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Funded Retirement and Insurance Committee Minutes October 7, 2011, 11:30 am 302 USB Funded Retirement and Insurance Committee (FRIC) Meeting
Funded Retirement and Insurance Committee Minutes from October 7, 2011
Meeting was called to order at 11:30 am in 302 USB.
Members in attendance: Steve Bernholtz, Nancy Davin, Katherine Dudley, Jon Garfinkel, Daniel Katz, Bernard Sorofman, Katherine Tachau, Anand Vijh, Lynn Vining, Michael Wichman
Members absent: Matthew Glasson, Sheldon Kurtz, Heather Schnoebelen, Victoria Sharp
Administrative Officers present: Sue Buckley, Richard Saunders
Guests present: Amber Goedken, Suzanne Hilleman, Debra Hughes, Susan Klatt, Christine Miller, Joni Troester, Dianne Wasson, Nancy Williams, William Buss
- Committee members, administration representatives, and guests introduced themselves.
- Nancy Davin chaired the meeting as Sheldon Kurtz could not be present.
- The minutes of meeting from September 9, 2011, were approved unanimously.
- The committee first took up the topic of whether the UI health plan should cover vitamins (and supplements). This is a controversial topic. Some research points out that Americans take too many vitamins that cannot be absorbed by the body. Other research says that vitamins are essential and as necessary for human body as some of the medicines.
The committee sought expert opinions from two committee members and one visitor. First, Bernard Sorofman from Pharmacy informed the committee that vitamins are in fact required by many people and not just wasteful expenditure. Second, Dan Katz from Surgery gave a presentation on vitamins. He believes that vitamins are as necessary as medicines and can save expensive procedures such as hip fractures that are caused by calcium deficiency leading to osteoporosis. He informed the committee that five or six vitamins and supplements (namely, Calcium, Vitamin D, Iron, Folate (or Folic Acid), and Potassium) account for 71% of vitamins usage. The longer list includes 62 vitamins and supplements, based on his research survey. Third, Amber Goedken, PHD student in Pharmacy shared a list of common vitamins and supplements from Wellmark/Blue Cross.
At present some vitamins are covered and some are not covered. As a rule of thumb, over-the-counter vitamins are not covered while prescription vitamins are covered. This motivates some employees to shift to expensive prescription vitamins. The committee wanted more information on the cost aspects of vitamins coverage, but this is not easily available. The committee is still discussing this issue and will continue next time.
- The committee next discussed product selection penalties for prescription drugs. As is well-known, generic drugs cost less than brand name drugs. The FDA requires generics to be identical to brand name drugs, yet some generics do not work as well as brand names, at least for some patients. On such occasions the UI health plan accepts that the doctor may prescribe a brand name drug and put a code of Dispense As Written (DAW)=1 on the prescription. With that code in place the health plan provides coverage like any other brand name drugs, which means there is a co-insurance requirement. There is no co-pay requirement for generic drugs in order to induce employees to use them, which benefits everyone in the plan.
Some employees still want to use brand name drugs even though the doctor does not consider them necessary. In such cases the doctor uses DAW=2 code. Alternately, even if there is no DAW code (equivalently, a default code of DAW=0), employee may insist on the brand name drug. In either case the current health plan imposes a product selection penalty. However, this penalty is the difference of the price of the generic vs. the name brand drug which can in some cases be smaller than the required co-insurance under DAW=1. The net effect is a cost increase to the plan and doubtful (if any) benefit to the employee.
One solution is to require DAW=0 or DAW=2 patients to pay greater of co-insurance and product selection penalty, but Wellmark systems cannot handle this option. Wellmark says that in such cases plans by other employers all of their fully insured plans typically require the employee to pay the sum of the product selection penalty and the co-insurance. Based on 2010 data, Richard Saunders estimates that there will be a saving to the plan of about $160,000 a year.
There was considerable discussion between committee members. Most felt that this is an unintended consequence, a design flaw, or a loophole. However, during this meeting a motion was not proposed to say that in DAW=0 or DAW=2 cases the employee should be required to pay the product selection penalty plus the co-insurance penalty. There will be more discussions during a future meeting.
- The last substantial discussion focused on the dental plan for 2013. At present, and continuing into 2012, there are two dental plans available: Dental 1 and Dental II. Their costs and coverage are described on the following web-site:
Dental I plan has lower premiums and lower coverage than the Dental II plan. Both plans are provided by Delta Dental of Iowa. It is important to note one important difference between health plans and dental plans. For health plans you have the potential risk of large catastrophic claims, while under dental insurance there are much lower limits to what can be covered in a calendar year.
It has been suggested that the University move to one common plan for all employees. Thus, instead of Dental I and Dental II there will be just one Dental Plan II. The Dental I plan would be closed. The costs and coverage under this alternative are attractive. The employee cost will be lower than currently under Dental II, and only slightly higher than Dental I. The estimated savings to employer are the order of $680,000, and to the employees another $120,000. The total savings of $800,000 are a compelling reason to go for this plan. It is a win-win situation. The University also saves with lower administrative costs from Delta Dental of Iowa by only having one plan. This change is slated to go into effect during 2013. This was moved and approved by the committee.
- Mr. Saunders informed the committee that during the November 2011 meeting there may be a presentation by Dr. Boutros on the new Iowa River Landing facility of UI Hospital and Clinics. This facility will house General Internal Medicine and other specialties that are not equipment intensive. The committee also suggested additional topics to Christine Miller to be forwarded to Dr. Boutros to be included in his comments.
- The meeting adjourned around 1:00 p.m. as scheduled.
Recorder: Anand M. Vijh