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Minutes 07-15-09 MINUTES OF THE INSURANCE COMMITTEE HELD ON JULY 15, 2009 IN THE FIRE/POLICE TRAINING ROOM BOYNTON BEACH, FLORIDA PRESENT: Sharyn Goebelt Marylee Coyle Patricia Sholos Tim Howard Larry Lederhandler Robert Kruse Carole Doppler Scott Blasie Gary Chapman Craig Anthony Kalem Mahdi J.C. Julia Human Resources Human Resources Human Resources Finance Fire Fire Purchasing Code Compliance Police Police Utilities Fire Willis: Mike Meredith, Renee Schiwdler, Sue Wiesing, Allison Frederick I. Welcome Sharyn Goebelt, Director, Human Resources, welcomed the attendees and began the meeting at approximately 8:30 a.m. Self-introductions were made. II. Dependent Audit Results Pat Sholos, Benefits Administrator, provided audit results reflecting there were 41 drops from the plan: 14 involuntary and 27 voluntary. There were 33 drops from the dental plan and 15 from the vision plan. Some drops also occurred with the medical plan. It was noted individuals who were ineligible would cause the plan's claims experience to increase. III. Health Risk Assessment - Summary Findings Marylee Coyle, Assistant Director, Human Resources, reviewed the March 26, 2009 Health Fair Health Risk Summary Data provided by Blue Cross/Blue Shield. The major risk factors identified included: stress, weight, nutrition and lack of exercise. Of the 129 members identified with risk factors, 18.5% had five or more "at risk values". IV. Update on Claims - Willis The cost increased 19%. There were $880K in claims which was a 23% cost increase. Long term, the goal was to have partial self-funding in the future. Mr. Meredith advised several municipalities saved money by staying fully insured for another year. When the economy stabilized, the plans would again be reviewed. The cost would be significantly better than what it should be. 1 Meeting Minutes Insurance Committee Boynton Beach, FL July 15, 2009 The claims resulted in a 23% to 24% increase in the cost of the plan. Ms. Goebelt advised when they budgeted for the increase, only 20% was budgeted. V. Update on the Bid Process Ms. Goebelt reported the City went out to bid. RFP #055-1610-CJD - Rx - Cancelled It was reported only one bid was received and since the proposal was not viable, staff cancelled the RFP. It was also noted when staff issued the bid for the medical, dental and vision, they cancelled the pharmacy bid. RFP #056-161 O-CJD - Medical, Dental, Vision - ranking The City issued an RFP for fully insured benefits and self-insured benefits to match the existing plan with no increase in deductibles or co-pays. Responses were received from CIGNA, FSAI (First Service Administrators), Humana and Loomis. Blue Cross submitted their response, which reflected a 10.9% increase. If the City did not go out to bid, the increase would have been 23%. A rate comparison was distributed. Dental bids were received from the current vendor, MetLife, Florida Combined Life, Florida Blue Cross/Blue Shield, Cigna, Delta Dental and Humana. The best plan was Humana as their rates were lower by 3.67% for the same plan. Mr. Meredith explained Humana purchased a company called Comp Benefits a few years back. Between Humana and Comp Benefits, they had the largest network in Florida although the network was slightly different than the MetLife network. They have a good reputation in terms of dental coverage and the job they do. The discounts were also significant. The advantage to the employee was if they used a participating provider, it would stretch the dollar, and there would be no balance billing. Additionally, Willis has the opportunity to return to the vendors and negotiate an even lower rate. MetLife would have increased their cost 6%. One issue was quality, the second issue was to reduce the cost to the employee to help offset the cost of the medical insurance. Staff recommended cancelling Met Life and going with Humana for dental. Vision would remain the same with the same vendor because they came in at 9.86% lower for the premium than they had in the past. 2 Meeting Minutes Insurance Committee Boynton Beach, FL July 15, 2009 Ms. Goebelt indicated there was a short timeframe to do the bid. Willis was instrumental in meeting the timeline. She reported the City's medical rates were one of the best and they have one of the best plans. The increase was 10.9%, but it was not 23%. VI. Committee Q&A The monthly rate for Cigna was $634, and $527 for Blue Cross. Humana was $588. Ms. Goebelt agreed to forward the figures from all the vendors to the meeting participants. Mr. Meredith explained if the City continued on their current trend, Blue Cross/Blue Shield would lose money next year. He explained how insurance companies take risks and the City was being subsidized going into this year. At the end of the year, they would target a loss ratio of about 80%. The difference between fully insured and self-insured was explained. An insurance company would project what their claims would be and insurance would kick in after