Appellate Win - Now the Political War at the City Council over Section 12-126

On November 22, 2022, a NY appeals court decided in favor of the Medicare eligible city retirees in their fight with the City to keep their Medicare supplemental insurance coverage. The City had attempted force the retirees into a Mediacer Advatage plan that the City did not have to pay for.

The Stabilization Fund and Age Discrimination

In a previous post about the Medicare Advantage Scam I highlighted a document from OLR to the former Mayor. It went into great detail about the Health Insurance Stabilization Fund, the HISF.

In 1983 the City and its labor unions agreed to set up the HISF to equalize HIP and GHI insurance rates.

In 2005 HIP and GHI merged into Emblemhealth. The City fought this merger in court but lost the fight.

The HISF Agreement

The following is part of a section from the UFA's 2008-2010 labor contarct with the City that recites the HISF agreement:

Section 3.

A. Effective July 1, 1983 and thereafter, the City's cost for each employee and each retiree under ager 65 shall be qualized at at the community rated basic HIP/HMO plan payment rate as approved by the State department of Insurance on a category basis of individual or family e.g.the Blue Cros/GHI-CBP payment for family coverage shall be equal to the HIP/HMO payment for the family coverage.

B. If a replacement plan is offereed to employees and retirees under age 65 which exceeds the cost of the HIP/HMO equalization provided in Section 3a, the City shall not bear the additional costs.

C. The City (and other related Employers) shall continue to contribute on a City employee benefits program-wide basis the additional annual amount of $30 million to maitain the health insurance stabilization reserve fund which shall be used to continue equaliztion and protect the integrity of health insurance benefits.

The health insurance stabilization reserve fund shall be used: to provide a sufficient reserve; to maintain to the extent possible the current level of health insurance benefits provide under the Blue Cross/GHI-CBP plan; and if sufficient funds are available , to fund new benefits.

The health insurance stabilization reserve fund shall be credited with the dividends or reduced by the losses attributable to the Blue Cross/GHI-CBP plan.

Pursuant to paragraph 7 of MLC Healt benefits Agreement, notwithstanding the above in each of the fiscal years 2001 and 2002, the City shall not make the annual $35 million contributions to the health insurance stabilization fund.

It appears that this agreement violates the federal age discrimination law (ADEA - 1967) by giving a benefit to a subset of a group based only on their age. Why didn't the agreement provide equaliztion for retirees age 65 and older?

How Come?

Actually, there was no need to provide an equalization mechanism for retirees age 65 or older. The cost of their health insurance, both for GHI Senior Care and HIP-Medicare, has always been significantly less than the HIP/HMO benchmark.

In fact, the City has always used the GHI Senior Care cost as the internal benchmark cost for Medicare eligible city retirees. This was done administratively without reference to Section 12-126 which had set up the HIP/HMO benchmark. With the start of Medicare in July 1966, the HIP/HMO health care service model conflicted with the original Medicare indemnity model, whereas the GHI/CBP indemnity model was a better match.

Starinting 1965, the City contracted with GHI to provide an alternative health insurance plan. other than HIP, to employyes and retirees. GHI was built to handle claims coming in from out of network doctors and hospitals.

In 1966, Medicare began paying 80% of doctors and hospital costs for enrolled retirees over age 65. Very quickly most doctores and hospitals began particpating in Medicare. HIP was not equiped to pay claims from independent doctors and non-HIP hospitals. The City adapted the GHI/Blue Cross plan Over the years, GHI Senior Care has become the dominant choice of city retirees enrolling in Medicare with a 84% share while the HIP Medicare plan has a 12% share

Threat from OLR to Trash Older City Retirees Health Insurance

On October 27, 2022, there were oral arguments in the appellate court for the trial court decision stopping the City from charging retired city workers for their supplemental Medicare insurance. It appeared that the appellate court would defer to the City Council over the wording of Section 12-126 which would leave standing the trial court decision.

On October 28, 2022, the City's OLR director sent the Municipal Labor Committee (MLC) a letter threatening to terminate all existing health insurance contracts for all older city retirees (I am assuming that the City did not mean younger retirees) and leave the older retirees with only a Medicare Advantage plan for which the City doesn't have to pay anything.

