1

Community Briefing

WPI Health Insurance Update

Jeff SolomonCFO &

VP for Finance and Operations and

Tracy HassettAVP, Human Resources &

Special Assistant to the President

February 23, 2007

2

Health Care Environment New Technologies (MRI, PET, etc.) People Living Longer Higher Utilization Prescription Drugs Underinsured Population Consumer Driven Healthcare

3

History of Fallon Rate IncreasesFallon Increase History

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%45.00%

HM

O

Sel

ect

Dire

ct

Sel

ect

Dire

ct

Sel

ect

Dire

ct

Sel

ect

Dire

ct

FY03

FY 04 FY 05 FY 06 FY 07

Fiscal Year/Plan

Fallon's RenewalCalculation

Final Renewal

4

Considerations Quality and Flexibility of Coverage Cost to Employees Physician Network Long-Term Health Insurance Outlook WPI Budget Impact

5

Demographics Total Eligible For Health Insurance – 755 Total Enrolled – 632 (84%) Total Enrolled in Fallon – 540 Total Enrolled in Tufts – 92

6

Demographics

FY07 Participation

84

21 4

85

850

136

152

180

5

42

0

50

100

150

200

250

300

FallonDirect

FallonDirect 500

FallonPPO

FallonSelect

FallonSelect 500

Tufts HMO

Plan

# of

Par

ticpa

nts

Family

Individual

7

FY08 Health Insurance Renewal Process

Office of Human Resources and CFO Issue Request For Quotes Using Health Insurance Consultant

Original Quotes Reviewed by HR and CFO and Negotiations Begin

Proposals Reviewed and Analyzed by FBC Community Forum FBC Makes Recommendation to the

Administration Administration Considers FBC Recommendation Administration Makes Recommendation to Board

of Trustees

8

Fringe Benefits Committee

Jim Hanlan, ChairEd ConnorJill CummingsPaula DelaneyMarylou Duggan

Calvin HillChick KasoufJack O’ConnorSatya ShivkumarJayson Wilbur

9

Alternatives Considered

Colleges of Worcester Consortium

Self Insurance

“Buy-Out” Incentives

Tiered Employee Costs Based on Salary

Ranges

10

Request For Quotes Blue Cross – Blue Shield of MA Cigna HealthCare Fallon Community Health Plan Harvard Pilgrim Health Care Health New England Neighborhood Health Plan Tufts Health Plan United HealthCare

11

Received Quotes Blue Cross Blue Shield of MA Cigna HealthCare (shares Tufts network) Fallon Community Health Plan Harvard Pilgrim Health Care Health New England (service area) Neighborhood Health Plan (service area) Tufts Health Plan United HealthCare (shares HPHC network)

12

             

                                                                                                                                                                                                                                                                                                                                                          

13

Viable Options

# 1

FallonAndTufts

# 2

Blue CrossBlue Shield

Total Replacement

14

Option #1 – Fallon and Tufts Fallon

– 17.5% Rate Increase on All Plans– Significant Plan Design Changes

Tufts– 30.8% Rate Increase– No Plan Design Changes

15

Fallon Community Health PlanMajor Plan Design Changes Fallon Select and Direct

Fallon Select/Direct

Current Plan Design ChangeOffice Visit (PCP/Specialist) $10.00 $20/$30

Outpatient Surgery $0.00 $250.00

Emergency Room (if not admitted) $50.00 $100.00

Inpatient Admission $0.00 $250.00

Prescription Drugs30-day supply $10/$25/$50 $15/$30/$50

Mail Order Program (90-day supply) $20/$50/$150 $30/$60/$100

16

Tufts Health Plan

No Plan Design Changes Tufts HMO

– Office Visits $25 (PCP or Specialist)– Outpatient Surgery $600– Emergency Room $100 (if not admitted)– Inpatient Admission $600– Prescription Drugs

• 30 Day Supply - $10/$30/$45• Mail Order 90 Day Supply - $20/$60/$90

17

Option #2 – Blue Cross Blue Shield

Company Information– 90.3 million members nationwide– Over 32,000 providers in our region– 181 hospitals throughout New

