HomeMy WebLinkAbout140-00 RESOLUTION•
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RESOLUTION NO. 140-00
A RESOLUTION RENEWING THE BLUE CROSS/BLUE SHIELD
MEDICAL CONTRACT FOR POLICY YEAR JANUARY 1, 2001
THROUGH DECEMBER 31, 2001.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE,
ARKANSAS:
Section 1. That the City Council hereby approves the Blue Cross/Blue Shield Medical
contract for policy year January 1, 2001 through December 31, 2001. A copy of the contract is
attached hereto marked Exhibit,"A" and made a part hereof.
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PASSED AND APPROVED this 17ih day of October , 2000.
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ATTEST:
eather Woodruff, Clerk
NAME OF FILE:
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CROSS REFERENCE:
Date
Contents of File
lnitials
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Arkansas
BlueCross B1ueShield
September 28, 2000
Mr. Don Bailey
Personnel Director
City of Fayetteville
113 West Mountain St.
Faveneville. AR 72701-6069
EXHIBIT A
Barbara C. Lovin, C11E
(:roup \Iarkenng Hcpmseml:elivc
237 NIillsap Boat! — Suite #I
FaceuevdL:. Arkansas 727(13
Phony: (50 1) 527-2317
FAX (:d(1) 527-2323
RE: City of Fayetteville & Fayetteville Public Library
Comprehensive Major Medical #09004/ & #090042
Preferred Provider Organization #024813 & #0248/4
Dear Mr. Bailey:
Arkansas Blue Cross and Blue Shield is pleased to offer the following rates for the City of Fayetteville &
Fayetteville Public Library for the policy period 01/01/01 — 12/31/01:
Employee Family
CMM $197.16 $477.13
PPO $159.84 $382.60
Dental $14.26 $49.97
The above rates assume the policyholder will adopt the following changes in benefits effective 01/01/01:
• $200 Individual Deductible/$400 Family Deductible
• $7/$15/$25 Prescription Drug Card
Arkansas Blue Cross and Blue Shield welcomes the opportunity to continue to administer the health and
dental benefits on behalf of the City of Fayetteville and Fayetteville Public I.ihrary. It has been a pleasure
serving the employees and families of both these organizations.
Respectfully,
Barbara Lovin
Group Marketing Representative
Cc: Beff Kent
Mel Blackwood
Anne Fullerton
Together. For A State of Better Health.
Arkansas Blue) Cross mut Blue Shield. A Mutual Insurance Company
An Indeprndrnt I.icrn<ec of the Rio: (:con. and Blue Shield Association
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Arkansas
BlueCross BlueShield
FACTORS AFFECTING RENEWAL RATING ACTION
• Drug cost as a percentage of total healthcare cost for the City of
Fayetteville/Fayetteville Public Library has out paced the Arkansas Blue Cross and
Blue Shield experience for the periods in review.
• The per member per month (PMPM) percentage change in medical costs for the
City of Fayetteville/Fayetteville Public Library continued to out pace the Arkansas
Blue Cross and Blue Shield experience for the periods in review.
• On the January 1, 2000 renewal, the city did not receive a rate increase due to the
decision to offer the PPO Option. We expected roughly 70% of the cites employees
to participate in the PPO. The discounts from the PPO were projected to more than
offset the projected rate increase needed January 1, 2000 to meet our target loss ratio
of 85%. As a result of lower than expected participation in the PPO Product we
were not able to reach our target Toss ratio for the current contract year.
• As a result of the decision by the city to offer the PPO Option we have seen a
reduction in paid claims for the most recent 12 months compared to the two prior
years. If the city had not offered the PPO Option last year we would have
incorporated a rate increase January 1, 2000 and would likely have needed a larger
increase January 1, 2001 based on claims experience.
• Based on the most recent rating period (7/1/1997 - 6/30/2000) the city experienced a
loss ratio of 90.3% compared to the target loss ratio of 85%. The higher than
expected claims (5%) coupled with the combined medical and prescription trends
(13%) is driving the overall increase of 20.2%.
1 1
Annual RX Costs*
ABCBS
2000 Projected
City of Fayetteville & Library
10/97 - 7/98
10/98 - 7/99
10/99 - 7/00
'Based on paid dates; Drug cost as a percentage of total healthcare cost for the City of Fayetteville!
