health care reform allow people to keep their current health coverage? . „` *vLo`o ^` 7i, /,'.. |.� .'./.."~. ..,*,w�|` :` w/*"wp , 0`� '|.^. L ''~,/ n /^• /|,- 'm |^: .,^' o".. '` /`''�'°^ J'o '� ,,^` ,. u.` ' ':'^``".`";', 'xp '",',.w' w,`mrfl x.H .. ''i'`'1,. i| ` ok" '"~\ '|`** o` ,* P all required by taw to offer health coverage to my employees? n�`L^.c :p/'.m, | v, m,ra||v ,.'wo'' .w/'/`^'v~�/',` '+.|L, .`.' ,oA,,'�t",x emu|ov,~ � oenmr` / /o11. *1' , . r oo+ .,'/�, thdt'�, no/ v�c' ^ .v"o''." |..^,|"` .n`.'agc ,/Uhpmb;,n,.� 0 any or Mr'' '`n`:_|,)= '`.. lnvrx.n,, `obnd/, l.' i"^:| .v.,x«' :,,a/gh*`nx'|w Also l"' , n^m"` ,., `''|'c,:,'d"'"..Hx"^ ^' -`,''` ,+/'' , '`^°"`'-v_i' / ' ','.., ^.'.`/ n'H'..,.' s lJ|/,r + What are the penalty amounts for large enlployers that don't offer coverage? ,,'` /'`x,|oy�n '|aT .'p '`.`! ,;r.` u,''1?.' +d| L, �o L,.. ,: a■`:o| o' ../ ■/ UUU o"r hU'omr ,m|x',e' , ''`, h',, ;0 ",.c| np'`, ' a"r "! m': �J1' pp`p|"'~c e. |`•'hcpd . °,rcig' r11 * What are the penalty amounts for large employers that offer coverage and have employees who receive subsidized coverage through an exchange? These employers a to penalty of S.3,000 for :^c|` h,U-mnr employe:: Uat receives subsidized cover aq^ through an exchange - flip max^nun/ oe:a|,/ is the amnm`/ ^o.1, to sJ.UUU w,'c,t»e nombcr o[foU'on`e employe ~xuvclinq the first ]Opmu|^�:^*, What is a ^grandtatheredp|an^r `.: /,^ "/ :.n':_', * "x/iv"x'�| `'m� u` ^p ..` '.`^,`: nca riow does health care reform affect grandfathered plans? ~` • ������J�� ,�V-r�vv��� 11■2',11111 C Luc Rc1C)1 (iCI1CnI1 Qut ion & .\11N\ cr ir Empl()\ crs . , , ; .-• . • 1C'Ht "A " 1, i • , r ' :I • . , • • • Can a grandfathered plan be amended without losing the grandfathered status? I .r . „ . • . • • )1 t rn • Now does the grandtather rule apply to collectively bargained plans? tienth rjta, co•■,t ') • [.),;(•4di• tlidt t;ilifk-dbefcr 1ar.f 2 2010, r■rt , ,tihject. ef 11:LI n Sui1,-.:‘, , „ rrn -i'" 1r,;.; , • tr`.. Hr'f!" tilt CVt_rr rige t'• ,, What is the small business tax credit and how do I know if I am eligible? • Health Care Rc'Il)iin: (lend-Li! Questions & Ans \\ CI"s for Ln p1()vers -11 K: �_ y h '`).1.1116 ..<<; '-` ?t),(I()(1 (III What if my small business doesn't offer insurance today, but I choose to start offering insurance this year? Will I be eligible for these tax credits? ,I ;' all !n n I ;tip_ 'I :II 1 • What is a health insurance exchange? I , -1lt'i 444, ''r; i) put, , I..i 1.44 -i. ,l l!dlii. I4,1A,4 4 _ - �� 'U, .� 'I .. t ,l „I ;L 't thf. r t,, (lrh' Does the new law affect dependent care flex accounts and health flexible spending accounts? ,, t ft( f) —dcl •,f OR. Icyl_Idtion, rlopcnrlcnt (ale- tl ;,re iddIF td SPRING 2012 Suggested Health Plan Changes Current Police Patrolmans Current City Employee 2012 Suggested Benefit Plan Benefit Association Health Care Plan Health Care Plan All City Employees Deductible $100 Individual; $200 Family $200 Individual; $400 Family $500 Individual; $1,000 Family $600 Individual; $1,200 Family $1,200 Individual; $2,400 Family Includes Deductible Includes Deductible $5,000 Individual; $10,000 Family First 5 Visits: 100 %* In Network: Out of Network: In Network: Out of Network: Off lce Visits 6+ Visit: $15 Copay then 100% $20 Copay then 100 %* 60% 80% 60% rgency Room $25 Copay then 80% $100 Copay then 80% $100 Copay then 60% $150 Copay then 80% $150 Copay then 80% Venthre Care $15 Copay then 100%* $20 Copay then 100%* 60% 100% 60% *Deductible waived DRAFT 8/17/2011 3:48 PM • • • 4 -., - I T , , ., ; _,„- , • . .- . - . 110100** g • 0 1 11 I . ; . 0 *A 4 111 1 1 I I I 1111 III I 111 I I I II II 111 I I 1114 ill I I 111' 1 ill ' ...z„ - .9.a ,,,, „ 4,4$ SI I Illi 0 vA eatth pans S to eV Date: 41111M111■11111.1111.111111111111/1111111111......... In which industry/sector does your organization operate? How many employees does your organization have? sewer than 50 340„ SC: 99 21'4, I ',C) 749 22 • 4 99 ..Eiggitar- 11% In what state is your organization based , 999 6% (the most employees)? (),) 749 ‘,1( 5000 19' 5)00 4 1 % A, 10'S. YY, 2G 12% What is your organization's annual revenue? ft°' " • less than $5rn 10' 14.9m 26% Sl5m - 529.9rn 13% :230m $49.9m 9% S50rn $99.9m 9% S100rn c— ., 2011 Health Plans Survey Results • 2 fil PPO In- Network vs. Out -of- Network Out -of- Pocket Maximum !r»u,df, u3' -. 1 0250 5499 2.1'i 0 7' >., 5500 $999 5.1"', 2 2% 51.000 51,499 10 3 °4 5 6 51,500 51,999 8.5% 51 °t 52.000 52,499 1 1.45 ? 8' >, <.' 500 - $3,499 25 2% 13 8`n S'..'410 - 54,999 12 1 °4. 1) 05 55,000 - 57,499 12 8% 24.21 57 500+ i 2°3, 22 7% No out-of- network coverage 4 3 PPO In- Network vs. Out- of- Networr. Deductible 50 7 6% 1 8 < PPO In- Network vs. Out -of- Network Office Visit Copay S1 59Q 3. /% 2 6% S100 5199 1.1% 1.3% ailliall1111111 4111 011141114MmiNe 5200 5249 2 3% 1.8% 50 4 6% 3.7% 5250 5499 9.2% 5.6% S 1 59 0 2% 0 0 °/n 5500 5749 14.6 9.9%, 510 514 4.1% 0 6% ilk 5999 4.b% 3.2`/; 515 -519 7 3% 1 6% - 0 51.499 17.8% 14 -9" 520 574 25 5% 5 7% 500 51,999 9 5% 7 7 °,4 525 529 20.9% 5.6% 52.000- $2.499 10.1% 12.3°. 530 - 534 12.8% 4.1% 52,500 19.4 ^c 35.5% 535 + 8 0% 10.9% Subject to deductible & No out•of network coverage- -- 3.4% 16.6% 62.4% coinsurance No out -of- network coverage •- 5 6% PPO In- Network vs. Out -of- Network Employee Coinsurance wo'lu101t comemooreit PPO In- Network vs. Out -of- Network 0% 28.7% 13.6% Emergency Room Copay 1% - 9% 1.9% 1 0 °' 10 % -14% 107% ._ +.• ..-- 15 °u - 19'/, 3 7% 525 - 549 3.3% 1.8% 20% 24% 38 8'/+ 17 5 °i S50 - 574 8.9% 4.6% 75 ^;, 29 °/r 3 q °,; S75 599 5 6% 2.9% 30% - 34% 5 0% _,%, 5100 - 5124 22.2% 12.3% 35',, - 39,0 0.4%:. 