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HomeMy WebLinkAboutRES.1932.12-15-2003BILL NO. 03-221 RESOLUTION NO. A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE A CONTRACT WITH ALLIANCE BLUE CROSS FOR EMPLOYEE HEALTH INSURANCE SERVICES, IN THE CITY OF CAPE GIRARDEAU, MISSOURI BE IT RESOLVED BY THE COUNCIL OF THE CITY OF CAPE GIRARDEAU, MISSOURI, AS FOLLOWS: ARTICLE 1. The City Manager, for and on behalf of the City of Cape Girardeau, Missouri, is hereby authorized to execute a Contract with Alliance Blue Cross for employee health insurance services, in the City of Cape Girardeau. Said Contract shall contain the terms set out in Renewal Option III, and shall designate the following rates: Employee Only Add Spouse Only Add Child(ren) Add Family $342.31 $276.87 $207.66 $484.58 A copy of the proposal information from CBIZ Benefits and Insurance Services, Inc., is attached hereto and made a part hereof. PASSED AND ADOPTED THIS{\, DAY OF 20 ATTEST: Gayle . Conrad, City Clerk eay B. Knudtson, Mayor MEMORANDUM To: Mr. Doug Leslie, Mr. John Richbourg and Ms. Heather Brooks From: James V. Vigliaturo, Jr., CBIZ Benefits & Insurance Services David J. Johnson, CBIZ Benefits & Insurance Services Subject: Medical and Dental Plan Renewals Date: 12/10/03 As you know, we have been working with your current carriers, Alliance Blue Cross and Delta Dental, with regard to your renewal effective 1/1/04. We also submitted Request for Proposals to other carriers to receive proposals for the City's medical insurance program effective 1/1/04. The following data is a result of these requests and analysis. Dental Insurance Renewal We are very pleased to inform you that the negotiations have been completed for the dental program effective 1/1/04 through Delta Dental of Missouri. Effective 1/1/04, the plan will renew without any changes in plan design or premium structure. We are very pleased with this renewal in light of the fact that dental costs are increasing between 10-14% per year. We would recommend the renewal of the dental program through Delta Dental of Missouri. The current and renewal rates are as follows: Current and Renewal Rates Employee Only Employee & Spouse Only Employee & Child(ren) Employee & Spouse & Child Employee Cost $0 $17.70 $15.18 $32.38 City Cost $23.34 $23.34 $23.34 $23.34 Total Cost $23.34 $41.04 $38.52 $55.72 Medical Insurance Request for Proposal As you know, we sent a Request for Proposal to the marketplace for your medical plan. We requested proposals from 16 carriers, plus the renewal from Blue Cross. Of the 16 requests, 3 parties did not respond, 10 declined to provide a proposal, and 3 parties provided a proposal. The declinations were due to various reasons, including outside of the company's service area, not competitive, and inadequate network of providers available. Two of the proposals were from self-funded plan administrators. Simply put, these plans would be prohibitively priced -- at an increase well in excess of that offered by your current plan. The third proposal was from MARCIT, a self-funded pool located in Kansas City. The rates offered were more in-line with your current plan, although they were still higher. Additionally, MARCIT functions as a true pool, so that your rates are not dependent upon your own claims experience, rather on the plan as a whole. Thus, you may benefit or you may suffer due to this rating methodology. Additionally, MARCIT is able to "assess" its members additional costs based on the experience of the pool. Finally, the rates provided would be effective from 1/1/04 to 6/30/04. The actual plan renewal would be July 1, 2004. These issues will not allow the City of Cape Girardeau near the flexibility you have had in the past. We would not recommend any further consideration of any of these plans. A response to RFP Illustration is attached. Medical Insurance Terminal Liability Provision It is important to note that while your current Blue Cross/Blue Shield plan is technically an insured plan, you do hold your own reserves for incurred but not reported (INBR) claims. In other words, if you were to cancel your contract with Blue Cross, you would be liable for any claims that have been incurred, but have not yet been paid. This amount is usually equal to about 2-3 months of paid claims, or $250,0004400,000 of paid claims. Last year at renewal time, the City signed Blue Cross' Terminal Liability agreement. This agreement calculates a maximum liability upon termination. In addition to this amount, any outstanding deficit would be payable, as well. Based on these