HomeMy WebLinkAboutResolution - 2016-R0359 - Application For Renewal - Blue Cross Clue Shield - Stop Loss Coverage Policy - 10/13/2016Resolution No. 2016-R0359
Item No. 6.17
October 13, 2016
RESOLUTION
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF LUBBOCK:
THAT the Mayor of the City of Lubbock is hereby authorized and directed to
execute for and on behalf of the City of Lubbock, an Application for renewal of a Stop
Loss Coverage Policy, by and between the City of Lubbock and Blue Cross Blue Shield
of Texas, and related documents. Said Application is attached hereto and incorporated in
this resolution as if fully set forth herein and shall be included in the minutes of the City
Council.
THAT the City Manager may execute any routine documents and forms
associated with said coverage.
Passed by the City Council on October 13, 2016 --
DANIEL M. POPE, MAYOR
ATTEST:
Rebe ca Garza, City Secretary
APPROVED AS TO CONTENT:
r �
Leisa Hutcheson
Director of Human Resources and Risk Management
APPROVED AS TO FORM:
4Mitchlte hite, First Assistant City Attorney
RES.Risk Mgmt-Application-Stop Loss Coverage Policy
9.9.16
Resolution No. 2016-RO359
BlueCross BlueShield
V4 of Texas
APPLICATION FOR STOP LOSS COVERAGE
Employer Group Name: City of Lubbock
Employer Group Address: 1625 13th Street
City: Lubbock State of Situs: TX Zip Code: 79401
Account Number: 010097
Employer Group Number(s): 010097, 106837
Effective Date of Policy 01/01/2017
Policy Period: These specifications are for the Policy Period commencing on 01/01/2017 and ending on 12/31/2017
The specifications below shall become effective on the first day of the Policy Period specified above and shall continue in
full force and effect until the earliest of the following dates: (1) The last day of the Policy Period; (2) The date the Policy
terminates; or (3) The date this Application for Stop Loss Coverage (herein called the "Application") is superseded in
whole or in part by a later executed Application.
A. Aggregate Stop Loss Insurance: ❑ Yes ® No
If yes, complete items 1 through 9 below.
1. ❑ New Coverage ❑ Renewal of Existing Coverage
2. Stop Loss Coverage Period:
❑ New Coverage (Select one from below):
❑ Standard: Claims incurred and paid during the Policy Period.
❑ "Run-in" included: Claims incurred on or after and paid during the Policy Period.
"Run-in" includes claims paid by Policyholder's prior claim administrator: Yes ❑ No ❑
If yes, such claims must be reported by the Policyholder to the Company (Blue Cross and Blue Shield of
Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company) within 12
months of the Policy Effective Date and paid by the Policyholder's prior claim administrator within 6
months after the Policy Effective Date.
❑ Renewal of Existing Coverage:
Claims incurred on or after the original Effective Date of Policy and paid during the Policy Period.
3. Aggregate Stop Loss Insurance shall apply to:
❑ Medical Claims
❑ Outpatient Prescription Drug Claims
❑ Dental Claims
❑ Other (please specify):
A Division of Health Care Service Corporation, a Mutual Legal Reserve Company
an Independent Licensee of the Blue Cross and Blue Shield Association
TXStopLossApp-11 /10
4
5
Average Claim Value: per Employee
Attachment Factor: % of the Average Claim Value
Aggregate Claim Liability and Run -Off Claim Liability Factors
a. Employer's Claim Liability for each Policy Period shall be the sum of the Monthly amounts obtained by
multiplying the number of Coverage Units for each Month by the following factors:
for each Employee Coverage Unit
$ for each Employee/Family Coverage Unit
Please use the continuous text field directly below for any other structure (leaving the fields above blank).
Note: you can use the "return" key to create additional rows, if needed:
b. Employer's Run -Off Claim Liability shall be calculated by multiplying the sum average of all Coverage Units
during each of the three calendar Months immediately preceding termination by the factors shown below.
Settlement for the final accounting period will be described in the section of the Policy entitled
SETTLEMENTS, Run -Off Period subsection of the Policy.
$ for each Employee Coverage Unit
$ for each Employee/Family Coverage Unit
Please use the continuous text field directly below for any other structure (leaving the fields above blank).
