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HomeMy WebLinkAbout06-16-03 Admin Com. MinutesDublin City Council ADIv1mIISTIUTIVE COMIVIITTEE June 16, 2003 Committee Members Chuck Kranstuber, Chair Marilee Chinnici-Zuercher Amy Salay Staff Members Jane Brautigam David Harding Mary Kay Ruwette Michele Hoyle ATTENDANCE: Guests: Jay Verhulst, Managed Care of America Jane Kiwacka, Managed Care of America Mr. Kranstuber called the meeting to order at 6:00 p.m. in Council Chambers. He noted that a packet was distributed by Mr. Harding to the committee members, which included results of the employee surveys regarding employee health care. Mr. Kranstuber asked if anyone present in the audience would like to provide input. Two employees were present. Mr. Kranstuber indicated they could address the Committee following the first portion of the agenda. Co-Insurance - In and Out of Network Differential Mr. Kranstuber stated that there was consideration given to a 70/30 out of network and 90/10 in network. The Committee has settled upon a 90/10 in network and 80/20 out of network. Mr. Kranstuber noted that as he has previously indicated, the network is only as good as the providers in the network. He had expressed concerns about some employees who live out side of the Columbus area and what kind of availability they would have for qualified providers. The survey responses seem to support this concern about choices in rural areas. Ms. Chinnici-Zuercher stated that the analysis from staff indicates that 78 percent of employees have doctors in the network. The Committee was told by MCA that if employees currently use doctors outside of the network, MCA would be willing to tallc with those doctors about joining the network. Ms. Salay stated that she understands that using the network costs the City less as a rate has been negotiated for various procedures. What if an employee went outside the network and the City would pay the fee in place for an in network doctor. It would then be up to the employee to discuss with the physician what he/she will or will not accept. Some doctors may be willing to do so. 1VIr. Harding asked for clarification: does this mean the City could opt to pay 90/10 for out of network as well as in network? Ms. Salay responded no -she is suggesting that there be no differentiation if the doctor is willing to accept the 90 percent payment as full payment for his services. If a tonsillectomy costs $1,000 and the City pays $900 for in network, then if an out of network physician charged $1,100 and the City paid $900, then the employee would negotiate with the physician to accept that $900. Administrative Committee June 16, 2003 Page 2 Ms. Brautigam stated that if a doctor is out of network, someone must negotiate with that provider after the employee has been given services to see if he/she is willing to accept the 90 percent as opposed to taking the 80 and not billing the employee. It is the individual negotiation on a case- by-case basis that would add administrative costs. Ms. Salay responded that there would be no negotiation, other than by the employee. Ms. Chinnici-Zuercher stated that that is the way it is handled presently, as she understands it. Mr. Harding stated that the savings for the City with the differential in the system comes when the extra 10 percent steers more business into the network where there are agreed upon fees. Even if there were no differential between out of and in network, there would still not be a contracted fee. Although the percentage maybe the same, what the doctor is billing for the procedure could be a lot more. Mr. Kranstuber noted that if the UCR for a tonsillectomy is 2, 800 and the doctor wants to bill $4,000, the network doesn't allow this. It sounds that the employee gains by using the network, as there is a negotiated rate for procedures. Mr. Kranstuber noted that in terms of a family's physicians currently in the network, there is a much lower percentage of union employees with in network physicians versus the non-union employees. What can the City do to improve the network? Mr. Harding responded that the survey reflects perceptions - in fact, some comments are inaccurate. Someone indicated that there are few providers in Delaware, yet the Internet listing showed over 400 providers in the City of Delaware and Delaware County. In reality, the percentage of employees' physicians in the network is fairly high. Mr. Verhulst, MCA stated that no network would include every doctor. The whole concept of the network is to negotiate discounts and steer employee groups to them based upon those discounts. With Dublin having no incentive (differential) to use the network, it has been difficult to encourage employees to do so. Virtually all PPO's require a 10 percent steerage. If desired, MCA can review other PPO networks on the City's behalf. Part of what the network does is