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HomeMy WebLinkAbout08/11/1997 BAKERSFIELD Patricia J. DeMond, Chair Mark Salvaggio Jacquie Sullivan Staff: John W. Stinson AGENDA PERSONNEL COMMITTEE Monday, August 11, 1997 12:00 noon Risk Management Conference Room 1501 Truxtun Avenue Bakersfield, CA 1. ROLL CALL 2. APPROVAL OF JULY 14, 1997 MINUTES 3 PRESENTATIONS 4. PUBLIC STATEMENTS 5. DEFERRED BUSINESS A. HEALTH PLAN MARKETING -Stinson 6. NEW BUSINESS A. PLANNING TECHNICIAN RECLASSIFICATION 7. ADJOURNMENT JWS:jp FILE COPY DRAFT BAKERSFIELD Alan Tandy, City Manager Patricia J. DeMond, Chair Staff: John Stinson Mark Salvaggio Jacquie Sullivan AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, July 14, 1997 12:15 p.m. - City Manager's Conference Room 1501 Truxtun Avenue Bakersfield, CA 93301 1. ROLL CALL Call to Order 12-:25 p.m. Present: Councilmembers Patricia J. DeMond, Chair; and Jacquie Sullivan Councilmember Mark Salvaggio (seated at 12:30 p.m. Item 6.A) 2. APPROVAL OF JUNE 23, 1997 MINUTES Approved as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS After New Business Item 6.B., Committee member Salvaggio requested information on the graffiti position in Public Works. Staff responded that a survey of-other cities is in progress and the Committee Chair requested that this be on the Personnel Committee agenda for the August 11th meeting. 5. DEFERRED BUSINESS None AGENDA SUMMARY REPORT PERSONNEL COMMITTEE Monday, July 14, 1997 Page -2- 6. NEW BUSINESS A. RECLASSIFICATION Micrographic Technician to Engineering Aide I Human Resources Manager Carroll Hayden clarified that the Micrographic Technician is a current position and a reclassification to Engineering Aide I is recommended as the job duties assigned are those of Engineering Aide I. The Committee approved: All Ayes. B. ORGANIZATIONAL ISSUES New Job Specification: Assistant Director.of Recreation and Parks Assistant City Manager John Stinson handed out a memo (attached) and gave a brief overview of the organization process put in place two years ago which created the Recreation and Parks Director position. This change included the proposed Assistant Director of Recreation and Parks, instead of the Parks Superintendent position, which is now vacant due to the retirement of Frank Fabbri. The Committee approved the job specification: All Ayes. 7. ADJOURNMENT The meeting was adjourned at 12:50 p.m. Staff present: Assistant City Manager John W. Stinson; Human Resources Manager Carroll Hayden; Human Resources Supervisor Janet McCrea; Public Works Engineering Services Manager Jack LaRochelle; Recreation and Parks Director Stan Ford; and City Attorney Judy Skousen (seated at 12:32 p.m.). cc: Honorable Mayor and City Council JWS:jp BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM August 6, 1997 TO: Personnel Committee Members FROM: John W. Stinso~, ~stant City Manager SUBJECT: Health Insurance Renewal/Marketing Summary Report Attached are several key sections from the Health Insurance Renewal/Marketing Summary Report prepared-by Herb Kaighan, of AON consulting. I am providing you with the Introduction which describes the plans, the Renewal Summary, the Marketing Summary, the Executive Summary and the glossary of terms. The remainder of the rePort which consists of the numerous pages of detailed supporting financial and rate information and other backup information will be available in the City Clerk's Office should you wish to review it. Herb Kaighan will be attending the Personnel Committee meeting to provide an overview of the report and its recommendations. He will also be able to address any questions you may have at that time. The report has been reviewed by the employee insurance committee and staff. Their recommendations will be presented at the Committee meeting on Monday. P:XATTASKS\Vacation requcst, wpd Introduction THE CITY OF BAKERSFIELD INTRODUCTION On behalf of the City of Bakersfield (City), Aon Consulting (Aon) has requested proposals for a benefits package including medical [Fee-For-Service/Prudent Buyer (FFS/PB), Health Maintenance Organization (HMO) and Medicare Risk)] with prescription drugs and dental (indemnity and prepaid) coverages. The reason for the marketing is to confirm that the City's current costs and benefit programs are competitive in the marketplace. The City offers Fee-For-Service/Prudent Buyer (FFS/PB) and HMO medical coverage with prescription drug benefits to actives, COBRA-eligibles, and retirees and their eligible dependents. These plans are underwritten by Blue Cross of California (Blue Cross) on a fully-insured basis. The FFS/PB portion is retired cligiblc. Medicare Risk coverage is available to Medicare eligible retirees and Medicare eligible dependents. These coverages are currently underwritten by Blue Cross and PacifiCare of California (PacifiCare) on a fully-insured basis. Active employees (including COBRA-eligibles) and their eligible dependents can also enroll in either the indemnity dental or a choice between two prepaid dental plans. The City offers employees the Blue Cross indemnity dental and prepaid plans from Dedicated Dental Systems, Inc. (DDS) and Health Benefits, Incorporated (HBI). These coverages are underwritten on a fully-insured basis by the can-iers. The Blue Cross plan is refund eligible. 1 7/28:97 Edition THE CITY OF BAKERSFIELD INTRODUCTION Census data received from the City indicates eligible participants are enrolled in either the FFS/PB, HMO or Medicare Risk and indemnity or prepaid dental plans. Based on the above information, we requested proposals from insurance carriers to duplicate, as closely as possible, the existing medic'al (FFS/PB, HMO, and Medicare Risk) and dental (indemnity and prepaid) plans. Both the specifications and bid list were approved by the City. Following is a summary of who received the specifications and their response(s), or lack thereof: · Aetna - Quoted Medicare Risk. · American Benefits Network (ABN) - Quoted PPO medical. · Ameritas - Quoted PPO dental. · Blue Cross - Presented renewal of existing FFS/PB, HMO and Medicare Risk and indemnity dental coverages and quoted prepaid dental. · Blue Shield - Quoted PPO and HMO medical and Medicare Risk. · Care America - Quoted Point-of-Service (POS) and HMO. · CIGNA - Quoted prepaid dental. · CNA - Declined to quote. · DDS - Presented renewal of existing prepaid dental. · Delta Dental - Quoted indemnity, PPO and prepaid dental. · Dental Benefit Providers - Declined to quote. 