Health Insurance Considerations - MSBO · Expectation is that case will ultimately find its way to...

©2019 ARTHUR J. GALLAGHER & CO.

Health Insurance Considerations(and overall benefit risk mitigation strategies)

Chadd Hodkinson | Doug Derks | Mike Hagerty | Jill Goldstone

MSBO 2020 Financial Strategies ConferenceJanuary 22, 2020

2 ©2019 ARTHUR J. GALLAGHER & CO.

Today’s Conversation

Recap of prior case studies – where are they now?

Brief update on the health insurance market and benefits in general

The opioid epidemic – why it matters to Michigan school business officials

New case studies and district action steps

1

2

3

4


Where Are They Now?

4 ©2019 ARTHUR J. GALLAGHER & CO. 4

Case Studies

• Expensive program; no access to actionable data

• Union leadership demanded an opportunity to search out other more cost effective options.

• Solution identified that maintained coverage levels, offering additional choices and creating substantive savings for all members

• Members more actively involved in education and wellness to be healthier and better consumers

District #1


$15,624$16,066 $16,100 $16,229

$16,927$17,194

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

2015/2016 2016/2017 2017/2018 2018 2019 2020

Trend (7%) K-12 School

0.2%2.8%

4.3%

0.8%

1.6%

Original renewalin 2016/2017 was +14.3%{ { { { {

Case StudiesDistrict #1 - Medical/RX per employee per year (PEPY) 200 Employees


• Created financial stability for both employees and district in new program

• Continue to offer the same suite of plan designs from 2015

• Generated additional savings with ancillary alternatives

• Employee enrollment has shifted towards more consumer driven plans over time

Case StudiesDistrict #1 – Where are they now?


• Smaller group in an expensive program with limited perceived options and no access to actionable data

• Administration decided to move to a new solution, but chose to inform the Union leadership of their decision.

• Union leadership quickly vetted the solution and within two weeks made a determination to move as well, saving each teacher over $2,800 for FF coverage.

District #2

Case Studies


$16,350

$15,253$15,498

$15,928

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

2017/2018 2018 2019 2020


1.6%-6.7% 2.7%

Case StudiesDistrict #2 - Medical/RX per employee per year (PEPY) 100 Employees


Case Studies

• Added more consumer-driven options for employees to choose from

• Created financial stability for district and employees

District #2 – Where are they now?


Case Studies

District #3

• Self-funded medical program in death spiral

• Established benefits committee and educated on cause and available alternatives

• Able to move group to commercial carrier to gain stability

• Committee continued to meet and understand likely alternatives for a multiyear strategy


Case Studies

$16,049

$15,063

$13,819

$15,503

$14,284$14,693

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

$22,000

2015/2016 2016/2017 2017/2018 2018/2019 2019 2020


-8.3%

-6.1% -7.9%

12.2%2.9%

Original renewalin 2016/2017 was +37.4%

District #3 - Medical/RX per employee per year (PEPY) -200+ Employees

{ {

{ { {


Case StudiesDistrict #3 – where are they now?

• Benefit committee identified an HSA-compatible HMO plan as an additional plan option; plan remains well under the hard cap.

• New initiatives undertaken by committee to enhance employee situation:

Evaluation of supplemental retirement program to ensure maximum value for employee

Recommending changes to enhance voluntary benefit program which improved coverage and reduced cost to employees


Case Studies

District #4

• Expensive program; no access to actionable data

• Education of union and non-union leadership in committee setting in advance of evaluating market alternatives

• Solution identified that maintained coverage levels while holding down costs

• Group obtained actionable data which positioned them to explore several multi-year strategies


Case Studies

$14,253 $14,311

$15,064

$15,953

$14,883

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

2015/2016 2016/2017 2017/2018 2018/2020 2020


5.3%

0.4%

-6.7%

5.9%


District #4 - Historical Review: Medical/RX PEPY - 500+ Employees

{ {

{

{


Case Studies


• Benefit committee continues to meet, track program performance and proactively evaluate alternatives

• A wellbeing committee was created as a spinoff from the benefit committee. The new committee is focused on engaging district employees on physical, emotional, financial, career and community wellbeing

• District evaluated and added an employee assistance program (EAP) and a strategic voluntary benefits program with support from committees


Brief Benefits Market Update


Current State of U.S. Healthcare

• Cost of medical and prescription drug coverage has become crushing for many Americans and for employers

• Increased discussion around misaligned incentives in the system; how can we move from volume to value?

