COUNCIL OF THE CITY OF PHILADELPHIA2 COMMITTEE ON LABOR AND CIVIL SERVICE3 Room 400, City Hall6 Philadelphia, Pennsylvania Thursday, April 28, 20117 12:20 p.m. PRESENT: COUNCILMAN BILL GREEN, CHAIR10 COUNCILMAN W. WILSON GOODE, JR. COUNCILMAN CURTIS JONES, JR.11 COUNCILWOMAN MARIA D. QUINONES-SANCHEZ RESOLUTION 110019 - Resolution authorizing the Committee on Labor and Civil Service to hold14 hearings investigating ways that targeting medical resources can help the City of15 Philadelphia improve the quality and reduce the cost of providing health care services to16 its employees and citizens. - - -18 2
Good2 afternoon. I am going to call to order3 the hearing on Resolution No. 110019 on4 targeted healthcare.5 Would the Clerk please read the6 resolution.7
Resolution 110019,8 authorizing the Committee on Labor and9 Civil Services to hold hearings10 investigating ways that targeting medical11 resources can help the City of12 Philadelphia improve the quality and13 reduce the cost of providing health care14 services to its employees and citizens.15
I note for16 the record that to my left is17 Councilwoman Quinones-Sanchez. To my18 right is Councilman Wilson Goode and19 Councilman Curtis Jones, which constitute20 a quorum.21 The first to testify will be22 the Law Enforcement Health Benefits23 organization. Would Tom Lamb please come24 to testify.25 4/28/11 - LABOR - RES. 1100191 (No response.)2
Who is here3 to testify from the Law Enforcement4 Health Benefits organization?5 (No response.)6
No one?7 Okay. Well, we'll give them some more8 time, and we'll ask Cathy Scott to come9 testify, please.10 (Witness approached witness11 table.)12
Good afternoon,15 Chairman Green and members of the16 Committee. My name is Catherine Scott17 and I am President of AFSCME District18 Council 47 and I also serve as the Chair19 of the Board of Trustees of the AFSCME20 District Council 47 Health and Welfare21 Fund. We welcome the opportunity to22 participate in the Committee on Labor and23 Civil Service's hearings investigating24 ways that targeting medical resources can25 4/28/11 - LABOR - RES. 5 I believe I have a unique6 vantage point from which to view the best7 health policies. As a longtime labor8 leader, I have seen firsthand for decades9 the health challenges that our members10 and their families face. As a Trustee11 and now Chair of the Board of Trustees of12 our Health and Welfare Fund, I am13 confronted with the need to deploy the14 Fund's scarce resources strategically to15 ensure that members and their families16 receive the health coverage that they17 need and deserve. 20 While I am not in a position to21 make suggestions about the comprehensive22 targeted healthcare delivery model that23 is the topic of these hearings, I can24 share certain tools that the Committee25 4/28/11 - LABOR - RES. 3 I am very serious when I talk4 about the need to deploy health resources5 strategically. As we all know, it's easy6 to spend a huge amount of money on7 healthcare. This city is famous for its8 many teaching hospitals, superb medical9 schools and army of world-famous medical10 specialists. However, too often what's11 lacking is the basic care, delivered on12 an ongoing basis that can prevent small13 or chronic problems from developing over14 time into hugely expensive problems. 24 Trustees of the Fund and I have25 4/28/11 - LABOR - RES. 1100191 thought long and hard about the best way2 to use healthcare dollars. 14 In March 2010, our union presented the15 City with a comprehensive proposal for16 wellness programs, which I have provided17 to you. 21 Notwithstanding the funding22 constraint, the Trustees of the District23 Council 47 Health and Welfare Fund have24 moved ahead with a program based on25 4/28/11 - LABOR - RES. 1100191 extensive research into wellness programs2 that really work not only in reducing3 costs but in actually making people4 healthier. 11 This is the approach that12 Dr. Brenner found he was forced to13 develop if he was going to get his arms14 around the medical problems of the people15 in Camden. The New Yorker article16 focused in on Dr. Brenner's early17 reasoning about data. If he could find18 people whose use of medical care was19 highest, he figured, he could do20 something to help them. If he helped21 them, he would also be lowering their22 healthcare costs. And if the stats23 approach to crime was right, targeting24 those with the highest healthcare costs25 4/28/11 - LABOR - RES. 1100191 would help lower the entire city's2 healthcare costs. His calculations3 revealed that just one percent of the4 hundred thousand people who made use of5 Camden's medical facilities accounted for6 30 percent of its costs. 10 We are all aware of the limp11 and useless programs that are often12 called, quote, "wellness," end quote,13 programs, those that too often consist of14 postcards that get thrown into the trash15 upon receipt or generalized16 communications about quitting smoking or17 losing weight. 21 After considering many models,22 we have rolled out a program called Know23 Your Numbers. The numbers in question24 include, among others, weight, blood25 4/28/11 - LABOR - RES. 1100191 pressure, blood glucose levels,2 cholesterol and BMI. This is a pilot3 program that we developed in partnership4 with Independence Blue Cross. 10 Back to facts. First, we11 looked at facts; namely, the Fund's12 detailed claims history. 22 What the Trustees found,23 working with a health actuarial firm with24 sophisticated tools and access to25 4/28/11 - LABOR - RES.
1100191 relevant databases, was that DC 47 Fund2 participants have a higher prevalence of3 certain chronic diseases, not only as4 compared to the other City employees5 overall but also compared to the entire6 book of business of Independence Blue7 Cross. These conditions include asthma,8 coronary artery disease, congestive heart9 failure, chronic obstructive pulmonary10 disease and diabetes. 17 As the doctors seeking to18 improve health outcomes found in Camden,19 each of these conditions, if untreated20 and unmonitored, can explode in short21 order to very expensive and debilitating22 conditions. These five conditions, which23 affect less than percent of the Fund's24 participants and their families, account25 11 4/28/11 - LABOR - RES. 1100191 for nearly half of the dollars spent by2 the Fund. 4 Gather more facts. If you want to have5 an aggressive, successful targeted health6 program, you need to know a lot of7 information about the group you're8 working with. 11 We urge the Committee to12 analyze the level of risk for illness of13 the target population. Like all groups,14 the Fund's participants and their15 families fall across the spectrum of16 wellness to illness. 25 12 4/28/11 - LABOR - RES. 21 Next I have the doctor tell him22 or her their test results. In Year of23 Know Your Numbers, participants will then24 be required to complete a personal health25 13 4/28/11 - LABOR - RES. 1100191 profile, which includes recording this2 data. The downside of failing to do so3 will be a less favorable payroll4 deduction in 2012. The upsides are5 substantial, both for the participants6 and the Fund. 17 I want to emphasize that the18 Committee will want to consider adding a19 realtime requirement for obtaining this20 testing data. If the City relies only on21 claims data, it will know only the22 services received. 25 14 4/28/11 - LABOR - RES. 1100191 The Know Your Numbers campaign2 grows out of the much more comprehensive3 targeted wellness program that I4 mentioned above. Unfortunately, the City5 responded with the same tired, unproved6 programs that they call wellness and7 disease management, but are really only8 about decreasing benefits and raising9 costs to participants. As I said10 earlier, I will leave aside for now the11 collective bargaining aspects of the12 City's position. 20 Any wellness program must have21 a comprehensive communication program22 that provides comprehensive and current23 health information. Our wellness program24 began on April 1st, 2011. We will be25 15 4/28/11 - LABOR - RES. 1100191 doing a monthly newsletter which2 highlights one of the disease conditions3 discussed earlier. I have a copy of our4 first newsletter for each of you. And5 you should have a copy of this. As you6 can see, we are providing comprehensive7 information on the provisions of the8 Healthcare Reform Act, which requires no9 co-pay for preventative services. 19 These include, in addition to work site20 screening opportunities, much more21 comprehensive screening, including22 mineral and vitamin deficiencies; direct23 communication healthcare providers and24 educators to patients about programs for25 16 4/28/11 - LABOR - RES. 1100191 medication compliance, diet and exercise,2 et cetera, as well as a menu of3 complementary programs. 11 As you can see, the payroll deductions12 for some of these plans are very13 significant. 18 We are attempting to create a19 climate where a culture shift can occur20 and members can feel comfortable21 preparing for the visit and questioning22 their doctor about recommended care and23 lower-cost alternatives, such as generic24 drugs rather than brand name drugs. You25 17 4/28/11 - LABOR - RES. 21
Thank you22 for your testimony. This is really an23 issue that the City and the country can't24 ignore, and, that is, how to deal with25 18 4/28/11 - LABOR - RES. 1100191 ever-rising healthcare costs. 11 I was prompted in part by the12 article that you cited, and really the13 key things there are improving health14 outcomes by targeting resources and15 outpatient care to patients with high16 recurrent medical costs, which was the17 focus of the article. And the other18 thing that we're going to talk about19 today is questioning claims and the20 ability to get reimbursements for money21 that somehow seemed to be paid out by our22 providers every year, millions and23 millions of dollars, that shouldn't have24 been paid out and recovering that back25 19 4/28/11 - LABOR - RES. 7 Approximately 1,200 chronically ill8 patients elected to join. The union and9 the hospital piloted an innovative care10 delivery model at the center, including a11 monthly flat fee per patient instead of12 per visit fees, allowing patients --13 which was paid for by the insurance14 company or the employer, allowing15 patients unlimited access to the center,16 without co-payments or insurance bills,17 to encourage the people who are the18 highest utilizers of healthcare to go get19 treatment when symptoms first arise or to20 keep getting recurring treatment to21 manage their healthcare costs, without22 any cost associated with that, because23 their utilization rates were way more24 expensive than we recovered in co-pays,25 20 4/28/11 - LABOR - RES. 1100191 et cetera -- or than they did. 19 After just one year -- and I20 find these statistics amazing -- the21 center delivered reduced costs and22 improved health outcomes. An independent23 economist found that healthcare costs for24 the casino workers had fallen by 2525 21 4/28/11 - LABOR - RES. 1100191 percent in comparison to those in Las2 Vegas. 11 In Camden, the physician you12 mentioned, Jeffrey Brenner, who founded13 the Camden Coalition Healthcare Providers14 to focus on super-utilizers, the one15 percent of patients who account for 3016 percent of healthcare costs in Camden,17 which is astonishing that one percent of18 patients account for 30 percent of19 healthcare costs, which was in large part20 due to frequent ER visits. The21 grant-funded Coalition delivered patient22 services through home visits and phone23 calls and works with patients on issues24 ranging from medical crisis to unfilled25 22 4/28/11 - LABOR - RES. 1100191 prescriptions to housing stability. 23 We'll hear that LEHB saves over24 $61 million since 2002 based on its25 23 4/28/11 - LABOR - RES. 22
