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HomeMy WebLinkAboutIR 10055 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. I CC55 To the Mayor and Members of the City Council September 26, 2017 c�ansap ]ae Page 1 of 2 L SUBJECT: FIREFIGHTER HEALTHCARE BENEFITS EXF ra,ra As you are aware, the Fire Fighters' Local 440 is seeking to carve out and independently manage healthcare benefits for their active and pre-65 retirees with the objective of reducing costs through a different reimbursement model and influencing member behavior. The purpose of this informal report is to provide you a status of that effort. We have scheduled a briefing for October 24 where we will identify a schedule forward, but we wanted to provide some context with this Informal Report. While the Local 440 prefers a January 1, 2018 effective date, this is an extremely aggressive schedule for the 440's selection/contracting with appropriate vendors, the City's review of the financial data and legal issues, the development of data interfaces with new vendors for City and member payroll contributions, and open enrollment. As a result, both Fire Fighters and affected retirees will be required to participate in the City's open enrollment in October. In the event that a financially viable plan that allows an orderly transition is developed for a January 1, 2018 implementation, their selections of City plans would become moot. The Firefighters' Local 440 proposal is based on Reference Based Pricing that adjudicates medical fees with providers based on Medicare rates plus a specific percentage. Because the rates are not established by contract with providers, they often require negotiation and in some instances litigation to resolve. The City is evaluating the results of this model in other jurisdictions to identify risks for the members, the results with providers, and the resulting diversion of funds to legal proceedings instead of medical care. The proposal assumes that the City would provide the same subsidy as if the firefighters remained on the City's health plan. As you know, it was only determined in the last few weeks what those contributions would be. Last week, the Local 440's consultant, LBG Advisors, provided a financial analysis concluding that their proposal is feasible at the proposed contribution levels while retaining the City's 2017 plan design. Human Resources has forwarded it to the City's health benefits consultants, Holmes Murphy, to perform a risk assessment and better determine the appropriate City subsidy based on existing contractual obligations that will continue with a potentially smaller member pool. The two consultants are in contact with each other and working through the details. In order to perform a risk assessment and determine the appropriate subsidy and evaluate the viability of the proposed structure, the following questions were posed to LBG Advisors and the Local 440: • Confirmation of the Third Party Administrator (TPA) for the medical benefits will be • Confirmation of the physician only wrap network (if applicable) that will be used L • Confirmation of the Pharmacy Benefit Manager (PBM) administering the Rx benefits will be • Benefit Summaries from the TPA that outline the medical plan design • Benefit Summaries from the PBM that outline the pharmacy plan design ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. I CO 55 To the Mayor and Members of the City Council September 26, 2017 eX_ Page 2 of 2 SUBJECT: FIREFIGHTER HEALTHCARE BENEFITS Y8'/3 • Overview of the Reference Based Pricing (RBP) methodology and who will be administering the RBP • Proposed Employee and Retiree premiums • Proposed administrative fees for medical and a comprehensive list from the TPA of what that fee includes • Proposed Administrative fees for pharmacy and a comprehensive list from the PBM of what that fee includes • Proposal from Stop Loss carrier with the rates, terms, conditions and assumptions Additional considerations: • Who will create the plan document? • Who will be submitting eligibility to the TPA/PBM? • Will the claims data be submitted to Deerwalk (City's Data warehouse for claims)? Will the City have access to the claims data (outside of Deerwalk)? • Who will create the open enrollment materials and do the open enrollment education for employees/retirees? • Who will be responsible for paying the annual PCORI fee for Affordable Care Act (ACA)? • Who will be responsible for submitting the 1095-1096 reporting to the federal government per the Affordable Care Act guidelines? • Will the group continue to have access to the following services? o Life Insurance o Employee Assistance Program o Viverae /Wellness Incentive o Surgery Plus o Health Centers access Depending on receipt of the above, a risk analysis will be provided for City management to make a recommendation to Council as soon as practical based on the complexity of the analysis. David Cooke City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS