Item Q5
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BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
, Meeting Date: Mav 15. 2002
Division: County Administrator
Bulk Item: Yes X No
Department: County Administrator
AGENDA ITEM WORDING: Report of the County's consultants concerning the possibility
of obtaining a fully insured medical and dental program for Monroe County government.
ITEM BACKGROUND: The Board of County Commissioners approved the Gallagher Benefit
Services to undertake an analysis of the possibility of finding a fully insured medical and
dental program as an alternate to the self-insured program. Gallagher was to approach
carriers who might be interested and to return to the County with proposals, if possible. In
summary, Gallagher found very little interest in quoting a program for Monroe County
government. This will be explained more fully in the presentation and in the written
information to follow. The two carriers that were interested in the County quoted numbers
that were higher than the present costs the County has for approximately the same service
and did not include some of the benefits that the County presently provides, such as vision,
employee assistance program and life insurance. In summary, Blue Cross/Blue Shield was
$768,000 (6.10/0) more expensive than our current program. Humana was $3,210,000
(25.4%) over the cost of our current service. It would be anticipated that there would be
cost increases for all types of coverage, including our self-insured program, in the future.
PREVIOUS RELEVANT BOCC ACTION: As above
CONTRACT I AGREEMENT CHANGES: N/A
STAFF RECOMMENDATIONS: No change at this time.
TOTAL COST:
o
BUDGETED: Yes
No
COST TO COUNTY: 0
REVENUE PRODUCING: Yes
No X
AMOUNT PER MONTH
YR
APPROVED BY: County Atty _
DIVISION DIRECTOR APPROVAL:
O~B/Purchasing ~ ~iSk Management
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James L. Roberts, County Administrator
DOCUMENTATION:
Included X
To Follow
Not Required
DISPOSITION:
AGENDA ITEM # 4Jo-
SUMMARY OF FINDINGS
MEDICAL/DENTAL MARKETING
FOR THE
MONROE COUNTY BOARD OF COUNTY COMMISSIONERS
In March 2002, Gallagher Benefit Services initiated a project to market Fully Insured Medical
and Prescription Drugs, Dental, Vision, and EAP services by authority of the Monroe County
Board of County Commissioners. Attached to this Summary of Findings is the full text of the
Executive Overview provided to the County Administrator and his staff
Eight Medical Insurance Carriers were contacted and notified that the MCBCC wished to secure
a fully insured contract for HMO and/or PPO benefits for the employees of the County. Of those
carriers, we were able to secure commitments to quote from two: BlueCross BlueShield of
Florida and Humana, Inc.
The six carriers that indicated they would not quote consistently cited their lack of networks in
Monroe County as the reason for declining the opportunity. Several of the carriers also indicated
that they do not plan to expand their business into the Keys.
The RFP was released on March 1, 2002 and was sent to 15 carriers, including the two medical
carriers and 13 dental carriers. The following carriers elected to respond to the RFP by the April
2002 deadline.
1. BlueCross BlueShield of Florida (Medical)
2. Humana (Medical and Dental)
3. Ameritas (Dental and Vision)
4. CIGNA (Dental)
5, CompBenefits (Dental and Vision)
6. Delta Dental (Dental)
7. MetLife (Dental)
8, WorkLife Solutions (EAP)
On May 1,2002 Gallagher Benefit Services presented its analysis of the proposals to the County
Administrator and his staffwith the following assessments.
Medical and PrescriDtion Dru2s
The evaluation concentrated on overall cost, benefit comparisons, network availability, and
provider discounts in Monroe County. Of the two medical carriers responding, BlueCross
BlueShield of Florida clearly provided the strongest case for consideration. However, based on
our assessment there was still not a sufficiently compelling reason to recommend a switch to a
fully insured plan at this time.
