Fiscal Year 21 Department Budget Employee Total Compensation - - PowerPoint PPT Presentation

Fiscal Year 21

Department Budget Employee Total Compensation

Bureau of Human Resources February 18, 2020

BHR Partners to Achieve Other’s Goals

• Organization

Effectiveness

• Total Rewards
• Compliance

D.Seeley Commissioner

• T. Steckel
• Dir. Benefits

E.Zeller

• Dir. HR Centers of

Excellence OPEN

• Dir. Human

Resources M.Deyo-Amende

• Cood. Special

Projects M.Barnett Legal Counsel

2

No Budget Change is Recommended

3

93% 92%

91.4% 91.6% 91.8% 92.0% 92.2% 92.4% 92.6% 60 65 70 75 FY 2018 FY 2019

FTE Utilization

Budgeted FTE Utilized FTE 2.8% 15.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Turnover

BHR Turnover

FY 2019 FY 2018

18.1% 31.9% 44.4%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% Jan 2020 5 Years 10 Years

BHR Retirement Eligibility

$295,389 $7,121,983

BHR Funding

General Funds Federal Funds Other Funds

4

Executive Branch Employees

1/3 of Employees Have 15 or More Years of Service

6% 24% 22% 22% 23% 3%

Age

18 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65 + 23% 21% 23% 25% 8%

Years of Service

< 3 3 - 6 7 - 14 15 - 29 30 + 5

13.5% 12.4% 10.5% 10.8% 12.2% 14.4% 13.5% 13.3% 13.5% 13.9% 12.0% 14.6% 14.3% 2.8% 2.7% 4.2% 5.0% 4.9% 4.4% 4.1% 3.6% 3.3% 3.0% 3.2% 3.4% 2.8%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Statewide Turnover Unemployment

Turnover Rises As Unemployment Drops

6

Pay Reported as Second Highest Reason for Leaving

Reason for Exit Percent Responding Primary Reason Retirement, Family Obligations, etc. 37% Pay 17% Job Location 7% Lack of Advancement Opportunities 6% Work Environment 5%

382 157 72

FY19 Internal Movement

Promotions Transfers Demotions

8.4% of employees changed jobs within state

7

State Faces Significant Retirement Risk

14.4% 27.9% 41.0%

DENR, 22.60% BOA, 39.90% BOA, 58.90%

0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% Today Five Years Ten Years

As of Jan 1, 2020

Statewide Highest 8

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Compensation

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Governor’s Budget Recommends No Increase

Governor Noem has recommended no salary policy increase for FY21 based upon revenue projections.

Recruitment and Retention

Culture of State Government Work Environment Type of Work Personal and Professional Development Career Advancement Compensation and Benefits

Many Factors Impact Attraction and Retention

11

Market Analysis and Pay Ranges Best Comparison

Market Minimum Market Value Maximum

80 - 90% of market value 50th Percentile of market data 110 - 125% of market value

Illustration of a pay range Artificial Minimum

Currently 69 - 78%

• f market value

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92 95 855 1,508 1,610 1,590 830 493 123 17 14 4 1 1 200 400 600 800 1,000 1,200 1,400 1,600 1,800

Position In Range

2.2% 35.3% 62.5%

97.8% of State Employees Paid Below Market

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666 People in SDSEHP and Medicaid in FY19

73 438 123 543 100 200 300 400 500 600

Adults Children

Medicaid Recipients in SDSEHP

Dec-19 FYI 2019

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$0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 Single Parent One Child Pregnant Mother with One Child Family of four

Medicaid Income Threshold

Income Threshold 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 Single Parent One Child Pregnant Mother with One Child* Family of four

Count of Employees below Medicaid Threshold

Count of Employees below Threshold

*female employees only

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Benefits

Fully Employee Paid

• Dental Insurance (8,920)
• Vision Insurance (8,379)
• Accident Insurance (5,392)
• Hospital Indemnity Insurance (3,699)
• Short-Term Disability (4,836)
• Supplemental Life Insurance (5,626)
• Dependent Life Insurance (2,902)

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Employer and Employee Share Benefits Package Cost

Account Base Plans Available

• Flexible Spending Accounts (1,097)
• Health Reimbursement Arrangements (1,945)
• Health Savings Accounts (9,236)

