The City of Riviera Beach historically has provided what most would considered a rich health care plan. On April 27th, 2018, City Staff, in consultation with our Broker Bernstein & Associates met to discuss the City's renewal, statistictical data, and cost projection.
As you recall, last fiscal year the City count and utilization(hospital, emergency room and prescription) resulted in a 14%rate increase. However, the final negation rate for health insurance was at 3% for FY 17-18.
This fiscal year the City's utilization rate has increase to 86% (Aggregated premium billed $6,028,512 vs. Aggregated Incurred Claims $5,170,672). The utilization rate is based on utilization of emergency room, hospitalization, and pharmacy which are the cost drivers. Based on the 86% utilization rate we are trending at a 25% rate increased.
Aetna is proposing a 10% increase for FY 18-19 due to the City's high experience, utilization along with a number of catastrophic. Based on our current experience we are likely to receive a unfavorable renewal if we were to issue an RFP.
With that in mind, staff discussed with the Broker additional measures to decrease our claims experience and stabilize our utilization (see attached report claim vs premium paid). In order to stabilize the rates various options were reviewed with a focus to reduce the City's and employee's costs.
Based on staff's analysis(see exhibit #2 and #3) and continuous negotiations by Bernstein & Associates, we are recommending continuation of Health Insurance with Aetna for 2018-2019 Fiscal Year with minimal plan changes and the least impact to the City's and employee contribution.
All final recommendations would lean out the health plan, moving the City in the same direction with comparable City's within the area (see exhibit 1). In addition, Aetna will provide an additional premium reduction for adding Aetna dental along side the current Solstice dental Plan.
Below are the proposed changes to achieve rate below 5% for FY 2018-2019 Fiscal year:
The proposed Benefit Changes for FY 18/19 are:
1. Change in Emergency Room (ER) cop pay from $100 to $250
2. Change in Specialist Co-pay from $30 to $35
3. Change in Prescription from $5/$30/$50 to $$5/$35/$75
4. Premium reduction from Aetna if the City adds Aetna Dental as a second option along side Solstice dental to all employees.
Upon final negotiation and discussion Aetna final proposed rate is 4.99 %. We are recommending for the City Council to renewal our health insurance for FY 18-19 with Aetna Health acre at the negotiated rate of 4.99%.