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HomeMy WebLinkAbout06-20-07 Chapter 172 Employee Retiree Insurance and Benefits Board Meeting Minutes Chapter 172 Employee Retiree Insurance and Benefits Board Meeting Minutes Wednesday, June 20, 2007 The Chapter 172 Employee Retiree Insurance and Benefits Board Meeting was called to Order at 5:42 pm by Robert Swanagan. Attendees: Clark Askins Matt Daeumer Michael Dolby Juliane Graham Sammy Jacobs George Van Dyke Steve Valerius Robert Swanagan 172 Board Member 172 Board Member 172 Board Member 172 Board Member 172 Board Member 172 Board Member 172 Board Member Staff Representative Absent: Karen Beerman Guest: Kathy Clark, HRH Consultant Donnie Wright, HRH Consultant Robert Swanagan called the meeting to order at 5:34 pm. Robert thanked the Retirees and active employees for attending the meeting to get information about the Medical Insurance and the process being used to evaluate the Request For Proposals (RFPs) that had been submitted. He also stated that all Chapter 172 Board members would be available after the meeting to receive input from meeting attendees about the Medical Insurance and the process used to select another carrier. The Minutes of the June 7, 2007 Chapter 172 Meeting were reviewed for approval by the board. Motion was made by Clark Askins to accept the minutes as written and seconded by George VanDyke. The motion carried. 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. Question Matt Daeumer: Do you know what we have averaged for the last three years on Disease Management? Answer Kathy Clark: We haven't received that information. We did ask for it. Once we have it we will re- populate the spreadsheet. Question George Van Dyke: Can you explain Stop Loss Benefits? Answer Donnie Wright: When you are in a self-insured plan it is very wise to buy Stop Loss Insurance. Which means you will cover the claims up to a certain point. But if you have a very large claim Stop Loss coverage pays the rest. Stop Loss is generally purchased by an independent company. Claim Fiduciary: Service purchased to deal with the employees and their claims and if there is a dispute regarding a claim. The Claim Fiduciary has the final word in terms of claim determinations. Aetna provides the service on a mature basis, which means at the end of the contract if you have claims run-off they will cover them. These are claims that are incurred prior to the end of the contract. Question Robert Swanagan: We have had claims that fell in this category when we left TML and I was told that after a certain period of time the old TML was not liable to pay these claims after six months. Do we have something to protect us from this and is this something we should insist that a future carrier specifically spell out? Answer Donnie Wright: Yes it is something you need to consider and it is normally longer than six months. It is normally twelve months. Network Discounts: We ask all of the carriers to tell us what their average Network Discounts were in the Houston area including La Porte. We wanted to know what it was for the physicians, for in-patient and outpatient claims. For example with Humana 52% is their discount. Therefore, if a Doctor's claim was for $100 the discount knocks it down to $48.00 to be paid to the Doctor. In the middle section "eligible bill claims" which is not what the City of La Porte paid. It is what the hospitals and Doctors billed the insurance company. This is the allowed cost which is the actual cost the City of La Porte paid in 2006. It generated a claim cost saving in excess of $50,000. When you look at a total claim cost of $2,500,000; $600,000 is a big number. As we analyze proposals we look at two things: Administrative Cost and Network Discounts. We summarize that information in a schedule to show you where they rank financially. Aetna is number one with Administrative cost of $173,000 and zero differentials. The next closest one is TML with $133,000 in Administrative cost and $211 ,000 in differentials. This is a difference in cost of $344,000 with TML and $173,000 with Aetna. By the way, Humana Network is about $600,000 dollars higher in terms of cost. As we look at Networks we have 100 Doctors in your current plan. As we look at all five proposals the number of Doctors in the plans ranges from 94 in Humana, 95 in Blue Cross, 92 in Aetna and 75 in TML. Question Robert Swanagan: Previous to Humana being our insurance carrier we could order Prescription Drugs on a three month basis. Have you guys looked at that component with these proposals? Comment Sammy Jacobs: We can do this right now but it is at the same price there just isn't discount for bulk orders. Comment Kathy Clark: When we go out for Best And Final Offer (BAFO) we will have that question answered for you. Donnie Wright Presentation continued: The last page of the Drug Analysis shows "What In." This means the carrier is neutral because the City can decide what tier it wants to place a drug in. There are eighty-three (83) drugs listed here. We have calculated what the average tier is for these drugs. For Aetna it is 2.1. This means Aetna has the highest cost to the consumer. The lowest is Pfizer which has a 1.6 the rest of them are in the 1.7 to 1.9 range. Question Matt Daeumer: I understand these tier numbers, but do they all have the same co-pays? Answer Donnie Wright: That is a plan design issue and the City sets that. It can be whatever you want it to be. Question Matt Daeumer: So, we set the co-pays on the Doctors visits and the prescription drugs? Answer Donnie Wright: The bottom line is yes. Obviously there is a cost consideration that goes with each of those decisions. Once you decide which carrier you are going to go with they will sit down with District Representative and go thru plan design. They will be able to tell you plus or minus what percent that impact has on your claims. Comments Matt Daeumer: If we went out with regards to the current