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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