provisions, the current terminal liability amount would be approximately $275,000. The outstanding deficit as of November 1, 2003 was approximately $25,000, making the total obligation on the part of the City $300,000. Again, this is paid directly to Blue Cross within 15 days of termination. This amount is a flat cost -- there is no accounting to determine if the claims experience is less or more. It is important to note that in the following renewal calculations, there is no specific funding for the terminal liability. This is a risk assumed by the City. The actual cost factors for the 2004 plan year have been negotiated so that there is no increase for this component for the renewal. Again, this amount should be reserved by the City in case of termination. The renewal calculations do not include this liability. Medical Plan Renewal Currently, the employees and dependents of the City of Cape Girardeau are insured through a PPO program through Alliance Blue Cross/Blue Shield. A synopsis of that plan is as follows: PPO $500 deductible/2x for family Coinsurance: 90% Individual Coinsurance Maximum: $500 Physician Office Copay: $20 Rx: $10/$20/$20 A full plan summary is attached. Non -PPO $500 deductible/2x for family Coinsurance: 70% Individual Coinsurance Maximum: $1,500 Physician Office Copay: Deductible, then coinsurance Prescription Drug: In -network copay + 30% In terms of the financial components of your renewal, Blue Cross has been aggressive with their underwriting. First, there was a large claim for $147,902 which Blue Cross completely removed from your rating. There was also a deficit carry forward this year of nearly $90,000. As of November l" there is still a deficit of nearly $25,000 that still exists from last year. One change that Blue Cross has recommended would be to increase the individual stop loss point from $75,000 to $100,000. From 7/1/02 to 6/30/03 there were 10 claims over $25,000, ranging from $28,000 to $147,000, for a total of $220,770. Only one of these claims was over $75,000. For an additional liability on this claim, the credit in premium would have more than out -weighed the additional liability. 2 One additional change was that Blue Cross has removed all commission from the program effective 1/1/04. Renewal Plan Options and Costs The following rates and plans represent the current and renewal options for the City of Cape Girardeau: Current Plan The current monthly rates, effective 1/1/03 —12/31/03 are as follows: Employee Only Add Spouse Only Add Child(ren) Add Family $301.86 $263.69 $197.77 $461.50 Renewal Option 1015%) The first renewal option would be to leave all benefits of the program the same. The only change would be to increase the pooling point from $75,000 to $100,000. Those rates would be as follows: Employee Only Add Spouse Only Add Child(ren) Add Family $347.14 $303.24 $227.44 $530.73 Renewal Option H 012.7.16) The second renewal option would again include the pooling point change. All benefits would remain the same as current EXCEPT the prescription drug copays would change as follows: • Prescription drug copays change from $10/$20/$30 Retail $20/$40/$60 Mail Order To $8/$25/$45 Retail $16/$50/$90 Mail Order The rates would be as follows: Employee Only Add Spouse Only Add Child(ren) Add Family $340.20 $297.18 $222.89 $520.11 Renewal Option 111011.7'16) Renewal Option III would again include the pooling point change. All other benefits would remain the same EXCEPT the following: • Prescription drug copays change from $10/$20/$30 Retail $20/$40/$60 Mail Order To $8/$25/$45 Retail $16/$50/$90 Mail Order • Office Visit Copay changes from $20 to $30 3 The rates would be as follows: Employee* Add Spouse Only Add Child(rm Add Family $336.88 $294.28 $220.71 $515.03 Renewal Option IV -Consumer Centric/Core Buy up Projram Healthcare consumerism is becoming a popular topic with not only plan sponsors and insurance companies, but also with plan members themselves. Statistics tell us that an average of 15% of a group's population will incur 86% of the total paid claims. Furthermore, 4% of that population will incur 45% of those claims. Conversely, 85% of the plan's members are utilizing the plan at a minimum, but are still paying the dramatically increasing premium driven by higher utilizers. Consumer Driven plans and programs, or at least the concepts of those plans, are getting attention because the premiums are lower than traditional plans. The premium is lower because the risk of higher out-of-pocket costs in shifted to the consumer. Theoretically, this shift should encourage