Final Draft
10/14/2010
1
WMC Board of Pension, &
Health & Welfare Benefits
(“the Board”) is committed to
maintaining a sustainable
Medical Benefit ...
 To maintain reasonable access to high quality
medical service providers
 To limit financial risk exposure and provide
f...
 To provide a reasonable balance in the Plan
cost sharing between clergy and churches
(direct and indirect cost sharing p...
After the 2011, changes, the WMC
Medical Benefit Plan will still be a top
tier program which
◦ has higher Benefit Coverage...
WMC Medical Benefit Plan will still rank within
the top quartile when compared to medical
benefit plans sponsored by other...
WMC Medical Benefit Plan would be ranked well
above median market levels regardless of the
comparison standard or benchmar...
The average 2011 premium cost of the WMC
Preferred Provider (PPO) Medical Benefit Plan
will exceed $14,000 per year.
The t...
Medical Plan expenses are a major cost factor
in the delivery of total compensation for
clergy and conference staff.
As th...
The Board is charged with the responsibility to
proactively & effectively manage the benefit
delivery and costs of the WMC...
 The Medical Plan Surcharge for Churches
with clergy who do not participate under the
Medical Plan will be increased from...
 If this Surcharge had been adjusted by an
annual Medical Inflation Factor after
implementation, the current Surcharge le...
 To support the funding and long-term
financial viability and sustainability of the
Medical Benefit Plan
 To allocate a ...
 To support the Clergy appointment process
and reduce the compensation cost
differentials between Clergy with medical
ben...
1. To maintain the long-term financial viability
& sustainability of the Medical Benefit Plan
2. To control the overall Pl...
4. To address the rising costs under specific
components of the Medical Plan (i.e.
particularly the benefit coverages for
...
6. To balance the increase in Plan Funding
Costs between
◦ Direct Participant Cost Sharing (i.e. premium
contribution paym...
7. To modify the PPO Plan Structure and make
it a more consumer driven program
◦ Maintain service delivery flexibility of ...
2010
Monthly
2010
Annual
Expected 2010 Medical & Drug Claims Cost
(Based on Stop Loss Insurance
Underwriting)
$286,100 $3,...
 Exceptionally high Drug Utilization Levels as
well as Unusually high Utilization of & Cost
Levels for Branded Prescripti...
 The Funding Method has no impact on the
Medical and Drug Claims Expense under the
Plan
◦ Claims Costs are determined by ...
The 2011Medical Premium Rate increases are a
direct result of higher than expected Medical
and Drug utilization and claims...
In fact, the Premium Rate increases would have
been even higher under an insured funding
approach.
Based on a recent insur...
 The overall scope of the 2011 Plan Changes
is more comprehensive/ broader because-
◦ The higher claims costs have dictat...
 A commitment was made by the Board to
retain the current PPO benefit structure thru
2010 as part of conversion to a self...
Projected 2011
Cost Reduction
Cost Savings from Design Changes to
Medical Benefits
$135,000
Cost Savings from Design Chang...
Projected 2011
Cost Reductions
Estimated Increase in Premium
Funding Contribution Payments by
Participants under Revised
C...
Projected 2011 Premium Funding for Medical Plan
Churches & Conference Funding
Allocation (Participating &
Nonparticipating...
Tier
Level
Annual Salary
Range
2011
Premium
Contr.
Percentage
Contri.
Percent
Increase
Monthly
Partic.
Contri.
Payment
Ann...
Tier Level Annual
Salary
Range
2011
Premium
Contribut.
Percentage
Contribut.
Percent
Increase
Monthly
Participant
Contribu...
Expected Average Participant Premium
Contribution Payment is 12.4% based on
Salary Distribution
Churches & Conference Pay ...
Estimated 2011 Indirect Participant
Cost Sharing under Revised Plan
Structure (combined Deductibles,
Copayments & Coinsura...
Basic Plan Structure will continue to be a
Preferred Provider (PPO) Plan with participants
selecting their service provide...
 Self-funded Plan will continue to be
administered by Professional Benefit Services
(PBS)
 PPO Provider Network will be ...
 Maximum Annual Benefit Limit remains
unchanged at $2.0 million per year.
 Maximum Benefit Limit for Organ Transplants
i...
1. To produce immediate cost savings for the
Plan in 2011
2. To increase the Indirect Cost Sharing
features of the Plan to...
3. To balance the increase in the Participant costs
resulting from the higher claims cost between Direct
Cost Sharing (i.e...
In-Network Benefit Coverage
 A Graduated, Salary based In-Network
Deductible Schedule will be maintained in 2011
 In-Net...
In-Network Benefit Coverage
 In-Network Annual Family Deductible
Expense Levels:
◦ Tier #1- Under $35,000- Family Deducti...
Out-of-Network Benefit Coverage
 Out-of-Network Coverage changes are
targeted to reduce the out-of-network
utilization pa...
In-Network Benefit Coverage
 In-Network Coinsurance Payment Level
remains unchanged at Plan-90% &
Participant- 10%
 In-N...
