BENEFITS ADVISORY
COMMITTEE
MINUTES OF MEETING
APRIL 1, 2004
[In these minutes:
Presentation by Definity Health, Announcements]
[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: Gavin Watt (chair), Pam Wilson, Karen
Wolterstorff, Jody Ebert, Carla Volkman-Lien, George Green, Gailon Roen, Susan
Brorson, Steve Chilton, Amos Deinard, Richard McGehee, Peh Ng, Theodor Litman,
Rodney Loper
REGRETS: Peter Benner, Dann Chapman, Joseph
Jameson, Fred Morrison, Ruth Rounds, Wendy Williamson
ABSENT: Linda
Aaker, Carol Carrier, Don Cavalier, Frank Cerra, Keith Dunder, Ronald Enger
GUESTS: Tomas
Valdivia - Chief Medical Officer, Kurt Cegielski - Director of Underwriting,
Barbara Flitsch - Sr. Account Executive, Lisa Sekely - Sr. Account Executive
OTHERS: Linda Blake, Karen Chapin, Kathy
Pouliot, Ted Butler
1 DEFINITY HEALTH
Dick McGehee
started by noting that results from the Definity survey he did are still on the
web for members to access. From
this survey, 63 percent of users are happy with the Definity plan and
execution, 80 percent of users like the concept of Definity (PCA and high
deductible PPO), and 14 percent of users expressed concern with execution of
the plan relating to customer support and billing. He noted that some of the problems reported have been noted
since the beginning, and while there has been a slight decrease in the
frequency of reports this is still a serious issue.
Another comment
expressed by many users was funds in a PCA and FSA and why funds from the FSA
cannot be spent first. This is an
area that the committee will need to explore, if legally feasible.
Dick McGehee noted
that this is not a plan that suits everyone. Some users of the plan were relatively healthy and
lower-income employees. If health
problems did arise, the PCA was gone quickly and the rest of the expenses were
the responsibility of the employee.
This type of case was seen a few times last year.
Q: Are only
younger, healthier employees enrolling in this plan?
A: No. Many employees with serious health
problems are also enrolled. High
users find great value in the flexibility and support offered by Definity. The employee cost is a function of plan
design and employer contribution, not a cost shift to sicker members.
Barb Flitsch for Definity, said that she has been working
with the University for the past two years and appreciates the patience and
support that the University has shown.
In the last two years, Definityıs membership has grown from 5000 to
300,000 and it now enrolls 90 clients. Due to these increases exciting changes are taking place for
users, and the company has been cash-flow positive for the last three
quarters. She then distributed a series
of slides that the other speakers would walk through with the committee.
Curt ??, Actuary
for Definity, reviewed statistics on the almost 1200 employees enrolled in the
plan, noting the number of single and family coverages as well as the older
overall population from the University.
He noted that most University employees are using their entire PCA each
year. For 2004, Definity is
projecting a 10 percent increase in costs, lower than the increases for other
health insurance programs.
Q: Why does the
University have a lower overall in-patient cost, compared to the Definity
average?
A: This may be due
to the small population that was enrolled the first year.
Q: Are other
clients enrolled with Definity as their only options?
A: Some clients
have other insurance options, although there has been a movement to just
offering Definity.
Kurt
Cegielski then said that the
PMPM average for the University is higher than the Definity book of business
(BOB), likely due to increased age of University enrollees. The PMPM showed a slight increase in
2002-03. Other trends for the
University were an increase in generics drugs and substitution and less mail
order of prescriptions, contrary to the BOB. Large claims for the University, which equates to an
individual with over $25,000 in claims in a year, accounted for one-third of
the total claims in 2002 and one-fourth of the total claims in 2003. The highest claim payout over the
two-year period was $196,000.
A member noted
that a Definity user used the mail order service for five prescriptions, and
all five were filled incorrectly, forcing the user to go to a local pharmacy
since they are prescriptions needed every day. Once this user had a bad experience with mail order, they
said that they will not return to using it.
Dr. Tomas Valdivia for Definity, described the vision
for Definity and how it plans to interact with members. In 2001-02, Definity was the first plan
to put price information on the web to allow members to better manage their
condition and resources. In
2002-03 web tools were enhanced to help users, and other companies started to adopt
Definityıs approach.
The results seen
to-date have been good, such as reductions in employee costs, but they are not
sufficient. The next step is to
provide proactive personal information to users to create activated consumers
who are prepared to interact with the care system and can find the best value
for their dollars when interactions are not acute cases.
