A. Health Plan Overview Health Plan Funding Plan Administration National Trends

Transcription

1 Brevard Public Schools Health Care Plan 1

2 A. Health Plan Overview Health Plan Funding Plan Administration National Trends B. BPS Plan History: C. In-House Fund Management D. Insurance Committee Process and Ideas 2

3 A. Health Plan Overview Health Plan Funding Plan Administration National Trends 3

4 Self-Funded Model Sources of Revenue Board Contributions Employee Contributions Interest Income Other sources Sources of Spending Medical Claims Pharmacy Claims Behavioral/EAP Costs Administrative Fees Health Care Trust Fund 4

5 The self-retention of risk in lieu of transferring the risk to a third party. Funding is actuarially projected to cover anticipated claims costs and administrative expenses. The employer assumes the financial risk for providing health care benefits. Self-funding and self-insurance are routinely substituted terms. 5

6 The employer pays a premium to an insurer for health coverage. Premium is due in advance and is actuarially projected to cover anticipated claim costs and administrative expenses. The insurer assumes the risk of providing health coverage. 6

7 Claims Administrative Expenses Stop Loss / Reinsurance Premium Taxes (Fully Insured) Margin (Fully Insured) 7

8 Fully Insured Self-Funded Payments Premium due beginning of month ASO fees beginning of month and claims as paid Claims Ratio 85% to 90% 90% to 95% IBNR Favorable Experience Unfavorable Experience Included in premium Profit to Company Loss for Company Kept in Employer account Surplus for Employer Made up by Employer 8

9 Size of the Group Stability of the Workforce Employer Cash Flow Tolerance for Risk Capability to Administer the Plan Discipline of Employer 9

10 10

11 Agriculture/Mining/Construction 35%* Manufacturing 66%* Trans./Communications/Utilities 58% Wholesale 43%* Retail 52% Finance 55% Service 49%* State/Local Government 66% Health Care 65% ALL FIRMS 55% * Estimate is statistically different from estimates for all other firms not in indicated industry 11

12 Save Money Avoid Some Regulations Ability to Carve Out Certain Programs Have Better Control of Plan Experience of Other Employers Plan Flexibility 12

13 Favorable Claims Experience Benefits Employer Avoid Premium Tax No Margin or Profit Employer Control of Reserves Improved Cash Flow Accumulation of Interest Plan Design Flexibility Carve-out Program Options 13

14 Assumption of Risk Additional Administration Requests for Plan Exceptions Determination of Plan Interpretation Potential for Inadequate Premium Setting Potential to Use Reserves for Recurring Expenses 14

15 Need to Actively Manage the Plan Eligibility Funding Arrangements Auditing Track Experience and Utilization Administer Benefits as Specifically Defined in the Plan Document Implement Programs that Will Improve Health Define the Administrative Services to be Provided by the TPA 15

16 Governed under Chapter 112, Section To obtain Office of Insurance Regulation approval, plan must show annual actuarial soundness. This requires 60-day reserve of BPS approximately $10 million. If the plan is not actuarially sound, the organization must submit a plan to amortize any unfunded liabilities and a description of actions taken to reduce unfunded liabilities. 16

17 Insurance Carrier Administrative Services Only (ASO) Independent Third Party Administrator (TPA) Employer Self-Administered Specialty Carve-outs Pharmacy Benefit Managers Behavioral Health Companies Disease Management Companies 17

18 Eligibility Maintenance Claims Administration Members Services Network Development Care / Utilization Management Disease Management Wellness Initiatives Stop Loss Claims Reporting Reporting and Performance Review 18

19 Systems Technology Data Security and HIPAA Compliance Network Composition and Discounts Care Management Activities Plan Design Flexibility Accuracy Customer Service Cost 19

20 Requests for Proposals Purchasing Cooperative with Brevard County Government Joint Selection Committee Schools & County 20

21 89% of Employers over 5,000 Employees Self- Fund Health Plans (76% of Employers over 1,000 Employees) Successful Characteristics Large Groups with Predictable Trends Stable Population Active Management of Plan Plan Needs to be Properly Funded and Run as a Fully Insured Plan Timely and Accurate Reporting is Essential 21

22 1. Higher Out-of-Pocket Cost 2. Use of Incentives to Stay Healthy 3. Adjustment to Plan Offerings 4. Changes in Prescription Drug Benefits 5. Eligibility for Coverage 6. Consumer-Directed Health Plans 22

