Inter-Departmental Correspondence

Health Services Agency



March 12, 2004


April 6, 2004



Honorable Board of Supervisors


Margaret Taylor, Director of Health Services



Amendment to the Health Plan of San Mateo contract to administer the Healthy Kids program



Adopt a resolution authorizing the president of the Board to execute a Second Amendment to the agreement with the San Mateo Health Commission



In 2002 your Board established and funded the San Mateo County Children's Health Initiative (CHI) to address community-wide concern for the 17,000 county children who lacked access to comprehensive medical, dental and vision health insurance coverage.


The Health Services Agency has served as the lead organization in administering the various components of the CHI. It has overseen the contract for the Healthy Kids insurance program, community-based outreach, enrollment and marketing activities, and the project's overall administration, evaluation, and fiscal oversight.


The San Mateo Health Commission, doing business as the Health Plan of San Mateo (HPSM), serves as the contracted plan administrator for Healthy Kids, receiving a monthly per-member per-month (PMPM) premium, under an "at-risk" arrangement, to provide comprehensive health benefits. The HPSM determined the appropriate PMPM premium rate by using the utilization experience of Santa Clara Healthy Kids and the age- and demographic-adjusted San Mateo County Medi-Cal and Healthy Families programs. The San Mateo County Healthy Kids utilization is lower than the projection, and it is likely that the collected premiums will be greater than the cost of providing health care services.



Health Services and the Health Commission seek to further amend the agreement. The Second Amendment provides that the Commission will return 80 percent of any year-end Healthy Kids funding surplus (i.e., the remainder when collected premiums are subtracted from the cost of providing health care services) to the County, which will use the funds to cover future Healthy Kids premiums. The Commission will retain 20% of the surplus to offset the cost of administering Healthy Kids, to improve the quality of health care services provided to those with limited means. On an annual basis, the Commission will report its year-end cost of providing health cares services to Healthy Kids members, administrative costs for the Healthy Kids program, and the resulting balance after costs are subtracted from premiums.


Vision Alignment

The amendment keeps to the commitment of Ensuring Basic Health and Safety for All and goal number 5: Residents have access to health care and preventive care. They contribute to this commitment and goal by providing health care coverage to all children from low-income and middle-income families.


Fiscal Impact

Approval of this item has no impact on the County General Fund. Any funds returned by the Commission to the County will be used to offset future years' expenses for Healthy Kids. The approved CHI budget for Fiscal Year 03-04 is $6 million with $1.9 million earmarked from the County and $4.1 million appropriated from First 5 San Mateo County, private foundations, and the Sequoia and Peninsula Healthcare Districts. The projected CHI budget for Fiscal Year 04-05 is $7.7 million with a fiscal impact on the County of $2.7 million.