Loading...
HomeMy WebLinkAbout2004 From: Carroll Hayden To: Jean Parks Date: 8/25/2004 9:52:12 AM Subject: Re: Is Monday okay? Please drop the recommended by Insurance cte. from the agenda, so they can be free to develop their own recommendations after hearing the InsuranCe cte.'s recommendations. >>> Jean Parks 8/25/2004 9:45:00 AM >>> Carroll, Harold, Irma and Mark have all confirmed they can meet on Monday, Aug 30th. Mark is requesting it be at 4:15 p.m., so I will let Harold and Irma know we ,heed to make it at 4:15. I will finish the agenda summary for August 19th this morning and get it to you. The wording I have for the agenda is: Review and Committee recommendation on 2005 health insurance plan design changes recommended by the Insurance Committee. Would you please let melknow if that is okay or what changes are needed. Thanks. >>> Carroll Hayden 8/25/2004 9:12:33 AM >>> Yes, please set it up. Thank you. >>> Jean Parks 8/25/2004 8:31:59 AM >>> Harold Hanson just called and said he could notlfit a Personnel Committee meeting in his calendar on Wednesday, Sept 1. , He can do Monday, August 30th at 4:00--would rather not do Friday, Sept 3rd. Wants to stay away from 4:00 o'clock meetings on Fridays if possible. Page 1 of 1 Jean Parks - RE: Personnel Committee meeting From: "Mark Salvaggio" <msalvaggio@arvin-do.com> To: ".lean Parks" <.lparks@ci.bakersfield.ca.us> Date: 8/25/2004 9:33 AM Subject: RE: Personnel Committee meeting okay, but 4:15. ..... Original Message ..... From-' Jean Parks [mailto;Jparks@ci.bakersfield.ca.us] Sent-' Wednesday, August 25, 2004 9:31 AlVl To-' Mark Salvaggio Subject-' Personnel Committee meeting Harold Hanson called this morning--he spoke with Carroll yesterday. He would like to have a Personnel Committee meeting. Can you meet on Monday, August 30th at 4:00 p.m.? We can probably slide it to 4:15 if you cannot make it at 4:00. Irma said she is available to meet on Monday. ~e://C:~D~cuments%2~and%2~Settings\jparks.BAKERSFIELD\L~ca~%2~Settings\Temp\~... 8/25/2004 From: Alan Tandy To: Jean Parks Date: 8/20/2004 1:24:35 PM Subject: Re: Can we set a Personnel Committee Meeting ok to meet without me >>> Jean Parks 8/20/04 11:32:51 AM >>> Carroll said: Review and Committee recommendation on 2005 health insurance plan design changes recommended by the Insurance Committee. The Insurance Committee is meeting on Friday, August 27th. >>> Alan Tandy 8/20/2004 11:26:17 AM >>> what is on the agenda? . >>> Jean Parks 8/20/04 11:15:00 AM >>> Carroll called and requested we set a Personnel Committee meeting the week of August 30th. You will be on vacation. Is it okay to set one or would you prefer to be here. /~. ,,¢. /~¢. /7. /~. ~/. From: Alan Tandy To: Jean Parks Date: 8/13/2004 12:46:59 PM Subject: Re: Personnel Committee yes to meeting- no to other items >>> Jean Parks 8/13/04 11:32:32 AM >>> Carroll said Harold wants a Personnel Committee meeting as soon as possible. Is it okay to set one up. The consultants are available next week on Thursday the 19th at 4:00 p.m. Do you have other agenda items beside the Health Insurance Plans Status; 2005 Projections? } ~, J~i'S FILE COPY From: Carroll Hayden To: Jean Parks Date: 6/8/2004 11:04:20 AM Subject: Re: Question on Personnel agenda It is just informational at this time. >>> Jean Parks 6/8/2004 10:45:56 AM >>> Do we want to give the Committee the opportunity to make recommendations? or is this just an informational meeting this time? If the Committee is going to make recommendations, we need to add that wording into the agenda item. I~Jean Parks - Re: Personnel Committee Me~t n~ From: Carroll Hayden To: Jean Parks Date: 6/2/2004 11:39:10 AM Subject: Re: Personnel Committee Meeting The consultants are free, so we can consider the date confirmed. Thanks for Harold's message and for setting up the meeting. >>> Jean Parks 6/2/2004 11:21:48 AM >>> Alan is available and Harold, Irma and Mark can meet on Friday, June 18th at 12:30 p.m. Do you need to check with the consultants? or can we consider this as confirmed? Also, Harold wanted me to pass along that he would like to get any information available a few days before the meeting, so he can come prepared. REQUEST FOR PROPOSALS GENERAL INFORMATION The City of Bakersfield is seeking proposals from experienced consultants to research, analyze, make recommendations and assist in the implementation of a multi-year strategy for a multi-faced health insurance program for its employees. The consultant will work closely with Human Resources staff, City Council members and the Joint City Insurance Committee, a meet and confer group made up of the City's seven employee groups and retirees. The following will be required of the Health Care Consultant: · Ability to analyze our present health care plans for any cost saving opportunities and make recommendations regarding implementing any changes. · Ability to analyze alternative/additional health care choices to improve our benefit package and contain costs. · Ability to act as the City's liaison With health care vendors and negotiate contract renewals or changes. · Ability to provide benefit recommendations in conformance with current state and federal laws and regulations. · Attendance at numerous City Council meetings, Insurance Committee meetings and meetings of the Personnel Committee of the City Council. · Ability to work with City staff to keep them informed of benefit strategies and plan design changes. ·Ability to account and report on the City's plan experience and analyze financial reports provided by vendors. ·Ability to provide legal advice and training to Human Resources staff as state and/or legal statutes change, requiring new/changed mandates. The proposal shall address these considerations and shall include: · An outline of the method to be used in developing the City's health care strategy. · A resume of the primary person responsible for the account. · Resumes of the primary persons responsible for the account. · A current client reference list. Proposed fees and conditions; the City desires service on a not-to-exceed, flat fee basis for items required above. Fees for any additional proposed services should be provided in detail. · An executed sample contract. (Attached) · Experience with retiree