Bargaining for Bargaining for Health BenefitsHealth Benefits

CWA Staff Web BriefingCWA Staff Web BriefingMarch 15/17, 2011March 15/17, 2011

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What We will CoverWhat We will Cover

Trends and Developments in Health Trends and Developments in Health BenefitsBenefits

A Framework for Bargaining Health A Framework for Bargaining Health BenefitsBenefits

Key Elements of Health PlansKey Elements of Health Plans New Approaches to Bargaining New Approaches to Bargaining

Health BenefitsHealth Benefits ResourcesResources

Trends and Trends and Developments in Health Developments in Health

BenefitsBenefits

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Health Care System Failures: Health Care System Failures: Costs Rise While Quality Lags Costs Rise While Quality Lags

Health care costs increase as economy shrinksHealth care costs increase as economy shrinks

Employer-sponsored health plan costs increased Employer-sponsored health plan costs increased 6.0% in 2009, 6.9% in 2010, est. 8.8% in 20116.0% in 2009, 6.9% in 2010, est. 8.8% in 2011

Annually: 1.7 million hospital acquired infections Annually: 1.7 million hospital acquired infections causing 100,000 deaths [CDC, March 2007]causing 100,000 deaths [CDC, March 2007]

25% of all hospital patients end up back in the 25% of all hospital patients end up back in the hospital within 2 years (2/3’s avoidable) [AHRQ]hospital within 2 years (2/3’s avoidable) [AHRQ]

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What is Behind these Failures?What is Behind these Failures?Why can’t our health plans control Why can’t our health plans control

costs?costs? Health benefit bargaining focuses on Health benefit bargaining focuses on

who pays not how care is deliveredwho pays not how care is delivered

Quantity rewarded, regardless of resultsQuantity rewarded, regardless of results

Prevention is not integral to the systemPrevention is not integral to the system

Providers have no incentive to improveProviders have no incentive to improve

Plans do not promote more efficient Plans do not promote more efficient delivery of health caredelivery of health care

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Health Care Reform Will Impact Health Care Reform Will Impact Health Plan CostsHealth Plan Costs

Some Elements of Reform May Add Some Elements of Reform May Add to Plan Coststo Plan Costs– Cover adult dependents to age 26Cover adult dependents to age 26– Eliminate lifetime limitsEliminate lifetime limits– Excise Tax on high value health plansExcise Tax on high value health plans– Auto-enrollment and reduced waiting Auto-enrollment and reduced waiting

periodsperiods

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Health Care Reform Will Impact Health Care Reform Will Impact Health Plan Costs (Continued)Health Plan Costs (Continued)

Some Elements of Reform May Offer Some Elements of Reform May Offer Cost Relief to Employer PlansCost Relief to Employer Plans– Gov’t reimbursement to employers for Gov’t reimbursement to employers for

early retirees with very high health costsearly retirees with very high health costs– Expanded coverage of uninsured Expanded coverage of uninsured

through health exchanges and Medicaid through health exchanges and Medicaid – Improvements in Medicare: preventive Improvements in Medicare: preventive

care, prescription drug “donut hole”care, prescription drug “donut hole”

A Framework for A Framework for Bargaining for Health Bargaining for Health

BenefitsBenefits

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CWA Approach to CWA Approach to Health Care BargainingHealth Care Bargaining

There is no “one size fits all” strategy There is no “one size fits all” strategy for bargaining health benefitsfor bargaining health benefits

Analyze health plan in comparison to Analyze health plan in comparison to other plansother plans

Analyze health plan for true cost driversAnalyze health plan for true cost drivers

Assess health care agreement in Assess health care agreement in relation to total economic packagerelation to total economic package

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Our Guiding Principles in Our Guiding Principles in Bargaining for Health BenefitsBargaining for Health Benefits

Assure coverage by quality, Assure coverage by quality, affordable health plansaffordable health plans

Assure access, affordability and Assure access, affordability and fairness for workers at all wage fairness for workers at all wage levelslevels

Assure access and affordability for Assure access and affordability for those with chronic conditionsthose with chronic conditions

