Inspiring
Innovation
H OW O EB B I S CHA NG I NG
H E A LT H CA RE I N OREG ON
We were looking for high-quality care that
focused on outcomes, innovation, creativity and
integrated care. So we very much were looking
for carriers that weren’t going to give us the same
old program they gave anyone else.
T abl e of C o n ten ts
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Help for rising health care costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Districts meet OEBB with mixed reviews . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Reducing waste in health care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Increasing prevention to reduce future costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
The right care, at the right time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Innovation attracts researchers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Excellent service to members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Powering research to improve care in Oregon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
OEBB saves districts and taxpayers money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Healthcare premium savings (in millions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Medical premiums rate of increase comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Oregon leads the nation in health care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Schools struggle to keep up with rising premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
OREGON MAKES HEALTH CARE HISTORY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Legislators take a new approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
OEBB becomes the state’s largest pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
The right leadership, the right carriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
BRINGING OEBB TO THE SCHOOLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Initial enrollment poses a challenge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Flexible, high-quality plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Life, disability and additional benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Controversy erupts over OEBB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
A NEW STATE OF CARE: OEBB’S FIRST YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Rates increase, but OEBB saves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Value-based plans reduce waste . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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INSPIRING INNOVATION I Table of Contents
OEBB SPARKS INNOVATION IN BENEFIT DESIGN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Benefits focus on preventive care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Additional cost tier encourages options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Weight Watchers and tobacco cessation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Oregon Prescription Drug Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Dental plans based on research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Feedback informs plan design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Integrating care through Medical Home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
CHANGING HEALTH CARE DELIVERY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Better purchasing and payment strategies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
MIT economist takes interest in OEBB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
INNOVATION ATTRACTS RESEARCHERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Value-based designs inform Medicare plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Excellent member service, when it counts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
MEMBERS GAIN BETTER SERVICE AND MORE CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
MyOEBB gives members more control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Benefits calculator makes comparing plans easier . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Submitting data to improve health care . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
MAKING A DIFFERENCE IN OREGON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Providing a model for business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
OEBB sponsors the Children’s Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Cost savings compared to open market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
OEBB REDUCES THE GROWTH IN PREMIUMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Additional benefits at affordable costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Value-based plans demonstrate savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
OEBB strives for long-term cost reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
A future without OEBB could hurt districts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
OREGON LEADS THE WAY IN HEALTH CARE INNOVATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Moving Oregon forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
It all comes down to health . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table of Contents I INSPIRING INNOVATION
5
Exec utiv e summ ary
In Oregon, and across the country, health care
costs are spiraling out of control. The average
premiums for groups in Oregon have more than
doubled in just 10 years, from $456 to $1,065 per
month for a family policy.1 As school districts
stretch their thin budgets, already burdened
with overall cost increases and fewer financial
resources, they struggle to keep up with health
insurance premiums that in recent years have
increased by double-digit percentages annually.
“They were just skyrocketing,” said Sara
Simmons, HR Compensation and Benefits
Coordinator at Clackamas Community College. “I
think the premiums went up 28 percent one year,
22 percent another. We couldn’t keep up with it.”
Representative Arnie Roblan (D-Coos Bay)
understands the struggle first-hand. Before he
became Co-Speaker of the Oregon House of
Representatives, he spent 32 years as a teacher
and administrator at Marshfield High School.
“We have to contain the costs of health
insurance,” he said. “It’s been growing much
faster than the cost of living. We can’t keep doing
that and expecting everyone will have insurance.”
To help stem rising costs and protect the benefits
of school employees, lawmakers passed legislation
that created the Oregon Educators Benefit
Board (OEBB). This unique program has gained
the attention of national health care experts,
economists and policymakers, and has inspired
insurance carriers and providers to rethink the
way they cover health care. The initial results are
promising. In its first three years, OEBB has saved
educational entities more than $125 million in
premiums and administrative costs.
HELP FOR RISING HEALTH CARE COSTS
Prior to 2008, school and educational service
districts in Oregon were responsible for their
own medical, dental, vision and pharmacy plans.
While some bought insurance on the open
market, through brokers or directly from carriers,
most purchased plans through the Oregon
School Boards Association (OSBA) Health
Trust, the Oregon Education Association (OEA)
Choice Trust, or the Oregon School Employees
Association (OSEA). These plans varied widely in
pricing and were subject to unstable premiums.
Some of Oregon’s smaller districts, hit the hardest
by rising costs, had few options due to regional
restrictions or small group sizes.
“There wasn’t really competition between
insurance providers for these [smaller] groups,”
said James Sager, who was Governor Ted
Kulongoski’s Senior Policy Advisor for Education
and Workforce in 2007. “The smaller the pool of
members in the plan, the more expensive the plan
is. We had parts of the state where school districts
were finding it difficult to even find options.”
In 2007, the Oregon legislature passed Senate
Bill 426, creating OEBB. Its sponsors hoped that
a centralized administration would give each
district more purchasing power, more leverage
“Health Insurance in Oregon,” Department of Consumer & Business Services, Jan. 2011.
http://insurance.oregon.gov/health_report/3458-health_report-2011.pdf
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INSPIRING INNOVATION I Executive summary
to negotiate contracts, and more stability in
premium rates as part of a larger pool. The
collective group would also reduce administrative
costs and ensure that all school employees had
access to the same benefits.
Ryan Deckert, now President of the Oregon
Business Association, was then the Oregon state
senator (D-Beaverton) who sponsored the bill.
“The main motivator [of SB 426] was having the
health care benefit conversation all in one place,”
said Deckert. “It could focus the conversation
around the core question of how do you get a good
benefit for your employees, but also in this case,
protect the taxpayers?”
House Representative Bill Garrard (R-Klamath
Falls) voted for SB 426 to ensure his constituents
continued to receive affordable access to health
care. “I voted for [SB 426] because I believed it
would help rural and smaller districts benefit from
being a member of a much larger pool. That would
help control costs and premium rates. I believe
the program is now achieving that,” Garrard said.
“I believe it is now running at a sustainable level
that is working the way we had envisioned.”
OEBB brought together benefits administration
for nearly 200 school districts, 20 educational
service districts, and most of the state’s
community colleges — in effect, creating the
largest insurance pool in Oregon. In 2007, the
board approved its plan designs and hired Joan
Kapowich to serve as OEBB Administrator. In
2008, after an intensive review process, OEBB
announced that Kaiser Permanente, ODS,
Providence and Willamette Dental had been
awarded its contracts for medical, pharmacy,
dental and vision coverage.
“We wanted carriers who would be good
partners,” said Kapowich. “We were looking
for high-quality care that focused on outcomes,
innovation, creativity and integrated care. So we
very much were looking for carriers that weren’t
going to give us the same old program they gave
anyone else.”
OEBB negotiated three-year administrative rate
guarantees from the medical plan carriers — an
unprecedented negotiation in Oregon’s history.
DISTRICTS MEET OEBB
WITH MIXED REVIEWS
In October 2008, OEBB began offering health
plans to more than 220 educational entities with
an initial enrollment of 145,645 members. OEBB
streamlined medical plans offered throughout
districts from 88 to nine, while preserving
comparability and a variety of choice. The group
would also eventually administer life insurance,
short- and long-term disability insurance,
accidental death and dismemberment (AD&D)
insurance, an Employee Assistance Program
(EAP), and long-term care insurance.
Districts met OEBB with mixed reviews. Some
were enthusiastic with immediate savings. Others
felt that participation had been forced.
“Previously, we didn’t have a menu of services,”
said Kaeko Blackburn, Business Manager
and e-Rate Specialist at Harney ESD, a small
Executive summary I INSPIRING INNOVATION
7
district with fewer than 30 employees. “Now,
with OEBB, we’re able to offer our employees
a variety of health plans and dental plans. They
have more of an ability to pick what insurance
package fits their needs.”
Lance Colley, Chief Operations Officer for the
Roseburg School District, was strongly opposed.
“My opposition was not the creation of the
insurance pool for choosing carriers. It was the
fact that all districts were mandated to join a pool
that would then be administered by the state,” he
explained. However, he has since enjoyed a good
relationship with OEBB. “I think the products
and services that are offered are reasonable.
Generally speaking, we’ve been fairly successful
with the statewide program, though it’s limited
our choices.”
Because OEBB was intended to curb premium
costs, many districts were upset when premiums
rose in OEBB’s first years. However, costs were
rising throughout the state. According to actuarial
firm Towers Watson, in 2009, medical premiums
in Oregon rose 12 percent per employee, on
average. But among OEBB members, the average
increase was slightly lower, at 11 percent. Towers
Watson calculated OEBB’s medical, pharmacy,
dental and vision savings at $39.6 million, or 6.3
percent, during the 2008-09 plan year.
“Entering OEBB, it helped us save money,” said
Sara Simmons with Clackamas Community
College, who noted that premium increases
with OEBB have never gone as high as with their
previous plans.
Kaeko Blackburn with Harney ESD said that
being part of a larger pool helped control
costs. “Whether we had stuck with BlueCross
BlueShield or as part of OEBB, everybody’s rates
are rising. But for us to be in a large group, it
gives us savings.”
REDUCING WASTE IN HEALTH CARE
As much as 30 percent of the average health
insurance benefit dollar is wasted on unnecessary
care, according to the National Business Coalition
on Health (NBCH).2
“A lot of procedures are inappropriate,” said
Dennis White, Senior Vice President of ValueBased Purchasing with NBCH. “We pay for
transactions, and that’s what we get — office visits,
tests, imaging procedures, even surgeries … It’s
not that the doctors are out to hurt us, but they err
on the side of doing more.”
In addition, he said, more available equipment
often translates into more services being
performed, whether or not they are needed.
“Health care is not normal economics. Supply
does create its own demand here,” said White. “If
there are more MRI machines, more procedures
will be done.”
OEBB aims to cut waste out of health care
wherever possible, while promoting better
population health. Its value-based benefit designs
National Business Coalition on Health, accessed Nov. 19, 2011.
http://www.nbch.org/Expanding-Health-Care-Coverage-to-the-Working-Uninsured
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INSPIRING INNOVATION I Executive summary
OEBB has recognized that one of the major
areas of spending is in chronic disease, and
there may be ways to reduce spending
focus resources on services, tests and procedures
that have greater health and economic value.
Plans also offer free or low-cost access to services
that provide a high value for each dollar, such as
preventive care, chronic care, tobacco cessation
and weight management.
Not only does value-based benefit design save
money, but it also helps avoid unnecessary
treatments that could actually hurt patients.
Margaret O’Kane is the President of the National
Committee for Quality Assurance (NCQA).
“Many [treatments] that don’t offer much value
can actually cause harm,” she said.
However, trying to prevent inappropriate
treatment by simply raising a plan’s deductible
can create a barrier to care that is needed. “There
have been studies that show people tend to go to
the doctor less, or don’t take medications, and so
on, if they have a really high deductible,” O’Kane
said. That’s why value-based plan designs, like
those offered though OEBB, are so crucial.
An additional cost tier for ODS and Providence
medical plans encourages members to talk
seriously with their doctors before undergoing
treatments that have not been shown to add high
value to member health. It sets an extra $100
copayment for advanced imaging, sleep studies,
spinal injections for pain and outpatient upper
endoscopy, and a $500 copayment for shoulder
and knee arthroscopies, spine surgery for pain,
and knee and hip replacement.
INCREASING PREVENTION
TO REDUCE FUTURE COSTS
OEBB plans fully cover 17 preventive services,
such as immunizations, well-child visits and
mammograms, with no member copays. An
incentive tier for ODS and Providence plans
offers a lower copay for care related to asthma,
heart conditions, high cholesterol, high blood
pressure and diabetes.
Jeston Black, Government Relations Consultant
with the Oregon Education Association (OEA),
has heard from members how OEBB’s focus
on preventive care makes maintaining care for
chronic conditions more affordable.
“I’ve had a bunch of OEBB members come up
and say how much easier [the incentive tier]
makes it to keep on top of their diabetes and high
cholesterol,” he said.
Dental plans also emphasize preventive care.
With ODS dental plans, pregnant and diabetic
members receive extra dental benefits as part of
its Oral Health, Total Health program.
“OEBB has recognized that one of the major areas
of spending is in chronic disease, and there may
be ways to reduce spending on that by increasing
the use of preventive care,” said John McConnell,
a health economist at OHSU.
To help members maintain a healthy weight, OEBB
offers Weight Watchers®. Since the start of the
program, more than 7,000 OEBB members have
participated, losing more than 111,000 pounds.
Executive summary I INSPIRING INNOVATION
9
I think consumers will choose
value-based designs over traditional
ones for the lower premiums.
