Health Rosetta Case Study - City of Kirkland, Washington

CDMH: Six Month Performance AnalysisThe Healthy Kirkland InitiativeA Full Systems Approach to High Value Health Care

City of Kirkland City CouncilDecember 8th, 2015

To update the City Council on the development of the City’s long term efforts to improve employee health while mitigating the rising cost of health care, and update the Council on the City’s progress towards

compliance with the Affordable Care Act and its possible financial impacts

Council Study SessionHealth Care Update

Improving Employee Health

Bending the Cost Growth Trend

Avoiding Liability Under the Cadillac Tax

Council Study SessionDriver of Change: Claims Trend

Council Study SessionDriver of Change: ACA Tax Liability

** High risk employees may be subject to a higher threshold

Council Study SessionDriver of Change: Employee Wellness

Only about 20% of employees participated in past health risk assessments and biometric screenings

Only 1 spouse participated in 2013 (the last time the City sponsored an onsite event)

The incentive to participate was between $25 - $100

Council Study SessionSystems Approach


“An important aspect of a part’s performance is how it interacts with other parts to affect the performance of the whole.”

-Russell Ackoff Professor of Management Science

Wharton School, University of Pennsylvania


• Training and Engagement • Incentives

• Information• Care

Employee Training

(To win in the market)

Consumer Driven Health Plan(High

Deductible Health Plan)

Market Transparency and Decision Support

On Site-Near Site

Health Clinic

(High Quality Fixed Cost

Care)

Council Study SessionHealthy Kirkland Initiative

Participating•MAC•Teamsters•AFSMCE•Guild•PSEU

Offered•IAFF•Guild NC

Council Study SessionHealthy Kirkland Initiative

$1,500 DEDUCTIBLE

20% CO

-IN

SURAN

CE (EM

PLOYEE)

HRA

CON

TRIBUTI

ON

80%CO

-IN

SURAN

CE (PLAN

)

$2,500 OUT-OF-POCKET MAX

$1200

POTEN

TIAL W

ELLNESS

INCEN

TIVE

$700N

ET EXPO

SUR

E

Council Study SessionConsumer Driven Health Plan

Consumer Driven Health Plan*Medical only [Individual Plan]

Net exposure after total HRA contributions with

incentive: $700 [$2500 - ($1,800)]

Employee

Plan

$600

COK D

EDU

CTIBLE(HRA VEBA total with wellness incentive:

$1,800)

Council Study SessionHealth Concierge Service

To date there have been over 244 doctor recommendations

Participants have call in to Compass 478 times

Projected savings to the plan are $142,815

Current Medical Model Symptom reactive

Traditional Health Reacts to Illness and Injury

1. Prolonged wait for appointment2. 15 minute wait in reception area3. 15 Minute interview/vitals with Nurses Assistant4. 7-12 minute visit with Dr. to address complaint

Focus: The Immediate complaint (Symptom or injury)Objective: Restore previous level of functionality

Council Study SessionVera Health Center

The “Coach Approach”

1. Same or next day appointments2. 0-2 minute wait in reception area3. 20-60 Minute appointment with Doctor or other healthcare professional4. Teams with Health Coach

Focus: Whole PersonObjective: Considers whole person in light of personal history and

interconnected ongoing health factors

Personal empowerment through increased medical IQ and ongoing supportive interactions to facilitate enduring lifestyle changes


Healthy Kirkland Initiative Personal empowerment through the “Coach Approach”

• Between April and the end of September, 52% of our eligible participants, including dependents and children, were seen at the center for a total of 1,735 patient visits, 533 of which are coaching visits.

• Approximately 70% of eligible employees and spouses have earned their “Wellness Incentive”.

• These 6 month participation rates are the highest on record for Vera.

• Because of this robust utilization, City costs for the clinic have actually risen corresponding to a greater decrease in traditional insured claims.

Utilization


•Vera has provided the City with two patient satisfaction survey results in which 109 of the 479 clinic utilizers responded. •From the first survey to the second, we have seen improvement in all categories with overall satisfaction going from 4.3 to 4.48 out of 5.

Satisfaction


•Sustained success for the Healthy Kirkland Initiative, will depend on continued culture change.•To Facilitate this ongoing culture shift, the City has implemented the Whole Health Council made up of City employees and Vera staff.•The Whole Health Council recommendations on issues such as quality of care, services provided and hours of operation.

Culture Change


Primary Care Provider (PCP) office visits decreased 23.7% Expensive specialist visits decreased 13% Adjusting for the 1,950 medical encounters that occurred at the clinic, there was a 37.6% net

increase in total office visits Clinic visits are longer and often address multiple concerns.

Jul-13

Aug-13

Sep-13Oct-

13

Nov-13

Dec-13

Jan-14

Feb-14

Mar-14

Apr-14

May-14

Jun-14Jul-1

4

Aug-14

Sep-14Oct-

14

Nov-14

Dec-14

Jan-15

Feb-15

Mar-15

Apr-15

May-15

Jun-15Jul-1

5

Aug-15

Sep-150

100200300400500600700800900

1000Office Visits by Month

Preventive Visits PCP Specialists

ClinicPreventive PCP Specialist Clinic Total

Pre (4/1/14 - 3/31/15) 61.4 230.5 211.0 0.0 502.9Post (4/1/15 - 9/30/15) 46.8 172.3 183.7 289.2 692.0Change -23.7% -25.2% -13.0% N/A 37.6%


The high deductible plan lowered City costs. The City allocated the available funds to employees in the form of cash contributions to individually owned HRA VEBA accounts.

Employees may access these dollars for immediate unreimbursed medical expenses.

Balances accumulate for future use or in retirement.

Council Study SessionHRA VEBA

Approximately $800,000 were contributed to HRA VEBA Accounts since April 2015.

During that time, 1,217 individual claims were submitted for reimbursement from HRA-VEBA accounts for a total of $185,064.

The final net gain won’t be known until the end of the year, but current data shows many employees are realizing a substantial monetary benefit that can be carried forward into future years.

This monetary benefit to Kirkland employees did not add any cost to the city.

Council Study SessionHRA VEBA

Council Study SessionEmployee Information and Engagement

Whole Health Council

Learning Management System

Looking back our proposal included a comprehensive strategy that integrated three dynamic features:

1. Consumer Directed Health Plan (CDHP) with an HRA / VEBA health account. The annual contribution to the HRA account will offset the entire deductible. (Trend impact -4.3%)

2. Onsite/Nearsite Clinic. This clinic effectively delivers primary care, Wellness, Rx, and basic lab services at cost, and at no cost to the employees. (Trend impact -2.5%)

3. Concierge Referral Support (Compass): This service provides convenience and real time cost and quality data regarding services that can vary widely in price. (Trend impact -.5%)

The City’s revised 2014 renewal projected growth is 10.8%. The accumulative impacts of these strategies results in a sustained projected growth trend of 3%.

2014 2015 2016 2017 2018$650

$700

$750

$800

$850

$900

$950

$1,000

$1,050

2014 Projected Renewal GrowthCompass ImpactOnsite/Near-site Clinic ImpactCDHP/HRA ImpactAccumulative Impact

Council Study SessionBending the Trend

5.8%

3%

8.3%

10.8%10.3%

In 2013 the projected 2018 excise tax liability was projected at between $500k and $1.5 million.

Staying below the Excise tax threshold would require a sustained trend of 2.5% or less.

Achieved trend reduction: The 2016 downturn of trend (-4.5%) exceeds our original projected trend impact of the proposed plan changes.

The initial success of the Healthy Kirkland Initiative makes it probable that the City will remain below the Cadillac Tax threshold.