plan members to become better consumers and encourage healthier lifestyles, thus lower out-of-pocket costs. While offering a lower premium/higher out-of-pocket plan, we would continue to provide a plan that would protect those who are more comfortable with the current type of plan. However, the member would pay the difference in cost to "Buy -up" to this plan. The following is an example of the CorcBuy-up Plan: Core Plan (+4%) PPO $1,000 Deductible/2x family Coinsurance: 80% Individual Coinsurance Maximum: $1,000 Physician Office Copay: $20 Rx: $8/$25/$45 (2x mail order) Employee Only $313.93 0 Current Plan of Benefits Employee Only $353.18 Employee Only $39.25 Add Spouse Only $274.24 Non -PPO $1,000 Deductible/2x family Coinsurance: 50% Individual Coinsurance Maximum: $5,000 Physician Office Visit Copay: Deductible, then coinsurance Rx: In -network copay, +30% Add Child(ren) Add Family $205.68 $479.96 Buy -up Plan (+17'x) Add Spouse Only Add Child(ren) Add Family $308.52 $231.39 $539.96 Employee Cost for Buy -up Add Spouse Only Add Child(ren) Add Family $347.77 $270.64 $579.21 *Employee pays full difference in cost. As you can see from the above rates, the City's cost increase would be minimal (+4%) while still providing a strong benefit to employees and their dependents. The City would also allow employees the option to "Buy -up" to a stronger benefits package for an increase in cost. 4 Obviously, the Core/Buy-up concept is quite different than the approach the City currently utilizes. However, we thought it was important to at least introduce the concept, since it may be a strong possibility in the future. Additionally, while the Core plan is still a good basic plan, it may be too soon to decrease the benefits this dramatically. Since this year's renewal was favorable, and since there are already some very good options available, it may be more appropriate to leave this option for the future when a more dramatic impact to the renewal is needed. Recommended Renewal Plan Option Our recommendation for your renewal would be Renewal Option III. However, in order to still provide employees a reasonably priced insurance program for their dependents, we would suggest consideration of increasing the employee premium (paid by the City) by 13.4% and increasing the dependent cost by 5%. This shift still allows the full cost of the program to be within the City's budget, provides minimal plan changes, and keeps the dependent cost below "market rates". Renewal Option III would again include the pooling point change from $75,000 to $100,000. All other benefits would remain the same except for the following: • Prescription drug copays change from $10/$20/$30 Retail $20/$40/$60 Mail Order To $8/$25/$45 Retail $16/$50/$90 Mail Order • Office Visit Copay changes from $20 to $30 The rates for the plan would be as follows: Employee Only Add Spouse Only Add Child(ren) Add Familv $342.31 $276.87 $207.66 $484.58 Again, this Option would accomplish these goals: 1) City stays within budget 2) Employees still have reasonable premium for dependents 3) Minor change in benefits allows more flexibility for future options Conclusion We believe the City has some very positive options to consider. With the recommended option, the City still has a very competitive plan available, and still has room to change in the future if needed. Response to RFP City of Cape Girardeau Medical Effective January 1, 2004 CARRIER RESPONSE Aetna Declined — Inadequate network Blue Cross Blue Shield of Missouri Current Cigna Declined — Not competitive Coventry Healthcare Declined — Outside service area Epoch Quoted First Health Declined — Outside service area FMH Declined — Underwriting defines GE No Response Great West No Response Humana Declined — Inadequate network Kansas City Life Declined — Underwriting guidelines MARCIT Quoted Mutual of Omaha Declined — Not competitive Principal Healthcare Declined — Rates not competitive Trustmark No Response United Headhcare Declined — Outside service area Wausau Quoted Epoch: Cost is substantially higher than Blue Cross renewal. MARCIT: Cost is higher than renewal ■ Rates are guaranteed from 1/1/04 to 6/30/04. Plan will renew again on 7/1/04. ■ Fully pooled plan — no claims experience is available for individual entities. Wausau: Cost is substantially higher than Blue Cross renewal. 