The State of Montana, - Health Care & Benefits Division

2017 ANNUAL REPORT

The State of Montana,

Department of Administration,

Health Care & Benefits

Division’s Annual Report explains how the State

of Montana Benefit Plan (State Plan) is administered. In addition

it provides historical and projected program costs and

reserve fund status. Finally, the Annual Report outlines

anticipated changes to the State Plan for future plan years.

INTRODUCTIONThe State of Montana Benefit Plan (State Plan) is administered by the State of Montana Department of Administration’s (DOA) Health Care & Benefits Division (HCBD). The State Plan is self-funded, which is different than fully insured, traditional insurance.

The Self-Funded State Plan

The State Plan assumes the financial risk.• The Plan is funded by employee contributions, via bi-weekly payroll

deductions, and by the State of Montana, via bi-weekly employercontributions.

• HCBD determines the benefit coverage, contribution levels, and out-of-pocket limits, which are defined in the Wrap Plan Document.

Traditional Insurance

• The Insurance Company assumes the financial risk.• The Insurance Company is funded by premiums collected from the insured

participants and their employers.• The Insurance Company determines the benefit coverage, premiums and out

of-pocket limits, which are defined in the Insurance Policy

Self Funded• Medical• Prescription• Dental• Vision• Employee and Dependent Life Insurance*• Long Term Disability Insurance*Other Benefits• Flexible Spending Accounts for Medical and Dependent Care

Reimbursement• State Plan member also have the opportunity to participate in the Live Life

Well Incentive Program and many valuable wellness programs.• Montana Health Centers

* Fully Insured

State Plan Benefits

2HEALTH CARE & BENEFITS DIVISION

ANNUAL REPORT32

State Plan Third Party Administrators (TPAs) and Vendors

With approximately 31,000 members state-wide, the State Plan contracts with outside companies to process claims and administer State Plan benefits. The State Plan also relies on these companies for their expertise and experience in administrating self-funded benefit programs. Our TPAs include:• Allegiance Benefit Plan Management, Inc. - Medical Claims, Visionand Vision Hardware (subcontracted through Cigna), and FlexibleSpending Accounts• Delta Dental - Dental• Navitus Health Solutions - PrescriptionsWe also contract with other companies that support the State Plan:• CareHere manages the Montana Health Centers.• The Standard provides fully insured life and accidental death anddismemberment insurance options, as well as Long Term Disabilityinsurance for active employees.• Montana Family Pharmacies and the University of MT School ofPharmacy provide the Medication Therapy Management Program.• Alliant provides Benefit Plan Consulting

State Employee Group Benefit Advisory Council (SEGBAC)

The role of SEGBAC is to provide advice on State Plan matters and to meet quarterly as presented in MCA 2-18-810.

Bottom Line

Because the State Plan is funded with State of Montana Employees' money and taxpayer dollars, HCBD and plan members work together to be good health care consumers.

ANNUAL REPORT

4HEALTH CARE & BENEFITS DIVISIONHEALTH CARE & BENEFITS DIVISION

HCBD HISTORICAL DATA

2016REDUCED PLAN SPEND AT MONTANA HOSPITALS 87% of Montana hospital spend was attributed to 11 hospitals, making a change in hospital reimbursements had the potential to create significant cost savings. DOA took a bold, innovative step by implementing Transparent Pricing contracts. By July 2016, the State Plan had implemented contracts with all Montana hospitals, basing reimbursement on a percentage above Medicare reimbursement rather than the standard facility method of billed less discount. Projections showed the State Plan would save over $25 million during the initial contract phase, July 1, 2016 to June 30, 2019.

PARTNERED WITH PUBLIC ENTITIESHCBD increased efforts to work with other public entities (MMIA, MUST, MUS, Butte Silver Bow, MACO and others) to coordinate benefit offerings, leverage purchasing power and partner on legislative initiatives. Through these efforts, the State Plan shared resources and participated in joint contracts. The Montana University System (MUS) joined the Navitus contract in July 2017.

