City Council - Regular Meeting

How you doing? All right. I will call to order the March 16th, 2026 Belmont City Council workshop meeting. I don't believe there are any changes to the agenda as is presented. So I will entertain a motion to set the agenda. Second Mark, seconded by Jason. All in favor?

Any opposed? All right, the agenda is set. Uh moving to item B1. I believe we have Hannah that will be introducing everyone. And again, just so everyone knows, the microphone is a little low, so if you don't mind, get nice and close. Thank you, Mayor and Council. Can you hear me? Okay.

Okay. Okay. Um, my portion is going to be brief before I bring Donna Nixon with Club International up here. Um, I want to give a brief history, background, and a little bit of a refresh and the timeline that brings us where we are today and why we're having this discussion. All right. So, back in late February of 2025, the North Carolina League of Municipalities, they shut down their health insurance trust, effectively pulling us out of their health pool as of July 1st of 2025. Because of that, it put us into a compressed timeline. We had to rush to secure a broker, um, get quotes to secure health coverage for all of our employees in time for open enrollment and budget. We looked at approximately four different brokerage firms and we compared them based on municipal excuse me, um service capabilities and implementation support and ability to meet the compressed timeline that we were in as well as cost competitiveness. We compared it down to about two and of that two, we did partner with Hub International. We were impressed with their service model um their employee education, communication and open enrollment support that they provided. They have really good HR tools and compliance resources that they include as well. Um they specialize they have special and alternative funding strategies and deep public sector and municipal government experience. And of the two that we were considering, they were the most cost effective option among the top uh finalists. Once partnering with hub, uh we sourced quotes and as you can see due to our poor claims year, um we were declined to quotes from all major um full coverage carriers except for United Healthcare. We're kind of backed into a corner there. We had to go with United Healthcare.

Hannah, can you give some perspective on when you say poor claims history, was that like a one time spike for the last year or was it more of a multi-year? So, there's a 24 month look back for claims history and okay, sorry.

Um, so yeah, we were kind of acted to a corner and health United Healthcare was our only option. So that rates didn't spike astronomically for our employees who have dependent on coverage. This is a brief overview of what our rates are currently under United Healthcare. Um, from the perspective of an employee, this is cost per pay period. The city does pay 100% premiums for employee only coverage. We do not contribute to dependent premiums. Um, employees have to absorb those costs. These are the costs for employee children, spouse, and family per pay period as well as The city has approximately 190 employees on our health plan. Of that 190, 148 have elected employee only coverage, paying zero in premiums. 33 have elected employee child. Seven employee spouse and only two out of the 190 have elected family coverage. So, of those 190 employees, only approximately 22% have elected dependents at all to be placed on their health plans. This is a good indicator that our plan design discourages dependent coverage. In current family enrollment, health premiums consume 15 to 30% of annual gross wages for those two employees that are carrying family coverage. The city has approximately 18 employees earning under $43,000, including seven who could potentially add dependence, but would likely face similar affordability challenges. And this doesn't exclude employees above that 43,000 threshold who also would face affordability challenges. It's a reoccurring thing that pops up in our exit interviews and in general and especially during open enrollment season. So currently um while we went with the decision to go with United Healthcare, we do understand there's been a employee dissatisfaction um so we've been working with uh to

evaluate alternative strategies to improve both the employee experience and long-term costability for the city. One option being considered for uh is transitioning to self-funded hopefully to provide greater cost transparency, more control over our plan design, which would be very helpful, and potential long-term savings. So, with that, I'm going to hand it over to Donna Nixon with Hub International. Thank you.

Good evening. Thank you, Hannah. Thank you, city council. It's a pleasure to be here with you tonight. So, my name is Donna Nixon and I serve as senior vice president with Hub International. And my primary role is to serve as our employee benefit strategist to really help all of our groups um kind of think through decisions such as this. Make sure that we're bringing all of the creative options to the table for consideration and how to structure a benefit program that's going to help you attract and retain your employees. So, I'd like to start off by sharing a little bit about um as Hannah mentioned, you know, the experience as to where you have been and kind of where you are currently today. And so, this chart right here shows 29 months worth of claims history. Um the red line that you see around the bottom is the 85% carrier target. And so regardless of where you obtain your health insurance, um they are going to want your claims to run at a loss ratio of 85% or lower. So this chart kind of shows 29 months worth of data. And you can see here um the numbers represent what that loss ratio is. And loss ratio is simply just taking your claims divided by your premiums that you're paying for that coverage. Everything above that red line means that your health care provider paid more out in claims than it received in premiums. Everything under that line means that the city of Belmont paid more in premiums than what were um incurred in claims. And so you can see there's been some pretty rocky months um as far as what that claims history looks like. um you know loss ratios as high as 358% um with some real spiked um claims there. The majority of those large

spikes really are attributed to highcost climates. So things you know such as cancer or highcost specialty medications and we'll show a little bit about those here a little bit further. But um as Hannah mentioned, you know, when the League of Municipalities closed their funding pool, um it did leave, you know, the city of Belmont and many others in kind of a bind because the claims history wasn't favorable and um yet you still had to go out to the market and find health insurance for your employees. Um, one thing I just want to make sure people understand is, um, you know, the League of Municipalities really got a lot of leeway in how they structured their program. They were established for the betterment of their membership, the cities, and so they were really trying very hard to keep their rates as low as possible. They did operate like a fully insured program from your perspective, meaning you just paid a flat premium each month and they paid the claims. they took all of the risk for all of the municipalities. Um, where it ran into trouble is obviously once you start to have claims that are exceeding that premium amount, you know, there's no choice but all of that to be compacted and then all of a sudden there's not enough premium there to continue to offer that program. However, the timing created a huge burden and challenge for municipalities um across the state because there really wasn't a lot of time to really kind of dig in and say, you know, what can we do about this today? Um and then, you know, even though they did provide some claims information, um the carrier market, the traditional insurance carrier market really just didn't have an appetite for that risk. So, as Hannah mentioned, United Healthcare really was the only one that um source gave gave a benefit package. They did so at a pretty

favorable rate in our opinion. And so, we have been completely transparent with um Mr. Brasswell and your um finance officer that, you know, we are worried because the pattern has continued as far as claims experience what that renewal is going to look like from United Healthcare. And so our actuary and underwriters are projecting um a renewal increase between 25 and 50% for this next July to June um time period. So with that, we wanted to make sure we were really talking through um alternate funding mechanisms that the city may want to consider as we kind of move forward outside of the fully insured market. And so I'd like to dive in a little bit and share with you um you know h how how you are funded today with fully insured and and what challenges that creates. So um the fully insured model is really fundamentally designed for the insurance carrier not necessarily for the employer. Um, under the traditional insurance, there's really four types of things that are happening that, you know, most um, group plans really aren't being made aware of. And, you know, the first one is those hidden margins. So, the carriers do build in profit margins right into their premium. Um, you don't really ever see what the claims costs. It's a pretty limited amount of data that you receive. when the claims are running low, the carrier keeps all of that profit and you don't really know um you know what that really looks like. The second thing is really that limited claims visibility. So the data, your claims data actually belongs to the carrier. It does not belong to the city of Belmont. So they only provide very limited data which makes it you know nearly impossible to target those cost drivers because you don't really know what they are except for very general um claims information. So it makes it very difficult to make informed plan

decisions. Next is really um you know the the renewal roulette as we call it. Um you know every renewal is really dictated by the carrier's pricing model and the market conditions. Um you know one bad claims year can really trigger doubledigit increases and there's really no recourse or transparency especially if there's no other competition in the market that's available to provide um a quote. And then lastly, um the pharmacy benefit management services um kind of creates a black box. All of your pharmacy costs are really kind of hidden into your premiums and that pharmacy benefit manager um profits from spread pricing. Um you don't really see what the drugs cost, what the carrier is really paying the pharmacy for those medications. and all of the manufacturer rebates are going back to the pharmacy benefit manager, the carrier, and not to the city of Belmont. So, um that's kind of exactly the arrangement that you all have today is the lonorture arrangement with United Healthcare.

