Kaiser is being recommended for continuation without a formal request for proposal process because they:
• Offer the lowest cost premium for employer-provided health coverage,
• Provide a closed-panel network of physicians that is not offered by any other health plan and
• Provide a network that, if changed, would cause 100% patient disruption because no new plan would be able to offer coverage through the Kaiser primary and specialist physicians.
The increase in the Kaiser premium for the County plan for active employees and retirees under age 65 is 12.33%. This increase is comparable to Kaiser’s community rate for all northern California employers.
The premium decrease for retirees age 65 and over is 6% due primarily to the implementation of Medicare Part D effective January 1, 2006. Under this new program Medicare will reimburse a portion of prescription drug costs, reducing the cost for employers. Employers have two main options. They may “integrate” the coverage provided by Medicare with their current coverage, allowing health plans to receive reimbursement and pass savings along to employers through premium reductions. Alternatively, employers must obtain annual actuarial assessments of costs and apply direct to the Centers for Medicare and Medicaid Services (CMMS) to obtain a maximum reimbursement of 28%. Health plans have been analyzing the comparative savings under both options and concluded that the integration provides more direct savings to employers and involves less administrative expense.
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. For this reason, we are requesting Board approval of the renewal of agreements and authorization for the Employee and Public Services Director to sign amendments upon approval by County Counsel.
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