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Home My WebLink About06072011 HEALTH CARE PRESENTATION6/7/2011 Agenda Health Care Goals Experience/Projections Health Care Fund Update Health Care Initiatives/Results Health Care RFP Next Steps z 1 alth Care Goals • Offer affordable, quality health care as part of a total compensation package • Control costs by managing the health care trend and reducing the GASB 45 liability • Maintain a healthy and productive workforce • Achieve best prices for goods and services • Focus on health risks that are significant cost drivers • Promote a culture of change and accountability • Promote health awareness, education and involvement of enrollees in their health and wellness 3 perience /Projections 2010 Trend • Experienced a 10% increase in trend 201 1 Plan Changes • Plan Changes • Grandfathered Status • Removal of Lifetime Limits • Removal of Annual Limits for Essential Benefits • Dependent coverage extended to age 26 (if no access to other group coverage) • Contribution Strategy - No changes 2011 Projection • 10% Trend 4 6/x/2011 2 6/7/2011 Health plan claims cost trend - historical and forecasted Health plan trend on rise VA BEACH HISTORICAL AND PROJECTED TOTAL INCURRED CLAIMS PEPM r ____.- _____- ___ ~, ~ - 6650 ~ ~, ~ j ~ _. _. 5600- ._. I ~O.Ox UMM s 1 8.0% trend i- --- ~- ~- - ~ - ---- ~-- r - - n 6550 _ l-. __ ~_._- _. _~. -~. ~. _ E ~ ~ ~ ~ ~ U 5500 --.-. ~' 50.50 .___-- - - - j - ~ - - ~ ~ - - -, i, I _ _ I _ ~ __~ 60001 _. -.___-.~------ '~"aJ 2003 ~4"d° 2004 a"as 2005 Jen°B 2006~'"~ 2007 '~'"~ 2008 ~"~ 2009'1n-10 IO'10-fO1M Forecast ~vEaM i_mm aEF ,° -e,. n~"a -i°.. ,_~~e _._.. r...„r J Health Care Fund Update Total Fund Equity - 06/30/2009 - $31 .5M • City S l 4.4M / 45.7% • Schoolf S17.1M / 54.3% - 06/30/2010 - $30.7M • City $1 2.7M J 41 .4% • Schools S18.OM / 58.6% - 06/30/201 1 -Estimated $25.8M • City $9.2M / 35.7% • SchoolsS16.6M / 64.3% - 06/30/2012 -Estimated $3-8M Enrollment as of 7/1 /Z071 -Schools 61. S% /City 38.5% 3 'i and Condition Management scalar Disease Management Program Disease Management Program ~ry Disease Management Program in Pregnancy" Prenatal Program Programs Incentive Tracking Program (FIT) aenings and Vaccinations ~cer Screening Initiatives Shot Clinics ~Ith Screenings >onal Flealth Protile ~ Education Classes Support Services ^Care Management ^Employee Assistance Program ^Tobacco Cessation Program Weight Management ^Eating for Life ^Maintain Don't Gain ^Weight Watchers (~"~ .. New I n itiatives Programming Created and implemented reduced copay benefit for diabetics, helping to make diabetes medication more affordable and therefore encourage better medication compliance Increased offerings for Health Screenings (cholesterol, blood pressure, BMI) including onsite opportunities and quarterly health fairs Implemented Al c screenings to follow up with employees at risk for diabetes and encouraged physician follow-up Implemented Special Events program encouraging employees to have a wellness initiative integrated into their staff programs. Examples include: Public Works Annual Picnic (800 employees), Public Works and Public Utilities Health and Safety Fair (1 700 employees), Library all staff training day (250 city employees) Offered more onsite opportunities including health education classes, health screenings, and Weight Watcher programs Expanded flu shot coverage to spouses covered by our health plan and part time employees Coordinated with Occupation Health to offer Care Management onsite, price weekly, to work with high risk employees 6/7/2011 4 6/7/2011 Newlnitiatives --continued Education Provided educational material and classes on diabetic resources and reduced copay benefit Created new quarterly Retiree Wellness Update Provided quarterly Health Fairs throughout the city Included online wellness resources in 201 1 Wellness Guide Researching prenatal fitness program to offer in 2012 Provided educational seminar on Health Equity plan Provided Benefit Seminar Series • "You The Smart Patient" • "Understanding the Alphabet Soup - FSA & HRA" • "Medicare and You" NeW ~ n ItIatlVes -- continued Process Change/Implementation • Developed and utilize Dependent Certification form for 201 1 • Provides continued dependent audit procedures • Requires certification of dependent status Developed and utilize Medicare Eligibility Certification Form for retirees • Provides notification of eligibility for retirees and spouses eligible for Medicare due to disability Created a system for employees to submit Fitness Incentive Tracking program facility requests Enhanced Wellness Ambassador designation process Worked with technology in online program registration for the following programs: Maintain Don't Gain, Weight Watchers and Flu Shots io W ~ n ItIatIVeS -- continued Collaboration Participate on eValue8 Strategic Partnership through Virginia Business Coalition on Health for health plan/employer/provider collaboration Enhanced collaboration with Occupational health Enhanced collaboration with Optima Case Management Participate on the Virginia Business Coalition on Health (VBCH) Wellness Collaboration committee Recognition Recognized in 2009, 2010 and 201 1 by American Heart Association as "Gold Start! Fit-Friendly Company" Recognized in 1997, 2004 and 201 1 by the Virginia Business Coalition on Health, receiving the "Wellness in the Workplace" award. City and Schools Cancer Screenings 90.0% __ - -I ' 80.0% 70.0% ~ ~~ 60.0% I i 50.0% ^ 2007 ' 40.0% ! ~ 2008 30.0% ~ ~~ 2009 ~ 20.0% ^ 2010 10.0% 0.0% ~ ~I Cervical Cancer Mammography Prostate Cancer Colorectal Screening Screening Screening Cancer Screening I iz 6/7/2011 6 I 6/7/2011 ~, Health Stratification History - c>yands~t,oois ~-~ 2007 % Member3 39.8% 20.5% 19.8 % 13.8 % ti.2'ro 2010 X Membsn- 41.9% 20.7% 18.8% 129% 5.7 % 2007 Members Acdvsly Engaged wlth Health Coach 178 164 28S 738 467 1.676 3.676 5.4 % 21.5 % 30.2% 2010 Members Aedwly Engaged with Health Coach 430 445 654 913 765 4.1 % 8.876 13.8 % 28.1 % 54.0 13 Health Care RFP Results - Request for Proposal Issued for 2012 Plan Year for fully and self- insured options - Proposal Requested from: • Aetna • Anthem BCBS • CIGNA • Optima • United Healthcare • Made available to others through advertising - Proposals Received from: • Anthem BCBS • Optima • All others declined to bid stating non-competitive in market is 7 Health Care RFP Results -- ~oinc~nuea - Criteria for Selection The most comprehensive discounts and administrative fees • High quality standards of customer and member service • Quality networks with competitive financial arrangements • Network access to as many employees/retirees and their dependents as possible • Minimal provider disruption and consistent network approach • Proven medical management and disease management programs is Financial Analysis Backaround -claims cost - Impact of the RFP on claims cost • To determine the impact of changing medical vendors, Mercer conducted a vendor discount analysis on in-network medical claims costs o Based on home zip codes for City/VBCPS employees enrolled in the health plan o Utilized Mercer's NetPic tool o Compares vendors' discounts achieved in areas where City/VBCPS employees reside o Does not consider expected improvement or erosion in vendors' future discounts ~ City/VBCPS claim costs are projected to 2012 based on incurred claim data paid through December 2010 and do not reflect any plan design changes • Pharmacy and administrative fees are included for completeness 16 6/x/2011 8 6/7/2011 Financial Analysis Self-Insured Results - Best financial proposal for self-insured health plan is Optima - Optima produces the lowest medical, pharmacy and administrative costs - Switching to Anthem would increase plan costs by approximately$7.1 million or 5.9% - In addition to Optima having the lowest projected medical spend based on known provider discounts in the market, Optima administrative fees are also lower when compared to Anthem - Optima has achieved 99.8% accuracy in claims payments. Anthem would not agree to the claims audit as requested . - Over the term of a three year contract, Optima administrative fees are approximately $3M less than Anthem ,~ Financial Analysis Fully insured options - Anthem and Optima fully insured rates are guaranteed for 1 year only - The most competitive fully insured quote was from Anthem - Anthem's fully insured quote was $2M greater than the projected self insured Optima costs - Anthem was asked to guarantee the fully insured rates for more than one year and declined is 9 6/~/zoil Fully Insured vs. Self Insured Considerations - Financials ~~ Expected increase to current costs by moving to fully insured arrangement ($2M in first year) + Unfavorable impact to cash flow in year one (pay run out claims from 2011 in addition to paying full premiums) • Reduced administrative expenses (no premium tax, carrier profit or overhead charges) - Plan design changes Plans would be subject to any state mandates as well as any carrier changes - Health care reform • Plan would lose grandfathered status 19 RFP Award - Health RFP Committee selected Optima under a self insured arrangement • Lowest cost option • Flexibility in plan design • No internal switching cost o Communication o Information technology • Proven reliable partner • Proven track record of improving the health status of our members zo 10 6/7/2011 Next Steps - Plan Year 2012 - No plan design, carrier, or contribution changes • Adoption of ordinance for 2012 health care (City) -June J4, 1011 • Consolidated Benefits Office finalize materials for open enrollment - Ju/y Z9, ZO11 • Open Enrollment -October 10 -October 30, 2011 - Claims audit for 2010 -August/September 2011 - Council/Board Briefing for Health Care Strategy for 2013/2014 - August/September 207 J n 11