BENEFITS ADVISORY COMMITTEE

MINUTES OF MEETING

MARCH 10, 2005

[In these minutes: Farmer's Market, Review of RFP Issues, Pharmacy Benefit Structure, HealthPartners' Half-Tablet Program, Minnesota Community Measurement Program]

[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), William Roberts, Pam Wilson, Karen Wolterstorff, Peter Benner, Ronald Enger, Rhonda Jennen for Rita McCue, Joseph Jameson, Michael Marotteck, Carla Volkman-Lien, George Green, Penelope Morton, Fred Morrison, Richard McGehee, Peh Ng, Theodor Litman, Rodney Loper, Dann Chapman, Keith Dunder

REGRETS: Jody Ebert, Carol Carrier, Carl Anderson, Joe Kelly

ABSENT: Linda Aaker, Don Cavalier, Frank Cerra

OTHERS: Bob Altman, Linda Blake, Karen Chapin, Amos Deinard, Jennifer Durocher, Shirley Kuehn, Candace Lund for Jody Ebert, Kathy Pouliot, Ruth Rounds, Jackie Singer, Curtis Swenson, Phyllis Walker

I). Gavin Watt called the meeting to order.

II). Gavin Watt thanked RFP Subcommittee members, Employee Benefits staff and Professor Stephen Schondelmeyer for their hard work during the RFP review/interview process.

III). Ruth Rounds and Joe Jameson announced that final details are underway to locate the University's Farmer's Market on Church Street. Additional information concerning the Farmer's Market will be forthcoming once all the details are solidified.

IV). Professor Morrison noted that the March 24^th BAC meeting would be a åmembers only'/closed meeting. Information discussed at this meeting will likely contain trade secret information, which is confidential.

Members spent a large part of the remainder of today's meeting reviewing RFP issues. Professor Morrison provided those present with a review of the current health plan options:

• Plan A: HealthPartners - the University's base plan, which is a tight HMO. This plan has a limited network, low co-pays, no out-of-network care except for emergency room, urgent care and dependents who are not living in the area.
• Plan B: PatientChoice - a tiered HMO. This is a broader tiered HMO than HealthPartners that requires its participants to choose their tier at the time of enrollment. Premiums vary in accordance with the tier selected. PatientChoice has higher co-pays than the base plan, however, the co-pays are the same for all the tiers. There is limited out of network coverage.
• Plan C: PreferredOne – a preferred provider plan. This plan has a very broad network, with higher co-pays than both HealthPartners and PatientChoice. Additionally, the plan has out of network coverage with a $500 deductible and 70% coverage once the deductible has been satisfied.
• Plan D: Definity Health – a consumer-driven plan. The plan pays for preventive coverage and then creates a Patient Care Account (PCA). Once the PCA is exhausted the employee must pay applicable charges until the deductible is reached. All payments are coordinated through the plan and it has a very broad network.

The BAC has already discussed and decided to:

• Retain the present plan structure.
• Explore the possibility of offering a second base plan in the Twin Cities to create competition between base plan providers.

Issues discussed today included:

• With respect to a second base plan, should employees enrolled in the more expensive of the two base plans pay the premium difference? The second base plan would offer the same co-pay structure as the other base plan, but would have a different network. Members agreed this would be acceptable.
• The current tiered plan, PatientChoice, requires its care systems to bid yearly for their tier placement. If a care system is, for example, in Tier 1 in 2004, it does not necessarily mean that care system will be in that tier in future years. A further restriction with this model is that participants are required to select a care system within a particular tier. If an employee wants to change care systems within a tier they must follow the proper procedures. The market has responded to the limitations noted above by creating an alternative format, which would allow for one premium across all tiers but with varying co-pays. Under this plan design, members only have to sign up for the plan and do not have to choose a tier within the plan. Is this alternative structure acceptable? After much discussion and for a variety of reasons including that that alternate format would be easier to understand and administer, the Committee decided to explore offering the alternate option of a tiered plan versus the current structure.
• Should the University consider offering out-of-network benefits for Plan A for only a slightly higher cost? There was no objection by members to adding a benefit to the base plan.
• For those individuals enrolled in Plans C and D, should the Mayo Clinic continue to be an in-network benefit? Or, alternatively, should the premium be reduced on these plans, and, if participants want to go to Mayo Clinic, they pay out of network charges to do so? Members concurred that for those employees paying for Plans C and D they should have in-network access to the have Mayo Clinic.
• Currently, Plan C, PreferredOne, charges $30 for an office visit co-pay and $50 for an emergency room visit co-pay, should the emergency room co-pay be increased? Members agreed it should be increased because there needs to be a meaningful difference between an office co-pay and an emergency room co-pay.
• Presently under Definity Health, the plan includes an automatic deposit into an employees' PCA (Personal Care Account). New plans offer employer contributions into both the PCA and HSA (Health Savings Account). The PCA option requires automatic deposit of the employer's contribution into this plan, while the HSA could be offered with a lower premium, but no automatic employer contribution into the HSA. Should the University offer a HSA with a lower premium, but no (or very little) University contribution to the HSA? After clarification/discussion around this plan, it was decided that there should be little to no differential between the employer's contribution into the PCA or the HSA regardless if the premium may be lower.
• Definity Health pays doctor/pharmacy bills from an employees PCA account directly to the respective providers. In some proposed plans, the vendor makes reimbursement payments directly to the member, who then must pay the provider. How important to plan participants is the automatic payment feature currently offered by Definity? Members agreed that the best bid should be more of a driving factor when it comes to plan selection than whether the plan makes payments to the member or to the provider.

V). Professor Morrison stated that at a future BAC meeting the issue of the University's pharmacy benefit structure needs to be addressed. The question has to do with the distinction between generic, formulary and brand drugs. The University's ultimate goal is to increase the use of generic and less expensive drugs. There are two ways to accomplish this:

1. Increase generic drug use. Currently, the generic substitution law in Minnesota states that if two drugs have the exact same molecular compound, the pharmacist is required to dispense the generic drug. Under the UPlan, if a participant insists on having the brand equivalent dispensed, he/she must pay the full cost between the generic and brand equivalent. Thus, there is already sufficient incentive to encourage generic use when a molecular equivalent is available.
2. Use of therapeutic classes of drugs to treat ailments. Even when a generic molecular equivalent is not available, there is frequently a therapeutic equivalent drug can that could be substituted for more expensive drugs. These therapeutic equivalents often provide equal or better results, and can be significantly less costly.

Using therapeutic equivalent drug could significantly reduce the UPlan's pharmacy costs. Is this something that the Committee wants to consider? Members agreed they would like to hear more from Professor Stephen Schondelmeyer from the College of Pharmacy regarding this issue.

VI). Karen Chapin noted with prescription drug prices continuing to increase, HealthPartners is launching a voluntary Half-Tablet Program to help control costs. The program will encourage tablet splitting when clinically appropriate and safe. The program is initially available on a limited basis for some cholesterol and anti-depressant medications. Hearing no objections from the Committee, Karen Chapin volunteered to let HealthPartners know that the University will participate in this program.

VII). Peter Benner distributed information on the Minnesota Community Measurement Project. This project is funded by Minnesota's health plans to make available quality health care data for Minnesota consumers. The site, http://www.mnhealthcare.org/, reports the data by clinic system, however, provides no easy way to actually compare clinics with each other. Therefore, Peter Benner on behalf of AFSMCE Council 5 compiled spreadsheets, which he distributed that allows for more meaningful comparisons of the MCM data. Mr. Benner encouraged members to review this information.

VIII). Hearing no further business, Gavin Watt adjourned the meeting.

Renee Dempsey

University Senate