Genesee County 1 Findings and Recommendations Regarding Retiree - PowerPoint PPT Presentation

Genesee County 1 Findings and Recommendations Regarding Retiree Medical Benefits February 19, 2020

AGENDA Process Findings Recommendations Proposed Project Process and Timing Appendix Pre and Post-65 Costs and Enrollment Current Plan Designs Factors that Impact Cost of Retiree Medical Plans 2

Process Retained to evaluate existing retiree medical benefit plans in terms of: Plan design • Plan funding • Costs • Contributions • Purpose is to determine if there are: Better, more efficient methods to deliver the benefits at lower costs to • both the County and its retirees, and Create greater sustainability of retiree medical benefit plans • 3

Process Data provided by the County, broker, and carriers to understand: Plan enrollment – data in today’s report is based on master list from the • County, Plan designs, • Rates/premium equivalent rates and carrier enrollment summaries, and • Retiree contributions • Collected information from County’s legal counsel regarding status of bargaining requirements Over 100 variations by retiree group in terms of potential to change one or more of the following: Plan administrator (Blue Cross or HAP) • Plan financing method (insured or self-insured) • Plan design (24 different retiree plan designs between the two • administrators) 4

Findings Pre-65 Retirees account for 319 former employees Represents an annual gross spend (using accrual rates) of $7.023 million • Retiree contributions are about 1.7% of premiums • For Post-65 retirees, the story is similar 718 covered retirees • Annual post-65 retiree medical spend is $7.35 million • Contributions are 1.1% of premiums • Groups # of Subscribers Premium Equivalence Contributions Net Expense Pre-65 Retirees 319 $7,147,318.04 $123,825.48 $7,023,492.56 Post 65 Retirees 718 $7,427,634.93 $80,710.56 $7,346,924.37 All retirees, pre and post, have been accounted for and reconciled between the Master List and billing statement with the vendors 5

Findings The County operates 24 different pre and post-65 retiree medical plans through two different carriers/administrators Blue Cross plans are self-insured • HAP plans are fully-insured • 100+ permutations of plan offerings – all permutations are based on the time of retirement of the retiree The chart below illustrates the number of plans, to whom they apply, and a general comment on cost efficiency of the platform Type Ty pe o of Pl f Plan Pr Pre-65 65 Post st-65 65 Effic fficie iency o of Pl Plan Pu Purchasin ing Comprehensive Major Medical 11 11 No pre-65 cost effectiveness; Modest for Post 65 – design limits apply to both pre and post PPO 4 4 Modest cost effectiveness – design limits HMO 3 3 Modest cost effectiveness – design limits Hybrid – Comp MM/PPO 4 4 Low cost effectiveness for pre-65, Modest for Post 65 – design limits MAPD 0 2 Good effectiveness – completely unleveraged 6

Findings As currently structured, the County’s plans are not sustainable The Comprehensive Major Medical plan for pre-65 retirees delivers excellent benefits but on a cost basis that is 15% to 25% above market norms if purchased through PPOs and HMOs In addition: Levels of benefits shift virtually all of the medical inflationary (trend) costs • to the County Retiree contributions are slightly over 1% in total • 7

Findings Comprehensive Major Medical for post-65 is not as problematic as it is for the pre-65 cohort since reimbursement is based on Medicare PPO, Hybrid, and Limited MAPD plans are problematic due to design structure as noted previously Having multiple vendors on different financing platforms limits/eliminates any purchasing leverage that could be available to the County 8

Recommendation Comprehensive approach to consolidate the County’s purchasing for Actives and Retirees At this time leave active plan designs alone, but include them in a • consolidated purchasing effort to deliver: Lower costs  Easier administration  Opportunity to deal with carrier imposed administrative limitations affecting  pre-65 retirees with post-65 dependents, post-65 retirees with pre-65 dependents (split contracts) Provide multiple (not more than three options each) for pre-65 and post • 65 plans Range of costs savings estimated at: Retire iree C Class Estimated L Low ow S Sav avin ings Estimated H Hig igh S Sav avin ings Range e Ran ange Pre-65 retirees $700,000 $1,000,000 Post -65 retirees $1,850,000 $2,600,000 Total $2,550,000 $3,600,000 9