7/28;97 Edition THE CITY OF BAKERSFIELD INTRODUCTION · DentiCare - Quoted indemnity, PPO, and prepaid dental. · FHP - Declined to quote. · First Dental Health - Declined to quote. · Foundation Health Plan - Quoted PPO and HMO medical. · General American - Declined to quote. · Great West - Declined to quote. · HBI - Presented renewal of existing prepaid dental. · Health Net - Dcclined to quote. · Jefferson Pilot - Declined to quote. · Kaiser - Quoted POS, HMO and Medicare Risk. · Maxicare - Declined to quote. · MetLife - Quoted indemnity, PPO, and prepaid dental. * MetraHealth - Quoted PPO and HMO medical. · MIDA Dental - Declined to quote. · Mutual of Omaha - Declined to quote. · New England - Declined to quote. * NYL Care - Declined to quote. 3 T28 '97 Edition THE CITY OF BAKERSFIELD INTRODUCTION · PacifiCare Presented renewal of Medicare Risk and quoted HMO medical and indemnity and prepaid dental. · Prudential ' Declined to quote. · ReliaStar Declined to quote. · Safeguard Declined to quote. · United Dental Declined to quote. · Western Dental Declined to quote. In addition, the benefit specifications were sent to any insurance carrier or broker that requested them. We received separate proposals from several brokers duplicating the insurance carrier's proposals we had already received. The following brokers provided proposals from the indicated carriers: Broker Carrier{s) · Cavale and Taylor MetraHealth. · Clifford and Bradford Kaiser. · Gagosian and Barks Blue Shield, Foundation, and Kaiser for medical and DentiCare for dental. 4 7/28/97 Edition THE CITY OF BAKERSFIELD INTRODUCTION We were also informed by Care America that they prepared a proposal for a broker that did not want to be identified. It was released directly to the broker. Care America was not willing to release a copy of it to Aon. However, Care America did submit to Aona response to our specifications as indicated above. Their proposal was not competitive and was not included in the report. Aon requested 1998 renewal rates from the City's current medical and dental providers. In light of the marketing results, the rates to renew coverage with the incumbent carriers appear to be very competitive. The most cost competitive alternative proposals for the following coverages were received from: PPO/POS Medical HMO Medical Medicare Risk Indemnity Dental Prepaid Dental Blue Shield (PPO) Blue Shield Blue Shield Delta Dental Delta Dental Kaiser (POS) Kaiser The Aetna, ABN, Ameritas, Blue Cross (prepaid dental), Care America, CIGNA, Foundation Health Plan, Kaiser (Medicare Risk), Met Life, MetraHealth, and PacifiCare (HMO medical and indemnity and prepaid dental) proposals were not cost competitive or did not meet the proposal criteria, therefore, no analysis of these programs is included in this report. 5 7/28,'97 Edition THE CITY OF BAKERSFIELD INTRODUCTION Finally, the insurance carriers' proposals submitted by other brokers duplicated the proposed rates and benefits of the proposals received directly by Aon from these carriers. These proposals have no advantage when compared to the proposals received directly from the carders. All proposals submitied by Kaiser, Foundation, and Denticare include commissions so rates were the same. Blue Shield submitted their proposal to Gagosian and Barks and to Aon with commissions but agreed to remove commissions from Aon's proposal. Therefore, the Blue Shield rates shown in our report are lower. MetraHealth's proposal to Aon and the broker contained no commissions. Care America indicated their proposal to Aon and the other broker include commissions. Thus, the broker proposals do not contain any infom~ation that is not already shown in our report. Table 1 summarizes if commissions are or are not included in the proposals carriers released to Aon and to other brokers: Table 1. CommissiOns Status Cartier Aon Proposal Broker Proposal Blue Shield Without comnussions With commissions Care America With commissions With cot'nmiss~ons Denticare With commissions With commissions Foundation With commissions With commissions Kaiser With commissions With commissmns MetraHealth Without commissions Without commissions 6 7/28/97 Edition THE CITY OF BAKERSFIELD INTRODUCTION If the City decided to implement coverage with a carrier that included commissions in their rates, Aon would arrange to return commissions directly to the City. Our review focused on the City's ability to maintain, or to improve, the medical and dental benefits offered to eligible plan participants with the least amount of disruption and minimal additional administrative change for the City. This could be achieved by either: · Renewing the existing benefits package with the current carriers, or · Renewing some coverages with current carriers and moving other coverages to alternate carriers. 7 7/28'97 Edi6on THE CITY OF BAKERSFIELD INTRODUCTION Our report is arranged as follows: · Section 1 r · Part A Renewal information for the incumbent carriers (and Blue Cross' alternative Medicare Risk proposal). · Part B Summary of viable proposals received from the marketing. · Part C Executive summary. · Section 2 Cost and benefit comparisons for the current FFS/PB and alternative PPO. · Section 3 Cost and plan comparisons for tile current and alternative HMOs. · Section 4 Cost and benefit comparisons for the current FFS/PB and altemative POS. · Section 5 Cost and plan compariisons for the current and alternative Medicare Risk plans. · Section 6 Cost and benefit comparisons for the current and alternative Indemnity and Prepaid Dental coverages. 8 7/28;9? Edition THE CITY OF BAKERSFIELI) INTRODUCTION · Section 7 Glossary of Terms · Section 8 Insurance Carrier Letters 9 7/28.97 Edition Part A- Renewal Summary THE CITY OF BAKERSFIELD RENEWAL SUMMARY The City offers FFS/PB and HMO medical to actives, COBRA-eligibles, and retirees and their qualifying dependents. Medicare Risk is offered to Medicare-eligibles and their dependents. Based on the census data received, the enrollment, and respective percentages of total enrollment, by plan is approximately: Plan Percentage of Active Retiree COBRA Total Total Medical Plans Blue Cross FFS/PB 488 158 3 649 46.6% CalifomiaCare HMO 580 121 3 704 50.6% Blue Cross Medicare Risk N/A 10 N/A 10 0.7% PacifiCare Medicare Risk N/A 29 N/A 29 2.1% 10 7/28 97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY For the dental programs, the enrollment and percentage in eacl~ plan are approximately: Plan Percentage of Active COBRA Total Total Dental Plans Blue Cross Indemnity 504 17 521 48.0% DDS 128 N/A 128 11.8% HBI 436 N/A 436 40.2% The following summarizes renewals for the Blue Cross (including the proposed Senior Secure III, Medicare Risk alternative), DDS, HBI, and PacifiCare coverages. 