Loading...
HomeMy WebLinkAbout05/31/2005 B A K E R S F I E L D Staff: Carroll Haydc~h Zack Scrivner .For: Alan Tandy, City Manager Jacquie Sullivan AGENDA SUMMARY REPORT SPECIAL MEETING · PERSONNEL COMMITTEE Tuesday, May 31,2005 - 11:00 a.m. City Manager's Conference Room, Suite 201 Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL Called to Order at 11:05 a.m. Present: Councilmembers Harold Hanson, Chair; Zack Scrivner; and Jacquie Sullivan 2. ADOPT APRIL 11,2005 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Report and Committee recommendation on Medicare Part D. Human Resources Manager Carroll Hayden explained at the last Committee meeting the consultants had been requested to provide additional information on the options available and their recommendation on Medicare Part D. Medicare Part D is a supplemental drug program for retirees over age 65, which can be administered in different ways. She introduced Mike Schionning from buckconsultants an ACS Company (Buck) formerly Mellon. Consultant Schionning provided an overview of the number of retirees including spouses over age 65 participating in City medical plans. Some of the retirees currently covered by the City did not participate in Social Security and are not eligible for Medicare, and therefore, will not be eligible for Medicare Part D, but the exact number has not been determined. The current maximum total of Agenda Summary Report Personnel Committee Meeting , May 31,2005 Page - 2- individuals who could be affected by Medicare Part D is 286; however, 63 individuals in the Kaiser Senior Advantage and the Blue Cross Senior Secure plans are not directly affected. Plan Retirees/Spouses Kaiser Senior Advantage 23 Blue Cross Senior Secure 40 PPO 99 HMO 124 Total 286 Kaiser Senior Advantage - Medicare Part D Because Kaiser intends to be a Medicare Advantage PDP (prescription drug plan) it will add Part D coverage to its Senior Advantage plan. Kaiser will be receiving money for this plan from the Federal Government, which will provide improved drug coverage for retirees qualified for Part D coverage. · Kaiser will enroll these retirees in Part D if they so request. · Kaiser will pay the $35 monthly premium for MediCare Part D for each retiree. · Kaiser is anticipating a 15% premium increases in the non-PDP plan, but either no increase or a rate decrease for the plans with the PDP option. · This option will be financially advantageous to both the retirees and the City. Blue Cross Senior Secure - Medicare Part D Because Blue Cross also intends to be a Medicare Advantage PDP plan, it will add Part D coverage to its Senior Secure plan. Blue Cross will be receiving money for this plan from the federal Government, which will provide for better drug coverage for retirees. · Blue Cross will enroll these retirees in Part D directly. · Blue Cross will most likely pay the $35 monthly premium for Medicare Part D for each retiree. However, Blue Cross has' not made a definite decision, but will decide by September. · Blue Cross is anticipating larger premium increases for the non-PDP plan than for the plans with the PDP option. · This option will be financially advantageous to both the retirees and the City Buck consultants recommended the Kaiser Senior Advantage and Blue Cross Se'nior Secure plans take advantage of the Medicare Advantage PDP option, which will lower the City's cost somewhat and provide a better benefit to the retirees. Agenda Summary Report Personnel Committee Meeting May 31,2005 Page - 3- Blue Cross HMO and PPO Plans - Medicare Part D Consultant Schionning provided information on the'Blue Cross wraparound benefit plan requested by the Committee. · Blue Cross intends to offer a wraparound benefit plan, but it will not have pricing available until late June or early July 2005. · Blue Cross has not finalized the plan designs that will be offered to insured benefit plans like the City's. · The wraparound plan will require a completely separate policy for the retirees, which may require programming changes. · For the Blue Cross PPO plan the rates for the actives and retirees are self- supporting and stand alone. · Currently for the Blue Cross HMO plan the rates are blended for the actives and the retirees resulting in the actives subsidizing retiree premiums. · The wraparound benefit plan will likely require the City to discontinue the active subsidization of the retiree HMO rates, which in turn will increase the retiree premiums by more than 100%, even taking into account the reduction due to the wraparound benefit design. This subsidy by actives for retirees participating in the .Blue Cross HMO plan will also increase the City's unfunded liability when the GASB 43/45 reporting requirements take effect in 2007-08. Consultant Schionning suggested if'the Committee decides to recommend the premium rates for the Blue Cross HMO plan be separate for the active¢ and retirees, it be phased-in over three or five years, so the increase would not double the premiums for retirees participating in the Blue Cross HMO in one year. This doubling of rates will affect retirees under age 65 and retirees not qualified for Medicare Parts A and B. Retirees over 65 years of age who qualify for Medicare Parts A and B could change to Kaiser Senior Advantage or Blue Cross Senior Secure to obtain lower rates. Due to the complexity of the wraparound coverage and because Blue Cross cannot provide essential information until late June or early July, Buck consultants recommended the City keep the designs of the current Blue Cross PPO and HMO plans unchanged and elect to seek the subscription