Item C18C ounty of M onroe
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BOARD OF COUNTY COMMISSIONERS
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Mayor David Rice, District 4
The FlOnda Key
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Mayor Pro Tem Sylvia J. Murphy, District 5
Danny L. Kolhage, District 1
George Neugent, District 2
Heather Carruthers, District 3
County Commission Meeting
June 20, 2018
Agenda Item Number: C.18
Agenda Item Summary #4280
BULK ITEM: Yes DEPARTMENT: Employee Services
TIME APPROXIMATE: STAFF CONTACT: Maria Fernandez- Gonzalez (305)
292 -4448
N/A
AGENDA ITEM WORDING: Approval to renew the Administrative Services Agreement for five
years with Florida Blue to continue providing Claims Administration, Case Management and
Utilization Review Services, Disease Management, Network Management, Wellness Programs and
other Related Services to Monroe County.
ITEM BACKGROUND: In February 2017 BOCC requested that staff issue two health insurance
Request for Proposals. The first one was for a Fully Insured Medical Plan and the second was for a
Self- Insured Medical Plan.
The Fully Insured RFP was distributed December 18, 2017 with bid opening February 21,
2018. One proposal was received on the Fully Insured RFP from Aetna.
The Self- Insured RFP was distributed February 26, 2018 with bid opening on April 12, 2018.
Three proposals were received on the Self- Insured RFP: Florida Blue, Aetna and Benefit
Administrative Systems (BAS).
On May 24, 2018, the Selection Committee (Maria Fernandez- Gonzalez — BOCC; Pam Radloff —
Clerk; Tamara Snider — MCSO; DeeDee Harnish — Property Appraiser and Dina Gambuzza — Land
Authority) met to discuss the proposals and make a recommendation to the BOCC. The County's
consultant, Gallagher Benefit Services, prepared analyses on the Fully Insured Proposal and on the
three Self- Insured Proposals. In addition, Gallagher provided the Selection Committee with an
Actuarial Analysis on the TPA (Self - Insured) Medical Plans and Fully Insured Medical Plan.
(Attached)
The Selection Committee agreed to discuss the RFP's (fully and self) separately. They then
compared the Fully Insured option to the Self- Insured options in order to make a recommendation to
the BOCC.
• The Selection Committee began with the Fully Insured Proposal from Aetna.
1. Aetna's proposed premium rates produce a 2019 annual premium of $16.2
million. County insurance enrollment actually fell approximately 8% because of
the January 1, 2018 benefit changes implemented by the County. Using actual
March 2018 enrollment, the quoted Aetna rates produce an annual premium of
$14.7 million.
2. Gallagher prepared a forecast of the self - funded expense for 2019 (excluding
pharmacy and any ancillary expenses not related to the medical plan). Gallagher's
projected expense is $13.3 million, based on projected claims of $12.5 million
(using Florida Blue's actual claims experience) and projected fixed costs of just
over $800,000.
3. The Fully Insured premium, adjusted to the current enrollment is $1,350,000
(10.2 %) higher than the projected Self- Insured cost.
4. Aetna claim projection is 86.2% of the Aetna premium under the Fully Insured.
Under the Self- Insured projection, the claims represent 94% of total expected
claims. The higher expected cost under the Fully Insured quote is a result of
Aetna requiring 14% of the premium to cover administration, risk and profit
charges on a Fully Insured basis compared to a Self- Insured administrative
expense of 6 %.
5. Aetna had some deviations to the current plan that would need to be addressed.
• The Selection Committee proceeded with discussing the Self- Insured Proposals received
from Florida Blue, Aetna and Benefit Administrative Systems (BAS).
• Benefit Administrative Systems (BAS) — BAS has a different model. They do
not have a defined network. BAS establishes a schedule that is used to pay each
provider and members can then use any provider. If a provider pursues a member
for balance billing, BAS is supposed to handle it. In exchange for this, they also
charge a fee equal to 12% of billed charges. They claim however that their
savings more than offset that. Estimate of the 12% of billed charges to equate to
over $4 million.
• BAS listed multiple deviations that either require an additional charge, use a third
party to comply with request, or does not have a network to administer.
• ASO fees are lower but they have more a la carte fees, such as a $10,000 setup
fee.
• BAS offered no Wellness Programs.
• AETNA
1. Offered a three -year contract with ASO fees increasing each year ($47.10
per - employee- per -month (PEPM) - 2019; $48.51 PEPM - 2020; $49.97
PEPM - 2021.
