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HomeMy WebLinkAbout07/23/2008 PERSONNEL COMMITTEE Wednesday, July 23, 2008 ATTENDANCE LIST Name Organization Contact: Phone/ E-mail '61 J 3 U S1V 9SC 6-7)C 14 y dAr�-2 � 8c(b) `3 13R rat a i3/��� 3 a 6, �I j c r ✓ d � e�. �O �v �d X40 L B A K E R S F I E L D Staff: City Council members: John W. Stinson, Assistant City Manager Harold Hanson, Chair Steven Teglia, Administrative Analyst David Couch Ken Weir SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield Wednesday, July 23, 2008 3:00 p.m. City Manager's Conference Room City Hall South 1501 Truxtun Avenue, Second Floor Bakersfield, California 93301 AGENDA I. ROLL CALL 2. ADOPT DECEMBER 19, 2007 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Introduction of Segal Company, Health Care Consultants and Discussion of Insurance Renewal Information— Stinson, Lozano 5. COMMITTEE COMMENTS 6. ADJOURNMENT i BAK0/0 ERS DRAFT F I E L D Harold Hanson, Chair Staff: John W. Stinson David Couch Assistant City Manager Ken Weir AGENDA SUMMARY REPORT SPECIAL MEETING of the PERSONNEL COMMITTEE Wednesday, December 19, 2007 3:00 p.m. City Manager's Conference Room 1501 Truxtun Avenue; Bakersfield, California 93301 Called to Order at 3:04:49 p.m. 1. ROLL CALL Committee members present: Councilmember Harold Hanson, Chair Councilmember David Couch Councilmember Ken Weir Staff present: Alan Tandy, City Manager John W. Stinson, Assistant City Manager Rhonda Smiley, Assistant to the City Manager/PIO Rick Kirkwood, Management Assistant—City Manager's Office Steven Teglia, Administrative Analyst— City Manager's Office Joshua Rudnick, Deputy City Attorney Robert Sherfy, Deputy City Attorney Javier Lozano, Human Resources Manager Ginger Rubin, Benefits Clerk Pamela McCarthy, City Clerk Nelson Smith, Finance Director Scott Monroe, Engineer- Bakersfield Fire Department John Patterson, Maintenance Craftworker- Bakersfield Fire Department Paul Smith, Engineer- Bakersfield Fire Department Allan Abney, Sergeant—Bakersfield Police Department Bob Bivens, Captain — Bakersfield Police Department Todd Dickson, Detective - Bakersfield Police Department Brian West, Detective - Bakersfield Police Department Brad Underwood, Operations Manager—Public Works Department Sam Russell, Communications Technician - Public Works Department Retired employees: Sandee Morris and Gene Bogart Others: Chuck Waide, SEIU Local 521 Jim Summers, BUCK Consultants Miscellaneous members of the media 2. ADOPT N DRAFT NOVEMBER 27, 2007 AGENDA SUMMARY REPORT 3:05:40 a.m. Adopted, with one correction. Item 4a., first paragraph, second sentence: 2007 is changed to 2008. 3. PUBLIC STATEMENTS None 4. DEFERRED BUSINESS 3:07:02 p.m. A. Discussion regarding Medical Insurance Renewals Lozano Stinson Assistant City Manager Stinson distributed a memorandum from the City Manager with regard to health insurance renewals. He also referenced a document in the agenda packet that had been prepared by the Finance Department that reflected very poor sales tax growth and estimated shortfalls in projected revenues for development related activities. The most recent quarterly sales tax data compares the most recent quarter with same quarter last year, and it is down by 13%. The most recent four quarters compared with the prior four quarters, shows a decrease of 5%. Over the last 10 years, the City's cost for benefits has increased from 21% to 32%, and the cost for active and retiree medical cost has increased from 6% of the General Fund to 9%. Staff attempted to contain costs; however, the rates continued to increase. Meetings were held with the Insurance Committee in an effort to reach agreement on plan changes. As of December 18, 2007, the Insurance Committee determined that the City's proposal was unacceptable. Based on that decision, impasse was declared. Impasse procedures will be followed and the matter will be brought before the City Council on January 16, 2008 for further direction. Chuck Waide, with SEIU Local 521, distributed a statement