health plans.' · Experience with public agencies and labor unions. The City currently has approximately 1,300 full time employees and 300 retirees for whom health coverage is provided. The City currently has contracts with the following health care providers: MEDICAL VISION HMO & Indemnity (PPO) Plan Medical Eye Services Blue Cross of California Karen Carnakis, Regional Manager ((HMO) California Care) PO Box 25209 Nina Billinger, Manager Group Santa Ana CA 92799 sales 499 W Shaw Ave Ste 108 Fresno CA 93704 HMO Plan LIFE INSURANCE Kaiser Permanente Ruth Bouchard, Senior Account Fort Dearborn Life Insurance Co. Manager Stan Erickson, Regional Vice 5055 California Ave Ste 110 President Bakersfield CA 93309 1611 116th Avenue NE, Ste. 224 Bellevue WA 98004-3024 DENTAL LONG TERM DISABILITY Pacific Union Dental Glen Davis, Contract Analysis Unum Bonita Wiley-Brown, Catherine Conrad, Account 1390 Willow Pass Road Ste 800 Consultant Concord CA 94520-5240 655 North CentralAve Ste. 1200 Glendale CA 91203-1400 Blue Cross of California SECTION 125 FLEXIBLE BENEFITS Nina Billinger, Manager Group Sales HealthComp 499 W Shaw Ave Ste 108 Sylvia De La Torre, Manager Fresno CA 93704 PO Box45018 Fresno CA 93718-5018 Dedicated Dental Systems Holly Vonderhaarh, Account EMPLOYEE ASSSISTANCE PLAN Manager AND MENTAL HEALTH PLAN 3990 Ming Ave Bakersfield CA 93309 Pacificare Behavioral Health Nicole Freeman, LCSW Account Manager 3100 Lake Center Drive, Mail Stop LC03-225 Santa Ana CA 92704 The consultant selected to provide these services shall be prohibited from performing as a broker with any provider for the City of Bakersfield during the term of their contract. If you are interested in submitting a proposal to conduct this service, you must do so no later than September 8, 2004. Submit 5 copies of your proposal. It is anticipated that a decision shall be made as to whom the consultant contract shall be awarded to by the end - of 2004 and services shall begin immediately thereafter as determined by the City Council. Proposals are to be submitted to: Carroll Hayden Human Resources Manager City of Bakersfield 1501 Truxtun Avenue Bakersfield, CA 93301 and are to be received no later than September 8, 2004 at 5:00 P.M. Late proposals will not be accepted. " t AGREEMENT NO. CONSULTANT'S AGREEMENT THIS AGREEMENT is made and entered into on , by and between the CITY OF BAKERSFIELD, a municipal corporation ("CITY" herein), and BUCK CONSULTANTS ("CONSULTANT" herein). RECITALS WHEREAS, the CITY issued a Request for Proposals and CONSULTANT has submitted a proposal concerning employees health care plan analysis and recommendation, said Request for Proposal are incorporated herein by reference; and WHEREAS, CONSULTANT represents CONSULTANT is experienced, well qualified and a specialist in employee benefit consulting; and WHEREAS, CONSULTANT is required and does currently have errors and omissions insurance which will protect the City of Bakersfield in the event of professional errors or omissions by the CONSULTANT; and WHEREAS, the CITY does not have expertise currently on staff to conduct an analysis, recommend and implement a multi-year strategy to control health care costs for active and retired employees; and WHEREAS, CONSULTANT is aware that information may come into CONSULTANT's possession which may impact the CITY's legal position in the event such information was released to outside parties, NOW, THEREFORE, incorporating the foregoing recitals herein, CITY and CONSULTANT mutually agree as follows: 1. SCOPE OF WORK. The scope of work is described as: Analyzing, recommending, and implementing a multi-year strategy to control health care coSts for. active and retired employees. The scope of'work shall include all items contained in CONSULTANT's Proposal and CITY's Request for Proposals. CONSULTANT's Proposal and CITY's Request for Proposals are incorporated herein by reference as though fully set forth. CONSULTANT's services will include all the procedures necessary to properly complete the task CONSULTANT has been hired to perform whether specifically included in the scope of work or not. 2. COMPENSATION. Compensation for all work, services or products called for under this Agreement shall consist of a total payment of Dollars ($ ) which shall be paid as follows: S:~Karen~AGREEMENTS\Buck Consultants agree draft 2004.doc -- Page I of 8 Pages -- The compensation set forth in this section shall be the total compensation under this Agreement including, but not limited to, all out-of-pocket Costs and taxes. CITY shall pay only the compensation listed unless otherwise agreed to in writing by the parties. 3. PAYMENT PROCEDURE. CONSULTANT shall be paid for services rendered after receipt of an itemiZed invoice for the work completed and approved by CITY in accordance with the terms of this Agreement. Payment by CITY to CONSULTANT shall be made within thirty (30) days after receipt and approval by CITY of CONSULTANT's itemized invoice. 4. KEY PERSONNEL. At request of CITY, CONSULTANT shall name all key personnel to be assigned to the work set forth herein. CONSULTANT shall provide background for each of the key personnel including, without limitation, resumes and work experience in the type of work called for herein. CITY reserves the right to approve key personnel. Once the key personnel are approved CONSULTANT shall not change such personnel without the written approval of CITY. 5. INCLUDED DOCUMENTS. Any bid documents, including, without limitation, special provisions and standard specifications and any Request for Proposals, Request for Qualifications and responses thereto relating to this Agreement are incorporated by reference as though fully set forth. 6. STARTING WORK. CONSULTANT shall not begin work until authorized to do so in writing by CITY. No work will be authorized until the contract has been fully executed by CONSULTANT and CITY. 7. TITLE TO DOCUMENTS. All documents, plans and drawings, maps, photographs and other papers, or copies thereof prepared by CONSULTANT pursuant to the terms of this Agreement shall, upon preparation, become the property of CITY. 8. LICENSES. CONSULTANT shall, at its sole cost and expense, keep in effect or obtain at all times during the term of this Agreement any licenses, permits and approvals which are legally required for CONSULTANT to practice its profession. 