HomeMy WebLinkAbout05/31/2005 B A K E R S F I E L D
Harold Hanson, Chair
Zack Scrivner
Jacquie Sullivan
Staff: Carroll Hayden
SPECIAL MEETING NOTICE
PERSONNEL COMMITrEE
of the City Council - City of Bakersfield
Tuesday, May 31,2005
11:00 a.m.
City Manager's Conference Room, Suite 201
Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA
AGENDA
1. ROLL CALL
2. ADOPT APRIL 11, 2005 AGENDA SUMMARY REPORT
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Report and Committee recommendation on Medicare Part D - Hayden
B. Review and Committee recommendation on Health Plan design changes -
Hayden
5. COMMITTEE COMMENTS
6. ADJOURNMENT
S:~C\05 Personnel\PO5may31agen.doc
B A K E R S F I E L D
~Staff: C~rroll ZacR Scdvner
For: Alan Tandy, City Manager Jacquie Sullivan
AGENDA SUMMARY REPORT
SPECIAL MEETING · PERSONNEL COMMI'n'EE
Monday~ April 11,2005 - 11:00 a.m.
City Manager's Conference Room, Suite201
Second Floor, City Hall, 1501 Truxtun Avenue, Bakersfield, CA
1. ROLL CALL
Called to Order at 11:00 a.m.
Present: Councilmembers Harold Hanson; Chair; Zack Scrivner; and Jacquie Sullivan
2. ADOPT MARCH 16 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 the City needs to make a
decision by June 2005 on a plan to handle the newly enacted Medicare Part D,
which covers prescription drug benefits. She introduced 'Tim Beck and Jim
Summers from Mellon, the City's health care consultants, who have developed a
decision guide'on Medicare Part D outlining options and timelines.
Consultant Jim Summers explained the newly enacted Medicare. Part D only
affects retirees who are over 65 years of age and eligible for Medicare. Some
retirees during their active working years did not participate in Social Security
and are not eligible for Medicare. There are approximately 286 affeCted retirees;
however, 63 of the 286 retirees who are covered in the Kaiser Senior Advantage
plan or the Blue Cross Senior Secure are not directly affected as these HMO
plans will most likely deal directly with Medicare.
DRAFT
Agenda Summary Report
Personnel Committee Meeting
April 11, 2005
Page - 2-
The City has three options to choose from regarding this new benefit. High'lights
of the options are:
Option 1~ Do nothing. The consultant did not recommend this option for the
. following reasons:
· It may force the City to accept changes made by Blue Cross and/or Kaiser that
are not in the City's best interest.
· The City will miss out on the opportunity to receive subsidy payments from
Medicare to reduce the cost of providing retiree coverage for Medicare-eligible
retirees, which can benefit both the retiree and the City.
Option 2. Seek the subsidy from the Federal Government:
· This option, would provide a reimbursement to the City from the Federal
Government equal to 28% of the amount the City and each retiree over-65
years of age spend on prescription drug coverage, subject to some limitations.
· The federal government estimates this will be approximately $677 per covered
retiree beneficiary, which includes both the retiree and spouse---the payment
to the City could be as must as $150,000 annually based on current retiree
population.
· The money is paid to the City as the plan sponsor and can be used for any
purpose. There is no requirement the money be used to reduce the cost of
providing retiree benefits.
· The subsidy is only available for retirees over 65 who participate in Medicare
Parts A and B, are not enrolled in 'the Senior Secure or Senior Advantage
plans and who do not enroll in' the Medicare Part D plan.
· The City's HMO and PPO plans meet the requirements under Federal
Regulations to receive the subsidy payment.
· This option allows the City to keep its current retiree benefits unchanged.
The process required to seek the subsidy is fairly straightforward, but will require
additional administrative work for City staff:
· Enrollment--the City will need to inform the CMS (Federal Center for
Medicare and Medicaid Services) whether the retiree is enrolled in
Medicare Part D or not.
· The City will need to work with Blue Cross to keep track of drug claims
for retirees over 65 years of age to calculate the subsidy.
· The City will need to provide an annual actuarial attestation and an
annual notification to CMS that it intends to seek the subsidy.
· The City will need to determine which retirees cannot participate in
Medicare and track them separately.
· The City will have to provide annual certificates of credible coverage to
retirees, so the retirees will have proof of qualification for Medicare
Part D in case at some point' later in time they wish to sign up.
DR ,AFT
Agenda Summary Report
Personnel Committee Meeting
April 11, 2005
Page - 3 -
· The City will need to communicate with the retirees to ensure they do
not enroll in MediCare Part D (with the exception of those in Senior
Secure and Senior Advantage plans) and assure the retirees that they
still will have the same drug coverage. The Federal Government will
do a blitz coveragetelling retirees to sign up for-Medicare Part D.
City Manager Alan. Tandy expressed the City provides options to retirees, but has
never given advice, especially, when the advice contradicts advice from the
Federal Government and is dealing with financial advice that could cost retirees
money and impact their health plans.
