CITY OF LOS ANGELES JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE

Transcription

1 CITY OF LOS ANGELES JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE PROPOSED MINUTES SPECIAL MEETING MAY 23, :00 A.M. CITY HALL, 200 NORTH SPRING STREET, ROOM 1050 Present: Committee Members Regular: Wendy Macy Personnel Department Cheryl Parisi AFSCME, Council 36 Tony Royster General Services Department June Gibson Fire Department Alternates: Ramon Rubalcava SEIU Local 721 Norma Gutierrez Fire Department Maritta Aspen City Administrative Office Marleen Fonseca Engineers and Architects Association Personnel Department Staff Jody Yoxsimer Assistant General Manager Russell Escueta Management Assistant Paul Makowski Senior Personnel Analyst I Daisy Tam Personnel Analyst II Steven Montagna Chief Personnel Analyst Jenny Yau Senior Management Analyst II Ted Vasquez Management Assistant Office of the City Attorney Curtis Kidder Assistant City Attorney The Segal Group Robert Mitchell Stephen Murphy Keenan Associates Steven Balentine Laurie LoFranco

2 1. Call to Order Cheryl Parisi called the meeting to order at 9:20 a.m. 2. Public Comments Xavier Becerra made a public comment on Committee Report and addressed the benefit service provider procurements. Xavier Becerra made a public comment on Committee Report regarding the rate renewal increases. 3. Minutes A motion was made by Tony Royster and seconded by Chris Hannan to approve the JLMBC minutes of the April 6, 2017 Special Meeting; the Committee unanimously adopted this motion. 4. Committee Report 17-19: 2017 Benefits Service Provider Procurement Updates Employee Assistance Program (EAP) and Tax-Advantaged Spending Accounts Jenny Yau presented this report. She began by stating that the JLMBC approved the Request For Proposals (RFPs) for EAP and Tax-Advantaged Spending Accounts at its previous meetings in January and February and that the RFPs were subsequently released on the City s Los Angeles Business Assistance Virtual Network (BAVN) site, on April 10. Ms. Yau stated that the City received two proposals each (four total) in response to both RFPs. She then explained that for a proposal to be deemed responsive, both parts A and B of the RFP must be completed and submitted by the proposal submission deadline. She stated that staff from the Personnel Department, Administrative Services Division reviewed each vendor s proposal for compliance with part B and that one vendor for each RFP failed to complete the City s Business Inclusion Program outreach requirement that led to the disqualification of their bids. Ms. Yau stated that the disqualification of two of the four proposals limits the City to considering one proposal each for Employee Assistance Program and Tax- Advantaged Spending Accounts services. She further stated that being limited to considering one vendor for each service is not in the City s best interest towards negotiating the most favorable contractual terms. She stated that staff s recommendation was that the current RFPs be cancelled and reissued. She explained that there is insufficient time remaining to reissue the RFPs and make a selection for the 2018 plan year, adding that all decisions for 2018 must be made by July to meet recordkeeping, programming, and administrative deadlines for the October Open Enrollment period. As a result, she stated that assuming cancellation of the procurements, the current contracts with each incumbent provider would need 2

