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Minutes 06-28-10 MINUTES OF THE BOYNTON BEACH INSURANCE COMMITTEE MEETING HELD ON JUNE 28, 2010, AT 2 P.M. IN THE LIBRARY PROGRAM ROOM, BOYNTON BEACH, FLORIDA MEMBERS PRESENT: Pat Sholos, Benefits Administrator Sharyn Goebelt, Director Marylee Coyle, Assistant Director Hanna Matras, Planner Chuck Magazine. Director Kalem Mahd, Blue Collar Union Representative Pete Mazzella, Deputy Director Scott Blasie, Administrator Philip Svehla, Intern Henry Diehl, Union Representative Kurt Bressner, City Manager Catherine Cherry, Recording Secretary Skip Lewis, White Collar Union Representative Robert Kruse, Firefighters' Union Local 1891 Larry Lederhandler, Firefighters' Union, Local 1891 Tim Howard, Assistant Finance Director Barry Atwood, Finance Director Maggi Woodall, Finance Administrator Willis Representatives: Renee Schindler, Willis Sue Weising, Willis, Janice Pontlitz, Willis Human Resources Human Resources Human Resources Planning and Development Risk Management Utilities Utilities Code Compliance Human Resources Police Department City Manager City Clerk's Office Code Compliance Fire Department Fire Department Finance Finance South Central Regional Wastewater Treatment and Disposal Board Ms. Goebelt opened the meeting at 2:04 p.m. Self-introductions were made. Ms. Goebelt explained at the last meeting that the members were made aware there were more claims paid out than premiums paid into the plan. Bids were issued and five responses were received. The City Commission would make a decision regarding the City's medical insurance plan for the next year. A handout was distributed and the April and May 2010 claims were reviewed. The claims were much better than the prior months. Willis had not recalculated the financial projections to determine the impact; however, the report reflected the loss ratio dropped from 119% to 98.7% in April. In May, the ratio dropped to 81.7%. This was significant because if Willis received authorization from the City to negotiate with the current carrier 1 Meeting Minutes Insurance Committee Boynton Beach, FL June 28,2010 or the other respondents, the lower claims would help drive the final decision regarding the renewal and the associated cost. The high-cost cases were reviewed which reflected the impact the large claims had on the plan. Blue Cross Blue Shield tracked claimants exceeding $50,000 in claims. They also attempt to initiate case management with enrollees having high claims; however, case management was voluntary on the part of the enrollee. The medical renewal, the marketing process, how it worked and what Willis found were reviewed. Willis issued an RFP for fully and self-insured medical plan proposals. They requested the carriers match the current plan, provide proposals to put in place a deductible on the coinsurance that would provide for office and hospital visit co-pays, have no co-pays, and a 4th option to give a reduction in the cost and what type of plan would yield a reduction. During analysis of the responses, the partially self-funded plans were more expensive than the fully-insured plan. Willis conference called the team and City Manager and it was agreed staying fully-insured at this time made sense for the City. The City Manager requested Willis focus on the Cigna plan. The current plan renewal rate came in at 34.6% over the current rate and was no longer on the table. The City recognized they have Collective Bargaining Agreements up for renewal and the Firefighter agreement had one year remaining in the contract with a reopener for insurance. The remaining agreements indicated the insurance may be amended from time-to-time. Ms. Goebelt noted the City could not afford the current plan. An inquiry was raised regarding the partially self-insured plan being more expensive and whether it took the clinic into consideration. It was explained a clinic was more effective in a self-funded environment and was more of a long-term solution and it was not feasible at this time because it required up-front funding. Ms. Schindler noted it was also not cost effective in a fully-insured environment. Willis reviewed the administrative fees to administer the plan in a partially self-funded environment; they estimated what the stop-loss premiums and fixed-costs would be, and the first-year paid claims. The total of the first-year cash outlay was compared to what the renewals would be and the renewals on the fully-insured plans were less expensive on an annual basis. The carriers want the business, they assumed the risk if the claims rocketed, and it was to the City's advantage to stay fully insured this year. A multi-year contract was suggested, but none of the carriers agreed to it. The second proposal from Blue Cross Blue Shield reflected the cost would increase by 26%. If Willis were authorized to negotiate with them it was possible the increase might be diminished. Overall, the City still had a 103% loss ratio, which meant the carrier would still incur a loss. 2 Meeting Minutes Insurance Committee Boynton Beach, FL June 28, 2010 There had been brief prior discussion the team was considering having a separate policy, apart from the City's, for dependents. Ms. Coyle clarified that pertained to if an employee left as opposed to COBRA. An inquiry was also made about receiving pay-in- lieu-of benefits, which would allow employees to be covered under a spouse's plan. Willis explained that could only occur with employees who did not have dependents on the City's plan. Ms. Goebelt indicated it would have to be negotiated in the Collective Bargaining Agreements, because it indicated the City would pay for insurance. In a larger group it could be of benefit to maintain the size of the pool, but the City would want to retain healthy individuals. There was a question regarding the out-of-pocket expenses and whether they were per calendar year. It was explained the options under consideration puts in place a deductible, which the current plan did not have. It would increase the out of pocket limits. Co-insurance is applied to the out-of-pocket maximum and copays did not count towards the deductible. Option 1 of the handout was reviewed. A