Nov 25, 2014

Group Insurance Commission Update: November

Richard Waring, NAGE's representative on the Group Insurance Commission (GIC), and Margaret Thompson, the Trial Court's representative, attended the commission meeting on November 21, 2014.  The GIC meeting provided a preview of what may be coming in the new year in regards to employee health insurance. 
The GIC is running a deficit of about $45,000,000 as of October 31st, 2014, based on $675,000,000 in spending against a spending plan of $630,000,000. This is not a surprise—we were advised when the budget was passed last spring that it would be insufficient to take the GIC through FY2015, and that a supplemental budget would be needed. 
But to deal with the FY 2016 budget, GIC Executive Director Dolores Mitchell said that plan design changes would likely be needed, even though the GIC is continuing to press the plans to keep costs down through expansion of ACO's (Accountable Care Organizations), among other tactics. ACO's are health care providers that agree to take on a specific patient population for a fixed fee for a fixed period.  If the costs are below the total fee, the ACO benefits.  If the costs are above the total fee, the ACO has to absorb the loss. Copays have not been raised in several years, Director Mitchell indicated, and she did not rule out changes in either copays or deductibles. She also stated that the issue at hand was not utilization of services, but the cost of services.
Director Mitchell did not reveal the proposal she will make to the commissioners, but she indicated that that a proposal with more than one option for making cost-reducing plan changes is in the cards.  How the new administration will affect all this is still unknown.
There was also a discussion regarding the Employer's Group Waiver Plan (EGWP), a system designed to handle retirees' Medicare prescription costs. EGWP permits qualifying employers to enroll its Medicare retirees in Medicare Part D (the drug plan), and then reimburse the employer (in this case the GIC) for a portion of the drug costs. It would only apply to retirees in the Unicare Medicare supplement plan, not to those in Harvard, Tufts or other GIC Medicare products, because the latter three are not subject to the prescription drug carve-out. This would not affect active working members.
While there is no hard estimate of what an EGWP might save the GIC, the savings could be substantial because older individuals can incur substantial prescription drug costs. This money would be credited against the GIC's PBM (pharmacy management) account. To be sure, it could result in some savings which would help the GIC in general. On the other side of the ledger, creating one of these plans is complicated for bureaucratic reasons, such as different computer systems, ID numbers and drug formularies. GIC is far from committed to doing this yet, largely because implementing such a plan is so complicated.
Richard Waring and Margaret Thomson were also given a list of municipalities now, or soon to be under, GIC health coverage.  As of July 15, 2015, the total number of municipalities under GIC coverage will be 57.  That includes 44 cities and towns, seven regional school districts, four planning councils, one sewerage district and one regional dispatch district.

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