HomeMy WebLinkAboutIR 8382 INFORMAL REP r T TO CITY COUNCIL MEMBERS No. 8382
r To the Mayor and Members of the City Council February 26, 2n02
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SUBJECT: HEALTH BENEFITS FUND UPDATE —
QUARTERLY REPORT TO THE CITY COUNCIL
Purpose: Prior to October 1, 2001, the City of Fort Worth Health Insurance program for employees,
retirees and dependents was fully insured, through Pacificare. Beginning October 1, 2001, the
City's Health Benefits program became self-insured. Management of this self-insured fund is
critical.
The City Council requested staff to provide quarterly updates on the health benefits program. This
report is for the first quarter of FY 2001-02, for the period of October 1 - December 31, 2001, and
provides information on:
• Claims costs
• Health Benefits Advisory Committee
• Wellness Program
• Network Issues
• Customer Service Issues
0� ` "One Stop Benefits Shop" Implementation
Claims Costs:
A summary of the paid claims for the first quarter of the fiscal year (October— December 2001) is
shown below:
Total Paid Total Paid Claims Self-Funded Funding Surplus
Claims Plus Admin. Fees Equivalent Premium Deficit
OCT'01 $ 494,006 $ 811,305 $3,257,158 $2,445,853
NOV'01 $2,184,562 $2,502,116 $3,181,847 $ 679,731
DEC '01 $2,447,025 $2,763,782 $3,164,486 $ 400,704
TOTAL $5,125,593 $6,077,204 $9,603,492 $3,526,288
A more detailed summary of claims and other expenses for the first quarter is attached.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8382
To the Mayor and Members of the City Council February 25, 2002
Page 2 of 2
� r SUBJECT: HEALTH BENEFITS FUND UPDATE -
QUARTERLY REPORT TO THE CITY COUNCIL
The City's paid health claims for the period October 1 through December 31, 2001 are consistent
with expectations. The first month reflects relatively low paid claims, as would be expected in the
first month of a new contract. The next two months reflect more normal claims costs. Because of
the lag effect of claims during the first quarter of this new Plan Year, the available funds for
payment of incurred but unreported claims liability together with any claims that exceed expected
levels amounts to approximately$3.5 million.
As you'll recall, the plan is funded at 125% of expected claims costs. If projected claims costs
prove accurate, a reserve of approximately $7 million will accumulate through September 30"' of
this year. (The aggregate stop loss insurance applies if actual claims costs exceed 125% of
expected claims costs.) Since the City is now self-funded it is critical that, especially in the first
year, the reserves be sufficient to assume any risk that might emerge in excess of the expected
level as well as to fund incurred but unreported liability.
rov In summary, the claims data in the first quarter reflects an adequate position at this time. However,
health benefit cost projections for the next fiscal year reflect a 15% increase. The Health Benefits
Advisory Committee has scheduled two work sessions in March to review the claims data more
closely and to consider cost control options.
Health Benefit Advisory Committee: The City Manager appointed and chartered a Health
Benefit Advisory Committee in January 2002. The purpose of the committee is to provide input to
the City Manager on medical benefit administration, specifically:
• Monitoring the financial performance of the fund;
• Reviewing the administrator's performance;
• Reviewing the plan design and operation of the health benefit program; and,
• Providing input on health benefit policies and procedures.
Members of the Health Benefit Advisory Committee may also serve in an ad hoc capacity to
consider appeals regarding plan benefits. In the event a plan member exhausts all appeals
through the third party administrator and is unsuccessful in such administrative appeal, the member
may file an appeal with the City of Fort Worth Human Resources Director. The HR Director will
appoint an ad hoc committee of three members of the Health Benefit Advisory Committee to review
the appeal and issue a written determination.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8382
PA-T
To the Mayor and Members of the City Council February 26, 2002
Page 3 of 3
# SUBJECT: HEALTH BENEFITS FUND UPDATE —
QUARTERLY REPORT TO THE CITY COUNCIL
The Committee consists of nine (9) members, appointed annually by the City Manager:
(1) The Director of Human Resources or her designee (Linda Cobb)
(2) The Director of Finance or his designee (Jim Keyes)
(3) One representative from the Police Department(John Kerr)
(4) One representative from the Fire Department(Don Westmoreland)
(5) Three general employees at large (Dinah Horton - Finance; Yolanda Gonzalez-Water;
Sally McCoy- Library)
(6) One retiree (Jean Banks)
(7) One insurance or health care professional from the community (John Collins, with
Higginbotham and Associates)
The City's health benefits consultant serves as a resource to the committee.
The Committee met February 13 to review claims data and review this quarterly report.