Note: you can use the "return" key to create additional rows, if needed:
6. CAP Arrangement ❑ Yes ❑ No
7. Aggregate Stop Loss Claims
a. The amount of Paid Claims during the current Policy Period, less:
i. Individual (Specific) Stop Loss Claims
ii. Any claims in excess of the Individual (Specific) Stop Loss Claims per Covered Person per
Lifetime Maximum
iii. Any claims in excess of the Individual (Specific) Stop Loss Claims maximum Point of Attachment
that exceeds the Aggregate Point of Attachment. The Aggregate Point of Attachment shall equal the sum of
the Employer's Claim Liability amounts calculated Monthly as described in Item 5.a. above for the indicated
Policy Period.
b. In the event of termination at the end of a Policy Period, the Final Settlement Aggregate Point of Attachment
shall equal the sum of the Employer's Claim Liability amount for the Final Policy Period and the Employer's
Run -Off Claim Liability calculated as described in item 5.b. above. However, for the indicated Policy Period
the minimum Aggregate Point of Attachment shall be $
c. Aggregate Stop Loss Claims shall not exceed a lifetime maximum of for the indicated Policy Period.
Premium (Select one):
❑ Annual Premium (Due on the first day of the Policy Period): $
❑ Monthly Premium shall be equal to the amounts obtained by multiplying the number of Coverage Units for a
particular Month by
$ for each Employee Coverage Unit
$ for each Employee/Family Coverage Unit
TXStopLossApp-11/10 2
Please use the continuous text field directly below for any other structure (leaving the fields above blank). Note:
you can use the "return" key to create additional rows, if needed:
9. The premium is based upon a current membership of Individual Coverage Units and Family
Coverage Units.
B. Individual (Specific) Stop Loss Insurance: ® Yes ❑ No
If yes, complete items 1 through 6 below.
1. ❑ New Coverage ® Renewal of Existing Coverage
Stop Loss Coverage Period:
❑ New Coverage (Select one from below):
❑ Standard: Claims incurred and paid during the Policy Period.
❑ "Run-in" included: Claims incurred on or after and paid during the Policy Period
"Run-in" includes claims paid by Policyholder's prior claim administrator: Yes ❑ No ❑
If yes, such claims must be reported by the Policyholder to the Company (Blue Cross and Blue Shield of
Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company) within
months of the Policy Effective Date and paid by the Policyholder's prior claim administrator within
months after the Policy Effective Date.
® Renewal of Existing Coverage:
Claims incurred on or after the original Effective Date of Policy and paid during the Policy Period.
Individual (Specific) Stop Loss Insurance shall apply to:
® Medical Claims
® Outpatient Prescription Drug Claims
❑ Dental Claims
❑ Vision Claims
❑ Other (please specify):
Individual (Specific) Stop Loss Claims
a. For NA who is identified by the health identification (ID) number NA, the amount of Paid Claims during the
current Policy Period in excess of the Individual Point of Attachment of $NA. Such amount shall apply for
the Policy Period.
b. For each other Covered Person:
The amount of Paid Claims during the current Policy Period in excess of the Individual Point of Attachment
of $350,000 per Covered Person but not to exceed a maximum Point of Attachment of $ Unlimited per
Policy Period. Paid Claims in excess of the maximum point of attachment shall not be eligible to satisfy the
Aggregate Point of Attachment. Such amount shall apply for the Policy Period.
c. Covered Person per Lifetime Maximum:
The Individual (Specific) Stop Loss Claims shall not exceed Unlimited per Covered Person per Lifetime.
Paid Claims in excess of the Covered Person per Lifetime Maximum shall not be eligible to satisfy the
Aggregate Point of Attachment.
Point of Attachment ® Includes Claim Administrator's Provider Access Fee
❑ Excludes Claim Administrator's Provider Access Fee
TXStopLossApp-11 /10
5. Premium (select one):
❑ Annual Premium (Due on the first day of the Policy Period): $
® Monthly Premium shall be equal to the amounts obtained by multiplying the number of Coverage Units for a
particular Month by
$ for each Employee Coverage Unit
$ for each Employee/Family Coverage Unit
Please use the continuous text field directly below for any other structure (leaving the fields above blank). Note:
you can use the "return" key to create additional rows, if needed:
$23.38 Composite
6. The premium is based upon a current membership of 1,336 Individual Coverage Units and 1,473 Family
Coverage Units.
