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2003 Open Enrollment Benefits Overview Presented by Mark G. Cauthen

This presentation delivered by Mark G. Cauthen discusses critical topics surrounding the 2003 Open Enrollment Benefits. The main areas include the implications of being self-insured, the Trust Fund overview, factors affecting healthcare costs, and significant changes to the benefits plan for the year. Key elements highlighted are the revenue management of the Trust Fund, projected expenditures, and detailed adjustments to medical, pharmacy, dental, and vision plans. Attendees will gain insights into premium rate increases and co-insurance changes for the upcoming year.

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2003 Open Enrollment Benefits Overview Presented by Mark G. Cauthen

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  1. 2003 Open Enrollment Benefits Presentation Presented By: Mark G. Cauthen Effective: 1/1/2003

  2. Topics of Discussion • Self Insured Plan • Overview of the Trust Fund • Factors Driving Increase in Cost of Health Care • 2003 Plan Changes • Private Health Care Systems (PHCS) • 2003 Rate Adjustments

  3. What does it mean to be Self-Insured? • The employer assumes the role of the insurance company and assumes all of the risk.

  4. Overview of the Trust Fund • Joint fund between City and Colorado Springs Utilities (CSU) • Where all of the premiums go • Where claims are paid from (similar to a checking account) • We need to bring in more revenue than what is spent on claims • Projected 2002 expenditures (City/CSU) • Medical: $16 million • Pharmacy: $3.8 million • Dental: $2.8 million

  5. How is the Trust Fund Kept Viable? • Premium Rate Increases • Cost Sharing with Employees • Vendor Management • Audited Walgreen's • As a result, we are renegotiating for better rates • Performed a Medicare Audit • Collected funds from Memorial Hospital as a result of the Medicare Audit

  6. Factors Driving Rising Costs in Healthcare Premiums (2001-2002) • Nationally • Litigation and Risk Management -- 7% • Fraud and Abuse -- 5% • General Inflation (CPI) -- 18% • Increased Consumer Demand -- 15% • Rising Provider Expenses -- 18% • Legislation/Regulations -- 15% • Rx, Medical Technology -- 22% Source: PricewaterhouseCoopers analysis, April 2002

  7. Factors Driving Increase in Cost for City • Increasing Medical costs • Increase in our Claims Experience • Low Reserve Level because of Several Catastrophic Claims • Projected increase in cost of claims for 2003

  8. 2003 Rate Increases • State Employees -- 39% • National -- 25% • City -- 14.3%

  9. 2003 Plan Changes • Plans Affected: • Medical • Pharmacy • Dental • Vision

  10. Medical Plans • We will have 3 Medical Plans Next Year • EPO • EPO Mid-Level • CORE • The Swing Plan will be Eliminated • There will be a new out-of-network option available under the EPO Mid-Level Plan

  11. Terms • Out-of-Pocket Maximums • The maximum amount that you will spend annually for covered expenses, does not include co-pays. • After the out-of-pocket maximum is reached, the plan pays 100% for covered services • Annual Deductible • The amount that must be paid by the member before the plan pays anything • Co-Insurance • The portion of Eligible Medical Expenses for which the Covered individual has financial responsibility

  12. Hospital Pre-Admission Diagnostic Testing • Subject to the Inpatient Hospital diagnostic coinsurance • EPO--Plan pays 90%, Employee pays10% up to the out-of-pocket maximum • EPO Mid-Level (In-Network)--Plan pays 80%, Employee pays 20% up to the out-of-pocket maximum • EPO Mid-Level [Out-of-Network] and CORE • Subject to deductible and co-insurance

  13. EPO: Plan Change • Out-of-Pocket Maximums • 2003 • $750 per Individual per year • $2,250 per Family per year • 2002 • Individual -- $500 • Family-- $1,500

  14. EPO: Plan Change • In-patient Hospital Stays • 2003 • 10% Co-insurance (applies to the out-of-pocket maximum) • 2002 • $100 co-pay per day of confinement, $500 maximum

  15. EPO: Plan Change • Pharmacy Benefit • Increase to Maximum Co-Pay on Brand Named Prescriptions only • Retail: From $35.00 to $50.00 per RX (30 day supply) • Mail: From $40 to $60 for a 90 day supply • Generic Pricing Stays the Same

  16. EPO Mid-Level: Plan Change • Plan Enhancement • Two Features: In and Out-of-Network Options (Replaces Swing Option) • In-Network option continues to function as it does today in that you have to use MHMN. • Out-of-Network: Separate Benefit Schedule, deductible, and coinsurance

  17. EPO Mid-Level: Plan Change • Annual Deductible • Out-of-Network: • $1,000 per individual • $2,000 maximum for a family • Plan pays 70% for most services after the annual deductible is met • Plan pays 100% for eligible medical expenses once the out-of-pocket maximum is reached • In-Network: • No Annual Deductible

  18. EPO Mid-Level: Plan Change • Out-of-Pocket Maximums • In Network • Individual--$1,000 • Family--$3,000 • 2002 • Individual--$750 • Family--$2,250

