OCMA 2014 Winter Conference Presentation

Report
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• Today’s Agenda
• Examine opportunities for public employers to self-insure their
benefit program through group purchasing
• Review the advantages of self-insurance through either traditional
or allocated balance model consortiums
• Provide information on the Jefferson Health Plan, an allocated
balance model consortium
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• Issues affecting plan costs
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Technological advances
Usage patterns
Aging population
Varying practice patterns
Advertising
Annual Inflation
10% - Medical
8% - Prescription Drug
• Government Regulation – Affordable Care Act (ACA)
Federally required benefit enhancements
Federally required taxes to support ACA
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• Issues affecting plan costs
• Claims drive plan costs - more than 90% of costs are for claims
• Anything designed to control costs must affect claims
• Plan Design
• Fewer Claims
• Costs will continue to rise
• Inflationary pressures
• Advancing Technology
• Greater Demands on an aging population
• You cannot control some outside forces but you can control your
benefit plan
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• Advantages of Self Insurance
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Lower operating costs
Eliminates insurance company profits
Avoids some Federal and State taxes
Control of plan design
Effective Claim Processing – dedicated to your risks
Management of risk with stop loss
No insurance premiums
No insurance company profits or dictates
No insurance for claims
Employer is responsible for the benefits promised by the program
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• Self-Insured employers pay less for their benefits
• Savings on state and federal taxes on insurance premiums
• Reduced administrative costs
• Retain surpluses in good years and maintain reserves for poor
experience years
• Minimize risk, profit and insurance charges
• Viewed from a long term perspective, self-insured employer’s pay
less for their benefits
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• Consortium Purchasing
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Manage risk through shared risk and self-insurance
Provide more stable plan costs
Provide more flexibility to consortium members
Offer programs and services under specific Ohio Statutory
Authority for Ohio based public entities
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• Consortium Purchasing
• Participation in a consortium affords the small employer the
advantages otherwise available only to the largest employers
• Generally, there are two types of consortia
• Community Pool Programs
• Allocated Balance Pool Programs
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• Consortium Purchasing
• Community Pooled Programs combine the experience and reserves
of all members in a single pool owned by the program
• Allocated Balance Pooled Programs combine the large claims
experience of all members in a single pool and fully vest the
ownership of reserves in individual member accounts
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• Consortium Purchasing – Community Pooled Features
Plan Design
Network Options
Deductible
Costs
Reserves
Interest Income
Moratoria
Rebates
Reporting
Ability to
impact costs
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Determined by Pool
Determined by Pool
Determined by Pool
Determined by Pool (Average Costs)
Owned by Pool
Owned by Pool
Determined by Pool
Held by Pool
Pool only
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Determined by Pool
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• Allocated Balance Model Consortium
• Allows member organizations to retain control of surpluses in good
experience years
• Separate Reserve Accounts for each member organization
• Monthly statements and daily transaction reporting on member
reserve accounts allows tracking of experience throughout the plan
year
• Excess reserves can be held in the consortium and earn returns for
the member organization, or used as moratoria against monthly
accruals
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• Jefferson Health Plan – Allocated Balance Pooled Features
Plan Design
Network Options
Deductible
Costs
Reserves
Interest Income
Moratoria
Rebates
Reporting
Ability to
impact costs
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Member decides
Member decides
Member choice
Based on your experience/Pool Blend
Owned by Member
Retained by Member
Member decides
Retained by Member
Online Access to Account
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Member controls plan design
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• Jefferson Health Plan – Consortium Purchasing
• Formerly known as OME-RESA, has been in operation since 1985
• Organized as a Public Employer Group Insurance Trust under
Council of Government Rules (Section 167)
• Each participating organization is a voting member
• Membership elects a Board of Directors, consisting of
representatives from the member organizations
• Over 100 separate member organizations today
• Approximately 12,000 employees
• Approximately 30,000 plan participants
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• Jefferson Health Plan – Consortium Purchasing
• Leverages purchasing power of members to reduce cost of
