BENEFITS ADVISORY COMMITTEE

MINUTES OF MEETING

MAY 4, 2006

[In these minutes: AWG Update, RxAmerica Update, Harris HealthTrends Update, Long Term Care, Wellness Update, MinuteClinic]

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

PRESENT: Gavin Watt (chair), Linda Aaker, Tina Falkner, William Roberts, Jody Ebert, Rhonda Jennen for Rita McCue, Penny Morton, Curt Swenson, Don Cavalier, Joseph Jameson, Michael Marotteck, Carla Volkman-Lien, Carl Anderson, George Green, Richard McGehee, Fred Morrison, Peh Ng, Theodor Litman, Rodney Loper, Dann Chapman,

REGRETS: Karen Wolterstorff

ABSENT: Carol Carrier, Frank Cerra, Amos Deinard, Keith Dunder

OTHERS: Linda Blake, Karen Chapin, Ronald Enger, Nancy Fulton, Joe Kelly, Shirley Kuehn, Gladys McKenzie, Kathy Pouliot

I). Gavin Watt called the meeting to order.

II). Gavin Watt reported that in March the Administrative Working Group (AWG) visited Watson Wyatt, the University’s health care consultant. The purpose of the visit was to learn about new health care developments in the marketplace and to discuss ideas for reducing UPlan health care costs, without shifting costs to employees.

III). Employee Benefits’ Announcements:

a). Dann Chapman reported that the number of issues involving RxAmerica are down from earlier this year, and, in fact, are in what Employee Benefits considers the ‘normal’ range. Employee Benefits is no longer dealing with the large-scale, systemic problems that occurred earlier this year.

Next, Mr. Chapman provided members with some preliminary UPlan pharmaceutical utilization data. There has been a significant increase in the use of generic drugs between first quarter 2005 and first quarter 2006. In the first quarter of 2006, the UPlan had 56% generic usage as compared to 2005 when generic usage averaged 45% - 47%. Anecdotally, for every 1% increase in generic usage, the UPlan could conservatively save between $300,000 - $400,000 annually. While it is too early to know if this data can be annualized, it is a positive indicator. Mr. Chapman added that the increase in generic usage is not the result of denying participants their medications. In fact, comparing first quarter 2005 with first quarter 2006 shows the difference in the number of people receiving scripts was statistically insignificant, and, in fact, more scripts were filled in first quarter 2006 than first quarter 2005. Lastly, Mr. Chapman noted that when comparing 2005 with 2006, the average member’s out-of-pocket expenses for drugs went down by approximately .40 cents per prescription, which represents about a 3% change; therefore, employees are sharing in the savings.

b). Employee Benefits has never received a significant number of complaints concerning Harris HealthTrends. Of the concerns that have been reported a majority deal with Harris HealthTrends contacting UPlan members and encouraging them to participate in a health improvement program, and this is specifically what the University hired them to do. Employee Benefits is in regular contact with Harris HealthTrends to discuss any concerns that arise. To date, there has been a good level of participation in both the wellness assessment and the health improvement programs offered by Harris HealthTrends.

A member asked whether, with time, people’s experiences with getting their prescriptions filled have improved e.g. specifically, in terms of RxAmerica working with pharmacists to encourage generic utilization, use of step therapy drugs, etc. According to Mr. Chapman, what was to be a smooth, friendly transition for employees in the beginning of the year was an extremely difficult transition. RxAmerica failed to deliver what the University needed and expected at a very critical time. However, since that time, in general, experiences have improved. Gavin Watt added that the Pharmacy Subcommittee that was formed has been meeting on a regular basis with the clinical representative from RxAmerica in attempt to fine-tune the program. Mr. Chapin reported that meetings are being scheduled involving RxAmerica and high utilizing groups such as HealthPartners, UMP, and Boynton as a means to improve communication, and resolve any remaining service issues.

Mr. Chapman noted that it is unlikely there will ever come a point in time that a participant will not on occasion have problems with the coverage on a particular script. While challenging, physicians should have the resources available to work with a variety of formularies so as not to put patients in the position of going to the pharmacy only to find out a prescribed drug is not on the formulary. In response, a member asked what role RxAmerica is taking to educate physicians about the UPlan formulary. Ms. Chapin stated that RxAmerica publishes the UPlan formulary on its website, and that many physicians now carry around handheld devices, which allow them to download many different formularies and have them at their fingertips. Additionally, it was noted that some pharmacists are willing to call physicians to resolve issues that arise at the pharmacy.

The University will continue to work with RxAmerica to resolve outstanding communication issues. Mr. Chapman stated that his RxAmerica update today attempted to share some good news, rather than simply focusing on the bad.