Out-of-Network Benefit Coverage
 Out-of-Network Coinsurance Payment Level
is revised to Plan-60% & Participant 40% from
P...
Participant Copayment levels for Physician Care
Benefit Coverage were increased for the
following reasons:
◦ To adjust for...
 To adjust for the actual cost differential to the Plan
between in-network physician care and out-of-
network physician c...
 Routine/ Primary Care Physician Office Visits
(General Practitioner)
◦ In-Network Benefit- Copayment increased from $15
...
 Specialist Physician Care/ Office Visits
(Specialist Only)
◦ In-Network Benefit- Copayment increased from $15
to $30 per...
 Physician Care/ Services for Allergy Testing &
Diagnosis
◦ In-Network Benefit- Copayment increased from $15
to 20 per vi...
 Physician Care/Services for Allergy Treatment
(Serum & Injections)
◦ In-Network Benefit- Copayment increased from $15
to...
 Physician Care for Pregnancy- Prenatal &
Postnatal Care Only (Excludes Delivery & In-
Hospital Nursery Care Charges)
◦ I...
 Physician Services for Routine/ Well Child
Care
◦ In-Network Benefit- Copayment increased from $15
to $20 per visit
Plan...
The Coverage structure & separate Copayment
levels for Emergency Care Benefits were
modified and increased for the followi...
The Coverage structure & separate Deductible
and Copayment levels for Emergency Care
Benefits were modified and increased ...
 Emergency Treatment in Physician’s Office (All
Emergency Care of Illness & Injury)
◦ In-Network Benefit- $20 Copayment O...
 Emergency Treatment at Urgent Care Facility
(All Emergency Care of Illness & Injury)
◦ In-Network Benefit- Separate $75 ...
 Emergency Treatment of Illness or Injury in
Hospital Emergency room with or without
Hospital Admission
◦ In-Network Bene...
 Nonemergency Care in Hospital Emergency
room without Hospital Admission
◦ In-Network Benefit- Separate $250 Copayment
Pa...
In-Network Coverage for Chiropractic Services
 Plan Coinsurance payment is unchanged at
90% level
 Maximum Benefit Limit...
Out-of-Network Coverage for Chiropractic
Services
 Plan Coinsurance payment is reduced from
70% to 60% level
 Maximum Be...
Benefit Reductions will be incorporated for
failure to obtain Precertification of
Nonemergency Hospital Admissions and/or
...
 Cost of the Drug Benefit Coverage is
Exceptionally High for the WMC Plan
◦ WMC costs are substantially higher than other...
 Average Prescription Rate per participant for
WMC Plan is 3x higher than national norm
 Cost for Branded Medications re...
 To obtain immediate drug cost savings in
2011 & offset higher drug benefit utilization
trends.
 To support control of f...
 To reduce the utilization of branded
medications (particularly branded
nonformulary).
 To encourage greater utilization...
Retail Drug Coverage Schedule to be Revised from 2
Coverage Levels to 4 Levels of Coverage
◦ Tier #1 Coverage- Low Cost Ge...
◦ Tier #3 Coverage- Preferred Branded Drugs- $30
Copayment (No Change) Applies to Formulary
Branded Medications Only
◦ Tie...
Mail Order/ Home Delivery Drug Coverage
Schedule to be Revised from 2 Coverage
Levels to 3 Coverage Levels
◦ Tier #1 Cover...
◦ Tier #3 Coverage- Nonpreferred Branded Drugs-
$150 Copayment (Reduction)
Applies for Nonformulary Branded Medications On...
 A mandatory Mail Order/Home Delivery
Coverage will be implemented in January 2011
 Long-term Maintenance Drugs must be
...
 90 Day Transition Period will be provided to
convert existing Long-term Maintenance
Prescriptions to Home Delivery Cover...
A Step Therapy Requirement will be added to the
Drug Coverage in January, 2011.
Step Therapy requires the use of a generic...
 Drug Utilization Review & Case Management
Program will be implemented during first
quarter of 2011
 Express Scripts wil...
 Utilization Review will focus on cases with
multiple prescriptions (abusive or conflicting
drug patterns) & high cost ca...
 Medtipster Value Plan will be implemented in
January, 2011 to integrate with WMC Drug
Benefit Coverage.
 Medtipster Val...
 Tier #1 Coverage under the 2011 Drug
Benefit Schedule will apply for Low Cost
Generic Drugs dispensed under the
Medtipst...
 Copayment under WMC Plan is waived when eligible
Low Cost Generic Drugs are dispensed at the
specified pharmacies partic...
Assumptions for this Claims Example:
 Participant has surgery with total eligible In-
Network charges of $75,000
 Partic...
 Participant obtained precertification of hospital
confinement & operation prior to admission/
surgery
 Participant has ...
1. Participant pays the deductible (i.e. the first
$225 of eligible charges)
2. Participant also pays 10% of the next $650...
5. In summary, Participant pays a total of $875
or 1.2% of total claims cost under this
example.
6. Plan pays a total of $...
There are 3 key Elements to the effective long-
term management and control of Medical
Costs.
 Proactive Management of th...
The most important long-term control over
future medical expenses is the Participant
maintenance & control over their pers...
