The University of Alaska
Proposed Wellness Review Services
Kristen A. Russell, FSA, MAAA
President & Founder
Fall River Consulting Group LLC
www.fallriverconsulting.com
Agenda
I. Background
II. Fall River Six Step Trend BusterTM Strategy
III.High Level Plan Review
IV.Wellness Review Services
2
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Fall River Background
www.fallriverconsulting.com
Fall River Background
We are a boutique actuarial consulting firm in Denver, CO
5 W-2 Employees and 4 Independent Contractors
Ms. Russell is a member of the American Academy of
Actuaries and a Fellow of the Society of Actuaries
Over 16 years of experience in the employee benefits and
health actuarial fields
76% of the time we review a health plan we find ways
employers can save money without giving up anything in
terms of benefit value
Employer clients include hospitals, schools, non-profits,
technology, and professional services firms
4
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
The Fall River
Trend BusterTM Strategy
www.fallriverconsulting.com
Craft a Long Term Strategy
Quick fixes often backfire, and employees grow
tired of “flavor of the month” initiatives
A recent Watson Wyatt study revealed:
The average large employer experienced a 6% healthcare
cost trend;
Those who took focused, proactive steps to manage their
healthcare costs averaged only 0.5% increases; and
Those who did little to nothing to tackle their costs instead
paid 10.5% increases on average.
6
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Engage Employees through Plan Design
Employees are typically no more concerned about
spending your healthcare dollars wisely than a
teen-aged girl shopping with Dad’s money.
We help firms evaluate how their plan designs can
be enhanced to engage employees in the actual
cost of health care so they are incented to spend
your money wisely.
7
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Get ‘Em Moving
8
Two-thirds of our healthcare dollars spent on
conditions preventable or treatable by lifestyle
(Centers for Disease Control and Prevention).
Wellness programs can achieve 300-600% ROI over 3
years, but most are haphazardly designed or only
attract participation of already healthy members.
We have experience designing outcome based
incentive structures that incent the least healthy
members to participate the most
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Create Savvy Healthcare Consumers
Consumers can estimate the price of a Honda Accord
within 3%, but are 56% off on a four day hospital stay
(Harris Interactive survey).
Employees cannot make wise decisions with your
healthcare dollars unless they have the knowledge and
tools to be informed consumers.
Fall River helps employers create an education strategy
to teach members how to:
9
Seek care in the most appropriate setting
Become an active partner in their treatment plans
Find out which of their drugs have generic alternatives and
how to find the lowest cost source for those prescriptions
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Mine Your Data
When you don’t know what’s driving up your
healthcare costs, it’s hard to reverse it.
The claims experience data provided by a TPA and PBM
is a treasure map showing how to better manage your
claims, but it doesn’t do any good sitting on a shelf…
Fall River takes charge of the claim management process
for large employers, using our actuarial expertise to
identify problematic cost drivers and benefit designs
that are being abused, and reporting back regularly.
10
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Communicate Constantly
Adults need to see or hear new info 7 times to absorb it.
Employees need to hear things in different ways too:
Face-to-face education (WIN conducting today with Wellness
Breaks, but consumer education could be added)
Online information and email reminders and encouragement
Print information sent home to reach spouses – e.g. Fall River
offers an optional wellness print newsletter to send home
We also keep you updated on the latest benefit
strategies, wellness ideas, and compliance updates via our
Fall River Journal employer newsletter.
11
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
A recent Watson Wyatt study revealed:
The average large employer experienced a 6%
healthcare cost trend;
Those who took focused, proactive steps to manage
their healthcare costs averaged only 0.5% increases;
and
Those who did little to nothing to tackle their costs
instead paid 10.5% increases on average.
Which group would you rather be in?
