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HomeMy WebLinkAboutTCMHC Annual Report.pdf125 E. Coilrl Street llhaca NY 14550 604-274-55S0 I N FO: consodiunl tDf,v c nv J r.can www -lompkinSc ountyny.gov/hcst$orti$n *Iurrici palities b uilding a $latrle insurance fulure. rt4rFG,!!QM Greater Tompkins County Municipal Health Insurance Consortium2014 Annual Report May 2015 The Greater Tompkins County Municipal Health Insurance Consortium was created with a mission in mind; pooling municipal resources to reduce administration costs and leverage purchasing powers to obtain health care services at a lower cost while spreading potential large ,losses over a larger number of policyholders. The year 2014 marks the completion of the fourth consecutive successful year of The Greater Tompkins County Municipal Health Insurance Consortium. The Greater Tornpkins County Municipal Health Insurance Consortium received its Certificate of Authority to conduct operations in October 20 10 and began providing health insurance for 2002 employees and retirees of thirteen municipalities within Tompkins County on January I, 2011. GTCMHIC is an Article 47 insurance company that creates benefit plans, collects premiums, and pays medical and pharmaceutical claims for its covered members. Currently >5000 employees, retirees, and their dependents of the sixteen (16) municipalities of the Towns of Caroline, Danby, Dryden, Enfield, Groton, Ithaca, Lansing, Ulysses, the Villages of Cayuga Heights, Dryden, Groton, Homer, and Trumansburg, the Cities of Cortland and Ithaca and Tompkins County are covered by one of the Consoftium's approved benefit plans for medical and pharmaceutical claims. Benefit plans are a contract between the employer, the employee, and the health care providers including pharmacies. The insurance company is the intermediary that provides the mechanism for alarge group of persons to pool their risk of health conditions along with their premium payment. Claims are paid that meet the benefit plan criteria. The amount paid to providers is negotiated by the insurance company or its agent for in-network and out of network claims. Operations Highlights: o fn 2014, the Consortium received $36 million in premiums and paid $29.8 million in claims resulting in $3.85 rnillion in net income. r With this strong financial result, the Board of Directors increased its Catastrophic Claims Reserve and its retention limit of large loss claims. . The Board also established a Rate Stabilization Resele and approved a 5%o premium rate increase for 201 5. o The Consodium continues to operate very efficiently with 92o/o of its expenses going to pay claims. . The Village of Homer joined the Consortium inlate 2014. o Two benefit plans were added -- the Medicare Supplement and the Platinum Plan to the Consoftiums offerings. r For the first time: the Consortium offered flu clinics that were conducted in ten locations. r The Board of Directors created the position of Executive Director. e The Consortium completed the Department of Financial Services Audit for years 20ll and2012. o A Consortium wide educational retreat on basics of health care and where the Consortium fits in was conducted on September 15,2014. Committees: The Greater Tompkins Consoftium Board is supported by several special committees that perform the in- depth research and deliberation to propose policies, products, and process improvements to benefit the operation of the Consortium. Greater Tompkins County Municipal Health Insurance Consoftium 2014 Anntal Report In2014 the Audit and Finance Committees were merged. The new Audit and Finance Committee is chaired by CFO Steve Thayer, merged into one committee to better service the Board. The Audit and Finance Committee was instrumental in bringing forward the Membership Dependent Certification Process and the Medical Claims Audit. The Audit and Finance Committee collaborates closely with Steve Locey, the Consultant, and Rick Snyder Treasurer, to monitor the budget and spending trends while maintaining a strong reserving policy. The Owning Your Own Health (OYOH) Committee, chaired by Director Mack Cook, implemented a pilot biometric screening program with involvement from the both the City of Ithaca and the City of Cortland. They continue to explore wellness awareness programs and keep the cost controlled by utilizing existing community and vendor programs. The Committee receives support from both the medical and prescription claims administrators. They executed successful flu shot clinics by partnering with Pro-Act at numerous locations, which was used by 347 members. The Joint Committee on Plan Structure and Design, chaired by Director Scott Weatherby reviewed and provided input on two new products to the Consortium's menu of plan offerings. Both the Classic Blue Medicare Supplement plan and the Platinum metal level look a-like plan were approved by the Board. Financial Highlights: Net position: For the year ending December 31,2014, the Plan's net position has increased by $3,851,816 to a grand total of $10,900,699. GTCMHIC Board of Directors have been consciously building reserves starting in year one (2011) when required to post the Incurred But Not Reported Reserve (IBNR) of $2.6 million and Surplus reserve of $1.3 million. In subsequent years, reserves were built to protect the Consortium against an abnormal claims activity which is a statistical possibility. Reserves were also built to retain more claims cost and reduce the Stop-Loss Insurance premium. The Board of Directors felt, with this 2014 posting of net position, that reserves could be used to offset premiums which resulted in a 5%o increase in premiums as opposed to 8Yo and 9Yo in the first years of the Consoftium's operation. It should be noted that 8% premium increases compares favorably to the indushy average. Five percent demonstrates strong performance. Statements of Revenues and Expenses - The Statements of Revenues, Expenses, and Changes in Net Position present the results of operations of the Plan for the years ending December 3 1 : Revenue Overview Premiums Aggregate write-ins for other revenues lnterest earnings Total Revenues 36,063,291 $ 134,659 12,641 34,507,670 $ 146,563 9,871 28,575,531 105,902 7,332 36,210,591 $34,664,104 $28,688,765 Greater Tompkins County Municipal 2014 Annual Report Health Insurance Consortium Sources ofRevenue for 2014 Aggregate write-l ins for other revenues F ezx Expense Overview - The following table summarizes expenses by Claims expense Administrative fees (3'o party administrators) Other expenses Reinsurance expenses, net of recoveries Total Expenses Prenfuns 99.60% function for the years ending December 31: 988,796 562,919 836,935 939,946 610,890 310,713 928,502 373,096 (590,041) 32,144,140 $29,875,306 $ 25,510,592 Operating Expenses - 2014 Claims 92.57n/o Please note the expense summation above shows a very efficient structure with >92%o of expenses going to pay claims. Reserving for the Future: New York State Article 47 Legislxion requires its certificate holders to hold a Surplus Reserve equal to 5% of premiums and an Incumed But Not Reported Claims (IBNR) Reserve of I2Yo of the paid claims. Additionally, for 2013 the Board of Directors established a "Catastrophic Claims Reselve" of $600,000 to provide resources forthe additional risk of retaining $50,000 more of claim cost or increasing to $300,000 of cost per claim prior to Stop-Loss insurance covering such large loss claims. The Board of Dirbctors increased that reserve to $1,050,000 and increased the large loss claim retention to $400,000 for 2015. Greater Tompkins County Municipal Health Insurance Consortium 2014 Annual Report Great€r Tompkins Courrty Munic$al Henlth Insurnnee Consortium Asret Distribution (2011 - 20I4) ljncncrmbcrcd rtdlu$tnretrt frr I Cnl*ttrophic Economic Factors Affecting the Future: r Prior to the start of the 2013 Fiscal Year, the Consortium renewed its specific stop-loss insurance with an increased deductible level of $300,000 in an effort to keep the premium increase at a reasonable level. This increased deductible does create an additional level of risk associated with the Consoftium's operations. However, the Consortium experienced fewer catastrophic losses in 2013 and 2014. This contributed to the better than expected paid claims result which allowed the Consortium Board of Directors to establish a Catastrophic Claims Reserve to help off-set the increased risk associated with the higher deductible on the specific stop-loss iirsurance. In 2014 the Catastrophic Claims Reserve was established at approximately $600,000. During the 2015 budget development process which occured in the Fall of 2014, the Board of Directors again agreed to increase the specific stop-loss insurance deductible to its current level of $400,000. This resulted in an additional increase in exposure and a lower premium expense. To help protect the Consortium's financial position the Board of Directors voted to increase the Catastrophic Claims Reserve to $1,050,000 for the 2015 Fiseal Year. This is an area which will be reviewed by the Board of Directors on an annual basis to ensure a tolerable balance is achieved between the risk and cost of the stop-loss insurance. Greater Tompkins County Municipal Health Insurance Consortium 2014 Annual Report Statement of Position Greater Tompkins County Municipal Health Insurance Consortium Statements of Net Position - December 31. 