There are clear indicators under the claims
utilization patterns that, on an overall basis,
the WMC participant group is-
...
You & Your Dependents can help control future
Medical costs by
 Becoming more informed & discriminating health
care consu...
 Take Advantage of Health Screening and
Assessment offered at Annual Conference
Meetings
 Get Regular Exercise & Physica...
 Reduce Stress Levels in Your Life & Your
Families
◦ Take Regular Vacations
◦ Take Time off during the Week for personal ...
Plan pays 100% of the eligible In-Network Costs
without any deductible or copayments for the
following Preventative Medica...
This is the single area where there is
underutilization or lower utilization levels
under WMC Plan and an increase in util...
 Board is committed to proactively managing the
costs of the Medical Benefit Plan in order to maintain
a financially viab...
 Board believes that the 2011 Plan Changes are
necessary to stabilize plan costs and maintain the
future financial viabil...
 Board is hopeful that medical & drug claims costs
will level off during 2011.
 If Medical Plan Costs stabilize in 2011,...
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2011 changes to wmc medical benefit plan

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  • The Board is fully committed to maintaining a competitive, comprehensive Benefit Package for clergy and conference staff.
  • The recommended changes to the Medical Plan conforms with the objectives outlined under the Medical Benefit Strategy.
  • Because of the substantial changes which have occurred in the health care field and medical benefit plans over the past few years, the WMC Plan is a top tier program regardless of the benchmark or measuring standard which is applied.
  • The intent of the recommended Plan changes is to support the continuation of a top notch medical benefit plan.
  • The enhanced capability to exercise more flexibility and greater control over the Plan administration and costs is one of the primary reasons for the recommended changes to the Plan.
  • Self-funding will produce future cost savings for the WMC Plan

    This change enable us to make future administrative and structural changes which will help control future expense levels.

    2. There are synergies and cost efficiencies to be realized by consolidating coverage under a single plan.

  • 2011 changes to wmc medical benefit plan

    1. 1. Final Draft 10/14/2010 1
    2. 2. WMC Board of Pension, & Health & Welfare Benefits (“the Board”) is committed to maintaining a sustainable Medical Benefit Plan that will provide quality health care for active clergy and retirees of the WMC. 2
    3. 3.  To maintain reasonable access to high quality medical service providers  To limit financial risk exposure and provide financial security in event of catastrophic medical conditions  To maintain a medical benefit plan which is financially stable and sustainable on a long- term basis 3
    4. 4.  To provide a reasonable balance in the Plan cost sharing between clergy and churches (direct and indirect cost sharing provisions)  To support a family focused premium cost sharing approach which keeps family medical coverage affordable for clergy and conference staff. 4
    5. 5. After the 2011, changes, the WMC Medical Benefit Plan will still be a top tier program which ◦ has higher Benefit Coverage Levels and ◦ charges lower Participant Premium Cost Sharing Contribution Levels than most comparable medical benefit plans 5
    6. 6. WMC Medical Benefit Plan will still rank within the top quartile when compared to medical benefit plans sponsored by other Methodist Conferences. o The average participant premium cost sharing level for other Methodist Conferences exceeds 20% of the premium expenses. o Annual Deductible and Copayment levels are generally higher under medical plans for most Methodist Conferences 6
    7. 7. WMC Medical Benefit Plan would be ranked well above median market levels regardless of the comparison standard or benchmark which is applied ◦ WMC Plan benefit coverage levels are higher and premium cost sharing levels are lower than most comparable medical plans 7
    8. 8. The average 2011 premium cost of the WMC Preferred Provider (PPO) Medical Benefit Plan will exceed $14,000 per year. The total Funding Expense for the WMC Medical Benefit Plan exceeds $4.5 million in 2011. 8
    9. 9. Medical Plan expenses are a major cost factor in the delivery of total compensation for clergy and conference staff. As the primary stakeholders involved, the clergy, churches and Conference all have a vested interest in more effectively managing the benefit delivery and the costs of the WMC Medical Plan. 9
    10. 10. The Board is charged with the responsibility to proactively & effectively manage the benefit delivery and costs of the WMC Medical Plan to support the long-term financial stability and viability of this program. The 2011 Benefit changes are designed to respond to the actual 2009/2010 claims experience under the self-funded Plan and the changing dynamics of the medical benefit environment. 10
    11. 11.  The Medical Plan Surcharge for Churches with clergy who do not participate under the Medical Plan will be increased from $1,200 to $3,000 per year in January 2011. ◦ The $3,000 Surcharge is 21% of the Blended Medical Premium Rate which is charged to Participating Churches  The Current Surcharge of $1,200 per year was initially implemented in January, 2004 and has not been increased since that time. 11