Yes. Question. Um with regard to renewal pricing, is it purely a rearview facing perspective on the renewal rates or is there any consideration given to for instance um employee attrition? You know, if for instance some of those participants that triggered some of the the spike in claims, if they're no longer a participant in the plan, does that have any factor in in renewal rates or even who who might wish to to bid on our plan?

So, um that's a great question. And so most of it is really attributed to historical information, right? Because the carrier saying we paid out X, we didn't receive enough, right? So we want to recoup that money. However, we do work very closely with HR kind of trying to monitor, you know, hey, we can see that there's these four highcost claimments. The problem is there's no data transparency. So I don't know who they are. And so we're like, do do you happen to know who they are? Sometimes in a group of your size, right? you know, because somebody's out on disability coverage or something, but like if it's a spouse or dependent, we may not know who those high-cost claimants are to do some of that factchecking as far as, oh, are they still on the plan? Are they off the plan? It is. It is. Um,

and again, they own the data. You don't own your data. So um you know so when we are made aware of oh perhaps oh this person came off the claim um and they would have to exhaust their COBRA eligibility window um for us to be able to then negotiate. We don't want this claimant to be considered in the renewal. Um, it's really hard to try to do those negotiations though on a fully insured basis again because they're looking in the rear view and they want to regardless if the person's going to be here or not, they want to recoup the money that's kind of been paid out.

But excellent question. So when we think about um kind of the negatives or the challenges that exist in fully insured, you know, we really want to think through what's that alternative and self-funding is really the alternative that we think most employers um that really want to try to retain um the best odds of winning in the insurance game really are self-infunded. Self-funded. Um, so how that works is instead of paying a fixed premium every month, um, you would simply fund a claims account and you would pay as you go. So right now, if you have 190 people on the plan, you're paying that premium for 190 people. And you have no idea whether claims are being incurred or not. In a self-funded arrangement, you're still going to set your budget rates. Um, you're still going to collect employee contributions. However, you're going to hold that money in an account. And when claims are incurred, they will draw money out of that account to pay for those claims.

Do we need to seed the account at the beginning? So like, you know, so there's money to pay claims if somebody makes a claim like in the first month.

So naturally, there is a lag when you make any type of carrier transition. Um because you know claims have to even if they're incurred July 1, right? They don't get build by the provider usually until closer to the end of the month. you're still collecting those contributions and still have funded at your premium rates. So, you're going to have money in that account, say the first paycheck um of of the month by weekly um to have that money there. Obviously, it's a great idea if you can fund in advance so that you know, say, you know, you get that high cost claimment in month one, right? You want to make sure that there's money there. I'm going to talk a little bit about how we're going to protect the plan as well to make sure that you do have um not as much volatility as what it sounds like in a self-funded arrangement um to offer that protection for the city.

Donna, real quick, just a point of clarification for me. So if it's pay only as you go are are the insured through the city or employees are they treated as cash pay for purposes of what it the claim amount that comes back?

No they are not. So even though you are paying as you go we do structure the plan with a third party administrator that pays the claims and more importantly we also provide a provider network for that coverage. So just like today they have employee ID cards that say United Healthcare on them. We would go ahead and build a plan that has a provider network. Maybe MedCost who the city has used in the past as a provider network. Maybe Etna another big national um network. They also have the state health plan here in North Carolina. So very very robust network. What that means is when they have that network, you all would benefit from those provider contracts that exist inside that network to get that discounted pricing. And employees would still render services just like today. They'd show their ID card. If it was an office visit, they'd pay their co-pay. Um the city would just then be build through the third party administrator kind of on an aggregate basis for those months claims.

Okay. Thank you. Does that answer your question? It does. Thank you.

Great. Um so with the self-funding model um you pay as you go you also receive full transparency. So to your question earlier you know what are the high-cost claimments like what what's driving our costs today we have very limited insight when you are self-funded. Um we would have full insight into all claims that are paid. Obviously, we do follow HIPPO regulations, right? You would designate who here at the city actually has HIPPA authorization to actually see that level of detail. But what that does is it allows us a couple of things. One, it allows us to really try to provide some risk mitigation for claims that are ongoing. And it also allows us to really customize plan designs knowing the types of services that are being rendered. Um, and then as I mentioned, most self-funded um, employers really do feel like they are in the best position to win in this arrangement. However, it can feel scary. There was questions about, well, do we have to fund in advance? What if we get a large peak of claims? Um, we also want to make sure that you have stoploss being built into this program alongside your TPA, your provider network, and your um, pharmacy benefits to offer protection. And I'll dive into kind of how the stop-loss works here in a moment. So self-funding really lets you kind of choose that best-in-class vendor. Um, you know, third-party administrator. Today, United Healthcare basically is doing that work. They're offering ID cards, they're processing claims. Um, they're taking on the risk for you all today. um city of Belmont would actually have that covered through stop-loss insurance in this model. So stop-loss insurance can be structured in many different ways. The um most advantageous for groups of your size is to go through a captive to purchase

stop-loss insurance. That captive uses excessive buying power to basically get best-in-class stop-loss insurance. And most importantly, they get contract terms that are going to provide the city with protection. Meaning, they're going to cap the most that you're going to pay. And they do that in two different ways. They're going to cap the most that you pay per claimant. So that highcost claimment that maybe has, you know, $900,000 in cancer expenses, your exposure for that one claimment would be capped at maybe $75,000 as an example. They're also going to cap your exposure for an aggregate of everybody in the plan. That's just incurring regular doctor's visits, emergency rooms, co-pays at the pharmacy. They're also going to provide you with aggregate protection so that you know in one plan year, this is the very most that you're going to be able to spend if you add up all 190 employees and their dependents on the plan and their incurring claims. The other thing that we feel is really important for groups your size is to make sure that that stop-loss protection offers some guarantees as far as what do my rates look like next year because the same philosophy that we talked about in the fully insured arrangement as far as well they're going to use that rearview thinking of oh I pay out more than I'm receiving. We want to make sure that there are some protections in place to cap that exposure for the city um at renewal. And so rate guarantees are going to be something that we're going to make sure that the captive has in place and can um negotiate. And I'll share a little bit more about those percentages here in a moment. We also want to make sure that you're using a transparent pharmacy benefit manager. So today, United Healthcare uses Optum RX as the pharmacy benefit

manager. So you have on your ID card, um it says Optimum on there somewhere. That's who's actually really sourcing the medications, setting the prices for the pharmacies, and managing the pharmacy formulary. Um they're also the ones that are receiving all of the rebates instead of passing those on to uh city of Belmont. So, we think it's really important to choose a pass through pharmacy benefit manager to really manage your plan to the lowest cost of um transparent pricing. And so, they just you pay them an admin fee. They're sourcing the drugs and building in programs to make sure that you are paying the lowest cost for those drugs. Still works the same from an employee level. They're going to a pharmacy with an ID card, paying their co-pay at time of service. Uh we talked a little bit about network access, making sure that you have the right network of providers available to make sure that there's full access for all of your employees and that the city can benefit from the um provider discounts. Um care management is another piece that we want to make sure gets built into the program from the start. Again, making sure that, you know, when we get to start looking at what those claims are, do we have the appropriate health management systems in place to help the employees and the patients actually manage their care so that they are getting healthier quicker, managing that spend and getting the very best care that they can um for that condition. And then lastly, really making sure that you have the claims reporting that can help you guide plan design um cost forecasting and control and most importantly budgeting and predictability. So when you get to see under the hood, it really does allow us to do underwriting in advance. So um that we can provide you on a month-to-month basis a projection as to where do we think your costs are going to be, you know, in that next plan year. So, you know, a lot of employers like that from a funding standpoint that, you

