retirees rally

GETTING MORE TIME TO DECIDE: Retirees protesting the shift to a Medicare Advantage plan from Medicare like this group outside City Hall in May said they were suspicious of the change in part because they were given little information about how a new program would affect benefits and out-of-pocket costs. They won a victory when a Manhattan Supreme Court Justice required the city to scrap an Oct. 31 deadline for retiree decisions on the plan and ordered it to 'cure deficiencies' in its implementation.

A Manhattan State Supreme Court Justice hearing objections to the city's moving 250,000 retirees' health coverage to a Medicare Advantage plan Oct. 21 ruled it could not require them to make a choice on participating in the program by Oct. 31, citing an "irrational" plan for implementation of the controversial shift.

That ruling by Manhattan Supreme Court Justice Lyle E. Frank came shortly after he issued another ruling dismissing a lawsuit brought by the losing bidder for the contract to provide coverage to those retirees for at least the next five years, concluding that the decision by the Office of Labor Relations to pick a consortium of providers was "rational."

Must 'Cure Deficiencies'

The judge's four-page ruling in the case brought by NYC Organization of Public Service Retirees requires the city to "maintain the status-quo enrollment until the respondents cure deficiencies with the implementation of the proposed new Medicare Advantage plan."

Justice Frank said a revised implementation plan must be sent to lawyers for the retiree group seven days before it is submitted to him, in order to give them a chance to respond.

That group and other retirees have charged that they have not been provided with sufficient information to make educated decisions about whether to allow themselves to be automatically transferred from their traditional Medicare coverage effective Jan. 1. 

They have also questioned whether the new program, known as NYC Medicare Advantage Plus, would have negative consequences for them, based on both problems with such plans in other cities and the fact that unions under the Municipal Labor Committee have said the change was desirable in part to produce savings that could be used for contract bargaining on behalf of active members.

City: Won't Get Hurt

City Labor Commissioner Renee Campion had previously emphasized  that the city had not sought the maximum possible savings under the deal with a consortium known as The Alliance—whose best-known participants are Emblem Health and Blue Cross, Blue Shield—precisely because the intent was to offer retirees benefits that, while different in some respects, would be as good as, or slightly better than, what they have been receiving until now.

Justice Frank did not rule on the merits of that claim, either in this decision or in dismissing the lawsuit brought by Aetna, a case in which he noted that under law he was not permitted to substitute his judgment for that of an administrative body such as the Office of Labor Relations as to whether the city had chosen the best bidder, but rather was to determine whether there was something arbitrary or capricious about that choice.

In his ruling in the retirees' suit, he wrote, "while the Court has already determined that [the city's] ultimate determination of choosing a Medicare Advantage Plan provider was rational and does not intend to disturb that determination, the Court finds that the implementation of the program is irrational and if the petitioners and similarly situated individuals are required to opt-in or out o a medical program by the October 31, 2021 deadline, there would be irreparable harm." 

During a virtual hearing conducted the previous afternoon, Justice Frank heard from a lawyer who had enlisted 8,000 retirees for the suit charging that they were not given adequate input or information regarding the change in coverage. A City Council hearing that originally was expected to be held last month had been set for Oct. 28—just three days before the opt-out deadline (his decision appeared to indicate that by the time he made the ruling, that hearing had been postponed, but he was actually referring to an OLR  hearing that day regarding the contract. The Council hearing will proceed as scheduled).

Deal May Reach $34B

He also heard extensive arguments from an attorney for Aetna Life Insurance, the losing bidder for a five-year contract that it claimed in its court papers could be worth as much as $34 billion if extended to 11 years—an option under the deal.

Aetna had questioned the contract award to the group known as The Alliance on two grounds. It claimed that a new criterion of "familiarity" was inserted midway through the bidding process that tipped the decision in favor of The Alliance because it included Emblem Health and Empire Blue Cross, Blue Shield. It also alleged that those two entities were leaving it to a third provider, Anthem Insurance Cos. Inc., despite what the suit claimed was that firm's failure to run a program anywhere near this size. 

An attorney for Aetna, Karl Geercken, told Justice Frank, "We wouldn't have bid if the city was essentially saying the incumbent's gonna win." He said that when Martin F. Scheinman, an arbitrator who has long settled disputes between the city's Office of Labor Relations and the Municipal Labor Committee, was asked for his opinion and he mentioned "familiarity" as a factor in The Alliance's favor, "This was a new criterion" that had not been mentioned at the outset of negotiations.