2. Aetna & Florida Blue have comparable hospital discounts in Miami -Dade
County. Aetna's Self- reported hospital discounts for Monroe County are
not nearly as favorable as what Florida Blue reports. Because hospital
costs have historically made up a much larger share of the cost than
physician claims for Monroe County. Gallagher's claim projection based
on the reported discounts is $2 million lower for Florida Blue than for
Aetna.
3. On the Benefit Comparison Options, Aetna indicated under several of our
plan benefits that they are unable to offer the exact benefit. Under Option
5 — Medicare Retiree Only PPO with EGWP Design, there was no
information found in the proposal on whether they could or could not
administer a Medicare Retiree Only PPO with EGWP Design. The BOCC
just approved going to an EGWP Wrap for our Medicare Eligible retirees
under our Prescription Plan effective 1/1/18. Selecting Aetna would mean
a significant plan change to how we insure our Medicare Retirees.
4. Aetna did offer annual Wellness Credits with lots of caveats that restrict
the County from freely managing its own Wellness program.
• FLORIDA BLUE
1. Offered a five -year contract with ASO fees remaining at the current rate of
$48.25 PEPM for the next three years. In years four and five the ASO fee
increases to $49.75 PEPM.
2. Wellness Allowance of $50,000 available to Monroe County BOCC upon
annual renewals from 1/1/2019 through 1/1/2023; $250,000 total Wellness
Allowance over the next five years.
3. Guaranteed a discount of 62.0 %. There are some caveats (e.g., inpatient
claims over $150,000 removed completely from calculation). If they miss
the guarantee they will forfeit from $1.00 PEPM up to $3.00 PEPM
depending on the percentage they miss by.
4. Gallagher's claim projection based on the reported discounts is $2 million
lower for Florida Blue than for Aetna.
Summary:
• The Selection Committee scored the only Fully Insured proposal from Aetna at 423.
• The Selection Committee scored and ranked the Self- Insured Proposals as follows:
1. Florida Blue — total score 525
2. Aetna — total score 437
3. Benefit Administrative Services (BAS) — total score 143
The Selection Committee discussed both the Fully Insured Proposal and the Self- Insured
Proposals. A fully insured plan premium is projected to be $1,350,000 (10.2 %) higher than
the projected self - insured costs. Guarantee of premium is for one year and in year two, the
premium can increase by up to 12 %. After year two, there is no cap on how much the
premium can go up. The Committee felt that going with a Fully Insured Plan could be a
significant risk for the County if claims increase in future years.
The Selection Committee recommends that the Monroe County BOCC Group Health Plan
remain self - insured and renew the contract with Florida Blue for five more years. (Pricing
Attached).
If this agenda item is approved by the BOCC, staff will bring the contract back before the BOCC at a
subsequent meeting.
PREVIOUS RELEVANT BOCC ACTION:
March 2010 — Board directed staff to RFP for a Fully- insured and self - insured
February 2011 — BOCC approved RFP's for Fully Insured and Self- Insured.
March 2011 — Bid opening Fully Insured and Self- Insured. No Fully- Insured proposals received.
Two proposals were received for the Self- Insured. Blue Cross & Blue Shield of Florida ranked 41.
November 2011 — BOCC approved a three -year contract with Blue Cross & Blue Shield of Florida.
March 2015 — BOCC approved RFP for Medical Third Party Administration Services.
October 2015 — BOCC approved amendment to extend terms of agreement with Florida Blue until
December 31, 2020.
February 2017 — BOCC directed staff to issue Fully Insured and Self Insured RFP's in 2017 -2018.
CONTRACT /AGREEMENT CHANGES:
N/A
STAFF RECOMMENDATION: Selection Committee recommends that the Monroe County
Group Health Plan remain self - insured at this time and renew current administrative agreement with
41 ranked Florida Blue for five years. If this item is approved by the BOCC, staff will bring back a
contract for approval by the BOCC at a subsequent meeting.
DOCUMENTATION:
ACTUARIAL ANALYSIS
FLORIDA BLUE PRICING
FINANCIAL IMPACT:
Effective Date: N/A
Expiration Date: N/A
Total Dollar Value of Contract: N/A
Total Cost to County:
Current Year Portion:
Budgeted:
Source of Funds:
CPI:
Indirect Costs:
Estimated Ongoing Costs Not Included in above dollar amounts:
Revenue Producing:
Grant:
County Match:
Insurance Required:
Additional Details:
If yes, amount:
REVIEWED BY:
Bryan Cook Completed 05/31/2018 10:46 AM
Assistant County Administrator Christine Hurley
06/04/2018 9:31 AM
Cynthia Hall Completed
Budget and Finance Completed
Maria Slavik Completed
Kathy Peters Completed
Board of County Commissioners Pending
Completed
06/04/2018 3:33 PM
06/04/2018 3:56 PM
06/04/2018 4:01 PM
06/04/2018 4:15 PM
06/20/2018 9:00 AM
TPA & FULLY INSURED R-.