9. CONFIDENTIALITY. During the term of this Agreement, CONSULTANT will be dealing with information of a legal and confidential nature, and such information could severely damage CITY if disclosed to outside parties. CONSULTANT will not disclose to any person, directly or indirectly, either during the term of this Agreement or at any time thereafter, any such information or use such information other than as necessary in the course of this Agreement. All documents CONSULTANT prepares and confidential information given to CONSULTANT under this Agreement are the exclusive property of the CITY. Under no circumstances shall any such information or documents be removed from the CITY without the CITY's prior wdtten consent. 10. NEWS RELEASES/INTERVIEWS. All news releases, media interviews, testimony at hearings and public comments relating to this Agreement by CONSULTANT shall be prohibited unless authorized by CITY. S:\Karen~,GREEMENTS\Buck Consultants agree draft 2004.doc -- Page 2 of 8 Pages -- 11. NO WAIVER OF DEFAULT. The failure of any party to enforce against another party any provision of this Agreement shall not constitute a waiver of that party's right to enforce such a provision at a later time, and shall not serve to vary the terms of this Agreement. 12. GOVERNING LAW. The laws of the State of California will govern the validity of this Agreement, its interpretation and performance. Any litigation arising in any way from this Agreement shall be brought in Kern County, California. 13. FURTHER ASSURANCES. Each party shall execute and deliver such papers, documents and instruments, and perform such acts as are necessary or appropriate, to implement the terms of this Agreement and the intent of the parties to this Agreement. 14. NOTICES. All notices relative to this Agreement shall be given in writing and shall be personally served or sent by certified or registered mail and be effective upon depositing in the United States mail. The parties shall be addressed as follows, or at any other address designated by notice: CITY: CITY OF BAKERSFIELD City Hall 1501 Truxtun Avenue Bakersfield, California 93301 CONSULTANT: 15. ASSIGNMENT. Neither this Agreement, nor any interest in it, may be assigned or transferred by any party without the prior written consent of all the parties. Any such assignment will be subject to such terms and conditions as CITY may choose to impose. 16. BINDING EFFECT. The dghts and obligations of this Agreement .shall inure to the benefit of, and be binding upon, the parties to the contract and their heirs, administrators, executors, personal representatives, successors and assigns, and whenever the context so requires, the masculine gender includes the feminine and neuter, and the singular number includes the plural. This Agreement may be executed in any number of counterparts, each of which shall be considered as an original and be effective as such. 17. EXHIBITS. In the event of a conflict between the terms, conditions or specifications set forth in this Agreement and those in exhibits attached hereto, the terms, conditions or specifications set forth in this Agreement shall prevail. All exhibits to which reference is made in this Agreement are deemed incorporated in this Agreement, whether or not actually attached. S:\KarenV~,GREEMENTS\Buck Consultants agree draft 2004.doc -- Page 3 of 8 Pages -- 18. MERGER AND MODIFICATION. This contract sets forth the entire Agreement between the parties and supersedes all other oral or written representations. This contract may be modified only in a writing approved by the City Council and signed by all the parties. 19. CONFLICTS OF INTEREST. CONSULTANT stipulates that corporately, or individually, the firm, its employees and subconsultants have no financial interest in either the success or failure of any project which is dependent upon the result of the work prepared pursuant to this Agreement. 20. CORPORATE AUTHORITY. Each individual signing this Agreement on behalf of entities represents and warrants that they are, respectively, duly authorized to sign on behalf of the entities and to bind the entities fully to each and all of the obligations set forth in this Agreement. 21. TERMINATION FOR CAUSE. If at any time CITY becomes dissatisfied with the performance of CONSULTANT under this Agreement, CITY may terminate this Agreement on ten (10) days written notice. Wdtten notice shall be given pursuant to the "Notices" paragraph of this Agreement. In the event of early termination,' CONSULTANT shall be compensated only for work satisfactorily completed up to the date of termination and delivered to and accepted by CITY. 22. COMPLIANCE WITH ALL LAW~. CONSULTANT shall, at CONSULTANT's sole cost, comply with all of the requirements of Municipal, State and Federal authorities now in force, or which may hereafter be in force, pertaining to this Agreement, and shall faithfully observe in all activities relating to or growing out of this Agreement all Municipal ordinances and State and Federal statutes, rules or regulations and permitting requirements now in force or which may hereafter be in force including, without limitation, obtaining a City of Bakersfield business tax certificate (Bakersfield Municipal Code Chapter 5.02) where required. 23. INDEPENDENT CONTRACTOR. This Agreement calls for the performance of the service of CONSULTANT as an independent contractor. CONSULTANT is not an agent or employee of CITY for any purpose and is not entitled to any of the benefits provided by CITY to its employees. This Agreement shall not be construed as forming a partnership or any other association with CONSULTANT other than that of an independent contractor. 24. DIRECTION. CONSULTANT retains the right to control or direct the manner in which the services described herein are performed. 25. EQUIPMENT. CONSULTANT will supply all equipment, tools, materials and supplies necessary to perform the services under this Agreement. 