COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee and Public Services

DATE:

May 20, 2003

BOARD MEETING DATE:

June 10, 2003

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, EPS Director

Paul Hackleman, Benefits Manager

SUBJECT:

Resolution Approving Agreement with Vision Service Plan

Recommendation

Adopt a resolution waiving the Request for Proposal process and authorizing an agreement with Vision Service Plan (VSP) effective August 1, 2003 through July 31, 2006.

Background

Vision Service Plan (VSP) provides routine vision care to County employees and their dependents. Through a series of cost containment efforts, including self-funding, redesign and competitive bidding, the premiums for vision benefits have been kept stable. Since it is self-funded, the cost for the vision care program is partly the administrative expense charged by VSP but mostly the cost of actual claims. Since 1990 total fees for administrative costs have increased by 17% or 1.3% per year. During the past six years, claims cost have grown by only 2%.

Discussion

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

1. Provide a broad network of optometrists and ophthalmologists. The next largest provider, Medical Eye Services (MES) has a network that would require approximately 39% of current plan members to change providers.

2. Control provider costs through negotiated agreements that apply to both covered and non-covered services. As a result, cost is controlled for the County and also for the member through discounts of additional selected options. In 2000, VSP also introduced laser surgery with 20% discounts to eligible employees and their family members.

3. Provide services that are virtually complaint free. During the term of the last agreement, VSP has scored above 95% in claims processing speed and accuracy, positive patient satisfaction and response to telephone and written inquiry. Of all the benefits administered by the Benefits Division, the VSP plan has the lowest number of complaints or employee issues.

The non-discrimination provision has been modified to require VSP to "report to the County Manager any finding against Contractor by any court on any complaint of discrimination or any finding against Contractor on any charge before the Equal Employment Opportunity Commission, the Fair Employment and Housing Commission or any other entity charged with the investigation of allegations of discrimination, within 10 days of such finding." Both County Counsel and the County Manager have approved this modification.

Vision Alignment

The agreement with VSP 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 agreement specifies no premium increase through the first two years (through July 31, 2005). Effective with the last year of the contract (August 1, 2005), the premium will increase from $1.20 to $1.27 (5.8%). The increased County cost in the third year of the agreement is $4,200.