“I have been on the program one year and have
lost 60 pounds. I love it,” said OEBB member
Stacy Zoon of Riverview Elementary. “It was the
icing on the cake when OEBB started covering
Weight Watchers … I feel healthier than I have
felt in a long time.”
As a group, OEBB has a relatively low rate of
smokers. A tobacco cessation benefit is helping
to further reduce that rate. Available through all
medical plans, the benefit includes telephone
consults, web coaching, patches, gum and
prescription medications. In two years, 464
OEBB members have participated, with an
average quit rate around 49 percent.
THE RIGHT CARE, AT THE RIGHT TIME
“There’s a broad-based feeling that we need
to reform the delivery system, particularly [by
encouraging] doctors and primary care to do
some things that put them back in control,” said
Dennis White with the NBCH.
To that end, OEBB focuses on securing the right
care at the right time. Select plans based on a
Medical Home strategy assign each member to
a personal physician, a group of specialists and
one or more hospitals. This encourages better
integration of care and holds providers more
accountable for cost and quality.
In addition, OEBB has adopted a purchasing
guideline that emphasizes quality care and
payments based on outcomes. And since its
inception, OEBB has encouraged alternate ways
10
INSPIRING INNOVATION I Executive summary
for providers and facilities to bill, such as using
diagnosis-related groups (DRGs).
INNOVATION ATTRACTS RESEARCHERS
With its innovative take on health care, OEBB
has attracted attention from a variety of wellknown researchers. Jon Gruber, a Massachusetts
Institute of Technology economist best known
for his research on public finance and health, is
currently researching OEBB to learn more about
how members choose their plans.
“Information is a really important question in my
study — how people are using that information
and how it’s making a difference in their
decisions,” Gruber said. He praised features
like OEBB’s online cost comparison tool, which
shows members their out-of-pocket costs for
each available plan. Gruber also thinks that
strategies like OEBB’s value-based plan designs
and additional cost tier might help private-sector
employees save. “I think it’s a matter of getting
employers to offer that choice,” he said. “I think
consumers will choose value-based designs over
traditional ones for the lower premiums.”
The National Opinion Research Center (NORC)
at the University of Chicago approached OEBB to
learn more about value-based benefit design and
share the group’s ideas with the U.S. Medicare
Payment Advisory Commission.
“We learned about some of the work OEBB is
doing in terms of really thinking through their
entire benefits design, and not only making it
easier for individuals to access high-value services,
but also placing measures that make consumers
think twice about options that don’t have the
same known medical value,” Jessica Kronstadt, a
research scientist with NORC, explained.
“Oregon has really embraced this concept of the
population, thinking about what’s going to do the
most good for the most people, at the lowest cost.
And it’s a very refreshing way of looking at health
insurance,” she continued. “I don’t think you hear
about other places around the country doing that.”
EXCELLENT SERVICE TO MEMBERS
OEBB strives for excellent service. Survey results
show high member satisfaction with benefits,
carrier options, access and MyOEBB. OEBB
staff provide educational materials and make
presentations to help members understand
benefits, and the MyOEBB online system lets
members easily manage benefits.
In addition, OEBB strongly supports members
when they have issues related to claims.
“OEBB has been helpful in really making sure
people get their claims paid correctly,” said
Jeston Black with OEA. “We had a member
who had an emergency surgery while he was in
New Jersey, and the hospital was trying to bill
for the entire thing. OEBB helped get it down to
the maximum out-of-pocket.” When it was all
said and done, there was a $20,000 difference
between what the hospital had charged and
OEBB’s negotiated charges. “If OEBB weren’t
there, it would be the member on his own in that
scenario,” Black said.
POWERING RESEARCH TO
IMPROVE CARE IN OREGON
By supplying claims data to research
organizations such as the Oregon Health Care
Quality Corporation (Quality Corp), OEBB is
helping improve the way care is delivered.
“We believe that employers, policymakers,
purchasers and consumers all need to be at the
table together in order to make meaningful
change,” said Mylia Christensen, Executive
Director of Quality Corp. “They are active
participants in developing metrics and helping us
shape our program plans.”
And OEBB’s early adoption of strategies
recommended by the Oregon Health Leadership
Council, such as value-based plan designs,
is informing the private sector about how to
reduce costs.
“What’s nice about value-based benefit plans is
that they put appropriate costs into the place where
it has the best value, rather than putting everything
into a high deductible,” said Denise Honzel,
Executive Director of the OHLC. “The business
community challenged the council to keep health
care costs and premiums down … And it was the
public sector that took it on more aggressively.”
In addition, OEBB helps provide free dental care
to children whose families could not otherwise
afford it. All Oregon dentists contribute 1.5
percent of their fees from OEBB members to the
Children’s Program.
Executive summary I INSPIRING INNOVATION
11
ƒƒ
In 2009, the state average premium
OEBB SAVES DISTRICTS
AND TAXPAYERS MONEY
In its first three years, OEBB has saved an
estimated total of $125.3 million in premium
costs for medical, pharmacy, dental and vision
coverage. And although premiums for medical
coverage are still increasing each year, they are
rising less rapidly than rates on the open market.
Estimated savings are as follows:
increased by 12 percent, but OEBB
premiums increased by 11 percent.
ƒƒ
In 2010, the state average increased by 11
percent, but OEBB premiums increased
only 6.8 percent.
ƒƒ
In 2011, OEBB medical premiums increased
an average of just 0.7 percent. State averages
have not yet been calculated.
``
In medical, pharmacy, dental and vision
premiums, OEBB saved:
ƒƒ
$39.6 million in 2008-09
ƒƒ
$40.1 million in 2009-10
ƒƒ
$45.6 million in 2010-11
Medical premium rate
of increase comparison
12%
11%
6.8%
Healthcare premium savings
(in millions)
$45.6
$39.6
$40.1
11%
.7%
2009
2010
2011
*Average medical premium increase in the
State of Oregon as identified by a study of
employers conducted by Towers Watson
``
Value-based plan designs reduced premium
2008-09
2009-10
2010-11
``
OEBB premiums have increased at a slower
rate, compared with the average medical
premiums in Oregon:
12
INSPIRING INNOVATION I Executive summary
increases by 1.5 to 2 percent in 2010-11.
``
OEBB saved $5.3 million for life, disability
and AD&D insurance in 2009-10, and $6.4
million in 2010-11.
``
An Employee Assistance Program saved
districts an average of nearly 35 percent.
``
The Oregon Prescription Drug Program saved
more than $6 million on a roughly $57-$60
million drug spend for OEBB in 2009-10.
Instead of avoiding the health care
conversation, we’ve leaned into it
OREGON LEADS THE
NATION IN HEALTH CARE
Oregon is leading the nation in changing the
way health care is purchased, administered and
delivered. OEBB is just one component of a
larger plan promoted by the state and the Oregon
Health Authority to reduce costs while improving
care. By 2014, Oregon will have a statewide
exchange that will be open to individuals and
small businesses, giving them access to the
benefits of a larger pool. OEBB has helped inform
and guide that process.
“I think Oregon is taking a much more discerning
position and saying, we don’t want to have
financial barriers between people and the health
care they really need,” said Margaret O’Kane
with NCQA. “I think [OEBB] is particularly
innovative, and there’s a passion with these
people to improve the health of Oregonians. It
takes passion to really get moving. I applaud them
for their efforts.”
Today, more than 130,500 public school
employees and their dependents are OEBB
members. The districts that participate in OEBB
thrive on the value and stability of pooled risk,
and without it, would be left on their own. The
past four years have demonstrated the value
and possibilities of a statewide benefits pool for
school employees. Today, OEBB members, school
districts, state legislators and industry experts are
paying close attention to the results that OEBB
can deliver next.
“I don’t think we could negotiate the same kind
of insurance rates [without OEBB],” said Kaeko
Blackburn with Harney ESD. “I don’t think we’d
be able to offer dental, vision and medical as a
package.”
Sara Simmons with Clackamas Community
College said that, without OEBB, her group would
have to spend more time and energy at a time
when the school’s budget has been severely cut
and staff laid off. “I think it would really hurt, all
the way around, if OEBB were not in existence
right now,” she said. “I think it would cost us a lot
more out of pocket, in the energy of our people,
and we’d become overwhelmed again. I think,
financially, it would be a big hit to us.”
“I think [OEBB is] part of the solution that we’re
looking for as we move forward with health
reform in Oregon,” said Co-Speaker of the House
Arnie Roblan. “OEBB has done a nice job. I’ve
been pleased with what I’m seeing.”
Looking back, Ryan Deckert, the former state
senator who sponsored SB 426, said that he’s
glad he played a role in creating the legislation.
“Instead of avoiding the health care conversation,
we’ve leaned into it,” Deckert said. “I think OEBB
fits into that narrative — how do you get folks to fit
together into large pools? We’ve been much more
willing to jump right in and figure out if there’s a
way to insure more folks, provide a decent benefit
for them, but also bend that cost curve for the
public and private sector.”
Executive summary I INSPIRING INNOVATION
13
Introductio n
Every year, health care costs have eaten a larger
share of Oregonians’ incomes. In 1999, the
average monthly group premium was only $182
for an individual and $456 for a family. But
10 years later, those numbers had more than
doubled, with premiums skyrocketing to $390 per
individual and $1,065 per family.3
As consumers have worried about how they’ll
pay their share of premium and out-of-pocket
costs, employers have struggled to fund health
plans without cutting benefits. For public schools,
this experience has been particularly painful.
Oregon’s public educational entities — school
and educational service districts (ESDs) — are
stretching their budgets thinner and thinner as
overall costs increase and financial resources
dwindle. The rising cost of healthcare has placed
even more pressure on these budgets as districts
strain to continue offering coverage to the
employees who keep schools running.
The short-term results are promising. In its
first three years, OEBB has saved educational
entities more than $125 million in premium and
administrative costs. But this is just the beginning.
Going forward, OEBB’s innovations in benefit
design and health care delivery will further drive
down costs by boosting preventive care, improving
the management of chronic conditions and
encouraging healthier behavior in its population.
The urgent situation demanded action, and state
legislators responded with determination to curtail
health care costs. In 2007, the state of Oregon
enacted a unique piece of legislation, designed to
protect the benefits of its public school employees.
This legislation created the Oregon Educators
Benefit Board (OEBB), gaining the attention of
national health care experts, economists and
policymakers. It also helped insurance carriers and
providers throughout the state rethink and rework
the way they cover health care.
“Health Insurance in Oregon,” Department of Consumer & Business Services, Jan. 2011.
http://insurance.oregon.gov/health_report/3458-health_report-2011.pdf
3
14
INSPIRING INNOVATION I Introduction
Or egon m akes h ealth ca r e hi s tor y
SCHOOLS STRUGGLE TO KEEP
UP WITH RISING PREMIUMS
see the increases peak at 15 to 20 percent [in
subsequent years],” he said.
Prior to 2008, the statewide process for
schools to purchase health care was disjointed.
In Oregon, educational institutions were
responsible for procuring their own medical,
dental, vision and pharmacy plans. Some schools
and educational service districts (ESDs) bought
plans on the open market, through brokers or
direct contracts with carriers. Most purchased
plans through the Oregon School Boards
Association (OSBA) Health Trust, the Oregon
Education Association (OEA) Choice Trust,
or the Oregon School Employees Association
(OSEA). The plans offered by these groups varied
widely in pricing and were subject to enormous
instability in premium costs.
When every dollar counts, those double-digit
spikes are simply impossible to keep up with, said
Roblan. “We have to contain the costs of health
insurance. It’s been growing much faster than
the cost of living. We can’t keep doing that and
expecting everyone will have insurance.”
Representative Arnie Roblan (D-Coos Bay)
knows how difficult it can be for a school district
to purchase heath insurance on its own. Before
Roblan became Co-Speaker of the Oregon House
of Representatives, he spent 32 years as a teacher
and administrator at Marshfield High School.
“Health insurance has always been a part of the
negotiating pain as a teacher and administrator,”
Roblan said. His district, like many others,
had purchased insurance through the OSBA.
But Roblan said it was typical to see a wide
fluctuation in premiums from year to year. “You
could always negotiate a really good deal when
your contract was coming up. But then you’d
Some of the smaller districts in Oregon were
hit the hardest by rising costs, left vulnerable
to greater fluctuations in premiums. James
Sager, now the Northwest Regional ESD
Superintendant, was Governor Ted Kulongoski’s
Senior Policy Advisor for Education and
Workforce in 2007. He watched many smaller
districts struggle to find coverage.
“There wasn’t really competition between
insurance providers for these [smaller] groups,”
Sager said. “The smaller the pool of members
in the plan, the more expensive the plan is. We
had parts of the state where school districts were
finding it difficult to even find options.”
