BENEFITS ADVISORY COMMITTEE

MINUTES OF MEETING

AUGUST 4, 2005

[In these minutes: Employee Benefits Announcements; UPlan Design Issues – Hospice Care, Prenatal Infusion Therapy, Duluth Base Plan, Consumer Driven Health Plans; 2006 Medical and Dental Rates; Two Tier v Four Tier Rate Structure, Food Services/Vending Motion]

[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), Linda Aaker, William Roberts, Pam Wilson, Karen Wolterstorff, Don Cavalier, Joseph Jameson, Michael Marotteck, Carla Volkman-Lien, Carol Carrier, George Green, Penelope Morton, Fred Morrison, Richard McGehee, Peh Ng, Theodor Litman, Rodney Loper, Dann Chapman

REGRETS: Carl Anderson, Amos Deinard

ABSENT: Frank Cerra, Keith Dunder

OTHERS: Robert Altman, Linda Blake, Ted Butler, Karen Chapin, Jennifer Durocher, Nancy Fulton, Betty Gilchrist, Shirley Kuehn, Eric Miller, Kathy Pouliot, Ruth Rounds, Jackie Singer

I). Gavin Watt called the meeting to order. He reported that because bargaining is underway, bargaining unit members are not in attendance at today’s BAC meeting.

II). Employee Benefits Announcements:

• Employee Benefits continues its implementation meetings with plan administrators. Dann Chapman thanked Employee Benefits’ staff that have been involved in these meetings for their hard work.
• Due to the significant changes to UPlan medical offerings for 2006, this fall will be a positive enrollment year for medical coverage. This means that all employees must make a new medical election during the upcoming open enrollment period. [PLEASE NOTE: Since this meeting, Employee Benefits has determined that 2006 will also be a positive enrollment year for dental coverage. As a result, all employees must make both a medical election AND a dental election.] An expanded open enrollment communication plan will be rolled out to provide employees with the information they need to make an informed decision about their benefit choices. As reported to the BAC in the past, some changes to this year’s open enrollment period are being considered. Since aspects of this are covered in the collective bargaining agreements, which are not yet settled, final open enrollment dates have not been set. As part of the open enrollment process, employees will continue to receive a paper packet with open enrollment materials even though open enrollment elections will be done on-line.
• Dann Chapman reported that the Farmer’s Market has received very positive feedback from the University community. Ruth Rounds thanked those that were involved from the onset in making this endeavor a success.
• Ruth Rounds noted that the University’s fall Wellness Campaign, “Take Time to be Active”, is being modeled after the Governor’s Fitness Challenge. The fall campaign is scheduled to be kicked-off at the University on or around September 12^th. For additional information about this initiative, visit the following URL: http://www.beactiveminnesota.org/govchallenge.asp Ms. Rounds thanked selected members of the BAC who helped design this campaign.
• Karen Chapin reported that because Medicare Part D goes into effect on January 1, 2006, rates for retiree medical coverage have been delayed. Retiree medical rates are expected to be available in early to mid October. Based on what is known so far, it is likely that the Medica, HealthPartners and UCare programs will continue to be offered in a similar manner as the current plans. The Blue Cross/Blue Shield (BCBS) program, however, will likely need to be separated into two parts:
• A medical portion, which the University will retain control of designing.
• A pharmacy program that will work with Medicare Part D.

In general, it is fairly likely the UPlan Retiree Group plans will incorporate the Medicare Part D benefit in the premium. In closing, Ms. Chapin solicited names of retirees that may be interested in serving on a committee to discuss this issue further.

