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HomeMy WebLinkAbout07/20/2017 B A K E R S F I E L D Staff: Committee Members: Steven Teglia Councilmember, Ken Weir - Chair Assistant City Manager Councilmember, Willie Rivera Councilmember, Bruce Freeman SPECIAL MEETING NOTICE PERSONNEL COMMITTEE of the City Council - City of Bakersfield July 20, 2017 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue, First Floor Bakersfield, California 93301 A G E N D A 1. ROLL CALL 2. ADOPT AUGUST 16, 2016 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. 2018 Health Care Plan Renewals - Teglia 5. COMMITTEE COMMENTS 6. ADJOURNMENT ________________________________________________________________ S:\Council Committees\2016\Personnel\August\August 16 ASR.docx Page 1 ST:mc B A K E R S F I E L D Committee Members Staff: Steven Teglia Councilmember, Ken Weir, Chair Assistant City Manager Councilmember, Terry Maxwell Vice Mayor, Harold Hanson SPECIAL MEETING OF THE PERSONNEL COMMITTEE Tuesday, August 16, 2016 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 AGENDA SUMMARY REPORT Meeting called to order at 12:00 p.m. 1. ROLL CALL Committee members: Councilmember, Ken Weir, Chair Councilmember, Terry Maxwell Vice Mayor, Harold Hanson City staff: Alan Tandy, City Manager Steven Teglia, Assistant City Manager Chris Huot, Assistant City Manager Christopher Gerry, Administrative Analyst, City Manager’s Office Caleb Blaschke, Management Asst. – City Manager’s Office Virginia Gennaro, City Attorney Nelson Smith, Finance Director Lisa McGranahan, Human Resources Manager Mari Blowers, Benefits Technician Retired employees Fred Baugher and BCARE: Others present: Tom Morrison, Jerry Huang, and Johnny Wu, Segal Company /s/ Steven Teglia ________________________________________________________________ S:\Council Committees\2016\Personnel\August\August 16 ASR.docx Page 2 ST:mc 2. ADOPTION OF SEPTEMBER 18, 2015 AGENDA SUMMARY REPORT The Report was adopted as submitted. PUBLIC STATEMENTS There were no public statements. 3. NEW BUSINESS A. 2017 Health Care Plan Renewals - Teglia Assistant City Manager Teglia stated Segal Company had been working with the various plan providers to obtain an understanding of the rates for the new plan year, which begins in January 1, 2017. The same information was provided to the Insurance Committee earlier in the day. He introduced Tom Morrison with the Segal Company to present their report by way of a handout and PowerPoint presentation. The report included information from the Request For Proposals (RFP) for the vision and dental plans. Mr. Morrison distributed information to the Committee and gave a summary overview. Key points are:  The overall City 2017 contribution for active employee medical benefit is increasing 3.7% or $557,200. The Blue Shield PPO had no increase, while Blue Shield Full HMO (+6.8%), Blue Shield Narrow HMO (+3.9%), Kaiser HMO (+9.5%), and Kaiser High Deductible Health Plan (+6.1%) all had increases.  For retirees the proposed rates for the Blue Shield PPO is increasing by 4.1% while the Blue Shield Medicare Advantage plan rates decreased by 22%. Comparatively, Kaiser’s proposed rates for the HMO, High Deductible, and HMO Senior Advantage plans are also increasing by 15.1%, 14.8%, 1% respectively.  