Although smaller districts struggled, even larger
groups found themselves constantly battling
higher premiums. “They were just skyrocketing,”
said Sara Simmons, HR Compensation and
Benefits Coordinator at Clackamas Community
College. “I think the premiums went up 28
percent one year, 22 percent another. We couldn’t
keep up with it.”
Oregon makes health care history I INSPIRING INNOVATION
15
To help find the most cost-effective plans,
Clackamas Community College hired a broker to
collect quotes from several carriers. But this only
added to the group’s costs, said Simmons. “The
broker fees are pretty expensive when you have to
hire a third-party administrator.”
LEGISLATORS TAKE A NEW APPROACH
Recognizing that the process for purchasing
health care was inefficient and expensive, a
group of Oregon legislators formulated a plan.
With cost-savings and risk management in mind,
they advocated for a statewide health care pool
that would encompass all school employees
in the state. A similar group had already been
created for public employees in Oregon through
the Public Employees’ Benefit Board (PEBB).
The legislators hoped that a centralized
administration would give each school or
educational service district more purchasing
power, more leverage to negotiate contracts, and
more stability in premium rates as part of a larger
pool. The collective group would also reduce
administrative costs and ensure that all public
school employees in Oregon had access to the
same benefits.
“The only way to manage [rising health care costs]
is to create pools large enough to manage risk. It’s
a way to spread the cost, so that no one person has
to go bankrupt,” said Roblan.
In 2003, legislators submitted their first bill to
create the statewide pool. The bill failed. They
revived the effort in 2005, but again their bill failed.
16
By the 2007 legislative session, health care costs
had become so alarming that a broader group of
lawmakers began to realize that something had
to be done. At this point, consulting firm Towers
Watson (then Watson Wyatt) estimated that the
creation of a statewide pool for educators’ benefits
would save the state $40 million in its first year, or
about 5 percent of total administrative costs.
At the request of Governor Kulongoski, the
Senate sponsored a new bill, Senate Bill 426.
James Sager, the governor’s policy advisor, helped
design the package and submit the legislation.
“With a larger pool, we felt we had greater
opportunities to control the upward pressure on
premiums and greater leverage with the providers
to control those costs,” Sager said. In addition,
moving to a single pool would help align state
resources. “And we wouldn’t have 30, 40 or 50
different kinds of insurance plans out there.”
This time Senate Bill 426 passed. The bill was
signed into law in March of 2007, establishing the
Oregon Educators Benefit Board.
Ryan Deckert, now President of the Oregon
Business Association, was then the Oregon state
senator (D-Beaverton) who helped write the
bill and sponsored it in the Senate. “The main
motivator [of SB 426] was having the health
care benefit conversation all in one place,” said
Deckert. “It could focus the conversation around
the core question of how do you get a good benefit
for your employees, but also in this case, protect
the taxpayers?”
INSPIRING INNOVATION I Oregon makes health care history
We worked really hard to try to
create a health policy agenda in Oregon,
and we’re proud of where it’s gone.
common purpose. Leading the board as chair was
Steve McNannay, the Executive Director of the
OEA Choice Trust. McNannay has been involved
in the administration and delivery of health care
benefits for school employees in Oregon for more
than 20 years.
Other legislators voted for the bill to make sure
their constituents continued to receive affordable
access to health care. House Representative Bill
Garrard (R-Klamath Falls) wanted to help rural
districts manage costs. “I voted for [SB 426]
because I believed it would help rural and smaller
districts benefit from being a member of a much
larger pool,” he said. “That would help control
costs and premium rates.”
“My personal goal was to see that OEBB’s
operation would support the overall goals of the
legislation — to enhance the benefit program and
provide choice at the best possible price to school
employees,” McNannay said.
Representative Mitch Greenlick (D-Portland)
was the Co-Chair of the House Health Care
Committee, the group that is first to review any
bills proposed by House members related to
health care.
As stated, OEBB’s mission was to design,
implement and administer a program that
provided high-quality benefits at the lowest
possible cost to districts and taxpayers.
This strategy would help encourage a more
competitive marketplace for health insurance. It
would also encourage health plans and providers
to take more creative approaches to care.
“OEBB was part of a pretty significant health
policy agenda that we passed in 2007,” said
Greenlick. “I believed it was the right thing to do.
We worked really hard to try to create a health
policy agenda in Oregon, and we’re proud of where
it’s gone. We think we’re way ahead of the nation,
and OEBB was a piece of that whole process.”
OEBB BECOMES THE
STATE’S LARGEST POOL
For the first time, OEBB brought together
benefits administration for nearly 200 school
districts, 20 educational service districts, and
most of the state’s community colleges — in effect,
creating the largest insurance pool in Oregon.
In July 2007, Governor Kulongoski appointed
the first 10 members to the OEBB board. They
came from diverse backgrounds — school district
board members, union and non-union employees,
and experts in health policy — and convened for a
“The legislation specifically talks about OEBB
coming forward with innovative ideas for
building a better benefits program. We all knew
that the health care system, as it is, is just not
sustainable,” McNannay said. “You’re going to
have to be innovative to come up with some ways
to control costs.”
But OEBB’s guiding principles went even
further than that. The goal of the OEBB board, its
insurance carriers, providers and members was
to do everything possible to promote healthier
lifestyles — while improving access to the kind
of care that could prevent more serious health
problems down the road.
Oregon makes health care history I INSPIRING INNOVATION
17
B ri ngin g O E BB to th e s chools
With OEBB signed into law and armed with a
strong mission, the board forged ahead. To ensure
that school employees would not experience
reduced benefits when joining OEBB, the new
legislation mandated that OEBB offer benefit
plans that were comparable to what school and
educational service districts already had in place.
Through this requirement, employees could
potentially gain even better benefits than they’d
had previously.
in running the program, but she also brought
experience in Medicaid, the commercial market
and workers’ compensation.”
The board selected Towers Watson to analyze
data on benefit plans from school and educational
service districts, health trusts and brokers. Based
on Towers Watson’s findings, the board approved
nine medical, four pharmacy, eight dental and five
vision plan designs in December 2007.
In March 2008, the OEBB Scoring Committee
interviewed 22 carriers over a five-day period.
“It’s not too different from a job interview,” said
Kapowich. “We wanted them to be excited about
the program, and willing to do what it took to
make OEBB successful.”
THE RIGHT LEADERSHIP,
THE RIGHT CARRIERS
The following month, the board announced
that Kaiser Permanente, ODS, Providence
and Willamette Dental had been awarded the
contracts for medical, pharmacy, dental and
vision coverage.
The same month, the board hired Joan Kapowich
as OEBB Administrator. In her dual role,
Kapowich also served as the administrator for
the Public Employees’ Benefit Board (PEBB),
helping to ensure that the state benefit pools
were aligned. With an extensive background in
health policy, benefits, medical contracting and
state administration, Kapowich delivered the
experience and leadership OEBB needed.
“The board selected the most talented, dynamic
person we could find to help lead the program,”
said McNannay. “Joan is very familiar with
health care and the challenges faced by the state
18
INSPIRING INNOVATION I Bringing OEBB to the schools
Next, OEBB sent out a request for proposal to
insurance carriers. In response, 30 proposals met
OEBB’s minimum requirements. Towers Watson
narrowed the list by scoring each carrier on cost,
network, access to services, customer service,
claims administration, account administration,
quality and security.
“We wanted carriers who would be good
partners,” said Kapowich. “We were looking
for high-quality care that focused on outcomes,
innovation, creativity and integrated care. So we
very much were looking for carriers that weren’t
going to give us the same old program they gave
everyone else.”
Each of OEBB’s carriers demonstrated the ability
to accept that challenge. “I believe we were
selected because our goals aligned with OEBB’s
goals,” said Robert Gootee, President and CEO
of ODS. “We have a strong medical management
team that is aligned with creating better outcomes
for OEBB members. For example, ODS has
programs that focus on maintaining good
nutrition and one-on-one health coaching.”
Health Plan Services, said that Kaiser was intent
on continuing that care.
Providence CEO Jack Friedman said that OEBB
chose his company in part because of its ability
to deliver on a “Triple Aim” strategy. Triple Aim
is an approach to healthcare based on population
health, experience of care, and cost per capita.
The Oregon Health Fund Board (which preceded
today’s Oregon Health Authority) had adopted
this strategy as part of improving health care
across the state. OEBB, too, wanted to align with
that mission.
By studying the OEBB population, she said,
researchers can determine whether benefit design
and wellness incentives can improve members’
health and the way they use services.
“[OEBB] liked our disease and case management
resources, which showed early results and
impact on costs,” Friedman said. “OEBB was
also attracted to the fact that we are a providersponsored plan. A lot of our roots are in care
delivery. We have a health plan, a medical group
and hospitals under one roof.”
For Kaiser Permanente, participation in OEBB
was about an ongoing commitment to state
programs. Prior to OEBB’s creation, Kaiser
already had been serving many of Oregon’s school
and educational service districts. Sue Hennessy,
Kaiser’s Vice President of Strategic Planning and
“It didn’t mean a lot of new enrollment; it meant
being able to care for people who had been
Kaiser members for a long time,” Hennessy
said. “It’s also an opportunity for us to work on
improvement in the health of that population.”
“Can you reduce obesity in the population?
Can you lower smoking rates? Can you reduce
hospitalization rates because you have total
access to primary care?” asked Hennessy. “The
real power is you can use the benefit design and
purchasing pool to get at the underlying health of
the population. So that’s what we stand for. For
us, it’s a natural place to go.”
For dental plans, ODS and Willamette Dental
aligned with OEBB’s goals to deliver high-quality
care that focuses on evidence-based methods
of prevention and treatment. And each with a
history of community involvement, ODS and
Willamette Dental were excellent candidates to
serve schools.
With contracts in place, OEBB negotiated threeyear administrative rate guarantees from ODS,
Kaiser, Providence and Willamette Dental. This
rate guarantee did not impact premium costs,
Bringing OEBB to the schools I INSPIRING INNOVATION
19
which would be determined each year based on
claims experience. Instead, it set predetermined
rates the carriers would charge for administering
plans for each of three years — an unprecedented
negotiation in Oregon’s history.
INITIAL ENROLLMENT
POSES A CHALLENGE
With carriers and plans finalized, preparations
were going smoothly for the Oct. 1, 2008, initial
enrollment. OEBB had estimated a first-year
enrollment of 65,000 members, made up of
22,000 district employees and their eligible
dependents. But those numbers were about to
change dramatically.
In May 2008, the Oregon School Boards
Association (OSBA) announced that it would
no longer offer medical and dental benefits,
based on projected double-digit rate increases
for the 2008-09 plan year. School districts and
ESDs that had previously purchased health
plans through the OSBA Health Trust had few,
if any, alternatives to joining OEBB earlier than
planned. This resulted in an initial enrollment
of 145,645 members — more than double the
anticipated number.
Over the next several months, staff from OEBB
and all four carriers dedicated long hours to
process and deliver member ID cards, provide
timely phone and email assistance, and get
the group’s new online enrollment system up
and running. This system, MyOEBB, helped
20
INSPIRING INNOVATION I Bringing OEBB to the schools
to streamline the enrollment process, with 98
percent of eligible employees enrolling online.
To prepare for the influx of members, ODS rented
additional space and hired more than 150 new
employees to handle customer service, claims,
billing and eligibility, and other service areas.
“It was by far the biggest and best implementation
we’ve ever done,” said Tracie Murphy, ODS
Senior Vice President. “It’s really about service at
the end of the day. The worst thing that could have
happened on Oct. 1 was that a member needed a
prescription and didn’t have his or her ID card.”
The obstacles wouldn’t end there. In OEBB’s
first months, member access had also posed a
challenge. When OEBB had selected its carriers,
one of its deciding factors had been provider
networks, as the board needed to ensure that all
members had local access to care. Immediately
after signing their OEBB contracts, both
Providence and ODS began working to enhance
their provider networks.
In early September 2008, district employees in
Eastern Oregon, particularly those in Malheur
County, contacted OEBB with concerns that
there were few providers they traditionally used
in the Southwest Idaho area participating with
either ODS or Providence. OEBB contacted
both carriers, and in response, both ODS and
Providence expedited their efforts to add
providers in Malheur County, Boise and the
surrounding area.
Now, with OEBB, we’re able to offer our
employees a variety of health plans and dental
plans. They have more of an ability to pick
what insurance package fits their needs. Their efforts were successful. By the end of the
year, ODS’ network had grown from 143 providers
in Southwest Idaho to 956 providers. Providence
had also expanded its network, from 713 regional
providers to 918. More recently, ODS negotiated
a contract with the Idaho Physicians Network,
adding more than 7,000 providers to its network.