Additional Provisions:
12 15 Stop Loss Policy - Claims incurred 01;01/2017 through 12/31!2017 and paid 01 01 2017 through 03/3112018. Premium is
based on 2,809 enrolled.
The undersigned person represents that he/she is authorized and responsible for purchasing stop loss coverage on behalf
of the Employer Group. It is understood that the actual terms and conditions of coverage are those contained in this
Application the Stop Loss Coverage Policy into which this Application shall be incorporated at the time of acceptance by
Blue Cross and Blue Shield of Texas, a Division of Health Care Service Corporation, a Mutual Legal Reserve Company
("HCSC"). Upon acceptance, HCSC shall issue a Stop Loss Coverage Policy to the Employer Group. Upon acceptance of
this Application and issuance of the Stop Loss Coverage Policy, the Employer Group shall be referred to as the
"Policyholder."
Tave Lawhorn
Sales Representative
Trang Nguyen
Name of Underwriter
L-,�Jk,e�
Signature of Authorized Purchaser
Daniel M. Pope, Mayor
Title of Authorized Purchaser
October 13, 2016
Date
INTERNAL USE ONLY I Date Application approved by Underwriting:
TXStopLossApp-11 /10 4
ATTEST:
Re' b cca Garza
City Secretary
APPROVED AS TO CONTENT:
Leisa Hutcheson, Director of
Human Resources and Risk Mgmt.
AttorneyFirst Assistant City
■1120
0.4'o
Milliman
South 101" Street
N/A
Suite 400
N/A
Omaha. NE 68124
N/A
USA
NIA
Tel +1 402 393 9400
N/A
Fax +1 402 384 5776
milliman.com
March 1, 2016
Mr. Travis L. Sartain, CBC
Partner
MHBT
8144 Walnut Hill Lane, 16`I' Floor
Dallas, TX 75231
Re: City of Lubbock Renewal Projection for the 2017 Plan Year
Dear Mr. Sartain:
At your request, Milliman, Inc. (Milliman) has completed a projection of City of Lubbock's 2017
renewals. This letter includes the executive summary, detailed analysis, methodology, reliance, and
limitations of our findings.
Executive Summary
City of Lubbock currently offers its eligible employees various medical, dental, life, disability, and
other types of coverage. You engaged Milliman to perform our calculation of expected claims cost
for self-insured medical and dental benefits for the 2017 plan year Qanuary 1, 2017 — December 31,
2017) assuming their current plan design structure as well as comment on the current trend. Our
initial projection of the carriers' proposals is shown in the table below:
Medical (Self -Insured)
Claims Cost
Claims Administration
Rx Rebates
Organ Transplant Fee
Individual Stop -Loss
ACA fees
Total Medical
Dental (Self -Insured)
Claims Cost
Claims Administration
Total Dental
N/A
0.4'o
N/A
3.0'o
N/A
5.6
N/A
5.0'o
N/A
5.0'o
NIA
`1?
N/A
0.2%
N ` \ (29.1'n
N/% 5.00 o
N/A (27.200)
Offices in Principal Cities Worldwide
■
Mi l l i m a n March 1, 2016
We estimate that self-insured annual claims and expenses for the 2017 plan year will be
approximately:
• $31.23 million for medical and prescription drugs based on current enrollment
levels of 2,764 employees and a projected premium of $941.55 per employee per
month (PEPM); and
• $1.32 million for dental based on current enrollment levels of 2,677 employees and
a projected premium of $41.05 PEPM. However, we recommend continuing to
budget at $56.35 or $1.81 million annually.
See Attachments #1-3 for more details. We will use these figures in our projection of budgets
for the upcoming plan year. Note that these figures also depend on current plan designs, claims
experience that was available to us, and estimated expenses. If enrollment levels, plan designs,
vendors, or locations should change dramatically, this number should be updated with the new
information. We recommend updating this analysis once the 2017 renewals become available.