There is no rate increase to the Flexible Benefits, Long Term Disability and AD&D Life Insurance. The Basic Life Insurance plan is increasing by 27.5 % increase. Segal recommended that a RFP be issued for the basic life insurance plan in 2018 to determine whether a more cost competitive provider exists.  A RFP for dental and vision plans were issued. It requested vendors submit proposals that match the current benefit plans. The results provide savings opportunities for the City and employee to maintain the current benefits at a lower cost.  The favorable renewal increase will help lower the City’s liability for Other Post-Employment Benefits when the next valuation is performed in June of 2018. ________________________________________________________________ S:\Council Committees\2016\Personnel\August\August 16 ASR.docx Page 3 ST:mc To summarize the Dental Plan RFP:  The RFP was sent to Anthem, Delta Dental, Liberty Dental, Met Life, UnitedHeathCare, United Concordia, and Western Dental. All providers submitted responses for the PPO and DMO plans with the exception of Western Dental who submitted a response only for the DMO plan. Anthem, Delta Dental, Liberty Dental, Met Life, UnitedHeathCare, and United Concordia submitted financially competitive proposals for the PPO plans. Liberty, UnitedHealthCare, United Concordia, and Western Dental submitted financially competitive proposals for the DMO plans.  The United Concordia proposal provided the overall best benefit, network and cost to the City and its participants. The active and retiree DMO plans can be consolidated into one plan for each group from the current two plans, at an improved benefit for retirees and cost saving to the majority of retirees, active employees, and the City.  Financial Analysis for PPO Plans - Active employees – the current premiums are $1.2 million. Proposals received ranged from $961,000 to $1,144,800 or a 7.7% to 22.5 % cost savings. All proposals are for a three year flat rate guarantee with the exception of UnitedHealthCare whose proposal was for a two year flat rate guarantee.  Financial Analysis for DMO Plans - Active employees and retirees – the current premiums are $415,800. The proposals received ranged from $320,100 to $419,500 or a 23% decrease to a 0.9% increase of current premiums. The lowest bidder however, had the most restricted network as well. All proposals are for a three year flat rate guarantee. To summarize the Vision Plan RFP:  The RFP was sent to Anthem, Blue Shield, Eye Med Services, MES Vision, Met Life, UnitedHealthCare, and VSP requesting providers submit proposals to match current benefit plans. All providers, except UnitedHealthCare, submitted responses. Anthem, Blue Shield, Eye Med Services, and MES Vision submitted financially competitive proposals for a three year flat rate guarantee.  The two lowest cost proposals were submitted by Eye Med Services (20% cost savings) and MES Vision (8% annual cost savings), $29,600 and $11,900 respectively. Of the two, MES Vision had the larger network in Kern County. For this reason, it was determined that MES Vision’s proposal was the better option. ________________________________________________________________ S:\Council Committees\2016\Personnel\August\August 16 ASR.docx Page 4 ST:mc Assistant City Manager Teglia reported that after careful consideration and thorough discussion, the Insurance Committee voted unanimously to recommend the following: Medical Coverage – the Blue Shield and Kaiser plans; Dental Coverage – United Concordia plan; and Vision Coverage – Retaining MES Vision. Staff