Well, let me23 clarify. The proposal that we made to24 the City was specifically designed for25 24 4/28/11 - LABOR - RES. 1100191 our Health Fund. We didn't make2 proposals for the City's plan itself.3 However, we do think that the model that4 we put forth could be applicable to the5 City's plan as well as our plan.6 What we wanted to -- one of the7 things that you have to be very conscious8 about when I said we wanted to be very9 strategic is, there is this erroneous10 presumption that if people have not been11 diagnosed with a disease, that they're12 healthy. Lots of people just don't go to13 the doctor. And so you are really not14 able to determine the specific health or15 lack of health of people unless they are16 getting a physical examination and they17 actually do know what their numbers are.18 So the suggestion that we made,19 and it is a very comprehensive proposal20 that we made to the City, was to try to21 get as much buy-in as we could for people22 to get an annual physical, get baseline23 so the funds would know exactly what the24 health status is of the majority of their25 25 4/28/11 - LABOR - RES. 1100191 population. So we focused on -- we've2 done a lot of research on this, and3 companies who do this and other funds who4 do it, if it is work based, there's a5 higher level of success.6 So part of the proposal we made7 to the City was to develop a work-based8 opportunity for physical examinations,9 for getting that testing done, that the10 City would allow people to go to the11 place in their workplace to have it done,12 and those numbers would then be reported13 to their primary care physician so that14 you would close the loop and make sure15 that there was not any gap in16 information, as well as to them, and then17 encourage them to do a personal health18 profile. If they were signing on to the19 program, they would go through the whole20 thing.21 As it is now, we are not able22 to do the workplace annual physicals,23 because there was no buy-in from the24 City. So we have moved forward with25 26 4/28/11 - LABOR - RES. 1100191 doing the annual physicals, and, of2 course, it's up to the person to go to3 their primary care physician.4 In addition, because we know5 from the data that we've gathered and the6 Fund paid to have that actuarial7 evaluation done, we know the five8 conditions that we need to treat, and the9 major focus that we did in the program10 with the City was focusing on diabetes11 and CVS. So we had two components. One12 was identifying the high users, because13 diabetes is a very high prevalence in our14 particular population. It is also a very15 debilitating condition, and if not kept16 in control, it can lead to very high17 personal costs in healthcare but also18 high cost to the Fund. So we targeted19 two specific programs for disease20 management that we wanted to very21 aggressively deal with, and those22 programs include the things that you were23 talking about earlier, which is having a24 team that would work on behalf of the25 27 4/28/11 - LABOR - RES. 1100191 person, some of whom are not physicians2 but lay people who would be working on3 it. So people would get nutrition4 counseling, they would -- if they were in5 the medical home model, which is sort of6 the non-clinic version, it's a7 physician-based version of the clinic8 model that you were talking about, there9 is more money that is paid for that model10 by the insurance company, because there's11 a higher expectation that people will get12 a higher level of care.13 So generally that was the14 proposal that we put out to the City to15 try to address those issues.16
So my17 question is, will those proposals -- do18 you have an estimate of potential savings19 as a result of adoption of those specific20 programs that has been common citywide21 that we could expect to see --22
Yes. We had return23 on investment estimates done by The Segal24 Company, who is the consulting firm that25 28 4/28/11 - LABOR - RES. 1100191 worked with us. Of course, any of these2 programs, you have to understand the3 return on investment. The return on4 investment was to be 1.5. For every $15 you would spend, you would get 1.5 dollar6 return initially. Of course, as it goes7 out, the savings are greater, and one of8 the advantages we think for the City is9 because most City employees are long-term10 employees, they're really making a11 long-term investment and could really,12 because there isn't significant turnover13 in the City, they could really see the14 fruits of those investments, because15 people would stay there and they would16 continue to be healthy.17
Do you have18 an initial estimate of how much would be19 spent in the first year?20
Our initial21 proposal to the City was in the area of22 $2 million for the entire comprehensive23 program.24
Within your25 29 4/28/11 - LABOR - RES. 1100191 Fund. So that would result in savings2 the first year of $3 million -- or a3 million dollars in savings.4
Right. And7 the savings would increase in the out8 years?9
Yes. That's the10 expectation, and the health of the --11 just as important, the health of the12 members and City employees also.13
So I'm going14 to allow my colleagues to ask whatever15 questions they have for you and then16 bring up Mr. Gault and then LEHB. And I17 apologize to everyone. We had two hours18 for this hearing, so this is a much19 broader discussion than the time we're20 allotting for today, and so I would21 expect that after we get through22 everybody's testimony, we'll come back23 and continue this topic based on the24 information we have. So thank you.25 30 4/28/11 - LABOR - RES. 1100191 Councilman.2
Thank you,3 Mr. Chairman, and thank you for4 conducting these hearings. To operate a5 government, we have to take care of our6 employees, and to take care of our7 employees, we have to be constantly8 monitoring cost of healthcare, because it9 is such a huge expense.10 I have a couple of questions.11 In your testimony did you say that12 members of District Council 47 had13 particular illnesses in higher proportion14 than the general workforce? Is that what15 you said?16
Yes. The five17 diseases that I mentioned in the18 comparison with Independence Blue Cross'19 book of business, I'll give you an20 example. Their average book of business,21 five percent of their population is22 diagnosed with diabetes. Ours is 1123 percent. So we are more than double the24 Independence Blue Cross' book of25 31 4/28/11 - LABOR - RES. 1100191 business.2 I am not at liberty to go into3 other information that was gotten at the4 Healthcare Committee that everyone5 participated in, but I can tell you6 Independence Blue Cross' book of7 business, ours is double their average.8
Without9 violating any HIPAA regulations, but was10 it environmental? Was it something -- a11 lifestyle? What were the factors that12 made your membership more at risk than13 others?14
Well, you know,15 without having enough data, it's very16 difficult to speculate on that. I guess17 maybe a good answer would be, our18 members, because they have a good health19 program, get tested and, therefore,20 they're diagnosed, where maybe the21 general public is, because it doesn't22 have as good a healthcare program, may23 not go to the doctor, may not know that24 they actually have -- because this is a25 32 4/28/11 - LABOR - RES. 1100191 silent killer. I mean, lots of people2 walk around with diabetes and have no3 idea that they have it until they're4 very, very sick.5 So I guess we haven't drilled6 down that much yet, because we are really7 starting to significantly build that8 database, but what we do know is that we9 have a serious problem that needs to get10 addressed, and that is a condition that11 we know with changing lifestyle and some12 other initiatives, increased exercise, et13 cetera, can become a very controlled14 condition.15
The reason I16 ask, if it's environmental, we share the17 same environment.18
These20 illnesses know no union designation or21 elected official designation.22
I'm going to make a23 comment, because I have raised this24 before. I do think that the lack of25 33 4/28/11 - LABOR - RES. 1100191 supermarkets and having fresh fruit in2 the City of Philadelphia, especially in a3 significant number of neighborhoods, I4 believe contributes to perhaps a higher5 level of diabetes in the population and a6 higher level of obesity. I know the City7 has been working on initiatives to try to8 bring more supermarkets to neighborhoods,9 but I don't think that we can ignore that10 as an environmental issue.11
We've12 learned in other testimony that there are13 causal relationships between a number of14 environmental, health and lifestyle15 choices of particular sections of cities16 economic groups suffer from, but it was17 just startling to hear that there were18 about five or so diseases that were19 higher in your membership.20 Okay. So the unintended21 consequence of getting better healthcare22 is more diagnosis of illnesses. That23 might contribute to the spike in that24 regard?25 34 4/28/11 - LABOR - RES. 1100191
It could be. I2 mean, we are looking at that, and part of3 the problem -- and I think if this4 Committee is able to move forward on what5 your, I think, a very ambitious but good6 vision for healthcare in the City, you7 may very well find out as people get8 tested and more people are seeing the9 doctor that in fact in Philadelphia it10 isn't five percent, it's 11 or 1211 percent.12
