May 27, 2018
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Bangor’s big returns from insurance provider show employee health improving, city says

By Nick McCrea, BDN Staff

BANGOR, Maine — The city’s efforts to improve the health of its employees and reduce health care costs appear to be paying off, according to officials and the city’s health care provider.

From 2008 to 2011, Bangor received nearly $1.8 million in cash-back payments under Cigna’s Shared Returns program, which gives cash-back to clients if their total claims for the year are less than expected. Under the program, an employer group doesn’t pay more than its monthly fixed premium if the city’s total claims exceed predictions.

Prior to switching to Cigna in 2008, the city got a “significant proposed rate increase [from its former provider], which we were not happy with,” Assistant City Manager Bob Farrar said during a recent interview.

In 2011, the cash-back amount was $818,000, by far the best year Bangor has had under the program. The city got $466,000 in 2010, $340,000 in 2009, and $170,000 in 2008. The numbers from 2012 are not yet available.

“We’ve had four very, very good years,” Farrar said.

The cash-back doesn’t go into the city’s coffers. Instead, the money is put into an account, where it goes toward keeping the annual rate increase as low as possible, according to Farrar.

As a result of this program, Cigna’s annual rate increases for Bangor have averaged about 5 percent. Before switching providers, the increases averaged about 10 percent. In 2011, premiums totaled around $6 million, including the amount the city and its employees paid in under the policy, according to Farrar.

Farrar said the fact that the city increasingly is coming in far below its projected claims year-to-year is a sign that efforts to improve employee wellness are working.

Working with a Cigna “health coach,” a Bangor wellness committee, made up of staff from multiple departments, was formed to promote dieting, smoking cessation, stress reduction and other wellness programs in an effort to decrease the amount and severity of health-related claims over the long term.

“We believe these have really begun to show some results,” Farrar said.

“Some of it is the fact that we’re just fortunate,” because one large claim could take a significant chunk out of the cash-back amount and mean a higher rate increase for the next year, Farrar added.

In a given year, Bangor has about 1,000 individuals, including employees and their families and dependants, under its Cigna health insurance plan. Farrar said Bangor is one of a few Maine municipalities that has gone into the private marketplace for health insurance.

The Maine Municipal Association has about 460 individual employer groups under its six medical plan options. About half of those are municipalities, according to Stephen Gove, deputy director of the association’s Health Trust Services.

The MMA’s self-funded Maine Municipal Employees Health Trust also includes county governments, water and sewer districts, and quasi-municipal agencies. It covers about 20,000 employees, family members and dependants.

Gove said the MMA’s program has several strong points — one of the most significant being that it has such a large pool. Because there are 20 times more individuals under the plan, a few serious, expensive health issues among members are less likely to have an effect on future rates.

The trust also has health education programs, a 30-year track record, and is heavily involved in attempts to improve the quality of health care statewide, Gove said.

While MMA does not have a direct premium reimbursement program for its members, it does apply reserves to its annual funding model as a way of reducing future premium hikes, Gove said.

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