ACTUARIAL ANALYSIS
MONROE COUNTY
BOARD OF COUNTY COMMISSIONERS
TPA and Fully Insured Medical RFP
Actuarial Analysis
May 14. 2018
Thts information is int nded as only a summary of the results of this analysm Data contained here is from what are considered reliable sources, however neither Gallagher Benefit Semces, Inc,
/nr rph.hiliry In the event that a diweoancv e� if source matenal(s) and the
2255 Glades Rd
Boca RduN FL 33031
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Gallagher
Insurance I Risk Management I Consulting
Monroe County Board of County Commissioners
2018 Self - Funded Insured Medical RFP -- Financial Analysis Executive Summary
Fixed Costs
• Aetna and Florida Blue proposed similar ASO fees and both are comparable to current fees.
• BAS has a different model. Their ASO fee is lower but they have more a la carte fees. In addition, they don't
have a defined network. They establish a schedule that is used to pay each provider and members can then use
any provider. If a provider pursues a member for balance billing, BAS is supposed to handle it. In exchange for
this, they also charge a fee equal to 12% of billed charges but they argue that their claim savings more than
offset that. We estimate the 12% of billed charges to equate to over $4 million.
Discounts
• Aetna's self - reported hospital discounts for Monroe County are not nearly as favorable as what Florida Blue
reports. The Florida Blue self- reported hospital discounts are comparable to what the County has actually
experienced.
• Aetna and Florida Blue have comparable hospital discounts in Miami -Dade County.
• Aetna self - reports more favorable physician fee schedules. This is consistent with what we have seen on other
RFPs involving Aetna and Florida Blue.
• Because hospital costs have historically made up a much larger share of the cost than physician claims for the
County, our claim projection based on the reported discounts is $2 million lower For Florida Blue than for Aetna
• Aetna provided a claim projection and after we adjust for the lower enrollment in 2018 it is much closer to what
we project using the Florida Blue experience. That claim projection is also very consistent with the fully insured
premium Aetna quoted for that RFP. So while the discount data suggests that Florida Blue has an advantage,
Aetna believes they are competitive to the point that they have based their fully insured premiums on a claim
cost that is very similar to what we expect under Florida Blue.
• Aetna also offered a per capita cost guarantee that puts a portion of their fees at risk. IN that guarantee, one of
the assumptions is that they will have a unit cost advantage over Florida Blue.
Total Cost
• With comparable ASO fees between Aetna and Florida Blue, the only material difference in projected costs are
the expected claim differences.
If we rely on the self - reported discounts, we expect a significant advantage for Florida Blue.
• If we rely on the Aetna claim projection, Aetna has a very small advantage that is well within the margin of error
Insurance I Risk Management I Consulting
2255 Glades Rd 56 1-99R-67S5
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USA
Monroe County Board of County Commissioners
2018 Fully Insured Medical RFP — Financial Analysis Executive Summary
• Based on the enrollment provided in the RFP, Aetna's proposed premium rates produce a 2019 annual premium
of $16.2 million.
• Enrollment fell approximately 8% as a result of the January 1, 2018 changes implemented by the County. With
actual March 2018 enrolment, the quoted Aetna rates produce an annual premium of $14.7 million.
• Aetna has the right to revise rates it enrollment changes by 15% or more. The change was less than 15% so the
proposed rates are valid.
• Gallagher prepared a forecast of the self - funded expense for 2019 excluding pharmacy and any ancillary
expenses not related to the medical plan. Our projected expense is $13.3 million, based on projected claims of
$12.5 million and projected fixed costs of just over $800,000.
• The fully insured premium, adjusted to the current enrollment, is $1,350,000 (10.2 %) higher than the projected
self - funded cost.
• Aetna provided a claim projection as part of their response to the self - funded proposal. Their 2019 claim
projection is $13.7 million. If we adjust that down for the enrollment decrease (using a straight pro rata
reduction), we get a revised value of $12.6 million. That is very similar to the Gallagher claim projection of $12.5
million.
• The difference in the total projected fully insured and self- funded expenses is therefore all in the expense and
risk charges included in the fully insured premiums.
• The Aetna claim projection is 86.2% of the Aetna premium under the fully insured proposal. Under the self -
funded projection, the claims represent 94% of the total expected costs. So the higher expected cost under the
fully insured quote is a result of Aetna requiring 14% of the premium to cover administration and risk and profit
charges on a fully insured basis compared to a self- funded administrative expense of 6% of total cost.