23 Increase in Deductibles Increase Copayments Increase Coinsurance Eliminate Copayments Higher Out of Pocket Maximums Higher Cost for Out of Network Services Employee Contribution Increases 23

24 Wellness Communication Incentives for Wellness Activities Health Risk Assessments Tobacco-Free Workplace Condition Specific Programs Weight Management Diabetes Hypertension Smoking Cessation Stress Management 24

25 Movement Away from HMO Plans Reduction of Plan Options Restricted Network Plans Introduction of Onsite Clinics Provider Steerage Value Based Plan Design Medical Tourism Retiree Options 25

26 Emphasis on Generics Copayment Differentials Mandatory Generic Coinsurance on Brand Medication Dispensing Clinical Prior Authorizations Step Therapies for Certain Therapeutic Classes Higher Cost Share for Lifestyle Medications Management of Specialty Drugs Distribution Cost Share Consumer Assistance 26

27 Spousal Surcharge Dependent Audits Overage Dependent Verification Waiting Periods Definition of Benefits Eligibility Medicare Enrollment for ESRD and Disability 27

28 High Deductible PPO Plans Consumer Education and Engagement Health Savings Accounts (HSA) All Covered Services Must Apply Toward Deductible Employee Controls the Account Health Reimbursement Arrangements (HRA) Employer Determines the Services that Apply Toward Deductible Employer Controls the Account 28

29 Questions and Comments on Health Plan Funding Plan Administration National Trends 29

30 30

31 BPS Self-Funded Health Care Plan /1/00 1/1/01 1/1/02 1/1/03 Bd. Contrib. HMO $250/mo.; EPO $245/mo.; PPO $310/mo. Bd. Contrib. HMO & EPO 278/mo.; PPO $345/mo. Bd. Contrib. HMO & EPO $334/mo.; PPO $345/mo. Bd. Contrib. $468/mo. Reserves Balance: $(4,049,609) $(5,940,995) $(2,300,524) -2% claims decrease Bd. Lump Contrib. 6/30/00 $1.3M Bd. Lump Contrib. 6/30/01 $4.9M Bd. Lump Contrib. 6/30/02 $8M Self-Insured Plan Established Employee contributions increased 25% Salary Budget: % % % NOTE: Reserves balances provided by Wakely Consulting Group, Inc. are actuarial calculations and include IBNR posted every six months. 31

32 BPS Self-Funded Health Care Plan /1/04 1/1/05 11,200 Members 11,800 Members Bd. Contrib. $515/mo. Bd. Contrib. $546/mo. 1/1/06 1/1/07 12,400 Members 12,500 Members Bd. Contrib. $546/mo. Bd. Contrib. $524/mo. $ 2,474,368 $ 14,221,510 6% cost increase 19% cost increase $ 21,984,983 8% cost increase $ 26,105,218 8% cost increase Board calls for return of overfunding to employees Declining trust reserves trend presented Premium Holiday: $3.5M Board Savings $750K Employee Savings Reserves burn begins Avg. $500K/mo. Declining trust reserves trend presented Assumed opt-out funding = $1.2M cost/yr. PPO premiums reduced = $200K loss in revenue/year Board Reduces contribution: net revenue loss $1.7M/year % % % % NOTE: Reserves balances provided by Wakely Consulting Group, Inc. are actuarial calculations and include IBNR posted every six months. 32

33 BPS Self-Funded Health Care Plan 2008 Present 1/1/08 1/1/09 13,000 Members 13,500 Members Bd. Contrib. $524/mo. Bd. Contrib. $524/mo. 9/1/09 13,400 Members Bd. Contrib. $524/mo. 12/31/09 13,400 Members Bd. Contrib. $524/mo. $20,737,337 $11,100,000 16% cost increase 10% cost increase $4,500,000 10% cost increase $1,000,000 (est.) 10% cost increase trend Declining trust reserves presented Declining trust reserves presented $6M transferred to Operating Fund $3.6M transferred to Operating Fund Reduced interest income = $500K year on year Plan not in compliance with F.S guidance on 60-day surplus balance Salary Budget: % % NOTE: Reserves balances provided by Wakely Consulting Group, Inc. are actuarial calculations and include IBNR posted every six months. 33

34 Cost Containment Initiatives Medicare Part D subsidy Pharmacy rebates Medication management Third-party administrators from 3 to 2 Moved benefits calculations in-house In-house LOA accounts receivable Wellness Program cost reduction Total Programs in Place Specialty Drug Mgt. Program AWP reduction Total These Programs Plan Cumulative 890,000 1,900, ,000 1,400, ,000 80,000 60,000 4,910, ,000 1,000,000 $6,110,000 34

