Outsourcing vs. Insourcing When it makes sense to do both ......The mission of the Broward County...
Transcript of Outsourcing vs. Insourcing When it makes sense to do both ......The mission of the Broward County...
Outsourcing vs. InsourcingWhen it makes sense to do both:
Managing Workers‘ Compensation Broward County Public Schools
COUNCIL OF THE GREAT CITY SCHOOLSChief Human Resource Officers & Chief Information Officers Joint Meeting
February 6, 2018
2MISSION AND VISION
BCPS Foundation. BCPS Foundation
3DISTRICT PROFILE
4TEACHING & LEARNING
BCPS Foundation. Core Business
5DISTRICT PROFILE
6
Outsourcing and the SMART Program
• The District amended its approach to
implementing its capital program in
anticipation of the SMART Program
A NEW DELIVERY MODEL
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Outsourcing and the SMART Program
Three Primary Reasons to Outsource:1. History of Poor Execution in Construction
2. Not Core Business
3. Scalable to need
A NEW DELIVERY MODEL
Program Manager Cost & Program Controls
Awardees / Partners
8
SMART Program Continues to Progress
MOVING FORWARD AND ON TRACK
Workers’ Compensation (WC) is a statutorily mandated (Chapter 440, Florida Statutes) entitlement program for covered employees, who become injured or ill from a work related accident or exposure. When appropriate, WC provides specific guaranteed benefits such as relevant medical care and partial wage replacement.
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Workers’ Compensation 101
THE BASICS
10KEY PARTIES INVOLVED
Three Primary Stakeholders
INJUREDWORKER EMPLOYER
MEDICAL
BCPS Workers’ Comp History
2005 Pre-CBM Structure• Self-Insured
• Fully Outsourced TPA– Subcontracted medical network/services
• Full Compliance with statutory requirements but costs significantly rising
FOUR DISTINCT PERIODS OF HISTORY 10
Pre-CBM Early CBM Pre- Self Administered Current CBM
July 1, 2006 July 1, 2009 July 1, 2013
$17,043,224.94
$16,066,210.23
$18,160,496.31 $18,257,865.08
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
FY 1999-2000
FY 2000-2001
FY 2001-2002
FY 2002-2003
FY 2003-2004
FY 2004-2005
Pre CBMPrior to July 1, 2006
Pre CBMPrior to July 1, 2006
PRE-CRITERIA BASED MODEL 11
Experience Development
Total Experience is one year of claims. Experience = paid + outstanding reserve
June 22, 2005: BCPS Internal WC Audit
Major Findings• Lack of an Integrated
System• Lack of Medical
Consumerism• Lack of Employer
Oversight• Passive Return-to-Work
Program
Program Compliance ≠ Program Performance
12A TURNING POINT
14FUNDAMENTALS
July 2006 - Program Reform
New Program Structure
• Still Fully Outsourced
• TPA-Single Provider of Services
• SBBC Private Label Network
• Nurses on every claim
• Stay-at-Work Program
• Dedicated BCPS WC Specialist
• Based on the Criteria-Based
Model (CBM)™
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Comparison of Models
Large Contracted Clinician Network with Minimal Inclusions
Enhanced Reimbursement Structure
Based on Clinical Outcomes (Pay for Performance)
Concentrated Network of Trained Clinicians Based on Performance
Traditional Model CBM Model
Financial-Based Model Medical-Based Model
Discount Medicine Focused on Minimizing Unit Costs
Paper Notification of Injury Coordinated by SBBC location staff
Early Intervention Real-Time Telephonic Notification of Injury Coordinated by Dedicated Triage
Nurse
Private Label Network
Priority Driver
Employee/Clinician Driven Medical Utilization
"Cookbook" MedicineEvidenced-Based Medical
Philosophy (C.A.R.P.)
