Travis County Commssioners Court
March 11, 2003
The Closed Caption log for this Commissioners Court agenda item is provided by Travis County Internet Services. Since this file is derived from the Closed Captions created during live cablecasts, there are occasional spelling and grammatical errors. This Closed Caption log is not an official record the Commissioners Court Meeting and cannot be relied on for official purposes. For official records please contact the County Clerk at (512) 854-4722.
Item 22
22 is discuss and take appropriate action of the Travis County self-funded
health program annual report for plan year 2002 including fund 526 actuarial
report and the first quarter financial report for plan year 2003.
>> this is the first annual report of the health care. The
Travis County self funding of the benefits plan in f.y. '02. We would like
to go through the report on the -- the annual report and then go ahead and
go to the first quarter of '03. But for f.y. '02, we had -- and you can follow
along in the actual report.
>> did all of us receive the annual report?
>> yes, sir.
>> should I be looking at the quarterly report or --
>> the annual.
>> because i've got multiple things.
>> for f.y. '02, we had approximately 3,900 employees that
participated in our plan, and we had about 2,756 dependents much we had a
total of of covered members of 6,659. We have a stop loss coverage as part
of our plan, which means that once a particular claim, one claim reaches 125,000
-- is over 125,000, that we have insurance for that, and that's covered for
those particular losses. It is important to note last year we had five claims
that reached 125,000 or more. We had 16 claims that reached 50,000 or more.
So what we call high-loss claims ended up taking up about 18.8% of our total
annual budget, which is 17,392,000, so approximately 300. Those are claims
that we watch, we get reports every time that there is a claim over $8,000.
But that is a point of focus that we had.
>> so what are we comparing those claims to, though? The
previous year?
>> no, sir. We have a norm, and in fact what we do is just
report the ones that are 50,000 or over. And then we have a comparative norm.
>> okay. How do we compare it to the norm in '01? See what
I'm saying?
>> we did not because we didn't have the data. We were covered
by blue cross/blue shield I believe at that time and we did not have all the
data cindy, do you want to address that?
>> we had four stop off claims under the blue cross plan,
but that's all the data we had. We just know we had about four penetrations.
>> 125.
>> at the 125 level. We couldn't tell you how many was over
50,000 at this point because the data we got from blue cross was so limited.
We do have data now. We've got lots of data. But -- so I would say that we
probably had a little higher than expected large claims.
>> when we get into the cost drivers, because that's one
thing that the court always asks, we do have very good information on how
we compared to the norm on the cost drivers. The actual claim budget which
can be found on page 20 was 17.4 million. The cost drivers, which is something
that the court always asks what has caused us to -- what are the items that
-- claims are the highest cost drivers for the plan. Number one is high utilization.
About 90% of all members, of all members submitted covered expenses at least
once for f.y. '03. At least once for f.y. '03. I'm sorry, for f.y. '02. Sorry,
for f.y. '02. 90%. That is indeed about 25.5% higher than your norm. And let
me just point out that the norm that we are using include employers that are
both covered by insurance and are self-funded. Dell, h.e.b., I.b.m. And Travis
County, so that was the norm that u.a.c. Provided. We also had the use of
specialists will you through the open access plan which was part of the appeal
of our plan, but the cost for reimbursement specialist is higher than the
reimbursement for g.p. We had hire outpatient surgeries. Increases in the
frequent of surgeries performed in outpatient setting. The reasons for that
are interesting. One is the growth of diagnostics. The scopies, the lap scopys,
those are now used more, and they are used more as outpatient as preventive
measures. Also the improved methods of anesthesia enable more procedures to
be performed under local rather than general anesthesia; therefore the outpatients.
There is also an increase in the value, we believe, of the awareness regarding
these particular health screenings, and it resulted in higher utilization.
Number 3 on the cost drivers were -- I'm sorry, number 4 on cost drivers were
pharmacy. And pharmaceutical expenses. That consists of 23% of all our claims.
On the average, Travis County participants filled 11 prescriptions per member
per year. We paid per prescription about $45 so the total cost per prescription
is $66.79. 71% of all medications are brand names. In the development of a
new plan, this is an area where I believe we will really need to look at maybe
not a form larry, but a modified plan that would look at the need for the
particular drug, whether you need brand name, the use of it, whether it's
preventive or for a particular illness. But we will bring that to you and
we're discussing that particular issue with the employee health committee.
>> there's also some pretty pricy name brands that are getting
ready to go generic. Claritin and some of those, and we have some high allergy
folks that work for us so that may be things that shift over in terms of cost.
