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 Secure Horizons (Pacificare)

 

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 Secure Horizons for provision of health plan benefits to County 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 retirees enrolled in a health plan within 30 days of eligibility

N/A

98%

Total percentage of enrolled retirees

N/A

20%

 

BACKGROUND:

Secure Horizons currently covers 96 retirees and represents the Independent Practice Association (IPA) HMO model that is no longer offered by Aetna. The County conducted a formal Request for proposal in 2000. At that time only two plans offered this kind of coverage, Secure Horizons and HealthNet. Secure Horizons was selected because its premium was less and its network more closely mirrored the Blue Shield and Aetna retiree health networks which minimized disruption of participants.

 

DISCUSSION:

Secure Horizons is being recommended for continuation without a formal request for proposal process because:

They were initially selected in a Labor-Management-Retiree Request for Proposal process,

No new options have arisen which would represent comparable design, less costs or less disruption of patient-physician relationships and

Secure Horizons has implemented back-to-back premium reductions in the last two years.

The premium decrease for retirees age 65 and over is 8.83% 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.

 

FISCAL IMPACT:

The net County cost decrease for 2006 is an estimated $ 3,000. This cost has already been included in the FY 05-06 budget.