Consultant tells school district
Health-care costs well-managed, gives Rx


GUILDERLAND — Being part of a health-insurance consortium has had "a positive financial result" for the Guilderland School District, according to UHY Advisors, consultants hired by the district to review its health-insurance programs, focusing on financial efficiency.

In 1996, Guilderland joined the Capital Area Schools Health Insurance Consortium (known as CASHIC), which currently has 15 members.
"Participation has given you economy of scale," John DePalma of UHY Advisors told the Guilderland School Board last Tuesday.
"The risk is spread through all the members," he went on. "Guilderland is rated on its own claims experience".On your own, your rate increase would be higher."

DePalma also outlined a series of recommendations for change — both for the consortium and for Guilderland.

Last year — with health-care benefits for district employees costing $8.2 million, or nearly 11 percent of the district’s $76 million budget — some board members, led by Peter Golden, questioned spending. One proposal was to move to a single insurer, in order to save the district money. Golden now heads the district’s business practices committee, which worked with UHY Advisors on the current evaluation.

Guilderland, unlike most districts, does not negotiate health benefits during the collective-bargaining process with labor unions, but, rather, has a district health-insurance committee, which includes representatives from each of its 12 bargaining units.

The district offers four different health-insurance plans, covering medical, dental, and prescription drug costs.

Recommendations for the consortium

DePalma outlined five recommendations, which Guilderland will present to the consortium:

— To establish a prescription drug pooling point: With the development of biotech and specialty drugs for conditions like hemophilia, cancer, and multiple sclerosis, the cost of drugs can be several hundred thousand dollars per person, said DePalma.

A pooling point is a specific stop loss. For example, if the pooling point were $100,000, and an individual used $400,000 worth of drugs in a year, $300,000 would be the responsibility of the insurance company. Raising the pooling point can lower the premium, said DePalma;

— To re-evaluate Blue Shield’s retrospective funding terms: The consortium uses an 80/20 funding arrangement for the Blue Shield program, which is expensive, DePalma said; Guilderland is charged 3 percent of all premiums or about $90,000 annually. The consortium should allow districts to end this arrangement, DePalma said;
— To raise medical pooling points: The consortium’s current medical pooling point level is $100,000; any claim over that is not charged to Guilderland. Because of the size of the consortium, which serves about 5,600 people, a study should be conducted on raising the pooling point to a higher level, DePalma said. If the pooling point were increased to various levels, he said, "You’d be taking on more risk," but Guilderland could save between $22,000 and $44,000 annually;
— To enhance claims-reporting capabilities: It is hard to do detailed analysis, said DePalma, integrating Guilderland’s medical and pharmacy claims data. "In an era when technology gives us the ability to attain knowledge," said DePalma, "data needs to be analyzed." It could contain costs, he said, if, for example, blood pressures were taken regularly or workers were tested for diabetes;
— To phase out the Par Plus indemnity plans: While DePalma termed these "wonderful programs," he also said they are "extremely expensive" and named a number of insurance companies that no longer offer them. Under Par Plus, he said, "You go to any doctor you want" and there is no issue with managed care. Guilderland doesn’t offer Par Plus now and DePalma called it "a smart move to eliminate that."

Offering Par Plus plans inhibits the consortium’s member districts from considering other insurance companies that may not offer such programs, UHY said.

Recommendations for Guilderland

The UHY Advisors also made four recommendations for the Guilderland School District:

— To increase use of mail-order drugs: Guilderland workers under-use mail-order drugs, said DePalma; for the past four years, use has ranged between 9 and 10 percent, he said. This costs Guilderland additional funds for its prescription plans. If mail-order use were increased, DePalma said, Guilderland’s annual pharmacy costs could be cut between $100,000 and $400,000.

UHY Advisors recommends educating Guilderland employees about mail-order drugs being less costly, making mail-order mandatory for all maintenance drugs, and reducing co-pays for mail orders;
— To adopt drug step therapy programs: Step therapy dispenses drugs in the most efficient way to "maximize outcomes at the appropriate cost," says UHY.
DePalma gave the example of a patient with heartburn. Rather than immediately being prescribed "the little purple pill," which DePalma said had been well sold and well marketed, the patient would first be advised to take Rolaids. "If it doesn’t work, then prescribe something that does work," said DePalma;
— To conduct risk analysis: Guilderland should do a risk analysis of its Blue Shield and ExpressScripts programs "to gain greater understanding of the health needs of their population and design programs to meet the needs of its population," says UHY. DePalma called this "converting data into usable knowledge" and said, "You need to develop programs that meet the population’s health concerns"; and
— To continue to explore alternatives: Guilderland’s" "health-insurance committee structure provides the ability to make annual recommendations for change that affect all members, which is not possible under the typical collective bargaining model," says UHY.

Wellness programs, DePalma told the school board, help keep health-care costs down.

District response

Superintendent Gregory Aidala asked DePalma what would be a reasonable goal to target for mail-order drugs at Guilderland next year. DePalma responded that lots of companies have achieved 20 to 25 percent, compared to Guilderland’s 9 or 10 percent.
Denise Eisele, a school board member and a nurse, asked how the drug step therapy would be implemented. She said it would almost be "getting into a physician’s practice," and asked how to encourage it "without stepping on physicians’ toes""
"That’s the classic battle," DePalma responded. He said that physicians are aware of the protocols that insurance companies want followed.
"You’ll have conflicts from time to time, where the doctors push back," said DePalma.

He said his biggest concern was about the biotech specialty drugs and gave the example of a hemophiliac who used $400,000 worth of drugs in one year.

Golden made the point that the district is paying 15 percent on money from Blue Shield that it could borrow for 4-percent interest.

Golden also made the point that, since Guilderland employees shoulder 20 percent of their health-insurance costs, when the district’s costs go up, the workers’ cost also rise.

Golden also cited figures from compliance plans used in corporate America where companies had saved up to 15 percent, he said, by making certain requirements of employees.
"There are programs out there now," said DePalma, stressing wellness and prevention. "Our preference is people go for an annual physical"Incentives will become more commonplace," he said.

Golden recommended adding that to the list of topics to discuss with CASHIC.
On another topic, Neil Sanders, the assistant superintendent for business, said that, right now all 15 school districts in the consortium are treated the same. "We’re going to have to see if some schools can be under one funding arrangement and others under another"It will certainly be a discussion."

Board President Richard Weisz asked if bigger would be better for the consortium.
Increasing the size would give more leverage, said DePalma, but he added, "The CASHIC consortium is well run"It has good equilibrium and good stability."
Weisz then asked what he called an "out of the box" question: "Does it make sense for the state to take over"if bigger is better""
"In theory, yes," replied DePalma. But one of the issues with large plans, he said, is sometimes they fall victim to politics.
Weisz concluded the session by telling DePalma, "Your report says we’re basically doing a responsible job managing health-care costs."
"You are," responded DePalma.