2014 2015 2016 2017 2018$650

$700

$750

$800

$850

$900

$950

$1,000

$1,050

2014 Projected Renewal Growth

Compass Impact

Onsite/Nearsite Clinic Impact

CDHP/HRA Impact

Accumulative Impact

Actual Renewal Growth

5.8%

3%

8.3%

10.8%10.3%

.5%


HDHP+Clinic+HRA/ VEBA

Annual Increase 2.49% 8% 12% 2.49% 8% 12%Employee 7,720$ 8,730$ 11,343$ 13,605$ 9,319$ 9,789$ 10,870$ 11,690$

Employee + Spouse/ DP 16,212$ 18,333$ 23,821$ 28,571$ 16,489$ 17,320$ 19,232$ 20,683$ Employee + Child 11,967$ 13,533$ 17,583$ 21,090$ 13,394$ 14,069$ 15,623$ 16,801$ Employee + Children 16,213$ 18,335$ 23,822$ 28,573$ 16,269$ 17,090$ 18,976$ 20,408$ Employee, Spouse/ DP +Child 19,687$ 22,263$ 28,927$ 34,695$ 18,622$ 19,561$ 21,720$ 23,359$ Employee + Family 24,319$ 27,501$ 35,733$ 42,858$ 21,758$ 22,855$ 25,379$ 27,293$

Projected Tax 120$ 648,016$ 1,447,016$ -$ 23,571$ 52,438$

Individual Threshold 10,200$ Family Threshold 27,500$

2018 "Cadillac" Tax

Projected Annual Cost 2018 Projected Annual Cost 20182016 CostsPrime Plan

2013 Costs

2011 2012 2013 2014 2015 Funding 2016 CDMH* 2016 Prime* $-

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$781.04

$1,050.19 $1,115.67 $1,240.30 $1,191.40

$804.08

$1,395.74

$168.54

$159.74 $121.70

$139.01 $160.51

$177.25

$176.47 110.24

190.95

86.57

224.31

Historical Med/Rx Per Employee Per Month Costs

Claims Fixed Fees Clinic Costs VEBA Funding *Projected 2016 Costs


Actual Costs Projected Costs


2015 PRIME 2015 CDMH $-

$200.00

$400.00

$600.00

$800.00

$1,000.00

$1,200.00

$1,400.00

$1,600.00

$1,379.47

$654.42

$158.86

$163.16

$285.28

$224.02

2015 YTD Plan Comparison Actual CostsClaims Data Through October 31, 2015

Claims Fixed Fees Clinic Costs VEBA Funding

∆ $211.45 PEPM

Council Study SessionChallenges and New Changes

Wellness Incentive

Crush

• Late Start• High Demand• Criteria Confusion

Paying Claims

• New Process• Multiple Cards, Applications and Acceptable Methods• Provider Differences

Changes• New Wellness Calendar• New Online Tracker• Enhanced Payment Information and Training

Council Study SessionWhat’s Next?

High Performing NetworksReferenced Based Pricing

Leveraged PartnershipsGrowth of the Vera Network

Council Study SessionConclusion

After just over 7 months the Healthy Kirkland Initiative has achieved promising results. The 4.5% decrease in health care PEPM contributions has exceeded our expectations. In addition to the effectiveness of the whole systems approach, and the alignment

of incentives, this success is due in large part to due to the hard work and diligence of the City staff, especially from the internal services departments, HR, Finance and Information Technology.

Secondly, our employees are to be commended. They have engaged and learned the new system, and have gone out of their comfort zone to engage in this new approach to healthcare.

Finally, The City of Kirkland itself has demonstrated remarkable vision and leadership. The willingness of the City elders to support the management team in the implementation of well thought out innovations is paying off in terms of fiscal responsibility to our tax paying base, as well as all of the benefits to our membership that have been enumerated in this report.

Date post:	15-Apr-2017
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Health Rosetta Case Study - City of Kirkland, Washington

Healthcare