LEVERAGING VOLUNTARY BENEFITS AS A STRATEGIC APROACH TO HR

Transcription

1 LEVERAGING VOLUNTARY BENEFITS AS A STRATEGIC APROACH TO HR The City of Atlanta and Healthier You! Yvonne Cowser Yancy Commissioner, Human Resources yyancy@atlantaga.gov November 9, 2015

2 Overview The City of Atlanta 2011 Healthcare Overview and Challenges Plan of Action Outcomes Lessons Learned

3 Where We Started Recession Budget Crisis Pension Reform Healthcare Concerns Budget Employer Value Proposition OPEB ACA

4 COA Healthcare Overview 3 rd largest public sector health benefit plan in the State of Georgia and the largest municipality in the Southeast Over 20,000 covered lives with an estimated $156 million dollar annual insurance budget Overarching goal is to provide quality, affordable and accessible health care benefits in the most cost efficient manner while maintaining financial accountability for our stakeholders (1) Fully-Insured HMO, (1) Self-Funded POS and (2) Medicare Advantage Plans offered to employees, retirees and dependents

5 COA Health Plans Challenges COA faced with continued increases in medical cost due to: Increasing aging population and inability to completely utilize Medicare for retirees aged 65+ Over 60% of overall health care spend associated with age 55 and above population Nationally more than 1/3 of American adults are obese Georgia is the 17 th most obese state in the US Obesity related conditions contributes to over 40% of COA medical cost Top 5 Chronic Diseases in both (active and retiree) COA Medical Plans Diabetes Heart Disease Coronary Artery Disease (including circulatory restrictions and strokes) Musculoskeletal Disorders (including lower back pain) Digestive Disorders

6 Medical Insurance Premium Increases for (City+Employee) from Plan Year Premium Increase Over Prior Year *20% % % % % *In two health vendors submitted 20% increases after holding rates the same for 18 month period. The City budget year changed from calendar to fiscal year in 2008.

7 COA Health Plans Challenges High Cost Claims had a significant impact on medical cost increase as a result of high prevalence of chronic disease BCBS -29 members (claims>$200,000) - accounts for 18.0% of total medical benefits paid. (Only.2% of the population) Kaiser 25 members (claims>$150,000) - accounts for 13.9% of total medical benefits paid. (Only.2% of the population) 3,037 ER visits with 38 admits 732 members had more than 1 visit to ER, 144 of those members had more than 4 visits Inpatient Claims and Specialty Drugs primary contributor for medical cost increase OPEB Affordable Care Act

8 What Did We Do? Developed a comprehensive employee benefits strategy which focuses on the following: Preventive Care Wellness Initiatives Chronic Disease Management Proactive Cost Containment We hoped the outcome of these efforts would be: Significant increase in utilization of primary care physicians Expanded health and wellness opportunities Proactive management of chronic disease cost Insurance premiums increases below national average Reduction in OPEB liabilities

9 COA Healthier You! Summer 2011 we launched Healthier You! No budget Focused on Education & Competition Program intended to focus on mental, physical, and financial health Partnered with current vendors Employee Volunteers Maximized the opportunities and resources we already had

10 Negotiated New Healthcare Contracts New benefits contracts, with no benefit reductions, the City expected to save ~$3.2M over the next fiscal year, The City budgeted a $4.3M (~5%) increase over FY13, for a total savings of $7.5M against budget Comparative government entities like the State had seen rates increase as much as ~9.5% The new strategy and contract includes the following: A projected decrease in premiums despite more than 8% p.a. increases since % reduction in costs for retired employees over 65 who are eligible for Medicare Advantage Flat administrative costs for the contract duration A campaign and cost structure to incentivize preventative care Double the cost of going to the emergency room to reduce unnecessary visits A campaign to assign a primary care physician (PCP) to every employee If an employee suffers from a chronic condition, they will receive 100% coverage for maintenance drugs and doctor visits if they join a chronic condition clinic and remain compliant An investment of $1.725 million in wellness initiatives over the next three years

