Virginia State Employee Health Insurance

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1 Virginia State Health Insurance Virginia Department of Human Resource Management Virginia Executive Institute Alumni Association Virginia Department of Transportation Auditorium, Richmond, Virginia April 29, 2014

2 FY 2014 Health Plan Enrollment 102,201 employees eligible for state health benefits 92,767 employees enrolled in all plans 200,197 members enrolled in all plans Health Plan Enrollment FY 2014 COVA Care FY 2014 COVA HealthAware FY 2014 Kaiser Permanente HMO 2,151 2% COVA 3,147 HealthAware 3% COVA HDHP 623 1% 9,434 9% TRICARE 91 0% Waived Coverage 4, % 17, % 27, % 17, % 2, % 17, % % 1,085 35% 1,240 39% Basic Basic + Out of Network Basic + Expanded Dental COVA Care 86,755 85% Basic + Vsn, Hrng & Exp. Dental Basic + Out of Network and Expanded Dental Basic + All Basic + Exp. Dental & Vision

3 FY 2013 Cost Trends Total program expense increased 9.9% in FY 13 $966.8 million total claims paid in FY million total claims processed 15% Health Benefits Expense Trend Year to Year Health Benefits Expense (in millions) 10% $1,100.0 $1, % 0% -5% FY 09 FY10 FY11 FY12 FY13 $1,000.0 $900.0 $800.0 $914.3 $910.7 $885.1 $ % $ Claims Administration Total Claims Administration

4 FY 2013 Total Cost Per $14,583 total cost per employee in FY % increase in FY 13 from prior year National and State Average Annual Cost Per $14,000 $12,000 $20,000 Total State Health Benefits Cost Per * $10,000 $8,000 $6,000 $15,000 $10,000 $12,468 $12,314 22% 21% $12,709 $13,250 21% 21% $14,583 21% $4,000 $2,000 $5,000 78% 79% 79% 79% 79% $ State Employer Cost Per $9,889 $9,656 $10,043 $10,431 $11,471 National Large Government Employer Cost Per $9,779 $9,996 $11,251 $12,042 $12,886 State Cost $2,580 $2,658 $2,666 $2,819 $3,112 National Average Cost $6,820 $7,330 $8,008 $8,584 $9,144 $ Cost (includes out-of-pocket and premium) Employer Cost (includes premium) * contribution to premium varies by dependent coverage. In general, employees pay 12 percent of premium costs. The Henry J. Kaiser Family Foundation projects an average national health benefits cost per employee of $16,351 for CY 2013.

5 FY 2013 Cost Drivers Expensive procedures Treatment of chronic conditions Prescription drug therapy cost lifestyle Average employee age Plan Paid PMPM $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 $23.09 Joint Degeneration $12.68 Lifestyle Impact Plan Per Member Per Month $3.70 $5.63 $0.48 CAD Diabetes Hypertension Hyperlipidemia GERD $ Norm Blood Pressure <140/90 Cholesterol <240 Body Mass Index <30.0 State Health Measures 63% 68% 66% 75% 73% 71% 69% 71% 65% 61% 71% 59% 62% 66% 86% 94% 90% 87% 0% 20% 40% 60% 80% 100% National Average National Goal $ $ $ $ $ $ $ $ $ $0.00 1,433 37,025 Medical Expense by Age (COVA Care Per Member) July June ,295 22,200 29,787 36,982 17,939 < Cost Per Member Per Month Member Count 6,304 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0

6 FY 2013 Top Ten Claims Expense $619 million of total plan expense 64% of total plan expense Obesity related Diabetes Coronary artery disease Hypertension Musculoskeletal disorders Digestive disorders High cost specialty drugs required Rheumatoid arthritis Multiple sclerosis Medical Procedures 1. Musculoskeletal 2. V-Codes health services not classified as disease or injury 3. Neoplasms tumors 4. Circulatory 5. Ill-defined symptomsundetermined causes 6. Digestive 7. Genitourinary 8. Nervous system/sense organs 9. Accidental injury 10. Respiratory 53.5% of All Claims Expense Top Ten Claims Expense Chronic Conditions 1. Coronary artery disease 2. Breast cancer 3. Cerebrovascular disease 4. Diabetes 5. Hypertension 6. Obesity 7. Lung cancer 8. Skin cancer 9. Oral cancer 10. Substance abuse 5.3% of All Claims Expense Prescription Drugs 1. Nexium-stomach acid 2. Humira-rheumatoid arthritis 3. Enbrel-rheumatoid arthritis 4. Crestor-high cholesterol 5. Cymbalta -depression 6. Montelukast Sodium - asthma/copd 7. Ambilify-depression 8. Copaxone-multiple sclerosis 9. Advair Diskusasthma/COPD 10. Escitalopram Oxalatedepression 5.0% of All Claims Expense Note: These areas may not be mutually exclusive

7 Pilot Launched 10/1/13 Medication Therapy Management Applies to COVA Care, COVA HealthAware, and COVA HDHP MTM network Mirixa 100% of cost paid by health plan 1 comprehensive annual visit with up to 3 follow-up visits Eligibility 3 or more of 8 disease states --Asthma --Heart Failure --COPD --High Blood Pressure --Depression --High Cholesterol --Diabetes --Osteoporosis 7 or more chronic medications January 2014