I just know13 when we were listening to the14 firefighters, that there was an issue15 dealing with diesel fuel that I never16 forgot and that -- so I was very worried17 about the membership.18 I want to -- my other question,19 Mr. Chairman, is that in your statistics20 and also yours that the issue of one21 percent of the population costing --22
-- thirty25 35 4/28/11 - LABOR - RES. 1100191 percent of the healthcare piece, how do2 you plan on addressing that particular3 population? Just clarify that for me.4
That's not5 City employees. That's an example in6 Camden that focused care on moving people7 from emergency rooms into clinics that8 dealt with them, and there are models.9
But if I10 heard her testimony correctly, she also11 had a similar program.12 Is that true?13
Yes. In looking at14 the information that we were able to15 ascertain, there is a percentage of our16 population that is driving the healthcare17 costs. It's not one percent. It's18 higher than one percent. I think what I19 said was 30 percent of the -- 20 percent20 of the population is driving 50 percent21 of the cost.22
And I know23 we have the interest of cost containment24 and then the interest of good healthcare25 36 4/28/11 - LABOR - RES. 1100191 provided to members, but how do you2 approach that particular segment to kind3 of do two worthwhile things; one, get4 them the healthcare that they need, but5 also manage the cost? And I heard the6 Camden example of how they do it, but how7 is yours different?8
If you could9 keep your answer as brief as possible, I10 would appreciate it.11
Well, that's why14 we're pursuing the aggressive disease15 management program. Once we put that in16 place, we will be able, we hope, to --17
Yes. Yes --20 (continued) more aggressively reach out21 to the population.22
And with23 hopefully similar results.24 Just for the record, what do25 37 4/28/11 - LABOR - RES. 1100191 your members -- what do you get per2 member for healthcare reimbursement under3 your contract?4
Nine hundred7 and seventy-six dollars per person. Are8 you aware of what it costs the City for9 non-exempt employees?10
Well, our actuary11 believes that the cost is close to12 $1,100. I believe the City disputes13 that.14
The City15 disputes that, okay. So you have far16 greater benefits than we have, lower17 deductibles than we have, et cetera; is18 that true?19
I think the HMO at20 this point, our newest HMO program, is21 equivalent to the City. Our Personal22 Choice program is superior.23
Superior,24 okay.25 38 4/28/11 - LABOR - RES. 1100191 So I want to say to everybody,2 we all recognize that most of the things3 that we're talking about here have to be4 bargained or arbitrated, and fully hope5 and expect that that will occur in order6 so that the City and the unions can have7 better healthcare but also that as8 collectively there are more resources9 available to deal with the other subjects10 in the contracts that are of importance11 to everybody in this room.12 A couple of things come to13 mind. I'm just going to mention one of14 them. As part of collective bargaining,15 obviously we could provide different16 co-pays or other things for people who17 choose to participate in a program of18 healthcare, annual checkups and providing19 that data versus people who choose not to20 participate in that healthcare, a sort of21 carrot and stick approach to getting the22 data we need to lower healthcare costs.23
And I mentioned in24 my testimony actually that's a program25 39 4/28/11 - LABOR - RES. 1100191 that we've undertaken.2
That's3 great. Thank you very much.4 Mr. Gault.5 (Witness approached witness6 table.)7
Please state10 your name for the record and proceed with11 your testimony. Good afternoon.12
15 Thank you for inviting me to16 address the Committee today. My name is17 Bill Gault. I'm President of IAFF Local18 22, and I also chair the IAFF Local 22's19 Health Plan. 23 My remarks will be brief, as I24 know you will have many experts and25 40 4/28/11 - LABOR - RES. 1100191 policymakers here to provide facts,2 figures and philosophy about targeted3 healthcare efforts. 8 In most health plans, only a small group9 of people use a majority of the10 healthcare dollars. 14 This is like the results that Dr. 19 From this, it's clear that what20 the City needs to do and what our plan21 has started to do is to target care to22 where it is most needed. We have spent23 the past few years working with our24 consultants and insurance carriers to add25 41 4/28/11 - LABOR - RES. 5 More of the obvious: Telling6 people what to do isn't enough. For7 example, we all know that telling people8 not to smoke doesn't make people stop9 smoking. Telling people to exercise10 doesn't get them off the couch and into11 the gym. 14 One of the things that research15 shows is that the only real way to drive16 compliance in health and fitness programs17 is to keep the programs local and18 personal. We haven't had the support19 from the City on our wellness and disease20 management programs. In fact, until the21 last two years, the City scoffed at our22 wellness efforts. So we have tried to23 find programs that address the needs of24 our members in ways that relate directly25 42 4/28/11 - LABOR - RES. 2 For example, we partnered with3 Pfizer Pharmaceuticals on a program to4 quit smoking. " We've8 had some success with each of these9 programs, but we've been stymied by the10 City's inflexibility. In order to be11 really effective, these programs need to12 be brought to the firehouses, the13 stations. 23 It's a great program. The hospital was24 willing to send staff to the firehouses25 43 4/28/11 - LABOR - RES. 3 The program would have given the4 firefighters great timely information to5 share with their own physicians about6 issues they need to address. As I said7 before, the key to the success of a8 program like this is keeping it local and9 personal. 12 I'm not here to bash the City,13 although there may be another occasion to14 talk about the City's endless appeals of15 the arbitration award and the terrible16 effects of the delays and not just on our17 ability to push forward on creative18 health strategies. What I am saying is19 that any effort of the kind of targeted20 healthcare that you are exploring will21 require that the City get off its22 inertia -- there was a different word23 there -- and think in creative ways. The24 answer isn't always, No, we don't have25 44 4/28/11 - LABOR - RES. 1100191 the money. 7 My recommendations is, do your8 homework, start with the statistical9 analysis and learn who is sick with what10 and then tailor the programs to fit the11 people you're trying to target. 19 Finally, firefighters in this20 City see every part of the City every21 day, and not just the charming22 neighborhoods. We see more of the23 corrosive effect of chronic bad health24 and failed health policies than nearly25 45 4/28/11 - LABOR - RES. 1100191 any group of City employees. Someone has2 to take a new look. 6 I've also enclosed at the back7 of that -- I don't want to read it. 12
Thank you.13 Well, I just want to thank you for your14 testimony and we appreciate your coming15 in in support for this effort. You know,16 I want to commend you on what you're17 trying to do with the City, and hopefully18 we'll be able to move forward on some19 comprehensive strategies. Hopefully20 hearings like this and bringing these21 issues to light will focus attention22 where it needs to be focused.23 Thank you for your testimony.24 I'm sorry. Mr. Jones,25 46 4/28/11 - LABOR - RES. 1100191 Councilman Jones.2
And I'll be3 brief, Mr. Chairman. I realize we don't4 get paid by the word.5 But I remember in your6 testimony a couple years back about the7 diesel fuel emissions that your members8 face. Has that condition improved any in9 the firehouses?10
Some work; some11 don't. No, it hasn't improved. No, sir,12 Councilman. And the thing about cancers13 in firemen is, it's called a latency14 period. The stuff goes in your system,15 whether it be inhaled, mouth, skin,16 absorbed, and the latency period, you17 don't see the effects for five or ten18 years. It sits there, lays, goes in your19 system, goes on your lungs, and in ten20 years, you have cancer, lymphoma.21 I mean, we could go on about22 cancers with firefighters and medics all23 day. I'm not going to get into a fight24 with other unions about who is sicker.25 47 4/28/11 - LABOR - RES. 1100191 The City is sick, my members are sick.2 The problem is, we only get five years3 medical when we retire, and this stuff4 doesn't hit us until it's done, until5 after five years. That's problematic.6
I remember7 your testimony and it stuck with me, and8 whatever we can do to alleviate --9
Councilman, I10 appreciate everything you've done. I was11 there when you offered them the money to12 stop the brownouts and Everett Gillison13 sat here and Lloyd sat here, and they14 didn't have an answer for you. This is15 what I'm dealing with. It's a stone wall16 every time I hit something. The only17 thing they appreciate is when people die18 or we go to funerals.19 Currently, the Fire Department,20 we're at 106 injuries as of this morning,21 and I don't want to -- everybody's22 injuries are bad. My injuries are23 disfigurement and life-affecting,24 life-changing injuries. At this time25 48 4/28/11 - LABOR - RES. 1100191 last year, we were at 65. One hundred2 and six injuries.3 The other day I had to go into4 the hospital. I had three of my members5 all burns, all disfigurement burns. One6 guy dove out a window. He's out of --7 they're all out of the hospital except8 for the one girl. This is the first time9 I ever seen a girl firefighter with two10 burnt hands, steam burns, face burns,11 broken -- I mean, I'm done.12
We're still going17 to do it, and we appreciate your help,18 but, please, talk to them. They're19 appealing our contract now. Our health20 plan, we accrued that reserve by being21 diligent and fiscally responsible. Right22 now I'm a half a million dollars of23 deficit spending a month. We still have24 19 million in reserves, so we can last a25 49 4/28/11 - LABOR - RES. 1100191 little while. We get a contract; they2 appeal it.3 There's a question that you4 asked Cathy. We get 1,270 per member a5 month. It costs us 1,500 a month for our6 plan. And we'll keep cutting it down.7 We'll do whatever it's got to take, but8 we need our healthcare, and we're on9 board with any plan you got. My main10 thing is to keep my members healthy.11 That's all I'm about, is to take care of12 my members, and it's very important you's13 understand what my members are prepared14 to do for the City. We all live here.15 We'll take a bullet for the City, for16 lack of better wording. We give our17 lives. We give our health. We want18 you's to take care of us.19
