Travis County Commissioners Court
November 23, 2004
Item 18
Number 18 is to consider and take appropriate action on employees' hospital
fund quarterly report for the third quarter ending June 30th, 2004.
>> I知 the executive manager for administrative operations.
The report we will go over with you today is a third quarter reported of the
Travis County health care fund. It covers a period from October 1st of 2003
to June 30th of 2004. As the court knows, the self-insured health program
in Travis County has been in existence for approximately two years and nine
months now. If the court would turn to page 4 in the report,, that page details
the changes in enrollment from October 1 of 2003 to June 30th for that particular
quarter. This is one of the items, data points that we look at to determine
if indeed we could expect more claims, if there's more people coming in the
plan, we usually look at this data point to measure if there's a significant
change in that. In there we compare this data to -- in comparison to the fy
'05 enrollment, which is what we just saw this last October. The total number
of participants changed by approximately 400. And that certificates the shift
of employees to the state plan. And that information is the last page in your
report that gives you information on the health, benefits and enrollment for
'05, and I wanted to point that out to you in case you had questions of why
the difference and for the cscd employees. If the court turns to page 6 of
the report, you will see that through 630 of '04 totaled $6,676,000 $6,676,000.
Through the third quarter those were the claims. According to the figures
were stop loss claims. You're aware that Travis County carries stop loss insurance.
It covers all claims over $125,000, what we call high cost claims. And this
is $125,000 stop loss for individual claims. We also use high dollar (indiscernible)
as determining what is a level of illness, what we can expect in terms of
cost. And in terms of the trainings as we see with our employees and health
care. And for the June of '04 there were 13 claims that had extended $125,000
stop loss. By the end of the plan year, which would have been in September,
we had 19 that exceeded stop loss. Compared to the same period for '03, there
were seven claims. For '02 there were five claims that exceeded the $125,000.
Stop loss claims have increased by about 170% since last year.
>> do we know why?
>> we're seeing more serious claims. We looked at the diagnosis
for these cases, and what we're seeing is renal failure associated with diabetes,
cancer, and premature birth and then some complications in surgery. But what
we see is the renal failure and cancer.
>> and in the course of our audits during the course of the
year I detected what I thought was too high of charges on dialysis. And we
met with uhc, they did some research and came back and said, you're right,
so as a result of that we now have terminated those particular contracts for
those facilities that were charging us three and four times what we should
have been charged on a monthly basis for dialysis, and we know have others
-- now have others to take they're place that are right in line with the national
average. So that is a result -- part of that is the reason maybe for the high
renal costs that we're seeing, but also it's also as a result of auditing.
Next year probably those costs won't appear quite as high. So it's kind of
a good and bad, but at least it shows that when you're looking, sometimes
you find things.
>> do we have any recourse on that?
>> no. Because the providers contract with united health
care, they don't have a contract contract with us, but I will tell you that
we're not the only entity in the area that reacted to the costs and terminated
their contracts. You know, we all talk to each other. So that would be our
recourse, I would think.
>> they were allowed to do it, it's just that until folks
started taking a look at the claims didn't realize what they were paying?
>> their contract was a percent of bills charging, so they
just jacked the billed charges up really high and they were ending up getting
paid three and four times what they should have been paid. It was really amazing.
And so as a result of that, uhc has changed how they're contracting with renal
dialysis providers.
>> I think I sent you -- maybe I didn't send the article
about one of the areas of concern in the country. You know, basically we're
checking your bills, checking your -- my wife is always on me to check the
bill before you just sign the credit card, and it is amazing.
>> that's part of the function I perform when I look at these
bills. And you don't always find something that was that large, but it was
just really amazingly large. They were way out of line. But it was a nationwide
company, so it probably is something they're seeing across the country.
>> good.
>> not only do the claims that are -- that reach a stop loss
of 125,000, we also track claims that go over 50,000, between 50 and 125.
125,000. In the third quarter we saw 26 claims that went over 50,000, but
under 125. And by the end of the year in September, we're seeing 32 of those
claims over 50,000, but less than 125. Again, we talked about the diagnosis
that we're seeing most often with that, the renal failure and cancer. Even
though we have experienced an increase in high cost claims, the good news
is that overall the trend in medical costs have been lower than projected.
We included in your package a letter from our actuary that talks about the
decrease. We have also had --
>> what page is that on?