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A synopsis of the findings is as follows:
1. Gallagher estimates that BlueCross BlueShield of Florida (BCBS) would be more
expensive than the projected cost for the self-insured plan by an estimated $768,204
or 6% for the 2002/2003 plan year. Estimated expense for BCBS is $13,422,281
versus Self-Insured expense of$12,654,077.
2. Benefits were slightly better but would not warrant the cost differentiation.
3. While the physician/hospital networks were comparable in numbers, BCBS was
lacking a core group of what are considered to be MCBCC's very highly utilized
physicians.
4. Physician discounts on the most commonly utilized procedures were significantly
better with BCBS at an average of36% greater. If the BlueCross BlueShield of
Florida network remains stable this could result in cost savings to the County over
time. However, BlueCross BlueShield did not appear to pass along the savings from
their deeper discounts in the original proposal to MCBCe.
5. The analysis ofHumana's cost and network yielded variances that were too great for
Humana to be considered a serious alternative,
Dental
Six carriers responded with dental plans. Five quoted a PPO product with a limited network in
Monroe County and one quoted an indemnity plan. All benefit designs closely resembled the
existing County plan. Annual costs varied from savings of$133,000 to an increase of over
$275,000 over the current plan.
While savings could equate to over 18% on the dental portion of the insurance, the overall
impact in regard to the total benefit budget was insignificant. Considering the annual estimated
cost for the Medical/Prescription Drugs exceeds $12,600,000, a $133,000 savings equates to only
1%, In view of this perspective, we see no compelling reason to change plans at this time.
Vision
Two vision plans were submitted with one PPO benefit and one indemnity plan similar to your
current plan. Cost differentials ranged from $30,973 in savings to a $2,099 increase over current
plan costs.
The lack of Optometrists throughout the Keys (7 in total) creates a potential inconvenience for
MCBCC employees that would offset the value of the savings for this program.
Mf
One proposal was submitted from W orklife Solutions. Price and benefits were comparable to the
current plan, however, the carrier had virtually no providers in the County. The carrier is willing
to recruit a network for the Keys, however, the uncertainty of success warrants eliminating them
from consideration.
In conclusion, the proposals offer no compelling reason to move at this point from either a
benefit or projected cost standpoint, The most significant value of the proposals is the mitigation
of the unlimited claim liability in the current Self-Insured plan. Assuming adequate reserves and
funding or sufficient reinsurance, this argument is diminished as well.
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EXECUTIVE SUMMARY
Fully Insured Medical and Dental Benefits RFP
On behalf of Gallagher Benefit Services, it is with
pleasure that we submit the final analysis of the
Fully Insured Medical, Prescription Drug, Dental
and Vision benefits RFP for the Monroe County
Board of County Commissioners. While all
phases of the analysis are reviewed in the context
of this binder, the primary focus of this overview
is a review of the following areas:
I. Overall cost comparison to the MCBCC
for Medical, Prescription Drug, Dental
and Vision.
2. Comparison of proposed benefits for
Medical, Prescription Drug, Dental and
Vision.
3. Hospital/Physician network comparison
between the respondents.
4. Discount comparison on the most
prevalently utilized procedures of the
MCBCe.
In response to the RFP for Fully Insured Medical,
Dental, Vision, and EAP benefits, seven proposals
were submitted. The Proposing entities include:
· Blue Cross Blue Shield of Florida
(Medical)
· Humana (Medical and Dental)
· Ameritas (Dental and Vision))
· CIGNA (Dental)
· CompBenefits (Dental)
· Delta Dental (Dental)
· MetLife (Dental)
In addition to the above referenced proposals, we
received a Vision proposal from VisionCare Plan
(Underwritten by CompBenefits)
We have secured a proposal for EAP services as
of April 25, 2002. Two copies of the proposal are
being forwarded to MCBCC and a brief synopsis
is included in this summary.