Thank you,20 Mr. Gault. That's one of the purposes of21 this hearing today. We thank you, and we22 thank you for your passion and your23 obviously great care for your members.24 Thank you very much.25 50 4/28/11 - LABOR - RES. 1100191
I call3 Mr. Lamb and the members and colleagues4 at LEHB who will be providing testimony5 on the program at the Law Enforcement6 Health Benefits organization.7 I see that Mr. McNesby is also8 joining for the testimony. Welcome.9 (Witnesses approached witness10 table.)11
While12 everybody is getting situated, when we13 first introduced this resolution and sent14 around a letter to the unions, everybody15 responded with what they were doing, and16 we were invited out by Mr. Lamb and his17 colleagues and associates at LEHB at the18 direction of Mr. McNesby to hear about19 specifically the programs that they're20 running there. I thought that it was a21 terrific model of people already doing a22 lot of what had been discussed in the New23 Yorker article as innovative and the24 model for the future.25 51 4/28/11 - LABOR - RES. 1100191 The reality is, we have people2 doing that right here in the City of3 Philadelphia today, and they've been4 doing it for ten years. And so I thought5 it would be useful for us to hear about6 this as a potential model, not just for7 the City and City employees but a model8 that would benefit people providing9 healthcare in the City and region10 generally.11 So thank you very much, and12 please proceed with your testimony.13 MR. McNESBY: Thank you,14 Councilman. Thank you to the panel for15 having us here today to be able to shed16 some light on our plan.17 Law Enforcement Health Benefits18 is the plan which administers the19 medical, dental, optical and prescription20 for the police officers and the deputy21 sheriffs in the City of Philadelphia.22 Mainly we have two goals. One is to23 administer the best possible health plan24 possible and, number two, to do it at the25 52 4/28/11 - LABOR - RES. 1100191 least possible cost to the taxpayers of2 Philadelphia. I believe we do so. I3 believe we have the sharpest tool in the4 medical field, and we have one of the5 best persons running that plan through6 the FOP, and that's Tom Lamb, who7 administers -- and is the administrator8 of Law Enforcement Health Benefits.9 And with that, I'll turn the10 testimony over to Tom and his staff, who11 have a great presentation put together12 for the panel today.13
I first want to16 applaud you, Councilman, for taking the17 time and the initiative to come to our18 building and sit through the presentation19 and have your Committee members here to20 hear what we do. You obviously are aware21 we're very proud of what we do. The22 employees that handle the different23 programs are very proud, and we sit there24 and develop our own programs and our25 53 4/28/11 - LABOR - RES. 1100191 initiative.2 I think one of the single3 biggest things that separates us from the4 City managed plan is, way back in 19935 the LEHB, Law Enforcement Health6 Benefits, formed its own corporation.7 The President at the time wanted the8 medical benefits removed from FOP9 politics. So we are a separate entity,10 obviously bound to the FOP, with their11 support, but the thing that we have that12 the City managed plan does not have, we13 are directly accountable to our members.14 We have nine directors, active15 police officers, that are elected every16 two years. So we just can't hand17 somebody a piece of paper and say, Your18 payroll deduction is going up $100 next19 month, without a repercussion. So we20 have direct accountability to the21 members.22 I am a retired Philadelphia23 police officer, took over the plan in24 1989 with the purpose that John said, the25 54 4/28/11 - LABOR - RES. 1100191 highest level of benefits for our members2 at the lowest possible cost for the3 taxpayers of Philadelphia.4 And just to start off, when we5 get to the City contribution, in 2007,6 our binding arbitration contribution was7 $1,303 a month per member, and we have8 8,000 members. We have about 8,0009 members. In 2008, at that contract10 hearings, the arbitrator, because of how11 efficiently the plan was run, reduced our12 contribution from $1,303 to $1,165,13 without any effect to our members. That14 was a savings of $13.2 million to the15 taxpayers of Philadelphia, without16 affecting our members' benefits.17 In 2009, we had the second18 arbitration. The arbitrator ruled that19 the 1,165 would remain in place because20 he felt we could provide the benefits to21 the members. However, since our reserve22 total was over the normal three-month23 required reserve, in the second six24 months he reduced the contribution to25 55 4/28/11 - LABOR - RES. 1100191 965. That was a savings to the City, a2 direct savings, of almost $20 million in3 contributions that would have been4 required if the 1,303 didn't even5 increase. So that's $36 million that the6 taxpayers of Philadelphia were saved7 because of our efforts.8 I'd like to introduce my office9 manager and customer service manager,10 Cindy Garey.11
Thank you. Thank12 you for having us. I just want to give13 you a quick overview or summary of --14 thank you. I just want to give you a15 quick summary of customer service for the16 year of 2010. First of all, our members17 do not call an 800 number. They call18 LEHB. Our members are assigned a19 specialized customer service20 representative to handle their particular21 issues. Any issues that they may have,22 we give them directions and options.23 I've combined a report, a24 summary report, for 2010 for all walk-ins25 56 4/28/11 - LABOR - RES. 1100191 and phone calls. LEHB staff handled over2 103,000 member walk-ins and phone calls.3 And for each member walk-in and phone4 call, there was about an average of 115 minutes.6 The billing problems that LEHB7 employees customer service staff handled8 for the year of 2010 was over 4,000, and9 they are -- I don't know if you can see10 clearly, but they are in reason order.11 Every one of our members12 receive a phone call twice a year to13 address their issues, concerns. We have14 two officers, retired officers, who make15 those phone calls. At the end of the16 day, we receive a report from the retired17 officers on the phone call or feedback18 from our membership. As you can see, the19 comments, I do -- I can't see them, but20 any questions they have, whether it's, I21 need medication and don't know how to get22 it, what do I do, I'm running out;23 whether it's, I need a nurse, or how do I24 get a doctor, can you just -- I have some25 57 4/28/11 - LABOR - RES. 1100191 questions, can you direct me, just help2 me, we reach out to our members that day3 or the very next day and give whatever4 assistance that we can.5 Thank you very much, and I'd6 like to introduce Amber, who is going to7 tell you about our member education.8 MS. DiMARINO: Hello. We9 educate our members about their benefits10 and we involve them in controlling costs.11 We have a two-year medical disk, which we12 put on there two years of their13 prescription and their medical history,14 which they can use for emergency purposes15 or for just routine visits.16 They become eligible when they17 complete surveys, if they participate in18 our flu shots, our HeartCams, our health19 fairs, our Guardian Nurses assistance,20 our Blue Cross health coach or any21 clinical trial, and they become eligible22 for the $250 incentive that we offer all23 of our members.24 The vision -- we have a vision25 58 4/28/11 - LABOR - RES. 1100191 cost containment survey, for an example.2 On the first side, it's the routine and3 medical information for the member, and4 we ask them questions. For this example,5 the member states that they have had no6 idea that the services were his.7 The following slide is a vision8 provider found guilty, which we don't9 have in our network anymore, because of10 our investigations.11
Cost containment12 programs, obviously we're limited. So13 Amber just gave you some of the member14 education that assists improving office15 visits, emergency room visits and16 educating the members with their medical17 history and prescription history, which18 all equates to lowering costs and one of19 the reasons how we could save the City20 $36 million.21 The cost containment, we22 currently have 49 cost containment23 programs. Every month we review them for24 return on investment. We look at the25 59 4/28/11 - LABOR - RES. 1100191 ones that we can enhance, improve or new2 ones that develop, and every month3 there's another new program that we start4 to look at to see if we can develop. And5 we develop everything internal. Dave,6 the gentleman working the slides, is our7 computer person. The individual8 employees, when we sit down, we formulate9 our programs, we evaluate them, and these10 are just a sample of some of the programs11 that we're going to do. And I'll12 introduce you to Bobbie Bortnick, who is13 our eligibility specialist.14
Thank you.15 This slide represents an Excel16 spreadsheet that I run monthly for17 ineligible claims, "ineligible claims"18 meaning no longer a City employee,19 terminated, divorced. If we don't20 receive the information in a timely21 manner, Blue Cross may process the22 claims.23 Another example of an24 ineligible claim would be a member and a25 60 4/28/11 - LABOR - RES. 1100191 child having the same name, the child is2 off coverage. And the way that we3 determine if the claim has been processed4 properly is to check on the date of5 birth.6 This spreadsheet is one page7 only and it shows the amount of money8 that we've retrieved.9 Next I'd like to introduce Kim10 Boston, who does the baby report.11
Good afternoon. I12 am Kim Boston, a customer service13 representative at LEHB, and each month I14 run the LEHB Baby Report looking for15 duplicate claims submitted by the16 hospital for all new babies. We pay17 special attention also to premature18 births, where the claims can run very19 high.20 Upon birth, some newborns are21 not given a name and the hospital bills,22 for example, as Boy or Girl Smith.23 Later, after the baby has been named, the24 hospitals resubmit the claims for the25 61 4/28/11 - LABOR - RES. 1100191 same services. These claims would be2 paid twice, if not reviewed by LEHB, and3 disputed with Blue Cross. After one or4 two months, Blue Cross then issues a5 credit to LEHB for the disputed claims.6 Thank you, and I would now like7 to introduce Linda Bloom, who will review8 duplicate claims.9