5125 - S149 3.6% 1.8% 40 % 7.0% 5150+ 27.4% 22.1% No out-of - network coin<urance - Subject to deductible & coinsurance 29.0% 48.8`/° No out -of - network covet age -- 5.6`.x. • 2011 Health Plans Survey Results • 3 I WrIMMINfiriiiralliMMINNIIMakiii '416, PPO Employee Contribution Percentage 410 _. . ilimissa.6...i.. ai...vaill= Vole FIE •, 6 4 8 tlt 4 8/. 11 i'r 5 1 trt • 1 • C 3 • 0 3% 41% i t 6%, 3E- 2"/,' 34 9% 3 .,,,, i ;MO ill vs. Out-of-Network N/A 1 8 6 -.-, 9 4% . Deductible Annual Average Cost per Employee for PPO >q17, 7 3.., Plans , 1 ;qr., 11 7% '. 4% 5•1 30 9 2 1% t 0_ - :D0 S24k., 5.99c ,- . - _., s4 0n1) $4 4 `!' - . 3 3' , C 8`• 51 soc, 54 4 , : ' t . . i , , ;5 OW 55,49" I 1 . 7 ...,,,,, ,., 9r!‘ ., L. .,1 --,0, Sf 4 1 ....-”, 1, t1.., 1, .1 19 . 9 5';. 14 1 .' , • ...),1 - . :,.; .. ,, •.,1? 5.8 st:, 5 r.lc ■ I 01 ■F tttr -,,,p ,..f 446 ti 3 g11C• - , HMO In-Network vs. Out-of-Network Employee Coinsurance Annual Average Cost per Employee Plus Dependents for PPO Plans 0% 440% 15 0% 6'% 10% 14,v 6 8% 3 5 3O 215% 65 '5 ae'... '2 : t 5'20 _ 4 9% 3 ,),,,, () '''. / $ .:" 1 ,-,- .1 . 5 '1' ; iil •, zio-9 '4 5ot LA' : S:4 ",-!`• , 1 ./ 50[ :-. e 95 59 - .42! S, .!. : , >1: r',,.. ' 5,1J 5 III .. 5, 201 1 Health Plans Survey Results • 4 O In- Network vs. Out -of- Network Out -of- HMO Employee Contribution Percentage cket Maximum O% 21.5% 7.1 °%% 6.3% 6.5% Less than S249 10.9% 2.5% 1 % 4% 3 3`: 11% 1 1%, 1 6`.- 5250 - 5499 3.0% 1.4% 5500 - $999 5 4`% 5% 9% 4 6' => % 2.2% 1.9% 1 b 2 10% - 14% 10 1% 7 1% 6.3% 5 2% 51,000 - 51.499 12.5% 3 3' 15% - 19% 5.74! 4.1% 3.8% 5.2 %, 51,500 51,999 10.9% 3.8`s;, 20 %. - 24% 15 -8 %: 10.3%. 10.1% 9.2 % 52,000 52,499 13.3 0 i 4 9 25% - 79% 10 6% 9 2% 10.1% 10 6% 52,500 53.499 19.3% 7.1% 30% • 34% 1.3 7.3% 6.5% 8.2% 53.500 - 54,999 11.1% 4 4% 55.000 - 57,499 7 9 % 7 1.7 %n 35% 40% 5.7% 6.5% 6.8% 7.3% 41 %+ 12.5% 36.4% 35.1% 40.0% 57.500 + 5 7% 8.7% N/A 3.0% 8.7% 72.7% 4 6% No out -of- network coverage -- 50 0% Annual Average Cost per Employee for HMO Plans HMO In- Network vs. Out -of- Network Office Visit Copay 53,000 • 53,499 16 09-5 58.500 58,999 0.335 53.500 53.999 8 4% 59,000 59.499 0 8% 50 2.2% 2 2% 54,000 54,495 11 4% 59,500 - 59.999 0.3% 51 - 59 0 5% 2 0 54 500 54,999 15.0% 510,000 • 510.499 0 5% c 10 - 514 5.4° 55.000 55,499 13 6% 510,500 - 510.999 0 5% 519 11 5.4 , % SS 500 5.999 10 1% 511,000 S 1 1.499 0.3% 524 29.9 ?; 56 000 56,499 5.7% 511,500 • 511.999 0 3% 525 - 529 17 7`%u - 3 ? 56 500 56.999 6 5% 512.600 512,499 0.5% 530 534 14.1% 3 5 °% 57.000 57.49E 3.39' 512.500 517.999 0.0% $35 + 7 9 % 7 3 %, 51.500 51,999 7 7% 513,000 + 1 4% Subject to deductible & St1 000 58,499 2.5% 11.1 °k, 21.5% coinsurance No out - network coverage 53 8% Annual Average Cost per Employee Plus Dependents for HMO Plans HMO In- Network vs. Out -of- Network " "" "" y° Emergency Room Copay b . • i; - 3' .5.501. . :3.y9.! . 525 - 549 3 3%, 0 5+ ,: 550 $74 9 85 3.59: . . ..y � .1 ' $75 - 599 9 215 3.e-' . scCp. - _ '3 5100 - 5124 25.8`: : t t 5125 5149 3 0 9 „ $150+ a i5.8;;: Subject to deductible & y . coinsurance No out -of- network coverage , -,, .. • 2011 Health Plans Survey Results • 5 POS In-Network vs. Out-of-Network Out-of- Pocket Maximum Ll - .. -,:- , " less than 5249 13 6°4, 2.S% 1'2')(1 5499 0 (r S500 $99q 4 cr; 2 5% 51.000 51.499 9 :1' `, (,'.., 51.500 51.999 11.1 , 52,000 52,499 13.0', 86 •,- 52,500 - 53,499 19 8 9 3 53.500. 54,999 9 39,. 13 6'. POS In-Network vs. Out-of-Network 55000 S7,499 13.6% 21 0. Deductible 57.500 + 4 (.tci. 27 29 No out•of -network coverage 6 2=:-;. SC 247. . , SI • 599 1 2Y., 1 2 , 5100 - 5199 0.09 ; 0 6 2'OS ..in-ivetwork vs. Out-of-Network Office 5200 5249 0 051. 0 (7 Writ Copay 5250 5499 3 159 6.2 5500 - 5749 12.4% 9.3‘;,; SO 6 8% 6.2% 5750 5999 3 79' 1 cl°. SI SO 0 6% 0.0% 5),030 52.4)9 11 1% 111.< ., 510 514 6.7% 0.0% ,:.1.,:.) „ s1.,,,,,I 12451 8.051 515 - 519 8.6% 0.6% 52.0:,a - 52.499 10 5% n 3'4 520 524 15.4% 1.2% •.' ',:);),- 21 0% 38.9 525 - 579 70 4% 4 9% No out 0' net wct-1 . ■-, el ;rime 6 }- 530 - 534 14.8% 1.9% S35 + 10.5% 8.6% POS In-Network vs. Out-of-Networi,. Subject to deductible & 16.7% 69.1' Employee Coinsurance coinsurance No out-of-network coverage 7.4% 0% 46.3% 13.0% 1% 9% 3 .1°A 1.9% POS In vs. Out 10% - 14% 13.6% 5.69/c Emergency Room Copay 15% - 19% 3.7% 4.3% 20% - 24% 19.1% 13.0% $25 - $49 3.759 3.1'.% 25% - 29% 2.5% 1.9% 550 - 574 7.49:-. 3 30% - 34% 8.0% 24.5% $75 - 599 4 9% 0.0°x 35% 39% 0.6% 3.159 5100 - 5124 228 111% 40% 4 3.1% 26.5% 5125 - 5149 1 951, 1.251 No out-ot-network 7.4% 5150 + 3=1 F.., 22 2'1. , coinsurance. Subject to deductible & b() !, coinsurance No out-of-network coverage III 2011 Health Plans Survey Results • 6 • 5 Employee Contribution Percentage 0%. 16 1' 6 8% 6 2`k, 6 7q 1% 4% 4 3L 1 9% 1 9% I. 1, 5% 9% 3.!'h 3 i9:• 2 5% 1 2% 10 % - 14% 9.9% 4.90. -% 7-,, • 15 - 19 1i 1 • 6 2` >. u$ - 24 23 0'>; 13.0% i3.6°3 13.. 29% 10 5 11 75:, 9 9% 11 Indemnity In- Network vs. Out -of- Network 30% - 34% 4.3% 6 u% 7 4% 7./:',. Deductible 35-'4,- 40% 3.1% 4 9%. 5 6 7 4% 46 t Ouloa 110.016 15 4% 3S 8% 37.0% -,t, 3.9% 2.0%. Ni.4 0 6% 3 7 4 9% 1 9`- 51 599 0.0 ° %0 0 0% 5100 -5199 3.9% 2.0% Annual Average Cost per Employee for POS 5700 5249 2 o 3.9% Plans 5250 $499 13 7% 5 9% _ INIIM 5500 5749 7 8% 9.8% 53,000 - 53,499 9.9% 58,500 - 58,999 3.1% 5750 5999 3.9% 3.9% "3,500 S3,999 7.4% 59.000 59.499 1.2% 51.000 • 51.499 5.9% 0.0% S4,000 94,499 5.6% 59,500 59,999 2.5% 51,500 - 51,999 9.8% 3.9% 54,500 54,999 19.8% 510,000 510499 1.1" 52,000 52.499 11.8% 7.8% 00 55,499 8,0% 510,500 510.999 1.24 52.500 37.3% 51 0% 0 • $5,999 8.0% $11 000 511,499 0.0%0 No out 06nrty 0rk coverage 9.8% 6,000 56,499 7.475 511.500 $11,999 0 60/ St.,500 96,999 8.0% 512.000 • 512.499 0.0' 57.030 - 57,499 4.9% 512.500 512.999 0 6'. inaemnity In- Network vs. Out -of- Network 57.500 57.999 7.4%, 513,0001 1.9% Employee CoinsurRice 58.000 58,499 1.2% Annual Average Cost per Employee Plus o'., 31 4%; 19 6% Dependents for POS Plans 1% - 9% o ( ' o o%, 10% 14% 3.9% 0.0% + uoo 5 t 499 - 1', 511 lit); , $1.' 