26. INSURANCE. In addition to any other insurance or bond required under this Agreement, the CONSULTANT shall procure and maintain for the duration of this Agreement the following types and limits of insurance ("basic insurance requirements" herein): S:\KarenW, GREEMENTS\Buck Consultants agree draft 2004.doc -- Page 4 of 8 Pages -- 26.1 Professional liability insurance, providing coverage on claims made basis for errors and omissions with limits of not less than One Million Dollars ($1,000,000) aggregate; and 26.2 Automobile liability insurance, providing coverage on an occurrence basis for bodily injury, including death, of one or more persons, property damage and personal injury, with limits of not less than One Million Dollars ($1,000,000) per occurrence; and the policy shall: 26.2.1 Provide coverage for owned, non-owned and hired autos. 26.3 Broad form commercial ,qeneral liability insurance, unless otherwise approved by the CITY's Risk Manager, providing coverage on an occurrence basis for bodily injury, including death, of one or more persons, property damage and personal injury, with limits of not less than One Million Dollars ($1,000,000) per occurrence; and the policy shall: 26.3.1 Provide' contractual liability coverage for the terms of this Agreement. 26.3.2 Contain an additional insured endorsement in favor of the CITY, its mayor, council, officers, agents, employees and volunteers. 26.4 Workers' compensation insurance with statutory limits and employer's liability insurance with limits of not less than One Million Dollars ($1,000,000) per occurrence; and the policy shall contain a waiver of subrogation in favor of the CITY, its mayor, council, officers, agents, employees and volunteers. 26.5 Except for professional liability, all policies required of the CONSULTANT shall be primary insurance as to the CITY, its mayor, council, officers, agents, employees or designated volunteers, and any insurance or self-insurance maintained by the CITY, its mayor, council, officers, agents, employees and designated volunteers shall be excess of the CONSULTANT's insurance and shall not contribute with it. 26.6 Except for workers' compensation, insurance is to be placed with insurers with a Bests' rating as approved by CITY's Risk Manager, but in no event less than A:V. Any deductibles, self-insurance retentions or insurance in lesser amounts, or lack of certain types of insurance otherwise required by this Agreement, or insurance rated below Bests' A:V must be declared prior to execution of this Agreement and approved by the CITY in writing. 26.7 Unless otherwise approved by CITY's Risk Manager, all policies shall contain an endorsement providing the CITY with thirty (30) days written notice of cancellation or material change in policy language or terms. All policies shall provide S:\Karen~,GREEMENTS\Buck Consultants agree draft 2004.doc -- Page 5 of 8 Pages -~ that there shall be continuing liability thereon, notwithstanding any recovery on any policy. Copies of policies shall be delivered to CITY on demand. 26.8 The insurance required 'hereunder shall be maintained until all work required to be performed by this Agreement is satisfactorily completed as evidenced by written acceptance by the CITY. 26.9 The CONSULTANT shall furnish the CITY's Risk Manager with a certificate of insurance and required endorsements evidencing the insurance required. The CITY may withdraw its offer of contract or cancel this contract if certificates of insurance and endorsements required have not been provided prior to the execution of this Agreement. 26.10 Full compensation for all premiums which the CONSULTANT is required to pay on all the insurance described herein shall be considered as included in the prices paid for the various items of work to be performed under this Agreement, arid no additional allowance will be made therefore or for additional premiums which may be required by extensions of the policies of insurance. 26.11 It is further understood and agreed by the CONSULTANT that its liability to the CITY shall not in any way be limited to or affected by the amount of insurance obtained and carried by the CONSULTANT in connection with this Agreement. 26.12 Unless otherwise approved by the CITY, if any part of the work under this Agreement is subcontracted, the "basic insurance requirements" set forth above shall be provided by, or on behalf of, all subcontractors even if the CITY has approved lesser insurance requirements for CONSULTANT. 27. THIRD PARTY CLAIMS. In the case of public works contracts, CITY will timely notify CONSULTANT of third party claims relating to this contract. CITY shall be allowed to recover from CONSULTANT, and CONSULTANT shall pay on demand, all costs of notification. 28. INDEMNITY. CONSULTANT shall indemnify, defend and hold harmless CITY, its officers, agents and employees against any and all liability, claims, actions, causes of action or demands whatsoever, against them, or any of them, before administrative or judicial tribunals of any kind whatsoever, arising out of, connected with, or caused by CONSULTANT, CONSULTANT's employees, agents, independent contractors, companies or subcontractors in the performance of, or in any way arising from, the terms and provisions of this Agreement whether or not caused in part by a party indemnified hereunder, except for CITY's sole active negligence or willful misconduct. 29. EXECUTION. This Agreement is effective upon execution. It is the product of negotiation and all parties are equally responsible for authorship of this Agreement. . Section 1654 of the California Civil Code shall not apply to the interpretation of this Agreement. S:\Karen~AGREEMENTS\Buck Consultants agree draft 2004.doc -- Page 6 of 8,Pages - 30. CONTRACT ADMINISTRATOR. The Contract Administrator for the CITY is: Carroll Hayden, Human Resources Manager CITY OF BAKERSFIELD 1501 Truxtun Avenue Bakersfield, California 93301 Telephone (661) CONSULTANT's Project Manager shall be: (Name of Project Manager) (Title of Project Manager) (Address) : Telephone ( ) 'i 30.1. The Contract Administrator and the Project Manager shall be the primary contact persons for CITY and CONSULTANT. It is expressly understood that only the City Council may approve modifications to the contract, which modifications must be in writing. 