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City of Charleston Healthcare Trends . February 7, 2011 Presented By J. Arthur Dail, Inc. J. Arthur Dail, Inc. (JAD) & The City of Charleston. In 2006, JAD was retained by the City to solicit proposals for administration of the City’s medical and pharmacy plan.
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City of Charleston Healthcare Trends February 7, 2011 Presented By J. Arthur Dail, Inc.
J. Arthur Dail, Inc. (JAD) & The City of Charleston • In 2006, JAD was retained by the City to solicit proposals for administration of the City’s medical and pharmacy plan. • As a result of the RFP process, the City selected two separate vendors for its Pharmacy and Medical Plans in lieu of Mountain State BCBS (MS BCBS) with Medco: • Catalyst Rx for pharmacy benefit administration (Effective October 2006) • Acordia National (currently Wells Fargo Third Party Administrators) for medical plan administration (Effective January 2007) • Over the years, our services to the City have expanded and currently include: • Consultation on various healthcare benefit matters including plan design • Medical and Pharmacy Cost & Utilization Reporting • Assistance when requested for establishing projection of expenses and budgetary rates • Oversight assistance of Healthstat regarding the on-site clinic
City’s Healthcare Plan History • 2006 • MS BCBS served as Plan Administrator for medical and pharmacy benefits • Effective October 1, 2006, Catalyst Rx became pharmacy benefit manager (PBM), replacing Medco via MS BCBS Pharmacy Plan Benefits: • Generic - $5 copay + 20% • Brand and Non-Preferred - $15 copay + 20% • Specialty Drugs – Greater of $40 copay or 20% • 2007 Medical • Effective January 1, 2007, Acordia National (now Wells Fargo Third Party Administrators) became Plan Administrator • City continued its direct contractual arrangement with CAMC, resulting in greater discounts • Plan benefit structure crafted to encourage utilization On-Site Clinic • JAD assisted City with RFP to establish an on-site clinic • As a result of the RFP Healthstat was chosen to establish and manage the on-site clinic • Employees and spouses completed baseline Health Risk Assessments (HRAs)
City’s Healthcare Plan History(Continued) • 2008 Medical • City partnered with CAMC’s Behavioral Health program Pharmacy • Non-Preferred Brand copay increased from $15 + 20% of balance to $25 + 20% of balance On-Site Clinic • Clinic initially opened to employees and retirees in May 2008 and services expanded to include dependents in November 2008 • 2009 Medical • No changes Pharmacy • Catalyst Rx 2009 Formulary with 3 tiers implemented • Adjustments made to retail copays • Preferred Brand ($20 + 20%) • Non-Preferred Brand ($25 +20%) with a maximum copay of $100 for specialty products • Brand with generic equivalent copay ($35 + 20%) • Catalyst Rx standard quantity limits implemented • Walgreen’s Specialty Management Program implemented – Q3 2009 On-Site Clinic • No changes
City’s Healthcare Plan History(Continued) • 2010 Medical • Stop loss coverage cancelled – premium costs banked for future expenses • Annual maximum of $750,000 added to benefit plan in lieu of stop loss • Plan design changed to provide parity for mental health benefits in line with Federal Government regulation Pharmacy • Formulary Optimization Program implemented mid-year On-Site Clinic • October 2010 – HRA Reassessments • 1,084 individuals participated in a mass HRA campaign • Deadline for completing HRAs extended to February 28, 2011 due to demand • 2011 Medical • Federal Government’s Patient Protection and Affordable Care Act of 2009 • City maintained “Grandfather” status limiting number of mandated plan changes • Coverage for dependent children extended to age 26
City’s Average Employee Count Note: Average employee counts based on WFTPA census reports
Overview of Healthcare Plan Expenses Note: 2007 – Admin fees include both MS BCBS (10% of paid run-out claims) and Acordia National 2010 – Stop loss premium banked for future events
City’s Total Plan Spend Mountain State BCBS Note: Total spend includes paid claims, admin costs and pharmacy rebates Healthstat Clinic costs are not included
Components of Health Care Trend • General Health Care Inflation • Increased Utilization • Technology and Prescription Drugs • Availability of more expensive, state-of-the-art technological services • New drugs – Industry must recoup costs associated with developing new drugs • Chronic Disease • Longer life spans • Greater prevalence of chronic illnesses • Aging Population
Actions Taken to Offset Trend • Opened an on-site clinic for employees and dependents to promote a more cost effective venue for acute care, for wellness care, and for chronic disease management • Created plan incentives to promote the use of more cost-effective drugs, such as generics, through the Pharmacy Plan • Established an annual maximum provision under the medical plan in lieu of purchasing medical stop-loss insurance
City’s Healthcare Trend Versus National Trend2006 - 2010 • In 2006, the City’s average cost per employee was $7,725 while the National Average cost per employee was $7,140 • In 2010, the City’s average cost per employee was $7,502 while the National Average cost per employee was $9,028 • From 2006 – 2010, the City’s average cost per employee decreased2% and the National Average increasedby 24% • Over the 4-year period, the City’s average annual trend was -0.5% while the National Average annual trend was +6%
Average Cost Per Employee National City Note: City’s average cost included paid claims, admin costs and pharmacy rebates Healthstat Clinic costs not included National Average obtained from Aon-Hewitt
Measures Taken to Reduce Pharmacy Costs Note: Estimated Annualized Financial Impact and Estimated Member Impact data provided by Catalyst Rx
Healthstat Clinic Costs Note: Miscellaneous includes set-up charges, flu shots, etc.
Healthstat Clinic VisitsFor the Period of January – December 2010
Current Participants with Chronic Disease Note: Based on current year data representing January – November 2010 Participants may be included in more than one category Data Source: Sightlines Medical Intelligence (D2 Hawkeye)
New Pharmacist-Based ProgramFor Chronic Disease Management • The City and the University of Charleston School of Pharmacy Program • Face-to-face Counseling Sessions – at the School of Pharmacy • Drug Therapy & Regimen Compliance • Establishment of Realistic Individual Goals for Success • Pharmacist and participant develop a trusting relationship that creates accountability • Results = • Clinical Improvement • Financial Improvement • Quality of Life Improvement
Summary • From 2006 to 2010, the City’s medical plan trended significantly BELOWnational average while the pharmacy plan tracked the national average. • Although there were numerous contributing factors, key factors affecting the City’s trends were the changes in medical and pharmacy plan administrators • By choosing to establish an on-site clinic, the City benefited from reduced time away from work with less absenteeism and is gaining a healthier work force • Questions?