Fayetteville Public Library has out paced the ABCBS experience for the periods in review.
1 All other Benefits I
[Accidents
Out-of-pocket maximum
slender Year Deductible
Lyment Percentage
Network
Definition of CMM and PPO
•
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40 with no deductible up to 3500, then 20%
subject to deductible
91,000 plus deductible per family member
Covered expenses paid at 100% of allowance
thereafter for the remainder of the calendar
year.
9100/2 deductibles per family
• Payment percentage at 80% of the Blue
Cross fee schedule regardless of where
you go.
• Network has all hospitals in the state of
Arkansas and 93% of physicians
(Northwest Medical Center/Springdale
Hospital participates).
• Open network. If members use a Blue
Book provider, they have protection
a • ainst balance billin • .
CMM (The Blue Book) Is a network of doctors
end hospitals that have agreed to the
following:
• Accept Blue Cross fee schedule
• File claims
Comprehensive Major Medical
CMM
1 benefits /ncludlna dental. Prescription drua card. wellness services. etc.. are the same under the Comprehensive MalorMedical
Initial care - 20% with no deductible 1
Follow up (In -network 20%, Out -of -network 40%)
91,000 plus deductible per Individual
92,000 family aggregate (plus ded.) After
1 family member meets the out of
pocket, the remaining family members
can combine eligible charges to meet the
out of pocket. Covered expenses paid at
100% of allowance thereafter for the
remainder of the calendar year.
9100 Individual
4200 family aggregate deductible
After 1 family member meats the deductible, the remaining family members can
combine eligible charges to meet the second
• Payment percentage et 80% In -network and 60% out -of -network. For accidents
and life threatening medical emergencies, seek treatment at nearest facility,
charges will be paid as in -network, 80%.
• Network has 90 hospitals and approximately 4,195 physicians. Nationwide -
Blue Cross and Blue Shield networks are available to 96% of United Sates
population in all 50 states. All hospitals in Northwest Arkansas are in -network
except for Northwest Medical Center and Bates.
• Because of the cost -savings associated with the provider discounts, members are
encouraged to utilize the PPO network for services. When members use the PPO
network, they receive a richer benefit and protection against balance billing.
PPO (PPO directory) is a network of doctors and hospitals that have agreed to the
following:
• Charge discounted fees to PPO members. These are fees discounted from the
CMM fee schedule.
• File claims
IN -NETWORK
Preferred Provider Organization
PPO
94,000 plus deductible per individual
98,000 family aggregate (plus ded.)
After 1 family member meets the out of
pocket, the remaining family members
can combine eligible charges to meet
the out of pocket. Covered expenses
paid at 100% of allowance thereafter
for the remainder of the calendar year.
OUT -OF -NETWORK
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All Other Benefits
Accidents
Out-of-pocket maximum
Blender Year Deductible
itPayment Percentage
Network
Definition of CMM and PPO
IP
Is
30 with no deductible up to 3500, then 20%
subject to deductible
$1,000 plus deductible per family member
Covered expenses paid at 100% of allowance
thereafter for the remainder of the calendar
year.
$200/2 deductibles per family
• Payment percentage at 80% of the Blue
Cross fee schedule regardless of where
you go.
• Network has all hospitals in the state of
Arkansas and 93% of physicians
(Northwest Medical Center/Springdale
Hospital participates).
• Open network. If members use a Blue
Book provider, they have protection
against balance billing.
CMM (The Blue Book) is a network of doctors
and hospitals that have agreed to the
following:
• Accept Blue Cross fee schedule
• File claims
Comprehensive Major Medical
CMM
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Initial care - 20% with no deductible
Follow up (In -network 20%, Out -of -network 40%)
31,000 plus deductible per individual
32,000 family aggregate (plus ded.) After
1 family member meets the out of
pocket, the remaining family members
can combine eligible charges to meet the
out of pocket. Covered expenses paid at
100% of allowance thereafter for the
remainder of the calendar year.
