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HomeMy WebLinkAbout616 - MINUTES - City Commission MINUTES OF WORKSHOP MEETING DANIA BEACH CITY COMMISSION HEALTH INSURANCE TUESDAY, SEPTEMBER 14, 2004 - 4:00 P.M. 1. Call to Order Mayor McElyea called the meeting to order at 4:05 p.m. 2. Roll Call Present: Mayor: C.K. McElyea Commissioners: Bob Anton Robert Chunn arrived at 4:14 p.m. Patricia Flury City Manager: Ivan Pato City Attorney: Tom Ansbro City Clerk: Louise Stilson Absent: Vice-Mayor: Bob Mikes 3. Discussion of Health Insurance Program (Lloyd Rhodes, Rhodes Insurance Group) Mary McDonald, Director of Human Resources and Risk Management, introduced Lloyd Rhodes, of the Rhodes Insurance Group. She remarked that health insurance is a nationwide problem and we have been struggling with designing a health plan that both the City and the employees can afford. We hired an expert, Lloyd Rhodes of the Rhodes Insurance Group, to analyze our program and make recommendations to us. Mr. Rhodes advised his company specializes in employee health benefits and he has been in this business since 1976. Most of his company's clients are public sector employers. Today's presentation is an overview of the City of Dania Beach health plan. The City's plan is self-funded, and has a reinsurance plan with Trust Mark. This policy includes a specific reinsurance policy which pays any claim that exceeds $60,000 during the contract period. In addition, we have added protection of an aggregate plan which will pay anything that exceeds 125% of claims that are expected; and Third Party Administration with Maxon, whose responsibility it is to adjudicate claims, to perform utilization review and pre-certification. The City also has a PPO Network which is comprised of Florida Health Choice and National Healthcare. • Dental claim experience indicates it is not a problem. He advised they are not proposing any benefit changes for the Dental Plan. In addition, Disability Claims also are not a problem for the City. Commissioner Chunn arrived at 4:14 p.m. Mr. Rhodes remarked that Health Care and Prescription costs are the bulk of the City's costs. He provided information obtained from when his firm was contracted by the City of Fort Lauderdale in April of 2004. He remarked that AvMed commands significantly lower discounts than the others. The point he is trying to make is that there are better deals out there. He advised the City of Fort Lauderdale ran up a deficit of$13M in their self-funded plan because it had extremely rich benefits, and no employee contributions. He provided comparisons between the health plans with the City of Fort Lauderdale, City of Lauderhill, and City of Aventura. Mr. Rhodes remarked there are a lot of companies to choose from in South Florida because the competition is working well here. He indicated if an RFP were sent out for Dania Beach requesting the same plan that we currently have, not all of the companies would respond because the City has many uncommon plan benefits, and 22% of the members are retirees. He remarked the annual medical trends have increased by double digits. Prescription drugs continue to be a concern, they continue to outpace the regular health inflation due largely to the • new drugs in the marketplace. This is one reason most companies are going to a 3 tier benefit program. Mr. Rhodes stated they do not suggest going out for an RFP to duplicate the existing benefits because they know it will not produce the most effective results. They know we will have a limited response primarily from self-funded Third Party Administrators. The administrative fixed cost is not the issue for the City, it is the network discount and programs such as disease management. They feel that modifying the existing benefits will produce a better scenario for the City and the employees. The recommendation is to formulate a plan designed to achieve maximum market response; and prepare an RFP for a release date of June 2005, with the plan becoming effective October 1, 2005. He suggested three RFPs: 1) Health and Vision, both fully-insured and self-funded; 2) Dental, Third Party Administrator; and 3)Disability, Third Party Administrator. City Manager Pato remarked we have no option but to make changes because the plan has not been looked at since 1989. We need to make recommendations to change the plan and find ways to minimize the impact on everyone. He commented that we need cooperation from the entire group to recognize that we cannot continue with the current plan. The direction we are looking for from the Commission is to know they are comfortable with the timeframe for the RFP, the changes proposed, and to allow us the time to bring back specific proposals. He hopes this is an eye opener for everyone and would like to hear that he has support. Minutes of Workshop Meeting 2 Dania Beach City Commission Health Insurance Tuesday, September 14,2004—4:00 p.m. Commissioner Flury responded there are no real suggestions today; only highlights of items that are uncommon in this plan. She thinks this plan will go bankrupt, it is just a matter of time. She feels we have limited information and we need information from the medical side. She suggested the employees could help design the new plan. City Manager Pato agrees. He commented that we have received valuable input from the Employee Committee. He asked Mr. Rhodes what method is typically used to make this type of transition. Mr. Rhodes responded the most important item is communication. We need to get the information from Maxon and put it in a logical understandable format to share with the employees that will have the input to help formulate a plan that makes sense and doesn't kill the employees financially, and is still competitive with the marketplace. Commissioner Anton asked Mr. Rhodes if having limited employees increased the ability to keep the rates down. He wondered if larger groups received better rates. Mr. Rhodes responded it depends on the morbidity of the group. Commissioner Anton asked if it would be beneficial to merge plans with other Cities. Mr. Rhodes responded this has been looked at by a lot of people, but his experience is that it has • not been good. The City has been very lucky in the last three years regarding claims. The bottom line is it might help to be a large group, but if the group is healthier and younger, it could work as a benefit also. Commissioner Anton remarked we have time before going out to bid, but we have to begin the process. He hopes the employees recognize this plan is extremely generous and realize the City cannot afford to continue to pay for this. City Manager Pato agreed. Mary McDonald encouraged the Union representatives to ask questions. Will Dubisky, President of the General Employees Union, commented he does not see how the cost can be distributed evenly between employees who make a lot of money and those that do not. He remarked when people came to work for the City of Dania Beach, one of the attractions was the generous benefits. He understands budgetary problems, but the City is doing very well right now. He is asking that the City look closely at what they are doing to the employees. Elisabeth Judd, Union Business Agent, remarked the Union is always willing to look at data and have their economists and specialists in the Washington office make suggestions. They will look at suggestions and make comparisons with national trends. Once they have enough data they will analyze it and make a report and suggestions. If adjustments can be made based on habits of the employees utilizing the plan, that is the place to start. She stated the Union is willing to work with us on this matter. Minutes of Workshop Meeting 3 Dania Beach City Commission Health Insurance Tuesday, September 14,2004—4:00 p.m. Commissioner Flury commented that Will Dubisky made a good point, but if someone needs care, it does not matter how much money they make, the cost is the same. The way that most companies have been able to get around this is by sharing the cost with the employees. Options should be looked at for employees who want to pay for a PPO or an HMO. If the employee wants the expensive plan, or a lesser plan, they should have the option to choose. Mary McDonald had one final comment. She is hoping everyone realizes our significant limitation on our ability to get other vendors to work with us because our plan design is so unique. We need cooperation from the Unions in order to make the plan more standardized. If we want to keep employee contributions low, we need to be able to have the ability to market the plan. 4, Adjournment Mayor McElyea adjourned the workshop at 5:11 p.m. CITY OF DANIA BEACH ATTEST% C.K. MCEL MAYOR-COMMISSIONER • LOUISE STILSON CITY CLERK APPROVED: October 12, 2004 Minutes of Workshop Meeting 4 Dania Beach City Commission Health Insurance Tuesday, September 14,2004—4:00 p.m.