REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
December 19, 2023
FROM
DIANE RUNDLES, Assistant Executive Officer, Human Resources Department
SUBJECT
Title
Medical Premium Rates for Retiree Plan Year 2024
End
RECOMMENDATION(S)
Recommendation
1. Approve medical premium rates for Blue Shield of California and Kaiser Foundation Health Plan, Inc. for retired employees, eligible dependents, and retired Consolidated Omnibus Budget Reconciliation Act participants for plan year 2024, as listed in Attachment A.
2. Approve Amendment No. 2 to Contract No. 19-844 with Blue Shield of California updating performance guarantees for non-Medicare medical plans, with no other changes to the contract terms and conditions for plan year 2024.
(Presenter: Diane Rundles, Assistant Executive Officer, 387-5570)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of this item will not result in the use of additional Discretionary General Funding (Net County Cost). There is no additional cost to the County associated with the approval of this item, as the County does not contribute to the cost of premiums for retired employees and their eligible dependents, or retired Consolidated Omnibus Budget Reconciliation Act (COBRA) participants.
BACKGROUND INFORMATION
Effective January 1, 2024, the new medical premium rates for Blue Shield of California (Blue Shield) and Kaiser Foundation Health Plan, Inc. (Kaiser) for retired employees, their eligible dependents, and retired COBRA participants will be established for retiree plan year 2024.
Each year, the Human Resources Department (HR) and the Employee Benefits Advisory Committee (EBAC) work collaboratively with a contracted health and welfare consultant to review plan utilization and negotiate medical premium rates. The EBAC is a labor-management committee, composed of individuals representing employee bargaining units, management, and retirees.
In June 2023, the County contracted with health and welfare consultant, The Segal Company (Western States) Inc. (Segal), to conduct a comprehensive analysis of data provided by Blue Shield and Kaiser to determine the best medical rates for the upcoming retiree plan year. Blue Shield initially proposed an 8.9% rate increase for non-Medicare medical plans and a 6.9% rate increase for Medicare medical plans. Kaiser initially proposed an 8.58% rate increase for non-Medicare medical plans and an 11.17% rate decrease for Medicare medical plans.
In September 2023, after two months of negotiations between Segal and the medical carriers, and several meetings with HR and the EBAC, Blue Shield offered a rate pass (no increase) for non-Medicare medical plans and a 4.9% rate increase for Medicare medical plans. Kaiser remained at 8.58% rate increase for the non-Medicare medical plans and offered a 9.17% increase for the Medicare medical plans. Additionally, medical plans for retirees over 65 who are not enrolled in both Medicare Parts A and/or B, will see slightly greater increases. However, there are currently no retirees on these medical plans. After reviewing the carriers’ revised proposals, HR and EBAC are recommending the approval of the Blue Shield and Kaiser medical premium rates for retired employees, eligible dependents and retired COBRA participants, as listed in Attachment A.
Amendment No. 2 to Contract No. 19-844 with Blue Shield will update the performance guarantee for non-Medicare medical plans for plan year 2024. The proposed updated language to the performance guarantee includes adding exceptions for public health emergencies and new legal mandates, updating metrics to be consistent with the standard Healthcare Effectiveness Data and Information Set (HEDIS) methodology for Blue Shield’s commercial health maintenance organization (HMO) business, and adding timeliness calculation exclusions. After reviewing the proposed amendments and implications of the changes, HR accepts and recommends approval of the amended performance guarantees through the end of the contract in December 2024.
PROCUREMENT
As a result of a competitive process, on December 17, 2019 (Item No. 28), the Board of Supervisors (Board) approved Blue Shield Contract No. 19-844 and Kaiser Contract No. 19-845 as the group health plan providers for all eligible retirees and their dependents for January 1, 2020, through December 31, 2022, benefit plan years. On December 6, 2022 (Item No. 24), the Board approved Amendment No. 1 to Contract No. 19-844 with Blue Shield, and to Contract No. 19-845 with Kaiser, for extension of the contract term through December 31, 2024. Retiree medical premium rates are negotiated annually.
REVIEW BY OTHERS
This item has been reviewed by County Counsel (Ken Brown, Deputy County Counsel, 387-5455) on November 27, 2023; Purchasing (Ariel Gill, Supervising Buyer, 387-2070) on November 22, 2023; Finance (Abigail Grant, Administrative Analyst, 387-4603) on December 4, 2023; and County Finance and Administration (Paloma Hernandez-Barker, Deputy Executive Officer, 387-5423) on December 4, 2023.