The NSHE Task Force that the Chancellor appointed last fall to analyze the impact of the PEBP Board's proposal for a new insurance model has posted its report, which will be discussed by the Regents at the upcoming Board meeting March 10-11.
The NFA was well represented on the Task Force, by UNR Professor Jim Richardson and UNLV Professor of Health Care Administration Chris Cochran. The full report has been available on the Chancellor's website since late January, and can be found on the NFA website here.
Because it is rather lengthy, including various appendices, a summary has been prepared by Chris Cochran and is available here. (Note that even this brief summary is six pages single-spaced; this topic is truly not for the faint of heart or the rushed...)
The key elements of the recommendations follow:
• NSHE should engage (as NFA already has through the Benefits Coalition) to seek legislative action to ameliorate the impact of the PEBP Board proposal, at a minimum by increasing the amount of money allocated to each individual participant's Health Savings Account.
• NSHE should explore offering a "flexible benefit option," a supplemental health benefit available to NSHE active employees for FY 12. (This might involve a three-year pilot program of NSHE operating a supplemental, partially separate or fully separate health insurance pool for its professional and classified employees.)
• NSHE should seek greater flexibility in handling the full array of benefits for its professional and classified employees, just as it currently operates the RPA retirement accounts independently of the state. This might enable NSHE to redirect the anticipated increase of a fraction of a percent of the state match for our RPA retirement accounts towards health benefits. This might also enable NSHE to explore whether we could obtain more cost-effective coverage as a separate insurance pool than PEBP offers currently. (This is not to recommend that NSHE leave PEBP outright, which would require legislative approval and could be costly for both entities; rather, it is to consider becoming a separate, autonomous insurance pool within PEBP.)
In support of these recommendations, the report includes an evidence-based comparison of PEBP benefits – current and projected under the new CDHP plan being proposed to take effect this summer – with the health benefits offered by leading private employers in Nevada and with those offered by public and private institutions or systems of higher education in the West. The Task Force found that Nevada is already at a "competitive disadvantage" with the current benefits and is likely to be even less competitive with the higher premiums and deductibles, and reduced co-insurance and reduced dental coverage included in the PEBP Board Plan for the coming biennium. (This comparison is based upon the work of an independent consultant retained by NSHE to provide an empirical analysis of PEBP benefits.)
This data leads to a series of recommendations. The full recommendations are reproduced below for those unable or too short of time to read through to Pages 5-6 of the summary.
a. The Task Force recommends that NSHE have Gallagher Benefits update and finalize their
comparative data analysis as soon as the PEBP premium levels are known February).
b. The Task Force recommends that NSHE be very active in the upcoming legislative
session regarding health care benefits for its employees. This could include supporting
improvements in the PEBP health care program over what has been approved by the
PEBP Board, adjusting the structure to include both a high and low deductible option
(since the current plan with only a high deductible option and an HMO will be relatively
unique in comparison to other public and private employers) and/or consideration of
viable near‐term alternatives for how NSHE provides health care benefits to its
c. It is recommended that NSHE develop a communications plan with an external focus, to
highlight that NSHE employees do not have high benefits, and are in general not in the
PERS retirement program (except for classified and a very small percentage of
faculty/professional staff who came from PERS covered employment).
d. NSHE should support an implementation year adjustment for spouse or domestic
partners that are covered under non‐PEBP plans, to allow flexibility for the six (6) month
period of overlap between those on a calendar year plan schedule.
e. Consideration should be given to extending the enrollment period, as was done last
legislative session to allow employees to adjust to the radical changes in the PEBP plan,
and still have a July 1, 2011 implementation date. It is recognized there is a relatively
large cost associated with this option.
f. Phase‐in of the reductions in HMO rates in the North, if in fact these rates drop over
what exists now. There is a PEBP policy for short‐term/2 ‐year subsidy for large rate
increases, and this is inserted below. It should be noted that this subsidy policy is
currently in effect with the Northern HMO program for FY10/FY11, but at their 1/13/11
meeting the PEBP Board suspended this policy for the FY12/FY13 biennium. This adds
additional concern since the northern HMO rates have been under this subsidy policy
for the current biennium, combined with the fact that the pooling of rates north and
south will clearly lead to reductions in the north and increases in the south. The HMO
participants in the south will therefore have no advantage of this subsidy policy during a
biennium when their rates will increase due to higher costs in the north.
