HomeMy WebLinkAboutRPT 1 GALBRAITH & GREEN 5-18-81DATE: May 13, 1981
REPORTS
NO. 1
5-18-81
Inter-Corn
TO: Honorable Mayor & City Council
FR08: Roy Gonzalo$, ~ersonnol B±roctor
$~££1: Galbra±th and Green
Galbraith and Green (G&G) continues to be a source of concern for several reasons,
cost of plan operations, efficiency of claims handling, and stability of plan with
addition of Health Maintenance Program.
G & G charges us for plan administration and advises us regarding premium costs
in order to keep the medical fund solvent. Our current premium is high because
of the nature of our benefits. Tustin is unusual in offering different benefits
for employees and their dependents. The higher level of benefits for employees
tends to promote higher utilization which in turn raises premiums.
The problem of split benefits also complicates the claims handling process be-
cause the computerized system used by G & G for all their clients is not pro-
grammed to accept split benefits, and all employee claims must be entered manually,
overriding the computer. This increases the chances of improperly processed
claims. This office has dealt extensively with G & G on this problem, and has
managed to significantly reduce the number of incorrect claims. Under our current
plan, however, we will not be able to effectively eliminate such claims problems.
Several questions have been raised concerning pre-authorization of specific medical
questions. The current process calls for a claim to be submitted and reviewed
by G & G. Wh$1e this appears to create a hardship on employees who may have to
bear the cost if a claim is denied, it is designed for the protection of the plan
and in turn the City. G & G will review the claim based on the actual medical
documentation and consider the circumstances involved. Denied claims may be
appealed. Pre-authorization of a claim presents the problem of having to pay
on claims where the actual documentation might conflict with initial diagnosis
or claim. Such a process is standard among medical plans and in most situations
where the administering agency wishes to make a decision based on actual documen-
tation. Any change in this situation would be a major policy change, which
should be seriously reviewed by the Council.
Our current employee base for G & G is about 135 employees. The minimum for
efficient self-administration of a medical plan is around 100 employees. With
the ability to change to the Health Maintenance program on an annual basis, it is
conceivable that the employee base for G & G could be reduced to the point where
it would not be economically feasible to continue to self-administer our medical
plan, especially with our high level of utilization.
Honorable Mayor and City Council
May 13, 1981
Page Two
There are several possible solutions to the problems presented by G & G, which
are discussed below.
Change back to an established Indemnity Insurance Plan. This would
require reducing the benefits available to employees, and would re-
move control of the plan from the City, but would reduce and standard-
ize program costs. It would also reduce some of the claims problems,
shifting the burden of dealing with those remaining problems to the
Insurance Company.
Reduce and standardize the benefits for employees to those of depen-
dents. This would reduce the dollar value of the medical benefit
to employees, but would eliminate some claims problems and reduce
overall costs.
Revise the specifications and expectations for G & G to require a
special computer program and/or administrative adjustments which
would deal with some of the claims problems. This runs the risk
of making our plan prohibitive for G & G where they would volun-
tarily withdraw from administration, and has no significant cost
savings.
Review additional "innovative" insurance options which might be
appropriate for our size employee base. These present the chance
of instability or additional unforeseen problems which could be
equal to or worse than those presently experienced under G & G.
It is important that the Council realize that the majority of the concerns with
G & G are tied into the fact that we developed a specialized program and sought
an administrator. Most insurance agencies would not offer or accept any similar
plan because of the inherent problems. The ultimate solution may lie in
standardizing the level of benefits for both employees and dependents, whether
with G & G, an insurance plan or another program administrator.
This department, in conjunction with Finance and Administration continues to
review our current plan under G & G and to review other medical insurance options,
with the intention of maintaining an efficient, cost-effective medical insurance
plan.
RPG/kaf