Good afternoon. My10 name is Linda, and I do a monthly report11 also for duplicate claims. I review12 these claims to see that if a doctor has13 been paid and also his practice has been14 paid for the same services and the same15 date of service. After I review these16 claims, I send them to Blue Cross to have17 them reviewed. Then Blue Cross sends us18 the credits for the duplicate claims,19 which we then -- it helps LEHB keep the20 cost down with very good health21 management.22 And I'd like to introduce23 Nicole.24
Good afternoon.25 62 4/28/11 - LABOR - RES. 1100191 My name is Nicole Williams.2 The first thing I want to talk3 about is the Coordination of Benefits4 form. This form is sent out to over5 8,000 active and retired police officers6 requesting other insurance information.7 That information is requested from the8 member, the spouse and/or dependents.9 The first sheet is also an update sheet10 to see if we need to update our systems11 with the correct spelling of names,12 Social Security numbers, date of birth.13 The second form is on the14 reverse side of the Coordination of15 Benefits form is the authorization to16 release personal health information.17 This form is used to help the members if18 they need any assistance with the doctors19 or for the hospital bills. It's also20 used for sensitive areas when we need to21 contact Independence Blue Cross.22 The next thing I want to23 discuss is the coordination of benefits,24 the contested claims that comes from the25 63 4/28/11 - LABOR - RES. 1100191 Coordination of Benefits form. Once we2 obtain other insurance information, we3 run a program, capture any claims that4 LEHB is not responsible for. What I do5 is, I send over a list of claims that we6 pay for which we should have been7 secondary. This is an example of8 Medicare claims that LEHB paid for. In9 2010 LEHB, recovered over $1 million10 worth of claims that we shouldn't have11 paid.12 The next slide is the Charge13 Credit Recharge from the contested claims14 report. What I noticed was that we would15 receive credits from Independence Blue16 Cross. Shortly after I would notice that17 the charges were re-billed to LEHB. So18 what I did was, I asked our computer19 programmer to come up with a program that20 captures this information. So what you21 have up there is claims that were22 originally charged to LEHB, then it was23 retracted by Blue Cross and recharged by24 the hospital. This information goes over25 64 4/28/11 - LABOR - RES. 1100191 to Blue Cross, and what they do is, they2 once again retract the claim and flag the3 claim so that the claim could not come4 back through.5 I would like to turn this over6 to Kelley for disease management.7
Hello. My name8 is Kelley Sweeney. 10 Myself, Kim and Phyllis make up the11 Disease Management Team. 15 Blue Cross starts -- we usually16 start with Blue Cross, that we can use17 them for things such as health coaches,18 healthy lifestyles and case managers. We19 use this -- for healthy lifestyles, they20 can help with weight management, so can21 health coaches. The case managers really22 come in handy when someone is diagnosed23 with a particular disease and they can24 make sure that all of the25 65 4/28/11 - LABOR - RES. 5 The next thing that we deal6 with is Guardian Nurses. We really7 primarily use Guardian Nurses for second8 opinions. Guardian Nurses is led by9 Betty Long and her team of nurses. They10 are great because they are able to get us11 into center of excellences. 18 In one case that we had, a19 member was diagnosed with cancer and they20 had gotten a second opinion and actually21 the first diagnosis was wrong. The22 member didn't have cancer. And actually23 saved LEHB money and it saved the member24 and his family a lot of trauma and25 66 4/28/11 - LABOR - RES. 2 The newest addition to our3 disease management is our medical4 professionals. LEHB and Temple have5 teamed up. We actually have a nurse on6 staff. Her name is Sally. She works7 with us five days a week. 10 Whenever a member calls in and11 an LEHB employee types in their payroll12 number, we get a screen that comes up13 like the blue screen at the top and it14 will say if the member has diabetes,15 asthma, and they can offer to talk to the16 nurse right away. 20 This is an internal average21 monthly referrals. This just shows that22 in one month Sally has talked to 9223 members just by a phone call. It doesn't24 even -- they don't even always have to be25 67 4/28/11 - LABOR - RES. 5 Another new program that LEHB6 has started is our personalized medical7 benefit. 8 We sent them out this letter. They can9 get engaged. All they have to do is come10 in, talk to Sally for a little bit, give11 a little brief history. They go over all12 their medical. 19 LEHB offers a lot of different20 incentives for our members. This is just21 one of many. 22 We offer this every year. For every23 dollar that is spent, we actually save24 $3. We do the flu shots at multiple25 68 4/28/11 - LABOR - RES. 1100191 occasions and at multiple times so that2 every member has an opportunity. Whether3 they be on day shift or on night shift,4 they can come in. It's offered to the5 member, their family members. 7 This is another free offer to8 the members. It's a HeartCam. The9 HeartCam is done at Penn Presbyterian and10 it takes 15 minutes. It's a non-invasive11 procedure that's done. They check to see12 if there's plaque or anything in the13 arteries. 18 Our Heads-Up program is19 designed for children. We do it at the20 beginning of each school year so that21 when the children are going into school,22 they might have -- it shows the effects23 of drugs, peer pressure, anything that24 the child may be encountering in the25 69 4/28/11 - LABOR - RES. 2 This is a tip sheet that is3 given out in our diabetes mailing. This4 just -- we are trying to make every5 member aware of diabetes and what could6 happen. They think that just because7 they have it, they can take a pill and8 nothing will happen to them. But this is9 the real life effects. 19
We have many, many20 programs, and we appreciate the21 Councilman inviting us over. The summary22 is, we have had two benefit changes to23 our members since 1993 when we were the24 first largest plan to go into the new25 70 4/28/11 - LABOR - RES. 1100191 Personal Choice program. In 2006, we had2 a minor change to our prescription plan3 because of the arbitration award, and in4 2009, the arbitration award mandated that5 we increase our co-pays for medical6 office visits, specialist office visits7 and prescriptions. However, our members8 still enjoy no payroll deduction, no9 deductibles and no co-insurance. So it10 fits right into our goal of the highest11 level of benefits at the lowest possible12 cost. And I think the Councilman was13 very astute in asking us a question at14 the presentation of your contract, Why15 are you doing all of this, because the16 City is obligated to pay every medical17 claim, and the answer is, we have another18 contract in July 2014. We want to stay19 true to our goals of the highest level of20 benefits at the lowest possible cost.21 These are our cost containment22 program savings. As we discussed before,23 the disease management, you can on some24 put a dollar savings and in some you have25 71 4/28/11 - LABOR - RES. 1100191 to guesstimate. We have actually saved2 over $61 million since 2002 in medical3 claims that were retracted from4 Independence Blue Cross because of LEHB's5 cost containment programs.6
Thank you so7 much. I appreciate your testimony, and8 one of the things that was most9 impressive is, I've never been to an10 organization where -- we were down in11 your basement and we got the presentation12 from the team that is here. I've never13 been to an organization where the people,14 everybody involved, was just so15 passionate about their job and the16 mission that they have, and I just want17 to say that it was a great example. It's18 clearly a great work environment, and the19 people who are working for you clearly20 absolutely love what they do and they do21 it very well.22
It was clear25 72 4/28/11 - LABOR - RES. 1100191 that they're all engaged and really care,2 and one of the great things I saw was3 that a lot of the ideas for a new4 computer program or a new way to catch5 this charge that we should be contesting6 or other things come from the people who7 just testified, because they've seen it8 once or twice or three times and they9 think, is there a way we can just catch10 this without calling every time through11 implementation of technology and other12 things.13 And so, you know, I just want14 to commend you for building a great team15 and let them know how appreciative we are16 of their efforts.17
Well,20 hopefully I just did, but please tell the21 rest of the people --22
Please tell25 73 4/28/11 - LABOR - RES. 1100191 everybody back at the shop that that's2 how I feel.3 So I would like to talk a4 little bit about that, about the5 contested charges. So that means that a6 claim went to Blue Cross and Blue Cross7 paid it or approved it and then you later8 through your auditing methods, your9 technology, have caught that this was a10 duplicate claim, a claim that should not11 have been paid or something like that,12 and you've gone to Blue Cross, pointed13 this out and they have then returned the14 money to the fund or in the future it15 will be the City. Is that a fair --16
So how many18 members do you have or, I guess, belly19 buttons to keep, is what I mean when I20 say "members"?21
We have22 approximately 23,000.23 Just a comment on the Charge24 Credit Recharge, Councilman. What is25 74 4/28/11 - LABOR - RES. 1100191 scary about it, we put all of these2 resources to find the savings, and if3 Nicole wouldn't have noticed that the4 claim came through again two or three5 months later because the provider has a6 computer system that simply re-bills and7 when we called Blue Cross, Blue Cross8 processes it as a clean claim with a new9 claim number, and when we brought it up10 to them, it was very -- it was sort of11 amazing, because Blue Cross couldn't see12 the recharge in their computer system.13 So because of our efforts, they have now14 cleaned that up.15
Well,19 hopefully. No; I appreciate that. But20 how much -- not disease management but21 the focus on -- and the other services22 you provide, the cost containment. Do23 you know how much that costs you a year?24
Well, our total25 75 4/28/11 - LABOR - RES. 1100191 administrative cost is between 1.2 and2 1.4 million a year, and most of that, as3 you know, Councilman, overlaps with the4 employees' regular job. I guess if I had5 to guess, I would say between 400,000 to6 500,000, because it involves the7 employees' overlapping time.8
So just in9 cost containment measures, there's a --10 let's call it $600,000 -- there's a 1111 times return on investment?12