  19. EPO Mid-Level: Plan Change • Out-of-Pocket Maximums • Out-of-Network • Individual--$3,250 • Family--$9,750 • These amounts are above the deductible • Plan pays 100% for covered services after out-of-pocket maximum is reached

  20. EPO Mid-Level: Plan Change • Inpatient Hospital Stays • 2003 • In-Network • 20% Co-insurance (applies to the out-of-pocket maximum) • Out-Of-Network • 30% Co-insurance (applies to out-of-network out-of-pocket maximum • 2002 • $300 co-pay per day of confinement, $750 maximum

  21. EPO Mid-Level: Plan Change • Pharmacy Benefit • Increase to Maximum Co-Pay on Brand Named Prescriptions only • Retail: From $35.00 to $60.00 per RX [30 day supply] • Mail: From $40 to $75 for a 90 day supply

  22. Swing Medical Plan • Will be discontinued in 2003 • Enhancement of EPO Mid-Level Plan • Features an out-of-network benefit option

  23. Core Medical: Plan Change • Out-of-Pocket Maximums • 2003 • Increased to $7,750 per individual • 2002 • $7500 per individual

  24. Core Medical: • Annual Deductible • $1,500 per individual per year, no family limitation • No change from 2002

  25. Private Healthcare Systems (PHCS) • New Option for 2003 • PHCS • New Wrap Around Network • Nearly 370,000 providers and 3,500 facilities • We have Pre-Negotiated Network Discounts • Eligibility • Members who are enrolled in a City Medical Plan (EPO, EPO Mid-Level, or CORE) can take advantage of the PHCS in Certain Circumstances

  26. Private Healthcare Systems (PHCS) • National Network • Enables members to choose providers from within a national network • In-Network Benefit • All plan participants receive the in-network benefit for emergency situations • Discounts • All emergency situations, all plans • EPO Mid-Level plan participants who use the out-of-network benefit and use PHCS services

  27. EPO Participants - PHCS • Can only be used for out-of-area emergency situations • As defined in the Medical Summary Plan Description (SPD) • Non Emergency out-of-area services will not be paid by the plan

  28. EPO Mid-Level Participants - PHCS • PHCS enables EPO Mid-Level out-of-network participants to take advantage of discounts • Emergency and Non-Emergency situations

  29. Core Participants - PHCS • PHCS enables CORE indemnity plan to take advantage of discounts

  30. New Generic Medical Cards • To be distributed by January 1, 2003 • Will include PHCS information

  31. Alternative Medicine • Pilot Program for 2003 • Applies to all Medical Plans • No additional premium • Must be enrolled in a medical plan • New Option for 2003

  32. Alternative Medicine • Services must be provided by a licensed provider • Covers: • Acupuncture • Nutritionist • Chiropractic • Massage therapy • Homeopathic Services

  33. Alternative Medicine • All plans pay 50% of each claim • Maximum amount paid by plan is $300 per family • 50% co-insurance does not apply to the plans out-of-pocket maximum or deductible

  34. Dental Plans • Delta Hi-Option DPO Dental Plan • Formerly Delta Premier Dental Plan (Springs Dental) • Enhanced by including the DPO provider Network • When DPO provider is used, employee and plan receive discounts • DPO Providers will be shown in Red Lettering in the provider directory

  35. Dental Plans • Delta Standard-Option DPO Dental Plan • Formerly Delta Preferred DPO Dental Plan • No change in deductible (In or Out-of-Network) • $50 per individual • $150 per family • DPO Providers will be shown in Red Lettering in the provider directory

  36. Dental Plans - Calendar Year Deductibles • Delta Hi-Option DPO Dental Plan • $50 Per Individual • $100 Family • Delta Standard-Option DPO Dental Plan • $50 Per Individual • $150 Per Family • Core Dental • $75 Per Individual

  37. Vision • Benefit Enhancement • Frames: In-Network Frame allowance increased to $130 retail ($50 Wholesale) • Service Enhancements • Contact Lenses: • Member Preferred Pricing • Direct delivery to your home • Other Incentives • Contact VSP at 1-800-877-7195 to learn more

  38. Rate Increases • Medical • Prescription (RX) • Dental

  39. Funding the Medical Plan • Due to an increase in medical plan costs and increased claims experience, there will be a 14.3% increase in overall funding for 2003

  40. Rate Re-Structuring • The rate structure was realigned to more accurately reflect the claims experience and industry standards. • Creates greater equity for the participants

  41. Rate Re-Structuring

  42. Dental • Rate increase of 13.1%

  43. Vision • Rate Increase is zero

  44. After Hours Clinic • Effective Sept 30, Memorial Hospital After-Hours Clinic Moved • Location: 2502 E. Pikes Peak Ave (North side of building) • Open 7 days a week: 11 a.m. to 11 p.m. • Closed Holidays • Phone: 365-2888 • Call ahead to decrease waiting time

  45. Benefit Enhancement Recap • Medical • PHCS Wrap Around Network • EPO Mid-Level, Out-of-Network Option • Alternative Medicine • Dental • DPO Provider Network Discount Added to Delta Hi-Option DPO Dental Plan • Vision • Frame Allowance Increase

  46. Questions • Benefits Line: 385-5904, Press 2 at the Prompt.

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