BHR's Strategic Priorities Talent Acquisition Provide agencies - PDF document

UPDATED Salary Policy/Health Ins Presentation - FY14 Thursday, January 31, 2013 2:59 PM State of South Dakota Salary Policy & Heath Insurance Presentation to Joint Committee on Appropriations January 25, 2013 1

BHR's Strategic Priorities • Talent Acquisition Provide agencies with the resources needed to attract and hire the best talent available. • Talent Development Help agencies develop and effectively use talent to maximize employee performance and increase agency efficiency and productivity. • Talent Retention Provide agencies with the tools and information needed to retain mission-critical talent. 2

South Dakota State Employee Health Plan

Service Partners of Health Plan Provider etwork Claims Processing Flex.Ible Spending .Accounts Intensin Case ~lanagement Hll!!I! Express Scripts ~lanagement Partners Prescription etwork Prior -authorization Formula~ · & ~lalntenance l\ledical ~lanagement List Case - 1111zat1on Prior -authorization for Health creenings certain prescriptions Condition ~lanagement Claims Associates Health Fitness ubrogation Health .Assessment Claims Re"iew Health .Ad"ising Health Coaching 4

Health Plan Members 25 , 000 ~------------------------------ 19, 88 1 20 , 000 t-----.====--------------------------- 17,271 15, 000 1 I • FY 12 FY 13 10, 000 7, 455 6, 555 5, 000 1, 462 1, 801 0 L atitude Hea l th Pl an S1 , 000 Deduc ti ble S1 , 800 Deductib le (S500 Deductib le) 5

Health Plan Budget Cycle Budget Planning Session for a Finalize year end that is proposed FYXX 24 months away Budget Legislature approves FYXX End FYXX, Budget compare budget Project claims to actual 18-21 months ahead *Projections are compared to actual claims on a monthly basis. 6

AON Hwttt Your 2012 Aon Hewitt Guide to Health Care Solutions State of South Dakota (SD) January 2013 7

Competitive Cost Benchmarks • Cost Sharing Mix • Financial Efficiency • Actuarial Value AON Hewitt, January 2013 8

Competitive Cost Benchmarks- Cost Sharing Mix • A measure of employee cost sharing is the percentage of total health care expenses paid for by the employer versus the employee. • Estimated out-of-pocket costs are added to the total health plan costs to determine an estimate of total health care expenses. • Employees share costs through dependent contributions, deductibles, copayments, and coinsurance. 9 AON Hewitt, January 2013

Competitive Cost Benchmarks- Cost Sharing Mix Cost Sharing Mix-Overall D Out-of-Pocket Costs II Employee Contributions a Employer Cost Fortune Labor 10,000- In dustry SD 24,999 500 Market HHVI Out-of-Pocket Costs* 26 . 0% 11 . 6% 18 . 1% 18 . 2% 24 . 0% 16 . 6% 11 . 0% 9. 4% 18 . 5% 18 . 3% 13.4% 16 . 8% Employee Contributions Employer Cost 63 . 0% 79 . 1% 63 . 5% 63 . 5% 62 . 6% 66 . 6% * Employee Out- of -Pocket Costs AON Hewitt, January 2013 10

Competitive Cost Benchmarks- Cost Sharing Mix Cost Sharing Mix-Overall a Out-of-Pocket Costs a Employee Co ntributions a Employer Cost SD State 1 State 2 State 3 State 4 State 5 State 6 Out-of-Pocket Costs 26 . 0% 21 . 7% 201% 171% 6. 1% 17 . 0% 21. 3% 11 . 0% 14 .4% 167% 110% 20 . 6% Employee Contributions 34% Emp l oyer Cost 63 . 0% 64 . 0% 632% 72 . 0% 00 . 5% 83 . 0% 58 . 1% AON Hewitt, January 2013 11

Competitive Cost Benchmarks- Financial Efficiency Financial efficiency provides a better • comparative measure than per participants cost- population demographics, richness of plan design, and geographic location are removed. • Financial efficiency measures how effectively you are delivering health care to your participants. • A Fl greater than 100% reflects better-than- average financial efficiency. • An Fl greater than 100% indicates your plans are providing a greater value per dollar spent than other plans. 12 AON Hewitt, January 2013

Competitive Cost Benchmarks- Financial Efficiency Financial Efficiency--Overall 110.0% / -- 100.0% 90 .0% 80 .0% 70 .0% 60 .0% 10 ,000- Labor so Industry 24,999 Fortune 500 Market HHVI Financial Index 105.9% 101 .7% 100. 5% 992% 100. 0% 100.0% Enrollment 12,356 582,048 1,513,720 3,192,410 132,365 6,3 81 , 193 13 AON Hewitt, January 2013

Competitive Cost Benchmarks- Financial Efficiency Financial Efficiency-Overall 110. 0% 100 . 0% 90 . 0% 80 . 0% 700% 60 . 0% SD State 1 State 2 State 3 State 4 State 5 State6 1 05 9% 102 3% 102 . 0% 93 . 2% 991% 103 5% 100 . 1% Financia l Index 14 AON Hewitt, January 2013

Competitive Cost Benchmarks- Actuarial Value Actuarial Value is a percentage of total health • care costs expected to be paid by the plan after deductibles, coinsurance, and copays are applied. • An Actuarial Value of 100% indicates no participant cost; that is, no copays, deductibles, or other out-of-pocket cost. • The measure shown here is an average across all plans offered within each category, weighted by the number of participants. 15 AON Hewitt, January 2013