And to your17 knowledge, the City-exempt employee plan,18 is there any cost containment done or is19 Blue Cross the final arbiter of whether20 or not the bill gets paid?21
Well, the last time22 we were involved in contract negotiations23 and had the information available through24 discovery, it appeared that most of the25 76 4/28/11 - LABOR - RES. 1100191 City's managed plan, cost containment and2 disease management, they relied on3 Independence Blue Cross.4
And in your5 experience, that could be quite6 expensive.7
It could be quite8 expensive unless you force them to9 engage, which they willingly do with10 LEHB.11
Because you12 are there questioning the claim in the13 first instance?14
Right. And16 there's no one in the City doing that17 right now?18
I know they hired a19 new benefits manager. I don't know what20 his restrictions are, but he seems very21 competent, but I don't know --22
I'm sure he23 is. I think we'll hear from him shortly.24 Has anybody -- don't mention25 77 4/28/11 - LABOR - RES. 1100191 names, but have other people approached2 you outside the City to have you do for3 their organization what you do for your4 members and the FOP?5
Yes. We participate6 with the Delaware Valley Healthcare7 Coalition. We had an agreement that we8 would do two building trade unions, the9 backroom information that we do10 internally, but when we started -- and11 they were going to pay us, but we started12 to be concerned about our reputation and13 our cutability, because we were not sure14 how their members would receive the15 engagement with disease management. That16 offer is still on the table. In fact,17 they want to expand it, but we're18 somewhat reluctant, because that means19 you have to retrain people and hire new20 people.21
Is what you22 do replicable? Could you train other23 organizations either inside the City or24 other unions or other people to do what25 78 4/28/11 - LABOR - RES. 1100191 you do?2
Yeah. If they have3 the initiative and the willingness to4 learn, sure.5
Would you be6 willing to share your technology and the7 platforms that you have for that purpose?8
Of course,11 yes. Sorry. I didn't mean to put you on12 the spot.13 But do you believe that there14 are significant savings that could be15 achieved just in cost containment if,16 let's just say, the Administration came17 to you -- and I know you'd have to check18 with Mr. McNesby, but if the19 Administration came to you and said,20 Would you handle all of our exempt21 employees?22
That would be almost23 doubling, and I think with their benefits24 manager, who seems competent, that may25 79 4/28/11 - LABOR - RES. 1100191 work. Our problem is, Councilman, since2 19 --3
Oh, okay. Then not6 quite double. Okay. I'm sorry.7 Our problem is, to be quite8 frank, since 1992 it is perceived by all9 of the unions that the City of10 Philadelphia wants to take control of the11 union plans and place the management12 under them. When we had that Health13 Share Committee, I expressed that14 concern, and I know it's a concern of the15 other unions, because I think everyone16 administers the plan best for their own17 people. So the firefighters administer18 it best. So we have to be very concerned19 about would we end up stabbing ourself in20 the back.21
I completely22 understand that concern, and I think23 we're talking about coordinating best24 practices and sharing those across all25 80 4/28/11 - LABOR - RES. 1100191 the different funds, and it's clear that2 your plan and the other -- many of the3 other union plans are run far more4 efficiently and effectively than the5 City's own plan given the fact that we're6 not doing any cost containment on that7 level alone.8 Do you have any estimate of9 what the extensive disease management10 examples given save any kind of ROI or11 return on investment for, say, diabetes12 or -- I mean, just in the aggregate13 rather than mentioning any specific14 examples.15
I think Cathy had16 said one and a half dollars on every17 dollar. I think with how our members18 engage with us because of the customer19 service and not calling an 800 number, I20 would tend to think we'd be a little21 higher. We're probably going to be22 between $3 to $5 return on every dollar23 spent for disease management.24
And when you25 81 4/28/11 - LABOR - RES. 1100191 spend the dollars on disease management,2 is that included in the million four?3
And so now5 that you're a self-funded plan, those6 dollars won't come back to you, right?7 Or explain to me how that's going to work8 in the future when as a self-funded plan9 LEHB's operations and investments in10 reducing costs are going to be paid for.11
The contract says12 that the two consultants, Segal, who is13 our consultant, and Aon, the City14 consultant, at the beginning of the year15 and no later than September of that year16 are supposed to project the trend for the17 year that you're in, and at the end of18 the year if LEHB is less than the trend,19 then the City, realizing the savings,20 would split the difference with us and21 send us a check for half of the savings.22
Okay. And23 you're confident that that's going to24 more than support your operations going25 82 4/28/11 - LABOR - RES. 1100191 forward?2
Okay. And4 do you get any credit for disease5 management as part of that or is that6 just only cost containment?7
Well, what it boils8 down to is, when we back into the per9 contract per month based on the claims10 accumulation and administrative costs, so11 when we back into what does it actually12 cost LEHB to operate and provide all of13 the services and pay all the claims, we14 would compare that figure to what the two15 consultants based their trend on. So16 right now I think our consultant based17 this year's trend at $1,354. We're still18 having a discussion with the City on19 getting their consultant to come up with20 the trend. I can tell you in the first21 year, we are going to be substantially22 less than the trend.23
And the24 trend -- which means that you're coming25 83 4/28/11 - LABOR - RES. 1100191 in less than the consultants predict that2 you would otherwise spend as a result of3 your cost containment and disease4 management effort?5
I don't8 think you answered my question directly,9 and I apologize if you did. Do you get10 any credit for investment in disease11 management in terms of reimbursement for12 LEHB's operations?13
Ultimately,19 I mean, my big fear is that there have to20 be at a certain point diminishing21 marginal levels of return on cost22 containment. I mean, in ten years, that23 may be much less of what you're able to24 save compared to the disease management25 84 4/28/11 - LABOR - RES. 1100191 things that were the subject of the New2 Yorker article and, et cetera.3 Could you talk about -- which4 we didn't really cover much in your5 presentation -- how you focus on the top6 one or two or three percent of utilizers7 and whether or not since you began that8 you've been able to track a reduction in9 what their actual costs are.10
Yeah. What we're11 doing -- in fact, that's a program we're12 currently reevaluating, and what we're13 doing is, we're looking at the very high14 users and seeing what medical condition15 do they have and can we affect their16 trauma and anxiety and lower cost.17 Obviously people with stage four cancer,18 there's little you can do.19 So we're trying a new aspect.20 We are looking at people that are on the21 lower end of the expenditures, say over22 $30,000, and we're looking to see why are23 they incurring these claims, and we're24 starting to devote our resources to that,25 85 4/28/11 - LABOR - RES. 1100191 with the hope they don't get to 100,0002 or 300,000. But we're not discarding the3 high users, but we're evaluating them4 more closely.5
Okay. And I6 assume you'll track what the impact of7 that has been and maybe we can talk about8 it in a year or so?9
Yeah. What we're10 doing with the areas that Sally, our11 internal nurse, she's dealing with12 diabetes, asthma and high cost members.13 We took the last 12 months. We found out14 how many members are in that category,15 what was the average cost per member and16 what was the total cost, and we're going17 to compare that at the end of the efforts18 to our new disease management program to19 the future 12 months.20
I just want21 to apologize for the loss of some of my22 colleagues. They were all here for 1223 o'clock and they all view this as very24 important. Several of them said to me as25 86 4/28/11 - LABOR - RES. 1100191 they left that they had an appointment2 and that they were very impressed with3 what they were hearing from everybody,4 and I'm confident more of my colleagues5 are watching it online. Also, we'll have6 a record of this hearing now, which I'll7 share with you and which also will be up8 on the City's Internet site and you can9 point to, if you like, from your own10 website, which your members might enjoy11 seeing.12 So with that said, I will13 recognize Councilman Jones.14
Because one15 of your colleagues is still here.16 I guess what I'm hearing and I17 guess my question both, Mr. Chairman, and18 to members, at the end of the day, will19 there be a grid that says City health20 plan, Fire, Police, 47, 33 health plans21 that gives an apples-to-apples comparison22 of what some of the benefits, factors,23 cost savings are? And if you were to say24 apples to apples, a number of members,25 87 4/28/11 - LABOR - RES. 1100191 apples to apples, amount of contribution,2 apple to apples, types of benefit3 coverages, and then do a matrix so that4 we can kind of make better sense of what5 those best practices are and what the6 cost-benefit analysis of those practices7 are, so that we can say that an ounce of8 prevention is a pound of cure, that we9 can make a decision about if we follow up10 in a statistical manner on ten percent of11 all invoices, it will yield this many12 errors and savings and recouping of13 dollars.14 I guess what I'm trying to get15 to is, is there going to be that kind of16 matrix prepared out of this so that we17 can kind of as a Council kind of put the18 question to all parties, how do we get19 the best benefits for members, how do we20 get the best savings for the City and21 then savings to taxpayers? Is that one22 of the goals of this? Is there such a23 comparison, first, and then is that a24 goal of this Committee's hearing?25 88 4/28/11 - LABOR - RES. 1100191
The goal4 here is to try to identify innovative5 measures that have existed within what6 our City unions have done that if7 expanded or invested in the best8 practices of each of the unions, we can9 save millions and millions of dollars10 more --11