■
M i l l i m a n March 1, 2016
Detailed Analysis
L Medical & Prescription Drugs
Proyected Cbange in Premium - Claims 6 Eapelrses
Attachment #4 shows our calculation of estimated claims costs and expenses for the self-insured
medical and prescription drug plans. Using the assumed increases to expenses listed in the
Executive Summary above and shown in Attachment #2, we estimate that City of Lubbock's claims
and expenses will be $941.55 PEPM which is 0.20 o more than current premiums and 15.0% more
than the City of Lubbock's flat department charge. Based on current enrollment, this amounts to
$31.23 million in annual premium. If claims do not trend as much as our estimate or City of
Lubbock is able to reduce expenses, then this amount could be lower.
The methodology we used to arrive at the expected PEPM premium can best be described as
"experience rating" and can be seen in our analysis by following the column labeled "Medical" in
Attachment #4. The development of a PEPM premium involves three steps: 1) Experience; 2)
Adjustments; and 3) Expenses. We received monthly claims and enrollment for January 2012
through December 2015. We then made adjustments for trend, plan design changes and contract
changes. For the trend adjustment, we blended City of Lubbock's trend with national averages from
our Milliman MedicalIiidev to arrive at the annual trend rate of 4.9%. Using this value, we calculated
the trend factor for each experience period by applying the annual trend rate from the midpoint of
the experience period to the midpoint of the 2017 plan year. The effect of historic plan design
changes are applied as a factor to put past claims experience on the same level with the most recent
claims experience. We also took into consideration any proposed plan design changes and adjusted
the claims basis accordingly. The adjusted claims experience is then weighted according to
credibility, with the most recent claims being the most credible and the oldest claims being the least
credible. The same methodology was followed for the Prescription Drugs calculations. Finally,
expenses are added to the adjusted total. The combination of these factors gives the actuarial
estimate of costs for 2017.
Stop -Loss Coverage - Individual Stop -Loss
Based on our experience in the industry and the analysis displayed in Attachments #5-7, individual
stop -loss insurance coverage for claims exceeding $350,000 is reasonable given the size of the group
and the claims data. Other levels, such as $375,000, can be considered with a limited amount of
additional risk. Given the current stop -loss market, we suggest discussions with various carriers in
an effort to obtain the lowest possible rates. At an individual deductible level of $350,000 our
models indicate that City of Lubbock can expect 0.050 o of the population to have annual claims in
excess of the individual stop -loss deductible. This equates to 2.9 members. At $375,000, that
probability decreases to 0.04% which equates to 2.5 members. The following table highlights the
inherent variability of individual medical claims displayed in Attachment #5.
■
Milkman March 1, 2016
Individual Stop-
Loss Deductible
Probability of a Claim
over the Deductible
Number of
Members
$400,000
0.040'0
2.2
$375,000
0.040"o
2.5
$350,000
0.05°'0
2.9
$325,000
0.06%
3.4
Additionally, Attachment #6 shows expected stop -loss reimbursements at various levels of
individual stop -loss coverage. Note that as the individual deductible increases, the expected
reimbursements decrease. Without actual premium quotes, it is difficult to say with certainty what
the optimal level of individual stop -loss would be for City of Lubbock. However, a general
guideline is that the appropriate deductible would be one where the additional claims liability is equal
to the corresponding premium savings.
Attachment #7 compares recent years' paid stop -loss premiums to reimbursements received and
calculates a loss ratio over the time period. Since January 2012, the paid loss ratio is 3.00 o. Note
that the paid loss ratio since January 2014 with the current carrier is slightly higher at slightly 5.40 o.
Stop -loss carriers typically target paid loss ratios between 700 o and 80% for groups of this size. The
stop -loss carrier may wish to base the proposed premium more heavily on their risk pool and less on
City of Lubbock's actual experience.
Based on expected and historical large claims, we recommend that City of Lubbock obtain quotes to
purchase individual stop -loss at a level between $350,000 and $375,000. Of course, this depends on
the group's tolerance for risk and the premium quotes received. In this calculation, we have
assumed the individual stop -loss deductible will remain at the current level and have assumed a 5°
increase to premiums.
Stop -Lass Coverage -Aggregate Stop -Loss
Self-insured employers may also purchase aggregate stop -loss coverage to protect against aggregate
claim fluctuation. Groups with fewer employees will generally have a lower tolerance for risk than
groups of a larger size. Due to the nature of aggregate stop -loss, potential reimbursements will
typically be high relative to annual premium. However, with the appropriate individual stop -loss
coverage, the probability of an aggregate reimbursement occurring is insignificant. The following
table highlights the inherent variability of aggregate medical claims. The "No Deductible" and
current ISL deductible scenarios are displayed in Attachments #8-9.
