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HomeMy WebLinkAbout04-22-20 Admin Comm MinutesDUBLIN CITY COUNCIL ADMINISTRATIVE COMMITTEE Wednesday, April 22, 2020 Virtual Platform Minutes of Meeting Vice Mayor De Rosa called the meeting to order at 5:02 p.m. Committee Members present: Vice Mayor De Rosa, Chair; Ms. Fox, and Ms. Alutto. Staff members present: Mr. Rogers, Mr. Stiffler, Ms. Miglietti Approval of Minutes Ms. Fox moved, seconded by Ms. Alutto to approve the December 2, 2019 Administrative Committee meeting minutes. Vote on the motion: Ms. Alutto, yes; Ms. Fox, yes; Vice Mayor De Rosa, yes. Healthcare and Benefits Discussion Mr. Rogers introduced the topic of healthcare and benefits and stated that this is vital for recruitment and retention of the workforce and makes Dublin desirable as an employer. It is important to review the program periodically to ensure it is viable for the long term. Ms. Miglietti provided a presentation for the Committee (attached hereto and incorporated herein by reference as Exhibit A). She stated that this meeting will provide an opportunity to recap the 2020 budget discussion as well as provide some information regarding the City's current healthcare plan and costs. During the 2020 Operating Budget discussion, a comparison was provided to illustrate the changes in benefit expenditures from 2019 to 2020. Funding for the City's benefits programs was budgeted at $16.8 million in 2020, which represents a 14% increase over 2019. Some of this percentage change is related to providing health insurance, OPERS and Medicare to the 10 new funded full-time employees added in 2020. About $1.1 million of this increase is due to health insurance costs for current employees. This increase is being driven by a 16% increase in medical claim costs and a 49% increase in stop loss premiums. The increase in health insurance expenditures was one of the noteworthy items discussed during the budget process. As a result, it was determined by Council that no changes to the City's health insurance program would occur for 2020, but that the program would be discussed prior to the 2021 Operating Budget. The City's health insurance is paid from the Fund 701, which is classified as an internal service fund. The major cost components of the City's health insurance and the annual Administrative Committee April 22, 2020 Page 2 percentage change in budget since 2016 was identified in the presentation (Exhibit A, Slide 6). All Fund expenditures have increased by 6.1% annually. Medical, dental, vision and prescription coverage has increased annually by 3.3% since 2016. Stop loss coverage has increased 26.3% annually and increased sharply in 2020, representing the largest percentage increase in expenditures. Employer HSA contributions have increased 2.8% annually as the City has held constant the amount deposited per employee, but the number of City employees has increased. Vice Mayor De Rosa sought clarification regarding whether the numbers shown were actual expenditures or budgeted expenditures. Mr. Stiffler stated that these numbers in the presentation were budgeted expenditures, but the next slide shows actual expenditures. She also asked if the stop loss was a premium increase or an actual payment increase. Ms. Miglietti stated that she will provide additional detail later in the presentation. Ms. Miglietti then provided an illustration of the actual expenditures back to 2014. All fund expenditures have increased by 5% annually. Medical, dental, vision and prescription coverage has increased 3.9% per year since 2016. Stop loss coverage has increased 21.3% per year, again representing the largest percentage increase in expenditures. These statistics show that since 2014, the major driver and the changes in healthcare costs for the City have been associated with stop loss premiums. Ms. Fox stated that it appears that even though the budgeted and actual expenditures have increased, we are still below the budget. Mr. Stiffler stated that was correct. Ms. Miglietti defined some of the terms that will be discussed. The terms were defined as: • Stop Loss is insurance that protects the City against large claims. Stop loss policies take effect after a certain threshold has been exceeded for claims. For Dublin, that threshold is $150,000. • Hiah Deductible Health Plan (HDHP) is a health plan project that combines a Health Savings Account or a Health Reimbursement Account, a traditional medical coverage plan and a tax -advantaged way to help save for future medical expenses while providing flexibility and discretion over how you use your health care dollars. • Health Savinas Account (HSA) is a tax-exempt account set up to pay or reimburse certain medical expenses incurred. The City contributes to employees and employees can also contribute up to IRS limits. • Health Reimbursement Accounts are City -funded exactly the same as an HSA. The City offers HRAs to employees who do not qualify for HSAs under the IRS guidelines. Employees are reimbursed tax-free for qualified medical expenses. Unused amounts may be rolled over to be used in subsequent years. The employer funds and owns the account, meaning employees cannot take this money when they leave or retire. Administrative Committee April 22, 2020 Page 3 • Deductible is the amount paid for covered health care services before the insurance plan starts to pay. • Co -Insurance is the percentage paid by the patient of the allowed amount for covered health care services to providers. • Out -of -Pocket Maximum is the expenses for medical care that aren't reimbursed by insurance. Out-of-pocket costs include deductibles, and coinsurance for covered services plus all costs for services that aren't covered. • PPO