Sparks City Council Meeting 12/11/2017 2:00:00 PM

    Monday, December 11, 2017 2:00 PM
    Council Chambers, Legislative Bldg, 745 4th St., Sparks, NV

General Business: 9.1

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 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.

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.

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



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 changes 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 most members.

Increase Annual Deductible for Out-of-Network Services. The current deductibles for providers out of our network,  are $200 for an individual and $400 for a family.  The proposed increase would change the deductible to $800 for an individual and $1,600 for a family.

Increase Annual Out-of-Pocket Maximums for Out-of-Network Services. The Annual Out-of-Pocket for Out-of-Network services is currently $5,000 for an individual and $10,000 for a family. These out-of-pocket annual maximums would increase to $10,000 for an individual and $20,000 for a family.

The goal of these proposed increases is to discourage members from seeking out-of-network facilities and physicians that are not contracted with the City. For example, in 2017, just one out-of-network claim cost the Plan more than $70,000. Had the procedure been handled by the available, in-network contracted provider hospital, the cost to the Plan would have been approximately $5,000. 

These proposed changes will not affect dependents and retirees that live out of the area or those members needing emergency services.  These changes would only impact members choosing to utilize out-of-network hospitals and physicians when an in-network alternative exists.

Add Intercept Rx Program.  The Intercept program is designed to target specialty drug products, identified by WellDyne Rx, our Pharmacy Benefit Manager.  This program is provided at no cost to the plan and provides better discounts and clinical outcomes over retail.  The program targets 60 specific specialty drug products that may reduce both the patients’ and the Plan’s drug costs.  Year to date, specialty drugs have cost the Plan $382,908.  Under the Intercept Rx Program, the same claims with intercept Rx discounts would have cost $339,114 – a savings of $43,793 annually.

WellDyne Rx will reach out to members directly, to enroll in them in the Intercept Rx program.  Members refusing to participate in the Intercept Rx Program, will be responsible for a 40% co-pay of the cost of the Specialty Drug.

Eliminate Deductible Carry-Over.  The current language in the Plan allows eligible expenses incurred in the last 3 months of a calendar year and applied toward that year's deductible to be carried forward and applied toward the member's deductible for the next Calendar Year.

In 2016, 117 members had deductible carry-over.  The potential liability to the Plan was $23,400.  The Plan had 18 members utilize deductible carry over in 2017, requiring the plan to pay out $2,400 in deductibles on behalf of these 18 members. 

Currently, a member meeting their deductible in the first 9 months of a calendar year, will pay a new deductible in the following calendar year.  But members paying their deductible in the last 90 days of a calendar year – do not have to meet a deductible in the following calendar year.  Not only is this benefit not applied fairly to members, but it will save an estimated $2,400 annually.  Therefore, the City’s Group Health Committee wishes to remove this language from the City’s Group Health Plan Document. 

Reduce Back on Track Visits. Current Plan language allows unlimited visits to Specialty Health for the treatment of chronic back and neck pain.  While in the Back-on-Track Program all services authorized by Specialty Health, except surgery related services, are not subject to a calendar year deductible or co-insurance.

After review of information provided by Specialty Health, it was determined that 90% of members seen by Specialty Health under this program, are released from care after 90 days.  However, an additional 10% continue to use the program for chronic conditions where other health issues may exist.  If after 90 days, the Medical Director at Specialty Health determines that a chronic condition exists, then the member will be referred to the appropriate physician and be subject to co-insurance and annual deductibles.

Add Pre-Certification for all In-Patient and Out-Patient Admissions. Currently, the Plan only requires pre-certification for in-patient hospital admissions, transplant services and clinical trials.  The proposed language change in the City’s Group Health Plan Document will require pre-certification for all in-patient admissions and all same day out-patient surgical procedures to determine medical necessity.

It is the member’s responsibility to ensure that pre-certification occurs when it is required by the Plan.  Any penalty for failure to pre-certify is the member’s responsibility, not the health care provider.  The member, physician or facility must call Hometown Health’s Utilization Management team at least five (5) business days before the expected date of service or as soon as reasonably possible.  For an emergency admission, Utilization Management must be contacted within 48 hours after admission or on the first business day after admission.

Pre-Certification protects members and the City from expenses that result from receiving services that are not covered, not medically necessary or are otherwise excluded from coverage under the Plan.

Failure to Pre-Certify:  If the Pre-Certification requirements are not completed, benefits payable for the service that was not pre-certified may be reduced to 50% and the member will be responsible for anything exceeding the contracted allowable of billed charges.  Expenses related to the penalty will not be counted towards your plan year deductible or out-of-pocket maximum.  In addition, services received by an out-of-network provider, regardless of prior-authorization may be subject to usual and customary charges.

Add Optomap Retinal Exam. The Plan currently covers the cost of pupil dilation through VSP, our vision service provider.  However, most providers now use the optomap exam in lieu of pupil dilation as it allows for a more comfortable retinal exam and allows the doctor to view a majority of the retina.  Patients leave the office with vision intact and without sensitivity. Optomap creates a permanent record and allows for future comparisons.  Members may still request dilation, however if a member chooses the optomap exam, the Plan proposes covering the cost.  This will result in an annual plan increase of $14,000.

Increase Annual Dental Benefit Maximum.  The current plan design allows for an individual annual maximum of $2,500.  Due to rising dental costs, the committee feels the plan is more competitive and desirable to current and new employees if the annual maximum is increased to $3,000.  This would result in an anticipated plan increase of $38,000.

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 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.

2.  The Council may choose not to approve the proposed 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.

3.  The Council may choose not to approve the proposed 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; 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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