3200 individual
*400 family aggregate deductible
After 1 family member meets the deductible, the remaining family members can
combine eligible charges to meet the second
• Payment percentage at 80% in -network and 60% out -of -network. For accidents
and life threatening medical emergencies, seek treatment at nearest facility,
charges will be paid as in -network, 8096.
• Network has 90 hospitals and approximately 4,195 physicians. Nationwide -
Blue Cross and Blue Shield networks ere available to 95% of United Sates
population in all 50 states. All hospitals in Northwest Arkansas are in -network
except for Northwest Medical Center and Bates.
• Because of the cost -savings associated with the provider discounts, members are
encouraged to utilize the PPO network for services. When members use the PPO
network, they receive a richer benefit and protection against balance billing.
PPO (PPO directory) is a network of doctors and hospitals that have agreed to the
following:
• Charge discounted fees to PPO members. These are fees discounted from the
CMM fee schedule.
• File claims
IN -NETWORK OUT -OF -NETWORK
Preferred Provider Organization
PPO
34,000 plus deductible per individual
38,000 family aggregate (plus ded.)
After 1 family member meets the out of
pocket, the remaining family members
can combine eligible charges to meet
the out of pocket. Covered expenses
paid at 100% of allowance thereafter
for the remainder of the calendar year.
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Arkansas
BlueCross BlueShield
THREE -TIER CO -PAY
PRESCRIPTION DRUG BENEFIT PLAN
Advantages of the Three -Tier Copav Plan:
The Three -Tier Co -pay Plan works to lower prescription drug costs by using the co -payment
structure to steer patients to utilize preferred drugs. The Arkansas Blue Cross Enterprise
Pharmacy and Therapeutics Committee has approved the Preferred Drug List based upon
defined criteria of safety, efficacy, uniqueness and cost.
Benefit Structure:
Co -payments: $7/$15/$25
$7 per prescription for Generic Drugs
$15 per prescription for Preferred Name Brand Drugs
$25 per prescription for Non -Preferred Name Brand Drugs
Days Supply: 34 -Day supply on all new or refill medications for a single copayment
100 -day supply for refill Maintenance List medications. A co -pay will
be charged for each 34 -day supply.
Limitations: See Policy for benefit coverage.
Compounds not covered
Generic Incentive: If a member selects a Name Brand drug and a Generic is available, the
member pays the appropriate Name Brand copay ($20 or $30) plus the
difference in price between the Generic and the Name Brand dispensed.
Members may receive a Name Brand Drug at the appropriate Name
Brand Co -pay when a Generic is available if the physician indicates
DAW — 1 on the prescription.
Lockouts: The following name brand medications are not available at either co -pay
level:
Sporanox
Prinivil
Viagra
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FAYETTEVILLE
THE CITY OF FAYETTEVILLE, ARKANSAS
•
TO:
FROM:
DATE:
SUBJECT:
Mayor Fred Hanna and the Fayetteville City Council
John Maguire, Administrative Services Director
Don Bailey, Personnel Director
September 28, 2000
Employee Group Health Contract Renewal
The contract renewal date for the City's Blue Cross Blue Shield group health and endorsed dental
plans is January 1, 2001. Our current group contract was adopted by the Council 01-01-98. The
term of this contract is for one year with four additional one year options for renewal to be
exercised annually with the agreement of the City and Blue Cross. Exercising the 01-01-2001
renewal is the third of the four one-year options for renewal.
The City's group medical plan has incurred unfavorable loss ratios in four of the past five years.
Again, for the year 2001 premium rates have increased due to our loss ratio and medical care cost
escalation. Drug costs which now represent 20.9% of premium are the principle factor driving
costs. There is no indication cost escalation will abate. The current annual medical and drug
cost trend is 8.63% and 27% respectively.
Group medical coverage is highly valued by virtually all City employees. As such, in the past we
have been very reluctant to adjust benefits to offset costs. We again face this dilemma and
recognize we cannot afford to maintain the current schedule of benefits. If we make no change,
net of any adjustments, medical calls for a 12.7% increase and drugs 55% for a combined rate
increase of 20.8%. Based on the current participant count, a 20.8% increase equals $422,000
annually.
Two changes to the benefit schedule can be made which will reduce the aggregate premium
increase to 13.5%.