know, there's a little bit more um transparency earlier in the process than exists today. So, I talked about pharmacy a little bit um that pass through PBM model and why that matters. Right now, you all are spending about 37% of your total claims on pharmacy. um your traditional PBM, you know, is receiving the rebates on your behalf. You're not really sure what you're paying, what part of your premium is paying for what drugs. Um we know that with a pass through PBM, we can have that structured so that you pay the very lowest cost. those rebates come back and um formulary decisions are really based on clinical and financial data that you own rather than being predicated to you through the carrier. And then uh patient assistance and coupon programs are maximized. So you all I'm sure have um seen some TV with um some RX commercials. You probably know some of the jingles um because they're on all the time. um those commercials are there basically those are the highest cost drugs that are available today to treat conditions. Now don't get me wrong in a lot of cases they're lifesaving drugs and very much needed. What you don't know is that the carriers are receiving what's called rebates to put those drugs on their formulary lists to basically say we want to encourage our membership to use these medications and in return you'll send us this rebate and um there are other medications out there that do the exact same things but maybe don't have the same level of rebate. the carrier decides not to put that lower cost drug on their list because they're not going to receive that financial rebate on the back side,

otherwise known as a kickback.

Yeah. So, we want to structure programs that the manufacturers do offer financial support. So, you probably heard that at the very last minute of the thing. If you have commercial insurance, let us know and we'll see if you can qualify for patient assistance. Well, the patient assistance part is a really good part of the program that if that person really needs that drug, we don't want to prevent the person from getting that drug, we also don't want them to have to pay the cost. And really, we want the plan to be able to pay the lowest cost for that medication. And so having a program where that patient assistance model is more of the go-to and the standard is really important, not only for the city to make sure they're getting the best cost, but for the patient that needs that medication at sometimes free or, you know, a $5 co-pay. It makes sure that they are adherent to taking that medication and um, you know, hopefully treating that condition the best that they can. In that scenario, that rebate still exists from the manufacturer, but instead of it going to the carrier, it would come back to the city of Belmont. So, it's really a win-win in that scenario. So, you can see here, you know, I mentioned that pharmacy spend was about 37% of your total claim cost just in this plan year. So, just from July through November of 25. Um, and here's kind of your leading um, medications and the costs of those medications in those five months period. Today, all every single one of those on this list is generating rebates that are going back to um, the carrier. And in most cases, we're not really sure did your employees actually get offered patient assistance to get any of these medications. Um, you know, that's just not a go-to for the for the um for the care. So, you know, pharmacy is a really big driver. We know that for employers that make the switch going from a fully insured and it doesn't matter which one

you are. If you're with Blue Cross, Etna, Sigma, United, if you move from that traditional model in a fully insured arrangement and you move to a pass through PBM, we are going to see 20 to 40% reduction in your pharmacy spend. Um, that's, you know, every case that we've moved, we see it. Um, and the great thing about pharmacy is that you realize those savings right away because somebody's taking that medication every single month, right? So, as that cost is going down, it's not something that you have to wait a year for to say, "Oh, did we save money?" That cost starts to go down right away. So, I talked about making sure that you're getting the stop-loss protections that you need. And, um, what we've talked about with the city is really the paro health captive model. um talked about the fact that you choose your plan design and your TPA. So for most cases when we transition from fully insured, we're going to recommend that the city keeps the exact same plan design. Plan design means pharmacy benefit co-pays, right? Prescription drug um specialty co-pays, making sure your primary care and your specialist co-pays are the same, your co- insurance is the same. That's what we mean by plan design. it's just easier for a transition to kind of mirror what's in place today with that new TPA. Um, we're going to help you establish how to fund that claims account both through the employer contribution and the employee contribution. Again, any of those months where there's low claims, that money still sits here in in the bank account. And then really where Parade of Captive comes is is purchasing that stop-loss protection. um making sure that we're getting the very best rates for both the individual protection and then the aggregate and you then become a captive equity owner. So um in this captive arrangement you do have a capital contribution that you provide for the

first two years. It does sit on your balance sheet as an asset and it is earning interest and will be returned to you upon exit and you do receive reporting as to what that looks like. What exactly is paro? I've seen it referred to in the presentation, but I I haven't like what is that? Yeah. So, Paro Health is the name of the captive that we're um recommending um for consideration company. So, it's the company name Paro Health. Yep.

So, Paro Health is actually um the largest captive um in the nation. Um I'll have a slide here in just a minute that gives some of their statistics. um want to just show a little bit more about kind of why we recommend um paro in a lot of our cases. Um the pass through PBM model is in place for them. Again, we see savings between 20 and 40%. They also have integrated cost management. So that was one of the pillars that we said you know makes important sense to put that in place. Basically, they are providing different types of services to help patients really navigate through that health journey. You know, cancer care assistance where maybe a cancer nurse is helping every cancer patient figure out, you know, was the cancer staged appropriately? Are they receiving care at the most beneficial place? What questions and concerns do they have? Um maybe it's something as um balance health is built in helping employees find the very best places to go for MRIs, CT scans or any um non emergency surgeries getting those done at the lowest cost and for reward they basically get those services for free instead of having those go to deductible and co insurance.

Do we have anything like that in our current program? Um United Healthcare says you can go on their website and use their tool to try to find the very best highly rated providers. You don't really get anything too much as far as cost transparency goes and there's certainly nothing that's going to incentivize the employees to make good decisions. Okay. Can you tell me and I may have missed this completely, what does PEPM mean? Per employee per month. Thank you.

So, we use that jargon um and we use that metric to um you know show value because population is always changing, right? So you one month you might have 190 people, next month you might have a 92, next month you might have 187. So most of the time when we do any type of health forecasting, we're going to use a PEPM just to normalize that value. Great question. So Paro Health um is the largest captive. They have 3,500 plus um employer groups. So um and that comprises about 1.2 2 million covered lives. So between those 3,500 employer groups, there's about a hundred 1.2 million people insured under that plan. Under management, they have 6.8 billion dollars under stop-loss management. So if they were a standalone stop-loss carrier, they'd be the third largest stop-loss carrier in the country. So they have tremendous buying power when it comes to securing that stop-loss. and they have a 96% retention rate as far as the groups that um are in the captive and then they renew um year after year. Talked about making sure that the city of Belmont is protected and making sure that the contract language in that stop loss is going to offer that protection. And so one of the provisions that they standardly offer is called a no new laser um contract provision. I gave the example earlier of a cancer patient with a $900,000 claim and I also said that we make sure that we have rate relief protection in your program. We feel like you need to have both of those pieces working side by side, the no new laser and the rate protection. So if you have that $900,000 cancer patient and then you sit at renewal, Paro Health could do the same thing like United

Healthcare and be like, "Oh, you need a 50 60 70 80% rate increase, right?" We said, "Well, we want that capped." So they cap that at 30%. Now, your stop-loss premium is only about um 30% of what your overall spend is. So that's really about a 9% increase to the total plan. 9% increase to the total plant compared to today we're thinking we're going to be looking at a 50% increase with United. Um, however, the rate cap isn't enough if they could say, "Well, you know what? You have that claimant that has a $900,000 cancer claim. Instead of offering that protection at 75,000, like I said earlier, for that one person, we're going to laser that person out of that stop-loss arrangement, and we're going to make the city of Belmont responsible for $500,000 for that one person." That wouldn't be right. So we make sure that those two provisions work hand in hand. That once you're in the plan, you cannot have any new lasers in perpetuity. They cannot zero out any one claimant and they cannot increase the stop-loss by more than 30%. It is the strongest stop-loss contract in the market and it is exclusive to just paro health members. that really does provide that volatility protection that you know self-funded groups that are kind of out there on their own um you know may experience.