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What Determines What Determines AffordabilityAffordability

The Cost of the Health CareThe Cost of the Health Care

Plan DesignPlan Design

Employee and Employer Employee and Employer Contributions to CoverageContributions to Coverage

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What Determines Health Care What Determines Health Care CostsCosts

Health Care Costs = Health Care Costs =

Price of Health Care Services Price of Health Care Services

X Use of Health Care Services X Use of Health Care Services (Utilization)(Utilization)

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Plan Design: Determines How Much of Plan Design: Determines How Much of Health Care Costs are Covered by the Health Care Costs are Covered by the

PlanPlan

1. Covered Benefits1. Covered Benefits -- Which benefits -- Which benefits are offered and/or services coveredare offered and/or services covered

2. Provider Reimbursement2. Provider Reimbursement -- The -- The level at which provider charges are level at which provider charges are reimbursed reimbursed

3. Type of Plan3. Type of Plan -- How a participant can -- How a participant can access careaccess care

4. Cost Sharing4. Cost Sharing -- The amount of -- The amount of covered charges to be paid by plan and covered charges to be paid by plan and the amount to be paid by participantsthe amount to be paid by participants

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1.1. Covered Benefits – Covered Benefits – Which benefits are offered; services Which benefits are offered; services

coveredcovered

Ambulatory Patient Ambulatory Patient ServicesServices

Emergency Emergency ServicesServices

HospitalizationHospitalization Maternity and Maternity and

Newborn CareNewborn Care Mental Health and Mental Health and

Substance Abuse Substance Abuse TreatmentTreatment

Prescription DrugsPrescription Drugs

Rehabilitative Rehabilitative Services and Services and DevicesDevices

Laboratory ServicesLaboratory Services Pediatric Services, Pediatric Services,

including dental including dental and vision careand vision care

Preventive and Preventive and wellness serviceswellness services

Chronic Disease Chronic Disease ManagementManagement

The Affordable Care Act requires all plans to cover “essential benefits” by 2014.

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2.2. Provider Reimbursement –Provider Reimbursement –The level at which provider charges are The level at which provider charges are reimbursedreimbursed

The amount the plan will pay the provider (doctors, hospitals, other covered providers). Most common methods for determining provider payment:

Reasonable Reasonable and and CustomaryCustomary

The standard or usual rate charged by The standard or usual rate charged by providers in the area for a service or providers in the area for a service or procedureprocedure

Network Network Discounted Discounted RateRate

The rate negotiated by the plan The rate negotiated by the plan administrator with providers; usually a administrator with providers; usually a discount off of R&C.discount off of R&C.

Resource Resource Based Relative Based Relative Value ScaleValue Scale

Used for physician reimbursement; Used for physician reimbursement; payments for services are based on the payments for services are based on the resource costs needed to provide themresource costs needed to provide them

Pay for Pay for PerformancePerformance

Providers rewarded for meeting Providers rewarded for meeting performance measures related to the performance measures related to the delivery of quality health care services.delivery of quality health care services.

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3.3. Types of Health Plans – Types of Health Plans – How a participant can access careHow a participant can access care

Fee for Service Fee for Service (FFS)(FFS)

Unlimited choice of providers; includes Unlimited choice of providers; includes deductible and coinsurancedeductible and coinsurance

Preferred Provider Preferred Provider Organization (PPO)Organization (PPO)

Network & non-network providers Network & non-network providers covered; includes copays, deductibles, covered; includes copays, deductibles, coinsurancecoinsurance

Point of Service Point of Service (POS)(POS)

More restricted networks; includes More restricted networks; includes copays rather than coinsurance and copays rather than coinsurance and deductiblesdeductibles

Health Health Maintenance Maintenance Organization Organization (HMO)(HMO)

Restricted networks -- HMO providers Restricted networks -- HMO providers only; includes copays; no deductibles only; includes copays; no deductibles or coinsuranceor coinsurance

Consumer Driven Consumer Driven Health Plan (CDHP)Health Plan (CDHP)

Can be network or FFS style; higher out Can be network or FFS style; higher out of pocket costs than other plansof pocket costs than other plans

