MINUTES

[In these minutes: Revised Guiding Principles, Discussion of Plan Administrator Reviews]

BENEFITS ADVISORY COMMITTEE (BAC) MINUTES

THURSDAY, MAY 20, 2004
10:00 A.M. – 12:00 PM
101 WALTER LIBRARY

[These minutes reflect discussion and debate at a meeting of a committee of the University of Minnesota Senate or Twin Cities Campus 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), Linda Aaker, Peter Benner, Linda Blake, Ted Butler, Don Cavalier, Frank Cerra, Karen Chapin, Dann Chapman, Steve Chilton, Amos Deinard, Keith Dunder, Jennifer Durocher, Jody Ebert, Ron Enger, Joe Jameson, Rhonda Jennen, Shirley Kuehn, Ted Litman, Rod Loper, Cathy Marquardt, Gladys McKenzie, Peh Ng, Kathy Pouliot, Gailon Roen, Ruth Rounds, Jackie Singer, Phyllis Walker, Gavin Watt, Pam Wilson. Karen Wolsterstorff.

REGRETS: Sue Brorson, George Green, Richard McGehee, Carla Volkman-Lien.

1. ANNOUNCEMENTS

Professor Morrison noted that the next BAC meeting would take place on Thursday, June 17, which would be his last as chair as Gavin Watt’s term as chair starts July 1. At that meeting, members whose terms end would be recognized, including Gailon Roen who is retiring from the University.

Dann Chapman then said that he recently met with the Executive Committee, which is supportive of the Trek across the University program, as well as the pedometers and educational materials being sent. The Trek design is to increase physical activity, build a community which cares about well-being, and build enthusiasm for overall UPlan wellness. The Trek will have three kick-off walking events, each 20 minutes in length, on each of the first Wednesdays in June, July, and August at 1 pm. The program recognizes that not all employees can leave every department, so they are encouraging supervisors to find alternate walking times for some employees, as well as alternate activities for those who cannot walk.

Q: How will the event be publicized?

A: An email will be sent to all employees, as well as deans, directors, and department heads. A paper mailing is also being considered.

Ted Butler then distributed the UPlan satisfaction survey follow-up results, sorted by administrator. He noted that the numbers in the table indicate the percent of responses of that type, while the number following the administrator indicates the percentage of total employees enrolled in that option.

Dann Chapman then distributed an email that was sent to all employees detailing 2005 rate changes. The email was sent at the request of some employees groups to give employees more preparation time and remind them that changes will take place in the next year. Final rate costs are still general figures, assuming another 15.7 percent rate increase like this year. More risk adjustment will be needed in the future, which will be a topic for the committee to address.

Karen Chapin said that the proposed 15.7 percent increase covers increases in health care costs, a 3 percent administrative fee, and a 25 percent increase in stop loss insurance.

Professor Morrison said that actual employee data from 2004 will influence the 2005 rates, which will be made available to the committee at its August meeting.

Q: Were tiered premiums considered for 2005?

A: They were, but the decision was made not to implement until at the least the following year otherwise family rates would have been hit twice in the same year.

Karen Chapin then distributed a letter that will be sent to employee who do not register for medical or dental coverage and whose coverage will now be terminated. This letter will be sent to an employee’s home and work addresses.

Dann Chapman then informed the committee that at their May meeting, the Regents approved the consultant contract for 2005. The RFP has two parts: standard services which would start January 1, 2005 and special services to begin immediately upon a finalized contract. He stated that both parts of the contract were awarded to Watson Wyatt. They will be presenting the committee with information at the August retreat. He noted that the firm is based locally, so there will not be the need for a long distance relationship.

2. REVIEW REVISED GUIDING PRINCIPLES

Professor Morrison distributed the presentation outline that will be given to the Regents in June regarding health care trends of the UPlan. He noted that at one time the Regents wanted to establish their own principles. It was felt that one set would be better, so committee and Regent views were fused into this document. He then asked members for their feedback.

Q: The state is considering a proposal to buy drugs. Is the University included in this proposal?

A: The University has had discussions with the governor and commissioners, but is not a formal part of the process at this time due to legal challenges. The University does not want its own progress held up by legal implications, but could take advantage of a plan once it is finalized.

Q: Why is the uneconomical cost of the University hospital not included in the principles?

A: This was not included because the analysis is not finished yet, although it appears that it is not a physician cost but a clinical use fee from the hospital that creates the increased expense. If the University stops paying these use fees, the cost will be reduced for all the plans.

Q: Will any cost savings be shared with employees?

A: Savings at this time are still going to increase the University reserves which would be needed in an emergency. However, any future savings could be applied to the next year’s premiums. This topic will be discussed more with the committee.

Senior Vice President Frank Cerra said that changes in the premium structure might be needed so that employees below a certain income level are not targeted. Employees who cannot pay more need to be protected while the University works to control market-place costs.

Q: Is Fairview charging the University double in terms of rates and fees?

A: Fairview currently charges the University for facility fees in labs and physician charges in clinics. Facility-use fees can also be assessed, not for profit, but as part of cost recovery. Clinic overhead fees are paid by a number of sources, such as lab and physician fees.

Q: Can the University keep health care costs compartmentalized from other University costs?

A: It can try, but it is also the guarantor in case of emergency. The health care reserves, however, are not used to supplement other University functions.

A member asked that the principle regarding union be changed to: “The collective bargaining process will determine the health benefits of represented members.”

Q: What is the lowest level of premiums and increases that must be passed onto employees?

A: The goal is have increases not be more than the rate they are at currently. The RFP process provides a cost per employee, and the low cost plan then determines the University’s contribution.

Q: Are more BAC representatives needed on the AWG?

A: The AWG has sufficient representation from this committee, by Professor Morrison and Mr. Watt, and does hear the committee’s opinion on every topic.

Q: How will this report be presented?

A: It will go to the Faculty, Staff, and Student Committee, and then be presented to the whole Board on Friday for discussion.

Q: Do some of the Regents want to see the University have a high deductible-high out of pocket plan option?

A: There has not been any feedback from the Regents to push a plan of this design. Cost savings will not be realized through shifting them to employees, but through better management.

Dann Chapman summarized that the University has a high sense of social responsibility to keep costs low for its employees. A partnership is needed between employees and administrators to make any model work. The question is also not if the University will offer incentives, but instead when and how they will be offered.

3. DISCUSSION OF PLAN ADMINISTRATOR REVIEWS – ISSUES FOR PLAN DEVELOPMENT

Professor Morrison asked if members had any comments or concerns about the completed plan administrator reviews.

Members made the following comments: