RFP RETIREE HEALTHCARE BENEFITS PROGRAM CONSULTING SERVICES QUESTIONS AND ANSWERS

Transcription

1 RFP RETIREE HEALTHCARE BENEFITS PROGRAM CONSULTING SERVICES QUESTIONS AND ANSWERS 1. How many RDS attestations and applications does LACERA conduct each year? LACERA conducts four RDS attestations and applications each plan year. 2. How many RDS UBOIs does each application include? Anthem Blue Cross RDS application- Four UBOIs Cigna RDS application - One UBOI Kaiser RDS application - One UBOI Local 1014 RDS application - One UBOI 3. Are the current PBMs acting as the Cost Reporter for RDS? Yes, the current PBMs/carriers are acting as the Cost Reporter for the RDS applications. 4. Will the consultant be expected to audit the RDS retiree pharmacy results? No, the Medicare Part D RDS Audit service is a separate RFP process and a separate contract. 5. Does the consultant need to audit the Part B eligibility data for payment? No, this service is included in the Medicare Part D RDS Audit Services contract. 6. How often does LACERA conduct full RFPs on carriers and PBMs and when is the next cycle due? There is a 1982 agreement between LACERA and the County of Los Angeles (plan sponsor), in which, LACERA has no mandated obligation to conduct full RFP's on our carriers. Under this agreement, with the exception of Medicare Supplement (Anthem Blue Cross III), Medicare Advantage plans (Cigna HealthSpring Preferred Rx, Kaiser Permanente Sr. Advantage, SCAN, and United Healthcare Medicare Advantage), all other medical and the dental plans currently offered were plans offered at the time the 1982 agreement was signed, and therefore, cannot be changed so long as the terms of the contract are being upheld by all parties involved. 7. Are you looking to audit the medical management programs of your carriers (i.e., utilization review, case management, disease management, etc.) for quality, efficiency, best practices, etc.? Not at this time. 8. What specific practices are you wanting to explore? Auditing to ensure that claims are being paid accurately and that all Performance Guarantee standards are up-to-date and being met accordingly. RFP Retiree Healthcare Benefits Program Consulting Services Page 1

2 9. When was the last audit performed on your Medical Plans? The medical plan audit referred to is an annual audit of all the Anthem Blue Cross medical plans. The last audit of the medical plans was conducted mid- September 2014 for the July 1, June 30, 2015 time period. An audit of the time period is in process under the current healthcare consultant contract. 10. When was the last audit performed on your Dental Plans? Please refer to Question #9 as this applies to the annual audit of the dental/vision PPO plan. 11. Is the intent to audit Medical plans starting calendar year 2016 (claims audited in 2017) - calendar year 2021 (claims audited in 2022)? If no, please provide calendar years and claims audited years. Yes, that is correct. 12. Will a Pharmacy audit be included in the future? Yes, however, there will be a separate RFP process with a separate contract for Pharmacy audit services. 13. Are you open to a multi-year audit strategy proposal? If so, what benefits would you like included? Medical, Dental, Pharmacy? No, we will continue with the current process 14. Can you be more specific about what you mean by auditing the "effectiveness, accuracy and quality of our carriers and of the Retiree Healthcare Benefits Program internal operational practices"? To ensure that carriers are complying with the terms of their contracts and that the Retiree Healthcare Benefits Program is being managed prudently on behalf of the plan sponsor and that we are in compliance with federal rules and regulations including any mandated changes such as Medicare. 15. Are there any particular reasons you are going out to bid or is the issuance of an RFP to meet a requirement to solicit proposals? No, historically, LACERA s healthcare contract is for a 5-year period. 16. Will the firm currently providing retiree healthcare benefits program consulting be invited to bid? How long has the current consultant been providing these services? Yes, the bidding process does allow for the current healthcare program consultant to participate in this bidding process. The current consultant has been providing these services since RFP Retiree Healthcare Benefits Program Consulting Services Page 2

