Little Rock should wait a year or so before switching to self-funded insurance for its employees and, instead, should renew with its current provider at a 2.5 percent cost increase, the city's adviser has recommended.
Tom Kane, senior vice president of Stephens Insurance LLC, originally suggested in May that the city look into self-funded insurance plans with a set of local providers. After reviewing responses to the city's request for proposals, Kane determined that the local "clinically integrated networks" need some time to work out their kinks and grow before Little Rock joins them.
The city is insured with United Healthcare. Payouts were greater than premiums paid in over the past year, causing the company to initially quote the city a 15 percent cost increase.
After Kane got other insurance providers to calculate their proposed costs based on the most recent six months of employee claims rather than the past year, United Healthcare was persuaded to do the same, resulting in a new bid with only a 2.5 percent cost increase.
The Little Rock Board of Directors will be asked at its 6 p.m. meeting today at City Hall to approve renewing with United Healthcare for city employees.
The city budgeted $13.1 million for its share of premium payments this year, but it may not spend the total amount. With the increase, it will budget about $330,000 more for 2018.
Employees' annual deductibles will stay the same in 2018. The base plan will offer $3,000 in-network deductibles for individuals or $6,000 for families. There are two buy-up options that feature cheaper co-pays and deductibles that also will not change.
The co-pay for a primary care office visit on the base plan will increase from $35 in-network to $40. A specialty visit co-pay will go up by $5 to $70. For the first time, the plan will offer virtual visits. They will have a $40 co-pay.
Employees pay nothing toward the base plan for themselves. The city covers the cost 100 percent. That cost will increase by about $10 to $460.56 per month per employee. If an employee purchases the family plan, he will pay about $10 more per month under the base plan, with the employee's portion increasing to $461.26 in 2018.
The city has about 1,900 employees.
The city is starting a new policy requiring employees to get a yearly physical or risk paying $25 per paycheck toward their health insurance. The requirement is meant to encourage employees to learn what their health situation is early, which should lead to healthier employees, reduced medical costs and cheaper insurance.
Routine physicals are covered 100 percent by all insurance companies as a requirement of the federal Patient Protection and Affordable Care Act. If Little Rock employees don't get a physical between July of this year and June 30 of next year, they will start paying the biweekly charge in July 2018.
"There are a significant number of employees who have not had a physical and do not know what their health risk factors are and do not even have a primary care physician," Kane told the city Board of Directors last week.
"It's about just knowing what your risk factors are and then as you start to develop this strategy around health care management, what can you do to encourage people to be compliant?" Kane said. "If you look at the data with a noncompliant diabetic versus a compliant diabetic, it's dramatic. Starting with the physical is the first step."
He said he thinks the city will be in a better position to move to a self-insured plan in 2019.
The self-insured options the city was looking at were to have direct contracts with either Baptist Health Medical Center or CHI St. Vincent. Whichever was chosen would be the in-network option, and the plan would give everyone access to Arkansas Children's Hospital and the UAMS Medical Center.
There would have been a "national wrap" add-on in case an employee or retiree were out of Arkansas and needed access to a national network.
Both Baptist and CHI St. Vincent only insure their own employees now and are taking on outside groups for the first time in 2018, Kane said. By not joining the first year, the city of Little Rock can see how the networks manage.
At-large board member Dean Kumpuris, who is a gastroenterologist at CHI St. Vincent, is strongly in favor of moving to a self-funded plan.
"I really think in the future, having the doctors have to be responsible and having skin in the game is the way we all are going to have to be taken care of. ... I'm looking long-term to try to find something manageable for us," he said.
Mayor Mark Stodola expressed concern over the increase in co-pays by staying with United Healthcare. He said an extra $5 might not sound like much, but he could remember when co-pays were only $20 as opposed to the proposed $40 and annual deductibles were $1,000, not $3,000.
"That's a substantial amount for many of our employees," the mayor said.
Metro on 10/02/2017