III). Professor Morrison brought forward additional 2006 UPlan design issues, which have been uncovered and need to be resolved. The issues included:

• Hospice Care – Currently, hospital-based hospice care does not have a co-pay, but home-based hospice care has a $10 co-pay. As a result, this benefit could potentially discourage some plan participants from taking advantage of less costly, more comfortable home-based hospice care. Committee members unanimously recommended that starting in 2006 both hospital-based and home-based hospice care have no co-pay.
• Prenatal Infusion Therapy – Currently, prenatal care is considered preventive care under the UPlan and is covered at 100%. However, prenatal infusion therapy is not considered prenatal care, but rather as home health care, with a $10 co-pay. The BAC recommended starting in 2006 that prenatal infusion therapy be included as part of prenatal care and covered at 100% with no co-pay.
• Duluth Base Plan – In Duluth there are essentially only two clinic systems, St. Mary’s/Duluth Clinic (SMDC) and CareNorth. Approximately 75% of Duluth UPlan participants are in the CareNorth Care System and the remaining 25% are receiving care from SMDC. SMDC has traditionally been one of the most expensive care systems in the state, and CareNorth has customarily been one of the more economical.

Originally, the Selection Committee with the endorsement of the BAC put forward a recommendation to have the Duluth base plan be PatientChoice Insights by Medica. PatientChoice Insights has a common premium for each of its tiers but varying co-pays. For 2006, SMDC bid at a much higher rate than the previous two years. Their bid has put them in Tier III. SMDC’s very high bid was so high that the co-pay differential will not make up for the difference. This, among other factors, means it would cost the University an additional $400,000 to retain SMDC in the PatientChoice Insights base plan. Additionally, employees’ costs would be impacted. Because SMDC will be in Tier III, all employee co-pays would be at the $40 level even with a referral from CareNorth.

An alternative option is to have Medica Elect & Essential be the Duluth base plan, the same base plan that will be offered in the Twin Cities. Medica Elect & Essential includes CareNorth as part of its care system. SMDC, however, would become an out-of-network provider in Elect & Essential. Thus, Duluth participants will have the choice of accessing SMDC through the out-of-network feature ($500 deductible and a 30% co-pay) or they can choose to purchase one of the buy-up plans, which would include SMDC. SMDC will be available thru Medica Choice, the Medica Direct HRA and HSA plans, and also through Medica Insights. It was noted that for 2006, the margin between the base plan and the buy-up plans will be smaller than it has been in the past.

Questions/comments from members:

· What is the co-pay if someone is referred from the base plan to SMDC? The co-pay would be the base plan co-pay of $10.

· Is there any quality differential between these two care systems? Quality data has been reviewed and there is not enough difference to warrant the price differential.

· Two BAC members with SMDC and CareNorth experience stated that based on their quality of care experience and physician availability, having only CareNorth in the base plan would be acceptable in their opinions.

· The out-of-network benefit added to the base plan for 2006, provides participants with an additional level of comfort (limited exposure) should they choose to go out of network.

After much discussion members of the BAC came to the consensus that Medica Elect & Essential should be the Duluth base plan.

• Consumer Driven Health Plans - Currently, two Definity Plans are offered (HRA). For 2006, the original recommendation was to offer a Health Reimbursement Account (HRA) and a Health Savings Account (HSA):
• HRA (single coverage) - $600 account, $1,500 deductible and 100% coverage.
• HSA (single coverage) - $550 account, $1,500 deductible and 100% coverage.

In order to offer these two options, pricing for these plans would increase by over 30% above 2005 rates. As a result, neither plan would tie to the base plan pricing, and both would discourage participation by younger, healthier employees.

The new recommendation for 2006 is to offer the two options below. The goal is to make the HRA competitive with Medica Choice, the PPO product and the HSA competitive with the base plan:

• HRA (single coverage) - $500 account, $2,000 deductible and 90% coverage. Pricing for this option would be roughly $2 per pay period more than Medica Choice for single employees and roughly .40 per pay period more for family coverage.
• HSA (single coverage) - $500 account, $2,500 deductible, and 80% coverage. Pricing for this plan would be roughly $2 per pay period more than the base plan for single employees, and roughly .50 cents per pay period more than the base plan for family coverage.

Members discussed the possibility/feasibility of eliminating the HRA option altogether and simply offer two HSA options. Driving factors for retaining the HRA option include: 1). The HSA is not available to individuals over 65 years old 2). The HRA reduces the amount of risk an employee is exposed to as compared to an HSA and 3). Eliminating the HRA option would disadvantage employees with money to carry forward. (Until an employee with an HRA balance either spends or abandons any money they have in their account they cannot legally participate in an HSA).

Another suggestion was made to offer two HRA options and two HSA options with varying account amounts, deductibles and coverage levels. Mr. Chapman indicated for administrative and complexity reasons this would not be possible.

Mr. Chapman explained the University’s rationale for wanting to continue to offer a consumer driven health plan (CDHP) option:

• Maintain the CDHP coverage for high users – (HRA).
• Offer an option that would be attractive to younger, healthier people (HSA).

In light of time, and after much discussion on this topic, Professor Morrison indicated that Employee Benefits and the Administrative Working Group (AWG) would take into consideration input from the BAC in deciding how to handle this plan design issue. BAC members agreed that if 4 CDHP options could not be offered (2 HRA and 2 HSA) that they would like to offer one of each.

IV). A 2005 – 2006 medical rate comparison handout was distributed for members to review. Mr. Chapman noted that there is a need for 2006 rates to increase at a higher rate than previously thought. At the Board of Regents’ presentation in June it was estimated that the 2006 UPlan rates would increase by approximately 9% over 2005 rates. Instead, the rate increase for 2006 will be roughly 14% over 2005 rates. Once the underwriters/actuaries conducted their cost projections it became clear that the UPlan was under-priced in 2004 and 2005. Therefore, in order to make sure this problem does not persist it is necessary to have the annual 2005 to 2006 increase plus an adjustment that reflects where the 2005 rates ought to have been set. Since the UPlan has been in existence it has ended each year in the red rather than the black.

Ted Butler provided members with an overview of the medical rate comparison handout. Professor Morrison noted that incentives have been built into the 2006 rate structure to encourage employees to participate in wellness activities. For example, the incentive (the equivalent of $5 per pay period in a $65 lump sum payment) for the first half of 2006 is for employees to take a Health Risk Appraisal. The wellness incentive for the second half of 2006 (again, the equivalent to $5 per pay period in a $65 lump sum payment) is to participate in a qualifying Health Improvement Program. These payments could be used by employees at $5 per pay period to offset medical plan rate increases, although they will be paid in a lump sum.

Next, a 2005 – 2006 dental rate comparison handout was distributed. There is good news for 2006 in terms of dental rates. For the second consecutive year dental rates have remained relatively flat with one exception, HealthPartners, which has a minor increase for 2006. Ted Butler provided members with an overview of the handout. The handout contained an error, which Mr. Butler agreed to correct. The corrected spreadsheet will be distributed to members via email.

It was noted that dental enrollment is open for 2006. Mr. Chapman stated that employees are not required to make a positive dental election unless they want to change or waive coverage. [PLEASE NOTE: Since this meeting, Employee Benefits has determined that 2006 will also be a positive enrollment year for dental coverage. As a result, all employees must make both a medical election AND a dental election.]

Members were told that the rate sheets distributed at today’s meeting are confidential because they have not been finalized.

V). Gavin Watt noted that after much debate over the past few years the BAC put forward last spring a recommendation to the administration to phase-in over two years a four tier rate structure. This recommendation is subject to bargaining. It is uncertain at this time whether this recommendation will move forward or not.

A member asked how moving to a four tier rate structure would impact retirees. Mr. Chapman stated if the University moves to a four-tier rate structure, retirees without dependent children would be treated the same as an employee plus spouse or same sex domestic partner.

VI). Professor Morrison reported that the University’s current Food Services, Vending and Coca Cola contracts expire this year. The University’s Purchasing Department in conjunction with University Services will work collaboratively using the RFP process to put these contracts up for bid.

When the BAC first started talking about wellness issues, it expressed an interested in getting involved in making sure healthy food choices be made available on campus. As a result, members unanimously endorsed a motion put forward by Professor Morrison that the BAC be consulted in the formulation of the Food Services and Vending RFP as a means to promote the University’s wellness activities.

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

Renee Dempsey

University Senate