Benefit Options Annual Report 2008

              Janice K. Brewer
Governor
William Bell
Director
Arizona Department of Administration FORWARD
Benefit Options is the name for the various insurance benefits offered to Arizona State employees by the State of Arizona. This report was prepared to give a broad overview of Benefit Options.
The information provided in the report was gathered from contractors participating in the Benefit Options insurance programs. This report was compiled to meet the requirements of A.R.S. §38-652 (G) and A.R.S. §38-658 (B).
The data shown is presented for the period October 1, 2007 through September 30, 2008. The active Plan Year runs October 1, 2007 through September 30, 2008. However, all retiree statistics herein are adjusted to reflect that same period, despite the fact that the retiree Plan Year runs January 1 to December 31.
Any questions relating to the contents of this report should be addressed to:
Benefit Options
Department of Administration
100 N. 15th Avenue
Suite 103
Phoenix, Arizona 85007
Telephone: 602-542-5008
Fax: 602-542-4048 Contents
Executive Summary 1
Glossary of Terms 2
Health Insurance Trust Fund Summary 5
Enrollment in Benefit Options Medical Plans 6
Networks for Active Employees and Non-Medicare-Eligible Retirees 7
Networks for Medicare-Eligible Retirees 8
Expenses vs. Premiums for Active and Retired Members 9
Expenses for Benefit Options Self-Funded Plans 10
Medical Expenses Associated with Medical Diagnoses 11
Hospital Care 12
Emergency Room Visits 14
Physician Visits 14
Urgent Care Visits 14
Generic and Name-Brand Prescription Use 16
Prescription Use by Therapeutic Class 16
Prescription Use by type of Drug 17
Annual Prescription Use 18
Annual Pharmacy Expenses by Age 19
Benefit Options Dental Plans 20
Dental Rates 22
Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums 23
Health Insurance Vendor Performance Standards 24 Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Executive Summary
The purpose of this document is to report the financial status of the Employee Health Insurance Trust Fund pursuant to A.R.S. §38-652 (G), which reads:
G. The department of administration shall annually report the financial status of the trust account to officers and employees who have paid premiums under one of the insurance plans from which monies were received for deposit in the trust account since the inception of the health and accident coverage program or since submission of the last such report, whichever is later.
The State’s Benefit Options programs fall into two major categories. The first of these provides medical and pharmaceutical benefits; the second is comprised of various health benefit programs including dental, vision, disability insurance, life insurance and a flexible spending account plan.
The health benefit programs, except for the flexible spending account plan, are fully insured. The medical and pharmaceutical programs fall into one of two types—fully-funded and self-funded.
The self-funded medical plan began on October 1, 2004. As a part of the design, two distinct options were created: the “integrated” and “non-integrated” options. The differences between these options are discussed below:
The Integrated Option: Currently UnitedHealthcare (UHC) provides this integrated option. UHC combines the functions of claims review and payment, contracting and administering a network of medical providers, utilization review, and disease management, all in one contract with the State of Arizona.
The Non-Integrated Option: Under this model, the basic functions of the plan are contracted out to numerous service providers. The Non-Integrated Option allows the State greater flexibility in contracting since service providers can be replaced, if necessary, without radically affecting the Benefit Options members.
Schedules of premiums received, incurred and paid medical/drug claims, and expenses related to the self-funded plans are included within this document. Also included is information regarding enrollment and the distribution of self-funded medical and pharmacy expenses.
Although not related to the Health Insurance Trust Fund, a summary of premiums collected and paid for life insurance, vision insurance and flexible spending accounts has also been included.
All data provided herein is for the active employee Plan Year 2007-2008 (October 1, 2007 – September 30, 2008). Except where noted, data related to the fully-funded Blue Cross Blue Shield and Secure Horizons plans is excluded.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Glossary of Terms
The following terminology will be used in this report:
Administrative fees – fees paid to third-party vendors for plan administration, network rental, transplant network access fees, shared savings for negotiated discounted rates with other providers, COBRA administration, direct pay billing, additional reporting billing, state fees (MA and NY), and bank reconciliation fees.
Case management – a collaborative process that facilitates recommended treatment plans to ensure that appropriate medical care is provided to disabled, ill or injured individuals.
Claim – a provider’s demand upon the payer for payment for medical services or products.
Claim appeal – a request for a review of the denial of coverage for a specific medical procedure contemplated or performed.