SUMMARY PLAN DOCUMENT (SPD)The Summary Plan Document (SPD) contract that governs the State Plan had not been updated since 2011. HCBD embarked on a 10-month effort to completely revise the SPD, including external legalreview for compliance. The new SPD was issued in July 2016 and isnow updated annually.

IMPROVE RESERVE LEVEL2016 Plan Reserves reached $74 million, increasing $15 million over the prior year.

ANNUAL REPORT5

ANNUAL REPORT

2017CONTINUED TRANSPARENT PRICING EFFORTS

HCBD staff received training on Medicare DRGs and pricing in order to perform audits of hospital claim payments made by Allegiance. Several hospital transparent pricing contracts included a phased in approach, reducing the reimbursement percentage over Medicare over a three year period. This phased in approach resulted in additional State Plan savings. Other public entities reached out to the State Plan for assistance in Transparent Pricing models and options. In addition, DOA and HCBD leadership accepted invitations to speak at national and state conferences about this innovative approach.

PHARMACY BENEFIT MANAGERNavitus was selected as the Pharmacy Benefit Manager through an RFP process effective January 1, 2017. The Navitus model is a full pass-through transparent pricing model, with the State Plan receiving all rebates and reimbursing the exact amount paid to individual pharmacies – there is no capping of rebates and no “spread” pricing. The State Plan also implemented the Employer Group Waiver Plan (EGWP) for Medicare eligible retirees, allowing the State Plan to access coverage gap discounts and CMS reinsurance. The Navitus RX program yielded over 7 million dollars in savings to the plan during the first year.

MONTANA HEALTH CENTERSThrough improved contract management and reduced administrative fees, the cost per visit at Montana Health Centers was reduced to 60% of the cost of a similar visit with a private provider. Lab services

d at the Montana Health Centers were sub-contracted to Billings Clinic, bringing the services to a Montana provider at the same rates provided by the prior out of state vendor. Actuaries Northwest compared the lab costs through the Montana Health Centers with comparable lab tests the State Plan reimburses in the private market and confirmed $1.1 million savings were realized in 2016.

IMPROVED RESERVE LEVEL2017 Plan Reserves reached $112 million, increasing $38 million over the prior year.


2017 FINANCIAL REPORTRESERVES AND FUND BALANCE STATUSFund balance continues to exceed incurred but not reported (IBNR) claim reserves, and currently falls roughly $40 million above recommended reserves.

*IBNR is the IBNR reserve plus the grandfathered benefit reserve.**Fund Balance is the Total Assets as of the Report Date.***Based on actuarial recommendation as of 12/31/2017.****As of the 09/30/2017 table, Difference is at Report Date in place ofProjected Year End.

$0 K

$20,000 K

$40,000 K

$60,000 K

$80,000 K

$100,000 K

$120,000 K

2012 2013 2014 2016 2017

RESERVE LEVEL ANALYSIS

Fund Balance

2015

Recommended Reserves

REPORT DATE IBNR RESERVE1

GENERAL RESERVES

FUND BALANCE2

RECOMMENDED RESERVES3

DIFFERENCE4

12/31/2016 $17,378,729 $56,563,827 $73,942,556 $72,178,729 $1,763,827

3/31/2017 $17,804,433 $65,198,406 $83,002,839 $71,404,433 $11,598,406

6/30/2017 $20,362,284 $72,406,947 $92,769,231 $70,472,440 $22,296,791

9/30/2017 $20,447,700 $79,364,289 $99,811,989 $73,147,700 $26,664,289

12/31/2017 $20,362,284 $92,240,154 $112,602,438 $72,862,284 $39,740,154


ANNUAL REPORT7

ELIGIBLE PARTICIPANTS *

through 1/1/17

3/31/17

4/1/17 through 5/30/17

7/1/17 through 9/30/17

ACTIVE:

10/1/17 through 12/31/17

Employees 12,149 12,085 12,084 11,878 Spouses 5,476 5,408 5,387 5,260 Dependents 9,211 9,109 9,094 8,828