and the Segal Company were also in agreement with the Insurance Committee’s recommendation. Committee member Hanson thanked staff and the Segal Company for all their work in particular for communicating the necessary information to all the interested parties. He made a motion to accept staff’s recommendation and submit the item for approval to the full City Council. The motion was unanimously approved. Committee Chair Weir inquired about what will happen to the Blue Shield plans after the current three year flat rate guarantee expires at the end of 2017. Mr. Morrison stated Blue Shield opted to pass on any rate increases and determined it was justified based on claims submissions. Committee Chair Weir thanked staff and the Segal Company for their efforts. He also expressed his satisfaction with dealing with Blue Shield. 3. COMMITTEE COMMENTS There were no committee comments. 4. ADJOURNMENT The meeting was adjourned at 12:35 pm Documents Presented At The Personnel Committee July 20, 2017 Meeting Copyright © 2015 by The Segal Group, Inc. All rights reserved. Calendar Year 2018 Renewal Insurance and Personnel Committee City of Bakersfield July 20, 2017 Tom Morrison, Senior Vice President Johnny Wu, Actuary Jerry Huang, Health Benefit Analyst 5489697v3 2 Table of Contents Overview of 2018 Plan Renewals Principle Causes of Rate Increase Potential Plan Modifications and Mandated Changes Appendix •Medical Rate Increase History •Medical Enrollment by Plan •Financial Ratings •Kaiser HMO Experience 3 Overview of 2018 Plan Renewals 4 2018 City Contribution at 80% Plan Enrollment Current City Contribution at 80% 2018 City Contribution at 80% Annual Increase Percentage Change Blue Shield Full HMO 173 $2,214,300 $2,237,600 $23,300 1.1% Narrow HMO 72 $776,300 $784,500 $8,200 1.1% PPO 632 $7,837,400 $8,413,400 $576,000 7.3% Sub Total 877 $10,828,000 $11,435,500 $607,500 Kaiser(1) HMO 428 $3,991,700 $4,374,200 $382,500 9.6% HDHP 18 $99,600 $101,200 $1,600 1.6% Sub Total 446 $4,091,300 $4,475,400 $384,100 United Concordia(2) HMO 475 $202,100 $202,100 $0 0.0% PPO 892 $785,000 $785,000 $0 0.0% Sub Total 1,367 $987,100 $987,100 $0 MES Vision(3) HMO 690 $46,500 $46,500 $0 0.0% PPO 631 $60,500 $60,500 $0 0.0% Sub Total 1,321 $107,000 $107,000 $0 Total Medical, Dental, Vision(4)$16,013,400 $17,005,000 $991,600 6.2% (2) United Concordia rates are guaranteed through December 31, 2019. (3) MES Vision rates are guaranteed through December 31, 2020. (4) Voya Life and AD&D, Optum EAP, Unum LTD and HealthComp are not included above. (1) Enrollment counts for Kaiser include COBRA participants, therefore City contributions are slightly overstated. Segal is obtaining that enrollment to more truly reflect the City’s contribution amount. CITY OF BAKERSFIELD Active 5 2018 Annual Premiums (Active and COBRA) Plan Enrollment Current Annual Premium 2018 Annual Premium Annual Increase Percentage Change Blue Shield Full HMO 178 $2,835,200 $2,865,000 $29,800 1.1% Narrow HMO 73 $981,500 $991,800 $10,300 1.0% PPO 638 $9,849,900 $10,574,000 $724,100 7.4% Subtotal 889 $13,666,600 $14,430,800 $764,200 Kaiser HMO 436 $5,048,400 $5,532,100 $483,700 9.6% HDHP 18 $124,500 $126,500 $2,000 1.6% Subtotal 454 $5,172,900 $5,658,600 $485,700 United Concordia HMO 492 $259,200 $259,200 $0 0.0% PPO 935 $1,007,900 $1,007,900 $0 0.0% Subtotal 1,427 $1,267,100 $1,267,100 $0 MES Vision HMO 702 $58,800 $58,800 $0 0.0% PPO 655 $77,300 $77,300 $0 