to review the doctor's credentials to ensure quality. The fee scheduled is typically below the UCR. Of the 78 percent with doctors in the network, there may be individuals whose doctors are in the network but who are aware of it. Eight-five percent of the claims paid at this time are to providers within the network. A network book is no longer printed as it changes too frequently. The current provider list is on the MCA web site as well as the Ernerald Health Network web site. Mr. Kranstuber summarized that the options are: 1) do nothing; 2) change the plan to 80/20 for out of network physicians and 90/10 for in network physicians. There is still an issue of improving the network for some rural areas. One way to lessen the impact would be to have a period oftime where existing employees could use the same doctors -perhaps five years. Would that be possible? Mr. Harding asked if that could be accommodated. Administrative Committee June 16, 2003 Page 3 Mr. Verhulst asked for clarification -existing employees would be grandfathered and there would not necessarily be a differential, but for new employees there would be a differential? Mr. Kranstuber agreed that would be the practical effect of what he is suggesting. Mr. Verhulst responded that it would be a matter of setting this up in the system -the new employees would be placed into new plans and the existing employees would stay in the existing plans. Ms. Chinnici-Zuercher asked about the turnover rate for employees. Mr. Harding stated that it is probably under two percent. Ms. Chinnici-Zuercher stated that with such a low turnover, there would then be no sense in doing this. It would take years to realize any savings. Ms. Salay thought 11~Ir. Kranstuber's suggestion related to existing employees and their ability to stay with the same physicians. Mr. Kranstuber agreed, noting that this would recognize the fact that many current employees may have doctors they have used for a long time and don't want to change. This would provide a period of years for the transition. Ms. Salay commented that she would support having a period of time prior to implementation that would allow employees to talk with their physicians about possibly joining the network. She asked if it is anticipated to be an 80/20 for the other services in network -will it be 80/20 out of network for services also? Mr. Harding responded that this is correct. In regard to 1VIr. Kranstuber's suggestion about allowing current employees to retain their physicians for a period of time which would require administering benefits on an individual basis, it would be more practical to defer the implementation ofthe program until later than 1/1/04. Ms. Salay noted that she is concerned about some employees considering unionization because these changes will apply only to non-union. The comments in the survey are accurate -that the City does expect a lot oftheir employees and has a rich benefit package. It is perceived as a hardship for some, according to the survey. For these reasons, it seems that the changes should be implemented for both union and non-union at the same time. Ms. Chinnici-Zuercher noted that at the last meeting, the Committee was told that part of the issue was the need to demonstrate to the unions what the non-union members have in benefits, and that it would be part of the negotiation strategy. Ms. Salay asked if there would be a problem with delaying implementation of these changes until January of 2005. Would that impact the union negotiations? Mr. Harding responded that it is always easier to have an internal comparable where the change has already been implemented. Without that, it is more difficult to negotiate those provisions into the union contract. It would not be necessary to implement all ofthe changes when they are suggested -if the Committee believes that the employee contribution is too aggressive and wants to defer on that, it is an option. Administrative Committee June 16, 2003 Page 4 Out-of-pocket Maximums Mr. Kranstuber noted that this is proposed as $500 for single and $750 for family, with phasing to $500 single and $1,000 family. Mr. Harding stated that, currently, the maximum is $500 for single and family. Once an employee has paid $500 out of pocket, the medical coverage is 100 percent. The change would require paying out of pocket until an employee with a family paid $750 and then the 100 percent provision would kick in. Ms. Salay asked if it would be possible to set this as $500 per individual and $1,000 for family so that an employee pays $500 for any one individual in a family, their bills would then be covered at 100 percent. Ms. Chinnici-Zuercher interprets that this would benefit only for a family of three or more - it would not benefit a family of two. Mr. Harding stated that the plan design could be modified as the Committee desires. Ms. Salay stated that a sole