    12. 12.  If this Surcharge had been adjusted by an annual Medical Inflation Factor after implementation, the current Surcharge level would be in the range of $1,900 to $2,000 per year at this time.  Long-term Cost Allocation Target for this Surcharge is 40% to 50% of the Blended Medical Premium Rate which is in effect during future years. ◦ To reach this Targeted Long-term Surcharge Objective, future adjustments will be phased in between 2012 & 2014 12
    13. 13.  To support the funding and long-term financial viability and sustainability of the Medical Benefit Plan  To allocate a larger portion of the funding for the Mandatory Medical Coverage for Clergy among all Churches (not just Participating Churches) ◦ Total Surcharge Payments by Nonparticipating Churches will only amount to 5%-6% of Consolidated Premium Funding for Medical Plan 13
    14. 14.  To support the Clergy appointment process and reduce the compensation cost differentials between Clergy with medical benefit coverage and those without medical coverage.  To support the Connectional system of health care for clergy & Conference staff. 14
    15. 15. 1. To maintain the long-term financial viability & sustainability of the Medical Benefit Plan 2. To control the overall Plan costs and slow the growth in the utilization trends in 2011 and beyond 3. To achieve immediate cost savings and reduce the cost of maintaining the Medical Plan in 2011 & 2012 15
    16. 16. 4. To address the rising costs under specific components of the Medical Plan (i.e. particularly the benefit coverages for Prescription Drugs, Out-of-Network Medical services, Hospital Emergency Care, Physician Care, etc.) 5. To balance the higher Premium/ Funding Costs of the Medical Plan between Participants and the Churches/ Conference 16
    17. 17. 6. To balance the increase in Plan Funding Costs between ◦ Direct Participant Cost Sharing (i.e. premium contribution payments by participants); and, ◦ Indirect Participant Cost Sharing (i.e. deductible, copayments, and coinsurance payments under the Medical Plan). 17
    18. 18. 7. To modify the PPO Plan Structure and make it a more consumer driven program ◦ Maintain service delivery flexibility of PPO structure with service choices by participants ◦ Encourage utilization of lower cost services under the In-Network coverage ◦ Discourage utilization of higher cost services under Out-of-Network coverage 18
    19. 19. 2010 Monthly 2010 Annual Expected 2010 Medical & Drug Claims Cost (Based on Stop Loss Insurance Underwriting) $286,100 $3,433,200 Estimated Actual 2010 Medical & Drug Claims Cost (Based on Average Actual Claims Cost for Period of 11/01/09 to 8/31/10 with Credible Claims Experience) $344,325 $4,131,900 Estimated/Potential 2010 Cost Variance between Expected & Actual Claims Cost at 12/31/2010 $57,925 $698,700 19
    20. 20.  Exceptionally high Drug Utilization Levels as well as Unusually high Utilization of & Cost Levels for Branded Prescription Medications  Large Number of Major Medical Claims- 19 Major Claims (Exceeding $35,000 per claim) totaling over $975,000 or approximately 24% of the total claims costs to-date.  None of the Major Claims exceeded the Deductible Limit of the Specific Stop Loss Insurance Coverage to qualify for reimbursement payment to the Plan 20
    21. 21.  The Funding Method has no impact on the Medical and Drug Claims Expense under the Plan ◦ Claims Costs are determined by the utilization patterns of the participants and their families. ◦ Claims cost level would be the same regardless of funding method (i.e. insured or self-funded)  The Premium or Funding Cost is determined by the medical and drug claims costs under the Plan ◦ Approximately 90% of the Medical Plan Costs are directly claims related (i.e. medical & drug claims costs plus stop loss insurance premiums) 21
    22. 22. The 2011Medical Premium Rate increases are a direct result of higher than expected Medical and Drug utilization and claims cost levels. 2011 Premium Rate increases would be necessary regardless of the Plan Funding Method. 22
    23. 23. In fact, the Premium Rate increases would have been even higher under an insured funding approach. Based on a recent insurance proposal, the 2011 annual premium expense for a PPO Insurance Plan thru BC/BS with a comparable benefit structure to the current PPO Plan would be in $5.0 million range. 23
    24. 24.  The overall scope of the 2011 Plan Changes is more comprehensive/ broader because- ◦ The higher claims costs have dictated this action, and ◦ there is also a certain degree of catch-up involved with the 2011 revisions.  Benefit Coverage levels under the current PPO structure have not been revised since the implementation of the existing structure 24
    25. 25.  A commitment was made by the Board to retain the current PPO benefit structure thru 2010 as part of conversion to a self-funded program.  Some of the 2011 Changes would otherwise have been made in 2009 & 2010 if the Plan had not been converted to self-funded arrangement. 25