44 , . • 15% - 19% 0 0 %. 0 0% 53,500 $3.499 .0 yIL. 500 -612 495 20% - 24% 41.2% 21 6% 51.000 54.499 1 2 513 5 :1 1, 25 %, 29 %, 5.9% 3 9% s•1 53P 54.999 1.9 ,. >: - ,P^. - ` :: A5 i 9. 30% -34% 39'% 118% 55 49 .; ■.. , �° - - .:.Y.. - - i6 5' S5 '199 L1.. . , =:.500 51 1. .� 35% - 39% 0 0% 0 0 %t. SI -:, ,,..:. ..� � 4p;... 13 7% 33 3 "% 9YS o 9. No out of network coinsurance 9 8% .,- ';7c 7 99. 4 s, Sio Su. - .L. 9J`- _ 01 '8.9 Off _ l , 5Y,56> 55' 995 _., o .A. , : ,L,945 , - 510.19• 616',x6 -., c10nqu =t, 2011 Health Plans Survey Results • 7 I Indemnity In- Network vs. Out -of- Network Indemnity Employee Contribution III Out -of- Pocket Maximum Percentage ;r ,I lava '1"- 4 z , toss than 5749 C 0,, C 11 ,c '., 7 8" 7 S':. 5250 5499 0 0`* 0.0;., 5500 5999 1• 2 C r;. 51.000 51,499 9 8% 5, ', ,,. au. • 51,500 51.999 7 8v, 7 8:; ) 52.000 52,499 21 bit ■ ( -- r - 18' 52,500 53,499 27 5» 15 ')?' 53,500 54,999 / 8% 11 8 % i' c 9 55.000 57,499 118% 25 57,500- 7.8% 0. 11 c ^% No out - of-network coverage - 9 , Cr`" = % 7';. 13 Annual Average Cost per Employee for Indemnity In- Network vs. Out -of- Network Indemnity Plans Office Visit Copay eMby.. wit _ __ ' '' 090 51 44n 27 5% 58.500 58.999 0 0% 50 11.8 ° /i 9 P' ,, , ,, , L - )91:. 17. S9,000 59.499 0 0% 0.0% 54,000 54.499 7 8% 59.500 59,999 0.0% Si $9 0.0% 0.0:. 510 514 44 54 999 15 7% 510.000 510 499 2 0% 0.0°% 0.0% ;5,000 55.499 13 7! 510,500 510.999 0 0% ID 515 519 0.0° 0.01/4 , '. 55 999 5.9% 51 i.oac 511.499 0 0% 520 - 524 7.8°% 3.9% 50,499 2.01/4) 511.50c 511.999 2 0% 525 529 11.8% 2.0% 51.5.,C SC 9 2 , 2 0 51c,000 512.499 0 0% 530 534 7.0% 0.0° < r n 57 799 r 2 0... 512 500 51: 999 n n ^<. 5 35 + 7 -0% ; 3u/, S7.5JC 5 99E' 2.0% 512,000 0.0% Subject to deductible & 58,000 58 0 0% coinsurance 64.7% 68.6`, No out -of- network coverage -- 7.8!, Annual Average Cost per Employee Plus Dependents for Indemnity Plans Indemnity In- Network vs. Out -of- Network >; :::s∎ S �.: I;,, .;,, Emergency Room Copay ;3 ',O , : C.10 _ :, ..3002 S:'4 525 549 s :.99 SR s ., ■ 5.9�' 2.0% , 550. 574 9.8% 7 s* , .... y4 575 -599 2.0",. 2.0% $100 -$124 59% 3 .,�, . 5125 $149 0 0'o, o 5150 7 3 9' Subject to deductible & /2 6% %'1 coinsurance ,. No out of- network caveragt - IP 2011 Health Plans Survey Results • 8 • Do you offer health benefits to unmarried same -sex domestic partners? 17'% 26% Yes How many tiers does your prescription plan have (excluding mail order)? N ' 12% Two No, but considering it 25% ] hree Hav n ot encountered issue in Not applicable 55% Four 12°i Included i our medical 51% plan under deductible / coinsurance Do you offer health benefits to married same -sex domestic partners? •' 4 21% Yes litht No No, but considering it 2% 411111111P. Have not encountered Do you offer health benefits to unmarried issue / Not applicable oDDosite -sex domestic partners? 43% 23% 18% Yes • No 2% • No, but considering r Have not encountered Issue / Not applicab 57% • 2011 Health Plans Survey Results • 9 Do you anticipate that health care reform • will increase your organization's health benefit costs? l 0 Yes No What is your organization doing to reduce 81 health care costs for this plan year, or in the near future What are the likely actions your organization will take if health care reform increases your organization's health care / benefit costs? ?59 4 110 0 °i i O4;, ? 30r- 40 50°. 60'. 10 Poe • 201 1 Health Plans Survey Results • 10 • EMSPRING . PERSPECTIVES PROVIDING INSIGHT INTO TODAY'S EMPLOYEE BENEFITS ISSUES Annual Health Care Cost Increases, National Averages 2003-2011 40 +r 12.3% c• o t' , 9.2% 8 8% 6.9% 6 J °r° 6 0 A EALTH CARE costs, and consequently employee health p , enefits costs, have been increasing at an alarming rate for nearly a decade. Though cost increases had seemed to be leveling out 1.0° based on 2009 data. cost increases actually jumped in 2010 and are expected to rise further in 2011. Avoiding rising health care 2002 14 200': - ..7 2105 -01 2006 -17 2007 -08 200609 2039.10 2010 -11 costs is nearly impossible, but you can learn about why they o,ol 1 continue to rise and what you can do to manage costs for your Saline Hewitt Health t alu.:n butt" . 20/0 organization and your employees. The next few pages will discuss the latest health care cost figures, the factors leading to nearly a decade of unprecedented a: rate hikes, and some strategies that firms around the United States 2010 Health Care Cost Increases, t ~ „ are implementing to help manage costs. Also included is a Major Metropolitan Areas prescription drug report released each year by Kaiser Family Foundation. °" °"` 5 Bosto• 6.2°/0 National Health Care Cost and Renewal Rate .w. A .6 Projections = , ai :as ft ` o 1 3 751, ne•,••u 5 2% Overall national health care costs have been skyrocketing for •10,, < :,.,. 7 7w over a decade. Exhibit 1A. right, depicts the percent change in average annual health care cost increases from 2003 to 2011. Cost Qnurle, 1"._ .2% M /s•. •.aul 5 6°/ B increases leveled off between 2007 and 2009, and last year's Nev. , o. w Cr . E. l' Hewitt Health Value Initiatives had projected 2010's increase to g range ( o, 10 6% remain at 6 percent. However, cost increases in 2010 actually Opanoc - 7 2% jumped to 6.9 percent, and Hewitt expects an even larger spike in °hHade■c ,, 10 2• 2011. , fuu ‘)E , e " se' msi 1C The overall cost of health care has a direct impact on the rates Wast.o tor. 0._ L _p ,, /, . employers pay for employee health benefits. However, health enefits costs have varied widely across the country for the last v 2 o °rt a o �. 