Program A: State Group Benefits Program
Program Authorization: Act 745 of 1979; Executive Order No. McK 69-70; R.S. Title 42, Chapter 12, Sections 821, 851, and 871-879
PROGRAM DESCRIPTION
The mission of the State Group Benefits Program is to provide group health and accident insurance and group life insurance to political subdivision employees, political subdivision retirees, state employees, state retirees, school board employees, school board retirees and their dependents, and to administer a Section 125 employees, Cafeteria Plan.
The goal of the State Group Benefits Program is to provide affordable benefits to indemnify its plan members against the economic impact of long-term illnesses and hospitalization.
The State Group Benefits Program provides the opportunity for eligible individuals to obtain group accident and health benefits and group life insurance geared to the needs of the plan members. A Board of Trustees administers this program and provides direction in developing cost containment features in order that an affordable group insurance program may be available to its plan members.
OBJECTIVES AND PERFORMANCE INDICATORS
1. In FY 1998-99, the State Group Benefits Program will pay health claims within an average of 16.46 days.
Explanatory Note: The Customer Service Department of the State Group Benefits Program assists walk-in visitors in the Baton Rouge office and six satellite offices domiciled throughout strategic locations within the state. Field representatives and supervisors conducted fewer agency visits during FY 1996-97 because these employees were reassigned to assist in various satellite offices. Estimates for FY 1997-98 and projections for FY 1998-99 are based in part on the implementation of a interactive voice response communications system; increased telephone activity related to PPO growth; increased contact from plan members, providers, and agencies to explain contract revisions and in-depth advisement of policy guidelines, and possible growth with enrollment of new agencies (school boards and political subdivisions) that will generate increased telephone activity.
2. In FY 1998-99, the State Group Benefits Program will hold administrative expense to approximately 5% of total program costs.
3. In FY 1998-99, the State Group Benefits Program will provide constant monitoring of industry practices and search for available cost containment mechanisms.
No performance figures were provided to support this objective. However, the program anticipates that through greater usage of PPOs, total benefits costs can be contained. New state-of-the-art hardware and software have been purchased in order to increase productivity and efficiency.
RESOURCE ALLOCATION FOR THE PROGRAM
SOURCE OF FUNDING
This program is funded from self-generated revenues including premiums collected from plan members and their employers, as well as earnings of program funds.
ANALYSIS OF RECOMMENDATION
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GENERAL FUND
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TOTAL
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T.O.
|
|
DESCRIPTION
|
|
|
|
|
|
|
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$0
|
$448,431,197
|
358
|
|
ACT 1430 FISCAL YEAR 1997-1998
|
|
|
|
|
|
|
|
|
|
|
|
BA-7 TRANSACTIONS:
|
|
$0
|
$90,039
|
0
|
|
Carryforward for printing and equipment purchase orders
|
|
|
|
|
|
|
|
$0
|
$448,521,236
|
358
|
|
EXISTING OPERATING BUDGET - December 10, 1997
|
|
|
|
|
|
|
|
$0
|
($90,039)
|
0
|
|
Non-Recurring Carryforward for printing and equipment purchase orders
|
|
$0
|
($1,279,700)
|
0
|
|
Non-Recurring Adjustment(s) for funding associated with claims outsourcing - adjustment pursuant to agency request
|
|
$0
|
$1,144,811
|
0
|
|
Equipment/Major Repairs Adjustment(s)
|
|
$0
|
$194,381
|
0
|
|
Annualization of 1997 -'98 Merit Pay Adjustment(s)
|
|
$0
|
$244,389
|
0
|
|
1998 -'99 Merit Pay Adjustment(s)
|
|
$0
|
($53,077)
|
0
|
|
Retirement Rate Adjustment(s)
|
|
$0
|
$2,303
|
0
|
|
Adjustment(s) for Civil Service, Training and Other Statewide Interagency Transfer Activities
|
|
$0
|
($574,516)
|
0
|
|
Reductions in various Expenditure Categories; Including Reductions to fully fund Salaries
|
|
$0
|
$113,493
|
0
|
|
Risk Management Adjustment(s)
|
|
$0
|
($93)
|
0
|
|
Maintenance of State-owned Buildings Adjustment(s)
|
|
$0
|
$1,370
|
0
|
|
UPS Fees
|
|
$0
|
$10,905
|
0
|
|
Legislative Auditor Fees
|
|
$0
|
($433,288)
|
0
|
|
Professional Services funding for Management Consulting, Legal Services, and Utilization Review. This adjustment is based upon contractual obligation estimates.
