Item C14
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: January 16 & 17,2002
Division: Management Services
Bulk Item: Yes X
No
Department: Administrative Services
AGENDA ITEM WORDING: Approval of Recommendations re2ardin2 the proposals received
from the RFP distributed July 13. 2001. Proposals reQuested for: 1) Claims Administration and
Utilization Review~ '2) Excess/Stop Loss Insurance; 3) Prescription Benefits Plan~ 4) Group Life
Insurance. Voluntary Life Insurance and Dependent Life Insurance~ 5) Short & Lon2 Term
Disability; 6) Employee Assistance Plan~ 7) Nationwide Provider Network~ 8) Flexible Spendin2
Account. 9) Approval also to Solicit fully funded insurance plan.
The RFP process did not result in anv considerable savin2s to the County. there were no
innovative alternatives proposed and no proposals were received for a fullv insured medical
plan. 2003 will be the earliest the Countv can join the State Plan. Until we have an application
from the state. we will continue to explore options to contain the costs of 2roup insurance.
ITEM BACKGROUND: BOCC directed on March 13. 2001 that a ReQuest for Proposals be
done for a self-funded. fullv-funded and cafeteria plan.
PREVIOUS RELA VENT BOCC ACTION: For a number of vears the County has been
reviewin2 its health plan for ideas to save money and at the same time provide excellent medical
covera2e to its active employees as well as retirees.
CONTRACT/AGREEMENT CHANGES: See attached for proposal recommendations.
STAFF RECOMMENDATIONS: See~attached for proposal recommendations.
TOT AL COST: $24,000 only cost being authorized by this Agenda Item.
BUDGETED: Yes No X
COST TO COUNTY:
REVENUE PRODUCING: Yes
No-K- AMOUNTPERMONTH_ Year
APPROVED BY: County Atty _
DIVISION DIRECTOR APPROVAL:
OMB/Purchasing _ Risk Management _
~~
James L. Rob~rts
DOCUMENTATION:
Included
To Follow_
Not Required_
DISPOSITION:
AGENDAITEM# /~C~
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STAFF RECOMMENDATIONS:
Proposal #1: Claims Administration and Utilization Review - (# of Proposers 8) - The proposed
costs from the County's existing Claims Administrator (Acordia National) and provider of Utilization
Review Services (Keys Physician-Hospital Alliance) were the most competitive received for these
services. The County's current contract with Acordia National and Keys Physician-Hospital Alliance
will expire September 30, 2002. RECOMMENDATION: Accept Acordia National and Keys
Physician-Hospital Alliance proposals. Contract will be presented at later date, as current contract will
not expire until September 30,2002.
Proposal #2: Excess/Stop Loss Insurance - (# of Proposers 5) - At the August 2001 BOCC meeting
the board decided to be self insured for specific and excess stop loss coverage. The County may want
to reconsider excess stop loss coverage in the future in order to limit the liability in case of large
claims. RECOMMENDATION: Monitor funds closely over the next year and reconsider coverage.
Proposal #3: Prescription Benefits Plan - (# of Proposers 8) :.... The County's current provider for its
Prescription Plan is Walgreens Health Initiatives, Inc. Walgreens had the most competitive proposal
received for prescription services. The County's .current contract with Walgreens Health Initiatives
will expire September 30, 2002, RECOMMENDATION: Walgreens Health Initiatives, Inc.
Contract will be presented at later date as current contract will not expire until September 30,2002.
Proposal #4: Group Life, Voluntary Life and Dependent Life Insurance - (# of Proposers 7) -
The Hartford Life Insurance Co. had the most competitive proposal for life insurance coverage. The
Hartford Life Insurance Co. is currently the County's life insurance carrier with our contract expiring
September 30,2002. RECOMMENDATION: The Hartford Life Insurance Company. Contract will
be presented at later date, as current contract will not expire until September 30, 2002.