Competitive Cost Benchmarks- Actuarial Value Actuarial Value 90 _ 0% 88 .4 % 83.4% - 8 50 % 81_ 9% 81 . 8% 80 .0% 760 % - 750 % 74 0% 7 00 % - 6 50 % SD Industry 10 ,000-24, 999 Fortune 500 Labor Market HHVI 16 AON Hewitt. January 2013

Competitive Cost Benchmarks- Actuarial Value Actuarial Value By Plan Type a c ombined 100% 93.9% 90% 80% 70% 60% 50% so State 1 State 2 State 3 State 4 State 5 State 6 17 AON Hewitt, January 2013

FY12 and FY13 Budgets 18

Major Factors Impacting FY12 Budget • Increase in High Cost Claimants from 271 to 308. • $5.4 M • Increase usage and cost of Specialty Drugs. • $2.0 M • Change in claims processing. • $2.8 M (paid 53 weeks) Total • $8.5 M* * $10.2 M FY12 budget shortfall was offset by minus $1.7 M in additional miscellaneous revenue 19

FY12 Claims by Cost Segment Average Claim Amount per Group Claimants Claim Count Check Amount Member No Claims 5,377 0 $0 $0 $7,923,683 $446 Pa id Claims <$2K 17 ,786 165,490 $34,019,749 $5,980 Pa id Claims $2K-$20K 5,689 207,614 $16,233,112 $32,145 Pa id Claims $20K -$50K 505 34, 196 $39,894,882 $129,529 Pa id Claims $SOK Plus 308 34,359 20

FY 12 Most Costly Conditions Among High Cost Claimants Condition Claimants (cost In millions) $12.9 M Oncology Bac k Condit ions $4.6 M Bl ood Disorders $3.4 M Injuri es & Po isoning $3.1 M Forms of Chronic Heart Disease $2.9 M Ki dney Disease $2 .8 M Newborns wi th Complications $1 M Other Diseases* *Degenerative Joint Diseases, Respiratory Disease, $9.1 M etc. 21

FY13 Budget • Major plan changes were implemented to keep plan claim cost the same as the previous year. • Increase in deductible from $300 to $500 • Eliminated copayments for Office Visits. • Increased copayments for Emergency Room, Inpatient Hospital, all Global Maternity, and CT/PET scans. • Intensive Case Management program implemented. • Management of ER use. • FY13 plan changes would have resulted in a break even year. However, FY12 claims were $10.2 M higher than projected creating a budget gap for FY13 before the year even started. 22

Major Factors Impacting FY13 Budget • Increased claim projections from actuary. • $9.7 M • Increased need to carry a higher reserve for claims Incurred But Not Reported (IBNR). • $1.9 M • Increased administration fees from implementation of two new programs: Intensive Case Management and Emergency Room Management. • $500,000 • Reduced interest revenue. • $500,000 Total • FY13 projected shortfall $12.6 M 23

FY13 One-Time Budget Request • SB 90 Health Plan Appropriation Request General Funds $ 7,916,366 Federal Funds $4,925,785 Other $ 8,472,259 Total $21,314,410 One-time employer rate increase $1,615 Current FY13 employer rate $6,335 Total $7,950 24

Employer Health Insurance Contributions Employer Health Insurance Contributions $7,950 - $8,000 $7,000 $6,000 $5,000 • One TI me Rate Increase • Employer Cont ri bution $4,000 $3,000 $2,000 $1,000 so South Dakota FY13 South Dakota FY14 25

Health Plan Full Accrual Financial Statement state E1111loyee Self Insured Health Plan Full Accrual Basis Financial S mants FY2012 FY 2012 FY 2013 FY 2013 Rev i sed Estimate Original Estimate Actual Original Estimate Revenue Coolnbuoo,.. 10 Plan ~-erPald $78040 . 861 S77,896 559 Sl!0,337.566 S80514054 Re t iree CXlBRA ard Employee PaXI for Dependenls S18 972,174 s 9. ro4,os 1 S19, 45304 1 S19, 50406 Federal Early Reurement Re,ns<rance Program $650,000 $0 $0 $0 Adrnristrauve Fee $145,168 $ 47 770 $145,168 S147.000 ltterest Reverue $600,000 $468 447 $600, 000 $150,000 Refl.nd of Pnor Years Claims S2 :l00,000 $5,192171 $1,350000 $1500000 Total Reverue $101 ,240,090 $103,157 988 $101, 936795 $101 283,228 E.Npenses $91,642,174 $103,238 687 S91 , 888080 $103520232 $560,000 ssn500 S560, 000 $550,000 ss,460 no Adrnristrauon S7 733, 751 $7, 962083 $9258 225 Total Expenses $99,925,925 s 11 , ne . 2so $101,898,850 $113 328 457 Clxrenl Year Over/(Underrecolery) $1 , 314165 (S8620262) $37,945 (S 12 045 229) s 545100) $75,162 S75 1 62 S ,389,327 S8 • u1 1 ! 329 1 S1389327 51427272 cmwbve Olerl{Undem,c;overy) 11 the analysll of he revenues and expe,- &Ince the beglnrang of the proiµm 26

FY14 Health Insurance Increase Two Components • Health Plan Base Rate Request $12.3 M • Wellness Initiative $8.1 M Total $20.4 M 27