0.0% Subtotal 1,357 $136,100 $136,100 $0 Total Premiums $20,242,700 $21,492,600 $1,249,900 6.2% CITY OF BAKERSFIELD Active and COBRA 6 2018 Annual Premiums (Retiree) Plan Enrollment Current Annual Premium 2018 Annual Premium Annual Increase Percentage Change Blue Shield PPO 426 $7,397,100 $7,571,500 $174,400 2.4% Medicare Advantage 19 $74,600 $83,200 $8,600 11.5% Subtotal 445 $7,471,700 $7,654,700 $183,000 Kaiser HMO 3 $89,700 $103,100 $13,400 15.0% HDHP 0 $0 $0 $0 0.0% Senior Advantage 150 $385,600 $413,400 $27,800 7.2% Subtotal 153 $475,300 $516,500 $41,200 United Concordia HMO 213 $59,200 $59,200 $0 0.0% MES Vision HMO 3 $200 $200 $0 0.0% Total Premiums $8,006,400 $8,230,600 $224,200 2.8% CITY OF BAKERSFIELD Retiree 7 2018 Blue Shield of California Monthly Rate Summary Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 37 $563.03 $568.95 1.05%$455.16 $113.79 $4.74 $1.18 Two-Party 29 $1,131.59 $1,143.48 1.05%$914.78 $228.70 $9.51 $2.38 Family 107 $1,654.28 $1,671.67 1.05%$1,337.34 $334.33 $13.91 $3.48 COBRA/Cal-COBRA Single 1 $563.03 $568.95 1.05% Two-Party 3 $1,131.59 $1,143.48 1.05% Family 1 $1,654.28 $1,671.67 1.05% Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 13 $459.11 $463.93 1.05%$371.14 $92.79 $3.86 $0.96 Two-Party 11 $922.71 $932.41 1.05%$745.93 $186.48 $7.76 $1.94 Family 48 $1,348.93 $1,363.11 1.05%$1,090.49 $272.62 $11.34 $2.84 COBRA/Cal-COBRA Single 0 $459.11 $463.93 1.05% Two-Party 1 $922.71 $932.41 1.05% Family 0 $1,348.93 $1,363.11 1.05% Blue Shield HMO Access+ Summary (Full Network) - Medical, Mental Health, Prescription Drugs Blue Shield HMO Trio ACO Summary (Narrow Network) - Medical, Mental Health, Prescription Drugs No City Contribution No City Contribution 8 2018 Blue Shield of California Monthly Rate Summary Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 143 $554.19 $594.93 7.35%$475.94 $118.99 $32.59 $8.15 Two-Party 141 $1,110.28 $1,191.89 7.35%$953.51 $238.38 $65.29 $16.32 Family 348 $1,668.37 $1,791.00 7.35%$1,432.80 $358.20 $98.10 $24.53 COBRA/Cal-COBRA Single 4 $554.19 $594.93 7.35% Two-Party 2 $1,110.28 $1,191.89 7.35% Family 0 $1,668.37 $1,791.00 7.35% Retiree Single 276 $1,048.38 $1,073.10 2.36% Two-Party 138 $2,096.62 $2,146.06 2.36% Family 12 $3,144.96 $3,219.12 2.36% Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Over 65 Retiree Single 19 $327.29 $364.95 11.51% Blue Shield PPO Summary - Medical, Mental Health, Prescription Drugs Varies Varies No City Contribution Blue Shield Medicare Advantage 9 2018 Kaiser Monthly Rate Summary Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 114 $445.31 $487.98 9.58%$390.38 $97.60 $34.14 $8.53 Two-Party 83 $890.63 $975.96 9.58%$780.77 $195.19 $68.26 $17.07 Family 231 $1,260.24 $1,380.98 9.58%$1,104.78 $276.20 $96.59 $24.15 COBRA Single 5 $445.31 $487.98 9.58% Two-Party 3 $890.63 $975.96 9.58% Family 0 $1,260.24 $1,380.98 9.58% Under 65 Retiree Single 0 $1,245.38 $1,432.19 15.00% Two-Party 3 $2,490.76 $2,864.37 15.00% Family 0 $3,524.42 $4,053.09 15.00% Kaiser HMO Summary - Medical, Mental Health, Prescription Drugs Varies No City Contribution 10 2018 Kaiser Monthly Rate Summary Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 7 $329.44 $334.78 1.62%$267.82 $66.96 $4.27 $1.07 Two-Party 8 $658.88 $669.57 1.62%$535.66 $133.91 $8.55 $2.14 Family 3 $932.31 $947.44 1.62%$757.95 $189.49 $12.10 $3.03 COBRA Single 0 $329.44 $334.78 1.62% Two-Party 0 $658.88 $669.57 1.62% Family 0 $932.31 $947.44 