COBRA Consolidated Omnibus Budget Reconciliation Act of 1985 – a federal law that requires an employer to allow eligible employees, retirees, and their dependents to continue their health coverage after they have terminated their employment or are no longer eligible for the health plan - COBRA enrollees must pay the total contribution, in addition to an administrative fee of 2%.
Contribution strategy – a premium structure that includes both the employer’s financial contribution and the employee’s financial contribution towards the total plan cost.
Copayment – a form of medical cost sharing in the health plan that requires the member to pay a fixed dollar amount for a medical service or prescription.
Deductible – a fixed dollar amount during the plan year that a member pays before the health plan starts to make payments for covered medical services.
Dependent – an unmarried child of the employee or spouse who meets the conditions established by the relevant plan description.
Disease management – a comprehensive, ongoing, and coordinated approach to achieving desired outcomes for a population of patients - These outcomes include improving members’ clinical condition and quality of life as well as reducing unnecessary healthcare costs. These objectives require rigorous, protocol-based, clinical management in conjunction with intensive patient education, coaching, and monitoring.
Eligibility appeal – a request for a review of the denial of coverage relating to a claimant’s entitlement to benefits under a plan.
Employee – a person, other than one excluded by the Arizona Administrative Code, who works for the State of Arizona or a State University.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Exclusive Provider Organization (EPO) – an exclusive provider organization or network - Enrollees are limited to use only those providers on the exclusive list. Any exceptions require prior authorization.
Flexible spending account (FSA) – an account that can be set up through the State’s Benefit Options program – An FSA allows an employee to set aside a portion of his/her earnings to pay for qualified medical and dependent care expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes.
Formulary – a list of preferred medications covered by the health plan - The list contains generic and name brand drugs. The most cost-effective name brand drugs are placed in the “preferred” category and all other name brand drugs are placed in the “non-preferred” category.
Fully-funded – an insurance model wherein Benefit Options collects premiums and transfers the premiums to commercial insurers who take the risk of revenue to expense.
Integrated – health plan operations that are provided by one entity - These operations include: claims processing and payment, a network of medical providers, utilization management, case management and disease management services.
Medicare – the federal health insurance program provided to those who are age 65 and older or those with disabilities who are eligible for Social Security benefits - Medicare has four parts: Part A, which covers hospitalization; Part B, which covers physicians and medical providers; Part C, which expands the availability of managed care arrangements for Medicare recipients; and, Part D, which provides a prescription drug benefit. Retirees signing up for ADOA insurance should enroll in Parts A and B, but not C or D.
Member – a health plan participant - This individual can be an employee, retiree, spouse or dependent.
Network – an organization that contracts with providers (hospitals, physicians, and other health care professionals) to provide health care services - Contract terms include agreed upon fee arrangements for services and performance standards.
Non-integrated – health plan operations that are provided by multiple entities - These operations include claims processing and payments, a network of medical providers, and disease management services.
Payer – the entity responsible for paying a claim.
Pharmacy benefit manager – an organization that provides a pharmacy network, processes and pays for all pharmacy claims, and negotiates discounts on medicines directly from the pharmaceutical manufacturers - These discounts are passed to the employer payer in the form of rebates and reduced costs in the formulary.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Plan year – the period October 1 through September 30 for employees; January 1 through December 31 for retirees.
Preferred Provider Organization (PPO) – an organization that offers a broad selection of providers and the ability to choose a non-PPO provider as well - This non-PPO provider requires greater copay from the enrollee and a deductible to be paid.
Premium – agreed upon fees paid for medical insurance coverage - Premiums are paid by both the employer and the health plan member.
Retiree – a former State or State University employee, officer or elected official who is retired under a state-sponsored retirement plan - For analytical purposes, this term encompasses both actual retirees and their dependents.
Self-funded – insurance program wherein Benefit Options collects premiums, pays claims, and assumes the risk of revenues to expenses.
Self-insured – a plan that is funded by the employer who is financially responsible for all medical claims and administrative expenses.
Spouse – one legally married—as defined by the Arizona Revised Statutes—to an employee or a retiree.
Stop-loss – a form of insurance for self-insured employers that limits the amount the employer as primary insurer will pay for medical expenses.
Subscriber – employee, officer, elected official or retiree who is eligible and enrolls in the health plan.
Third party administrator – an organization that handles all administrative functions of a health plan, including: processing and paying medical claims, compiling and producing management reports, and providing customer service.