6 0 8.0% o o ,,. 12 c /. verai years, hitting some metropolitan areas much harder than Source Hewm Health I .,/ ' Imnat,. .'u!P others. Exhibit 1B, right illustrates health care cost increases in major metropolitan areas in 2010. Experts expect significant annual increases in health care Several factors that have contributed to climbing health care costs • costs to continue. According to the 2010 Hewitt Health Value over the past decade include: Initiative, the average cost of health care benefits for active Demographics employees rose to $9,028 per year in 2010 and is expected to Expansion of health care providers grow to $9,821 in 2011. Employers are also passing more of Consolidation of managed care companies these costs onto employees, as the percentage that employees are Political environment/government regulation asked to pay is also increasing. In 2010 employees paid an annual Increased utilization and consumer demand average of $1,966 (21.8 percent of the total cost of their New medical technology coverage); this figure is projected to grow to $2,209 in 2011 Weakening of managed care system (22.5 percent of the total cost). Health care spending and medical cost inflation Exhibit 2A, below, shows the average total health benefit Increased prescription drug costs costs for active employees for the years 2004 to 2011. Exhibit 2B below depicts the 2010 health care costs per employee in U.S. In addition, Hewitt has identified a couple specific factors that major metropolitan areas. are contributing to current 2010 health care costs and projected 2011 figures that are the highest we've seen in five years: Factors Leading to Increased Health Care Costs Why are U.S. health care costs skyrocketing? Several market An Aging Population conditions working in tandem have lead to a decade of Not only is the American population aging, but workforces are unrelenting increases. Understanding why your annual health as well. This is partially due to slower hiring levels recently, plan renewal rates may be significantly higher than the previous which has resulted in older employee populations. Because older year is the key to formulating alternatives and solutions to your workers are more prone to health problems, companies are seeing particular plan's challenges. It is also important for educating a rise in chronic conditions, costly medical problems and the use your employees about the reasons behind any plan or of prescription drugs, plus an increase in the amount and contribution changes you may decide to introduce. frequency of catastrophic claims. Annual Health Care Costs per Employee, National Averages 2004 -2011 S 02I- 928.4 s . 'Ioc c '.Sit g6,btF> btl'ci A 94 CI0C. ]• Y Y 2004 2005 :JOE 700 X006 2009 2010 2■1 ;r -r 2010 Health Care Costs per Employee, Major Metropolitan Areas e ' lab - . n ` L G. r F' n , i,b =1 Sao_ uh,. i6< • -` SI)�, '. l•i; .. �.I _. .. � I 1 I -.. b�u, ce ih�zh. !Yewul He ✓ I. ,lat lumntrv, : �i; h Health Care Reform Implications • It is too early to know exactly what impact health care reform Especially with the uncerta will have on health care costs in the long run, but there are some clearer early implications. There are several provisions going into of the impact of health care effect that are expected to raise costs, at least in the short term, including: reform, employers are looking n Covering dependents up to age 26 • Elimination of certain lifetime and annual limits at strategies to manage costs in Required coverage of preventive services the short and long term. • Prohibiting coverage rescissions • No pre - existing condition exclusions for children successful wellness and disease management initiatives are What Can Employers Do? dependent on quality employee education and communication You and other employers are undoubtedly trying to determine techniques. how to keep accelerating health plan rates from having debilitating repercussions on your organization. After years of Increased Employee Cost - Sharing trying to absorb most of the costs because of attraction and Though companies will continue to shoulder the burden of retention issues, many firms are now trying to attack the root increasing health care costs, many are choosing to pass more and causes of rising costs with sustained, systemic changes. more costs to employees. These are a few of the strategies for Especially with the uncertainty of the overall impact of health doing so: care reform, many employers are looking at strategies to manage Moving from fixed dollar copayments to a coinsurance costs both in the short and long term. model (employee pays a percentage of costs for each health care service) Using Health Care Data to Drive Strategy r Increasing deductibles and out -of- pocket maximums A separate Hewitt Associates survey found that employers Increasing employee cost - sharing for non - network cite using health care data to make strategic health plan decisions providers as their top cost - cutting strategy. However, the survey also consumer - driven plans, either as an option along iscussed the importance of going beyond just accessing data, with a traditional plan, or as the primary plan and understanding how to apply it to make decisions and implement strategic changes. Dependent Management Strategies Employers are changing the way the manage dependents