1.62% Under 65 Retiree Single 0 $1,074.97 $1,236.22 15.00% Two-Party 0 $2,149.94 $2,472.43 15.00% Family 0 $3,042.16 $3,498.48 15.00% Enrollment 2017 Rates 2018 Rates Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Over 65 Retiree Single 150 $214.22 $229.69 7.22% Kaiser Deductible Summary - Medical, Mental Health, Prescription Drugs Kaiser HMO Senior Advantage Varies No City Contribution Varies 11 2018 Dental Monthly Rate Summary Enrollment 2017 Rates 2018 Rates(1)Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 125 $20.75 $20.75 0.00%$16.60 $4.15 $0.00 $0.00 Two-Party 116 $38.05 $38.05 0.00%$30.44 $7.61 $0.00 $0.00 Family 234 $60.00 $60.00 0.00%$48.00 $12.00 $0.00 $0.00 COBRA Single 8 $20.75 $20.75 0.00% Two-Party 7 $38.05 $38.05 0.00% Family 2 $60.00 $60.00 0.00% Retiree Single 102 $15.85 $15.85 0.00% Two-Party 104 $28.85 $28.85 0.00% Family 7 $44.60 $44.60 0.00% Enrollment 2017 Rates 2018 Rates(1)Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 219 $35.97 $35.97 0.00%$28.78 $7.19 $0.00 $0.00 Two-Party 184 $73.96 $73.96 0.00%$59.17 $14.79 $0.00 $0.00 Family 489 $123.29 $123.29 0.00%$98.63 $24.66 $0.00 $0.00 COBRA Single 28 $35.97 $35.97 0.00% Two-Party 13 $73.96 $73.96 0.00% Family 2 $123.29 $123.29 0.00% (1) Rates are guaranteed through December 31, 2019. United Concordia (UCCI) DMO Summary - Dental No City Contribution No City Contribution No City Contribution United Concordia (UCCI) PPO Summary - Dental 12 2018 Vision Monthly Rate Summary Enrollment 2017 Rates 2018 Rates(1)Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 192 $3.45 $3.45 0.00%$2.76 $0.69 $0.00 $0.00 Two-Party 137 $6.90 $6.90 0.00%$5.52 $1.38 $0.00 $0.00 Family 361 $8.97 $8.97 0.00%$7.18 $1.79 $0.00 $0.00 COBRA Single 9 $3.45 $3.45 0.00% Two-Party 2 $6.90 $6.90 0.00% Family 1 $8.97 $8.97 0.00% Retiree Single 0 $3.45 $3.45 0.00% Two-Party 3 $6.90 $6.90 0.00% Family 0 $8.97 $8.97 0.00% Enrollment 2017 Rates 2018 Rates(1)Percentage Change 2018 City Contribution 2018 Employee Contribution 2018 City Contribution Increase 2018 Employee Contribution Increase Active Single 148 $4.83 $4.83 0.00%$3.86 $0.97 $0.00 $0.00 Two-Party 176 $9.70 $9.70 0.00%$7.76 $1.94 $0.00 $0.00 Family 307 $12.65 $12.65 0.00%$10.12 $2.53 $0.00 $0.00 COBRA Single 20 $4.83 $4.83 0.00% Two-Party 3 $9.70 $9.70 0.00% Family 1 $12.65 $12.65 0.00% (1) Rates are guaranteed through December 31, 2020. No City Contribution No City Contribution Varies Medical Eye Services (MES) HMO Summary - Vision Medical Eye Services (MES) PPO Summary - Vision 13 2018 Life and AD&D Monthly Rate Summary 2017 Rates 2018 Rates(1)Percentage Change Alternative 2018 Rates(1)(2) Percentage Change Basic Life $0.140 $0.140 0.0%$0.130 -7.14% Supplemental Life (Employee and Spouse) <29 $0.090 $0.090 0.0%$0.070 -22.22% 30-34 $0.090 $0.090 0.0%$0.100 11.11% 35-39 $0.130 $0.130 0.0%$0.120 -7.69% 40-44 $0.210 $0.210 0.0%$0.180 -14.29% 45-49 $0.310 $0.310 0.0%$0.270 -12.90% 50-54 $0.520 $0.520 0.0%$0.440 -15.38% 55-59 $0.880 $0.880 0.0%$0.760 -13.64% 60-64 $1.390 $1.390 0.0%$1.170 -15.83% 65-69 $2.190 $2.190 0.0%$2.260 3.20% 70-74 $3.480 $3.480 0.0%$3.600 3.45% 75+$6.170 $6.170 0.0%$3.600 -41.65% Supplemental Dependent Life $0.200 $0.200 0.0%$0.200 0.00% Basic AD&D $0.020 $0.020 0.0%$0.020 0.00% Supplemental AD&D Subscriber Only $0.050 $0.050 0.0%$0.050 0.00% Family $0.080 $0.080 0.0%$0.080 0.00% (1) Rates are guaranteed through December 31, 2019. Voya - Life and AD&D Insurance (Rate per $1,000) (2) Rates are contingent on the City sponsoring an open enrollment for the supplemental life plan based on Voya's open enrollment strategy and communication campaign. 