Today, network access for OEBB members is
excellent, says Jim Foley, Vice President of
Medical Professional Relations at ODS. “OEBB
probably has the best access in the state of any
covered employee,” he said. “Members can get to
a provider within a reasonable amount of time.”
FLEXIBLE, HIGH-QUALITY PLANS
In October 2008, OEBB began offering medical,
dental, vision and pharmacy plans to more than
220 educational entities. OEBB streamlined
the number of medical plan designs offered
throughout school districts in Oregon from 88 to
nine, while preserving comparability and a variety
of choice.
OEBB aimed to give districts and their employees
comparable selection in plan designs, encouraging
them to choose the benefits that were right for
them. Each district could choose up to four plan
designs from the medical options — three from
dental, two from vision, and a pharmacy option.
Employees could then select their package from
among those plans. This flexibility was important
both financially and health-wise, given that
income levels and health care needs fluctuated
widely both among districts and within the
employee population of each district.
“Previously, we didn’t have a menu of services,”
said Kaeko Blackburn, Business Manager and
e-Rate Specialist at Harney ESD, a small district
with fewer than 30 employees. “Now, with
OEBB, we’re able to offer our employees a variety
of health plans and dental plans. They have more
of an ability to pick what insurance package fits
their needs.”
Recently, Harney ESD was able to add a health
savings account plan to the options available to
employees. This type of plan, which was never
before available to Harney ESD, has proven
popular with district employees. “It’s more bang
for their buck. And it’s an alternative that, if we
went out on our own, we could never have offered.
[OEBB] gives you that flexibility to offer a variety
of selections,” Blackburn said.
LIFE, DISABILITY AND
ADDITIONAL BENEFITS
In addition to health plans, OEBB would
eventually administer other valuable benefits:
life insurance, short- and long-term disability
insurance, accidental death and dismemberment
(AD&D) insurance, and an Employee Assistance
Program (EAP). More recently, OEBB also added
a long-term care insurance benefit.
“Those are [benefits] our employees did not have
before joining OEBB,” said Kaeko Blackburn
of Harney ESD. Because of the district’s small
size, Blackburn said it would have been cost-
Bringing OEBB to the schools I INSPIRING INNOVATION
21
prohibitive to purchase life and disability
insurance on the open market. And even though
employees must contribute a portion of the
premium cost, many opt in for these benefits.
“It’s their cost out of pocket, but it’s still at a
reduced cost, and it’s a savings that wouldn’t have
been realized if we had not been part of [OEBB].
We never would have offered it,” said Blackburn.
David Scearce is National Accounts Consultant
with The Standard, which provides OEBB’s
life, short- and long-term disability, and AD&D
insurance. He has continued to see growth in
OEBB’s life insurance plan, which guarantees
members up to $200,000 in coverage, regardless
of medical conditions.
“Some of these members have conditions that
might have prevented them from getting [life]
insurance otherwise,” Scearce said.
AD&D insurance provides an extra layer of
protection. “When an accidental death happens,
there’s no opportunity to prepare for it,” he said.
The Standard’s AD&D policy includes additional
family benefits that help cover college education
and retraining for the surviving spouse.
Short- and long-term disability insurance
guarantees a set amount of income replacement
if an OEBB member becomes unable to work.
Plus, it’s easier to qualify for benefits than with
Social Security, which has a stricter definition of
disability, said Scearce.
22
INSPIRING INNOVATION I Bringing OEBB to the schools
The Standard’s Workplace Possibilities
Program evaluates work environments to see if
any accommodations can be made to improve
ergonomics, thereby preventing a member
from experiencing discomfort on the job. The
Standard has evaluated 45 disability-related cases
among the OEBB population and has purchased
everything from dictation software to adjustable
workstations to help members get back to work.
By taking the time to investigate these cases and
invest in the proper equipment, The Standard
has decreased claims payouts, saved districts in
sick pay and the cost of hiring new employees,
and allowed members to continue working and
making their full paychecks. Among OEBB
districts, the Workplace Possibilities Program has
saved $129,000 in long-term disability costs and
helped 17 employees successfully return to work.
As with all of OEBB’s carriers, The Standard
emphasizes customer service and a personal
approach.
“When someone calls The Standard, they’re
talking to folks in Portland — typically the
person who’s handling their claim,” said Scearce.
“We try to develop a personal relationship with
these folks. They’re going through an event they
never expected to go through, and it’s a scary
time for them.”
A new state of care: OE B B ’ s f i r s t y ear
CONTROVERSY ERUPTS OVER OEBB
The Oregon state legislature had created OEBB
to provide high-quality benefits to all public
school employees while reducing the cost to
taxpayers. But in spite of the program’s goals, not
every district was happy about joining OEBB.
Many employees and administrators felt that
participation was forced, especially since Senate
Bill 426 dictated that a district had to meet specific
criteria in order to decline participation in OEBB.
In particular, a district was required to purchase
comparable plans to those offered by OEBB.
“We didn’t want winners and losers,” said James
Sager, the governor’s policy advisor who had
helped draft Senate Bill 426. “So before, a district
might have had a very minimal plan. Now, if they
were required to join the [OEBB] pool, it would
raise their costs and they’d have a richer plan.”
Prior to joining OEBB, Monroe School District
had purchased health insurance through the
OSBA Health Trust. Superintendent Randy
Crowson said that although the OSBA had
been making profits on the health plans it
administered, it had been using those profits to
subsidize future premiums. “We were happy with
OSBA,” said Crowson, who fought against the
passage of SB 426. “I wrote a letter and was very
unhappy with the legislation … that we needed to
get another government agency involved.”
Lance Colley, Chief Operations Officer for the
Roseburg School District, was also strongly
opposed. “I was probably one of the more
outspoken people. I testified in opposition to the
creation of a state agency that we were mandated
to purchase through,” Colley said. “We were
already in a large insurance pool that was run
by OSBA. But it was voluntary. My opposition
was not the creation of the insurance pool for
choosing carriers. It was the fact that all districts
were mandated to join a pool that would then be
administered by the state.”
OEBB was met with a different reception in each
district. While many districts fared very well under
the new system, depending on the age and health
of its employees, some districts didn’t initially
experience lower premium rates through OEBB.
“There were some districts that got a better deal
[outside of OEBB] because they had favorable
risk balance. For example, young teachers,” said
Representative Mitch Greenlick, the Co-Chair
of the House Health Care Committee. “So the
controversy was, while [OEBB] might reduce
the cost overall, it might increase the costs for
some districts.”
The controversy was compounded by the fact that
once a district was in OEBB, it could not leave.
“People are now wanting to say, we should have
that option to get out of OEBB,” Sager said. But in
order to provide long-term stability in premium
A new state of care: OEBB’s first year I INSPIRING INNOVATION
23
I really believe, overall, that since the
state is paying the teachers’ cost of benefits,
it’s going to be way better off with OEBB rates, OEBB does not allow adverse selection —
which would mean allowing districts to join when
they can save money as part of the larger pool,
and then jump back out if they find they can save
money on their own.
In a hypothetical example, imagine a district has
a large number of employees who are retiring, so
they hire a crop of younger teachers. “Now they
want to jump out of OEBB because they think
they can get a really great rate in the next year.
And they do,” Sager explained. “But then they
have three pregnancies, and one of those is a
complicated pregnancy, and they have two cancer
cases. Now, suddenly, their rate goes way up.”
That’s where the district wants to jump back in
and have the protection of the larger pool once
more. But, Sager said, “We don’t allow adverse
selection. Once you’re in, you’re in. It gives a
smoother year-to-year rate control, because
you’re not having to react to a really catastrophic
health year.”
On the other hand, there are districts that have
met all the requirements to stay out of OEBB.
Sager calls Beaverton School District a “shining
light” as a group that stayed out of OEBB by
having a direct plan with Regence BlueCross
BlueShield. The district has a relatively young
workforce and has also modified plans to keep
costs down. “They have been doing the right
things to stay out,” Sager said.
24
“OEBB was created, despite our opposition. And
I will say that I have had a very good working
relationship with the people I have dealt with
at OEBB,” said Colley of Roseburg. He said
that he has been fairly happy with the providers
and carriers available. “I think the products
and services that are offered are reasonable.
Generally speaking, we’ve been fairly successful
with the statewide program, though it’s limited
our choices.”
“It wasn’t an easy sell,” said Rep. Greenlick. “But I
really believe, overall, that since the state is paying
the teachers’ cost of benefits, it’s going to be way
better off with OEBB.”
RATES INCREASE, BUT OEBB SAVES
Because OEBB had been designed to help stem
the spike in health insurance premiums, many
districts were upset when premiums rose in
OEBB’s first years. Part of the increase was
due to the requirement for all plan benefits to
be comparable to the best that districts had
previously offered. Because many district
employees had access to — and selected — more
expensive plans, OEBB members used more
benefits as a result, and claims shot up.
“One of the things that the law said the board
needed to do in rolling out OEBB was to make
sure that plans were comparable. In doing that,
the board had to err on the side of being more
generous,” said Steve Carlson, Northwest Leader,
Health & Group Benefits at Towers Watson and
INSPIRING INNOVATION I A new state of care: OEBB’s first year
part of the actuarial team that analyzed OEBB’s
administrative costs. “It’s our belief that this made
the plans a bit more expensive than they otherwise
would have been. It says to me that there’s more
opportunity for savings in the future.”
“It’s hard to tell whether we felt like the prices
went up for what we got in coverage,” said Crowson
with Monroe. “Would that have happened with
OSBA? Who knows? Prices have gone up every
quarter. It’s a question no one can answer.”
In addition, health insurance rates were rising
throughout Oregon — not just among the OEBB
plans.
But for some groups, the answer was a little
clearer. “Entering OEBB, it helped us save
money,” said Sara Simmons with Clackamas
Community College. “Especially the first year; the
increase was only single digits. Then they went up
into double digits, but they didn’t go up as high [as
before joining OEBB].”
“Rates went up in the first couple of years. People
thought that was the creation of OEBB. What
they weren’t doing was comparing the rate
increase of OEBB to the rate increases of the open
market,” said Sager.
According to Towers Watson, in 2009, the
average medical premium increase in Oregon
was 12 percent per employee. But among OEBB
members, the average increase was 11 percent —
slightly lower than the state’s average. Towers
Watson calculated the medical, pharmacy, dental
and vision savings on behalf of OEBB members
at $39.6 million during the 2008-09 plan year.
That’s a savings of 6.3 percent.
Districts that previously had been with OSBA,
like Monroe, may have had a different experience,
had OSBA continued to offer coverage. The OSBA
had a history of subsidizing premiums by using its
reserve fund, explained Sager. When OEBB was
created, that reserve fund was no longer available
to the districts who had participated in the OSBA
Health Trust. So, rather than benefiting from
a premium discount paid down by the OSBA,
districts would have to start from scratch.
Kaeko Blackburn with Harney ESD said that just
being part of a larger pool was enough to help
stem premium costs. “Whether we had stuck
with BlueCross BlueShield or as part of OEBB,
everybody’s rates are rising. But for us to be in a
large group, it gives us savings,” she said.
In addition to helping member districts
save, OEBB may also pose benefits to nonmember districts. Jeston Black, Government
Relations Consultant with OEA, believes that
OEBB’s competitive contracts helped to drive
competition in the open market. “[OEBB] helps
keep costs down in districts that are not in OEBB
because it gives them bargaining power,” he said.
That means that carriers on the open market have
to meet or beat OEBB’s rates. “It helps districts
purchase equal benefits at a lower cost.”
A new state of care: OEBB’s first year I INSPIRING INNOVATION
25
OEB B sparks in n o vati on i n ben e f i t des i g n
As much as 30 percent of the average health
insurance benefit dollar is wasted on unnecessary
care, according to the National Business Coalition
on Health (NBCH).4 This staggering amount
of waste is caused by a variety of factors —
redundancies in procedures and tests, providers
who don’t share information with each other,
members who seek a more expensive type of care
when a cheaper one will suffice, and services that
were never needed in the first place.
“A lot of procedures are inappropriate,” said
Dennis White, Senior Vice President of ValueBased Purchasing with NBCH, a non-profit group
that promotes high-quality, value-based health
care purchasing. “We pay for transactions, and
that’s what we get — office visits, tests, imaging
procedures, even surgeries. You would be amazed
at how many high-risk open heart surgeries are
performed. It’s not that the doctors are out to hurt
us, but they err on the side of doing more.”
