BENEFITS ADVISORY COMMITTEE

MINUTES OF MEETING

JANUARY 23, 2003

 

[In these minutes:  Human Resource Updates, MEDEX, UPlan Lab Co-Pay Issues, Lifetime Maximum Plan Design Issues, Joint Family Coverage For University Families]

 

[These minutes reflect discussion and debate at a meeting of a committee of the University Senate or Twin Cities Assembly; none of the comments, conclusions, or actions reported in these minutes represent the view of, nor are they binding on the Senate or Assembly, the Administration, or the Board of Regents.]

 

PRESENT:  Fred Morrison (chair), Gavin Watt, Pam Wilson, Karen Wolterstorff, Jody Ebert, Ronald Enger, Wendy Williamson, George Green, Gailon Roen, Susan Brorson, Steve Chilton, Amos Deinard, Richard McGehee, Peh Ng, Theodor Litman, Dann Chapman,

 

ABSENT:  Linda Aaker, Carol Carrier, Frank Cerra, Marjorie Cowmeadow, Keith Dunder

 

REGRETS:  Nancy Wilson, Don Cavalier, Joseph Jameson, Carla Volkman-Lien

 

OTHERS:  Kathy Pouliot, Phyllis Walker, Tonya Soli-Hill, Karen Chapin, Linda Blake, Pat Yozamp

 

I).  Professor Morrison called the meeting to order and welcomed those present.

 

II).  Professor Morrison and Dann Chapman provided members with a few announcements:

 

�         On the Twin Cities campus alone 3,661 faculty and staff received flu shots.  The relatively modest campaign to encourage employees to get flu shots was quite successful.

�         Upcoming Agenda Items – At the February 6, 2003 meeting the committee will hear the consultant’s wellness report.  Then, at the February 20, 2003 meeting the committee will discuss the Johnson & Johnson wellness report.  At the March 6th and April 3rd meetings the committee will look at various issues including HIPAA, Post Retirement Health Care Savings Plan (PRHCSP), and an update on the data warehouse.  Future spring 2003 meetings will deal with plan design issues such as opting out of coverage, etc.

�         The UPlan is up and running successfully with one exception.  Definity Health is having a problem with the third party vendor that prints their medical cards.  The cards that were sent to Definity members contained the wrong group number.  Definity is working with this vendor on quality control issues and how to prevent this problem in the future.  Cards with the correct group number were mailed along with a letter explaining the situation.  Fortunately, this glitch has had no impact on peoples’ claims being paid.  There is the possibility, however, that University of Minnesota employees’ claims are being applied to the wrong group number.  Ironically, the wrong group number on the membership cards is for Definity employees.

�         Mr. Chapman noted that Human Resources will be reporting back to the committee on the data warehouse and will provide some initial results.  The data warehouse is anticipated to be up and running on January 30, 2003.

�         UPlan performance for 2002 based on approximately 10 months of paid claims indicates the University is ahead of its projections in terms of cash.  While the University spent slightly more than expected, its revenues were higher than projected.  Human Resources will provide the Board of Regent’s with a presentation on the UPlan’s performance at their February 13th meeting.  Following that presentation, HR will provide the report to the BAC.

 

III).  Karen Chapin reported to the committee on MEDEX, the University’s vendor for out of area medical emergency insurance.  MEDEX was incorporated into the UPlan effective January 1, 2003.  The program covers all individuals enrolled in the ‘active’ UPlan including active employees, early retirees, individuals on COBRA, and those on disability insurance.  The program does not cover retirees over age 65.

 

Questions have arisen regarding the program.  The benefits department plans to send a letter along with a FAQ sheet to benefit contact people in all University departments for distribution to their employees.  Before this is done, the BAC is being consulted and member input requested concerning these documents.  A draft copy of the letter and FAQ sheet was distributed to members for their review.  Comments and suggestions regarding these documents should be referred to Tonya Soli-Hill at hillx087@umn.edu

 

Ms. Chapin provided members with information regarding the MEDEX plan for active employees:

 

�         The plan covers both employees and their covered dependents.  Because only one membership card was sent out with the initial materials that were distributed, some employees thought their dependents were not covered.  The card is for informational purposes only, and, therefore, it can be photocopied for dependents.  Or, HR, at an employee’s request, will send out an additional card(s).

�         Individuals are automatically enrolled in MEDEX if they are a UPlan participant.  There are no additional costs above the premiums for the UPlan. 

�         The plan covers both business and personal travel.

�         MEDEX communication pieces to date have included:  An introductory memo to department benefit contacts; an introductory letter, brochure and card sent to the employee’s home and the UPlan Summary of Benefits.  Additional communication pieces will include:  A follow-up letter and FAQ sheet; a segment in “The Brief” and there will soon be information about the plan on the Benefit Department’s website.

 

Next, Ms. Chapin addressed the issue of retirees over age 65 as it relates to MEDEX.  It had always been the University’s intent to include retirees over age 65 in the MEDEX program.  Unfortunately, it was determined that there would be too much risk to offer MEDEX in connection with the fully insured retiree medical plans.  Because there would be the potential for disagreement between the three parties involved in how a case is managed, MediCare, the plan administrator and MEDEX, the decision was made not to include retirees over age 65 in the program.  The University did not want any uncovered expenses to fall on its retirees in the event there was a dispute amongst the parties mentioned above.

 

Given this information, HR proceeded to see what MEDEX offered on an individual basis.  Ms. Chapin provided members with information on MEDEX’s TravMed Abroad Program.

 

TravMed Abroad features:

 

�         Two enrollment options:  1).  Per trip and 2). Frequent traveler option.

�         The per-trip pricing is based on how long an individual(s) will be gone on each trip.

�         For those that travel frequently costs are assessed annually.

�         TravMed Abroad pays up to $100,000 for doctor and hospital fees, emergency dental, evacuation to a U.S. style care facility, repatriation of remains, trip expenses for child(ren) or companion and will make direct payment to a provider that will not let an individual in or out of a hospital without cash upfront.

�         TravMed also offers travel emergency assistance.

�         There is 24 hours/day, 7 days/week, 365 days/year access to a toll free phone number.

�         This plan covers international travel only.

�         This plan would be secondary to the UPlan.

�         This plan would be primary for repatriation of remains and companion trips.

 

TravMed Abroad exclusions:

 

�         The plan does not cover non-emergency care.

�         Mental or emotional disorders are not covered.

�         The plan will not cover a pre-existing condition if the medical problem has not been “in control” for 6 months.

�         There are a few other exclusions noted in the plan’s brochure.  Should the University decide to offer this plan to its retirees over age 65, HR will look into these exclusions further.

 

Ms. Chapin recommended that if the committee decides they would like to be able to offer retirees over 65 such a plan, other products such as SOS and ON-CALL should be looked into as well.

 

Comments and questions following the presentation included:

 

A member asked what portion of the UPlan premium can be attributed to MEDEX?  It was noted that it is a very small part of the total cost because the University buys on a group basis and because the plan is not primary on most occurrences.  Professor Morrison noted that the cost is substantially less than 1/10th of 1%.

 

The University’s role in offering such a plan to its retirees over 65 would be to merely publicize its availability and give interested individuals the contact information.  The University has no intention of administering this as a benefit.

 

Professor Morrison summarized the committee’s view that HR should go ahead and make information about this plan available.

 

IV).  Dann Chapman provided members with information concerning UPlan Lab Co-Pay issues.  Mr. Chapman noted:

 

�         Currently, lab co-pays are being charged by PatientChoice and PreferredOne.

�         Co-pays are not applicable to the Definity plan because it has a different cost sharing mechanism other than co-pays.

�         Lab co-pays are not being charged by HealthPartners even though it was the University’s intent for this to occur.

�         Lab co-pays are primarily being charged under the following circumstances:

a.     When lab services and a physician visit do not occur on the same day.

b.     When lab services are provided by another facility other than the physician’s lab.

c.     When the initial lab services are conducted at the physician’s lab but further analysis requires the lab work to be sent to another facility.

�         A PowerPoint slide illustrating co-pays paid by members into the UPlan was disclosed to the committee.  The co-pay figures represent a very small percentage; approximately 100th of 1% of all UPlan charges.  Professor Morrison recommended the committee endorse abolishing lab co-pays.  Dann Chapman, speaking on behalf of Employee Benefits, concurred.  This issue has generated a lot more pain than revenue.  Members unanimously passed a motion to recommend abolition of lab co-pays.

 

V).  Next, Mr. Chapman presented the committee with information on the lifetime maximum plan design issue.  Presentation highlights included:

 

�         PreferredOne has an unlimited lifetime maximum except there is a $500,000 lifetime maximum on out-of-network costs.

�         Definity has a $2 million lifetime maximum.

�         HealthPartners and PatientChoice both have unlimited lifetime maximums.

�         The University has $2 million stop/loss insurance on PreferredOne, Definity and HealthPartners products and $5 million stop/loss insurance on the Patient Choice product.  Stop/loss represents the actual insurance the University has purchased.  To illustrate, the University has payment responsibility for each individual’s claims up to $200,000.  Then, once an individual’s claims exceed $200,000 stop/loss coverage would take over and the University’s stop/loss insurance would pay for claims between $200,001 up to either $2 million or $5 million based on the respective plan.  After that the risk comes back to the University and the University is exposed for those claims.

�         No stop/loss carriers are willing to provide unlimited lifetime maximums and write a policy for unlimited exposure.

�         Big 10 schools with insured products, particularly HMOs, have unlimited lifetime maximums.  In Minnesota, insured HMO products must offer unlimited lifetime maximums.  Big 10 schools with self-insured plans, such as the University, have lifetime maximums on those plans ranging from $2 - $5 million.