14 2018 EAP, Flexible Benefits, and LTD Summary 2017 Rates 2018 Rates Percentage Change Active $1.71 $1.71 0.00% 2017 Rates 2018 Rates(1)Percentage Change Flexible Benefits $5.00 $5.00 0.00% (1) Pending result of Flexible Benefits RFP. 2017 Rates 2018 Rates Percentage Change Long Term Disability $0.57 $0.57 0.00% Optum EAP Summary - EAP HealthComp - Section 125 Flexible Benefits (Rate per participant per month) Unum - Long Term Disability (Rate per $100) 15 Principle Causes of Rate Increase 16 Re-introduction of the Insurer Fee mandated by the Affordable Care Act •Fee was waived for 2017 •Added 2.9%-3.2% to the 2018 Blue Shield rate increases. The active PPO was most affected at 3.2%, followed by the retiree PPO at 3.0%, and the HMO at 2.9%. •Added 1.1% to the Kaiser rate increase •Absent the Insurer Fee, the Blue Shield HMO plans would have had a decrease Kaiser participant per month cost increased significantly •In Hospital Cost –145% •In Hospital Surgical –142% •Professional Charges for Maternity –226% •Total Inpatient Cost per Member per Month –99.3% Blue Shield PPO cost increase at the same rate as Blue Shield “book of business” trend but there were several very large claims Drug costs for all plans were equal to or lower than 2016 cost due to a drop in specialty medications. Principle Causes of Rate Increase 17 Potential Plan Modifications and Mandated Changes 18 Kaiser HMO Plan Modifications Current HMO Option 1 (Inpatient -$250 per day) Option 2 (Outpatient Procedures) Option 3 (MRI, CT, and PET) Option 4 (Inpatient -$500 per admit) Option 5 (Emergency Visit) Deductible Single $0 $0 $0 $0 $0 $0 Family $0 $0 $0 $0 $0 $0 Annual Out-of-Pocket Maximum Single $1,500 $1,500 $1,500 $1,500 $1,500 $1,500 Family $3,000 $3,000 $3,000 $3,000 $3,000 $3,000 Hospital Inpatient $250 $250 per day $250 $250 $500 $250 Outpatient $25 $25 $125 $25 $25 $25 Primary Care Visits $25 $25 $25 $25 $25 $25 Specialty Care Visits $25 $25 $25 $25 $25 $25 Diagnostic X-Ray and Lab $0 $0 $0 $0 $0 $0 MRI, CT, and PET Scans $0 $0 $0 $100 $0 $0 Preventive Care $0 $0 $0 $0 $0 $0 Durable Medical Equipment 20%20%20%20%20%20% Emergency Room $100 $100 $100 $100 $100 $200 Prescription Drug Retail Generic $10 $10 $10 $10 $10 $10 Brand $20 $20 $20 $20 $20 $20 Specialty 20%20%20%20%20%20% Rate Decrease from Option Change -.50%-.10%-.15%-.20%-1.00% 19 2017 Tier Name 2018 Tier Name 2018 Description Generic Tier 1 Most Generic Drugs or low-cost, Preferred Brand Drugs Formulary Brand Tier 2 Preferred Brand Drugs or Non-preferred Generic Drugs Non-Formulary Brand Tier 3 Non-preferred Brand Drugs, or Non-preferred Generic Drugs Specialty Tier 4 Specialty Drugs or net drug cost per prescription > $600 Blue Shield Changes -Mandated 20 Appendix 21 Active Plan Rate History 1 1 Anthem PPO benefit designs were modified in 2014. Mental health component was carved back in with Anthem in 2014 which was originally carved out to Optum for both HMO and PPO plans. 2 Benefit designs for both Anthem and Kaiser HMO are modified in 2015. 3 In 2016, Anthem was replaced with Blue Shield of California. 