31. ACCOUNTING RECORDS. CONSULTANT shall maintain accurate accounting records and other written documentation pertaining to all costs incurred in performance of this Agreement. Such records and documentation shall be kept at CONSULTANT's office during the term of this Agreement, and for a period of three years from the date of the final payment hereunder, and said records shall be made available to CITY representatives upon request at any time during regular business hours. 32. TAX NUMBERS. CONSULTANT's Federal Tax ID Number CONSULTANT is a corporation? Yes ~ No ~ (please check one) 33. NON-INTEREST. No officer or employee' of CITY shall hold any interest in this Agreement (California Government Code section 1090). 34. RESOURCE ALLOCATION. All obligations of CITY under the terms of this Agreement are subject to the appropriation and allocation of resources by the City Council. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed, the day and year first above written. '"- S:\KarenV~GREEMENTS\Buck Consultants agree draft 2004.doc -- Page 7 of 8 Pages - "CITY" "CONSULTANT" CITY OF BAKERSFIELD' By: By: HARVEY L. HALL Mayor Type or Print Name: Title: APPROVED AS TO FORM: VIRGINIA GENNARO City Attorney By: (NAME AND TITLE) Insurance: APPROVED AS TO CONTENT: (CITY DEPARTMENT) By:, (DEPT. HEAD NAME AND TITLE) COUNTERSIGNED: By: GREGORY J. KLIMKO Finance Director S:\Karen~AGREEMENTS\Buck Consultants agree draft 2004.doc -- Page 8 of 8 Pages -- City of Bakersfield Commentary & Observations Introduction This report analyzes the City of Bakersfield's (City) claim and utilization results for its Blue Cross medical/Rx and dental indemnity benefit plans. We have not included financial information for the City's HMO plans. The report includes year-end 2003 results, preliminary projections and analysis for 2004 and 2005, plan financial summaries, medical PPO plan utilization indices and a brief prescription drug analysis. Where available, we have provided separate active and retired results. The information used in this report was provided by Blue Cross of California. We consider all 2004 and 2005 projections preliminary. Summary · Blue Cross' 2003 year-end accounting indicates a $26,784 surplus. In addition,the plan was credited with $6,973 in interest on the existing reserve. Together, this increases the accumulated surplus to $462,835 through 12/31/2003. · Projected 2004 year-end results indicate that the Blue Cross medical/Rx and dental plans will settle with an additional surplus of approximately $17,000. The preliminary plan year 2004 projections indicate a 12.9% overall renewal adjustment. The active medical/Rx renewal adjustment is projected at 21.3%, retiree medical/Rx is projected at -14.1%, and the dental is projected at 23.6%. · The 2003 active medical paid loss ratio was 77.6%, and is projected to increase to 88.1% in 2004. The 2003 retiree medical paid loss ratio was 64.3%, and is projected to increase to 67.1% in 2004. City of Bakersfield Commentary & Observations · The 2003 active employees' medical/Rx paid claims per employee per year (PEPY) decreased 1.1% to $5,175; 2004 active medical/Rx paid claims are projected to increase by 32.3% to $6,847 PEPY. The 2003 retired employees' medical/Rx claims PEPY decreased 23.7% to $7,241; 2004 retiree medical/Rx claims are projected to increase 21.6% to $8,806. The low increases are caused by the switch from the Kern network to the Blue Cross Prudent Buyer network in 2003. · The 2004 average benefit paid per claim increased 43.0% for active employees and decreased 5.9% for retired employees. The 2003 active benefit paid per admission increased 50.1%, whereas the retired benefit paid per admission increased 15.8% over the same period. · The 2003 average provider discount for active employees was 55.5%, compared to 57.8% for retired employees. Active employees paid 6.0% of 2002 eligible charges, while retired employees paid 2.5% of eligible charges. · Professional services represents the largest segment of active and retired employees' cost. 2003 inpatient services costs actually decreased for the retiree group. Professional services for active and retired employees increased 7.1% and decreased 21.0% for retirees. · For active employees, the number of 2003 admissions increased 8.2% to 79. The average length of stay (ALOS) increased 40.7% to 3.8. The number of admissions for retired employees increased decreased 37.0% to 17 during 2003. Likewise, the ALOS decreased 31.25% from 3.2 for 2002 to 2.2 for 2003. 2 City of Bakersfield Commentary & Observations · The 50 - 59 age group was most costly age group for the active employees, whereas the most costly age group for the retirees was 65 - 69. The 50 - 59 age group was the most costly age group for the dependents of active and retired employees. The most costly age groups for employees and dependents combined were the 50 - 59 group for the actives, and the 65 - 69 age group for the retirees. The 2003 dependent costs, as a percentage of total medical/Rx costs, for the active and retired employees were 63.6% and 25.9%, respectively. · 2003 prescription drug claims increased 23.8% to $1,385,794, compared to $1,119,018 for 2002. The proportion of total retail drug claims grew from 83.1% of claims to 83.9% of total claims and amounted to $1,163,190. Mail-order claims represented 16.1% of total claims and amounted to $222,604. · 2003 prescription drug claims PEPY increased 14.9% to $1,745.33 from $1,518.34 for 2002 due primarily to an 16.2% increase in PEPY retail prescription drug claims and decreasing utilization of mail-order services per script. · Cardiac drugs were the most costly category of drugs among the top 25 prescribed drugs by dollar volume and represented 17.5% of the claims. Cardiac drugs were the most prescribed category by total number of prescriptions, accounting for 23.7% of prescriptions. 