    26. 26. Projected 2011 Cost Reduction Cost Savings from Design Changes to Medical Benefits $135,000 Cost Savings from Design Changes to Prescription Drug Benefits $90,000 Subtotal of Cost Savings for Plan Modifications $225,000 Increase of Cost Offset from Surcharge to Nonparticipating Churches $135,000 Total Cost Offsets to the Higher 2011 Premium Funding of Medical Plan $360,000 26
    27. 27. Projected 2011 Cost Reductions Estimated Increase in Premium Funding Contribution Payments by Participants under Revised Contribution Schedule $115,000 Total 2011 Cost Offsets to Higher Premium/ Funding Requirement of Medical Benefit Plan $475,000 27
    28. 28. Projected 2011 Premium Funding for Medical Plan Churches & Conference Funding Allocation (Participating & Nonparticipating) 87.6% Participant Premium Funding Allocation 12.4% 28
    29. 29. Tier Level Annual Salary Range 2011 Premium Contr. Percentage Contri. Percent Increase Monthly Partic. Contri. Payment Annual Participant Contribution Payment 1 Under $20,000 7.0% 2.0% $83.44 $1,001.28 2 $20,001 to $25,000 8.0% 2.0% $95.36 $1,144.32 3 $25,001 to $30,000 9.0% 2.0% $107.28 $1,287.36 4 $30,001 to $35,000 10.0% 2.0% $119.20 $1,430.40 5 $35,001 to $40,000 11.0% 2.0% $131.12 $1,573.44 29
    30. 30. Tier Level Annual Salary Range 2011 Premium Contribut. Percentage Contribut. Percent Increase Monthly Participant Contribut. Payment Annual Participant Contribut. Payment 6 $40,001 to $45,000 12.0% 2.0% $143.04 $1716.48 7 $45,001 to $50,000 14.0% 2.0% $166.88 $2,002.56 8 $50,001 to $55,000 16.0% 3.0% $190.72 $2,288.64 9 $55,001 to $60,000 17.0% 3.0% $202.64 $2,431.68 10 $60,001 to $65,000 18.0% 3.0% $214.56 $2,574.72 11 $65,001 to $70,000 19.0% 4.0% $226.48 $2717.26 12 Over $70,000 20.0% 5.0% $238.40 $2860.80 30
    31. 31. Expected Average Participant Premium Contribution Payment is 12.4% based on Salary Distribution Churches & Conference Pay 87.6% of Annual Premium Expense or Approximately $12,400 per clergy 31
    32. 32. Estimated 2011 Indirect Participant Cost Sharing under Revised Plan Structure (combined Deductibles, Copayments & Coinsurance Payments) 8.5% Projected 2011 Direct Participant Cost Sharing thru Premium Funding Contribution Payments 12.4% Estimated Total Participant Funding or Cost Sharing after Plan Changes 20.9% 32
    33. 33. Basic Plan Structure will continue to be a Preferred Provider (PPO) Plan with participants selecting their service providers. Plan Coverage will vary between In-Network and Out-of-Network Medical Services. ◦ The Coverance variances will increase between In- Network and Out-of-Network Benefit levels. 33
    34. 34.  Self-funded Plan will continue to be administered by Professional Benefit Services (PBS)  PPO Provider Network will be provided thru Cofinity  Express Scripts remains the Prescription Drug Benefit Manager 34
    35. 35.  Maximum Annual Benefit Limit remains unchanged at $2.0 million per year.  Maximum Benefit Limit for Organ Transplants is unchanged at $1.0 million per transplant surgery. 35
    36. 36. 1. To produce immediate cost savings for the Plan in 2011 2. To increase the Indirect Cost Sharing features of the Plan towards Median/ Average Market Levels (i.e. Deductible, Copayments, Maximum Out-of-Pocket Payment Limits) 36
    37. 37. 3. To balance the increase in the Participant costs resulting from the higher claims cost between Direct Cost Sharing (i.e. higher participant premium payment levels) and Indirect Cost Sharing under the Plan Coverage features (i.e. higher Deductible, Copayment level and Maximum Out-of-Pocket Payment Levels). 4. To shift a larger share of the Overall Plan Costs to Participants utilizing the Medical Coverage by increasing the Indirect Cost Sharing Features of the Plan (i.e. higher deductibles, Copayments, & Maximum Out-of-Pocket Expense/ Payment levels. 37
    38. 38. In-Network Benefit Coverage  A Graduated, Salary based In-Network Deductible Schedule will be maintained in 2011  In-Network Annual Individual Deductible Expense Levels: ◦ Tier #1 Under $35,000- Deductible increased to $150 from $100 ◦ Tier #2 $35,001-$55,000- Deductible increased to $225 from $150 ◦ Tier #3 Over $55,000- Deductible increased from $300 from $200 38
    39. 39. In-Network Benefit Coverage  In-Network Annual Family Deductible Expense Levels: ◦ Tier #1- Under $35,000- Family Deductible increased to $300 from $200 ◦ Tier #2- $35,001- $55,000- Family Deductible increased to $450 from $300 ◦ Tier #3- Over $55,000- Family Deductible increased to $600 from $400 39
    40. 40. Out-of-Network Benefit Coverage  Out-of-Network Coverage changes are targeted to reduce the out-of-network utilization patterns under the Plan.  Out-of-Network Annual Individual Deductible Expense Level increased to $800 from $400  Out-of-Network Annual Family Deductible Expense Level increased to $1600 from $800 40
    41. 41. In-Network Benefit Coverage  In-Network Coinsurance Payment Level remains unchanged at Plan-90% & Participant- 10%  In-Network Individual Maximum Out-of- Pocket Expense Limit is increased to $650 per year from $500  In-Network Family Maximum Out-of-Pocket Expense Limit is increased to $1,300 per year from $1,000 41
    42. 42. Out-of-Network Benefit Coverage  Out-of-Network Coinsurance Payment Level is revised to Plan-60% & Participant 40% from Plan- 70% & Participant- 30%  Out-of-Network Individual Maximum Out-of- Pocket Expense Limit is increased to $3,000 per year from $2,000  Out-of-Network Family Maximum Out-of- Pocket Expense Limit is increased to $6,000 per year from $3,000 42