High Deductible High Deductible Health PlanHealth Plan

CDHP-style plan; deductibles and out of CDHP-style plan; deductibles and out of pocket limits set by law; higher out of pocket limits set by law; higher out of pocket costs than CDHPpocket costs than CDHP

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4.4. Cost Sharing – Cost Sharing – The Amount of Covered Charges to be The Amount of Covered Charges to be Paid by the ParticipantPaid by the Participant

DeductibleDeductible Dollar amount paid by participant Dollar amount paid by participant before plan covers benefitsbefore plan covers benefits

Co-payCo-pay Flat dollar payment from participant Flat dollar payment from participant before specified services.before specified services.

Co-insuranceCo-insurance The percentage of covered charges The percentage of covered charges split between plan and participant.split between plan and participant.

Out-of-pocket Out-of-pocket maximummaximum

The maximum amount of a The maximum amount of a participant must pay for covered participant must pay for covered services in a year. services in a year.

Premium/Premium/

Co-premiumCo-premium

Monthly payment made for insurance Monthly payment made for insurance coverage, usually based on the cost coverage, usually based on the cost of the plan.of the plan.

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Requesting Data About Plan Requesting Data About Plan CostsCosts

Check out Health Care Data Request at Check out Health Care Data Request at www.cwa-union.org/intranetwww.cwa-union.org/intranet

Look for trends: Look for trends: – Changes in total costs Changes in total costs – Changes in enrollmentChanges in enrollment– Changes in per employee costsChanges in per employee costs

Identify Cost Drivers:Identify Cost Drivers:– Number and dollar amount of high cost casesNumber and dollar amount of high cost cases– Number and dollar amount of prevalent Number and dollar amount of prevalent

diagnosesdiagnoses

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Requesting Data about Cost Requesting Data about Cost SharingSharing

Understand the true cost burden for Understand the true cost burden for employees and true plan costsemployees and true plan costs– Some claims not coveredSome claims not covered– Some charges paid by Some charges paid by

employees/participantemployees/participant– Savings generated by Coordination of Savings generated by Coordination of

Benefits (COB), discounts, etc.Benefits (COB), discounts, etc.

With response to data request, With response to data request, calculate cost share percentagecalculate cost share percentage

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Assessing AffordabilityAssessing Affordability

What percentage of income should be What percentage of income should be devoted to health care?devoted to health care?– Affordable Care Act sets a Affordable Care Act sets a guidelineguideline of 8%; of 8%;

consider this a maximumconsider this a maximum

Are flat dollar premium contributions Are flat dollar premium contributions and out of pocket expense and out of pocket expense requirements fair?requirements fair?– Does the plan cover high wage and Does the plan cover high wage and

management employees as well as low and management employees as well as low and middle income bargaining unit members?middle income bargaining unit members?

New Approaches to New Approaches to Health Benefits Health Benefits

BargainingBargaining

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A Strategic Plan to Change the A Strategic Plan to Change the Course of Health Benefit BargainingCourse of Health Benefit Bargaining Analyze current health plan for true cost Analyze current health plan for true cost

drivers; with employer, engage in thorough drivers; with employer, engage in thorough data analysisdata analysis

Analyze health plan in light of cost drivers – Analyze health plan in light of cost drivers – what changes in plan design could promote what changes in plan design could promote quality and achieve cost efficienciesquality and achieve cost efficiencies

Review developments in plan design and Review developments in plan design and health care delivery and assess feasibility for health care delivery and assess feasibility for our plan and contractour plan and contract

Consider approaches that reach outside plan Consider approaches that reach outside plan design to work with providers and other plans, design to work with providers and other plans, employers, unions, purchasersemployers, unions, purchasers

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Strategies to Increase Quality, Strategies to Increase Quality, Control Costs and Instill Control Costs and Instill

Fairness/AffordabilityFairness/Affordability Promote Preventive Care and WellnessPromote Preventive Care and Wellness

– Reduce risk of preventable diseaseReduce risk of preventable disease– ApproachesApproaches

