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New Folder MINUTES OF THE BOYNTON BEACH INSURANCE COMMITTEE MEETING HELD ON JULY 14, 2008, IN THE FIRE POLICE TRAINING ROOM AT 3:30 P.M. BOYNTON BEACH, FLORIDA MEMBERS PRESENT: Sharyn Goebelt Carol Doppler Chuck Magazine Kalem Mahd Marylee Coyle Craig Anthony Juan Carlos Julia Mike Villamarin Skip Lewis Richard Stone Scott Harris, President Group Insurance Solutions Steve Barden, Insurance Consultant ABSENT: Barry Attwood Rob Eichorst Dave Friedberg Dean Kinser Pat Sholos Shawn Weeks Sharyn Goebelt, Human Resource Director, opened the meeting at 3:37 p.m. Self-introductions were made. The purpose of the meeting was to review the options for FY 08/09 benefits and obtain a consensus about what would be appropriate based on information from the consultants, budget limitations and the City. The information would be forwarded to the City Manager and the final decision for benefits would rest with the City Commission. Ms. Goebelt distributed information on the City's plans for review. Steve Barden, Insurance Consultant, explained the City's plans were on a hybrid split rate basis which meant the single rate for the City's current plans was blended and then the rates for adding dependents were split rates. The PPO (Blue Choice Plan) had been in effect for many years, but the HMO, and two Blue Options Plans were added later. Blue Option Plan 1748 was a non-standard (NS) plan and Blue Options Plan 1362 were offered for the first time last year. There was a pooling charge of $344K which the City paid to protect itself against claims for over $125K. If a claim came in over that amount it was not used in the renewal calculations The original renewal rates for the current four plans had a 16.6% increase. After further negotiations, that rate was revised to 9.6%. 1 Meeting Minutes Insurance Committee Boynton Beach, Florida July 14, 2008 The employer cost was based on a combination of factors. The City paid 100% of the employee only fees which excluded retirees and COBRA continuants, who paid their own premiums. The payroll deductions for continuing the current plans were reviewed. In an effort to save money, the City reviewed its options to change the plans which would result in a change in benefit. The current plans could be continued or the City could use a combination of them or have a stand-alone plan. Four alternate plans were developed based on a combination of existing plans. Alternate Plan 1 was a stand-alone plan which would be to change the Blue Options 1748 Non- Standard Plan to a Standard Plan and a prescription plan with co-pays of 10/25/40. . Alternate 2 was a dual option plan which combined the Blue Option 1748 Plan with the 10/25/40 Prescription Plan, and a new plan Blue Option 1766 with a different prescription plan. Alternate 3 was a triple option plan which encompassed both Alternate Plans 1 and 2 and offered the HMO. Alternate 4 was a dual option with the Blue Option 1748 and the HMO 8 Plan. The HMO 8 Plan included in Alternate Plan 4 was a Not Federally Qualified (NFQ) plan. This meant that any conditions the employee might have prior to entering the plan would not be covered. The current HMO plan included pre-existing conditions. Ms. Goebelt explained Scott Harris, President, Group Insurance Solutions, and Steve Barden, Insurance Consultant, would no longer be working with the City after September 30, 2008. The City has gone out to bid and would be picking up 100% of the fee for the new consultant. Employees also would no longer be paying the 2% commission on their dependent coverage. A benefit comparison sheet was distributed reflecting the current and alternate plan benefits. It was noted one of the plans the City offered was not on the handout. Mr. Harris advised Plan 1748 was the current non-standard plan, and the richest plan offered by Blue Cross. When it was originally offered, the City wanted to make it easier for employees wanting to transition from HMO into Blue Options. They paid 4.5% extra to buy down the co-pays to match the HMO Plan 1. The four types of physicians that had the lower co-pays were Family Practice, General Practice, Internal Medicine and Pediatricians. All other physicians were considered specialists, including Chiropractors. Urgent Care Centers, if they participated in the plan, had a specialist co-pay. The doctor office visit co-pay covered whatever was done in the office, even blood draws. Ms. Goebelt explained the employee should make smart choices, and Mr. Harris explained if employees used the plan in a way to save them money, the co-pay would be lower. The methodology used to develop an alternative plan was reviewed. Mr. Harris explained all Blue Network plans used the same network of doctors, had the same rules and the same national access to healthcare and there was still an extremely high level of service on the Standard 1748 plan. Benefits included $10 and $20 co-pays for doctor and specialist office visits, zero deductibles, coinsurance plan for surgeons, physicians and ambulance services, and 2 Meeting Minutes Insurance Committee