11 7/28/97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY BLUE CROSS PLANS FFS/PB Medical Platt · The current FFS/PB plan has an annual deductible of $150 for the individual; the family limit is three times the individual amount. A 30 day supply of prescription drugs obtained at a pharmacy are covered after a $10 copay for brands and a $5 copay for generics. Mail order prescriptions are covered after a $5 copay for a 60 day supply. · The Blue Cross FFS/PB plan covers most inpatient network benefits at 100%, office visits at 80%, and other outpatient services at 80% to 90%. Non-network inpatient, authorized, benefits are covered at 80%, office visits at 80%, and other outpatient services at 70% to 80%. Blue Cross' network benefits are based on negotiated rates; non-network benefits on usual and customary (U&C). · Blue Cross pays claims at the 70th percentile; that is 70% of all non-network clai~ns are paid with no cutbacks for excess over U&C. · The renewal assumes indemnity claims will continue to be paid by the Kern Foundation. · BaSed on the zip code information, Blue Cross produced a provider network match showing that 98.6% of eligible participants would have access to two primary care physicians (PCPs) within 10 miles of their home residence; 93.2% would have access to two specialty care physicians (SCPs) within l0 miles of their residence; and 99.9% would have access to one hospital within 30 miles of their home residence. 12 7/28;97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY · Blue Cross did not propose any changes to the current t~FS/PB plan of benefits for a January 1, 1998 effective date. Assuming enrollment in the FFS/PB plan remains unchanged from the data included in the City's census file, annual FFS/PB premiums are projected to be approximately $2,629,000, a decrease of about 7.6% (or $216,000) compared to current annual cost. Rates are guaranteed for 12 months, through December 31, 1998. · The City's pooling point is currently at $125,000. To increase the pooling point to $150,000, Blue Cross proposed a 1% decrease (an additional $26,000 savings) to the renewal rates. To increase the pooling point to $200,000, the proposed rates would decrease by 1.5% (an additional $39,000 savings) to the renewal rates. · Blue Cross guarantees the following rating factors and components for the second and third-year renewal calculations: Annual maximum medical trend factor will be: 8% for medical and 9% for prescription drugs. Retention will not increase more than 5% above $35.92 per contract per month for medical and prescription drugs. Pooling will not increase more than 5% above $13.71 per contract per month for a $125,000 pooling point, $11.16 for a $150,000 pooling point, or $8.69 for a $200,000 pooling point. 13 7/28;97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY HMO Medical Plan · For services obtained from a participating provider, the Blue Cross HMO plan covers inpatient care at 100% and outpatient care with a $5 copay. Prescription drugs are covered after a $10 copay for brands and a $5 copay for generics for active employees; a $5 copay for brands and a $2 copay for generics for retirees. Prescription drugs obtained through the mail order supplier are covered after a $5 copay for actives and a $2 copay for retirees. · Based on the census data, Blue Cross' HMO provider network match report shows that 94.9% of eligible participants would have access to two PCPs within 10 miles of their home residence; 88.3% would have access to two SCPs within 10 miles of their residence; and 99.2% would have access to one hospital within 30 miles of their residence. '" Blue Cross did not propose any changes to the current HMO plan of benefits for a January 1, 1998 effective date. Assuming enrollment in the lIMO plan remains unchanged from the enrolhnent figures included in the City's census file, the Blue Cross annual HMO premiums are projected to be approximately $2,337,000, producing a savings of 1.5% or $36,000 below current cost. · For the second year, Blue Cross guarantees no greater than an 8% increase to the HMO renewal rates. · If the City decides to implement the $3 office visit HMO plan, the projected annual cost, assuming current HMO enrollment, will be $2,360,000, an approximate increase of 1% (or $23,000) over the HMO renewal rates. 14 $/4~97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY Medicare Risk Plan · Blue Cross' Senior Secure Medicare Risk plan covers inpatient care at 100% and outpatient care with a $5 copay. Prescription drugs are covered after a $5 copay for brands and generics filled only at a participating pharmacy or through mail order. · Blue Cross also proposed an alternative Medicare Risk plan, Senior Secure III, which provides richer benefits than the current plan. This plan covers inpatient care at 100% and most outpatient services are covered without a copay. Formulary brand prescriptions are covered after a $10 copay; formulary generics after a $5 copay. The drug copays apply to those filled at a pharmacy or through the mail order program. In addition, hearing supplies are covered up to a $500 maximum per year. · Blue Cross renewed the City's plan for a July 1, 1997 effective date at "zero premium". Blue Cross also proposes to offer the Senior Secure I!I plan at "zero premium". According to Blue Cross, "zero premium" means the plan participants will not be charged a premium cost for enrolling in the plan. The cost of the plan will be covered through capitation payments received from the Federal Government by Blue Cross based on the number enrolled. Assuming enrollment in the Medicare Risk plan remains unchanged from the enrollment information included in the City's census file, the projected annual Blue Cross Medicare Risk premiums will decrease by approximately $3,000 compared to ct~rrent annual cost. · Rates are guaranteed for 18 months, through December 31, 1998. 15 7,'28/97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY h~demni~_ Dental Plan · The indemnity dental plan has a $50 individual deductible; tile family deductible equals three times the individual amount. Diagnostic and preventive services are covered at 100%; basic and major services at 80%; child orthodontia at 50%. Services are covered at U&C. Blue Cross pays claims at the 70th percentile. The renewal assumes indemnity claims will continue to be paid by the Kern Foundation. · Blue Cross did not propose any changes to tile current indemnity dental plan of benefits for a January 1, 1998 effective date. Assuming enrollment in the dental plan remains unchanged from the enrollment figures included in the City's census file, the projected annual indemnity dental premiums will be $373,000, no change cmnpared to current annual cost. · For the renewal effective January 1, 1999, Blue Cross agrees that the retention component used in calculating the renewal will not increase more than 5% above $4.08 per cOntract per month. 