Firefighter Healthcare ProposalPresented to the City Council

by

David Cooke, City Manager

and

Michael Glynn, President of the Local 440

October 24, 2017

1

Guiding Principles (“Our Agreement”)

• 440 will assume responsibility of healthcare for all recruits, active fire fighters and pre-65 retirees

• Separation of firefighter plan will not have a negative financial impact on the City; 440 will cover all transition costs

• City’s exposure to liability will be minimized to every extent possible

• 440 assumes all accountability for the success of their plan

2

Medical Plan Components

Local 440

Medical Plan

Stop Loss/

Reinsurance

Medical & Trust

Administrator

Pharmacy Benefit

Manager

Reference Based

Provider

Consultant

Maestro Health:Medical & Trust

Administration

LBG Advisors:Assists trust with plan set

up and monitoring

AMPS:Works with providers, facilities,

and coordinates fair paymentsKroger Prescription

Plans:Coordinates with pharmacies for

pricing, access, data

Montgomery

Management:Handles Re-insurance for large

claims or too many claims

Claims Support: Chain of Command

Customer Service @ Maestro Health / AMPS /

Kroger

•800 number access

•Service reps can look up plan benefits, claim details, etc.

•Care coordinators @ Maestro for claims issues

•Care coordinators @ AMPS for coordinating care connex/ billing issues

•Kroger customer service assists with pharmacy related questions

•Day to day issues with providers, cards, benefits questions, etc.

Dedicated Account Management @ Maestro Health / AMPS / Kroger

Dedicated account manager with escalated claims issues at each vendor

Those with ongoing issues tend to utilize these key vendor reps ongoing

Special issues addressed at this level that cannot be handled by regular customer service at vendors

LBG Advisors’ Claims Advocacy / Client Support

/ Consultant Support

LBG Advisors internal claims support staff handles issues escalated beyond dedicated account management at vendors

LBG Advisors staff performs monthly calls to client locations to check on needs of population

LBG Advisors’ consultants handle more complex issues that LBG Advisors internal claims support staff cannot handle

Trust Board Management

Trust board representatives (typically 3) that can field screened questions/issues from LBG Advisors and make final decisions

Voluntary Procedure• PreCertification Request

• Member Contacts AdvocateMember Contact

• Tier 1 – Direct Contract Option

• Tier 2 – High Quality, Fair Price

• Tier 3 – Physician ReferralMember Options

• Member goes for care at chosen facility

• Member PreCertified or presents Voucher

• Facility collects CoPay, submits claim to Maestro

Member Treatment

• Tier 1 - Maestro pays claim according to the voucher

• Tier 2/3 - Maestro pays claim according to the Plan Document

Claim Payment

Member has some control over time and

place

Potential Balance Bill

See Balance

Bill Workflow

Emergent Procedure • Member goes for care

• Member presents ID card

• Provider contacts Maestro for authorization

Member Visit

• Provider may be Care Connex

• Provider may be member of extended network

• Otherwise, provider is informed of member responsibility

Member Authorization

• Facility collects CoPay, submits claim to Maestro

Member Treatment

• Maestro pays claim according to the Plan Document

• If not a contracted facility, member is contacted and provided instructions in case there is a Balance Bill.

Claim Payment

Member has no control over time and

place

or member goes for care without

contacting

Maestro for Navigation Assistance.

Potential Balance Bill

See Balance

Bill Workflow

Next Steps

Enroll Group Medical, Dental, Vision, Ancillary

Set Set enrollment calendar and process

Engage Engage medical TPA, dental carrier, vision carrier, ancillary benefit options to create Plan Documents

Create Finalize trust document

Finalize Finalize budget, agreement between the city and L 440

Transition Steps: October 2017

• Council Meeting(s)

• Determine budget/agreement between the City and L440 for January 1st, 2018 start date

• Notify selected service vendors of approval to move forward

• Begin Trust establishment (including trustees selection) & filings

• Begin coordination of data to / from cityOctober

Transition Steps: November 2017

• Set up agreements/contracts between carriers, Trust Consultant

• Secure updated data from current carrier/update stop loss pricing

• Coordinate data between city and The Trust carriers/set up appropriate EDI files

• Trust membership education: establish open enrollment dates, initial enrollment document creation

• Plan doc, SPD creation Set actuarial rates/COBRA

• Set up Trust benefits web site

• Finalize budget/agreement between the City and L440 for January 1st, 2018 start date

November

Transition Steps: December 2017

• Enrollment meetings/Trust Membership education cont.