Utilization management – a process whereby an insurer evaluates the quantity (duration) and quality (level) of the delivery of medical services.
Utilization review – a process whereby an insurer evaluates the appropriateness, necessity, and cost of services provided.
Utilizer – a member who receives a specific service.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Health Insurance Trust Fund Summary
Table 1 provides a summary of receipts, expenses, and enrollment.
UMR, formerly FISERV Health or Harrington, is the claims payer for the non-integrated network of services. These include the Arizona Foundation, Beech Street, RAN+AMN, and Schaller Anderson networks. UHC refers to the UnitedHealthcare network. Both the UMR and UHC programs are self-funded. Secure Horizons, Blue Cross Blue Shield (BCBS), and all dental programs are fully-funded.
Table 1: Health Insurance Trust Fund Summary 2007-2008 2006-2007Premium (accrual basis, in dollars)UMR, UHC622,865,513 579,995,347 Secure Horizons8,536,011 8,122,332 BCBS33,707,464 32,398,069 Dental49,186,542 44,296,625 Total714,295,530 664,812,373 Expenses (in dollars)Medical Claims (accrual basis)467,414,597 420,133,173 Drug Claims (accrual basis)104,369,240 91,414,992 Medicare Part D Subsidy(2,483,125) (1,747,224) Rebates & Recoveries(14,851,232) (10,629,727) Reserves for future benefits38,559,679 39,912,651 Secure Horizons expense7,719,357 7,961,816 BCBS Payments33,713,166 32,398,069 Administration Fees24,455,648 22,353,777 Stop-Loss Premiums3,578,650 3,439,590 Appropriated Expenses4,830,477 4,205,835 Dental Costs48,878,502 44,296,625 Total716,184,958 653,739,577 Difference(1,889,429) 11,072,796 EnrollmentSubscribers66,993 66,490 Members133,099 131,496
In general, state, university, and political subdivision employees and retirees choose from one of the self-funded networks. However, Secure Horizons is the only fully-funded option available to Medicare-eligible retirees and Blue Cross Blue Shield is the only fully-funded option available to NAU employees and retirees.
The Medicare Part D Subsidy is paid to employers who provide pharmacy insurance to Medicare-eligible retirees. Rebates & Recoveries consist of rebates paid by drug manufacturers and stop-loss payments. Reserve (IBNR) is the amount of money that must be “reserved” for the purpose of paying claims that have been incurred but have not been reported. Stop-loss is a “catastrophic claim” reinsurance program that covers individual medical/drug plan expenses over $500,000 with a lifetime maximum of $2 million. 5
Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Enrollment in Benefit Options Medical Plans
The Benefit Options group medical plan is available to all:
•
eligible state and university employees, officers, and elected officials
•
state retirees receiving pension benefits through any of the state retirement systems
•
state or university employees accepted for long-term disability benefits
•
employees of participating political subdivisions
•
state or university employees eligible for COBRA benefits
The Table below shows how enrollment was distributed between networks and between active, retired, and university members. Network availability varies by region. The following pages show the networks available in each county.
Table 2: Average Monthly EnrollmentNetworkPlan TypeSubscribersMembersSubscribersMembersAFMCActivePPO522 990 5841,052RetireePPO584 788 7351,000UniversityPPO469 874 5611,038Beech StreetActivePPO130 380 121357RetireePPO259 310 290351UniversityPPO105 203 97182RAN+AMNActiveEPO7,469 17,943 7,84118,709RetireeEPO876 1,144 9281,233UniversityEPO1,968 3,664 2,3044,177Schaller AndersonActiveEPO8,282 18,328 9,10819,840RetireeEPO1,350 1,731 1,3121,701UniversityEPO3,650 7,363 3,9627,793UnitedHealthcareActiveEPO20,248 45,739 18,57541,696RetireeEPO3,561 4,830 3,5034,821UniversityEPO10,527 22,465 9,75321,029ActivePPO854 1,590 7001,834RetireePPO191 250 203268UniversityPPO830 1,530 6581,211Blue Cross Blue ShieldNAU onlyPPO2,854 not available 2,860 not available SecureHorizonsMedicare onlyHMO2,225 2,892 2,3183,034Political SubdivisionsEPO/ PPO39 85 77175Total66,993 133,099 66,490131,496 2007-2008 2006-2007
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Networks for Active Employees and Non-Medicare-Eligible Retirees
Coconino
Navajo
Mohave
Apache
La Paz
Yuma
Yavapai
Maricopa
Pima
Pinal
Gila
Graham
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Networks for Medicare-Eligible Retirees
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Expenses vs. Premiums for Active and Retired Members
The Figure below shows how the average monthly premiums compared to the average monthly cost for active and retired members. $-$100.00$200.00$300.00$400.00$500.00$600.00$700.00Active PremiumActive ExpenseRetiree PremiumRetiree ExpenseActive PremiumActive ExpenseRetiree PremiumRetiree ExpenseFigure 1: Average Monthly Premiums and Expenses per MemberSubscriber PaidState PaidDrugsMedicalAdministrative 2007-2008 2006-2007
ADOA developed a contribution strategy that provided affordable health insurance to all state and university employees. The EPO plan was offered to employees for $25 for single coverage, $50 for employee plus one, and $125 for family coverage. PPO monthly premiums were determined from actual experience and the true cost of the coverage.
