Fresno Unified broke lifetime benefits promise after 2023 decision, retirees say

Some retired Fresno Unified employees say their simmering frustration with their health care benefits, which remain in limbo, stems back to the district’s 2023 decision to outsource retiree coverage to a profit-driven private insurer.

Thousands of retirees lost access to some of the region’s major local health care facilities Jan. 1 because of a dispute between a Fresno Unified insurance provider, Aetna, and Community Health System, the Fresno area’s largest health care provider.

The disruption impacted about 6,200 retirees and dependents enrolled in the Aetna program, of which 1,500 received primary medical care services under the Community Health System network of clinics and hospitals, according to the district.

Fresno Unified, for decades, has agreed to provide lifetime health insurance benefits to its retired employees and had done so for most of that period through its unorthodox self-funded insurance model.

But some retirees say their benefits have felt noticeably diluted after the school district replaced its preferred provider organization, or PPO, insurance plan in 2023 with for-profit Aetna’s Medicare Advantage Plan. While the district has said Aetna Medicare Advantage Plan offers more benefits at lower premiums, retirees said it the change has led to a more restricted provider network, increased red tape, and higher referral and denial rates.

“I was denied a CT scan before I had ankle surgery. The surgery was approved. The doctor ordered the CT scan. He has to have that CT scan before he can do the surgery,” said Larry Moore, a retired teacher of Fresno Unified. “Two days before I was supposed to have the thing, they called me and said, ‘Your insurance doesn’t cover it.’ They turned it down.”

Moore said though his doctor appealed, he had to pay upfront because he had to have the surgery. The insurance company was supposed to reimburse his payment, he said.

“I paid $300. I submitted the bill to Aetna. That was some years ago. I still haven’t gotten paid,” Moore said.

For nearly five decades, Fresno Unified operated its own supplemental insurance, meaning the district’s Health Fund directly paid the remaining bill after Medicare for retirees age 65 and older as long as they enrolled in Medicare Parts A and B.

In 2005, when Fresno Unified neared bankruptcy and identified employee health benefits as a major expense, it established the Joint Health Management Board, which consists of union representatives and district administration, to oversee benefit spending and vendor performance.

“It has taken compromise. But since 2006, JHMB has outperformed the state’s average growth in medical spending by a cumulative total of more than $132 million. The district’s health and welfare program is now solvent,” Ruth F. Quinto, former deputy superintendent and CFO of Fresno Unified, wrote in a 2015 op-ed to The Fresno Bee.

According to the most recently available Quarterly Health Fund Report, the first nine months of the 2021-22 fiscal year showed the fund had a budget surplus of more than $1.618 million. The plan expenses were also expected to be 4.7% lower than the budgeted amount.

Though publicly available data noted the self-funded insurance model was solvent, the district’s governing board approved a contract in June 2023 to transition its PPO health insurance coverage for 6,200 retired employees and their dependents from Medicare Parts A and B and the district’s PPO plan to the Aetna Medicare Advantage Plan.

The new plan enhanced benefits for retirees, including better hearing benefits, home visit services, non-emergency transportation, and Silver Sneakers fitness benefits, according to board meeting documents.

The annual estimated cost for 2023 was $17 million, with 7% rate increases for 2024 and 2025. Fresno Unified projected to save between $12 to $15 million each year by moving to the Aetna Medicare Advantage Plan, the document wrote.

Moore said Fresno Unified told retirees in writing that if retirees preferred to stay with their original Medicare plans, they would cease receiving further benefits from the district.

“They evaluated, allegedly for three years, never told anyone, and it was just simply announced in the spring of 2023,” Moore said. “And then July 1, we were in the plan. There was no choice.”

Retirees who opted out of the Aetna Medicare Advantage Plan are responsible for paying the remaining bill after traditional Medicare on their own, which is about 20% in most occasions, according to Moore.

The school district said in an email that both the old and new models provide retirees the option to enroll in a PPO plan or Kaiser Senior Advantage HMO plan, which remains unaffected. The district did not confirm whether notices were sent to retirees in 2023, though said the PPO plan offered to retirees “is better than the plan that our active employees currently enjoy.”

“The Aetna Medicare Advantage PPO Plan offers in-network options to Medicare retirees, including those residing outside of the state, and reduces out-of-pocket expenses for out-of-network services in many instances,” the district said in an email. “The plan covers everything that is covered under traditional Medicare, plus offers additional benefits.”

Some retirees say Fresno Unified broke its promise to provide lifetime benefits to its retired employees. The perk was secured in a bargaining agreement with the school district.

Emily Brandt, a retired English teacher from Bullard High School, said the insurance plan transition to Aetna violated the contract.

“Our lifetime health benefits were negotiated as part of our collective bargaining agreement, so the fact that we were paid less than 17 other districts here in the Central Valley in order to receive these lifetime benefits is very important to our financial arrangements,” Brandt said.

Brandt said the retirees were satisfied with the combination of Medicare and district’s PPO plan.

“We were able to manage quite well. We had small co-pays, but we didn’t have pre-authorizations at this level,” Brandt said. “Medicare has a very big list of authorizations.”

Brandt said the Medicare Advantage Plan does not provide retirees the same level of benefits they had before retirement. Though both plans are carried by Aetna, Fresno Unified’s active employees are enrolled in the Aetna PPO, while retirees are enrolled in the Aetna Medicare Advantage Plan, which provides a more restricted provider network.

Medicare Advantage Plans have been criticized nationally for insurers’ misleading marketing tactics. According to a 2023 report by the Centers for Medicare & Medicaid Services, some Medicare Advantage insurers in Massachusetts exaggerated savings for customers, promoted benefits unavailable in the regions, and distributed posters mimicking official federal Medicare notices.

Moore, who once served as the president of the Fresno Teachers Association, said he thinks Fresno Unified was deceived into thinking it could save money through the insurance replacement.

At the Dec. 17 meeting, Fresno Unified’s board approved the continuation of the Aetna Medicare Advantage Plan for 2026. The program carries an annual cost of $40 million, more than doubling the 2023 rate, and another 11.7% increase for 2027.

The district cited recent federal legislation and high medical usage as the reason for the rate increases, staff wrote in the recommendation.

District officials told the board that despite the stalled network dispute, if the contract were not approved, thousands of retired employees would lose their health insurance entirely.

“I told junior reps, I told anybody, I tried to communicate, you’re going to have problems because a lot of places in California, in the United States, don’t like Medicare Advantage, and many doctors and hospitals are dropping it,” Moore said. “It took three years to reach Fresno, but it finally did. Now we have this big mess.”

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