3 17. How much did LACERA spend on retiree healthcare benefits program consulting in the past year? Does this compensation include commissions paid and if so, how much of this compensation was attributable to commissions? Approximately $900,000. LACERA does not allow commissions! 18. Is the Los Angeles County Fire Fighters (Local 1014) plan included in the scope of this proposal? No, Local 1014 is not included in the scope of this proposal. Local 1014 administer their program. LACERA is simply a pass through in which their healthcare premium deductions are handled. 19. Please provide a copy of the most recent consultant report, Medicare Part B premium reimbursement program analysis report. Please see attached. 20. Should vendors include the cost of printing of communication materials for participants in addition to the creation of documents for cost proposals? Yes, vendors should include the cost of printing of communication materials in addition to the creation of documents for cost proposals. 21. While LACERA has outlined a number of communication services that may be provided (including enrollment forms and brochures, rate booklets, vendor booklets, outgoing and return envelopes, letters and other information to retirees, carrier/vendor informational material, Medicare charts, special mailings, and wellness program handouts and mailings) in Section G of Exhibit A, Statement of Work (pages 4-6), the scope of communications in pricing may vary widely from firm to firm. In order to ensure that cost proposals reflect a true apples-to-apples comparison, please provide a detailed scope of annual communication services for pricing. We understand that this scope may change. Services requested are printing, updates, communications consulting, inventory management, PDF blue line, mailing, collating and inserting, and fulfillment. The following link provides samples of each of the communication pieces listed: Please see below a list of communication pieces and frequency of updates. FORMS/BROCHURES/BOOKLETS/CHARTS ENROLLMENT FORMS Dental and Vision Plan: New Enrollment, Change Cancellation Form (two page carbon form) Medical Plan New Enrollment, Change, Cancellation Form (two page carbon form) FREQUENCY OF UPDATES As needed 5,000 As needed 5,000 Medicare Advantage Prescription Drug Plan As needed 5,000 Print Quantity (Estimated) RFP Retiree Healthcare Benefits Program Consulting Services Page 3

4 Enrollment Form (Four page carbon form) BROCHURES & RATE TABLES BOOKLET Medical Premium Rates Booklet Out-of- Annual 2,600 State Dental Vision Chart Annual 9,500 Plan Comparison Chart Annual 12,500 Plan Comparison Chart Medicare Annual 12,500 Plan Comparison Chart Out-of-Area Annual 2,000 Medicare Benefits Chart Annual 8,500 How You Anthem Blue Cross Plan I, II, and III Annual 8,000 Coordinate with Medicare Chart NEW RETIREE HEALTHCARE PACKET Exploring Your Healthcare Benefits Booklet Occasional, as 2,000 needed Contact Information Sheet Occasional, as 2,000 needed Decision Guide Chart Occasional, as 2,000 needed Dental/Vision Plans Chart Occasional, as 2,000 needed Medical Plans Overview Booklet Occasional, as 2,000 needed When You Travel Chart Occasional, as 2,000 Request for Enrollment Forms Sheet needed Occasional, as needed 2,000 ANNUAL RETIREE HEALTHCARE PACKET Annual Healthcare Letter Annual 51,000 Benefits Guide Booklet Annual 51,000 Benefits Update Booklet Annual 51,000 Notice of Creditable Coverage Letter Annual 51,000 Medical Plan & Dental/Vision Premium Rates Annual 62,000 Booklet RETIREE WELLNESS PROGRAM WORKSHOP Postcard invitation Semi annual 47,500 Agenda Semi annual 450 Posters Semi annual 5 RFP Retiree Healthcare Benefits Program Consulting Services Page 4

