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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