HealthMatters

April 2014, Special Edition

Special Edition for AlaskaCare Retirees


Answers to Retirees’ Frequently Asked Questions

In January 2014, the Division of Retirement and Benefits (Division) released a draft update to the AlaskaCare Retiree Health Plan booklet. During informational meetings with retirees about the draft booklet, Division employees recorded issues that frequently surfaced. To clarify these issues and to make sure all AlaskaCare retirees—not just those who were able to attend the meetings—are able to review our answers, we have compiled answers to frequently asked questions about compound medications, prescriptions with over-the-counter equivalents, the dental plan, and the retiree plan booklet.

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Compound Medications

NOTE: As of April 1, 2014, Aetna has resumed coverage for compound medications. Such coverage will extend through at least December 31, 2014. During the remainder of 2014, we will work with Aetna and our members on the various issues regarding compound medications.

Has coverage for prescription medications changed?

No, coverage for prescription medications has not changed. AlaskaCare defines “prescription drugs” to mean a substance that “may be dispensed only by prescription, and which is required to be labeled, ‘Caution: Federal law prohibits dispensing without a prescription.’” These medications are sometimes called “FDA (Food and Drug Administration) legend drugs.” A compound medication that has an ingredient which is an FDA legend drug is covered by the plan

But something has changed, because my compound prescriptions were covered last year, and now they are not. Why?

There may be a number of reasons. Your compound medication may:

  • Not have an FDA legend drug in it
  • Be experimental or investigational, and therefore the safety or medical efficacy of it is not well-established
  • Not be medically necessary as defined in the plan booklet

So what happens next?

Aetna has resumed coverage for compound medications as of April 1, 2014.

How did this happen?

The administration of compound medications was not properly transitioned. You should know that for a variety of reasons more plan administrators, including Aetna and Envision (the plan’s previous pharmacy benefit manager), are recommending against coverage for compound medications. Those reasons need to be thoughtfully considered and conveyed to our members. The abrupt change on January 1, 2014, was disruptive for our members, as well as for Aetna and AlaskaCare. Accordingly, we have advised Aetna to resume coverage for compound medication for the 2014 plan year.

What happens to compounds that were denied between January 1, 2014, and March 31, 2014?

Aetna will review and reconsider appeals that were filed for denial of compound medications. To submit a claim for a Aetna will review and reconsider appeals that were filed for denial of compound medications. To submit a claim for a compound you paid for from January 1, 2014, to March 31, 2014:

  1. Obtain a detailed receipt or invoice from your pharmacy that lists all ingredients in the compounded medication, including quantities and strengths of all ingredients and cost of the medications.
  2. Complete a pharmacy claim form and submit it to the address on the form. If you paid for more than one prescription, you can submit all of your prescriptions with one claim form. Find the claim form…
  3. Aetna will process your claim and mail you a reimbursement check for your out-of-pocket expense minus your applicable copay or coinsurance provided the claim is otherwise covered under the plan.

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Prescriptions with Over-the-Counter Equivalents

Why isn’t my prescription with an over-the-counter equivalent covered?

As of April 1, 2014, Aetna has resumed coverage for medications that must be dispensed by prescription that have an over-the-counter (OTC) equivalent. Such coverage will extend through at least December 31, 2014. If you paid for a prescription from January 1 through March 31, 2014, because it was denied due to an OTC equivalent, please complete steps 2 and 3 above.

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Dental Plan

Who is administering the retiree dental plan?

The Division is the plan administrator. Moda Health/Delta Dental of Alaska is the claims administrator and provides a dental provider network. Delta Dental is the largest dental network in the country, with over 145,000 dentists in network.

Why do we need a provider network?

Provider networks are now very common in the United States and can be effective in helping to control cost growth. The premiums for the retiree dental plan increased an average of 7% per year from 2010 to 2013. That was about two and a half times the rate of inflation in Anchorage during the same time period. For retirees electing “retiree+spouse” coverage, the premiums have increased by $312/year since 2010 (from $1356/year to $1668/year). If this rate of premium growth continued until 2020, the premiums would increase to $2700/year, an increase of $1344/year over the 2010 premium. We believe use of a dental network will help control this cost growth and maintain the financial integrity of the plan—this will help AlaskaCare and retirees save money.

How does Moda Health/Delta Dental of Alaska help us save money?

Moda contracts with dentists in Alaska to take part in the Delta Dental of Alaska network. Three-hundred and eleven dentists in Alaska are now part of this network. That’s about 60% of the dentists in Alaska. A dentist in the Delta Dental network agrees to two important things:

  1. To not charge more than the 80th percentile of charges for a particular procedure.
  2. To not balance bill the member.

Prior to Moda, the recognized charge for a procedure was computed off the 90th percentile of charges for the procedure, and any dentist could balance bill our members.

Here is an example that illustrates the change:

Assume a dentist charged $300 to fill a cavity. Assume the 90th percentile of charges for a filling was $250. The plan would pay the dentist 80% of $250, or $200. The member paid the remaining 20% ($50) plus the dentist sent the member a balance bill for $50. Member total charges: $100.