Subcontracted Nurse Case Mangers on Select Claims for Specific Tasks
(Fee for Service)
In-house Nurse Case Manager on Every Claim Throughout Life of Claim
(Service Inclusive)
Medical Consumerism
Employee Primary Conduit of Information with Supervisor
Adjuster/Nurse Primary Conduit for All Communication
Passive Return-to-Work Program
Communication
Return to WorkAggressive Stay-at-Work Program
TRADITIONAL VS. CBM
$17,043,224.94
$16,066,210.23
$18,257,865.08
$13,083,934.75
$8,966,296.97
$9,926,057.28
$12,620,006.95
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
FY 1999-2000
FY 2000-2001
FY 2001-2002
FY 2002-2003
FY 2003-2004
FY 2004-2005
FY 2005-2006
FY 2006-2007
FY 2007-2008
FY 2008-2009
Transition Year between Audit & CBM
Early CBM7/1/06 – 6/30/09 Experience Development
16TREMENDOUS FINANCIAL IMPROVEMENT
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Experience at 36 Months
TREMENDOUS FINANCIAL IMPROVEMENT
Fiscal Year Total Incurred at 36 months
FY 1999-2000 $ 18,404,398.51 FY 2000-2001 $ 17,309,558.76 FY 2001-2002 $ 17,534,834.35 FY 2002-2003 $ 17,489,066.06 FY 2003-2004 $ 17,885,819.01 FY 2004-2005 $ 17,184,304.68 FY 2005-2006 $ 11,808,906.00 FY 2006-2007 $ 8,768,790.18 FY 2007-2008 $ 9,343,700.00
FY 2008-2009 $ 10,937,414.49
Average Savings of 45% or $7.9 million per claim year
Early CBM7/1/06 – 6/30/09
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Total Experience at 36 Months
TREMENDOUS FINANCIAL IMPROVEMENT
Average Savings of 38% or $5.9 million per claim year
Early CBM7/1/06 – 6/30/09
$18,404,399 $17,534,834 $17,885,819
$11,808,906
$8,768,790
$10,937,414
$‐
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
FY 1999‐2000
FY 2000‐2001
FY 2001‐2002
FY 2002‐2003
FY 2003‐2004
FY 2004‐2005
FY 2005‐2006
FY 2006‐2007
FY 2007‐2008
FY 2008‐2009
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$7,224$6,672
$5,833
$3,616 $3,522 $3,867
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009
Average Experience
per Net Claim ( 12 months)
Average Experience
3 BEST YEARS
Early CBM7/1/06 – 6/30/09
Net Claims represent WC claims filed which have expenses associated with them.. An increase in report only claims will not impact the average incurred figures.
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Lost Work Days
TOTAL LOST DAYS (ILD AND INDEMNITY)
24,535
8,028
5,882 5,033
‐
5,000
10,000
15,000
20,000
25,000
30,000
2005‐2006 2006‐2007 2007‐2008 2008‐2009
Over 65% reduction in first year of CBM Program. And 80% reduction by year 3.
Early CBM7/1/06 – 6/30/09
$90,640,000
$71,346,000
$50,000,000
$55,000,000
$60,000,000
$65,000,000
$70,000,000
$75,000,000
$80,000,000
$85,000,000
$90,000,000
$95,000,000
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Reserve has decreasedover $19 million in first 3years of new WC Model at 75% confidence level, 100% funded.
