HEALTH BENEFITS REPORT
Health benefits changes:
Endorsed and outlined
On August 29 we voted to adopt a package of
cost-saving health benefits changes. After days of
discussions and consideration of what is right for
our members, active or retired, state or local, we
decided to vote for a package that decreased rates
for some of our members, and slashed the increases for the rest.
As we have said all along, we would not endorse
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any changes that would shift more costs onto our
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members. After five months of negotiations with
Design Committee representatives, we were able
to produce a package that will change some of the processes and
create a small rate reduction for local actives and an approximate
3.4 percent increase for state actives. I am sure you know that these
numbers are unprecedented. The package also slashes increases
for retirees and will help control rates for retirees for years to come.
It was our opinion that we would have been jeopardizing these cost
savings had action not been taken on behalf of our members, and
we would have faced increases from 6 percent to 13 percent.
Below are the seven changes that were acted upon, and a very
brief description of each explaining the reason that the PBA chose
to support the resolution. It is important to remember that these
changes only apply to those enrolled in the State Health Benefits
Plan. Also, as a point of clarity, last year there was a resolution
passed that would increase emergency copays by another $25, up
to $100, if emergency room (ER) utilization did not decrease; unfortunately it decreased. These copay increases do not apply to pediatric emergency room visits, and the copay is waived for any
admission into a hospital from an ER.
• All post-65 aged retirees switching to a Medicare advantage
plan: It is important to know that the State Health Benefits
Commission already acted on this, as it is deemed a contract
change. We simply voted on a resolution that would ensure
equal benefits to what members are receiving now, and create
prescription drug savings for the member if savings reached 20
percent. This is a strategy that we have been embracing for
years. The plans are actually stronger and the network is larger.
This will have a positive effect on the Chapter 330 rates as well,
decreasing costs for those retirees. Had we not acted, post-65
aged retirees would have faced an 11-percent increase, which
is now projected to be 5 percent – a reduction of more than 50
percent.
• Mandatory use of generic drugs in certain situations: The
SHBP generic utilization rate is at approximately 75 percent,
instead of at the 85 percent it should be. This will require that
a generic be dispensed first (providing lower copays for our
members) and, if the member can demonstrate a medical
necessity, he or she will receive the name brand. This
regulation will not apply to Medicare retirees.
• Formulary management: With the skyrocketing cost of prescription drugs, the pharmacy benefit manager has created a
list of drugs that it has chosen to discontinue unless the drug
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is proven to be medically necessary. All drugs on this list have
an alternative name brand that will be available, which should,
clinically, produce the same results. This change, too, will not
apply to Medicare retirees. We will provide this list to delegates
and presidents through the intranet account.
• Prescription timeline and implementation: Both prescription drug changes are good for one year and will be discontinued without an affirmative vote of the committee.
• Prescription Drug Step therapy: Our members have had this
for years; there are no changes for any of our members.
• Restructure Physical Therapy out-of-network payments:
Some physical therapists were taking advantage of the payment structure. This is similar to the change we made last year
to out-of-network chiropractors. After extensive research, it
was determined that there were more than 1,400 physical therapists in New Jersey, and the only state employees who lived
beyond a few miles away from a provider were those who lived
far out of state. This, too, will not be continued without an affirmative vote of the committee for 2018.
• Support to extend the pharmacy benefit manager contract
(which was already adopted by the commission): The state
just spent three years trying to award a new pharmacy contract
and was unable to do so. It was a foregone conclusion that
there would be a one-year extension, and we had no confidence that it could be done in two. Extending for two years
produced additional savings that will be realized in 2017 and
2018. Had we extended for one year, we would have lost the
leverage for additional savings, as the pharmacy vendor would
have known that we had no choice but to extend for an additional year. We also voted to add an auditor for 100 percent of
the claims. We project that this action will save us millions in
the future, until we can implement a reverse auction.
• Incentives for switching to the tiered networks: Any state
employee who switches to the tiered network for two years will
receive $1,000 for single coverage, $1,250 for member and
spouse, and member and child coverage and $2,000 for family
coverage. This incentive allows members to be compensated
for taking on more risk, if they choose. At this time, this incentive is only available to state employees, but the resolution
requires local government units be encouraged to do the same
thing. Just as a point of clarification, the tiered networks are not
available for retirees. This was done specifically to keep the
much lower rates from negatively impacting Chapter 330 rates.
We did not take the approval of this package lightly, and the labor
side of the commission got almost everything it asked for in the
package, while keeping rates and benefits in check with iron-clad
safeguards. We have remained vigilant in our philosophy of no cost
shifting. In the coming weeks, we will post detailed information on
these changes and, if there is an interruption with regards to prescriptions or physical therapy, the resolutions require that the
administrators make notification if you are affected. Please continue to follow upd