8.6% 9.5% 3.6% 9.5%9.6% 8.2% 4.0% 5.0% 3.6% 6.3% 1.6% 4.1% 19.8% 5.0% 9.4% 0.0% 7.4% 8.3% 11.9% 10.7%9.9% 6.8% 1.1% 8.1% 3.9% 1.1% 2.5% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2014 ¹2015 ²2016 ³2017 2018 Average Active Plan Rate History Kaiser HMO Kaiser DHMO Anthem/Blue Shield PPO Anthem/Blue Shield Full HMO Blue Shield Narrow HMO 22 Active Plan Rate for Single Employee –Rate History 2014 2015 2016 2017 2018 Kaiser HMO $358.50 $392.55 $406.68 $445.31 $487.98 Kaiser DHMO $284.79 $299.03 $309.79 $329.44 $334.78 Anthem/Blue Shield PPO $482.66 $506.78 $554.19 $554.19 $594.93 Anthem/Blue Shield HMO $432.97 $479.35 $527.03 $563.03 $568.95 Blue Shield Narrow HMO $441.83 $459.11 $463.93 $- $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 Active Rate History 23 Retiree Plan Rate History 1 Anthem PPO benefit designs were modified in 2014. Mental health component was carved back in with Anthem in 2014 which was originally carved out to Optum for both HMO and PPO plans. 2 Benefit designs for both Anthem and Kaiser HMO are modified in 2015. 3 In 2016, Anthem was replaced with Blue Shield of California. 16.2% 9.5% 15.0%15.1%15.0%14.2% -8.6% 23.0% 7.6% 4.1% 2.4% 5.7% 16.2%15.6%15.0%14.8%15.0%15.3% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 2014 ¹2015 ²2016 ³2017 2018 Average Retiree Plan Rate History Kaiser HMO Anthem/Blue Shield PPO Kaiser DHMO 24 Retiree Plan Rate for Single Retiree –Rate History 2014 2015 2016 2017 2018 Kaiser HMO $859.25 $940.88 $1,082.01 $1,245.38 $1,432.19 Anthem/Blue Shield PPO $760.96 $935.86 $1,006.76 $1,048.38 $1,073.10 Kaiser DHMO $703.99 $814.09 $936.20 $1,074.97 $1,236.22 $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 Retiree Rate History 25 Medicare Advantage Plan Rate History 1 In 2016, Anthem was replaced with Blue Shield of California. 4.8% 1.2%0.2%1.0% 7.2% 2.9% -5.5% 4.6% -29.9% -22.0% 11.5% -8.3% -35.0% -30.0% -25.0% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 2014 2015 2016 ¹2017 2018 Average Medicare Advantage Plan Rate History Kaiser Senior Advantage Anthem/Blue Shield Medicare Advantage 26 Medicare Advantage Plan Rate for Single Retiree –Rate History 2014 2015 2016 2017 2018 Kaiser Senior Advantage $209.11 $211.64 $212.00 $214.22 $229.69 Anthem/Blue Shield MC Advantage $572.48 $598.68 $419.38 $327.29 $364.95 $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 Medicare Advantage Rate History 27 Enrollment for Active Plans Blue Shield Full HMO, 178, 13.3% Blue Shield Narrow HMO, 73, 5.4% Blue Shield PPO, 638, 47.5% Kaiser HMO, 436, 32.5% Kaiser DHMO, 18, 1.3% 2017 Enrollment -Actives Blue Shield Full HMO, 182, 13.2% Blue Shield Narrow HMO, 79, 5.7% Blue Shield PPO, 640, 46.4% Kaiser HMO, 467, 33.9% Kaiser DHMO, 11, 0.8% 2016 Enrollment -Actives 28 Enrollment for Retiree Plans Blue Shield PPO, 415, 99.0% Kaiser HMO, 4, 1.0% Kaiser DHMO, 0, 0.0% 2016 Enrollment –Retirees Blue Shield PPO, 426, 99.3% Kaiser HMO, 3, 0.7% Kaiser DHMO, 0, 0.0% 2017 Enrollment –Retirees 29 Enrollment for Medicare Advantage Plans Blue Shield Medicare Advantage, 15, 9.6% Kaiser Senior Advantage, 142, 90.4% 2016 Enrollment -Medicare Advantage Blue Shield Medicare Advantage, 19, 11.2% Kaiser Senior Advantage, 150, 88.8% 2017 Enrollment -Medicare Advantage 30 Financial Ratings for 2018 Renewals Company Rating Agency Rating Blue Shield of California Life & Health Insurance Company A.M. Best A HealthComp Not Rated Not Rated Kaiser Foundation Health Plan, Inc.Standard & Poor’s AA- Medical Eye Services, Inc.Not Rated Not Rated United Concordia Dental Plans of California, Inc.A.M. Best A- Unum Life