The 2008 contribution strategy allowed employees to pay only 8% coverage of the total premium, while the State absorbed the remaining 92%.
Pursuant to A.R.S. §38.651.01(B.), retiree and active medical expenses shall be grouped together to “obtain health and accident coverage at favorable rates.” This requirement results in retiree premium rates lower than what their experience would otherwise dictate.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Expenses for Benefit Options Self-Funded Plans
The Tables below show how self-funded plan expenses were distributed between active/retired and EPO/PPO members. The average annual cost to insure each type of subscriber/member is also provided.
Table 3: Self-Funded Expenses by Active, Retiree, EPO, and PPO Subscribers and MembersExpenses (in dollars) OverallActiveRetireeEPOPPOMedical Claims (accrual basis)467,414,597422,478,25544,936,342434,731,52532,683,072Drug Claims (accrual basis)104,369,24081,659,75322,709,48792,637,34511,731,895Medicare Part D Subsidy(2,483,125)(2,483,125)(1,856,872)(626,254)Rebates & Recoveries(14,851,232)(13,215,088)(1,636,145)(13,905,190)(946,042)Reserve (IBNR)38,559,67934,311,6004,248,07936,103,3792,456,300Administration Fees24,455,64821,761,3952,694,25322,897,7921,557,856Stop-Loss Premiums3,578,6503,184,394394,2563,350,685227,965Appropriated Expenses4,830,4774,298,308532,1694,522,770307,707Total625,873,933554,478,61871,395,316578,481,43447,392,499Enrollment in self-funded plansSubscribers61,91455,0936,82157,9703,944Members130,207121,1549,053123,2926,915Annual cost (in dollars)Per subscriber10,10910,06410,4679,97912,016Per member4,8074,5777,8864,6926,854Table 4: Self-funded Expenses by Active, Retiree, EPO, and PPO Subscribers and MembersExpenses (in dollars) OverallActive/ EPOActive/ PPORetiree/ EPORetiree/ PPOMedical Claims (accrual basis)467,414,597395,694,16826,784,08839,037,3585,898,984Drug Claims (accrual basis)104,369,24074,753,1996,906,55417,884,1464,825,341Medicare Part D Subsidy(2,483,125)(1,856,872)(626,254)Rebates & Recoveries(14,851,232)(12,517,070)(698,018)(1,388,120)(248,024)Reserve (IBNR)38,559,67932,499,2691,812,3313,604,110643,969Administration Fees24,455,64820,611,9631,149,4322,285,829408,424Stop-Loss Premiums3,578,6503,016,195168,199334,49159,766Appropriated Expenses4,830,4774,071,273227,036451,49780,672Total625,873,933518,128,99636,349,62260,352,43811,042,878Enrollment in self-funded plansSubscribers61,91452,1832,9105,7871,034Members130,207115,5875,5677,7051,348Annual cost (in dollars)Per subscriber10,1099,92912,49110,42910,680Per member4,8074,4836,5297,8338,192
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Medical Expenses Associated with Medical Diagnoses
The Table below shows how medical expenses were distributed among different diagnoses. More dollars are spent on treating conditions related to the musculoskeletal system than on any other type of disorder.
