San Francisco Health Service System

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1 San Francisco Health Service System Health Service Board Rates & Benefits Kaiser Permanente Senior Advantage HMO Plan Renewal for Medicare Retirees June 11, 2015 Prepared by: Aon Hewitt Health & Benefits

2 Contents Executive Summary Kaiser Medicare Advantage Prescription Drug (MAPD) Retiree Renewal for Rates and Contributions 2016 Monthly Rate Cards Reconciliation of Medicare Rates Aon Hewitt Recommendation Glossary Health Service Board Presentation Kaiser Permanente Medicare Renewal 2

3 Executive Summary This reports provides the Health Service Board with Aon Hewitt s 2016 renewal recommendation for the fully insured Kaiser Permanente MAPD HMO for Medicare retirees. In 2014, per a request by the Health Service System (HSS), Kaiser Permanente provided an early estimate for 2015 rates for Medicare eligible retirees. The initial rate for 2015 was $ per member per month (PMPM). The final rate released in fall 2014 was $ This creates a credit of $7.75 PMPM which will be built into the proposed 2016 rates. The early estimate for 2016 is $ When the $7.75 credit is applied to 2016, the rate is $ Based on the most current information provided by HSS there are 12,254 retirees enrolled in this plan, not including dependents. 1 1 Kaiser enrollment data provided by the Health Service System Health Service Board Presentation Kaiser Permanente Medicare Renewal 3

4 Monthly Rate Card Kaiser MAPD Plan Year 2016 City and County of San Francisco 2016 Health Plan Renewals Kaiser MAPD Rates January 1, 2016 December 31, 2016 Retiree and Spouse with Medicare MAPD Retiree and Family (all Medicare) Retiree with Medicare Retiree and Family Premium $ $ $ $1, Vision $4.03 $8.08 $11.43 $11.43 Expense $2.05 $2.05 $2.05 $2.05 Total $ $ $ $1, County Amount (early retirees and retirees only) 1 $ $0.00 $0.00 $0.00 Single Retiree Offset 2 $0.00 $ $ $ "Actuarial Difference" 3 $0.00 $0.00 $0.00 $0.00 Prop. E Subsidy 4 $0.00 $ $ $ Subtotal City Contributions $ $ $ $ Non-Bargained Contribution Rate $0.00 $ $ $ Final Retiree Contribution 2016 $0.00 $ $ $ Final Retiree Contribution 2015 $0.00 $ $ $ Difference $0.00 $3.38 $10.35 $3.41 Notes: 1) "10 County" City Contribution: Per Charter Section A8.423, the employer contribution must equal the average of the employer contribution to health premiums of the 10 most populous counties in California, not including San Francisco. 2) "Single Retiree Offset": Per Charter Section A8.428, for retirees = 10 County Amount; for Medicare eligible retirees = Medicare premium (because it is lower than 10 County Amount). 3) Retiree "Actuarial Difference": Per Charter Section A8.428, employer contributes the difference between a single employee and a single non- Medicare retiree cost of premium. Calculated for non-medicare retiree only. 4) Prop. E Subsidy passed in November 2000 election: Per Charter A8.428, employer subsidy for retiree (R) and R+1 = 50% x [Total Rate Cost 10 County Actuarial Difference]. Health Service Board Presentation Kaiser Permanente Medicare Renewal 4

5 Medicare Retiree Renewal 2016 Rates and Contributions Kaiser HMO Plan Year 2016 MAPD EE EE+1 EE+2 (all Medicare) EE+2 Members Plan Year 2015 $0.00 $ $ $ Plan Year 2016 $0.00 $ $ $ % Increase 0.00% 2.17% 2.22% 0.56% $ Increase $0.00 $3.38 $10.35 $3.41 Employer Plan Year 2015 $ $ $ $ Plan Year 2016 $ $ $ $ % Increase 2.15% 2.16% 2.16% 2.16% $ Increase $6.76 $10.14 $10.14 $10.14 Total Plan Year 2015 $ $ $ $1, Plan Year 2016 $ $ $ $1, % Increase 2.15% 2.16% 2.19% 1.25% $ Increase $6.76 $13.52 $20.49 $13.55 Retiree member contributions have increased slightly based on an increase in the billed MAPD rate for Kaiser. Retiree employer contributions have increased for all tiers. Health Service Board Presentation Kaiser Permanente Medicare Renewal 5

6 Reconciliation of Medicare Rates The proposed 2016 rate, adjusted for the 2015 credit, is an estimate since Kaiser has not received final approval from the Center for Medicare and Medicaid Services (CMS) for the 2016 rate. Given that it is only an estimate, Kaiser will reconcile any difference between the rate given today and the final rate next spring. This reconciliation will be applied to the 2017 rates. Since HSS is risk-rated for the Medicare population, the rate could be higher or lower than the estimate supplied. Although Kaiser s desire is to have the actual rate be as close to the estimate as possible, they cannot project a "worst-case" scenario. There will be no limit to the load or credit that will be applied to the 2017 rates for this reconciliation. Health Service Board Presentation Kaiser Permanente Medicare Renewal 6

7 Recommendation Aon Hewitt recommends that the Health Service Board accept the Kaiser Medicare retiree rates as presented. Health Service Board Presentation Kaiser Permanente Medicare Renewal 7

8 Glossary Medicare Advantage Prescription Drug Plan (MAPD): Medicare Advantage Prescription Drug Plan (MAPD) includes Medicare Part D and is available to beneficiaries enrolled in Medicare Part A and Part B. HSS offers only MAPD plans in which the Center for Medicare and Medicaid Services (CMS) pays a Managed Care Organization a per member per month premium. HSS negotiates additional benefits not covered by MAPD plans alone. The Kaiser s Medicare Advantage Plan is called KPSA: Kaiser Permanente Senior Advantage. Health Service Board Presentation Kaiser Permanente Medicare Renewal 8