    43. 43. Participant Copayment levels for Physician Care Benefit Coverage were increased for the following reasons: ◦ To adjust for medical cost inflation since the original implementation of the PPO Insurance Plan ◦ To reflect median market levels in physician care benefit coverage levels among other medical benefit plan ◦ To reflect the cost differential between primary physician care and specialist physician care and to adjust for the higher cost of specialist care 43
    44. 44.  To adjust for the actual cost differential to the Plan between in-network physician care and out-of- network physician care Reminder: Copayments for Physician Care Benefits are not applied towards Annual Deductible & Maximum Out-of-Pocket Expense Limits. 44
    45. 45.  Routine/ Primary Care Physician Office Visits (General Practitioner) ◦ In-Network Benefit- Copayment increased from $15 to $20 per visit Plan pays100% after $20 Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charge per visit Plan Pays 80% after $35 Copayment 45
    46. 46.  Specialist Physician Care/ Office Visits (Specialist Only) ◦ In-Network Benefit- Copayment increased from $15 to $30 per visit Plan Pays100% after $30 Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $45 Copayment plus 20% of charge Plan Pays 80% after $45 Copayment 46
    47. 47.  Physician Care/ Services for Allergy Testing & Diagnosis ◦ In-Network Benefit- Copayment increased from $15 to 20 per visit Plan Pays 100% of charges after Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charge Plan Pays 80% after $35 Copayment 47
    48. 48.  Physician Care/Services for Allergy Treatment (Serum & Injections) ◦ In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charges to $35 Copayment plus 20% of charges Plan Pays 80% after $35 Copayment 48
    49. 49.  Physician Care for Pregnancy- Prenatal & Postnatal Care Only (Excludes Delivery & In- Hospital Nursery Care Charges) ◦ In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charge to $35 Copayment plus 20% of charges Plan Pays 80% of charges after $35 Copayment 49
    50. 50.  Physician Services for Routine/ Well Child Care ◦ In-Network Benefit- Copayment increased from $15 to $20 per visit Plan Pays 100% of charges after Copayment ◦ Out-of-Network Benefit- Copayment increased from $15 plus 20% of charges to $35 Copayment plus 20% of charges after Copayment Plan Pays 80% of charges after $35 Copayment 50
    51. 51. The Coverage structure & separate Copayment levels for Emergency Care Benefits were modified and increased for the following reasons: ◦ To adjust for medical cost inflation since the PPO Plan implementation ◦ To reflect median market trends/levels in Emergency Care Benefit Coverages among other medical benefit plans ◦ To reflect the significant cost variances between the alternate types of available emergency care 51
    52. 52. The Coverage structure & separate Deductible and Copayment levels for Emergency Care Benefits were modified and increased for the following reasons: ◦ To encourage and motivate lower cost emergency care treatment in physician offices and Urgent Care Facilities ◦ To discourage & disincent out-of-network hospital emergency care and nonemergency care within any hospital emergency room setting 52
    53. 53.  Emergency Treatment in Physician’s Office (All Emergency Care of Illness & Injury) ◦ In-Network Benefit- $20 Copayment Only Plan Pays 100% of Charges after $20 Copayment ◦ Out-of-Network Benefit- $35 Copayment Only Plan Pays 100% of Charges after $35 Copayment 53
    54. 54.  Emergency Treatment at Urgent Care Facility (All Emergency Care of Illness & Injury) ◦ In-Network Benefit- Separate $75 Copayment Only Plan Pays 100% of Charges after $75 Copayment ◦ Out-of-Network Benefit- Separate $75 Copayment Only Plan Pays 100% of Charges after $75 Copayment 54
    55. 55.  Emergency Treatment of Illness or Injury in Hospital Emergency room with or without Hospital Admission ◦ In-Network Benefit- Separate $150 Copayment Plan Pays standard In-Network 90% Coinsurance Level after $150 Copayment ◦ Out-of-Network Benefit- Separate $150 Copayment Plan Pays Higher Out-of-Network 90% Coinsurance Level after $150 Copayment 55
    56. 56.  Nonemergency Care in Hospital Emergency room without Hospital Admission ◦ In-Network Benefit- Separate $250 Copayment Payment Plan Pays Standard 90% Coinsurance Level after Copayment ◦ Out-of-Network Benefit-Separate $250 Copayment Plan pays higher 90% Coinsurance after Copayment Nonemergency Care is defined as a condition that could be treated at physician office or urgent care facility. 56
    57. 57. In-Network Coverage for Chiropractic Services  Plan Coinsurance payment is unchanged at 90% level  Maximum Benefit Limit of $100 per office visit or treatment  Maximum Annual Benefit Limit for Chiropractic Services ◦ Annual Benefit Limit of 24 visits per year, and ◦ Maximum Benefit of $2,000 per year 57
    58. 58. Out-of-Network Coverage for Chiropractic Services  Plan Coinsurance payment is reduced from 70% to 60% level  Maximum Benefit Limit of $100 per office visit or treatment  Maximum Annual Benefit Limit for Chiropractic Services ◦ Annual Benefit Limit of 24 visits per year, and ◦ Maximum Benefit of $2,000 per year 58
