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Home My WebLink About05-06-2015 Board Meeting Agenda Packet Orange County Sanitation District Wednesday, May 6, 2015 SPECIAL Meeting of the 6:30 P.M. Board of Directors Board Room 10844 Ellis Avenue Fountain Valley, CA 92708 (714) 593-7433 AGENDA DECLARATION OF QUORUM: ROLL CALL: PUBLIC COMMENTS: If you wish to speak, please complete a Speaker's Form (located at the table outside of the Board Room) and give it to the Clerk of the Board. Speakers are requested to limit comments to three minutes. CONSENT CALENDAR: Consent Calendar Items are considered to be routine and will be enacted, by the Board of Directors, after one motion, without discussion. Any items withdrawn from the Consent Calendar for separate discussion will be considered in the regular order of business. None. NON-CONSENT: 1. A. Adopt Resolution No. OCSD 15-11, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Approving Medical Insurance Changes Identified Through the 2015 Medical Reopener Negotiations"; and B. Direct staff to work with OCSD's broker to initiate a contract with the selected carrier, effective July 1, 2015. INFORMATION ITEMS: None. CLOSED SESSION: None. 05/06/15 OCSD Board of Directors'Agenda Page 1 of 2 OTHER BUSINESS AND COMMUNICATIONS OR SUPPLEMENTAL AGENDA ITEMS, IF ANY: ADJOURNMENT: Adjourn the Special Board meeting until the next Regular Board Meeting on May 27, 2015, at 6:00 p.m. Accommodations for the Disabled: Meeting Rooms are wheelchair accessible. If you require any special disability related accommodations, please contact the Orange County Sanitation District Clerk of the Board's once at (714)593-7433 at least 72 hours prior to the scheduled meeting. Requests must specify the nature of the disability and the type of accommodation requested. Agenda Posting: In accordance with the requirements of California Government Code Section 54954.2,this agenda has been posted outside the main gate of the Sanitation District's Administration Building located at 10844 Ellis Avenue, Fountain Valley, California, not less than 72 hours prior to the meeting date and time above. All public records relating to each agenda item, including any public records distributed less than 72 hours prior to the meeting to all,or a majority of the Board of Directors,are available for public inspection in the office of the Clerk of the Board. NOTICE TO DIRECTORS: To place items on the agenda for the Committee Meeting, items must be submitted to the Clerk of the Board 14 days before the meeting. Kelly A. Lore Clerk of the Board (714)593-7433 klore(o3ocsd.com For any questions on the agenda,Committee members may contact staff at: General Manager Jim Herberg (714)593-7300 iherbem(rpomd.com Assistant General Manager Bob Ghirelli (714)593-7400 rohirelli[dlocsd.cem Director of Engineering Rob Thompson (714)593-7310 rthomoson0ocsd.cem Director of Facility Support Services Nick Arhontes (714)593-7210 narhontesaocsd.cem Director of Finance and Lorenzo Tyner (714)593-7550 Itvner(Wocsd.com Administrative Services Director of Operations&Maintenance Ed Tortes 714 593-7080 etorres ocsd.com 05/06/16 OCSD Board of Directors Agenda Page 2 of 2 BOARD OF DIRECTORS Meeting Dare I TO%60/f Dir. oS/o /iS AGENDA REPORT Item Number Item Number Orange County Sanitation District FROM: James D. Herberg, General Manager SUBJECT: OCSD MEDICAL INSURANCE REOPENER GENERAL MANAGER'S RECOMMENDATION A. Adopt Resolution No. OCSD 15-11, entitled, "A Resolution of the Board of Directors of the Orange County Sanitation District Approving Medical Insurance Changes Identified Through the 2015 Medical Reopener Negotiations." B. Direct staff to work with OCSD's broker to initiate a contract with the selected carrier, effective July 1, 2015. SUMMARY On February 26, 2015, OCSD began a medical reopener with representatives of each exclusively recognized employee organization and each of OCSD's unrepresented employee groups. The purpose of the reopener was to explore the possibility of joining an insurance risk sharing pool, consider potential changes to OCSD's insurance carriers, and explore plan design changes to mitigate excise taxation in 2018. Throughout the reopener, all stakeholders demonstrated an awareness of the rising costs of healthcare and the potential for excise taxation in 2018, and showed an openness toward making changes to control costs and improve OCSD's healthcare options. The stakeholder groups worked collaboratively with OCSD throughout the course of the discussions to evaluate various options. After eight (8) meetings, the representatives developed a consensus on items to present to their membership, and each of the bargaining units held voting sessions for members to evaluate the potential options. The voting sessions yielded one (1) mutually agreed upon change, which was to join an insurance risk sharing pool under California State Association of Counties — Excess Insurance Authority (CSAC-EIA). This change will yield $980K in annual cost savings. The District will save approximately $794K annually, and employees will save approximately $186K annually. PRIOR COMMITTEE/BOARD ACTIONS April 22, 2015 — The Board of Directors authorized