3 to be extended for one additional year to December 31, She further stated that staff will prepare for the RFPs to be reissued later in the year to ensure ample time to conduct review and evaluations in advance of the implementation date for the 2018 plan year. Ramon Rubalcava asked if there are plans to encourage more bidders to respond to the RFPs. Steven Montagna responded that staff can work with the JLMBC s consultants to encourage responses, and continue ongoing efforts to emphasize the importance of vendors registering on the BAVN site to receive notification of when RFPs are posted. Mr. Rubalcava asked if vendors can still access RFPs without registering on BAVN. Mr. Montagna responded that vendors who contact Employee Benefits are directed to register on the BAVN website to access the RFP since they also receive addenda and communications via BAVN. He added that this process ensures that all communications are in writing and every vendor receives the same information at the same time. Tony Royster stated that it may help to have a tutorial that can aid vendors in registering on the website and sit with vendors to help them through the RFP process. Mr. Montagna replied that the focus of the pre-proposal conference is entirely on the Standard Provision general contracting requirements. He added that there is also an opportunity for bidders to pre-submit certain general contracting requirement documents which allows them to receive feedback as to whether those documents are compliant and allows them time to correct any deficient areas before the final submission deadline. A motion was made by Ramon Rubalcava and seconded by Tony Royster to recommend to the General Manager of the Personnel Department that (a) the 2017 Requests for Proposal (RFPs) for EAP and Tax-Advantaged Spending Accounts services be canceled; (b) these RFPs be modified and re-issued within the third quarter of 2017; and (c) the term of: (1) Contract No. C with Managed Health Network to provide an Employee Assistance Program for the LAwell Civilian Benefits Program be extended through December 31, 2018; and (2) Contract No. C with WageWorks to provide tax-advantaged spending accounts (healthcare flexible spending account, dependent care reimbursement account, and commuter spending accounts) for the LAwell Civilian Benefits Program be extended through December 31, 2018; the Committee unanimously adopted this motion. 5. Committee Report 17-20: 2018 LAwell Benefits Plan Review and Rate Renewal Update Jenny Yau presented this report. She began by providing an overview of the demographics of the LAwell population by gender, age, and salary on page 4 of the report. She added that the City employee population tends to skew older with approximately 65% of employees comprising the age 45 and older age range. Regarding salary information, she stated that 59% of employees earn between $50,000 and $100,000 annually. 3

4 Ms. Yau next discussed medical and dental plan enrollments and stated that 55% of the population is enrolled in the Kaiser medical plan, with a majority of the remaining share enrolled in the Anthem Narrow Network. She added that there was a change in enrollment with the introduction of the new Anthem Vivity HMO plan, adding that 3% opted to enroll in the new plan during last year s Open Enrollment period. She further stated that enrollment tends to be consistent between plans since most employees passively enroll in their benefits. Ms. Parisi asked if an orientation for new hires is available to inform them about their health plan and benefits options. Ms. Yau responded that many new hire orientations have been held throughout the year for departments hiring new employees such as Library and Police. Marleen Fonseca asked if the orientations are given per the request of departments. Ms. Yau responded affirmatively and then noted that a minimum of 10 attendees is required for an orientation session to be provided. Ms. Yau then detailed the dental plan enrollment information and stated that the majority of employees are enrolled in the dental PPO plan. She next described the disability plan enrollment profile on pages 8 and 9 of the report. She stated that 25% of employees are currently participating and purchasing the supplemental disability plan option. She highlighted on page 9 that MOU 3 has the highest participation rate in the supplemental disability plan at 18%. On pages 10 through 14, Ms. Yau next discussed the enrollment information for the supplemental benefits options such as accidental death & dismemberment insurance, flexible spending accounts, and supplemental life insurance. She stated that enrollment in these benefits options remained largely the same from year 2016 to She then stated, on page 13 of the report, that 64% of employees are purchasing supplemental life insurance. She continued by stating that there is a much lower participation rate in spouse and child life insurance options. Ms. Yau next discussed benefits cost drivers such as the number of dependents and employees covered, premium rates driven by member utilization, and city subsidies. She stated that the vision plan cost which was previously bundled with the health plan cost is now a stand-alone benefit and is represented as a separate line item on the projected premium cost chart on page 17. She indicated that projected cost increases for the next five fiscal years are based on an assumption of 1% enrollment growth and average premium rate increases of 7.5%. She further stated that actual expenditures will vary depending on changes in enrollment, final premium rates, and proprietary department reimbursement rates. Ms. Yau then presented the timeline for the upcoming 2018 plan year and stated that several meetings are scheduled in June to finalize all decisions for She noted the current schedule is for the JLMBC to review and approve final rate renewals and plan design changes at its June 8, 2017 meeting and that additional meetings are scheduled in June if needed. Stephen Murphy and Robert Mitchell from Segal Consulting next presented the report on 2018 medical plan renewal rates. Mr. Murphy stated there was modest movement 4