is a preferred provider organization and is a medical care arrangement in which medical professionals and facilities provide services to subscribed clients at reduced rates. Ms. Miglietti provided a brief history of the medical plans in the City. In 2011, the City introduced a high deductible health plan paired with a health savings account or health reimbursement account. Since then, the plan design and the cost to our employees has remained unchanged. The City has been able to continue a high level of funding. Over the past six years, the City has had increasing high cost claimants, and more claimants hitting our stop loss threshold. Our general plan spend is below trend. The City is doing the right things to lead employees to make solid choices that keep the plan spend lower than the trend. The City provides employees several educational opportunities, which encourage participation in activities that promote wellness. The current deductible and out-of-pocket maximums for single and family are within the IRS definitions of a high deductible health plan. Ms. Miglietti illustrated what the total annual cost to an employee would be if the employee fully utilized their insurance. She also stated that preventative care is covered at 100% and each employee receives the annual contribution to their HSA/HRA. In response to Vice Mayor De Rosa's question regarding why there are only single and family versus single, single and spouse and then family, Ms. Miglietti stated that because the City is self-funded, breaking down the numbers to that level does not actualize any savings to the City. Ms. Fox inquired as to the percentage of savings the City has realized since the Healthy by Choice plan has been in effect. She also asked if there was a way to determine, using the Healthy by Choice data, what percentage of the employees have the most claims due to chronic illness or issues. Ms. Miglietti stated that there was a great deal of data included further in the presentation and that she would point it out. Ms. Miglietti provided a general review of the City's dental plan design. Employees and their covered family members receive 2 preventative cleanings per calendar year. Ms. Miglietti illustrated the last three years of claims (Exhibit A, Slide 13). Because high cost claims and stop loss claims can't be predicted, the City has exceeded projected Administrative Committee April 22, 2020 Page 4 costs by over 19% in 2017 and 2018. 2019 was closed out at 181.3% of projections due to the highest stop loss claim the City has ever experienced. The spike in total claims in August 2018 and 2019 show the claim volatility, which has led to increased stop loss premiums for the last two years. As of this meeting, there is only one month of claim data for January; and it was running at 125.1% of projected costs. Additional data will be shared in upcoming meetings as it becomes available. Ms. Fox inquired as to whether or not there was a way to mitigate simple stop loss premiums. Ms. Miglietti stated that over the last six years, the City has experienced a great deal of stop loss claims. She will discuss that further in the presentation. Vice Mayor De Rosa asked about the last decade of data. Ms. Miglietti stated that upcoming in the presentation are six years of data. With the transition to a high deductible health plan, the City's benefit consultant, Oswald, analyzed the future cost trends (Exhibit A, Slide 14). The findings were that: • the City is spending significantly less than what we would with a traditional PPO plan; • Stop loss policy has been of paramount importance, as without stop loss, the City would have paid the full cost or $19 million in 2019; • By moving to a high deductible plan and continuing the wellness programs, the City has saved $11.5 million in 2019 and a cumulative savings of approximately $60 million since 2011. Ms. Fox inquired as to whether or not there was a way to have two stop loss plans: one for employees who are of the healthier population and one for those who have been identified as having health issues. Are there options on handling rapidly increasing stop loss claims? Ms. Miglietti stated that they would like to take the feedback of the committee and be prepared at the next meeting to bring forward the options of interest to the committee. Ms. Miglietti illustrated a fully funded plan versus the self-funded plan. Using the same projections Oswald used for our 2020 renewal, but using a fulling insured model, the City's overall plan costs would have been 18.64% higher or 2 million dollars more for 2020 than our current self-funded model. Having a self-funded plan is the most economical and gives the City the greatest control in our plan spend. The City's stop loss policy reimburses the plan for medical expenses over $150,000. The stop loss policy is a form of excess risk coverage that provides protection to the City against a high claim on any one individual. The City pays a significant stop loss premium, which has steadily increased year after year due to the number of stop loss claims and the amount of reimbursements to our plan. As stated earlier, this factor has been the primary driver of increased costs over the past six years. Included in the expected claims are high cost claims --claims less than the stop loss threshold of $150,000 but over $75,000. The high cost claims have increased in cost per case. Even though the stop lost premium per employee per month is going up, the City has Administrative Committee April 22, 2020 Page 5 received more in stop loss reimbursements than have been paid out in premiums. As of the renewal last fall, before the close of the year, the City's projected per employee per month cost for stop loss coverage