benefit plans
• Provides same purchasing efficiencies available to the largest
employers to all size members of the consortium
• Negotiates the “best” contracts and passes through 100% of the
savings
• Provides fixed annual funding rates to members
• Full disclosure of plan income and expenses to member group
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• Jefferson Health Plan – Internal Pool
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Member chooses a specific deductible
Deductibles range from $35,000 to $150,000
Deductible pooling charge included in monthly funding rates
Member group is subject to reimbursement for plan participant’s
cumulative claims above the deductible
Reimbursements are credited to the member group’s trust account
Standard rates at each deductible, not based on member claims
No lasers or exclusions permitted
Aggregate Protection
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• Jefferson Health Plan – Consortium Purchasing
• Focus on reducing Plan Payments to providers
• Get the best provider network for your employees, based on
member group location and claims
best access to providers
best discounts on services
lowest network fees
100% pass-through of network discounts to group
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• The Jefferson Health Plan offers members access to several
national and regional networks
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CIGNA
OCHIP
Aetna
FrontPath
HealthSpan
Paramount
HealthSmart
The Health Plan
United Healthcare
Medical Mutual of Ohio
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• The Jefferson Health Plan offers members access to several
national and regional claims administrators
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Meritain, Boardman
Self-Funded Plans, Cleveland
The Health Plan, St. Clairsville
Paramount Health Care, Maumee
Healthsmart (formerly Klais), Akron
United Healthcare or UMR, Westerville
Employee Benefit Management Corp., Dublin
Medical Mutual of Ohio or Mutual Health Services, Cleveland
Aetna
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• The Jefferson Health Plan members can retain their own
plan designs or convert to another of their choosing
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Deductibles
Co-pays
Co-insurance levels
Out-of-Pocket limits
Provider Networks
PPO Plans
HMO Plans
POS Plans
CDHP, HDHP and HSA Plans
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• Jefferson Health Plan – Affiliated Vendor Partners
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MetLife – Life Insurance Carrier
Gilmore, Jasion & Mahler – Auditor
Vision Service Plan – Vision Carrier
Sun Life – Reinsurance Carrier
Alere – Wellness & Disease Management
U.S. Bank – Consortium Banking Institution
CVS Caremark – Pharmacy Benefit Manager
Johnson Investment Counsel – Investment Manager
ValueOptions – Employee Assistance Program – New Sept. 1
Key Underwriting Financial Indicators
Ins. Comm. Filings
for 2013
Administration
Profit
Premium Dollars
used for Benefits
Aetna
11.14%
5.90%
$0.83
Anthem BC/BS
7.28%
10.24%
$0.81
Aultcare
10.47%
-.02%
$0.89
The Health Plan
6.54%
2.39%
$0.91
Medical Mutual
12.94%
2.04%
$0.85
Paramount
10.07%
-5.35%
$0.95
United
10.55%
5.48%
$0.84
Average Carrier
9.86%
4.48%
$0.86
JHP FY13
6.55%
0.0%
$0.94
VALUE PURCHASING
• The Jefferson Health Plan – Consistent Renewals
• To help produce more consistent renewals, the member’s plan
experience is combined with that of the overall consortium in a
process called “blending”
• “Blending” means that the overall cost of claims on a member’s
plan is shared on a credibility adjusted basis with the experience of
the other members in the consortium
• This provides stability to renewal rates, because the consortium’s entire
population is used to develop a part of a member’s renewal
• Pooling claims experience with other similar employers decreases rate
volatility since claims are spread on a credibility basis over a large
population of plan participants
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Jefferson Health Plan Trend Rates
Medical (w/o Rx)
Prescription Drugs
Dental
Vision
High Deductible Plans (with Rx)
1
Consortium
FY14
Market
Rate1
8.0%
10.8%
6.0%
6.4%
4.0%
4.0%
3.5%
3.7%
8.0%
9.1%
Annual Segal National Survey of Managed care Plans (2013)
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• The Jefferson Health Plan Advantages
• Financial Security with over $100 million in reserves
• Group purchasing power with over 30,000 lives
• More predictive, more stable funding levels with pooling of large
claims experience
• Availability of Moratoria, interest on reserves, and “no interest”
loans
• Online access to reserve account and monthly financial statement
• Health Care reform guidance and support
• Member can work with insurance agency advisors
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• Important Questions to ask about a consortium
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Length of time in business
Size of consortium
Governance of consortium
Strength of reserves
Ownership of reserves
Rate setting policies and methodologies
Risk sharing techniques and availability of Moratoria
Member control over plan design
Member choice of networks or plan administrators
Entry and exit requirements
Buy in requirements, if any
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QUESTIONS?

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