5 between medical plans. He stated that the City s overall demographics improved slightly and had a positive impact on the Kaiser rate renewal. Regarding 2016 vs 2015, he stated that Kaiser s cost per member per month for the City increased by 3.3%, which was less than what Kaiser experienced for their book of business. He added that inpatient admissions per 1,000 members were down 15% but the average length of stay was up 11%, which translates to more serious conditions for hospital visits. He continued by stating that there was an increase from 5 individuals in 2015 with catastrophic claims to 8 individuals in He explained that the trend factors used in the renewal in pharmacy and medical combined was 5.2%, which is trending below average in comparison to other HMOs. Mr. Murphy also stated that the renewal includes $1 million in discretionary funds that can be invested in the City s wellness program. He further explained that Affordable Care Act (ACA) fees are embedded in the overall costs of the programs and that because Kaiser is identified as a non-profit, their liability for ACA fees is less, at 1%, than other vendors such as Cigna, Anthem, etc. Mr. Murphy also stated that Kaiser updates its non-discrimination rules per ACA requirements. He explained that the City s plan has historically had zero co-pays for some pediatric care services but because those services are seen as potentially discriminatory, the co-pays had to be increased to the same level as adult services. Ms. Parisi asked why co-pays for babies are seen as discriminatory under the ACA. Mr. Murphy replied that the applicable provision of the ACA is a federal requirement and that it may be considered discriminatory because adults do not have the same co-pays that babies do for the same services. Ms. Parisi asked if clarification could be provided on what exists now and what will be changed regarding co-pays. Mr. Murphy replied that preventive screenings and other tests will still have zero co-payments. Ms. Parisi asked what the 0-7% and 15% co-pays identified in the report apply to. Mr. Murphy replied that different services have different co-pays within the current plan. Ms. Parisi asked if the well-baby services would still have zero co-pays to which Mr. Murphy confirmed yes. Mr. Murphy then introduced Justin Cao, Kaiser executive account manager for the City of LA plan, for further discussion. Mr. Cao explained that that the ACA mandates health plans not be discriminatory for age groups, ethnicities, and populations. He continued that the benefits under the City s group plan had different co-pays for chemical health, mental health, and some pediatric office visits. He further explained that these services were offered for zero dollars for children under a certain age but offered at the normal co-pay price for any other age of the population. He then stated that it is the responsibility of the health plan to prevent discriminatory benefit practices. Ms. Parisi asked what the change in co-pays will be as a result of the changes made by Kaiser. Mr. Cao replied that chemical dependency and mental health, currently offered at zero dollars for pediatrics in the age category of 0-59 months, will now be offered at $15 for private sessions in line with the current cost for other age categories. He then added that group sessions offered for the same services at zero dollars will now be offered at $5-7 across all age groups. Ms. Parisi asked if the ACA 1% insured fee was waived in 2017 but will apply in Mr. Murphy confirmed yes and Mr. Mitchell added it that may change during the year. 5

