Item C29
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date:_December 17, 2003
Division: Management Services
Bulk Item: Yes X No
Department: Administrative Services
AGENDA ITEM WORDING: Approval to reject proposals for the Health Benefit Plan Claims
Ad'ministration and Utilization Review Services and continue the contracts with Acordia National
and Keys Physician Hospital Alliance (KPHA) to provide Third Party Administration services and
case management as outlined in Contracts approved in September, 2003.
ITEM BACKGROUND: The BOCC approved contracts with Acordia and KPHA at the September
17, 2003 meeting pending results of Request for Proposals for Fully Insured and Self- Funded
Insurance Plans. We did not receive any plans for a fully insured program and of the nine plans
that we received for a self-funded plan, the proposal submitted by AcordialKPHAJHealth Spectrum
was the most cost effective and least disruptive proposal received. (Copy of our consultant's,
Interisk, report attached).
PREVIOUS RELEVANT BOCC ACTION:
CONTRACT/AGREEMENT CHANGES: Contract Amendments will be brought to the January
2004 meeting with plan changes made during FY 2004 budget process and reflecting higher
discounts from KPHA.
ST AFF RECOMMENDATIONS: Approval
Acordia $225,000*
TOTAL COST: KPHA $ 27.000
Acordia $225,000*
COST TO COUNTY: KPHA $27,000
* Charges are Per Employee/Per Month
REVENUE PRODUCING: Yes No X
BUDGETED: Yes ----X- No
SOURCE OF FUNDS: Primarily Ad Valorem
AMOUNTPERMONTH_ Year
APPROVED BY:
County Atty _ OMBlPurchasing_
Risk Management_
DIVISION DIRECTOR APPROVAL:
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Sheila A. Barker
DOCUMENTATION:
Included X
To Follow_
Not Required_
DISPOSITION:
AGENDA ITEM #~
Revised 1/03
INTERISK
CORPORA TION
Consultants
1111 North Westshore Boulevard
Suite 208
Tampa, FL33607-4711
Phone (813) 287-1040
Facsimile (813) 287-1041
e-mail: lsinterisk@aol.com
Risk Management
Employee Benefits
Report on Medical Benefits Proposals
For January 1, 2004 Implementation
December 2, 2003
This report provides a review of the results of the October 2003 Request for Proposals for fully insured and
self-insured medical benefits and recommendation for selection of the best suited ovemll solution based on
abilities, responsiveness and cost.
The purpose of the Request for Proposals was to solicit responses for both fully insured and self-insured
benefits and services for Monroe County's medical benefits program. The objective was to determine the most
advantageous method of providing medical benefits to County employees and their dependents.
Results of Request For Proposals
The Request For Proposals (RFP) received wide distribution through the Demand Star network as well as
newspaper notices. Numerous requests for loss history documents were received and distributed indicating
interest by the insurance market place. Ten separate proposals were received for various forms of self-
insurance. No proposals were received for fully insured programs. One additional proposal was received after
the proposal-opening deadline and was returned to the proposer unopened in accordance with County
purchasing guidelines. All proposals were reviewed for responsiveness to the RFP documents, ability to
provide the required services and cost.
Proposals were received from:
o Acordia National Corporation
o Blue Cross & Blue Shield
o Harrington Benefit Services
o Managed Care Concepts, Inc.
o Millennium
o North American Health Plans
o Preferred Benefit Administration
o Self Insured Plans, LLC
o United Benefits, Inc.
o United Group Progmms
Blue Cross & Blue Shield initially indicated that they would submit both a fully insured and a self-insured
proposal, but submitted only a self-insured type of plan. When contacted, Blue Cross indicated that they
decided not to submit a fully insured plan because the county's demographics and other factors do not meet
Blue Cross' underwriting criteria.
Blue Cross' decision not to submit a fully insured program is consistent with the insurance industry in general
in using fully insured plans for smaller, less complex organizations. Based upon our experience, it is believed
that the County's size and plan design will continue to make it difficult to obtain a quality, fully insured plan in
the future. Fully insured plans, where available, offer less flexibility in benefits and include a profit margin
for the insurers.
An initial review of the proposals indicated that the ones received from Blue Cross & Blue Shield, Harrington
Benefit Services, Managed Care Concepts, Inc., Millennium, Preferred Benefit Administration, Self Insured
Plans LLC and United Benefits, Inc. were not as competitive and it is recommended that they be eliminated
from further considemtion.
Two proposals were received for stop-loss protection, (excess insumnce), for the self-insured plan. One was
part of the Blue Cross & Blue Shield proposal and the other was submitted by the Arthur J. Gallagher
organization for Safeco Life Insurance Company. Both ofthe stop-loss proposals were reviewed for possible
purchase. The County discontinued the purchase of stop-loss insurance approximately two years ago. The
premium and terms ofthe stop-loss insurance proposals are not considered to be a cost effective option and are
not recommended for purchase this year.
