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HomeMy WebLinkAbout2005-02-02-HBRC-min Minutes of Health Benefits Review Committee February 2,2005 Present: Deborah Strod, Dick Dougherty, Bob Beckwith, Evelyn Silber, Bill Kennedy, Claudia Scheffield, Rose Ducharm, Linda Roemer Minutes The minutes of the January 5th meeting were amended to show that Vita LaMura and Bob Cunha were present. The minutes were then approved. Data on Town Comparisons Dick Dougherty said that this was not complete. Preliminary data indicated that the cost to Lexington enrollees was relatively low, but in the ball park. The separation of school employees and non-school employees was judged to be necessary. Meeting of January 26 Dick reported that he found Kevin Walsh to be knowledgeable and that his strategy was good. GBS advises about 200 communities in Massachusetts. Overall he felt that the town was getting good counsel and advice. Dick said he felt that GBS has a system (which was probably set up some time ago) and had difficulty doing anything outside of the system. Kevin had suggested the possibility of carving out pharmacy benefits and having more aggressive management than is currently being done. This holds some promise of savings but raises the threat to local pharmacies. Kevin is looking into this for other towns. GBS will price this possibility in the RFP. There was extended discussion about the projected $800,000 surplus for next year. In the budget process a 9% increase was adopted. It was stressed that the surplus is a projection based in part on surplus in this fiscal year, which of course has 5 months left. Kevin felt that the margin of error on these projections is 3-5%. Approximately half of the surplus is going to the reduction and the rest to the trust fund. The Committee felt that it was very important to get back to at least 2 months funding in the trust fund. The Committee also discussed the need to begin to fund future retiree benefits, particularly with the GASB requirement looming. The town is currently paying about $900,000 in administrative fees plus $500,000 is reinsurance. Kevin reported that drugs are 20% of total costs and 60% for Medex. About 34% could be saved by Canadian purchase. Five states have web sites connecting to Canadian drug purchasing. Kevin also reported that he is not yet seeing high deductible plans in municipal governments and didn't expect to see them for 10 years because of the strength of the unions. The Committee noted that unions have chosen health care benefits over salary because of the tax consequences. Preliminary Review of Matrix and Consensus on Recommendations This review followed the outline that Deborah had done and distributed. 1.1 Alternative plans---the possibility of putting the out-of-state enrollees into a separate plan was discussed. It was thought that because of the need to include them, in-state enrollees may be paying more than was necessary. 1.2 Self-insured vs. fully insured plans. It was stated that the self-insurance option continues to be cheaper and that if low bids are obtained for fully-insured initially, they were likely to be raised in later years. 1.3 The Committee discussed whether those choosing Blue Choice should pay more. It was noted that some of those choosing Blue Choice stayed in network. 1.4 The benefits and disadvantages of raising copays from $5 were discussed. It seemed low to the Committee but was comparable to other towns. 1.5 The Committee discussed the difficulties of asking full-time employees making low salaries to pay more for health care. The possibility of increasing the co-pays but putting the cost into the premium was discussed briefly. Given the salary distribution which had been given to the Committee, it was thought that little would be gained by charging differential premiums according to salary level. There was extended discussion about the part-time employees, particularly in the school department. who get about $7 an hour in health care benefits for working less than full-time. This is unfair because the part-time workers are getting a relatively higher benefit than the full-time workers and is a very large expense. Solutions to this, including job restructuring and prorating premiums, were discussed but it was felt that the Committee needed to point out the problem and the large savings that might be possible and leave it to others to negotiate the resolution. Plans for Next Steps in Completing Report It was agreed that we have a great deal of the material needed for the final report. Deborah, Dick and Evelyn will meet on February 9th to draft the final report, sending sections to Bob for comment and to everyone as they are ready. The report will start with a statement of the problem and then discuss the recommendations with the greatest potential impact on savings. These include more aggressive management of the drug benefit, part-time employees, moving the out-of-state enrollees into a separate plan and possibly having Blue Choice enrollees pay a larger share of the cost. Items will be arranged by descending savings impact. The Committee will meet on February 14th for final agreement on the report. Linda volunteered to do a final polish and edit, once the report is put together. 1. Options for Review: Each option shall be reviewed for cost and benefits, including town savings; employee benefits; costs of administration; other consequences and long term impact. 