Proposal #5: Short & Long Term Disability - (# of Proposers 1) - Colonial Life had the only
proposal for this service. Their rates are varied along with the number of participants required for
enrollment. Implementation of this type of service would require further surveying of our employees
with regards to their interest in acquiring this type of coverage, We surveyed employees in December
1999 and did not receive enough interest to secure coverage. We need to determine by survey of
employees if this coverage will be in addition to participation in the sick-leave pool, or in lieu of
participation in sick-leave pool. RECOMMENDATION: Reconsider after polling of employees,
Proposal #6: Employee Assistance Program (EAP) - (# of Proposers 2) - The two proposal received
were both lacking in providers for Monroe County. There is also concern for the continuity of care.
Our current EAP is with the Care Center for Mental Health and our contract will expire with them
March 31,2002. RECOMMENDATION: Possible extension of current contract with a reduction of
charge per employee/per month, which will be cost savings to the County. Dr. Marshall Wolfe has
indicated his willingness in working with us to maintain coverage and reduce costs.
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Proposal #7: Nation}Vide Provider Network - (#of Proposers 5) - All five proposals received from
network providers named Beechstreet as their nationwide network. The proposal from Arthur J,
Gallagher was the most competitive bid with Beechstreet as the network. Accessing a nationwide
network is an additional cost to the plan but could result in substantial savings for the County by
reducing the amount reimbursed to providers for their services, RECOMMENDATION: Reconsider
this proposal for Beechstreet as our nationwide network after discussing other networks and possibly
negotiate a larger discount and lower the payout level with our current network providers Keys
Physician-Hospital Alliance and Dimension,
Proposal #8: Flexible Spending Account - (#ofProposers 5) - vVe got no proposals for types and or
plans of Flexible Spending Accounts. The most competitive bid for administration of a Spending
Account was HealthSpectrum. Again this will take surveying employees in order to be evaluate their
needs and interest. Acordia will help design self-insured cafeteria plan but anticipates no major
savings if implemented due to adverse selection. RECOMMENDATION: Reconsider after polling
of employees.
Proposal #9: Solicit proposals for fully insured group insurance plan. - On July 12,2001, we
began RFP process in which we solicited creative proposals for either self-funded or fully funded
insurance plans to contain costs, We received nothing for fully funded plans, Although the market is
limited in the Keys for this type of program, we belIeve we should explore it as completely as possible
to know ifit will save us any money, RECOMMENDATION: Engage Gallagher Benefit Services,
Inc, in the process of soliciting proposals for fully insured group insurance plan. Cost $24,000.
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, .):]7
Gallagher Benefit Services, Inc.
December 28, 200 I
A Subsidiary of Arthur J. Gallagher & Co.
Ms, Sheila A. Barker
Senior Director - Human Resources
5100 College Rd,
Public Service Bldg #208
Key West, FL 33040
Dear Sheila,
Weare pleased to offer our services in securing proposals from health insurance carriers.
As we discussed, the market in the Keys is limited and th~re may only be one or two
carriers who are capable of providing a proposal. We wOlild approach all potential
carriers and may ask that you participate in exploratory meetings with potential vendors
to make certain our objectives are met.
As this type of purchasing is non-standard and outside of the regular RFP process, we
believe it can be accomplished fairly quickly, We would suggest that you check internally
as to the validity of these processes before securing coverage.
Our cost for this project will be $24,000 and would include travel costs for presumably
two meetings, one to present to staff and the other for presentation to the commission, if
warranted.