increased 43.1% between 2019 and 2020 alone. In late December, United Healthcare requoted the stop loss rate at $1,444,015 or $321.75 per month per employee for a savings of over $442,651 for 2020. In an unfortunate turn, the City has a brand new stop loss claimant introduced to the plan, a young child of an employee with a rare disease that may become another high cost stop loss claim. Stop loss premium increases are the area of our plan that is causing increased costs. There are limited solutions to control this as it's a risk of being a self-insured plan. Over the last six years, the per employee per year total cost has increased nearly $4,000. Again, this is nearly exclusively due to the stop loss premium increases. Every year, the City goes out to market to bid our stop loss policy to determine if we can achieve more competitive rates. For the last several years, we have not found a vendor to meet the rates and terms that we currently have. It is reasonable to expect an annual increase to our stop loss premium until stop loss claims start to recede. Ms. Fox asked what would happen if we raised the threshold above $150,000. Ms. Miglietti stated that staff has considered that and could provide more information at the next meeting. The Healthy by Choice Wellness Program has a positive impact on the organization. Outside of our high claims and stop loss claims, the general health of Dublin employees has remained steady with a low prevalence of disease in our general population. We continue to incorporate educational opportunities/programs with a complete lifestyle focus in an effort to maintain the health of our population. All of the following statistics are compared to United Healthcare's Book of Business, listed as the "norm": 60% of Catastrophic Claimants are engaged in case management (over 50% is excellent); 9.81% below Per Member Per Month spend norm; Our pharmacy is 9.9% below trend; 4% of our population identify as tobacco users; Average family size is much larger than the norm, which is to be expected given our average age demographic; 30.7% more families on our plan than norm; 99.3% network utilization; Emergency room visits are 39.9% lower than the norm; Risk score is 20.3% below the norm; and All of our catastrophic claims were non -preventive. Preventive Care visits and biometric screenings encourage people to take a proactive interest in their health. Another key indicator for mitigating future risk is medication Administrative Committee April 22, 2020 Page 6 compliance. Members are taking medications and managing their health, which can prevent catastrophic events in the future. In order to thoroughly examine our plan spend and analyze driving cost factors, the City contracted with Vital Incite, a third party contractor, in early 2018 to complete a comprehensive review of our medical plan population risk identification. After a 1.5 year evaluation, Vital Incite confirmed what was assessed from both UHC and our benefit consultant Oswald. The conclusion was that the risk population compares better than benchmarks, but that high cost claimants with non -preventive claims have been diving our increasing costs. Our population has a low prevalence of chronic disease and overall, risk maintenance and improvement compares better than benchmark across all risk categories. This is a strong confirmation from a third party that we are executing the best solutions to control plan costs. In looking at 2021 and beyond, the concern remains high cost claims (over $75,000) and stop loss claims ($150,000), over which we have limited control. Ms. Fox asked about case management and monitoring high cost claimants. Ms. Miglietti stated that most of that information would be covered under HIPAA. The City contracts with UHC to monitor as much as possible to ensure that employees are following proper protocols. Ms. Miglietti shared that regarding pharmacy guarantee and rebate share, the City could potentially see a savings that more than doubles the rebate credit we once received. Benefit consultant, Oswald has found that generally speaking, the amount of rebates that the carriers were accepting in lieu of an admin fee credit were twice the admin fee credit and sometimes greater. The rebate share is expected to off -set expenses because the City will be receiving a rebate. This is speculative right now as it depends on our pharmacy spend. Ms. Fox asked why these rebates were being given. Ms. Miglietti stated that this is pharmacy administration. There are two options with pharmacy administration: a pharmacy guarantee or a rebate share. The City previously took a reduced cost to our administrative fee, this is the guaranteed cost. This year, the City will be trying to get a greater savings using the rebate share. Ms. Fox asked if the pharmacy program has ever been priced outside of UHC. Ms. Miglietti stated that it is examined every year with the consultant. Ms. Miglietti provided an update on the collective bargaining agreement negotiations. She stated that staff needs resolution and guidance as to how we will move forward in 2021 as this will have an impact on negotiations with collective bargaining units. USW agreed to a one-year contract with a reopener to give the City time to evaluate benefits. The FOP was not receptive and put negotiations on hold due to the pandemic Administrative Committee April 22, 2020 Page 7 crisis. It is anticipated that negotiations will resume in June or sooner. The negotiations with FOP-OLC will begin in the early Fall. Mr. Stiffler stated that this discussion was prompted due to the increase in health care costs estimated to be $1.2 million. The budgeted variance in 2020 is noteworthy compared to previous years. The 2020 budgeted