5 22. In regards to e. Fee Proposal of E. Bidder's Proposal Submission Requirements under 9. Proposal Contents (pages 12-13), Does LACERA wish for firms to present a fixed fee cost proposal, monthly retainer proposal, or does LACERA wish for firms to present both fixed fee and monthly retainer proposals? Please provide both. 23. What are the frequency and quantities of the various Communications elements, such as Letters and Other Information to Retirees, Special Mailings, letters advising members, special projects, etc.? (Section G of Exhibit A, Statement of Work (pages 4-6) Frequency and quantity information from a most recent cycle would be helpful to us for pricing purposes. Please refer to our answer to Question # For purposes of planning for enrollment packet mailings, what is a reasonable estimate of the number of retirees per month? (Section G of Exhibit A, Statement of Work (pages 4-6)). On average, 150 new retiree healthcare packets are mailed per month. During the March Madness season that runs from August March each year, the number averages to 300 per month. 25. Enrollment forms and brochures are listed as one of the communication elements. How are those forms currently processed? (Section G of Exhibit A, Statement of Work (page 4-6). The updates, review, printing, fulfillment, and inventory control of the forms/brochures are currently managed/handled by the current RHCBP consultant s Communications Team as part of their scope of services. LACERA provides the final review and approval. 26. What are the contents of the enrollment packets for new retirees? Are there any personalized pieces included and if so, what is the nature of the personalized information provided? (Section G of Exhibit A, Statement of Work (page 4-6)). Please refer to our answer to Question #21. Yes, there are some personalized pieces such as reminders to members, those are handled/managed by LACERA. 27. Regarding the claims auditing listed in Section E.1 of Exhibit A, Statement of Work (page 3), what types of data (medical, dental, vision, and pharmacy) are to be audited? Medical and dental claims for the indemnity plan are to be audited. 28. Given that carriers won't allow extrapolation in a claims audit, will LACERA consider a proposal for a focused claims audit for better results? LACERA will continue with the current claims audit practice. RFP Retiree Healthcare Benefits Program Consulting Services Page 5

6 29. Regarding the development of an audit program in Section E.2 of Exhibit A (page 3), Statement of Work, what is meant by a "comprehensive audit program"? Is this a software system? Can LACERA provide additional details of what is being asked for here? Please refer to our answer to Question # What data warehouse vendors and products, if any, does LACERA currently use for data analysis and reporting purposes? This is managed by LACERA s internal Systems Division. 31. During the past two plan years, what was the average annual number of hours reported by LACERA's current consultant to provide the services outlined in RFP Exhibit A, Statement of Work (i.e., Strategic Planning, Annual Program Evaluation, Annual Medicare Part B Premium Reimbursement Program Analysis Report, Annual Renewal Process, Audits, Ongoing Program Administration and Maintenance, Communications, Training and Education, and Special Projects)? We have a comprehensive contract so we do not keep track of the hours. Our expectation is that our consultants are available as needed and required by LACERA staff. 32. During the past two plan years, what was the total annual compensation paid to LACERA's consultant for the services outlined in RFP Exhibit A, Statement of Work? The total amount of annual compensation paid to LACERA s current consultant during the past two plan years is approximately $1.8 Million. 33. During the past two plan years, how many onsite meetings (e.g., IBLC, Board of Retirement, staff and board education events, Stay Healthy Together events, Open Enrollment, etc.) did your consultant attend annually? Insurance Benefits and Legislative Committee - approx. 24 Board of Retirement = approx. 24 Consultants are expected to attend every Board meeting including the Insurance, Benefits & Legislative Committee meeting each month). We expect our consultants to be available as needed & required by staff Staff and board education events = Two (2) Board educational offsite, premeet and post meets during contract negotiations, annual due diligences to every carrier. Retiree Wellness Program call Staying Healthy Together workshop events = One (1) in the fall and one (1) in the spring each year and are held half a day in various locations in Los Angeles County. LACERA does not conduct an annual open enrollments period. Members are allowed to change anytime in accordance to the group guidelines and comply with the waiting periods (six months wait for medical and one year wait for dental/vision). RFP Retiree Healthcare Benefits Program Consulting Services Page 6

7 34. With regard to the Anthem Blue Cross claim audit, is it LACERA's preference that all Anthem Blue Cross Plans be combined into one population for claim sampling purposes, or should each plan (i.e., Indemnity and Medicare Supplement) be reviewed separately? Historically all Anthem plans have been combined 35. Is LACERA interested in making design changes to its existing retiree healthcare materials during the course of the contract (e.g., develop new design "look and feel" for program collateral). Yes, there is an interest in exploring this area. 36. Would LACERA be open to the consultant reviewing LACERA's current communications content to improve readability and understanding? Yes, there is an interest in exploring this area. 37. Will LACERA's current design files for communications material be provided to the new consultant? If yes, in what format (e.g., In Design)? Yes, the format is In Design. 38. Is the consultant asked to include print and fulfillment costs in its fee proposal, or will LACERA pay printers and fulfillment vendors directly for these services, outside of the contract? Yes, please include print and fulfillment costs as an all inclusive fee proposal 39. If the consultant is asked to include print and fulfillment costs in its fee proposal, what quantities were printed, assembled, and mailed during the plan year for the following materials: Enrollment/Change Forms Dental and Vision Plan - New Enrollment, Change, Cancellation Medical Plan New Enrollment, Change, Cancellation Medicare Advantage Prescription Drug Plan Enrollment Form Brochures and Rate Tables Medical & Dental/Vision Premium Rates Medical Premium Rates - Out of Area Dental Vision Chart Plan Comparison Plan Comparison - Medicare Plan Comparison - Out of Area 2016 Medicare Benefits Chart How Your Anthem Blue Cross Plans I, II, and III Coordinate with Medicare RFP Retiree Healthcare Benefits Program Consulting Services Page 7

8 New Retiree Healthcare Packet Exploring Your Healthcare Benefits Through LACERA Contact Information Decision Guide Dental/Vision Plans Medical Plans Overview When You Travel Request Enrollment Forms Annual Retiree Healthcare Packet Annual Healthcare Letter Benefits Guide Benefits Update Notice of Creditable Coverage Please refer to our answer to our answer to Question # After a newly eligible retiree submits a request to enroll for coverage (by calling LACERA or returning the "Request for Enrollment Forms" document), your materials indicate the member will receive an envelope containing plan packets and enrollment instructions. Please provide more details on the contents of this packet. Please refer to the answer to question #21, listed under New Retiree Healthcare Packet. 41. Are there additional printed materials that must be included in scope? If yes, what are the specifications? (Page number and quantity printed is sufficient for scoping.) Yes, Turning 65 booklet, approximately 20 pages, with quantity of 2, How many retirees attended the "Staying Healthy Together" semi-annual workshops during the plan year? The number of attendees varies by location held in Los Angeles County. They range from per event. 43. How many carriers participated in the "Staying Healthy Together" semi-annual workshops during the plan year? All of our carriers are required to participate in the Staying Healthy Together workshops. 44. How frequently does the consultant provide content for the Postcript and Spotlight newsletters and/or the LACERA website? The consultant provides contents for the Spotlight (newsletter for retired members) quarterly and as needed for the Postscript (newsletter for active members). RFP Retiree Healthcare Benefits Program Consulting Services Page 8

9 45. Describe the media campaigns and/or special communications projects LACERA produced for the plan year that would be considered within the scope of this engagement. Any communication materials that affect LACERA in order to comply with federal rules and regulations and mandated changes such as: Section 1557 of the Affordable Care Act. In addition, as a result of a potential dependents audit project. 46. Does the consultant provide video support services? If so, please provide links to current videos, or provide information on the number of videos required and their length. No, however, we would like to explore this area further. For example, Medicare 101 video, Turning 65 video or Retiree wellness videos. 47. How much did you spend on consulting services in fiscal year ? Was this compensation on a commission or fee basis? If based on a commission arrangement, what is the percentage rate of commission for each coverage? How much do you expect to spend in fiscal year ? Please refer to our answer to Question # Is LACERA seeking any specific change in the consulting services you have been receiving, such as the size or experience of the team or the cost of the contract? No, please refer to our answer to Question # Over the past year, how many consulting hours would LACERA estimate were spent by the current consultant in your day-to-day administration, program administration and maintenance. Please refer to our answer to Question # What is your satisfaction level with the services you are currently receiving? Does LACERA have any service related issues or other concerns with the current consultant? No, please refer to our answer to Question # Please elaborate on the importance of your consultant having a presence in Washington DC as it pertains to being informed on pending legislation related to employee benefits? It is very important and required to have a presence in Washington, DC. particularly due to our being a retiree only plan and everything having to do with Medicare in the healthcare industry. RFP Retiree Healthcare Benefits Program Consulting Services Page 9