■Milliman March 1, 2016
Individual Stop-
Loss Deductible
ProbabilityofAggregate Claims Exceeding
105% of Expected
115% of Expected
125% of Expected
No Deductible
17.50o
0.6%
— 0.0%
$400,000
14.30 o
0.2%
—0.0%
$375,000
14.00o
0.2%
— 0.0°'0
$350,000
13.80o
0.2°,o
—0.0%
$325,000
13.5'o
0.1 °'a
—0.0%
To assess the aggregate stop -loss risk, we performed a Monte Carlo simulation on the current
enrollment. The spread of expected claims without and with individual stop -loss is shown in these
attachments. The vertical axis shows the probability of exceeding a certain level of expected claims.
The horizontal axis shows a range as a percent of expected average claims. Assuming that City of
Lubbock's 2,764 enrollees in the census data correspond to 5,694 covered lives, we simulated 10,000
scenarios, or 10,000 years of claims experience. The results of our Monte Carlo analysis indicate
that, with no individual stop -loss as displayed in Attachment #8, there is a 0.60 o probability that City
of Lubbock will realize an aggregate claim total greater than 1150 o of the expected claims resulting
from pure randomness. This probability drops to approximately 0.00 o at a level of 1250 o. With
individual stop -loss set at $350,000, as displayed in Attachment #9, the probability of aggregate
claims greater than 1150 o of the expected claims drops to 0.20 o, and the chance of having aggregate
claims greater than 1250 o of the expected claims is approximately 0.00 o. Note that this assumes that
the attachment point is set correctly.
We do not recommend aggregate stop -loss coverage for City of Lubbock at this time and have not
included coverage in our analysis.
Trend Analysis - Claims
Using a six-month rolling average, we performed a linear regression analysis of City of Lubbock's
monthly paid claims and enrollment to calculate that the claims in the self-insured medical and
prescription drug plans have been increasing at an annualized rate of 2.60 o for medical and 10.90 o
for prescription drugs. The results are displayed in Attachments #10-11. Nationally, based on the
Millimau Mid -Market Survey of employers, annual trend for medical and prescription drugs combined
is approximately 5-90 o for 2014 with expectations for 2015 at the same or slightly higher level.
Additionally, the Millimau Medicallude < (WMI), which examines the total cost to deliver healthcare,
saw increases of 6.30 o from 2014 to 2015. In order to mitigate variations due to the inherent
variability in claims data on individual groups, we blended the calculated trends for City of Lubbock
with national averages as appropriate to arrive at the trend levels used in the budget calculations.
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Milliman March 1, 2016
Prelinninay Budgeting — Premium Equivalencies far the 2017 Plan Year
Attachment #12 contains our findings and recommendations for distributing the previously
calculated total premium on a PEPM basis over the relevant plan options. Based on our actuarial
cost model, Health Cost Guidelines, u2014, the relative values of City of Lubbock's medical plan
designs, including expenses, are 100.0% for the Active/COBRA plan, 150.7% for the Non -Medicare
Retirees plan, and 73.5% for the Medicare Retirees plan. That is, the cost of the Non -Medicare
Retirees plan is expected to be about 50.7% more than the cost of the Active/COBRA plan.
Additionally, tier pricing levels for a 4 -tier plan should be 1.000 for EE Only, 2.135 for EE +
Spouse, 1.674 for EE + Child(ren), and 2.971 for Family. That is, the cost of a spouse is expected
to be about 141 o greater than the cost of an employee.
City of Lubbock's current plan pricing levels vary from our plan pricing relativities, but their tier
factors are near our expectation of the cost of coverage for each tier. For this analysis, we kept the
current plan and tier pricing levels in place.
Based on the factors above, we "spread" the premiums over the plan options and tiers to reflect the
assumed variances, while maintaining the same average total premium calculated in Attachment #4.
Referring to Attachment #12, we arrive at the "CY 2017 Proposed" premiums. The variances
between these and the current premiums are shown in the bottom rows of the attachment, and the
total costs are shown in the far right column.