6 2003 Health and Dental Insurance Rates Effective January 1, 2003 Health Insurance (Monthly Costs) Active Employees Employee Add Spouse Add Children Add Family $301.86* $263.69 $197.77 $461.50 *Paid by the City based on Maximum Claims premiums. All Dependent tiers are based on Expected Claims premiums. COBRA Rates Em to ee Add Spouse Add Children Add Family $307.90 $301.97 $226.28 $528.49 The responsible party(ies) pays all monthly costs. All monthly premiums based on Maximum Claims premiums, plus 2% administrative fees. Employee Retired over age 65 Em to ee Add Spouse Add Children Add Famil $280.56 $244.66 $203.00 $420.95 The retiree pays all monthly costs. Employee premium based on Maximum Claim figures. All depended tiers based on Expected Claims figures. Surviving spouses will be charged the Employee tier amount should the Retired Employee pass away first. Dental Insurance (Monthly Costs) Employees Em to ee Add S ouse Add Children Add FanAly $23.34* $17.70 $15.18 $32.38 *Paid by the City includes $5.11 monthly per employee Delta Dental Administration Fee. All Dependent Tiers paid by employee, no additional Administration Fee. Retiree's that retired directly from the City, regardless of age, are treated the same in the Dental Plan Tiers as in the Health Plan Tiers. 7 ALLIANCE CITY OF CAPE GIRARDEAU Network Providers Non -Network Providers Annual deductible (Applies to most care) Individual $500 $500 Family 2 times individual 2 times individual Coinsurance percentage (Amount program covers after the 90% 70% deductible) Individual coinsurance maximum $500 $1500 Family coinsurance maximum 2 times individual amount 2 times individual amount Physician office visit $20 copay per visit covered the office -visit Subject to deductible and coinsurance charge only Preventive care (in physician's office) • Routine physicals (annual) — Covered at 100% with no deductible, up to Subject to deductible and coinsurance, up to $150 in benefits per year in and out of $150 in benefits per year in and out of network network Office -visit Copay applies • Immunizations 100% of eligible expenses through age 18 100% of eligible expenses through age 5 (deductible and coinsurance apply if there's (deductible and coinsurance apply to office an office visit charge) visit and any other covered service) Subject (Copay applies if there's an office visit to deductible and coinsurance for age 6 charge) through 18. • Flu shots and pneumonia vaccine Subject to deductible and coinsurance Subject to deductible and coinsurance (applies to $150 preventive care limit) Copay applies if there's an office visit charge Cancer screenings Subject to deductible and coinsurance • Annual pelvic exam Copay applies if there's an office visit charge • Prostate exam • Colorectal screening Hospital services Subject to deductible and coinsurance Subject to deductible and coinsurance (inpatient care including physician services) Maternity care Physician's office: Subject to deductible and coinsurance (member and spouse only) Office -visit copay applies to first office visit only. Inpatient care: Deductible and coinsurance apply to hospital and physician delivery charges. X-ray and laboratory services • Mammograms 100% of eligible expenses Subject to deductible and coinsurance (copay applies if there's an office visit charge) • Colorectal lab tests • Prostate lab tests • Pap tests (annual) Physician office Copay applies if there's an office visit charge Subject to deductible and coinsurance Hospital or other facility Subject to deductible and coinsurance Subject to deductible and coinsurance (inpatient or outpatient) Alliance Network Providers Non -Network Providers Surgery and related services Subject to deductible and coinsurance Subject to deductible and coinsurance • Physician's office • Outpatient hospital • Inpatient hospital Emergency room care Subject to deductible and coinsurance Subject to network deductible and coinsurance Ambulance service Emergency Subject to deductible and coinsurance Subject to deductible and network coinsurance Non -emergency Subject to deductible and coinsurance Subject to deductible and non -network coinsurance Outpatient hospital care Subject to deductible and coinsurance Subject to deductible and coinsurance • Chemotherapy • Radiation therapy • Respiratory therapy • Dialysis treatment • Cardiac and pulmonary rehabilitation (for certain diagnoses and subject to limitations) Therapies (up to 20 visits per calendar year for each type of therapy; preventive and maintenance care excluded) Physician office, freestanding facility Subject to deductible and coinsurance Subject to deductible and coinsurance and outpatient hospital • Physical medicine (including chiropractic care) • Occupational therapy • Speech therapy Inpatient hospital Subject to deductible and coinsurance Subject