Presented by: Chuck Petruccione Brown & Brown of CT, Inc. AHM - - PowerPoint PPT Presentation

Presented by: Chuck Petruccione Brown & Brown of CT, Inc.

15+ years of cooperation equals:

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• AHM Youth Services
• Town of Andover
• Andover Schools
• Town of Hebron
• Hebron Schools
• Town of Marlborough
• Marlborough Schools
• Reg. School District No. 8
• More members – over 1,000 lives
• Better coverage
• Stabilized pricing

• The Consortium has been working to move from

its current fully-insured arrangement to a self- funded one for almost two years

• In the simplest terms, the Consortium will be

responsible for paying the claims of its members, instead of passing that responsibility to an insurance carrier

• This move brings potential risk, and reward

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• The Consortium is looking to implement this

change upon renewal of its health insurance plan with Anthem on July 1, 2017.

• To accomplish this, the AHM Board and each

Board of Selectmen & Board of Education need to give their approval by April 13 in order to meet Anthem’s implementation deadlines.

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Potential Risk

• If claims run poorly, the cost may be greater
• Stop Loss Insurance is used to protect

against unexpected or catastrophic loss

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Potential Risk

Risk is reduced by using Stop Loss

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Aggregate Stop Loss Individual Stop Loss Caps the risk at 115% of projected claims.

Limiting Risk

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Stop Loss Insurance is purchased to limit unexpected claims

Potential Reward

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Savings

Fully Insured vs. Self-Funded Costs

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Fully Insured* Self-Funded**

$7,748,251 Expected Medical & Rx Claims $6,728,640 n/a

• Med. & Rx 15% Claims Corridor

$960,694 $48,000 Broker Commission $48,000 $148,739 Health Insurer Fee (ACA) n/a $2,385 PCORI Fee (ACA) $2,385 n/a Individual Stop Loss $545,457 n/a Aggregate Stop Loss $70,282 n/a Self-Funding Admin Fee $190,180 n/a CT Public Health Assessment $6,194 n/a TPA Fee $75,000 $155,092 State Taxes $10,775 $425,257 Pooling Charges n/a $375,155 Administration / Margin n/a .

$8,900,494 Total $8,637,608

* Numbers estimated based upon Anthem’s Fully Insured Renewal for Region 8, 2017-18. ** Numbers estimated based upon Anthem Self-Funded Quote for Region 8 for 2017-18 plan year.

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Savings at 115% Claims: $262,885 Savings at 100% Claims: $1,223,579

Fully Insured vs. Self-Funded Benefits

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Fully Insured Self Insured Insurance Carrier Anthem Anthem Physician Choice Yes Yes Hospital Choice Yes Yes Pharmacy Benefit Yes Yes Co-pay/Deductible Amounts Yes Yes New Mandates Yes Yes Same Coverage Yes Yes Premiums & Claims Paid Anthem Consortium

Only the funding vehicle has changed!

Analysis of Actual Cost vs. Self-Funded Quotes

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2012-13

Fully Insured Premium = $8,083,852 Claims + Fees – Lg Claims = $7,613,628

Savings = $388,601

2013-14 Fully Insured Premium = $8,801,481 Claims + Fees – Lg Claims = $7,653,897

Savings = $1,147,583

2014-15

Fully Insured Premium = $8,793,347 Claims + Fees – Lg Claims = $8,197,281

Savings = $596,065

2015-16

Fully Insured Premium = $7,987,118 Claims + Fees – Lg Claims = $7,841,191

Savings = $145,926

Potential four year total savings, approximately

$2,300,000

Members Should Not Notice Any Differences

• No impact on day-to-day services for member
• Keeps everything with Anthem, no changes to

provider networks, doctors or plan details

• Keeps all benefit levels the same as in the

current fully-insured plan

• No changes to personnel policies, collective

bargaining agreements or state mandated coverages.

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• Here are the entities that would be involved if

the consortium moved to self-funding:

• Each Town/BOE/AHM – Each member entity and its employees.
• Anthem – Would serve as administrator of plan and stop loss

provider.

• Brown & Brown – Health Insurance Broker/Consultant
• Audit Firm – Identity to be determined. An audit firm would need

to be retained each year to analyze the plan’s financial stability.

• Third Party Administrator (TPA) – Identity to be determined. The

group may decide to hire a TPA to help smooth the transition from the fully insured process to a self-funded one.

• This is not a TPA like you may be familiar with in handling FSAs or HSAs.

This would strictly be a behind-the-scenes company helping to facilitate the financial transactions between the consortium and Anthem.

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17 COMBINED CLAIM BANK ACCOUNT Each Entity is responsible to pay the monthly allocated rates for their employees into a combined Claim Bank Account. The carrier will request payment for the adjudicated claims on a routine schedule and the administrator will be responsible to pay the expenses of the health plan monthly.

RHAM AHM Youth Services Marlborough BOE Town of Marlborough Andover BOE Town of Andover Hebron BOE Town of Hebron

Consortium Agreement

The consortium will modify the existing document that governs how we operate as there are additional financial considerations that need to be addressed.

Trust Agreement

A separate trust document is being drafted to govern the group’s joint bank account and other financial considerations.

Banking Agreement

The consortium would enter in to an agreement with a bank, which would hold the group’s finances in a joint account.

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Administrative Services Agreement

The consortium will enter in to an agreement with Anthem to use its network of doctors and claims administration platform.

Stop Loss Agreement

The consortium will enter in to an agreement with Anthem to purchase both aggregate and individual stop loss protection against any large or “shock” claims.

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• Many towns and school boards have already

made the switch to self-funding.

• Though each group’s experience is unique,

those who have had the proper protection and have budgeted appropriately have been very pleased.

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• Some local districts that are self funded
• Hartford
• Willimantic
• Windsor Locks
• Manchester
• Coventry
• Haddam
• Reg.17
• Westbrook
• Groton
• Colchester
• Montville
• Ledyard
• Killingly
• Mansfield
• East Hartford
• Windsor
• Farmington
• Avon
• New Britain

Next Steps

• Finalize Consortium Agreement
• Finalize Trust Agreement
• Approval from boards
• Selectmen
• BOEs
• AHM Board
• Educate members

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Thank you for your attention!

• Rev. SV 3/09