and Greater Emphasis on Consumer Driven Plans finding huge cost - saving opportunities. Dependent eligibility An increasingly popular trend in the health care industry is audits can save companies huge amounts of money, as studies the adoption of consumer - driven health plans, typically involving show that an average of 3 to 12 percent of dependents are and HRA or HSA. These plans offer cost - savings for the actually not eligible to be on the health plan. Many companies are employer, but also benefit the employee as well. With proper also shifting to a per- member premium structure, rather than just education, employees can become smarter health care consumers, "individual" and "family." In addition, an emerging trend is which can save them and the company money. companies requiring spouses to pay more in premium or assessing a surcharge, to encourage spouses to enroll in their own Promoting Employee Health and Wellness employer's plan. Health and wellness initiatives have become another popular health care cost management strategy in recent years, and remain Strategic Vendor Management one of employers' top cost containment strategies. As more and A more recent trend involves companies more aggressively more employers are realizing, improving employee health and evaluating their vendor relationships and replacing or eliminating wellness can effectively lower health care costs and increase those vendors not producing measurable results. Employers are productivity. As this trend continues, many employers are also increasingly looking for opportunities to consolidate vendor creating more comprehensive programs, targeting specific relationships to get the most for their money. diseases and including dependents in the initiatives. Long - Term Solutions vs. Short - Term Fixes Incentives for participation are growing in popularity as well Particularly due to the financial pressure many employers are (including incentives for dependents), but it is important that under, short-term tactics like employee cost - sharing are still effective incentives are used. Rewarding employees for prevalent. However, employers are increasingly exploring multi- participating in a program or meeting a health goal is much more year plans and longer -term initiatives to improve overall impactful than incentivizing simply the completion of a health employee health and strategically manage costs into the future. ilk sk assessment. Many employers are instituting penalties for Especially in the wake of health care reform, many employers are onparticipation as well, often in the form of higher premiums or becoming more concerned with developing strategies that have additional employee cost- sharing. It is also important to note that sustainability in keeping costs down. 3 Which Solution is Right for You? • Should you pass costs on to employees at the risk of losing some of them? Or, should you try to manage costs in some of the other ways discussed in this report? Ultimately, it is a decision that you need to come to through thoughtful and detailed analysis of your plans and with the advice of your broker - consultant. Below are some questions you can address in order to begin developing an effective strategy that is right for your organization. Is our program structure, plan design and pricing appropriate? Do we have the right vendors, services, contracting and funding in place? Are our employee communication efforts appropriate and effective — especially in regards to employee health and wellness and/or consumerism? Do we have effective disease management and wellness programs for our employees? Do our pricing and plan design features encourage cost - conscious behavior on the part of our employees? Are we thinking about long -term solutions rather than simply quick fixes for this year? What Should I Tell My Employees? It's a fact: health care costs and health benefit costs continue to increase at exceptionally high rates from year to year. You want to continue to offer valuable health benefits to your current • and future employees, and you want those benefits to help you attract and retain quality employees. However, you also need to consider the cost- effectiveness of those benefits at a time when hefty rate hikes are the none, rather than the exception. The information contained in this report is designed to help you understand why your renewal rates may have increased, and to consequently help you educate your employees about the reasons for any plan or contribution changes you may have to make. If your employees understand current trends in the health care industry, they will be more supportive of changes and will appreciate the resources required to provide them with their health care benefits. 0 Perspectives is provided to EmSpring clients for informational purposes. Please seek qualified and appropriate counsel for advice on how to apply the topics discussed herein to your employee benefits plan. © 2007 -2010 Zywave, Inc. • 4 .. . . . . . ,.. _...„.. , . PlOr [U` T T A e c �, .,t.. •...... Special Report: Overview 28 percent in that period. However, the implementation of the Prescription drugs are a vital part of health care plans, and it is Medicare Part D drug benefit in 2006 substantially changed the mix important for employers to understand the trends beyond prescription of funding sources, as the government's share rose from 28 to 37 drug costs and what they can do to manage those costs. percent between 2005 and 2008, while the private insurance portion fell from 48 to 42 percent, and the consumer out-of-pocket share Spending in the U.S. for prescription drugs was $234.1 billion in declined from 24 to 21 percent. 