Do they have sorry do they have the ability um because I know you said on an individual basis they can't laser out people like could they come in and say okay your individual stop loss is 50,000 we're going to raise it to 75,000 next year. Um, so you would receive a renewal at that same spec level. We are going to model for you what it looks like if you go up or down. So you might decide, you know what, we want to lower it down to 50. You're going to pay more for that stop-loss. Or we might say, you know what, based on your claims history, maybe you should increase that, take on more of the risk, and maybe you should put that at 100. Then your stop-loss insurance renewal is going to go down because you're taking on more risk, they're taking less. But you're you're not going to be forced to change that individual spec level

whether they could come in at renewal and say well you have to increase right where they are going to look is that aggregate coverage right so we talked about each individual person would have a cap then they're going to really set kind of hey as a group as a whole what are you what do we think that you're going to experience that's called aggregate protection they're going to really underwrite to the number that they expect you to have because insurance really is to provide protection for those known risks. If they know the risk is there, they're going to underwrite to that risk. Um so the aggregate protection is really the number that you know may fluctuate

based on your claims. Um and so for groups who have moved into the paro captive um you know we're kind of showing you their average savings um versus a fully insured contract. So in year one, you know, most groups are seeing about a 7 and a half% um decrease on spend. Year two about 13.2 and by year three about a 16.5% savings from their renewal projection the last year that they were fully insured. Oh, okay. How? Yep. So from the savings from the projected new rate that we're we're leaving.

Yes. So we're looking at what a 50% increase roughly. So we would have a 7% savings from the 50% increase number. Okay. So just so I understand like how insurance is something that's always like the gray area for me. But how are we assuring ourselves that we are going to get a 50% increase from our existing? Has that already been

We're not we're not going to assume. We're going to wait until we have those numbers. So today we're not going to ask you to approve this. We're basically just kind of showing this as proof of concept. And we're running both scenarios um to really evaluate and help the city decide, you know, what's it going to look like. So, we're not making this recommendation today. We're just saying, hey, this is an alternative that we think you should consider. Um we're going to wait and see what the real numbers are. So, we're going to kind of show some illustrative numbers here, right? And that's all they are. their illustrations because we don't have your renewal yet with United Healthcare because again insurance is priced based on what we know.

So anytime you move carriers or anytime you move to either fully insured to fully insured or fully insured to self-funded underwriters aren't going to release their final numbers to you until they know what that renewal is. Right? Because United Healthcare really has the upper hand. They know what your claims are. Whatever they say your renewal is means that they know something that all of us in this room don't know. Right? that there are claims that are predicated on what those rates are going to look like. So underwriters are basically going to use those projections in their models to set those new rates. Okay.

So, but we can we can get pretty close with some projections and that's what this here this illustration here is is really a 12-month financial summary um from Paro Health as you know where they think that you're going to be. So, they have modeled this assuming that you're going to get um you know a reference premium of a $2 million. So, today you're paying about 1.5, right? They're looking that you're probably going to go up to about $2 million with your renewal. At the time that they did this projection, you all had 186 enrolled members, enrolled employees. And so, it breaks down the different components that we talked about that are necessary when you move to self-funded. So, you know, you can see on the left those components, you know, your fixed cost, your benefit administration cost, your stop-loss premium. Those are your fixed costs, right? You're going to get build a per employee per month um for those costs every single month. You know, to pay your claims, to give you ID cards, to give you access to your provider network for our services, your stop-loss premium, everything's going to kind of be built in there in that benefit administration. Um that third line is really your claims and they've kind of modeled for you three different scenarios. So you can see a great kind of a typical and expected and then a maximum or worst case. So you know we're going to really kind of be very conservative. We're going to look at really that expected or in most cases that worst case. When we move a group for that first year from fully insured to self-funded, we're going to recommend that the budget be set at worst case scenario. So to your question, you know, how do do we have to seed that money in advance? How much of a fund needs to be there? If you budget to the maximum, you know that you're not going to run out of money before the end of that year because you've budgeted to

that cap, that accurate cap. So, the worst thing that's going to happen is you're not going to meet that cap and all that money is going to still be sitting here in City of Belmont's claim fund. Um, and so you can see here we've kind of modeled out for you, you know, what that total cost looks like in that line in the blue under the typical um expected or the maximum. So, you know, 2.3 as the maximum claims cost for the city of Belmont. So kind of looking at the three, you know, boxes here on this page, if you look at the renewal scenario versus Paro kind of at a glance, you know, if United comes in with a 50% renewal with the membership that you all have today, that's going to be about close to $2.3 million. You can see from the previous page, the expected with paro is about 1.8, but the maximum is also 2.3. So again, our recommendation always that first year is to fund to the maximum. So if United's renewal comes in at 50%, you're going to pay $2.3 million next year. If you fund to the maximum with Paro on this illustrative proposal, you're going to pay $2.3 million this year. However, what you're going to gain is tremendous under the paro model for both the city and for the employees and having that flexibility, that control, and the transparency that's really required to bring your plan to that next level.

And if we don't spend it, it stays in the account. That's correct. Yes. The 2.3 that you spend with United, it's gone.

There's It doesn't matter if your claims get better. Doesn't matter if they only spent half of it. you've paid that money for that year. The other thing that happens with fully insured, when you have those great years, they come back and they say, "Oh, you know what? You're great. Here's your 5% increase." The next year, oh, here's another 5% increase because of medical trend, right? You probably heard that medical trend. Oh, costs keep going up. No matter what, even though you're running great, we got to still keep up with medical trend. They very rarely come back to maybe flat. that might be a very exceptional year where they say, "Well, we'll hold your rates." But very, very few times do they say, "You know what? You all did great. We're going to decrease your rates." When you're in a self-funded arrangement, your rates reset every single year. So, even if you have the worst year possible and you spend that full 2.3, you're going to reset again at zero the very next year. And what are you going to spend that next year? Right? you're still going to fund it the same amount, but that year your claims run better. That money is sitting there in your account. You don't have to pay that excess amount that next year and over and over and over again.

When these projections were done, um I assume you were taking into consideration our past 20 what was it 29 month window that spike of claims that was assumed that would replicate again. Well, so we know in a fiveyear period you're going to have really one great year, you're going to have one really horrendous year, and you're going to have three average years. The problem is in that time, we don't really know is this year even worse than that year, or was this your great year? We don't know because you don't really get any visibility into what those claims look like. Um, so that's why we say, you know, if you fund to the maximum, you know, you're going to be safe. you know that you're not going to experience that really terrible year and not have the money to fund for it. Um but they do model based off of that, right? They don't have as much data as they would like to be able to pinpoint exactly like, oh, you know what, this was the stage of the cancer. We think they're just about wrapped up. They're getting better, right? We can take feedback if we know who those claimants are and bring that to the case. Um, the other thing that we can do when you are self-funded and we do have access to that data, hub has their own technology backed by clinicians. And so when you are self-funded, we will receive direct claim files into our um claims integrity system that will allow our clinicians to basically see all the claims and help project with our underwriters to figure out like, hey, is that really at the end of this claim or is it at the beginning or is it in the middle? Um, and they will help us negotiate that stop-loss with that information so that even though you maybe had a horrendous year, if we know we can project forward 12, 18 months as to what we expect your claims to be, that's going to put you in the best position in us to be able to negotiate the very best terms for you.