>> the last of the cost drivers is something that I had mentioned
before which were the high cost claims, which accounted for almost 19% of
all of our claims. And those were the five cost drivers. I would like to go
through just briefly some of the audit procedures that we use when we receive
the claims and what we do to assure they are valid claims and that they are
not excessive. And --
>> cindy, human resources. As you know, we have an ongoing
audited procedure on a weekly basis where we audit 100% of the eligibility
of every single claim that comes through. We also are looking at 100% of all
claims over $8,000, which we consider a large pay. We are looking at 100%
of all claims that have exceeded the 125 limit, so stop loss claims. And then
I audit 15% of the random, basically a random audit of 15% of what's left
over. We've been doing this on a weekly basis for the entire year, and I would
say that the results of our audits have been very encouraging. We have not
found any patterns of claims not being processed properly. You know, you find
something here and there, but as a pattern, we're not seeing any patterns,
and the eligibility has been fairly clean as far as, you know, they have the
eligibility that we send them, so that's in our shop. If there's a eligibility
problem, it's something we need to correct and we see that right away and
get that corrected that week.
>> I will ask -- yes.
>> to either or any of you, has industry given you any response
as to why they think we would be 90% versus a 65% average for the other one
that you compared or went back to? Since we were about 25% higher. I mean,
they would know before anybody else. Did they give you any sort of reasonable
explanation or is this just a blip or something that we probably should --
>> well, I think, commissioner, that as we continue to look
at our plan through the second plan year, that we're hoping some of our values
will stabilize closer to the normative range. We are seeing high utilization
just across the board. No one thing that we can pinpoint other than high utilization.
So no, they haven't provided us with a direct explanation and there's not
one that we see in looking at the data, so I'm hoping that it's just first
plan year, you know, ups and downs and it will stabilize a little bit more
towards the normative level.
>> so what are you saying, that we don't have enough experience
with it at this point to really give an explanation for that?
>> well, we have our entire first annual and then plus the
first quarterly, so we have about 15 months of experience.
>> about 15 months of experience.
>> but it's nothing that's directing to us one area. So what
we're seeing is high utilization kind of across the board.
>> did blue cross say that we were -- I mean, I know we had
a hard time getting information, but blue cross said, you know, you guys really
use it.
>> yes, they did. That was -- and when they gave us the rate
increases, you know, appropriate for that every year. So yes, it's not something
that's new for any governmental entity really.
>> oh, it's not?
>> no. Governmental entities are -- I don't want to say notoriously,
but they are regularly high utilization groups.
>> can I ask a -- can you guys run this that if you were
to exclude, just for purposes of analysis, the retirees, I would be interested
in knowing what our utilization rate was for our active employees, because
i've got to presume because of the nature of health care for folks who have
retired, that theirs is probably 110,000% in terms of utilization. I would
be interested in knowing what our active employees are doing and how much
of that may be driven, because there are an awful lot of governmental entities
that have pulled out their retirees from being being in their plan because
of the high utilization.
>> actually the financials do address that somewhat.
>> if you look at page 8, I think that responds partially
in terms of the just financial picture.
>> because it's the really not financial picture, it's utilization.
If we're saying 90% of everybody is utilizing it, pull out just for purposes
of discussion the retirees, and I bet they are there.
>> if you look at page 8, we know that for the active, if
you look at the columns, you have active, retiree and cobra. If you look at
the last line, the bottom line, the difference, we know that the active, their
consideration and the consideration of the -- contribution of the county covered
all their claims and in fact left you a surplus of that. With retirees, with
even their contribution and the county's contribution, and we pay more of
a contribution for retirees, that left us in terms of covering their claims
about half a million dollars short. The same thing with cobra, about $361,000
short. So we know that the contributions in and of themselves are not covering
the expenses for that particular group. Again, we are working with a committee
made up of employees in Travis County to look at these numbers and come up
with ideas that we would submit to the court in terms of a change in the plan.
>> if you could generate that for me, that would be great.
>> sure.
>> thank you.
>> you want to go through the graph?
>> sure.
>> I think that would be --
>> actually I would like for mark to do the graphs on page
10 and 11, and then i'll do the rest of those.
>> mark wise, human resources. Page 10. This is our comparison,
overall big picture of how we're doing versus what blue cross would have been
versus what blue cross charged us in 2001. You will see our actual in the
middle.
>> so I think, judge, your question was how would we compare
if we were in a private -- if we were insured the way we were with blue cross/blue
shield as a private carrier. And we have taken their proposal and they had
a multi-year proposal, and that's what you see in terms of the differences.