Carl Anderson, chief operating officer of Boynton, reported that an early analysis conducted by Boynton indicates that the RxAmerica business is not allowing Boynton to recover its costs. While some pharmacies are set up to be loss-leaders, Boynton is not set up this way. Mr. Anderson attributes these losses in part to prescribing patterns and authorization patterns, which are not giving Boynton the margins it needs to cover its costs.

A member strongly encouraged Employee Benefits to consider offering workshops similar to the retirement workshops that are offered, but geared towards pharmacy, etc. Using Breeze software, these workshops could be offered to the coordinate campuses as well. Mr. Chapman stated that this was an interesting idea and that he would take it under advisement.

IV). Karen Chapin distributed a handout to supplement her presentation on the RFP that is being drafted for Long Term Care (LTC) insurance. The handout contained the LTC benefits schedule as well as other information. Currently, the University offers two benefit levels, $80 & $120 as well as two programs, a facilities only plan and a comprehensive plan. The facilities only plan covers nursing home care or care at another comparable facility, while the comprehensive plan provides for nursing home coverage as well as community based options such as home health care, assisted living, etc.

With respect to the lifetime maximum benefit, there are currently three options:

1. 1250 days
2. 1825 days
3. 5000 days

Other plan features include:

• Waiver of premium – Once receiving the benefit, no additional premiums are due.
• Temporary bed holding – If the need arises for a patient to temporarily vacate a nursing home, the facility agrees to hold the bed for a specified amount of time.
• Standard inflation protection – Every three years an individual can elect to increase his/her coverage.

Optional plan features and benefits include:

• Paid up policy – If an individual pays on a LTC policy for at least three years and then chooses to stop coverage, he/she would have at least a small paid-up policy.
• Inflation protection equivalent to 5% annual compounding.

In terms of the inflation protection piece, it is important that the University’s plans keep pace with ever increasing rates noted one member. If these policies do not keep pace with increasing costs, then individuals have just spent their money on a policy that will not pay off in a meaningful way. Individuals that purchase LTC should be encouraged to take advantage of the inflation protection feature.

Currently, 2166 employees purchase LTC. Of this total, 2001 purchase the comprehensive plan and 165 purchase the facility only plan. In terms of the different benefit levels, 653 employees have purchased the $80 benefit and 966 employees have purchased the $120 benefit. There are other benefit levels that employees have bought up to as well, which include $100 and $150. At present, 189 employees have purchased the $100 benefit and 358 employees have purchased the $150 benefit.

The LTC RFP Committee has studied the current program and puts forward the following recommendations for the BAC to consider:

• Structure the daily benefit level so it more adequately addresses the inflation that has occurred in LTC prices. Recommended benefit level options would be $120, $150, $200 and $250.
• In light of the inflation that has occurred since the current policy was put in place, eliminate the $80 benefit level, but grandfather this benefit level for current participants.
• Offer only a comprehensive benefit and not a facilities-only benefit due to the increasing emphasis on community-based or home-based care. Employees currently purchasing facilities-only coverage shall be allowed to continue this coverage if they choose.
• Add unlimited days of coverage to the current options that are available, 1250 days, 1825 days and 5000 days. Actuarially speaking, the equivalent to unlimited days of coverage is a 3 – 4 year timeframe.
• Provide ongoing coverage on new program for active employees with LTC coverage as well as coverage for those who retire or terminate employment with LTC coverage after 4/1/07 effective date.
• Discontinue the separate LTC retiree plan going forward due to low participation. Currently, 21 individuals participate in this plan. These individuals will be given the option of continuing this coverage if they choose.
• Add an optional benefit, ‘restoration of benefits’ for individuals that use a portion of their LTC benefit and then return to work.

Ms. Chapin noted that LTC elections do not need to be tied to open enrollment. To give employees more time to think through their decision, it is being recommended that LTC elections have an effective date of April 1, 2007.

The RFP will request full open enrollment with guarantee issue for all active UPlan participants. Ms. Chapin added that the current LTC plan covers employees, spouses, same-sex domestic partners, parents and stepparents.

Questions/comments:

• Can employees sign up for LTC at anytime throughout the year? Yes. If employees do not enroll during open enrollment their policies would need to be underwritten to prove insurability. New hires, of course, are guarantee issue. The RFP asks vendors their willingness to offer another open enrollment in, for example, three years after the initial effective date.
• If the current vendor, CNA, does not win the bid, will current CNA policyholders be rolled over to the new carrier? Ms. Chapin stated that this is the objective. If it is necessary to transfer current policyholders, the intent will be to transfer the group at their purchase age (the age when coverage was purchased) if possible. She added that until the responses are received, it would be impossible to guarantee that the prices will stay the same. The purpose of the RFP is to obtain the best possible pricing.
• If an employee has MS, can he/she get LTC coverage? Ms. Chapin stated that if the University has full open enrollment with guarantee issue, this individual could enroll. Ms. Pouliot added that there is no guarantee issue for spouses, same-sex domestic partners, parents or stepparents.
• Why is consideration being given to discontinuing the separate LTC retiree plan? Simply because the participation is low does not seem like a valid reason. Ms. Chapin noted that retirees currently covered under this plan would not lose their coverage if the plan is discontinued, but would be transferred to another policy. This recommendation by the LTC RFP Committee would close the option for retirees to purchase LTC through the University once they have retired. Very few retirees thus far have taken advantage of this benefit, which requires underwriting. Employees who have LTC at the time of retirement would continue to have the option of continuing coverage; however, there would be no future solicitation of existing retirees for LTC as coverage is readily available in the LTC marketplace.
• If the facilities only option is eliminated, will individuals with this coverage have a higher premium? Ms. Chapin stated that it is impossible to know what the premiums will be until the RFP comes back, but facilities only coverage is not expected to significantly increase. The intent is to keep the facilities only option for those currently enrolled, but not to offer it going forward.
• Please explain the difference between reimbursement versus indemnity LTC models. Reimbursement means that the total cost of care would be paid until the benefit amount is exhausted and indemnity means that a specified dollar figure is paid towards care, with the remaining balance being the patient’s responsibility. There are pros and cons to each model. The University’s LTC plan uses a reimbursement approach.
• Are there restrictions on which facilities accept LTC payments? Ms. Chapin noted that generally all long term care facilities will accept LTC insurance payments. The RFP will ask carriers whether their plan has negotiated discounted rates with LTC facilities in Minnesota, surrounding states and typical retirement areas.
• Is it possible for the University to offer an option that does not include nursing home coverage? Ms. Chapin did not know the answer to this question, but would inquire about it.

Members approved the suggested changes put forward by the LTC RFP Committee.

V). Karen Chapin provided members with a wellness update and distributed a handout to supplement her presentation. The following information was highlighted:

• Employees who completed the wellness assessment on or before April 30, 2006 received a $65 reward. Employees can still complete the assessment after April 30^th, but are no longer eligible for the reward.
• Employees can earn another $65 reward by completing one of the follow-up health improvement programs:
• Six or twelve month lifestyle management program.
• Twelve-month disease management program.
• Self-pace, online “Healthy Living” program.
• UPlan wellness-sponsored health action program (to be rolled out later this year).

Ms. Chapin also noted that employees do not have to complete the wellness assessment in order to participate in one of the health improvement programs and receive a reward.

• As of April 28, 2006, 7,928 UPlan participants, which represents 45% of the total University employee population, took the wellness assessment, and the breakdown is as follows: 7,745 employees, 165 spouses or same-sex domestic partners and 18 other dependents. The target is to have 69% of University employees taking the assessment after a several year period. Member’s attention was turned to a chart illustrating the year to date wellness assessment participation.
• Lifestyle and disease management program participation numbers were shared. A total of 5,418 people have enrolled in one of the health improvement programs. This represents 32% of UPlan members, which is higher than the target of 31%.

Comments/questions from members:

• Would it be possible for employees that have opted out of health insurance coverage, to pay to participate in the wellness program? Mr. Chapman stated that this is a good question, and would need further consideration. Currently, this initiative is in its start-up phase. Before the program is expanded, the University will want to make sure it is seeing a demonstrable return on its investment.
• How many people are ineligible to participate in the wellness program? Mr. Chapman stated that the 500 – 600 employees that have opted out of the UPlan as well as employees who work less than 75% time are ineligible to participate in the University’s wellness program. Mr. Chapman added that the goal has always been to measure the program’s results against the UPlan’s membership, which can be monitored for return on investment (ROI) purposes. If a group of people are added to the wellness program that the University is not receiving data on because they are not in the UPlan, dilutes the data collected. This group would have an unknown effect on the program that could not be measured.

VI). Karen Chapin reported that MinuteClinic and Target Stores have dissolved their business arrangement. After May 31^st, MinuteClinics will no longer be located in Target Stores. Instead, MinuteClinic is moving into CVS stores. MinuteClinic will be able to have double clinics in CVS stores, which was not an option at the Target locations. Additionally, MinuteClinic will be permitted signage at CVS stores. A communication piece will be distributed to employees to make them aware of this change.

Ms. Chapin noted that the CMU MinuteClinic is closed until October. In Duluth, QuickCare is open through the end of May.

VII). Upcoming meeting agendas:

• May 18^th - Medica plan review
• June 1 – HealthPartners plan review
• June 18 – Avian Influenza update and emergency preparedness plan

Hearing no further business, Mr. Watt adjourned the meeting.

Renee Dempsey

University Senate