from the Insurance Committee, which he read into the record: The Joint Insurance Committee has met and provides to the Council Personnel Committee the following response to the City's two proposals. Whereas, the City failed to meet and confer with the Insurance Committee prior to October 31, 2007, in accordance with the MOU, despite numerous written and verbal requests; Whereas, the first City-scheduled Insurance Committee meeting was held on November 14, 2007, Whereas, the City requested an extension of the October 31, 2007 meet and confer deadline which was unanimously rejected by the Committee at the November 14, 2007 committee meeting. However at the request of the City, the Insurance Committee continued to meet for informational purposes only, Whereas, the City was provided with timely information by their insurance consultant and failed to share this information with the Insurance Committee prior to November 14, 2007, Whereas, the City has unilaterally implemented a number of contract plan changes without participation or knowledge of the Insurance Committee; these items include but are not limited to: S:\Council Committees\2007\07 Personnel\December 19\December 19 ASR.doc Page 2 • Prior authorization on prescription drugs DRAFT • Co-pays for wellness exams • Retiree medical contribution based upon active rates rather than retiree rates Therefore based on the above facts, it is the recommendation of the Insurance Committee: • All medical insurance plans remain unchanged for the calendar year of 2008. • The City recognizes the Insurance Committee structure as proposed by the Committee. • All future insurance plan changes shall be presented to the Committee for meet and confer. • Prior Plan changes unilaterally implemented by the City shall be brought to the Committee for action. • The City to utilize the lowest "applicable retiree rate" when computing the retiree years of service contribution. Mr. Stinson verified that a wellness program has been in effect since 1994, and the outpatient drug authorization has been a requirement since 1999. In regard to the retiree medical contribution being separate from active employees, the City's policy is consistent with current Memorandum of Understandings with the bargaining units, as follows: "Received the subsidy of the lower of the HMO or Fee for Service single rate." Deputy City Attorney Sherfy stated that the purpose of this meeting is informational. Statements have been taken from the public, Mr. Waide and Mr. Stinson. He emphasized to the Committee that because the impasse procedure has been begun, any lengthy discussions about the matter should be deferred to the City Council meeting on January 16, 2008. S. COMMITTEE COMMENTS None 6. 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Medical Trends - Specialty drugs,which require special handling, support and delivery,address a number of compli- The 2008 Segal Health Plan Cost cated conditions,including osteoporosis,arthritis, Trend Survey—The Segal Company's multiple sclerosis and cancer.'this category contains g p y�g genetically engineered,injectable therapies with costs eleventh annual survey of managed greatly exceeding those of most traditional therapies. care organizations (MCOs) health the Centers for Medicare&Medicaid Services now informally defines specialty drugs as those regularly insurers, pharmacy benefit managers costing$500 or more for a 30-day supply. (PBMs) and third party administrators (TPAs)—forecasts continued declines What Is Trend? in trends for 2008. This marks the fifth consecutive year of declining Trend is the forecasted change in health plans'per-capita claims cost determined by insurance medical trends. The most surprising carriers,MCOs,PBMs and TPAs.Many factors influence trend: finding is that trends for prescription drug coverage are projected to deceler- >Price inflation, >The availability and use of more expensive ate most—to levels similar to trends >The leveraging effect of fixed deductibles treatment and drug therapies,including