Gainesville — The North Texas Medical Center board of directors voted to approve an employee insurance plan with Cigna at Monday night’s special-called board meeting.

Prior to the vote, the board heard a presentation from Brian Stephens of Stephens, Bastian and Cartwright, LP.

Chief Financial Officer Kelly Hayes said Stephens’ firm is responsible for “going out to get bids for health insurance for our employees.”

Promising to do the presentation as expeditiously as possible, Stephens said he wanted to talk about the factors which drive health insurance premiums and discuss plan design options.

Stephens’ presentation included information about the hospital’s claims history, the bid negotiation process, the bid results and the firm’s recommendations.

Shopping for a health insurance plan is a fairly complicated process.

Factors influencing the selection of a health plan include plan design, the age and gender mix of the employees, the rate at which employees utilize the plan, the type of industry involved, competition, impending healthcare reform issues and medical loss ratio data.

The type of industry is a major factor, Stephens said.

“Some carriers have certain industries that they just really won’t underwrite at all. Some of them, they’re not as keen on and some they’re more excited about,” Stephens said.

Health care, he added, is “one of those (industries) that, on average, carriers are not as excited about.”

One of the most important factors effecting premium rates is user ratio.

User ratio reflects the number of dollars paid out in claims versus the dollars paid in for premiums.

Data for the last three years, reflects some unsettling trends at the hospital, Stephens noted.

Using an electronic data presentation, Stephens pointed out that the claims loss ratio for 2007-2008 was 165 percent.

“It’s just really...It’s bad. There’s no other way to say it...That’s dramatically high,” Stephens said of NTMC’s claims loss ratio for the 2007-2008 year.

“The next year it was 95 percent — still a high loss ratio — and this year, it was 148 percent,” he said. “It makes it more difficult to get reasonable price increases, but the goal that the carriers all have is for you to run at about 80 percent and obviously we’re way above that.”

He also noted some additional claims issues for 2010.

The top four claims totaled over $1.15 million.

The group also has 13 claims that are over $25,000, Stephens said.

Five continuing claims are expected to reach $100,000 or more in the coming year “due to the diagnosis that’s associated with them.”

He said underwriters factor in their expected risk in the upcoming year when determining premiums.

Stephens said his firms shops for the cheapest rates for its clients.

The company begins by writing proposals for health insurance coverage and submitting the proposals to “every single carrier that writes group health in the state of Texas, on a fully-insured basis.”

The process is designed to ensure that the company’s clients are getting “the very best deal that’s out there.”

“Once we get (the quotes) back we compare them side-by-side in a spreadsheet for differences,” he said.

Eventually, the list is narrowed down to the most competitive bids and the results are presented to the board.

The hospital’s current health insurance carrier is Aetna.

Stephens told the board several companies submitted competitive quotes.

Stephens told the board that his firm recommended keeping the current plan designs intact and switching to Cigna for health and dental coverage for hospital employees.

Hayes noted that Monday night’s vote was designed to prevent changeover-related hassles for NTMC employees.

“The reason that we called this meeting to do this tonight is because we are changing carriers... It takes time to get all the information to the new carrier. And so we want as much time as possible to get this process going and if we wait until next week that’s a pretty short time period,” Hayes said.

Interim CEO Randy Bacus said the vote gives the hospital 15 days to complete the changeover.