Town of Greenfield
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Municipality Overview:
Facing a fiscal deficit, strict state regulations on benefits and impending GASB 45 requirements, in 2005 this municipality located in the northeastern Unites States turned to KTP Advisors for help in developing and implementing a new Retiree Benefit Solutions.
Major Objectives:
- Reduce and simplify the number of plan offerings
- Generate meaningful savings for the city to avoid increasing taxes, spending cuts to city services or possiblyĀ impacting the bond rating
- Shift the plan year from July 1 to January 1 to coincide with the Medicare plan year (previously, retireesĀ received two rate changes per year, one based on the city’s fiscal year end and one based on changes to Medicare deductibles and rates at calendar year end)
- Determine the best way for the city to take advantage of the Medicare Modernization Act ā apply for theĀ direct RDS or offer an Employer Group Waiver Plan (EGWP)
Initial Results:
For the city’s plan year, effective July 1, 2005, KTP negotiated a 1.2% rate decrease from the existing rate compared to the average 11.1% increase in the national trend for similar plans in 2005. The 1.2% reduction is even more dramatic when compared to the renewal rate of the previous plan which, left unchanged, would have resulted in a rate increase of approximately 32% for 2005.
KTP successfully transitioned the plan year to January 1, 2006 and, in seeking additional savings, made the following changes for the 2006 plan year:
- Replaced regional HMOs with nationwide indemnity plans while keeping the medical benefits virtually identical
- Transitioned the Rx plan from $2 and $15 co-pays to a co-insurance structure incorporating Part D in the form of an EGWP
- Increased the Rx deductible from $140 to $250
These changes resulted in a 25% decrease in rates for 2006. During the renewal process for the 2007 plan year, KTP Advisorsā¢ completed an RFP process that generated competing proposals from several different national medical and prescription drug plans. KTP was able to reduce the initial bids by an average of 18.2% through multiple rounds of complex negotiations.
Based on KTP’s recommendations, the selected plan offering represents savings over the city’s former plan of 14.8% and included the following benefit improvements:
- Elimination of all deductibles
- A more comprehensive Rx formulary
- A four-tier co-payment structure
- Improved customer service
Results over the past 10 years:
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