Southampton Mayor Pushes Plan to Revamp Government Employee Health Insurance on East End

The mayor of Southampton Village is leading an initiative to establish a new government employee health plan on the East End aimed at replacing local municipalities' dependence on Empire Blue Cross Blue Shield and stemming the tide of rising health care costs.

The initiative includes villages, towns and municipal districts banding together to self-fund a health plan and working with hospitals and physician groups to rethink how health care is delivered, said Southampton Mayor Mark Epley.

The new insurance plan would be coupled with a health care method called the patient-centered medical home model, or PCMH.

The model calls for paying doctors more than they would typically be paid by an insurance company, Epley admitted, but he said the benefits municipalities receive in turn will ultimately result in savings.

"Right now the insurance companies are really busting their chops over every single dime," he said. "So, at the end of the day, the doctor doesn't really have the ability to staff his practice properly, to manage the health care of his patients, because the cost of it is so high."

Under PCMH, doctors and their staffs spend more time with patients in an out-patient setting to monitor their health better. Epley said taking that extra time to keep an eye on and address chronic conditions such as diabetes, heart disease and obesity will reduce patients' number of costly hospital stays.

The genesis of the project was one year ago, at the December 2009 meeting of the East End Supervisors and Mayors Association. State Assemblyman Fred Thiele attended and he explained that the state had recently modified insurance regulations, allowing for municipalities to form a health insurance cooperative.

Epley said he offered to take the helm of the initiative because he has experience in dealing with health insurance from his other job, executive director of Seafield Center, an alcohol and substance abuse treatment center in Westhampton Beach. He was also concerned about the strain on his village's budget caused by rising health care costs. At the current rate of growth, the cost of health care to Southampton Village will double in five years, he said, and health care already comprises 12 percent of the village's annual budget, about $2.3 million.

In doing research, Epley said he found that 11 schools in the Eastern Suffolk Board of Cooperative Educational Services (BOCES) participate in a cooperative designed to lower their health care costs, but he said it is actually costing them more than the Blue Cross Blue Shield plan.

The discovery left him asking, "How can you successfully merge the municipalities together and lower healthcare costs?" he said.

The answer he came to was PCMH.

Thiele recommended Scott Bradley, a senior vice president at insurance and risk management firm Cook, Hall & Hyde in East Hampton, to coordinate and consult on the initiative. Epley disclosed that Bradley handles the health insurance benefits for Seafield employees.

Bradley said Thursday that he has made several trips over the past year to Washington D.C. to visit the Patient-Centered Primary Care Collaborative, which supports various initiatives and pilots across the country. He noted that there are 27 PCMH pilots across 18 states, and 44 states have enacted legislation to encourage pilot programs.

The need to identify long-term cost savings for his clients is what attracted him to PCMH, Bradley said. He criticized the national health care reform bill that passed Congress in March for not addressing costs, a point Epley agreed on.

"What they passed really was accessibility to health insurance, which in the long term will actually probably increase the cost of premiums, and what they failed to do was address the delivery system itself," Epley said.

On top of PCMH, greater health care savings can be achieved through clinical integration, Bradley said. He explained that integration includes using electronic medical records to streamline common tasks and reduce the duplication of services, such as x-rays and blood tests. It will also give doctors access to best practices and clinical care guidelines. "This will have an significant impact on health care costs," he said.

"We met with the hospitals out here, and we've met with many of the doctors groups out here, and all of them are very much in favor of doing this," Epley said.

Southampton Hospital spokeswoman Marsha Kenny said hospital President and CEO Robert Chaloner does not wish to comment at this time because discussions are still very preliminary.

A study of the costs and feasibility of an East End Cooperative Health Plan would be about $8,750 for each town and approximately $4,375 per village, if all eligible towns and village participate, according to Bradley.

To fund the start-up costs, he said the cooperative will compete for New York State Department of State Local Government Efficiency grants of up to $200,000 per municipality, with an aggregate cap of $1 million.

A minimum number of participants needs to be met before the state will sign off on a cooperative.

"You need at least three municipalities," Epley said. There must also be a minimum of 2,000 members, including current employees and retirees.

"There is fear associated with this, because you start worrying about, 'How are my benefits going to be impacted?'" Epley said. He asserted that benefits will not be negatively affected at all, because most municipal employee contracts use the Blue Cross Blue Shield plan as the minimum requirement, so benefits will be the same or better.

And employees with children off at college and retirees who move out of state can opt to use the Blue Cross Blue Shield plan, he said.

The plan is projected to take effect in January 1,  2013. Bradley said the estimate acknowledges it may take up to a year to get approval from the New York State Department of Insurance once a plan is submitted.

"It's a good initiative that I think long term will pay dividends to all the villages and the taxpayers," Epley said. 

The initiative was presented to the Southampton Village Board on Nov. 23 and to the East Hampton Village Board on Thursday, and Epley says he is scheduled to go in front of the Quogue and Westhampton Beach village boards.

James Dougherty, supervisor of Shelter Island Town and chairman of the East End Supervisors and Mayors Association, said he is scheduling a time for Epley to present the initiative to the Shelter Island Town Board.

"We want to fill in the blanks a little here on Shelter Island," Dougherty said, adding that he expects the presentation to take place before the end of the year.

"I have an open mind on it," he said. "I haven't made any judgments."