Table 5: Medical Expenses by Diagnosis – Actives & RetireesActivesRetireesAll membersActivesRetireesAll membersDiagnosis% of Total% of Total% of Total% of Total% of Total% of TotalMusculoskeletal System13.20%12.89%13.17%12.79%14.60%12.98%Ill-defined110.69%8.25%10.46%10.85%8.11%10.56%Health Status (lab tests, etc.)9.78%7.21%9.53%9.11%6.20%8.80%Neoplasm (tumors)8.65%14.39%9.20%9.33%14.59%9.88%Circulatory System8.22%13.76%8.75%7.94%12.58%8.43%Injury/Poisoning8.75%7.87%8.66%9.55%6.87%9.27%Genitourinary System7.09%7.21%7.11%6.76%7.38%6.82%Digestive System6.86%6.66%6.84%7.15%6.83%7.12%Nervous System5.20%6.50%5.33%4.99%7.21%5.23%Respiratory System5.18%4.40%5.11%4.94%5.57%5.00%Pregnancy/Childbirth Complications4.33%0.03%3.91%4.67%0.01%4.18%Endocrine System3.36%2.98%3.33%3.26%2.73%3.20%Mental Health2.26%1.54%2.19%2.43%1.87%2.37%Infectious/Parasitic1.65%3.51%1.83%2.03%2.42%2.07%Skin and Subcutaneous Tissue1.68%1.65%1.68%1.82%1.49%1.79%Congenital Anomalies1.31%0.08%1.19%1.08%0.58%1.03%Conditions in the Perinatal Period1.04%0.00%0.94%0.54%0.00%0.48%Blood and Blood Forming Organs0.74%1.08%0.77%0.75%0.96%0.77%External Causes of Injury/Poisoning0.00%0.00%0.00%0.01%0.00%0.01%Grand Total100.00%100.00%100.00%100.00%100.00%100.00% 2007-2008 2006-2007
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of program data following the completion of the previous annual report. In no case does the variation represent a substantive change in trend or comparative values.
1The ill-defined category is a technical term including symptoms, laboratory results and disorders which cannot be categorized elsewhere. Examples of ill-defined diagnoses are: adult convulsions not related to epilepsy, laboratory analysis of blood with findings not related to cellular abnormality, and senility associated with old age.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Hospital Care
The Figures below show how active/retired members and EPO/PPO members compared in terms of their number of admissions and their average lengths of stay. Inpatient hospital care represents a significant portion of total medical expenses: 36% and 38% for active and retired members, respectively. Active69.4Retiree155.4EPO73.3PPO81.6Active67.7Retiree148.9EPO71.2PPO87.6020406080100120140160Admissions2007-20082006-2007Figure 2: Admissions per 1,000 Members Active4.5Retiree5.8EPO4.5PPO6.2Active4.3Retiree6.7EPO4.5PPO5.701234567Days 2007-20082006-2007Figure 3: Average Length of Stay
Note: Mental health, substance abuse, and maternity admissions are included.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Hospital Care (continued)
The Figures below show how active/retired members and EPO/PPO members compared with regards to their collective number of hospital days and average cost per admission. As a group, retirees spent 3 times as many days in the hospital as active members. Also, PPO members spent 1.5 times as many days in the hospital as EPO members. On average, PPO members cost per admission was $4,623 higher than EPO members. Active309.6Retiree902.2EPO328.9PPO509.5Active291.3Retiree997.6EPO320.4PPO497.701002003004005006007008009001000Days2007-20082006-2007Figure 4: Days per 1,000 Members Active $13,833Retiree $15,452 EPO $13,805PPO $18,428 Active $12,385Retiree $18,200 EPO $12,376PPO $19,834 $-$2,000$4,000$6,000$8,000$10,000$12,000$14,000$16,000$18,000$20,000PY 2007-2008PY 2006-2007Figure 5: Average Cost per Admission
Note: Mental health, substance abuse, and maternity admissions are included.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Emergency Room Visits
During Plan Year 2007-2008, there were approximately 204.9 emergency room visits per 1,000 members of the self-funded plan. Each emergency room visit cost the plan $1,261.95 on average. These figures include facility claims and exclude professional fees.
Physician Visits
During Plan Year 2007-2008, each member of the self-funded plan visited a physician approximately 3.5 times or 3,500 visits per 1,000 members. Each office visit cost the plan $83.54 on average.
Urgent Care Visits
During Plan Year 2007-2008, there were approximately 97.9 urgent care visits per 1,000 members of the self-funded plan. Each urgent care visit cost the plan $227.18 on average.