    59. 59. Benefit Reductions will be incorporated for failure to obtain Precertification of Nonemergency Hospital Admissions and/or the Specified Medical Care and Treatment Procedure outlined under the Plan.  In-Network Coverage Reduction of $100 per incident  Out-of-Network Coverage Reduction of $500 per incident 59
    60. 60.  Cost of the Drug Benefit Coverage is Exceptionally High for the WMC Plan ◦ WMC costs are substantially higher than other comparable plans for other business sectors and other religious organizations  Annualized Cost of Drug Benefits exceeds $750,000 per year  Average Monthly Cost of Drug Benefit is $210 to $220 per month per participant unit 60
    61. 61.  Average Prescription Rate per participant for WMC Plan is 3x higher than national norm  Cost for Branded Medications represents over 70% of Total Drug Costs of Plan  Increase in Drug Benefit Costs & Drug Utilization trends are Escalating Faster than Medical Benefit Costs 61
    62. 62.  To obtain immediate drug cost savings in 2011 & offset higher drug benefit utilization trends.  To support control of future drug benefit cost increases & slow future drug cost inflation & utilization trends.  To change the basic structure of the drug coverage to a more cost efficient design which is consistent with the vast majority of drug benefit plans. 62
    63. 63.  To reduce the utilization of branded medications (particularly branded nonformulary).  To encourage greater utilization of generic equivalent drugs.  No changes have been made to the Prescription Drug Coverage during the last 4 years. 63
    64. 64. Retail Drug Coverage Schedule to be Revised from 2 Coverage Levels to 4 Levels of Coverage ◦ Tier #1 Coverage- Low Cost Generic Drugs- No Copayment (Enhancement) Applies only to Low Cost Generic Equivalent Drugs with Discounted Price below $16.00 ◦ Tier #2 Coverage- Other Generic Drugs- $15 Copayment (No Change) Applies for all other Generic Equivalent Drugs with Formulary Price of $16.00 or more 64
    65. 65. ◦ Tier #3 Coverage- Preferred Branded Drugs- $30 Copayment (No Change) Applies to Formulary Branded Medications Only ◦ Tier #4 Coverage- Nonpreferred Branded Drugs- $75 Copayment (Increase) Applies to Nonformulary Branded Drugs Only Note: The Standard Express Scripts Formulary will be used to determine Preferred versus Nonpreferred Drug Classification status. 65
    66. 66. Mail Order/ Home Delivery Drug Coverage Schedule to be Revised from 2 Coverage Levels to 3 Coverage Levels ◦ Tier #1 Coverage- All Generic Drugs- $30 Copayment (No Change) Applies for All Generic Equivalent Drugs. There is no Distinction for Low Cost Generics ◦ Tier #2 Coverage- Preferred Branded Drugs- $60 Copayment (No Change) Applies for Formulary Branded Medications Only 66
    67. 67. ◦ Tier #3 Coverage- Nonpreferred Branded Drugs- $150 Copayment (Reduction) Applies for Nonformulary Branded Medications Only Note: Low Cost Generic Drugs may be obtained under the Retail Drug Coverage without any copayment rather than converting to Mail Order/ Home Delivery Program. 67
    68. 68.  A mandatory Mail Order/Home Delivery Coverage will be implemented in January 2011  Long-term Maintenance Drugs must be obtained thru the Exclusive Home Delivery Program of Express Scripts  New Prescriptions for Long-term Maintenance Medication must be filled thru Home Delivery Coverage 68
    69. 69.  90 Day Transition Period will be provided to convert existing Long-term Maintenance Prescriptions to Home Delivery Coverage (transition period is equivalent to 3 monthly retail purchases)  There is no adverse impact to participants because the drug copayment levels are lower for Home Delivery 69
    70. 70. A Step Therapy Requirement will be added to the Drug Coverage in January, 2011. Step Therapy requires the use of a generic equivalent drug (when available) for a specified trial period before the prescription can be filled with either a Preferred or Nonpreferred Branded medication. This requirement will also encourage the use of alternate medications & treatment therapies. 70
    71. 71.  Drug Utilization Review & Case Management Program will be implemented during first quarter of 2011  Express Scripts will manage both components of this Program  This Program will proactively monitor and support the control of future drug utilization patterns & drug benefit costs. 71
    72. 72.  Utilization Review will focus on cases with multiple prescriptions (abusive or conflicting drug patterns) & high cost cases with annual drug expenses exceeding $6,000-8,000 per year.  Case Management will provide professional review, external support and case management expertise for catastrophic situations with annual drug costs exceeding the threshold expense level. 72
    73. 73.  Medtipster Value Plan will be implemented in January, 2011 to integrate with WMC Drug Benefit Coverage.  Medtipster Value Plan will offer Low Cost Generic Drugs without any Copayment under WMC Drug Coverage.  Medtipster is an independent company which is a clearinghouse for generic drug discount pricing programs. 73
    74. 74.  Tier #1 Coverage under the 2011 Drug Benefit Schedule will apply for Low Cost Generic Drugs dispensed under the Medtipster Value Plan.  Low Cost Generic Drugs are defined as generic equivalent drugs with a discounted price of less than $16 per prescription. 74