provider with a sickly child would then not cost them an extra $500 - that coverage would kick in after the $500 for that child. Mr. Kranstuber agreed with this option. Prescription Drug Co-Pay Mr. Harding summarized that the proposal is to change the co-pay for brand name drugs from the current $15 to $20 in 2004, and to keep the $8 co-pay for generic the same for 2004. Mr. Kt•anstuber asked MCA to provide details about the generic drugs. Mr. Verhulst stated that the Plan uses the highest class generic in the formularies. Any generic drugs that are not a triple A rated would not be considered dispensable. Most of the generics are made by the brand manufacturer. Mr. Kranstuber asked what happens if the generic is not available. Mr. Verhulst responded that this depends on how the system is set up - it could be set up so that if there is no generic equivalent, the brand name drug can be purchased for the lower co-pay. It could also be set up so that there would be a co-pay plus the difference between the brand and the generic cost. Mr. Kranstuber suggested that if a generic is not available, the employee co-pay for the brand name should be the same as the generic drug. Mr. Verhulst asked if there is a generic and the employee chooses to purchases the brand name, how would that be handled? Ms. Salay responded that for her, it would depend on what the doctor prefers. If the physician has a specific reason for prescribing a brand name and can document it, the employee should pay the generic co-pay. Administrative Committee June 16, 2003 Page 5 Mr. Verhulst suggested that a DAW code could be added so that if the physician writes "Dispense as Written" on the prescription, there would be no penalty applied. If the physician does not write DAW, the penalty would apply which would be the difference between the brand and generic costs. Ms. Salay and hls. Chinnici-Zuercher stated that the employee in this case would pay the generic co-pay, not the difference in the costs of the generic and brand name. Mr. Kranstuber agreed. Ms. Salay stated that employees should also be encouraged to discuss generic drugs with their physicians. This will provide a greater comfort level to employees. Mr. Kranstuber stated that this should not constitute a major change, in view of the fact that if the generic is not available or if a doctor specifically prescribes the brand name and writes "Dispense as Written", then the employee can have the brand name at the generic cost. Mr. Harding stated that in the survey, this seemed to be the area in which employees were most receptive to a change. Ms. Chinnici-Zuercher noted that it was also the area where the employees seem to be the least educated. She asked if the mail order system is restricted to a 90-day supply. Mr. Verhulst responded that this is an industry standard. If prescriptions are filled for less than a 90-day supply, the shipping costs become an issue. Ms. Chinnici-Zuercher stated that the system is then designed for maintenance drugs which people take regularly. Mr. Verhulst stated that this is correct. He added that 80 percent of prescriptions are for maintenance type drugs -blood pressure, heart medicines, etc. Monthl•~ployee Contribution Mr. Kranstuber summarized that, currently, there is no employee contribution. What is proposed is instituting a family coverage charge for 2005 of $30 and $45 for 2006. There would be no employee contribution for single coverage. Ms. Salay asked about the overall cost impact of these changes on the City's budget. Mr. Harding responded that the calculations reflect savings of $357,000 over two years. Ms. Salay asked if the employee contribution being implemented would be a factor considered in employee salary evaluations. She assumes that an employee's evaluation is done annually. Mr. Harding stated that there are some employees who are at the maximum of their pay range. The City does a compensation study every three years to address this. Ms. Salay asked what would happen if the employee asks about the effective pay cut resulting from the employee contribution for benefits. Will the employee be compensated for this in salary? What is the bottom line in savings in view of these factors? Mr. Harding stated that he would not encourage supervisors to view things in this way. Administrative Committee June 16, 2003 Page 6 1VIr. Kranstuber asked if the savings includes direct costs or does it also include the fact that making these changes will affect employees' decisions about which person in the family carries the policy? Mr. Harding responded that the employee contribution as proposed is still very low compared to a lot of other plans, so he doesn't believe this would drive people away from using the plan. Mr. Kranstuber stated that the other item that came up in the employee surveys is related to compensation policy in general. Dublin has strived to