2008, more than 6 times the $40.3 billion spent in 1990: Although prescription drug spending has been a relatively small proportion of Figure 2: Percent of Total National Prescription Drug national health care spending, it has been one of the fastest growing Expenditures by Type of Payer, 1990-2008 components compared to hospital and physician services. However, due to various trends, the rate of increase in drug spending has co declined in recent years. By 2008, the annual rate of increase in 5 6 Consumer so prescription spending was 3 %, compared to 5% for hospital care and 4 9 4' 49 48 48 44 Out -of- ° 0 for physician services (Figure 1). 40 43 a3 37 Pocket i5 35 30 31 31 28 26 �4 Private Figure 1: Average Annual Percentage Change in 20 26 20 27 n 22 23 7_ , 284 22 21 Hearn' Insurance Selected National Health Expenditures, 1996 - 2008 10 Pudic 20 12 0 Funds 18 16 15 15 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 14 12 13 14 14 Source: Kaiser Family Foundation colrulations using National Healt h Expe nddure 12 11 historical doto from Centers for Medicare & Me di mid Services. 10 8 7 8 9 9 88 8 77 77 7 6 55 6 6 6 66 5 55 6 4 45 4 3 3 3 2 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Hospital Care Physidan & Clinical Services Prescription Drugs Medicare's and Medicaid's shares of public funding changed when Source: Kaiser Family Foundation mtulatbns using Notbnol Health Expenditure the Medicare drug benefit took effect in 2006. Between 2005 and historical data from Centers for Medicare & Medicaid Services. 2008, Medicare's share grew from 7 to 60 percent, and Medicaid's share fell from 70 to 24 percent (Figure 3), because Medicare Annual prescription spending growth slowed from 1999 (18 percent) replaced Medicaid as the primary source of drug coverage for to 2005 (6 percent) because of the increased use of generic drugs, the beneficiaries with coverage under both programs. increase in tiered copayment benefit plans, changes in the types of drugs used and a decrease in the number of new drugs introduced.2 Figure 3: Distribution of Total Public Prescription The annual change in drug spending in 2006 (9 spending) increased Drug Expenditures by Type of Payer, 2005 & 2008 as a result of a number of factors, including the implementionation of Medicare Part D. The 2007 change in drug spending (5 percent) decelerated because of an increase in the generic dispensing rate, 23% slower growth in prescription drug prices and growing consumer 2005 70% safety concerns about certain drugs. The 2008 drug spending change 7% (3 percent) declined because of a slight decline in per capita use of prescription drugs due to the impact of the recession, a low number 16% of new drug products, and safety and efficacy concerns." 2008 25% 60% en below in Figure 2, the share of prescription drug spending by private health insurance increased substantially between 1990 0 2 0% lo% zo% 30% 4054 5056 60°e 70% 80% 005 (from 26 to 48 percent), contributing to a decline in the Other Public Medicaid Medicare Source: Kaiser Family Foundation calculations using National Heolth Expenditures share that people paid out -of- pocket (from 56 to 24 percent); the hisrorica, data from Centers for Medicare & Medicaid Services. public funds (government) share of expenditures increased from 18 to 5 Factors Driving Changes and public sources, including employer coverage, individually III A number of factors contribute to changes in prescription drug costs. purchased policies, Medicare and Medicaid. Increased Utilization. The number of prescriptions dispensed in the PPACA Changes Affecting Prescription Drug Coverage. PPACA U.S. in 2009 increased 2.1 percent, a larger growth rate than the 1.0 provisions affecting prescription drug coverage include: percent increase in 2008 over 2007. From 1999 to 2009, the number Significant expansion of coverage to the uninsured. PPACA of prescriptions increased 39 percent, compared to a U.S. population provides that prescription drugs is one of the "essential health growth of 9 percent. 5 benefits" that must be included in health plans in the new Health Benefit Exchanges and in the benchmark benefit package or Lack of Adherence. A recent study found that the rate of unfilled benchmark - equivalent for newly eligible adults under Medicaid. prescriptions has increased. Together, health plan denials and patient abandonment resulted in 14.4 percent of all new, commercial plan Rebates, discounts and other benefits for certain Medicare Part prescriptions going unfilled in 2009, up 5.5 percent from 2008. A D beneficiaries over the next several years 2009 study found that drug- related morbidity, including poor adherence (not taking medication as prescribed by doctors) and Response suboptimal prescribing, drug administration and diagnosis, costs as A variety of public and private strategies have been implemented to much as $289 billion annually, about 13 percent of total health care try to contain rising prescription drug costs. expenditures.' Utilization Management Strategies. Health plans have responded to Price. Prescription drug prices increased 3.4 percent in 2009, 2.5 rising prescription drug costs by increasing enrollee cost - sharing percent in 2008, 1.4 percent in 2007 and 4.3 percent in 2006. The amounts, using formularies to exclude certain drugs from coverage, average annual growth in prescription drug prices from 2000 to 2009 applying quantity dispensing limits, requiting prior authorization, and was 3.6 percent, compared to 4.1 percent for all medical care and 2.5 using step therapy (starting with the most cost - effective drug and