"MAP" Plan

In her letter the OLR director refers to the "MAP" plan indicating that she and the MLC have a "MAP" plan ready to go. For the record, since Anthem has withdrawn from its offering to provide a Medicare Advantage plan, OLR has not given public notice about what constitutes the "MAP" plan. There may be a new "MAP" plan but we don't know anything about it.

NYC retirees live all over the United States. That is why traditional Medicare with supplemental insurance works so well for NYC retirees. Medicare is almost universally accepted across the country. Medicare coverage with supplemental insurance provides the best health care for older retirees who statisically have more health problems than younger retirees. Preversely, the younger retirees cost the City more than the older retirees.

I know that contracts between Medicare (CMS) and insurance companies offering Medicare Advantage plans are regionally based. I suspect that to provide the same plan on a national basis is not really possible.

Attack on Section 12-126

The OLR director also stated in the letter that she and the MLC had agreed via collective bargainning to changes to Section 12-126 of the NYC Admin Code which would eliminate the health insurance protections for older city retirees. She was complaining that these changes have not yet been introduced at the City Council. The proposed changes, however, are floating around and are dangerous.

The OLR director claims that the City is losing $50M per month paying for the supplemental Medicare insurance for older city retirees because the changes have not been passed into law. The City paid $425M for supplemental insurance in FY-2022. Divided by 12, that is $35.4M per month. This type of inaccuracy is always indicative of deception.

In fact the City is not losing money. It is continuing to honor the committment that it made in 1965 and memorialized in statute in 1967.

There were 246,832 city retirees in 2022 of which 173,231 were Medicare eligible. Of that number 139,442 were covered by the supplemental insurance. The City wants to terminate their supplemental insurance and only offer a Medicare Advantage plan with an exclusionary drug rider that the retiree would have to pay for.

Talk about Losing Money

On October 31, 2022, the Comptroller released the FY-2022 NYC Financial Statement (CAFR).

The statement documents that in 2022 the City contributed $3.03B to the teachers' pension fund (TRS) and in turn TRS skimmed off $2.14B into the teachers' deferred compensation plan (403-b). Yes, it is mind boggling but legal. The 2021 skim was $1.99B.

The UFT is the dominant player at TRS. The UFT is also the main union pushing the "MAP" scam on the other unions.

The CAFR also documents that the City paid $1.42B to the union welfare funds in 2022. The 2021 amount was $985M. The City paid $126M to the union annuity funds in 2022 and $109M in 2021.

Conclusion

Let's hope the City Council stands by its 1967 committment to provide health insurance to the City's workers and retirees and not dump older retirees into a second rate private insurance plan.

Anthem - US Department of Justice - Medicare Advantage Scam

I just stumbled on the following notice from DOJ. Within the press release you can find 112 page complaint. You can read the opening paragraph below:

Department of Justice
U.S. Attorney’s Office
Southern District of New York
FOR IMMEDIATE RELEASE
Friday, March 27, 2020

Manhattan U.S. Attorney Files Civil Fraud Suit Against Anthem, Inc., For Falsely Certifying The Accuracy Of Its Diagnosis Data

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that the United States filed a civil fraud lawsuit today against ANTHEM, INC. (“ANTHEM”), alleging that ANTHEM falsely certified the accuracy of the diagnosis data it submitted to the Centers for Medicare and Medicaid Services (“CMS”) for risk-adjustment purposes under Medicare Part C and knowingly failed to delete inaccurate diagnosis codes. As a result of these acts, ANTHEM caused CMS to calculate the risk-adjustment payments to ANTHEM based on inaccurate, and inflated, diagnosis information, which enabled ANTHEM to obtain millions of dollars in Medicare funds to which it was not entitled.

Why is the notice significant? Well, Anthem is the company NYC has contracted with to ramrod NYC retirees into a Medicarae Part C plan (aka Medicare Advantage). You can read the opening of the proposed NYC/Anthem contract below. This raises serious questions about the integrity of this whole process.