16 7/28i97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY DEDICA TED DENTAL SYSTEMS, INC. Prepaid Dental Platt · DDS's current prepaid dental plan covers most preventive, diagnostic, restorative, periodontic, and endodontic services at no cost to the employee. Copays are required for crowns and bridges, pontics (with non-precious metals), prosthodontics, and oral surgery. Phase I orthodontics is covered with a $575 copay and Phase II with an $1,150 copay. These amounts do not include applicable copays for x-rays, case studies, diagnosis, and retention. The following benefits which were not covered previously will be covered effective January 1, 1998 at no charge or with a small copay: additional prophylaxis, sedative base, space maintainers, recalcification, extra stress breakers, removable unilateral bridges, denture adjustments, tissue conditioning, broken denture repairs with no teeth involvement, and intra-oral I.C.D. of abscesses. · DDS indicates they have twenty (20) primary dentists in their network of which 13 have offices with Bakersfield addresses. · Effective January 1, 1998, assuming enrollment in the prepaid plan remains unchanged from the enrollment figures included in the City's census file, the projected annual DDS prepaid dental premiums will be $65,000, a decrease of approximately 2.4% (or $2,000) compared to current annual cost. · DDS agreed to guarantee the proposed rates for three years. 17 7/28/97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY HEAL TH BENEFITS, INC. Prepaid Dental Plan · HBI's current prepaid dental plan is similar to the plan proposed by DDS effective January 1, 1998 except that crowns, bridges, and pontics require lesser copays, however, some periodontics, endodontics, veneers, and oral surgery require a 50% copay. In addition, orthodontia benefits are subject to higher copays. (Phase I at $600 and Phase II at $1,200. These amounts do not include the cost for records and retention.) Overall, thc current }IBI plan provides a richer benefit compared the tile DDS plan. · HBI indicates they have twenty-four (24) primary dentists in their network of which 10 have offices with Bakersfield addresses. · ' Effective January l, 1998, HBI agrees to continue the current rates. Assuming enrollment in this prepaid plan remains unchanged from the enrollment figures included in the City's census file, HBI's annual prepaid dental premiums will remain unchanged compared to current annual cost. · As an alternative, HBI can duplicate DDS' plan of benefits and proposed rates effective January 1, 1998. Using the current HBI enrollment assumptions, the projected annual premium would be $217,000, a 2.4% ($5,000) decrease. We do not believe the employee disruption caused by reducing benefits offsets the potential savings, especially since the majority of the City's prepaid dental participants are enrolled in this plan. · HBI guaranteed the renewal rates for both plans of benefits for three years. 18 7/28'97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY PA CIFICARE I Medicare Risk Platt , · PacifiCare's Medicare Risk (Secure Horizons) plan covers inpatient care at 100% and outpatient care with a $3 copay. Prescription drugs are covered after a $5 copay for brands and generics filled at a pharmacy or through the mail order service. The plan also includes a benefit for glasses and limited dental coverage (exams). · PacifiCare proposed to renew the City's plan for a July 1, 1997 effective date with no plan changes and a rate decrease. Assuming PacifiCare retains their current enrolhnent, annual Medicare Risk premiums for the Secure Horizons plan will be approximately $7,000, a decrease of 18.2% (or $2,000) compared to current annual cost. · The proposed rates are guaranteed until for 18 months through December 31, 1998. 19 7/28/97 Edition THE CITY OF BAKERSFIELD RENEWAL SUMMARY CARRIER SUMMARIES · To renew all existing Blue Cross medical (continue the current Medicare Risk plan or implement the new Secure Plan III) and dental, DDS and HBI prepaid dental, and PacifiCare Medicare Risk coverages, the estimated annual renewal premiums (based on the census data provided) will be approximately $4,973,000 for medical and $660,000 for dental. The overall premium reduction will be approximately $258,000, or 4.4% less than current premium. 2O 8t4/97 Edition Part B - Marketing Summary THE CITY OF BAKERSFIELD MARKETING SUMMARY BLUE SHIELD Blue Shield proposed their PPO and HMO medical and Medicare Supplement coverages. They did not feel their indemnity dental rates would be competitive compared to the Blue Cross plan and their prepaid dental network access levels were not comparable to the DDS and HBI networks, therefore, they declined to quote dental coverage. PPo Medical Platt Blue Shield's proposed PPO plan matches the current individual deductible, however, the family deductible is $500 compared to 3 times the individual amount (or $450) under Blue Cross. Like the Blue Cross plan, Blue Shield covers most network inpatient benefits at 100%, office visits at 80%, and other outpatient services at 80% to 90%. Network charges are covered based on negotiated rates. Blue Shield indicated "Standard Benefits Apply" to non-network inpatient and outpatient hospital benefits. According to Blue Shield, this means that services are reimbursed at slightly less than 80% of allowable charges and the patient is subject to balance billing. Therefore, these are lesser benefits compared to the current Blue Cross plan. Office visits are covered at 80% and other outpatient services are at 70% to 80%. Non- network services are covered at allowable charges. In addition, Blue Shield's proposed prescription drug benefit matches the current benefit except for the mail order supply which is for 90 days compared to Blue Cross' 60 days. 21 7,'28,'97 l[d/tit3n THE CITY OF BAKERSFIELD MARKETING SUMMARY · Blue Shield pays network claims between the 7$th and 80th percentile; non-network claims are paid at the 60th percentile. · Based on the census data, Blue Shield produced a PP© provider network match report showing that 98.4% of eligible participants would have access to two PCPs within 10 miles of their home residence and 99.3% would have access to one hospital within 30 miles of their home residence. · Assuming enrollment in the FFS/PB plan remains unchanged from the data included in the census file, the City's projected PPO annual premiums effective January 1, 1998 will be $2,805,000, an increase of appro'ximately 6.7% or $176,000 compared to annual renewal cost. Blue Shield did not provide rate guarantees or caps for the second year. · To increase the pooling point to $150,000 or $200,000, Blue Shield proposed a 1% decrease to the rates. HMO Medical Plan · For services obtained from a participating provider, the Blue Shield HMO plan covers inpatient care at 100% and outpatient care with a $5 copay. Blue Shield was able to duplicate the current copays for prescriptions obtained through a participating pharmacy or through mail order for actives and retirees. Blue Shield's pr6posed plan provides richer benefits for routine physicals, tubal ligation, and hospice care, however, benefits for allergy testing/treatment, durable medical equipment, vasectomy, home health services, and therapy are covered subject to higher copays. 