(1)
•
Increase the deductible amount from $100 to $200
(2) Change the drug card from $3-$10 to a three-tier $7-$15-$25 co -pay.
We believe these to he reasonable, responsible changes which do not alter the policy's healthcare
provisions nor do they adversely affect our competitive position in the labor market. This action
will result in a reduction of the premium increase to $252,000. Long term this action can perhaps
forestall an even larger underwriting increase in the year 2002 in view of the current medical and
drug cost trends.
113 WEST MOUNTAIN 72701 501 521-7700
FAX 501 575-8257
• .
The Council has always acted very favorably toward paying premium cost increases without
requiring additional employee premium contributions. A review of the past five years of
increases in City contributions follows:
05-31-96
01-01-97
01-01-98
01-01-99
01-01-00
10%
17.6%
12.7%
10.2%
No Increase Required
The total premium cost to the City from 01-01-96 through the year 2000 will have increased from
approximately $756,000 to $1,607,000 annually. It is therefore reasonable that employees also
now increase their share of the premium as shown on the attached premium schedule.
The one very positive aspect of the program was establishing the dual choice option on May 1,
1999 which introduced the Preferred Provider Organization (PPO). Thirty-one percent of group
participants are currently enrolled in this option. On a stand alone basis the loss ratio of this
option is a very low 45%. It is our intent to encourage additional employees to elect the PPO
during the annual open enrollment in November. Because of the loss record, and our desire to
provide an economic incentive to elect the PPO option, we do not propose to raise the employee -
paid portion of the PPO premium. The city -paid portion of the premium of both individual and
family rates will be adjusted to cover the required increase. An identical amount of increase will
be added to the City paid portion of the Comprehensive Major Medical (CMM) option
participants. This satisfies the commitment made last year to employees that the City would fund
equal amounts to both options and any savings would accrue to PPO participants.
Dental rates, paid fully by employees, are unchanged for 2001.
An attachment to this memo lists the current premium structure and the proposed 2001 premium
structure. The increased premium to be paid by the City in 2001, with the additional employee
contributions, is $90,000. The projected total City paid premium cost for 2001, based on current
enrollment, will be $1,754,000.
XX AGENDA REQUEST
CONTRACT REVIEW
GRANT REVIEW
For the Fayetteville
•
STAFF REVIEW FORM
City Council meeting of
•
OCTOBER 17, 2000
FROM,
DON BAILEY
Name
PERSONNEL
Division
ADMIN_ SFRVICES
Department
ACTION REQUIRED:
RENEWAL OF BCBS MEDICAL CONTRACT FOR POLICY YEAR 1-1-2001 THROUGH 12-31-2001
COST TO CITY:
$ 1,754,090
Cost ofthis Request
VARIOUS
Account Number
Project Number
$ 1.757.39
Category/Project Budget
$ 0
Funds Used To Date
$ 1,757,395
Remaining Balance
HFALTH TN$ITRANCE
Category/Project Name
Program Name
Fund
BUDGET REVIEW:
Budgeted Item
Budget Manager
Budget Adjustment Attached
Administrative Services Director
CONTRACT/GRANT/LEASE REVIEW:
Accounting Manager
City Attorney
Purchasing Officer
GRANTING AGENCY:
Date Internal Auditor
Date ADA Coordinator
Date
Date
Date
STAFF RECOMMENDATION:
7
. Div siony Head
De'a•
• -ctor
ii
A . A Ls 4
s
®
=tive 5 ces Director :ate
/(�J,DO
May Date
9-21-00
Date
C:\DATA\BLANKFOR\AGENDA. BL7(
Cross Reference
New Item: Yes No
Prev Ord/Res II:
Orig Contract Date:
Orig Contract Number:
FAYETTEVILLE
THE CITY OF FAYETTEVILLE. ARKANSAS
DEPARTMENTAL CORRESPONDENCE
•
To: Don Bailey, Personnel Division
From: Heather Woodruff, City Clerk
Date: October 23, 2000
Attached is a copy of Resolution No. 140-00 renewing the Blue Cross/Blue Shield Medical
contract. The original will be microfilmed and filed with the City Clerk.
cc: Nancy Smith, Internal Auditor e*c
John Maguire, Administrative Services Director