|
|
$0
|
$7,996,029
|
0
|
|
Additional Health Claims payments - to projected medical utilization
|
|
$0
|
$117,319
|
0
|
|
Additional training costs associated with classes, seminars, and conferences as a means of providing continuous, on-going upgrading of computer knowledge for the data processing staff
|
|
$0
|
$655,506
|
0
|
|
Additional Paid Prescriptions expenses to projected utilization
|
|
$0
|
$157,820
|
0
|
|
Additional Child Care Reimbursement costs for Day Care Reimbursements for the Cafeteria Plan - to projected utilization
|
|
$0
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($2,100,000)
|
0
|
|
Reduced funding for Biodyne service line - (mental and nervous disorder) costs as per the contractual agreement
|
|
$0
|
$38,616
|
0
|
|
Funding for building supplies for renovation of headquarter's building
|
|
|
|
|
|
|
|
$0
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$454,667,465
|
358
|
|
TOTAL RECOMMENDED
|
|
|
|
|
|
|
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$0
|
$6,146,229
|
0
|
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DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)
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The total means of financing for this program is recommended at 101.4% of the existing operating budget. It represents 99.8% of the total request ($455,606,326) for this program. The increased funding over existing operating budget reflects additional costs of $8,809,355 associated with projected increases in participation in the state group health insurance plan, Paid Prescription plan, and the Child Care Reimbursement option under the Cafeteria plan. The increased funding is offset, in part, by reductions in professional service contract costs of $433,288 pursuant to contractual terms, reduction of $2,100,000 in projected participant utilization of the Biodyne health coverage line (mental and nervous disorders), and reductions from various categories of $574,516, in part, to fully fund salary and related benefits. Additionally, nonrecurring expenses associated with claims outsourcing ($1,279,700) and prior year carryforward obligations ($90,039) were eliminated. A net increase of $1,144,811 in acquisitions is recommended over existing operating budget. Of the $1,676,728 recommended for acquisitions in Fiscal Year 1999, $1,203,083 is for replacement office and computer equipment, and $473,645 is for new office and computer equipment. The itemization and justification of the recommended acquisitions are reflected in the ACQUISITIONS AND MAJOR REPAIRS section of this narrative.
The major differences between total recommended and total request are as follows: (1) reduction of Other Charges category of $460,044 to fully fund salaries and related benefits, (2) maintaining a 2.7% attrition rate ($303,190), and (3) not funding the requested increase of five (5) positions and associated costs ($177,512). These requested positions were for the Customer Service section and Quality Assurance section to increase direct servicing of plan members and to increase audit coverage of health care vendors and preferred provider option (p.p.o.) network. All applicable statewide policy adjustments have been applied to this program. The recommended funding level adequately provides for this program to continue the coverage of health and life insurance needs of its participating members in a timely and efficient manner.