22 7/28,97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY · Based on the zip code information, Blue Shield produced a provider network match report for the HMO showing that 97.7% of eligible participants would access to two PCPs within 10 miles of their home residence and 94.9% would have access to two SPCs within 10 miles of their home residence. · Assuming enrollment in the HMO plan remains unchanged from the enrolhnent included in the City's census file, the projected annual HMO premiums effective January 1, 1998 will be $2,243,000, a decrease of approximately'4.0% (or $94,000) compared to annual renewal cost. · Based on experience, trends, and group demographics, Blue Shield's rates for the second year will not increase more than 6% over proposed. · Blue Shield did not propose rates for the $3 HMO copay plan. Medicare Risk Platt · Blue Shield's Medicare Risk plan covers inpatient care at 100% and some outpatient care with a $5 copay. Prescription drugs are covered after a $5 copay for brands and generics. Prescription drugs obtained through the mail order supplier are covered after a $10 copay for brands and generics. In addition, coverage is available for hearing appliances which are not covered under the current Blue Cross plan. The maximum benefit is $500 per year under the proposed Senior Secure Plan III. 23 8/4/97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY Assuming ali enrollment in both Medicare Risk program is ~noved to Blue Shield (and assuming the City's current enrollment), the projected annual Medicare Risk premiums effective January 1, 1998 will increase by approximately 119.0% or $9,000 compared to annual renewal cost. The rates are proposed for one year. Carrier Sumnta~ Blue Shield's proposal is based on their replacing all existing medical coverages with their proposed medical plans or offering their ttMO on a standalone basis. For Blue Shield to take over all of the medical (PPO, HMO, and Medicare Risk) coverages and leave the dental coverages with the existing carriers, assuming no change in enrollment, the approximate projected annual medical premiums will be $5,063,000 and the dental renewal premimns will be $660,000. The additional cost will be approximately $90,000, or 1.6% more, compared to renewal costs. Blue Shield is willing to replace the Blue Cross HMO with their proposed HMO on a standalone basis. However, Blue Cross will not agree with this alternative. , 24 8/4t97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY KAISER Kaiser proposed their POS, HMO, and Medicare Supplement coverages. The proposals for POS and HMO can be on a stand alone basis or the POS can be offered as a total takeover o£the Blue Cross FFS/PB and HMO plans. Or, Kaiser will offer their HMO as a second HMO choice to City employees. POS Medical Platt · Kaiser's proposed POS is a three tier plan. To receive benefits under the first tier (HMO), employees must obtain services through a Kaiser facility. The proposed first tier benefits covet' inpatient services at 100% and most office visits after a $I0 copay. Formulary prescription drugs are covered at a $10 copay for brands and a $5 copay for generics whether obtained at a pharmacy or through mail order. The second tier, which utilizes the CCN network, is equivalent to a PPO network plan; the third tier is equivalent to an indemnity or out-of-network plan. The individual deductible is $250; the family deductible is 3 times the individual amount. This deductible applies to the second and third tier benefit levels. Under the second tier, most inpatient and outpatient services are covered at 80%. Most third tier services are covered at 60%, with a separate $250 deductible per admission for hospital services. Under either the second or third tier, prescriptions obtained at the pharmacy are subject to a $25 copay for brands and $15 copay for generics. Generally, second and third tier services are covered at a reduced amount compared to the current Blue Cross FFS/PB which covers these services at 100% and 80%, respectively. Second tier services are covered at negotiated rates; third tier at allowable charges. .- 25 7/28,97 liditi{m THE CITY OF BAKERSFIELD MARKETING SUMMARY · Kaiser indicates that claims are paid at the 85th percentile. · Based on the zip code information provided with the census data, Kaiser's PPO provider network match shows that 93.2% of the City's eligible participants would have access to two providers within 10 miles of their home residence; 94.5% have access to 2 SPCs within 10 miles of their residence; and 98.7% have access to one hospital within 30 miles. · The POS plan is not available to retirees age 65 and over. For our analysis, we assumed the retirees currently covered in the Blue Cross FFS/PB are under age 65. · Assuming enrollment in the FFS/PB only shifts to the POS plan, projected annual POS premiums effective January 1, 1998 will be $2,433,000, a decrease of 7.5% (or $196,000) compared to annual renewal cost. The City should consider this plan design. However, before making a decision, Blue Cross should also be given the opportunity to provide a proposal for this type of plan.. The rates include commissions approximating a flat amount of.8%. These are filed as part of Kaiser's rate stn~cture and cannot be removed. If any part of the Kaiser proposal is implemented, Aon would arrange to have these commissions returned to the City. The projected POS cost assumes Kaiser's HMO will also be implemented. (Note: If Kaiser's POS and HMO are in place, the HMO tier of the POS cannot be offered with the same office visit copay as the traditional Kaiser HMO.) · Kaiser also proposed rates assuming the POS plan totally replaces both the Blue Cross FFS/PB and HMO plans. Combining current enrollment in the FFS/PB and HMO pla~s, the estimated annual premiums for the total replacement POS plan alternative will be approximately $5,209,000, or an increase of 4.9% (or $243,000) compared to renewal costs. The estimate assumes retirees in the FFS/PB plan are all under age 65 and assumes all over age 65 HMO enrollees are not Medicare eligible. Based on this premium, the costs include flat commissions approximating a .5% level which cannot be removed from the proposed rates. 