County sticks with same health plan administrator
BY CARRIE NAPOLEON Post-Tribune correspondent October 16, 2013 4:54PM
Updated: November 18, 2013 7:44AM
CROWN POINT — Professional Claims Management Inc. will retain the contract to service the county’s self-insurance plan despite objections from one commissioner and a recommendation from the insurance oversight committee to make a change.
Lake County Commissioners on Wednesday approved retaining Professional Claims Management Inc. as the third-party administrator for the county’s self-insurance plan. Commissioner Michael Repay, D-Hammond, voted against the move.
Repay said PCM has been the county’s plan administrator for years but has done nothing to help lower the approximately $30 million in annual insurance costs until officials moved earlier this year to hire Buck Agency Consultants to review the county’s health plan. Buck made cost savings recommendations and helped the county create the request for proposals that brought in five bidders for the administrator contract. PCM has been the third-party administrator for the county since 2001.
“It wasn’t until we presented this process that (PCM) sought to sharpen his pencil,” Repay said.
The county has taken all the other steps recommended by Buck to reduce insurance costs. Officials removed all part-time employees from the plan, including the county’s public defenders and stopped adding new employees to the coverage. Premiums were increased and a new, more sustainable plan was developed for new hires.
Repay said the only step left is to get the actual cost of coverage down. The administrator recommended by the insurance oversight committee, Meritain, offered significant reductions in the cost of coverage based on its projections, compared to the other providers.
Meritain estimated it would save the county $3.5 million a year due to its discount network through Aetna. Professional Claims Management estimated it could save the county about $2 million a year by switching to the Cigna network from the network presently used.
Repay said it is incumbent on the commission to choose the company that will potentially offer the greatest savings to taxpayers and county employees alike. If Meritain is able to secure larger discounts for services, that means employees ultimately will have lower co-pays.
Commission Chair Roosevelt Allen Jr., said the only guaranteed cost savings are from administration costs and reinsurance limits. PCM administrative and reinsurance costs are about $400,000 a year less than Meritain’s.
Reinsurance is the amount at which catastrophic claims insurance kicks in. Under the PCM proposal, once an individual claim reaches $855,000, the reinsurance pays any additional amounts. Meritain’s reinsurance cap is $1.25 million, meaning the county must pay for claims up to $1.25 million before the catastrophic claims insurance kicks in.
Allen said projected savings by all bidders are just that — projections. Each company uses a different formula to calculate what they expect the annual payouts to be.
It was in the best interests of the county to hire Buck to analyze the insurance program and it got PCM to be more competitive, Allen said.
“It saves us $400,000 a year and that more than justifies the $50,000 cost,” Allen said.