To: The Board of Supervisors of Sonoma County, Board of Directors of the Sonoma County Water Agency, Board of Commissioners of the Community Development Commission, Board of Directors of the Sonoma County Agricultural Preservation and Open Space District
Department or Agency Name(s): Human Resources Department
Staff Name and Phone Number: Cheryl Thibault, Employee Benefits Manager - 707-565-3033
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Employee and Retiree Medical Plan Agreements and Amendments
End
Recommended Action:
Recommended action
A) Authorize the Director of Human Resources to execute an agreement for a fully insured Retiree Medicare Advantage (MA) Preferred Provider Organization (PPO) Plan with Anthem, for the term June 1, 2024, through May 31, 2025.
B) Authorize the Director of Human Resources to execute an amendment to the Administrative Services Agreement with Anthem Blue Cross (BC) for third-party claims administration and provider network access for the self-insured County of Sonoma Health Plans (CHP), for the term June 1, 2024, through May 31, 2027.
C) Authorize the Director of Human Resources to execute amendments for Employee and Retiree Medical Plans with Kaiser Permanente (Kaiser), Sutter Health Plus, and Western Health Advantage, for the term June 1, 2024, through May 31, 2025.
end
Executive Summary:
The Human Resources (HR) Benefits Unit is responsible for management and administration of the County’s health and welfare benefit programs provided to employees, retirees, and eligible dependents. The HR Benefits Unit contracts with fully insured providers and third-party administrators (TPA) who provide services, specialized skills, and expertise to public and private employers nationally.
Per County purchasing policies, the HR Benefits Unit solicits services from vendors to meet the County’s needs regarding benefits provided through Board approved memorandums of understanding and the Salary Resolution. The HR Benefits Unit’s purpose is to provide high quality benefits at the best market prices.
Anthem BC Medicare Plan and Administrative Services Agreement
The recommended action is to authorize the Director of Human Resources to execute a new agreement with Anthem to provide a medical plan option for County Medicare retirees and their Medicare eligible dependents, effective June 1, 2024, and to execute an amendment to the agreement with Anthem BC to provide Administrative Services Only (ASO) for the CHP. Implementing the Anthem Medicare Advantage plan will reduce the premium rate by 55.8% compared to the current CHP rate of $646.52. The Anthem BC amendment extends the agreement term through May 31, 2027, with the monthly administrative fee increasing from $42.53 to $48.26 per enrollee and includes rate caps of 3% each for Years 2 and 3.
Medical Plan Renewals
The recommended action authorizes the Director of Human Resources to execute amendments to renew the Kaiser; Sutter Health Plus; and Western Health Advantage agreements to provide medical plan options for County employees, Medicare and non-Medicare retirees and their eligible dependents, effective June 1, 2024.
Discussion:
Request for Proposal
The Human Resources (HR) Department issued a Request for Proposal (RFP) for employee and retiree medical plan benefits in August 2023. Six proposals were received in September from the following medical plan vendors: Aetna, Anthem BC, Health Net, Kaiser, Sutter Health Plus, and Western Health Advantage. All proposals were evaluated by a Subcommittee of the Joint Labor Management Benefits Committee (JLMBC) with the assistance of the County’s benefit consultants, The Segal Company (Segal). The following criteria was used to evaluate the proposals: Proposed rates under multiple scenarios, benefits provided, provider access, quality of care, financial stability, customer service, and demonstrated experience with similar employers. A detailed report of the comparative data was provided by Segal to the Subcommittee for review and consideration. After a thorough analysis of the data provided in the RFP responses and in the report, four medical carriers were interviewed as finalists. Following these interviews, the Subcommittee requested each finalist to submit their best and final offers.
In January 2024, the Subcommittee made a recommendation to the full JLMBC to add a fully insured Anthem MA PPO Plan and to renew agreements with Kaiser, Sutter Health Plus, and Western Health Advantage to be effective June 1, 2024. The Subcommittee also recommended Anthem BC to continue to provide third-party administration for the CHP. In February 2024, the JLMBC decided to endorse these recommendations to the Director of Human Resources and the Board of Supervisors. Each year, the County and the JLMBC with the assistance of Segal negotiate premium renewals without the requirement of completing the RFP process. After the Board of Supervisors’ initial contract approval, the Director of Human Resources has the authority to approve amendments to change the terms, such as premium rates and length of agreement. The next RFP for medical plan coverage will be conducted in three to five years.