Not surprisingly, healthcare waste occurs on
the local level as well. John McConnell, an
associate professor and health economist at
Oregon Health & Science University, focuses his
research on state health care policy, insurance
benefit structure and quality improvement. “In
Oregon, there’s a lot of focus on the potential
for coordinating care and integrating behavioral
health and physical health care. There’s also a
lot of desire to bend the cost curve and find some
way to control costs without reducing quality,”
McConnell said. “OEBB has been perceived as a
real innovator [in this area].”
More than just a statewide insurance pool, OEBB
was also designed to promote innovation that
cuts waste out of the health care system wherever
possible, while promoting better population
health. One of the major ways OEBB accomplishes
this goal is through value-based benefit design —
a hot concept in the health care industry that’s
gaining more attention as costs rise.
VALUE-BASED PLANS REDUCE WASTE
Value-based benefit design focuses resources
behind the services, tests and procedures that
have greater health and economic value to both
the member and the plan. Using this strategy,
doctors prescribe the drugs, services and tests that
are most effective, based on a body of scientific
evidence. For example, if there is no difference in
effectiveness between a generic drug and a brandname prescription, value-based benefit design
suggests that the generic drug be used.
Not only is value-based benefit design intended
to save money, but it also helps avoid treatments
that were not needed in the first place and could
actually harm patients. Margaret O’Kane is the
President of the National Committee for Quality
Assurance (NCQA), a non-profit dedicated to
improving health care quality. “Many [treatments]
that don’t offer much value can actually cause
harm,” she said. “In Oregon, there’s a lot of back
surgery. Back surgery often has bad outcomes.”
National Business Coalition on Health, accessed Nov. 19, 2011.
http://www.nbch.org/Expanding-Health-Care-Coverage-to-the-Working-Uninsured
4
26
INSPIRING INNOVATION I OEBB sparks innovation in benefit design
However, trying to prevent inappropriate
treatment by simply raising the deductible on a
plan can create a barrier between patients and
the care they need. “There have been studies that
show people tend to go to the doctor less, or don’t
take medications, and so on, if they have a really
high deductible,” O’Kane said. That’s why valuebased plan designs are so crucial.
“OEBB was one of the first to try to implement
something like value-based insurance,” said
John McConnell, the OHSU health economist.
Most plans have responded to rising costs by
simply making everything more expensive for
consumers, he said. “The typical approach was
to just put higher copayments on everything. But
that was a blunt instrument.”
Fighting that trend, OEBB manages the growth of
health care costs through plan design, research on
members’ utilization of services and surveys on
members’ health status. Plans offer free or lowcost access to services that provide a high value
for each dollar, such as preventive care, chronic
care, tobacco cessation and weight management.
“They haven’t reached out blindly for things that
might work,” McConnell said. “OEBB has done an
excellent job of picking things that are based on
evidence and research.”
White, with the NBCH, said that more groups
should be looking at plan design as a way to
influence insurance carriers and get better results
in member health. “Plan design, when used well,
could become a very important and powerful
lever to get you to stay healthy,” he said. And as
a larger, centralized group, OEBB can put more
resources into benefit design.
“Individual districts are not going to have the
knowledge and expertise to know what you can
do,” said White. “Most purchasers on a smaller
scale, it’s all they can do to keep the budget in
control and worry about the network size. That’s
the typical purchaser approach, which ignores all
the levers you can pull for better care.”
Better care can also mean less waste. Providence
CEO Jack Friedman said there is good reason for
school employees, in particular, to be concerned
about reducing waste in health care.
“Every dollar we spend on health care is a
dollar we don’t have to spend someplace else,”
Friedman said. To illustrate that point, 5.5
percent of total gross domestic product was spent
on public education in 2007.5 Compare that figure
to the total expenditure for health care the same
year, which was 16.0 percent of GDP.6 Recent
figures for health care have risen to 17.4 percent
as recently as 2009.
“We’re spending less to educate our children than
we are on health care,” Friedman said. “So we’ve
got to redirect money out of health care and move
it into public education. And the way you do that
is by making sure you don’t pay for things that are
not based on science.”
International Human Development Indicators, United Nations Development Programme, accessed Nov. 19, 2011.
http://hdrstats.undp.org/en/indicators/38006.html
5
6
OECD Health Data 2011, Organisation for Economic Co-operation and Development, accessed Nov. 19, 2011. www.oecd.org
OEBB sparks innovation in benefit design I INSPIRING INNOVATION
27
OEBB has recognized that one of the major
areas of spending is in chronic disease, and
there may be ways to reduce spending on
that by increasing the use of preventive care
BENEFITS FOCUS ON PREVENTIVE CARE
Without a doubt, preventive care is among
the services that provide the highest value to
consumers, groups and insurance carriers.
That idea is reflected in the Patient Protection
and Affordable Care Act. The law dictates
that insurance plans must cover a variety of
preventive services without cost to consumers.
OEBB adopted this concept well before it was
required by law.
OEBB plans fully cover 17 preventive services,
such as immunizations, well-child visits and
mammograms, with no member copays. The goal
is to help decrease future costs by preventing
more serious health issues from occurring or
getting worse.
In addition, an incentive tier for ODS and
Providence plans offers a lower copayment for
office visits related to care for asthma, heart
conditions, high cholesterol, high blood pressure
and diabetes.
“OEBB has recognized that one of the major
areas of spending is in chronic disease, and
there may be ways to reduce spending on that
by increasing the use of preventive care,” said
McConnell, the OHSU health economist.
For some members, a little preventive care can
go a very long way. “Generally, 20 percent of
individuals drive 80 percent of health care costs,”
said William Johnson, Senior Vice President and
28
Chief Medical Officer at ODS. “Those individuals
typically have chronic conditions, like diabetes.”
Keeping a diabetic supplied with insulin, ensuring
regular checkups, and monitoring blood sugar can
help prevent more serious complications down
the road, such as glaucoma or nerve damage.
When health care prevents complications,
members stay healthy and everyone saves money.
“If you’re a diabetic, the plan knows that,” said
Dennis White, the Senior Vice President at
NBCH. “If you skip a prescription, that can be
dangerous. If you don’t take a blood pressure test,
that can be dangerous.”
Health plans should know these details, White
said, and use that information to communicate
more effectively with patients and providers.
“Are you reminding the patient about what they
should be doing? Are you telling their doctor
what prescriptions they’re filling?” he said.
“Those are some of the levers the plan can pull to
ensure better care.”
Jeston Black with the Oregon Education
Association (OEA) has heard first-hand how
OEBB’s focus on preventive care has impacted
members, especially those with chronic
conditions. The incentive tier makes office visits
more affordable, encouraging members to stay on
schedule with regular medical care.
“I’ve had a bunch of OEBB members come up
and say how much easier [the incentive tier]
INSPIRING INNOVATION I OEBB sparks innovation in benefit design
makes it to keep on top of their diabetes and high
cholesterol,” he said.
“Early intervention helps you stem the
consequences of disease and its associated
complications,” said Sue Hennessy, Vice President
of Strategic Planning & Health Plan Services at
Kaiser. She said that at its core, Kaiser’s benefits
have always been designed to remove barriers to
prevention, so it was easy to align with OEBB’s
mission. “When you do that, greater amounts of
your population remain at the healthier end of the
spectrum and result in lower costs.”
ADDITIONAL COST TIER
ENCOURAGES OPTIONS
In addition to OEBB’s strategy to better support
preventive services, another aspect of its costreduction plan was to decrease the use of services
that did not return substantial value to members.
An example of this effort came from the
unnecessary use of some extremely expensive
care options. Here, claims data from OEBB
members showed they were using more services
for musculoskeletal conditions, imaging and sleep
studies than expected. In response, OEBB added
a higher cost-sharing benefit tier to its plans. This
additional out-of-pocket cost for members was
intended to encourage them to talk with their
providers about treatment options and outcomes,
rather than immediately settle on the most
expensive treatment available.
“To be budget neutral, you need to put higher
barriers to the things that matter less,” explained
White of NBCH. In addition, he noted, certain
services — such as expensive imaging procedures
— don’t have well-established benefits.
The additional cost tier was integrated into ODS
and Providence medical plans. It requires an extra
$100 copayment for advanced imaging, sleep
studies, spinal injections for pain and outpatient
upper endoscopy, and a $500 copayment for
shoulder and knee arthroscopies, spine surgery
for pain, and knee and hip replacement.
There were other procedures OEBB targeted as
not offering substantial value to members, such
as back surgery. “Surgery for back pain is one of
the procedures that’s the most overdone on the
planet,” said White.
Indeed, William Johnson with ODS said that
ODS’ musculoskeletal spend is one of the
highest costs. As a result, ODS is participating
in a pilot program for back pain and is exploring
how behavioral changes can help improve back
problems.
Providence is also exploring a low-back pain
protocol. That plan includes immediately
connecting patients with physical therapists to
begin treatment sooner.
“We have very high rates for back surgery, and the
data would suggest that not all back surgeries are
successful,” said Providence CEO Jack Friedman.
OEBB sparks innovation in benefit design I INSPIRING INNOVATION
29
“The cost of a standard back surgery for the
commercial insurance market is about $50,000
to $60,000, when you combine hospital with
professional services. So we want to make sure
we’re doing them on the right people.”
guidelines to help providers determine whether
a patient needed an imaging procedure or not. “If
you give the physician this science behind whether
they need that CT scan or MRI, they’ll look at it
and say, ‘Well, we don’t need this,’” said Johnson.
After back surgery, patients are asked to fill out
a questionnaire about how they’re doing. This
will help provide analysts with information about
what makes a back surgery successful — and help
carriers better determine who needs it.
Along with the additional $100 copay, new
imaging guidelines require providers who
want an advanced imaging test to enter clinical
information into a portal and receive approval
before conducting the procedure. In the end,
about 90 percent of procedures are approved,
said Johnson. In addition, the guidelines don’t
limit access to X-rays for cancer or emergency
room patients.
In its cost-reduction plan, OEBB is also targeting
advanced medical imaging — which includes CT
scans, MRIs and PET scans.
NBCH’s Dennis White said that the simple
fact that more equipment was available meant
that more imaging would be done, whether or
not it was needed. “Health care is not normal
economics. Supply does create its own demand
here,” he said. “If there are more MRI machines,
more procedures will be done.”
“Billions of dollars are spent on imaging every
year,” said Johnson with ODS. “A lot of the time,
that imaging is unnecessary. Not just in cost, but
there’s also a degree of radiation that’s just not
needed.”
One of Johnson’s initiatives at ODS was to help
determine how to better manage imaging. A
surgeon himself, Johnson said that doctors tend
to order imaging just to be on the safe side. So
there was a need to use evidence-based clinical
30
In a similar vein, ODS has created clinical
guidelines for sleep studies, which are also subject
to the $100 additional cost tier copay for OEBB
members. “It’s become this sort of fad — if you
snore, you get a sleep study,” said Johnson.
“There’s clear evidence behind who really needs
a sleep study and who does not. We looked at
the science behind that and created clinical
guidelines to determine who was at risk for having
obstructive sleep apnea.” Those who meet the
guidelines get proper treatment, decreasing the
utilization of needless sleep studies.
Johnson said that he appreciates OEBB’s stance
on evidence-based care like this. “I commend
OEBB for thinking out of the box and for applying
science to diagnostics and treatment,” he said.
“We should be held to a higher standard.”
INSPIRING INNOVATION I OEBB sparks innovation in benefit design
It was the icing on the cake when OEBB
started covering Weight Watchers … I feel
healthier than I have felt in a long time.
WEIGHT WATCHERS
AND TOBACCO CESSATION
OEBB continually looks for ways to improve
member health and well-being. An example of
this approach came when OEBB staff analyzed
member surveys, finding that 64 percent of their
members were overweight or obese. On top of
that, 90 percent of members said they wanted to
reduce or maintain a healthy weight.
Beyond member health, cost-savings was also
a motivating force. High medical costs related
to obesity — particularly those that result from
diabetes, musculoskeletal issues and cardiac
conditions — provided a strong incentive for
OEBB to add a weight management program to
its medical plan benefits.
For these reasons, OEBB began offering Weight
Watchers. In the first three months after including
the program, more than 6,800 OEBB members
were participating, the majority of them at one of
210 worksite meeting locations across the state.
“I have been on the program one year and have
lost 60 pounds. I love it,” wrote OEBB member
Stacy Zoon of Riverview Elementary, in a
testimonial dated January 2011. “It was the icing
on the cake when OEBB started covering Weight
Watchers … I feel healthier than I have felt in a
long time.”
OEBB member Leah Lyons had reached 377
pounds and was beginning to wonder how much
longer she would be able to teach; it had become
extremely painful for Lyons to stand or move.
She joined Weight Watchers as part of her
OEBB coverage.