3 City of Bakersfield Commentary & Observations Financial Results & Projections Blue Cross's 2003 year-end accounting showed a $26,784 surplus, which increases the accumulated surplus to $462,835. Total premium was $6,594,401, compared to total plan costs of $6,567,617. The active and retired employees' medical plan settled in a positive balance position. The dental plan settled in a slight negative positiOn. The plan was also credited with $6,973 in interest. Projected 2004 year-end results indicate that the Blue Cross medical/Rx and dental plans will settle in a slightly positive position with a surplus of $17,156. The medical/Rx plan is projected to settle with a $106,211 surplus, while the dental plan is projected to settle with a $89,055 deficit. Actual 2004 year-end results will vary based on emerging claim and utilization patterns. However, if the projections materialize, the accumulated surplus will increase to approximately $479,835 at the end of 2004. · The projected 2004 year-end results for the active medical/Rx plan indicate an $316,181 deficit; the projected 2004 year-end results for the retired medical/Rx plan indicate an $422,393 surplus. · Preliminary plan year 2005 projections indicate a 12.9% overall renewal adjustment for the medical and dental plans combined. We are projecting 2005 increases of 20% for both Kaiser and the Blue Cross HMO plan. The active medical/Rx renewal adjustment is projected at 21.3%, retiree medical/Rx is projected at-14.1%, and the dental is projected at 23.6%. The renewal projections are preliminary, and based on medical/Rx and dental claims through April 30, 2004. We will continue to update these projections as additional claims experience becomes available. 4 City of Bakersfield Commentary & Observations · Monthly medical premiums versus claims results for both active and retired employees remained unchanged in 2003. Overall monthly dental premiums versus claims results have been worsening. · The monthly medical paid loss ratio for the active and retired employees continues to fluctuate month to month. The active medical paid loss ratio was increasing throughout 2003; in addition, the retiree paid loss ratio was volatile but flat. The dental loss ratio was more volatile than the medical group. Paid loss ratio fluctuations are typical for similarly sized employer groups. · The 2003 active medical paid loss ratio decreased to 77.6% from 84.2% in 2002; the 2004 active paid loss ratio is projected to increase to 88.1%. The 2003 retiree medical paid loss ratio decreased to 64.3% from 88.8% for 2002; the 2004 retiree paid loss ratio is projected to be 67.1%. · The 2003 active employees' medical/Rx paid claims PEPY decreased 1.1% to $5,175, compared to $5,232 PEPY for 2002. 2004 active medical/Rx paid claims are projected to increase 32.3% to $6,847 PEPY. The low increase for 2003 is due to the change from the Kern Foundation provider network to the Prudent Buyer network in 2003. · The 2003 retired employees' medical/Rx claims PEPY decreased 32.3% to $8,806, compared to $9,490 PEPY for 2002. 2004 retiree medical/Rx claims are projected to increase 11.9% to $9,856. The low increase for 2003 is due to the change from the Kern Foundation provider network to the Prudent Buyer network in 2003. · The 2003 paid loss ratio for the active employees is 95.0% (medical/Rx and dental), while the retired employees' paid loss ratio is 77.2%. 5 City of Bakersfield Commentary & Observations Plan Utilization Summary · A majority of the City's active employee claims continue to be incurred by dependents. For 2003, 63.6% of the active employees' claims were incurred by dependents, while 36.4% were incurred by City employees. This compared 2002 results of 65.5% and 34.5% for dependents and employees, respectively. · A majority of the City's 2003 retired employee claims were incurred by the retired employees. For 2003, 74.1% of the retired employees' claims were incurred by retired City employees, while 25.9% were incurred by dependents. This compared to 2002 results of 64.3% and 35.7% for retired employees and dependents, respectively. · The 2003 average benefit paid per claim for all employees increased 29.7% to $186.10, compared to $143.53 for 2002. This increase was driven by increases to the active benefit paid per claim partially offset by a decrease in the retiree benefit paid per claim. The active benefit paid per claim increased 43.0% to $179.29 compared to $125.35 for 2002. The retired employees benefit per claim decreased 5.9% to $219.41, compared to $179.29 for 2002. · The 2003 average provider discount for active employees was 55.5%, compared to 51.6% for 2002. The 2003 average provider discount for retired employees was 57.8%, compared to 47.6% for 2002. The average provider discount includes both professional and hospital charges. 6 City of Bakersfield Commentary & Observations · Employees and retirees combined paid 5.4% of 2003 eligible charges, compared to 4.3% for 2002. For 2003, the plan paid 38.7% and provider discounts averaged 55.9%. For 2002, the plan paid 45.1% and provider discounts averaged 50.6%. · Active employees paid 6.0% of eligible charges in 2003, compared to 4.8% in 2002. For 2003, the plan paid 38.5% and provider discounts averaged 55.5%. For 2002, the plan paid 43.6% and provider discounts averaged 51.6%. · Retired employees paid 2.5% of 2003 eligible plan charges, compared to 2.7% for 2002. For 2003, the plan paid 39.6% and provider discounts averaged 57.8%. For 2002, the plan paid 49.7% and provider discounts averaged 47.6%. Benefits Paid by Medical Service · Benefits paid for professional services represents the largest segment of active employees' 2003 medical costs at $1,746,919 or 57.6% of medical benefits paid. 2002 professional services benefits paid were $1,630,598 or 65.2% of total benefits paid. Outpatient services increased 48.9% to $476,591 for 2003 from $320,165 for 2002. · Benefits paid for professional services also represents the largest segment for retired employees' medical costs at $362,922, or 51.3% of total benefits paid. This was higher than the 2002 professional services paid of $496,832 or 52.2% of total benefits paid. Outpatient benefits paid for retirees decreased to $166,368, or 23.5% of total benefits paid, compared to $231,611 or 24.3% of total benefits paid for 2002. 7 City of Bakersfield Commentary & Observations Inpatient Utilization Statistics · The 2003 benefit paid per admission was up slightly for active and retired employees combined. The 2003 active benefit paid per admission increased 50.1% to $7,644, compared to $5,092 for 2002; the 2001 benefit paid per admission was $3,897. The 2003 retired benefit paid per admission increased 15.8% to $7,035, compared to $6,077 for 2002; the 2001 retired benefit paid per admission was $7,934. · Total 2003 hospital bed days decreased 30.5% to 328, compared to 472 for 2002. Active employee bed days increased significantly to 301, from 242 for 2002 (2001 bed days were 161). 