December 13, 2011
PEIA Finance Board Adopts PEIA Plan
The PEIA Finance Board met on December 13, 2011 and adopted the plan for 2012-13. The meeting was a mix of good news and bad news.
Good News
A number of favorable changes were made based on testimony at the public hearings. Those changes moved the cost shifting from the originally proposed $32.6 million in benefit cuts from participants to a total of $18.4 million. Changes in the original proposal include:
· Removed the proposed fee of $50 for imaging.
· Massage Therapy, deemed medically necessary, will be a $10 co-pay in addition to deductible and coinsurance. After the first 20 visits, it will be $25 co-pay plus deductible and coinsurance.
· Removed $500 co-pays for spine, knee, hip and shoulder procedures and modified the $100 emergency room visit fee.
· Modified Pharmacy A proposal: non-preferred brand will change to 75% co-insurance and 25% PEIA with money paid to apply toward deductible and out-of-pocket max. In addition, there were other minor changes made to the additional pharmacy plans.
· The family out-of-pocket maximum proposal was changed from 2 times the single plan to 1 ½ times a single plan
· Retirees will see a 9% premium increase with no increase in co-pays or deductibles.
· Plus additional changes that will be outlined in the new PEIA Shopper’s Guide
“These plan changes will save money for participants and retirees,” states WVEA President Dale Lee. “We worked hard to get these changes made. We thank those who spoke at the public hearings and submitted comments. It was your comments which caused the policy revisions by the Finance Board.”
Bad News
The bad news is retirees and future retirees will have a tremendous cost shifted to them by the action of the Finance Board to cap the growth of state contributions to retiree health care cost at 3% per year beginning in July 2012.
This is not a part of the PEIA plan but an attempt to deal with the OPEB debt. Board members approved a plan that will cap the amount the state pays toward premiums for retirees. The state currently provides a $343 subsidy toward premiums for every retiree. The board voted to cap subsides at $343, with a 3 percent increase each year to account for medical inflation. For example, if inflation increases 10 percent next year, the state will cover only 3 percent of that increase. Retirees will have to cover the additional 7 percent.
This motion was originally made at the October 11, 2011 meeting by Josh Sword, an AFT staff person who sits on the Finance Board. WVEA spoke against the action at the December meeting and encouraged the board not to act on this until the legislature put together a comprehensive plan to eliminate the OPEB liability.
WVEA would never agree to a such a proposal until it contained 3 key components: 1) county boards are relieved of OPEB liability for employees in the school aid formula; 2) the state must guarantee to commit resources to the OPEB solution instead of all the money coming from plan participants; and 3) cost containment measures are in place not just cost shifting to employees/retirees.
“It is clearly an attack on current and future retirees and does nothing to eliminate the liability from county boards of education which ultimately hurts our students,” states Lee. “It was simply a punitive motion when it was made in October and it is now a reality. Some will argue the legislature can cap the state’s retiree contribution at a higher percentage but realistically that will not happen.”
“I am shocked the original motion came from the AFT and even more shocked that the retiree representative on the board voted in favor of the proposal. They were trying to backtrack at the meeting but the damage had been done. Clearly they don’t understand or care what the implication will be on current and future retirees,” concluded Lee.
November 16, 2011
WVEA's Public Hearing Testimony
I am WVEA President Dale Lee, speaking on behalf of the West Virginia Education Association. Another year, another PEIA public hearing and again we appear before you to discuss cost shifting to employees. The entire $42 million is being taken from employees and retirees – none of the cost containment in the proposed plan is coming from providers.
Increasing co-pays is a way to shift the burden completely to the employees. This enables the state to avoid any increases in cost and places all increases on the backs of the members.
Not only that; but all of the cost has been shifted to those who are sick, take medications or need to see the doctor. In many cases, these are the lowest income participants. Increased co-pays burden those with lower incomes more than others.
Research shows most often those with the highest medical expenses are the lowest earners. Increasing co-pays equally for all individuals disproportionately burdens the poorest of the population and is basically a way to shift increasing medical costs to employees with the lowest salaries.
After reviewing the proposed plan changes, I am truly disheartened PEIA would consider increasing the cost of all prescription medications. I encourage you to maintain the costs of Tier 1 and 2 drugs at the same levels. When the cost of medication increases, usage decreases and causes declines in the health of members. To prevent inflated future health care costs and to encourage usage of medications; the prices of basic drugs, such as blood pressure medicines, should remain the same.