Not just based off of what happened in the past, but more importantly, what we expect is going to happen in the future. And that's why that the savings increases as you go years. driven decisions

and and the and the um patients are actually going through these case management types of programs right like you know the cancer care or you know getting their MRIs at the lowest cost providers right so I always tell people we can't do this for you you can't do it for your employees right so we're talking a lot about the financials here tonight the other pieces right this requires a lot of communication and education to your employees as Well, they need to understand that, you know what, we're providing the very best benefits to you, but we need your help. We need you to be good stewards of the plan and we need your help in making good decisions and we're going to be right alongside here making sure we're making it as easy as possible for you. But they do have ownership into the plan as much as you all do when you set that budget. What has our historical renewal pricing look like over the last say two or three years in terms of increases? I know we haven't had any reductions, I'm pretty sure. Right.

Um I don't know what your renewals were like when you were still right. But I mean are we but the increases that we've had have been they've been on the order of like 15 20 30%. I think we had a 30% renewal within the last year to do. So this last renewal, I think it was about a 22% increase from the league. Sounds

Yeah. Um you know the years prior again being part of that program um you know we the biggest problem that we had when we went out to market is that because the league had the flexibility to um kind of set their rates across the entire program. the employeeonly rate was far far under market. So even if your claims had been great, which they weren't, but even if they had, no matter what, the rates were going to need to still go up to just get to where the market rates are. So one other thing that we wanted to kind of be able to illustratively show for you are kind of contribution rate scenarios. So you heard from Hannah at the very beginning that you know there's employee dissatisfaction. Um and then you know employees that come to work here are having a very hard time offering health benefits to their dependents whether that's children, spouses, families um because the rates are just you know very um very high and they're they're high across every employer, every type of market. Um, however, you know, the way that you can help with that is by increasing the employer contribution there. And so, wanted to just illustrate for you kind of a couple of different scenarios as to what how that $2.3 million um kind of translates. Um, you'll see it shows it a little bit higher because we're using 196 in this chart where that paro proposal was at 186. um you have 196 slotted open um positions here today. And so we're trying to give you a most accurate model as far as what that contribution looks like per person. Um and so I had mentioned earlier that

we always try to recommend funding to the maximum. So you'll see in these spread the spreadsheet basically you have current rates in one column and then you have four columns that are showing you at the maximum rate which would be $2.5 million. Underneath that we're showing you kind of what that employer contribution percentage is today. So you can see by tier um how you all pay um towards that coverage. So for employees only the city is paying 100%. Um then for the spouses they're paying 47% for children paying 63% and for family paying about 34%. And so each of these green boxes are trying to kind of illustrate different types of ways to fund your contribution strategy. So the very first column to the right of those current rates, basically we're keeping the exact same employer contribution but modeling that increase um to cover that premium cost or the total um expected contribution. So you can see down at the bottom what those rates would be if you kept the exact same employer contribution percentages. The next column over, we're showing you, well, what if we kept the employee deduction exactly the same? How does that change what the city is funding? And then the columns to the right of that are basically two different scenarios as far as changing employer contribution by different percentages to give you kind of a look as to how that would um decrease employee deductions um by tier as well at the bottom. You know, the goal is to really get to a point with this funding mechanism to take those savings that you're going to achieve and really help you reinvest those savings back into designing a

program that is sustainable for the city and affordable for your employees. Just so want to make sure I'm understanding the numbers on here. So, the difference between the 1.8 expected from the previous slide and the $2 million on the current rates in your first column there. Is that the difference in just the employee count? I just want to make sure I'm kind of comparing apples to apples. So, um, let me just go back to the slide here. So, the expected the 1.8 is if you run pretty well and your claims aren't, you know, too hard. You may fall in that you only spend $1.8 million. Okay.

However, the 2.3 in this scenario is funding to the maximum. That aggregate, we know you're not going to have to pay any more than 2.3. The difference between the 2.3 and the 2.5 is your employee count. So this 2.3 was only 186 people on the plan. This spreadsheet is showing all 196 allocated positions. Okay. The 1.8 is not coming into that. Yeah. 1.8 isn't on this spreadsheet at all. They're comparing it to the 2.3. Yep. It's just an employee difference between 2.3 and 2.5. Um maximum.

Oh, I see. Okay. I was looking at the wrong line. So, what is that $2 million? Sorry, I'm on the next slide. Yep. The second red line, that $2 million underneath the 2.5. Yep. Great, great question. So, you can see that 2.5, that's going to be the total contribution to fund the plan. The 2, the 2 million is going to be what your share of that contribution is. Your employees are going to be paying the $500,000 in in payroll deductions. I see. So, we're trying to model for you what your share will be. Okay. Oh, okay. Okay. Okay. That makes sense.

Okay. Okay. Yeah. I was just having trouble making those numbers make sense, but that Okay, that that I I see it now. Great. Any other questions on the spreadsheet? And again, these are just kind of illustrative rates, right? So when we finally get to the point where we have numbers, right, all of this will be updated with real numbers. This is really just trying to give you an idea of the different contribution strategies that we may kind of bring forward as recommendations. I just have a maybe a general question about that. Um, as far as the structure of our plan right now, we're basically employees don't contribute anything.

Is that typical? Because I in my own experience, I've seen the employee always contributes something, but the family and spouse and children rates are always much lower. I assume because the other employees are contributing, there's more money those numbers were. So if you look at private employers, very few maybe tech companies or pharmaceutical companies of all industries um offer 100% coverage to employees. Most private employers are requiring employees to cost share at that employee only level because there's a large number of people that are enrolled, right? It's helping fund for that program. However, with public sector, most are funding that employee only at 100%.

So, municipalities, counties across North Carolina, most of them are funding, not at the state level, but at the, you know, local government level, they are funding that employee only at 100%. Very few have started to switch and they're, you know, just starting to try to say, "Oh, well, you're going to have a little bit of cost share." Some of them are tying it to a wellness program. I know you all do a great wellness program here with offering some incentives. Some are saying, "Oh, well, if the wellness rate or non-wellness rate, if you don't do the wellness, you're going to pay a little bit more." Um, but, you know, they're still pretty um very well, they're very, very competitive. I mean, most of them are like maybe $25 contribution or 50. I don't know that I've seen even one over $100 employee contribution um in North Carolina local government.

Okay. Do their rates generally kind of as far as like because I know that the like the family and the spouse contribution levels are kind of stressed to point right now like how do those other so employers handle that

I would say as an overall trend most municipalities are struggling to get participation in their dependent tiers because most of them are funding at that employee only level and there's not enough money to go around a fund at that dependent level right so it becomes a very um heavy employeeonly benefit across the state for you know local governments most of them have very small numbers in those dependent tiers um because it's unaffordable now I will say the ones that have figured that out if you go back and you start to look the ones that are self-funded are the ones that are making that coverage more affordable because they are managing their costs very differently than they are really allowed to on a fully insured basis

and still at least with u still keeping the employee only coverage fully covered by the employer. They're still the savings they're realizing they're able to lower those other tiers of coverage. Y but that's like a longear plan like what's the general turnaround time that those municipalities have like quote unquote figured it out like two years three years?

