In FY15, the City and the PEC entered into their second agreement, which is projected to reduce projected costs by approximately $50 million over five years. This most recent agreement is unique because it includes not only a continued increase in member cost share, but also multiple other approaches to containing total costs for both the City and members, including:
Competitive bidding and refinement of the City’s health plan options
After the elimination of a costly indemnity plan in FY12 saving several million dollars annually, non-Medicare health plan options were further reduced in FY16 to three plans: one PPO (Indemnity) with an open provider network and two HMO managed plans with a local provider network. Savings of over $1 million dollars per year in administrative fees were realized from this change which is shared by both employees and the City. Also, effective July 1, 2017 the City’s most expensive Medicare Plan, Master Medical, was be closed to new enrollment and will be replaced with an alternative BCBS Medicare product.
The FY15 PEC agreement continued to prioritize funding of health care costs through self-insurance. Prior to FY13, the City self-insured 20% of these costs, which increased to 92% in FY13, saving $12 million per year. In FY19, 99% of the City’s health care costs will be self-insured, saving an additional $1 million.
More cost effective prescription drug
Within the current agreement, the City and the PEC began analyzing options for more cost effective management of the City’s prescription benefits, which now total roughly $100 million per year for all plans. A lower cost Medicare prescription drug product will be included in the replacement plan for BCBS Master Medical, which is projected to save the City $1.4 million per year. The City and PEC will also continue to analyze options for carving out prescription drug management through a separate contract, as well as rebidding of the City’s six Medicare plans.
Expanded wellness program
The City, through the agreement, will annually contribute $75,000 toward wellness programs, managed through a sub-committee of the PEC. In 2018, a citywide digital platform was established through which city employees and family members can access information about fitness and nutrition programs, and participate in wellness challenges.