County council to consider self-insurance plan

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By Arin McKenna

In October 2012, the Los Alamos County Council approved a staff recommendation that the county become self-insured. On Tuesday, staff brings the finished product before council for approval.
Self-insurance provides two benefits to the county.
The first is lower insurance premiums. When staff first proposed the option, the county had been quoted a preliminary renewal rate with a 16.4 percent increase. By moving to a self-funded arrangement, the increase was only 3.5 percent.
Self-funding also allows the county more options with variables such as copays. Under a fully insured arrangement, the employer must choose from plans filed with the state insurance authority.
The initial quote for 2014 included a 21.3 percent increase. A newly-formed health insurance committee worked with County Administrator Harry Burgess to research and develop a plan design that was both affordable and comprehensive.
The group researched approximately 60 different options, with a goal of keeping the increase under 15 percent. They also reviewed plans offered by Los Alamos National Laboratory, the State of New Mexico and the State Health Care Exchange before deciding on options.
The committee found that adding deductibles for some services was the only way to significantly impact premiums. The proposed plan includes deductibles for facility charges (emergency room visits, hospitalization and surgeries), diagnostic lab services, and radiological services such as MRIs, X-Rays and CT scans.
Services such as preventive care, office visits, physical therapy, hospice, home health care and Urgent Care will not be subject to deductible.
The plan also includes a small increase for prescription drug co-pays.
“We did a lot of research, and this was a compromise,” said Benefits and Pension Manager Kat Brophy. “Some employers have to cut their coverage significantly, or just stop offering coverage and face paying that healthcare reform (Affordable Care Act) penalty. And that’s just not something we feel would be good for our organization.
“It’s a good tradeoff because it’s a way to contain plan expenses and it’s a good compromise, rather than either significantly cutting the benefits or having to pay exorbitant premiums that nobody can afford in this day and age.”
The committee developed four options with deductibles ranging from $350 to $500 for an individual and $700 to $1,500 for a family, with premium increases ranging from 14.8 percent for the lowest deductibles to 11.7 for the highest.
Human resources held nine meetings to explain the changes to employees and allow them to vote on their preferred option. Brophy said the vote was a “landside” in favor of Option 1, which has the lowest deductible and a premium increase of 14.8 percent.
Brophy reported that employees took the changes in stride.
“The reaction has been very good,” Brophy said. “It was actually better than I was expecting. The employees have never had to deal with things like deductibles before. We’ve always had an HMO (health maintenance organization) platform. So we are looking at having to add deductibles, just to mitigate our claims expense. But they received it very well. They understood why.”
The new plan being proposed moves the county from a HMO platform to a preferred provider organization (PPO) plan. The change expands the provider network to include doctors all over the United States and throughout the world. Under the HMO, employees only had access to in-state providers.
The PPO also provides Explanation of Benefits documents, which allows employees to see the actual cost of services, as well as a cost estimator tool on the Blue Cross Blue Shield website, which compares prices each provider charges for services. The staff report explains the significance of those services.
“Once participants are better educated regarding actual costs, they can begin making more informed health care decisions, and hopefully participate in efforts to manage our plan’s overall cost.”
Staff is also proposing a rebate program to incentivize employees to make wiser healthcare choices.
The rebate program would reimburse participating employees a portion of their premiums if the Health Insurance Fund has a balance exceeding its 25 percent reserve at the end of the year.
The self-insurance plan requires greater staff involvement and more analytical administration.
“We have to keep track of claims paid all the time, versus revenues (premiums), and make sure we’re not getting into a deficit between those two numbers,” Brophy said. “The interesting thing about it under a self-funded plan, we look a lot more at demographic information and the types of claims that we’re getting.”
The health insurance committee is using the claims information (aggregate reports with no individual information) to develop wellness programs and educate employees regarding medical costs. For example, if reports revealed a prevalence of high cholesterol among employees, an educational campaign on how lower or control cholesterol could be developed.
“That kind of information is something we didn’t necessarily look at before. That was up to our insurance carrier, and then they would target employees with communication campaign pieces. But now we’re looking at that,” Brophy said.”One of our goals is to establish some sort of true wellness program that is completely in cooperation with our medical plan.”
The committee also surveyed employees to find out which wellness programs would appeal to them.
Final approval of the plan rests with council on Tuesday. Brophy is hopeful that goes without a hitch.
“We’ve done a lot of research. We really did our homework. We did have the employee meetings. And I think that this was the best compromise that we could come up with.”