-- in the13 City and to bring light to what I think14 is LEHB being really a model that was way15 ahead of its time that now other people16 are undertaking across the country,17 including some private-sector unions and18 other organizations who would like LEHB19 to manage their healthcare.20 I would suggest that if they21 were a private company, they would22 have -- they would be quickly a23 billion-dollar company and have customers24 across the country, and I thought it was25 89 4/28/11 - LABOR - RES. 1100191 important that Philadelphians know that2 we have really innovative things going on3 here in this city.4 And so it's my hope that by5 sharing these best practices publicly,6 that it will result in more cooperation7 from the City and across all of our8 stakeholders.9
I think10 that's a laudable goal and one worth11 these hearings for sure, but at the end12 of the day, I think for me personally, I13 want to know those best practices as they14 are -- and I'm sure we're going to hear15 from the City at some point, but at the16 end of this kind of process, that we have17 something tangible that we can say, All18 right, that's a best practice -- and I19 heard about the customer service thing.20 I just wish that we could have that kind21 of responsiveness as to where I get this22 cold medicine versus that pill or what's23 the best way to proceed. I mean, those24 kinds of customer services things are, in25 90 4/28/11 - LABOR - RES. 1100191 my mind, valuable as a consumer. But I2 also would want to know how we stack up,3 if you would, with Blue Cross's and what4 things don't they do that if we employ5 them, what will it mean by way of cost6 and then what it will at the end of the7 day mean by benefit and/or service.8 So in order for -- it's good to9 know that you exist, but to dissect how10 you exist to make it replicable -- I know11 there's a place in my district that12 produces the best cheese steaks in the13 world, but if we tried to mass produce it14 to become the McDonald's of that type of15 cheese steak, it would be a little more16 difficult to do. So maybe you have the17 best cheese steak in healthcare, but in18 order for us to replicate it like19 McDonald's does in New York and LA to20 have that same kind of benefit or same21 kind of taste, we need to dissect it a22 little better so that we understand23 exactly what it is you do and why you do24 it so well.25 91 4/28/11 - LABOR - RES. 1100191 So I guess for me, to kind of2 give those kinds of comparisons of apples3 to apples, benefits, costs and outcomes4 would be useful to me, Mr. Chairman.5 Thank you.6
We appreciate the10 insight, because you hit on the key11 point, customer service. They call LEHB.12 They get the same employee until their13 medical billing problem is resolved.14 Cindy Garey, my office manager, and I sit15 down every month and evaluate where are16 the medical problems, why is it costing17 us so much money, what can we do to18 minimize it. That all opens the door to19 trust. So when we start to get involved20 in disease management, cost containment,21 the surveys where we identify fraud, the22 customer service opens up the trust door.23 And every union and the City, I'm sure,24 does things, some areas, better than we25 92 4/28/11 - LABOR - RES. 1100191 do. So everybody has an idea. But in2 the 2008 contract addressing exactly what3 you said -- and obviously you're aware4 we're under binding arbitration, the5 Police and the Fire. We put on the6 medical testimony. Ours usually lasts a7 full day. We are cross-examined by the8 healthcare experts and the healthcare9 attorneys from the City, so we can stand10 up everything that we do.11 We asked Blue Cross in 2008, if12 you compare us to your Personal Choice13 book of business, and they call it14 weighted, which allows not -- the15 firefighters may have a high incident of16 a specific medical condition relating to17 their job, 47, the Police. But18 "weighted" meaning adjusting the co-pays,19 the deductibles, et cetera, and we20 received a document from Blue Cross21 saying that LEHB incurred 23 percent less22 medical claims than the Personal Choice23 book of business. When you think about24 that, it's one hell of a statement.25 93 4/28/11 - LABOR - RES. 1100191
I can tell.6 But, again, I'm going to give this.7 Before we got elected, there was a8 lady -- and before 3-1-1, there was a9 lady that if you called City Hall10 switchboard, she had everyone's number.11 I mean, she had the number to the number12 that no one thought existed, and this13 lady was just the ability to connect14 people to people that needed to talk to15 people because of City-related services16 and emergency. She retired. Actually,17 probably got a piece of that DROP18 program. She took her Rolodex with her.19 So that particular service was unique20 unto a personality. In order to21 replicate that, we've invested millions22 of dollars in computers and we just can't23 find her Rolodex, is what I'm telling24 you.25 94 4/28/11 - LABOR - RES. 1100191 So as we do this in a2 methodical manner as a managerial tool,3 that matrix of apples to apples is4 important to me so that we can take what5 you have instead of -- how many members6 do you have?7
Eight thousand11 contracts. I'm sorry. Twenty-three12 thousand belly buttons.13
Right. So14 if you could double that, can that same15 quality exist? And that's why I insist16 upon --17
I think that would18 depend again on the member and membership19 of the City or the -- would they be20 willing to fill out the Coordination of21 Benefit forms to make sure that the22 husband and wife's insurance policy, both23 were not paying for one medical claim.24 Would they be willing to get involved in25 95 4/28/11 - LABOR - RES. 1100191 flu shots, HeartCams. Would they would2 be willing to fill out the surveys.3
And it may4 be that each union on its own or each5 entity on its own can best do that, build6 out an organization like yours, which may7 take a couple of years and training and8 things like that, but subject to -- I9 recognize that all of that cooperation10 would have to be approved by Mr. McNesby,11 but it's certainly one thing we consider.12 I did think that your testimony13 was quite tangible and specific about14 what works for you, and certainly there15 will be a record of that, and I do think16 it's a good idea for us to try to put17 together some kind of matrix that takes18 the best practices from everybody, sees19 what it's saving and have that as part of20 the record in our continued next hearing,21 and I certainly will do that.22 Are there any other questions23 from -- no. So thank you very much for24 coming in today. We really appreciate25 96 4/28/11 - LABOR - RES. 1100191 it. And, once again, I can't say how2 impressive it is what you guys do.3
Well, we appreciate4 that. Thank you for your time,5 Councilman.6 Thank you, Councilman Green.7
Will8 representatives of the City please come9 up to testify while I try to find my list10 of names.11 Will Mr. James Startare please12 approach. Thanks.13 (Witnesses approached witness14 table.)15
Please state16 your name and proceed with your17 testimony.18
Good afternoon,19 Chairman Green and members of the20 Committee. 25 97 4/28/11 - LABOR - RES. 4 The City program is one of five5 healthcare benefit programs funded by the6 City of Philadelphia, with each of the7 four City unions operating an independent8 health and welfare fund. I am the9 minority City representative on each10 union's joint board. Each of the four11 unions has authority to determine their12 benefit levels and has administrative13 oversight of their respective plans. The14 City pays a fixed monthly per-employee15 per-month fee to three of the four16 unions. For the Fraternal Order of17 Police, the City pays the actual cost of18 the healthcare programs. 22 The City of Philadelphia has23 authority over the City program. The24 City program covers approximately 6,70025 98 4/28/11 - LABOR - RES. 1100191 active employees and retirees. 8 The current annual cost for the9 City program comprised of medical,10 prescription drug, dental and vision is11 $82 million, which is substantially less12 than the year prior. 16 In January 2010, the City17 medical program transitioned to a18 self-insured funding arrangement, which19 was the primary cause for the recent20 healthcare savings. Under the21 self-insured model, the City is the owner22 of the plan and has claims payment23 liability. Under this model, designated24 representatives have the benefit of25 99 4/28/11 - LABOR - RES. 1100191 receiving claims detail, allowing the2 City program to be sophisticated with3 review of trends and occurrences within4 the claims utilization data. The City5 appreciates the fact that a successful6 program must be able to access the data,7 understand the data and make smart8 decisions as a result. 9 million in medical claims costs. 21 With factors such as medical22 trend and inflation continually rising,23 along with the recent passing of the24 Patient Protection and Affordable Care25 100 4/28/11 - LABOR - RES. 17 In September 2010, the City18 selected Active Health Management to19 assist in the clinical data20 stratification and disease management21 efforts. Active Health Management is a22 subsidiary of Aetna and one of the23 industry leaders in chronic health24 management through health coaching and25 101 4/28/11 - LABOR - RES. 2 Similar to the actions3 mentioned in the New Yorker article, the4 City plans to purchase a web-based data5 analytic software package following the6 selection of such software through the7 RFP process. This software will allow8 the City to reconcile financial and9 eligibility data, but, more importantly,10 it will be the reporting and analysis11 tool allowing the City to examine the12 claims data. As I mentioned previously13 in this testimony, in addition to14 accessing and understanding the data,15 wise decision-making in areas such as16 health management, plan design and17 contracting must result. 19 The City program and its20 selected vendors have a blueprint in21 place surrounding health management and22 data analytics. We are, of course,23 always open for further discussion,24 idea-sharing and potential collaboration25 102 4/28/11 - LABOR - RES. 5 I want to thank you for this6 opportunity to present my testimony, and7 I welcome any questions that you may8 have. 13
Thank you14 very much for your testimony,15 Mr. Startare.16 Mr. D'Attilio, are you just17 here to answer questions or do you have18 testimony?19
Yes. That's20 all, I'm just here to answer questions.21 Mr. Startare is our benefit manager.22 He's our technical expert.23
