COUNTY OF KANE Human Services Committee Presentation Agenda - - PowerPoint PPT Presentation

COUNTY OF KANE Human Services Committee Presentation

Agenda

• Global Group Introduction
• Historical County Plan Performance Overview
• County Health Care & Cost Containment Strategies
• Current Strategies
• Enrollment/Dependent Management
• Medical Advocacy Program
• Wellness Program Progression
• Medical Plan Funding Arrangement
• Health Care Reform Impacts

Global Group Introduction

Global Group

• Awarded County’s benefits consulting

contract in 2009

• 30+ years working with the Public Sector
• Extensive relationship with all major

carriers, TPAs, stop-loss providers, and health care advocacy organizations

• Superior understanding of Collective

Bargaining relationships

• Leader in compliance and consulting

relative to legislative changes impacting public sector benefit plans

Global Group

• Advanced understanding of underwriting

processes and plan funding arrangements

• Unique awareness of the impact tax

revenue streams have on plan funding and design.

Historical County Plan Performance Overview

Renewal History

Actual vs. Trend Comparison

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Increase

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

2007: Plan changes to HMO and PPO plans

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

2008: Wellness Program Introduced

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

2010: Wellness Contributions Introduced

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

2012: Plan changes to HMO and PPO Plans

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013 Trend Actual

2013: Plan changes to HMO and PPO Plans

Renewal History

Actual vs. Trend Comparison Medical Cost PEPM

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2005 2006 2007 2008 2009 2010 2011 2012 2013

Plan Increase – Trend vs. Actual

Trend Actual

Trend PEPM increase: 107% Actual PEPM increase: 55.3%

Cost Containment Strategies Current Programs

Cost Containment

Bona Fide Wellness Program

• Claims cost is the largest component of

health care premiums

• Wellness program identifies conditions at

an early stage to help prevent & reduce large claims

Cost Containment

• Wellness Program

– Beginning in 2008, participating employees and their spouses are screened by a 3rd party vendor (Interactive Health Solutions) via blood draw – Employees receive a confidential, personalized individual health score comparing their results to AMA guidelines

Cost Containment

• Wellness Program

– From 2008-2009, reward for participation was a contribution to a “wellness account” with BCBS – Beginning in 2010, a $50/$100 incentive was established to promote participation in the wellness program

Cost Containment

• Wellness Program

100 200 300 400 500 600 2008 2009 2010 2011 2012

Condition Discoveries

New Conditions Serious Conditions

10.0% 9.7% 1.0% 2.5% 3.1%

Wellness Participants Plan Increase

406 316 1624 1560 1547 2009 2010 2011 2012 2013

Cost Containment

• Wellness Program

Wellness Program What’s Next?

Wellness Program

• Since 2010, employees and their spouses

have received the wellness incentive premium credit simply for participating in the annual biometric screening with IHS.

• Each screened member has received an

individual score (“IHI Score”) from the screening with a goal score for the following year’s screening.

Wellness Program

• Suggested next step would be to move to

a compliance-based screening program, where members are required to meet or exceed their IHI goal for the following year.

• Compliance-based programs put the
• nus on the member to manage and

improve their health to continue receiving the financial incentive.

Cost Containment

Health Maintenance Organization (HMO)

• HMO plans offer

– Capitated physician payments – Managed care – Superior facility discounts

Cost Containment

HMO Migration Strategy

• Cost reducing strategy to move employees from

PPO and HMO IL to HMO BA

– Began in 2010 – HMO BA premiums are 10% lower than HMO IL with same benefit plan design, and 30% lower than PPO – Dreyer Clinic (the most heavily utilized Medical Group) participates in both HMO programs

Cost Containment

BCBS Resources

• Condition Management

– BCBS outreach program to members with chronic conditions, such as asthma, COPD, congestive heart failure, coronary artery disease, and diabetes. – Case managers at BCBS helps members adopt healthier behaviors, set goals, and manage conditions

Cost Containment

BCBS Resources

• Condition Management

– 2012 Engagement

• 152 Total Members Targeted by Outbound calls
• 25 New Members Targeted
• 13 New Members Engaged with BCBS
• 52% Engagement Rate of New Members

Cost Containment

BCBS Resources

• 24/7 Nurseline

– Employees have access to a 24/7 nurseline with experienced clinical staff to provide immediate decision support to help members select the most appropriate course of treatment

• 3 Inbound calls to BCBS’s Nurseline in 2012

Cost Containment

BCBS Resources

• Treatment Cost Estimator

– On BCBS’s Blue Access for Members, members can estimate out-of-pocket and total costs of treatment and procedures at different network providers based on their plan provisions.