percent for all items. progressing to more costly therapy only if necessary). In 2009, over three - quarters of workers with employer- sponsored coverage were in Changes in Types of Drugs Used. Prescription drug spending is plans with three or more tiers of cost sharing for prescription drugs, affected when new drugs enter the market and when existing almost 3 times the proportion in 2000 (27 %). Figure 4 shows medications lose patent protection. New drugs can either increase or worker copayment amounts for three- and four -tier structures. decrease overall drug spending, depending on price and how the new F igu re4 :Amo rg Covered Workers t .i th Three Four drug relates to existing drugs on the market (replaces something, is a prescription Drug Cost Sharing Arerag eCopayments, 2000 new treatment, adds competition, etc.). Drug spending is also typically reduced when brand name drugs lose patent protection and 90 85 il face competition from new, cheaper generic substitutes. FDA 9D 75 analysis of 1999 -2004 data shows that for products with a large 70 number of generics, the average generic price falls to 20 percent of C0 59 59 the branded price and lower. Several high -sales brand name drugs 50 38 4346 46 are expected to go off - patent in the next five years. New competitions 25 2932 from generic drugs may bring down costs for patients. 1518 22 2526 27 8 9 10 1110 10 Sales and Profitability. Prescription drug sales were $300.3 billion in 2009, an increase of 5.1 percent over 2008. This increase was over 0 double the 1.9 percent increase from 2007 to 2008. IMS Health Gen eric Pr efer re d Non prefer re d Fou rt h -Tier' attributes the 2009 growth to various factors including stronger 2000 2002 2004 2006 2009 2009 demand, manufacturing pricing practices, greater use of specialty Sou oe. Kos a/ HAFT su,V a y E m #o,e' -s * n so re d He a I th B e n Bits 2 007 -2 009 & h b t 94 drugs and fewer product safety issues." IMS Health forecasts a 3 to 6 percent annual growth in the U.S. pharmaceutical market in the next five years. A 2009 survey of individually purchased health policies found that PPACA Changes Affecting the Pharmaceutical Industry. The Patient the vast majority had drug benefits, with copayments being the Protection and Affordable Care Act, enacted March 23, 2010, predominant form of cost sharing. All HMOs and the majority of includes several provisions that affect the pharmaceutical industry: PPO/POS policies charged copayments which averaged, respectively, Imposes an annual fee on certain manufacturers and importers of $10/$13 for generic drugs, $26/$28 for preferred brand name drugs, brand name drugs whose branded sales exceed $5 million. and $44/$48 for nonformulary drugs. Fewer than half of the PPO/POS policies had a prescription drug deductible, while over half Establishes a process for FDA licensure of biosimilar (i.e., of the HMOs had a drug deductible. r5 interchangeable) versions of brand name drug; drugs are granted 12 years of exclusivity before biosimilar versions of a drug can Discounts and Rebates. Private and public drug programs negotiate be approved. with pharmaceutical manufacturers (often using contracted Changes certain drug labeling requirements and requires the organizations known as pharmacy benefit managers) to receive HHS Secretary to determine whether adding certain information discounts and rebates which are applied based on volume, prompt to a prescription drug's labeling and advertising would improve payment and market share. health care decision - making. Medicaid. Historically, prescription drugs have been one of the fastest - growing Medicaid services. Medicaid spent $19.4 billion for Insurance Coverage prescription drugs in 2008, an increase of 3.5 percent over 2007. Lack of insurance coverage for prescription drugs can have adverse effects, including not filling prescriptions or skipping doses because Medicaid requires drug manufacturers who want to sell their products of cost. Prescription drug coverage comes from a variety of private to Medicaid patients to agree to pay rebates to states for 6 atient drugs purchased on behalf of Medicaid beneficiaries. These and other PPACA changes will ultimately impact national CA increases the Medicaid drug rebate percentages for several spending for prescription drugs in ways yet to be seen. 0 es of outpatient drugs and requires that the resulting savings be remitted to the federal government. Reprinted with Permission from the Kaiser Family Foundation. The Henry 1 Kaiser Family Foundation is a non-profit, private operating Medicare. The Medicare Part D drug benefit shifted spending from foundation dedicated to providing information and analysis on health the private sector and Medicaid to Medicare, making Medicare the care issues to policymakers, the media, the health care community, nation's largest public payer of prescription drugs (from 7 percent in and the general public. The Foundation is not associated with Kaiser 2005 to 60 percent in 2008). Medicare prescription drug spending as Permanente or Kaiser Industries. a share of total U.S. prescription spending rose from 2 percent in 2005 to 22 percent in 2008. Medicare prescription drug spending totaled $52.1 billion in 2008, an increase of 13 percent over 2007.1' 1 All spending amounts in this report are in current dollars (i.e., not adjusted for inflation.) 2 Aaron Catlin et al.. "National Health Spending In 2005: The Slowdown Continues, Purchasing Pools. Some public and private organizations have "Health Affairs 26, no. 1 (January/February 2007)142 -153. banded together to form prescription drug purchasing pools which 3 Micah Hartman et al., "National Health Spending In 2007: Slower Drug Spending increase their purchasing power through higher volume and shared Contributes To Lowest Rate Of Overall Growth Since 1998," Health Affairs 28, no. 1 (January/February 2009) 246 -261. expertise. 