increase can be broken down as follows: • The increase in healthcare expenditures due to the addition of eight full-time staff positions associated with the dispatching center. These costs have offsetting revenue and Dublin will pay only a portion of this increase under the dispatch reimbursement agreements that are in place. • There was an amount that was not needed but was budgeted during the 2020 operating budget. This reduction was the result of an event involving the City's stop loss claims and the resulting fee change. • The projected pharmaceutical rebate minus the increase in administrative costs. This increases the amount budgeted in 2020, but creates an overall savings when the revenue is received. This is offsetting revenue in the form of rebates. Mr. Stiffler stated that Council and Administration should engage in a robust discussion regarding the future of the City's healthcare and all options for bending the cost curve should be evaluated. There are increasing costs, mainly with stop loss premiums, that will continue to put pressure on the City's finances. However, by analyzing the individual components and identifying new offsetting revenue streams, 2020 did not represent a significant increase in expenditures relative to prior years. Ms. Fox expressed her appreciation for Mr. Stiffler's analysis of the trends. Vice Mayor De Rosa asked if the bump in 2017 costs were due to Obamacare. Mr. Stiffler stated that he would need to investigate that year in more detail to understand the cause of that increase. Vice Mayor De Rosa stated that this would be good information to have. She asked what the budget number would be if all this were to come to pass. Mr. Stiffler stated that it would be the savings of $442,651 from the original amount due to the stop loss event. He also pointed out that the City doesn't hire eight new full-time employees every year, so that is not part of the trend, but more of a one-time occurrence. This is also the first year we will take the risk in taking part of the rebate share. Vice Mayor De Rosa asked if the 701 Fund has a fund balance that carries over or if it is replenished as needed. Mr. Stiffler stated that this fund does have a fund balance, which is currently at $3.5 million. Vice Mayor De Rosa asked what was appropriated to this fund in the budget. Mr. Stiffler stated that $8.8 million was appropriated to this fund. It is important to keep a buffer in this fund so no direct transfers from the General Fund are necessary. In response to Vice Mayor De Rosa, Mr. Stiffler stated Administrative Committee April 22, 2020 Page 8 that the fund balance has been flat over the last few years, meaning the expenditures and revenues were well matched. Vice Mayor De Rosa asked about the health of the fund itself, looking at the rising cost of healthcare from 2019 to 2020. She asked if there was reason to say that the fund is in good stead, where it is today. Mr. Stiffler stated that was correct. Ms. Fox asked about the fund balance and whether or not that amount is intentionally kept in the fund for buffer. Mr. Stiffler stated that there are no guidelines as to what percentage must be kept in the fund. Ms. Fox clarified that State or Federal government does not mandate how much money an employer must have in reserve to pay for the benefits of its employees. Mr. Stiffler stated he is not aware of any such mandate. Ms. Alutto asked if the funding in the 701 fund was ever exceeded, then a transfer would come from the General Fund. Mr. Stiffler stated that was correct and that request would come before Council. Ms. Miglietti summarized her presentation stating that: • the City has managed a cost effective program compared to a traditional fully funded program. It has performed very well and saved $2 million in 2019; • Based on the analysis from Vital Incite, the program is working very well and as intended; • Costs of our general plan spend are below trend; • Stop loss costs in more recent years are negatively impacting the savings this program has historically provided. Next Steps The next healthcare and benefits discussion will discuss options on how to control or mitigate risk. Staff can provide some thoughts on options, based on this Committee's guidance/feedback. Ms. Alutto stated that the numbers are good compared to some she has seen. She is supportive of trying the pharmacy rebate program. She suggested thinking about a tiered pricing in terms of what employees are "charged" for their insurance, so the people who are paid more are shouldering a little more of the burden. There are also companies who incentivize their employees not to take their insurance program if their spouse has benefits that could be used instead. She asked if staff expects the stop loss to continue to increase as the pandemic continues. Ms. Miglietti stated that as of this date, there have been no pandemic related claims. She can bring some projections to the next meeting, based on aggregate data that has been secured by the consultant. Ms. Alutto asked what ideas or suggestions are offered by staff. Ms. Miglietti stated that staff has several that will be shared at the next meeting. Administrative Committee April 22, 2020 Page 9 Vice Mayor De Rosa stated that one item to bring back is to look at the $150,000 stop loss threshold and if there are different levels of coverages as Ms. Fox had suggested. In response to Vice Mayor De Rosa's question regarding how often we look at providers, Ms. Miglietti stated that they compare providers every year. Vice Mayor De Rosa inquired about whether or not a self-funded plan or a fully -funded plan ever converge in the current environment and whether or not there is a point where it would be more fiscally prudent