10 52. Has LACERA implemented any wellness initiatives, such as Health Risk Assessments, online resources, lifestyle coaching, etc.? If so, what has been implemented and what would you like to see as part of your overall wellness program in the future? Yes. The LACERA Retiree Wellness Program called Staying Healthy Together Program is currently in place and held bi-annual in a form of a half day workshop and designed to help educate members with the benefits of leading a healthy lifestyle. This program is a two-prong design: 1) ½ day educational workshop and 2) communications in our retiree newsletter (Spotlight) with a focus on health and fitness education materials. Carriers are very involved with this program. In addition, each carrier plan has a disease management program as part of the plan benefits. 53. What Health Care Reform decisions have been made and what are LACERA's outstanding Health Care Reform issues for 2017? The Plan Sponsor, the County of Los Angeles, approved the increase of dependent age limit to 26 based on SB LACERA is currently reviewing how the ACA 1557 and the Excise tax will impact the Retiree Healthcare Benefits Program. RFP Retiree Healthcare Benefits Program Consulting Services Page 10

11 s Empower ResuIts ATTACHMENT C See question 19. November 18, 2015 Cassandra Smith Director Health Care Benefits Program LACERA 300 N. Lake Avenue, Suite 300 Pasadena, CA Subject: Medicare Part B Premium Reimbursement An&ysis Dear Cassandra: This letter confirms the financial advantage to the County of Los Angeles to continue its practice of reimbursing Medicare Part B premiums for retirees and dependents enrolled in Medicare Advantage Prescription Drug Plans (MAPD) and the Medicare Supplement Plan (Anthem Plan Ill). This analysis is for the plan year commencing July 1, As in the past, because LACERA has a number of health plan options, we have included four migration scenarios. Each scenario is based upon a different set of migration assumptions of where the retirees might enroll if the County ceased to offer MAPD plans and ceased to subsidize Medicare Part B premiums for enrollees who participate in those plans. In all scenarios, we assumed no differences in utilization. Of course, LACERA could continue to offer MAPD plans without the Part B premium subsidy, but our expectation would be that enrollment declines in those plans due to elimination of the Part B reimbursement incentive would at some point offset any savings the County might expect from eliminating the subsidy. Under all analyses and scenarios and based upon the underlying assumptions, Aon Hewitt s analysis indicates it is in the County s financial best interest to continue offering Medicare Advantage Prescription Drug Plans and subsidizing Part B premiums for enrollees in those plans. Background of the Medicare Part B Premium Current retirees who enrolled in Part B are paying Social Security Administration (SSA) Medicare Part B premium of $ per month in The Medicate Part B premium beginning on January 1, 2016 remains at the 2015 rate of $ for those participants who are held harmless from any increase in premiums in For retirees not subject to the hold-harmless provision, this rate will increase to Aon Hewitt Heat & Benef:ts 707 Wthbre Bouevrd Sue 2600 os Angeles, CA t -i.213fl f - aonhewittcom Licen urnher O? onmnstisl

