FEH Health Insurance Consortium 2018/19 Six-Month Management Report 2019/20 Budget Worksheet Prepared by: KBM Management, Inc. January 2019

Budget Performance – Projected vs. Actual 1 The Budget Performance graph illustrates the difference between the projected costs and actual Plan performance by line item. Premium is lower due to a shift to the lower cost PPO and Medicare plans. Other Revenue is boosted with receipt of a $632,385 stop-loss payment for claims paid last year in addition to the $654,639 paid this year. Prescription drug rebates were not received due to a delay in receiving the contract from ESI. Administration fees are higher with the stop-loss increase and one month prepayment of Excellus fees. KBM Management, Inc.- January 2019 FEH Health Insurance Consortium

Distribution of Revenue 2 The Distribution of Revenue presents a breakdown of where the money is received from. This shows that over 94% of revenue came from premiums this plan year. The delayed prescription rebates for six months is estimated at $950,000. Total premium dollars increased 0.5% with a budget increase 2%. Stop-loss reimbursement is up over $1 million over last year through six months. 2018/19 Revenue = $23,476,922 2017/18 Revenue = $24,134,321 KBM Management, Inc.- January 2019 FEH Health Insurance Consortium

Distribution of Expenditures 3 The Distribution of Expenditures presents a breakdown of money paid out on behalf of the Plan. Over $0.92 of every $1.00 paid goes to reimburse actual claim costs. This loss ratio continues to illustrate the spending efficiency of the self-funded mechanism. Claim Administration includes Excellus retention, stop-loss premium, ESI and KBM management fees. Total expenditures do not reflect the prepayment of administrative fees. Total Expenditures = $22,436,732 KBM Management, Inc.- January 2019 FEH Health Insurance Consortium

Distribution of Fund Balance 4 The Distribution of Fund Balance shows where fund balance was allocated after six months of this plan year. The Advance Deposit is held by Excellus to assure payment of claims they have processed and paid prior to billing the Consortium. The IBNR Reserve is necessary for the payment and processing of claims that have been incurred but not reported. Equity includes Rate Stabilization and any outstanding receivables. 2018/19 Fund Balance = $29,574,747 KBM Management, Inc.- January 2019 FEH Health Insurance Consortium

Projected vs. Paid Claims 5 Projected vs. Paid Claims The following paid claim charts were created using information provided by Excellus Blue Cross Blue Shield of Utica. This Projected vs. Paid Claims graph compares the projected claims cost with paid claims reported by Excellus for the 2018/19 plan year. Paid claims are presently 1.7% below projection. We anticipate claims will remain near projection through the end of the year. YTD Paid Claims = $21,026,970 YTD Projection = $21,373,808 KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

6 Monthly Paid Claims The Monthly Paid Claims presents a comparison over the last three plan years. The red line represents the monthly projected claim amounts. Large dollar claimant experience is seen in those months that have spiked. Claims continue to trend higher through this period. KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

Distribution of Claims by Service Type 7 Distribution of Claims by Service Type The Distribution of Claims by Service Type shows a comparison of the allocation of paid claims for this plan year and last. Large dollar claimants have pushed hospital costs double digit. Prescription utilization programs continue to keep prescription drug costs below national trends. Census continues to increase and shift to lower cost options. 2017/18 Total = $19,943,926 2019/20 Total = $21,026,970 KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

Distribution of Claims by Product Type 8 Distribution of Claims by Product Type Traditional Total = $6,593,218 Medicare (>65) Total = $4,041,826 PPO Total = $10,391,926 The Distribution of Claims by Product Type shows a comparison of the allocation of paid claims for Traditional, Medicare and PPO members. The six month data shows the cost and apportionment differences between the products. Average costs illustrate not only the difference in benefits but also the difference in demographics and their effect on costs. KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

Quarterly Cost per Enrollee 9 Quarterly Cost per Enrollee The Quarterly Cost per Enrollee is based on average monthly cost during each quarter. The red line represents the average cost trend over the past 4.5 plan years. Average annual trend during this period is 5.2%. The long term trend remains near 7% with the updated experience. The recent trends provide a greater confidence to lower future trend projections. KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

10 Paid Claim History The Paid Claim History provides a 20 year look at the Consortium annual paid claims. The average change over this period was 7.0%. Over the past five years the Plan saw the cost change, on average, 5.0%. During its worst four year stretch, from 2006/07 to 2009/10, costs increased 38.8%. This was followed by a total increase of 6.7% over the following four years. Cost changes ranged from -.5% in 2013/14 to 25.9% in 2002/03. KBM Management, Inc. – January 2019 FEH Health Insurance Consortium

2019/20 Budget Worksheet 11 KBM Management, Inc. – January 2019 FEH Health Insurance Consortium