Tuesday, October 28, 2014

Little Rock's negotiations on health insurance: A piece of disclosure

Posted By on Tue, Oct 28, 2014 at 4:36 PM

I've been reading with interest the Democrat-Gazette coverage of what the city of Little Rock plans to do about city employee health insurance.

City Manager Bruce Moore had first recommended accepting a 7.4 percent rate increase, at a cost to the city of $888,000, with the existing insurer, QualChoice. The City Board didn't like that idea because of tight 2015 finances. Then, Oct. 21, the City Board indicated it didn't like a second Moore proposal — a dual option that would have employees pay a portion of their insurance for the first time (a pay cut). Both would have been QualChoice plans.

Mayor Mark Stodola pushed for the city to consider joining the Arkansas Municipal League's group insurance plan, which the League said could save the city $1.6 to $2.6 million. The city is paying $16.8 million this year.

A decision is needed soon. The QualChoice contract reportedly has an automatic renewal option in mid-November if nothing else happens. The city is continuing to negotiate with the Municipal League on some aspects of its coverage that it feels aren't comparable with current city coverage. For example, the city has unlimited hospitalization. The Municipal League has a 30-day limit, but it's a rarely invoked limit used primarily to prevent abuse of hospitalization and normally can be settled in negotiated terms.

Moore has said the offers made so far from the Municipal League are of interest.

The Municipal League is to respond by tomorrow with a letter confirming its offers. It has also come up with a third option that would continue the existing cost, but give employees lower deductibles. 

I learned something today that hasn't been mentioned in news coverage. City Manager Moore is a member of the board of directors of CHI St. Vincent. QualChoice was acquired in May by Catholic Health Initiatives, which operates St. Vincent.

I've asked him by e-mail whether he thinks this represents a conflict in recommending QualChoice coverage. It's certainly worth disclosure. Perhaps it's widely known at City Hall. He hasn't responded.

UPDATE: His response:

I receive no compensation from St. Vincent or CHI and never have.

And I don’t not believe it is a conflict of interest to make a recommendation on a health care provider. Our employees are eligible to go to any doctor or hospital they may choose.

But …. employees don't have a choice on insurance company and it's a party directly related to the hospital.

The hospital's most recent federal tax form on file shows that board members such as Moore are unpaid for their service. Board members also include Dr. Andrew Kumpuris, brother of Dr. Dean Kumpuris, a member of the Little Rock City Board. That tax form notes that Andrew Kumpuris received more than $1.1 million in compensation from the hospital in its most recent tax year, 2013, for his professional services. At one meeting, City Director Dean Kumpuris, whose gastroenterology clinic is owned by CHI St. Vincent, suggested going with the Municipal League insurance plan and adding a re-insurance provision to protect high-cost employees who might have longer hospital stays.

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