COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee and Public Services

DATE:

November 20, 2002

BOARD MEETING DATE:

December 17, 2002

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, ESP Director

Paul Hackleman, Benefits Manager

SUBJECT:

Approve a resolution waiving the Request for Proposal process and authorizing the EPS Director to sign an agreement with Aetna.

Recommendation

Approve a resolution waiving the Request for Proposal process and authorizing the EPS Director to sign an agreement with Aetna for the provision of health benefits to County employees, retirees and their dependents for the period from January 1, 2003 through December 31, 2003.

Background

A County Labor-Management-Retiree Committee conducted a Request for Proposal for HMO benefits for 2001 and 2002. Aetna was selected in a competitive process that included HealthNet and PacifiCare.

Discussion

Aetna's initial proposed premium increase for 2003 was 41.7%. In negotiations, the County and labor agreed to retain Aetna but to make substantial changes in co-payments in order to reduce the overall premium increase. The negotiated agreement between labor and management resulted in the following changes:

· Office visits for primary care physician will increase from $5 to $10.

· Office visits for specialists will increase from $5 to $20.

· A $100 hospitalization co-pay will be implemented.

· Co-pays for emergency room visits will increase from $35 to $100.

Co-pays for prescription drug costs will increase from $5 (generic) $10 (brand name formulary) and $25 (brand name - non-formulary) to $10, $20 and $35 respectively.

Aetna is being recommended for continuation without a formal request for proposal process because they:

· Offered the best proposal for 2001 in response to a Request for Proposal process,

· No new options have arisen which would represent less cost and less disruption of patient-physician relationships and

· Labor requested the continuation of Aetna and agreed to changes in co-payments.

Vision Alignment

The contract with Aetna represents Vision Statement #20 which focuses on careful consideration of future impact and #21 incorporating the County's vision and goals into delivery of services.

Fiscal Impact

The net County cost increase for 2003 is $1,600,000 which represents a 25.6% increase.