11 New Contracts = Resources Healthier You with funding provided more opportunities Launched Stress Reduction Program Diabetes Disease Management Program Partnership with Morehouse School of Medicine Monthly programs Run/Walk Initiatives Launch of Employee Incentive Program for Health Risk Assessment (HRA) and Annual Physical Examination ($ total reward) Launch of on-site biometric screenings for active employees ($50.00 incentive) Weekly Weight Watchers Meetings Line Dancing Classes Zumba Classes Fitness Trainers at COA Employee Fitness Centers Expanded Mental Health Awareness Program (Employee s Assistance Program - EAP & Medical Carriers Behavior Health Benefits)

12 Surprise Culture Change

13 Dr. Ian Smith s Shred Diet / COA s Biggest Losers With Katie Couric As a part of Mayor Reed s A Healthier You initiative, over 500 employees were given Dr. Ian Smith s 6 weeks, 4 inches, 2 sizes challenge and shared this experience as one of the the first municipalities to do so on the Katie Couric show. The weigh-in challenge is an ongoing effort with an around the clock scale available for tracking progress on site. this successfully resulted in a total of over 2000 pounds lost and counting!

14 Best & Brightest Companies To Work For In Atlanta For 4 consecutive years, the City of Atlanta (COA) has been named the Best and Brightest Company To Work For in Atlanta in the large business catergory, beating out over 100 other companies in both the private and public sector. The program identifies and honors organizations that display a commitment to excellence in their human resource practices and employee enrichment. The COA has also been named as an elite national winner and is currently the only municipality to do so in the 3 years this honor has been given.

15 Healthier You! Next Steps Expansion of Employee Fitness Center 12,000 state of the art Fitness Center and Health Center off site City of Atlanta Health Clinic and Pharmacy FY 16 Budget includes first FTE to support initiative Expansion to Retiree population Expansion to Atlanta Community Fitness Challenges at Recreation Facilities Affordable Care Act White House Healthy Communities Challenge Continue with onsite classes and programs

16 Cost Containment Outcomes Moved from annual premium increases of 9-10% in 2011 to 0-4% in 2015 Successfully negotiated health insurance premiums below national average for the 4 th year including the cost increases associated with Affordable Care Act taxes and premiums Affordable Care Act costs are projected at $2.1 million for FY15 Reduced overall cost of care while maintaining high value plans Engaged carriers in more aggressive wellness programs Shift in Employee behavior = Lower Costs Expanded enrollment options Consumer Driven High Deductible Plan Continue to operate with lower costs than national average Medicare Transition Savings Substantial OPEB Reduction

17 Background: Medicare Part A In general, Medicare Part A covers: Inpatient hospital care Skilled nursing facility care Hospice Home health services Coverage is provided by the Centers for Medicare & Medicaid Services (CMS), without a premium, to individuals that contributed sufficient Medicare taxes during their career: 40 covered quarters of taxes paid: Full benefits and eligibility attained Less than 30 quarters: Individuals pay the full premium, ($426 monthly in 2014) 30 covered quarters: Individuals pay approximately half of the full premium, ($234 monthly in 2014) Eligibility is extended to spouses In most cases, individuals automatically get Part A coverage starting the first day of the month they turn 65

18 Background: Medicare Part B In general, Medicare Part B covers: Doctor s services necessary to diagnose or treat a medical condition Outpatient hospital Preventive services Ambulance services Durable medical equipment Coverage is provided by CMS based on an individual premium requirement. The 2015 monthly Part B premium is $ for most individuals (high earners are subject to a means based schedule) Eligibility for Part B is not dependent on Part A participation: Individuals first become eligible starting the first day of the month they turn 65 (once retired) Participation is voluntary through CMS For each 12 month period enrollment is delayed in Part B, an extra 10% of the Part B premium penalty is assessed The penalty must be paid every month for as long as an individual has Part B