12 Aoi v Empower Results $ (Retirees not subject to this provision include those not collecting Social Security benefits, first time Part B enrollees in 2016, dual eligible beneficiaries who have premiums paid by Medicaid, and retirees who pay an additional income-related premium) Currently, the County covers Part B premiums (and Medicare late enrollment penalties 1) for retiree and dependent participants in the Medicare Advantage Prescription Drug plan and Medicare Supplement plan to encourage enrollment in these more cost-effective plans. There are approximately 31,408 retirees in such plans. According to LACERA s Medicare Part B Reimbursement and Penalty Report provided to Aon Hewitt for the pay period 10/31/2015, the average amount paid for retirees and dependents, including penalties, is $ per retiree per month. Income-Related Medicare Part B Premium As part of the Medicare Modernization Act, effective January 2007, Medicare Part B premiums are income tested. Currently, the Medicare Part B premium is set at 50% of the monthly actuarial rate (MAR). The MAR represents 50% of the cost for Part B expenditures. Effective January 2007, individuals over a certain income level are paying a minimum of twice the targeted premium. Our model assumes that the County will not reimburse the means-tested amounts of the Part B premiums. In other words, it assumes that the County will pay only for the standard Medicare Part B premium amount and the late penalties for those who enrolled when the reimbursement plan was first introduced. Projection Methodology In this projection, the savings are determined by comparing LACERA s current total plan cost (medical, dental/vision and Part B premium/penalties) with the projected total cost assuming there were no Medicare Advantage Plan offerings. The projected costs are based on the migration of MAPD participants into non-mapd plans and the discontinuance of Plan B reimbursement by the County in some scenarios. The County s contributions are based upon years of service. For 2015 plan year, Aon Hewitt estimates that the County is contributing 92.5% of the total plan costs. This represents the County s share of the total premium and Medicare Part B Reimbursement plus penalties. This methodology is consistent with the projections prepared last year by Aon Hewitt. This projection assumes that 70% of current Part B participants are held harmless from any increase in premiums in Due to the mix of Medicare-eligible and ineligible membership in the non-medicare Advantage plans, the savings may be an overstatement. financial results. Following is a description of each scenario along with the 1 The late enrollment penalty amount is paid only to those who enrolled into one of the LACERA-administered Medicare Advantage/Medicare Supplement plans prior to May 1, 1993 when the reimbursement plan was first introduced. Aon Hewftt H? & Beiwf:t 707 W&hire Roed Suite 2506 LO Ange&s. CA S * * aonhewitt.com Licertse Number Propiietaru & Ccnfideiitiu

13 AoN Empower Resufts Projection A - Migration Assumptions This projection assumes the following: All Medicare Advantage Prescription Drug Plan participants move from their current MAPD plan into the following corresponding non- MAPD plans: o Kaiser Senior Advantage participants migrate to the Kaiser Excess plan o SCAN, Anthem Blue Cross Plan Ill (Medicare Supplement), and United HealthCare participants migrate to Anthem Plan Il. o CIGNA plan participants migrate into the non-medicare CIGNA HMO plan o County will stop paying the Part B premium for all members. Under this scenario LACERA s premium would increase approximately by $252.0 M from current plan costs. Projection B - Migration Assumptions Migration B scenario assumes: All Medicare Advantage Prescription Drug Plan participants migrate from their current MAPD plans to Anthem Plan II Current Anthem Plan Ill enrollment remains in Anthem Plan III County will stop paying the Part B premium for all members. Under this scenario, LACERA s premium would increase by approximately $204.6 M from the current plan costs. Projection C - Migration Assumptions This projection assumes: Medicare Advantage Prescription Drug Plan participant migration is split 50/50 between non- Medicare corresponding HMO plans and Anthem Plan II Current Anthem Plan Ill enrollment remains in Anthem Plan Ill County will stop paying the Part B premium for all members. Under this scenario, LACERA s premium would increase by approximately $169.8 M from current plan costs. Aon Hewftt Heth & Benefts hir Rawevrd Su&e 2500 F Los Ange&s CA t aonhewitt corn Lces,s Number Prop7 etary & Confldentu7

14 Aoti Empower Results Projection D - Migration Assumptions This scenario assumes: All Medicare Advantage Prescription Drug Plan and Anthem Plan Ill (Medicare Supplement) participants migrate to Anthem Plan II County will stop paying Part B premium for all members. Under this scenario, LACERA s premium would increase by approximately $318.8 M from current plan costs. Summary of Findings Based upon our analysis described above and its underlying assumptions, we conclude the current program, where the County is subsidizing Medicare Part B premiums for retirees and dependents enrolled in the Medicare Advantage Prescription Drug plans and Medicare Supplement Plan (Anthem Blue Cross Plan Ill) is financially beneficial to the County, and represents significant savings compared with the four scenarios in this analysis. Please refer to the attachment for back-up calculations and documentation. Sincerely, j /I Brian McGuire Aon H&B Vice President Helen Batsalkin AVP Consulting cc: Kirby Bosley, Southern California H&B Practice Leader Laura Peck, Aon H&B Vice President, ESA, MAAA Jim Park, Aon H&B Consultant, ASA, MAAA Aon Hewftt Hehh & Benefts 707 Wi!br BouIevrd I Swte 2600 I Los Ang&es, CA t i.2i i4 f % aonhew3t,com LILsn Number Propret5mv & Conbdenta