The following Figures compare how total active and retiree medical expenses were distributed by type of care. 4% of medical expenses for active employees were spent for emergency room care while 4% of medical expenses for retired members were spent for home care. Figure 6: Active Employee Medical Expense by Place of ServiceInpatient Hospital, 36%Office, 26%Outpatient Hospital, 22%Ambulatory Surgical Center, 5%Emergency Room, 4%Independent Laboratory, 3%Home Health, 2%Other, 2%
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Figure 7: Retiree Medical Expenses by Place of ServiceInpatient Hospital 38%Office 26%Outpatient Hospital 22%Ambulatory Surgical Center 4%Emergency Room 2%Home Health 4%Independent Laboratory 2%Other 2%
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Generic and Name-Brand Prescription Use
The Table below shows how total pharmacy expenses were distributed among generic, preferred, and non-preferred types of drugs.
Table 6: Claim Distribution for 3-Tier FormularyTotal PrescriptionsPercentTotal PrescriptionsPercentTier 1 Generic ($10 copay)996,78564.0%939,70861.3%Tier 2-Preferred ($20 copay)443,88128.5%469,08830.6%Tier 3-Non-Preferred ($40 copay)116,8117.5%124,1708.1%Total$1,557,477100.0%$1,532,966100.0% 2007-2008 2006-2007
Prescription Use by Therapeutic Class
T
dollars were spent on antihyperlipidemics (cholesterol-lowering drugs), than on any other therapeutic class.
Table 7: Top Therapeutic Classes by Total ExpenseTherapeutic classTotal CostPercentTotal CostPercentantihyperlipidemics11,419,50910.94%10,808,2769.22%antidepressants8,907,6038.53%8,601,0337.34%ulcer medications8,624,5708.26%8,203,5687.00%antidiabetics7,821,2907.49%6,602,1235.63%antihypertensives7,807,1757.48%7,945,4936.78%antiasthmatic/bronchodilator agents7,627,2177.31%7,310,1416.24%analgesics – opioids6,406,8916.14%5,798,1444.95%analgesics – anti-inflammatory5,458,3435.23%4,709,5454.02%anticonvulsants5,223,9885.01%4,156,6833.55%antivirals4,429,6414.24%4,510,8483.85%Total$73,726,22770.64%$68,645,85458.58% 2007-20082006-2007
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
P
T
exceeded last year’s top drug, Lipitor, during Plan Year 2007-2008. Drug NameTherapeutic ClassTotal CostPercentTotal CostPercentPrevacidanti-ulcer/gastrointestinal4,206,8174.03%3,806,8013.26%Lipitorantihyperlipidemics4,103,6943.93%3,983,7583.41%Enbrelantiarthritics2,413,9522.31%2,121,8021.82%Advair diskusbronchial dilators2,339,8192.24%2,323,7481.99%Effexor XRpsychostimulants-antidepressants2,302,8712.21%2,000,7961.71%Singulairbronchial dilators1,999,7001.92%1,911,9041.64%Crestorantihyperlipidemics1,680,7721.61%1,344,9401.15%Lexapropsychostimulants-antidepressants1,645,1871.58%1,436,2421.23%Actosactidiabetics1,617,8191.55%1,371,7311.17%Vytorinantihyperlipidemics1,595,7441.53%1,575,9801.35%Total$23,906,37522.91%$21,877,70218.72%Table 8: Top 10 Drugs by Total Expense2007-20082006-2007
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Annual Prescription Use
The Figure below compares the average number of prescriptions filled last plan year by active and retired members. Active10.2Retiree30.6Active10.4Retiree31.205101520253035 2007-2008 2006-2007Figure 8: Average Number of Prescriptions per Member per Year
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Annual Pharmacy Expenses by Age
The Figure below shows how pharmacy expenses increase with age among plan members. 3807201,7232,9213556491,6272,722050010001500200025003000 2007-2008 2006-2007Figure 9: Pharmacy Expense per Utilizer per Year(in dollars)0-18 yrs19-39 yrs40-64 yrs65+ yrs
Note: Some statistics may vary slightly from previous annual reports due to the late receipt of program data following the completion of the previous annual report. In no case does the variation represent a substantive change in trend or comparative values.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Benefit Options Dental Plans
Prepaid Plans – Employers Dental Services and Assurant
•
See a Participating Dental Provider (PDP) to provide and coordinate all dental care.