to change plans. Ms. Miglietti stated that if the City switched over to a fully insured plan, then the City would be paying more money because someone else would be assuming the risk. All things considered, self-funded is definitely the preferred plan for Dublin. Ms. Miglietti stated that usually the stop loss claims tend to volley back and forth between good years and bad years, but the last few years have been very hard for the City of Dublin in stop loss claims. Ms. Alutto asked about the effect of tele -medicine. Is there a cost savings to having this option versus having in-person appointments? She also inquired about preventative health care and whether or not there is a way to enhance the wellness program and improve it further. Ms. Miglietti agreed that there is always room for improvement. She stated that staff uses the UHC Book of Business to focus on areas of improvement, such as educating employees about alternatives to going to the emergency room. She added that UHC is currently holding weekly calls to discuss how the current environment and how healthcare might be changing. Ms. Alutto commented on the time savings of tele -health appointments as a benefit also. Mr. Rogers stated that 26 employees went through a pilot program called CHIP and it was considered very successful. This pilot program is a way that the wellness program can be enhanced. Ms. Fox agreed with Ms. Alutto and Mr. Rogers. She stated that involvement in programs makes it more personal and helps engage employees. Any ways to manage health and increase one-on-one personal contact would be beneficial. Ms. Fox stated she was doing some research on stop loss claims and discovered something called "lasering." She understood this to mean that a company can separate the party that is causing the high claims and put them under a different plan/contract. Ms. Miglietti stated that a good example of lasering would be when you assume the risk of the high claim person, so in the case of the City's high claimant last year, the City would have been responsible for paying the $2 million cost of the claims for that claimant. When you laser a high claimant off of your plan, you absorb all the risk. By leaving the high claimant on the plan, the City only paid the $150,000 threshold versus the $2 million. Ms. Fox asked about case management and how often a case is reviewed to make sure it is being managed as efficiently as possible for that patient. Is there a way to control these high cost case management expenses? Ms. Miglietti stated that staff can look at that further. Administrative Committee April 22, 2020 Page 10 Vice Mayor De Rosa stated that the plan for the next meeting is for staff to bring back some options, based upon what was discussed at this meeting. She stated that the City's plan is a terrific plan and a wonderful benefit for employees, so she thanked staff for the work in reviewing this. Dublin 2035 Framework Vice Mayor De Rosa stated that she wanted to keep the Dublin 2035 Framework on the agenda to continue work on it. During the retreat, there was not a great deal of time to talk about specifics with this framework. Because this is a large project, she suggested categorizing the main components into smaller, more manageable work groups. She would like Council Members and staff to collaborate in the areas of greatest interest to them. Then, after some exploration and conversation, all of these sub -groups would come together to Council as a whole for further discussion. The Community Plan and the 2035 Framework could complement each other and may even collide in some areas, so it would be important to keep this as a holistic approach. She asked Committee Members for their input. Ms. Fox agreed that it should be on the agenda and that the Community Plan must be a part of these conversations. Segmenting the bigger categories is a great way to recognize challenges and opportunities to gain some understanding when seeking community input. In response to Vice Mayor De Rosa's question about staff and Council Members working together in sub -groups, Ms. Fox stated that it is a great place to start identifying challenges and visioning. Ms. Alutto agreed that it would be disjointed to talk about Dublin Framework 2035 without considering the Community Plan. She thinks breaking it down into sub -groups is a great idea. She believes Council buy -in is necessary and would allow this to progress. Ms. Fox stated that it will be important to identify some specific objectives. Ms. Alutto agreed and stated that community input is important as Council develops the vision for 2035. Vice Mayor De Rosa agreed that if Council Members are fine with this approach, then it will be important to identify objectives. Vice Mayor De Rosa stated that there were a couple of items that were not discussed at the retreat due to time constraints, so she is suggesting that those items be put on hold until in-person meetings are possible again. Committee members agreed. Future Agenda Items Mr. Rogers stated that in November 2019, the Human Rights Campaign advised the City of Dublin that we will be scored on their Municipal Equality Index. There are several criteria that a City is scored on, and the City has received notice that Dublin will be scored again this year. He would like to discuss this with the Committee to see if there Administrative Committee April 22, 2020 Page 11 are any criteria they would like to change or act upon. He will send the memo from November to Committee Members so they can review and it will be placed on the next agenda in May. Vice Mayor De Rosa thanked everyone for their presentation and discussion. The meeting was adjourned at 6:34 p.m. Jennifer Delgado_ _ Deputy Clerk of Council