�         Dann Chapman recommended setting the UPlan lifetime maximum at $5 million for all plans and purchasing stop/loss to cover the entire $5 million exposure.  As a representative of the University’s administration and taking into account the fiscal well-being of the University, Mr. Chapman believes that the University needs to be protected against that kind of eventuality.

 

Committee members engaged in a lengthy discussion over the ethicality of imposing a lifetime maximum on all its health plans.  Questions and comments that arose during the course of the discussion included:

 

�         Would the University periodically review the lifetime maximum amount in light of ever-increasing health care costs?  Mr. Chapman stated this is a figure that would be monitored and adjusted over time.

�         Each administrator has figures on how much each enrollee has accumulated towards their lifetime maximum.  Mr. Chapman noted that all University employees started from scratch with the UPlan in 2002.

�         A member noted that lifetime maximums could be perceived negatively by younger employees who plan to stay at the University, and theoretically could reach the lifetime maximum.  Dr. Chapman stated again that he is confident this figure would be looked at and adjusted over time.  Professor Morrison noted an example to the contrary.  He stated that despite reassurances from the administration that disability insurance would be re-evaluated and periodically adjusted this has never happened.

�         Mr. Chapman stressed that he is in no way attempting to reduce costs to the University by cutting off medical coverage for people who incur ordinary medical expenses throughout their lifetime.  Rather stop/loss insurance is catastrophic insurance protection for the University against the unusual circumstance that one or more individuals would incur phenomenal expenses that the University would then have to cover.

�         Professor Green voiced his opinion that this kind of exposure would not destroy the University’s budget in the unlikely event a few cases would occur.  However, for the individual faced with such a situation it would be totally catastrophic.  The University should, therefore, institutionalize no lifetime maximums on its health plans.  The likelihood of such an occurrence is small and the cost is bearable to the University.  Professor Green feels strongly that the University should incur this risk and to look at the human aspect of this issue.

�         Mr. Chapman noted that if such an occurrence would happen, as with any self-insured employer in the marketplace, catastrophic coverage responsibility would fall to the state or county.  Additionally, he stated that it is impossible to predict how many catastrophic occurrences will happen over the life of the UPlan.

�         Because the University has no experience on which to base such a decision, a member asked if it would it be possible to institute a lifetime maximum at a future date?  Mr. Chapman said although it would be possible to put this in place later, it would be difficult to do so retrospectively.  If the University allowed the UPlan to stand without a lifetime maximum for a number of years and then later try to impose a maximum and hold years of claims data against individuals would put the University in a very precarious position.  It would be extremely difficult to tell individuals at a future date after they had incurred years of expenses that they no longer had medical coverage because they reached the lifetime maximum that was recently put in place.

�         Professor Morrison, in an effort to multiply the lifetime maximum coverage from $5 million to $20 million, asked what impact there would be to premiums if individuals could switch plans and start the clock over again on the lifetime maximum?  In other words, try to get the lifetime maximum to be specific to the individual plan rather than to the UPlan as a whole.  Dann Chapman voiced a concern that by making the lifetime maximum plan specific there may be a real cost to the University on an annual basis.  One of the ways the University is getting the best stop/loss rates is by having competitors.  Currently, the University has three stop/loss vendors covering the 4 products.

 

Professor Green made a motion for the University to secure $5 million in lifetime maximum insurance for each plan, monitor and raise these maximums over time, and have the University absorb the extreme cases over $5 million.  Professor McGehee seconded the motion but suggested before making a final decision on this issue that actuarial data be obtained to help the committee determine risk.  Pat Yozamp concurred and stated that this is a very important issue requiring further thought and discussion before formal action should be taken.  The committee unanimously agreed to table the motion at this time.

 

VI).  Joint Family Coverage for University Families:  This plan design issue impacts married couples and domestic partners who are both employed at the University and have dependents.  In this situation, when an employee chooses family coverage, their spouse/partner, also an employee of the University, cannot be covered as a dependent.  The spouse/partner, therefore, must choose single coverage.  Under these circumstances, University families are forced to pay for both family and single coverage unless they choose the no cost plan.  Non-University families pay for only family coverage and do not incur the additional single coverage expense.

 

There was general agreement that couples in this situation should only be charged the same amount of premium as a couple that only has one family member employed at the University.  Consideration was given to the following proposition:

 

�         Allow the second spouse or partner to be added to the policy as a dependent.  In this scenario, one employee would pay the family premium and the spouse or partner would be a dependent on the policy.  The ‘dependent’ spouse or partner in this circumstance would not be forced to pay the extra single coverage premium.  Mr. Chapman noted that this plan design issue only has implications for a family with children.

 

Once logistical details are worked out on how to implement such a plan design change, it will be brought back to the committee for action.  In the meantime, hearing no further business, Professor Morrison adjourned the meeting.

 

                                                                                                Renee Dempsey

                                                                                                University Senate