for medical coverage for the second and copsyments, biotech drugs, consecutive year. >Cost-shifting, >Government-mandated benefits and >Utilization increases due to aging, other legislative changes,and 9 ery Promo >Technological More Survey Highlights tion and improved diagnostic services, °glee(changes and their effect Other notable findings from this year's on the intensity of care. survey include: Although there is usually a high correlation between a trend rate and the actual cost increase assessed by a carrier,trend and the net annual change in plan costs are not the same.Changes >Prescription drug projected trends in the costs to plan sponsors can be significantly different from reflecting such diverse factors as an design cha Projected con ib claims cost trends have declined dramatically, by near( a rages,employee contribution rate increases, y group demographics,carrier retention,margins,stop-loss coverage and artificial rate relief nine percentage points,since their from the effects of competitive bidding. high of 19.3 percent in 2003. The Segal Health Plan Cost Trend Survey focuses on claims cost trend—before changes in >Similar 2008 trend rates are fore- plan designs or participant contributions are considered.The 2008 survey reports projections casted for all managed care plan obtained from a survey of major insurance carriers,MCOs,PBMs and TPAs conducted by Segal in the summer of 2007.Segal received more than 70 responses to the survey!Survey types, ranging from 10.S percent participants were asked to provide the trend factors they will be applying to historical claims to 10.9 percent. to predict expected claims for 2008. >Price inflation appears to be the ' The f011owin 9 participants agreed to disclose their names:Aetna Altius Health Plans,Amalgamated Life Insurance Company, biggest element of overall medical Arkansas Blue Cross and Blue Shield Assurant Employee Benefits,Benecare Dental Plans,Blue cross and Blue Shield of Kansas.Blue Cross and Blue Shield of Minnesota,Blue Cross 6 Blue Shield of Rhode Island,Blue Goss Blue Shield of Tennessee, plan trend, accounting for ap- Blue cross of Idaho,Blue cross of Northeastern Pennsylvania,Blue Shield of California,CareFirst BlueCross Blueshield, proximately 60 percent of overall Care-Plus California.� Plans, Dental Catalyst f Colorado,Delta Dental of Illinois,Deltaap n`ttaf Delta Massachusetts,Delta Dental of Now Delta projected preferred provider Jersey,Delta Dental of Virglr;m.Delta Dental of Wisconsin,Employers Dental Services,Inc.,Excetius aces,Express Scripts, Great-West Healthcare,Group Health Cooperative(Kaiser Foundation Health Plan,Inc.),Group Health incorporated(GHO, organization (PPO) trend in 2008. Guardian Life Insurance,Health Net of Arizona,Health Net of California,Health Net of the Northeast lne,Health New England, hiKaiser I I d ltOo,Medics Health Plans.Medics Mutua o Oh o Foundation Lde.MMS nc,Nppon Life Insurance of Am erica,Northeast Delta >Although brand drug utilization Dental,Preferred Health Systems,Prescription Solutions,Principal Life Insurance Company,RxAmerica LLC,Security Health is rapidly shifting to generic drugs Plan of Wisconsin''^°•The ODS Companies,Trustmark Group Insurance,UnitedHealdt Group and UnitedHealthcsre. 'Y' SEGAL Segal Health Plan Cost Trend Survey >Utilization rates of services 2007 levels. Fixed-scheduled plans Nearly one-quarter of survey continue to show more modest and dental maintenance organiza- respondents forecasted PPO trend rate increases. tions (DMOs) have the lowest rates of under 10 percent for 2008. >The survey found some regional forecasted rates:4.3 percent. This represents a significant increase variation in medical trend projec- >The projected trend rate for from four years earlier when only tions. Survey respondents forecast scheduled vision plans is expected 3 percent of respondents forecasted trends ranging from a low of 9.4 to decline by more than one PPO trend rates of under 10 percent percent in the Midwest to a high percentage point