R-2015-114 2015-06-29RESOLUTION NO. R2015-114
A Resolution of the City Council of the City of Pearland, renewing the
employee health insurance benefits for stop Toss and administration
services with Cigna, awarding the employee dental insurance benefits
to Aetna, and awarding the employee vision plan benefits to Vision
Benefits of America for fiscal year 2015-2016.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND, TEXAS:
Section 1. That the City of Pearland has received proposals for employee benefit
rates, attached hereto as Exhibit "A", and such rates have been evaluated.
Section 2. That the City Council hereby renews the employee health insurance
benefits for stop loss and administration services to Cigna in the amount described in
exhibit "A", attached hereto and incorporated for all purposes.
Section 3. That the City Council hereby awards a contract for employee dental
insurance to Aetna in the amount described in exhibit "A", attached hereto and
incorporated for all purposes.
Section 4. That the City Council hereby awards a contract for employee vision
benefits to Vision Benefits of America in the amount described in exhibit "A", attached
hereto and incorporated for all purposes
PASSED, APPROVED and ADOPTED this the 29th day of June, A.D., 2015
ATTEST:
APPROVED AS TO FORM:
DARRIN M. COKER
CITY ATTORNEY
GA_
TOM REID
MAYOR
CITY OF PEARLAND
HUMAN RESOURCES
WHITEPAPER
ON
THE CITY'S HEALTH CARE
RESOLUTION NO. R2015-114
Exhibit "A"
February 2015
IPS Advisors, the City's consultant on all matters of health and benefits, met with City Staff in
November 2014 to discuss end of year results as well as what may be expected for the upcoming
year. Below are some of the major areas of discussion.
Financial Results
At year end 2013-14, the City experienced a significant increase in its per capita health care
(medical and prescription) spending. Utilization statistics show increases in large claims costs
were the primary driver of these results. At the end of the year, the City had four claims over the
top of the specific stop loss level accounting for $603,870 in reimbursements. The City also
experienced an aggregate stop loss reimbursement of $35,294, incurring over 25% above the
insurance carriers expected claims target.
Per Capita Medical Claims
Per Capita Medical Claims
Medical Claims
% Difference
2008-2009
$ 4,678
11.0%
2009-2010
$ 5,733
22.6%
2010-2011
$ 6,478
13.0%
2011-2012
$ 6,641
2.5%
2012-2013
$ 7,368
10.9%
2013-2014
$ 8,640
17.3%
Per Capita Rx Claims
Per Capita Rx Claims
Rx Claims
% Difference
2008-2009
$ 1,001
18.6%
2009-2010
$ 1,235
__
23.4%
2010-2011
$ 1,384
12.1%
2011-2012
$ 1,546
11.7%
2012-2013
$ 1,682
8.8%
2013-2014
$ 1,643
-2.3%
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Health Care Whitepaper
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Total Per Capita Claims
Total Per Capita Claims
Total Claims
% Difference
2008-2009
$ 5,679
12.2%
2009-2010
$ 6,968
22.7%
2010-2011
$ 7,862
12.8%
2011-2012
$ 8,187
4.1%
2012-2013
$ 9,050
10.5%
2013-2014
$10,283
13.6%
Renewal
Due to significant loss ratios, the City experienced a 25.9% increase to its maximum annual
funding assuming no plan design changes. By discounting the current basic plan and offering a
menu of two Kelsey -Care Options and the HSA Plan, the City was able to reduce the increase to
its maximum annual funding to 15.3%. Final stop loss premium costs increased 3.3% and
administrative fees decreased by .09%. After plan changes, the 2014-15 budget equaled
$6,801,888 for budgeted authorized positions with a current reserve of $994,450.
The City also renewed its Dental plan through Aetna at no increase to the premium rates to the
City. The voluntary Vision plan renewed at a 6% decrease with rates guaranteed until 10/01/16.
Life, Accidental Death and Dismemberment and Disability is currently in a rate guarantee period
until 10/01/16.
Plan Design Strategy
The City has taken significant steps to alter health care purchasing behavior by discontinuing its
traditional PPO health plans and offering Accountable Care and Consumer Driven health plan
models. The City has experienced declining utilization trends in outpatient, professional and
prescription drug spend which can largely be attributable to adjustments to these models.
However, large claimants have overpowered much of the positive results in fiscal year 2013-14.
