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Item M06 Board of County Commissioners Agenda Item Summary Meeting Date:May 19, 2004 Bulk Item: Yes [] No tcr' Division: Board of County Commissioners Department: George R. Neugent AGENDA ITEM WORDING: A request for a full and comprehensive report to the Board of County Commissioners on the proposed Rural Health Network Insurance Program for the uninsured residents of Monroe County. ITEM BACKGROUND: ' It appears -without request from the Board of County Commissioners, State Representative Sorensen with support from the Rural Health Network partnered to pass legislation that would create a Countywide Insurance Program with a start-up cost loan of 3 million dollars. Based upon correspondence, the Attorney General of the State of Florida questions the legal ability to do such. In a letter from Lewis W. Fishman, Attorney, to Mary Ann Hiatt, Administrator of the Lower Keys Hospital District - He states, "The district should refrain from being deemed a "partner" in this venture, historically, self insured health insurance vehicles such as the one proposed have failed, not withstanding good intentions and actuarially projected premiums, and therefore, it would not behoove the District to be considered a venture partner whose exposure can be viewed not just from the potential loss of its loan, but as an entity at risk for a failed insurance vehicle." PREVIOUS RELEVANT BOCC ACTION: CONTRACT I AGREEMENT CHANGES: STAFF RECOMMENDATIONS: TOTAL COST: BUDGETED: YES [] NO [] VA COST TO COUNTY: $ Source of Funds: REVENUE PRODUCING: YES C NO [] AMT PER MONTH: YEAR: [] OMS/PURCHASING [] RISK MANAGEMENT [] APPROVAL: Commissioner GEORGE R. N DISTRICT II DOCUMENTATION: INCLUDED [] TO FOLLOW [] NOT REQUIRED ui' DISPosmON: AGENDA ITEM # M& , Rural Celebrating 10 Years of Service in Monroe County Health 1993-2003 Network of Momoe County, Florida, Inc. p.o. Box 4966, Key West, Florida 33041-4966 HEAL TH INSURANCE TASK FORCE UPDATE ESPECIALLY PREPARED FOR THE MONROE COUNTY COMMISSION Administration, Community Outreach, Finance, or Health Services VOICE 305-293-7570; FAX 305-293-7573; Dental Clinic 305-295-3115 Program Development, Insurance Projects & KidCare -VOICE 305-517-9002; FAX 305-517-9004 www.ruralhealth-floridakeys.org Rural Celebrating 10 Years of Service in Monroe County Health 1993-2003 Network of Monroe County, Florida, Inc. P.o. Box 4966, Key West, Florida 33041-4966 HEALTH INSURANCE TASKFORCE COUNTYWIDE INSURANCE PLAN ffiGHLIGHTS OVERVIEW The Rural Health Network of Monroe County Florida (RHNMC) in an effort to address the increasing number of the uninsured population, created a special Health Insurance Task Force (InTF) in May 2002, under the leadership of County Commissioner and RHNMC Board Vice-Chair, Dixie Spehar. to investigate the feasibility of creating a countywide health insurance plan available for everyone over the age of 19. The}fiTF is comprised of members of the Chambers of Commerce, health care providers, social service organizations, major employers such as the Monroe County School District, county government, and municipalities, consumers and members of the faith-based community. The IDTF contracted with Milliman USA to conduct the actuarial analysis and produce a feasibility study for review by the RHNMC board. The study was presented to the RHNMC board on January 26, 2004 at their annual meeting. The RHNMC board held a special meeting on March 29, 2004 to make decisions on specifics of the insurance plan and how to proceed with its implementation. Five separate resolutions were passed unanimously relating to Trust Fund funding, issuing a Request for Proposals to insurance carriers and third party administrators, reinsurance options, creation of a separate non- profit corporation and an implementation strategy. Although there are a number of issues remaining to be resolved, the IDTF hopes to begin the implementation of the Monroe County Health Insurance Plan (MCHIP) in 2005. GOALS >> Reduce the currently 17,000 uninsured individual under the age of 65 level to about 7,000 with the first several years of operation. >> Stabilize the provider base particularly financially protecting physicians. >> Bring more money into the healthcare system by generating premium payments for a segment of the population with the ability to pay premiums, who currently use the healthcare system, but who remain uninsured. PLAN IDGHLIGHTS >> The implementation of the plan to a potential 50,000 people requires the utilization of a "phased-in" approach. The initial target market will be both public and private sector employers currently insured and a portion of the uninsured. Administration,Community Outreach, Finance, or Health Services VOICE 305-293-7570; FAX 305-293-7573; Dental Clinic 305-295-3115 Program Development, Insurance Projects & KidCare -VOICE 305-517-9002; FAX 305-517-9004 www.ruralheolth-fJoridokeys.org -2- ~ Fully self-funded with a carrier partner OR a third party administrator with a PPO network vendor. ~ Reinsurance provisions. ~ There will be three benefit plans with "buy-up" options. The "high end" option is patterned after the current county government plan. The "low end" option is patterned after the typical plan many small to medium-sized businesses now participate in and the "catastrophic" option will give basic coverage to those currently unable to afford benefits. ~ An of the benefits is as follows: Deductibles $500-$1,000 (High Option), $1,000- $2,000 (Low Option), $3,000-$4,000 (Catastrophic); Coinsurance In- networklOut-of-network- 80%/600.10 (High Option), $4,000-$8,000 (Low Option and Catastrophic); Out-of-Pocket Coinsurance Maximums $2,000-$4,000 (High Option). $4,000-$8,000 (Low Option), $4,000-$8,000 (Catastrophic); Emergency Room Co-pay- $100 for all three plans; Inpatient Co-pay- $500-$1000 (High Option), $1,000-$2,000 (Low Option and Catastrophic); Office Visit Co-Pay- $20-$40 (High Option), $30-$50 (Low Option); Wellness Benefit- $3oo/member/year (High and Low Option), $300 max/yr at 800.10 (Catastrophic). ~ There will be heavy emphasis on "wellness" programs, rewarding with premiums and other benefits, the practice of good health habits. ~ Those individuals with incomes less than 2500.10 of the federal poverty level (FPL) will be subsidized on a sliding scale. ~ The plan would be a public/private partnership with the creation of a Health Insurance Trust Fund funded with both public money and residual premiums among other sources. The Trust Fund would supplement employer contributions as well as private assistance for the working poor. ~ Premiums are designed to attract both businesses that to not currently offer health benefits and individuals and families that are not currently insured. Typically, employers would contribute $150 per month per employee with an additional $100 per employee to be subsidized by the Trost. Employees would pay between $75 - $125/month, depending on the plan. ~ The plan will be marketed and serviced by local agents. ~ There will be established residence and work requirements in order to participate. ISSUES REMAINING There are several major issues remaining. The IDTF will make recommendations to the RHNMC board of directors on March 29 regarding the following: ~ Reimbursement rates for providers. >> Trost Fund funding. ~ Transition plan from the Task Force to the creation of a governing entity for the MCHIP. >> Carrier partner or TP A with PPO network vendor. >> Implementation timetable. RURAL HEALTH NETWORK OF MONROE COUNTY Health Insurance Task Force Recommendations March 29, 2004 BACKGROUND The Health Insurance Task Force presented the feasibility of a countywide health care plan to the Board of Directors of the Rural Health Network of Monroe County (RHNMC) at their annual meeting on January 26.2004. At that time, the Board scheduled a special meeting for March 29th to allow them ample time to review the Feasibility Study produced by Milliman USA and charged the Task Force with producing a series of recommendations for their review regarding several "unknown" aspects of the Monroe County Health Insurance Plan (MCHIP). Since the annual meeting, a pre-bidders' conference was held in Miami, which attracted a number of third party administrators (TPA) and one carrier, as well as discussions with several hospitals and other providers. The Task Force also investigated possible funding sources for the Trust Fund. These and other discussions are ongoing and thus the final recommendations related to such areas as provider issues and Trust Fund funding are preliminary. The recommendations listed below are based on the facts available at present and do not represent all of the remaining issues to be resolved. Due to the rapidly changing health care environment and facts as they become known, recommendations may change prior to the final product being produced for board approval and public scrutiny. Issue 1. Fully. Partially or Self-Insured Plan It has become apparent as the result of the pre-bidders' conference in March along with input from local providers, the MCHIP will be a self-funded program. An RFP should be developed and released for the purpose of securing a vendor for premium billing, enrollment and claims' administration. Additionally through the RFP process, a preferred provider organization (PPO) network will be secured with existing physician and hospital contracts. Emphasis will be placed on local providers to address the stated goal of stabilizing our local doctors base while eliminating their additional administration burdens. The plan will also contain ample reinsurance to limit risk from any catastrophic claim. To limit initial start-up