Health Risk AssessmentsHealth Risk Assessments Health coach, risk reduction planHealth coach, risk reduction plan Diet, exercise, on-site clinicsDiet, exercise, on-site clinics

Improve Chronic Disease ManagementImprove Chronic Disease Management– Deliver proven treatment to the 20% of patients who incur Deliver proven treatment to the 20% of patients who incur

80% of costs80% of costs– Prevent chronic illness from getting worsePrevent chronic illness from getting worse– Direct engagement with physicians and facilitiesDirect engagement with physicians and facilities– Reduce co-pays for maintenance drugs and preventive Reduce co-pays for maintenance drugs and preventive

servicesservices

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More Strategies to Increase Quality, More Strategies to Increase Quality, Control Costs and Instill Control Costs and Instill

Fairness/AffordabilityFairness/Affordability Eliminate Regressive Cost Sharing Eliminate Regressive Cost Sharing

– Assess plan costs versus wages of bargaining unit Assess plan costs versus wages of bargaining unit membersmembers

– Regressive Cost Sharing: Lower-wage workers Regressive Cost Sharing: Lower-wage workers contribute a greater portion of their income to contribute a greater portion of their income to coverage costs than higher-paid workers.coverage costs than higher-paid workers.

– Progressive rates ensure affordability and allow Progressive rates ensure affordability and allow the lowest earners money to pay for other the lowest earners money to pay for other essentials.essentials.

– In 2014, when ACA requires coverage, employees In 2014, when ACA requires coverage, employees must be able to find affordable coverage through must be able to find affordable coverage through their employer, or go to the new health exchange.their employer, or go to the new health exchange.

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More Strategies to Increase Quality, More Strategies to Increase Quality, Control Costs and Instill Control Costs and Instill

Fairness/AffordabilityFairness/Affordability Encourage Electronic Medical Records SystemsEncourage Electronic Medical Records Systems

– Modern technologies streamline administration and Modern technologies streamline administration and reduce wastereduce waste

– Promote quality with accurate, efficient records and Promote quality with accurate, efficient records and access to information about best practicesaccess to information about best practices

Press for Provider Payment ReformPress for Provider Payment Reform– Incentives for providers to promote quality, comply Incentives for providers to promote quality, comply

with standards, coordinate care with otherswith standards, coordinate care with others– Work with other employers, Medicare and Medicaid Work with other employers, Medicare and Medicaid

to tie payment approaches to quality careto tie payment approaches to quality care

Resources for Health Resources for Health Benefits BargainingBenefits Bargaining

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Important Plan DocumentsImportant Plan Documents

Summary Plan Description (SPD)Summary Plan Description (SPD)

Plan DocumentPlan Document

60-days notice of material 60-days notice of material modifications (ACA; effective 2012)modifications (ACA; effective 2012)

Annual summary plan description Annual summary plan description (ACA; effective 2012)(ACA; effective 2012)

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External ResourcesExternal Resources For good, unbiased information about employer For good, unbiased information about employer

health plans – costs and design:health plans – costs and design: – Kaiser Family Foundation Employer Health Kaiser Family Foundation Employer Health

Benefits Survey: Benefits Survey: http://ehbs.kff.orghttp://ehbs.kff.org

For good analysis of trends and developments in For good analysis of trends and developments in employer health plans with a business bias: employer health plans with a business bias: – Towers Watson: Towers Watson: http://http://www.towerswatson.comwww.towerswatson.com

/health-care-reform/health-care-reform

For extensive information about health care For extensive information about health care reform and the Accountable Care Act:reform and the Accountable Care Act:– www.healthcare.govwww.healthcare.gov

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CWA ResourcesCWA Resources

Information and tools on health care Information and tools on health care reform: reform: – cwa-union.org/healthcarecwa-union.org/healthcare

Sample data requests: Sample data requests: – cwa-union.org/intranet cwa-union.org/intranet – (click on Bargaining & Organizing tools, then (click on Bargaining & Organizing tools, then

Data Requests)Data Requests)

This powerpoint and other webinar info:This powerpoint and other webinar info:– cwa-union.org/cbtrainingcwa-union.org/cbtraining