The consultant said the City would need to inform the eligible retirees not to sign
up and not to pay the $35. If the retiree'does enroll in Medicare Part D, the City
will not get the subsidy for that retiree. Each year, the City and retirees will have'
an opportunity to change the plan as long as the retirees have the certificate of
credible coverage for Medicare Part D.'
Retiree Margaret Ursin spoke regarding the employer plan to apply for the
subsidy and the advantages for the City and retirees.
Option 3. The Wrap Plan. This .option is to develop a program that supplements
the Medicare Part D benefit and requires all eligible retirees to elect Medicare
Part D and pay the $35 per month to receive any prescription drug coverage from
the City.
· It was noted the $35 per month payment for Medicare Part D could increase
with inflation. The $35 is 'the present cost.
· This could reduce the Blue Cross premiums by as much as 25% for these'
retirees because it includes a component for prescription drugs.
· The City would pay secondary coverage.
· It would require splitting the Blue Cross PPO premiums between those retirees
eligible for Medicare and those who are not eligible.
· This option is also subject to the ability of Blue Cross to effectively and
efficiently coordinate coverage with Medicare.
· Retirees' benefits can remain unchanged in aggregate, reducing disruption to
participants, consistent with current City approach to Medicare Parts A and B.
· There are no actuarial attestation, certificates of credible coverage or CMS
reporting requirements.
· . Potentially greater saving than those represented by the Subsidy plan.
Disadvantages include:
· Much more complex claims payment particularly if the retiree's
chosen Prescription Drug Plan (PDP) Medicare Part D has .a
different administrator than Blue Cross.
Aoenda Summary .eport DRAFT
Personnel Cornmittee Meeting
April ~ ~, 2005
Page - 4 -
· Inconsistencies in plan terms between the Prescription Drug Plan
(PDP) and the Blue Cross Plan could lead to retiree confusion.
· Significant communications necessary with retirees to help retirees
make choices and assure enrollment in a PDP.
· Since the PPO rates would have to be split between Medicare and
non-Medicare retirees, the non-Medicare retirees could see a large
increase in their health insurance costs.
Based on the complexity of the .wrap coverage, the consultant stated Mellon
recommended, the City keep the current benefit plans unchanged and elect to
seek Option 2, the Subsidy from the federal government. The subsidy would
reduce the liability reported under GASB 45.
If the City makes a decision to go with the Subsidy Plan, the following would
be the immediate time frame:
Late April 2005
· CMS (Federal Government) issues final guidelines.
May 2005
· Personnel Committee makes recommendation to the .City Council.
May 2005
· City' begins developing retiree communications directing retirees to not
elect Medicare Part D.
· City begins work with Blue Cross and Kaiser to develop the process for
collecting the needed claim data to support the subsidy reimbursement.
City Manager Alan Tandy asked the consultant how much extra staff will be
needed to facilitate the Subsidy Plan. Before staff would be able to make a
recommendation to the Committee, it will be necessary to get the costs for
implementation versus the subsidy the City would receive.
Consultant Tim Beck stated he would provide the information regarding the
work required for the retiree campaign and cost savings information to the
city.
Committee Chair Hanson requested the Personnel Committee meet again
when the cost information is available. The Mellon consultants will provide
hard copies of the information and if necessary, set up a conference call
during the COmmittee meeting.
DRAFT
Agenda Summary Report
Personnel Committee Meeting
April 11, 2005
Page - 5 -
B. Review and Committee recommendation on emergency room utilization
for Blue Cross PPO
Consultant Jim Summers explained currently there is no co-payment in the
PPO plan when employees go to a hospital emergency room as compared to
the HMO plan which has a $25 co-payment. Many.employees go to hospital
emergency rooms instead of urgent care centers.
The information below was provided by Blue Cross for active and retired
employees, for the PPO and HMO plans. Similar informatiOn was not
available from Kaiser.
Hospital Emergency Room VisitsmPatient Not Admitted
PPO HMO
Active 226 96
Retiree 39 18
Totals 265 114
Committee Chair Hanson expressed he would like to wait until the Insurance
Committee meets and makes its recommendation to the Personnel
Committee before the. Personnel Committee takes any action. The
Committee deferred this item to the next Personnel Committee meeting.
C. Report on Government Accounting Standards Board (GASB) 45 -
Klimko/Smith
This item was not heard due to time constraints.
5. COMMITrEE COMMENTS
6, ADJOURNMENT
The meeting was .adjourned at 11:55 a.m.
Attendees: City Manager Alan Tandy; Assistant City Manager Alan Christensen; Assistant
City Manager John Stinson; City Attorney Ginny Gennaro; Human Resources Manager
Carroll Hayden; Finance Director Gregory Klimko; Deputy Fire Chief Gary Hutton; John
Patterson, Craft Worker II (CCAPE/Miscellaneous); Scott Monroe and Paul Smith, Fire
Department; City Clerk Pam McCarthy; Ginger Rubin, Human Resources Benefits; Chuck
Waide and Pete Rodriguez, SEIU-CCAPE; Tim Beck and Jim Summers from Mellon; and
Margaret Ursin, Retiree.
cc: Honorable Mayor and City Council
S:~AC\O5PersonnelCommitteePO5aprl 1summary ' "