While medical inflation is a problem we must address, there are ways to decrease the financial burden placed on state employees. Rough estimates indicate during the next several years PEIA will see increased reimbursements and costs diminish to the amount of tens of millions of dollars in savings from Medicare prescription reimbursements and also medications becoming available in generic format. The right thing to do would be to pass this savings on to the members of the plan.
I am also disheartened to see the introduction of $500 co-pays for a series of procedures. These are almost always non-elective/medically necessary procedures. They should not be postponed or neglected due to the lack of the $500 co-pay. The same applies to the introduction of a $50 imaging co-pay. Imaging is not elective but is a tool used to make a correct diagnosis.
The Board also needs to continue and enhance preventative programs such as those for diabetes, obesity, and high blood pressure that improve the long term health of members and decrease costs in the long run. Encourage doctors to engage in medical homes, which are not paid based on services and the type of service; but regularly paid a set amount per patient. These clinics have been proven to increase the health of patients and decrease costs by coordinating and combing services. There is no incentive for multiple visits or additional testing, which encourages a better approach to patient care.
The useful retiree assistance program is a wonderful resource for lower income retirees. Through my interaction with retirees, however, it appears that awareness of the program is a problem. Therefore, I strongly encourage you to continue the program and increase your efforts to increase awareness and accessibility.
WVEA urges you to revise the plan to share the burden of cost containment between providers and plan participants. We also encourage you to develop additional cost containment programs before passing all the plan’s cost to participants.
Increasing co-pays for a number of procedures, increasing the costs of prescription drugs and doing away with coverage for certain procedures take money directly out of the pockets of the participants. This practice of robbing Peter to pay Paul must stop. Providers and the state must bear some of the responsibility of cost containment and balancing the plan.
The state must modify the 80/20 calculation to include the co-pays and increased costs being shifted to employees and retirees in the calculation.
Employees and retirees can no longer continue to balance the plan by themselves.
Thank you for your time.
October 11, 2011
Some benefit reduction may occur in proposed plan
PEIA--no premium increases in FY 2013
The PEIA Finance Board has proposed a plan for fiscal year 2012-13 that has no premium increases for active or retired participants. The plan does, however, include $42 million of proposed benefit reductions.
Among the possible actions to be considered are: remove acupuncture coverage; remove massage therapy coverage; add $10 co-pay to physical, occupational and speech therapy coverage; increase ER co-pay to $100; increase Urgent Care co-pay to $25; introduce imaging co-pay of $50; Specialty co-pay increases from $20 to $25; increase the family out-of-pocket to 2X single plan; introduce $500 co-pay for spine procedures, knee replacements, hip replacements, shoulder surgery, hysterectomy,gastric bypass and dental procedures that are medically necessary.
In addition to the changes listed above, the plan proposes increases in co-pays for prescription drug coverage. Those include: Pharmacy Option A – eliminate Tier 3 ($5/$50/100%/$50 sp); Pharmacy Option B – increased co-pay ($8/$50/$85/$100 sp); Pharmacy Option C – no PPI (acid reflux) coverage; Pharmacy Option D – no coverage for $4 Walmart drugs.
PEIA Plan C could see a proposed increase in deductibles from $25 to $100; increases in outpatient co-pays from $50 to $100 and increases in inpatient co-pays from $100 to $150. The proposed plan also calls for a new Plan D to be created. Plan D will be the same as Plan A but use only WV providers.
WVEA President Dale Lee was in attendance at the PEIA Finance Board meeting. “While I applaud the board for not increasing premiums, I am saddened they have chosen to balance the plan by reducing benefits to employees,” states Lee. “They could have shifted some of the costs to the providers, but chose to place the entire burden on plan participants. That is wrong.
The state is sitting on hundreds of millions of dollars in the Rainy Day funds and a surplus in the current budget. Yet, because of the 80/20 statute, if the state put any of those funds into PEIA the employees would have to match with a 20 percent contribution. In times of budget surpluses that is unfair to our state employees, educators and retirees. We must change the statute during the next legislative
session to eliminate or modify the 80/20 rule.”
The PEIA proposed plan will be discussed at Public Hearings throughout the state. Registration is from 5 - 6 p.m. with the public hearing scheduled for 6 - 8 p.m.
Monday, November 7
Charleston - Civic Center Little Theater
Tuesday, November 8
Beckley - Tamarack Ballroom A
Monday, November 14
Martinsburg - Holiday Inn
Tuesday, November 15
Morgantown - Ramada Inn
Wednesday, November 16
Wheeling WV - Northern–B&O Auditorium
Thursday, November 17
Huntington - MU Medical School–Harless Auditorium