Fully Employer Paid

• Life Insurance ($25,000)
• Fee for Account Based Plans
• Health Plan Opt Out Payment
• HSA Seed Money
• Vacation, Sick, Holidays

Employer and Employee Paid

• Health Insurance

Health Plan 27,000 lives Auditors CVS/Caremark Segal Group BHR & Governor’s Office Health Management Partners DAKOTACARE Staywell Dialog Direct KEPRO

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Managing SDSEHP Requires Complex Partnership

Self-funded Plan

• Avoids insurers built-in profit margin
• Allows for greater flexibility in plan design
• Employer assumes the risk

Direct Contracts

• Lower inflation risk
• Recognizes geographically dispersed employee base
• Requires higher levels of administrative effort

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SDSEHP Designed to Save Money and Control Costs

Total al covered e employees, p pre-65 r 5 retirees, s spouses, d dependents, an and C COBRA p par articipants o

• n J

Jan anuary 1, 1, 202 2020*

*As of January 1, 2020, there were 425 opt outs.

12,781 4,272 9,814 26,867 5,000 10,000 15,000 20,000 25,000 30,000 Employees Spouses Dependents Total Members

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Coverage by Type

Covered Employee and Dependent Count Nearly Equal 70% 30%

Health Plan Enrollment

High Plan Low Plan

53 13 43 5 499 67 37 31 50 29 501 19 147 86 64 127 86 165 47 89 41

3,026

103 735 267

4,354

57 47 93 382 538 16 38 49 111 29 15 26 52 92

1,422

126 6 794

2,166

243 245 25 205

16

58 42 309 29 141 37 66 90

2,840

982 90

Chart includes covered employees, pre-65 retirees, spouses, dependents, and COBRA participants; there are 673 members of the health plan who live outside South Dakota.

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Dispersed Workforce Complicates and Raises Costs

22 $0.M $5.M $10.M $15.M $20.M $25.M $30.M $35.M $40.M $45.M $0-$499.99 $500-$4.9K $5K-$19.9K $20K-$49.9K $50K-$99.9K $100K-$999.9K $1M-$1.99M $2M or > 14,093 8045 2,472 631 289 199 < 5 < 5

Employer Cost Millions Number of Members w/Claims within Employer Cost Range

Health Plan Cost Distribution

The Plan Spent $718 Per to Cover 86% of Members

Less than 1% of Covered Drive 34% of Medical Cost

$30.3 $35.0 $43.3

$82.6 $84.6 $84.4 0% 20% 40% 60% 80% 100% FY2017 FY2018 FY2019

High Cost Claimant Spending by Fiscal Year

HCC ALL OTHERS In Millions

139 171 206

27,005 27,311 26,985

0% 20% 40% 60% 80% 100% FY2017 FY2018 FY2019

Number of High Cost Claimants by Fiscal Year

HCC Count All Others

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Top 5 Diagnosis Categories Account for 68% of HCC Spend

57 $11.4M 26 $5.4M 24 $4.9M 14 $4.6M 9 $3.2M

Cancer Diseases of the circulatory system Diseases of the nervous system and sense organs Diseases of the musculoskeletal system and connective tissue Infectious and parasitic diseases

FY19 High Cost Claimant Spending Analysis

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SDSEHP FY19 Top Contributors to Rx Trend Overall drug class Net Cost Contribution to Net Trend CVS BoB Analgesics -Anti-inflammatory $6,641,429 3.90% 1.20% Anti-cancer $3,071,236 2.90% 0.80% Antidiabetics $4,787,412 2.20% 1.50% Specialty Drugs Top Contributors to Rx Trend Oncology $3,552,396 4.10% 0.90% Rheumatoid Arthritis $6,152,789 3.20% 1.00% Psoriasis $2,001,535 2.70% 1.30%

Specialty Drug Users and Costs Higher than Peers

SDSEHP Key Rx Metrics FY19 FY19 SDSEHP FY19 Peer Total Prescriptions 225,994 Generic Dispensing Rate (GDR) 87.00% 86.80% Average Monthly Utilizers as % of Members 31.50% 41.70% Specialty Utilizers as % of Members 1.20% 0.90% Specialty % of Total Net Cost 55.10% 45.40% Specialty % of Total Prescriptions 1.30% 1.00% % Specialty Member Cost Share 3.40% 2.40%