from 2007 levels, for 2004. of 11.7 percent in the West.' to 3.6 percent. More dramatically, nearly one-third >Dental trends for 2008 are pro- Table 1 summarizes key findings, of survey respondents reported pre- jected to decline modestly from scription drug trends for 2008 of less Trend Ranges than 10 percent, up from 3 percent ------- -- Table 2 shows trend ranges for of respondents in the 2004 survey. e Projected trends in the South and'Northeast are Conversely, 86 percent of respondents 9.7 percent and 10.9 percent,respectively.'These medical PPO coverage and retail regional trends represent all medical plan types. prescription drug carve-out coverage. Projected prescription drug trend rates of 15 percent or greater for 2004. Table 1:Projected This compares to only 7 percent of respondents forecasting 15 percent or greater trend rates for 2008. Fet3 far Barytes(FFS)/lndemmty Plans 13.7% y 12;gi16 . 12 ' Trends for Active Htgh Detluctlble Health Plans(HDHPs)** 12.0% 12.0% 10.9% 10.9% Participants& Retirees Open Access Preferred Provider Organiza- 11.6% 11.7% 10.6% 10.6% Notable findings about trends for tions(PPOs)/Point of Service(POS)Plans*"* PPOs/POS Plans(with PCP gatekeepers) 11.0% 11.1% 10.5% 10.5% active participants and retirees include the following: Health Maintenance Organizations(HMOs) 11.1% 11.3% 10.7% 10.7% >Projected trends for point-of- Medicare Advantage(MA)*'FFS Plans g 796 g god ' �9.79b 9 8% service(POS) plans and health MA HMOs maintenance organizations(HMOs) 8.6% 9.8% 8.8% 9.2% peaked in 2003 for actives and (Actives MAge 6si retirees under age 65 and have Retail Network declined steadily since then. Mail Order 11.9% 10.7% 11.5% 1060 >Trend rates for active and early retirees are slightly higher than RiC r� 0{~:(Retiraea Age for Medicare-eligible retirees for Retail Network 12.0% 10.1% .-r most medical and prescription Mail Order 11.1% 10.7% drug plan types. p. >Medicare Advantage HMO plans Scheduled Plans 5.0% 4.3% { have the lowest projected medical FFSllndemnity Plans 7.5% 6.8% trend for 2008: 8.8 percent. Dental Provider Organizations(DPOs) 6.2% 5.8% Dental Maintenance Organizations(DMOs) 5.2% 4.3% >High-deductible health plans �$ .z. w (HDHPs) are forecasted to be at similar levels to other managed Scheduled Plans 5.1% 8.6% care plan types. Reasonable&Customary(R&C) Plans 5.5% 4.6% >The forecasted trend rate of 10.7 Trend projections were derived by proportionally blending medical plan trends and freestanding prescription drug trends. percent for retail prescription drug HDHPs are defined as those where the deductible is at least the minimum health savings account(HSA)level coverage for actives and retirees required by the Internal Revenue Service($1,100 single,$2,200 family in 2008). Open-access PPOs and POS plans are those that do not require a primary care physician(PCP)gatekeeper referral under age 65 is comparable to the for specialty services. 2008 projected trends for man- "" MA plans,part of the Medicare program,can be FFS plans,HMOs,PPOs or special needs plans. aged medical plans, which range from 10.5 percent to 10.9 percent. 2 -7yrSEGAL Segal Health Plan Cost Trend Survey .. • Projected Trend Ranges for PPOs& Retail Network Graph 1:Selected Projected Medical, Rx Carve-Out Rx Carve-Out Coverage:2004 — 2008 & D ray i0• 2096 . , PPO��w711out.RaJ �, <10% 3% 14% 16% 19% 24% 15 1014.9% 69% 69% 78% 78% 76% 1519.9% 28% 17% 3% 3% 0% — 2t20% 0% 0% 3% 0% 0% Average 13.5% 12.6% 12.4% 11.6% 10.6% 10 1 °3 4b 5 0-14.94 11% 37% 55% 53% 82% 2004 2005 2006 2007 2008 1519.9% 58% 37% 36% 16% 7% >20% 28% 17% 2% 0% 0% Key: .,__.. =t k--K Ar—A 0­6 �---� 10 7 11.9 Average 18.196 15.296 13.896 96 96 PPOs POS Plans HMOs MA HMOs Rx Retail DPOs (without Rx) (without Rx) (without W (without Rx) All trends are illustrated for actives and retirees under age 65,except for the trend for MA HMOs,An expanded version of this graph,showing survey data for 10 years,is available Some totals do not equal 100%due to rounding, on the following page of segars Web