26 8/4 97 Edition C'ons/dti g THE CITY OF BAKERSFIELD MARKETING SUMMARY · The proposed POS rates are guaranteed for one year. · There will be no impact to the proposed POS rates to increase the pooling point from $125,000 to $150,000 or to $200,000. Kaiser will not write this on a refunding basis. tlMO Medical Platt · For services obtained from a participating provider, Kaiser covers inpatient care at 100% and office visits with a $5 copay. Prescriptions obtained through a participating pharmacy or through mail order are covered with a $5 copay for actives and retirees. The maximum annual copay limit is $1,400 for the individual and $4,000 for the family; higher than Blue Cross which is $500 and $1,500, respectively. · Based on the zip code information, Kaiser's HMO provider network match indicates 91.8% of the City's eligible participants would have access to one medical office within 10 miles of their home residence and 97.9% would have access to one hospital within 30 miles of their residence. · Assuming the City's current HMO participants shift to the Kaiser plan, the City's estimated annual premium will be $1,993,000. This i's 14.7% less ($344,000) than the annualized renewal premiums for the Blue Cross HMO. Kaiser's rates include commissions at a flat .9% level. This cost assumes retirees over age 65 who are Medicare eligible are enrolled in a Medicare Risk plan. 27 THE CITY OF BAKERSFIELD MARKETING SUMMARY · Should the Kaiser HMO fully replace the Blue Cross H~O, Blue Cross indicated they would increase their proposed FFS/PB renewal rates by an additional 1.5% ($39,000). Therefore, the requested FFS/PB annual renewal premium would be approximately $2,669,000, a 6.2% savings ($177,000) compared to current rates. · As an alternative, the cost for offering the Kaiser HMO in conjunction with the Blue Cross FFS/PB and HMO plans was calculated. Kaiser indicated the proposed HMO costs will not change under this option. Blue Cross has agreed to no rate impact if Kaiser is offered as a second alternative and the enrollment shift in the Kaiser HMO is 15% or less; if the enrollment in the Kaiser HMO is greater than 15%, Blue Cross requires a 3% increase to their proposed rates effective January 1, 1998. Assuming 15% of the current Blue Cross HMO enrollment moves to the Kaiser HMO, the City's projected annual HMO premiums for this piece effective January 1, 1998 will be an approximate savings of 2.6% (or $60,000) compared to Blue Cross' HMO renewal rates. Assuming a 30% enrollment shift to the Kaiser plan, the City's projected savings (with a corresponding 3% increase in the Blue Cross HMO renewal rates) would be 2.7% (or $63,000). Both calculations assume only enrollment shifts for individuals currently enrolled in the Blue Cross HMO. Since the Blue Cross enrollment percentage would not be known until after the enrollment is conducted, it is not practical to anticipate a retroactive adjustment to rates if the Kaiser enrollment exceeds 15%. The monies in the current Premium Deposit Fund could be used to satisfy any rate adjustments. However, Blue Cross indicates that from the Finance Department's perspective, this would be administratively burdensome. Blue Cross would rather guarantee no more than an 11% increase to the renewal rates effective January 1 ~99 (8% cap for the renewal plus 3% for enrollment shift). · Kaiser did not propose rates for a $3 copay plan. 28 THE CITY OF BAKERSFIELD MARKETING SUMMARY · Kaiser guaranteed the above rates for one year and was only willing to guarantee the active and COBRA medical components of the rates illustrated for two years with an increase of $2.00, $4.00, and $5.66 for single, two party, and family, respectively. Kaiser was not willing to offer guarantees on the active (and COBRA) prescription drug components or the retiree (under and over age 65) medical and prescription drug components. Carrier Summa~_ The replacement of thc Bluc Cross FFS/PB and lIMO with the Kaiser POS and lIMO or with tile Kaiser POS on a standalone basis is probably not a realistic option. However, a reasonable alternative may be to offer the Kaiser HMO as a second HMO choice to the existing coverages. Using the 15% assumption described in tile Kaiser HMO section, this would result in savings of approximately 2.6% (or $60,000) compared to the renewal rates for Blue Cross' FFS/PB and HMO. Using the 30% assumption and a 3% increase to Blue Cross' HMO rates, the savings would be approximately 2.7% (or $63,000). 29 8'4.97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY DELTA DENTAL Delta Dental proposed their indemnity, I~PO and prepaid dental plans. Delta's rates are valid whether they takeover the total dental program or if only the indemnity or the prepaid plan is implemented. Our analysis compares Delta's indemnity and prepaid dental rates and plan designs to that of the inforce carriers. Although the network portion of the PPO dental plan reimburses services at percentages similar to the current indemnity plan, employees would be required to obtain these services from Delta's contracted providers. If employees receive care fi'om non-network providers, major services are reduced to a reimbursement rate of 50%. Even though replacing the current indemnity plan with a PPO plan will generate additional savings for the City, the plan will be perceived as ~nore restrictive for employees that currently have access to any dental provider. Therefore, the PPO rates and plan design are not included in the analysis. Blue Cross also has a PPO dental plan. We do not have information regarding their coverage, however, it can be requested if the City would like to see a comparison of Blue Cross' and Delta's PPO plans. ¸30 %'28,97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY h~demnit~ Dental Plan · Deita's proposed indemnity dental plan has a $50 individual and $150 family deductible instead of a deductible that equals three times the individual mnount for the family, as under the current Blue Cross plan. Diagnostic and preventive services are covered at 100%; basic and major services at 80%; child orthodontia at 50%. · In California, Delta has contracts with about 94% of the dentists. Payments to contracted providers are based on annual filed fees. Non-contracted California providers are reimbursed at the 51st percentile of the average of the filed fees of the contracted providers. Providers located out of state