question was raised about diagnostic tests. The following information was given: If the tests were done during the office visit as part 'of a routine, it was covered. There was a $200 copay if one went to a hospital or a freestanding facility. There would be a $50 copay for major diagnostic tests such as MRls and PET Scans. The Blue Cross Out-of-Network had a $1,000 deductible for a family. The co-insurance was 40% which could be balance billed. This was consistent with the current plan. It was emphasized that if an employee was going to an in-network provider, they should never be balanced billed. There was discussion about hospital stays. If an in-network provider admitted an individual to an in-network hospital, tests would be performed at the hospital. There would be reviews of those tests conducted, in some cases, by an out-of-network provider. If the service was processed as out of network, the employee could request it be reprocessed as in-network because the test reviews were beyond the employee's control. This would not occur automatically, but that was typically how it was handled. Several "what if' questions were posed and answered. There was confusion about the co-pay and the difference between an ER visit at $50 and Hospital visit at $200 or free- standing facility charges for diagnostics. An emergency room visit was when you have a life-threatening emergency. Anything that happened when one visited the emergency room would be covered. Willis would obtain clarification on the $200 hospital charge. One suggestion was also made to raise the emergency room co-pay as a deterrent to individuals just walking in to an emergency room as opposed to going to urgent care or their primary physician. It was observed the fees were the same with all of the plans. The Cigna plan was reviewed and it was noted the deductible was per plan year, which avoided anyone having two plan deductibles in one calendar year. It was explained the 3 Meeting Minutes Insurance Committee Boynton Beach, FL June 28, 2010 new plan had an unlimited lifetime maximum. Mr. Magazine expressed his understanding the new reforms would do away with the unlimited maximum. It was noted the plan was written and filed for an unlimited benefit. Cigna has a broad network and within the network, a specialist network or the Cigna "Condensed Network" provider (CCN). If an employee used a CNN provider, the copay would be $25. If a non-CCN doctor was used, the copay would be $30. The plan featured an unlimited Wellness Program which matched the current plan. When needing diagnostic tests, the onus was put on the employee to call the various facilities to determine the contracted rates and to use the facility with the lowest rates. "STEP" Therapy was when a physician writes a prescription. The insurance carrier requires a generic drug to be used before a brand name drug because their research indicates the generics are effective and less costly. If the generic drug was not effective, the brand name could then be used and the insurance carrier would pay for it. Individuals who have gone through that process would have their prescriptions remain unchanged. Ms. Woodall noted there were individuals making only $17 per hour. The cost of the insurance would be increasing 7.2%. With the maximum out-of-pocket expenses for a family being $5,000, it would be a hardship. Willis pointed out a family of 3 would have the same maximum as a family of 2 people. It was also noted the deductible was $250 per person. A family of two would have a $500 deductible and a family of three would be $750. The financial exposure was limited by the out-of-pocket maximums so if something catastrophic occurred, the employee was not looking at being buried in debt by thousands and thousands of dollars. Willis tried to give as much information as possible regarding prescriptions. One can go to Costco without being a member for prescriptions. It would require a bit of thought and legwork on the part of the employee. A great deal of education was needed to help individuals manage the out-of-pocket cost. The Cigna network compared to Blue Cross Blue Shield had more access to medical providers than the current plan. A Disruption Analysis was done to determine where employees went for care over the past twelve months, what the claims were, and a comparison showed there was a variation. There would be some people in the network with Blue Cross Blue Shield that may have to shift to a new provider. Of the 92% of the services that were in network with Blue Cross Blue Shield, 85% would be in the Cigna Network. Of the 98% of in-network claims 92% were for Cigna. Some employees would need to make a decision whether they wanted to pay more to stay with their current because they were out of Cigna's network or not. Willis would need authorization to negotiate with any of the carriers on behalf of the City. Ms. Goebelt requested feedback from the members. She advised the City was 4 Meeting Minutes Insurance Committee Boynton Beach, FL June 28, 2010 interested in pursuing negotiations with Cigna. She also announced the City Manager was also interested in pursuing Gap coverage. Gap coverage was an indemnity plan that paid lump sum benefits for outpatient surgical and inpatient hospital services. The plan would pay per occurrence, and there were different levels of plans. It would pay the employee a portion of their deductible and copays to help the out-of-pocket costs. They were individual insurance plans either paid for by individuals or the City, similar to the AFLAC plans except it was an Allstate financial plan. There were different plan options and the premiums were low. It would be about $20 per month to cover a $500 in-hospital and $250 outpatient facility family benefit. Mr. Bressner had requested Willis run the numbers on the Gap coverage recognizing the Cigna plan was different than the Blue Cross Blue Shield plan. The reality was the City was facing a 34% or 26.9% increase versus a 7.2% increase. The difference was not going to be closed through negotiations with Blue Cross Blue Shield. With the plan change, if there were actions the City could take to buffer some of the impacts, the City