15 LACERA Medicare Advantage Savings Projections Exhibit A July 1, 2015 through June 30, 2016 Current Plan Cost (w/part B Subsidy) County Share $ 481,691, % $ 481,691, % $ 481,691, % $ 481,691, % Member Share $ 38,791, % $ 38,791, % $ 38,791, % $ 38,791, % Total $ 520,483, % $ 520,483, % $ 520,483, % $ 520,483, % Assumed Plan Cost (w/migration and Benefit Options) Migration A Percent Migration B Percent Migration C Percent Migration D Percent *County Share $ 708,435, % $ 665,033, % $ 633,106, % $ 769,681, % Member Share $ 64,018, % $ 60,096, % $ 57,211, % $ 69,552, % Total $ 772,454, % $ 725,129, % $ 690,317, % $ 839,234, % Annual Cost Differential County Share $ 226,744,160 $ 183,341,940 $ 151,414,834 $ 287,989,850 Member Share $ 25,226,318 $ 21,304,252 $ 18,419,141 $ 30,760,819 Total $ 251,970,478 $ 204,646,192 $ 169,833,975 $ 318,750,669 Percentage Difference County Share 47.07% 38.06% 31.43% 59.79% Member Share 65.03% 54.92% 47.48% 79.30% Total 48.41% 39.32% 32.63% 61.24% *County Share in this calculation does not include Medicare Part B Subsidy Notes: Medicare Part B Premiums: Assumes all current members Part B reimbursement is for 2016 Medicare Eligibility Due to the mix of medicare eligible and ineligible membership in the non Medicare Advantage plans, the savings may be an overstatement Migration A: Cigna Medicare Advantage members move to Cigna non Medicare Advantage Plan Kaiser Senior Advantage members move to the Kaiser Excess Plan Anthem Plan III, SCAN and UHC members move to Anthem Plan II County will stop paying Medicare Part B premium for all members Migration B: UHC, Cigna, Kaiser and SCAN Medicare Advantage members move to Anthem Plan II Anthem Plan III members stay in Anthem Plan III County will stop paying Medicare Part B premium for all members Migration C: UHC, Cigna, Kaiser and SCAN members move to non MA corresponding HMO plan and Anthem Plan II (50%50%) Anthem Plan III members stay in Anthem Plan III County will stop paying Medicare Part B premium for all members Migration D: UHC, Cigna, Kaiser, SCAN, and Anthem Plan III members move to Anthem Plan II County will stop paying Medicare Part B premium for all members