12
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
High Level Plan Review
www.fallriverconsulting.com
Medical PEPM – 36 Months
14
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Trend Analysis Results
Medical Trends
Composite
Period Ending
24/24
18/18
12/12
9/9
6/6
3/3
11.38%
6/30/09
N/A
11.7%
18.0%
20.1%
21.5%
21.5%
17.8%
3/31/09
N/A
9.8%
9.9%
16.7%
19.3%
21.4%
13.9%
12/31/08
N/A
15.0%
6.5%
5.9%
14.0%
16.8%
10.3%
9/30/08
N/A
N/A
5.0%
3.3%
1.0%
11.2%
3.1%
6/30/08
N/A
N/A
15.5%
3.1%
-0.1%
-7.2%
6.0%
3/31/08
N/A
N/A
N/A
27.3%
9.8%
8.5%
18.2%
12/31/07
N/A
N/A
N/A
N/A
41.7%
11.3%
N/A
9/30/07
N/A
N/A
N/A
N/A
N/A
96.6%
N/A
15
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Regression Analysis Results
16
Number of Months
Trend Value from
Regression
15 Months
46.78%
15 Months
31.03%
18 Month
21.95%
21 Months
22.81%
24 Months
21.41%
27 Months
12.79%
30 Month
12.09%
33 Months
14.28%
35 Months
18.28%
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Medical Utilization
Ignore Claim report columns titled “Claims Per Employee” as
they are erroneous on most all GER reports reviewed
U of A population is older, more female, and with fewer kids
than the norm, but the male/female split did balance a little
back toward norms in the last year
2008 Utilization report from Premera indicates that trend
(actually change in PEPM) was reduced from 13.5% to 4.3%
This is due in part to a dramatic reduction in inpatient
utilization – bed days are down 21% overall
Large claims down in 2008 but still at or above norms – top 5
causes are all able to be impacted by lifestyle and wellness
Musculoskeletal, Cancer, Digestive, Circulatory, Genitourinary
17
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Union vs. Non-Union Stats (from 2007)
Category
Union
Non-Union
Average Mem Age
37.2
34.8
Male/Female Split
50/50
46/54
IP Bed Days
300
214
Change in PMPM
28%
7%
Mem Cost Share
8.7%
10.4%
Claims Over 50K
10.3 CPT
9.4 CPT
18
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Disease Management - Activity
Premera’s prospective UR/CM reviews dropped dramatically
in most recent, but still at norms for book
PMPM savings attributable to UR/CM dropped 18% diminishing returns?
On DM, Premera is managing more patients on a cumulative
basis, but far fewer contacts in terms of:
Welcome kits
Quarterly standard of care reminders
Employee Newsletters
Number of outbound calls did increase, which is positive
% of Opt Outs increased in most programs
Is U of A still getting its money’s worth with Premera’s DM?
19
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Disease Management – Clinical Outcomes
Only detail reporting was for Diabetes, CHF, and CAD, and is greatly
delayed (reviewing CY 07 stats in Nov 08)
Hospital admissions and ER visits were down for diabetes and CHF but
both were up for CAD
Categorization of members by how well they are managing disease
indicated several concerns:
All CHF patients had an ER or hospital visit in the past year, meaning that’s
the only way Premera found them
0% of diabetics are classified as “Managing Condition Effectively” without an
elevated risk of exacerbation
% of Opt Outs increased in most programs
Savings calculation seems to indicate that claims dropped dramatically in
2006 after the 2005 baseline year, and then increased quite a bit again in
2007. Appears to be taking credit for reversion to the mean.
20
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Pharmacy Reporting
Total PEPY cost is up 6.6%, utilization (measured by days’
supply) is up 2.1%
Generic dispensing rate of 54.7% is well below norms and
Best in Class (Addition of 3 Tier benefit 7/1/08 should help)
Employee cost share is very low at 9.7%; norm is 19.2%
41.4% of scripts are maintenance drugs that are filled at retail
– work to convert these to mail order
Medication adherence (Med Possession Ratio) is well below
Best in Class
Consider these improvements:
21
Step Therapy
Mandatory OTC
Value Based Purchasing / Evidence Based Design
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Proposed Wellness Review Services
www.fallriverconsulting.com
How Fall River Can Help U of Alaska
Perform an on-site review of all wellness services and offerings with an
objective eye
Evaluate offerings in context of other major university programs
Review ROI calculation methodology for actuarial soundness and provide
recommendations for drilling down further
In depth investigation of the return on various investments – what’s
working best and not as well, and what are you REALLY getting for what
you pay
Provide recommendations for strategies to increase wellness plan
participation, including full legal and other details regarding outcome
based incentives, as well as a review of current HRA incentive
Provide overall recommendations in context with a full actuarial cost
containment strategy
23
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Advantages of Fall River
Many years experience with healthcare cost containment
An actuary can put wellness into context with larger strategy
Extensive familiarity with outcome based wellness rewards
and rules governing them
Can conduct a lower cost ($35,000 - $50,000) overall
strategy review and identify areas to dive deeper on
Ensure you’re digging in the right places before spending
$100K+ to dig
Engagement could include (if desired) quarterly review of all
medical, pharmacy, and DM utilization reporting review –
enables faster action than annual reviews
24
EXPERT EMPLOYEE BENEFITS & ACTUARIAL CONSULTING
Questions?
www.fallriverconsulting.com