Following this example under Moda with a network dentist:

Assume the 80th percentile of charges for a filling is $200. With Moda, the plan will pay the dentist 80% of $200, or $160. The member pays the remaining 20% ($40) and no balance bill. Member total charges: $40.

What if my dentist is not in the Delta Dental network?

You can continue to see your dentist, but it may cost you more, particularly if your dentist charges above the 80th percentile. You can call Moda at (855) 718-1768 to request an out-of-network cost estimate.

How much more will it cost me?

The Delta Dental network has different recognized charge formulas in each state. In Alaska, the Delta out-of-network recognized charge formula is 75% of the 80th percentile.

Following the example above:

Assume the recognized charge is 75% of $200, or $150, so the plan would pay the out-of-network dentist 80% of $150, or $120. The member pays the remaining 20% ($30) plus the dentist may send a balance bill for $150. Member total charges: $180.

What do I do if I want to keep my dentist, but I don’t want to pay more for a filling?

You have a number of options:

  • Ask your dentist to join the Delta Dental network
  • Ask your dentist to waive the balance bill; in the example above, if your dentist waives the balance bill, your cost goes down by $10
  • Show your dentist what you would save if you went with a network dentist; remind the dentist you are a retiree living on a fixed income

How has the plan changed with respect to cleanings?

Beginning January 1, 2014, the plan limits cleaning frequency. After discussion with retirees in January, we increased the cleaning frequency limits in some cases. The frequency limits are as follows:

  • One cleaning every six months for most people
  • Up to three cleanings per year for pregnancy
  • Up to four cleanings per year for diabetes or periodontal disease
  • Additional cleanings are available when dentally or medically necessary with Moda/Delta Dental of Alaska approval

Why limit the frequency of cleanings?

Most people only need one cleaning every six months. Some members were getting five to nine cleanings per year. That may be dentally necessary in some cases, but if not necessary, these extra cleanings are imposing unnecessary costs on the plan that our members pay for.

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Retiree Plan Booklet

Why update and re-publish the health plan booklet?

It is standard practice for public health plans to regularly update and publish their plan booklets. Many do so annually. Our historic goal was to annually publish the retiree health plan booklet. However, over the last decade, staffing changes and workload affected our ability to achieve this goal. We updated and published the booklet in 1975, 1979, 1983, 1984, 1985, 1989, 1991, 1998, 2000, and 2003. We added amendments to the 2003 booklet in 2004, 2005, 2007, 2009, and 2014.

But isn’t our 2003 booklet fine the way it is?

Since the booklet’s original publication, approximately 16 decisions have been issued by the Office of Administrative Hearings regarding the retiree health plan. Many of those decisions should be reflected in the booklet. Additionally, we issued a large volume of benefit clarifications to the claims administrators during this time period. We believe these clarifications should be either incorporated in the booklet or otherwise published.

Isn’t it a diminishment to change the plan?

We have not changed the basic coverage of your health plan. The vast majority of our updates to the draft booklet are wording changes intended to eliminate ambiguity. There has been no change to the deductible, out-of-pocket maximum, lifetime maximum, coinsurance amounts (with the exception of transplant care), coordination of benefits, pharmacy copay, or medical coverages. In 2003, the Alaska Supreme Court ruled that the retiree health plan could be changed and any coverage diminishments should be offset by coverage enhancements as measured by the impact on the entire retiree population. The Court held that the retiree plan should resemble a “mainstream” public employee health plan. But, in many ways, the retiree health plan no longer resembles a mainstream plan. For example, the plan document is over 10 years old and the plan has recently been administered in ways that have provided coverage for treatments that may not be medically necessary.

Aren’t you required to pay for all of my health care?

AlaskaCare is only required to pay for “medically necessary” health care.

Why is the draft retiree plan booklet so hard to understand?

Some have said that parts of the 2003 booklet lack precision and clarity. Many of the changes we are making to the booklet are intended to address this issue. We will explore ways to provide explanatory documents that are more readable.

Why have you removed the Division from the appeals process?

The previous four-level appeals process was unnecessarily time consuming. The Division had unacceptably long backlogs of pending appeals. Moreover, there was no independent medical expertise at any level in the process. The delay and lack of medical expertise was costly to members and AlaskaCare. To address these issues, we have streamlined the appeals process to three levels:

  • Level 1: Aetna
  • Level 2: Independent Medical Review Organization for medical issues; Aetna for coverage issues
  • Level 3: Office of Administrative Hearings We also borrowed a policy from the Affordable Care Act— now, if a member prevails at the Independent Medical Review level (Level 2), AlaskaCare must pay immediately.

But hasn’t the Division delegated its fiduciary duty to Aetna?

Under the previous appeals process, our third-party administrator handled the Level 1 and Level 2 appeal. Our new process improves this process by requiring Level 2 medical issues to be decided by an Affordable Care Act-compliant Independent Medical Review Organization. However, we retain our fiduciary responsibility at Level 3. Our goal with the streamlined appeals process is to more accurately and rapidly get decisions for members. We have also created a full-time vendor manager position. This employee is responsible for sampling the processing of claims and appeals at each of the three levels to ensure they are being processed in compliance with the plan booklet.

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