1. COMPASS IS REVOLUTIONARY HEALTHCARE
City of San Angelo
City Council Update
October 15, 2013

2. COMPASS IS REVOLUTIONARY HEALTHCARE
MAY 15, 2012 REVIEW OF CITY‟S CHALLENGE –
THE 2012 PLAN YEAR
The Charge:
• Lower Overall Costs
• Maintain Benefits
• No Increase to the Employee/Employer Funding
The Challenge:
• Health Risks of Employees Declining
• Procurement Process Showed Marginal Savings
– Insurance Carriers’ Network Discounts Similar at 58%
– Administrative Costs Not Enough to Offset Projected Claim
Cost Increase
– No Administrator Able to Deliver Lower Costs

3. COMPASS IS REVOLUTIONARY HEALTHCARE
MAY 15, 2012 REVIEW –
ACAP HEALTH ENGAGED
• Former Insurance Executive with contracting knowledge
• Data warehouse to assess physician/hospital performance
• Based on the knowledge of the providers‟ current costs:
–
–
–
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First Step: Contacted hospitals‟ CEOs on COSA‟s objectives
Second Step: Requested fixed cost financial arrangement
Third Step: Analyzed the hospitals‟ contracts
Finally: Resolved financial outliers to identify best financials
• Selection of Community resulted in a projected 35%
facility cost savings from current
• ACAP‟s paid on a results-based model - % of actual savings

4. COMPASS IS REVOLUTIONARY HEALTHCARE
MAY 15, 2012 COUNCIL REQUEST
• Health Plan is realizing savings today
• Year to date (as of April), we estimate the plan has saved
over $250,000
• The health fund reserves are healthy
• Seeking approval to pay ACAP for services rendered on
a shared savings basis
• Need assistance from ACAP to address additional
shared savings opportunities

5. COMPASS IS REVOLUTIONARY HEALTHCARE
2012 CONTRACT STATUS
• 9/11: City Leadership authorized work under a percentage
of savings arrangement
– The City currently has a 30% and a 40% Shared
Savings Contract for specific Aetna services
• 5/15/12: Council Meeting, Councilmember Hirschfeld
motioned for Staff to formalize a contract on a percentage
of savings basis; seconded by Councilmember Farmer,
with unanimous approval
– Weekly outreaches to Staff to initiate contracting
process
• 9/12: Instructed that new City Manager had to approve
before taking addendum back to Council

6. COMPASS IS REVOLUTIONARY HEALTHCARE
WORK ENTAILED TO DELIVER SAVINGS
• Multiple visits to San Angelo
• Numerous conference calls to the Hospitals and
with City leadership
• Sophisticated data analysis model built to compare
hospital financial responses
• Line by line claims analysis to assess actual claim
savings results
• Three year contracted rates with local hospital

7. COMPASS IS REVOLUTIONARY HEALTHCARE
NOV 7, 2012 REVIEW - CLAIM SAVINGS
Claim
Analysis
Jan - Feb 2012
Mar - June
2012
Grand Total
Actual
SACMC Cost
Avg. Cost
on Old Rate
Total
Savings
Revenue
Amt Due
$89,370
$182,253
$92,883
$27,865
$369,269
$458,639
$587,503
$769,757
$218,233
$311,117
$65,470
$93,335
• Compared each 2012 facility claim under new contract to the 2011
facility claim cost
• Comparison was taken down to the line item CPT level (individual
claim level) in both files for the highest possible accuracy
• 2013 and 2014 Savings will adjust the 2011 facility claims by market
average increases to compare to more aggressive fixed costs
negotiated by ACAP

8. COMPASS IS REVOLUTIONARY HEALTHCARE
Category
Compliant
Members
Non-Compliant Total Eligible
Members
Members
Cancer
447
1,142
1,589
28%
Diabetes
381
339
720
53%
Respiratory & Other
55
274
329
17%
Vascular
399
915
1,314
30%
Wellness
857
3,649
4,506
19%
Grand Total
2,139
6,319
8,458
25%
% Compliant
8