Medicare Advantage Group Agreement

This NYC Medicare Advantage Plus Plan Group Agreement (hereinafter "MA Agreement") is entered into as of January 1, 2022 (hereinafter “Effective Date”) by and between

the City of New York (“City”) acting through Mayor’s Office of Labor Relations – Employee Benefits Program on behalf of the Labor Management Health Insurance Policy Committee for the New York City Health Benefits Program with an office at 22 Cortlandt Street, 12th Floor, New York, NY 10007 (hereinafter "Group") and

Anthem Insurance Companies, Inc. doing business as Empire BlueCross BlueShield Retiree Solutions, on behalf of itself and the Alliance, defined below (hereinafter “Empire” or the “Alliance”) sponsor of the NYC Medicare Advantage Plus Plan (hereinafter "MA Plan"). Empire and The Group each are sometimes referred to herein as a “Party” and collectively as the “Parties.”

WHEREAS,

the City and Municipal Labor Committee (“MLC”), an umbrella organization for municipal unions, negotiate on a variety of matters, including collective bargaining regarding health benefits pursuant to their obligations under the New York Collective Bargaining Law;

WHEREAS,

to aid in the administration of the negotiated health benefits agreements, the City and the MLC established the Labor Management Health Insurance Policy Committee (“Committee”) for the MLC and City representatives to meet on a regular basis to discuss City health insurance benefits; and

WHEREAS,

the Employee Benefits Program (“EBP”) is a division of the Mayor’s Office of Labor Relations (“OLR”), and OLR is acting under the authority of the New York City Administrative Code Section 12.126(d) as the administrator of the New York City Health Benefits Program (“HBP”); and

WHEREAS,

on October 30, 2020 OLR’s request for authorization to enter into a Negotiated Acquisition to solicit a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program was approved by the City Chief Procurement Officer; and

WHEREAS,

OLR issued a public notice for a negotiated acquisition (EPIN:0021N002) in conformance with the New York City Procurement Policy Board Rules (“PPB”) and had otherwise advertised in order to solicit vendors through the Notice of Intent to provide health benefits services in the form of a Medicare Advantage plan under Medicare Part C for the Medicare eligible retirees and dependents of the City of New York who are eligible for the City’s Health Benefits Program; and

WHEREAS,

the Retiree Health Alliance (“the Alliance”), a strategic alliance between Empire and EmblemHealth Plan, Inc. (“EmblemHealth”) and their affiliates, submitted a response for such services, as provided for in the public notice for a negotiated acquisition, in the form of an expression of interest to OLR; responses were evaluated by an evaluation committee pursuant to PPB Section 3-04; and

WHEREAS,

OLR determined the Alliance’s proposal to be most advantageous to the City, taking into consideration technical expertise, price, contract terms, M/WBE Utilization Plan and other factors set forth in the negotiated acquisition solicitation; and

WHEREAS,

the City desires to appoint the Alliance to provide a Medicare Advantage Plan Under Medicare Part C for City of New York Retirees, and their Dependents, and

NOW, THEREFORE,

in consideration of the terms and conditions contained herein, the parties hereby agree as follows:

  ARTICLE 1 - PURPOSE
The Alliance will provide health insurance coverage to the Group’s eligible retirees and other eligible individuals as described in this MA Agreement. Empire is accountable for the operations, compliance, and performance of the MA Plan. EmblemHealth is an entity contracting with Empire to administer portions of this co-branded product to help ensure the City’s retirees receive continuity of care and membership support.

Specifically, EmblemHealth will co-manage the account, provide a professional network in the downstate New York area, deliver care through Neighborhood Health Centers, and support Empire in multiple areas of plan performance. ...

NYS Medigap Rate Chart for 2022 and the NYC Medicare Advantage Scam

New York State and Medigap Insurance

If you click on the link below, you will see the all the Medicare Supplememt(Medigap) insurance plans available in New York State for 2022 along with their monthly premiums. These plans are avalilable on the open market to everyone covered by traditional Medicare. I have always found when you get to see everyting laid out in chart, it all comes into focus.

NYS Medigap Rate Chart for 2022

Medigap inurance is what the City currently provides for retired City workers who are eligible for and covered by Medicare. The City pays a $194 premium per month per retiree to EmblemHealt/GHI. If the retiree is married the City also pays another $194 per month for the spouse if he/she is also eligible for Medicare.

