04012008 Regular Meeting - Laserfiche WebLink

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4. DETAILED NOTES ON ALL FUNDS (Continued) Other Information (Continued) Benefits Management (Continued) The plan includes a pre- existing clause to deter adverse selection into the plan subject to the provisions of the Health Insurance Portability and Accountability Act of 1996. Features of the medical plan include a preferred provider organization and various cost containment features such as a tiered co -pay structure to encourage use of lower cost drugs and managing utilization based on therapeutic equivalencies. The medical plan continues to build wrap around networks and contracting for specialized services such as lab to manage costs. The plan is funded by contributions from the City and participating employees based on recommendations of maximum plan exposure as calculated by an employee benefits specialty firm. Projected claim costs are based on claims experience, lag studies, industry trends, consideration of claims run off, census and aggregate factors. A liability for claims is established based on estimated incurred but not recorded claims outstanding and anticipated associated insurance and administrative costs. The stop -loss contract establishes the aggregate attachment point based on census and aggregate factors defined in the contract. A reconciliation of changes in the aggregate liabilities of the prior and current year is presented below: Year Ended Beginning September 30, Liability 2005 $ 895,426 2006 780,785 2007 898,440 Risk and Safety Management Current Year Claims and Changes in Claim Ending Estimate Payments Liability $ 2,070,246 $ 2,185,187 $ 780,485 205,238 2,547,583 898,440 2,472,275 2,574,795 795,920 The City of San Marcos maintains a risk management program to prevent and mitigate accidental losses. Components of the program include the identification of exposure to loss and the selection, implementation and monitoring of risk management techniques. Prevention measures include activities such as training, annual review of assets and exposures, driving and drug testing programs, safety awareness events and the "Safety Coach" Safety Leadership Development Program. Post incident activities to minimize the impact of losses include immediate incident investigation and management of claims until closed. A commitment to managing workers compensation claims including a return to work program resulted in a workers compensation modifier of .41. Collectively these programs have resulted in direct savings in excess of $250,000 in the last two years. (continued) 46