2003 Open Enrollment Benefits Presentation

Presented By: Mark G. Cauthen

Effective: 1/1/2003

Topics of Discussion Self Insured Plan Overview of the Trust Fund Factors Driving Increase in Cost of

Health Care 2003 Plan Changes

Private Health Care Systems (PHCS) 2003 Rate Adjustments

What does it mean to be Self-Insured?

The employer assumes the role of the insurance company and assumes all of the risk.

Overview of the Trust Fund Joint fund between City and Colorado

Springs Utilities (CSU) Where all of the premiums go Where claims are paid from (similar to a

checking account) We need to bring in more revenue than

what is spent on claims Projected 2002 expenditures (City/CSU)

Medical: $16 million Pharmacy: $3.8 million Dental: $2.8 million

How is the Trust Fund Kept Viable?

Premium Rate Increases Cost Sharing with Employees Vendor Management

Audited Walgreen's As a result, we are renegotiating for

better rates Performed a Medicare Audit Collected funds from Memorial

Hospital as a result of the Medicare Audit

Factors Driving Rising Costs in Healthcare Premiums (2001-2002) Nationally

Litigation and Risk Management -- 7% Fraud and Abuse -- 5% General Inflation (CPI) -- 18% Increased Consumer Demand -- 15% Rising Provider Expenses -- 18% Legislation/Regulations -- 15% Rx, Medical Technology -- 22%

Source: PricewaterhouseCoopers analysis, April 2002

Factors Driving Increase in Cost for City Increasing Medical costs Increase in our Claims

Experience Low Reserve Level

because of Several Catastrophic Claims

Projected increase in cost of claims for 2003

2003 Rate Increases

State Employees -- 39% National -- 25% City -- 14.3%

2003 Plan Changes

Plans Affected: Medical Pharmacy Dental Vision

Medical Plans

We will have 3 Medical Plans Next Year EPO EPO Mid-Level CORE

The Swing Plan will be Eliminated There will be a new out-of-network

option available under the EPO Mid-Level Plan

Terms Out-of-Pocket Maximums

The maximum amount that you will spend annually for covered expenses, does not include co-pays.

After the out-of-pocket maximum is reached, the plan pays 100% for covered services

Annual Deductible The amount that must be paid by the

member before the plan pays anything Co-Insurance

The portion of Eligible Medical Expenses for which the Covered individual has financial responsibility

Hospital Pre-Admission Diagnostic Testing Subject to the Inpatient Hospital

diagnostic coinsurance EPO--Plan pays 90%, Employee

pays10% up to the out-of-pocket maximum

EPO Mid-Level (In-Network)--Plan pays 80%, Employee pays 20% up to the out-of-pocket maximum

EPO Mid-Level [Out-of-Network] and CORE Subject to deductible and co-insurance

EPO: Plan Change

Out-of-Pocket Maximums 2003

$750 per Individual per year $2,250 per Family per year

2002 Individual -- $500 Family-- $1,500

EPO: Plan Change

In-patient Hospital Stays 2003

10% Co-insurance (applies to the out-of-pocket maximum)

2002 $100 co-pay per day of

confinement, $500 maximum

EPO: Plan Change

Pharmacy Benefit Increase to Maximum Co-Pay on

Brand Named Prescriptions only Retail: From $35.00 to $50.00

per RX (30 day supply) Mail: From $40 to $60 for a 90

day supply Generic Pricing Stays the

Same

EPO Mid-Level: Plan Change

Plan Enhancement Two Features: In and Out-of-

Network Options (Replaces Swing Option)

In-Network option continues to function as it does today in that you have to use MHMN.

Out-of-Network: Separate Benefit Schedule, deductible, and coinsurance

EPO Mid-Level: Plan Change

Annual Deductible Out-of-Network:

$1,000 per individual $2,000 maximum for a family

Plan pays 70% for most services after the annual deductible is met

Plan pays 100% for eligible medical expenses once the out-of-pocket maximum is reached

In-Network: No Annual Deductible

EPO Mid-Level: Plan Change

Out-of-Pocket Maximums In Network

Individual--$1,000 Family--$3,000

2002 Individual--$750 Family--$2,250

EPO Mid-Level: Plan Change

Out-of-Pocket Maximums Out-of-Network

Individual--$3,250 Family--$9,750 These amounts are above the

deductible Plan pays 100% for covered

services after out-of-pocket maximum is reached

EPO Mid-Level: Plan Change

Inpatient Hospital Stays 2003

In-Network• 20% Co-insurance (applies to the

out-of-pocket maximum) Out-Of-Network

• 30% Co-insurance (applies to out-of-network out-of-pocket maximum

2002• $300 co-pay per day of

confinement, $750 maximum

EPO Mid-Level: Plan Change

Pharmacy Benefit Increase to Maximum Co-Pay on

Brand Named Prescriptions only Retail: From $35.00 to $60.00

per RX [30 day supply] Mail: From $40 to $75 for a 90

day supply

Swing Medical Plan Will be discontinued in

2003 Enhancement of EPO Mid-Level

Plan Features an out-of-network

benefit option

Core Medical: Plan Change

Out-of-Pocket Maximums 2003

Increased to $7,750 per individual

2002 $7500 per individual

Core Medical:

