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Sparks City Council Meeting 11/27/2017

General Business: 9.7

Title: Consideration, discussion and possible approval to make plan design changes to the City of Sparks Group Health Plan as recommended by the City of Sparks Group Health Committee effective January 1, 2018.
Petitioner/Presenter: Neil Krutz, Assistant City Manager/Jen McCall, Senior HR Analyst
Recommendation: To approve the changes as recommended by the City of Sparks Group Health Committee effective January 1, 2018.
Financial Impact: Estimated net annual savings of $9,493 expected within the City of Sparks Group Health Self-Insurance Fund.
Business Impact (Per NRS 237):
    
A Business Impact Statement is not required because this is not a rule.
Agenda Item Brief:

The City of Sparks provides a self-insured group health plan that includes medical, dental, pharmacy, vision and life for employees, retirees and dependents.

The purpose of the City’s Group Health Committee is to discuss cost containment measures, plan design changes and compliance requirements, and seek City Council approval when changes are recommended to the City's self-insured group health plan.

In 2017, through the open meeting law process, the City of Sparks Group Health Committee reviewed the current benefit structure to determine if savings could be realized within the current plan design, without significantly impacting group health plan members, and find areas where the benefit design could be updated and remain competitive.



Background:

The Group Health Committee is comprised of one (1) voting member from each of the following represented groups:

  • Operating Engineers (OE3)
  • Sparks Police Protective Association (SPPA)
  • International Association of Firefighters (IAFF)

The Committee is also comprised of one (1) non-voting member from each of the following represented and non-represented groups to provide input to voting members:

  • Operating Engineers Supervisory Unit
  • Confidential
  • Management Professional/Appointed
  • Classified Chief Officers
  • One retired employee

The voting member of each recognized bargaining unit shall have the authority to bind said bargaining unit to any modification in benefits recommended to the City Council subject to ratification of at least two (2) of the voting members (OE3, SPPA, IAFF).

Any modification in benefits agreed to by the City Council on recommendation of the voting members of the committee shall be binding upon each represented and non-represented group.



Analysis:

After review, discussion and vote at an open meeting of the Group Health Committee on October 24, 2017, it was determined that the following reductions and additions to the plan will reduce overall plan costs, while maintaining a completive benefit package for employees and an attractive plan for those new candidates wishing to join the City of Sparks.

In comparing the current benefit structure, the Group Health Committee determined that the below changes would not only save the plan money, but would be a better use of plan dollars and have a greater positive impact on the majority of members.

  • Reduce Benefit for Urgent Care Visits.  On January 1, 2016, the in-network urgent care benefit was increased to 100% coverage, after the individual annual deductible was met.  The purpose of this change was to discourage the use of the emergency room for sickness.  The plan design change resulted in more members seeking standard care at an urgent care vs. their primary care physician. A reduction in visits to the emergency room was not realized.  The Group Health Committee recommends the benefit be changed back to an in-network benefit of 80% after the individual deductible is met.  This change will result in an estimated plan savings of $11,300.
  • Reduce Benefit for Routine Dental Cleanings.  The current plan design allows four (4) routine cleanings per calendar year.  The recommendation is to reduce this to two (2) routine cleanings per calendar year. This change will result in an estimated plan savings of $40,200.
  • Eliminate Benefit for Free OTC Drugs.  The current plan design allows a member to obtain a prescription for an allergy medication or acid reducer, and receive the drug at no cost at the pharmacy counter. These drugs are available without a prescription. This benefit was implemented nearly 15 years ago, prior to the influx of antacid and allergy medication being made so readily available.  With prescription and drug costs rising, the committee feels that medication that can be purchased without a prescription should no longer be covered for free.  The anticipated savings to the plan is $47,548.
  • Modify Dental Language for Fillings.  The current dental plan benefit was written in 2001.  Dental technology has changed significantly, including the standard material used for fillings.  The plan currently does not allow for resin based composite fillings to posterior teeth, although this is now standard dental practice.  The committee wishes to modify the language to include resin based composite fillings to posterior teeth.  This would result in an increase to the plan of $4,128.
  • Modify Healthy Lifestyle Benefit List..  The Group Health Committee will review the list of covered items and ensure we are only including those items that truly encourage a healthy and/or physical lifestyle.
  • Increase Annual Dental Maximum.  The current plan design allows for an individual annual maximum of $1,500.  Due to rising dental costs, the committee feels the plan is more competitive and desirable to new employees if the annual maximum is increased to $2,500.  This would result in a plan increase of $38,000.
  • Increase Lifetime Orthodontia Maximum.  The current plan design provides a lifetime maximum of $1,500.  Due to increased orthodontia costs, the committee feels the plan is more competitive and desirable to new employees if the lifetime maximum is increased to $3,000.  This would result in a plan increase of $21,000.
  • Add Virtual Visits.  Through our agreement with Renown and Hometown, we can add Virtual Visit benefits to our plan design. Virtual Visits will allow members to call from home to address many of the sickness/illness related issues that may ordinarily draw them to the Urgent Care or even an Emergency Room.  Virtual visits are substantially less in cost than the Urgent Care and the Emergency Room.  Virtual visits will be covered at 100% in-network after an individual has met their annual deductible.

Benefits changes are effective the beginning of the plan year, January 1, 2018 and are not retroactive.  Please see the attached summary.



Alternatives:

1.  The Council may choose to approve the proposed changes as outlined by staff.

2.  The Council may choose not to approve the proposed changes as outlined by staff.

3.  The Council may choose not to approve the proposed changes and direct the City Manager to provide alternatives to staff.



Recommended Motion:

I move to approve the recommended changes to the City of Sparks Group Health Plan effective at the beginning of the plan year which is January 1, 2018.



Attached Files:
     January 1 2018 Group Health Plan Changes.pdf

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