Supplemental subsidy allocation:
• A supplemental subsidy will be allocated to any tier and plan with participant
* greater than one and a half times the blended medical trend as provided by plan
* greater than $100.
• The supplemental subsidy will be the amount required to reduce the participant
contribution percent increase to the average of the unsubsidized participant
contribution and the blended medical trend, but no lower than the amount required
to reduce the increase of the participant contribution to $100.
Other Overall Recommendations:
a. It is the recommendation of this Task Force that NSHE establish a system‐wide
standing committee on NSHE benefits overall, to include Health Care Benefits but
not just limited to this program. This would include a focus on future health care
coverage (including impacts of federal requirements) and retirement issues. This
group, while working with System staff, would also focus on how we can effectively
communicate with legislators and other key groups that NSHE employees have
major differences in retirement coverage, and that our "compensation" is not
consistent with the previous reports distributed about overall "public employee
compensation." The System needs to take immediate action in communicating these
facts to key constituent groups.
b. The Task Force recommends that NSHE immediately begin researching future
options to identify alternative approaches to providing health care benefits for NSHE
employees that are independent and outside of the current PEBP program, including
viable options for communications and/or action steps initiated in the 2011
legislative session. This could include consideration of fully insured programs,
self‐insured, and/or combining with other large public employee groups.
c. If the current PEBP plan for FY12 cannot be changed, the Task Force recommends
that a request be made to the Board of Regents to provide some funding to support
a Flexible Health Benefits Account for each NSHE employee to offset medical cost
increases and improve retention and recruitment. The “flexible benefit credit”
approach to provide employees with additional health care funding seems to be the
most flexible and easiest to implement of any options reviewed. It is recognized that
a key factor in implementing this recommendation is identifying funding, especially
in this financial climate.
d. As the Chancellor and Board of Regents consider the option of providing
supplemental benefits for NSHE employees, we would like to highlight several
potential challenges and key issues that would need to be addressed if supplemental
benefits are provided. We have attempted to highlight these issues below.
1) A major issue relates to identifying funding to provide additional health care
support, which will be challenging in this fiscal environment.
2) Another major issue that would have to be discussed relative to
supplemental benefits is a legal one relative to the Board authority over
NSHE state classified staff. It is the view of the Task Force that any
supplemental benefits authorized by the Board cover ALL NSHE employees
including state classified staff employed by NSHE.
3) The supplemental benefit approach recommended by this Task Force would
not be applicable for retirees under the current administrative structure. In
fact, we have not been able to identify any supplemental option for retirees
that would not require the development of an administrative solution.
Retirees interact directly with PEBP for health care, and this information
does not come through NSHE.
4) The Task Force recommends the Board of Regents consider the option for a
graduated rate/premium structure based on income levels (or allocation of
supplemental benefits from NSHE based on the same).
5) The Task Force recommends NSHE seek additional flexibility in managing all
“benefits,” specifically, the option to consider retirement and health care
programs as a package within all benefits, given they are the two largest
benefit programs by far. Additionally, there will be an added opportunity this
coming legislative session, with the projected significant increase required
for the PERS employee/employer contributions (moving from the current
11.25% for employee and employer to 12.25%). Most NSHE
professional/faculty do not participate in PERS, therefore does do not
contribute to any future state retirement liability. If NSHE received the
normal funding for retirement, health care and all other benefits, but was
given the flexibility to manage them as needed, we would be able to
consider a total compensation review of our competitiveness for
recruitment and retention of faculty and staff, with no increase in funding
from the state over what they provide to all other agencies.
6) Continue the analysis of the data from PEBP on actual claims experience for
NSHE employees in a form appropriate to compare the revenue and
expenses from NSHE (net costs), along with utilization trends relative to the
NSHE population. This will help foresee the longer range options and
opportunities for NSHE relative to health care programs.
7) NSHE should argue for alternative approaches to what exists now relative to
how PEBP negotiates rates for medical procedures (and including overhead
and profit costs). More transparency is needed regarding this process to
assure that PEBP members and taxpayers are getting the best prices
8) NSHE should consider developing specific health care options for NSHE
employees for the following biennium (2013‐2015). These
options/alternatives should consider ways that NSHE resources of health
professionals, health programs (med school, dental school, nursing
programs, etc.), and health and wellness centers might be used as part of an
overall plan to provide health care benefits to our employees.