• Rapid consolidation of insurance carriers, pharmacy benefit managers, hospital systems and physician groups

• Pricing is opaque and shopping is a challenge

• Large number of “solutions” being brought to market


What’s Trending in Healthcare?

HavenWalmart

CVS Health Google

AppleTrans-parency

Where are we heading?


One Size Does Not Fit All in Health Insurance

500+ enrolled lives

100% “credibility”Opportunities for added fixed fee efficienciesAdditional programs to complement core offering (e.g. disease mgmt. programs)

50-499 enrolled lives

Use data to analyze program performanceEducate on relationship between utilization and costSelf-funding as an alternative

2-49 enrolled livesAccuracy of data used to generate renewalNarrow networksRx formulary changesPooling

Effectively manage

healthcare cost

Items apply to larger group sizes


Dental, Vision, Life and Disability

• Beware bundling coverage – can see as much as 20-30% savings when placing these lines with best-in-class, low cost carriers/administrators

• Self-funding dental and vision coverage can be approachable for any group size

• Carriers sometimes willing to subsidize access to benefit administration systems

• Maintain awareness of additional benefits that are of interest to your workforce and offer on a payroll-deducted basis


Compliance Items

• Auto no-fault rule change

• ACA tax/fee update

Cadillac Plan tax repealed effective January 1, 2020

Medical Device Excise Tax repealed effective January 1, 2020

Annual Fee on Health Insurance Providers repealed effective January 1, 2021

Patient Centered Outcomes Research Institute (PCORI) Fee extended; will continue to apply for plan or policy years ending on/before September 30, 2029


Compliance Items

• SECURE Act – most significant retirement legislation since Pension Protection Act of 2006; in effect as of January 1, 2020

• ACA Individual Mandate provision

Ruled unconstitutional by Fifth Circuit Court of Appeals

Returned to lower Texas court for clarification on whether Individual Mandate can be severed from the remainder of the ACA

Expectation is that case will ultimately find its way to the U.S. Supreme Court


Employee Wellbeing

• Your district is most efficient when your workforce is at maximum productivity

• Organizational wellbeing will drive organizational efficiency


Addressing the Opioid Crisis: Creating a Workable Path

Jill GoldstoneArea Vice President, Innovation


My Story


Michigan Opioid Statistics

18xIncrease in Opioid Overdose Deaths from 1999-2018

NUMBER OF OVERDOSE DEATHSINVOLVING OPIOIDS OPIOID PRESCRIBING RATE

45%Higher than

USA

Michigan National 52%Higher than

USA

85 per 100people

56 per 100people

Michigan National21.2

per 100,000 people

14.6 per 100,000

people

HISTORY OF MICHIGAN OVERDOSE DEATHS


Employer Impact

HEALTHCARE COSTS

WORKERS COMPENSATION

ABSENTEEISM

PRODUCTIVITY

TURNOVER

4 of 10 of non-elderly adults with opioid use disorders are covered by private insurance

$10-20K

4 - 10x

17 days

17%

42%

Higher costs per person

Higher cost per claim

More missed from work

Less than other employees

Compared to 25% norm

1 https://www.jmcp.org/doi/full/10.18553/jmcp.2017.162652 2 From http://www.quizzify.com/single-post/2017/09/12/6-Shocking-Facts-About-Employee-Opioid-Abuse-Which-Cost-You3 https://www.ibiweb.org/opioids-pain-and-absence/\4&5 National Safety Council


• Success rates for long term sobriety increases significantly when an employer is supportive

• Employees returning post treatment have been proven to be better workers, with fewer missed days and higher levels of productivity

• More expensive to recruit and replace than to provide support and a 2nd chance to employees that have been good performers

• Value On Investing strategies that address the epidemic in a transparent way

Ignoring the problem is not an option

1 Hartford Study

NSC estimates savings of $3,200 per

person returning to work after substance

abuse treatment


How did we get here?

Characteristics of Initial Prescription Episodes and Likelihood of Long-Term Opioid Use — United States, 2006–2015

Out of 79dental patients…

54%

had pills unused

86%

Out of 212dermatologic patients…

of those who did use had pills left over

35% did not use at all

16

Out of 1,416orthopedic patients…

pills were unused, with only 8 pills

being used


Meet Kali

https://www.youtube.com/watch?v=dqTliR1SynE&feature=youtu.be


What are you doing to respond?

I’m not doing anything because I don’t have a clue where to start

A good place to start is to take a quick inventory.

Are your programs, strategies, policies and communication in alignment?