6 Mr. Murphy then discussed Anthem s proposed renewal rates for its City plans. He stated that Anthem s renewal was based on Blue Shield data since they did not have sufficient data from their own administration of the plans. He stated that Vivity was a new HMO offering in He compared 2016 to 2015 data and noted that the claims on the PPO plan have increased by 25.7%. Mr. Rubalcava asked whether the renewal rates are based on the City s experience or Anthem s book of business. Mr. Murphy responded that the proposed rates are a combination of the City s experience and Anthem s understanding of what is changing in healthcare or what they project will change over the next 12 to 18 months. Mr. Murphy then summarized the premium rate cap by stating that there would need to be certainty in the rates moving forward. He added that the rate cap for 2018 is 9% in aggregate. He further stated that the assumptions on the rate cap included no changes in benefits and no changes in contributions that exceed 5%. He then explained that the rates excluded ACA fees and that Anthem would add those afterward, which is consistent with what other vendors have done. Mr. Royster asked if the 9% is an estimate or a precise figure. Mr. Murphy replied the premium rates themselves were 9% and the federal fees will be added on top of them. He then noted that the distribution of the renewal was higher for the Narrow HMO, Full HMO, and PPO plans than the new Vivity option, which is proposed at 8.7% and PPO at 12.81%. He also stated that included in the overall proposal, is the million dollars in discretionary funding for the City s wellness program. Mr. Rubalcava asked about the relationship of HMO pricing to the PPO plan. Mr. Murphy responded that Anthem did what they were contractually obligated to do by providing the 9% rate cap. In lieu of the rate cap, he stated there may be an opportunity to look at reallocating the renewal differently to lower the PPO rate by having the HMO subsidize the PPO more. Mr. Royster asked what the premium increase would have been if there was no rate cap in place. Mr. Murphy replied that the PPO plan by itself would have been in the 40% range. Mr. Mitchell added that Anthem is using Blue Shield s data for the proposed rate renewals and indicated this is the reason bidders were requested to propose rate caps during the RFP process. Mr. Royster asked whether the higher catastrophic claims dollar threshold for Kaiser versus Anthem makes a difference in the rate renewals. Mr. Murphy answered that the main driver is that the PPO plan represents 25% of total Anthem enrollment. Mr. Royster stated that his concern was that the cap will not last forever and asked what will happen once it goes away. Mr. Murphy replied that Segal was reviewing steps the City might take to improve stability within the PPO rate structure. Mr. Royster stated that the employees need to select the right option for them financially. Ms. Parisi asked for explanation on the pricing difference between the Vivity, Narrow, and Full Network HMO plans. Mr. Murphy replied that the trend differentials are based on what Anthem expects claim costs to be in the future, and if they expect claim costs to be lower based on the different platforms. June Gibson asked how Kaiser is able to keep their costs lower compared to Anthem. Mr. Murphy replied that Kaiser s model is 6

7 well-established and utilized claims data specific to their group plan. Mr. Mitchell added that Kaiser has tighter control over distribution of care whereas participants in the PPO can go to a specialist and do not require a referral. Mr. Royster asked if 2018 is the last year for the rate cap. Mr. Murphy replied that there is a subsequent third year cap that will allow the Anthem claims experience to mature. Ms. Parisi stated it would be helpful to know what the rate of increase by plan would be absent the rate cap. Mr. Royster stated that a plan or strategy has to be developed when the 9% cap expires instead of waiting to address it when it happens. Mr. Montagna stated that there is active discussion with Anthem and a recommendation will be brought back on the renewal that is consistent with the process completed in previous years. A motion was made by Tony Royster and seconded by June Gibson to receive and file the staff report regarding the LAwell benefits plan review and rate renewal update for Plan Year 2018; the Committee unanimously adopted this motion. 6. Committee Report 17-21: Projects & Activities Report Paul Makowski presented this report. He began by stating that the Employee Benefits Division has been actively providing new hire orientations and that to date, 208 employees have attended these new hire orientation sessions. He next stated that the staff report provided updates on Wellness program activities including the wellness interests survey, provider meetings, RFP, and vision pop-up clinic results and that further discussion is scheduled for the Wellness Sub-Committee meeting in May. Mr. Makowski then stated that the TPA RFP was released on May 8 and provided an overview of upcoming projects related to ACA tax reporting which will begin in July. Lastly, he explained that there is a vacancy in the Wellness program that the Division is currently seeking to fill in order to bring staffing to full capacity. A motion was made by Marleen Fonseca and seconded by Tony Royster to receive and file the projects and activities report regarding informational items, projects update and summary, meeting calendar, and staffing summary for April and May 2017; the Committee unanimously adopted this motion. 7. REQUEST FOR FUTURE AGENDA ITEMS There were no requests for future agenda items. 8. NEXT MEETING DATE A meeting was noted for June 8, 2017 at 9:00 a.m. 9. ADJOURNMENT 7

8 A motion was made by Tony Royster and seconded by Maritta Aspen to adjourn the Joint Labor-Management Benefits Committee meeting; the Committee unanimously adopted this motion. The meeting was adjourned at 10:25 a.m. Minutes prepared by staff member Russell Escueta. 8