Project Process and Timing Week 1 through 3: Complete data collection – historical claims, enrollment, fixed costs, shock claims, etc. Week 2 through 5: Draft Vendor RFP complete with all historical data, proposal specifications, response timing, etc. Week 4 through 12: Manage Vendor questions, responses, begin analytics Week 10 through 16: Complete analysis of all vendor responses, prepare and present findings to County Week 14 through 24: Decision making process Week 23 through 40: Implementation, communications, open enrollment 10

Appendix 11

Pre-65 Retiree Costs and Enrollment Change Carrier? Change Funding? Change Plan? # of Subscribers Premium Equivalence Contributions Net Expense Maybe Maybe Maybe 2 $38,863 $0 $38,863 Maybe Maybe Yes 22 $424,176 $3,311 $420,866 Maybe No Maybe 5 $84,761 $1,741 $83,019 No No Maybe 2 $55,404 $0 $55,404 No No Yes 1 $11,624 $0 $11,624 Yes Maybe Yes 43 $1,037,662 $6,579 $1,031,082 Yes No Yes 2 $38,790 $0 $38,790 Yes Yes No 15 $377,424 $0 $377,424 Yes Yes Yes 218 $4,912,535 $110,491 $4,802,044 Blanks 9 $166,079 $1,704 $164,375 Totals 319 $7,147,318 $123,825 $7,023,493  Of the 319 pre-65 retirees, 304 either  Allow a plan change, or  May allow a plan change  Note, plan changes have been taking place each year as new medical technologies, clinical treatments, and pharmacy therapies replace old clinical approaches 12

Post-65 Retiree Costs and Enrollment Change Carrier? Change Funding? Change Plan? # of Subscribers Premium Equivalence Contributions Net Expense Maybe Maybe Maybe 24 $229,819 $0 $229,819 Maybe Maybe Yes 110 $1,128,244 $0 $1,128,244 Maybe No Maybe 110 $1,052,750 $0 $1,052,750 No No Maybe 28 $262,137 $310 $261,828 No No Yes 12 $162,288 $0 $162,288 Yes Maybe Yes 46 $535,387 $903 $534,484 Yes No Yes 22 $216,542 $4,888 $211,654 Yes Yes No 11 $141,832 $0 $141,832 Yes Yes Yes 287 $3,005,754 $70,095 $2,935,658 Blanks 68 $692,882 $4,514 $688,367 Totals 718 $7,427,635 $80,711 $7,346,924  Of the 718 post-65 retirees, 707 either  Allow a plan change, or  May allow a plan change  Note, plan changes have been taking place each year as new medical technologies, clinical treatments, and pharmacy therapies replace old clinical approaches 13

Current Medical Plan Designs Plans are administered by  Blue Cross Blue Shield of MI – all are self-insured  Health Alliance Plan (HAP) – all are fully insured  HAP also includes a post 65 retiree medical design that is a  Medicare Advantage Part D plan (MAPD) – by definition, fully insured The MAPD plan is a plan available only to participants in  Medicare Combines Medicare Part A (hospital), Part B (professional),  and supplemental benefits to both Part A, B, and all covered retail prescription drug benefits 14

Current Medical Plan Designs General commentary  For the Pre-65 population, a significant portion of the population are enrolled  in Comprehensive Major Medical plans Such plans carry with it a claims cost reimbursement rate that can be  anywhere from approximately 5% to 40% above the normal reimbursement levels for typical PPO providers This means that simply moving this group of retirees into a PPO plan  structure will produce a reduction in costs of 12% to 30% overall, without any change to the benefit level itself For the post 65 population, the situation is very similar in that the same plans  are generally available, with the exception of the two MAPD plans offered by HAP The difference is, that for those retirees post-65 are covered primary  by Medicare, Medicare reimbursements rates dictate how claims will be paid by the plan As such, for the Medicare population, cost savings due to  reimbursements based on plan type, e.g. Comp Major Med, PPO, or HMO do not drive a much cost savings All claims for this group are reimbursed at Medicare levels  15