and administrative costs, it is recommended that we pursue a vendor capable of providing a majority of the listed services. A comprehensive disease management program should be included in any plan offering to reduce risk and help achieve the goal ofimproving the overall health of Monroe Co. residents. We desire that this program be hospital-based for increased compliance and cost efficiency. Ancillary services including pharmacy, mental health and chemical dependency will be subcontracted and capitated to eliminate plan risk. 1 Approved Motion- To direct the Task Force to draft a request for proposals subject to the approval of the Executive Committee, from identified insurance carriers, third-party administrators and other interested entities from the health insurance industry, for the purpose of selecting a carrier and/or associated provider network. Issue 2. Benefit Plan Specifics The original three-plan designs as outlined in the Milliman USA Feasibility Study will be utilized. However, benefit adjustments will be made to address changes in market and regulatory conditions. The original benefit plans were developed to address the currently insured populations. Now our focus is to include the working uninsured in the initial enrollment for reasons to be discussed later. To accurately measure the difference in risk between these two different populations, it is recommended that we establish and maintain two risk pools. Furthermore, potential risk can be limited if we adopt a primary care plan for the uninsured population with limited benefits. This primary care plan will cover only physician services plus some outpatient services. The limited benefit will provide coverage for a limited number of office visits each year including an annual well visit. The annual well visit will be capped at $150. The Task Force recommends seeking a contract with one of several carriers that offer this type of primary care plan on an insured basis. This plan, specifically designed for the working uninsured, will limit overall risk, which could be considerable considering the potential pent up demand for services. In addition to the primary care plan, it is advised that we explore a catastrophic plan to cover high dollar hospital and surgical care for the uninsured population. This option would be part of the self-funded plan and set up as a separate risk pool. Specific benefits may include a $2,500 deductible and 700.10 co-insurance. Total out-of-pocket annual costs to enrollees would be capped at $10,000 annually. An annual benefit maximum would be capped at $500,000 with 10% replacement so the cap can grow over time. Lifetime maximums would be set at $1,000,000. Rates have not been developed for this benefit as of this writing. Given the potential risk, the cost may be prohibitive. The benefit plan for the currently insured population would be similar to what many businesses now offer. The Task Force recommends seeking a re-insurer for both specific and aggregate protection. Considering the unknown level of risk from the now included uninsured population, it may be difficult in obtaining a re-insured for Specific coverage. We feel Aggregate coverage would be available, but only with high limits of approximately $5,000,000. The Task Force should investigate all levels of coverage, but the cost may be prohibitive. Another possible option is to obtain in-kind donations from the three county hospitals. These monies would be used to offset hospital costs thereby reducing our claim reserve requirements. All benefit options should have rate adjustments for industry and lifestyle factors such as smoking and weight. After a series of information sessions with the management from each of our three hospitals along with representative fonD their parent companies, it is recommended that 2 an existing PPO network in Monroe Co. be secured. It is understood that reimbursements be reasonable as well as cost effective. It is further recommended that we seek additional provider discounts for the previously uninsured population that are now paying into the system. Given the fact that these premiums are "new money" into the system, uncollected indigent care costs will be reduced dramatically. Approved Motion- To direct the Task Force to continue to investigate Aggregate and Specific re-insurance options, continue to pursue carriers that could offer specific primary care plans on a fully-insured basis, and continue to work with health care providers directly or indirectly to realize pricing consideration and in- kind donations for the plans as outlined. Issue 3. Trust Fund Creation and Funding It is apparent that there will remain a difference between the recommended reimbursement rate payouts to providers and the anticipated premium fees collected even with significant discounts afforded to such a large group