19 Background Current Medicare Status About 3,000 Retirees/Spouses are considered Medicare-eligible (i.e., Medicare Parts A & B) by the City: Lawsuit settled with Retiree Pension Group regarding mandated participation for Pre-1986 hires who were not required to pay into Medicare by the City The vast majority of these retirees/spouses are in Medicare Advantage (MA) plans Approximately 500 Retirees who were hired prior to 1986 did not qualify for Medicare Part B as a result of their employment with the City During the 2015 Medicare Part B Open Enrollment Period (January thru March 2015) the City contacted approximately 500 Retirees/Spouses over age 65 without Medicare Part A or B in an effort to encourage their participation in a Medicare Advantage Plan for the next benefit plan year (September 2015 thru August 2016) The City expanded its medical options for Retirees by adding another Medicare Advantage vendor Aetna who offered both a Medicare Part A & Part B Plan and Part B only Retirees and Spouses who were currently being penalized by Medicare for not signing up at age 65 had an opportunity to enroll in Medicare Part B onsite with Social Security and the City would cover their penalty as long as they participate in a City sponsored Medicare Advantage plan

20 Medicare Enrollment Results As of October retirees/spouses participate in the Medicare Part B Penalty Program paid by the City (approximately $12,000 in monthly penalties) COA Medicare enrollment increased by approximately 250 members during the Open Enrollment Period for Estimate savings of $1M to $1.5M in the benefit plan year $32M $39M total savings over the next 10 years Net Savings = Reduction in claims cost - late enrollment penalty Late enrollment penalty cost $150K (assumes average premium penalty of 70%) Puts all Post -65 Retirees on same basis (i.e., all retirees pay Medicare Part B premium) Retirees not penalized for late enrollment since City pays penalty

21 OPEB Overview OPEB covers non-pension benefits provided to full-time employees upon retirement These benefits include healthcare to eligible retirees, their families, beneficiaries These benefits are available to eligible participants for their lifetime Approximately 30% of our eligible are not Medicare eligible which increases the City s financial responsibility. GASB Rules Change begins FY16 OPEB is a pay as you go liability. OPEB is directly impacted by the number of eligible participants, dependents etc. and the cost of care related to these participants. The City s largest concern in OPEB are the non-medicare eligible participants The City s second largest concern is that employees/retirees aged 55 and above contribute to over 48.1% of our overall healthcare costs. Retirees over 62 and their dependents in the original cost structure cost the City 50% more than the premium they pay. OPEB liability is included in the COA CAFR.

22 OPEB Options High Impact Moderate Impact Low Impact Cost Spectrum Eliminate Coverage for Everyone Eliminate Coverage for Future Retirees Access to group sponsored Plan only Plan design changes range from changing eligibility to amending out-of-pocket maximums Amend Deductibles, Co-pays, Coinsurance and Out-of-pocket maximums Amending deductibles will impact basically all retirees while amending co-pays/coinsurance will impact retirees who utilize coverage the most Changing the cost sharing or split will impact all retirees Change eligibility Change cost sharing Any combination of the plan design changes may be selected to move the cost to the desired state Beginning with the new benefits contracts in 2012 we began an aggressive plan to reduce OPEB by driving costs down without making substantive changes to plan offerings or increase in cost for retirees.

23 OPEB Overview The 2013 OPEB Review through July 1, 2012 showed the following: OPEB Liability of $1,543,508,500 Overall liability was reduced by $274,014,384 (-17%) due to change in cost of contracts. Annual OPEB Cost $104,468,321, (33.2% of payroll) however without rate change it would have been $87,337,216 or a reduction/savings of $17,131,105 Change to discount rate from 4.5% to 4.0% essentially eliminated all savings generated by our actions. The 2015 OPEB Review through July 1, 2014 showed the following: OPEB Liability of $1,119,868,507 Overall liability was reduced by $362,973,295 (-32%) due to change in cost of contracts, wellness initiatives, and demographic review. Annual OPEB Cost 74,140,607 (21.6% of payroll) or a reduction of $25,845,262 or (-25.8%) Over the last two OPEB reviews we have reduced the overall liability by $636,987,679.

24 Lessons Learned Seize your opportunities Leverage relationships The impossible is possible Unintended Consequences Culture change is possible but it is slow

25 Questions?

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27 LEVERAGING VOLUNTARY BENEFITS AS A STRATEGIC APROACH TO HR The City of Atlanta and Healthier You! Yvonne Cowser Yancy Commissioner, Human Resources yyancy@atlantaga.gov November 9, 2015