    75. 75.  Copayment under WMC Plan is waived when eligible Low Cost Generic Drugs are dispensed at the specified pharmacies participating under the Medtipster Value Plan. ◦ Participating Pharmacies include Walgreens, Walmart, Meijer, etc.  This Program complements and supports other changes to the drug coverage with a positive, cost savings alternative.  Any Low Cost Generic Maintenance Drugs which Qualify under Medtipster Value Plan can be obtained under this Program without converting to Home Delivery. 75
    76. 76. Assumptions for this Claims Example:  Participant has surgery with total eligible In- Network charges of $75,000  Participant has a 2011 In-Network Deductible of $225  Participant has a 2011 In-Network Out-of-Pocket Expense Limit of $650 76
    77. 77.  Participant obtained precertification of hospital confinement & operation prior to admission/ surgery  Participant has not paid any other medical expenses prior to the surgery (i.e. worst case situation) 77
    78. 78. 1. Participant pays the deductible (i.e. the first $225 of eligible charges) 2. Participant also pays 10% of the next $6500 of in-network charges or $650 3. Plan pays remaining 90% of the $6,500 in charges or $5850 4. At this point, the Participant has paid his/her full Maximum Annual Out-of-Pocket Expense Limit & Plan pays 100% of the outstanding charges of $68,275 78
    79. 79. 5. In summary, Participant pays a total of $875 or 1.2% of total claims cost under this example. 6. Plan pays a total of $74,125 or 98.8% of total claims under this example. This Provision provides financial security & makes quality healthcare, affordable for all Participants in event of catastrophic claim. 79
    80. 80. There are 3 key Elements to the effective long- term management and control of Medical Costs.  Proactive Management of the Program ◦ Design structure & administrative functions  Participant control over medical care delivery and plan utilization levels.  Participant control over their personal & their family’s health status. 80
    81. 81. The most important long-term control over future medical expenses is the Participant maintenance & control over their personal & family’s physical, mental & spiritual health & well being. 81
    82. 82. There are clear indicators under the claims utilization patterns that, on an overall basis, the WMC participant group is-  not as healthy as participants under other comparable group medical plans; and,  could be more effective and cost conscious consumers of medical services. Under a consumer driven Preferred Provider (PPO) Plan design structure, this combination will result in higher claims costs. 82
    83. 83. You & Your Dependents can help control future Medical costs by  Becoming more informed & discriminating health care consumers  Living a Healthier Life Style ◦ Your and your family’s lifestyle and health conditions have a direct impact on the future costs of our Plan These are the areas of direct control which you exercise over the Plan 83
    84. 84.  Take Advantage of Health Screening and Assessment offered at Annual Conference Meetings  Get Regular Exercise & Physical Activity- Participate in the WMC Wellness Program  Change Your Eating Habits ◦ Eat Healthier Diets ◦ Reduce the Food Intake 84
    85. 85.  Reduce Stress Levels in Your Life & Your Families ◦ Take Regular Vacations ◦ Take Time off during the Week for personal & family time & spiritual reflection  Take Advantage of Preventative Benefits Provided by Plan 85
    86. 86. Plan pays 100% of the eligible In-Network Costs without any deductible or copayments for the following Preventative Medical Services on an Annual Basis.  Routine Physical Examinations  Gynecological Examinations  Lab Testing for Pap Smears & prostate screening (PSA)  Influenza vaccinations  Immunization shots for children 86
    87. 87. This is the single area where there is underutilization or lower utilization levels under WMC Plan and an increase in utilization levels is encouraged. 87
    88. 88.  Board is committed to proactively managing the costs of the Medical Benefit Plan in order to maintain a financially viable & sustainable health care benefit program.  The Self-funded Arrangement is the most cost effective long-term funding method & the Board is committed to maintaining a self-funded plan. 88
    89. 89.  Board believes that the 2011 Plan Changes are necessary to stabilize plan costs and maintain the future financial viability and sustainability of the Plan. ◦ These Plan Changes address the major cost issues ◦ Structural Changes should address the funding issues ◦ Plan Changes should help slow the rate of future cost increases and hopefully stabilize future premium/ funding increase levels 89
    90. 90.  Board is hopeful that medical & drug claims costs will level off during 2011.  If Medical Plan Costs stabilize in 2011, the Board will not make any major changes to Benefit Coverage provisions for 2012, except as necessary to conform with future requirements of Health Care Reform Act.  It is important that every Participant does their part towards managing the Plan costs and maintaining the financial integrity of the Medical Plan by making cost efficient consumer decisions regarding medical services and living healthy lifestyles. 90

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