co-pay that we have. The reason I am asking is because right now some maintenance drugs that are in tier three cost $61 with a $50 co- pay. It is not much ofa benefit especially after the provider discount to see the Doctor is $52 with a $35 dollar co-pay it becomes a $17 dollar benefit. If you see the P A it is a $35 co-pay and with a $37 bill you get a $2 benefit. Answer Donnie Wright: These are the kind of questions that need to be brought to the table during plan design after selecting a carrier. You are self-insured and have a lot of flexibility there. Donnie Wright Presentation continued: The next slide is very proprietary information. We asked the carriers what their average discounts were. However, we have a verification process that we use. We get a sample of claims from your current carrier and we send those claims to the other carriers and we ask them to re-price those claims using their Network Discount. Humana's discount was 36% which is very close to what they say it was. Blue Cross showed the discount at 62% which is higher than what they had previously stated. Aetna was 62% which is right at what the others were. The last three would not disclose that information by hospital. We do a number of different analyses to look at carriers. I know this is overkill when it comes to analysis. However, it is something the Plan Administrators needs to look at. It is the cost that each plan is going to charge to plans for drugs. They are all different by networks. This shows what those percentages are. Kathy Clark's Comments: One of the things in the financial analysis is the rate guarantee. A lot of carriers like Blue Cross/Blue Shield are not offering a multiple year rate guarantee. This means after one year we might have to start all over again and do all of the analysis over again. Humana offered a one year rate guarantee, Aetna TML and Pfizer are all giving us a three year rate guarantee. Comment Donnie Wright: When Kathy is talking about rate, she is talking about the Administrative fees not the premium. Kathy Clark continued: Summary Plan Description: These (SPDs) are basic descriptions of your plan. They are offered at no additional charge by most of the carriers and they are also online. Enrollment Meetings: They are provided. Robert wants the new carrier to come out and inform everyone employee and retiree about the new product well in advance of Open Enrollment. Usual and Customary: U&C is basically a percentage for non-network charges in that geographical area. Normally it pay 90% of that amount, after that the employees pays out the remainder amount out of pocket. Maintaining records after termination: This is very important because it tells us what happens if the plan terminates. TML is the only one that cuts-off at the time the plan terminates. The other carriers will maintain the records up to three years after the plan termination. Disease Management: We ask about 32 disease states. Question: Juliane Graham What is disease management? Answer Kathy Clark: One of the things we do is attempt to bring specialist in a given expertise to assist employees in managing a disease. Diabetes Centers of America is currently working with the City of La Porte employees in a specialty area. They have physicians and other sources of assistance. Health Risk Assessment: This is a lengthy questionnaire that is a tool that allows the employer to determine the health state of the workforce and offers personal assistance in dealing with health related issues or concerns. We want to reduce shock claims. Centers of Excellence: These are primarily transplant organizations. Comment Robert Swanagan: I noticed in Centers of Excellence Humana provided information that showed they discounted 50% ofthe billed charges. Nobody else provided that information. Answer Kathy Clark: No they didn't. We don't go into transplant services and try to pull more information out because not many people in your plan are going to be a candidate for transplant. That's why we didn't try to pull this information. Shared Rebates: As you know there is considerable concern about Kick -back dollars by pharmaceutical companies in the medical arena. Most companies will share their rebates with the City which will lower the Administrative cost. Wellness Programs: This is a preventive action. Flex Spending Accounts: This allows active employees to put aside pretax dollars for various medical expenditures. All employees in the Flex Plan will receive a Flexible Spending Account Statement. Question George Van Dyke: The Flexible Spending Account statement. What is that? Is it how much they have accumulated in the account, how much they have spent in the account? Answer Kathy Clark: This is a statement that is sent out to employees that will show what kind of account balance they have, what they have spent and provides details of what has been deducted from the account. Administrative Reports Robert Swanagan: Robert passed out information to the Chapter 172 members present that detailed the TML required training on June 23, 2007. Robert passed out a copy of an E-Mail he received from Jack Owens former City Manager that expressed some concerns he wanted considered by the Chapter 172 members as they evaluated the RFP responses. In talking with Kathy and Donnie they feel like they will have another report ready by July 5,2007. We will confirm if this date will work and wanted to preview this date with each of you. Comments Sammy Jacobs: I would like to remind each of you that the minutes of our meeting are posted on the City website. Comments Matt Daeumer: I would like to ask if by the next meeting you will have a timeline for everyone as to what the process will be. Robert Swanagan moved that the meeting be adjourned at 6:38 pm. Motion was made by Michael Dolby to adjourn the meeting. Matt Daeumer seconded the motion. Respectfully submitted, ~_L.~t)-~ Robert Swanagan, Human Resour~e\ Staff Approved this 5th day of July, 2007.