Hoped to Overcome Fears

But Senior Assistant Corporation Counsel Vijeta Jasuja had earlier testified, "There is nothing inappropriate about familiarity" being a consideration in making the selection. She said officials gave it special weight because many retirees were concerned about the shift to Medicare Advantage because of problems in other cities with the program. Because many retirees "may not be technically savvy," she said, the MLC—which bargains on health benefits for all city unions—in particular believed they would be reassured if firms and employees they had dealt with in the past were administering the program.

Retiree groups had protested the switch even before The Alliance was chosen in mid-July, holding rallies at several lower Manhattan locations including outside City Hall and the headquarters of the United Federation of Teachers, whose president, Michael Mulgrew, has been a key advocate for the new program, which is known as NYC Medicare Advantage Plus.

In its lawsuit, Aetna noted that all four city representatives on the panel that made the award had preferred its bid, while the union representatives all chose The Alliance. MLC Chairman Harry Nespoli, who is also president of the Uniformed Sanitationmen's Association, last month explained labor leaders' preference by saying "we saw a savings for our members and we saw a savings for the City of New York. We thought we could make better health care for the retirees and the active members at a better rate."

Why Retirees Have Doubts

Mr. Mulgrew had been frank that the growth of health costs in recent years had limited the amount of money that had been available for pay raises for active employees, but also insisted in both union forums and interviews that the savings would not come at the expense of good benefits for retirees.

Aetna, in addition to objecting to Mr. Scheinman's involvement in the process—notwithstanding his having been engaged as a troubleshooter by the health program whenever problems cropped up in the past—claimed in its court papers that The Alliance had misrepresented the agreement as "a joint venture between 'Emblem Health and Empire BlueCross BlueShield.'"

It contested the claim by The Alliance that it met one criteria for getting the contract—having a current Medicare Advantage plan with at least 50,000 members—by citing the Colorado Public Employees Retirement Association. Besides noting that it was the Indiana-based Anthem, rather than the two local providers, that ran that program, "Colorado PERA never had anywhere close to 50,000 Medicare Advantage members" and was ending its dealings with Anthem at the end of this year, Aetna's lawsuit stated.

But Justice Frank concluded in a seven-page ruling that city lawyers had provided satisfactory answers on all those issues.

'Clear and Reasonable'

He agreed with OLR's contention "that the solicitation requirements were clear and reasonable, the determinations made by the Evaluation Committee were rational and consistent with the process set forth in the solicitation documents. The Alliance received no unfair advantage in the procurement process and [Aetna] was not prejudiced."

Noting that Mr. Scheinman was experienced enough in ironing out health-care issues for the city and the MLC that he had been made a co-chair of a tripartite committee that handled disagreements, Justice Frank wrote, "To this Court, to bring him in and have him serve as a further consultant was not only rational, but wise."

He added, "Finally, the court is not persuaded by the argument that there is a restraint of trade by awarding the contract to an entity that has multiple companies  in it. There is every indication that there was a robust process here that had 4 distinct bidders [in its early stages] and the final determination was extremely close."

The fraught process was further complicated when Eric Adams, the Democratic nominee for Mayor and the overwhelming favorite to occupy that job when the NYC Medicare Advantage Plus program takes effect Jan. 1, branded it a "bait-and-switch" Oct. 15, prompting a front-page headline in the next day's Daily News.

The Brooklyn Borough President subsequently complained that his words had been taken out of context, but that quote added to the concerns of some retirees about the new program.

Some Key Benefits

Among the specific objections by retiree advocates are that there will be some new co-pays under the program, and that certain benefits may not be available without pre-authorization.

City and union officials have responded that many of those co-pays were due to be implemented under the existing Medicare program as well, and that the gains under NYC Medicare Advantage Plus would outweigh the drawbacks. 

Among those they have touted is that retirees' out-of-pocket costs, which currently have no limit, under the new program will be capped at $1,470 annually. A Durable Medical Equipment benefit for employees that is now capped at $2,500 will become unlimited.

There will also be potentially huge savings for long-term hospital stays, with no coinsurance charge for any part of those stays. Under Medicare, retirees must pay the full coinsurance charge for stays of between 61 and 90 days, a 50-percent coinsurance charge for days 91 through 201, and full charge for each day after that up to 365.

Ambulance services, which carry a $25 deductible and a $2,500 annual cap under Medicare, will have no deductibles or caps under NYC Medicare Advantage Plus. While the ambulance rides must be deemed "medically necessary," in cases where that standard isn't met, retirees will be entitled to 24 paid rides annually, up to 30 miles per ride, in other vehicles.

There are other employee-wellness incentive programs under the plan.    


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