>> 22. And 23. In the letter from our actuary, they state
-- if you look on page 26. And that's the second sentence on there. ... Suggests
that the fiscal year experience ending September 30th, 2004 is expected to
result in a surplus and a stable amount. On page 23 they state at the end
of the first paragraph, if the high and low are smoothed, we see an historical
trend of about 10%. This is much lower than we had projected when setting
the rates, which was 16%. So they have much more data now and are estimating
that in fact overall rates will go down as our claims. If we look at the actual
amount of claims, last year we had about 22 million, and this year -- 22 million,
and this year it will be 22 -- last year it was 22,186,000. This year it's
22,152,000. So the claims were about the same. In terms of what we're looking
at. So that -- and it's a good move.
>> but if the rate that we pay is predicated on the -- an
assumption of going into the year, and they find that if that number is lower
than what we thought it was going to be, therefore we're going to get an adjustment
in your rate --
>> what it is is additional funding in the reserves.
>> okay.
>> and usually reserves are used to determine the rate for
next year, or as we discussed before the requirements of gasbe for funding
retiree health care, which will be coming up soon.
>> I guess what I want to make sure of is that it's the way
that -- it's not arbitrary. It's based on some sort of estimate as to what
you're going to have claimwise. But if you find that over an estimated --
since your rate is not according to that and you're saying that it goes into
the reserves, isn't it really the benefit of the provider to have gotten that
rate of where it is, and we're paying that rate, right?
>> well, we're self-insured. So in essence, we pay that rate
to ourselves, your own fund. That's how you end up with a reserve.
>> in the plan the reserve that's used manages to build over
a couple of years and can be critical as you go along.
>> in fact, if you turn to page 9 of your material, you will
see that we expect to have a reserve of approximately 4,651,000. That's as
of June the fourth. Our estimate, and that would be at the bottom of the page
where it says net, page 9. Was total net assets ending, 4,651,586. Our estimate
for the end of the plan year, which would be in September is approximately
$7 million. So because we are self-funded and plan increases are lowering
our claims, it goes into the reserve and we get to keep. On the reverse, as
you know, a couple of years ago any increases in claims, and we don't have
enough money, we put money into it. So overall I think that we're glad about
the reserve. We're also glad about the court's initiative on the wellness
program. It is becoming very apparent that preventive testing is important
to catch some of these diseases early on. That catching illness and chronic
illness is very important and for employees and for all of us to keep the
costs down. We hope to have next year a heightened awareness of where these
come from, what kind of illnesses and how employees can help with lowering
their claims through prevention, and also self management of chronic illness.
>> I知 really interested to see what it really does to our
pharmaceutical. There was a question that I -- cholesterol is the first thing
that comes to mind. Okay. You are preventing -- you're hopefully preventing
heart disease with it. It's one of those things that takes you a lot of years
before you really recognize that if I take this, you didn't have the heart
disease that you would have had maybe or at a much later time. But it will
be interesting to see if through the wellness program, which I知 all for letting
somebody know early on that, hey, you know, if you take this medicine, you're
going to have -- your life is going to be extended. I would think that we're
going to see something in a pharmaceutical line.
>> on page 15, cindy, if you want to go through some of the
charts, details on the funding.
>> okay. Again, these are charts that are based on paid claims,
not the banking, not clear checks. So these are experience reports basically.
It shows on page 15 that the pharmacy is 19% and the medical is 81%. And I
kind of looked back at the previous two plan years, and for fy '03 pharmacy
was 24% and the medical was 76%. So the pharmacy appears to be -- you have
to remember that that's the percentage of yet a larger number because our
claims increase, but it still looks like we're heading in the right direction
on our pharmacy. I would attribute a lot of that to our co-pay increase that
we did the year before. We can see the results of our co-pay increases and
our pharmacy co-pay increases in just the utilization. Going to page 16, this
is just a little bit of a graph of the pharmacy report, retail pharmacy versus
mail order. And that shows that of the pharmacy, 81% is being purchased retail,
and 19% is being purchased mail order. I feel like we can always work on the
mail order as long as it is -- provides a benefit for the employees or for
the plan, we could always do some more education on mail order pharmacy. They're
not a bad percentage. On page 17, this is just contract versus the retiree
costs, and it shows that active medical is 70% of the cost. Active pharmacy
is 13% of the cost. Retiree pharmacy is two% and retiree medical is nine percent.