Wellness Program: A Wellness Program was funded In the FY 2001-02 budget, at a cost of
$346,181. The Program included three components: (1) access to information and guidance on
questions related to physical symptoms, medical issues or health care concerns, through
registered nurses on a 24 hours/day, 7 days/week basis (provided by United HealthCare's
Nurseline); (2 enhancement of the City's internal Employee Assistance Program through an
outside vendor to include additional services such as legal/financial counseling, web-site access to
the EAP, and external referrals for employees who do not wish to use the internal EAP Program
(the RFP is currently being developed for this service); and (3) creation of a Wellness Program for
City employees, with an emphasis on healthy life styles, disease management and preventive
screenings.
Healthy Challenge is the new Employee Wellness Program. The program rewards employees for
maintaining and/or improving their health during the year. The Healthy Challenge Kick-Off will be
the week of February 25-March 1, 2002 and includes the health risk assessment(HRA) and health
screenings. Employees who participate in the kick-off and then participate in a variety of programs
(smoking cessation, weight loss, eating fruits and vegetables, exercise programs, etc.) during the
next year will be eligible for a Wellness Award (cash award from $50 up to $250 or leave award
from 3 to 15 hours of Wellness Leave), in March 2003, depending on the number of outcome
criteria met, as determined by the HRA/Screening.
Indicators of the program success include increased employee awareness and participation in
lifestyle changing interventions, reduced absenteeism, improved productivity, and improved job
satisfaction. Ultimately, one of the goals of the program is to have healthier employees and a
reduction in the rate of increase of health benefits costs.
Network Issues: The City of Fort Worth contracts with United Health Care for administrative
services relating to claims payment and for stop-loss insurance. In addition, the City utilizes the
UHC network of physicians for the EPO and PPO plans. The network is extremely volatile.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8382
To the Mayor and Members of the City Council
February 26, 2002
Page 4 of 4
SUBJECT: HEALTH BENEFITS FUND UPDATE —
QUARTERLY REPORT TO THE CITY COUNCIL
Physicians may notify UHC at any time that they are withdrawing from the network, after giving a
90 day notice.
It is obvious that maintenance of a viable network is in UHC's best interest; in order to attract
clients, and it's in the City's interest to contract with a company, which maintains a strong network
in the DFW area (as well as throughout the United States, as a benefit to retirees). To that end,
City staff has met several times with physicians and with United Health Care, with the goal of
understanding the contracting issues and of maintaining an open line of communication.
Customer Service Issues: It was anticipated that a variety of customer service issues would arise
with the changeover from Pacificare to United HealthCare. Errors in the enrollment of 14,000
members (employees, retirees, and dependents) would occur. Different administrative processes
and interpretation of the current plan design would lead to some confusion. All of these issues
arose during the transition period, especially with retirees.
As also anticipated, the issues are subsiding. During the month of December 2001, the Human
Resources Department conducted a telephone survey on customer service and satisfaction. The
results of that survey are summarized as follows:
• 34% indicated difficulty in reaching an on-site representative and 57% reported they
received a return phone call the same day
• 97% reported they were treated courteously and 94% reported they spoke with a
knowledgeable person.
• 97% felt their problem was handled in a timely manner
• 96% felt that the overall level of customer service met their expectations
• 85% reported satisfaction with the United Health Care Benefit plan
• 91%were satisfied with the customer service they received from United Health Care
Customer service is an area of importance to City staff. We are encouraging members to contact
United Health Care's 1-800 customer service line for routine matters. We are focusing the on-site
UHC representatives' and City staffs effort on resolution of more difficult issues and returning calls
in a timely manner. Customer service expectations have been established for the Health and
Benefits division of Human Resources: "If you call before 2 PM, we'll return the call the same day.
If you call after 2PM, we'll return the call the next day." The telephone system has been
redesigned to enhance call in-take and increase the probability of the customer reaching a staff
member.
We will continue to survey members and institute changes that will improve our customer service.
One Stop Benefits Shop: The Risk Management Department was eliminated in FY 2001-02.
Health benefits, miscellaneous insurance, unemployment insurance and occupational health and
safety were transferred to the Human Resources Department, with a goal of providing a more
integrated approach to the management of benefit issues.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8382
To the Mayor and Members of the City Council
February 26, 2002
Page 5 of 5
SUBJECT: HEALTH BENEFITS FUND UPDATE -
QUARTERLY REPORT TO THE CITY COUNCIL
To that end, the Human Resources Department has reorganized and combined all benefits into
one division at the same location, on the Lower Level of the City Municipal Building. Employees
and retirees can now come to one location to obtain information about health benefits, deferred
compensation, life insurance, dental and vision insurance, leave benefits, and the wellness
program. Human Resource Department employees are being cross-trained so that each will be
capable of handling basic issues in each benefit area.
Two newsletters were developed to better communicate with retirees and employees: Better
Health for Life and Better Health for Retired Life. These newsletters incorporate the former
"Benefax" newsletter but also provide information about all City benefits.
If you have additional questions, please contact me.
O `
Gary W. Jackson
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
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