• Confirm eligibility accuracy

• Monitor State and Federal filing and submissions (as required)

• First payment from city to Trust

• Strategic plan development

• Set quarterly trust meetings for upcoming plan year

December

2018: Ongoing

• Quarterly meetings with trust

• Ongoing education- participant

• Ongoing education- trust board

• Additional participant meetings/town hall with membership

• Support moves from operational set up to claims control

• Strategic planning

• Consider enacting recommended strategies of strategic plan

• Operational quarterly reviews: monitor operations, address needs, compliance needs

Ongoing

Discussion Items

• Collective Bargaining

• Retirees: Waivers required

• Association Management

• Plan Design – Financial Projections

• Plan Design – Reference-Based Pricing

12

Collective Bargaining

• Current contract expires September 30, 2018 and includes: Article 14 Group Health Benefits

− Requires same plan and subsidy as that offered to other employee groups

− Disallows diminishment of City’s contribution below 2015 level

Article 15 Retiree Health Benefits− For firefighters hired prior to 1/1/2009, City required to comply with Chapter 175 of the LGC

with same plan and subsidy as those offered to other employees

• Change during 2018 requires an amendment approved by members

• New negotiations commenced on October 3, 2017 for a contract commencing October 1, 2018

13

Retirees: Waiver Required• Texas Law clearly excludes retirees from representation by the

Association

• City will require a waiver from every retiree− Waiver cannot guarantee the right of a retiree to return to the City plan if the

Association ceases plan operation in the future

− City may offer opportunity to return if plan ceases for firefighters and retirees if City still providing benefit to other similarly situated retirees

• Separate contract with the Association is necessary to outline the conditions of the City’s premium remittance

• 440 is declining to include language that would prevent retirees from suing over introduction of new premium tiers

14

Association Management• Intended to maintain control of benefits offered

• Proposed structure to transfer responsibility:• Recruits – condition of employment• Active firefighters – CBA • Retirees – diversion of subsidy to the association resulting in full cost if they

stay on City plan

• Association to establish a Trust to receive premiums from City, Retirement Fund and members

− Administered by a board of 5 firefighter trustees− Contractual requirement to allow City attendance at all Board meetings

• Plan to be administered by consultant with oversight by 440 Board15

Plan Design – Financial Projections

• Mimic City’s 2017 plan design with lower deductibles, co-pays and maximum out of pockets

• 440 will charge same member premiums as the City’s 2018 rates

• City’s subsidy to be reduced by:− Life insurance and EAP costs

− Increased admin fee for City for UHC administration

• Manages cash flow with a monthly aggregate stop-loss attachment of an amount similar to monthly premiums

16

Fire Proposal

17

Revenue Expenditures

City $11.8M Claims $13.56M

Retiree $ 1.2 M Admin $ 1.0M

Member $ 4.5 M Stop Loss $ .8M

Trust Expenses $ .1M

Reserve Target $ 1.4M

$17.5M $16.86M

Contract Considerations• City subsidy would be paid based on a composite rate applied to

actual enrollment on a per pay period basis

• Methodology for future subsidy levels must be determined

• Experience with Workers Comp presumption for certain cancers need to be accounted for in future subsidy rates

• Terms of re-entry if plan fails must be identified

18

Responsibilities in MOU1. City contribution and transition costs finalized2. CBA amendment language approved by City and 4403. Employee vote to amend CBA 4. Waiver language approved by City and 4405. Retiree waivers received (100%) 6. City Council approval of CBA and healthcare contract7. 440 create Trust8. 440 plan contracts (TPA, PBM, RBP); premiums finalized 9. Data interfaces with City and FWERF

10. Transition and enrollment plan19

Guiding Principles (“Our Agreement”)

• 440 will assume responsibility of healthcare for all recruits, active fire fighters and pre-65 retirees

• Separation of firefighter plan will not have a negative financial impact on the City; 440 will cover all transition costs

• City’s exposure to liability will be minimized to every extent possible

• 440 assumes all accountability for the success of their plan

20

Questions