keep its compensation levels at the 80~' percentile in the marketplace. Will the benefit plan also be at the 80~' percentile in the marketplace? Mr. Harding stated that because of the divergence in plan design, there was no way of quantitatively measuring this. He believes that even with the proposed changes, Dublin's benefits are a fairly rich program. Comparing it to most private sector plans, Dublin's plan would still be considered extremely rich. It probably would bring Dublin somewhat more in line with the norm in other public sector jurisdictions -better than some, not as rich as others. Mr. Kranstuber invited public testimony. Vince Vanicelli, 17 year employee of the City stated that he and Mike Waugh, who is also present tonight, do not receive cost of living raises -they are at the maximum of their salary range. It has been two years since he has had a raise. He views the proposed benefit changes as a pay cut. Because the unions can negotiate, perhaps the non-union employees could wait to see what the unions are able to negotiate and accept that. Dispatchers just completed their union negotiations and these changes will not affect them for two to three years. Even though non-union employees will have changes made to thew benefits, it is not certain that the Steelworkers union employees will have the same changes to their plan. Essentially, the non-union employees will be helping to pay the costs of the benefits for the union employees. Mr. Kranstuber asked which portions of the recommended changes are most objectionable. Mr. Vanicelli responded that people view any changes as a pay cut. They believe the union will not accept any of the changes. The Steelworkers and FOP are strong unions. In years past, employees received the same benefits negotiated by the unions. Mr. Kranstuber summarized that even if the changes are implemented at 100 percent, the drug co- paywill have a minimal impact; the out-of-pocket maximum for single coverage will remain the same; the co-insurance could potentially have an additional cost for employees; the employee contribution will have no impact on single employees and a $500 per year impact on family coverage. Mr. Vanicelli responded that these changes would have more impact on those who are at the maximum oftheir pay ranges. Last year, he didn't receive a raise; this year, he didn't receive a raise. The only way he is eligible for a raise will be if the ranges are adjusted on January 1 of 2004. He noted that his wife does not work outside the home and stays home with the children. They fear that the non-union employees will receive less than the union employees. Administrative Committee June 16, 2003 Page 7 Mr. Kranstuber thanked Mr. Vanicelli for his hard work over the years with special events and his positive attitude with the citizens. Mike ~A'augh, long-time employee of the City asked if the projected savings for the City of $357,000 includes having the union employees in the plan. Mr. Harding responded that it does include the union employees. Mr. Waugh responded that removing the portion of savings related to union employees brings the savings down to a much lower level. He doesn't believe the changes are warranted in view of the ill will it will cause with the employees. It is perceived as a pay cut and is especially hard for those who are at the maximum of their pay ranges and therefore not eligible for raises. It does appear to those not in the union -those who were promised at the time the union was formed that they would be taken better care of by the City versus the union -that they are being used as "sacrificial lambs" to bring the unions in line with the proposed changes to the medical benefits. Mr. Kranstuber responded that it is important to keep in mind that this is not a union versus non- union issue. This is a nationwide problem of the cost of health care. The burden is on the employers, and some changes are needed. It is not unique to Dublin or to public entities. Mr. Waugh stated that he was self-employed for 20 years and he is aware ofthe cost of health benefits. On the other hand, he is aware of the completion of many capital projects and the brochures indicating the City has a high income level. The expectations of the City for its employees are very high and the employees believe they do a good job. From a negotiating point of view, it is probably in the City's best interests to have non-union employees' health benefits change. He is not sure how the dispatcher negotiations were completed before all of this happened. He suggests that the City wait until the union negotiations are completed to see what changes they are willing to accept. The union employees already have more benefits than the non- union employees, and it would be nice to be included in some of their benefits. Mr. Kranstuber responded that compared to other governmental agencies, even