August 4, 2009

ORANGE COUNTY 2010 MEDICAL PLAN

CHANGES

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

BACKGROUND

• 2007– County moved to self-

funded medical

• 2009 – Approved new contract

with UHC as ASO provider

– Contracted with Express Scripts as PBM

BACKGROUND

• Move to Self-funded working well

• Provides the County:

- More detailed claims experience information

- Increased flexibility in plan design

BACKGROUND

• Plan Trend (Experience) Remains a Challenge

• Plan Costs Increase 8–10% Each Year

• Continued Increases Are Not Sustainable

BACKGROUND

• County Able to Absorb Costs in 2010 with No Premium Increase

• Plan Changes Needed To:

– Help Offset Cost Increases in Specific Areas

– Influence Member Lifestyle Choices and Plan Utilization

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

TOBACCO USE SURCHARGE

• Tobacco Use Is a Leading Cause of Death and Key Driver of Medical Costs

• 2008 WFL Screenings Tied to Medical Claims

• Results Show Medical Claims Higher for Smokers

- $5,412 – Current or Previous Smokers

- $3,567 – Never Smoked

TOBACCO USE SURCHARGE

• Medical Plan Oversight Committee (MPOC) Recommends Implementing $25 Per Pay Period Tobacco Use Surcharge in 2010.

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

MEDICAL PLAN C0-PAY CHANGES

• MPOC Met with UHC, HR Benefits & RobinsonBush

• Reviewed 2008 & 1st Quarter 2009 Plan Experience

• Identified Key Cost Drivers and Solution Opportunities

MEDICAL PLAN C0-PAY CHANGES

Outpatient Surgery

– Hospital Outpatient Surgery Costs Increased 17.7%

– Average Cost $3,700 - Versus $723 for Surgery Performed in Ambulatory Surgery Center

– Average Cost of Colonoscopy $1,853 – Versus $513

MEDICAL PLAN C0-PAY CHANGES

Inpatient Hospital

– Inpatient Admissions Decreased by 5%

– Average Cost per Admission increased 11% - From $10,708 in 2007 to $11,867 in 2008

• Need to Better Align Inpatient & Outpatient Co-Pays

MEDICAL PLAN C0-PAY CHANGES

MPOC Recommends:

• Increasing Co-Pay for Non-Preventive Outpatient Surgery and Preventive Colonoscopy Performed in a Hospital to $200

• Moving Inpatient Hospital Co-Pay to $300 for 1st Day and $100 for Next Three Days to Maximum $600 Per Admission

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

PHARMACY PLAN CHANGES

• Outsourced Pharmacy to Express Scripts in 2009

• Few Changes Made in First Year

• New Programs Recommended to Control Rx Costs

PHARMACY PLAN CHANGES

• Select Home Delivery & Call 4 Generics

– Voluntary Programs– Projected Savings - $402,000 to

County & $251,000 to members

• Step Therapy Program – Grandfather Provision– Projected County Savings - $539,000

PHARMACY PLAN CHANGES

MPOC Recommends:

• Adding Select Home Delivery, Call 4 Generics and Step Therapy Programs to Pharmacy Plan

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

SPOUSAL WELLNESS FOR LIFE SCREENINGS

• 2008 Spousal Claims Averaged 27.5% Higher Than Employee Claims

• Spouses Not Included in Health & Wellness Programs

• WFL Screenings Offered to Employees Only

• Need to Engage & Encourage All Plan Members to Make Wise Healthcare Decisions

SPOUSAL WELLNESS FOR LIFE SCREENINGS

MPOC Recommends:

• Extending Voluntary Annual Wellness for Life Screenings & HRAs to Spouses Covered Under the County’s Medical Plan

PRESENTATION OUTLINE

• BACKGROUND

• TOBACCO USE SURCHARGE

• MEDICAL PLAN CO-PAY CHANGES

• PHARMACY PLAN CHANGES

• SPOUSAL WELLNESS FOR LIFE SCREENINGS

• ACTION REQUESTED

ACTION REQUESTED

Approve the Following MPOC Recommended Changes to the County’s 2010 Medical & Pharmacy Plans:

• $25 Per Pay Period Tobacco Use Surcharge

• $200 Co-Pay for Non-Preventive Outpatient Surgery and Preventive Colonoscopy Performed in Hospital Surgery Center

ACTION REQUESTED

• Inpatient Hospital Co-Pay of $300 for 1st Day and $100 for Next Three Days to Maximum $600 Per Admission

• Adding Select Home Delivery, Call 4 Generics and A Step Therapy Program to Pharmacy Plan

• Extending Voluntary Annual Wellness for Life Screenings & HRAs to Spouses Covered Under the County’s Medical Plan

August 4, 2009

ORANGE COUNTY 2010 MEDICAL PLAN

CHANGES