About half a million dollars more. So what did we get for that? Part of the
issue with self-funding was values that the court and the employees in fact
expressed that they wanted to see in a benefits plan, and that was additional
coverages for allergy testing, durable medical equipment. We were able to
look at or have eligibility control, plan design control, access to data,
and then of course interest from investments. There were several reasons why
the court went to a self-funded plan.
>> page 11 is the weekly -- weekly reimbursement. The up/down
comes from the fact every other week we're build for prescription drugs. --
billed for prescription drugs. We'll see that actual claims are actually higher
than budget. We were overbudget. I think everybody is aware of that. In claims
expenses. Adjustment was made for fiscal year '03 for what we -- we went off
knowing very little. Now we have over a year of experience.
>> and the good thing is that we had planned for that. We
had fund in our risk management reserve and so we had -- we had planned for
any overage because it was a first year of self-funding.
>> and then it's going on to the graph starting on page 13.
Now, these are graphs based on the paid claims. The graphs you just looked
at were financial, but these are paid claims experience graphs. Page 13 is
just the basic picture, how much of the pie is medical and how much of the
pie is pharmacy. And if you will notice our pharmacy is running about 23%,
which is about industry standard. Industry standard actually is about 24%
right now. So this is probably the picture we would expect to see. It would
tell us if we were aoff track on one side or the other. And if you go on to
the next one, page 14, this is a pie in a pie graph of, again, the medical
expenses, pulling out the pharmacy portion of the pie and expanding it to
show what part is retail pharmacy and what part is mail order pharmacy. So
we can see how much of the retail is mail order. Because mail order saves
the employees money and it saves the plan money so, this is something that
we want to continue to encourage the employees to explore. They can get a
90-day supply of drugs for two co-pays. So they actually get a month's free
supply of their drugs and it costs the plan less money. So we're at 14% on
our mail order pharmacy. 86 on retail. That gives us opportunities to make
sure that our employees are aware of how to use the benefit plan to their
advantage and also where it helps the plan as well.
>> cindy, what kind of proactive things are we doing to try
and maybe target folks that would be good candidates for those kinds of mail
order prescriptions? I'm thinking of people that have something that's just
an ongoing --
>> very careful because of privacy concerns. We want to be
very careful that we don't intrude upon someone's private medical care by
saying, oh, you are taking this drug, you know, have them sent mailers or
something like that. Merck medco does do some mailings when they see someone
taking certain drugs, they have a protocol set up. But especially with hipca
coming down the pike, we want to be sensitive to privacy issues, but we can
do employee education to let them know that's out there for them for the chronic
pharmacy needs that they have, the ongoing pharmacy issues. Mail order isn't
appropriate for a one-time antibiotic-type thing, it's more designed for ongoing
issues.
>> so if we were to send something out to everyone, doesn't
presume anything related to anything --
>> we can do that and we have done that in the past. I wouldn't
be surprised if we do it again very shortly.
>> okay. Thank u.
>> okay. Going on to page 15, this is -- again, answers another
little part of your question, commissioner, about the active versus the retirees.
This is how the whole pie is split up. Who is spending the money on what.
The active medical is 68% of the overall expense. The active pharmacy is 19%.
The rest is split between retirees and cobra. Okay? The retiree portion of
the pie is 7% foremedical and 4% for pharmacy. And that subpoena a little
bit from where we started out, so the retirees do have a significant impact
upon the plan. And we want to make sure as the benefit committee goes forward
in looking at retirees issues that we now have the data to know maybe a little
more closely what we should do. The next page, page 16, is a plans comparison
of the e.p.o. To the p.p.o. And you will notice we only have about 442 people
in the p.p.o. 3461 are in the e.p.o. So the majority of our employees are
in the e.p.o., Therefore their expense is by far the greatest chunk. But again,
you can see how it splits out, and I won't take too much time going over every
one. The next page, page 17, is the type of services. So what types of things
are we spending our money on. Again, the physician is the highest piece of
the pie. Which means we have a lot of office visits and professional billings
coming in, which again ties back to the utilization reports that we saw. Facility
outpatient is 26%, which is the next biggest piece of the pie. That ties in
with what alicia was saying that we see we're a little higher on outpatient
charges than normative, however, you would rather have those dollars in outpatient
than inpatient because inpatient a lot of times if someone is inappropriately
inpatient, it costs the plan a lot more. Page 18 is just basically the breakout
of the payments by the benefits types. It's a little more detailed breakout.
The one thing of note on page 18 is that Travis County received $725,000 back
from u.h.c. In stop loss reimbursements. That's how much we were over the
125 on those five people. And they -- that is all going as planned. Page 19
is a month by month break down of the -- of the claims experience. Pharmacy
is broken out for medical and then there's a total column. It's these two
pages basically that a lot of these graphs are based upon. And that brings
us to page 20, which is the budget.