You have some coverage that is minimal. On page 18 it's plan to plan comparison,
so this is comparing the actual plans, the edo to the ppo to the co-insured
perform po. And again, it shows that the plan that still has the most enrollment
is the epo, although there was a good bit of shift at open enrollment we saw
that the epo had 67% of the cost. The epo pharmacy was 12% of the cost. These
are kind of what we would expect. And I won't dwell on this. The graph is
pretty self- explanatory.
>> on page 16, comparing the mail order and the other pharmaceuticals
that are purchased out right, and the ones that are purchased out right, the
81%, is that pharmacy -- are those prescriptions basically maybe a one-time
deal or are they something that a person has to continue to get?
>> it's a combination of both. Because not every prescription
is suitable for mail order. You just want long-term maintenance prescriptions
for mail order. But some people prefer to go to the pharmacy and get their
prescriptions even if they are maintenance medications. I know the state of
Texas has adjusted their plan design to make people that want to do that pay
a little bit more money. We haven't gone in that direction to do that. To
answer your question, it's a combination.
>> since it's a combination, I just wonder if it's possible
due to break down the maintenance medication as opposed to the one-time need
for medication.
>> that would probably have to be a specialty report that
we get the pharmacy business manager to run.
>> (indiscernible).
>> let me see what I can come up with.
>> I think if we can focus on the maintenance medication
that would basically come up under mail order, if a person would like to do
that, and maybe separate that out, if it comes to that we may venture into
it too, especially if it's a cost dealing with the mail order as opposed to
the cost in the other direction.
>> and we might want to point out that in fact mail orders
save the employees money because you get three for the price of two prescriptions.
>> exactly.
>> and if you go to pharmacy, you will have to pay every
month for all three prescriptions. Even if it's $25 or more.
>> i'll see what we can get from the pharmacy benefit manager.
They can probably run a report that would tell us of the drugs that we have,
which ones would have been appropriate for mail order and then the percentage
of that that we're actually using in mail order, kind of give us a picture
that it might be a little clearer picture than we're looking at here.
>> okay. Thank you.
>> can we go back? There was at least one high profile allergy
medicine that switched from being prescription only to being over the counter.
Now that it is no longer prescription only, do we pay for prescriptions for
that particular medicine?
>> no. It's considered as an over the counter drug. You can
get reimbursement under your fsa plan on those drugs, but it will not go into
the health plan.
>> thank you for the information.
>> now let's go back to -- I guess we're on page 19. This
is the type of service. And this particular graph is kind of interesting because
we noticed a jump in the inpatient facility. It went from 19% in '03 for the
same time period in '03, to 25%. And the way of trying to explain that, I知
thinking it's going along with what we're seeing in our other areas as far
as more serious illnesses. We're seeing a lot of serious illnesses that are
require inpatient stays. So we had a jump from 19% to 25%. And the outpatient,
however, was very similar. I know last year it was 15% and this year it's
17%. So that's kind of on track. But I would think that the jump in the inpatient
would be due to the seriousness of some of our large claimants. And on 20,
this is a graph that attempts to show by tier the money we're spending by
tier. And I just showed the actives in this, but we did look at it for retiree
and cobra as well, but again, it shows you that for the epo, most of the money
being spent in the epo would be spent on the employee only. On the ppo, again,
employee only is the largest one. Yes. On the ppo, I知 sorry, the largest
tier is on the employee plus adult. You see a lot of our retirees in the ppo
plan, and I think that the green bar right here that represents the employee
plus adult is probably representative of that, although this is just for actives,
but we see the same thing when we're looking at the retirees. And then the
co-insured epo is still kind of so new by the third quarter of this plan year
that it really doesn't reflect too much there. But it is interesting to see
that on the epo most of the money being spent is on the employee. And that's
the end of the actual experience reports. Alicia in.
>> there was one more fact I would like to present to the
court just to know that in terms of our active employees, they are paying
for their claims. That is not the case with retirees. Retirees overspent their
premiums by about 646,000, as did the cobra, which are a smaller amount, but
that's important to note because of, again, the requirement that we'll have
from gasbe in terms of funding or booking the lienlt for retirees in the future.
Liability. And we did have an increase from last year to this year of retire
'83s, so about -- retirees, about nine, I believe.
>> so is that because the number of retirees is so small
as compared to active employees?
>> yes. But they're also tapping more -- they're having just
more claims. They're high utilizers.
>> because of age. They don't have a pharmacy benefit through
medicare.
>> okay. So we have one more report for the --
>> you have the annual report.
>> that will come in around December.
>> okay. Questions, comments?
>> appreciate it.
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Last Modified:
Wednesday, October 26, 2005 3:00 PM