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HomeMy WebLinkAbout04-08-03 Admin. Com. MinutesDublin City Council ADMINISTRATIVE COMMITTEE Apri18, 2003 Committee Members Chuck Kranstuber, Chair Marilee Chinnici-Zuercher Amy Salay Staff Members Dave Harding Renee Telfer Mary Kay Ruwette Michele Hoyle ATTENDANCE: Guests: Jay Verhulst, Managed Care of America Taffie Abrams, Managed Care of America Mayor Kranstuber called the meeting to order at 6:30 p.m. in the Council conference room, noting that the purpose oftonight's meeting is discussion of: (1) employee health care benefits, (2) car allowances. Mr. Harding introduced the Managed Care of America representatives, Jay Verhulst and Taffie Abrams. Mr. Harding noted that the health care benefits discussion would focus on: (1) plan design elements, and (2) employee contribution (payroll deduction). In order to compare the City of Dublin's health care plan with the marketplace, a survey was conducted of neighboring cities regarding four key health care plan elements. He will review the survey results, then present his recommendations for each key area. Co-Insurance Mr. Harding stated that the survey results indicated that most of the cities have an in-network and out-of-network co-insurance; Dublin has no differential in those areas. Currently, the City's plan is 90/10 percent co-insurance, applicable to both in- and out-of-network providers. He referred to a chart, which displays the results of that survey. Results range from a 95/5 percent coverage to 75/25 percent. Mr. Kranstuber inquired about the status of a current network. Mr. Verhulst stated that the City is currently using anetwork -Emerald Health Network. Ms. Abrams stated that the City is using a network, but the City's plan makes no tuiancial distinction between out- and in-network providers. Mr. Harding stated that the in-network provider cannot charge more than the Managed Care contract with the City permits -the usual and customary fee. Mr. Kranstuber stated that the incentive for working within the network, then, is that the provider tnust accept the contractual amount -- they cannot bill the employee/ patient for anything additional. Administrative Committee April 8, 2003 Page 2 Ms. Hoyle inquired if there were any data depicting the number of City employees who use the network providers versus those who are using out-of-network providers. Ms. Abrams stated that the claims numbers are broken down into PPO and non-PPO dollars in Section 3. Annual Out-of-Pocket NIaYimum Mr. Harding stated that, currently, the out-of-pocket maximum for single or family coverage is $500. There are some cities that have a differential for maximum out-of- pocket between network and non-network providers. There are four cities surveyed who have $150 for the maximum out-of- pocket for both single and farnily coverage. Those four cities are in a consortium, of which Dublin was previously a member, until Dublin decided to become self-insured. Most of the other cities surveyed have a $500 maximum for single and $1,000 for family. A greater maximum is sometimes allowed for out-of-network providers. Dublin's plan is more generous than most other plans in the out-of-pocket maximum for a family plan. The maximum for single is comparable. The survey suggests that the City is low compared to other cities in the out-of-pocket maximum. He suggested that the City could look at increasing the differentiation for the co-pay and out-of- pocket maximum between in- and out-of-network providers. Prescilption Drugs The survey compares coverages for retail drugs, generic and brand name, and mail order drugs. Dublin's co-pay is comparable with the other cities surveyed. Ms. Salay inquu•ed about the reference to preferred and non-preferred drugs. Mr. Verhulst responded that the City could have a list of preferred drugs, which would be based upon the same premise as in- and out-of-network providers. There is a lower co-pay linked to drugs on a preferred list. Ms. Salay stated that in the interest of securing quality health care for her family, she is uncomfortable with the idea of requesting her physician to prescribe from a preferred list. Mr. Verhulst responded that the intent is that the list be forrnulated by looking first at clinical effectiveness; secondly, at cost. However, most self-insured entities do not include a preferred drugs list. Mr. Harding stated that, currently, the City requires only $1.00 co-pay for either generic or brand- name mail order drugs. City Council may want to make some changes in that amount. Employee Contributions Mr. Harding stated that the survey indicated that of 14 cities, seven have plans that still do not require an employee contribution for single health insurance coverage. The survey indicates Administrative Committee April 8, 2003 Page 3 that four cities do not charge for family coverage, but the remainder require an employee contribution. He noted that the City of Dublin employees do pay less than the marketplace norm. He added that some of those cities also pay the employee PERS pick-up on behalf of the employee. Dublin does not. If Dublin wants to be competitive in its hire rate, it has to automatically offer 8.5% more to an employee coming from Upper Arlington, for instance. If the City considers phasing in an employee health insurance contribution, a major educational component will be needed. Mr. Kranstuber inquired if Upper