Proposal Review
North American Health Plans. The proposal as submitted by North American Health Plan included requested
services with the exception of utilization review and case management services. Claim processing is performed
in Buffalo, New York. They did not include a use of network fee and advised that they did not contact the
KPHA network to determine the cost. They indicated that they would use KPHA services for utilization
review. Their proposal contains a $4,895.00 start-up fee and they indicated that they would use the same
network that the County currently uses. Their cost structure for claim administration, network administration,
HIPAA administration and case management totals $13.65 per employee per month and is above the current
contract with Acordia and KPHA and is not recommended for selection.
United Group Programs. The proposal as submitted by United Group Programs is for claim administration,
HIP AA and use of network. They propose using the existing KPHA network and services, but do not indicate
a cost for the utilization review and case management services. Their cost is $11.95 without adding charges for
utilization review and case management. They do propose a maximum 5% cap on second year administration
charges. It is not currently known if United can use the same hospital and provider discounts as proposed by
the joint proposal between KPHA and Acordia. Since their cost structure is higher than the current Acordia
contract, particularly if the utilization review and case management charges are added, it is not recommended
for selection.
AcordiaIKPHA/Health Spectrum. The joint proposal as submitted by Acordia National/KPHAlHealth
Spectrum is a continuation of the existing contracts with the addition of increasing the provider discount to
25%. This is considered a significant increase that will reduce the County's overall claims. The case
management fee of$55.00 per hour is considerably below other proposers and will result in lower overall claim
and expense payment. Their cost structure is $11.94 for claim administration, HIPAA compliance and
utilization review and case management services. The County is already utilizing electronic review of claims
and claim report services. Health Spectrum has indicated that they may be able to reduce the current contmct
fee schedule. Continuation of the AcordiaIKPHA/Health Spectrum joint proposal will eliminate additional
expenses of reprinting ID cards, plan booklets, communication with employees and health care providers, use
of different report forms and enrollment data and other related expenses. Selection of the Acordia proposal also
eliminates the functions of outsourcing the holdover (run-out) claims at the point of changeover and the cost
associated with it. The Acordia/KPHAlHealth Spectrum proposal is recommended as the least cost and
least disruptive proposal of those reviewed.
Other Considerations
Page 2
Interisk
Corporation
The "soft" costs associated with a change in a self-insured program of Monroe County's size can be significant.
Staff time for new enrollment meetings, telephone counseling, error checking of documents, adjusting to new
claim and management reports, troubleshooting with health care providers all add to the actual cost of changing
from one administrator to another. Generally, it is not considered worthwhile to change for less than 10% or
more depending upon individual situations.
Another consideration is the benefit of routine periodic and continuous auditing of claim files. A number of
claim files can be audited by computer on a monthly basis and an annual audit can be performed to determine if
the claim administer is performing properly and within agreed upon standards and guidelines. We recommend
this activity regardless of which claim administrator is selected.
Adequate funding of a self-insured plan is important to avoid budget fluctuations and the need for large or
unplanned adjustments. Interim benefit plan claim reports against funding levels will point out any needed
funding level adjustments.
Plan design can be used to adjust benefits when needed to remain within funding levels. Monroe County has
recently approved several plan benefit adjustments that are expected to lower claim levels and provide
additional funding. These changes are expected to take effect January 1,2004 and will affect the 2003-2004
benefit plan fiscal year. Monitoring benefit levels is best when performed regularly to benchmark benefits
against other similar plans in Florida and nationwide.
Self-insurance is a successful way of providing employee benefits to an organization the size of Monroe
County, Florida.
Interisk Corporation
~~
December 2, 2003
Page 3
Interisk
Corporation
Cost Comparison for Selected Proposers
Proposers Acordia North United Group
American Programs
Health Plans
Network KPHAI Same as Same as
Dimension! current current
Multi Ian
Setu fee None $4,895 No
Min fee apply No No No
to contract
Claims $10.19 $9.50 PEPM $9.85 PEPM
admin PEPM + $1.50 (2nd
year up to
5% max.
Cobra admin N!A $.40 PEPM Included
HIPAA $.40 PEPM $.40 PEPM $.35 PEPM
Use of No-KPHA TBD $1.75 PEPM
Network. Yes, DIM &
Char e MP
Dental $1.80 PEPM $1.80 PEPM $1.75PEPM
Vision $.41 PEPM $.40 PEPM Not Included
Case $55 hour $2.25 PEPM Not quoted
Mana ement
UR $1.35 PEPM Not uoted Not uoted
Stop Loss None None None
Interface
Total Claim $11.94 $13.65 $11.95
Admin. PEPM PEPM PEPM
HIPAA & UR
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