are paid at the 80th percentile. · In Kern County, Delta has sixty-four (64) contracted primary providers, 52 of which have offices with a Bakersfield address. They expect to have an additional provider available in Kern County effective July 1st and are trying to contract with three more dentists in Bakersfield. · Assuming enrollment in the indemnity dental plan remains unchanged from the enrollment included in the City's census file, the overall indemnity dental annual premiums will be $385,000, an increase of approximately 3.2% or $12,000 compared to annual renewal cost. · The above costs assume rates for a one year contract. Delta's proposed rates for a two year contract that will be approximately 2.1% higher than for a one year contract. Rates for a three year contract will be approximately 12.3% higher compared to rates for a one year contract. · Rates will not change if only the current indemnity coverage is replaced or if both the indemnity and prepaid dental coverages are replaced with Delta. 31 7/28 97 Edition THE CITY OF BAKERSFIELD MARKETING SUMMARY Prepaid Dental Platt · Delta's proposed benefits for their'prepaid dental plan require higher copays for most service categories compared to the incumbent's prepaid plans. Based on the census data, Delta produced a provider network match report for the prepaid dental plan showing that 88.6% of eligible participants would access to one dentist within 10 miles of their home residence. In Kern County, Delta has six (6) contracted providers, 4 of which have offices with a Bakersfield address. They expect to have an additional provider available in Kern County effective July 1st and are trying to contract with three more dentists in Bakersfield. · Assuming total enrollment in the current prepaid plans is shifted to Delta's prepaid plan, the projected annual prepaid dental cost will be approximately $220,000, resulting in a savings ot'23.6% or $68,000 compared to annual renewal cost. · The above costs assume rates for a one year contract. Delta's proposed rates for a two year contract will be approximately 2.0% higher compared to a one year contract. Rates for a three year contact will be approximately 4.0% higher compared to rates for a one year contract. · Rates will not change if only the current prepaid coverage is rel~laced or if both the prepaid and indemnity dental coverages are replaced with Delta. 32 7/28,'97 Edition Aon Com//lti q THE CITY OF BAKERSFIELD MARKETING SUMMARY Carrier Sumtna~_ The combination of Delta's indemnity and prepaid plans would reduce overall dental cost when compared to the incumbents' renewals by $56,000, or 8.5% less. 33 7/28~97 Edilion THE CITY OF BAKERSFIELD EXECUTIVE SUMMARY Based on our analysis, we offer the following comments: · The Blue Cross renewal for the FFS/PB plan is competitive. The overall premium reduction will approximate $216,000 (7.6%). No other vendor was competitive for the same plan design. · Kaiser proposed a revised plan design using a POS approach. This would save the City an additional $196,000. If the City is interested in this approach we should request a POS proposal from Blue Cross for comparison purposes. · The Blue Cross renewal for the HMO plan is very competitive. The overall premium reduction is approximately $36,000 (1.5%). · The City should seriously consider offering the Kaiser HMO in addition to CalifomiaCare. Those participants that feel strongly about their Blue Cross plan can maintain it at a higher payroll deduction; those that want a lower payroll deduction would select Kaiser. The City will benefit from lower costs for those selectiug Kaiser. · The Medicare Risk programs with Blue Cross and PacifiCare are competitive. Serious consideration should be given to i~nplementing the new Blue Cross Secure Plan 111. · The Blue Cross Indemnity dental renewal is based on the City's own claims experience. Based on our calculation, the Blue Cross renewal is reasonable. Based on the marketing results, the Blue C~ross renewal is also competitve. · Delta has submitted an indemnity proposal at costs comparable to the current premium (slightly more expensive). 34 8'4'97 Edition AoJ Com hi g THE CITY OF BAKERSFIELD EXECUTIVE SUMMARY · The two current prepaid dental plans have provided good service to the participants and are competitive. The Delta prepaid proposal has a variety of benefit differences. Therefore, the benefits are not comparable. This may account for the lower premium (about $68,000 or 24%.). Further negotiations should be conducted to determine the final offer on the incumbent pre-paid dental plans with respect to costs and benefits. In addition, renewals have been requested from Medical Eye Services Corporation (MESC) and Psychology Systems International (PSI). We expect to have this information in early August. Following is a summary of the City's projected annual costs for the current plans, incumbent renewals, and alternative vendors. 35 7/28;97 Edition CITY OF BAKERSFIELD Current and Renewal Annnal C'ost Summary Current Renewal Dollar Change/ Programs Programs , Percentage Change FFS/PB - TOTAL Blue Cross Blue Cross Blue Cross' , $2,845,451.52 $2,629,224.58 -$216,226.94 -7.6% HMO - TOTAL Blue Cross Blue Cross Blue Cross $2,372,293.20 $2,336,708.75 -$35,584.45 -1.5% MEDICARE RISK Blue Cross/PacifiCare Blue Cross/PacifiCare Blue Cross/PacifiCare Blue Cross $2,969.28 $0.00 -$2,969.28 PacifiC are $8,947.44 $7,322.04 -$1,625.40 TOTAL $ l i ,9 ! 6.72 $7,322.04 -$4,594.68 -38.6% I)ENTAL PLANS Blue Cross/DDS/HBI Blue Cross/DDS/HBI Blue Cross/DDS/HBI Blue Cross $372,501.36 $372,501.36 $0.00 DDS $66,917.28 $65,310.00 -$1,607.28 HBI $222,159.36 $222,159.36 $0.00 TOTAL $661,578.00 $659,970.72 -$1,607.28 t -0.2% TOTAL MEDICAL AND DENTAL PLANS $5,891,239.44 $5,633,226.08 -$258,013.36 ~ -4.4% 36 s:'~.. "mktg', 1997A:.X I lIB FI'3.X l.S\total costs\g/4/97 OF B..~, K E RSFII'~IA) and Alternatives Annual Rcuc~val AIIcrn:tlive Doll:ir Change/ Alternative Dollar Change/ I'r~__!gr;m~s Blue Slfichl I'crcc[]tage Change Kaiser* Oplion I Pcrccnlqgc Chan~e I-'F-S/I'B - TOTAI~ Illuc (h',ss Illuc Shield Bluc Shield Kaiser POS Kaiser POS $2,629,224.58 $2,8114,732.91} $175,5(}8.33 $2,433,026.88 -$196,197.71} lIMO - TOT.,Xl, Ilhlc (:ross Illuc hhichl Ilh]c Shield Kaiser IIM() Kaiser lIMO $2,336,7{}8 75 $2,242,5026{} -$94,206.14 $1,993,188.00 -$343,520.75 -4.1}% - 14.7% MI:;DICARE RISK IIIHc ('r.ss/Pacil'i( 'arc Bluc Shichl IIluc Slficld PacifiCarc PacifiCarc Blue Cross ${}.00 N/A- N/A PacifiCare ?,322 114 N/A N/A ~l'o'r A L $7,32204 $ I hJ}34.04 $8,712.00 $9,365.40 $2,1)43.36 119.0% 27.9% III(N'I'AI, PI,ANS Illin: ('ross/[ H)S/I Illl Illuc ( :ross/l)l)S/llBI Blur ('ross/l)DS/lllll Bluc Cross/[)l)S/I IBI Bluc ('ross/DDS/llBI Blur ('ross 5372,5(1136 $372,501.36 $0.00 $372,501.36 $0.00 I)l)S $h5,.I Ill (}1) Sh5,3 ] ().