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BoB Rank State Rank Drug Name Specialty Class Total Net Cost % of Specialty Cost Total Utilizers Total Rxs Net Cost per Rx

1 1 Humira Rheumatoid Arthritis $4,424,928 24.14% 84 763 $5,799.38 10 2 Copaxone Multiple Sclerosis $1,186,619 6.47% 22 204 $5,816.76 2 3 Enbrel Rheumatoid Arthritis $1,052,924 5.74% 30 227 $4,638.43 3 4 Stelara Psoriasis $1,002,155 5.47% 16 57 $17,581.66 7 5 Gilenya Multiple Sclerosis $965,501 5.27% 12 122 $7,913.95 4 6 Tecfidera Multiple Sclerosis $865,711 4.72% 13 114 $7,593.96 30 7 Rebif Multiple Sclerosis $802,323 4.38% 10 108 $7,428.92 5 8 Revlimid Oncology $547,889 2.99% 4 36 $15,219.13 8 9 Cosentyx Psoriasis $529,432 2.89% 10 73 $7,252.49 236 10 Rydapt Oncology $415,282 2.27% 2 15 $27,685.49 Total $11,792,764 64.34% 203 1719

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10 Drugs Account for 64% of Specialty Costs

60% 63% 58%

45%

0% 10% 20% 30% 40% 50% 60% 70%

SD FY17 SD FY18 SD FY19 Staywell Book

• f Business

Percent Completion

28

Wellness Participation Remains Strong

29

76% 57% 51% 75% 45% 44%

0% 20% 40% 60% 80% 100% Weight Cholesteral Blood Pressure

At risk (moderate & high) Risk Factor

Past Current

Risk Factors Decrease for Many

30

50% 44% 6% 54% 41% 5%

0% 20% 40% 60% 80% 100%

Low risk (0-2 risks) Moderate risk (3-5 risks) High risk (6+ risks)

Past Current

Numbers with Multiple Risks Falling

FY19 Estimated Cost Avoidance Avoidable Health Care Cost Avoidable Indirect Cost Total Change All Repeat Participants (N=10,247) Total Change per Repeat Participant Total Increase (Decrease)

• $1,645,500
• $2,382,400
• $4,028,000
• $393

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Better Wellbeing Avoids Higher Spending

FY19 Plan Changes

• Deductible Increases
• HDP OOPM Increase
• HDP Add Coinsurance for Brand Name Drugs

FY20 Plan Changes

• Deductibles Increases
• OOPM Increases
• Increase Rx Co-pay, Except Generics
• LDP Rx Deductible Increase
• LDP Rx OOPM Increase

32

Past Plan Changes Focused on User

Must complete wellness qualifications to earn any Health Savings Account (HSA) seed money.

33

FY21 Change Focused on Improving Health

SDSEHP Deductible Rising Faster than National

$300 $500 $750 $850 $1,000 $1,500 $2,000 $1,800 $2,000 $2,200 $643 $736 $871 $1,153 $1,188 $1,838 $2,086 $2,349 $2,486 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 SD Low Deductible SD High Deductible Average Deductible* Average High Deductible* 34

*National data from the Kaiser Family Foundation Employer Health Benefits 2019 Annual Survey

South Dakota

South Dakota

South Dakota South Dakota $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Deductible-Low Indiv Deductible-High Indiv Deductible-Low Family Deductible-High Family

Deductible

South Dakota Public/Private 10K-20K EE Regional Public/Private all sizes Government-all sizes National

35 *Segal/Medical/Rx Benefit Benchmarking Report January 2020

Low Deductible Plan Not Aligned With Market

36

South Dakota South Dakota

South Dakota South Dakota $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 OOPM-Low Indiv OOPM-High Indiv OOPM-Low Family OOPM-High Family

Out of Pocket Maximum (OOPM)

South Dakota Public/Private 10K-20K EE Regional Public/Private all sizes Government-all sizes National

*Segal/Medical/Rx Benefit Benchmarking Report January 2020

Out of Pocket Max Higher than Market

37

$0 $4,000 $8,000 $12,000

Nebraska Minnesota Iowa South Dakota Wyoming

Low Plan-Individual Coverage*

Employer Contribution Employee Contribution

$0 $4,000 $8,000 $12,000

Nebraska Minnesota South Dakota

High Plan-Individual Coverage*

Employer Contribution Employee Contribution *Segal Medical/Rx Benefit Benchmarking Report January 2020