10 Self-Insured WC Reserve Early CBM7/1/06 – 6/30/09
CBM-TPASelf-Insured ReservesEarly CBM
7/1/06 – 6/30/09
21TREMENDOUS FINANCIAL IMPROVEMENT
22TREND BEGINS TO TURN
Program ComplacencyPre- Self Administered7/1/09 – 6/30/13
$17,043,224.94
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
FY 1999-2000
FY 2006-2007
FY 2007-2008
FY 2008-2009
FY 2009-2010
FY 2010-2011
FY 2011-2012
WC Experience Development
23NEGATIVE TREND
Experience DevelopmentPre- Self Administered7/1/09 – 6/30/13
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Total Experience at 36 Months
TREMENDOUS FINANCIAL IMPROVEMENT
$17,309,559 $17,489,066 $17,184,305
$9,343,700
$13,981,535
$10,891,394
$7,274,134
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
Pre- Self Administered7/1/09 – 6/30/13
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$7,224$6,672
$5,833
$3,616 $3,522 $3,867$4,431
$5,144 $5,046
$3,756
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013
Average Experience
per Net Claim
( 12 months)
Average Experience per Claim
3 BEST YEARS
Pre-Self Administered7/1/09 – 6/30/13
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Lost Work Days
TOTAL LOST DAYS (ILD AND INDEMNITY)
24,535
8,028
5,882 5,033
6,232 5,635 5,954 6,227
‐
5,000
10,000
15,000
20,000
25,000
30,000
2005‐2006 2006‐2007 2007‐2008 2008‐2009 2009‐2010 2010‐2011 2011‐2012 2012‐2013
Pre- Self Administered7/1/09 – 6/30/13
MERGERS & ACQUISITIONS
Industry EnvironmentPre- Self Administered7/1/09 – 6/30/13
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In order to insulate SBBC WC program and the CBM model from TPAs and industry as a whole:
– Bring “in-house” core operations and staff to manage the fundamental decision-making including claims and medical consumerism components of the CBM
– Continue to outsource non-core decision-making services, as it specifically relates to the CBM• Claims management software system, bill review, etc.
Industry Environment Current CBM7/1/13 – Present
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1. BCPS program very unique under CBM model.
2. CBM model proven successful when executed faithfully.
3. Inconsistences in TPA administrations / Volatile Insurance Industry
Reasons to Insource WC Program Current CBM7/1/13 – Present
• 28 Positions• Program Mgmt.• Claims Mgmt.• Medical Mgmt. &
Consumerism• SAW/RTW • Strategic Admin Support
Services and Operations
• Intake & Triage (24/7/365)
• Claims System/Software• Medical Bill Review,
Repricing & Payment• Contract Administration &
Vendor Mgmt.
In-HouseSBBC WC Unit
OutsourcedTPA Select Service Contract
Current CBM7/1/13 – OngoingCBM – Self Admin
Current Program Structure
26INSOURCE CORE DECISION MAKING
Current CBM7/1/13 – Present
31MISSION
BCPS Foundation. WC Unit Mission
The mission of the Broward County Public Schools Workers’ Compensation Unit is to effectively, efficiently, and ethically manage the Workers’ Compensation Program, thereby producing consistently superior outcomes in both human and financial terms.
Current CBM7/1/13 – Present
INDUSTRY PROVES US RIGHT
One year into Self Administration – District’s TPA Acquired
Industry EnvironmentCurrent CBM7/1/13 – Present
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Average Incurred Per Net Claim
AVERAGE INCURRED COST PER NET CLAIM (12 MONTHS)
$5,833
$3,616 $3,522$3,867
$4,431
$5,144 $5,046
$3,756 $3,503 $3,432 $3,571 $3,370
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Self-Administration
Current CBM7/1/13 – Present
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Total Experience at 36 Months
TREMENDOUS FINANCIAL IMPROVEMENT