“What I found when I went to my first meeting
[were] friendly, understanding faces and open
arms,” Lyons wrote in a testimonial dated October
2010. “As time passed, I learned to make healthier
food choices, [and] gained strength and confidence
in not only my body but my outlook on life.”
Incredibly, Lyons lost 240 pounds on Weight
Watchers. She said she can now keep up with
her students, is no longer on medication for
diabetes, and no longer has to suffer pain simply
by breathing.
Between Oct. 1, 2010, and June 30, 2011, more
than 7,000 OEBB members participated in Weight
Watchers, losing more than 111,000 pounds —
that’s the equivalent weight of about five school
buses, and an average of 15 pounds per member.
In 2011, there were 212 at-work Weight Watchers
meetings operating at participating schools.
“Weight Watchers is very popular,” said Jeston
Black with the OEA. “We had a conference over
the summer where members were adamantly
coming up to me and asking that the benefit get
extended to family members.”
OEBB listened to members and began offering
Weight Watchers to dependents in addition to
school employees.
Besides weight management, OEBB has
implemented another program to help improve
OEBB sparks innovation in benefit design I INSPIRING INNOVATION
31
Any savings we can negotiate with
the pharmacy is passed through to
members, as well as OEBB.
overall member health. A tobacco cessation
benefit, available through all medical plans,
encourages better health not only for members,
but for family members who were exposed to
secondhand smoke. According to the Centers
for Disease Control and Prevention, tobacco
use is responsible for about one in five deaths
annually, with about 11 percent of those deaths
the result of secondhand smoke exposure.7
The program includes telephone consults with
Free & Clear, web coaching, patches, gum and
prescription medications.
As a group, OEBB has a relatively low rate
of smokers. The tobacco cessation benefit is
helping to further reduce that rate. In the 200910 plan year, 246 OEBB members participated
in the program, with an average quit rate of 51
percent. From 2010-11, participation was at 218
members with an average quit rate of 47 percent.
According to Free & Clear, employers spend an
additional $7,874 each year, for each smoker,
in extra medical costs and lost productivity.8
The reduction in smoking among the OEBB
membership has saved districts — as well as the
entire statewide pool — thousands of dollars.
OREGON PRESCRIPTION DRUG PROGRAM
OEBB’s cost-saving initiatives continued well
beyond weight loss and smoking cessation
programs. In an effort to lower the cost of
pharmaceuticals, OEBB worked with ODS to
join the Oregon Prescription Drug Program
(OPDP), which ODS administers. This increased
the purchasing power of both groups, which now
boasted roughly 750,000 members. The end
result was clear: lower costs for schools and city
and state governments.
“The OPDP consortium was able to drive and
leverage the best discounts because of this
increased volume,” said Chandra Wahrgren,
Vice President of Pharmaceutical Programs at
ODS. The larger pool allowed ODS to negotiate
the best contracts with retail pharmacies,
which helped reduce overall costs for OPDP
participants. And when ODS is able to secure
better savings, that is directly passed through to
OEBB and its members.
“OEBB knows exactly what they’re paying ODS
in terms of administration,” Wahrgren explained.
“Any savings we can negotiate with the pharmacy
is passed through to members, as well as OEBB.”
Mirroring OEBB’s value-based philosophy, ODS
uses evidence-based clinical reviews to determine
which medications will deliver the best quality
outcomes at the lowest cost. When possible, ODS
encourages members and their providers to select
lower-cost alternatives by informing them about
the benefits of choosing a generic or more costeffective drug.
To improve access to drugs and boost medication
adherence, the OPDP includes a value-based tier
“Smoking and Tobacco Use Fast Facts,” Centers for Disease Control and Prevention, accessed Nov. 19, 2011.
http://www.cdc.gov/tobacco/data_statistics/fact_sheets/fast_facts/
7
8
32
Tobacco Cost Calculator, Free & Clear, accessed Nov. 23, 2011. http://www.alerewellbeing.com/our-services/quit-for-life/tobacco-cost-calculator/
INSPIRING INNOVATION I OEBB sparks innovation in benefit design
that reduces the cost of medications to less than
$5 per month. For example, insulin, which can
often cost more than $75 per month, is available
for only $5 to OEBB members. This price
reduction helps them keep their diabetes under
control and reduces the chance of more serious
complications.
By following these value-based plan designs, the
OPDP was able to demonstrate savings in excess
of $6 million on OEBB’s drug experience of
roughly $57-$60 million in the 2009-10 plan year.
In 2010, OEBB saw even more savings when the
OPDP piloted a group purchasing organization to
access manufacturer discounts — an arrangement
that had traditionally only been available to
federally qualified health centers. The OEBB
pilot of mail-order and generic medications saved
$100,000 in its first year.
DENTAL PLANS BASED ON RESEARCH
OEBB doesn’t reserve the model of evidencebased care for medicine – it also extends to dental
plans. With ODS plans, pregnant and diabetic
members receive extra dental benefits as part of
its Oral Health, Total Health program.
“We use evidence-based dentistry when we look
at the relevance and effectiveness of treatment,
and then we go back to OEBB and present that to
them,” said Bill Ten Pas, President of ODS Dental.
For example, research shows that if a diabetic
can lower his glycemic level by 1 percent, he can
extend his lifespan by 10 years, said Ten Pas. In
dental terms, by reducing inflammation, patients
will typically need less insulin.
ODS has also made recommendations to OEBB
regarding when it is most effective to use fluoride
or place sealants. By understanding when a
treatment has the most impact, OEBB can help
reduce the overall cost of dental care.
“OEBB has embraced our research-based
approach, and we have really seen some changes
as a result,” Ten Pas said.
FEEDBACK INFORMS PLAN DESIGN
OEBB believes that creativity and open dialogue
are keys to improving health care in Oregon. One
of the drivers of OEBB’s development of so many
creative, industry-leading benefit designs is the
group’s willingness to involve others in planning.
Through various outreach programs, OEBB
works to involve districts in the development of
plan designs. The OEBB Outreach Network is a
representative group of school employees from
districts throughout Oregon. Members gather
data, report reactions from their colleagues, and
identify emergent issues. Their feedback helps the
board shape programs and communications.
OEBB’s Administrative Rules Advisory Group
helps assist OEBB design programs and policies
that meet the needs of districts and members. The
group is made up of representatives from districts
and ESDs of varying size and location.
OEBB sparks innovation in benefit design I INSPIRING INNOVATION
33
When a new idea is brought to the OEBB board
— whether through one of the above groups, a
member, an actuary or another industry expert
— the board considers the idea seriously. A
dedicated Strategies on Evidence and Outcomes
Workgroup (SEOW) will then investigate and
make recommendations back to the board. If the
board agrees on a new program or benefit design,
it then provides direction to its carriers on how to
implement the strategies into the benefit design.
In this way, the voices of all stakeholders can be
heard, encouraging more creative thinking to
enhance health care in Oregon.
34
INSPIRING INNOVATION I OEBB sparks innovation in benefit design
Chang in g h ealth care deli ve r y
“If you’re healthy, you want to stay healthy,” said
Robert Gootee, President and CEO of ODS. “But if
you have a serious issue at some point in your life,
you want to have the best possible outcome. You
want to get the right care, at the right time, at the
right place. That’s what health care is all about.”
concept is a good way to prevent errors in the
health care delivery system. “There’s a broadbased feeling that we need to reform the delivery
system, particularly [by encouraging] doctors
and primary care to do some things that put them
back in control,” he said.
And that’s what OEBB is trying to change about
health care delivery across the state. Through
Medical Home and system of care plans, better
purchasing guidelines and more streamlined
payment strategies, OEBB is leading the industry
in securing the right care at the right time.
OEBB Medical Home plans are extremely
patient-centered, and help providers coordinate
care and exchange information with one another
more effectively than they could without the
joint-care model. This prevents redundancies in
treatment and better health care synergy.
INTEGRATING CARE
THROUGH MEDICAL HOME
Benefit design is a major component of OEBB’s
strategy to improve the health of its population
while reducing cost. But OEBB is also changing
the way heath care is delivered through its
Medical Home plans. An alternative to traditional
PPO medical plans, Medical Home plans assign
each member to a personal physician, a group
of specialists and one or more hospitals. The
Medical Home group shares an electronic
medical records system to better track patient
information. This strategy encourages better
integration of care and holds providers more
accountable for cost and quality.
Dennis White, Senior Vice President of ValueBased Purchasing with the National Business
Coalition on Health, said that the medical home
“We have a very strong and growing Medical
Home. We’ve put a lot of energy into it,” said
Providence CEO Jack Friedman. “Our experience
with Medical Home in PEBB got us to a place
where we think we can demonstrate a 7–10
percent potential to reduce expenses below a
standard PPO plan. We also know it delivers
better population health and makes primary care
more central to the delivery of care.”
ODS’ Medical Home strategy involves a “system
of care.” This system consists of primary care
physicians, including Medical Home specialists,
and at least one hospital. In an ODS system of
care, providers are held accountable for total
spending and quality of care for a defined patient
population. The advantages of this strategy
include the ability to provide and manage
care across the continuum, plan budgets and
resources, and measure performance.
Changing health care delivery I INSPIRING INNOVATION
35
As a health maintenance organization, Kaiser
naturally shares similarities with a Medical
Home system. “We’re historically an integrated
system,” said Sue Hennessy, Vice President of
Strategic Planning & Health Plan Services at
Kaiser. “We can derive outcomes through care
delivery as opposed to benefits.” She said that
Kaiser emphasizes joint decision making between
providers and the member, helping everyone
involved work better together.
BETTER PURCHASING
AND PAYMENT STRATEGIES
One of OEBB’s central missions is to ensure health
care dollars are being directed toward positive
health outcomes, instead of being wasted on
ineffective treatments. To that end, OEBB adopted
a purchasing guideline that emphasizes quality
care and sustainable payment rates that are based
on outcomes, not just the provision of services.
And since its inception, OEBB has encouraged
alternate ways for providers and facilities to bill,
such as using diagnosis-related groups (DRGs).
Traditionally, hospitals might bill separately for
each item involved in a treatment or procedure.
Alternatively, DRGs aggregate these various
billing items into one group, a payment form that
tends to be more purchaser-friendly.
“For example, a normal bill for a hospital
delivery might have 2,000 lines,” said Jim
Foley, Vice President of Medical Professional
36
INSPIRING INNOVATION I Changing health care delivery
Relations at ODS. “But under a DRG, you bill at
one rate. Whether the rate goes over or under,
it’s still one rate.”
All these strategies help ensure that OEBB
members receive not only the right care, but also
in the right place, at the right time.
Innovation attracts r e s ear che r s
In the relatively new field of value-based health
benefit design, researchers are hard-pressed to
find real examples of how the strategy is working.
That’s why OEBB has attracted attention from
researchers across the nation, from a prominent
economist who regularly advises presidential
candidates, to a research team that provides
recommendations to Medicare.
MIT ECONOMIST TAKES
INTEREST IN OEBB
Jon Gruber is a professor of economics at the
Massachusetts Institute of Technology (MIT)
and is best known for his research on public
finance and health economics. He has advised
politicians across the political spectrum,
including Barack Obama, Hillary Clinton and
Mitt Romney. In 2007, the Washington Post
called Gruber the Democrat Party’s “most
influential health-care expert and a voice of
realism in its internal debates.”9
After reading an article OEBB Administrator
Joan Kapowich had written for the industry
publication Health Affairs, Gruber became
intrigued with OEBB’s direction on value-based
benefit design. He called Kapowich and they
began to talk.
“I have a long-standing interest in how individuals
go about making their choices in health insurance
plans,” Gruber said. “I’ve been looking for an
environment where I can get data on claim sets.”
9
Gruber thought OEBB could be just the right
place. Several years ago, after Medicare had begun
offering its Part D pharmacy program, Gruber
had wanted to see how many consumers ended up
selecting the best plan for them — economically
speaking, of course — given the individual’s needs.
Consumers who were eligible for Medicare had
a very wide range of plans to choose from, and
Gruber wanted to see whether, given all those
choices, consumers had picked the right ones.
Now, Gruber wanted to know how well OEBB
members were doing in selecting their plans.
“There’s been a variety of options offered across
different districts to employees,” he said. “I’ll
match prices to employee claims to see how they
made their choices.”
According to Kapowich, when Gruber completes
his research, OEBB will use his findings to better
educate members about how they can make
better benefit selection and save money.
“Information is a really important question in my
study — how people are using that information
and how it’s making a difference in their
decisions,” Gruber said. Features like OEBB’s
recently launched online cost comparison tool,
which allows members to see how their out-ofpockets measure up side-by-side for various
plans, can help provide this education. “Such a
tool will be very useful … it’s a great aspect of the
[OEBB] program,” Gruber said.
