Insurers lining up for the lucrative OEBB contract need to sit on their hands for several months. The Oregon Educators Benefit Board had anticipated the release of its RFP in July, but decided to slow down the process and continue talking about the pros and cons of having fewer plan options for its 148,000 teachers, their dependents and retirees, according to Denise Hall, deputy administrator.
Now the RFP won’t see the light of day until September, while insurers face a short turn-around with proposals due by late October or early November. Decisions are expected next May for contracts starting in October 2016.
“Right now the board wants to make sure they’re asking the right questions and offer health plans that are in the best interest of its members,” Hall reiterated. “The delay gives us plenty of time.”
OEBB’s consulting firm, Towers Watson, prepared a document outlining the primary considerations for the RFP, such as limiting cost increases to 4.4 percent in alignment with the governor’s budget and supporting the transformation effort. The consultants also suggested fewer PPO, HMO and coordinated care model alternatives during their presentation at last week’s board meeting.
Currently, the complexity of handling 11 different health options has been daunting for OEBB, which, initially, didn’t have much say in the matter. When OEBB was created in 2007, legislators wanted to assure school districts there would be minimal disruption and they could keep their same choices, which, at that time, amounted to 98 different health plan designs.
“I’ve heard from district representatives and members now that there are still too many plan options, with more choices than people know what to do with,” said Hall.
Everyone will be on equal footing for the next RFP, Hall promised, with no favoritism shown. Both statewide and regional insurers will be eligible.
Whoever decides to submit a bid proposal must offer an integrated model of care, and demonstrate best practices, offer clinical guidelines, abide by the recommendations of the Health Evidence Review Commission, focus on outcomes and adhere to the Triple Aim – lower cost, improve the patient experience and the health of the population.
Right now there are also 900 different employee groups in OEBB –which are part of an estimated 500-600 collective bargaining units -- some of whom are represented by the Oregon Education Association and OSEA, a labor union which represents 20,000 education employees. Also, OEBB represents 247 employers, including school districts, educational service districts and community colleges.
Besides medical plans, OEBB also offers dental, vision and long-term care coverage, however those benefits will not be part of the RFP process, because of affordability, Hall said. Under the Affordable Care Act, an excise tax that starts in January 2018 will slap a heavy penalty on health insurers whose medical premiums exceed the established threshold of $10,200 per year for employee-only coverage and $27,500 for family coverage. “That’s why it’s not a good financial decision to combine these plans,” Hall admitted.
Money at Stake
The governor’s proposed budget, now awaiting approval by the Ways and Means Committee, sets aside $1.6 billion over the next two fiscal years dedicated to insurance costs and other non-operational expenditures, and $12.25 million for OEBB’s administrative operations.
The latest financials show that from October 2013-September 2014, OEBB paid out $672,713,639 for medical/dental and vision benefits; $13,791,537 for life, disability and AD&D; $696,795 for long-term care and $518,958 for employee assistance programs.
Currently Kaiser and Moda Health hold the cards for OEBB, and offer 11 different design options that have varied copayment levels and deductibles. Those contracts expire on September 30, 2016. At last count, Moda had the bulk of OEBB members – 104,695, compared to Kaiser, which insured 24,700.
Together their total enrollment is about 19,000 shy of all OEBB members because some people have only chosen a dental plan or vision coverage rather than a medical plan.
Nine school districts remain outside OEBB, and prefer to negotiate their own health insurance contracts. They include Beaverton, Medford, Ashland, West Linn and Wilsonville and together represent 18,000 employees. Up until the 2013 legislature, those districts had to meet a comparability assessment, showing their insurance costs did not exceed those of OEBB.
OEBB Openings
The 12-member board is also seeking new members following the resignation of Mary Lou Hennrich and Dr. Allison Little last year. Another positon – created for a non-representative from a local government – has been vacant since its inception in January 2013. Governor Kate Brown will make the appointments.