8 Plan Design Changes FY 2015 Pilot Onsite Health Center Planned pilot for Capitol Square area Provide employees convenient access to primary and preventive care Impact productivity with less work time lost Improve employee morale Offer health coaching support on site Managing chronic medical conditions Improving health behaviors Generate cost savings over time $754,100 for start-up and implementation from the HIF January 2014

9 Plan Design Changes FY 2015 Value Based Insurance Design (VBID) Applies to COVA Care and COVA HealthAware Reduces barriers to high value treatment for certain conditions Asthma/COPD and Hypertension VBIDs Waive co-pay or coinsurance for prescription drugs on tiers 1 and 2 Requirements Minimum 90-day compliance period On-going medication compliance Appropriate quarterly engagement in disease management program Annual wellness exam Flu shot for Asthma/COPD January 2014

10 Changes FY 2015 Plan Design Changes Item Plan Plan Design Change Cost 1 COVA Care COVA HealthAware COVA HDHP New onsite health center in Capitol Square Offer primary and preventive care, and health coaching support 1 st year- $55,000 5 years ($3.6 million) 2 COVA Care COVA HealthAware Prescription drug VBID- Asthma/COPD Drug co-pays and coinsurance waived for Tiers 1 and 2 if compliant $495,000 3 COVA Care COVA HealthAware Prescription drug VBID- Hypertension Drug co-pays and coinsurance waived for Tiers 1 and 2 if compliant $4,290,000 4 COVA Care Prescription drug-co-pay changes for tiers 2-4 Increase co-pay $5 for retail and $10 for mail ($9,120,000) January 2014

11 Changes FY 2015 Premium Rewards Applies to COVA Care and COVA HealthAware Eligible employees/retirees and/or spouses Continue reduction of $17/$34 per month if they do not opt out of MyActiveHealth portal Other employees have chance to earn Premium Rewards for FY 2015 plan year January 2014

12 Changes FY 2015 COVA HealthAware Do Rights Earned by employees/retirees and spouses for completing healthy activities Receive $50 each for up to 3 do rights Maximum $150 per person Added to Health Reimbursement Arrangement (HRA) In addition to HRA funds of $600/$1,200 annually Expanded do rights list options Annual wellness exam Annual dental exam Annual flu shot Use MyActiveHealth tracker 3 times per month in a quarter Annual vision exam Complete one MyActiveHealth online coaching module

13 FY 2015 Rates Assumes ~1 week IBNR paid by both employer and employee Includes health care reform costs Includes savings from plan design changes PLAN Current Monthly Cost Proposed Monthly Change Proposed Monthly Cost COVA Care Basic Only Plus One Plus 2 or More Only Plus One Plus 2 or More Only Plus One Plus 2 or More $55 $130 $186 $3 $7 $10 $58 $137 $196 Employer $502 $901 $1,321 $27 $47 $69 $529 $948 $1,390 TOTAL PREMIUM $557 $1,031 $1,507 $30 $54 $79 $587 $1,085 $1,586 COVA HealthAware Basic Only Plus One Plus 2 or More Only Plus One Plus 2 or More Only Plus One Plus 2 or More $9 $44 $59 $0 $3 $3 $9 $47 $62 Employer $502 $901 $1,321 $27 $47 $69 $529 $948 $1,390 TOTAL PREMIUM $511 $945 $1,380 $27 $50 $72 $538 $995 $1,452

14 FY 2015 Premium Rewards MONTHLY PREMIUMS Health Care Plan Reward Earner Only or Spouse Plus One and Spouse Plus Two Or More or and Spouse Spouse Premium $75 $171 $171 $230 $230 COVA Care COVA HealthAware Rewards -$17 -$17 -$34 -$17 -$34 Premium with Rewards $58 $154 $137 $213 $196 Premium $26 $81 $81 $96 $96 Rewards -$17 -$17 -$34 -$17 -$34 Premium with Rewards $9 $64 $47 $79 $62

15 FY End Balances Health Insurance Fund FY 2009 $228.4 million FY 2012 $69.4 million FY 2013 $1.8 million FY 2014 $57.8 million at 12/31/13 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 Health Insurance Fund Year End Balances

16 Health Insurance Funding Contingency Reserve covered under line of credit $81.1 million for Active s included in line of credit Incurred But Not Reported (IBNR) rebuild over 5 years with unfunded balance included in line of credit $105 million IBNR for Active s $17.5 million 1 st installment funded in FY 2014 $24.5 million 2 nd installment to be funded in FY 2015 $63 million IBNR gap, which varies each year, included in line of credit Line of Credit $150 million

17 Compensation 2014 Regular Session Special Session ACTION McDonnell Budget House Senate McAuliffe Budget House Senate Base Pay Increase 0% 0% 1% on Dec. 10, % on Mar. 25, % on Jun. 10, % on Mar. 25, 2015 Bonus 2% plus 1% perf. bonus on Dec. 1, % on July 1, % on Dec. 1, % 1% on Jan. 1, % High Turnover Jobs Base Pay Increase 2% for 19 specified positions on Jul. 25, % for 19 specified positions on Dec. 10, 2014, but no bonus 2% for District Ct. Dep. Clerks Jul. 25, % for 19 specified positions on Mar. 25, % for 19 specified positions on Dec. 10, 2014, but no bonus 2% for 19 specified positions on Mar. 25, 2015

18 2014 U.S.A. Collegiate Cycling Road National Championships See details at

19 Resources Department of Human Resource Management Annual Salary Survey Report to the General Assembly Annual Health Benefits Report annualreport2013.pdf Review of State Health Insurance Fund