>> and if you look at page 20, the budget comparison, we
ended newspaper f.y. '02 with about 176,483 in the ending fund balance. Frankly
we had counted on more like half a million dollars in that budget. In f.y.
'03, and we'll take a look at the first quarter report if it's projected out
to the end of the year, we look to an ending fund balance of [inaudible] right
now. That projection is very hard to make on something like health care because
you really don't start hitting your stop loss until you get towards the end
of the year. So right now it's still -- the clock is still running on the
high costs. Claims.
>> I guess as we get ready to go into the budget process,
there still may be some things -- I think what I'm hearing here today that
we maybe can look at as far as making adjustments to maybe decrease some of
the expenses as they have been accruing thus far. And I really don't know
what all those things are at this time. I think some of those things that
you brought up, education, mailers, you know, all those kind of things. All
those savings we look at as we go into the budget process. So these projections
-- I mean with the actual experience of the first quarter I guess is something
that we looked at, as we go on we can kind of look forward to looking at some
modifications to some of the things to off set expenses.
>> yes, sir. And there will be some difficult decisions given
the limited resources and what seems to be a national trend of just increase
in health care costs.
>> sure.
>> that is the -- our completion of the health care report
for f.y. 2000. We would like to move onto the first quarter.
>> alicia, has this been brought back to our ongoing employees
committee, health benefits committee?
>> yes.
>> they are aware of what's in here?
>> absolutely. In fact, that health care committee is not
only looking at the health care plan for f.y. '04, they are also looking at
issues as retirees, as the baby boomers get older, we really need to look
at those particular benefits and plan for those and look at written policies
really for how we treat retirees.
>> good job.
>> thank you. If you -- have you the first quarter of f.y.
'03. We did have an increase in the enrollment in that to about 3900 employees
plus the dependents. So there was a small increase from about -- was it 58
-- 6,650 57 to about -- a little bit over 7,000 covered lives. There are currently
three stop loss claims, and those are claims that have hit the 125,000. In
that particular first quarter.
>> however, one of those is not going to be ongoing, so that
will help a little as far as cost.
>> if you look also on page -- let me get to the budget.
>> 18.
>> if you look on page 18, have you the budget for this particular
year. Very similar to the projections for f.y. '03, we expect to have an ending
sum balance of about half a million. But it's early for us to predict that
with any certainty given that we will only have -- we only have three months
really of experience in f.y. '03. Given the limited resources that we know
will be available in f.y. '04, health care benefits is a big cost of an employee's
compensation. We would recommend that on the 20th of March when we come before
the court, we take another look at the benefits and also at some options along
with the issues of compensation. You have a compensation reserve that you
want to address, I guess deliberate on in April. We would request that you
provide at least six months of your current experience in f.y. '03 before
really you make decisions on that because we may need to have some of those
funds to cover our health care costs in f.y. '04. There are charts also in
the first quarter that have been prepared, and cindy, do you want to go through
some of those?
>> certainly. Again, these charts mirror just the charts
we just went through in the annual, and so i'll go through them rather quickly.
They start on page 9 and 10. Again, these are the comparison of where we --
page 9 is the comparison of where we feel like we would be if we were fully
insured. And page 10 is the weekly reimbursement rate. And as you -- the budgeted
claims is your blue line on page 10 on that chart. So, again, without so many
weeks in there, it's pretty parent of the up and down nature of the cycle,
but it's the fairly regular. We have some information that goes a little further
than this since then that may change the outlook a little bit when we come
back for the second quarter. Okay, starting on page 12 through 16, again are
the charts just exactly like we just went through for the annual report only
these are on the first quarter. Again, the pharmacy has gone down to 22% on
the first quarter, and medical expenses are 78%. The -- on page 13, the pharmacy
is 86% retail and 14% mail order, so that didn't change in the first quarter.
On page 15, again, comparing the e.p.o. To the p.p.o., That graph didn't change
very much either. Page 16, again, the type of service, the largest percentage
is still the physician piece. You are not going to see a big change between
the annual and this first quarter. And then page 17 is the monthly by month
expenditure so far in the first quarter. The thing to note on page 17 is that
so far this year the plan has received 450,000, almost $451,000 back in stop
loss reimbursement for the three games that we do have. And -- claims that
we do have. That brings us to page 18 which alicia just went over as the budget.
>> which almost covers the cost of the stop loss premium
that we had already.
>> yes. And it certainly did last year.
>> it certainly did last year, yeah.