•
No annual deductible or maximums ($200.00 maximum reimbursement for non-contracted emergency services) under Employers Dental Services and Assurant.
•
No claim forms (except for emergency services under Employers Dental Services).
Indemnity/PPO Plans – Delta Dental and MetLife Dental
•
May see any dentist. Deductible and/or out-of-pocket payments apply.
•
A maximum benefit of $2,000 per person per plan year for dental services.
•
$1,500 per person lifetime for orthodontia.
•
May need to submit a claim form for eligible expenses to be paid.
•
Benefits may be based on reasonable and customary charges.
The following Figures show how active employee and retiree dental enrollments were distributed among plans. Figure 10: Active Employee Dental EnrollmentAssurant Dental 8%Employers Dental Group 13%MetLife Dental 16%Delta Dental 63%
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Figure 11: Retiree Dental EnrollmentDelta Dental 75%Assurant Dental 11%MetLife Dental 7%Employers Dental Group 7%
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Dental Rates
The Table below summarizes monthly dental rates for active and retired members.
Table 9: Summary of Monthly Dental Rates for 2007-2008 Active EmployeesEmployeeStateTotalEmployeeStateTotalAssurant Dental4.686.1810.8618.0211.5029.52Delta Dental14.5619.8234.3854.1455.90110.04Employers Dental Group4.026.1810.2018.1611.5029.66MetLife Dental12.9020.5933.4945.0060.14105.14Retirees1Assurant Dental10.8629.52Delta Dental34.38110.04Employers Dental Group10.2029.66MetLife Dental33.49105.141Effective January 1, 2008 Single Coverage Family Coverage Single Coverage Family Coverage 22
Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Life, Disability, Vision Insurance and Flexible Spending Accounts Premiums
The Table below shows the amount of premiums collected and paid for life insurance, disability insurance, vision insurance and flexible spending accounts (FSA). Table 10: Summary of Premiums VendorCollectedPaidCollectedPaidStandardBasic Life$2,601,679$2,370,063Supp Life10,198,944 9,153,730 Dep Life1,614,299 1,428,241 STD10,114,116 8,947,462 LTD4,455,294 4,064,335 Total$28,787,110$25,963,831Avesis - Vision$5,561,668$5,145,120ASI - FSA$5,328,689$5,198,879Total$39,677,467$36,307,8302007-20082006-2007
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Health Insurance Vendor Performance Standards
Pursuant to A.R.S. § 38-658(B), the Arizona Department of Administration (ADOA) shall “...report to the Joint Legislative Budget Committee at least semiannually on the performance standards for health plans, including indemnity health insurance, hospital and medical service plans, dental plans and health maintenance organizations.”
Among the terms of the self-funded health insurance contracts are a number of ADOA-negotiated performance measures with specific financial guarantees tied to the contracted performance of the vendors providing various services for the health plans. If a vendor fails to meet any of the measures within the specified performance range, a percentage of the annual administrative fee is withheld by ADOA as liquidated damages. This percentage is allocated among the more critical measures of the contract.
The following is a report of the penalties incurred by health plan vendors for their non-performance during the Plan Year ending September 30, 2008. The details of each assessment are set forth in the exhibit specified by the same letter that identifies the vendor below. In each case below, the final member satisfaction survey and the Benefit Services Division Vendor Survey for FY 2007-2008, may result in additional penalties.
A. UMR (Claims Administrator) – penalties to date of $2,438.65, equaling 0.8% of the vendor’s annual administrative fee
MEASURE
Annual Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Written appeals resolved within 45 calendar days after receipt of participant's request for review in the case of Post-Service claims.
0.33%
•
0.08%: WHICH EQUALS 3 MONTHS MISSED OUT OF 12 MONTHS MEASURED
•
Corrective Action: UMR provided reinforcement training to their processing staff.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Health Insurance Vendor Performance Standards (continued)
B. ASI Flex – penalties to date of $1352.10, equaling 1% of the vendor’s annual administrative fee
MEASURE
Annual Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
95% of claims will be processed within two working days
1%
•
0.50%: WHICH EQUALS 2 QUARTERS MISSED OUT OF 12 MONTHS MEASURED
•
Corrective Action: ASI has hired approximately 10 new claims processors. ASI anticipated that the extra man hours will improve turn around time significantly. Subsequently, ASI met the measure for the 3rd & 4th quarters.