drug subsidy for 2006 calendar year from the Federal Government. The subsidy plan will result in a fairly significant payment to the City while minimizing disruption to current retirees. Choosing the subsidy plan for the 2006 calendar year will give the City time to develop a long-term position in regard to retiree medical coverage in general and in concert with the GASB 43/45 reporting requirements. The City could decide to Agenda Summary Report Personnel Committee Meeting May 31, 2005 Page - 4- change to another plan for 2007 calendar year, after one year's experience and when more information becomes available. Assistant Finance Director Nelson Smith explained the exact amount of the City's unfunded liability under the GASB reporting requirements for medical benefits cannot be determined until an actuarial is done plus one year's experience to make a comparison. Committee Member Scrivner made a motion the Committee recommend: 1)An actuarial study be done to determine the City's unfunded liability under GASB 43/45 reporting requirements for medical benefits; 2) For 2006 calendar year retirees qualified for Medicare Part D and participating in Kaiser Senior Advantage and Blue Cross Senior Secure plans take advantage of the Medicare Advantage PDP option; 3) Beginning with 2006 calendar year for the Blue Cross HMO plan, develop a phase-in plan to separate the rates for the actives and the retirees; and 4) For calendar year 2006 Blue Cross PPO and HMO plans--Medicare Part D, the. City elect the option to seek the subscription drug subsidy from the Federal Government. The Committee unanimously approved the motion. B,Review and Committee recommendation on emergency room utilization for Blue Cross PPO Human Resources Manager Carroll Hayden explained at a previous Personnel Committee meeting the Committee reviewed the consultants recommendation on plan design changes. The Committee requested the plan design changes be brought back to the Committee after the Employee Insurance Committee' had met and made its recommendation. The Employee Insurance Committee has met and recommended to make no plan design changes at all. Consultant Mike Schionning provided an overview of the medical plan changes recommended by Buck. , Estimated Rate Impact PPO Plan. · Change coinsurance to 90% in-network and 60% out-of-network -4.1% · Increase out-of-network out-of-pocket maximum to $5,000 -0.4% · Add $250 per admission hospital copayment -0.9% · Add $75 emergency room copayment -0.7% Total recommended medical changes to PPO Plan -6.0% Agenda Summary Report Personnel Committee Meeting May 31, 2005 Page - 5- HMO Plans · Increase office visit copay to $15 -1.7% · Add $250 per admission hospital copayment -0.8% · Add $75 emergency room copayment -0.6% Total recommended medical changes to HMO Plans -3.0% Blue Cross Dental Plan · Change prosthodOntic service to 60% -5.1% The consultant explained the changes being recommended are to bring the plan more in line with the typical plans in the Kern County marketplace and to reduce the cost increases for the 2006 medical plans. The recommended changes to the PPO plan are to encourage use of network providers and discourage the use of hospital emergency rooms instead of urgent care centers. Fifteen percent of the claims are for out-of-network providers and the typically usage of out-of-network providers is five percent 'with 95 percent using in-network providers. The overall estimated cost increase for the 2006 health benefit plans is $1.1 million. The above changes to the plan are estimated to reduce the cost of the increase by approximately $620,000. City Manager Alan Tandy explained after the consultants presented the estimated costs for 2006 health plans to the Personnel Committee in March, staff used the estimated medical plan costs, which included the plan design .changes from the consultants, to prepare the FY 2005-06 proposed budget. If the plan design changes are not approved by the Committee and Council, the proposed budget now being reviewed by the Council will be out of balance to reflect the increased medical costs for the first six months of 2006. Budget cuts elsewhere will be required to bring the budget back into balance. Chuck Waide, SEIU-CCAPE, stated one of the concerns of the Employee Insurance Committee was to be able to identify where the usage was for out-of-network providers. He requested a breakdown of actives and retirees using out-of-network providers. For instance, is the usage by retirees who have moved to another state with no access to network providers, or is the usage by actives and retirees here in Kern County using providers not in the network? Committee Member Scrivner made a motion to set another meeting and provide the information requested by Chuck Waide. The Committee unanimously approved the motion. A meeting Will be set for June 13th or 14th at 11:00 a.m. Agenda Summary Report Personnel Committee Meeting May 31,2005 Page - 6- 5. COMMITTEE COMMENTS 6. ADJOURNMENT The meeting was adjourned at 12:40 p.m. Attendees: City Manager Alan Tandy; Assistant City Manager Alan Christensen; City Attorney Ginny Gennaro; Human Resources Manager Carroll Hayden; Assistant Finance Director Nelson Smith; John Patterson, Craft Worker II (CCAPE/Miscellaneous); Paul Smith, Fire Department; Brian West, Police Department; City Clerk Pam McCarthy; Ginger Rubin, Human Resources Benefits; Chuck Waide and Pete Rodriguez, SEIU-CCAPE; Tim Beck and Mike Schionning from Buck; and retirees Cathy Williams and Sandra Morris. cc: Honorable Mayor and City Council S:'~AC\05PersonnelCommitteeP05may31summary