County health plan underfunded. Interfund loan covers 2016 bills; cost still lower than other plan
ALEDO — Mercer County’s self-funded alternative health plan that was instrumental in negotiating with Operators Local 150 union back in November 2015 was under-funded by almost $200,000 in 2016. The county had to pass a resolution for interfund borrowing to pay bills for 2016.
County Administrator, Bruce DeLashmit with Bellwether said when negotiating with the union, “We agreed that we would provide the same or better coverage.” He said the problem began when the union didn’t provide a coverage document.
“Then we asked for claims history of what (was) paid, through 150’s attorney, their explanation was, that’s handled by an entirely different organization, an affiliate of 150. This union did not have access to that information.”
“We appealed that three different times because it would have made a significant difference to how we priced the product ... in the absence of that, every employee was given a health screening survey at the start.”
He said the problems escalated when some employees did not disclose significant illnesses.
”The actuaries would have been able to price what the claim expected. Not knowing what they were being cared for, it really put the county behind on the claims fund by about $200,000.”
Jay Jensen, with Precise Benefits (the healthcare management group), Bloomington, gave the board options for funding the employee health-care plan over the coming year. Only one option fit the county’s cash flow restrictions.
Jensen explained that the board chose to fund 100 percent of what expected claims would be, “minus any claims we don’t know about ... (they will) deal with those as they come in on the county’s level.”
He said, “It’s pretty typical for most self-funded plans to pay their fixed costs, and then just pay claims as they come in, they’re actually going to pre-fund, even if there’s not claims in a certain month or (fewer) claims, they’re actually going to keep funding, so the money’s there. Most company’s don’t do that.” He said the county is, “going to stay about level, between this year and last year’s funding level.”
In an attempt to minimize and streamline healthcare services the group is putting in place a nurse-based coaching system for the employees.
“We hope all the employees understand, we have a joint responsibility to control costs in order to provide coverage,” DeLashmit said. “If costs keep climbing, we have to limit coverage. Or have higher deductibles.”
He said he was impressed with Precise Benefits for not raising their administrative fee as previously agreed upon, yearly by 6.5 percent.
He said the county is digging deep to pay its bills.
“This unexpected (claims) took already a very low reserve and just about wiped it out,” DeLashmit said. He said the next few months, the county will be razor thin on the budget and departments are told to defer expenses.
Nicole Watson, agent on the account, noted, “The care they (employees) are receiving is not going to change.” Neither the coverage level nor the deductible will change.
Jensen told the board it has attorneys prepared to take action to protect employees who are being harassed by healthcare facilities for unpaid “balance billing” with phone calls and letters threatening to send their claims to collections.
“Usually when you get the attorneys involved with something like that, we’ve seen things get settled pretty fast,” he said.
The county has provided those employees with a letter to pass along to their credit companies until the matter is resolved.
He said their other client in the area has had no issues while Mercer County has had eight claims with Trinity, one with Genesis and two from Advanced Medical Transport.
“We’ve offered these facilities 200 percent of Medicare, and they still won’t accept it, which has never happened,” Jensen said.
“Balance billing” is when the employee’s medical bill is paid by the county's management company, then the healthcare facility sends a bill for the remainder of what they want paid for the services.
Jensen said the providers choosing to “balance bill” Mercer County plan participants have accepted the same reimbursement rates from Medicare. The rate is 1,000 percent higher compared to other groups using the same self-funding healthcare program.
DeLeashmit explained that If the county had remained on the union’s healthcare the cost to the county would have been over $1.5 million, and covered only those in the union (about 50 employees), while under the self-funding vault plan the cost for all employees, union and non-union (71 employees), was $1.2 million to $1.4 million in 2016.
“Even with our increases, we will still be $400,000 less than we would have been if we had stayed with the Operators 150 plan,” DeLashmit said.