Yeah. So moving self that's a great question. I mean moving self-funded is a long-term strategy right? So if you all don't have the appetite for this level of risk, stay fully insured because it is going to take time, right? Just as much time as it's taken for us to get, you know, the transition from the league to United, right? That it's going to take time for all of those things to work out. Um that education alone doesn't happen overnight. And in a self-funded arrangement, education um really is a huge component of how you're going to realize those savings. And so um you know, you're going to see a little bit of savings year one really mostly from the pharmacy spend because those are going to happen really automatic without much um effort at the patient level to really start to move that needle. Um you know, you've got to get that buy in at that employee at the patient level. And so it is going to take a little bit of time. So you know most of our groups I would say within three years are starting to be like wow you know what it is really performing very well. Our employees are really you know engaged. They understand how to maximize the value of the program. You know it's all you know kind of making sense. Um you know that's where they're really kind of and and you know what they're being conservative. Most of the groups are being they don't want to just because you save you know 20% year one. Are you comfortable already taking that entire 20% and reinvesting it? Probably not. Maybe you take 10% and, you know, keep 10%. Um, so it is a multi-year strategy um to really start to realize those savings and um, you know, kind of requires that commitment up front that you know what, we're going to we're going to do this for the long haul and um, you know, we're going to invest appropriately and we're going to um, you know, really from the top down send the messaging about employee engagement. Is that I guess Hannah question for you.

Is that acceptable from what you're hearing on culture surveys and stuff like that from our employees? Like this isn't going to be an instant benefit, which is how I understood from the retreat a lot of people are looking at, right?

Just piggy backing off. Um it's not even if we weren't to go to a selfunded option, it's still not going to be an speaking to the education component of it is going to take a lot of that employees to help them realize the long-term benefits of this. So I I don't think either way they're going to be instantly satisfied whichever option you choose but I don't want to say that

a lot of that may be revealed whenever you get the renewal. Right. Well, based on the employee recommendations from the task force, number one item, the very first sentence, change our insurance provider or insurance plan to better support employee well-being and retention. So, that's where we've kind of had this discussion with Hub International and internally was like, all right, we've been doing the same thing for years. It's not getting any better. Today's the day that we need to make a change potentially if we see this renewal coming in from United Healthcare with 50% increase, which is the exact same amount that we'd have to fund for self-insured self-insured program. So, uh, as Donna continues on with her conversation here in this presentation, you'll see that, you know, we're running the parallel path to see if we get hopefully, I mean, it'd be great if United Healthcare came back with zero to 10%. We'd probably jump all over it. that's probably not what I mean. They've been studying our our health insurance claims and that's probably not what we're going to see. And so now we've we're trying to take both paths and give you as much information. If if we see something different coming up in the budget process, this is the reason because we see it coming. And this like like she said, you know, it's like long term. We've got to

if we're in, we're in. We can't go in and out, in and out, in and out. So, we think those cost savings that we'll see will help at some point to start reducing u those deductions. employees and so we can keep that level year year over year or either you know small percent increase you know it's zero to 5% I think employees would be fine versus like 50% last year 22% and the year before 9% or whatever it was trying to trying to get that down to make it um less

more level it's definitely the years are going to go by they're going to go by so positioning ourselves to be able to capture the benefit even if it isn't a few years makes a lot of sense in my The big takeaway that I hear is that it allows the city to manage its investment more than a fully insured once the money's paid in a fully insured is gone whether we're using it or not. But this allows that flexibility and hopefully the education and the movement and being able to cater it in ways that save money or allow us to expand benefits to employees. Um, so yeah, again thinking down the road as opposed to necessarily where we are right now. And I have one question and we can jump back to that if you have more questions. Um, but I have one question and you may have touched on I may have missed it. Is there a big demand for the family coverage or is it are we just abnormally low in demand?

When you break into the demographic analysis 30 and under, yeah, there's a big demand for it to me for me when they come to me directly. Yeah. Yes. Yeah. Okay. So, when we say, "Look, we've only got like what is it, two people that are on family coverage or whatever it is." Yeah. I I can I can speak directly to those. We implemented a new benefit in the maternity and paternity leave, six weeks. Um, with our last updates to our policy that was in March of last year. Since March of last year, I've had probably seven employees take advantage of that. I think only one put dependence on their coverage. The others I had to help them outsource to the marketplace and provide them resources to marketplace because they couldn't afford our coverage.

When you say the marketplace, you mean like Obamacare? I think that's why you're not getting Yeah, that's what that's what I was getting at. So that in my mind, you know, when I'm thinking of these on the slide before this one and which one are we looking at? Um that would be the driving factor to be looking at the ones that were reducing that family. It's probably not due to lack of interest. Yeah, that's what I was wondering. Well, how much of that is like because it's like a clip, right? Because you go from zero and you have Um I don't know like what would be considered do we have a feel for like what the employees are looking for as far as affordability on that

directly from the employees? I've not gotten specifically hey this is what I can afford. I just get I can't afford this what you're what you're offering I cannot afford for my family because how much of a percentage of their uh like annual salary is according to materials it's like somewhere close to 30% potentially so for um people who have employee child I think we calculated it was roughly about 6% of their salary um but when you go up to I think it's about 15% when you include spouse and between 15 and 30 for depending on the salary the employee.

Yeah. So for So Hannah ran some numbers in a spreadsheet and we have like 42 employees that have um the benefit election of employees, spouse, child, family coverage and then the percentage of the gross income. I mean it ranges and uh the lowest of course you know the lowest paid employees that would be a higher percent. Uh, so we're up to I think the the highest one in the spreadsheet was like 30% of their take-home pay was going 30.54% was a family employee and this employee was one of the lower paid employees. So 30% of that pay is going towards our health insurance. On average though for all those 42 employees, it's 7.81% of their gross income goes towards payments. So you've got a range highest 30 lowest maybe the highest some of the higher paid employees it could drop down to like 2%.

Have we looked at tiering the rates? That's what I was just about to say. So like you know you make I'm just making up numbers. Make less than $50,000 the rate's X. You make less than $75,000 the R's X plus 10% or whatever. At present we haven't.

Is that an option we can look at? because you almost will need to subsidize to a point for folks who are paying making a lot more versus folks who are on the lower end of the spectrum here where you're just going to apply the total leverage cost of the insurance policy across everyone. Right? So that is definitely a model that has become widely popular in private sector and if you know the state health plan actually here in North Carolina just moved to that model this last year um curing by salary. So, um, you know, that is certainly something that we can take back and model for you all as well and work with Hannah as far as whi which categories of salaries do you think need to be kind of put together. You know, I mean, you don't have to make it complex. You can do three salary bands. You could do five salary bands, right? You can kind of design that however you'd like in this type of an arrangement.

The wellness rates kind of intrigue me too because like that also kind of helps align incentives between the employees and plan. Yeah. Um, you know, you get rewarded with lower rates if you're doing stuff that saves the plan money, which then benefits everybody on the plan. Um, just here, but I like that idea, too,

because that's where my head was going when I was looking at some of the stuff, particularly the total dollar value. But, you know, maybe what would be nice to see additionally for the conversation is I know we're looking high level to say what is the city going to invest in for this insurance policy? what is the budget going to be going forward? But why don't we have the information of the bottom tier and see what that percentage is? Because that's almost what we need. It's two equations. How do we make it affordable for people who can't afford it today who work for the city? And how do we maintain and be good stewards to the taxpayers of the total value? And I think we can play around with a model. If Miles, you've got a spreadsheet there, whatever the buckets are, 30% goes to 10%. You know what I mean? But this is what it does to the top level of what we have to pay as a total city for the insurance. But then this also does for the top people who are being paid. Like that's almost what you have to do here or we're never going to solve the problem.

Yes. Yep. So we could certainly model that with those. Does that make sense to you all?

