Foster Swift Municipal Law News: MTA Edition
The Michigan Legislature recently adopted the Public Employees Health Benefit Act, which permits public employers (including Townships) to (1) offer health care coverage on a self-insured basis, (2) maintain a pooled plan with other public employers, or (3) obtain fully-insured benefits on an individual basis. The Act also contains new requirements for obtaining bids for public employer health care coverage, as well as new claims utilization and cost information requirements.
Establishing a Pooled Plan
The creation and maintenance of a public employer pooled plan involves applying for and obtaining a certificate of registration from the Michigan Office of Financial and Insurance Services. The Act describes the certificate of registration application process. The Act also prescribes certain cash reserve requirements for pooled plans.
If a Township establishes a pooled plan with other public employers, the pooled plan must accept any public employer that applies for membership in the pooled plan, as long as the applicant: (a) agrees to make the payments required by the pooled plan; (b) agrees to remain in the pool for a three-year period; and (c) satisfies the other reasonable provisions of the pooled plan. A Township that leaves a pooled plan may not rejoin the pooled plan for at least two years.
Obtaining Bids for Health Care Coverage
Any Township or pooled plan that establishes a new medical benefit plan and that seeks benefits from a carrier must solicit at least four bids from various carriers, including at least one bid from a voluntary employees’ beneficiary association, before making a final decision. For an established medical benefit plan, a Township or a pooled plan must conduct the bid process every three years when renewing or continuing that medical benefit plan. In addition, a Township offering a self-insured plan that is administered by a third party administrator, an insurer, or other entity, must obtain at least four bids for those administrative services when establishing a medical benefit plan, and that bid process must be repeated every three years when renewing or continuing the self-insured plan.
Claims Utilization and Cost Information
The Act provides that any Township that has 100 or more employees in a medical benefit plan (or any Township that is in a pool that covers 100 or more employees in a medical benefit plan) shall be provided annually with detailed (de-identified) claims utilization and cost information from its insurance carrier. If a Township is in a pooled plan, the detailed claims and cost data must be reported for the pool as a whole and cannot be separated out for each public employer within the pool. Once the Township receives the data, the Township must disclose the information to any carrier or administrator that the Township solicits to provide benefits or administrative services, to the employee representative of the employees covered under the plan, and to any carrier or administrator that requests the opportunity to submit a proposal to provide benefits or administrative services for the medical benefit plan at the time of the request for bids.
The data sharing requirement of the Act is significant. Prior to the Act, Townships and other employers were often left wondering whether their premium dollars were spent on actual medical claims, as opposed to the carrier’s administrative costs and profits. Through reviewing claims data, Townships can focus on wellness and preventive care, which may produce long-term savings. This information will also assist Townships in making more informed choices regarding health care coverage. The increased available information will allow Townships to seek competitive bids from carriers based on cost and performance, which should increase competition and lower prices. In addition, the bidding process will offer employers the chance to explore health coverage options that may have been overlooked in the past.
Although there are several available carriers, our office has worked extensively with Physicians Health Plan of Mid-Michigan ("PHPMM"), which has offered health care coverage to employers in the mid-Michigan area for over 25 years. In 2007, PHPMM introduced a statewide coverage option through its new insurance company. More than half of PHPMM’s current employer groups are public employers, including many municipalities and public schools. PHPMM has offered its groups the kinds of claims utilization and cost information described by the Act for many years, even before the Act required this type of disclosure. PHPMM also offers a variety of wellness programs to enhance the well-being of its members, which can be crafted to meet the needs of each individual group. PHPMM was recently voted #1 in overall member satisfaction in a survey conducted by U.S. News and World Report. For more information regarding the benefits and services that PHPMM can provide, please call the PHPMM Sales Department at 888-892-0009.