Fulton Pursues Insurance Savings

FULTON, NY – The city of Fulton has entered a service agreement to try to find cost savings for its self-insurance plan. The agreement will come at no cost to Fulton unless savings are delivered.

The Fulton Common Council approved the service agreement this week. According to Mayor Ronald Woodward, the efforts were prompted by deficiencies that were identified during a recent audit of the city’s self-insurance plan.

“One of the biggest employee costs is health insurance,” Woodward said.

Woodward explained that POMCO currently serves as the third-party benefits administrator for the self-funded health insurance plan in Fulton. During normal insurance cycles, the city’s insurance fund operates efficiently. During cycles that bring more significant claims, the city feels the affects.

Woodward explained that when the city receives large claims for more serious injuries or illnesses, it taps the self-insurance plan and requires larger contributions. In the past, the city funded stop-gap insurance that kicked in once a claim reached the $60,000 mark. Woodward noted, however, that the safety measure came with a significant price tag.

“This year was the first year that the city did not budget for stop-gap insurance,” Woodward explained.

“Our budget looks good this year,” he said. “But I don’t think the city feels comfortable taking those risks.”

Under the new agreement, Dillabough & Associates, Inc., will evaluate facility billed charges under the city’s insurance plan and negotiate reductions with providers.

Within the terms, the company explained that several factors are used as a basis for negotiations, such as the levels of reimbursement Medicare would pay on a procedure and hospital stay.

“In addition, we look at comparable diagnosis/procedures to determine actual charges compared to norms,” the agreement reads. “In selected states, we may have access to the facilities’ financial statements, which allows us to determine the facility costs and profitability of (the) procedure.

“We state the position of our client’s to the provider based on what other carriers are paying and the market, including Medicare,” it adds. “Our bottom up calculation or what you should pay drives the discount.”

The service is being offered at no charge to Fulton, unless savings are brought in above what POMCO delivers.

“If it is, we would pay (Dillabough & Associates) 25 percent of the savings,” Woodward said.

Woodward said that the city expects to receive new numbers for its insurance premiums next month. With that, the city has requested three quotes for stop-gap premiums for the coming year.

“If this is done, we will factor it in to the costs,” he said.

By hiring Dillabough & Associates, Woodward noted that the city’s premium for stop-gap insurance will be lower.

“We are doing everything we can to keep the costs down but still provide the contractual services to our employees,” he said.