COBRA:13 COBRA 20 31 33

Spouses 9 8 16 1518 Dependents 18 20 18

PRE 65 RETIREE:365 Retiree 353 338 323

Spouses 244 231 218 20181 Dependents 77 74 68

MEDICARE RETIREE:1,672 1,650 1,637 1,641767 752 750 76041 43 40 39

Medicare Retiree Spouses Dependents

Total 30,046 29,754 29,689 29,064

* Presented for a rolling 12 months

Quarterly trend

2017 FINANCIAL REPORT

6ANNUAL REPORT


Category Total $

Monthly Amount Per Employee Total $


Monthly Amount Per Employee Annual Trend

15,475Average PEPM* 15,131 14,895

Total Revenue $ 923.63 $ 1,050.03 $ 202,368,315 $ 1,132.21

Medical Claims $ 665.92 $ 707.69 $ 122,824,288 $ 687.18

Health Centers $ 34.98 $ 33.97 $ 6,721,802 $ 37.51

Pharmacy Claims $ 169.81 $ 179.17 $ 24,880,665 $ 139.20

Administration $ 47.16 $ 46.32 $ 10,739,121

∆ IBNR $ (10.11) $ (19.08) $ 486,575 $ 2.72

Total Expenses $ 907.77 $ 948.08 $ 165,652,451 $ 926.79

Medical/Rx Claims Gain/(Loss) $ 15.86 $ 101.95 $ 36,715,864 $ 205.42

15,171Average PEPM* 14,865 14,655

Total Revenue $ 48.69 $ 55.02 $ 9,618,720 $ 54.70

Dental Claims $ 42.55 $ 42.93 $ 7,663,288 $ 43.58

Administration $ 3.49 $ 3.82 $ 536,138 $ 3.05

∆ IBNR $ (0.19) $ 0.02 $ 1,643 $ 0.01

Total Expenses $ 45.85 $ 46.77 $ 8,201,068.25 $ 46.63

Dental Claims Gain/(Loss) $ 2.84 $ 8.25 $ 1,417,652 $ 8.06

Total Revenue $ 971.36 $ 1,104.09 $ 211,987,035 $ 1,186.03

Claims $ 912.42 $ 963.01 $ 162,090,042 $ 906.86

Administration $ 50.58 $ 50.077 $ 11,275,259 $ 63.08

$ (10.29) $ (19.05) $ 488,218 $ 2.73

$ 952.71 $ 994.03 $ 173,853,519 $ 972.68

$ 171,516,267

$ 123,659,330

$ 6,495,564

$ 31,533,988

$ 8,758,361

$ (1,876,990)

$ 168,570,253

$ 2,946,014

$ 8,864,022

$ 7,746,033

$ 634,578

$ (33,785)

$ 8,346,826

$ 517,196

$ 180,380,289

$ 169,434,915

$ 9,392,939

$ (1,910,775)

$ 176,917,079

$ 3,463,210 $ 18.65

∆ IBNR Total Expenses

Combined Medical/Rx and Dental Claims Gain/(Loss) $ 110.06 $ 213.35

Average PEPM*

1/1/15–12/31/15

$ 60.08

$ 190,650,460

$ 128,492,759

$ 6,168,643

$ 32,530,910

$ 8,410,434

$ (3,463,457)

$ 172,139,289

$ 18,511,171

$ 9,815,378

$ 7,657,990

$ 681,076

$ 4,444

$ 8,343,510

$ 1,471,868

$ 200,465,838

$ 174,850,302

$ 9,091,510

$ (3,459,013)

$ 180,482,799

$ 19,983,039 $ 38,133,515

1/1/16–12/31/16 1/1/17–12/31/17

MEDICAL PLAN

DENTAL PLAN

TOTAL

MEDICAL/RX AND DENTAL CLAIMS SUMMARY



ANNUAL REPORT9

Category Total $



Amount Per Employee

Average Eligible 12,922 12,955 12,896

Contributions $ 148,773,482 $ 959.40 $ 167,500,159 $ 1,077.46 $ 184,614,138 $ 1,192.93