Boynton Beach, Florida July 14, 2008 a $250 co-pay for the hospital. Using that plan they matched it with a 10/25/40 Prescription Plan. Plan 1766 Alternate Plan had higher co-pays. They were $20 for doctors, $35 specialists, and $100 for independent diagnostic testing facilities for MRI's and CAT scans. The plan could be matched with whatever prescription plan the City wanted. The coinsurance had a zero deductible for charges subject to the coinsurance, but the employee then paid 20% on charges subject to the coinsurance. The hospital co-pay for Option 1 contracted hospitals was higher, the out of pocket limit was higher and emergency room co-pays were higher. Mr. Harris explained there were also alternatives for the HMO plan. To compare the HMO Plans they reviewed Federally Qualified and Non-Federally Qualified benefits. A Federally Qualified HMO covered pre-existing conditions. The current PPO plans had a pre-existing clause for new members which could be waived, provided the members had continuous credible coverage. Mr. Harris explained the current HMO 1 FQ plan the City offered had lower rates compared with proposed HMO Plan 8 NFQ. Office visit co-pays, under the new HMO, would increase and the hospital co-pays were higher, but the idea was if you reduced benefits under the Blue Options program, if the HMO was continued there should be a comparable reduction in benefits in the HMO Option as well. The plan also would be matched with a prescription plan. The proposed Blue Choice PPO Plan had the same rules as Blue Options; open access to doctors, no primary care physicians, or specialist referrals. It required authorization for advanced imaging and it was a fairly simple plan. The plan had a $300 deductible and the insurance paid 90% and the employee paid 10%. It used the Blue Choice network and had national access to health care without getting authorization. The three PPO's the City had were the traditional network, Blue Choice, which was about 95% of the traditional network and the Blue Options network, which was a subset of Blue Choice, which was about 83% of the Blue Choice Network. There were some differences between the Blue Choice Network regarding benefits such as the adult physical exams were not covered under Blue Choice, but were covered under all the Blue Option Plans. Blue Options had prescription drug co-pay benefits for 5/15/30 for generic preferred and not preferred. Under Blue Choice, prescriptions were out-of-pocket at the pharmacy, applied to the deductible and then filed for reimbursement. The Blue Options could have an integrated pharmacy benefit, which could be an advantage because the pharmacy accepts responsibility for getting paid, and the employee just pays the co-pay and did not have to file a claim. An important distinction between the PPO and HMO, was the geographic access to medical care. The rules for the PPO were easier than the HMO, but the HMO plan had greater access. It was a regional plan encompassing Okeechobee, Martin, St. Lucie, Palm Beach, Dade and Broward Counties. If the services needed were located in the region, the employee had to go there. The PPO plans had identification cards which indicated they could use any Blue Cross network across the country. He explained insurance is purchased for when someone is really sick, not for the co-pays. 3 Meeting Minutes Insurance Committee Boynton Beach, Florida July 14, 2008 Scott Harris, President, Group Insurance Solutions, explained making the changes had an impact on the rates. One alternative was to use the standard version of Blue Options. When it was combined with the 10/25/40 prescription plan it incurred a 0.1% increase. Using Plan 1748 there was a 4% discount, and a 3% discount on the employee rate because of the way the blending was done. The City offered four plans but they were all offered at the same rate. Blue Cross PPO was the most expensive plan offered and if it was removed, it resulted in a reduction of 3%. Blue Cross had built in an anti-selection load, and that is removed if one plan is offered. That was how the reduction was from 9.6% to 1.1 % Alternate 2, Plan 1766 was a lower benefit plan than 1748, but individuals paid for dependents, and it had a 50% benefit on prescriptions, which pushed to use mail order. Plan 1748 Standard Version had a 1.1 % increase. The anti-selection load would be added because the City has two plans. Whether it was better to pay 1 % more on the entire population so individuals could receive lower cost dependent coverage was debatable and was an option. Alternate 3, a Triple Option included the Blue Option 1748, 1766 and HMO. HMO 8 Plan was 5% more expensive than the Blue Option 1748 in the alternative category and it changed the anti-selection load. Alternate 4 had the Blue Options with HMO Plan 8 was another possibility and now had a half percent load as opposed to a one percent load. Mr. Harris explained those plans were what the committee was discussing over the past several meetings. He explained, with the blended rate, if more than one plan was offered, Blue Cross, at the City's request, could