site:httpJlwww.sggalgpoom/publot*nyt gun'BySa!!.d.9h+d!g.F_/20�trgn5}su!Y@y94RR�l8ntpSlt >Prescription drug trend for Medi- Trend Components Table 3: of 2008 care-eligible retirees dropped nearly The survey captured data about compo- Projected omponents Trends two percentage points from prior nents of trend.As noted in the survey year projections for retail networks. highlights,price inflation for services iw�n o>pitAls -hltt X' Graph 1 shows the decline in pro- and supplies appear to be the biggest price Inflation 7.796 4.0% 13.596 jected trends over the last five surveys. element of overall medical plan trend. Utilization 3.2% 5.5% 4.3% Although this news is positive, it Price inflation is driving medical trend at is important to keep in mind that a rate of 6 percent for PPOs and HMOs. Total Trend" 11.3% 9.9% 10.7% most projected trends rates remain The survey also examined medical Hospital and physican trends are for open-access in the double digits and continue trends b service t PPO plans. Y type. For example, The components do not add up to total because there to outpace overall inflation and price inflation per hospital admission are other components of trend not illustrated,reflecting wage increases by wide margins. is expected to increase 6 7.7 percent changes festanddr g mix.Also. altng,technology ciPant pr All medical plan types are forecasted in 2008 for open-access PPO plans,as a mix.Also,notallpartcpantsprovded a breakdown of trend by component. to see cost trends in 2008 that are shown in Table 3. Prescription drug more than twice the consumer price price inflation is projected to be 6.5 index for all urban consumers percent. In contrast, price inflation importance in helping to eliminate (CPI-U), which was 2.4 percent as for physician services is forecasted to excessive utilization that comes of July 2007,and the annual increase be at 4 percent. from gaps in care and poor treat- in average weekly earnings, which Ch ment compliance. anges in utilization rates (another was 3.6 percent as of July 2007.` key component of trend) are increas- Graph 2 on page 4 summarizes This implies that price inflation ing moderately for hospital services trends broken down by brand and in the health care sector of the at 3.2 percent and more significantly generic drug types. Utilization economy is still much greater than for physician services at 5.5 percent, of more affordable generic drugs price inflation in the economy The higher physician utilization rates is increasing much faster than as a whole. underscore demand management's' brand drugs. This is the result of more generic alternatives in the these statistics,both of which were released on marketplace due to patent expira- Demand managementinvolves providing plan August 15,2007,were the most recent available participants with information to help them use tions, and changes in plan design, at the time this survey report went to press. medical care more appropriately. including coinsurance provisions, 3 _;�r SEGAL Segal Health Plan Cost Trend Survey and mandatory or incentive mail attributed to several factors,including experience.This comparison is order plan design. PBMs having access to more detailed shown in Table 5 on page 5. The increase in use of biotechnology data, MCOsrfPAs using more margin, in design options offered Graphs 3 and 4 on page 5 illustrate differences or specialty drugs and direct-to- the significant variances between consumer advertising has contributed and group size differentials. to an increase in brand utilization Surve trend forecasts versus actual trends y participants were asked how experienced in 2002 through 2006 from 0.3 percent forecasted last year they expect administrative expenses for PPOs and prescription drug plans, to 2.6 percent forecasted for 2008. on a per-member,per-month-basis to respectively. It should be noted that The 2008 projected trend for specialty increase relative to the overall CPI.A the accuracy of underwriter projec- drugs, a segment of brand drugs, is majority of