$17,885,819
$11,808,906
$9,343,700
$13,981,535
$8,542,738
$9,886,956
$-
$2,000,000
$4,000,000
$6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000
FY 2002-2003
FY 2003-2004
FY 2004-2005
FY 2005-2006
FY 2006-2007
FY 2007-2008
FY 2008-2009
FY 2009-2010
FY 2010-2011
FY 2011-2012
FY 2012-2013
FY 2013-2014
FY 2014-2015
Current CBM7/1/13 – Present
$16,066,210
$19,123,672
$14,518,611
$9,782,730
$10,029,314
$15,009,179
$10,513,323
$12,818,108
$8,920,163
$6,621,583 $6,000,000
$8,000,000
$10,000,000
$12,000,000
$14,000,000
$16,000,000
$18,000,000
$20,000,000FY 1999-2000
FY 2000-2001
FY 2001-2002
FY 2002-2003
FY 2003-2004
FY 2004-2005
FY 2005-2006
FY 2006-2007
FY 2007-2008
FY 2008-2009
FY 2009-2010
FY 2010-2011
FY 2011-2012
FY 2012-2013
FY 2013-2014
FY 2014-2015
FY 2015-2016
FY 2016-2017
as of 6/30/2017
Experience Development
TOTAL COST PER CLAIM YEAR
Current CBM7/1/13 – Present
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Cash Flow
CLAIMS COSTS - 4 BEST YEARS
21.2
16.518.6 18.6
15.1 14.5 14.5 13.5 13.7
9.611.4
9.912.1
$-
$5
$10
$15
$20
$25
Mill
ions
Average reduction of $3.3M per year
Current CBM7/1/13 – Present
37
Lost Days
TOTAL LOST DAYS (ILD AND INDEMNITY)
24,535
8,028
5,882 5,033
6,232 5,635 5,954 6,227 6,427 6,271
4,187 3,953
‐
5,000
10,000
15,000
20,000
25,000
30,000
Average Reduction of 35% in past two years
“in-house”
Current CBM7/1/13 – Present
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Total Program Costs
ADMINISTRATIVE AND CLAIM COSTS
Current CBM7/1/13 – Present
$3.8 M
3975% CONFIDENCE LEVEL, 100% FUNDED
Self-Insured Reserve
Actual current reserve is $20,814,000, at the (50%) and confidence (50%) level.
$84,849,000
$90,640,000
$77,647,000
$56,033,000
$48,440,000$45,000,000
$55,000,000
$65,000,000
$75,000,000
$85,000,000
$95,000,000
Reserves have decreased $42M in 11 years of new WC Model at 75%
confidence level, 100% funded
Current CBM7/1/13 – Present
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WC Self-Insured Experience Modification
LOWEST EXPERIENCE MOD SINCE CBM IMPLEMENTATION
Fiscal Year Experience Modification
State Self-Insurer Assessment
2006-2007 2.33 $2,134,260 2007-2008 1.99 $1,561,101 2008-2009 1.76 $1,076,701 2009-2010 1.39 $650,385 2010-2011 1.21 $251,181 2011-2012 1.31 $321,652 2012-2013 1.27 $425,013 2013-2014 1.25 $484,785 2014-2015 1.43 $513,785 2015-2016 1.14 $381,316 2016-2017 1.16 $367,990
2017-2018 1.08 $378,707
The Self-Insurer Experience Modification is used in the calculation of the District’s annual WC state assessment. The rating is promulgated by the state based on a formula using payroll and loss reports submitted by the District.
Current CBM
7/1/13 –Present
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Employee Satisfaction
2016-17 RESULTS
Triage / Initial SurveyMail-in
Post Closure SurveyOnline
95% 77%
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Claim Counts
FOCUS ON LOSS PREVENTION
1,9492,596 2,514 2,310 2,215 2,072 1,970 1,859 1,987 2,085 1,924 1,965
1,4681,087 1,246 1,402 1,393 1,510 1,500 1,497 1,491 1,366 1,364 1,391
3,417 3,683 3,760 3,712 3,608 3,582 3,470 3,356 3,478 3,451 3,288 3,356
0
1,000
2,000
3,000
4,000
5,000
6,000
Net Claims Report Only
Average of 3% reduction
43IMPROVEMENTS DESPITE INFLATION
44INDUSTRY INDICATIONS
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It (almost) happened again. Self-Insured TPA services spared
Industry EnvironmentCurrent CBM7/1/13 – Present
MERGERS & ACQUISITIONS
46BROWARD COUNTY PUBLIC SCHOOLS - WORKERS’ COMPENSATION UNIT
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