Bacon, Perry, Jr. “For Democrats, Pragmatism On Universal Health Care,” July 10, 2007, Washington Post.
Innovation attracts researchers I INSPIRING INNOVATION
37
He also thinks that designs like the additional cost
tier might be attractive to large employers in the
private sector, since premiums continue to rise
and employees can save using value-based plans.
“I think it’s a matter of getting employers to offer
that choice,” Gruber said. “I think consumers will
choose value-based designs over traditional ones
for the lower premiums. It’s a restriction, yes. But
you can get a lower premium.”
Gruber said that, so far, he loves working with the
OEBB staff. “My experience has been incredibly
positive. The people at OEBB are very helpful. I
feel like I’m talking to people who understand the
value of research.”
VALUE-BASED DESIGNS
INFORM MEDICARE PLANS
For researchers looking for information about
value-based benefit design, there aren’t many
groups to turn to. So when the National Opinion
Research Center (NORC) at the University of
Chicago was preparing a report for the Medicare
Payment Advisory Commission (MedPAC), they
came to OEBB.
NORC researchers interviewed Kapowich about
OEBB’s value-based benefit design because they
were looking for unique ideas to share with the
MedPAC, the agency that advises the U.S. Congress
on issues affecting the Medicare program.
“Are there ways to encourage consumers to make
good choices about the health care they receive?”
asked Jessica Kronstadt, a research scientist
38
INSPIRING INNOVATION I Innovation attracts researchers
with NORC. She went on to note that one way to
encourage this behavior is through value-based
benefit designs that encourage certain types of
care over others. “The way value-based plan
design typically plays out is that insurance plans
determine certain services are really valuable, and
it’s in our best interest to receive these services.”
These plans drive members to high-value services
that are proven through scientific evidence to
deliver more bang for their health care buck. At
the same time, these designs drive members away
from low-value services that don’t deliver the
same caliber of results.
“We learned about some of the work OEBB is
doing in terms of really thinking through their
entire benefits design, and not only making
it easier for individuals to access high-value
services, but also placing measures that make
consumers think twice about options that don’t
have the same known medical value,” Kronstadt
explained. In communicating with members,
she said, OEBB was careful not to give them the
impression that certain services would not be
covered — that’s not the point of value-based
benefit design. Instead, OEBB was attempting to
help members think through their options.
“Oregon has really embraced this concept of the
population, thinking about what’s going to do the
most good for the most people, at the lowest cost.
And it’s a very refreshing way of looking at health
insurance,” Kronstadt said. “I don’t think you hear
about other places around the country doing that.”
M embers gain b etter s e r vi ce a n d m or e con tr ol
In addition to pushing for high-quality health
care, OEBB strives for excellent service to
members and benefits administrators. During
initial enrollment, the average wait time for a
caller to talk with a live representative was just
over 90 seconds. Since initial enrollment, that
time has decreased to just 30 seconds. Survey
results have also shown high member satisfaction
with benefits, carrier options, access and the
MyOEBB system.
Communication with the member community is
critical to OEBB, which is why the group provides
regular updates and educational material to
help members make the best health-related
decisions and become better consumers of health
care. OEBB staff regularly make presentations
to insurance committees and members about
how plans work, how premiums are calculated,
and why the board implements benefit changes.
OEBB created an online seminar version of one of
these presentations. In the 2010 OEBB member
survey, 85 percent of responding seminar
participants said they found it useful, and 76
percent indicated that the information helped
them decide which plan to select.
EXCELLENT MEMBER
SERVICE, WHEN IT COUNTS
OEBB staff members consistently receive
excellent feedback about their support of both
members and district administrators. Sara
Simmons at Clackamas Community College said
she relies on OEBB’s support often. “I call them
all the time. They’ve always been very receptive
and very helpful by email, voicemail or phone,”
she said. “I think OEBB listens.”
“OEBB has been helpful in really making sure
people get their claims paid correctly,” said
Jeston Black, Government Relations Consultant
with OEA. “We had a member who had an
emergency surgery while he was in New Jersey,
and the hospital was trying to bill for the entire
thing. OEBB helped get it down to the maximum
out-of-pocket.” When it was all said and done,
there was a $20,000 difference between what
the hospital had charged and OEBB’s negotiated
charges. “If OEBB weren’t there, it would be the
member on his own in that scenario,” Black said.
In another case, a group of members in
Northeast Oregon had originally had trouble
finding providers in their area. They had been
paying more out of pocket to see these out-ofnetwork providers. In OEBB’s first year, ODS
and Providence worked to add more providers
to their network. “OEBB identified the problem
and now has just about every provider in Idaho,
so that members can receive the care at the innetwork price,” Black said.
And for those members who had originally been
billed out-of-network prices? “OEBB convinced
ODS to bill only in-network cost, retroactively,”
Black said.
Members gain better service and more control I INSPIRING INNOVATION
39
The idea is to help members select the
right plan for them, so that they don’t
spend more on premiums for a plan
with richer benefits if they don’t need it.
As part of its mission, OEBB also demands
outstanding service from all of the insurance
carriers it works with. Janell McCartin, Director
of Customer Service at ODS, recalled one
OEBB member calling her department with a
significant issue. The member’s son, who was
attending college out of state, had undergone an
arthroscopy. “The provider billed over $31,000
for the room, leaving the member owing over
$28,000 after our payment,” McCartin said.
“We were able to negotiate with the provider
and get them to agree to a $5,000 payment in
exchange for holding the member harmless for
the remaining $26,000.”
Deborah Jochumson, a Lead Customer Service
Representative with ODS, remembered another
OEBB member who had flown to South America
on vacation. “As she stepped off the plane, she fell.
The fall resulted in a fractured hip,” Jochumson
said. The member had no way to communicate
with ODS except by email, so Jochumson walked
her through the process of filing an out-of-country
claim. “I emailed her twice a week, asking how she
was doing, so she would not think we had forgotten
her,” Jochumson said. “I personally handled the
claims and monitored the progress … and informed
the member once the claims were processed
and paid. Both the subscriber and her husband
were going to tell everyone they know about the
individual and personal service they received.”
40
MYOEBB GIVES MEMBERS
MORE CONTROL
OEBB has moved to give members more control
and access to their benefits through an online
system, called MyOEBB. Here, members have the
ability to quickly and easily manage their benefits.
The online system allows members to enroll for
benefits, view current benefits, update personal
information, and make changes to benefits during
open enrollment.
According to Deputy OEBB Administrator Denise
Hall, MyOEBB helps move member benefits
management away from paper and to a faster,
more efficient electronic system. It also provides
reconciliation tools to the educational entities
and carriers, allowing for a more consistent
reconciliation on a monthly basis, and therefore
greater accountability.
“MyOEBB saves cost and time because
employees can go in and look at benefit elections
through the year,” Hall said. That opens the door
for members to learn more about their benefits
and, hopefully, make better selections based on
what’s right for them.
BENEFITS CALCULATOR MAKES
COMPARING PLANS EASIER
In 2010, OEBB added an online benefits calculator
to its website to help members compare the costs
and benefits of available plans. Many members
INSPIRING INNOVATION I Members gain better service and more control
told OEBB staff that this tool helped them see how
they could save enough in premiums to offset the
potential costs associated with higher deductibles
and out-of-pocket costs.
“The plan comparison and cost comparison
tool allows members to select the plans that are
available to them and line them up, right next to
each other, and compare them at a pretty detailed
level,” Hall said. The idea is to help members
select the right plan for them, so that they don’t
spend more on premiums for a plan with richer
benefits if they don’t need it. Hall has seen some
members shift to plans with higher deductibles,
but a lower premium cost. “People decide that’s
where they get the best return on the dollar.”
She also said that OEBB’s ultimate goal is to give
members all the tools they need to make the best
plan selection.
“It helps them use their money in the best way
possible, so they aren’t over-insuring,” she said.
Members gain better service and more control I INSPIRING INNOVATION
41
M ak i ng a differen ce i n O r eg on
Current annual estimates for health care
spending in the state range between $5,400 and
$7,000 for a typical Oregonian.10 In addition
to piloting ways to lower those costs, OEBB is
making meaningful and substantial differences in
the lives of Oregonians. One example of this result
comes from OEBB’s unique ability to collect data
from more than 130,500 members. By supplying
critical claims data to research organizations,
OEBB can help improve the way care is delivered
throughout the state. In addition, the value-based
plan designs OEBB is piloting can help inform
the private sector, giving businesses information
about how these new plan designs can reduce
costs. And as part of its effort to improve the
overall health of all Oregonians, OEBB helps
provide free dental care to children who could not
otherwise afford it.
SUBMITTING DATA TO
IMPROVE HEALTH CARE
The Oregon Health Care Quality Corporation
(Quality Corp) is a non-profit organization
dedicated to improving the quality and
affordability of health care in Oregon. Quality
Corp analyzes claims data from 13 suppliers
— including all three of OEBB’s medical plan
carriers: Providence, ODS and Kaiser. The group
uses this information to measure the quality of
care consumers receive.
“The really wonderful thing about PEBB and
OEBB is that they have stipulated in their
contracts with health plans their expectation that
the health plans fully participate in Quality Corp
activities,” said Mylia Christensen, Executive
Director of Quality Corp. “They are tremendous
supporters of the effort.”
Quality Corp studies areas such as women’s
health, diabetes and well child visits. Then, the
group publishes its data, allowing consumers
to compare scores among a variety of hospitals
and doctors’ offices. Consumers can find this
information at www.partnerforqualitycare.
org, a website that gives simple, side-by-side
comparisons of how well each provider delivers
care. For example, a consumer searching the
Portland metro area for women’s preventive
care can see how well a specific provider does in
mammogram, pap and Chlamydia testing.
Providers can respond to these findings by
working to improve their quality of care.
Christensen said that of 127 clinics that provided
data about HbA1c testing for diabetics, 102 clinics
ended their rating period with a higher test rate
than they had at the beginning of the survey.
“The same is true for Chlamydia screening, which
historically has been low,” Christensen said.
Of the 92 clinics that participated, 82 reported
a higher rate of testing than the year before.
“That’s an example of how having more people
Oregon Health Authority fact sheet, accessed Nov. 8, 2011.
http://www.oregon.gov/OHA/OHPR/RSCH/docs/All_Payer_all_Claims/APAC_fact_sheet.pdf?ga=t
10
42
INSPIRING INNOVATION I Making a difference in Oregon
participate makes everyone stronger, because the
measurements become stronger.”
as value-based benefit design — it was actually the
public sector that embraced the concept.
Quality Corp also translates their findings into
documents that purchasers, like OEBB, can use
to create health care policy. She said that OEBB’s
participation means that Quality Corp can help
improve healthcare not just for OEBB members,
but for all Oregonians.
“OEBB and PEBB have been early adopters of
several of these initiatives,” said Denise Honzel,
Executive Director of the OHLC. In fact, the
state-run OEBB is leading Oregon in promoting
the value-based, evidence-based benefit designs
Honzel thinks businesses may eventually adopt.
“We believe that employers, policymakers,
purchasers and consumers all need to be at the
table together in order to make meaningful
change,” Christensen said. “They are active
participants in developing metrics and helping us
shape our program plans.”
“What’s nice about value-based benefit plans
is that they put appropriate costs into the
place where it has the best value, rather than
putting everything into a high deductible,” said
Honzel. “OEBB also promotes wellness, patient
engagement, health and personal responsibility.”
PROVIDING A MODEL FOR BUSINESS
Concerns about rising health care costs extend
beyond public institutions. Oregon businesses are
especially worried about how they will continue
to provide coverage for their employees.
The Oregon Health Leadership Council (OHLC)
began as a task force to help address some of the
business community’s concerns about health
care costs. The task force created four distinct
initiatives that the OHLC promotes today:
payment and disbursement reform, evidencebased best practices, administrative simplification
and value-based benefits.
However, while most of Oregon’s private sector
has hesitated to adopt some of these ideas — such
Honzel said she believes OEBB is on the right
track and could serve as a model to the private
sector, demonstrating more effective ways to
reduce cost.
“The business community challenged the council
to keep health care costs and premiums down,”
Honzel said. “And it was the public sector that
took it on more aggressively.”
OEBB SPONSORS THE
CHILDREN’S PROGRAM
In Oregon, too many children never see a
dentist, with devastating effects. OEBB and ODS
created the Children’s Program in partnership
with Willamette Dental, Kaiser Permanente
Making a difference in Oregon I INSPIRING INNOVATION
43
and dentists throughout Oregon. The program
provides basic dental services to uninsured
children between the ages of 5 and 18.