the claims reached 120% of what they anticipated the claims to be. The cost to fully insure was $8.1 M versus partially self-funded at $8.5M. It was also explained over the long term, removing the wellness cap would save the City money. Ms. Goebelt explained how to read the handout. It was noted the pooling charges were included in the cost of the handout. Ms. Goebelt would meet with the City Manager. A recommendation would be made to the City Commission and the item would be put on the City Commission agenda for August 4, 2009. She indicated if the Fire Department does not agree with it, they could always pull the item. The information had to be reviewed by Legal which was expected to occur on Thursday. VII. Recommendation Comments from each group were received. Mr. Anthony explained he could not commit without talking to the Police membership first. Ms. Goebelt explained she would be forwarding information to him with an explanation why they would not be moving to self-insure at this point. Mr. Chapman inquired if a recommendation was coming from the membership by some kind of official vote or whether it was a recommendation from the committee based on what was presented at the meeting. In making the recommendation, there really was no vote or a quorum from the collective bargaining units from the City. It was strictly a recommendation from the committee based on the work. He asked if a vote was needed if he approached the membership with the figures. Mr. Anthony expressed he was looking for feedback from the membership and to afford them the opportunity to 3 Meeting Minutes Insurance Committee Boynton Beach, FL July 15, 2009 see the figures. After the members reviewed the information, he would notify Ms. Goebelt of the response via email. Ms. Goebelt reiterated the committee did not have the final say, rather they only made the recommendation. The City Manager would make the decision but he always reviewed the feedback from the committee. The members were polled and there were no objections to proceeding with the recommendation as presented. Mr. Anthony and Mr. Mahdi would notify Ms. Goebelt after checking with their members. There was discussion many companies were mandating a wellness plan. Mr. Meredith explained a plan could be designed to financially incentivize employees to do what they should as they found voluntary programs would have a slight impact on the results of healthcare costs. There could be strong financial incentives; however, a core plan should be established. Health risk appraisals and biometric screenings could be used. If the employee opted to partake in the activities, they would receive the reward. He explained, statistically, if employees were involved in those activities, the likelihood of them becoming healthier increased and the rate of cost increases could be minimized. At some point there would need to be significant changes. One small step was to take the $250 cap off the wellness program. It would be significant if it was removed because employees would be more proactive before a condition could become a critical illness. Mr. Meredith emphasized there needed to be a motivator and there was legal criteria that needed to be followed. As an example, the differential between the benefits and the contributions between the plan incentivizing employees to do things a certain way could not exceed 20%. Mr. Meredith had just modeled a program for a large health care system. There were also federal laws governing the models. Employees would have to earn entry into the plan. With the wellness, the employee paid 100% for the wellness, but had better access to the healthcare, which was provided at 100%. It was explained an underwriter reviews claims for the prior 12 months and then has a cut off. Willis requested the cut-off occur early in order to issue the RFP, which worked in favor of the City this year. The $880,000 claims would be in next years figures and the rest of the numbers would be unknown, but the trend was they were moving upward. A wellness program would take a three to five year period. Ms. Goebelt advised they had hoped to have a clinic but they needed to have funding. If they were self-funded they could perhaps use some of those funds. Risk Management was reviewing the issue because it encompassed workers compensation and wellness. Two individuals would need to manage the program which was costly. The City was reviewing many options. 4 Meeting Minutes Insurance Committee Boynton Beach, FL July 15, 2009 Ms. Goebelt invited the members to forward any questions to her and advised there was additional information available in Human Resources. The responses would be returned as soon as possible. There was a recommendation put on record that the committee should continue to meet once a month to discuss wellness initiatives. There was no further business. The meeting ended at 9:34 a.m. /1 '. , IIL.', tA , '. . "LI: I ,~ .' /. !\ ,t. I "-_ ~_ f\..Z' L~ v "--. . \..\... -' u u"-f . Catherine Cherry ( Recording Secretary 080309 5