Medical Claims $ 112,220,510 $ 723.68 $ 121,259,576 $ 780.02 $ 118,848,397 $ 767.97Pharmacy Claims $ 22,388,738 $ 144.38 $ 25,481,356 $ 163.91 $ 20,841,307 $ 134.67Total Claims $ 134,609,248 $ 868.06 $ 146,740,932 $ 943.93 $ 139,689,704 $ 902.64

Loss Ratio 90.5% 87.6% 75.7%

Average Eligible 464 361 345

Contributions $ 6,699,185 $ 1,203.16 $ 5,912,688 $ 1,364.26 $ 5,991,589 $ 1,446.72

Medical Claims $ 9,868,393 $ 1,772.34 $ 7,418,457 $ 1,711.69 $ 5,009,808 $ 1,209.66

Pharmacy Claims $ 1,638,497 $ 294.27 $ 1,853,928 $ 427.76 $ 1,168,650 $ 282.18Total Claims $ 11,506,890 $ 2,066.61 $ 9,272,385 $ 2,139.45 $ 6,178,458 $ 1,491.84

Loss Ratio 171.8% 156.8% 103.1%


Contributions $ 12,768,499 $ 509.50 $ 12,498,793 $ 574.00 $ 11,762,588 $ 592.92

Medical Claims $ 8,065,990 $ 321.85 $ 5,983,369 $ 274.78 $ 5,687,884 $ 286.71Pharmacy Claims $ 7,506,753 $ 299.54 $ 5,195,626 $ 238.61 $ 2,870,708 $ 144.70

Total Claims $ 15,572,743 $ 621.39 $ 11,178,995 $ 513.39 $ 8,558,592 $ 431.41

Loss Ratio 122.0% 89.4% 72.8%


Contributions $ 19,467,684 $ 635.60 $ 18,411,481 $ 705.18 $ 17,754,177 $ 740.37

Medical Claims $ 17,934,383 $ 585.54 $ 13,401,826 $ 513.30 $ 10,697,692 $ 446.11Pharmacy Claims $ 9,145,250 $ 298.58 $ 7,049,554 $ 270.00 $ 4,039,358 $ 168.45Total Claims $ 27,079,633 $ 884.12 $ 20,451,380 $ 783.31 $ 14,737,050 $ 614.56

Loss Ratio 139.1% 111.1% 83.0%

1/1/15–12/31/15 1/1/16–12/31/16 1/1/17–12/31/17

ACTIVES & COBRA

REITREES UNDER 65

MEDICARE RETIREES

TOTAL RETIREES

INCOME AND EXPENSE SUMMARY BY GROUPING


8ANNUAL REPORT


HCBD - PLANS FOR 2018

OVERALLHCBD analyzes potential health plan and business process changes for compliance with applicable laws and SPD language, increasing efficiencies and aligning with industry standards. HCBD will document business cases, gain appropriate approvals, and proceed to implement.

PLAN RESERVESThe Special Session of the Legislature passed SB 3, requiring a freeze on the employer contribution to the State Plan for two months in 2018, resulting in a funding reduction of $25 million to the State Plan.

HEALTH PLAN

• Medication Therapy Management (MTm) vendor contract completed and program implemented on July 1, 2018.

• Finalize Montana Health Center mission and strategy, implementing changes identified through the contract renewal for 2018/2019 Plan Years.

• Review all HIPPA procedures, policies, training programs, tracking, forms, etc. for HCBD. Design and implement enhanced HIPPA program for HCBD.

• Ensure Disease Management vendor contracts are implemented efficiently, with little if any duplication of services and appropriate outcomes reporting.

OTHER BENEFITS • Flexible Spending account RFP to be completed with an effective

date of January 1, 2019.

• Complete review of VEBA program with recommendations forprogram infrastructure, contracting and rule-making by July 2018.Complete RFP for required VEBA services for implementationJanuary of 2019.

BUSINESS SOLVER IMPLEMENTATION (BSC)• BSC will handle Open Enrollment for HCBD with full implementation

on January 1, 2019.

9 HEALTH CARE & BENEFITS DIVISION

ANNUAL REPORT11

EMPLOYEE ENGAGEMENT, HEALTH & WELLNESS Assessment of Wellness and Incentive Programs with a recommendation for a more improved, effective program effective January 2020.

