RESTRICTED  
  
WT/BFA/W/440  
 
1 March  2018 
(18-1299) Page: 1/4 
Committee on Budget, Finance and Administration    
 
 
ASHI UPDATE  FOR C OMMITTEE ON BUDGET,  
FINANCE AND ADMINIST RATION (C BFA) 
1  INTRODUCTION  
1.1.  In the WTO Secretariat Strategy for Managing the WTO Medical Plan and its After Service 
Health Insurance Liabilities (WT/BFA/W/406/Rev.1), the WTO Secretariat committed to reporting 
regularly to WTOMP stakeholders, including Members through the CBFA. It wa s stated that this 
would normally be an annual report, but that during the early stages of implementation reporting 
would be at least twice a year.  
1.2.  This is the first report in 2018 and since the CBFA established a Special Reserve Account 
(SRA) at the end of 2017. This report is intend ed to give a brief update on that concentrates on 
the financial position of the Spe cial Reserve Account. A second  report will be shared with the CBFA 
later in the year once the Secretariat has had the opportunity to analyse th e Medical Plan data 
from the first full year under the new Medical Plan Administrator.  
2  SPECIAL RESERVE ACCOU NT  
2.1.  The CBFA approved1 the establishment of a S RA to capture and ring -fence savings from the 
WTOMP line in the WTO budget which have accrued as a re sult of cost reduction and containment 
measures.  
2.2.  Although the figures are still being finalized in the process of closing the WTO accounts and 
preparing the annual financial statements, the expected balance in the SRA resulting from savings 
on the budget f or the Medical Plan is CHF 1.4 million. Of this amount, approximately one half is the 
result of paying less to the Medical Plan Administrator due to better negotiated terms and cost -
control measures and the other half comes from actually spending less than  budgeted as a result 
of a higher level of vacant regular budget posts than anticipated.   
2.3.  It is important to note that it is important to not over -interpret these results  as there are 
many factors that can influence the actual costs of the Plan  from year t o year . In addition, in the 
first year the contract the outcome is somewhat artificial due to the fixed contractual terms agreed 
with the Administrator and the fact that claims for 2017 will continue to arrive throu ghout 2018 
and even into 2019. Consequently, o nly over the evolution of the contract will it be possible to 
draw valid conclusions on  the factors driving costs and contributing to savings.  
3  EXTRA -BUDGETARY ASSESSMENT  
3.1.  The salaries and other costs linked to L -post employees are paid from e xtra-budgetary 
resources. This principle should also apply also to the long term liabil ities accruing in relation to 
L-post staff.  
3.2.  In anticipation of L-post employees  eventually claiming an entitlement to ASHI benefits , it 
has been decided to apply a charge on L -posts. This is because extra -budgetary funding is variable 
and the composition of donors can change significantly  over time. Therefore, it is in principle 
important to associate the costs with donors at the time the liabilities accrue.  This is cons istent 
with the approach of other international organizations in Geneva.  This charge will contribute an 
additional amount of about CHF 200,000 to the SRA.  
                                                
1 See WT/BFA/ W/431  Annex V for the Guidelines of the SRA.  WT/BFA/W/440  
 
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  4  MONITORING COSTS   
4.1.  The reporting to the CBFA on the Medical Plan and ASHI also anticipates the provision of 
actuarial information and KPIs .  
4.2.  At this point the actuaries are working on the usual IPSAS accounting analysis required for 
the financial statemen ts.  Once that work is done they will prepare an analysis estimat ing how the 
costs will evolve over the long term .  This information will be included in the next update later in 
the year.  
4.3.  There are also several indicators  that the Secretariat will be tracking and reporting on over 
time.  These include, for example, Medical Plan expenditures and expenditures relative to the WTO 
budget  and indicators  relating to cost containment measures. (Please see Annex I below for a 
summary of cost control measures being implemented by the Se cretariat. ). 
4.4.  The 2017 data are still preliminary;  nonetheless it appears that  certain cost containment 
measures are having an impact.  Globally the Plan Administrator estimates that negotiated 
network rates and claims processing controls have helped reduce  claims by nearly CHF 2 million 
compared to what they might have been without the control systems in place. Additionally, 
restrictions on private  hospital  room reimbursements have limited the usage of private rooms by 
participants.  This is important not o nly for the direct cost savings, but also because doctors ' fees 
can be much higher in private rooms . While that kind of indirect savings cannot be quantified 
because those higher costs will never materialize when participants choose non -private options , 
they are important and contribute to cost containment .  
4.5.  Cost containment measures will have limited impacts in any one year but can become 
meaningful  over longer period s of time. Therefore , they form an important part of the Secretariat 's 
strategy and will b e monitored and adapted in order to ensure the Plan is managed efficiently.  
 
