HomeMy WebLinkAboutAgenda - 10-03-2005-9aORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: October 3, 2005
Action Agenda
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
919-245-2550
Michael Edmonds, Benefits Manager
919-245-2558
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 quctation 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 Cross 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 Grass 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 Rate Increase
Blue Cross Blue Care Plan 22.3%
Blue Cross Blue O tN ions, Plan 22.3%
The increase in rates for the Bltae 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 Tnist 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 Cross 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 far migraines) only will be covered through
pharmacy benefits, Employees will not be allowed to have self-injectable dn~gs
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 January 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 far
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 far a specialist visit from $20 to $30 for both 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-Pay 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/$35 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-Pam 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 far 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.
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 carefi~l 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 F
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 Trust (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 for 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
Far the 2006 benefit plan year, the County's proposed contribution for employee health
insurance is the:
^ Full cost far individual employee coverage and
^ 52 percent of the cast 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.
Gantinuation 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 mare 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 an 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 Hated, the County budget for 2005-06 provides funding far up to a
15.9 percent health insurance cast 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,
Adapt the Attachment 3 health insurance rates for 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 2005 plan year to date, Increases in frequency and cost 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 costs, The chart below shows Orange County
premiums paid as compared to total claims and related casts 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 papa 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 rcom visits far Orange Cotanty 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 far Orange
County, and were above the NCACC norm, The increase in large part was due to an
increase in cost of brand name drugs 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 for 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, shoulders, etc,), and symptoms involving the head/neck, Services
also included several types of diagnostic procedures such as pathology, CT Scans,
MRIs and Calonoscopies,
^ 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 necklback 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 Paol 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 farmed 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 on 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, Fibramyalgia, 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 Crass programs.
In January 2006, 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 became 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
for change, as needed far 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.
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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 Oare Plan with the same
dollar amount then applied to the Blue Options Plan.