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HomeMy WebLinkAboutAgenda - 09-20-2005-9bORANGE COUNTY BOARD OF COMMISSIONERS ACTION AGENDA ITEM ABSTRACT Meeting Date: September 20, 2005 Action Ager~dab Item No. SUBJECT: Employee Health Insurance for 2006 DEPARTMENT: Personnel PUBLIC HEARING: (Y/N) No ATTACHMENT(S): 1) Orange County Health Claims Experience 2) Health Insurance Benefits Options and Estimated Casts for 2005-06 3) Draft 2006 Health Insurance Rates INFORMATION CONTACT: Elaine Holmes, Personnel Director Extension 2550 Michael Edmonds, Benefits Manager Extension 2558 TELEPHONE NUMBERS: Hillsborough 732-8181 Chapel Hill 968-4501 Durham 688-7331 Mebane 336-227-2031 PURPOSE: To consider renewal of employee health insurance plans through the North Carolina Association of County Commissioners (NCACC) Health Insurance Trust effective January 1, 2006. BACKGROUND: In summary, the County has received a renewal rate quotation for employee health insurance effective January 1, 2006. The NCACC Health Insurance Trust has quoted a renewal rate increase of 22.3 percent. The 2005-06 budget provides for up to a 15.9 percent health insurance rate increase. The Manager recommends that the Board approve the addition of a $250 deductible for inpatient hospital services and outpatient hospital services to the Blue Care Plan. With the addition of the deductible, the NCACC Trust quotes an overall renewal increase of 16.5 percent rather than 22.3 percent. Additional information is provided below. Current Health Plans Currently Orange County offers two health insurance plans: Health Plan Employees Enrolled Blue Crass Blue Care Plan 742 Blue Cross Blue Options Plan 45 The Blue Cross Blue Care Plan and the Blue Cross Blue Options Plan are contracted through the NCACC Health Insurance Trust. Blue Cross Blue Care is a health maintenance organization (HMO). The Blue Cross Blue Options Plan is a type of traditional health insurance plan known as a preferred provider organization (PPO). Past Years' Health Insurance Rate Changes The chart below lists past rate increases implemented by the NCACC Health Insurance Trust: Plan Year Percentage Increase 2005 -3,6% 2004 13.8% 2003 25.0% 2002 8,0% 2001 18,9% 2006 Rate Quote The NCACC Health Insurance Trust has provided renewal rate quotations effective January 1, 2006 for the current health plans as follows: Plan Ra__te Increase Blue Cross Blue Care Plan 22.3% Blue Cross Blue Options Plan 22.3% The increase in rates for the Blue Cross Blue Care and Blue Options Plans is due largely to the County's claims experience during the 2005 plan year to date, There were overall increases in utilization frequency and in cost per occurrence, The County was at or above pool averages in key areas including outpatient hospital services (including diagnostic testing), and prescription drug utilization, In addition, the NCACC Health Insurance Trust has included an increase in health plan administrative costs, resulting from an increase in its administration charges from Blue Cross, Attachment 1 provides additional information on Orange County's health insurance experience and an update on the employee wellness program now getting underway, In conjunction with the renewal, the NCACC Health Insurance Trust has advised of the following updates to the Blue Crass plan benefits: ^ Addition of four obesity assessment visits per benefit period, ^ Addition of coverage for FDA approved weight loss drugs for the long-term treatment of obesity. ^ Availability of six nutritional visits per benefit period for members who are enrolled in a Blue Cross Blue Shield disease management program (such as cardiac disease), or weight management program. ^ Specified self-injectable drugs (such as Imitrex for migraines) only will be covered through pharmacy benefits. Employees will not be allowed to have self-injectable drugs administered in a physician's office. Budget for Fiscal Year 2005-06 The County budget for fiscal year 2005-06 provides funding for up to a 15,9 percent health insurance increase effective .)anuary 1, 2006. In dollars, this is $361,024 budgeted for the projected increase, Based on the 22.3 percent quoted renewal rate for 2006, the cost of the County contribution for individual coverage and dependent coverage is greater than the amount budgeted for health insurance for 2005-06. In dollars, this is an increase of $517,817 for 2005-06 or an increase of $156,792 over the budgeted amount of $361,024, Available Options to Reduce Proposed Rate Increase Recognizing