Furthermore, claim results for this plan year included approximately 180 or 33% of employees
participating in the Basic Plan. The City will not experience the full effect of the total replacement
of the PPO plans and the Accountable Care model until the beginning of the 2015 calendar year.
Possible Considerations for 2015-16
For fiscal year 2015-16, IPS Advisors will prepare an RFP for Health, Dental, Life, Stop Loss,
Phannacy, AD&D and vision.
The City has eliminated traditional PPO health plans and is now offering Accountable Care and
Health Savings Account options. It would be recommended to continue to evaluate increases in
the out of pocket maximum cost sharing levels for all plans. The maximum mandated out of pocket
cost sharing for 2015 is $6,600. The City's Base and Buy up Kelsey -Care plans sit at $2,000
individual, $4,000 family and $3,000 individual and $6,000 family respectively. Copay
consideration on inpatient and outpatient services are also recommended for consideration.
City of Peariand Employee Health Care gt tg,{8 f�yalitiltealth Insurance for FY 2015/16 Page 6
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The City currently funds 100% to employee and 70% to dependents for the base Kelsey -Care plan.
Overall the City funds approximately 85.8% of health plan costs. The City evaluated options to
reduce dependent subsidies to a benchmark of 62% to the base Kelsey -Care plan. Continued
evaluation of dependent subsidy levels is recommended for the upcoming year. Also evaluating
the contribution strategy to the USA is recommended as the City is funding slightly more to this
program than both Kelsey -Care plans.
The Employer Mandate for the City of Pearland will be effective October 1, 2015. The City is
moving forward with all reform requirements and intends to be in compliance with the new
mandates.
Musculoskeletal conditions represent the top diagnostic category for the City of Pearland's plan.
It is recommended for the City consider a preferred benefit level for employees who utilize
manipulative therapy to manage musculoskeletal conditions thus reducing imaging, surgeries and
rehab visits. Companies such as Airrosti, can provide such a level of care for employees and over
91% of individuals utilizing them report no need for further medical care and 99.7% would refer
them to friends and family.
The City has substantial participation in its Biometric Screening and Health Risk Assessment
program. However, concerns regarding recommended preventative examinations and cancer
screenings do exist based on the latest data reported by Cigna. It is recommended for Cigna and
Kelsey -Care to provide insight on their strategy to increase compliance. Additional analysis on
the Disease Management program is also recommended from Cigna to evaluate viability of this
program moving forward.
Due to the City's accountable care contract with Kelsey -Care, implementing an on-site or near site
clinic is difficult. The Kelsey -Care model is based on management of employees' health
conditions throughout the continuum of care. A health and wellness clinic would substantially
disrupt this care as the majority of primary and preventive care would need to be run through the
clinic in order to be cost effective. Further, the City currently pays capitated fees for primary and
preventive care to Kelsey -Care and those fees would have to be reduced substantially for a health
clinic to be viable and after initial conversations with Kelsey Seybold Clinic a substantial enough
reduction is not available at this time.
The City has contracted with Partners Plus consulting in order to complete an audit reviewing
process accuracy, claims payment accuracy, claims turnaround time, eligibility. system set up,
subrogation, and more of the City's health plan. It is our hope the results will allow us to pursue
overpayments, identify underpayments, correct processing issues and benefit intent issues.
Another possible consideration for 2015-16 is Telemedicine which offers a lower cost option to a
Health Clinic. The program can provide 24/7/365 access to a physician specializing acute
conditions. The service is designed to treat conditions such as Cold, Flu, Bronchitis, Allergies,
Respiratory Infections, and more. Medications may also be prescribed. The service provides a
lower cost and more convenient care for common medical conditions.
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Another option for 2015-16 is private exchange alternative to the City's health care. IPS and a
company called Liazon are providing clients a private exchange alternative which may be a plan
consideration for the City in the future The exchange is huilt on a defined contribution approach
to providing health and welfare benefits. What makes private exchanges unique is that employees
are able to shop from a menu of health and welfare benefits and select a package that best suits
their needs.
When it cotnes to health care, the past several years have been and the next few years will be
unpredictable. The requirements as determined by Health Care Reform along with the growth and
change in the landscape of our City employee base keeps our attention. We remain steadfast in
our efforts to continue to provide quality health care options to our employees and their families.
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