(}1) $() ()() $65,31 ().()o $().o1) TOTAl. ${~59,97(}.72 ${~59J) 71).72 $().(1(} $659,970.72 $0.1}0 0.0% (}.0% I'()TAI~ MEI)ICAL A~I) I)ENTAI~ I'I.A~S $5.633.226.O8 $5,723,240.27 $90,014. ]8 $5,1}95,55 I.I)l} -$537,675.O8 _ 1.6% -9.5% * Kaiser premiums include thc following commissions: POS - $19,149.08 IIM()- $17.829.56 Cmnbincd POS and lIMO- $36,978.64 Kaiser POS premiums assume current I'lluc ('ross PPO retiree p'..'t~cipums arc under age 65. Thc respective Kaiser POS inpatient / outp~tticnt bcncl'its [or most scrviccs) arc: First Ticr: 100%/$1{}copay:Sccm~dTicr: 8o%/ 80%(aflcrdcductiblc);andThirdTicr: deductible). 37 I{c*,lc~ al AIIcrnaliv(.' I)oll'ar ('hartke/ Alle]'nqti~ e Dollar Changd ~[9~f'afils I~;ii~el'* (~{~()~ I'clTCllln~c ('ll;lllUe ~:iiser* OI)lion ~ I)crccnlaCc Chnn~c I-' I:~/I' B - 'i'()'I'.X I. I~luc ( ', (~ ~ ai~ I'( )~ ~ aiscr P( )~ Blu~ C'ro~s Blue ~ross I ~),,' ().()'~ ~, II.M{) - 'IO'I'.-YI. Illuc ('I'OS~ KiliNCI' I'( )S Kaiser P()S IIluc Cross/Kaiser lIMO Ihac Cross/Kaiser IIM() $2,33().708 75 I,~clmlcd with ahovc c(>st~ Sec abovc costs $2,276,414.41 -S60,294.34 -2.6% M I'tl)l('A ICl.: RINK ~}h!(2 ~_~[5)55~12'd~:t i ~ ~ [ .~[H t2 [~;JCJl'~[';J~r I';~ci fi{ ",~rc ItJuc ( '~ ()ss/I):~c il'i( 'arcII hie ( 'rt~ss/l)ac il'i( 'arc lllt~c Cross SI)D(} N/A PaciliCare 57.~22. 4 N/A $7,322.()4 TO I'AI. S7.322.()4 5(),3()5.4() $2,()-13.3() $7,322.04 $(1.(}(} 27.9% 0.(}% I)I.}N/'AI. PL.[NS }linc ( )()ss/I)l)h:lllll Ilhlc { ']()ss~l)l)S,/t[lll Illuc ('~()ss/I)l)S,/llBI Itluc ('ross/I)l)S/llBI Illuc Cross/I)l)S, IIBI Blue {'ross $372.51}1 3() $372,51}1.30 $0.1)0 $372,501.36 II1~1 %'" I~) ~() T()'I'..Y I. ~()~'),()7() 72 ~()~()J)7().72 ~0.()() ~()S(),07().72 ~().0() 0.1)% ~ * Kaiser Oplmn 2 premiums include the followm~ cmn]mssions: PO~- ~27,477.32 Kaiser Option 3 prcmmms include thc followmS commis~mns: lIMO- ~9.()73.16 fi)r mosl services) arc: First Tier: I()(}% / S 1(} copay; Second Tier: 8(}% / 8t)% (aflcr dcductiblc); and Third Tier: 60% /6(}% (after deductible). I{{'JiL'~ al :m(J ~,lt~rnatives Allnuul C()~I Niiinn~;try ~¥ilh Ilcnt,~al With AIIt, rll:llivt, Dollar ('h;lli~e/ [;li~el'* Option .1 an(I Dollar I'l'()~r:im~ I)t'lla I)t'n(;ll I't'rct'lila~e ('11;111~ I)ell. I)enlal/DhS/llBI I'ercenlace 1"1:."4'1'11 - I'()'1'..',.I. Illuc ( 'ms:-; Bluc( 'l~ss liluc ('ros.'-; I'lhm Cross I:lluc ('_':ross $2,~,2~L22.l.58 S2,('~2~F224.58 $().0() $2,629,224.58 $().()0 ().(}% 0.()% II:M() -'I'O'I'AI. I'lh,c (',~)ss I'lh,,.: (:mss Bluc ('ross IIlu¢ (:ross/Kaiser lIMO llluc Cross/K;.Liscr IIM() 52,336,7()8.75 $ 2,372,293.2() $35,584.45 $2,276,414.41 -$60,294.34 1.5% -2.6% 511~l)l{".& Il 15 RISK Ilhlc ('~s~;/l'at:il'i( '~.c IIluc (h'()ss/Pacil'i( 'mc Illuc ('lt)ss/l'acil'i( '.uf'c Illuc ('loss/l'acil'i('arc [tluc ('ross,;I);.~cil'i('at c Blue Cross 5().(}() $0.()() 5{).00 l'ariliCare hT~ ()4 . ~)~_~.322 (}4 $7,322.()4 'I'¢)'I'A I, $7,322.().1 $7,322.().1 5(}.0(} $7.322.1)4 50.01) I)l.~:h I.\l. I'l...~,hS Illuc ( ht~ss'l)l)h.'lllll I)c]la I)cnt~ll l)clta l)cntal I')clt~t I)cnlal/Dl)S/lllll I)cltu l')cnlul/I)l)S/llBI illue ('ross 5372,51)1.3~, $384,318.24 $ I 1,816.88 $384,318.24 $ I 1.816.88 |') I)S $()5,3 I ().()1) 5q1),78().52 -51-1,529.48 $(~5,3 I 1).1)() II Ill 5222~ 159.3¢, $1_68,'}29.()-1 ~53 ~231}.3~ $222.159.3~, $().01) ]'OI'AI. $659,97(}.72 $6()4,()27.8() -$55,942.92 $671,787.60 $11,816.88 -8.5% 1.8% '1'( )'1'.[ I. M I': DICA I. A~D DENIAL I'I.ANS $5,633,22~.08 $5,612,867.~2 -521),358.47 $5,584,748.63 -548,477.46 -0.4% -0.9% * Kaiscr Option 3 prcmiums inchJdc thc fl)llowing commissions: HMO- $9,073.16 39 ,, ~// ('.'.//.~///////,!~ THE CITY OF BAKERSFIELD GLOSSARY OF TERMS Fee-For-Service/Prudent Buyer(FFS/PB) A type of n~edical program offering a network of physicians, hospitals and other providers who deliver services at negotiated rates. Specifically, the current Blue Cross non-HMO medical plan. Health Maintenance Organization (HMO) A managed care program that provides comprehensive health care in return for a fixed prepaid fee. If members use providers not included in the HMO for non-emergency care, expenses are not covered. Indemnity Plan An insurance program that allows participants to receive health care services from any eligible provider chosen. Medicare Risk The medical programs offered to Medicare eligible retirees and their dependents. Network Providers or facilities the insurance cartier has contracted to provide managed care services under the program. Non-Network Providers or facilities the insurance carder has not contracted to provide managed care services under the program. THE CITY OF BAKERSFIELD GLOSSARY OF TERMS 'Non-Participating Providers or facilities that do not have an agreement in effect to provide services for the carrier or their members. Participating Providers or facilities that do have an agreement in effect to provide services for the carrier or their members. Point-of-Service (POS) A type of managed care plan that has a network of physicians, hospitals, and other providers who deliver services at negotiated rates. The users can decide to go outside the system when service is desired and receive a lower benefit reimbursement. Specifically, the proposed Kaiser non-HMO medical plan. Pooling or Pooling Point A pure insurance arrangement by which the insurance carrier assumes all the claim risk above a certain dollar maximum. Preferred Provider Organization (PPO) A type of managed care network of physicians, hospitals, and other providers who deliqer services at negotiated rates. Prepaid Denial A managed care program that provides cmnprehensive dental care in return for a fixed prepaid fee. The equivalent of the HMO for dental. THE CITY OF BAKERSFIELD GLOSSARY OF TERMS Primary Care Physician (PCP) The plan participant's "personal health care manager." They act as the primary caregiver for health care treatmeut by handling the majority of basic health care needs. , Sometimes referred to as the "gatekeeper." Rate Cap Tile maximum mnount tile insurance carrier can request when increasing premium rates. Retention The insurance carrier's cost of doing business or overhead. Specialty Care Physician (SPC) A physician with expertise in a particular area of medicine. Under managed care, the plan participant must receive written authorization prior to obtaining services. Trend Factor The increase in the health care costs due to inflation and utilization. Usual and Customary (U&C) Costs that fall within the range of charges or below a specified percentile within the sarde geographical area for the same service or medical supplies. 88 :1./? ( ,~ .... //:",