35 Brevard County Schools (Funding available for Claims Only) All Claims Trend Members Funding less Administration June 2006 $400 16,000 $380 15,000 $360 $340 $320 $300 $280 $260 $240 $268 $341 $260 $350 11% Trend $309 $350 11% Trend $220 $230 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec month trailing pmpm (paid 2003, incurred ) 14,000 13,000 12,000 11,000 10,000 9,000 8,000 Members 7,000 35

36 $360 $340 $357 Brevard Public Schools (Funding available for Claims Only) $342 June ,000 13, month trailing pmpm (paid 2003, incurred ) $320 $300 Insert Trend Graph $280 $290 $281 $299 8% Trend All Claims $322 12,000 11,000 10,000 $260 $250 $252 $240 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Members Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 1/04-12/06 Trend Members Funding less Administration; Source - RE Stmt 9,000 8,000 Pharmacy Rebates, SL premiums and Recoveries not included. Medicare Part D, approx $250,000 for CY06, included as a credit in funding. 36

37 Brevard Public Schools (Funding available for Claims Only) June ,000 $360 13,000 $340 12,000 $320 11,000 $300 10,000 $280 9,000 Members Med/Rx Claims $260 8, % Trend Funding Less Administation $240 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 37

38 Brevard Public Schools Trend August ,000 $380 13,000 $360 $340 Members 12,000 11,000 10,000 $320 $300 Per Member Per Month $280 9,000 8,000 Members Rolling 12 Mo Med/Rx Claims 9% Trend Revenue Minus Admin. $260 $240 38

39 C. In-House Fund Management 39

40 Fund Expense Summary Item Jan-Dec 2008 Jan-Aug 2009 Projected 2010 CLAIMS % Claims 58,474,414 41,048,560 68,539,999 Opt Out 1,156, ,442 1,156,467 MHNet 570, , ,000 ADMIN. % TPA Fees 3,753,314 2,609,247 3,790,841 All Other Adm. 1,010, ,454 1,007,692 TOTAL EXP. 64,964,328 45,427,704 75,064,999 40

41 Compensation & Benefits Staff Duties Administer plan according to Summary Plan Description Conduct RFPs and negotiate contracts for TPAs, ancillary benefits, stop loss protection, enrollment software systems Track claims experience and utilization Recommend plan design and premium changes Manage funding and expenditures and coordinate with Financial Services 41

42 Compensation & Benefits Staff Duties Develop and produce financial reports Ensure member eligibility Resolve claims and eligibility disputes Manage data flow between district and vendors Calculate premium deductions for payroll production Conduct annual Open Enrollment, new hire enrollments, and Section125 qualifying events changes 42

43 Compensation & Benefits Staff Duties Manage retiree benefits Coordinate Leaves of Absence with eligibility and premiums AR Manage district Wellness Program Comply with HIPAA, COBRA, auditing requirements, and public records requests Maintain employee and retiree benefits records 43

44 Current Labor Costs Self-Funded Health Plan Support % ANNUAL LABOR ALLOCATION TITLE FRINGED 90 Director 95, Trust Accountant 68, Lead Benefits Specialist 62, Benefits Specialist 42, Benefits Specialist 56, Benefits Specialist 43, Leave Specialist 46, Leave Specialist 49, AR Specialist 35, HR Analyst 37, HR Assistant 28,894 Total Benefits Support 565, Secretary 52, Manager 83,645 Total Wellness Program 136,593 Total Dept 9850 Labor & Fringe 702,165 44

45 Expense Consulting, Actuary, Audit, GASB 45 Study Bank Charges Amount 110,522 15,133 Office Supplies 3,317 Staff Travel 3,145 Printing, copier, communications 1,664 Capital Outlay TOTAL ,936 45

46 Provided by RobinsonBush, Inc., Orlando 46

47 Brevard Public Schools Brevard County Government Duval County Public Schools School Board of Polk County Marion County Public Schools Orange County Government City of Orlando Orange County Library System LYNX Transportation Valencia Community College Universal Studios Orlando Loews Hotels at Universal Orlando 47

