Download Santa Cruz JPA - Cabrillo College

Employee Benefits Committee
February 17, 2005
Information presented by
Keenan & Associates
What is a JPA ?
• “JPA” stands for Joint Powers Authority
•Consortium of public entities that join together to provide
employee health and welfare benefits.
•Larger Numbers – Risk Sharing, More Stability
•JPA Advisory Committee - Employee input into the process.
The Santa Cruz JPA is officially named the Santa Cruz County
Schools Health Insurance Group (SCCSHIG) and is a separate
legal entity from each individual member district.
JPA Enrollment
The SCCSHIG Member Districts are:
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Bonny Doon Union
Cabrillo College
Happy Valley Elementary
Live Oak Elementary
Mountain Elementary
Pacific Elementary
San Lorenzo Valley Unified
Santa Cruz City Schools
Santa Cruz County Office of Education
Scotts Valley Unified
Soquel Union
How Does the JPA Work
JPA Board
(11 members)
Employee
Advisory
Committee
Vendors
Blue
Cross
Delta
Dental
Health Net
VSP
Keenan &
Associates
JPA Consultant/Adminstrator
Santa Cruz JPA Medical Plans
What is “Self-Funding”?
Our Prudent Buyer Plans are self-funded:
• The SCCSHIG assumes the risk for all claims incurred by
members.
• The JPA collects a “premium” from each of its member
districts.
• Blue Cross draws from those funds to pay medical claims for
employees and their dependents.
• “Stop Loss” insurance to protect against catastrophic losses
or large claims.
How a Prudent Buyer Claim is Paid
The JPA gets the benefit of the
Prudent Buyer Network discounts
if you use a Blue Cross provider
Your Provider is reimbursed
Blue Cross draws from these funds
to pay claims
Santa
Cruz
JPA
Your district remits “premium” to
the JPA
A stop loss carrier or “reinsurance”
carrier protects the JPA against large
claims.
Santa Cruz JPA Medical Plans
Self Funding Components:
• Adequate Reserves
• Third Party Administrator (TPA)
Rent a Provider Network
Utilization Review Services
Care Management Services
• Stop Loss Insurance
• Carve out benefits (Mental Health, Chiropractic)
• Fully Insured Prescription
Blue Cross acts only as a third party administrator
Keenan is the Consultant/JPA Administrator
Administration and Insured
Premium Dollars – Prudent Buyer
Rx (Insured with Blue Cross)
Stop Loss
Blue Cross ASO
MHN (Mental Health)
Chiropractic (CHPC)
Keenan Consulting*
COE Fees
% of medical
(approximate)
18%
4%
3.8%
3.1%
1.2%
0.7%
0.1%
*Keenan has provided the JPA Board with a compensation disclosure.
Keenan’s direct and indirect compensation accounts for 1.85% of the
total cost of all programs (Medical, Dental and Vision). Full Board letter dated 1/27/05
Financial Issues –
What Led to Mid Year changes?
•Renewal Timing
•Changes in claims incurral patterns
•Major increase in Large Claim activity, particularly after ratesetting
•Relative richness of the Prudent Buyer Plans
•Adverse Selection
Santa Cruz JPA Medical Plans
PPO-Preferred Provider Organization
• Member self-directs medical care
• Referral not required for Specialist
• Member’s “out of pocket costs” are lower when using the
Blue Cross Prudent Buyer network
• Consolidated to Prudent Buyer “Standard” and
“Catastrophic” plans as the PPO offerings effective 7/1/04.
PPO Network
Out-of-Network
Santa Cruz JPA Medical Plans
HMO-Health Maintenance Organization
• Members must select and use a PCP (Primary Care
Physician) who manages all medical care
• Referrals required for Specialist Visits
• Member pays a flat co-payment
• Out of Network Services only approved if medically
necessary
What is Adverse Selection?
Adverse selection is a phenomenon where healthy
members tend to gravitate towards the lower cost plans.
This tends to tilt a plan with an even mix of lower and
higher utilizers to a plan made up mostly of those that use
the plan more. As the healthier members leave the
program, the claims costs cannot be sustained by the
premium generated.
Can lead to a “Death Spiral”,
where the more expensive plan
ultimately cannot be continued.
How are we addressing Adverse
Selection?
Common Risk Pool
This would entail having all of our
plans and the associated claims costs
in one pool.
The JPA would still be able to
maintain choice, but adverse selection
would be mitigated since everyone is
in the same pool.
Going Forward…
The Executive Board and Advisory Committee rated
the following as most important:
Save/Keep the PPO
Save/Keep the HMO plans
Reduce Adverse Selection
Contain Future Costs
A challenge, since this is the “status quo”…
Going Forward
• Consumer Directed Health Plans
• Exclusive Provider or “EPO”
• Fully Insured PPO
• Only offer the PPO?
• Only offer the HMO?
Marketing Issues – Limited
Players and Networks
Network vs. Cost
Employees have historically wanted Santa Cruz
Medical Clinic in network
Only (2) HMO’s have historically contracted with
the Clinic – Health Net and PacifiCare
CaliforniaCare only contracts with PMG
Blue Shield may be an alternative
Are we willing to limit network for cost?
KEY ISSUES (1)
• The plan increases we have been experiencing
are not out of line with national and state
trends. Our challenges are not unique.
• There are limited plan providers that allow
access to the Santa Cruz Medical Clinic.
• Are we willing to change the provider
network to achieve plan savings.
Key Issues (2)
• Does it make sense to offer both self insured
and fully insured plans.
• Should fully insured and self insured plans be
rated separately or together.
• How do we handle retirees?
Next Meeting…
Consumer Directed Health Care?