06-10-1996 Council Agenda - Laserfiche WebLink

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LEAGUE MN CITIES TEL :612- 281 -1298 May 31 96 8 :34 No.005 P.04 WHAT COSTS ARE INVOLVED? It varies among the companies supplying managed care services. Some managed care plans uhwge wily fu, byadific sarvice* when an injury has occurred. Others simply charge on a flat monthly or per - employee basis. For those companies that charge on a per -claim basis, the costs are simply made part of the claim that LMCIT pays. When the managed care fees are paid as part of the claim cost, they are treated like any other charge and are included for purposes of meeting the city's deductible and calculating subsequent years' experience modification. However, LMCIT believes that if managed care works as it is supposed to, it will more than pay for itself through favorable claims experience and reduced premiums. For companies charging on a monthly or per capita basis, the flat monthly or per - capita charges are billed by the managed care organization and paid directly by the city. DOES IT REALLY WORK? An initial actuarial study comparing the experience of cities using managed care, to those that are not, indicated that there were significant cost savings for those cities using a Managed Care Organization. Most of the savings showed up in "return to work" efforts that reduced lost wages claims. It is a little to early to draw any definitive conclusions from the initial study since the number of cities in managed care and the number claims generated were relatively small, but clearly the results were significant enough to compel the LMCIT Trust Board to increase the premium credit from 5% to 10 %. Two other Minnesota employers have also seen favorable results from using Managed Care. The Minnesota Department of Employee Relations estimates that for State Fiscal Year 1994 (its first year under managed care), it saved $1 million in medical costs compared to Fiscal Year 1993. This was after paying The managed care fees. The Hormel Company has had managed care in place since October 1993. They believe "without a doubt" that managed care has saved them significant money by managing medical utilization and helping to get employees back to work. 1'M INTERESTED, NOW WHAT? Talk with your agent or you can call Tom Grundhoefer at the League office (612) 281 -1266. 3 Page 43