For Immediate Release
August 26, 2003
Contact: Pam Henning, (608) 267-2929
State Group Insurance Board Approved Premium Rates
and Program Changes
MADISON -- Eric Stanchfield, Secretary of the Wisconsin Department
of Employee Trust Funds, (DETF), announced today that the Group
Insurance Board (GIB) approved premium rates from the health plans
participating in the State's group health insurance program
and established premium rates for the program's self-insured
plans. Moreover, the Board also approved significant program changes
that collectively will keep cost increases from rising as much as
they otherwise would have.
"The initial bids from our plans showed a 17% increase,"
says Tom Korpady, DETF Insurance Services Division Administrator.
"Through our negotiations, plans reduced their premium bids
to move to the lower tiers, and we were able to reduce that rate
of growth to about 12%. This is a significant development. Nationwide,
both public and private employers are expecting 14% to 16% premium
increases next year."
The catalyst for change came from efforts by the GIB and Governor
Doyle to improve service delivery and quality of care while controlling
escalating costs for the program's 200,000 members. The changes
were subsequently passed into law as part of the 2003-05 biennial
budget, Korpady explained. "These specific design changes ensure
quality health care at a reasonable cost. These budget initiatives
have put Wisconsin at the forefront of health insurance reform."
The GIB approved the following new program features effective
January 1, 2004:
- A three-tier premium contribution structure for active State
employees will replace the existing program that has been in existence
- A single Pharmacy Benefit Manager (PBM) will provide pharmacy
benefits services to all plan participants; and
- The Standard Plans will be converted to one Preferred Provider
Plan (PPP) for State employees.
Three-Tier Premium Contribution Structure
DETF evaluated each health plan's costs of providing benefits
to members and placed them in tiers, based on their ability to control
costs while providing quality health care. High quality plans that
proved to be most cost-effective were placed in Tier 1; moderately
cost-effective plans in tier 2; and the least cost-effective in
Tier 3. Under this system, plans that received high marks for quality
and patient safety measures were rewarded during the negotiation
of their premium bids.
During the Dual-Choice Enrollment period, set to begin October
6, health insurance program participants will be able to choose
among 16 plans in Tier 1 and 4 plans in Tier 2. The newly created
preferred provider plan will be in Tier 3.
The Board also expanded the availability of the State Maintenance
Plan to counties with no other high quality Health Maintenance Organization,
therefore making a Tier 1 plan available to employees throughout
Important note: The monthly out-of-pocket premium
contributions that state employees will pay in 2004 for plans in
Tier 1, Tier 2 and Tier 3 will be decided through collective bargaining
and the compensation plan for non-represented employees.
Pharmacy Benefit Manager
The new Pharmacy Benefit Manager (PBM) is Navitus Health Solutions,
a new firm created through a collaborative effort by several Wisconsin
health care providers. A PBM is a third party administrator of a
prescription drug program that is primarily responsible for processing
and paying prescription drug claims. The savings achieved through
such cost reduction initiatives as discounts with drug manufacturers,
rebate negotiations, and management of the list of preferred prescription
drugs, will directly benefit the health insurance program. Further,
because all drug coverage will be funneled through the PBM claims
system, it will provide checks and balances to alert members to
dangerous drug interactions.
As part of the new prescription drug benefit, a three-level co-payment
structure for pharmacy benefits will be implemented, with participants
paying $5 and $15 for most generic and brand name drugs, respectively.
Last year, participants paid $17.25 for brand name prescriptions.
Said Korpady, "The Board is excited about the potential for
short-term savings and even deeper prescription drug discounting
in the future as the size of our purchasing pool increases. This
change will help the Board moderate the size of expected premium
increases in the years ahead."
Preferred Provider Plan
The creation of the PPP will allow the State to lessen cost increases
by negotiating discounts with providers within an established provider
network. Participants in the PPP may still see any provider, but
use of providers within the PPP provider network will result in
lower out-of-pocket costs for the member.
Other Board Action
- The Board approved the integration of certain patient quality
and safety standards into program requirements. DETF has required
participating health plans to report on their hospitals'
progress in incorporating key patient safety and health care quality
standards recommended by the Leapfrog Group and other quality
initiatives, and favorably rewarded the plans for making extra
efforts in adopting the standards.
- The Board approved reductions in life insurance premium rates
for State employee participants in the 40 through 69 age groups.
This will result in an overall premium decrease of about 9.1%
for both State employees and State agencies. The Board also approved
reductions for local employee participants in the 40 to 59 age
groups. This will result in an overall employee rate reduction
of about 3.1%.