Yeah. Yeah. And I think from like like an employee recruitment attractiveness perspective too. Um, you know, if we can figure out a way to make crack that nut basically to make those sort of non employee rates more attractive, that would help retention um aspects of this too because like I mean it sounds like a lot of other places are having a similar problem which maybe means that it's a you know intractable issue. Who knows? But you know there's a lot of smart people here. And I think the only thing else we need to add is is what is like the market benchmark because like we have to keep in mind that 100% of the employee cost is being covered by the city. So we have to think of it as what if it wasn't that way almost and what is the total cost. Does that make sense? Like what is the market benchmark that we should be targeting to because for me in my mind I'm like I pay for insurance in the private world right and then there's an additional coverage for my family. My company doesn't pay me 100%, but what would the offset be if that was split? Like what if they did 100% cover me? What would that mean for me? Like there's there's got to be a percent

aloc or benchmark on gross pay that meets like market acceptability. And the other thing too is like if you can make the family and spouse coverage more attractive, which are the higher rates, you'll have more people enroll the money. Correct. So like the employee rates at that point become less important because they're not paying them anyway and then it accelerates your savings plan for

Yeah. You touched on I think at least one of the nuances earlier between say public and private sector when it comes to health insurance pricing. Um, are there any real significant differences typically in like plan design or pricing when it comes to public versus private sector that you see? Um, plan designs are pretty much the same, you know, across the board as far as, you know, what's the co-pay, what's the ER visit, you know, those kinds of things. Um,

pretty much across the board. Um, you know, I would think the the type of plan designs that are being offered certainly are have changed. So, um, you know, high deductible health plans is really in the private sector that's the go-to. Like that's everybody has it. Some only have high deductible health plans that either paired with a HSA or an HRA. They no longer have that traditional co-pay structure. It's um, you know, really first dollar for the employees and maybe they fund some particular amount of money into that HSA or HRA account for the employees. So, um, but you know, as far as the types of of plan designs, I would say that's pretty consistent. It's just really whether they offer a traditional co-pay plan or high deductible plan.

I like the um some of the positive aspects you've touched on this evening with the self-funded route. I know that's really, you know, with large employers and certain municipalities, that's kind of the direction a lot of them go. Um I like the transparency but the ability to better control you know kind of especially on a go forward basis because to an extent you know how how long we're going to keep kicking the can you know and just digesting these 10 20 30% increases every year and you know those numbers that spread between family coverage and employees definitely not going to get any better under that scenario. So, if we're really looking to make things more affordable, I'm intrigued by your option, you know, maybe looking at a tiered approach based on compensation perhaps if that's something that's an alternative to look at. But

I know that self-insured is is do you see that in terms of the public sector is that with municip municipalities say of our size that that is more the norm?

Yes. So nowaday so groups that have been introduced to captive arrangements um are moving in this model. So um and we expect to see more and more of them moving um you know we're seeing more and more smaller employers smaller than you moving into this model because they are tired of kind of that rat race because today the only recourse that you have when I come with that renewal and say oh United wants 30 40 50% more the only recourse we have is well let's increase that deductible well let's increase those co-pays right we don't have those conversations with our self-funded clients. You pick a plan design, we run that plan design, right? Because we have levers to move that are going to mitigate the cost. We don't have to worry about, oh, let's increase that deductible by another 500 or $1,000 or let's increase your co-pay from 25 to $50. Um, you choose a plan design and we we run that plan design. And so, um, you know, that just gives a lot of freedom to you all and really to your employees from a stability standpoint that, hey, you know what, we do have great benefits here at the city of Belmont. You know, I've had the same co-pay for x number of years, right? And they don't have to be, you know, having those same conversations that unfortunately every other fully insured employer is going to have to have and has been having. The problem is there are some employers out there, they've run out of options, right? They're already at the top of the co-pay structure. They're already at the top of that deductible structure. They have no more recourse in that fully insured arrangement. So, um, as Miles mentioned, um, you know, as far as what next steps look like, um, we've kind of laid out a timeline here. Um, you know, we do expect the United Healthcare renewal to be released in, um, April. At the same

time, um, we are going to be negotiating that renewal and doing a complete market survey. So, just because Blue Cross and Sigma and Etna said no, last year, we're going to go and ask them again this year what they want to do. Um, we don't necessarily expect different results, but we want to definitely do a market check to make sure. Um and then we're also working um at the same time on um formalizing a strong um stop-loss proposal through Paro Health. So that way we can come to the table with you all to all all of the options to the um city leadership by early May that says here are all the options that are available in the marketplace for you all to consider fully insured or self-funded um with the hopes that by um late May we would be in a position to share the news with whatever the city decided and um conduct open enrollment. And that's really where the work begins as far as, you know, really making sure that the investments that you're making in your plan um will hopefully prosper with um employee engagement and communication under that self-funded model. You know, the thing is under fully insured, right? You want to do it and you guys have a great little wellness program and you know, trying to incentivize good behavior, but you don't reap the benefit of it today. So even if every single person on your plan was like, "Oh, I'm going to do all of this great wellness stuff." you're still going to get a rate increase from your fully insured carrier. If they do all of those things in a self-funded arrangement, right, your money isn't going out the door.

And so, um, you know, that's really the big difference between kind of the model that you have today and, you know, kind of if you decide to move into a self-funded arrangement. So, like in this move though, I guess maybe a little bit more on the granular level, is the benefits as it pertains to the provider and level of care the same, better or worse? So anytime you change networks there will be differences and anyone who tells you there will be no differences is lying right because every single provider contract is different um with every carrier.

So we leave United Healthcare say we move to MedCost or uh um Etna the contracted rates are going to be different for those doctors than they are today with United. If you have a co-pay, not going to make a big difference. But let's say you have a surgery. Um maybe they had that same surgery a year ago. They're going to pay a different fee under this plan that's going to go to their deductible and co- insurance than they would have under the plan that they have today. But are the benefits the same? Yes. It's still going to be deductible co- insurance, but the payment might be different based on that contract.

And then as it pertains to employees, let's say, who are paying out of pocket in those situations today versus moving into this, I mean, would that change or the expectation of that level to change or do you think that would be about the same? Um, so they're going to still have a cap and I I don't remember what is your total out of pocket today. So $3,500 is your total out of pocket spend. So no matter what, your employees are going to spend $3,500. But it might be different if they spend it, you know, at different increments. Those charges might be a little bit different. So, oh, the X-ray that I had at this provider down the street was $50, but now I went to that same provider and now that X-ray was 45,

right? But at the end of the day, in the course of the plan year, they're still only going to pay $3,500 total. So, the $3,500 is what we're expecting for the new plan as well, right? It's the cap. And if we're we're we're modeling assuming you're going to keep your same exact plan design. All right. Okay. Okay, let me ask you this. So, I hear lots of things that I like. So, what are the downsides to to this self-funded plan? I mean, obvious in my mind, I'm thinking, well, if we have all these good things, why would everybody just not do this? Why would there be self these fully funded or whatever we're on now, the the jargon for that?

What's the the downside to us moving this direction other than just more administration? Well, we have the the cap. I mean we have the issue if you build your program right we don't see a downside which is why most of our groups are moving to this arrangement there is a little bit more administration so you know as far as what Jared and his team are going to have to do right the reporting is going to be a little bit different right we're going to have to do set up some banking calls we're going to have to set up the structure you're gonna be a little bit little bit

little bit of things on the front end that you have to set up differently right there's going to be different reports that come in you know on a weekly basis there's going to be a request that says, "Jared, we want you to authorize $150,000 to pay for claims." Right? Next week, it might say, "Well, we want you to authorize $25,000 to pay for claims." Um, when the stop loss gets involved, so you have that claimment, high-cost cancer claim, 900,000, right? When the stop loss is hit, anything over say that 75, there's going to be a flag that comes back to the city of Belmont says, "Um, can you verify that this person is actually on your plan?" you know, this is going to go through stop loss. So, there's there's going to be a few extra touch points in a self-funded arrangement um that don't exist today.