Arlington is self-insured. Mr. Verhulst responded that is his understanding. Ms. Telfer stated that the City of Powell charges on a "per dependent" basis. Mr. Verhulst stated that it is not permitted to discriminate on the basis of age, but it is acceptable to do so on the number of dependents. The rule-of--thumb with prescription co-pays is that brand co- pays should be four to five times the generic co-pay. His recommendation would be to mandate generic drugs. If an employee prefers brand name, in addition to the co-pay, the employee would pay the differential in cost. Clinically, Class A generic drugs and brand name drugs are equivalent. Usually, the same manufacturer makes them in the same facility. MCA's list of preferred drugs contains only Class A drugs. Mr. Kranstuber stated that should be subject to the availability of generic. Mr. Verhulst noted that when Managed Care of America began to work with Dublin 13 years ago, prescriptions were 3-4% of the City's total health insurance costs. Today, that amount has increased 8 to 10 times. Mr. Kranstuber stated that if the doctor indicates DAW (dispense as written) on the prescription, the employee should not be responsible for the differential. Aren't some heart medicines considered unstable in the generic form? Mr. Verhulst responded that in those cases, the generic would not be mandated. Mr. Kranstuber stated that he preferred not to get involved in dictating health issues. If the doctor indicates "dispense as written," he does not believe the health insurance plan should question that. Mr. Verhulst stated that would be the City's decision in designing its plan. He stated that another component of health plans is step therapy. Certain drugs should be tried before other drugs. If a physician prescribes ahigher-level drug, Managed Care handles that on an exception basis. Before that occurs, however, MCA contacts the pharmacist, who contacts the doctor to see if he/she is agreeable to trying alower-level drug first. If the doctor objects, the pharmacy calls MCA, and MCA inserts an over-ride in the system for that employee. Gastro-intestinal sensitivity is a factor the doctor may be considering. Administrative Committee April 8, 2003 Page 4 Mr. Verhulst stated that one practice also used is to partially fill prescriptions for certain drugs. The patient is advised to purchase only aten-day supply of the drug, and pay a corresponding portion of the co-pay. At the end often days, the patient would have become aware of any sensitivity to the drug, and could then purchase the remainder ofthe prescription, if desired. If, however, the patient has experienced a reaction, only a small portion of the co-pay has been lost. Ms. Salay stated that she would be upset if the pharmacist refiised to fill the prescription as written, and she was required to return to the pharmacy after a discussion had transpired with her physician. Mr. Verhulst stated that a partial prescription is handled as a POS -point of service transaction, without the physician's involvement. MCA messages back to the pharmacist the amount of the prescription to fill at that time and the amount of co-pay to be paid. Mr. Harding stated that he is not recommending that the drug step restriction be implemented at this time. It could be confusing to employees at this time. However, it could be a future option. Ms. Hoyle inquired if it is an accurate statement that the City is spending 18 percent of the total employee health care costs on prescriptions, while the norm is two-three percent. Mr. Verhulst responded that actually the norm is 20 percent. Dublin's usage is consistent with the marketplace, but it is becoming one of the costlier components of the health program. This discussion anticipates making a preemptive strike. Because Dublin has such a small co-pay, those families who have two insurance providers are probably using Dublin's pharmacy card in preference over the other. Mr. Verhulst stated that there is an advantage in filling all one's drugs from the same location. If MCA has the full list of all drugs the employee is taking, they can alert the patient and the physician of the existence of two contradictory prescriptions. Mr. Harding stated that the question is what options the City should pursue. He has compiled a list of recommendations for each of the four key elements of the survey. EMPLOYEE CO-PAY Mr. Harding recommended keeping the co-pay 90/10, as it is currently for in-network and 70/30 for out-of-network. He noted that it is important to be sensitive to the employee relations impact, union versus non-union. It is desirable that the non-union staff not take a disproportionate impact in the initial implementation stage. The increase in co-pay would be effective for non-union staff on January 2004. In January 2005, negotiations with both unions would commence, and the anticipation is that the employees in those unions would be brought on-line in January 2006. Mr. Kranstuber inquired if the intention is that the employee would not pay more than a maximum out-of-pocket on services. Administrative Committee April 8, 2003 Page 5 Mr. Harding responded that their recommendation is for aphased-in graduation on the maximum out-of-pocket contribution. The question is whether to have the co-pay share be 80/20 or perhaps 90/10 to be less complicated. Mr. Verhulst stated that it creates no problem for MCA to process claims differently. Mr. Kranstuber