OVERALL COST COMPARISON:
· Medical/Pharmacy
We estimate that insuring the plan with BlueCross
BlueShield of Florida would cost the MCBCC
$768,204 or 6.1 % more than our estimate of the
self-funded cost of the plan for 2002/2003. Our
self-funded estimate is based on actuarially sound
assumptions regarding medical trends, but does
not include any explicit claim margin. We also
note that the lack of any reinsurance makes the
self-funded plan more prone to large cost
variations from year to year. This is not reflected
in our cost comparisons.
Humana's proposal came in at $3,210,219 or
25.4% over the estimated current plan costs. Like
the Blues, Humana also showed a slightly higher
benefit structure with a 1,065 rating versus the
1.00 for the existing plan,
As all plans are on a fully insured basis, there is
rigidity with regard to any benefit changes.
However GBS adjusted the benefits and costs on a
hypothetical basis to those of the current plan with
the following differences from expected costs
with your current plan:
BlueCross
BlueShield
Humana
$440,831 3.5% Higher
$2,241,976 17.7% Higher
It should be noted that the self-funding rates
include fixed costs for all coverages since the
current vendor charges a single fee for medical,
dental and vision combined. As mentioned,
prescription drugs are included in all plans.
· Dental
As previously noted, quotes were obtained from 6
carriers, Two carriers submitted 3 tier rates
(Ameritas and CompBenefits), while four carriers
submitted 4 tier rates (CIGNA Dental, Delta
Dental, Humana Dental, and MetLife Dental).
Annual costs varied from a $130,877 savings
(18.9%) from Ameritas Dental to a $278,475
(40.3%) increase for Delta Dental over the current
plan costs. The estimated cost differentials from
the current plan were:
Ameritas
CompBenefits
CIGNA Dental
MetLife Dental
Humana Dental
Delta Dental
($130,877)
$22,012
$73,301
$123,593
$165,911
$278,475
(18.9%)
3,2%
10.6%
17,9%
24%
40.3%
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_GL
EXECUTIVE SUMMARY
Fully Insured Medical and Dental Benefits RFP
While the Ameritas quote is clearly advantageous
from a financial perspective, there are several
conditions in their proposal that could impact the
total cost of the proposal. The most significant
condition is the requirement for 100%
participation of all eligible employees and 65%
participation of all dependents. In addition, the
Ameritas proposal did not comply with the
conditions of the RFP. This is discussed further
later in the summary.
· Vision
There were two vision plans submitted through
Ameritas (Vision Perfect) and VisionCare, Inc..
Following are the cost differentials from the
current plan:
Ameritas Vision
Perfect
Vision Care, Inc.
$2,099 1. 9%
($30,978) (27.8%)
It should be noted that BlueCross BlueShield also
submitted with their proposal a discounted vision
plan through VisionCare, Inc. for in-network
services only. This differs from the plan
submitted directly by VisionCare, Inc.
BENEFIT COMPARISONS:
· Medical/Pharmacy
As mentioned previously, the medical and
pharmacy proposal benefits from both carriers
were slightly higher than the existing plan. A
relative weight was determined for all plans with
1.00 being the standard current plan for MCBCC.
Using this base, BlueCross BlueShield finished
the analysis with a rating of 1.025 while Humana
rated a 1.065. Being fully insured subjects the
carriers to all Federal and State mandates. The
greatest difference in benefits fell in the category
of routine exams and lab tests, deductibles, and
maximum out of pocket expenses for eligible
expenses.
· Dental
Dental plans offered 5 PPO packages with similar
or equal benefits. CIGNA Dental offered the only
indemnity plan with like benefits to the current
self-insured plan. As previously mentioned, some
carriers though competitive in their pricing, fell
short in their compliance with the RFP.
· Vision
Among the three submissions for vision plans
there was one indemnity plan offered through
Ameritas, one PPO type benefit through
CompBenefits (VisionPlan, Inc.) and one strictly
discounted plan through BlueCross BlueShield.
Benefits varied from plan to plan, however,
CompBenefits showed considerable benefit
advantages in lens allowances and complete visual
exams, including refraction. The only drawback
to this plan seemed to be the network that only
offered 7 optometrists through the Keys. Again,
the Ameritas proposal presented was not in
compliance with the RFP specifications. This
mayor may not have a bearing on your
consideration of this carrier. GBS will pursue any
course of action the MCBCC may desire,
HOSPITALIPHYSICIAN NETWORK
COMPARISON:
An extensive analysis was done in regard to the
various networks within Monroe County utilizing
data from the two proposers (BlueCross
BlueShield and Humana) and the existing KPHA
network. The results were the following:
BlueCross BlueShield
Humana
KPHA
142 physicians
24 physicians
119 physicians
In Key West, the BlueCross BlueShield network
had coverage of 52 physicians versus the KPHA
network of 66. Based upon a review of the
statistics it becomes obvious that Humana is
completely inadequate at the present time.
Humana has indicated their willingness to
negotiate with the physician community in the
Keys if their proposal is accepted by the MCBCC.
With regard to hospital participation in Monroe
County, it is important to note that BlueCross
BlueShield has participation agreements with the
three hospitals in the Keys, while Humana only
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EXECUTIVE SUMMARY
Fully Insured Medical and Dental Benefits RFP
listed Fisherman's Hospital as a participating
provider. As mentioned, the analysis provided in
the report provides a total analysis of Monroe
County including zip code listing and specialty
breakouts.
The hospital and physician network for Miami-
Dade and Broward counties is not addressed in
this report, since both BlueCross BlueShield and
Humana have substantial and strong networks in
both counties.
PHYSICIAN FEE SCHEDULE
COMPARISON:
The last area of significance in the analysis is the
review of 20 CPT procedures that were based on
the most prevalent procedures in the MCBCe
group utilization. Based on the data supplied,
both Humana and BlueCross BlueShield obtained
significantly better discounts than Acordia, which
utilized 80% of reasonable and customary
charges. Average discounts for both proposers
allowed their costs to come in about 36% lower
than Acordia's costs. It stands to reason, if the
reported discounts by the two carriers are in fact
"real" then it may warrant further consideration in
that their network will lead to lower claims in the
future,
It does not appear that the benefit of these deeper
discounts has been reflected in the rates quoted by
the carriers. We would expect that if the discount
differentials are real, future claims would be lower
under the carrier plans and presumably future
rates would be lower as a result. This also
suggests that self-funding through one of the
carriers may result in lower claims cost than
MCBCC will experience under the current
network, although higher administration fees
usually charged by carriers may offset some of
this cost reduction.
Zip codes in Monroe, Miami-Dade and Broward
counties (330, 331, 333) were utilized for this
analysis~ however, Humana identified only one
reimbursement schedule across the three zip areas,
while BlueCross BlueShield identified one
schedule for Monroe and Broward, with a slightly
higher reimbursement schedule for Miami-Dade.
As always, the data utilized is only as good as the
information that Gallagher Benefit Services has
obtained from the respective proposers.
MINIMUM ELIGmlLITY CRITERIA:
In Section 6.0 Minimum Eli2ibilitv Criteria. the
RFP states: "In order to be considered eligible for
this assignment, proposer shall meet or exceed the
following criteria: "6.2 Insurance carriers must
have a minimum size category of VI and a
financial rating of A- from A.M. Best."
Our examination of the proposals submitted by all
of the carriers resulted in the elimination of Delta
Dental from consideration for failure to meet this
criterion. Delta reported a rating of A- and a size
category of V from A.M. Best,
In addition, Section, 6.0 Minimum Eli2ibilitv
Criteria. states: "Failure to submit a statement,
indicating full compliance with the requirements
of this section will disqualify proposal submitted.
Two of the proposers neglected to address this
requirement in their proposals. Neither Ameritas,
nor MetLife responded with any
acknowledgement in the submission of their
proposal.
Experience and Qualifications:
MetLife did not provide references as requested in
the RFP.
