COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Employee and Public Services

 

DATE:

September 15, 2005

BOARD MEETING DATE:

October 18, 2005

SPECIAL NOTICE/HEARING:

None

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

Mary Welch, EPS Director

Paul Hackleman, Benefits Manager

SUBJECT:

Renewal of Agreement with Aetna

 

RECOMMENDATION:

Approve a resolution waiving the Request for Proposal process and authorizing the Employee and Public Services Director upon approval by County Counsel to sign an amendment to the current agreement with Aetna for provision of health plan benefits to County employees, retirees and their dependents for the period from January 1, 2006 through December 31, 2006.

 

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government

Goal(s) 20 and 21: Government decisions are based on careful consideration of future impact rather than temporary relief or immediate gain; and County employees understand, support and integrate the County vision and goals into their delivery of services.

 

Performance Measure(s):

Measure

FY 2004-05
Actual

FY 2005-06
Projected

Percentage of employees enrolled in a health program within 30 days of employment

N/A

98%

Total percentage of enrolled employees

N/A

25%

 

BACKGROUND:

The Aetna plan currently covers 1,251 employees (25%). Aetna terminated its HMO coverage for retirees in Northern California in 2001

Aetna is an Independent Physician Association (IPA) HMO which represents an important alternative to Kaiser and Blue Shield. The Aetna network is less restrictive than Kaiser’s, since individual providers are based throughout the community rather than being affiliated with a specific facility and it is less costly than the Blue Shield plan.

There are only three IPA HMOs operating in Northern California. A County Labor-Management-Retiree Committee conducted a Request for Proposal in 2001. Aetna was unanimously selected over both HealthNet and Pacificare based on both cost competitiveness and size of network.

 

DISCUSSION:

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

Offered the best proposal for coverage and cost in 2001 in response to a Request for Proposal process and

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

The increase in the Aetna premium for the County plan for active employees and retirees under age 65 is 8.47%. Aetna has indicated two primary reasons for the size of this increase. In the 2002 labor negotiations, the County and employee organizations agreed to increases in co-payments. In January 2005, the County also introduced a risk reduction program called “Simple Steps”. This program focuses on high-risk individuals with multiple diseases (e.g. diabetes, cardiovascular disease). Although Aetna normally charges an additional cost for this program it is being offered at no cost to the County or participating employees. The objective of the co-payment changes and risk reduction program is to reduce overall utilization and corresponding cost.

Because of the requirement that Health Plans secure CMMS approval for their integration of benefits, all health plans anticipate a delay in being able to get contracts to employers. Although Aetna does not offer a retiree plan in Northern California they are still subject to the same delays in providing contracts to employers. As a result, we are requesting that the Employee and Public Services Director be authorized to sign agreements upon County Counsel approval of the agreement.

 

FISCAL IMPACT:

The net County cost increase for 2006 is an estimated $966,800. This cost has already been included in the FY 05-06 budget.