.-
Jeffrey P. Angello
Area President
cc: Rick Capizzi
Glen Volk
One Boca Place
2255 Glades Road, Suite 400 E
Boca Raton, FL 33431
561.995.6706
Fax 561 .995.6708
www.ajg.com
n: \benefits \roc bcc \carrierproj ect. doc
December 10, 2001
Status of Monroe County Employee Benefits Program
Current State of the Benefits Industry and Background of Monroe County Benefits
The current problems in the insurance industry have resulted from prior years of over competition
and increased cost for the past several years. New technology and increased benefit utilization
caused insurers and many HMOs to suffer large losses, With insurer consolidation, mergers and
layoffs, they have been unable to continue their growth at profitable levels, The result is
deterioration of existing provider networks and increased costs to consumers, It is commonplace
to hear of thousands of people being displaced from networks or going totally uninsured. Many
individuals are unable to locate replacement coverage and the'Federal Government is
considering legislation to address the issue, .
During this time period, Monroe County has experienced increased costs as well, but has been
able to stabilize the cost of their benefit plan thro'ugh numerous adjustments in network cost and
plan design, The County has realized significant savings for its self-insured plan when compared
to the comparable cost of fully insured medical benefits. In addition, the County plan has
remained competitive in cost and benefits with other employers in the same area. As part of the
self-insured plan, the County has also forged an alliance with local community organizations
including the hospitals and physicians, It has been worthwhile for all concerned, While the state
of the market place is not promising in the short run, Monroe County has the ability to control
various activities and costs.
The County is geographically unique and experiences the absence of competing medical
networks, There are no HMOs in the County, competition among hospitals and physicians is
limited and Blue Cross/Blue Shield has experienced a depl.eted network with physicians leaving
their network. The Florida League of Cities is not currently writing any new business and Monroe
Country is too large for their facility, The State of Florida may permit political subdivisions to join
its medical plan with Blue Cross in the future, but the details have not yet been published, nor are
the costs known and it may not be beneficial to Monroe County, It will be 2003 at the earliest
before joining the State Plan can be considered,
The County currently has a growing number of retirees and presently offers benefits to domestic
partners, Upon researching the market place in Monroe County, we find that competition among
traditional medical insurers is reduced and many insurers are reluctant to or will not insure a great
number of retirees and will not consider providing domestic partner coverage.
Interisk
Corporation
A comparison with other Monroe County employers shows:
Monroe County Monroe County City of Key West City Electric
School Board System
Tvpe of Plan Indemnitv Indemnitv pas pas
Co Payments N/A N/A $25 $25
Deductible $200/$400 $400/$800 N/A in network N/A in network
In Network 80% first 80% 80% 100% after
Recovery $10,000 copay
1
Out of Network 70% first 70% ukh 60% of
Recovery $10,000 reasonable
charges after
. $500 ded.
RX Retail/Mail $100 cal. Yr. Oed
Generic $10/$25 $10 $10 $10
Brand $20/$50 $25 $20 $20
Non-preferred $35/$87,50 $40 $35 $35
Rates - per
month (*)
Emplovee $630, (*) $493,07 (*) $423,33 $465.93
Spouse Only N/A N/A $373.99 $291,20
One Dependent $238, N/A $277.55 $291.20
Two or More $282 $358,84(*) $651,54 $224,01
Dependents
Emp + Familv $912.00 Ukn $1,074,87 $981 ,26
(*) includes allocated expenses for funding purposes, Note also that various employers provide
subsidy for employee or employee and dependent costs, The amount varies by employer and
the rates above are not strictly comparable, The School Board rates are ten month rates,
Information is based on updated data from the County.