He stated that
most users want information about health care, but do not want it from their
providers since they feel that the provider always has an ulterior motive. Definity needs to engender the trust of
its members so they can rely on the information being provided. An example is emails that Definity
sends to select members when there is an opportunity to save money or improve
the quality of care. If a member
chooses to learn more, they click on the link and are taken to a secure site
with information relevant to their condition. Members can also learn about these opportunities when they
call Definity.
Q: Why do you
think that members consider Definityıs plan as different from other providers?
A: For
fully-insured plans, there is a set fee PMPM. The plan bares the risk if a member exceeds to fee, but the
plan also saves money for members who do not. In self-insured plans, the institution is just charged an
administrative fee so employees are ultimately liable to their employer, not a
plan. Unfortunately, even though
all the University plans are now self-funded, employee still have perceptions
of plans from past experience, where the health plan has a hidden agenda to
make a profit. Also, other
companies still offer fully-insured plans, which can create a conflict of
interest for them. Definity only
offers a self-insured plan.
Dr. Tom ?? then
said that members are using the nurse line, for options and coaching, at
two-times the national benchmark and the call times are twice the national
standard. Employees on these lines
are also instructed to give out their direct numbers so that members can call
back, talk to the same person, and establish a relationship. Definity also has 40 percent of its
call as outbound, with the goal being to be 50 percent outbound and 50 percent
inbound. This increased
interaction has been shown to lead to changes in behavior. Definity clinical employees are also
offered special training to interact with members.
Q: How much email
contact is their with members and does Definity sell its users information?
A: Definity does
not sell member information. For
its own members, Definity does not send spam, but only notifies members with
relevant information.
Q: Is there an
incentive for Definity to spend more on its programs?
A: Definityıs goal
is to make employees and employers happy, knowing that better results have
require a higher expenditure.
Lisa ??, account
manager for Definity??, repeated that 53 of the 84 comments received by Dick
McGehee were positive for execution.
For those with negative results, they related to claims and customer
service. She showed the Definity
flowchart when it started in 2002, noting the numerous touch points made at
each step since most service were out-sourced. The process was sleeker in 2003. She then showed the refine process for 2004, noting Definity
will add its own claim system in May.
This will allow Definity more control over the process. Additionally, 250 employees, who
already work with the Definity account, will become permanent employees of
Definity.
Q: How are members
able to reduce their costs?
A: Several
examples were relayed, noting that the key concepts are empowering users to ask
questions regarding price and services before making decisions.
Q: How does the
provider network differ for the Twin Cities versus greater Minnesota?
A: Definity uses
the Araz network while Preferred One and Patience Choice use a different PPO;
both have a similar discount in the Twin Cities area. Discounts with Araz in greater Minnesota are on par with other plans since no
one in these areas offers great discounts. Araz does have an extensive network in the five state area.
Q: Do greater
Minnesota members have good service?
A: There are few
greater Minnesota Definity members. There has been a shift in Duluth to
Definity from Patient Choice, without any negative comments.
Q: Will Definity
be able to accommodate Health Savings Account (HSA) funds rather than PCA
funds?
A: PCA is actually
a health reimbursement account (HRA).
HSA is the newest legislative tool from the Medicare reform act that
allows employees to put money into it, with or without the employer contributing. The funds are owned by the employee and
can be taken with them if they leave Definity. These funds can be used for health care expenses without
taxation, but can also be used for other purposes, at which point the funds are
subject to a 10 percent tax and treated as income. With an HSA a high deductible plan, with set minimums and
maximums, is also legislated so the University would not be able to choose its
own gap for employee coverage. The
funding mechanism has not been fully explained since funds are added in
one-twelfth increments. How would
a claim, incurred on January 2, then be paid?
At this point
there are more questions than answers.
Definity will be working to offer HSA in 2005 at the earliest, but wants
to make sure that it can be done right before it is done at all. The plan will be confusing for some
employees and could create trust implications for Definity. Upcoming web sessions will be offered
for all clients explaining the HSA.
2. ANNOUNCEMENTS
Karen Chapin noted
that work is progressing on the following RFPs:
She then noted
that the walking program is moving forward with a target start in May.
Gavin Watt then
said that once the consultant has been selected, the UPlan sequel will begin
next year. The committeeıs
recommendation will be made in April 2005, for Regents approval in May 2005. Work will begin this summer and the
committee has an all-day retreat planned on August 27 with the
consultants. At this time, members
should plan on weekly meetings of BAC in September and October so that the RFP
recommendations are ready by October/November.
Ted Litman
distributed a summary of the responses on the Patient Choice plans, which will
be discussed on April 15.
With no further
business, Gavin Watt thanked the members for attending and adjourned the
meeting.
Becky Hippert
University Senate