the overall cost of the rate increase quote provided by the NCACC and the significant amount over the 2005-06 health insurance budget, staff conferred with our health insurance providers to identify possible strategies for reducing the amount of the County's rate increase, while simultaneously preserving the high quality of our health plans, There are several options available for reducing the renewal rate increase quoted by the NCACC Health Insurance Trust, These are summarized below, More detailed information as to cost is provided in Attachment 2: 1, Option 1 -Renew the Contract with the NCACC Health Insurance Trust As Is This option would continue County health insurance benefits at their present level. This option requires a 22.3 percent budget increase, This exceeds the amount budgeted for 2005-06 and would require $156,792 in additional funding, 2.. Option 2 -Increase the Physician Office Visit Co-Pays With this option, the co-pay for a primary care physician office visit increases from $10 to $20, and for a specialist visit from $20 to $30 for bath plans. This option requires a 20.3 percent budget increase. This exceeds the budget for 2005-06 and requires $110,350 in additional funding. This option affects all physician visits by covered employees and their dependents. 3, Option 3 -Increase the Prescription Co-Pav Tiers With this option, the co-pay tiers for prescription drugs increase from $5 (generic)/$15 (preferred brand name)/$30 (non-preferred brand name) to $10/$20/$30 respectively for both plans, Option 3 requires a 19.1 percent budget increase, This exceeds the amount budgeted for 2005-06 and requires $82,485 in additional funding. This option affects all prescriptions obtained by covered employees and their dependents, 4. Option 4 -Increase Both Physician Office Co-Pays and Prescription Co-Pay Tiers This option combines Options 2 and 3 above, affects both plans and requires a 17,2 percent rate increase. Option 4 exceeds the amount budgeted for 2005-06 and requires $38,366 in additional funding, This option affects all physician office visits and all prescriptions obtained by covered employees and their dependents. 4 5, Option 5 -Add Annual $250 Per Member / $750 Per Family Deductible to the Blue Cross Blue Care Plan The $250 deductible applies to inpatient and outpatient hospital services including surgical procedures, and certain diagnostic procedures (such as Magnetic Resonance Imaging Scans -MRIs) for the Blue Care plan, The Blue Options plan benefits would not change, Option 5 requires an overall 16.5 percent budget increase (16.2 percent actual increase in the Blue Care plan and 21,6 percent for Blue Options). This option slightly exceeds the amount budgeted for 2005-06 and requires $19,212 in additional funding over the amount budgeted, This option does not affect primary care and specialist physician office visits, or pharmacy services. 6. Option 6 -Make All Changes in Options 2, 3, 4 and 5 Above This option combines all changes presented in Options 2, 3, 4, and 5 above and has the greatest impact on the benefits provided through the County's health plans. Option 6 includes increases to physician co-pays, prescription drug co-pays, and include a $250 deductible for inpatient/outpatient surgical procedures and diagnostic procedures, This option requires an overall 11,3 percent increase (11,1 percent for the Blue Care plan and 13,2 percent for Blue Options), is within the parameters of 2005-06 health insurance budget and is $101,699 less than the amount budgeted, Manager Recommendation After careful consideration of the proposed rate increase from the NCACC Health Insurance Trust and the options for rate reduction, the Manager recommends implementation of the $250 per member/$750 per family annual deductible for inpatient hospital services and outpatient hospital services (Option 5 above) for the Blue Care plan, The Manager recommends Option 5 for the following reasons: ^ A lessened impact on the County workforce and their dependents as a whole when compared to the other options available. This option will not affect employees on a day-to- day basis, as would increases in physician office co-pays and prescription drug co-pays, This deductible would only be activated for inpatient and outpatient hospital services including surgical procedures, and certain diagnostic procedures such as Magnetic Resonance Imaging Scans (MRIs), ^ This option, as a single item, would have the greatest impact in reducing the proposed increase provided by the