Insurance Company of America A.M. Best A Voya Insurance and Annuity Company A.M. Best A 31 Segal believes it is important to consider the financial strength of insurance companies and managed care organizations, which are candidates for initial selection or renewal as insurers or service providers to employee benefit plans. Therefore, we are providing the current claims paying ability rating that was available to us on the date this document was prepared for the insurance company or managed care organization under consideration. When available, we select Standard & Poor’s because of its excellent overall reputation as a rating service. In addition, it evaluates more insurance companies than any of the other comparable rating services. Several other rating services (e.g., Duff & Phelps, Moody’s, and A.M. Best) also provide claims paying ability evaluations of insurance companies and managed care organizations, which we provide when a Standard & Poor’s rating is not available. You may wish to consult these other services before making a decision regarding the initial selection or renewal of an insurance company or managed care organization. Insurance company and managed care organization rating categories explanations are attached. For example, Standard & Poor’s ratings range from “Vulnerable” to “Secure”. In particular, they regard “vulnerable” companies (i.e., ratings of BB+ and lower) to be at relatively serious risk in terms of meeting both claims and creditor obligations. Insurance companies in this category should be researched carefully before being selected. To the right is a chart, which explains the Standard & Poor’s rating categories. (Duff & Phelps uses the same rating system as Standard & Poor’s; A.M. Best’s rating system is shown in parentheses). Financial Ratings Investment Grade or Secure: AAA (A++)Companies rated AAA have the highest rating assigned. Capacity to pay interest and repay principal is extremely strong. AA (A+)Companies rated AA have a very strong capacity to pay interest and repay principal and differ from the highest rated issuers only to a small degree. A (A, A-)Companies rated A have a strong capacity to pay interest and repay principal, although they are somewhat more susceptible to adverse changes in economic conditions than those in higher rated categories. BBB (B++, B+)Companies rated BBB are regarded as having an adequate capacity to pay interest and repay principal, however, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal. Below Investment Grade or Vulnerable: BB (B) B (B-) CCC (C++, C+) CC (C, C-) Companies rated BB, B, CCC and CC are regarded, on balance, as speculative with respect to their credit worthiness. While such companies may have some protective characteristics, uncertainties and major risk exposure or adverse conditions outweigh them. R; NR The rating R is reserved for companies who “have experienced a REGULATORY ACTION regarding solvency.” The rating NR indicates that the insurer’s financial solvency is not rated. 32 Kaiser HMO Experience 33 Kaiser HMO Experience 34 Kaiser Inpatient Per Member Per Month Costs 35 Kaiser Inpatient Top 10 Diagnosis Related Group 36 Kaiser Outpatient Per Member Per Month Costs 37 Kaiser Pharmacy Per Member Per Month Costs 38 Kaiser Pharmacy Utilization by Drug Classes 39 Kaiser Top 25 Drugs by Net Claims 40 Kaiser Top 25 Drugs by Net Claims (continued) 41 Kaiser Top 25 Drugs by Net Claims (continued)