How does Cobra work with a selfunded plan? The exact same as if you're fully insured. Yep. Going back to your last point, um what does our capacity look like from a staffing perspective on that? Uh from a staffing perspective, talking about with Hannah, well, I know like for example, Jared's already very busy. I'm sure having to now deal with stuff like this is going to be more on his plate like is that does he have room on his plate to do that or do we need to start talking about headcount or stuff like that?

I think for the the good part is we have hub international first of all that kind of helps us go through this process since we're kind of unbundling all of that. We have different contracts. I think that they kind of help us set that up. So it's good that we have a broker. If we didn't have a broker I'd say we probably needed uh multiple more employees to do this because we know. So to have the professionalism of Hub International, I think that that helps us out. I hadn't really studied do we need another employee to help us out with that. So I don't have a have an answer quite on that. Um I think that we could rely on our our our render to help us out through the process.

So the third party administrators taking the bulk of that that's happening kind of at the high level and they're just coming to the city and saying, "Hey, we this is your expense essentially, your spend for the month." And it's just more of a an expense line item that's being paid out, right? Yeah. Yeah. It's all electronic. You know, everything's available, you know, electronically. And yeah, so it's pretty much click of a button. Yes. You're allowed to take the money out

and I mean, you've set the parameters. So, right, maybe he sets a threshold. You know what? I don't you have authorization to pull this much money. I don't want to I don't you know, I don't want to know. You can just go ahead and pull it without asking. You know, so when we set it up at the beginning, you'll set the parameters that you all are comfortable with. I think going back to your one of your questions, mayor, about the down what's the what's the downsize to do this? I think for this first year, there's a cost difference because last year our premium we paid like $1.6 million total. This year, we're going have to fund for the full 2.3. And so, we've got to look at our budget to say, "All right, where do we move the money from? How do we fund it? How do we set this up given that we're in the process of balancing a budget and then have to add 500,000 more dollars into the general fund. Um approximately $200,000 in the water sewer and maybe 10,000 to the storm water. So as we're going through the budget process and and balancing it, that's the complicated matter right now for us is um how do we fund it? Where are we going to how where we going to where we going to put the line item? Um and what is it going to affect as as the overall budget? So that's really the thing for us. healthare would be doing the same thing if we get the 50% renewal.

Okay. Um but it's just for this first year until we start realizing the cost savings to get us back down every every year. The first year is the most troublesome for the budget. It's a good point. On the uh analytics side, um how much of that like do you and then like how much of that kind of falls on us and then like as far as like what you've seen like what what's the best setup to take adv like you're saying like we'll have access to all the the claims data and everything else which is great if we know what to do with it but

yeah so we we don't expect you to know what to do with it we're not going to ask you all to have to know what to do with it right so that's what what we do right our entire team we have a whole team of people um you know that really monitor those claims um and you know kind of share those ideas like these are things that we're seeing here are some things we could be doing differently do you want to do these now do you want to wait until renewal right so Those would be continuous conversations that we would have with you all. Um, you know, we don't we don't expect anybody here at the city to have to log in to look at those claims, right? Our team can do that. Um, you know, you have access, but you know, I would say even in the private sector, employers are not digging into their claims. That's what they have brokers for. And um, you know, that's our job. And um the benefit of Hub International is we not only have our own actuaries and underwriters, we have our own clinicians, which is very non-standard in our industry. So anytime we see anything that all of a sudden flags, we have our own clinicians and our own pharmacists where we can go back and say, "Hey, what is this? Why is this happening this way?" You know, is this an error or is this like something that would be normal in this treatment? Um and then most importantly, they're able to say, "Hey, but if we could do this." So, you know, here's a scenario of one thing that we found in some one client's claims recently. Um, when you receive infusion treatments, they're build under what's called a Jcode. They're done at a facility. So, you go into a facility and you receive an intervenous and that drug is dispensed um into that person. We saw the exact same drug dispensed at two different locations with an $8,500 spread in pricing. Wow, what should we do about this? Right? So, we're not going to do anything about it. But what we are going to do, we have done is go back to the employer and say, okay, the exact same medication was, you know, intervenously

applied to two different people at two different facilities and there's this swing of $8,500. Would you like to, you know, create a steerage where people have to go through this mechanism to get that rather than this scenario? So things like that, that's just one little example that, you know, just came up here recently that we were like, "Oh, okay. Well, that's worth a conversation." Um, you know, that's what proactive plan management looks like where today, you know, we have zero control over that. I mean, because we don't even have exposure. I don't even know that that J code existed in your plan today. Right. So things like that, you know, if we start to see trends in certain types of conditions, you know, is there something that we could put in place um to help steer that? So, you know, another msk, so muscularkeeletal injuries, right? So all of your guys that are out there, you know, doing manual labor, right? I'm sure you got a lot of back issues, those kinds of things, knees, hips, right? Well, there's um a new solution that basically is using stem cell therapy to recure that part of the body without that person having to go through surgery. It's a zerocost solution to build into a self-funded plan. You got to tweak your contract language a little bit so that their fee schedule can be allocated at the TPA. Um the employee doesn't have to go through surgery. You don't have to have them out of work for six or eight or 12 weeks because they've had surgery and you know they do a little bit of physical therapy and have that treatment done. Much much less invasive.

But is that something that on a fully insured plan would even be covered? No, it's not even going to be No, they're not. But you would have that option. For instance, under a self-unded plan, you have that kind of latitude. That's right. Yeah. Because you're basically doing a direct contract with those providers that specialize in that treatment and you're agreeing to their fee schedule. Yeah. which is a heck of a lot less than paying for the surgery for those people. That's becoming a lot more mainstream.

Yep. So things like that are just examples that you know we work with our clinicians, we work with our health and performance team to um you know monitor what's happening but come to you with suggestions as far as this is considerations that you may want to deploy to um you know the benefit of the plan. Thank you so much for all of your time. You all have been um very gracious with with me taking so much of it here this evening and really appreciate um you know the discussion. So thank you Donnie did a great job explaining a very complicated subject and fielding questions. We really appreciate your time. Great. You're very welcome.

Um any further discussion on that? I think there were a lot of good questions, a lot of information that that came out. It is a a heavy lift to understand all this at the moment, especially for me. Um, but it sounds like there's a lot of good people working behind the scenes to get us the right information so that we'll be be able to make those decisions. I can say personally my initial takeoff of it is that I like the uh Jason, as you were saying, kind of the the flexibility or the the latitude to be for the city to be able to control a lot of what's happening there. I love the idea of the money and not necessarily just going out into the going out the door and going into the ether, but that for the control to be a little better. I think that makes a lot more sense in my mind. Um, but definitely something that we want to dig more into. I'll be interested to see what the the renewal comes back. I fully expect it will be at the top end of the the assumed

especially when we don't have much of any competition. Yeah. Well, I mean, our claims history isn't exactly favorable. So, but if there's only one player, I mean, how much leverage do we have, right? Yeah. Yeah. A lot. Um, thank you, Hannah, also for putting the time in to get that together for us. That is any other questions on this. So, this is our only agenda item this evening. So, if there's no further discussion on it, I'll entertain a motion to adjurnn. Motion to adjurnn. Motion to adjurnn by Alex. Second. Second by Jason. All in favor? I any opposed? All right, we'll stand ajourned.