The Monroe County Benefits Program is considered reasonable when compared with its
neighboring governmental agencies as well as other governmental bodies elsewhere in the state,
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I nterisk
Corporation
Summary of the Request for Proposals
The Board of County Commissioners recently mandated that the Benefits Program be
remarketed through a formal Request for Proposals (RFP) process, The RFP was distributed and
proposals received with the following results,
Benefits Requested Number of
Proposers
, Claims Administration 8
Utilization Review 8
Nationwide Provider Network 5
Excess Stoo-Loss 5
Long Term Disabilitv 1
Short Term Disabilitv 1
Life Insurance 7
RX 8
Emplovee Assistance Proaram 2
Flexible Spendina Account 5
While the RFP received widespread distribution, it is disappointing that no proposals were
received for fully insured medical benefits plans. This underscores the condition of the
marketplace and the position of many insurers, The County had hoped for creative approaches
to its medical benefits,
The proposed costs from Acordia, the County's existing Claims Administrator and provider of
Utilization Review Services are $1,35 per employee per month and $55,00 per hour for case
management. The Claim Administration costs are $11.85 per employee per month and Cobra
administration is included. This proposal was the most competitive received,
The most attractive proposals received for other b~nefits are:
.~
Pro oser
Rates
Life .39 AD&D ,02
Various rates
Various rates
1.42
3,00 er em . Per month
22.52 sin le/58.17 fam
AWP +1.25 per dispense + .52
er claim
There are various items that require clarification or qualification with these proposals.
Final recommendation is withheld pending additional information and discussion.
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I nterisk
Corporation
Discussion of Alternatives
Because the RFP process did not result in any considerable savings to the County and there
were no innovative alternatives proposed, the County might wish to consider some options to
their current benefits program,
1. Consider changing the coinsurance levels. The Country presently has an 80% plan for
the first $10,000 (increasing 10% each year to $20,000 in the network) and 70% of the first
$10,000 and 90% thereafter out of network. These levels could be changed to 75%/25%
and 65%/35% respectively. The effect is to share costs with only those employees who use
the plan benefits. All employees do not use benefits each year and not to the same extent
from year to year. While this is usually considered unpopular with employees, numerous
employers throughout the country are using it in an effort to control plan costs,
2. Review the possibility of changing the payout level. Currently, the payout level for
benefits is 85% of the maximum for various procedures. This could be reduced to 80%, The
effect is to have the employee participate in a greater portion of their claims. This works well
with smaller claims, but can cause employees to reach their maximum participation, (Le, 20%
of $10,000), faster, The Plan will then pay benefits at the 100% level thereafter.
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3, Review the possibility of using separate higher deduc!ibles. This can also be
accomplished by requiring a separate plan year deductible before claims are eligible for
payment. Deductibles can be used for specific benefits such as prescriptions or certain types
of procedures such as CAT scans and MRls.and others, Again, only those employees and
their dependents who actually use the plan benefits will be subject to the additional costs,
4, The deductible, which is presently $200, being increased to $300 in 2002, could be
increased to $500 or more. The employee could fund the deductible and other costs by
contributing periodic payments through payroll deduction that would be available at time of
need. By implementing this funding method it would lessen the burden to the employee,
5, Retirees could be split off into a sub-plan of their own. By separating retirees from the
regular employees, rates can be developed for only the retiree group themselves, Since they
are generally older and will use the plan more often, their rates may be higher. They could
contribute more on a proportion<;lie basis than regular employees, The result will be reducing
losses in the regular plan and having the retirees pay more of their group's cost. While
charging retirees has been discussed before, this arrangement could make it more viable and
will encourage more retirees to consider Medicare as a primary payor,
6, Consider employing a resident nurse to visit the upper, middle and lower keys on a
scheduled basis. The nurse could evaluate employee and dependent needs and prescribe
necessary medication and refer the employee or dependent to the doctor only if necessary.
This could eliminate unnecessary doctor or emergency room visits as well as reducing
worker's compensation losses. The cost of the nurse could be shared by the worker's
compensation plan.
7, The cost of stop-loss insurance should be continually evaluated versus the historical
claim activity and potential for large claims to determine the need to purchase stop-
loss protection. This will limit the Plan's liability in case of large claims.
All of these modifications should not be used together. They can, however be used in various
combinations to achieve the desired results, It is essential that claim analysis be continued to
determine the proper mix of adjustments as well as the timing needed,
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I nterisk
Corporation
We suggest a meeting to discuss these issues and develop a strategy for the coming year that
will contain plan losses as well as explore ways to assist employees and their dependents in
coping with the restriction in the insurance market place.
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Interisk
Corporation