“OEBB has taken an interest in the Children’s
Program because these are the children they see on
a daily basis,” said Bill Ten Pas, President of ODS
Dental. “Children with decay and pain are less
focused, more disruptive and less able to learn.”
All Oregon dentists contribute 1.5 percent of
their fees for services provided to OEBB members
to the Children’s Program. As of December 2011,
more than 2,800 children had been referred to see
dentists for treatment through the program. And
it makes an impact. Some educators have noticed
dramatic changes in a student’s personality, just
as a result of having received dental care. The
program also makes a real difference to parents.
“We get comments from parents that one time
they had to decide between food and dental care
for their children, and they chose food — and felt
they were terrible parents,” said Ten Pas.
Besides getting much-needed treatment, children
also gain a dentist of record. This is important
because, without a dentist of record, a patient
can’t get in to see a dentist in an emergency.
Ten Pas credits OEBB with the success of the
program and the hundreds of children whose lives
have been changed through it. “I don’t think the
Children’s Program could have happened except
for the relationship with OEBB.”
44
INSPIRING INNOVATION I Making a difference in Oregon
OEB B reduces th e grow th i n p r em i um s
OEBB was created in part to stem the rapid
increases in premiums, and it has delivered on
that goal. In its first three years of operation,
OEBB has saved an estimated total of $125.3
million in premium costs for medical, pharmacy,
dental and vision coverage. And although
premiums for medical coverage are still
increasing each year, they are rising less rapidly
than rates on the open market.
COST SAVINGS COMPARED
TO OPEN MARKET
“When we talk about health insurance premiums
and savings in a particular year, we’re almost
always talking about savings compared to what it
would have been,” said Steve Carlson, Northwest
Leader, Health & Group Benefits at Towers
Watson, the firm that verifies OEBB’s rates. “That
always makes it a little bit more challenging for
people to understand.”
Comparing premium costs under OEBB in 2008
to premium costs under another group — for
example, the OSBA — in the previous year is not
an apples-to-apples comparison, because costs
are always going up.
In 2009, the average per-employee medical
premium increased by 12 percent in Oregon,
according to Towers Watson. However, the
average increase among OEBB employees was 11
percent, slightly lower.
The next year, OEBB did even better. The
statewide average premium increase in 2010
was 11 percent. Meanwhile, OEBB employees
experienced only an average 6.8 percent rate
increase.
“Bottom line, those premium rates were lower
than we believe the premium rates would have
been without OEBB being in place,” said Carlson.
Towers Watson has yet to figure the statewide
average for 2011. However, the OEBB numbers
show a mere 0.7 percent increase in medical
plan premiums for its members, on average. In
addition, dental premiums for OEBB members
actually decreased by 2.3 percent. And although
premiums for vision plans increased by nearly 6
percent in 2011, more OEBB members have been
enrolled in the two highest benefit-level plans.
“One of the reasons those premiums are lower
[than the statewide averages] is that we believe
we get economies of scale on administration,”
Carlson explained. That theory says that a larger,
centralized system can handle administration
with less effort and cost than many smaller,
disparate groups doing everything on their own.
There are also savings in terms of advisory
services to negotiate a good deal with insurance
carriers, Carlson said. “When every school
district or group is doing things on their own and
has its own advisor, there’s more being spent on
advisory services,” he said. Those costs end up
reflected in higher premiums. OEBB, however,
OEBB reduces the growth in premiums I INSPIRING INNOVATION
45
It’s all about trying to do this for
members to have good, sustainable
health. That’s the most important.
negotiates for all groups at once, cutting out
additional costs. Plus, as a large group, OEBB
has more power to negotiate even better rates
thanks to group purchasing power.
Towers Watson estimated that OEBB saved
$39.6 million in medical, pharmacy, dental and
vision premiums on behalf of members for the
2008-09 plan year. For the 2009-10 plan year,
the firm estimated savings of $40.1 million. And
from 2010-11, savings were calculated at $45.6
million. All told, that’s a savings of $125.3 million
in OEBB’s first three years. Towers Watson’s
findings were reviewed and verified by another
firm, The Moser Group.
By adopting value-based plan designs, OEBB
reduces premiums in two ways. In the short
term, value-based plans can offer lower
premiums because they include components
like the additional cost tier, which sets a higher
copayment for certain procedures. But over the
long term, a value-based plan that emphasizes
preventive care can help encourage a healthier
member population. This healthier population,
in turn, requires less expensive medical care. As a
result, claims decrease, and so do premiums.
ADDITIONAL BENEFITS
AT AFFORDABLE COSTS
Towers Watson estimates that OEBB’s valuebased plan design reduced premium increases for
the 2010-11 plan year by 1.5 to 2 percent.
OEBB offers school employees more than
health benefits. It also offers life, disability, and
accidental death and dismemberment (AD&D)
insurance — a first for some of the smaller
districts who would not have been able to afford
coverage otherwise.
The value-based plan designs behind the Oregon
Prescription Drug Program, which provides
OEBB members with prescription drug coverage,
demonstrated an excess of $6 million in savings
on a roughly $57-$60 million drug spend for
OEBB in the 2009-10 plan year.
Towers Watson estimates that in the 2009-10
plan year, OEBB saved employees $5.3 million,
or 36 percent in premiums for life, disability and
AD&D insurance. The following year, OEBB saved
$6.4 million, or 36 percent, for this coverage.
OEBB STRIVES FOR
LONG-TERM COST REDUCTION
An Employee Assistance Program (EAP) was
also offered to districts at a savings of up to 60
percent over previous rates, with an average
savings just under 35 percent.
46
VALUE-BASED PLANS
DEMONSTRATE SAVINGS
In the coming years, OEBB hopes to build on the
progress it has made in reducing costs, through
plan design, by encouraging a healthier population,
and through negotiations with carriers.
“I think it’s fair to say that we negotiate really
tough deals with all our carriers,” said OEBB
INSPIRING INNOVATION I OEBB reduces the growth in premiums
Administrator Joan Kapowich. “If ODS
negotiates really good rates from providers, that
rate is reflected in their premiums, and that lower
premium is passed on to us. So we push them to
minimize any profit or administrative cost. We’re
pushing on all the right areas.”
And when OEBB saves, it’s bound by the
legislation that created the group to pass those
savings back to the members.
“The statute tells us what we can do with any
money we might end up with. There isn’t an
option that says we can keep it to ourselves and
buy a nice building and pay ourselves a lot of
money,” Kapowich said. “It’s all about trying to do
this for members to have good, sustainable health.
That’s the most important.”
OEBB reduces the growth in premiums I INSPIRING INNOVATION
47
Or egon leads th e way i n health car e i n n ovati on
Across the nation, changes are coming to health
care. But in Oregon, change is already here,
and OEBB is a meaningful participant in that
revolution. OEBB continues to advance in
benefit design, offerings and administration.
In October 2010, a long-term care benefit was
offered to participating entities for the first time.
This is just part of a comprehensive benefits
package — one that also includes life, long-term
disability, short-term disability, and accidental
death and dismemberment insurance, as well as
an Employee Assistance Program — that many
smaller districts in Oregon simply could not
afford on their own.
“I think Oregon is taking a much more discerning
position and saying, we don’t want to have
financial barriers between people and the health
care they really need,” said Margaret O’Kane,
President of the National Committee for
Quality Assurance (NCQA). “I think [OEBB] is
particularly innovative, and there’s a passion with
these people to improve the health of Oregonians.
It takes passion to really get moving. I applaud
them for their efforts.”
A FUTURE WITHOUT OEBB
COULD HURT DISTRICTS
As of November 2011, more than 130,500
school employees and their dependents are
OEBB members. The educational entities that
participate in OEBB thrive on the value and
48
stability of pooled risk. Should the statewide pool
no longer exist, many districts would be left out
on their own.
“I don’t think we could negotiate the same
kind of insurance rates [without OEBB],” said
Kaeko Blackburn, Business Manager and e-Rate
Specialist at Harney ESD. “I don’t think we
could have a menu of plans unless somehow we
partnered with a larger district. I don’t think
we’d be able to offer dental, vision and medical
as a package.”
Sara Simmons, HR Compensation and Benefits
Coordinator at Clackamas Community College,
said her group would have to go back to its old
ways of trying to find a broker. It would also take
more time and energy at a time when the school’s
budget has been severely cut and staff laid off.
“I think it would really hurt, all the way around, if
OEBB were not in existence right now,” Simmons
said. “I think it would cost us a lot more out of
pocket, in the energy of our people, and we’d
become overwhelmed again. I think, financially, it
would be a big hit to us.”
Lance Colley, the Chief Operations Officer for the
Roseburg School District, said that since the other
insurance pools are no longer available, his district
would be forced to find coverage on its own.
“If the statewide pool went away tomorrow, we
would have no choice but to go to the open market,”
he said. “I don’t think that’s a reasonable approach.”
INSPIRING INNOVATION I Oregon leads the way in health care innovation
MOVING OREGON FORWARD
Senate Bill 426, the legislation that created
OEBB, was designed to manage rising health
care costs while ensuring continued access to
benefits for Oregon public school employees.
House Representative Bill Garrard (R-Klamath
Falls) originally voted for the bill to help rural and
smaller districts control costs as part of a larger
pool. “I believe the program is now achieving
that,” Garrard said. “I think that while the
program got off to, say, a sluggish start, I believe
it is now running at a sustainable level that is
working the way we had envisioned.”
In the grand scheme, OEBB is just one part of
a larger plan embodied by leaders such as the
Oregon Health Authority to change health care
— and health care costs — in Oregon. By 2014,
Oregon will have an exchange that will be open to
individuals and small businesses. The exchange
will give these groups access to the benefits of a
larger pool, including more power to negotiate,
lower administrative costs and more stability.
“The things OEBB does now will help inform
that strategy,” said Joan Kapowich, OEBB
Administrator.
“OEBB fits nicely into our ability to move
healthcare reform forward in Oregon,” said
State Representative Mitch Greenlick. “What
we’re trying to do now is transform the health
care system so that OEBB, PEBB and Medicaid
can run much more efficiently. We hope we will
revolutionize the way services can be delivered
under OEBB.”
Co-Speaker of the House Arnie Roblan has a
similar point of view. “I think [OEBB is] part of
the solution that we’re looking for as we move
forward with health reform in Oregon,” he said.
“OEBB has done a nice job. I’ve been pleased with
what I’m seeing. I think we need to continue to
be on top of it all the time. I can see them making
difficult choices to keep the prices and insurance
viability going forward. My hope is they will
continue to have a conversation with districts
about what costs look like.”
Looking back, Ryan Deckert, the former state
senator who sponsored SB 426, said that he’s
glad he played a role in creating the legislation.
As Oregon develops its new health insurance
exchange, OEBB will inform the process. “Instead
of avoiding the health care conversation, we’ve
leaned into it,” Deckert said. “I think OEBB fits
into that narrative — how do you get folks to fit
together into large pools? We’ve been much more
willing to jump right in and figure out if there’s a
way to insure more folks, provide a decent benefit
for them, but also bend that cost curve for the
public and private sector.”
“We’re getting to where we envisioned ourselves
to be, where we can have high-quality plans
and better control of the growth of premiums,”
said James Sager, Northwest Regional ESD
Superintendant and the former policy advisor
to the governor. “With a larger pool, we felt we
had greater opportunities to control the upward
pressure on premiums. Now, we have greater
leverage with the providers to control these costs.”
Oregon leads the way in health care innovation I INSPIRING INNOVATION
49
School is just an amazingly
rich environment for teaching
healthy behavior.
IT ALL COMES DOWN TO HEALTH
After all the talk about benefit design, pooled
purchasing and administrative overhead, at the
end of the day, it comes down to health. And when
the health of the state’s teachers is at stake, health
becomes extremely important.
“Teachers are an incredibly important group of
people, and so is their influence over how health
happens and develops,” insisted Sue Hennessy,
Vice President of Strategic Planning & Health
Plan Services at Kaiser. She said that teachers
who join a walking club or volunteers who join
kids in a game of soccer on the playground
can have a positive impact on children’s view
of health. “School is just an amazingly rich
environment for teaching healthy behavior.”
“Health is a huge aspect of happiness,” said
Robert Gootee, President and CEO of ODS.
“Helping manage that health in school
environments is a major privilege for us. I believe
that we have helped to optimize the benefits and
services that this group deserves and needs.”
Kapowich said that OEBB has, and will continue
to, support wellness activities and health
worksites. “We want our members to take
advantage of the kinds of services that keep them
healthy,” she said. “We hope these are employees
we are going to be taking care of for years to come.
So we want to do everything we can to improve
their health, and the health of their families.”
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INSPIRING INNOVATION I Oregon leads the way in health care innovation
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