Scope of Services:
A detailed outline of the requested services was
provided to all potential proposers. None of the
proposers met the Scope of Services section of the
RFP without qualification. It is recommended
that the County identify those items that are non-
negotiable and make further determinations on its
desire to negotiate with the vendors or to
eliminate them.
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EXECUTIVE SUMMARY
Fully Insured Medical and Dental Benefits RFP
Information to be Included in the Submitted
Proposal:
Section 7.10. Reauired Purchasin2 Forms,
specifies: "Attachment A, B, C, D, E with all
required information completed and all signatures
as specified. Any modifications of alterations to
these forms shall not be accepted and proposal
will be rejected." Compliance with this section of
the RFP was strong with the exception of two
proposers. In this instance Arneritas and MetLife
did not comply by sending in all the required
forms.
As a result of this review of the RFP requirements
and the consistent lack of compliance with the
requests of the RFP, it is recommended that
Arneritas and MetLife also be excluded from
consideration.
EAP:
One separate proposal was secured from
W orkLife Solutions for a standalone EAP
product.
The proposal consists of an offering for an 8
session problem focused EAP for $3.74 on a Per
Employee Per Month charge. Employees needing
additional Behavioral treatment would be referred
into the County's medical coverage for Behavioral
Health.
For an additional $ .17 PEPM, WorkLife
Solutions will offer telephone counseling to
employees for Legal and Financial Services. Any
referrals from this program would be into a
discounted network.
WorkLife Solutions has no network to speak of in
the Keys (2 providers) but is willing to commit to
securing local coverage if MCBCC and WorkLife
Solutions enter into a contractual arrangement.
CONCLUSIONS:
In conclusion, the MCBCC must assess the
following issues:
I. Should the County move to the more
expensive fully-insured health plan or
continue with your current plan with
unlimited liability?
2. With an aging employee base on the plan,
will the claims continue to proliferate as
they have over the past few years?
3. How will the budget for the County be
able to absorb these costs with the
continued trend in higher claims
utilization?
Clearly these are familiar issues ldilemmas, not
only for the MCBCC, but also for all groups
throughout the area and the Country.
Gallagher Benefit Services would like to thank the
MCBCC for utilizing our services. We look
forward to a continuing partnership with the
MCBCC in any future endeavors.
Gallagher Benefits Services
April 2002
This analysis is for illustrative purposes only, and is
not a guarantee of future expenses, claims costs,
managed care savings, etc. There are many variables
that can affect future health care costs including
utilization patterns, catastrophic claims, changes in
plan design, health care trend increases, etc. This
analysis does not amend, extend, or alter the
coverage provided by the actual insurance policies
and contracts. Please see your policy or contact us
for specific information or further details in this
regard.
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MEMORANDUM
TO:
Board of County Commissioners
FROM:
James L. Roberts
County Administrator
DATE:
May 14, 2002
SUBJECT: Animal Control Contract(s)
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
On Friday, I submitted to you my recommendation for resolution of the animal control
contract issue as per the information available at that time. On Monday, we received information
that Stand Up For Animals was willing to do the Marathon and Big Pine portion of the contract
for 40% of the maximum bid amount (40% x $539,000 = $215,600).
After discussions with the SPCA, they agreed to do the Key West and Lower Keys
portion of the contract for 60% of the maximum bid amount (60% x $539,000 = $323,400).
Therefore, the total price for the two contracts is $539,000, which is the maximum that was
originally bid by the SPCA for the entire system from the Middle Keys to Key West.
If the Board of County Commissioners wishes to accept this arrangement, it will be
necessary to approve both contracts at the amounts indicated.
If the two contracts are approved, it is recommended that they have a provision in which
the performance of each organization will be evaluated by staff after 9 months. Then prior to
the end of the contracts, a recommendation could be made as to whether the two organizations
are performing their services adequately in a split system and whether the contracts should be
continued for another year.
If you have any questions, please let me know.
~~~
County Administrator
JLR:dlf
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