2003 retired employee bed days declined by nearly 88.3% to 27, from 230 for 2002 (2001 bed days were 88). · Total 2003 admissions - for all employees - decreased 4% to 96, from 100 in 2002. The 2003 ALOS for all employees increased to 3.5, from 2.8 for 2002. The ALOS was higher for medical services, higher for surgical, and lower for maternity services. This indicates that overall claim severity increased from 2002 levels. · Total active medical, surgical and maternity admissions for 2003 were 79, compared to 73 for 2002. Medical and maternity admissions increased from their respective levels of 16 and 10 for 2002 to 20 and 16 for 2003. Surgical admissions decreased slightly from 47 for 2002 to 43 for 2003. The ALOS for all services increased from 2.7 for 2002 to 3.8 for 2003. The ALOS was higher for medical and surgical services, and lower for maternity services. 8 City of Bakersfield Commentary & Observations · Total retiree medical, surgical and maternity admissions for 2003 increased to 17, compared to 27 for 2002. 2003 medical and surgical admissions decreased; there were no maternity admissions. The 2003 ALOS for all services decreased to 2.2, compared to 3.2 in 2002. The ALOS was higher for medical services and lower for surgical services. Benefit Paid by Member/Age · The 50 - 59 age group, with approximately 32% of total benefit paid, represented the most costly age category for the combined active and retired employees. The 50 - 59 age category remained the most costly category for active and retired employees. · For 2003, dependents - for active and retired employees combined - the less than 20 age group continued to have the highest dependent costs, which was followed by the 50 - 59 age group and the 40 - 49 age group. Employees in the 50 - 59 age group continued to be the most costly. · For 2003, dependents - for active employees - the less than 20 age group continued to be the most costly group, which was followed by the 40 - 49 and 50 - 59 age groups. Employees in the 50 - 59 age group were most costly. · For 2003, dependents - for retired employees - the 50 - 59 dependent age group continued to be the most costly group, which was followed by the 60 - 64 age group. Retired employees in the 50 - 59 age group were the most costly. 9 City of Bakersfield Commentary & Observations Prescription Drug Utilization Analysis 2003 prescription drag paid claims increased 23.8% to $1,385.794, compared to $1,119,018 for 2002. The proportion of mail-order claims decreased in 2003. 2003 mail-order paid claims represented 16.1% or $222,604 of total drug claims. 2002 mail-order claims were 16.9% or $189,546, of total drug claims. Retail drug claims increased 25.1% to $1,163,190, compared to $929,472 for 2002. Retail claims as a percent of total claims grew from the 2002 level of 83.1% to 83.9% for 2003. Total 2003 prescription drug claims PEPY increased 14.9% to $1,745.33 from $1,518.34 for 2002. 2003 mail-order claims PEPY increased 9.0% from $257.19 to $280.36, whereas retail claims grew 16.2% from $1,261.16 to $1,464.47. The percentage of mail-order prescriptions to the total number of prescriptions decreased from 9.1% to 8.1%, while the actual number of mail-order prescriptions increased 10.1% to from 2,073 to 2,282. Retail prescriptions increased 23.9% from 20,823 for 2002 to 25,802 for 2003. The total number of prescriptions increased 22.7% from 22,896 for 2002 to 28,084 for 2003. We would expect the City's mail-order usage to be higher than normative data based on the relatively high population covered by the medical/Rx program. The 2003 total paid claims per script increased a modest 1.0% from $48.87 in 2002 to $49.34 in 2003. This increase was the result of a 1.0% increase in retail claims per retail script, whereas mail order claims rose 6.7% per mail order script. In dollars, retail and mail-order claims were $44.64 and $91.44 for 2002, and $45.08 and $97.55 for 2003. 10 City of Bakersfield Commentary & Observations · Prescription drug utilization increased 13.8% in 2003. Overall, scripts per employee per year increased from 31.1 in 2002 to 35.4 for 2003. Retail prescriptions for 2002 and 2003 increased 14.8% from 28.3 to 32.5 per employee per year, whereas mail-order prescriptions increased slightly from 2.8 to 2.9 per employee per year. · A relatively low percentage of dispensed pharmacy prescriptions were for generic drugs. For 2003, 38.6% of all dispensed drugs were generic drugs, compared to 35.5% for 2002. The 2003 retail generic drug.dispensing rate was 39.3% compared to 36.1% for 2002. The 2003 mail-order genetic dispensing rate was 30.5% compared to 28.7% for 2002. All of these results are below national averages of 43%-44% for combined retail and mail-order scripts, 41% for retail scripts and 48% for mail-order scripts. · The 2003 top 5 prescribed drug categories (based on the top 25 most costly drugs) were cardiac, psychiatric, antiulcer, respiratory, and antibiotic/infection antidiabetic drugs. Cardiac drugs, the most costly category for 2003, represented 17.5% of claims for the top 25 drugs, whereas respiratory drugs, the most costly category for 2002, represented 12.5% of claims. · The 2003 top 5 prescribed drug categories (based on the top 25 drugs by number of prescriptions) were cardiac, pain, psychiatric, respiratory, and antibiotic/infection drugs. Cardiac drugs had the highest volume and accounted for 23.7% of prescriptions. Cardiac drugs was the most prescribed category for 2002. The general relative use by category increased substantially unchanged between 2002 and 2003 by approximately 23.1%. 