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News

Press Release

For Immediate Release
August 24, 2004

Contact: Tom Korpady, Administrator, Insurance Services (608) 266-0207


Group Insurance Board Announces Program Successes

MADISON -- Eric Stanchfield, Secretary of the Wisconsin Department of Employee Trust Funds (ETF), declared that strategic efforts developed to control escalating health insurance costs and improve quality of care and service delivery are successfully bearing fruit. Stanchfield was reacting to today’s Group Insurance Board (GIB) news that premium rate increases for the state’s group health insurance program members will be in the single digits – approximately 5% -- next year.

“This is a huge success story; the results have exceeded our expectations,” said Stanchfield. Two years ago the GIB and Governor Doyle initiated program changes to provide quality health care at a reasonable cost to state government employees and employers without simply shifting costs. One year ago ETF, administrator of the state’s group health insurance program, set them in place.

“In that short amount of time we’ve made significant changes that we hope will be sustainable in today’s health care marketplace,” said Stanchfield. “Our approach, particularly in the areas of value purchasing and prescription drug management, have
become nationally recognized and may provide a model for health care reform for other public and private purchasers.”

Tom Korpady, Administrator of the Division of Insurance Services, said, “because prescription drugs are such a substantial portion of the Medicare Plus $1 Million Plan, the savings from this new strategy will allow the GIB to reduce premiums for the plan.” The rate reduction affects approximately 10,000 participants age 65 and over.

Of the program revisions implemented last January 1, those that have had the biggest effect on problem areas identified by the GIB were:

  • Carving out the prescription drug benefit by contracting with a single Pharmacy Benefit Manager (PBM);
  • Changing the premium contribution structure to a tiered approach, also called “value-based purchasing”;
  • Integrating quality and safety standards into program requirements; and
  • Converting the Standard Plans into one preferred provider plan.

Pharmacy Benefit Manager

Significant savings realized by carving out the prescription drug benefit and selecting a Wisconsin-based PBM to provide pharmacy benefit services to the program’s approximately 230,000 members was a major factor behind the lower than expected premium rate increases.

Within a few months, the program achieved 95% compliance with the formulary, a list of prescription drugs determined to be clinically sound and cost effective by a statewide committee of physicians and pharmacists. “Such a high rate of compliance is key to our success,” said Stanchfield. “People are getting the drugs they need at the same or at more reasonable prices as before.” Members are also able to participate in other “value added” programs to help save money on drugs: tablet splitting, mail order purchasing, and the generic sampling program – in which the first fill of a new (to the patient) generic drug is free.

Value-Based Purchasing

A three-tier premium contribution structure for state employees replaced the former system on January 1. ETF evaluates each health plan’s cost of providing benefits to members and places them in tiers, based on its ability to control costs while providing quality health care. Plans that proved to be the most cost effective were placed in tier 1; moderately cost-effective plans in tier 2; and the least cost effective in tier 3. Plans that received high marks for quality and patient safety measures were rewarded during the negotiation of their premium bids. This new approach also enhances the GIB’s ability to negotiate more effectively with the health plans; which resulted in over $14 million in savings this year.

Quality and Safety Standards

Stanchfield says Wisconsin hospitals are making progress in their efforts to provide consumers of health care better information on quality and safety. The majority are also self-reporting their progress in adopting proven measures to prevent mistakes and protect patients from injury. ETF rewards plans that have been successful in meeting patient safety and quality goals set by such organizations as Leapfrog and the Wisconsin Hospital Association’s Checkpoint initiative. “We are holding the insurance plans and their providers accountable for their compliance with these efforts and performance to date; it’s a factor during premium negotiations,” he said.

In other action, the Board:

  • Approved aligning the State Maintenance Plan for state employees and retirees with the benefits offered under Uniform Benefits ensuring equitable access to the same benefit level throughout the state.
  • Changed the Medicare Plus $100,000 per illness/injury maximum to a $1 million lifetime aggregate maximum.

 

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