plan. As a result. a special Insurance Trust Fund should be created for the MCHIP with funds coming from both public and private sources as recommended in the Feasibility Study. It is recommended that 5% of surplus premium be returned to the fund once premium collection begins and continue on an ongoing basis. It is further recommended that the Task Force be empowered to continue negotiating with possible public and/or private entities for the purpose of establishing either a "line of credit" or outright grant for the initial capitalization funds required. Any contract for a line of credit would need to be ratified by the RHNMC board of directors. Approved Motion- To direct the Task Force to continue pursuing the necessary funding for the Trust Fund including requesting any legislative or other changes, in conjunction with the State Department of Insurance Regulation, required to facilitate the actualization of any public funds solicited. Issue 4. Creation of a Non-Profit Corporation for Plan Administration The Task Force recommends that a separate non-profit 501 (c)(3) corporation and be formed and be approved by the State Department of Financial Services to become an insurance carrier. The new corporation would have a separate governing board of between 9 and 15 members. The initial membership is to be appointed by the board of the RHNMC after securing applications from the general public, and members of the Network. The composition of the board can be determined at a later date, but at a minimum would consist of the local county hospital's representatives, three consumer representatives that are not associated with any health care provider, a member of the staff of the RHNMC, and two or more members of the business community. Other categories for membership are to be determined by the RHNMC board of directors. 3 Once the board is established, corporate papers are filed and bylaws are adopted, the RHNMC will assume no direct role in the governance of the new entity. At the earliest possible time and funds permitting, the RHNMC should establish a small office with an executive director designee and clerical staff member hired to first assist with the transition to the new entity and later to provide local professional administration of the plan. Approved Motion- To direct the Task Force to pursue the establishment of a separate non-profit corporation as outlined in the recommendations including, the establishment of a small office with staff to commence when sufficient funds exist to do so as determined by the CEO of the RHNMC in consultation with the Executive Committee. Issue 5. Implementation Strategy The implementation of the plan originally was to take place in phases. Although the Task Force had initially believed that it would be prudent to cover the currently insured population first, it is now recommended that the working uninsured population be included in the initial phase. Industry standard underwriting guidelines along with pre- existing condition clauses will reduce the potential risk from this new addition. Enrollment and eligibility guidelines as required under HIP AA will be adopted. The inclusion of the uninsured group is required to leverage existing provider contracts in Monroe County as well as address the ever growing number of non-pay patients seeking services in the hospitals and from physicians. The Task Force will pursue favorable pricing consideration for this population, as their premiums are new funds being brought into the health care system. The plans will be marketed primarily through the local broker community. The brokers will be required to meet several standards of customer service, increased limits on errors and omissions protection and sales performance. Commissions will be reduced from current industry standards, and is recommended to be 3%, which would be sufficient given the potentially large amount of business generated. There will be a small internal marketing staff to work large cases (over 100 enrolled employees) and to conduct the broker relations. This function should be the sole responsibility of the MCHIP executive director initially. The underwriting function will be conducted on two levels. The brokers will conduct field underwriting related to collecting employee information, group financial data and initial plan rating. It is recommended that the plan require level two medical/financial reviews of each group. Individuals without prior coverage will be subject to full medical review and potentially could be denied coverage. Final underwriting guidelines will be based on actuarial analysis, industry standards and final benefit designs. Plan eligibility will be limited to groups and businesses located in Monroe County, Florida. Employer groups with home offices and/or locations outside the county will not be eligible for the 4