Employer Subsidies and Employee Contributions
At this time, we have assumed that City of Lubbock will keep the employer subsidy for 2017 at the
same percentage as it was in 2016. As a result, City of Lubbock's portion of total medical costs is
remaining flat at 75.3% of the total cost. Please refer to Attachment #13 for details.
Additional Preliminary Budgeting — Premium Equivalencies for the 2017 Plan Year
Attachments #14-15 show additional premium equivalency calculations at the request of City of
Lubbock. Attachment #14 reflects our premium equivalency calculation should the Non -Medicare
Retirees plan and the Medicare Retirees plan combine plans for the 2017 plan year. Should City of
Lubbock move forward with combining these plans in 2017, we would ultimately recommend
performing separate pricing calculations for the two groups. Additionally, Attachment #15 reflects
our calculated increase applied to the flat department PEPM charge.
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Milliman March 1, 2016
2. Dental
Projected Change in Premium - Claims & Expenses
Attachment #16 shows our calculation of estimated claims costs and expenses for the self-insured
dental plans. Using the assumed increases to expenses listed in the Executive Summary above and
shown in Attachment #3, we estimate that City of Lubbock's claims and expenses will be $41.05
PEPM which is 27.20 o less than current premiums. Based on current enrollment, this amounts to
$1.32 million in annual premium. However, we recommending continuing to budget at $56.35
PEPM or $1.81 million annually. If claims do not trend as much as our estimate or City of Lubbock
is able to reduce expenses, then this amount could be lower. We used the same experience rating
methodology for dental as we did for medical.
Trend Analysis - Claims
Using a six-month rolling average, we performed a linear regression analysis of City of Lubbock's
monthly paid claims and enrollment to calculate that the claims in the self-insured plans have been
decreasing at an annualized rate of 4.6%. The results are displayed in Attachment #17. Nationally,
based on the Milliman Mid -Market Survy of employers, annual trend for dental is approximately 0-5° o
for 2014 with expectations for 2015 at the same level. In order to mitigate variations due to the
inherent variability in claims data on individual groups, we blended the calculated trends for City of
Lubbock with national averages as appropriate to arrive at the trend levels used in the budget
calculations.
Preliminary Budgeting — Premium Equivalencies far the 2017 Plan Year
Attachment #18 contains our findings and recommendations for distributing the previously
calculated total premium on a PEPM basis over the relevant plan options. While City of Lubbock's
tier factors vary from our expectation of the cost of coverage for each tier, we have kept the current
tier factors in place in this analysis.
Based on the factors above, we "spread" the premiums over the tier options to reflect the assumed
variances, while maintaining the same average total premiums calculated in Attachment #16.
Referring to Attachment #18, we arrive at the "CY 2017 Proposed" premiums. The variances
between these and the current premiums are shown in the bottom rows of the attachment, and the
total costs are shown in the far right column.
Employer Subsidies and Employee Contributions
At this time, we have assumed that City of Lubbock will keep the employer subsidy for 2017 at the
same percentage as it was in 2016. As a result, City of Lubbock's portion of total dental costs is
remaining flat at 71.60 o of the total cost. Please refer to Attachment #19 for details.
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Milliman March 1, 2016
Assumptions and Methodology
The steps we used to arrive at the results are outlined below:
1. We collected enrollment information from BCBS of TX and IVLHBT. We assumed that
those employees electing coverage would continue to elect coverage and that employees
waiving coverage would continue to waive coverage.
2. Monthly claims and current expense information was also provided by BCBS of TX and
MHBT.
3. Our expected claims range encompasses the current plan designs offered to employees and
the proposed plan designs. Should plan designs change, the Benefit Plan Design Factor
should be updated accordingly.
4. We made assumptions for trend factors based on annualized trends and national averages.
5. Using claims experience and assumed trend factors, we calculated projected claims costs on a
PEPM basis.
6. We performed an analysis of aggregate claim variability to determine an appropriate level of
individual stop -loss.
7. Using plan pricing levels, tier pricing levels, and enrollment assumptions, we calculated
premium equivalency rates by plan and coverage tier
8. Using employer subsidy assumptions, we calculated employer subsidies and employee
contributions by plan and coverage tier.