the General Manager to negotiate with the represented employee groups to discuss changes to District medical plans per the agreed upon medical reopener. Page 1 of 3 ADDITIONAL INFORMATION OCSD's total insurance premium for the 2014-2015 plan year was $9.49M. The initial renewal quotes provided by OCSD's current carriers for the 2015-2016 plan year constituted a 19.7% or$1.87M increase, for a total of$11.35M. OCSD and its insurance broker, Alliant Employee Benefits, work collaboratively each year to control costs and minimize renewal increases, and are typically successful in reducing the renewal quotes to a lower percentage. For the 2015-2016 plan year, the negotiated rates reduced OCSD's renewals to a 12.9% or $1.22M increase, for a total annual premium of $10.71 M. During the course of the reopener, the group considered a number of potential changes to OCSD's medical insurance offerings to further reduce OCSD's healthcare costs. Key items of discussion included the option of joining a pooled environment, considering possible carrier changes, providing additional plan choices, and considering possible plan design changes to reduce and/or more precisely distribute insurance premiums. Each of the bargaining units conducted voting sessions for their members to evaluate potential changes identified in the reopener. The specific change approved by the bargaining units was to join an insurance risk sharing pool under California State Association of Counties— Excess Insurance Authority (CSAC-EIA). Joining CSAC-EIA for OCSD's Anthem Blue Cross HMO and PPO plans will reduce OCSD's total premium for the 2015-2016 plan year by $331 K to $10.37M, compared to contracting directly with Anthem Blue Cross. Additionally, these rates will remain in place for 18 months without an increase, compared to 12 months under Anthem direct. After the initial 18 months, annual renewals will be based on the CSAC-EIA combined risk pool of 18,000 employees, making the rates much less volatile. CSAC-EIA's annual renewals have trended below OCSD's HMO and PPO renewals, as well as the California trend for PPO plans. In addition to the benefits listed above, this change will help to mitigate OCSD's exposure to the Affordable Care Act (ACA) excise tax in 2018. By joining a risk sharing pool, OCSD's medical insurance plans will be subject to the higher of the two excise tax thresholds (i.e., the threshold otherwise reserved for family plans). Additionally, the reduction in premiums from joining CSAC-EIA will further mitigate excise tax exposure. CEQA N/A BUDGET /PURCHASING ORDINANCE COMPLIANCE N/A Page 2 of 3 ATTACHMENT The following attachment(s)are included in hard copy and may be viewed on-line at the OCSD website (www.ocsd.com)with the complete agenda package: • OCSD Medical Reopener Overview Table • Resolution OCSD 15-11 Page 3 of 3 MD Medical Reopener Overview Cost Scenario Total Premium $Over Current %Over Current Premium Premium Current Premium $ 9,500,000 $ - - Initial Renewal Quotes $ 11,400,000 $ 1,900,000 19.7% Negotiated Renewals $ 10,700,000 $ 1,200,000 12.9% CSAC-EIA $ 10,400,000 $ 890,000 9.4% Savings Scenario Savings from Initial Renewal Negotiated Renewals $ 650,000 CSAC-EIA $ 1,000,000 Note:All dollar values rounded for simplicity of discussion RESOLUTION NO. OCSD 15-11 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE ORANGE COUNTY SANITATION DISTRICT APPROVING MEDICAL INSURANCE CHANGES IDENTIFIED THROUGH THE 2015 MEDICAL REOPENER NEGOTIATIONS. WHEREAS, on April 22, 2015, the Board of Directors ("Directors") of the Orange County Sanitation District (the "District") authorized the General Manager to negotiate with the represented employee organizations to discuss changes to District medical plans per the agreed upon medical reopener. WHEREAS, pursuant to Government Code Section 3500, et seq., representatives of the represented employee groups have met and conferred, in good faith, with the representatives of the District and have reached an understanding with regard to certain terms and conditions relative to employment; WHEREAS, during commencement of negotiations the parties agreed that any changes would take effect on July 1, 2015; and WHEREAS, the parties have modified the District's medical insurance plan offerings to reflect the parties' understanding regarding certain terms and conditions as set forth in the OCSD Medical Insurance Reopener agenda report, which include: CSAC-EIA — Moving to the California State Association of Counties — Excess Insurance Authority (CSAC-EIA), which is a member-directed risk sharing pool of counties and public entities providing risk coverage programs and risk management services, to reduce OCSD's annual health insurance premiums. NOW, THEREFORE, the Board of Directors of the Orange County Sanitation District, DOES HEREBY RESOLVE, DETERMINE AND ORDER: Section 1. The aforementioned medical insurance change as outlined herein is hereby approved. Section 2. The General Manager is authorized to sign a contract with the designated carrier for the approved change. OCSD 15-11-1 PASSED AND ADOPTED at a special meeting held May 6, 2015. Tom Beamish, Board Chair ATTEST: Kelly Lore Clerk of the Board OCSD 15-11-2