The State Board of Finance on Friday approved a draft state contract with UnitedHealthcare Insurance Co. to provide Group Medicare Advantage with prescription drug coverage for eligible retirees in state health insurance plans. for public and state school employees.
The state’s Benefits Division will contract with the company to provide Medicare Advantage services to eligible retirees in calendar years 2023, 2024, and 2025, and additional years may be added at the end of the initial term of three years, said Jake Bleed, director of the state’s Employee Benefits Division. UnitedHealthcare Insurance Co. is one of three companies that submitted bids for the contract.
There are about 16,000 retirees in the state health insurance plan for public school employees and about 14,000 retirees in the state health insurance plan for state employees, a- he declared.
Retirees, who are 65 or older or otherwise eligible for Medicare, will be automatically enrolled in the Medicare Advantage program and have the option to opt out of Medicare Advantage and retain existing benefits, Bleed said in a memo to the board. ‘State. finances.
The benefits offered under Medicare Advantage will mirror existing benefits, but will also provide additional services, including coverage for vision, dental and hearing care and other benefits not currently provided to retirees, it said. -he declares.
“We think it’s a very rich program to consider,” Bleed told the finance board.
The Medicare Advantage program will provide significant savings to retirees and the state, he said.
UnitedHealthcare will work statewide to educate retirees and healthcare providers about the program and ensure all retirees have the opportunity to make an informed decision, Bleed said.
The proposed contract with UnitedHealthcare will be governed by strict performance guarantees that the Benefits Division will oversee and stipulate minimum amounts the provider must spend to provide member benefits, he said.
In calendar year 2023, the company will receive $165.31 for each Medicare Advantage retiree per month in the State Employees Health Insurance Plan and $85.31 for each Medicare Advantage retiree per month in health insurance for public school employees under the proposed contract, according to Bleed’s memo.
The state will cover most of the costs, with retirees covering the rest, Bleed said.
In calendar year 2024, the company will receive $170.31 for each Medicare Advantage retiree per month in the State Employees Health Insurance Plan and $90.31 for each Medicare Advantage retiree per month in the Public School Employees Health Insurance Plan, Bleed said in his memo. .
In calendar year 2025, the company will receive $175.31 for each Medicare Advantage retiree per month in the State Employees Health Insurance Plan and $95.31 for each Medicare Advantage retiree per month in the health insurance plan for public school employees.
With 50% of eligible retirees enrolled in Medicare Advantage in 2023, the state health insurance plan for state employees could save $25.7 million and the state plan for school employees could save $9.3 million, according to Bleed’s projections.
With 50% of eligible retirees enrolled in Medicare Advantage by 2025, the state health insurance plan for state employees could save $30.4 million and the plan for public school employees could saving $10.1 million, according to Bleed’s memo.
Board of Finance member Andrea Lea, the Republican state auditor for Russellville, said “it sounds too good to be true.” But Bleed said the federal government provides significant subsidies to companies offering Medicare Advantage coverage.
The Medicare Advantage program has been in effect since 2008 and has been successfully adopted by many states, he said.
Responding to questions from Lea in March, Bleed acknowledged that some retirees were skeptical that “it’s too good to be true.”
Last year, consulting firm Segal Group recommended to the Legislative Council that Medicare Advantage benefits for state and public school employee plans be established so that benefits are at least equivalent to current benefits. , and that prescription drug coverage for public school retirees is reinstated. The state should structure contributions to incentivize the Medicare Advantage program so that the lower premium generates savings for the state and retirees, according to the consultant.
The state should expect savings of at least $34 million to $41 million for the state employee plan and “we would expect [this] will increase the number of people in a tender,” the Segal Group said last year.
In a separate action, the State Board of Finance adopted a policy on Friday to more fairly and accurately distribute the rising cost of health insurance among members of state health insurance plans to public school employees and state employees, and the state.
The policy aims to prevent budget crises and address the annual challenge of funding employee health insurance in a planned and organized manner, Bleed said in a memo to the finance board.
Under the policy, the state will adjust premium rates to reflect the actuarial risk that individual members pose to the plans and ensure that state contributions are distributed evenly across plans, he said.
Bleed said the state’s cost share is not uniform across health insurance plans and is relatively low compared to neighboring states. On average, the state pays about 65% of its employees’ contribution rates, he said.
Moving to a higher flat rate of 80% of the contribution rate will take time to adjust to the resulting increase in state funding, he said. The policy that the state will cover 80% of costs and employees will cover the remaining 20% will be implemented in state health insurance plans over the next five years, he said.
The State Board of Finance also voted to eliminate the monthly $25 per month wellness credit offered to plan members and the $25 monthly contribution for non-members of the wellness program.
Instead, the Employee Benefits Division recommends that “all employees begin the transition to new premium rates … as if receiving the wellness premium,” Bleed wrote in his memo to the State. “In other words, the minority of employees who violate wellness and pay the additional $50 fee would no longer be required to pay the penalty in 2023. While this would impose an additional cost on the plan, this cost will be lower than the cost of wellness testing and will greatly simplify registration and eliminate bureaucracy for our members.”
Bleed said the plans always encourage plan members to go to the doctor.
“We are not proposing the elimination of the wellness program.”
Bleed said he expects the Benefits Division to come up with rates for health insurance plan members soon for the 2023 calendar year.