>> currently there's one other issue that I just kind of
wanted to mention to the court, that currently we have 271 retirees on our
-- on our plan and about 10 cobra. That, as I mentioned earlier, the committee
is looking at that plan and an increase in retirees. I've asked leroy, who
has been doing some research in that area, to kind of mention to the court
the results of his research in terms of what we can look forward to in terms
of our plans and retirees in the future.
>> there are currently 179 active employees that could draw
retirement tomorrow. And over the next five years, there's approximately 1300
employees that will be eligible to draw retirement. So we're looking at the
impact on the hospitalization fund of yawd roop he willing potential-oaz quad
droop he willing and the committee is looking to get into a position where
we can make a recommendation to the court as to how we might want to be looking
at that issue over the next five years, say. Just as a point, one of the things
during the f.y. '03 budget cycle, the court approved an increase of premium
funding of 17% for the self-insurance fund. It looks like the actual amount
we ended up at the end of the year hitting the risk management for about 300,000.
We get fund balance for about 400,000. It looks like the actual increase was
more like 20, above 20%. At 24%, which is what blue cross is saying, although
we're not associated with blue cross, they are using as a rule of thumb 2%
per month escalation in health insurance costs. The general fund, if in fact
we find out the actuary comes back with something around 24%, we're looking
at about a $3.7 million requirement to keep the benefits at the level that
we're currently having within the plan.
>> have we started visiting with other governmental entities
to find out how they are handling the idea of i'll call them early retirees?
Because I think all of us are kind of used to thinking of retirees of being
at a certain age. We have folks with the rule of 75 can leave in their early
50s and many leave to begin new careers. How are the governmental entities
handling those folks related to the premiums that are associated or the fact
that some of those folks may be utilizing our county insurance because they
don't choose to get their own insurance when they move on to another career.
And I don't know if that was really what was intended when we said retirees
benefits. And I'm just asking a question. I'm not making any value judgment
here, I'm just asking a question about how others might be dealing with some
of these interesting issues about what substitutes a retirey.
>> that's a very good issue and it's a very apropos issue.
Harris county dwelt this about a year and a half, two years ago, and they
refined their retiree policies and also retirees in relationship to their
benefit plan. We have formed a committee within the benefits committee to
look at this very issue. Because we do have people that are retired from the
city or the state and come to Travis County and hit our benefit plan. They
may work here one year and retire on the Travis County benefit plan because
of the way t.c.d.r.s. Recognizes other years of service much we don't really
have -- there's a lot of policies that are unwritten, and we need to define
the policies and write them down and decide what it is that the county wants
to do with regard to this. Harris county says that once you retire, you must
be on the plan when you retire; you can never get off of the plan, in other
words, open enrollment does not apply to retirees as far as getting on and
off the plan. You say stay on the plan. If you ever get off, you are not eligible
to get back on. We've done some research, as a matter of fact, and I happen
to have a handout about how we compare with some other entities. It doesn't
deal as much with the retiree rates as maybe the active rates, but it is something
that we're going to be looking at closely and bringing things to court from
time to time for direction. Because it is an issue, especially if we have
this many that can drop on to the plan.
>> in Travis County, retirees can elect at any time to go
on the plan, so you could have adverse selection if somebody goes on a lower
plan until they have a problem, then they can come back on the plan during
open enrollment. So, you know, with the significant number of retirey population
over the next five years, I think we've got to recommend to the court some
measures that would reduce the possibility of adverse selection on the plan
in order to chemical weapon it financially solvent. Just a matter of note,
bexar county's self-insurance plan is $5 million deficit projected going into
'04, so, you know, I think with the projections, if we can hold the projections
we have for '03, that we're in relatively good shape. Other entities, I think
governmental entities have substantially underfunded and they are reaching
-- you know, they are looking at some challenges to finish out '03.
>> is there a anticipation that the benefits committee will
report to the court on some suggestions not only in this area but others long
before we get to having to make final decisions on this? Because these are
very sensitive issues with employees and they should not be sprung on anybody
because they need time to think about consequences and whether to take our
insurance or somebody else's insurance, and those are not decisions that families
can make quickly.
>> absolutely. In fact, on March 20th, we'll bring you a
schedule that will take us all the way through the budget season, and the
committee -- [inaudible] will probably be a multi-year study and report back
to the [inaudible]. The state of Texas will also be facing, I think, a much
larger crisis than we are because they pay all the retiree premiums. And part
of the [inaudible] retirees. Of this -- spouses of the retirees premium sovment
I think they are also going to be facing quite a crisis.
>>
>> [one moment, please, for change in captioners]
Last Modified: Wednesday, April 2, 2003 10:25 AM