11 City of Bakersfield Blue Cross 2003 Results Blue Cross 2003 Year-End Result 1. Total Premium $6,594,401 2. Incurred Charges $6,098,255 a. Paid Claims $5,899,100 b. Pooled Claims ($244,730) c. Pooled Paid Claim Charge $443,220 d. Beginning Reserve ($788,664) e. Ending Reserve $789,329 3. Retention $469,362 4. Surplus/(Deficit) $26,784 5. Prior Year Surplus $429,078 6. Interest on Surplus $6,973 7. Accumulated Surplus @ 12/31/2003 $462,835 12 City of Bakersfield Projected 2004 Blue Cross Renewal Calendar Year 2004 Projection Medical PPO/Rx I Active Retiree Total Dental Total Paid Premium $5,060,819 $1,903,107 $6,963,926 $708,189 $7,672,116 Plan Costs Paid Claims $4,461,044 $1,276,856 $5,737,900 $733,290 $6,471,190 Reserve Adjustment $0 $0 $0 $0 $0 Plan Administration/Retention $355,250 $79,066 $434,316 $63,954 $498,270 Stop Loss $560,707 $124,793 $685,500 $0 $685,500 Total Expenses/Fees $5,377,001 $1,480,714 $6,857,715 $797,244 $7,654,959 Net Balance ($316,181) $422,393 $106,211 ($89,055) $17,156 Projected 2004 Enrollment 652 145 797 713 Projected PEPY Results (~ Paid Premium $7,768 $13,125 $8,743 $994 $9,737 Total Plan Cost $8,253 $10,212 $8,610 $1,119 $9,729 Loss Ratio 106.2% 77.8% 98.5% 112.6% 99.9% Notes: o) PEPY - Per Employee Per Year 13 City of Bakersfield Projected 2005 Blue Cross Results Calendar Year 2005 Projection Medical PPO/Rx Acti ~e Re ti ree Total Dental Total Plan Costs Paid Claims $5,027,911 $1,429,076 $6,456,986 $784,621 $7,241,607 Reserve Adjustment $0 $0 $0 $0 $0 Margin $150,837 $42,872 $193,710 $23,539 $217,248 Plan Administration/Retention $373,012 $83,019 $456,031 $67,152 $523,183 Stop Loss $588,742 $80,510 $669,252 $0 $669,252 Total Expenses/Fees $6,140,503 $1,635,477 $7,775,979 $875,311 $8,651,290 Projected 2005 Enrollment 652 145 797 713 Projected PI~Y Renewal Adjustment (' 2005 Projected Annual Costs $9,425 $11,279 $9,763 $1,229 $10,991 2004 Projected Annual Premium $7,768 $13,125 $8,743 $994 $9,737 Renewal Adjustnent 21.3% -14.1% 11.7% 23.6% 12.9% Notes: (~) PEPY - Per Employee Per Year © © © © © © © © 0 © © © © © © © © ©© © © © © © © © © © © City of Bakersfield Monthly Experience Results Active Retiree I[ Paid Claims Premium Paid Claims I Premium I Loss Medical Rx Dental Total Medical Rx Total Total I Ratio IJ Jan-03 $248,987 $100,935 $51,475 $401,397 $415 865 96.5% $82 632 $49,082 $131,714 $132,457 99.4% Feb-03 $286,019 $74,141 $63,574 $423,734 $418 943 101.1% $26 362 $30,953 $57,315 $140,609 40.8% Mar-03 $222,694 $74,040 $75,332 $372,066 $417 567 89.1% $69 433 $33,800 $103,233 $136,533 75.6% Apr-03 $230,722 $73,942 $100,935 $405,599 $420 068 96.6% $82 784 $32,269 $115,053 $126,344 91.1 % May-03 $222,326 $70,285 $56,257 $348,868 $420 393 83.0% $55 397 $33,669 $89,066 $126,344 70.5% Jun-03 $289,599 $69,987 $51,527 $411,113 $419 661 98.0% $69 957 $36,739 $106,696 $133,816 79.7% Jul-03 $193,811 $66,019 $59,340 $319,170 $415 483 76.8% $74 707 $33,249 $107,956 $137,212 78.7% Aug-03 $230,236 $114,101 $59,105 $403,442 $419 022 96.3% $53 156 $54,765 $107,921 $135,854 79.4% Sep-03 $227,676 $77,336 $63,672 $368,684 $419 400 87.9% $46 544 $36,340 $82,884 $129,740 63.9% Oct-03 . $290,283 $76,380 $55,478 $422,141 $417 065 101.2% $35 521 $39,962 $75,483 $136,533 55.3% Nov-03 $265,482 $73,831 $55,345 $394,658 $416,819 94.7% $43 594 $36,145 $79,739 $136,533 58.4% Dec-03 $323,557 $81,859 $59,922 $465,338 $385,615 120.7% $67,299 $38,528 $105,827 $138,571 76.4% YTDII $3,031,392 $952,856 $751,962 $4,736,210 $4,985,899 95.0%1111 $707,386 $455,501 $1,162,887 $1,610,547 72.2%11 23 City of Bakersfield Monthly Experience Results Paid Claims Prenimn Paid Claims Premium Loss Medical Rx Dental Total Total Medical Rx Total Total Ratio Jan-02 $165,801 $48,790 $33,951 $248,542 $346,665 71.7% $91,085 $27,048 $118,133 $128,649 91.8% Feb-02 $130,738 $59,214 $33,414 $223,366 $343,048 65.1% $47,463 $25,746 $73,209 $123,629 59.2% Mar-02 $155,866 $89,172 $26,274 $271,312 $345,995 78.4% $101,256 $44,489 $145,745 $123,002 118.5% Apr-02 $203,175 $64,815 $50,492 $318,482 $347,218 91.7% $176,290 $26,104 $202,394 $123,629 163.7% May-02 $234,666 $57,544 $51,426 $343,636 $345,682 99.4% $50,124 $28,212 $78,336 $125,512 62.4% Jun-02 $192,261 $57,905 $32,154 $282,320 $352,484 80.1% $93,897 $27,523 $121,420 $120,491 100.8% Jul-02 $224,329 $52,303 $30,447 $307,079 $350,867 87.5% $45,455 $27,490 $72,945 $128,022 57.0% Aug-02 $274,434 $88,219 $27,688 $390,341 $353,519 110.4% $65,831 $43,987 $109,818 $124,884 87.9% Sep-02 $243,504 $50,813 $25,142 $319,459 $352,246 90.7% $63,080 $28,615 $91,695 $120,491 76.1% Oct-02 $250,534 $60,043 $77,740 $388,317 $355,539 109.2% $55,766 $29,958 $85,724 $124,257 69.0% Nov-02 $196,332 $57,305 $19,633 $273,270 $361,043 75.7% $64,993 $28,551 $93,544 $122,374 76.4% Dec-02 $227,633 $64,742 $49,373 $341.748 $380.476 89.8% $%.551 $30,432 $126,983 $121,746 104.3% YT[41 $2,499,273 $750,865 $457,734 $3,707,872 $4,234,781 87.60/4 II $951,791 $368,155 $1,319,946 $1,486,686 88.8c/41 24 City of Bakersfield Monthly Experience Results Active Retiree Medical Rx Dental Total Total Ratio Medical Rx Total Total Ratio Jan-01 $153,523 $40,444 $33,208 $227,175 $327,290 69.4% $63,982 $26,094 $90,076 $106,233 84.8% Feb-01 $85,299 $41,377 $31,751 $158,427 $326 575 48.5% $35,448 $21,170 $56,618 $109,606 51.7% Mar-01 $127,731 $71,648 $45,008 $314,388 $327 131 74.7% $103,592 $35,886 $139,478 $109,044 127.9% Apr-01 $99,773 $46,376 $27,609 $173,758 $323 577 53.7% $26,630 $20,103 $46,733 $105,109 44.5% M~ay-01 $133,511 $48,175 $41,151 $222,838 $321 248 69.4% $89,531 $25,566 $115,097 $99,488 115.7% Jun-01 $159,589 $46,101 $38,746 $244,436 $319 267 76.6% $54,440 $25,897 $80,338 $110,168 72.9% Jul-01 $154,396 $39,747 $33,945 $228,089 $349 887 65.2% $59,477 $25,640 $85,117 $125,581 67.8% Aug-01 $170,394 $67,733 $13,888 $252,014 $348 184 72.4% $75,876 $36,297 $112,173 $131,678 85.2% Sep-01 $137,601 $43,763 $24,091 $205,455 $354,429 58.0% $72,072 $26,241 $98,313 $128,020 76.8% Oct-01 $200,293 $49,009 $40,294 $289,597 $338,859 85.5% $85,518 $27,337 $112,855 $129,239 87.3% Nov-01 $155,313 $44,466 $58,139 $257,917 $352,593 73.1% $45,442 $27,432 $72,873 $129,239 56.4% ~c4)1 $168,174 $52,768 $41,804 $262,746 $361,397 72.7% $75,659 $27,062 $102,721 $129,239 79.5% l! 25 0 0 0 0 0 0 0 0 0 0 0 0 d d d d d d ~ 0 ~'~ 0 ~0 ~ ! o o o o o o o o o o o o o o o o o o o o o ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 <D + 0 0 0 0 0 o 0 0 0 0 0 o © o 0 o ~- o 0 o o o o o o~ o o d' cS' ~ d' 0 0 0 0 0 0 0 0 o 0 0 0 0 0 o 0 o 0 0 0 69 o o o o 0 0 d~ d c~' 0~ o~ 0 0 0 0 0 0 Od 0 CO rE> ~ + o © © © 0 8 8 s 8 8 8 8 s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Cq 0,4 ('q C~l C,.I ~ ~ ©