Reliance and Limitations
In performing our analysis for City of Lubbock, we relied on the data provided to us by BCBS of
TX and MHBT. We have not audited this data, but we performed a limited review for
reasonableness and we found no material defects in the data used in this report. If the underlying
data is inaccurate or incomplete, then the results of our review may be inaccurate or incomplete.
Differences between our projections and actual amounts depend on the extent to which future
experience conforms to the assumptions made for this analysis. It is likely that actual experience will
not conform exactly to the assumptions used in this analysis. Actual amounts will differ from
projected amounts to the extent that actual experience deviates from expected experience.
Milliman
March 1, 2016
The services provided for this project were performed under the signed Consulting Services
Agreement between Milliman and MHBT dated January 31, 2003 as well as the signed Services
Agreement between Milliman and City of Lubbock dated June 11, 2012. This letter and its
attachments have been prepared for the use of MHBT in their relationship with City of Lubbock
and are only to be relied upon by these organizations. No portion may be provided to any other
party without Milliman's prior written consent. Milliman does not intend to benefit any other
recipient of this report, even if Milliman consents to the release of this report to that recipient.
Please contact us if you have any questions.
Sincerely,
Jason E. Speer, F.S.A., M.A.A.A.
Principal & Consulting Actuary
Blaine A. Weber
Senior Benefits Consultant
G� --K
Paul T. Penke
Senior Financial Analyst, IVIBA
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Milliman
Renewal Evaluation Summa - Medical
City of Lubbock -
Carrier BCBS of TX
Attachment#2
1 Enrollment is taken from the January 2016 census files provided by City of Lubbock.
2 Current Rates represent the premium equivalencies based on current enrollment.
3 See attachments for additional details on Milliman calculation.
4 Pricing calculations incorporate Milliman's expectation of claims in conjunction with our projection of expenses
5. Aggressive and Conservative budgets are presented for illustrative purposes and should not be taken as Milliman's recommended
budgeting levels
Prepared on'.
PIP
3112016 Millman. Inc. COL 2017 Pricing
Aggressive Budget'
Conservative
Budgets
CY
2016
CY 2017
Total Medical - Self -Insured
$29,787,064
Milliman
Percent Increase Over Current
(4%)
4%
Total Annual Cost Over Current
($1,380,250)
$1,215,573
Claims &
75%
10%
Current
Milliman
Enrollment/
Rates
Total Annual
Projected
Medical - Self-insured
Coverage Basis
Volume'
PEPM :
Cost
Ex enses"
Expected Claims Cost PEPM a
Em to ees
1 2,7641
$866.42
1 $28.737.4961
$869.59
Percent Increase Over Current
0.4%
Total Annual Cost Over Current
$104,987
Claims Administration
JEmloyees
1 2.7641 $43.581 $1,445.4611
$44.89
Percent Increase Over Current
3.0%
Total Annual Cost Over Current
$43,450
Rx Rebates
JEmployees
1 2,764 ($734)1 $243.453
$6.93
Percent Increase Over Current
(5.6'/0)
Total Annual Cost Over Current
$13,599
Organ Transplant Fee
EE Only1,315
$6.08 $95,942
EE Family1
449 $14.60 $253,865
Total
,+,
2,764 $10.55 $349,8071
$11.07
Percent Increase Over Current
5.0%
Total Annual Cost Over Current
$17,490
Individual Stop -Loss
lEmployees
1 2,7641 $21.451 $711,4541
$22.52
Percent Increase Over Current
5.0%
Total Annual Cost Over Current
$35,573
ACA Fees
JEmployees
1 2,7641 $5.021 $166,5501
$0.40
•incudes PCORI 8 Transitional Reinsurance Fees
Percent Increase Over Current
(92.0V..)
Total Annual Cost Over Current
($153,226)
Composite
JEmployees
2,764r $939.68 $31,167,315
$941.55
Total Medical - Self -Insured
1 2,7641 $31,167,3151 $31,229,188
Percent Increase Over Current
0.2%
Total Annual Cost Over Current
$61,874
Premium Reduction
1 Enrollment is taken from the January 2016 census files provided by City of Lubbock.
2 Current Rates represent the premium equivalencies based on current enrollment.
3 See attachments for additional details on Milliman calculation.
4 Pricing calculations incorporate Milliman's expectation of claims in conjunction with our projection of expenses
5. Aggressive and Conservative budgets are presented for illustrative purposes and should not be taken as Milliman's recommended
budgeting levels
Prepared on'.
