Wednesday, September 09, 2009

Greg Nickell responds to Shirlee Zerkel

Dear Ms. Zerkel:

I have attempted to address your questions in Bold Blue below.

If you have additional questions or if I failed to answer your questions, please let me know.


Greg Nickell

Director, Health Care Services

From Shirlee Zerkel, September 8, 2009

Subject: Questions prompted by your August 31 email to me.

Dear Mr. Nickel:

I have some more questions based on your answers about the Aetna Medicare Plan.

1. Who determines what medical service is covered- Medicare, Aetna or STRS? Essentially all three entities play a roll. First, Medicare requires all Medicare Advantage plans to cover everything traditional Medicare covers (the Aetna Medicare Plan (PPO) will cover all these services for as long as it is offered to STRS Ohio enrollees). Second, each year STRS Ohio will play a roll (just like this year) in construction of the plan and establishing the basis of the Medical Plan Document as is documented for this year in the answer to your second question. Third, Aetna administers the plan based upon the Medical Plan Document just as they do today for the Plus and Basic Plans.

I also should point out that, by contract, Aetna is required to pay out a minimum percentage of premiums in actual claims payments each year. If the claims payments total to a percentage less than required, Aetna must return the entire dollar difference between the designated minimum percentage payments and the actual payments percentage to the Health Care Stabilization Fund. This effectively caps what Aetna can earn to pay for administration, production of required materials, required state premium tax and profits. It also removes the potential incentive for Aetna not to pay claims to improve its profitability.

2. What is the STRS definition of covered services? STRS Ohio’s instructions to Aetna were to start with Medicare coverage as required by Medicare for Medicare Advantage plans and add the following:

· Current Plus plan coverage;

· Current Basic Plan’s 100% preventive coverage;

· A $15 office copay that covers all services rendered during the office visit

· Lower the total annual out-of-pocket exposure from $2,000 (add together the $500 deductible & 20% coinsurance up to $1,500 coinsurance) under the Plus Plan to $1,500 (add together all $15 medical copayments, $500 deductible and 20% coinsurance) under the Aetna Medicare Plan (PPO);

· Gym memberships;

· Annual hearing exam coverage at 100%;

· Annual vision exam coverage at 100%;

· Care management programs like social services, dementia and behavioral health programs and disease management; and,

· Also added outside of the Medicare Advantage program was an ESI prescription value based diabetic mail order program for diabetic medications not already on the mail order $9 low cost generic program.

3. Who determines what the approved costs are for a certain service-Medicare, Aetna or STRS? Aetna determines the allowed (approved) costs for Network providers and Medicare for Out-Of-Network providers. STRS Ohio never determines what the allowed cost schedules are. It has always been and will continue to be the responsibility of the administrators (Aetna, Medical Mutual, Kaiser, Paramount, and AultCare).

4. If a retiree goes to a doctor who is not in the Aetna Plan, how much of the bill will be covered and can the doctor balance bill the retiree? First, the coverage and coverage level will be the same as for a Network provider. So, all applicable medical copayments, deductibles and 20% coinsurance will be the same and all apply to the same $1,500 out-of-pocket annual maximum.

Second, just like under the Plus and Basic Plan today, an Out-Of-Network provider who accepts Medicare assignment (almost all providers) cannot balance bill. In the rare case where an STRS Ohio enrollee sees an Out-Of-Network provider who does not accept assignment, the payment would be what Medicare allows and the provider could balance bill for the difference. Again in the provider who does not accept assignment case, the process will be the same as what happens today with the Plus and Basic Plans.

The one area where there could be a difference is in the delivery of care management services. Out-Of-Network providers are not contractually required to participate in or recommend these additional services and, in fact, they may not be aware of them. If they are aware and want an enrollee to participate, they can still request these services just like a Network provider.

5. I have a question concerning the cost of this Aetna Medicare Plan. I see in the STRS information that the premium total cost is $231 (the retirees' portion plus the STRS portion). Why is that cost so high for a large group such as STRS, when some individual advantage plans with much the same benefits cost under $75 a month? First, the majority of the costs are costs from the prescription program. The STRS Ohio prescription program is significantly richer than the vast majority of Medicare Part D programs in what is covered, the total out-of-pocket costs (no donut hole and lower deductible) and access.

Second, overall the medical plan is likely superior overall than those plans to which you refer. Without knowing specifically what plans you are comparing our plan against, I can not say for sure but I would refer you back to the answer to your second question to look at all the additional coverage STRS Ohio added over traditional Medicare.

If you compare the costs against the 2010 Medical Mutual Plus Plan, for a retiree with 30-years of service the retiree will save $18 a month ($216 per year) in premium and a spouse will save $73 a month ($876 per year) in premium with better coverage.

Also, we should not forget the contractual requirement for Aetna to pay a defined percentage amount of the premium in claims payments effectively limiting what they can charge for administration, required material generation, required state premium tax and profits.

Based upon these factors, I believe the premiums are an accurate reflection of the medical and prescription costs that will be incurred for the 2010 year.

Larry KehresMount Union Collge
Division III
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