9. COMPASS IS REVOLUTIONARY HEALTHCARE
2012 CONTRACT STATUS
• 11/7/12: Met with new City Manager, CFO and Director of HR
– Interim City Manager/CFO confirmed that the financial terms
reviewed in meeting were agreed to by City‟s leadership
– Director of HR clarified specific next steps in meeting, and City
Manager stated that she was to take contract to next City Council
meeting in November
– 11/9/12: Contract addendum sent, with 30% Shared Savings
• Note, this was the 3rd time a contract was provided with the
same financial terms
– 11/9/12: Confirmation email received, “I‟m so very glad that Daniel
is on board and we are moving forward. I met with Daniel
yesterday about the addendum going before Council. He definitely
wants it to go on the next agenda, which is November 20”.

10. COMPASS IS REVOLUTIONARY HEALTHCARE
2013 CONTRACT STATUS
• 2/28/13: Rescheduled call occurred and request for additional
information
• 3/1/13: Detailed overview of work provided
• 3/17/13: Follow-up call scheduled to review scope, and City
Manager stated, “committed to be fair in the payment for the
financial savings attained by the City and agreed in principle to
considering a prospective agreement which accounted for the
results delivered”
– City Manager requested financial options
• 3/27/13: Two financial options provided as requested
• 8/28/13: During call, City Manager stated that he now wanted a
settlement payment “for the value rendered”
• 9/19/13: During call, reviewed settlement payment and agreed to
review with City Council

11. COMPASS IS REVOLUTIONARY HEALTHCARE
FINANCIAL RESULTS 2012 AND 2013
Year
Avg EEs*
Total Medl Claims*
Cost/EE/Yr
2011
1,335
$3,930,688
$2,945
2012
1,307
$3,260,329
$2,495
$1,100,000*
Jan-Aug ‟13
1,296
$2,403,689
$1,855
$1,289,000
2014
Proj Net Save
$1,497,000
• Direct contract resulted in immediate savings each year –
Projected at $3,886,000 for three year period
• Savings derived at comparing 2011 hospital rates (adjusted for
trend) to guaranteed rates for 2012 thru 2014 with 3% escalators
vs estimated trend rate of 8%
• The health risk of the population has NOT been addressed $496,000 reinsurance for large claimants in YTD 2013
• New Community Leadership and Shannon interested in competing
for City‟s business at renewal for 2015
*Totals Provided by Holmes Murphy

12. COMPASS IS REVOLUTIONARY HEALTHCARE
CHALLENGES FOR EXECUTING A CONTRACT
•
9/26/13: Email received stating the challenges
– “Initially the City was told that ACAP was an affiliate of Holmes Murphy, and
later found this not to be correct.”
• RESPONSE: ACAP IS A WHOLLY-OWNED DIVISION OF HOLMES
MURPHY; PART OF DIVISION MERGED WITH COMPASS JAN. 2013
– “Yes, staff was authorized by City Council to negotiate a contract with ACAP,
yet state law does not allow public funds to be expended for prior
services...approvals must come before the work is engaged. Therefore any
shared savings agreement would require execution of the agreement prior to
the savings being realized.”
• RESPONSE: EVEN THOUGH COUNCIL AUTHORIZED CONTRACT
NEGOTIATIONS MAY „12, WE NEVER ENTERED INTO DISCUSSIONS,
SO EFFECTIVE DATES WERE NOT DISCUSSED
– “Negotiations to a 30% shared savings rate have yet to be confirmed by any
of the City employees involved in 2011, and without a signed agreement
approved by City Council, the City has been unable to proceed.”
• RESPONSE: 30% NOTED IN 11/7/12 PRESENTATION, AND 30%
NOTED IN EACH CONTRACT ADDENDUM PROVIDED

13. COMPASS IS REVOLUTIONARY HEALTHCARE
REQUEST OF CITY COUNCIL
• Based on projected savings of $3,887,000 for 2012-2014,
payment of $1,116,000 (30% of savings) due
– Payment of $717,000 (30% of savings) for 2012 and
2013 Projected Savings
• Settlement option: $500,000 – 13% of Projected Savings
• Please approve payment for services provided and
financial savings delivered