4 Micah Hartman et al., "Health Spending Growth Ar A Historic Low In 2008." Health Affairs 29, no. 1 (January 2010)147 -155. Consumers. Consumers are turning to a variety of methods to reduce 5 Kaiser Family Foundation calculations using data from IMS Health, Iq including (Press Room, US Top -Line Industry Data 2008), and Census their prescription costs, ncluding requesting cheaper drugs or Bureau, The per capita number may differ from the number generic drugs, using the Internet and other sources to make price reported at KFF's website because of differing data sources comparisons, using the Internet to purchase drugs, buying at discount which use different retail pharmacy definitions (e.g., IMS Health includes mail order, stores, buying over - the - counter instead of prescribed drugs, buying 6 Wolters Kluwer Pharma Solutions, Inc., Pharma Insight 2009: Patients take More drugs in bulk and pill - splitting, using mail -order pharmacies, and Power Over Prescription Decisions (March 2010), using pharmaceutical company or state drug assistance programs. 7 New England Healthcare institute, Thinking Outside the Pillbox: A System -wide Importation. The high cost of prescriptions has led some to suggest Approach to Improving Patient Medication Adherence for Chronic Disease (August that individuals be permitted to purchase prescription products from 2009), distributors in Canada or other countries (it is currently illegal, — — — - — - -- though it does still happen). Importation issues such as actual savings g Kaiser Family Foundation analysis of Consumer Price Index, All Urban Consumers, amounts, drug safety, and marketplace competition and pricing U.S. City Average, not seasonally adjusted, . accessed inue to be debated. April 28, 2010. 9 US Food and Drug Administration, Center for Drug Evaluation and Research, "Generic Competition and Drug Prices." lltlOOk - . accessed March HHS projects U.S. prescription drug spending to increase from 12.2010. $234.1 billion in 2008 to $457.8 billion in 2019, almost doubling 1 0 IMS Health, "IMS Forecasts Global Pharmaceutical Market Growth of 5-8% Annually g Through 2014; Maintains Expectations of4-6% Growth in 2010," April 20, 2010, over the 1 1 -year period. The average annual increase in drug (Press Room. Press Releases). spending from the previous year is projected to increase from 3.2 11 IMS Health, "IMS Health Reports U.S. Prescription Sales Grew 5.1 Percent in 2009, to $300.3 Billion" (April I. 2010), online al (Press Room, percent in 2008 to 5.2 percent in 2009, and then rise to 7.3 percent in Press Releases). 2019 (reflecting increases in drugs prices, the number of new drug 12 IMS Health Press Release, ibid., April 20, 2010. approvals and the share of expensive specialty drugs). Drug spending 13 See also Kaiser Family Foundation, Cost Containment Strategies For Prescription as a percent of overall national health spending is projected to Drugs: Assessing The Evidence In the Literature (March 2005), increase somewhat from 10.0 percent in 2008 to 10.2 percent in 2019. 14 Kaiser Family Foundation and Health Research and Educational Trust, op. cit., Ex. 9.1. - - - 15 America's Health Insurance Plans, Center for Policy and Research, Individual Health In the coming years, implementation of various provisions of PPACA Insurance 2009: A Comprehensive Survey of Premiums, Availability, and Benefits will affect prescription drug coverage, utilization, prices and (October2009), regulation. • 16 Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Coverage and utilization of prescription drugs will be expanded Statistics Group. at by PPACA's: 17 Ibid. 18 National Conference of State Legislatures, "Pharmaceutical Bulk Purchasing: Multi - Health insurance mandate and premium and cost - sharing state and Inter - agency Plans, 2008 edition" (Updated May 8, 2008), subsidies 19 Devon Herrick, National Center for Policy Analysis, Shopping for Drugs: 2004, Designation of prescription drugs as an essential health National Center for Policy Analysis, Policy Repon No. 270 (October 2004), benefit to be covered by private health plans through the new Health Benefit Exchanges and by Medicaid for newly 20 US mail services sales have increased 54% since 2003, though their share of total US eligible adults prescription sales has increased only slightly - 2007: $44.6 billion in sales, 16% of total prescription sales; 2003: $28.9 billion in sales, 13% of total prescription sales. IMS Medicare prescription drug rebate, cost - sharing and Health. (About Us. Press Room. US Top -Line Industry Data. 2007 U.S). catastrophic threshold changes. 21 Kaiser Family Foundation, Prescription Drugs: Advertising, Out -of- Pocket Costs, and Prices charged to government programs will be affected by Patient Safety from the Perspective of Doctors and Pharmacists (November 2006), changes to Medicaid rebate requirements and expansions to the 22 US Department of Health and Human Services Task Force on Drug Importation, Section 340B program. Repon on Prescription Drug Importation (December 2004), ix, 0 Prescription drug regulation will be affected by the new process for licensure of biosimilar versions of brand name biological 23 Christopher J. Troffer et al., "Health Spending Projections Through 2019: The Recession's Impact Continues," Health Affairs 29, no.3 (March 2010), 522 -529. products and by drug labeling requirements. 7