Benefits Changes Highlight Faculty Senate Meeting

Human Resources Vice President Sabrina Ellis presents plan details.

September 12, 2015

Human Resources Vice President Sabrina Ellis.

Human Resources Vice President Sabrina Ellis addresses Faculty Senate. (William Atkins/GW Today)

Changes to benefits at the George Washington University in 2016 highlighted a busy meeting of the Faculty Senate on Friday, as Vice President for Human Resources Sabrina Ellis outlined adjustments to the plan ahead of October’s open enrollment period.

The changes, endorsed in late July by the Benefits Advisory Committee and outlined in an August report in George Washington Today, will limit premium increases to 3 percent for 80 percent of university employees. They also will introduce plan adjustments aimed at mitigating prescription, MRI, X-ray and laboratory costs for the approximately 7,400 employees and dependents who rely on GW’s medical plans for their health and prescription drug needs.

The university is challenged by the national trend of rising healthcare costs, particularly prescription drug costs. The changes, Ms. Ellis said, will help GW manage those challenges, ensuring quality healthcare remains affordable, sustainable and competitive for the entire university.

“Employee benefits, particularly health benefits, continue to be a hot-button topic, particularly with self-sponsored plans, which GW has,” she said. “We’re fairly certain the changes are reflective of the best range of options that we’ve gone through in terms of keeping our plan costs within the budget.”

GW Human Resources released a peer report study Wednesday that shows benefits at the university rank in the middle compared to those offered at the 17 peer universities GW uses as its market basket for evaluating a wide range of academic measures.  The study, which was conducted by an actuarial team at Mercer, builds on a review by the Benefits Task Force by expanding the peer institutions studied to match what GW uses for other comparisons and uses a standardized approach to evaluate benefit value across many dimensions.  While each plan design is different based on an institution’s claims experience and demographics, the Mercer study aims to establish an “apples to apples” baseline for benchmarking GW benefits going forward.

GW’s health care changes for 2016, Ms. Ellis said, will limit medical premium increases to 3 percent for all faculty and staff making less than $120,000 a year, which is consistent with a recommendation of the Benefits Task Force. Without these changes, she added, health care costs at the university would increase 8 percent ($3.4 million), higher than the national average and the equivalent of an 18.2 percent premium increase per employee.

The university will host a series of benefits briefings beginning Monday for employees to learn firsthand about the proposed changes and to participate in an interactive conversation.

A closer look at the changes:

Establishing more tiers for premiums

Historically, GW has used two salary bands for medical premiums: employees making less than $35,000 annually and those making more than $35,000. The university is adding five more segments, creating salary bands among employees making between $35,000 and $240,000 a year—a recommendation of the Benefits Task Force, created in January to review GW health, retirement and tuition benefits and compare them with those offered by peer institutions.

In raw dollars, the 3 percent increase for an employee making $60,000 a year would range from $2 a month (enrolled in employee-only coverage on the university’s high-deductible plan) to $19 per month (enrolled in family coverage on the university's medium plan). Employees making more than $240,000 a year would see their monthly premiums increase from $15 to $162 on the same plans, respectively.                

“This was one of the major recommendations of the Benefits Task Force,” said John Kosky, associate vice president for HR talent management. “Basically what we’re proposing is to split that ‘over $35,000’ band into five different bands. The additional costs based on group is graduated based on income. We modeled it several different ways and consulted with the BAC and the task force.”

Matching HSA contribution

Employees enrolled in the high-deductible plan are eligible to participate in a health savings account—an account that allows the account holder to save and pay for eligible health care expenses tax-free, up to $6,650 per year. Beginning in 2016, GW will include an employer contribution to the plan. Employees enrolled in employee-only coverage will receive a one-for-one GW match on up to $300 a year in HSA contributions. The GW match for employees covering at least one dependent will be up to $600.

“This is a very positive thing for the plan,” Mr. Kosky said.

A little more than 8 percent of GW employees are enrolled in the high-deductible plan, which was introduced last year during open enrollment. HSA balances roll over year-to-year and can be used for qualified health-related expenses or as a supplemental retirement savings account. Employees who leave the university can take their HSA with them.

Network changes for labs and imaging services

Costs for routine labs and imaging services vary greatly depending on whether a facility is freestanding or affiliated with a doctor’s office or hospital, Mr. Kosky said. Beginning in 2016, GW will introduce a new preferred network for labs and major diagnostics. Common facilities used by GW employees such as LabCorp, GW Hospital and GW Medical Faculty Associates (MFA) are included in the preferred network.

This change will create a preferred network of 292 imaging and 166 labs in the D.C. area that would honor an 80/20 coinsurance ratio on the high-deductible and basic plans (GW pays 80 percent of the cost and the employee pays 20 percent). The medium plan would honor an 85/15 coinsurance ratio, Mr. Kosky said. Another 3,322 area imaging and lab facilities not in the preferred network would follow a 60/40 coinsurance ratio.

“Even in the D.C. market, the cost for a service can vary tremendously,” he said. “The cost of an MRI, for example can be between $230 to $2,300 for lower back, and it’s basically the same service. So we’re going to have a United Healthcare network in the area that, if you go there, you will pay a smaller percentage.”

Prescription drug changes

Several changes will go into effect for prescription drugs in 2016. The university will remove a separate $50 pharmacy deductible for brand name pharmacy drugs for employees enrolled in the basic and medium plans. GW also will switch to a coinsurance model for prescription drugs, Mr. Kosky said.

Instead of paying fixed prices for generic, preferred and specialty drugs, he explained, employees would pay a fixed percentage, with maximum caps—the most expensive specialty drugs would be capped at $100 for a 30-day supply, for example. Other universities are employing this practice as a way to mitigate cost, Mr. Kosky said.

“Both the elimination of the pharmacy deductible and the HSA contributions were items discussed in the Benefits Task Force,” he said. “They are examples of those recommendations being infused into the plan.”

Telemedicine and virtual visits

Beginning in 2016, Mr. Kosky said, a network of care providers offering virtual visits by phone or video will enable employees to consult with an in-network physician using real-time audio and video technology for minor medical needs. These remote treatment sessions through United Healthcare’s virtual visit program will allow employees to see and speak with a doctor without an appointment or physical visit to their office. Standard office visit copays will apply to virtual visits, Mr. Kosky said.