Health Rosetta Case Study - City of Kirkland, Washington

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 Session
Health Care Update
 Improving Employee Health
 Bending the Cost Growth Trend
 Avoiding Liability Under the Cadillac Tax

Driver of Change: Claims Trend

Driver of Change: ACA Tax Liability

Driver 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

Systems Approach

Systems 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

Systems Approach
•Information•Care
•Incentives•Training and
Engagement
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)

Healthy Kirkland Initiative

Participating
• MAC
• Teamsters
• AFSMCE
• Guild
• PSEU
Offered
• IAFF
• Guild NC

$1,500
DEDUCTIBLE
20%CO-
INSURANCE
(EMPLOYEE)
HRA
CONTRIBUTION
80%
CO-INSURANCE
(PLAN)
$2,500
OUT-OF-POCKET MAX
$1200
POTENTIAL
WELLNESS
INCENTIVE
$700
NET
EXPOSURE
Consumer 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
DEDUCTIBLE
(HRA VEBA total with wellness
incentive: $1,800)

Health 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 appointment
2. 15 minute wait in reception area
3. 15 Minute interview/vitals with Nurses Assistant
4. 7-12 minute visit with Dr. to address complaint
Focus: The Immediate complaint (Symptom or injury)
Objective: Restore previous level of functionality
Vera Health Center

The “Coach Approach”
1. Same or next day appointments
2. 0-2 minute wait in reception area
3. 20-60 Minute appointment with Doctor or other healthcare
professional
4. Teams with Health Coach
Focus: Whole Person
Objective: 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
Vera Health Center
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 Health Center

• 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
Vera Health Center

•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
Vera Health Center

 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.
0
100
200
300
400
500
600
700
800
900
1000
Office Visits by Month
Preventive Visits
PCP
Specialists
Clinic
Preventive PCP Specialist Clinic Total
Pre (4/1/14 - 3/31/15) 61.4 230.5 211.0 0.0 502.9
Post (4/1/15 - 9/30/15) 46.8 172.3 183.7 289.2 692.0
Change -23.7% -25.2% -13.0% N/A 37.6%
Vera Health Center

 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.
HRA 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.
HRA VEBA

Employee 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%.
$650
$700
$750
$800
$850
$900
$950
$1,000
$1,050
2014 2015 2016 2017 2018
2014 Projected
Renewal Growth
Compass Impact
Onsite/Nearsite
Clinic Impact
CDHP/HRA Impact
Accumulative
Impact
Bending 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.
Bending the Trend
$650
$700
$750
$800
$850
$900
$950
$1,000
$1,050
2014 2015 2016 2017 2018
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%

Bending the Trend

$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
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
$1,400.00
$1,600.00
2011 2012 2013 2014 2015 Funding 2016 CDMH* 2016 Prime*
Historical Med/Rx Per Employee Per Month Costs
Claims Fixed Fees Clinic Costs VEBA Funding *Projected 2016 Costs
Bending the Trend
Actual Costs Projected Costs

Bending the Trend
$1,379.47
$654.42
$158.86
$163.16
$285.28
$224.02
$-
$200.00
$400.00
$600.00
$800.00
$1,000.00
$1,200.00
$1,400.00
$1,600.00
2015 PRIME 2015 CDMH
2015 YTD Plan Comparison Actual Costs
Claims Data Through October 31, 2015
Claims Fixed Fees Clinic Costs VEBA Funding
∆ $211.45 PEPM

Challenges 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

What’s Next?
High
Performing
Networks
Referenced
Based
Pricing
Leveraged
Partnerships
Growth of
the Vera
Network

Conclusion
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.

Health Rosetta Case Study - City of Kirkland, Washington

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Health Rosetta Case Study - City of Kirkland, Washington

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