implementing 100 percent of the changes would still leave Dublin's plan as a very good one. Compared to State employee plans, Dublin's is very good. Ms. Salay asked how many employees have single versus family coverage. Mr. Harding responded that about 80 percent have family and 20 percent have single coverage. Ms. Salay asked then what the bottom line would be -will the changes be worthwhile? Ms. Hoyle responded that it depends upon what is negotiated with the unions. Ms. Chinnici-Zuercher asked if the savings projected anticipates 100 percent of the changes being included in union contracts. Mr. Harding responded affirmatively. Ms. Chinnici-Zuercher stated that without all of the proposed changes being included by the unions, the projected savings would then be $198,000 over two years. Administrative Committee June 16, 2003 Page 8 Ms. Salay asked about the birthday rule and how it impacts family coverage. Could she opt to have only single coverage for herself under Dublin's plan, with her husband's plan being required to carry the family coverage for the children? Mr. Harding stated that she could opt to have single-family coverage with Dublin. Ms. Salay asked if the other plan would have to accept the children in their plan due to her choice? Mr. Harding responded affirmatively. Mr. Iu•anstuber then summarized the Committee's recommendations: Prescription Drug Co-Pay Mr. Kranstuber stated that the Committee is recommending the proposal, with a slight modification to the generic drug co-pay under some circumstances. Ms. Salay clarified that the Committee is recommending that (1) if there is no generic available, or (2) if the doctor writes dispense as written and specifies a brand name, the employee pays the generic rate. Out-of-Packet Maximum Mr. Kranstuber summarized that the Committee is recommending the proposal, with a modification of a $500 out of pocket maximum per individual and a $1,000 out of pocket maximum per family. Mr. Kranstuber noted that there were some comments in the survey relating to discriminating against families in these changes, and why singles were less impacted in the changes for both the out of pocket maximum and a requu•ed employee contribution. Ms. Brautigam responded that the rationale is that as an employer, Dublin wants to provide excellent coverage for its employees -this is only good business to do so. Allowing family coverage at such good rates is a benefit, but is not the kind of benefit obtained from directly covering its employees. Staff's recommendation is to provide the best benefit for each of the employees, whether they have a family or not. Staff believes it is treating each employee the same by providing good single coverage, and then there is an extra bonus for those with a family of access to great health care benefits at a low cost. Ms. Chinnici-Zuercher suggested implementing Ms. Salay's suggestion of $500 maximum out of pocket per individual in a family. This would be consistent with the goals. Mr. Kranstuber summarized that the Committee is recommending the proposal, with a modification that an individual in a family coverage will have a maximum out-of-pocket of $500. There will still be a maximum of $1,000 out of pocket for the family. In-and Out-Of-Neh~~ark Differential 1VIr. Kranstuber summarized that the differential will be 90/10 for in network and 80/10 for out of network. There was some discussion about phasing this in. Ms. Salay asked if the in network diagnostic lab, x-ray and outpatient is also 80/20. Mr. Harding confirmed this. It would be possible to raise this to 90/10 to create a differential. He asked the MCA rep about what benefit this would provide to the City. Administrative Committee June 16, 2003 Page 9 Mr. Verhulst responded that he is a proponent of having lower co-pays for diagnostic type work, as this sometimes constitutes preventive care and can bring later savings to the City. The Committee endorsed making this change to 90,/10 for in network diagnostic lab and x-ray. Mr. Kranstuber asked about outpatient mental, nervous, drug and alcohol -would this be 90/10 in network and 80/20 out of network as well? Ms. Chinnici-Zuercher asked if staffwould endorse having all of these services at 90/10 in network and 80/20 out of network to create the differential. This would leave all three services at 90/10 in network and 80/20 out of network. Mr. Harding responded that is correct. Ms. Brautigam stated that the drug, alcohol and mental benefit change could have a negative impact on the bottom line, and she would prefer to have more analysis before making this recommendation. These kinds of medical care are generally long-term and very costly. Mr. Kranstuber responded that there is a maximum, however, of 26 visits annually. So the difference would not be substantial. Ms. Chinnici-Zuercher agreed. Ms. Salay asked about the use of these benefits. Mr. Harding