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 WT/BFA/W/440  
 
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  ANNEX I  
SUMMARY OF COST CONT ROL MEASURES IN MEDI CAL PLAN  
(Information provided by the Secretariat)  
1. It is important to note that staff members already bear a proportionate share of any increases 
in medical plan costs with the Members. This includes increases related to ASHI liabilities as 
they impact the overall premiums. Typically WTO Members cover 60% of the costs and WTO  
staff members 40% on average. Additionally, there are participants in the plan who do not 
receive any subsidy from the WTO budget who pay the full premiums (e.g. secondary 
dependents, non -dependent spouses and children). In this way the i ncentives to be cost 
conscious are well aligned for both WTO Members and WTO staff.  
2. In 2016, the WTO Secretariat conducted a procurement process for a new insurer and 
administrator of the WTOMP.  
3. It is important to note that good decision making requires g ood data. As part of the new 
insurance contract, the WTO Secretariat will now receive quarterly reports from the 
administrator of the WTOMP which will enable it to continue its evaluation of the benefit 
structure. The MIMC intends to continuously examine t he benefits as the WTO Secretariat 
receives better data.  
Cost Controls to improve the financial situation of the Plan  
o As of 1 January 2017, the WTO Secretariat has selected a provider that has very favourable 
negotiated rates with the local and regional ho spitals. It is estimated that this alone will result 
in at least a 5 per cent reduction in premiums, which should have a significant cumulative 
impact over the costs of the Plan in the coming years.  
 
o Prior to 2017 staff members were able to insure their se condary dependants on the WTOMP. 
The Director General has approved a recommendation that no new secondary dependants be 
allowed on the WTOMP after 1 January 2017.  
 
o All in patient procedures and hospitalizations other than emergencies already require pre 
authorisation. With respect to out patient procedures, the Director General has approved 
adding pre authorisation for orthodontia for those over 18 to ensure that it is for medical 
rather than cosmetic purposes.  
 
o For the benchmark rate for coverage outside Geneva, the Director General has approved that 
the benchmark be reasonable and customary with reference to those of the local area, so long 
as they do not exceed the Geneva rate.  
 
o With respect to private room, coverage is capped at CHF 700 per day for the room rate (18% 
lower than several comparator organizations). It should be noted that with the new 
negotiated rates and due to the larger co share for private rooms, shorter hospitalizations in a 
private room can often result in lower costs to the WTOMP tha n in a semi private room.  
 
o The WTO Secretariat has improved information to plan participants about its in -network 
(cheaper) providers and has sought to increase the direct billing arrangements with providers 
for high cost treatments as an incentive to stee r plan participants to them. To that end, the 
new insurance administrator has a mobile app that plan participants can download onto their 
smartphones to identify network providers. The new administrator has also agreed to pursue 
direct billi ng arrangements  for planned out patient treatments (other than dental) if they 
exceed CHF 1,000. As noted, the WTO Secretariat intends to continuously monitor the 
performance of the WTOMP and will return to this issue if these measures are not effective.  
 
o The Secretariat has implemented one change in policy to incentivize travel for lower cost 
treatment. As of 1 February 2017 a staff member may be authorized to use sick leave rather WT/BFA/W/440  
 
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  than annual leave for travel time to and from another location for treatment if, inter alia , the 
cost of treatment would be significantly reduced compared to that in Geneva. Similarly, the 
WTO Secretariat is looking at other incentives, such as a reimbursement for travel.  
 
o The WTO Secretariat examined other parts of the benefit package as part of this process and 
in the context of the procurement. Based on a recommendation from the MIMC the Director 
General agreed to  place an individual cap of CHF  2,000 on alternative th erapies while 
retaining the CHF  6,000 cumulative cap.  
 
o A primary mechanism f or controlling costs is to maintain or increase the "healthy" population 
that does not use the maximum benefits every year. A variety of measures can be taken to 
promote a healthy culture and prevention amongst employees and retirees. The exact 
amounts of medical costs that have been avoided or the extent to which the cost for a chronic 
illness has been reduced cannot be defined. Nevertheless, the positive impact on medical cost 
reduction and individual productivity of the workforce cannot be underestimated . 
 
o Discouragement of unhealthy behaviours and promotion of wellness through in house 
initiatives as well as through products offered by the provider of the WTOMP. Increased 
vaccinations as well as other preventative screenings have been identified as poten tial areas 
where the WTO could have a positive impact on the rate of cost growth. These would also 
reduce absenteeism due to illness.  
 
o As part of the procurement, the WTO Secretariat inquired as to the effect on the premium of 
adding 100% coverage for prescribed or over the counter vaccinations as well as smoking 
cessation medication. The selected insurer indicated that it would not increase the premium 
but might have a positive impact on long -term costs by preventing the onset of expensive 
diseases suc h as lung cancer, emphysema, measles, meningitis, etc. The Director -General 
accepted the MIMC's recommendation to augment the coverage for vaccination and this took 
effect with the new contract on 1 January 2017.  
 
o The Secretariat is restructuring its medic al service to include a physician who will be able to 
provide some primary c are and prescribe medications. This should reduce costs on the 
WTOMP and the WTO as staff will not necessarily need to leave work for routine matters.  
 
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