NCACC Health Tn~st (from 22.3 percent to an overall 16,5 percent), This reduction would bring the County very close to the amount budgeted for the 2005-06 plan year and would require only $19,212 in additional funding. ^ Given the pace of health insurance increases it is necessary that the County take action to address these rapidly growing costs, Of the available options, this best balances the County and employee needs, Employees have been heavily impacted by gasoline price increases, as has the County. Even with the reduction in the rate increase from 22.3 percent to 16,2 percent far the Blue Care plan, employees with dependent coverage still will experience a 16.2 percent increase in their cost, For many employees the four percent salary increase provided by the Board will not take place until late in 2005 or in 2006. Meanwhile employees must deal with these escalating costs. County Contribution for Employee Health Insurance For the 2006 benefit plan year, the County's proposed contribution for employee health insurance is the: ^ Full cost for individual employee coverage and ^ 52 percent of the cost of dependent coverage based on the Blue Cross Blue Care Plan rate. As is the usual process, the County then applied the dollar amount of the dependent contribution calculated based on the Blue Cross Blue Care rate to the Blue Cross Blue Options plan. The County has maintained a dependent subsidy of 52 percent since the 2003 plan year. Continuation of the subsidy at this level maintains a key "family friendly" policy offered by the County that is highly valued by a large number of County employees. This is a family friendly policy in that it makes health insurance coverage for dependents, whether spouse, domestic partner, children, or entire family more affordable, and thus, accessible. It particularly benefits lower salaried employees for whom dependent health insurance coverage is a significant cost, Draft 2006 Health Insurance Rates The Attachment 3 draft monthly health insurance plan rates are based on: ^ Renewal of the current plans with the addition of the $250 deductible to the Blue Care plan as in Option 5 above. ^ Continuation of the current 52 percent dependent subsidy, based on the Blue Crass Blue Care Plan. Next Steps With the Board's approval of the health insurance renewal and rates, staff will proceed to develop the employee open enrollment packets, distribute these to employees in early October, hold the open enrollment period October 17 through November 5 with the Benefits and Wellness Fair tentatively scheduled for Friday, October 21. Payroll deductions at the new rates will begin in the pay period beginning November 21 for coverage effective January 1, 2006. ABC Board Employee Health Insurance In follow up to the request of the ABC Board, the Board of Commissioners asked that staff explore the option of adding ABC employees to Orange County's health insurance, Information has been obtained for that review, Analysis and development of the requested report is underway, Meanwhile, the County has been advised that if ABC employees were added it would not affect the County's renewal rate for 2006, Given that, it is not necessary to delay consideration of the County's health insurance renewal pending the ABC Board report. FINANCIAL IMPACT: As noted, the County budget far 2005-06 provides funding far up to a 15,9 percent health insurance cost increase or about $361,024. Renewal with Option 5 as recommended requires about $19,000 mare than the amount budgeted, The Manager recommends the Board authorize the transfer of the required additional funds from fund balance, RECOMMENDATION(S): The Manager recommends that the Board: Approve renewal of employee health insurance plans with the NCACC Health Insurance Trust including the change outlined under Option 5 above which provides for the implementation of a $250 per member/$750 per family annual deductible for inpatient hospital services and outpatient hospital services for the Blue Care plan, • Adopt the Attachment 3 health insurance rates far coverage effective January 1, 2006 including continuing the dependent subsidy at 52 percent. • Authorize a transfer of $19,212 from fund balance to the employee health Insurance account to supplement the 2005-06 health insurance budget, 7 Attachment 1 Orange County Claims Experience and Wellness Program Update The County's health insurance rate increase for 2006 results largely from claims experience during the 200.5 plan year to date, Increases in frequency and cast