stated that the in-patient benefit is rarely used -generally, more outpatient counseling is used. Mr. Kranstuber stated that perhaps the outpatient mental, nervous, drug and alcohol should be left at 80/20. The other services of diagnostic, x-ray and lab would be changed to 90/10 in network and 80/20 out of network. The Committee concurred. Mr. Kranstuber stated that the other remaining issue relates to employees' cun•ent doctors not being in the network. Ms. Salay stated that employees could go to a web site to see which doctors are in the network. Mr. Verhulst stated that MCA can work with the City to develop educational materials and can recruit employees' doctors not currently in the network. Ms. Salay asked what percentage of current claims is with network providers. Mr. Harding responded that it is 80 percent. Emuloyee Contribution Ms. Chinnici-Zuercher suggested that any employee contribution be delayed until at least 2005. Mr. Kranstuber clarified that the recommendation is actually not to implement any contribution until 2005. Ms. Salay stated that the unions will be told that as of January 1, 2005 that non-union employees will pay an employee contribution for health benefits and that the City expects that the union employees will do so as well. Administrative Committee June 16, 2003 Page 10 Ms. Brautigam stated that in actuality, in mid-2004, staff will review the impact of the other changes made in the plan and return to the Administrative Committee to determine whether or not they want to implement an employee contribution in 2005. The wellness program is being improved, and staff is hopeful that some of the other changes will forestall any need for an employee contribution. Ms. Chinnici-Zuercher stated that in any event, another factor in all of this is the general increase of health care costs to begin with. Ms. Salay stated that she would appreciate analysis in mid-2004 ofthe impact ofthese changes. Ms. Brautigam stated that employees would have the opportunity to prove that progress has been rnade in changing their practices regarding the use of health care benefits. Mr. Kranstuber stated that in terms of the in and out of network differential, Mr. Harding indicated that it would not be administratively possible to allow existing employees to retain the physicians they have used for years while having different rules for new employees. It would require offering separate plans to existing and new employees. Mr. Harding responded that it would be difficult to be consistent. Mr. Verhulst stated that what it would require is that existing employees would have to remani in one plan, and new employees on another. It cannot be done on a per doctor basis. Mr. Kranstuber stated that he would feel more comfortable with phasing this change in beginning in 2005. Ms. Chinnici-Zuercher stated that the discussion was that there would be 6 months left in 2003 for MCA to talk with the physicians. At this time, there are only 15 percent of the claims outside of the network. Mr. Kranstuber noted that some doctors would never be persuaded to join the network. This is an emotional issue for people -they do not like to be told who to use for health care. Ms. Salay stated that for her, the City is not in an HMO that requires them to use certain doctors. There is a choice of doctors, and an employee can pay more to use someone out of the network. Her doctors are not in the network, as far as she is aware. It is an issue of educating employees about which doctors are in the network and which are not -maybe some do not realize their doctors are in the network. Having a differential will give them incentive to investigate. This can be re-evaluated in a year to see what savings result. Ms. Chinnici-Zuercher stated that employees would be empowered to make a choice. It does not take away the right to use the doctors they prefer, but instead they pay 10 percent more to use a physician out of the network. Ms. Salay added that most ofthe large hospitals are in network, so the larger medical bills will be in network and paid at the higher rate. Mr. Kranstuber stated that it is also important to emphasize that the out-of-pocket maximum for an individual will remain at $500. Administrative Committee June 16, 2003 Page 11 Mr. Kranstuber asked that there be an effort to encourage doctors to come into the network. Ms. Chinnici-Zuercher stated that employees would first have to provide the names of their doctors to HR so that they can be contacted. Mr. Verhulst stated that MCA does not own the network, but they will hold Emerald Health Network to the task. Mr. Kranstuber moved to recommend to Council the four components ofthe changes, as outlined in the minutes. Ms. Salay seconded the motion. Vote on the motion: Ms. Salay, yes; Ms. Chinnici-Zuercher, yes; Mr. Kranstuber, yes. The meeting was adjourned at 7:05 p.m. Clerk of Council