Cost Containment

BCBS Resources

• Blue Star Rating

– PPO and HMO hospitals and medical groups have been rated based on national, state, and care standards for quality and safety

Cost Containment Strategies Enrollment/Dependent Management Strategies

Enrollment Management

• Opt Out
• Spousal Carve-out
• Dependent Audit

Dependent Audit

• Full-scale audit process to ensure that only

eligible dependents are covered on the County health plan.

• Eligible dependents include:

– Spouse (or civil union) – Dependent children up to age 26 – Disabled children over the age of 26 – Eligible military children up to age 30

Dependent Audit

• Over a 10-12 week period, a third-party

vendor sends 2-3 rounds of communication to employees with covered dependents requesting proof of dependency

• Documents can be mailed, fax, or

uploaded to a secure website (if offered)

• Employees and county are notified of

approval status

Dependent Audit

• Estimated ineligible dependents removed

from the plan during an audit: 3-8%

• Current dependents on the plan: 1,628
• Average annual cost per member: $3,000
• Potential savings: $0 - $390,000

(0-2.6% of premium)

• Audit cost range: $16,000 - $19,000

Cost Containment Strategies Medical Advocacy Program

Medical Advocacy

• Confidential program providing

independent cost advice and direction to employees experiencing a care episode.

• Designed to support employees and their

family members in utilizing health care, increase confidence in their health care decisions, and reduce claims cost to the plan.

Medical Advocacy

• When paired with a fully-insured PPO and

HMO dual offering like the County program, HMO participants would not be impacted by cost-savings assistance, as plan copays are pre-determined.

• PPO participants who utilize an advocacy

program could see reduced out-of-pocket expenses for non-copay driven services.

• Program would have to be strictly voluntary

for County PPO plan

Medical Advocacy

• Estimated cost PEPM: $4.50
• Estimated annual cost (PPO only): $29,862
• Given County’s arrangement with BCBS,

program success may be limited (East Aurora School District)

Medical Plan Funding Arrangement

Medical Plan Funding

Fully-Insured vs. Self-Funded

• Fully-Insured

– Pre-determined monthly premium per plan/tier paid to the carrier. – Allows for easy budgeting, forecasting and development of employee contributions – Carrier bears all risk, pays claims, then determines annual renewal based on experience. – This is the current arrangement with BCBS.

Medical Plan Funding

Fully-Insured vs. Self-Funded

• Self-Funded

– County bears the claims risk and pays claims. – Provides more control over plan design and renewal increases. – County could benefit from underwriting profit and premium tax in a good claims year, as

• pposed to a fully-insured arrangement, but

would be exposed to claim payments higher than fully-insured premiums in a poor claims year

Medical Plan Funding

Fully-Insured vs. Self-Funded

• Global performs a funding evaluation at

each renewal.

• Historically, self-funded claims liability and
• verall projected costs were unattractive

compared to the BCBS fully-insured renewals

• Recent stabilization of County claims may

make this move a viable option

Health Care Reform Impacts

Health Care Reform

Provision Effective Date Necessary Response

Insurance Exchange Notification

Summer/Fall 2013 (delayed from March 2013) The County must notify all employees that in 2014, Insurance Exchanges will be a means for purchasing health insurance. Global can help draft communication to employees.

Penalty for not providing coverage

January 2014 Based on full-time employee population of 1,226, the annual penalty would be 1,196 (eliminate first 30 employees) x $2,000 = $2,392,000.

Insurance that is “too expensive”

January 2014 If employees pay more than 9.5% of their income for insurance, they will be eligible for a subsidy at an insurance exchange. Based on the lowest annual cost for single coverage of $292.32 for the HMO BA, the threshold salary is $3,077.05. If the minimum cost of coverage to employees surpasses this 9.5% relationship, the County will face a $3,000 penalty for each employee who receives a subsidy at the exchange.

Insurance Exchanges

January 2014 Insurance Exchanges become a means for purchasing Health Insurance.

Health Care Reform

Provision Effective Date Necessary Response

Reinsurance Fee

January 2014 To account for new high-risk members being forced into the insurance market, carriers are implementing an annual fee of $63 per covered employee that will be levied to the plan sponsor. The PEPY fee will decrease on an annual basis. Estimated first year cost for the County is $71,820.

Automatic Enrollment

Pending (was January 2014) Since the County has over 200 employees, all new employees must be automatically enrolled in medical coverage after satisfying the waiting period. Global can draft employee-facing communication to make new hires aware of this provision.

Cadillac Tax

January 2018 Current annual cost of the most expensive plan (PPO Plan) is $7,582.80 for single coverage and $22,286.40 for family coverage. With the existing plan design, the annual cost by 2018 may or may not surpass the thresholds of $10,200 and $27,500, respectively (depending on future premium increases). While any penalties are set to be imposed to the insurers, it is likely that they will be passed to the groups. Plan design changes can help mitigate these penalties.