stated that he believes the 70/30 out-of-net~~vork co-pay is too steep. He would prefer 80/20. He would need to know how strong the network is in order to make that decision. Mr. Verhulst responded that it is possible to change networks at any time. Mr. Kranstuber inquired if all the major hospitals are in the network. Are the rural hospitals included? Mr. Verhulst stated that whichever network includes Grant and Riverside does not include OSU. The network is statewide. Emerald Health has 90 percent of the hospitals. IVIr. Kranstuber inquu•ed about the number of general practitioners and pediatricians in the network. Mr. Verhulst responded that there is a report that could be run which would provide data on the availability of a doctor within afive-mile radius of every employee. Mr. Kranstuber responded that he has no doubt that a physician is available. The question is - is the employee's current physician on that list? He would like to verify that a high percentage of the employee's choices are within the network. Ms. Chinnici-Zuercher inquired about the percentage of employees currently going outside the network for care. Mr. Verhulst stated that 30 percent of the providers used are outside the network. Mr. Chinnici-Zuercher stated that there may be other physicians who would also meet their needs, but for whatever reasons, employees choose not to use them. Mr. Verhulst stated that some do make a conscious choice to remain with a preferred provider and pay the extra cost. However, there are others who would likely be willing to change to another provider. Mr. Kranstuber responded that he would not advocate penalizing those who go outside the network unless those physicians who are reputedly the best in their fields were included in the network. It «~ould be interesting to know why 30 percent of the providers currently used are outside of the network. REC011~I11~IENDAT IONS: Emnloyee Co-Pay Administrative Committee April 8, 2003 Page 6 Mr. Harding stated that the recommendation is for a differential for in-network and out-of-network for this component, also. For in-network providers, they suggest that $500 remain the maximum for the Single Plan, as that is consistent with the survey results. However, a higher amount for the Family Plan would be phased in, $750 in 2004 and $1000 in 2005. This attempts to insure that non-union employees not pay a disproportionate share in the initial implementation stage. For out- of-network, Single Plan: $500 in 2004, $750 in 2005, and $1,000 in 2006; Family Plan: $750 in 2004, $1,250 in 2005, and $1,500 in 2006. The differential provides the incentive for the employee to select in-network providers. Ms. Chinnici-Zuercher inquired if the City's bargaining position in the negotiation would be stronger if the non-union employees are already on this plan. Mr. Harding affirmed that is the case. Ms. Chinnici-Zuercher inquired how many employees are members ofthe unions. IVIr. Harding estimated that there are 175-200 non-union employees and 125-150 union employees. The internal comparable will be a significant factor with a mediator, fact-finder, or arbitrator. Prescilption Drugs The recommendation is to increase the current co-pay for generic drugs in the second year from $8.00 to $10.00. The brand-name co-pay would increase to $20 in 2004 and $25 in the second year. The mail-order co-pay is currently $1.00 for both generic and brand name. The increase in co-pay would be phased in: generic - $5 in 2004, $10 in 2005, and $15 in 2006; brand name -- $10 in 2004, $20 in 2005, and $30 in 2006. Employee Contribution Through Payroll Deductions The recommendation is not to charge a contribution for the Single Plan. The City would cover the cost of insurance for its employees. However, family members are not City employees. The employee contribution for the Family Plan would be phased in. This may have the effect of causing some employees «~ho have another plan available to move to that plan, thus saving the City some dollars. Ms. Chinnici-Zuercher inquu•ed what the anticipated cost savings would be if the recommendations were to be implemented. Mr. Harding indicated that the anticipation is to provide a report to the Committee on May 20~' with the projected cost savings with the above recommendations. Mr. Harding requested Committee input regarding the recommendations. Ms. Salay stated that during the last discussion, the suggestion was made to survey the City employees asking them to rank which was of the greater importance: (1) having the option of going Administrative Committee April 8, 2003 Page 7 to either an in- or out-of-network provider, even with an increase in co-pay, or (2) keeping the cost of health coverage as low as possible. If an employee is charged $100 or 200/month for the Family Plan, he will perceive it as losing $1,200 or $2,400 of his income -that is demoralizing. She stated that 70/30 appears to be too steep. The survey indicates that most of the other cities are 80/20 or 75/25. In addition, she would prefer phasing in the increase in co-pay, to allow the employees to adjust to using the network. Perhaps the network could also be changed or expanded. Presently, none of the physicians used by her family are in the network. Mr. Verhulst stated that the incentive to physicians to join the PPO is to attract more patients. The more established physician may not elect to be in the network. Mr. Kranstuber