Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Rocio Kiryczun, Human Resources Director
Kim Pearson, Benefits Manager
Subject: Medical Plan Agreement with UnitedHealthcare Medicare Advantage PPO Plan for Retiree Health
RECOMMENDATION:
title
Adopt a resolution authorizing the Human Resources Director or the Director’s designee to execute agreements with UnitedHealthcare for the County Retiree Medicare health insurance plan for the period of January 1, 2025 through December 31, 2027, with the aggregate amount not to exceed $ 7.7 million in 2025 based on projected enrollment.
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BACKGROUND:
The County’s current providers for its retiree Medicare insurance program are Kaiser and Aetna. The Kaiser Medicare Plan enrollment includes 910 total retirees, and enrollment in the Aetna Medicare plan includes 1,200 retirees.
The current agreement with Aetna expires on December 31, 2025. The County conducted a medical RFP in 2022 to explore alternative non-Kaiser options for healthcare. After reviewing proposals from several carriers, including the then-incumbent Blue Shield, the County’s Labor Benefits Committee made the recommendation to move to Aetna, which had offered significant initial cost savings for both the County and retiree plan members for 2023. Under industry standards, even under the contract, the medical plan provider publishes updated costs before each calendar year, based on prior year plan enrollment and utilization. The County can break the contract without penalty if we do not accept the new costs.
The Human Resources Department received the County’s 2025 Aetna Medicare insurance premium rate, and the rate was increased from $163.50 to $561.00 per retiree plan member for January 1, 2025.
Due to this large rate increase and recent access to care matters that have surfaced with retirees being denied care at Palo Alto Medical Foundation (PAMF), Sutter hospitals and UCSF Hospital network, the Human Resources Department conducted a request for quotes (RFQ) in partnership with the County’s broker/consultant, Alliant Benefits Consulting. The scope of the RFQ included only the non-Kaiser Medicare plan for which Aetna is the incumbent provider.
DISCUSSION:
Quotes were solicited from three national carriers that could offer provider networks to meet our Medicare retirees’ diverse geographic needs.
Each proposal was rated on provider network, pricing, ability to match or exceed the current benefit plan design, and service and performance guarantees-individually and in the aggregate. This review resulted in the unanimous selection of: UnitedHealthcare Medicare Advantage PPO Plan.
UnitedHealthcare’s rate was $539.80 per retiree. However, their plan offered solutions to key items affecting County retirees, including the following:
• Greater access to medical providers who contract with UnitedHealthcare Medicare Advantage PPO including Palo Alto Medical Foundation, Sutter Hospitals and USCF Hospital network.
• Reduce current access to care matters that Aetna Medicare Advantage PPO retirees are currently facing.
Based on these criteria, Human Resources recommends, and the Benefits Committee supports, approval of UnitedHealthcare Medicare Advantage PPO as the non-Kaiser medical plan provider for Medicare retirees. UnitedHealthcare will offer a comparable benefit plan that includes the Palo Alto Medication Foundation (PAMF), Sutter/Mills Peninsula provider group, UCSF and other nationwide large provider groups for Medicare-eligible retirees.
The transition to UnitedHealthcare Medicare Advantage PPO Plan will be implemented during the annual open enrollment period in October/November, to be effective January 1, 2025. Benefits staff will conduct targeted communication and extensive outreach to current Aetna Medicare enrollees. UnitedHealthcare and Benefits staff will host several information sessions for our retiree population.
UnitedHealthcare is also requesting a waiver of the standard County requirements that contractors report findings and complaints of discrimination. UnitedHealthcare represents that they are committed to complying with all legal requirements, including related to discrimination, but the scope and nature of their business prevents the UnitedHealthcare staff involved with the County business from having sufficient knowledge to comply with the requirements.
This resolution would authorize the Director of Human Resources to execute the necessary agreements. These agreements are currently under review by the County’s insurance broker and the County Attorney’s Office and include non-standard language subject to compliance by the State Department of Managed Care and by Medicare. This resolution contains the County’s standard provision allowing amendment of the County’s fiscal obligations by a maximum of $25,000 (in aggregate).
County Attorney has reviewed and approved this resolution as to form.
PERFORMANCE MEASURE:
|
Measure |
2024 Projected |
2025 Projected |
|
Number of Contracted Providers |
1.1 million (Aetna Medicare) |
1.2 million (UnitedHealthcare Medicare) |
FISCAL IMPACT:
The County’s projected annual total cost for 2025 is $3.7 million based on Retiree Health County contributions; the projected annual cost to be paid by retirees is $3.3 million based on current retiree cost share formulas. Future year costs depend on enrollment and plan utilization and are subject to review and negotiation by Alliant’s underwriters, as is standard in the industry.