This Medigap insurance, GHI Senior Care, appears to be a Plan A type of Medigap insurance based on its cost. This is the lowest cost Medigap insurance that CMS, the federal Medicare administraror, allows to qualify as Medicare Supplemental insurance. Medigap insurance basically covers the 20% of medical costs that Medicare doesn't cover.

As compared to Plan A, Plan F is the best type of Medigap insurance that you can buy as you can see in the chart. You can bet your ass that the City wasn't going to provide a Plan F type Medigap insurance for its retirees. You can see all the premium rates for all the plans in the NYS chart. The NYS Department of Financial Services (DFS) oversees the Medigap insurance plans sold in the state. DFS does not have authority over Medicare Advantage plans.

Critique of Medicare Advantage Problems

This is a clear critique of the Medicare Advantage business model and who gets the short end of the stick. Read this link, Medicare Advantage critique

Attack on the NYC City Council and the Health Benefits of NYC Workers and Retirees

The battle over health insurance for NYC Medicare eligible retirees is being fought over 126.b.(1) of the NYC Admin Code as well as workers’ contractual rights. This fight, however, effects all NYC retirees and workers.

The key part of Section 12-126 that is in dispute is:

Section 12-126. … b. Payment of health insurance costs. Except as otherwise provided in section 12-126.1 and section 12-126.2 of this chapter, for city employees, city retirees and their dependents: * (1) The city will pay the entire cost of health insurance coverage for city employees, city retirees, and their dependents, not to exceed one hundred percent of the full cost of H.I.P.-H.M.O. on a category basis. Where such health insurance coverage is predicated on the insured's enrollment in the hospital and medical program for the aged and disabled under the Social Security Act, the city will pay the amount set forth in such act under 1839 (a) as added by title XVIII of the 1965 amendment to the Social Security Act. …

The City Council’s Legislative Authority

The City Council is the legislative body for the NYC government.

On June 28, 2001, the NYC City Council unanimously overrode the mayor’s veto and passed Local Law 39 of 2001.This law modified Section 12-126.b.(1) of the Admin Code of the city of New York. Specifically, it made permanent the full refund of Part B premiums to eligible NYC retirees who were paying those premiums to the federal government as part of their Medicare benefits. This vote makes it clear that the City Council has authority over this part of Section 12-126 even in the face of mayoral opposition. As an insight to this law, remember who the mayor was in 2001.

The Proposed MAP Contract

As part of the Medical Advantage Plus (MAP) contract that the City wants to sign with Alliance, there is the following clause (Addendum A, Quoted Stipulations, page 4 ):

“Retirees who opt out of the NYC Medicare Advantage Plus Plan must pay the premium difference between the NYC Medicare Advantage Plus Plan and their selected retiree Medicare health plan, if applicable.”

In its raw form, this an agreement between two parties to damage a third party. The City and Alliance drafted this provision to put in place a mandatory penalty for retirees who choose to leave the MAP plan. The driving force behind Alliance’s profit margin is the number of retirees in the MAP plan. The more retirees that opt out, the less money that comes in from CMS ,the federal Medicare administrator, and the higher the risk of claim losses becomes.

Attack on the City Council

In addition to this attack on retirees, the clause is a secretive attempt to subvert the legislative authority of the City Council. It is my opinion that this clause violates the City Charter. The clause clearly attempts to block the City Council’s legislative authority over Section 12-126 and destroy the purpose of this 54-year-old statute.

At the November 10th City Council contract hearing, the OLR Commissioner made no mention of this penalty clause in the contact. She was there to sell the benefits of the MAP plan and not clearly state the problems with the MAP plan. Specifically, there was no mention of the fact that this would be an almost $4B annual contract. That is the amount that CMS will pay Alliance each year to cover the retirees’ health benefits. According to the stipulations in the contract, the City will only pay a trivial $14M in the first year of this five-year contract ($7.50 per month per retiree). This a dump and run scam if I ever saw one.

What would happen if the City Council chose to begin action to modify Section 12-126.b.(1) explicitly requiring the City to pay for the Senior Care premiums for eligible NYC retirees, like the action it took with Local Law 39/2001?

Would the Law Department argue that the mayor’s contract prevents the Council from passing such a law? I am beginning to think that this contract is illegal as it is currently drafted.