Medical Plan Dependent Audit September 14, 2010

Medical Plan Dependent AuditSeptember 14, 2010

Presentation Outline • Background • Audit Process • Audit Results • Summary • Board Action Requested

Background • BCC • Comptroller • Tax Collector • Supervisor of Elections • Expressway Authority • Housing Finance Authority • OBT Development Board • Metroplan Orlando • Property Appraiser • Lynx • Clerk of Courts • Research and Development • I-Ride Trolley Total Plan Members: 18,314 8,835 Covered Employees

Background • County’s Medical Plan expenses for 2009 reached over $85 million • Despite cost saving initiatives, healthcare costs are still trending at 10.9% • Beginning January 1, 2011 the County’s medical plan will become a Consumer Driven Health Plan

Background • A rising number of employers nationwide have conducted dependent eligibility audits as a way to contain healthcare costs • As of March 2008, 55% of surveyed employers planned to conduct an audit, and 74% planned to do so for 2009 • Chapman Kelly eligibility audits often find between 5-12% of dependents are ineligible • Removing ineligible dependents could save between 4% and 6% of annual healthcare costs

Background • Beginning Fall 2008 employees were notified of the upcoming audit through: • Spiel Email Announcements • Live for Today, Plan for Tomorrow Newsletter Articles • HR In the Loop (video) • Department HR Representatives • Last opportunity to remove ineligible dependents was Open Enrollment for 2009

Background • In mid 2009, a Request for Proposal process was conducted to select an audit vendor • Audit firm Chapman Kelly was selectedin September of 2009 to conduct a full Dependent Audit

Audit Process • The audit was conducted for 5,073 employees, COBRA participants and retirees • These plan members covered 10,277 dependents as of January 1, 2009 • Plan members were required to provide adequate documentation of eligibility

Audit Process • Human Resources sent a letter providing formal notification of the audit to plan members covering dependents on January 4, 2010 • Chapman Kelly notified plan members of required documentation and instructions for compliance • Continual communication was provided throughout the audit

Audit Process • Employees were given until March 31, 2010 to provide documentation • On April 5th, Chapman Kelly sent a letter to employees who failed to respond by the March 31st deadline • HR reached out to plan members notifying of non-compliance and asking for signed acknowledgment • A last chance date of April 30, 2010 was given to comply with the audit

Audit Process As documentation was collected: • Confirmation postcards were sent to plan members in compliance with the audit • Custom letters were sent to those who provided partial or insufficient documentation advising them to comply, or dependents would be removed from the plan

Audit Results Results can be separated into four broad categories: • Eligible/Complete • Ineligible • Partial/Incomplete Response • Non-Response

Audit Results Eligible/Complete • 97% were complete and eligible • Includes plan members with dependents who complied within the timeframe and provided sufficient documentation proving eligibility • Includes dropped dependents who were eligible until date of drop

Audit Results Ineligible • <1% of audited dependents were found to be ineligible • BCC: 42 • Non-BCC: 21 • Includes plan members with ineligible dependents who were not dropped within 30 days of becoming ineligible • Dependents removed from plan through 1/1/2011

Audit Results • Partial/Incomplete Response • 2% were partial responses • BCC: 131 • Non-BCC: 66 • Includes plan members with dependents who did not provide sufficient or complete documentation • Dependents removed from plan through 1/1/2011

Audit Results • Non-Response • <1% did not respond • BCC: 25 • Non-BCC: 16 • Includes plan members with dependents who did not comply with the audit within the timeframe or at all • Remove dependents through 1/1/2012

Audit Results January 2007 – June 2010 Claims $262,129,949 Ineligible Claims: $240,734 0.09%

Audit Results January 2007 – June 2010 Claims $262,129,949 Ineligible Claims: $240,734 0.09% Partial Response Claims: $1,091,049 0.42%

Audit Results January 2007 – June 2010 Claims $262,129,949 Ineligible Claims: $240,734 0.09% Partial Response Claims: $1,091,049 0.42% Non-Response Claims: $899,674 0.34%

Audit Results January 2007 – June 2010 Claims $262,129,949 Ineligible Claims: $240,734 0.09% Partial Response Claims: $1,091,049 0.42% Total of questionable claims represents <1% of total claims since 2007 Non-Response Claims: $899,674 0.34%

Audit Results Questionable Dependent Claim Costs (Since 2007) 76% of dependent claims were $5,000 or below $ Number of Dependents

Audit Results Questionable Dependent Claim Costs (Since 2007) 50% of dependent claims were $1,000 or below $ Number of Dependents

Audit Results Questionable Dependent Claim Costs (Since 2007) The one claim over $500,000 was technically from an eligible dependent $ Number of Dependents

Audit Results During the course of the audit, over 3.1% of dependents were removed from the plan producing a theoretical savings of just under $1 million annually

Summary • 97% of audited employees had eligible dependents and were compliant • 50% of ineligible, partial or non-response claims were under $1,000 • Chapman Kelly and other auditors recommend removing ineligibles and cleaning up the plan going forward • Continue to require sufficient documentation when adding dependents (Implemented 1/1/09)

Board Action Requested BCC ratification of the implementation plan: • Require sufficient documentation at time of enrollment (Implemented 1/1/09) • Non-recoupment of dependent claims • Removal of partial and ineligible dependents through 1/1/2011 • Removal of non-response dependents through 1/1/2012

Medical Plan Dependent AuditSeptember 14, 2010

Medical Plan Dependent Audit September 14, 2010