England

18

Blue Cross Blue Shield

Plans Offered:– HMO Blue NE Value Plus– HMO Blue NE Premier– HMO Blue NE $1000 Deductible Plan

19

Blue Cross Blue Shield

Plan Design Features HMO Blue NE Value Plus (most similar to

Fallon Select)– Office Visits $25 (PCP or Specialist)– Outpatient Surgery $250– Emergency Room $100 (if not admitted)– Inpatient Admission $250– Pediatric Dental Benefit– Prescription Drugs

• 30 Day Supply - $15/$30/$50• Mail Order 90 Day Supply - $30/$60/$100

20

Blue Cross Blue Shield

Plan Design Features HMO Blue NE Premier (their most popular

plan)– Office Visits $25 (PCP or Specialist)– Outpatient Surgery $250– Emergency Room $100 (if not admitted)– Inpatient Admission $1000 Ind/$2500 Fam– Pediatric Dental Benefit– Prescription Drugs

• 30 Day Supply - $15/$30/$50• Mail Order 90 Day Supply - $30/$60/$100

21

Blue Cross Blue Shield

Plan Design Features HMO Blue NE 1000 Deductible Plan

– Deductible• $1000 Inpatient / $2000 Outpatient

– Office Visits $25 (PCP or Specialist)– Outpatient Surgery 100% after deductible– Emergency Room $100 (if not admitted)– Inpatient Admission 100% after deductible– Pediatric Dental Benefit– Prescription Drugs

• 30 Day Supply - $15/$30/$50• Mail Order 90 Day Supply - $30/$60/$100

22

Employee Cost Comparison FY08Option #1 - Fallon/TuftsBased on 80% of Direct

Option #2 – Based on 70% of BCBS HMO NE Value Plus*

PLAN Employee per Month Employee per MonthFallon Direct 500 – Individual $ 35.17 $ 114.47

Fallon Direct 500 - Family $ 91.42 $ 303.33

Fallon Select 500 – Individual $ 94.77 $ 114.47

Fallon Select 500 - Family $ 246.41 $ 303.33

Fallon Direct - Individual $ 66.97 $ 114.47

Fallon Direct - Family $ 174.13 $ 303.33

Fallon Select - Individual $ 122.07 $ 114.47

Fallon Select - Family $ 317.38 $ 303.33

Fallon PPO - Individual $ 414.54 $ 114.47

Fallon PPO - Family $ 1,077.81 $ 303.33

Tufts - Individual $ 331.10 $ 114.47

Tufts - Family $ 781.15 $ 303.33

*Lower options available (e.g. deductible plan)

23

WPI Budget Impact

Current FY07 Budget $ 3.3M 80% of Fallon Direct

Original FY08 Health Insurance Budget $ 3.6M

10% Premium Increase using 80% of Fallon Direct

Option #1 – Fallon/Tufts FY08 Health Insurance Budget $ 3.9M

17.5% Premium Increase using 80% of Fallon Direct

Option #2 - Blue Cross FY08 Health Insurance

Budget $ 4.0M 21% Budget Increase using 70% of

HMO Blue NE Value Plus

24

Decisions, Decisions, Decisions Fallon Pros

– 30+ Year Relationship– Local Company– Ability to Control

Costs with Controlled Networks

– “Peace of Mind” Program

– Dental Benefit

Fallon Cons– No Boston PCPs– Out of Network

Coverage only Through PPO

– Lower Premiums Only If Offered With Tufts

– Stated Future Increases Will be At Least 17.5%

25

Decisions, Decisions, Decisions Blue Cross Pros

– Broad Network– No Need to Switch

Docs– Coverage for All WPI

Employees Without PPO

– Recruiting Tool– Nationally

Recognized

Blue Cross Cons– Does Not Offer a

Small-Network Option Such as Fallon Direct

– Limited Dental Benefit

26

Questions?

27

Thank You!