would consider them. That was the purpose of Willis being asked to look at options including Gap coverage as a way to mitigate the situation. The City would have to go to a deductible. It was unheard of to not have a deductible and the change was not easy. Mr. Bressner explained he could justify the 7.2% increase with the additional costs such as Gap coverage to the City Commission. Staff must understand the secret was to be more informed consumers and use the medical services more intelligently because the employees were a cost participant, and enrollees should participate to the best of their ability. That component also had to be part of the roll-out of any plan change and be a core component. Mr. Bressner did not like the increases: he liked Blue Cross Blue Shield, but as a taxpayer, he could not justify the increase. He recommended not negotiating with Blue Cross and dealing with Cigna. The figures were the fiscal reality and he was still trying to put the budget together. He appreciated the work the Committee had done over the last year. Mr. Bressner explained he wanted to provide the best possible hospitalization and medical plan there was. There were no significant changes and mammograms and colonoscopies are covered under Wellness. If the City buffered those expenses, he was receptive. His thoughts were the City would purchase the coverage for everyone since it was a cost-effective way to provide additional protection. There were many different options and the premium would vary depending on the coverage. It was also more cost effective for a larger group. There was a brief discussion about other options for dependents such as Florida Kids Care. Willis agreed to assist with obtaining dependent coverage for the employees and they would not load the cost. 5 Meeting Minutes Insurance Committee Boynton Beach, FL June 28,2010 Composite rates were if the City chose to purchase the coverage for all employees on the plan instead of having individual rates based on age, also known as age bands. Allstate composite rated it so each employee had one rate and each employee and spouse had another rate. If the City did not purchase the coverage and employees paid for it individually, the premium would be paid for on age bands. Ms. Goebelt requested the members give their comments to determine whether there was consensus. Willis would be negotiating with Cigna and she requested the members be specific as to what should be negotiated. The following comments were received: 1. When negotiating with Cigna, the City try to negotiate a better spread on emergency services. 2. Hospital services and outpatient services had a $125 cost and 20% after the deductible. It was suggested the co pay be lowered or eliminate the copay for urgent care, but still have a deductible. It was thought Blue Cross would not come down to match the Cigna cost. 3. Negotiate some of deductibles and try to negotiate out of the 20% deductible and raise the copays for the out-of-network costs. Willis noted when the copays are reduced or eliminated, the cost goes up. Cigna could afford to buy the business because of the copays. 4. Negotiate the 20% deductible down. 5. Negotiate with Cigna and check on the Gap coverage to see which is more cost effective. 6. With the GAP coverage, the co-pays would be offset by the cash indemnity plan. The 20% deductible would still remain. A cultural shift was needed. 7. With the Gap coverage, the employee would have to file a secondary claim. Human Resources would enroll them and administer it. 8. The 7.2% increase with Cigna was realistic and the Gap plan would help. 9. A self-insured plan could be implemented in the future. 10. There were unnecessary trips to the Emergency Room. The cost and better education could assist with the financial spreads. 11. The urgent care provider chains were on the Cigna participating provider list. Others facilities would be researched. 6 Meeting Minutes Insurance Committee Boynton Beach, FL June 28, 2010 12. Negotiate with Cigna and pursue the Gap plan. Get flyers to the employees about education. 13. Negotiate with Cigna to keep costs as low as possible. Negotiate for Gap coverage. Some individuals want to manage their health care more. 14. Pursue Cigna. 15. Offer a benefit to employees who do not have a certain amount of claims or offer next year's deductible at no charge. Would like a benefit for being healthy. 16. Using Cigna made sense. If there was only have one dependent there would be a $500 deductible. The maximum out of pocket expense per family was $5,000. 17. Ms. Goebelt explained the two representatives from the Firefighters' Union could not comment but expressed their opinion to stay with Blue Cross Blue Shield. 18. The Police Union representative indicated they would consider Cigna. 19. Go with Cigna. Cigna added back the Wellness screenings and mammograms. Try to obtain Gap coverage. 20. Mr. Bressner recommended Willis try to negotiate the rate with Cigna and include the Gap coverage to 8.5% or 9% combined. There was discussion that insurance companies purchased the coverage for the first year and then increased the next year. Willis explained that was not uncommon to see. They would requests a maximum increase for year two from Cigna. It was unusual to request a guarantee for year two, but they would know the limit of the increase on the second year which would help provide protection. If the increase was high, the City could proceed with a partially self-funded plan. Ms. Goebelt explained Willis was authorized to negotiate with Cigna to try to reduce the cost and negotiate the Gap coverage. The goal was once the decision was made, the item would be put on the agenda on the July 20th meeting and open enrollment was scheduled for August 11 and 12th. There would be a mandatory meeting and a mandatory 45-day timeframe to transition to the new plan which would become effective on October 1,2010. Ms. Goebelt thanked all for attending the meeting. The consensus of the committee was to use Cigna. 7 Meeting Minutes Insurance Committee Boynton Beach, FL June 28, 2010 There was no other business to discuss and the meeting was closed at 3:55 p.m. ~~~ Recording Secretary 070110 8