of medical services figured most prominently. Outlined below is additional information related to the County's claims experience and an update on the employee wellness program, Contributions Compared to Claims During the two year period of 2003-04 and 2004-05, there was a close margin between County premiums paid versus actual claims casts, The chart below shows Orange County premiums paid as compared to total claims and related costs for these two fiscal years. Fiscal Year Premiums Claims* Difference 2004-05 $4,975,764 $4,767,684 $208,080 2003-04 $3,921,838 $3,892,386 $29,452 'Includes administrative costs and costs for stop loss insurance. Premiums paid amount is from County records and claims cost is from the NCACC.. Utilization Trends While the County experience is below the NCACC norm in some areas of utilization such as inpatient hospital admissions and emergency room visits, it is above the norm in other areas such as outpatient visits, physician visits and prescription drugs. Several highlights of Orange County plan utilization during May 2004 through April 2005 are shown below: ^ Hospital outpatient visits increased six percent during the period as compared to the previous year and were above the NCACC norm, ^ While the average number of emergency room visits for Orange County has decreased and was below the NCACC norm, the average cost per visit rose 21 percent and exceeded the NCACC norm, ^ While the primary care visit rate has remained relatively stable and was comparable to the NCACC norm, the average allowed charge per office visit increased 22 percent and exceeded the NCACC norm. ^ Prescription drug costs and number of prescriptions per member increased for Orange County, and were above the NCACC norm, The increase in large part was due tc an increase in cost of brand name dn~gs without generic equivalents. ^ All measures of hospital inpatient utilization were below NCACC averages including the total number of admissions, as well as the average cost per admission. The admission rate far Orange County employees was 21 percent below the NCACC norm and the average days per admission were 24 percent below the norm, 8 Attachment 1 Health Services/Treatment Trends During 2004-05 Orange County employees utilized a variety of hospital services in inpatient and outpatient settings. Services and treatment included: ^ In the inpatient hospital setting, pregnancies were the most frequent cause of admission to the hospital, but still remained below NCACC averages, Excluding pregnancy, the most frequent cause of hospital admission was circulatory disease. The most common diagnosis was hardening of the arteries, The most common procedure performed was coronary artery dialation (i,e, angioplasty), ^ In the outpatient hospital setting, the most frequent diagnoses included screenings for breast cancer, diabetes, respiratory system/other chest systems (chest pain), joint disorders (knees, shculders, etc,), and symptoms involving the head/neck. Services also included several types of diagnostic procedures such as pathology, CT Scans, MRIs and Colonoscopies. ^ In the hospital emergency room the most frequent diagnoses included respiratory/chest symptoms (i,e, chest pain), abdominal symptoms, general symptoms (i,e. nausea, headache, fever, fatigue, etc.), soft tissue disorders (e.g. muscle spasms, limb pain), and neck/back sprains. ^ In examining the types of prescriptions utilized by Orange County, cardiac drugs were the most widely prescribed, while psychotherapeutic drugs were the costliest (since largely there is no generic equivalent for these drugs). Employee Wellness Program Update During 2004-05, County staff initiated development of an employee wellness program through a collaboration among the Health Department, Personnel, Blue Cross and the NCACC, The mission is to offer a wellness program to all employees that will improve heath and productivity, establish an overall work environment that promotes good health and a positive work attitude and, over the long term, may help reduce absenteeism and health care costs. At the May 17, 2005, Board of Commissioners' meeting, the Board endorsed the County's grant application for funding from the North Carolina Association of County Commissioners (NCACC) Risk Management Pocl to help support the planned Employee Wellness Program. The County submitted the grant in May, 2005, The NCACC grant review board plans to review the County's application when it next meets on September 21. Since the grant status still is pending, the