PROFESSIONAL SERVICES
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$395,000
|
|
Actuarial Services for rate calculations, claims projections, etc.
|
|
$20,000
|
|
Legal Services for depositions of doctors, witnesses, etc.
|
|
$45,000
|
|
Medical and Dental consultation to expedite the processing of medical claims
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|
$300,000
|
|
Technical Assistance for computer programming/testing services for newly acquired computer equipment and other computer related needs
|
|
$300,000
|
|
Technical Assistance for computer/consulting services for Imaging
|
|
$49,000
|
|
Technical Assistance to assist the agency in the planning and implementation of self-generated Dependent Care
|
|
$25,000
|
|
Technical Assistance to provide space planning and design services to assist in the planning and implementation of the renovation project
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$49,000
|
|
Technical Assistance, Training and Program services for the Cafeteria Plan software
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$883,300
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|
Utilization Review - pre-certification of inpatient hospital confinements, case management, etc.
|
|
|
|
|
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$2,066,300
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|
TOTAL PROFESSIONAL SERVICES
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OTHER CHARGES
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$1,683,086
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|
Cafeteria Plan including Child Care Reimbursement
|
|
$675,000
|
|
Dependent Life Payments
|
|
$239,434,424
|
|
Health Claims Payments
|
|
$125,000,000
|
|
Health Maintenance Organization Payments
|
|
$75,000
|
|
Hospital Audit Fees
|
|
$101,000
|
|
Legal Fees/Settlements
|
|
$97,009
|
|
Legislative Auditor expenses
|
|
$21,950,000
|
|
Life Claims Payments
|
|
$6,000,000
|
|
Mental and Nervous Disorder Claim Payments
|
|
$50,000
|
|
Medical payments for Louisiana State University Medical Center for physician services at E.A. Conway Hospital for medical information and claims review
|
|
$37,990,894
|
|
Paid Prescriptions
|
|
$127,319
|
|
Specialized training for claims payments, processing, etc.
|
|
|
|
|
|
$433,183,732
|
|
TOTAL OTHER CHARGES
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ACQUISITIONS AND MAJOR REPAIRS
|
$72,000
|
|
Four (4) replacement vehicles to be used as regional pool cars to visit hospitals and agencies; and to enroll and train new participant groups
|
|
$137,283
|
|
Replacement office equipment including modular chairs, fax machine, desks, file cabinets, letter openers (high volume), telephones, phone accessories, and detacher (continuous fold burster)
|
|
$300,000
|
|
One (1) replacement mail inserter to replace unit over six years of age and economically obsolete; for use in mailing over 3.1 million outgoing envelopes annually
|
|
$119,000
|
|
Thirty-four (34) personal computers with 36 + MB RAM to replace old 486 and 386 machines as the agency moves to microsoft office products for greater staff efficiency. Thirty-four (34) network cards
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|
$120,000
|
|
Thirty (30) image stations to replace old 486 image stations to increase speed of accessing images in claims processing
|
|
$4,000
|
|
Twenty (20) personal computer upgrades for better speed
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|
$20,800
|
|
Thirteen (13) laser printers to replace older IBM 4019 printers with new HP printers for printing images
|
|
$110,000
|
|
One (1) Multiple Access Unit (M.A.U.) to replace the existing M.A.U. system (wiring closet) with an intelligent hub system so network analysis can be performed
|
|
$150,000
|
|
One (1) RS/6000 Upgrade to replace Novell unit for expanded image usage
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|
$10,000
|
|
Miscellaneous computer parts to replace parts that fail throughout the fiscal year - based on agency experience
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|
$40,000
|
|
Two (2) Uninterrupted Power Service units (UPS) to replace batteries that are over seven years old
|
|
$120,000
|
|
Six (6) scanning stations to replace six year old scanning equipment with newer, faster, more efficient scanners
|
|
$32,145
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|
New office equipment including bookcases, fax machine, file cabinets, printer stands, chairs, desks, copiers and conference table
|
|
$25,000
|
|
One (1) new internet equipment to utilize the Internet, and to speed up access to remote sites
|
|
$400,000
|
|
One (1) new high speed printer needed for merging plan member checks and vouchers
|
|
$16,500
|
|
Five (5) new laptop computers to help improve efficiency of operations, such as at open enrollment meetings and other off-site activities
|
|
|
|
|
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$1,676,728
|
|
TOTAL ACQUISITIONS AND MAJOR REPAIRS
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