blend only on the single rate cost and if two plans were offered, they would need to determine the weighted average rate. There would be one more step, only if more than one plan were offered. The plans went to unblended rates about two years ago. The Blue Option network was larger than the HMO, but approximately 95% of the HMO doctors were in Blue Options. Physicians cancel and join networks all the time and it is not known how long they would want to remain in the network. Mr. Harris likened the network as concentric circles with Blue choice being 95% of the Traditional and then Blue Option having about 82% of Blue Choice. In Blue Options, that network is used, but if they go to a doctor who was not in Blue Options or Blue Choice, they still have access to the traditional network through the product. If the doctor is not in Blue Options, it would be paid at the out-of-network benefit level, but the larger issue was Blue Cross would pay that doctor what they would pay a traditional doctor, and thr fee was pre-negotiated. There was an 18% chance the doctor would go from an in network benefit level to the out of network benefit level, and there would still be a $3K out of pocket level. If a doctor is not in any network, employees could be balanced billed. How the percentage of change was calculated was reviewed. The Medicare Blue Option was a separate plan offered to the City's retirees to enroll in and it was advantageous for retirees if they were on Medicare because it had a much lower premium. The rates for this plan were offered with the understanding it would be offered, and it would take the retirees claims experience off the City's, which assists the City. This item would go before the City Commission on August 15' 2008. 4 Meeting Minutes Insurance Committee Boynton Beach, Florida July 14, 2008 Stephanie Kahn, City employee inquired who established the committee. The Committee had been meeting for years and a notice circulated to departments to send an office representative. The committee was required by the collective bargaining agreements referenced by contracts. It has changed over the years, and in the past they had greater participation. Department heads were always notified at the beginning of each year that the meetings were ongoing. Oanielle Crissinger, City employee, asked if the original HMO was considered as a stand alone option. The reduced benefit HMO was already 5% more expensive than the Blue Option Plan, and if there was a reduction in Blue Options, there would be a comparable benefit reduction in the HMO. Ms. Goebelt explained one of the main tasks was to find where to cut costs. If they kept all the plans, the increase would have been 9.6% to the City and for dependant coverage. The estimated savings going to one plan would result in a savings of $500K. The Commission's mandate was not to cut jobs. The employee raises were in the budget, and the committee thought it was important to cut costs as opposed to jobs. The budget cuts and the economic environment required such measures to be taken. Carol Doppler commented if they remained with the current plans and incurred the $500K budget cut, divided between the employees it would run about $46 per month for out of pocket expenses, exclusive of dependent coverage. It was explained there were six collective bargaining agreements, and they would have to renegotiate all six contracts. There were no changes in the vision and dental coverage; however, it was noted those benefits would be reviewed in the future. The City would be going out to bid for physical services and long term disability. The emergency room co-pay was discussed and when you have a contracted hospital but an out of network doctor there. The plans are a point-of-service plan. During emergency room services the patient does not have control over what doctor would be attending. With an HMO, the insurance carrier is required to pay actual charges if it's a non-participating provider. Under a PPO, the insurance company pays the claim based on the status of the provider. This puts pressure on the insurance company to get the hospital based physicians to participate, as well as the on-call specialists. On a PPO, the patient can be balanced billed. The committee noted in researching the issue, it was a bandaid fix. Any ideas were welcome. If the City moved to one plan, they would be priced out in the next two to three years. They checked with other local agencies and they were still at the top with similarly sized agencies paying a lot more for a lot less. Self-insurance and a clinic were all discussed. Consensus Ms. Goebelt asked if there was a consensus to go to the Medicare Blue for the retirees. The members were polled and a consensus was reached. Consensus Ms. Goebelt asked if there was consensus to migrate to the 1748 Blue Options Standard Plan. The members were polled and a consensus was reached. 5 Meeting Minutes Insurance Committee Boynton Beach, Florida July 14, 2008 There being no pending business to discuss, Ms. Goebelt closed the meeting at 4:44 p.m. r C~t~~ Recording Secretary 073008 6