County decided to take initial steps to implement the employee wellness program working within the current funds available, In June 2005, the County appointed a wellness coordinator and formed the wellness implementation team made up of employees in key departments such as Health, Personnel, Aging and Recreation and Parks. Working in collaboration with representatives from the Blue Cross Employer Health Partnerships (EHP Blue) program, this team began designing and planning specific wellness program activities, Some of these planned 9 Attachment 1 activities include making healthy options available in vending machines, working with the County's caterer to provide healthy, low fat options at County events, including wellness and/or nutrition information in each edition of the County newsletter, leading and providing maps and information an walking groups and other recreational opportunities, and offering employees "lunch and learn" workshops on nutrition, physical activity and targeted health risk topics such as diabetes and high blood pressure, A current strength of the County's partnership with BlueCross Blue Shield is the active employee participation in the Member Health Partnership's programs which is well above the Blue Shield norm. These programs include those designed for the management of Asthma, Diabetes, Fibromyalgia, Heart Disease and Specialty Care, Building on this strength, the wellness program will provide ongoing education and promotion to increase awareness and participation in Blue Cross programs, In January 2Qb6, as the formal kick off for the Employee Wellness Program, the County will be offering each employee the opportunity to participate in a confidential Health Risk Appraisal (HRA) at no cost. The HRA is a measurement of one's current health status and will help employees become aware of the health needs and lifestyle practices that determine personal well being. After completing the HRA each employee will receive a confidential personalized report that emphasizes factors that he or she can control, The report offers positive reinforcement of good health practices, along with recommendations far change, as needed for each of the major health areas, The HRA also will provide an aggregate report to Personnel that will be used to plan for future wellness programming focusing on the specific health risk areas identified in the HRA, O O N L O U C~ G N W 'v R N C O .r Q 1F QI m Q~ V R C t ~+ R N m `n ° o ~ m ~ ~ "'' a o co o ~n co m ~n a ° .~ a ~ ~ N (O O N ~ N O M r N N ~ C M ao ~ o N c ~ O a Y G ~ ~ O O O r ~Y M N ( D ~ O O (O O CV W d) .- t0 '~- E M ~- M M ~- O M N Q ~- ~- U .a G N ~ w d 07 O ~ rn m ~ ~» ~ ~ v~ ~ C ~ ~ O m M N O c' ') O G N W M to M N M ~ ~ m ro O Q o` ~ t 0 V O d' V' M M N y N O ~ N N ~.y ~} EA d} H3 fA L" Y N O O O O ~ ~ C N O O O O ~ o -~ m m M M ~- N M N ~ v N O 61 f~ M .- 0 C N N 4- ~ r 0 . .O 7 m .O C m O O O ~ ~,, c m c ° E ~ c O °' at ~ ' o N ~ O Q "d. O ~ t` d ~ .- ~ ~ .c `m o .c m y Q ~ "~ ~ ~ c O m ~ ~ p ~ ~ Qom .A w ~ >, O .. O d. E N V G "_ m "_ 'O ~ c O m N E V m M o ~ d m ~ ~ a n' U~ c m o m ~ ° m ~~ o~ ~~ m m rn `° r U °°' ° pg = p. M ~ m ° m 0 T N O Lo2S m~ ~ U N . 0 ~~ rL ~ a° O N a C C U N o c m m ~ ~° ~ij v, ~ c-O ~ m 3 N N~ N`- N N m >'m ' N C N V O ~ V~ V >, ~ E D. 'O N lL' C C Er1 . C Q~ O r N M Ct ~1'> fD C C m `B ~ °- c c o ° O ~ m °' N N "'~ ~- O O 4- ~' o o N O ~ N ~ -o c c m m c c m m d 4. N N N U U N _O C0 m N N w '~ O "- o o o ~ N M r ~ ,N N N m `° m U U C `C ~ m ~ ~ U O co ~ o m u? co r ~ O O y W m m N V C C m `~° > ~ p x Attachment 2 10 O O N ~_ N c 0 o. O m N r Attachment 3 11 DRAFT 2006 Monthly Health Insurance Rates Blue Cross Blue Care Plan Total Cost Paid by the County Paid by the Employee Old New Old New Old New Employee Only $342,77 $398.24 $342.77 $398..24 $0.00 $0,00 Employee/Child(dren) $661.55 $768.62 $508.54 $590,84 $153,01 $177.78 Employee/Spouse $722,92 $839,92 $540.45 $627,91 $182.47 $212.01 Employee/Family $1,028.30 $1,194,72 $699,25 $812,41 $329.05 $382.31 Blue Cross Blue Options Plan Total Cost Paid by the County Paid by the Employee Old New Old New Old New Employee Only $384.19 $467.16 $384,19 $467,16 $0.00 $0.00 Employee/Child(dren) $741.42 $901,56 $508.54 $590,84 $232,88 $310.72 Employee/Spouse $810.55 $985,62 $540.45 $627.91 $270..10 $357.71 Employee/Family $1,152,49 $1,401,42 $699.25 $812.41 $453,24 $589,01 Note: Rates are based upon a dependent subsidy of 52 percent calculated on the Blue Care Plan with the same dollar amount then applied to the Blue Options Plan.