Okay.24 Great.25 103 4/28/11 - LABOR - RES. 1100191 So I just would like you to2 respond to what you heard from LEHB and3 what you think of their program, its4 effectiveness, et cetera.5
Sure.6 Absolutely. Well, I commend LEHB. They7 do a very good job. They have taken8 steps that I believe most employers would9 like to take, and I could sit before you10 today and say that the City of11 Philadelphia for the exempt and12 non-represented population are also13 taking those steps. So there's many14 similarities with the steps that we are15 taking and there are also some16 differences.17
Mr.18 Startare, let's talk about what we're19 actually doing, not steps we're taking,20 if you know what I mean.21
So like I23 really -- we could go through each item24 that LEHB testified to that's in their25 104 4/28/11 - LABOR - RES. 1100191 PowerPoint with respect to questioning2 claims. With respect to cost containment3 for their 23,000 belly buttons, it's4 about a little under 7 million a year for5 the last eight years. Can you tell me6 how much the City has recovered after the7 claim Blue Cross cost containment8 measures?9
Yes, I can.10 That answer is, the City is currently not11 taking that action, but we plan to.12
Okay. And17 so can you tell me with respect to18 disease management efforts that are being19 conducted by LEHB and the firefighters20 and 47, what kind of investments are we21 making in disease management today?22
Sure. Well, I23 can speak to the program that we are24 currently negotiating with our disease25 105 4/28/11 - LABOR - RES. 1100191 management vendor at the --2
The ones that5 are currently in effect today? Currently6 in effect today, there is not a disease7 management or wellness program, but I can8 speak to the fact that in the year and a9 half that I've been with the City of10 Philadelphia, we have made tremendous11 leaps and bounds in the area of financial12 savings and we have a blueprint in place.13 If you heard Mr. Lamb's testimony, he has14 been with LEHB since 1988 or '89, if I'm15 correct.16
'89. Back in18 1989, I was much younger and at a19 different place, I could tell you that20 much. But I can say that in my year and21 a half, the City has taken tremendous22 steps, and what I do ask you and any23 other members of the Committee is to take24 a look at our blueprint, the plan of25 106 4/28/11 - LABOR - RES. 1100191 action, and you will see the similarities2 that we have in place.3
Absolutely,4 but let me ask you a question. Do you5 think there's any chance that you can do6 this as successfully as LEHB is currently7 doing it for its members?8
Well, you11 have a cynic here, that's all I can say.12 I don't believe that's the case. We're13 talking about hiring private-sector14 people, putting out RFPs for computer15 programs that look at codes for cost16 containment as opposed to the very17 inexpensive compared to the total cost of18 healthcare, very personal approach that19 LEHB and the other unions take with their20 members.21
Well,22 Councilman, I appreciate your honesty,23 and what I would ask again is, if you24 spend some time with me, you will also25 107 4/28/11 - LABOR - RES. 1100191 see that similar passion and also you2 will see the efforts of building my3 benefits team in a fashion that is also4 looking at true data analytics to uncover5 fraud, abuse, overbilling, so many of the6 similarities that I mentioned a moment7 ago that do match or mirror LEHB. Not8 particularly following their model, but9 these are due diligence steps that any10 self-insured plan should take.11 In addition to that, the12 disease management program, which also13 dovetails the data analytics, also should14 produce a return on investment, and I15 also can explain why our impending16 program is different than LEHB and why I17 think it would be a success.18
Let me ask19 you a simple question. How many years do20 we have to go back to Blue Cross to make21 a claim for overcharges or misbillings,22 things that were paid twice that23 shouldn't have been, et cetera? What's24 the statute on that under our contracts25 108 4/28/11 - LABOR - RES. 1100191 with Blue Cross?2
In general,3 there's a one-year statute for timely4 filing of a claim.5
Okay. So6 why wouldn't we just start using -- if7 you got the permission of Mr. McNesby,8 they have a computer platform that9 identifies all these things anyway. It's10 working for them tremendously. Why not11 build on what's working already with very12 similar plans to what the City has?13
And I'm not14 sitting here saying that I'm not open to15 do that. I am absolutely open. I have a16 very good relationship with Mr. Lamb and17 LEHB. So I'm open to idea-sharing.18 Although I like to think I am the19 expert --20
I can't speak23 for the labor relations side, but on the24 employee benefits side --25 109 4/28/11 - LABOR - RES. 1100191
On the2 employee benefits side, that's what I'm3 talking, in terms of utilizing their4 platform and model.5
Well, I can't6 speak to utilizing their platform because7 I don't know or understand their8 platform, because I've never seen it, but9 I'm open to --10
Well, let me11 just say we're going to continue these12 hearings. What I'd like to ask you to do13 in the next month is go get the full14 presentation that they gave here today.15 I mean, they gave a very short version of16 their presentation. It's several hours.17 It's extraordinarily impressive. When18 you're with them, you will see the19 passion that they have for the job that20 they do. And I want to suggest to you21 that an RFP just may not be necessary or22 it should certainly be written so they23 could participate.24
On the RFP5 issue, as Mr. Startare has already6 indicated, we did go out with a published7 RFP last fall. LEHB, fortunately or8 unfortunately, did not submit a proposal.9 So on the disease management side, I10 believe that legally we would have some11 issues with engaging LEHB on a12 contractual basis.13 On the data analytics, we14 intend to go out with an RFP shortly, and15 if LEHB wishes to submit a proposal, they16 would get full consideration.17
Have you18 shared the RFP either related to disease19 management or related to data analytics,20 or really I'm talking about cost21 containment, with LEHB to see if they22 would recommend things that should be in23 there that you may or may not --24
We went through25 111 4/28/11 - LABOR - RES. 1100191 the e-Philly contract process. So our2 RFP was posted on the website --3
I don't mean4 after it was created. I mean prior to5 its creation. We have -- I honestly6 believe that this is a model that needs7 to be carried out nationally. We have8 the example right here in the City of9 Philadelphia, and rather than working10 with them, we're creating RFPs that the11 private sector is going to respond to at12 far more cost than people who would13 probably be willing to just help us out14 because, you know, they care about the15 City. I don't know what else to say16 about that.17 The cost of -- you said that18 we're a self-funded plan.19
Okay. Blue25 112 4/28/11 - LABOR - RES. 1100191 Cross and Blue Shield does not charge us2 for their actual costs. It's a blended3 rate; isn't that correct?4
If I can5 explain. So an individual incurs a6 claim. That claim is discounted based on7 a negotiated discount between8 Independence Blue Cross and the hospital9 or provider. That claim is paid by Blue10 Cross at the discounted rate. That claim11 at the discounted rate is reimbursed by12 the City of Philadelphia. Does that13 answer your question?14
Yes, but I15 don't believe that's technically16 accurate, because it's my understanding17 based on talking to several people in the18 industry that what we have from Blue19 Cross is reimbursements at not the exact20 rate they pay the hospital, and so it is21 a blended rate that somehow gets -- so22 they pay the hospital $25 and may charge23 you $27, and that there's not an24 administrative fee for that, that's a25 113 4/28/11 - LABOR - RES. 1100191 blended rate, and that we'd be far better2 off as a city contracting to just pay3 exactly what they've negotiated with the4 hospital and having them just serve as a5 TPA.6
I can tell you7 this much: I like the idea of8 contracting directly with the hospital,9 even though that involves further10 discussion and is a much greater process.11 With regard to the12 reimbursement, I'm not -- in my 12 years13 of experience, I'm not familiar with that14 direct analogy that you explained, but, I15 mean, I see every dollar that comes16 through the City program and --17
The18 estimates of the blended rate are between19 eight and 14 percent that we're paying on20 top of Blue Cross's actual charge, and21 then additionally, in Medicare22 publications and elsewhere and from the23 example in LEHB, we can see that without24 having the cost containment and disease25 114 4/28/11 - LABOR - RES. 1100191 management that they have, it's also2 quite expensive, and that's about eight3 to 12 percent that we could save just by4 putting those measures in place, avoiding5 double billing, et cetera, which if it6 costs $69 million a year is 6 million a7 year.8
So if we can10 save 6 million, I think we ought to start11 doing it immediately, especially if we12 only have a year to go back and make the13 claims. Let's run a computer program now14 and go back a year, save 6 million for15 last year, 6 million for this year.16
I agree. I17 agree, and that is the purpose of the18 data analytic tool. But I am open to19 other ideas to streamline that process,20 and if part of that streamlining is21 discussions with LEHB, I am open to it.22
Thank you23 very much for your testimony.24 Any questions from members of25 115 4/28/11 - LABOR - RES. 1100191 the Committee?2 (No response.)3
I appreciate4 you coming in. I was very impressed by5 what I saw. I hope you were, and I hope6 we can find a way to work cooperatively7 to create greater savings. And, of8 course, there's only way to do that, and9 that's to have contracts.10 Thank you.11
I'm going to16 recess this Committee and this hearing to17 the call of the Chair.18 Thank you.19 (Committee on Labor and Civil20 Service recessed at 2:15 p.m.)21 - - -22 23 24 25 116 1 CERTIFICATE2 I HEREBY CERTIFY that the3 proceedings, evidence and objections are4 contained fully and accurately in the5 stenographic notes taken by me upon the6 foregoing matter on April 28, 2011, and that7 this is a true and correct transcript of same.8 9 10 11 12 --------------------13 MICHELE L. MURPHY14 RPR-Notary Public15 16 17 18 (The foregoing certification of this19 transcript does not apply to any reproduction20 of the same by any means, unless under the21 direct control and/or supervision of the22 certifying reporter.)23 24 25