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Monroe County Board of County Commissioners
Fully Insured Medical RFP Summary
Aetna Proposed Rates and Costs
Total Annual Premium $16,234,174
Enrollment Revised to Current
Enrollment Per RFP
Tier
PPO HDHP Medicare
2019 Rates
EE
Tier
PPO
HDHP Medicare
Total
PPO
HDHP
Medicare
EE
823
- 277
1,100
$589.67
$566.08
$582.07
ES
133
- 30
163
$1,487.38
$1,427.88
$1,468.20
EC
195
- 2
197
$1,185.03
$1,137.63
$1,169.75
EF
112
- 1
113
1 $2,044.73
$1,962.94
$2,018.36
Total
1 1,263
- 310
1,573
Total Annual Premium $16,234,174
-7.8% Drop in enrollment
Total Annual Premium $14,667,521
2020 Rate Increase Cap: I 12.7%
Included wellness allowance of $100,000 for 2019
If enrollment changes by 15% Aetna has the right to change rates. Enrollment is 8% lower than what was included in the RFP.
Enrollment Revised to Current
Tier
PPO HDHP Medicare
Total
EE
799 38 172
1,009
ES
131 13 -
144
EC
219 5 -
224
EF
1 69 5 -
74
Total
1 1,218 61 172
1,451
-7.8% Drop in enrollment
Total Annual Premium $14,667,521
2020 Rate Increase Cap: I 12.7%
Included wellness allowance of $100,000 for 2019
If enrollment changes by 15% Aetna has the right to change rates. Enrollment is 8% lower than what was included in the RFP.
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7 Monroe County Board of County Commissioners
v ' Fully Insured Medical RFP Summary
Projected Self- Funded Costs Based on March 2018 Forecast (excludes pharmacy)
Bosed on enrollment of 1451
Projected Claims
Projected Fixed Costs
$12,504,284
$810,261
Total Projected Costs
$13,314,545
Fully Insured Premium
$14,667,521
Expected Self- Funded Cost
$13,314,545
Additional $ Cost Under Fully Insured
$1,352,976
Additional % Cost Under Fully Insured
10.2%
Gallagher Projected Claims as % of Aetna Premium 85.3%
Aetna Self- Funded Claim Projection
Enrollment from RFP
Adjusted to Current Enrollment
$13,702,555
$12,639,801
Gallagher Claim Projection
$12,504,284
Gallagher Projection as % of Adjusted Aetna
98.9%
Estimated Aetna Pricing Loss Ratio
I 86.2%
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WELOVESSREPORTING
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v1DOMONA4 FEES NOT REPORTED
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Administrative % Only
Funding Arr;
Medical Administrative Fee including Teladoc 1 $ 48.25 j $ 48.25
Available to Monroe County BOCC upon renewal of
$50,000
1/1/2
Available to Monroe County BOCC upon renewal of
$50,000
1/1/2020-
Available to Monroe CountyBOCC upon renewal of
$50,000
1/1/2021-
Available to Monroe CountyBOCC upon renewal of
$50,000
1/1 /2022.
Available to Monroe CountyBOCC upon renewal of
$50,000
1/1/2023.
48.25 1 $ 49.75 1 $ 49.75
Access fees will be waived for claims rendered in the following states if Monroe County Board of
County Commissioners has active membership in those states. Active membership will be
determined on the group's anniversary date and will apply for the entire contract year.
Alabama, Alaska, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida,
Georgia, Idaho, Indiana, Illinois, Iowa, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota,
Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York (Empire), North Carolina,
Ohio, Oklahoma, Oregon, Pennsylvania (Central, Southeastern and Western PA for Facilities and Statewide
for Physicians), Rhode Island, South Dakota, Texas, Utah, Virginia, Washington, Wisconsin.
1,000 — 9,999 enrolled:
Up to 2.40% of network savings will be applied to all PPO claims and up to 4.30 to all Traditional claims
outside of the Blue Plan service areas where fees are waived (see list above). The applicable percentage of
network savings is capped at $2,000 per claim.
The access fee percentage is determined by the Blue Cross and Blue Shield Association and is subject to
change annually.
r
ASO plan sponsors are required to pay an annual fee to the Patient Centered Outcomes Research. Institute
Trust Fund (PCORTF). These fees should also be accrued as it is not included in the administrative fees. For
more information on these fees, please visit http://floridabluehealthcarereform.com/educational-resources
An Independent Livens of the Blue Cross and Blue Shield Association