The following provides more specific information about each vendor. Employer costs paid for medical plans are as follows, annualized based on payments from July 2023 through March 2024.
|
Medical Plan Employer Cost |
Annualized Cost Retiree |
Annualized Cost Employee |
Grand Total Medical Plans |
|
County Health Plan |
$4,122,054.38 |
$543,639.45 |
$4,665,693.83 |
|
Kaiser Premium |
$12,028,947.68 |
$28,658,044.81 |
$40,686,992.49 |
|
Sutter Health Plus Premiums |
$1,772,984.72 |
$36,199,096.65 |
$37,972,081.37 |
|
Western Health Advantage Prem |
$279,022.24 |
$2,539,366.93 |
$2,818,389.17 |
|
Total |
$18,203,009.02 |
$67,940,147.85 |
$86,143,156.87 |
Anthem - As a result of the Medical RFP, the County Health Plan for Medicare Retirees and Medicare Dependents will be replaced by the Anthem MA PPO Plan effective June 1, 2024. Although listed as a separate agreement below (Attachments 1.A and 1.B), the plan also includes prescription drug coverage for Medicare Retirees and Medicare Dependents. For the agreement period June 1, 2024, through May 31, 2025, the MA PPO premium rate is $285.70 per member per month and includes a rate cap of 7.5% for Year 2 on the total rate, and a rate cap of 5% for Year 3 on the medical portion of the MA PPO rate. The fully insured Anthem plan will reduce the premium rate by 55.8% compared to the current CHP rate of $646.52. As of March 1, 2024, there are 595 Medicare retirees in the CHP that will be migrated over to the new plan.
Anthem BC ASO - The Anthem BC ASO provides third-party claims administration, 24-hour nurse hotline, customer service, excess stop-loss claims filing services, and discounted network access services for the County Health Plan. Services also include access to the “Blue Card” Program, for plan members outside California through other Blue Cross/Blue Shield affiliates, nationwide. The amendment extends the agreement term through May 31, 2027, with the monthly administrative fee increasing from $42.53 to $48.26 per enrollee and includes rate caps of 3% each for Years 2 and 3. The fee applies only to Employees and non-Medicare Retirees in the CHP. As of March 1, 2024, there are 42 active employees and 83 non-Medicare retirees in the plan.
Kaiser - Kaiser has a long history of providing medical plan option for County employees, retirees, and their eligible dependents. Kaiser’s last, best, and final premium increase of 18.6% included a 2% rate reduction for employees and non-Medicare retirees in exchange for continued discussions with the JLMBC about how demographics and underlying health characteristics of the County’s population influence rate volatility. In response to the significant premium increase, the JLMBC researched and discussed alternative plan designs, including increasing copays for office visits, pharmacy, and emergency room visits. Ultimately, the group did not achieve consensus on changing the copay amounts and the $10 copay plan remained unchanged.
Sutter Health Plus - Sutter Health Plus’s $10 Copay plan increased 6.7% and included a second-year rate cap of 8%. Sutter Health Plus medical plans continue to be covered at 100% by the County contributions without the employee having to pay a portion of the premium.
Western Health Advantage -Western Health Advantage’s $10 Copay plan increased 4.9% and included a second-year rate cap of 6% and a third-year rate cap of 9.5% for employees and non-Medicare retirees. Western Health Advantage medical plans continue to be covered at 100% by the County contributions without the employee having to pay a portion of the premium.
Approval of the recommendations will provide continuity of medical coverage for the County’s employees, retirees, and their dependents. And a new medical plan option for County Medicare retirees and their Medicare dependents.
Additional medical plan information not attached to this Board Item can be found at the following link: <https://sonomacounty.ca.gov/benefits>
Strategic Plan:
N/A
Racial Equity:
N/A
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
March 1, 2016 (item #32) - Board authorized agreements with Anthem Blue Cross, Kaiser Permanente, Sutter Health Plus, and Western Health Advantage.
May 9, 2023 (item # 32; 2023-0357) - Board authorized amendment with Anthem Blue Cross to extend the term through May 31, 2024.
Fiscal Summary
|
Expenditures |
FY23-24 Adopted |
FY24-25 Projected |
FY25-26 Projected |
|
Budgeted Expenses |
$35,572 |
$264,254 |
$ 264,254 |
|
Additional Appropriation Requested |
|
|
|
|
Total Expenditures |
$35,572 |
$264,254 |
$ 264,254 |
|
Funding Sources |
|
|
|
|
General Fund/WA GF |
|
|
|
|
State/Federal |
|
|
|
|
Fees/Other |
$35,572 |
$264,254 |
$ 264,254 |
|
Use of Fund Balance |
|
|
|
|
General Fund Contingencies |
|
|
|
|
Total Sources |
$35,572 |
$264,254 |
$ 264,254 |
Narrative Explanation of Fiscal Impacts:
Third Party Administration costs associated with the Anthem BC Administrative Services Only agreement is paid from employer and employee contributions in the County Health Plan Internal Service Fund (ISF) as part of the Human Resources administered budget. This is reflected in the fiscal table above.
Medical plan premiums paid to each medical plan vendor are funded by employer and employee contributions. The employer portion of the costs will be absorbed by departmental operating budgets and the retiree health OPEB internal services fund.
|
Staffing Impacts: |
|
|
|
|
Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
|
N/A |
|
|
|
Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
1. A. Anthem Standard Medicare Advantage PPO Agreement
B. Anthem Senior Rx Plus Agreement
2. Anthem Blue Cross Administrative Services Agreement 11th Amendment
3. Kaiser Permanente Group Agreement Amendment
4. Sutter Health Plus Agreement Amendment
5. Western Health Advantage Agreement Amendment
Related Items “On File” with the Clerk of the Board:
N/A