Authorizing implementation of Nice Healthcare as a cost-effective supplement to the health plan network for our self-insured employee health plan.

Teammates in the City of Rochester Human Resources Department, aligning with the Finance Department, recommend that the City implement a contract with Nice Healthcare, an integrated Direct Primary Care (DPC) clinic that delivers hybrid virtual and in-home medical care. Nice is a one-stop care provider that offers services in the areas of primary care, mental health, physical therapy, prescription medications and specialized programs. All primary care services can be offered virtually, at work or in your home and the primary care services provided consist of the bulk of services found in an urgent care or primary care clinic setting. These include but aren't limited to; diagnosis and treatment of acute or chronic illness, physical exams, rapid tests, blood draws, labs, x-rays, care guidance, disease prevention, health maintenance, patient education, specialist referrals and care coordination. They also offer over 500 basic prescription medications. The Nice model provides for convenient and cost-effective health care. 

Healthcare costs are the #1 cause of bankruptcy for American families. Utilizing Nice healthcare would create a win-win scenario by allowing the City of Rochester to control increased healthcare costs for our employee health plan but also provide a more cost-effective solution to our members, relieving the financial burden of obtaining health care for our employees and their families. 

No prior legislative actions. 

Healthcare costs continue to rise across the nation, with experts anticipating employer health plan costs increasing between 8-10% in 2027. Southeast Minnesota, and Olmsted County specifically, ranks as the most expensive region for healthcare in Minnesota and we are consistently above the national average. These high costs have forced employers and health plans to consider more cost-effective solutions in an effort to reduce the cost of healthcare both to the plan and our members. 

The Nice model provides services free of charge to members but also a significantly reduced rate for the health plan. The City of Rochester employee health plan would pay a per employee per monthly activation rate fee for the program. Activation rates are based on utilization each month and rounded to the nearest 1%.

A chart of the activation-based pricing can be found in the contract attached to this request. Nice customers see a net yearly savings of approximately $510 per employee.  Higher savings are possible based on increased utilization of the Nice Healthcare solution in lieu of members seeking higher cost care at in-network clinics or hospitals. Based on benchmarking with peer organizations such as Olmsted County who currently utilizes Nice Healthcare, we expect this to result in lower costs to our self insured health plan.  While this likely does not translate into lower overall health insurance costs, it does mitigate increases that are being experienced throughout the health insurance market.  

No alternative actions are suggested at this time. Not using Nice as an alternative primary care provider service will result in our health plan members continuing to seek care at less cost-effective clinics or hospitals and would reduce the City's ability to use cost-effective measures to manage the rising healthcare costs that are impacting our plan.