06-20-07 Chapter 172 Employee Retiree Insurance and Benefits Board Meeting Minutes

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HRH Consultants Kathy Clark and Donnie Wright presented information to Chapter 172 members about the Health Insurance RJIP. Kathy Clark noted we were going out for proposals because the three year contract period presently with Humana would end December 31, 2007. Because the City is a self-funded plan we wanted to seek firms that were more aggressive regarding provider discounts. This means the higher the discount is the more it saves the plan money and saves money for the City employees as well. There were five proposals received and they had been evaluating the proposals received for about two weeks. There had also been some issues with Humana Administration that we thought could be eliminated with a new carrier. When we went out for proposals we did not want to change the plan too much. We wanted to have four plans as are currently offered by Humana. We wanted the same Prescription benefits and co-pays. We also wanted a Flex Plan which is offered to all Active employees. HRH Consultant Donnie Wright presented information about RFP respondents: Donnie indicated he would not be presenting information about the plan design or next year's premium cost. We will be hiring a company that will be administering your claims. They will also provide certain services to the employees such as Customer Service, Website and Disease Management. You are also buying the network which is the group of Doctors, hospitals and other facilities that each carrier individually contracts with. Later I will present information about the Doctors in the networks of the five carriers that responded to your RFP. Another important aspect of the Network is the Network Discount. Each carrier goes to Doctors and hospitals and contracts independently with them. The larger companies that have more bodies that are insured have a better negotiating position. Some of the larger companies like Aetna and United Healthcare bring more bodies to the negotiating process. Therefore, they can negotiate higher discounts from the hospitals. You will see significant differences between discounts contracts which has a significant impact on claim cost. The first slide shows some of the financial numbers that we look at. Some of the information we gave to the Chapter 172 members that you will not see is considered proprietary. One such item is the Network Discount. Here are some definitions that I want to familiarize you with: Administrative Cost: This is what the carrier charges the City of La Porte to administer claims. The cost range from $140,000 with Humana which does not include Disease Management to a $18, 000 costs by Aetna for their full-blown Disease Managemen1 program. Blue Cross Disease Management cost $179,000.