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HomeMy WebLinkAbout08/03/2012 Agenda Summary Report________________________________________________________________ S:\Council Committees\2012\Personnel\August\August 3 Agenda Summary Report.docx Page 1 ST:al B A K E R S F I E L D City Council members: Steven Teglia Ken Weir, Chair Staff: Steven Teglia David Couch Assistant to the City Manager Harold Hanson SPECIAL MEETING OF THE PERSONNEL COMMITTEE Friday, August 3, 2012 12:00 p.m. City Hall North – Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 AGENDA SUMMARY REPORT Meeting called to order at 12:00 p.m. 1. ROLL CALL Committee members: Councilmember Ken Weir, Chair Councilmember David Couch Councilmember Harold Hanson City staff: Alan Tandy, City Manager Steven Teglia, Assistant to the City Manager Rhonda Smiley, Assistant to the City Manager/PIO Nelson Smith, Finance Director Virginia Gennaro, City Attorney Christi Tenter, Human Resources Manager Ginger Rubin, Benefits Technician Retired employees Fred Baugher, Florn Core, Bill Descary, Patti Phoenix /BCARE: and Margaret Ursin Others present: Johnny Wu and Tom Morrison, Segal Company Chuck Waide and Tom Webster, SEIU Brent Boyd, Managed Care Systems Michael Myers, GEMCare Health Plan, Inc. Members of the media ________________________________________________________________ S:\Council Committees\2012\Personnel\August\August 3 Agenda Summary Report.docx Page 2 ST:al 2. ADOPTION OF APRIL 30, 2012 AGENDA SUMMARY REPORT Adopted as submitted 3. PUBLIC STATEMENTS None 4. NEW BUSINESS A. Discussion regarding the Recent Request for Information (RFI) Process Assistant to the City Manager Teglia reported that Segal Company was directed to distribute a Request for Information (RFI) to ascertain interest in providing health care services to employees. The goal was to identifying interest amongst medical providers, and if any of them might propose any deviation or change from the City’s existing plans. Tom Morrison of Segal Company distributed information related to the RFI process, and he gave a summary overview of the contents. Every major medical provider that does business in California was sent the RFI, other than Anthem, as the City currently has a contract with them. Five companies responded: Aetna, Cigna, GEMCare/Mercy Memorial Health System, United Healthcare, and Blue Shield. Aetna had notable exceptions to the City’s existing plan, as did Cigna and GEMCare. Blue Shield did not provide the requested information. The plan deviations included exclusion of some hospitals in the Anthem network, different lifetime maximums, increased co-pay amounts, exclusion of some medical groups, reduced benefits for retirees, and limitations to specifically identified counties in California. Mr. Morrison addressed the process for a Request for Proposal (RFP). It is evident that several companies would submit a bid; however, there are several factors to consider:  An additional cost to the City;  An additional six weeks to process the information, and then have it reviewed by both the Insurance and Personnel Committees, which would delay implementation and open enrollment;  There is no guarantee that it would result in lower rates for the City; and  It would result in significant deviations from existing plans. ________________________________________________________________ S:\Council Committees\2012\Personnel\August\August 3 Agenda Summary Report.docx Page 3 ST:al There is also the impending implementation of the Affordable Care Act on January 1, 2014, and it is unclear at this time how that will impact employees or medical rates. Mr. Teglia reported that the Insurance Committee had been provided this same information and presentation; and, after two meetings, unanimously recommended that the City not move forward with an RFP; and instead, move forward with the process of renewing the Anthem agreement. The basis for the recommendation was the impacts to existing employees based on plan deviations described earlier, and specifically, the impacts to retirees. They also took into account that earlier this year, some employees had to change medical providers when Anthem chose to discontinue the partnership with GEMCare. Should carriers be changed again, a larger group of employees would be affected, and, possibly, to a greater degree . City staff concurs with this recommendation. Chuck Waide of SEIU said he attended the Insurance Committee meetings. He thanked Segal Company for taking the time to answer all questions posed to them. He agrees with the recommendation of the Insurance Committee, and their reasoning behind it. Brent Boyd with Managed Care Systems, a GEMCare medical group, said they would like to participate in one of the plans that is chosen. Michael Myers of GEMCare Health Plans, said that although the GEMCare network is limited, he would like to see employees be given the choice. He supports offering an RFP. He stated that they are willing to part ner with Aetna to create a health plan that would allow them to offer a full network at a competitive rate. In regard to the dispute between Anthem and GEMCare, Mr. Morrison said that he has received reports that Anthem is still open to continuing negotiations with GEMCare, if they are approached. In response to a question from Committee member Hanson, Mr. Morrison said that insurance carriers have the option of excluding hospitals, such as Kern Medical Center, and it is based on what they believe will attract customers. Committee member Couch asked about the timeline for releasing an RFP. Mr. Morrison said that in order to be ready for open enrollment at the beginning of 2013, the time would be now. If the timing would be applicable to the January 2014 open enrollment, then it could be released at a later date. Mr. Tandy stated that there could be significant complexities once the new law is enacted. He also said that an RFP was ________________________________________________________________ S:\Council Committees\2012\Personnel\August\August 3 Agenda Summary Report.docx Page 4 ST:al issued two years ago that revealed a potential new carrier for re tirees. That action resulted in the creation of BCARE, an organization comprised of retired employees, who strongly objected to the proposal. Staff learned that insurance coverage is an extremely sensitive topic to all employees, active or retired. Mr. Morrison said that staff found last year that employees who had been enrolled in GEMCare did not lose their access to those physicians they had been doing business with; they just had to switch plans to keep them . Mr. Teglia said that all affected employees were counseled on their options, and there were no objections. Committee Chair Weir stated that it was time to move forward with a recommendation. Committee member Couch had a minor objection, but did not block the discussion from being closed. B. Presentation of the Updated Actuarial Valuation Report for Retiree Medical Mr. Morrison of the Segal Company gave an overview of materials provided to the Committee. The unfunded actuarial accrued liability has been reduced from $101,430,667 to $83,653,241, a reduction of $17,777,426. The Annual Required Contribution (ARC) was reduced from $9,495,763 in June 2010 to $8,006,053 in June 2012. The Annual Cost of Benefit (OPEB) is now at $686,739. Mr. Morrison explained a graph depicting how Bakersfield compares to other cities of similar size in relation to the amount contributed, ARC, unfunded liability, and funded ratio of assets to liability. Committee member Hanson congratulated the City Council, and specifically, Committee Chair Weir, who was the leader in these efforts. He also thanked all of the active and retired employees for their efforts. Committee member Couch asked if there would be a benefit to funding more. Mr. Tandy stated that during the recession, the City was behind by $8 million, but that has been reduced to $686,000. While more could be contributed, the City Council would have to decide whether to prioritize advance funding of the liability against other budget priorities. ________________________________________________________________ S:\Council Committees\2012\Personnel\August\August 3 Agenda Summary Report.docx Page 5 ST:al Committee member Couch asked about the trust account. Finance Director Smith said that it is an investment account with a m oderately conservative portfolio. Approximately 60% are bonds, and 40%, stock. The target return is 5.75%, although that percentage has not been reached. Mr. Morrison added that since this is an irrevocable trust, it cannot be used for any other purpose. Committee Chair Weir thanked the employee groups and staff for guiding the City to these exceptional results. Mr. Teglia confirmed that this information would be presented to the full Council at an upcoming workshop. 5. COMMITTEE COMMENTS None 6. ADJOURNMENT The meeting was adjourned at 1:15 p.m.