Joint Labor-Management Benefits Committee COMMITTEE REPORT 17-50

Transcription

1 Joint Labor-Management Benefits Committee COMMITTEE REPORT JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE MEMBERS: Employee Organizations Date: November 30, 2017 To: From: Subject: Joint Labor-Management Benefits Committee Staff Binding Arbitration Cheryl Parisi, Chairperson Paul Bechely Chris Hannan David Sanders William Violante Management Wendy G. Macy, Vice-Chairperson June Gibson Rich Llewellyn Tony Royster Matthew Rudnick RECOMMENDATION That the Joint Labor-Management Benefits Committee (JLMBC) receive and file the following information regarding binding arbitration provisions related to the Civilian Benefits Program health plans. DISCUSSION A. Background In June 2016, the JLMBC recommended to the General Manager Personnel Department that Kaiser Permanente (Kaiser) be selected as the provider for the Civilian Benefits Program Staff Model Health Maintenance Organization (HMO) plan and Anthem Blue Cross (Anthem) be selected as the provider for the Preferred Provider Option (PPO), Full Network HMO, Narrow Network HMO, and Vivity HMO plans effective January 1, This followed a competitive bid process conducted in early As part of their proposals, vendors were required to include a sample Evidence of Coverage (EOC), a document which describes in detail the health care benefits covered by the Health Plan (i.e. Kaiser, Anthem). The EOC also contains information on procedures for members who may wish to file a complaint and the Health Plan s dispute resolution procedures, including binding arbitration provisions. In general, binding arbitration is a procedure in which disputes are settled out of court by a neutral third party, called an arbitrator, who hears evidence and then makes a decision that is binding on both parties. The EOC is required to be filed annually by the Health Plan with the State of California, Department of Managed Health Care and is incorporated as part of the City s contract with the Health Plan. B. Binding Arbitration Provisions in Group Health Plans Staff consulted with the JLMBC s benefits plan administration consultant, the Segal Company (Segal) regarding binding arbitration provisions as it relates to group health plans and specifically to the Civilian Benefits Program health plans. Segal provided the following information: The use of binding arbitration is determined by the Health Plan. JOINT LABOR-MANAGEMENT BENEFITS COMMITTEE

2 Health Plans utilize binding arbitration as an alternative to litigation to resolve disputes fairly, quickly, and comparatively inexpensively. Heath Plans choosing to use binding arbitration apply this requirement to their entire customer base. Binding arbitration is utilized by many California insurers including Aetna, Anthem, Cigna, Health Net, Kaiser, and UnitedHealthcare to settle disputes. In addition to the City, CALPERS, County of Los Angeles, Los Angeles City Employees Retirement System (LACERS), Los Angeles County Employees Retirement Association, and the University of California offer health plans that utilize binding arbitration provisions. Segal indicates that at the time of the 2016 RFPs, Kaiser s binding arbitration requirement had been in place for nearly 20 years and that the top non-staff model HMO/PPO candidates, Anthem and Aetna both utilize binding arbitration to settle disputes. The City s contract with Kaiser and Anthem incorporates the terms of the 2017 EOC for both plans, including its binding arbitration provisions. C. Compliance with California State Law The State of California Health and Safety Code Section ( H&S Code ) introduced in 1994 and made effective January 1, 1995 outlines the requirements for disclosure of binding arbitration provisions for applicable health care plans. These requirements are provided in Attachment A, but in summary include the following: Any health care plan that requires binding arbitration to settle disputes shall include, in clear and understandable language, a disclosure that meets all of the following conditions: Clearly state the plan s use of binding arbitration to settle disputes and waiving of right to jury trial; On any contract or enrollment agreement, the disclosure shall be prominently displayed immediately before the signature line Currently, the Civilian Benefits Program ( Plan ) provides disclosure of binding arbitration provisions used by Kaiser and Anthem on the Personal Enrollment Fact Sheet ( PEFS ) that is provided to employees via a paper form mailed to the employee s home address when they become newly eligible for benefits and annually during every Open Enrollment period. This disclosure is provided in Attachment B. The binding arbitration disclosure included in the PEFS indicates that by enrolling in any health plan under the LAwell Civilian Benefits Program, the employee agrees to give up their right to have any dispute decided in a court of law by a jury, and instead, is accepting the use of arbitration. However, the PEFS is a document that provides a summary of each employee s personal benefit options and associated per pay period costs and is not a contract or enrollment form that requires employees to sign and return to the Plan. The PEFS is often used as a reference guide by the employee when enrolling in benefits and/or making changes to benefits. To initially enroll in benefits (i.e. health, dental, insurance plans) or make changes in their current benefits elections, employees must make an active election by 1) going online and logging into the Plan s member self-service website known as Mercer Benefits Central or 2) 2

3 calling the Benefits Service Center to make their benefits elections over the phone. In past practice, there has been no disclosure of the binding arbitration provisions during active web or phone enrollments. Staff requested Segal to conduct comparative research on how other large public sector employers comply with the H&S Code. Segal found that CALPERS, LACERS, and the University of CA include the health plan s binding arbitration provisions above the signature line of their benefits enrollment form. Additionally, staff contacted LA County regarding this subject matter. LA County s procedures closely mirror CALPERS, LACERS, and the University of CA. In preparing for the 2017 Open Enrollment period, staff reviewed this information and the requirements of the H&S Code with the City Attorney s Office. The City Attorney opined that because the City s contractual agreements with both Kaiser and Anthem include binding arbitration provisions, state law requires that disclosure of these provisions be made to Plan participants and that if an enrollment contract or agreement is used, the disclosure must be displayed in a prominent position above the signature line. Staff then worked with the Civilian Benefits Program Third Party Administrator, Mercer, on options available to disclose the binding arbitration provisions included in the PEFS during the benefits election process. Based on these options, the following was implemented during the 2017 Open Enrollment period: Web Disclosure of the binding arbitration provisions included in the PEFS was added to the online member self-service website during the checkout process. When employees complete their benefits enrollment online, they are required to agree to terms and conditions. Those terms and conditions were expanded to include disclosure of the binding arbitration provisions that are included in the PEFS. As stated in the terms and conditions, and immediately before the Yes, I accept check box, the action of clicking the box acts as a signature line for enrollment. Screen shots of the prior and current terms and conditions disclosure are provided below. Prior Disclosure 3

4 Current Disclosure Phone Binding arbitration language was added to the call center script used by the Benefits Service Center call center agents. When an employee completes enrollment over the phone, the call center agent reads the full terms and conditions, including the binding arbitration language and receives an audible confirmation from the employee that they understand and agree to the terms before the election can be completed. The audible confirmation is recorded and acts as the signature line for enrollment. It is important to note that a large number of City employees passively enroll into their benefits during every Open Enrollment period and hence never actively enroll online or through the call center. As noted above, these employees receive the required binding arbitration disclosure via the PEFS. Submitted by: Reviewed by: Approved by: Paul Makowski Jenny M. Yau Steven Montagna 4

5 ATTACHMENT A

6 ATTACHMENT B