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© 2018 ARTHUR J. GALLAGHER & CO. | AJG.COM

How can we save lives together?


Focus Areas

1. Prevention 2. Treatment Access3. Supportive Policies4. Workplace Culture & Wellbeing5. Education & Communication


1. Prevention

• Keep Safety top of Mind• Annually review emerging

safety risks• Engage team members to

identify potential risk

Safety

• Prevent overuse of opioids• Limit Pills – CDC guidelines• Naloxone • Work with Workers Comp

Carriers

Pharmacy


2. Treatment Access

• Acupuncture• Chiropractic• Physical/Occupational Therapy• Virtual Reality Goggles• Meditation

Alternatives(opioid naïve)

Access to Quality ProvidersRemove barriers to evidence based treatmentMedication Treatment DrugsCognitive Behavioral therapyLeverage EAP

For OUD


• 2nd Chance Program

• Leave and Return to Work Policies

• Transitional jobs

• Drug Free Workplace Policies

3. Supportive Policies


4. Culture & Wellbeing

• Organizational Message

• Culture of compassion & trust

• Address workplace stress

• Enhance Resiliency


5. Communication & Education

• Train Supervisors & Managers

• Educate on Risks & Alternatives

• Create Personal Advocates


A holistic Approach - Communication

• Your employer cares• Employees feel supported

and not judged• Resources available through

EAP and health plan• Opioid Use Disorder is a

disease that could affect anyone

• Protect employees from the risk of misuse or dependency

https://www.youtube.com/watch?v=ohS_oio8pZA&feature=youtu.be


Become Employer of Choice


What would it mean for you to impact just one life?

How many lives can we impact together?


New Case Studies and District Action Steps


New Case Studies

• Small District in self-funded plan, underfunded with unclear reporting and data to understand current and expected costs

• Felt “stuck” in current program due to lack of clear information

• Limited choices for employees, no consumer driven options

District #5


New Case Studies

• Worked to understand process and clear expected costs of moving from current program

• Evaluated options after renewal, implemented a more stable solution “off cycle” on 10/1

• Implemented more consumer driven options for employees to choose from

District #5


New Case Studies

$16,281

$18,033

$16,406$16,882

$12,000

$13,000

$14,000

$15,000

$16,000

$17,000

$18,000

$19,000

$20,000

$21,000

$22,000

2017/2018 2018 (6 month transition) 2019 2020


-9.2%10.7% 1.6%


District #5 - Medical/RX per employee per year (PEPY) - 60 Employees


New Case Studies

• Added additional plan options for employees to choose from

• District has a clearer understanding of total plan costs

• After initial transition, district will have much greater financial stability in the program



New Case Studies

• District was sold on self-funded health insurance program using independent third party administrator (TPA) and independent pharmacy benefit manager (PBM)

• Program was underpriced due to inaccurate cost projections

• Changed TPA, PBM and stop loss carrier at first renewal; program still underpriced

• Reached out for help with accurately projecting program cost moving forward

District #6


New Case Studies

• Actuarial analysis performed to project more reasonable program costs by plan option

• Assembled benefit committee to educate

• Eliminated most expensive plan offerings and replaced with more economical and more appropriately priced options

• Committee positioned to proactively track program performance and project future cost to enable advanced planning

District #6


District Action Steps• Apply best practices for evaluating health insurance program options:

Establish how long recommended solution has been in existence in Michigan

Request references for those using the solution

Determine what access will be provided to objective, transparent data to evaluate program performance after implementation

Do not base decision on an offer of free technology or free administrative services

• Leverage PA 106 bidding process as an opportunity to educate union and non-union leadership on current benefits and alternatives that exist in the market

• Assess how district is positioned to respond to the opioid epidemic


Chadd HodkinsonArea Vice [email protected]

Doug DerksArea Senior Vice President

[email protected]

The information contained herein is offered as insurance industry guidance and provided as an overview of current market risks and available coverages and is intended for discussion purposes only. This publication is not intended to offer legal advice or client-specific risk management advice. Any description of insurance coverages is not meant to interpret specific coverages that your company may already have in place or that may be generally available. General insurance descriptions contained herein do not include complete insurance policy definitions, terms, and/or conditions, and should not be relied on for coverage interpretation. Actual insurance policies must always be consulted for full coverage details and analysis.Insurance brokerage and related services to be provided by Arthur J. Gallagher Risk Management Services, Inc. (License No. 0D69293) and/or its affiliate Arthur J. Gallagher & Co. Insurance Brokers of California, Inc. (License No. 0726293).


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