DATA WAREHOUSE & ANALYTICS• Complete RFP process and implementation of Data Warehouse and

Data Analytics before January 2019.

• Develop key analytic reports.

• Develop HCBD capacity for Transparent Pricing analysis to identify results, potential issues, and contract recommendations.

WORKERS COMPENSATION• Reduce state government premiums by 5-8%.

• Implemented Medical Surveillance Contract for all impacted agencies effective January 1, 2018.

• Monitor total injuries to state employees with the focus on identifying claim severity trends.

LEGISLATIVE/INTER-AGENCY• Participate on HJR 20 Interim Study Groups for Transparency and

Pharmacy Cost Controls.

• Participate on SJ 27 Interim Study Group of Montana State Fundfor options for Worker’s Compensation.

• Provide support to interim work groups looking at opioid abuse.

• Support DPHHS initiatives for health care studies as needed.

• Support Governor’s office health care study groups and initiatives.

HCBD - PLANS FOR 2018

10ANNUAL REPORT


HCBD STAFF CONTACT INFO

NAME TITLE PHONEVacant Administrator

Amy Jenks Operations Bureau Chief 444-2528

Finance/Audit ManagementAmber Thorvilson Financial Manager 444-2604

Shelly Mathews Accounting Tech 444-2454

Sheri French Program Integrity Auditor 444-3811

Nancy Lightner Program Integrity Auditor 444-9123

LegalTerri Hogan Attorney/HIPPA Priv. Officer 444-3447

Medical ManagementErica Lewis Clinic Operations Manager 444-2510

Kim Pullman Wellness Program Manager 444-3809

Sherri Rickman Medical Case Manager 444-6105

Production ManagementMelanie Denning Health Officer/VEBA 444-3745

Cassandra Schmit Benefit Systems Analyst 444-3849

Service ManagementJackie Dunbar Service Team Manager 444-0380

Dennis Bohlman Benefit Specialist 444-0173

Crystal Gray Benefit Specialist 444-0175

Michelle Herren Benefit Specialist 444-3872

Sarah Huckins Benefit Specialist 444-1854

Workers’ Compensation ManagementLance Zanto Bureau Chief 444-5689

Matt Chambers Return to Work Specialist 444-7016

Lisa Brooks Safety and Loss Control 444-0122

11 HEALTH CARE & BENEFITS DIVISION

STATE PLAN VENDORS

ALL MONTANA HEALTH CENTERS (855) [email protected] Info: www.healthcenter.mt.gov Appointments: www.carehere.com Registration Code: MANA9

CLAIMS, BENEFITS, PARTICIPATING PROVIDERS, ETC.(855) 999-1057www.askallegiance.com/somPO Box 3018 Missoula, MT 59806

DENTAL BENEFITS, CLAIMS, & CUSTOMER SERVICE Phone: (866) 496-2370Web: www.deltadentalins.com/stateofmontana

LIFE & LONG TERM DISABILITY INSURANCE For questions about benefits, claims, status of application:(800) 759-8702www.standard.com

VISION SERVICE PROVIDERS AND HARDWARE COVERAGE Phone: (877) 478-7557Web: askallegiance.com/som “Vision” under “Benefits” Tab

PRESCRIPTIONS AND CUSTOMER SERVICE Phone: (866)333-2757 Web: www.navitus.com

Mail Order Prescription Drugs:Costco (800) 607-6861 Ridgeway Pharmacy (800) 630-3214MiRx (866) 894-1496

Specialty Meds: Lumicera Health Services (855) 847-3553

MISSION

To administer competitive

and comprehensive

benefits that provide

financial protection for

state employees, retirees,

and their families in a cost

effective manner.

VISION

Creating, managing, and

delivering industry leading

health care and workers’

compensation programs

focused on the needs of

the agencies and individual

customers.

www.benefits.mt.govPh: (800) 287-8266

TTY: (406) [email protected]

The State of Montana, - Health Care & Benefits Division

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