the respondents (55 per- tions is subject to a natural lag in 20.5 percent, almost 10 percentage cent) expect administrative expenses the underwriting cycle. In periods points above aggregate retail trend. to be at or below the CPI,and 25 where costs are decelerating, fore- This is significant because specialty percent indicated it would be above casters will tend to overestimate pharmaceuticals account for 17.9 the CPI. The remaining respondents trends. Similarly,when costs are percent of total drug trend.The high indicated they did not know. accelerating, trend projections will cost and trend-driving impact of these Accuracy of Projections generally be underestimated. Note drugs will continue to he felt in com- that 2008 projections are more in ing years as research and new drug To assess the accuracy of projections, approvals continue. Segal compared the average 2006 trend forecasts by national and Projected Trends for 2008: APBlVls vs. s a group, MCOs and TPAs pro- regional insurers, MCOs, PBMs and Carve-Out O ., jetted prescription drug trend rates TPAs for group medical,prescription to be significantly higher than PBMs' drug benefit and dental plans to the projections. As shown in'Fable 4, actual average trend rates experi- Acuves`& : the difference for actives and early enced by the health plans covered Retirees<Age 65 retirees was more than five percent- by those underwriters for the same Retail Network 6.2% 11.6% age points for retail drugs and more 12-month period. Comparing past Mail Order 6.8% 11.5% than four percentage points for mail projections to actual increases order drugs. Interestingly, man 'r ' g Y reveals that insurers tend to make re6ts` gAS ' MCOs and TPAs utilize carve-out conservative projections for medical Retail-Network` 7.4% 11.2% PBMs to administer prescription drug cost increases.Those forecasts are Mail Order 8.2% 11.8% coverage. This difference can be generally higher than the actual Components Graph 2: 002008 Projected Rx Carve-Out Trend for Brand& Generic Drugs Brand Drugs Generic Drugs Percentage 2007 20d8 of Overall 4% Percentage 2007 2008 Trend of Overall 24% Trend 6% Key: 2046 346 ■ Price Inflation ■ Utilization Drug Mix-Trend Component* 2007 2008 Trend Component 2007 2008 Price Inflation 76% 6.9% Utilization 0.3% Price Inflation 4.4% 5.0% 2.696 Utilization 7.4% Drug Mix** 2.5% 0.4% 5.8% Total Trend 10.4% Drug Mix** 2.94'0 0.7% 10.1% Total Trend 14.7% 12.0% The 2008 survey also measured"Other'as a component of prescription drug trend."Other"includes hems such as leveraging from cost-shifting and government-mandated benefits and other legislative granges.Other trend rates are forecasted to be 0.0 percent for brand drugs and 0.3 percent for generic drugs in 2008. Drug mix reflects therapeutic mix,brand/generic mix and new drugs. 4 _�rSEGAL Segal Health Plan Cost Trend Survey Graph .. • . ected to Actual Trends Graph 4:Comparison of Projected to Actual Trends for PPOs for Actives& Retirees under for Retail Rx Carve-Out Coverage for Actives& Aye 65:2002-2006 Retirees under Age 65:2002-2006 20% 20% • 15 15 r 10 - �"'----E- `� 10 5 2002 2003 2004 2005 2006 5 2002 2003 2004 2005 2006 Key: 0_0 Pm$cted PPO ♦♦ Actual PPO Projected H (without la) (without Rx) Key. 41--o� Rz Retail Actual Rx Retail • ' 5:Comparison of 2006 Projected I line with the latest reported actual r Trends . 006 A .. .° 006 experience in 2006. Carve-Out Brand&Generic z. The following are the most notable Drugs U1cf[vesrerspe8ti) (wrtte3lj findings about the accuracy of FFS/Indemnity{Mans 14. 9b 11.3% trend projections: 1 ToO% tom HDHPs 12.6% 10.5% Open-Access >Actual trends in 2006 for open- 700/0 PPOs/POS Plans 12.4% 9.6% access PPO plans and prescription 5.3% PPOs/POS Plans drug coverage were similar, 5 (with PCP gatekeeper) 11.8% 10.0% increasing at a rate of 9.6 percent 3. 