SD Contributes More for Individual Coverage

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$0 $10,000 $20,000 $30,000 $40,000

South Dakota Iowa Minnesota Nebraska Wyoming

Low Plan-Family Coverage*

Employer Contribution Employee Contribution

$0 $10,000 $20,000 $30,000

South Dakota Nebraska Minnesota

High Plan-Family Coverage*

Employer Contribution Employee Contribution *Segal Medical/Rx Benefit Benchmarking Report January 2020

Family Contribution Lower than Other States

39

$0 $2,000 $4,000 $6,000 $8,000

Minnesota Iowa Wyoming Nebraska South Dakota

Low Plan-Individual Coverage*

Employee Contributions Out of Pocket Costs

$0 $2,000 $4,000 $6,000

Minnesota Nebraska South Dakota

High Plan-Individual Coverage*

Employee Contributions Out of Pocket Costs *Segal Medical/Rx Benefit Benchmarking Report January 2020

Employee Costs Highest Among Neighbors

40

$0 $5,000 $10,000 $15,000 $20,000

Minnesota Iowa Wyoming Nebraska South Dakota

Low Plan-Family Coverage*

Employee Contributions Out of Pocket Costs

$0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

Minnesota South Dakota Nebraska

High Plan-Family Coverage*

Employee Contributions Out of Pocket Costs *Segal Medical/Rx Benefit Benchmarking Report January 2020

Covered Families Pay Much More

• Contracting with vendors
• Claims volatility
• Risk mitigation
• Intro of new, very expensive specialty drugs
• Medical inflation more than 2x greater than overall inflation

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Plan Faces Several Challenges

Location Melanom a Rate / 100k Regional Rank Oral / Pharyx Regional Rank Colon Regional Rank Prostate Regional Rank Non- Hodgkins Lymphoma Regional Rank United States 30.1 12.0 40.5 97.1 18.3 Iowa 25.4 7 12.9 3 44.3 3 103.7 6 19.8 3 Minnesota 53.9 1 12.4 4 38.7 5 104.5 5 21.1 1 Montana 53.2 2 11.6 6 38.9 4 112.2 2 17.7 4 Nebraska 40.4 5 12.0 5 44.3 3 108.7 4 17.6 5 North Dakota 31.8 6 13.1 2 45.1 1 114.8 1 16.2 7 South Dakota 44.1 3 13.3 1 44.4 2 111.9 3 20.0 2 Wyoming 43.2 4 10.1 7 34.1 6 102.6 7 16.3 6

SD Has Higher Rates of Some Cancers

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ONE-TIME INCREASE OF $82.50 RECOMMENDED ONE-TIME INCREASE OF $232 NO PLAN CHANGES RECOMMENDED PLAN CHANGES AND RATE INCREASE OF

$8,470+$82.50 $10,071+$232

$738

Employer Rate $8,552.50 $10,303 $10,071 $10,809 Actual Estimated Estimated Estimated FY 2019 FY 2020 FY 2021 FY 2021 Total Revenue $130,118,610 $149,517,701 $148,046,488 $156,830,840 Total Expenses $145,846,524 $149,516,154 $157,323,087 $156,823,087 Current Year Over/(Underrecovery) ($15,727,914) $1,547 ($9,276,599) $7,753 Prior Year Over/(Underrecovery) $15,836,221 $108,307 $109,854 $109,854 Cumulative Over/(Underrecovery)**/Reserve Level $108,307 $109,854 ($9,166,745) $117,607 IBNP/Allowable Reserve Level $15,544,100 $16,128,000 $17,208,000 $17,208,000

(Incurred But Not Paid included in claims amount) **Cumulative Over/(Underrecovery) is the analysis of the revenues and expenses since the beginning of the program.

When this line is zero we have collected enough to pay all liabilities for this program that would be paid out in the next fiscal year. Any amount above zero is considered reserve.

5% Expense Increase Expected in FY21

Request $5.5M Increase for FYs 20 & 21

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General Funds $1.5M Federal Funds $0.5M Other Funds $1.1M Total $3.1M

FY21 FY20

General Funds $4.1M Federal Funds $1.7M Other Funds $4.2M Total $10.0M