PIP
3112016 Millman. Inc. COL 2017 Pricing
Aggressive Budget'
Conservative
Budgets
Composite PEPM
$898
$976
Total Medical - Self -Insured
$29,787,064
$32,382,888
Percent Increase Over Current
(4%)
4%
Total Annual Cost Over Current
($1,380,250)
$1,215,573
Chance of Exceeding Budget
75%
10%
1 Enrollment is taken from the January 2016 census files provided by City of Lubbock.
2 Current Rates represent the premium equivalencies based on current enrollment.
3 See attachments for additional details on Milliman calculation.
4 Pricing calculations incorporate Milliman's expectation of claims in conjunction with our projection of expenses
5. Aggressive and Conservative budgets are presented for illustrative purposes and should not be taken as Milliman's recommended
budgeting levels
Prepared on'.
PIP
3112016 Millman. Inc. COL 2017 Pricing
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CERTIFICATE OF INTERESTED PARTIES
FORM 3.295
lofl
Complete Nos. l - 4 and 6 if there are interested parties.
Complete Nos. 1, 2, 3, 5, and 6 if there are no interested parties.
OFFICE USE ONLY
CERTIFICATION OF FILING
Certificate Number:
2016-111604
Date Filed:
09/13/2016
Date Acknowledged:
09/19/2016
1 Name of business entity filing form, and the city, state and country of the business entity's place
of business.
Blue Cross and Blue Shield of Texas
Richardson, TX United States
2 Name of governmental entity or state agency that is a party to the contract for which the form is
being filed.
City of Lubbock
3 Provide the identification number used by the governmental entity or state agency to track or identify the contract, and provide a
description of the services, goods, or other property to be provided under the contract.
13064
Employee Medical and Pharmacy Health Plan Services
4
Name of Interested Party
City, State, Country (place of business)
Nature of interest
(check applicable)
Controlling
I Intermediary
5 Check only if there is NO Interested Party. ❑
X
6 AFFIDAVIT I swear, or affirm, under penalty of perjury, that the above disclosure is true and correct.
Signature of authorized agent of contracting business entity
AFFIX NOTARY STAMP / SEAL ABOVE
Sworn to and subscribed before me, by the said this the day of
20 , to certify which, witness my hand and seal of office.
Signature of officer administering oath Printed name of officer administering oath Title of officer administering oath
Forms provided by Texas Ethics Commission www.ethics.state.tx.us Version V1.0.277
Forms provided by Texas Ethics Commission www.ethics.state,tx.us Version V1.0,21.
CERTIFICATE OF INTERESTED PARTIES
FORM 1295
1of1
Complete Nos. 1 - 4 and 6 if there are interested parties.
OFFICE USE ONLY
Complete Nos. 1, 2, 3, 5, and 6 if there are no interested parties.
CERTIFICATION OF FILING
Certificate Number:
1
Name of business entity filing form, and the city, state and country of the business entity's place
of business.
2016-111604
Blue Cross and Blue Shield of Texas
Richardson, TX United States
Date Filed:
09/13/2016
2
Name of governmental entity or state agency that is a party to the contract for ich t e form is
being filed.
City of Lubbock
Date Acknowledged:
3
Provide the identification number used by the governmental entity or state agency to track or identify the contract, and provide a
description of the services, goods, or other property to be provided under the contract.
13064
Employee Medical and Pharmacy Health Plan Services
4
Name of Interested Party
City, State, Country (place of business)
Nature of interest
(check applicable)
Controlling
Intermediary
11 11
FO
5
Check only if there` `Wr
X
s
6
AFFIDAVIT * I swear, or affirm, under penalty of perjury, that the above disclosure is true and correct.
�* Z
�! C
do kof
Signature of authorized agent of contracting business entity
AFFIX NOTARY STAMP / SEAL ABOVE
Sworn to and subscribed before me, by the said Tel, i ,L _ awV-%OY' Y-\,- this the I L�— day of C
20__LG_, to certify which, witness my hand and seal of office.
les Ass, 6
Signature of officer administering oath Printed name of officer administering oath Title of officer administering oath
Forms provided by Texas Ethics Commission www.ethics.state,tx.us Version V1.0,21.