3.3% HMOs 11 6% 10.2% and 9.5 percent, respectively. (Retirees Age 65+) Wthout`Pocy >Beginning in 2003,actual trends for 0 ■ MA FFS Plans 9.5% 9.2% prescription drug coverage have come t•796 MA HMOs 8.8% 7.2% in significantly lower than forecasted -3.0% -3.0% Vrfor each year with the average gap -5 (AcHVes&Network s G/1ge 6S) of nearly five percentage points. Brand Drugs Generic Drugs Retail Network 13.896 9.596 Mail Order 14.5% 10.7% >The increased availability of generic- Key: M M equivalent drugs in the marketplace Price Utilization Drug Other* Total (R Retail Network and ability by benefit plans and Inflation Mix Retail Network trend 14.2% 9.2% PBMs, to rapidly maximize generic 'other'includes items such as leveraging from cost- Mail Order 14.3% 13.1% shifting and drug utilization is supported b 9 9ovemmenl mandated benefits and other pP y legislative changes. Scetlufd Plates *' the actual generic utilization trend 3.9%' rate of 7.0 percent, noted in rap Indemnity Plans 7.0% 5 1% Graph h DPOs 63% 51% S. More effective prescription drug -1.7 percent observed in 2006. DMOs 5.2% 4.1% plan design and a lack of new Generic drugs will increasingly play blockbuster drugs has also played a bigger role in overall drug plan Scheduled Plans 30%'' a part in keeping increases in expenditure in the next few years. R&C Plans 3.6% brand utilization and brand drug >The 10 percent price inflation Projected 2006 trends for dental scheduled plans and spending at manageable levels, rate on brand drugs clearly illus- vision plans are not available because this data was as evidenced by the actual brand net collected in the 2006 survey. trates the impact of high-cost drug utilization rate change of specialty medications. 5 7r SEGAL Segal Health Plan Cost Trend Survey Commentary & Conclusion through health promotion and emphasis on individual health man- It is undeniably good news that health wellness, targeted intervention, agement. Ever-increasing medical cost trends are expected to be lower care coordination and patient costs will not be reduced effectively in 2008 and that a growing number management.Through the use with plan design cuts and cost shifting of group health plans project single- of health risk appraisals and to plan participants.The long-term digit trends for 2008. Nevertheless, predictive modeling, high risk or solutions to rising medical trend will it is important to keep in mind that at-risk claimants can be identified come through reducing health risk health plan cost trends are still and provided with outreach and factors experienced within a particu- significantly above general inflation support for appropriate evidence- lar plan's population. (2.4 percent as of July 2007). based treatments for acute and chronic conditions. It is also To promote individual health man- Because price inflation for treatments agement plan sponsors should brand and services are the largest com o- important to introduce health g comp o- and wellness incentives, their THM effort and demonstrate nent in overall plan cost increases, ongoing commitment through regular network managers' ability to keep and increase transparency by pro- viding participants with access to communication with the workforce future increases in reimbursement and their families. Supporting THM rates under control should be quality and cost information to evaluated closely. empower them to be more engaged may require the development of new in their health care decisions. in-house capabilities. Plan sponsors The Power of Total that take an active role in developing Health Management >Plan Management Plan design is an a THM strategy will maintain finan- essential aspect of THIM. Because cially sustainable health care programs To address health care cost increases, passive incentive approaches have for the long term that improve the increasingly, plan sponsors are yielded little cost savings, some value and quality of benefits for adopting a total health management plan sponsors are now taking plan participants. (THM) approach. THM focuses on more aggressive measures,which the development of a multi-year require participants who show strategy to influence participant unhealthy behaviors to pay a For assistance