FY 07-08Budget Worksession

July 17, 2007

ORANGE COUNTY MEDICAL & DENTAL PLAN

RENEWALS

PRESENTATION OUTLINE

•Self-Funded Medical Plan

•Retiree Medical

•Employee Wellness

•Wellness Screenings & Incentives

•Dental Plan Renewal

•Recommendations

SELF-FUNDED MEDICAL PLAN

BACKGROUND

• County moved to self-funded medical in 2007, with an ASO contract with United Healthcare (UHC)

• Move was seamless to employees – no change in plan design

• Risk transferred from UHC to the County

• Premiums increased 5% in 2007 versus 8% UHC proposed for fully insured

BACKGROUND

• County now collects premiums from all participating agencies and reimburses UHC for plan costs

• Position established in Human Resources to work with UHC, Comptroller’s office and participating agencies to monitor premium payments and plan enrollment

• Process working well

BACKGROUND

• Medical Plan Oversight Committee established for self-funded medical plan

• Committee works with UHC and Benefits Consultant to monitor plan experience, costs and County’s medical plan budget

2008 MEDICAL PLAN

• Plan experience (trend) remains stable - around 8%

• Minimum reserves must be established & maintained for self-funded medical plans

• Move to self-insured projected to increase reserves by $4 million

• Savings allows County to absorb much of 8% trend increase in 2008

2008 MEDICAL PLAN

• UHC met with oversight committee in June to review 2006 experience & trends

Key Findings• Inpatient costs increased 13%

• Emergency Room costs up 14%

• Diabetics account for 21% of total medical spend – 17% increase over previous year

• Pharmacy increased 7%

2008 MEDICAL PLAN

Based on annual experience, oversight committee recommends the following co-pay changes

• Inpatient $250 $300• Emergency Room 75 125• Major X-Ray 0 25• Outpatient Surgery 0 25

Pharmacy Co-Pays• Tier 1 $10 $10• Tier 2 25 30• Tier 3 40 50

2008 MEDICAL PLAN

• Co-pays for recommended screening procedures, and key disease management and maintenance drugs will not increase

– Colonoscopies– Cholesterol & Blood pressure

maintenance drugs – Diabetic drugs and supplies

• Committee & Benefits Consultant to work with UHC to identify exclusions

• Oversight committee recommends 1.35% premium increase with co-pay changes

RETIREE MEDICAL

RETIREE MEDICAL

• 127 Medicare eligible retirees and spouses enrolled in medical plan

• County does not currently require Medicare eligible retirees to enroll in Medicare Part B, so County plan remains primary

• This practice increases plan costs

• Medicare eligible retirees have Humana Choice plan option

• Oversight committee recommends requiring Medicare Part B enrollment in 2008

EMPLOYEE WELLNESS

EMPLOYEE WELLNESS

• County medical premiums have increased from

5 – 11% each year over past 5 years

• Increases primarily driven by plan experience

• Initial focus on controlling costs

• Learned that cost containment alone is not enough

• Must focus on employee wellness

EMPLOYEE WELLNESS

• County has focused on wellness over the past 4+ years

• Goal has been to increase employee wellness – control medical plan experience

• Conducted annual health screenings, health risk assessments, county-wide challenges, wellness fairs, etc.

WELLNESS FOR LIFE

• Annual wellness challenge participation levels have not changed (800 – 900 each year)

• Created “Wellness For Life” logo and program in 05/06

– Added wellness RN

– Created $5 wellness Beneflex credit

• Program objective – increase annual challenge participation to 2,000

BACKGROUND

2006 Wellness for Life participation:

– 1,250 screenings

– 899 also completed Health Risk Assessments (HRAs) and earned $5 Beneflex credit

– 463 also attended wellness class and submitted proof of physical

– Participation level disappointing

BACKGROUND

Learned

– Program design challenging to administer

– Employees uncomfortable with HIPAA release and health info shared with County

– Need for integration of screenings & HRAs

– Need for greater management support and participation

WHERE DO WE GO FROM HERE

• Move to self-funded medical increases the need to engage employees and control medical costs

• Need to integrate employee wellness into overall Benefits plans

• Propose redesign of Wellness for Life program

WELLNESS FOR LIFE 2007

• Wellness for Life – Continue wellness focus throughout the year

• Connect Benefits & Wellness –

One program that promotes

“physical, emotional &

financial well being”

• Revise annual screenings and incentives

WELLNESS SCREENINGS & INCENTIVES

WELLNESS SCREENINGS & INCENTIVES

• Must engage more employees in wellness screenings to impact medical plan costs

• Previous incentives have not been effective

• Current budget challenge mandates new approach

WELLNESS SCREENINGS & INCENTIVES

• Employees now receive $25 Beneflex credit each pay period – $650 annually

• Annual cost to County – $4.4M

• Propose changing Beneflex credit to Wellness for Life credit

2007 WELLNESS SCREENINGS & INCENTIVES

Required Wellness Activities

• Health Screening

• Health Risk Assessment

(HRA)

2007 WELLNESS SCREENINGS & INCENTIVES

• Employees who complete both activities earn $25 Wellness for Life credit

• Employees who choose not to participate forfeit $25 credit

DENTAL PLAN RENEWAL

BACKGROUND

• Dental insurance is 100% employee paid

• Dental Insurance provided by the Standard – three plan options (Low, Middle, High)

• Employees like current plan, provider network and plan options

2008 DENTAL PLAN

• Low plan experience increased slightly in past year

• Middle dental plan remained stable

• High plan experience continues to increase with high utilization of out of network dentists

• Plan participants have expressed interest in increased coverage of resin fillings

2008 DENTAL PLAN

• The Standard proposed two dental renewal options

1. No increase to Low and Middle Plans4% increase to High plan with 80% UCR coverage for out of network dentists

2. Add coverage of posterior resins with3% increase to low plan1.5% increase to Middle plan5% increase to High Plan – 80% UCR

• Oversight Committee Recommends Option 2

RECOMMEDATIONS

• Approve 1.35% medical plan premium increase, with recommended co-pay increases

• Approve mandatory Medicare Part B enrollment for Medicare eligible retirees

• Approve elimination of $25 Beneflex Credit, and replacement with a $25 Wellness For Life Credit

• Approve dental contract renewal with the Standard with addition of posterior resin fillings, 3% increase to low plan, 1.5% increase to middle plan and 5% increase to the high plan – with move to 80% UCR

FY 07-08Budget Worksession

July 17, 2007

ORANGE COUNTY MEDICAL & DENTAL PLAN

RENEWALS