As part of New York City's efforts to generate $3.4 billion in health care savings over four years, Mayor Bill de Blasio's administration and the Municipal Labor Committee, a coalition of unions, are overhauling city workers' health plans with a focus on preventive care.
The plan would increase co-pays for specialty care and emergency room visits while making routine checkups and preventive tests more affordable, especially when workers use certain doctors. Changes to the design of the health plan are expected to incentivize workers to stay healthy and avoid expensive visits to the ER.
"As a result of this agreement, there will be significant changes to the city's health plans for the first time in decades," wrote Robert Linn, the city's labor relations commissioner, in a memo sent to de Blasio Thursday. "These changes will not only secure the promised health savings but will also promote better utilization of health care resources and improving outcomes for city employees."
About $150 million of the $1 billion in fiscal 2017 savings is related to benefit design changes to EmblemHealth's GHI and HIP HMO health plans, which collectively insure about 90% of the city's workforce.
In its GHI plan, co-pays for emergency room care will rise to $150 from $50, though the co-pay is waived if a patient is admitted to the hospital. Meanwhile, primary care and specialty care will be available without a co-pay if patients visit a doctor at one of the 36 locations of AdvantageCare Physicians (ACP), a multispecialty practice that's partnered with EmblemHealth.
The elimination of co-pays should steer more patients to those practices, where the city will be picking up a greater portion of the bill, but Linn said the primary care change will ultimately save the city money.
"Emblem is providing a guarantee to the city that the additional costs for the $0 co-pay will be more than offset by the savings from the improved coordinated care at their locations," the memo said.
In addition, GHI members in the plan will pay a $50 co-pay at urgent care centers, up from $15, to encourage the use of primary care. Linn points out that the fee is still more favorable than the new emergency room copay.
The city will also increase access to telemedicine, offering access to a physician online or by telephone 24 hours a day. It has reached a deal with ZocDoc to create a customized version of the appointment-booking service's website for city employees that will promote in-network doctors and ACP physicians who provide care without a co-pay.
For HIP members, the city is introducing a plan on July 1, called HMO Preferred Plan, that will encourage the use of certain doctors who have agreed to be paid based on meeting certain goals related to their patients' health rather than for each test or procedure. For members who use a nonpreferred provider, there will be a $10 co-pay. To date, 60% of city employees are already using the preferred doctors, Linn said.
Other HIP efforts include expanding care management for the city's sickest beneficiaries and for individuals with diabetes.
Beyond the changes for workers, Linn's memo has sparked debate over whether the city can take all the credit for all the money it says it is saving.
The city said that it is on track to meet its goal of $700 million of health care savings in fiscal 2016 and $1 billion in fiscal 2017, according to Linn's memo. But several observers have questioned how the city arrived at its numbers and whether the cuts are sustainable.
Though he recognized the administration's progress so far, George Sweeting, deputy director of the New York City Independent Budget Office, cautioned that the current trajectory might not continue.
"While this is good news as far as the budget is concerned, the savings achieved so far have less to do with controlling health insurance costs than with budget accounting and one-time actions," he wrote in a prepared testimony to the City Council's committees on finance and civil service and labor.
Of the anticipated savings of $1 billion for fiscal 2017, more than half is related to health care premiums that have risen less than expected. The city had budgeted for a 9% increase in HIP premiums for 2017, but the rate increase is just 6%. Another $100 million is related to future audits to revoke benefits for employees' dependents who are ineligible for coverage.
City Council Finance Chair Julissa Ferreras-Copeland also criticized the city's use of $58 million from its Health Insurance Premium Stabilization Fund to cover a gap in savings. That fund was created in the 1980s to cover differences between the cost of a cheaper health plan and a more expensive one.
"It is unclear to the committees how spending city dollars to fill a gap could accurately be described as a savings," Ferreras-Copeland said.
A spokeswoman for the de Blasio administration said in an email that the fund is jointly controlled by the city and the Municipal Labor Committee. Any use of those funds is a product of the labor agreement, not just the spending of city dollars, she added.
Meanwhile, Maria Doulis, vice president of the Citizens Budget Commission, a fiscal watchdog, gave the city's plan a mixed review. She praised the efforts to truly "bend the cost curve," but denounced other claimed savings that were not the result of the de Blasio administration and the Municipal Labor Committee deal.
“While some worthwhile and significant initiatives have been agreed upon, the savings targets have been met primarily with savings from lower-than-anticipated premium rate increases, not true reforms,” she wrote in prepared testimony to the City Council delivered Friday.
"City overhauls health plans for municipal workers in shift toward preventive care" originally appeared in Crain's New York Business.