16 LACERA Medicare Part B Subsidy Projections 2015/2016 Exhibit B Carriers MA Lives MA Premium Per Retiree Non MA Lives Non MA Prem Per Retiree Combined Lives Combined Premium United HealthCare 2,550 $1,396, $ $1,387, $ 1, ,506 $ 2,783,756 Cigna 49 $32, $ $1,044, $ 1, $ 1,077,232 $ Kaiser (Excess shown in Non MA column) 16,469 $ 7,256, $ $ 2,632, $ 1, ,652 $ 9,888,551 Other Kaiser (basic & supplement) 3640 $ 4,790, $ 1, ,640 $ 4,790,599 $ SCAN 356 $146, $ $ 146,453 $ Anthem Plan III ,885 $7,297, $ ,885 $ 7,297,436 $ Anthem Plan II ,680 $7,225, $ 1, ,680 $ 7,225,792 $ Anthem Plan I ,435 $1,893, $ 1, ,435 $ 1,893,692 $ Anthem Prudent Buyer ,395 $1,644, $ 1, ,395 $ 1,644,613 Local 1014 Firefighters 0 0 1,667 $ 2,521, $ 1, ,667 $ 2,521,627 46,898 $ 39,269,752 Totals 19,424 $ 8,832, ,474 $ 30,437, ,898 $ 39,269,752 Annual Premium $ 471,237, Medicare Part B Reimbursement + Penalties for 2015/16 $ 49,246,600 Total Annual Premium Current Scenario $ 520,483, Migration A Monthly Annual Premium Contributions Cigna MA memb move to Cigna non MA $ 80, Kaiser MA memb move to Kaiser Excess Plan $ 19,857, $ 708,435,891 County 91.71% Anthem Plan III, SCAN, and UHC move to plan II $ 21,292, $ 64,018,205 Members 8.29% County stops paying part B premium for all members $ 772,454,096 Remaining Premium for the rest of population $ 23,139, Outcome $ 64,371, $ 772,454, Combined Premium $ 64,371, $ 772,454, Migration B UHC, Cigna, Kaiser, and SCAN members move to Plan II $ 29,990, $ 665,033, County 91.71% Plan III members stay in Plan III $7,297, $ 60,096,139 Members 8.29% County stops paying part B premium for all members $ $ 725,129, Remaining Premium for the rest of population $ 23,139, Outcome $ 60,427, $ 725,129, Combined Premium $ 60,427, $ 725,129, Migration C UHC, Cigna, Kaiser, and SCAN members move 50/50 to Corresponding Plans & II $ 27,089, $ 633,106, County 91.71% Plan III members stay in Plan III $ 7,297, $ 57,211,029 Members 8.29% County stops paying part B premium for all members $ $ 690,317, Remaining Premium for the rest of population $ 23,139, Outcome $ 57,526, $ 690,317, Combined Premium $ 57,526, $ 690,317, Migration D $ 769,681, County 91.71% UHC, Cigna, Kaiser, SCAN, and Plan III memb. move to Plan II $ 46,796, $ 69,552,706 Members 8.29% County stops paying part B premium for all members $ 839,234, Remaining Premium for the rest of population $ 23,139, Outcome $ 69,936, $ 839,234, Combined Premium $ 69,936, $ 839,234,287.49

17 LACERA MEDICARE PART B SUBSIDY CALCULATION Exhibit C 2015 Subsidy Calculation 2015/2016 Projection Part B Lives as of Oct 2015 (1) 31, Medicare B Premium $ Part B Subsidy $ 4,005, Medicare B Premium (3) $ Penalty (1) $ 1,260 Subsidy & Penalties (1) $ 4,007, Estimated Members Calculation Per Retiree Per Month $ Medicare Part B Prem for ret w/o dependents $ 3,294,699 Member to Subscriber Ratio Annual Part B Reimbursement & Penalty $ 48,084,950 Estimated Members 38,187 All Plans (Medical/Local 1014) Subsidy Projections 2015 /2016 Premium Amount (2) $ 39,253, County Share (2) $ 36,028,885 Estimated Members 38,187 38,187 Medicare B subsidy and penalties (1) $ 4,007,079 Medicare B Premium $ $ Total County Amount (2) $ 40,035,964 Monthly Premium $ 4,005,820 $ 4,199,428 Member Amount (2) $ 3,224,200 Monthly Penalty $ 1,260 $ 1,260 Total (members + County) $ 43,260,165 Annual 2015/16 Medicare Premium $ 49,246,600 (includes penalty) Total County Share % Per Retiree per month $ Total Member Share % 1 Per Medicare Part B Reimbursement and Penalty Report provided by LACERA for pay period as of 10/31/ Per Medical and Dental Vision Insurance Premiums Report of October 2015 provided by LACERA (pay period 10/31/2015) 2 County Share includes Adjustments 3 Weighted average based on an assumed 70% of participants with no increase to Part B premiums (whose premiums are deducted from Social Security and protected by the "hold harmless" provision) and 30% of participants with 2016 Medicare Part B premiums increasing to $121.80