with health care cost behaviors, health care provider greater share of their health care management strategies, contact your efficiency, plan sponsor capabilities cost. At the same time,significant Segal consultant or the nearest and service provider performance. incentives are put into place and Segal office. The most successful sponsors are barriers are removed to encourage using detailed claims data to deter- more efficient use of health care mine what diseases,conditions, services and the benefit plan. OMPANY facilities and treatments are driving >Vendor Management To support Allania 678.306.3100 cost increases. Integrated data mining THM, plan sponsors should provides the roadmap to plan sponsors in developing targeted intervention aggressively seek out vendors and Cafqary 4 03,692 2264 strategies to identify innovative contract terms that Chleago g y gaps , needed keep costs in check and provide treatment for participants, poor quality health care delivery to par- competitive pricing and superior '�� Hartford 860.67&3000 ticipants and ways plan sponsors can service. They should also use high- improve the health and health care Performance,high-quality managed Houston 7 13.664,4654 11 consumption of their plan partici care networks and prescription pants and reduce health trends to drug programs to optimize cost, ; New Orleans 504,483.0744 manageable levels. quality and the value of benefits. I New York 212,251.5000 Getting network managers to cap Plan sponsors implementing THM increase on annual reimbursement Phoe should continue using a compre- rates to network providers could hensive three-pronged approach be a differentiating factor when •0 Pr,mX,.ton 609 to health care cost management: selecting PPO and PBM vendors. >Individual Health Management Although plan management and ven- This critically important element dor management remain important of a THM strategy focuses on for plan sponsors adopting a THM improving the health of individuals strategy, they should place greater Copyright®2007 by The Segal Group,Inc.,the parent of The Segal Company.All rights reserved. X*100 L-- 0 ftftft B A K E R S F I E L D Staff: City Council members: John W. Stinson, Assistant City Manager Harold Hanson, Chair Steven Teglia, Administrative Analyst David Couch Ken Weir SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield Wednesday, July 23, 2008 3:00 p.m. City Manager's Conference Room City Hall South 1501 Truxtun Avenue, Second Floor Bakersfield, California 93301 AGENDA 1. ROLL CALL 2. ADOPT DECEMBER 19, 2007 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Introduction of Segal Company, Health Care Consultants and Discussion of Insurance Renewal Information — Stinson, Lozano 5. COMMITTEE COMMENTS & ADJOURNMENT File Fax List Tools Help 3 f-A 10 �O m �I � � ------ — ------- ---- ----- --- ®Rlewyw = a ® ® a ® +'Date time To/Forryfile Fez Number/ Pa s Status Account Mader Ur. 4130 I*- --..-...._)11.7f2008 6:56..News Editor_Bakersfield Caldprnie0 ----395_7519 1,pgs -__- OK 7/1701088:56...News Director-KERO TV23 323-5538 1pgs OOK -_-_.-. ---.- _,_.----..-__.,.. .-._-.-..-.-..._-.-_,. _7 All * 7/17/20088:56...News Director-KGETN77 283-1843 legs 0OK AL ° M81f1 * 7/1 7/20088:56...The Minority Construction News Bulletin 323-9287 1 logs 0 OK AL -J MISL 7/17/20088:56 News,Director-KUZZ/KCWFVKVVl TV45 328-7537 1pgs oOK AL *' 7/1712008 8:56...Holly Vogel-County of Kern 868-3190 logs 0OK AL ©Trasf t 7/17/21208 8,56..News Director-Chamber of Commerce 327-8751 1 pgs 0 OK 4L * 7/1)20088.56...News Director-KLLY95 FM7KNZR 393-1915 1pgs oOK AL 7/17/2008 8:56...Charles G.Weida 325-7874 1 pgs 0 OK AL 7/1720088:56...Editor-Bakersfield News Observer 324-9472 1 pgs 0 OK AL 7117/2008 8:56...HBA 633-1317 1 pgs 0 OK AL * 7/1720088',56...Government Affairs Dir-Bakersfield Assn... 635-2317 1pgs 0 O AL 7117/2008 8:56...pear Channel Radio 283-2963 1 pgs 0 OK AL * 7/1720088'.56...News Director-Channel 39 334-2685 logs oOK AL 7/1712008 8:56.. 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