to deductible and coinsurance Home care (includes home respiratory and Subject to deductible and coinsurance Subject to deductible and coinsurance infusion therapy; up to 100 visits per calendar year) Skilled nursing facility care (up to 100 Subject to deductible and coinsurance Subject to deductible and coinsurance inpatient days per calendar year) Durable medical equipment Subject to deductible and coinsurance Subject to deductible and coinsurance Mental health and substance abuse care Outpatient: Subject to deductible and Subject to deductible and coinsurance (each calendar year) coinsurance. Copay applies if there's an Mental health: Outpatient, day treatment, office visit charge; other care subject to and residential treatment: up to the program deductible and coinsurance maximum; Inpatient: up to 90 days. Inpatient: Subject to deductible and Program maximum for substance abuse: Substance abuse (Program maximum: up coinsurance $5,000. to 10 episodes): Outpatient: up to 30 one- hour sessions; Day treatment: up to 30 days; Inpatient: up to 21 days; Medical and social detoxification: up to 6 days. Prescription drugs, retail $10 generic/$20 Preferred brand/ In -network copay plus 30% of the allowed (up to a 30 -day supply) $30 Nonpreferred brand amount for the drug plus the difference between the allowed amount and the actual Mail order and online 2 times the network copay charge for the drug (up to a 90 -day supply) If the member purchases a brand-name NOTE: Some drugs have coverage limits or NOTE: Some drugs have coverage limits or drug when a generic is available, he or she require prior authorization. require prior authorization. will be responsible for the difference between the program's allowed charges for the generic and the brand-name drug, in addition to the copay. Alliance This is only a brief summary of benefits. The Certificate, issued when coverage is approved for the group, contains program details, and will in all cases, control over any information in this summary. The certificate is available upon request. Blue Cross and Blue Shield of Missouri is the name RightCHOICE® Managed Care, Inc. (RIT) uses to do business in most of Missouri. RIT and certain affiliates administer non -HMO benefits underwritten by Healthy Alliance® Life Insurance Company (HALIC) and HMO benefits underwritten by HMO Missouri, Inc. HMO Missouri, Inc. does business as BlueCHOICE. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. RIT, HMO Missouri, Inc. and HALIC are independent licensees of the Blue Cross and Blue Shield Association. Network Providers Non -Network Providers Vision and hearing discount services Discounts are available from selected Discounts are available from selected (within the BCBSMo plan area) providers by showing the BCBSMo ID card. providers by showing the BCBSMo ID card. (These providers are not part of the Alliance (These providers are not part of the Alliance network) network) Medical program maximum $2,500,000 $2,500,000 Precertification required for: Within the BCBSMo Plan area: Network Members are responsible for obtaining • Inpatient care providers handle all precertification/managed certifications. If the required certification is • Outpatient surgery care requirements for members. not obtained, the member will be responsible • Home health care BlueCard network providers outside the for the first 20% of eligible expenses in • Skilled nursing facility care BCBSMo Plan area: Members are addition to the deductible and coinsurance. • Mental health and substance abuse responsible for obtaining certifications. If the care in a facility required certification is not obtained, the member will be responsible for the first 20% of eligible expenses in addition to the deductible and coinsurance. This is only a brief summary of benefits. The Certificate, issued when coverage is approved for the group, contains program details, and will in all cases, control over any information in this summary. The certificate is available upon request. Blue Cross and Blue Shield of Missouri is the name RightCHOICE® Managed Care, Inc. (RIT) uses to do business in most of Missouri. RIT and certain affiliates administer non -HMO benefits underwritten by Healthy Alliance® Life Insurance Company (HALIC) and HMO benefits underwritten by HMO Missouri, Inc. HMO Missouri, Inc. does business as BlueCHOICE. RIT and certain affiliates only provide administrative services for self-funded plans and do not underwrite benefits. RIT, HMO Missouri, Inc. and HALIC are independent licensees of the Blue Cross and Blue Shield Association.