98% of dollars will be paid accurately
1%
•
0.50%: WHICH EQUALS 2 QUARTERS MISSED OUT OF 12 MONTHS MEASURED
•
Corrective Action: The Customer Service Manager initiated retraining on claims processing accuracy. Subsequently, ASI met the measure for the 4th quarter.
C. Schaller Anderson (Utilization Review / Utilization Management) – penalties to date of $2,915.93, equaling 0.249% of the vendor’s annual administrative fee
MEASURE
Annual Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Percent of calls answered in 30 seconds or less
1%
•
0.249%: WHICH EQUALS 3 MONTHS MISSED OUT OF THE 4 MONTHS MEASURED.
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Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
Health Insurance Vendor Performance Standards (continued)
D. Walgreens Health Initiative (Pharmacy Management) - penalties to date of $40,750.00, equaling 27.14% of the vendor’s annual administrative fee
MEASURE
Annual Percent of Fees at Risk
(Max $600K)
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
Average speed to answer for all calls made to the WHI Member Service Center
28%
•
13.99%: WHICH EQUALS 6 MONTHS MISSED OUT OF 12 MONTHS MEASURED
•
Corrective Action: WHI will report the results using an updated metric definition. Subsequently, WHI met the measure for the remainder of the year.
First call resolution
10%
•
2.5%: WHICH EQUALS 1 QUARTER MISSED OUT OF 4 QUARTERS MEASURED
•
Corrective Action: No action taken. Measurements were met for the rest of the year.
Standard management monthly reports series available on FTP site within 15 days of month end
8%
•
4.65%: WHICH EQUALS 7 MONTHS MISSED OUT OF 12 MONTHS MEASURED
•
Corrective Action: WHI implemented system enhancements.
Percent of transactions within three (3) seconds
8%
•
6%: WHICH EQUALS 3 QUARTERS MISSED OUT OF 4 QUARTERS MEASURED
•
Corrective Action: To improve performance and response time, WHI has been implementing several database enhancements.
E. Strategic Health Development Corporation (Utilization Review / Utilization Management) - penalties to date of $7,496.49, equaling 0.42% of the vendor’s annual administrative fee
MEASURE
Annual Percent of Fees at Risk
Total Percent Assessed Vendor
(BASED ON MISSED MEASURE)
95% of data file exchanges and reconciliation reports on time as established during implementation.
1.66%
•
0.42%: WHICH EQUALS 1 QUARTER MISSED OUT OF 3 QUARTERS MEASURED
•
Corrective Action: Due to numerous issues that were identified involving differing data at implementation the file exchange measure was not met. Subsequent to the resolution of the initial issues, all transmissions were made as scheduled.
26
Benefit Options Annual Report
Data contained herein is for Oct. 1, 2007 – Sep. 30, 2008
27
F. Successfully Met Performance Guarantees
Table 11: Successful Performance Guarantees
Vendor
At risk
Guarantees Met
UMR
13%
Appeals (met 9 out of 12 measures), Call Center, Eligibility Administration, Claims Statistics
UnitedHealthcare
$2,704,401.00
Appeals, Telephone Service, Claims Statistics, Eligibility Administration, Network Management, Care Coordination Guarantees
Schaller Anderson URUM
6.32%
Disease Management, Customer Service (met 13 out of 16 measures)
Strategic Health Development Corporation
Total Administration Fee 7.8%
Case Management Fee 7.5%
Disease Management Fee 5%
Nurseline Fee 5%
Implementation, Utilization Management, Case Management, Disease Management, Reporting (met 2 out of 3 measures), Systems, Nurse & Call Center
Walgreens Health Initiatives
$600,000.00
Data & Eligibility Requirements, Claims, Customer Services (met 21 of 28 measures), Account Services, Reports (met 21 out of 28 measures), Network Access, Network Pharmacy Management, Mail Order Service, Retail Paper Claims Processing Time, Network Pharmacy POS Compliance (met 15 out of 24 measures)
ASI Flex
4%
Claims Turnaround (3/4 of measure), Claims Adjudication Financial Accuracy (1/2 of measure), Web Availability, Phone Response Time
Schaller Anderson Network
5%
Program Management, Network Management
Arizona Foundation
1%
Program Management
RAN+AMN
1%
Program Management
The Standard Short Term Disability
5%
Telephone Service, Processing Timeline, Check Issuance Timeline, Processing Accuracy, Financial Accuracy, Appeals Timeline, Reports