Annual Deductible $1,500 per individual per year,

no family limitation No change from 2002

Private Healthcare Systems (PHCS)

New Option for 2003 PHCS

New Wrap Around Network Nearly 370,000 providers and 3,500

facilities We have Pre-Negotiated Network

Discounts Eligibility

Members who are enrolled in a City Medical Plan (EPO, EPO Mid-Level, or CORE) can take advantage of the PHCS in Certain Circumstances

Private Healthcare Systems (PHCS) National Network

Enables members to choose providers from within a national network

In-Network Benefit All plan participants receive the in-

network benefit for emergency situations

Discounts All emergency situations, all plans EPO Mid-Level plan participants who

use the out-of-network benefit and use PHCS services

EPO Participants - PHCS

Can only be used for out-of-area emergency situations As defined in the Medical Summary Plan

Description (SPD) Non Emergency out-of-area

services will not be paid by the plan

EPO Mid-Level Participants - PHCS

PHCS enables EPO Mid-Level out-of-network participants to take advantage of discounts Emergency and Non-Emergency

situations

Core Participants - PHCS

PHCS enables CORE indemnity plan to take advantage of discounts

New Generic Medical Cards

To be distributed by January 1, 2003

Will include PHCS information

Alternative Medicine

Pilot Program for 2003 Applies to all Medical Plans No additional premium Must be enrolled in a

medical plan New Option for 2003

Alternative Medicine

Services must be provided by a licensed provider

Covers: Acupuncture Nutritionist Chiropractic Massage therapy Homeopathic Services

Alternative Medicine

All plans pay 50% of each claim

Maximum amount paid by plan is $300 per family

50% co-insurance does not apply to the plans out-of-pocket maximum or deductible

Dental Plans Delta Hi-Option DPO Dental

Plan Formerly Delta Premier Dental Plan

(Springs Dental)

Enhanced by including the DPO provider Network

When DPO provider is used, employee and plan receive discounts

DPO Providers will be shown in Red Lettering in the provider directory

Dental Plans

Delta Standard-Option DPO Dental Plan Formerly Delta Preferred DPO

Dental Plan No change in deductible (In or Out-

of-Network) $50 per individual $150 per family

DPO Providers will be shown in Red Lettering in the provider directory

Dental Plans - Calendar Year Deductibles Delta Hi-Option DPO Dental Plan

$50 Per Individual $100 Family

Delta Standard-Option DPO Dental Plan $50 Per Individual $150 Per Family

Core Dental $75 Per Individual

Vision Benefit Enhancement

Frames: In-Network Frame allowance increased to $130 retail ($50 Wholesale)

Service Enhancements Contact Lenses:

Member Preferred Pricing Direct delivery to your home Other Incentives

Contact VSP at 1-800-877-7195 to learn more

Rate Increases

Medical Prescription (RX)

Dental

Funding the Medical Plan Due to an increase in

medical plan costs and increased claims experience, there will be a 14.3% increase in overall funding for 2003

Rate Re-Structuring

The rate structure was realigned to more accurately reflect the claims experience and industry standards.

Creates greater equity for the participants

Rate Re-Structuring

Tier2002 Premium

Structure2003 Premium

StructureEmployee Only 1 1Employee & Spouse 2.5 2.0Employee & Child(ren) 2.3 1.9Employee & Family 3.1 2.9

Dental Rate increase of 13.1%

Vision

Rate Increase is zero

After Hours Clinic

Effective Sept 30, Memorial Hospital After-Hours Clinic Moved

Location: 2502 E. Pikes Peak Ave (North side of building)

Open 7 days a week: 11 a.m. to 11 p.m.

Closed Holidays Phone: 365-2888 Call ahead to decrease waiting time

Benefit Enhancement Recap

Medical PHCS Wrap Around Network EPO Mid-Level, Out-of-Network Option Alternative Medicine

Dental DPO Provider Network Discount

Added to Delta Hi-Option DPO Dental Plan

Vision Frame Allowance Increase

Questions Benefits Line: 385-5904,

Press 2 at the Prompt.