stated the 70/30 is too aggressive. Looking at the list of physicians in the network, none of the physicians his family uses or specialists they would elect to use are listed in this network. He stated that he would like to know why 30 percent of the employees do not use network providers. Why is there only one physical therapist listed? Why are only five oral surgeons listed? There are other similarly lacking categories. Ms. Abrams stated that if the City chooses to remain with Emerald Health, MCA would run a report on the out-of-network providers used by City employees and then contact those physicians regarding the network. Ms. Chinnici-Zuercher stated that the circumstances are different between using an out-of-network provider because of personal preference and using an out-of-network provider due to the need for a highly specialized provider to address a particular need. Discussion continued regarding conducting an employee survey to determine the reasons for use of out-of-network providers. Mr. Harding stated that the expectation would be to complete the employee survey before the h•Iay 20th meeting. Mr. Verhulst stated that it is also possible to design a supplemental Dublin network. If there is a small group of physicians used by employees who are not in the network and do not want to join the network, a customized mini-network can be layered along with the Emerald Health network. That additional layer would be manually maintained in the MCA system, but the administrative costs would not be significant. Mr. Kranstuber inquired if a special field could be included in the database to permit a physician to be inchided for one employee with a specific health need. Mr. Verhulst stated that when a physician is added to the system, they are available to all the employees. However, it is possible to permit aone-time grandfathering of some physicians. IVIs. Salay inquu•ed if it would be possible to begin new employees on this system. Mr. Verhulst stated that it would. Administrative Committee April 8, 2003 Page 8 Mr. Kranstuber inquired about Committee consensus regarding establishing an employee contribution of $30 for Family coverage. Committee consensus was in support of this. Mr. Kranstuber inquired about Committee consensus regarding the prescription co-pay, as indicated. Committee consensus was to accept that recommendation. Mr. Kranstuber uiquired if the Committee has interest in making any adjustment to the Out-of- Pocket maximum payment. Mr. Harding inquired whether they prefer to use the 80/20 formula, or should the 70/30 be phased in. Mr. Kranstuber stated that he would prefer to use the 80/20 formula; it is a less aggressive penalty for going out of the network. IVIs. Chinnici-Zuercher asked if the payroll deduction would be pre-tax. Mr. Verhulst inquired if the City has a Flex plan. Mr. Harding responded that it does not. Mr. Verhulst stated that there are three parts to a Flex plan, which operates offof pre-tax contributions -Health Insurance premium, Dependent Care expenses, and Uncovered Medical Expenses. Mr. Harding stated that would be something to consider. He inquired how difficult it would be to convert the City's plan to the 125 option. Mr. Verhulst stated that it would not be difficult. There must be a plan document. There is a Florida law firm that they typically use to write the document. If the conversion involves the premium only, the City would be responsible for the administration. The other programs can also be self-administered, or MCA could administer them. The Committee thanked Mr. Verhulst and Ms. Abrams for excellent work. Car Allowance Mr. Kranstuber requested background on the issue. Mr. Harding explained that it was brought up at the time of the operating budget. A Council Member made an inquiry regarding policies on car allowances for the managers. He explained that a car allowance is typically provided as: (1) an incentive in hiring or a benefit to the managers, and (2) to facilitate managers in meeting their field responsibilities. The cities of Kettering and Westerville provide a car allowance as benefit to all department and division heads. Administrative Committee April 8, 2003 Page 9 The City of Worthington provides usage of a City vehicle to its managers. That includes a "take home privilege" as needed to enable the managers to respond directly from home. A minority of cities offers a car allowance as a management benefit, but most cities offer a car allowance to enable managers to meet their field responsibilities. Mr. Harding stated that he has compiled aone-page summary that indicates the City's current provision of car allowances to managers. The division heads in Finance and Service have a monthly car allowance of $300, which should be increased to $400 to be consistent with the allowances given to the Director of Development and Director of Streets and Utilities. Mr. Johnson's allowance is higher than some assistant city managers, as he is out in the field an extensive amount of time. One other division head was given this as an incentive -- Mr. Husenitza, in response to the marketplace trend. Other division heads have been provided car allowances to meet the function of field responsibilities. Mr. Kranstuber stated that, based on that premise, the Director of Building Standards and Director of Planning should also receive a car allowance. IVIr. Harding responded that no one has made a case