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Employee Benefit Trust Minutes - 06/29/2017 City of Wichita Falls Employee Benefits Trust Board Minutes June 29th, 2017 The meeting was held in the City Council Conference Room, 1300 Seventh Street, Wichita Falls, TX 76301. Present: Darron Leiker, City Manager Jim Dockery, Deputy City Manager Kinley Hegglund, City Attorney Christi Klyn, Human Resources Director Pat Halverson, Director of Finance Angela Bosma, Employee Benefits Specialist II Audrey Brininger, Employee Benefits Specialist I Brent Weegar, IPS Advisors, Principal Rebekah Ross, IPS Advisors, Sr. Account Executive Bennett Champagne, IPS Advisors, Benefit Analyst Penny Henderson, retiree spouse Laura Drury, retiree Agenda Items: Meeting was called to order at 1:05 p.m. II. Minutes from previous meeting were approved. III. Financial report was presented and discussed. IV. IPS Mid-Year Briefing: Items a — h are quoted directly from the IPS provided "City of Wichita Falls 2017 Mid-Year Review Strategy Meeting" held June 29, 2017. a. Overview: i. Financial Results: "Wichita Falls ended plan year 2016 at a -9.8% decrease to health and prescription per capita plan cost. This was primarily driven by reductions in large claims impact compared to the prior plan year. Total spend for claimants exceeding $50,000 decreased from $5.7m to $3.8m between plan years. Incidents of large claims above $50,000 actually increased from 28 to 34 claimants. For the 2017 plan year to date (through May 2017), the City's annualized per capita plan costs are sitting at a 10.7% increase from the prior plan year. Medical claims at this time are up 16.0% and prescription claims are sitting at no change. Medical trend has primarily been driven by two large claimants of 470k and 344k. These two large claimants are not expected to be on-going." ii. Moving Forward: "The Core PPO plan of benefits have conservative deductibles, co pays and out of pockets amounts when compared to like entities. For the 2018 Plan Year, it is recommended for the City to evaluate narrow network alternatives, out of network benefits, referenced based pricing alternates, High performance drug formularies. BCBS of Texas and Express Scripts have indicated that they can provide options and administration for all of these components." iii. Renewal: "The City of Wichita Falls released and RFP for all lines of coverage for the2017 plan year. The City currently has 3 renewal options before the next RFP is released. Only the Medical Stop Loss renews for the 2018 plan year as all other coverages have rate caps (Medical TPS Services) or are in rate guarantee periods in 2017." b. Historical Cost Analysis c. Utilization Review d. Budget Projection e. Renewal Recap: i. Third Party Administration: "The city went through an RFP process for the 2017 renewal and renewed with the incumbent, Blue Cross Blue Shield (BCB), for the 2017 plan year. BCBS provided a -3.7% decrease to their administrative fees and placed rate caps on their administrative fees of +4% for years 2 and 3 of the contract. Cigna provided a competitive administrative fee, however total costs including projected claims were 3.48% above the BCBS renewal offer." ii. Stop Loss: "The City conducted an RFP for stop loss and renewed with Highmark/Stealth at a 25% increase to rates and remained at a $500,000 specific deductible level. The City had experienced significant stop loss reimbursements in 2015/2016 that contributed to the increase for 2017." iii. Health Plan Design and Contributions: "The City elected to discontinue the Buy Up plan for 2017 and made no plan design adjustments to the Core, H.S.A. and Catastrophic Plans. The City did add additional services including coverage for MDLive Virtual Visits and Compass Professional Health Services. Both additions provide avenues for employees to pursue lower cost quality health care in addition to the employee health clinic." "In regard to employee contributions, the City elected to increase Core Plan premiums only by 7.5% for the 2017 plan year. The City added a spousal surcharge of$100 (per month) as well if a working spouse has access to an ACA qualified health plan. Last, the City increased retiree premiums for the Core plan only, passing on a 7.5% increase to retiree only coverage and between 12% and 13.5% increase to retiree dependent coverage." iv. Prescription Plan: "The City renewed with Express Scripts for the 2017 plan year. With its best and final offer, Express Scripts provided addition AWP discounts and more than doubled their 2016 rebate guarantees for the 2017 plan year. Express Scripts final pricing offer ended up providing approximately 3% additional savings over the best and final offer proposed by BCBS. Express Scripts allowed the City to maintain their current network, formulary and pharmacy plan design. With the BOBS offer, the City would have been required to eliminate CVS pharmacies and implement a limited formulary." v. Dental: "The City renewed with Humana for the 2017 plan year. Humana provided the strongest provider network of any carrier who presented. Administration fees received a +10.1% increase and were guaranteed for 2 years. No changes were made to plan design or premiums for 2017." vi. Vision: "The City made a carrier change from Humana to Superior for the 2017 plan year. Rates received a +4.7% increase and were guaranteed for four years. The superior vision proposal included a significant increase in network access by adding big box retail chains (Walmart, Sam's, etc.) that are currently not in the Humana network." vii. Life and Disability: "A carrier change from Sun Life to Symetra was made for the 2017 plan year. Symetra substantially matched the current plan of benefits and the City will experience a -23.0% or $28,455 reduction to annual premium costs. Rates were guaranteed for 3 years." viii. Employee Assistance Program: "The City renewed with the incumbent carrier Deer Oaks for the Employee Assistance Program. Rates renewed at no increase and were guaranteed for 2 years." f. Benchmarking: Plan Design Contributions g. Strategic Recommendations i. Request for Proposal: "The City of Wichita Falls released an RFP for all lines of coverage for the 1/1/17 plan year and maintains three one year renewal option periods. The City will renew its Stop Loss for the 1/1/18 plan year. All other lines have rate caps and/or rate guarantees in place at this time." ii. Health Plan: "The City altered plan designs to better align its plans with benchmarks and encourage members to exercise consumerism when seeking health care services. A Health Savings Account Plan and Catastrophic plan were added as low cost plan alternatives and it is recommended to continue sponsorship of these plans into the 2018 plan year." "The Core PPO plan of benefits have conservative deductibles, copays and out of pocket amounts when compared to like entities. For the 2018 Plan Year, it is recommended for the City to evaluate narrow network alternatives (Blue Essential s Network), out of network benefits and referenced based pricing alternatives. BOBS of Texas and Express Scripts have indicated they can provide options and administration for all of these components." iii. Prescription Plan: "Due to projected trend increases as a result of new to market drugs and specialty drugs, it is recommended that the City consider adjustments to the prescription drug program including enhanced utilization management programs to include high performance formulary and network alternatives. Further, IPS will be conducting an analysis of prescription drug pricing through the Health Action council inter-local agreement and will advise if pricing warrants consideration." iv. Employee Contributions: "For the 2017 plan year the City is funding 71.2% of the total cost of health care which is below public sector benchmarks of 80.3% and below private sector benchmarks of 77.2%. Moving forward, no significant adjustments are recommended to employee contributions for the Health Savings Account and Catastrophic plan options. It is also recommended for the City to evaluate additional funding toward the H.S.A. plan to encourage enrollment and cost mitigation. "As an additional contribution/eligibility consideration, the City may want to required new hires to enter into the H.S.A. plan for a period of time before having access to higher cost plans. v. Retiree Plans: "The City's retiree population experienced a -10.3% reduction in enrollment and -2.4% reduction in per capita claims at year end 2016. Retiree per capita claims were 162% of active employee per capita claims. As a best practice, the City applies separate risk adjusted rates for the retiree health programs which explicitly states the employer and employee subsidy levels of retiree risk. Currently the City funds between 60% and 63% of the retiree only premium and 0% toward dependent coverage. An actuarial premium rate study is recommended for the 2018 year. "In 2017, new GASB 74/75 rules go into effect replacing GASB 45. IPS recently added Mark Guajardo (previously with Milliman) to our team to provide GASB 74/75 valuation and premium rate setting as part of our available services for our clients. Our integrated approach and expertise will provide our clients with seamless active and retiree benefits counseling." vi. Health and wellness: "For 2016 the City is discounting employee premiums $35 per month for completing an annual physical and an additional $35 per month for employees who choose not to use tobacco. As a next step, it is recommended to consider expanding the wellness incentive program to provide additional "extra credit" for those employees who meet preferred health outcomes. Those who did not meet preferred health outcomes would have to be given an opportunity to participate in wellness initiatives to receive the reward. If the city moves this way we would recommend partnering with an administrator to assist with programming and incentive management." vii. Health Clinic: "IPS has reviewed year end reports from the QuadMed Health clinic and overall performance of the clinics operations are positive. Utilization, Total visits, Cost per Clinic Visit, Preventive Care Statistics and patient satisfaction exceed results IPS has seen from peers who maintain health clinic operations. It is recommended to evaluate strategies to minimize no-show encounters including adding a cost for repeat offenders." viii. Best doctors: "Evaluate implementation of Best Doctors second opinion services to assist employees with expert review of their medical issue and provide greater certainty regarding treatment plans. Best Doctors experience is that over 39% of diagnosis and 72% of treatment plans are adjusted based upon expert review. There are +800 clients of Best Doctors worldwide 23%, of which are Fortune 500 companies. They maintain a 96% client retention rate and 95% member satisfaction rate. Pricing ranges between $2 and $4 PEPM with an average cost savings of $36K per second opinion." ix. Health Care Reform: "With the new administration entering office, repeal and/or adjustments to the ACA is likely imminent. The House of Representatives passed the American Healthcare Act recently which would repeal many of the key elements of ACA including the Employer mandate. The Bill is now in the Senate and will likely o through significant adjustments in order to pass through Budget Reconciliation. Our compliance department will provide updates and guidance to the City of Wichita Falls as we received a clearer picture of key elements of the Bill. "In regard to the current requirements of the ACA, the City of Wichita Falls is following the employer mandate which includes 30 hour eligibility, minimum value and affordability provisions. The City is complying with the necessary 1094 and 1095 employer mandate substantiation of coverage reports. In regard to fees, the City will only be required to pay the PCORI fee for 2017 as the TRF fee is no longer applicable. Last, it is important to note that the next major provision of health care reform, the "Cadillac Tax" has been delayed until 2020." x. Claims and Analytics: "IPS will be moving to a new analytics software partner, Verscend, in 2017. Verscend, previously Verisk Heatlh, is an industry leader in healthcare analytics and predictive modeling. Using this new tools, IPS will work with the City's medical carrier to obtain monthly claims data feeds and provide analysis of eligibility information, medical claims, pharmacy claims, wellness and biometric statistics to help you: 1. Isolate gaps in care and drill down to root causes of health care cost (includes benchmarking) 2. Measure ROI of wellness and disease management activities 3. Using predictive analytics, project claims and benefit plan costs for budgeting/planning purposes 4. Develop a long-term health care strategy. xi. Plan Audit: "For 2018, it is recommended for the City to consider conducting a health and pharmacy plan Audit of the 2017 plan year. Audits are typically conducted as a best practice for a self0funded health plan every three years. Plans are audited to ensure accurate and timely processing of claims, network contracts, stop loss reimbursements, eligibility and more. h. Renewal Timeline V. Adjourned Prepared by Angela D. Bosma, EBS I I