The Washoe County School District Board of Trustees delayed a decision Tuesday night about whether to renew contracts with Renown Hospital and its health insurance arm after legal concerns were raised about pursuing alternative options for district employees.
Board members initially wanted to approve renewing the three-year contracts with Renown and Hometown Health while also requiring the district to initiate a competitive request for proposals process to explore other health-care options in one vote. However, the district’s attorney advised against doing so because the topic of exploring other health insurance options was not specifically noted on the board’s agenda and therefore voting on it could be a violation of the open meeting law.
Instead, the board decided to delay voting on the matter until its August 28 meeting so that the trustees could vote to both approve the contracts and direct staff to explore alternative options at the same time.
The district’s lawyer, Neil Rombardo, suggested that district staff had already expressed an interest in considering a competitive process and that the board might not directly need to request them to do so. However, Board President Katy Simon Holland said that she was more comfortable approving the items at the same time to ensure that the board directly asks district staff to begin the competitive process.
“I know that there are folks that are nervous and when they hear that they approve this and they hear that some other time we may come back and do a recommendation to open it up for a competitive process,” Simon Holland said.
For the last three years, the Washoe County School District has had exclusive contracts with Renown to provide hospital services and with Hometown Health to act as the third party administrator, responsible for for processing the claims, negotiating provider contracts and more. Until 2015, Saint Mary’s Health Network held the longstanding contract to provide coverage to the district’s employees.
The proposed contract renewal with Renown will cost the school district about $19.5 million, while the contract with Hometown Health will cost an additional $1 million, cumulatively, a $90,000 increase on the $20.5 million contracts. At the same time, the school district has been staring down increases in either health insurance premiums for district employees or decreases in benefits as it seeks to close a projected $9.7 million gap between what it projects that it will spend in 2019 and the amount it will collect through premiums.
This year, Saint Mary’s representatives have been vocal about the fact that they don’t think they were given a fair shot to compete for the contract, saying that they could have saved the school district between $5.4 million and $15.9 million in 2019 and addressed the gap in the health fund. The school district rejected Saint Mary’s proposal as “non-responsive” because the district had only requested information on hospital services, not a full health plan.
At the meeting, Saint Mary’s CEO Helen Lidholm asked the board to allow the health network’s proposal to be “evaluated on its merits,” saying that it’s the school district’s fiduciary responsibility to examine all options available to them.
“When you look at both dollars and at health-care costs as a percentage of their budget, we believe school district employees deserve better,” Lidholm said.
The school district currently pools the premiums it collects into a special health insurance fund out of which it pays health insurance claims. Saint Mary’s had proposed a different model whereby the health network would manage a fixed budget and provide all the necessary care to school district employees within that budget instead of individually drawing down from the health insurance fund.
District staff said at the hearing that if the trustees decided to renew the contracts with Renown and Hometown Health in the short term, the district would still be free to consider other options because the contracts have an “out clause.” The district would just need to give either Renown or Hometown Health 120 days notice before terminating the contract.
In light of that, several of the trustees expressed interest in renewing the contracts but also directing school district staff to begin a competitive process in order to consider all possible alternative health insurance proposals.
“My phone was ringing off the hook. I hear bells when there are not bells,” said Trustee John Mayer. “Really what they want is choice. That’s what everybody says. They want choice but they want it at a good price and we didn’t go out for bid. They say, ‘Why didn’t you?’”
The board also voted 4-3 Tuesday night to bump a recommended 10 percent increase in health insurance premiums, which would have only covered about $7.5 million of the projected $9.7 million gap, back to the district’s health insurance committee for further consideration after of the trustees expressed concern about the long-term impact of failing to address the health fund’s balance. Trustees also directed the committee to work with staff to come up with additional recommendations to cover the full projected gap and look at the long-term solvency of the insurance fund.
Teachers, support staff and retirees had urged the board to accept the 10 percent increase, with Washoe Education Association president Natha Anderson describing teachers as being “reluctantly okay” with the increase.