1.1. Alternative, perhaps more competitively priced health plans, 1.1.1. e.g. Tufts; United; Cigna, etc. Response: this is explored in an RFQ regularly. United declined, and participants reported negative things about Cigna, and Tufts came in much more expensive in the last RFQ. Must retain one plan which will cover out of state retirees and employees. Going out for bid helps to keep the prices down. Keep up the present practices. 1.1.2. Split into two plans, one of which covers out of state employees and one of which covers in-state. Kevin Walsh is going to get the group data to help us look at this. 1.1.3. New Retiree plan(s), local options or single national option without splitting. 1.2. Review self-insured vs. fully insured plans . 1.2.1. Caution that low first bids on converting from self-insured to fully- insured may be followed by price increases to recapture the insuror's administrative costs over time; so it may not be a good option for the long term even if in the first year a bid looks good. One member disagreed citing the need for different incentives and the risk to the town(the committee agreed that the risk needs to be appreciated, given 25 members attached to $2 Million in costs—it is easy to see how a"bad year" could happen easily with a few more people getting ill). 1.2.2. If switch to fully insured, have to pay run-out claims. 1.2.3. Also make sure that have enough in the trust fund--if savings to be accrued in healthcare, make sure not just put into other things in town which would require health care cuts later. Healthcare must be adequately capitalized beause could go from 25 people to 40 people ill which would make another 2M in claims. Argument that we should have 2 months claims. 1.2.4. Make sure to begin to fund retiree health--GASB issues. Lexington probably has to complete its calculation in 2007. Calculation in process of being done by the Retirement Board of the Town of Lexington. 1.3. Limit entry to high cost plan option—Blue Choice, or make revenue neutral, with higher deductible. Note that employees' utilization is almost 100% in- network, so employees are paying extra for flexibility they are not using. If employees shifted from this plan, for which they pay higher premiums, to a lower cost plan, the Town would likely have the same claims cost but would have lower revenue because employees pay lower contributions for the other plans. 1.4. Change plan design: 1.4.1. Increase co-pays. We entered research thinking that$5 co-pay is relatively low, but it appears that most towns are there. But that argument is insufficient to reject making a change: if all the other towns are in boats with 17 leaks, and we have 17 leaks, should we feel good about it? No, we need to lead, not compare ourselves to other sinking boats that will have the same giant problem in 10 years as we will. 1.4.2. Increase deductibles. 1.4.3. Need to quantify the savings in changing the co-pay (perhaps 100k balipart estimate, Rose will check). 1.4.4. Increase deductibles 1.5. Reduce town contribution to premiums: 1.5.1. Change the percentages 1.5.2. Cap the contribution by the town for the next 5 years, growth to be borne by employees. 1.5.3. Standard percentage across plans 1.5.4. Prorate employee contribution based on salary 1.5.5. Increase the rate that part-time employees pay. Could save $1Million according to Bill Kennedy's ballpark estimates. It is unfair to give Full- Time employees a benefit at the same level that the Part-Time people are getting it when they are doing half the work and receiving a proportionally greater subsidy. 1.6. Re-explore Implementing a Group Purchasing effort- join an existing or develop a new group (explore Minuteman Nashoba Health Group, since have already tried MIIA and West Suburban years ago) 1.7. Modify the Opt-Out pilot program and extend it to an annual, recurring payment: Pay a higher amount, annually, to those who Opt-out; this could end up paying the deductible for a spouse's plan which would encourage the employee to enroll in the spouse's plan and still save the town money if it is less than the average of 7,000 (?) we pay per member. 1.8. Consumer Directed Health Care plans for potential cost savings 1.8.1. Modify existing HSAs,FSAs, HRAs 1.8.2. Implement and employee dividend policy for savings in plans 1.9. Health Promotion,Disease Prevention and Consumer Education 1.9.1. Though our claims better than expected and than book of business, there is room for improvement 1.10. Adjust Insurance levels 1.10.1. Review reinsurance costs/quotes more often 1.10.2. Change stop loss levels for individual and aggregate 1.11. Implement more aggressive medical case management/disease management 1.12. Buy drugs from Canada or the European Union - not a longterm solution, but a short term one. Strictly illegal because the law says that it will only be legal if the FDA certifies as safe and FDA has not; but done by other states and towns via a separate GBS spun-off organization. 1.13. Pharmacy 1.13.1. Pharmacy Benefit Management carve-out. Recommended by Kevin Walsh. Potential great savings. 1.13.2. Greater incentives for generics 1.13.3. Greater incentives for using mail—for example, could limit reimbursement to what mail order would be. Could require to use mail. Concern about impact on local business and US business; could coordinate with local pharmacy to offer same discount. 1.13.4. Change pharmacy management rules--we have three tiered benefit, could change the tiers 1.14. Audits for accuracy of claims and enrollment