20r4 ASSETS Current Assets: Cash and cash equivalents Accounts receivable - stop loss and drug rebates Accounts receivable - ancillary benefits Premiums receivable Prepaid expenses Total Current Assets OTHER ASSETS Noncurrent Assets: Premium claims deposit Restricted cash and cash equivalents Total Other Assets Total Assets LIABILITIES Current Liabilities: Incurred claims liability: Incurred liability Claims payable Total Incurred Claims Liabilitv 8,535,686 6,907,3lg The Affordable Care Act's (ACA's) ongoing implementation has resulted in some increased costs to the Consortium with the payment of the Patient Centered Outcomes Research Institute (PCORI) Fee in the amount of $4,448 related to the 2012 Fiscal Year. This fee more than doubled in cost with the $10,252.46 payment made during the 2014 Fiscal Year for the 2013 Fee which was paid in July 2014. Starting with the 2014 PCORI fee this fee will continue to increase each year by an inflationary escalator as determined by the United States Internal Revenue Service until the fee is no longer applicable in 2019. In addition to the PCORI fee, in 2014, the Consortium was subject to the ACA Transitional Reinsurance Program Fee which required the Consoftium to pay $316,764 during the fiscal year. The Board of Directors is also keeping a close eye on the effect of continuing decreases in Medicare and Medicaid reimbursements to medical facilities and practitioners will have on the Consortium's paid claims expenses. The main concern is that these same providers of care will seek higher reimbursements from the third party administrators and insurance companies to make up for the losses in Medicare and Medicaid revenue. It is likely that these pressures will lead to contentious negotiations on network reimbursement rates which could also impact the overall provider network. Although the Consortium does not foresee any immediate financial issues related to this situation, the Board of Directors will continue to monitor paid claims and other data to ensure they make well informed and educated decisions regarding the financial structure ofthe plans. 2013 $7,958,073 540,237 -0- 36,379 997 $3,563,863 429,354 9,136 277,412 -0- 4,279,765 953,700 5,953,618 908,100 5,947,r89 6,955,299 15.443-004 ll 135.054 3,520,046 280,293 3,204,729 369,664 3,800,339 3,574,393 Greater Tompkins County Municipal Health Insurance Consortium 2014 Anntal Repoft Accounts payable Unearned revenues Total Current Liabilities Total Liabilities NET POSITION Restricted for contingency reserve - Section 4706(a)(5) Catastrophic claims reserve Adjustment for incurred but not reported claims Subtotal Unassigned Total Net Position 386,786 355,1 B0 315,382 1.96,396 4,542,305 4,086,177 4.s42.30s 4.086"t71 1,903,165 606,898 (1,039,i80) 1,725,394 600,000 (824,545) 1,370,993 g,52g,g16 1,5oo,g3g 5,548,044 $10,900,699 $7,048,883 Statements of Revenues, Expenses, and Changes in Net Position For the Years Ended December 31, 2074 2013 Operating Revenues: Premiums Aggregate write-ins for other revenues Total Operating Revenues Operating Expenses: Claims expense Reinsurance expenses, net Administrative fees Aggregate write-ins for other expenses Total Operating Expenses Excess of Operating Revenues Before Non-operating Revenue (Expense) Non-operating Revenue (Expense): Interest earnings' Interest (expense) Total Non-operating Revenue (Expense) Change in Net Position Net Position, January 1, Capital contributed (returned) Adjustment for incuned but not reported claims Net Position, December 31, $36,063,291 t34,659 $34,507,670 t46,s63 36"197.950 34.654"233 29,755,490 836,935 988,796 562.919 28,013,757 310,713 939,946 610,890 32,144,140 29,875,306 4,053,g lo 12,641 -0- 4,778,927 9,871 (179,426) 12.641 (109.555) 4,066,451 7,04g,gg3 -0- (2I4,635) 4,669,372 4,626,192 (1,422,136) (824,545) $10.900.699 $7.048,883 Greater Tompkins County Municipal Health Insurance Consortium 2014 Annaal Report Goals for 2015: o Creation of remaining look alike "metal level" plans from Affordable Care. . Complete required review of Municipal Cooperative Agreement. o Continue to research and establish reserye and fund balance policy. o Continue Consoftium community education of the operations of a Health Insurance Company. o Continue due diligence to ensure compliance with benefit plans and statutory regulations. o Continue to explore wellness opportunities. 201,4 Board of Directors Judith Drake, Chair Rordan Hart, Vice Chair Steven Thayer, Chief Fiscal Officer Deborah Prato, Secretary* Mack Cook John Fracchia Mary Ann Sumner Herb Masser Glenn Morey* Richard Goldmanx MichaelMurphy Charles Rankin Kathy Miller Peter Salton Laura Shawley Scott Weatherby Doug Perine* Town of lthaca Village of Trumansburg City of lthaca Tompkins County City of Cortland Town of Caroline Town of Dryden Town of Enfield Town of Groton Town of Ulysses Village of Dryden Village of Groton Town of Lansing Village of Cayuga Heights Town of Danby Chair, idrake@town.ithaca.nv.us ha rt@truma nsbu rg-nv.gov stevet@citvofithaca.org dprato@tom pkins-co.org mcook@cortla nd.org iohn fracchia @townofcar:oline.org supervisor@d rvden.nv.us herbmasser@gmail.com sem5@cornell.edu goldma n@ ulvsses.nv.us d rvdentrusteem urphv@gma l.com crankingroton @gmail.com kcm il le r154@twcnv. rr.com psalton @cavuga-heights.nv.us highwav(@townofda nbv.ors weathes@tc3.edu Joint Comm. on Plan Structure and Design 2no Labor Representative doug.perine@dfa.state.nv.us * Membership changed in 2075 Consortium website: www.tompkinscountvnv.gov/hconsortium Executive Director: Don Barber - edconsortium@twcnv.rr.com Consortium e-mail: consortium@twcnv.rr.com Respectfully submitted : Judy Drake Chair of Board of Directors Don Barber Executive Director