48 Large Governmental entities in Central Florida BPS Brevard County Self Funds Polk Schools Self Funds Duval Schools Self Funds Orange County Self Funds City Orlando Fully Ins Members (Est.) 13,000 10,000 20,000 23,000 19,000 8,500 Claims 92.7% 93.7% 90.7% 92.3% 92.9% 84.4% Admin 7.3% 6.3% 9.3% 7.7% 7.1% 15.6% Sources for comparison groups: -Latest filing F.S actuarial certification for self-funded groups renewal for fully insured group 48

49 Key Points to Clarify 7.3% total administrative costs are in line with the industry and other governmental entities Administrative costs have declined since 2006 BPS routinely evaluates the marketplace through the RFP process No $6 million or any other transfer has occurred in 2009 Openness to discuss health care alternatives for 2010 was dismissed 49

50 D. Insurance Committee Process and Ideas 50

51 Communications forum to address insurance issues. Provide employee involvement in discussions related to the selection of insurance benefits. Communicate these matters back to committee members constituencies. Provide options and ideas to the Superintendent related to insurance benefits; this limits committee s authority. 51

52 Board Members Appointees 5 Superintendent s Appointee 1 BFT Representatives 4 Local 1010 Representatives 4 Non-Bargaining Representatives 4 School Administrators 2 Retirees 4 TOTAL 24 52

53 Board Appointees: Louis Richardson (Mr. Jordan) Janie McDermott (Mrs. Henderson) Susan Steinert (Dr. Murray) Dawn Butterfield (Mrs. Kneessy) Jane Shouppe (Mr. Ziegler) Brevard Federation of Teachers: Janet Eastman John Russo Dan Bennett Dr. Debbie Rhyne IUPAT Local 1010: Debbie Greco Robert Cruz Kathy Gulledge Debbie Legge Superintendent s Appointee: Linda Loveday School Administrators: Richard Myers, Kennedy Middle Sherry Tomlinson, Atlantis Elem. Non-Bargaining: Sharon McNichols Rhonda Stewart Susan Standley Retirees: William C. Terry Johnny Harper Elaine Leclerc Nancy Taylor 53

54 EPO Copay Changes PPO Benefit Current January 1, 2010 PCP Office Visit $15 $20 Specialist Office Visit $25 $30 Hospital Admit $300 $300/day to 3 ER Visit $75 $200 Outpatient Surgery $25 $150 Major Diagnostics $50 $100 In-network Deductible $300/600 $500/1000 In-network Coinsurance 85% 80% In-network OOP Max $2000/4000 $2500/5000 Out of Network Deductible $400/800 $750/1500 Out of Network Coinsurance 70% 60% 54

55 Hybrid Plan Design Summary Benefit In-network Out of Network CY Deductible n/a $600/1200 Coinsurance 10% 30% Out of Pocket Max $2,500/5000 $4,000/8000 PCP OV Copay $20 Deductible/co-ins. Specialist OV Copay $30 Deductible/co-ins. Hospital Admit $500/day to 3 +co-ins. Deductible/co-ins. ER Visit $200+co-ins. Deductible/co-ins. Outpatient Surgery $150+co-ins. Deductible/co-ins. Major Diagnostics $100+co-ins. Deductible/co-ins. 55

56 Medical Plan Design Option 3 HRA Plan Offered with Option 2 Hybrid Plan HRA Plan Design Summary Benefit In-network Out of Network CY Deductible $1500/3000 $3000/6000 Coinsurance 20% 40% Out of Pocket Max $3000/6000 $6000/12000 Office Visits Deductible/co-ins. Deductible/co-ins. Hospital Admit Deductible/co-ins. Deductible/co-ins. ER Visit Deductible/co-ins. Deductible/co-ins. Outpatient Surgery Deductible/co-ins. Deductible/co-ins. Major Diagnostics Deductible/co-ins. Deductible/co-ins. Health Reimbursement Account $750 Employee; $1500 Family 56

57 Current: Retail: $10/$20/$35 Retail 90 & Mail: $20/$40/$70 Type Generic Preferred Brand Non-Preferred Retail 30 $8 $30 $45 Retail 90 $20 $75 $ Mail 90 $16 $60 $90 Estimated Impact -$907,967 57

58 Current: Retail: $10/$20/$35 Retail 90 & Mail: $20/$40/$70 Type Generic Preferred Brand Non-Preferred Retail 30 $8 $20+10% (max $60) $35+10% (max $100) Retail 90 $20 $50+10% (max $150) $ % (max $250) Mail 90 $16 $40+10% (max $120) $70+10% (max $200) Estimated Impact -$1,450,661 Max does not apply when generic is available and member requests brand medication. 58

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