Claims review: early catastrophic claims push City of Clearwater renewal projection to 5.3%

At the June 2, 2021, City of Clearwater Benefits Committee meeting, staff and consultants reviewed the plan’s claims experience through April and presented a renewal projection that would raise plan costs by 5.3% for the upcoming renewal period.

Consultant Sean Fleming of the Garing Group led the review and summarized the key drivers. Fleming said the plan recorded approximately $6,800,000 in funding into the plan through the first four months of the year, with roughly $320,000 paid to Cigna for administration and about $512,000 earmarked for reinsurance (the stop‑loss layer that applies after the plan’s stated retention). Fleming said total gross paid claims through April were about $6,200,000 (roughly $4,600,000 medical and $1,500,000 pharmacy). Pharmacy rebates of just under $1,100,000 and other items left the plan with a year‑to‑date surplus of about $900,000.

Catastrophic claims and stop‑loss Fleming identified several high‑cost claims as the primary reason the early months look above average. "We have a claim that's almost $1,100,000," he said, and noted the plan’s stop‑loss retention is $300,000 per individual; once a member’s claims surpass that retention, the stop‑loss carrier pays amounts above it for the rest of the plan year. Fleming and staff showed that a small number of catastrophic claims — eight claims over $100,000 in the current year versus six in the same period last year — accounted for much of the variance.

Reinsurance and recoveries Staff noted reinsurance recoveries year‑to‑date were roughly $755,000 while premiums for reinsurance to date were about $512,000. Committee members asked for a follow‑up verification of the cumulative stop‑loss recoveries and the turnaround of Cam’s high‑cost claim report; staff said they would verify and provide corrected cumulative numbers if needed.

Projection methodology and drivers Fleming walked the committee through how the projection was built: start with 12 months of gross paid claims (May 2020–April 2021, about $19 million), remove capitation and large claims (capitation cited as roughly $991,000 and reinsurance‑eligible claims roughly $2.3 million for the prior 12 months), then apply a maturation factor to account for COVID‑related deferred care (the actuary had reduced the COVID maturation factor to about 1.5% given more months of post‑COVID activity), and apply medical and pharmacy trend assumptions (about 5.5% medical trend and about 12.5% pharmacy trend). Compounding those assumptions over the projection window produced an increase that the consultant presented as a 5.3% renewal recommendation.

Membership, reserves and committee questions Fleming said the projection uses a plan membership count of 2,482 members (employees and dependents). Committee members asked about the plan’s reserves: staff and the consultant explained the state minimum reserve guidance is commonly interpreted as about 60 days of claims, and that the plan carried roughly $2.2 million in surplus at the end of the previous year; committee members requested a detailed, cumulative reserve balance and a reconciliation for the July meeting.

COVID‑era utilization, telehealth and service shifts The committee reviewed utilization changes during the pandemic: staff reported 11 COVID‑related hospital admissions in the reviewed calendar year for 79 total hospital days (average length of stay about seven days; 15 ICU bed days included). Telehealth usage rose sharply: the plan recorded 301 MDLive visits and 737 other telemedicine medical visits, plus 985 behavioral telehealth visits — a large increase compared with the prior year’s single‑digit total in company‑tracked virtual visits.

Other items discussed Committee members and staff discussed new vendor programs such as Omada (digital weight‑management/diabetes prevention) and FoodSmart (digital dietitian and meal planning). Fleming also summarized vendor offerings to address expensive new gene therapies (the meeting referenced a vendor program described as an additional protection layer for gene‑therapy claims) and noted the plan may need to consider expense coverage choices for such high‑cost therapies in coming renewals.

Next steps Staff will verify stop‑loss recoveries and provide a reserves reconciliation ahead of the July meeting, bring updated May claims, and present Omada program materials and dental renewal information. There was no formal committee vote at the June 2 meeting.