for those positions. Mr. Kranstuber stated that Ms. Clarke, in her position of Planning Director, is out in the field so frequently that it is difficult for her to track mileage. It makes better sense for her to receive a car allo~~~ance. Mr. Harding noted that a previous Economic Development Director, Mary Bearden, regularly had significant amounts of mileage reimbursement. Ms. Chinnici-Zuercher inquired if the City has vehicles for staff use. Mr. Harding responded that there are a limited number of vehicles; however, there is no vehicle available at all times. For instance, it is not uncommon for police officers to borrow the City jeeps for out-of--town training. Ms. Salay stated that in her opinion it would be wiser for the City to maintain a pool of vehicles in the City versus permitting them to be taken out-of--town. Ms. Chinnici-Zuercher inquired if there are regulations regarding the permitted use of City vehicles. Mr. Harding stated that the City's policy is governed by the IRS regulations. For take home privileges, the manager may use the vehicle for minimum personal use, i.e., stopping at a store en route. IVIr. Kranstuber inquu•ed if Mr. Harding is making any recommendations. Mr. Harding indicated that he is not. Administrative Committee April 8, 2003 Page 10 Mr. Kranstuber stated he does not have a strong opinion on the issue. It appears that the City has liberal benefits compared to other cities. Perhaps this information could be distributed to the other Council members, and it can be scheduled for future discussion. Mr. Harding stated that the issue arose regarding the inequity of some management staff receiving the allowance while others do not. Ms. Chinnici-Zuercher stated that the car allowance should not be part of salary negotiations at the time of hire. It should be based upon the need of certain positions for the vehicle allowance. For instance, Mr. Husenitza's position does not warrant the car allowance, while a case could be made that Ms. Clarke's does. Mr. Harding stated that because the City could not match what was being paid in the private sector for the IT Director position, the benefit of a car allowance was negotiated. Ms. Chinnici-Zuercher stated that within a reasonable time frame, a policy should be implemented to remove car allowances unjustified by the position. The salary ranges have improved within the City. Of course, with certain level of job, a car allo~i~ance is a fringe benefit. Mr. Harding stated that there is the issue with justifying car allowances to the public. Mr. Kranstuber inquired how many school administrators receive car allowances. Mr. Harding indicated that he does not have any information on the School Board's policy at this time. The issue raised was one of equity. He doesn't agree that everyone «~ho is a department or division director should have car. However, if the position has significant field responsibilities, it could be a better alternative to filling out numerous mileage reimbursement forms. He suggested that a policy be written providing the car allowance to a specific list of individuals. Then, on a case-by-case basis, the City would evaluate any future needs to add existing employees to the car allowance list or for new positions to receive a car allowance. He added that it is not anticipated that such a policy and list would be available for this year's budget workshops, unless Council directs differently. Mr. Kranstuber stated that in his opinion, it would be justifiable to add the Director of Building Standards and Director of Planning to that list. IVIr. Harding agreed that, initially, it would appear that a case could be made that each Department Head, excluding Information Technology, has sufficient field responsibilities to justify the car allowance. The Community Relations Director uses a City van in event season Mr. Kranstuber requested that this information be shared with Council members. The City Manager can also review the issue. The problem is that the Committee members present tonight were not a driving force on this issue. If there is someone, however, who has strong views on the matter, they may present the issue for discussion at a future Council Round Table. Administrative Committee April 8, 2003 Page 11 Ms. Chinnici-Zuercher stated that the position she would take in Round Table discussion is that if the City is presently considering benefit changes that will impact City employees with an increased cost, car allowances would become a low priority. The City cannot make all these changes at the same time, and car allowances have a limited effect for fewer people. Mr. Harding inquired if this Committee will be making a recommendation on car allowances. Mr. Kranstuber responded that the Committee would not. It would sut~ice to provide these minutes to Council. If a Council member so desires, they can present it for future discussion. Mr. Harding inquired if this Committee perceives this as an equity issue at the Deputy City Manager level. Ms. Salay inquired if a car allowance was provided to the Director of Development as an incentive. Mr. Harding responded that was offered at the time of recruitment due to the level of field responsibility with the position. Ms. Chinnici-Zuercher suggested that staff could make a list of the changes they believe are justified and then submit them during the budget process. The meeting was adjourned at 9:00 p.m. Clerk of Council