TITLE
Recommendation to authorize City Manager to execute contracts with Anthem Blue Cross for the Preferred Provider Organization (PPO), Health Maintenance Organization (HMO) and Medicare Supplement group health plans; and Scan Health Plan for the Medicare Advantage Plan;
Authorize City Manager to execute the renewal of contracts with United Healthcare for the Medicare Advantage Plan and closed-panel dental plan; Medco as the Prescription Benefit Manager (PBM) for the prescription drug plan; Delta Dental for the fee-for-service dental plan; Medical Eye Services (MES) for the vision plan; Standard Insurance Company for life insurance and Long- and Short-Term Disability; and Union Mutual Life Insurance Company (UNUM) through Larry Lambert & Associates Insurance Services, for the long-term care benefits; and
Authorize City Manager to execute any subsequent amendments and/or agreements necessary to maintain current benefit levels and remain in compliance with state and federal laws on all plans. (Citywide)
DISCUSSION
The City, with assistance from Alliant Insurance Services (Alliant), its health insurance advisor, marketed the City's health insurance plans for plan year 2012. The last marketing effort was in 2005. The scope of this bid was to obtain competitive quotes as options to replace the current PPO and HMO health benefit plans with more efficient and cost effective alternatives that would continue to provide the same level of benefit, service, and choice that the current plans provide.
In December 2010, the Request for Proposal (RFP) was advertised on the City's website www.longbeach.gov/purchasing <http://www.longbeach.gov/purchasing>. Eight proposals were received for the self- funded plan, and eight for the HMO plan. One of the respondents for the self-funded plan provided an initial response, but did not respond to additional requests for information. Therefore, they were eliminated from further consideration. All others were invited for an in-person presentation and interview.
A Health Insurance Review Sub-Committee, comprised of three representatives from the City Employees' Health Insurance Advisory Committee (HIAC), representatives from Human Resources and Alliant, reviewed the bid results, chose and interviewed finalists, and made a selection.
In accordance with Memoranda of Understanding (MOU) between the City of Long Beach and its employee associations, HIAC (which is composed of representatives from each of the employee associations), met with City staff from the Department of Human Resources to review the current employee health, dental, and life insurance programs, as well as the recommendations of the Health Insurance Review Sub-Committee, for both their immediate and long-term effects on the plan. Based on this review, HIAC submitted the following recommendations for plan year 2012 (January 1, 2012 to December 31, 2012) for both active employees and retirees:
1. Anthem Blue Cross PPO (90) and HMO, to replace CIGNA PPO and United Healthcare HMO
2. Add Scan Medicare Advantage Plan for retirees
3. Maintain the PPO (90) plan and eliminate the Open Access 100 (OAP 100), PPO (80) and High Deductible Plans
4. Eliminate the In-Hospital Indemnity Plan (plan is antiquated and cannot be administered by Anthem)
As a result, it is recommended that contracts be executed with Anthem Blue Cross for PPO (90), HMO and Medicare Supplement group health plan; and Scan Health Plan for the Medicare Advantage Plan for retirees. The Committee also recommends that the contracts be renewed with United Healthcare for the Medicare Advantage Plan and closed-panel dental plan; Medco as the PBM for the prescription drug plan; Delta Dental for the fee-for-service dental plan; MES for the vision plan; Standard Insurance Company for life insurance and Long- and Short- Term Disability; and UNUM for the long-term care benefits.
The City's Stop Loss Insurance carrier, Elite Stop-Loss Re-insurer, rates have not been finalized. This is because it is more advantageous for the City to obtain quotes closer to the plan year start date. Final quotes to determine the most competitive offering are contingent on receiving an evaluation of the City's medical plan performance through September 2011. Staff will return to City Council for approval at a later date.
This matter was reviewed by Christina Checel, Senior Deputy City Attorney, on August 25, 2011XX, and Victoria Bell, Budget Management Officer, on August 26, 2011.
TIMING CONSIDERATIONS
Open enrollment for the health plan year 2012 will be conducted in late October. Therefore, City Council action is requested on September 20, 2011, so the Department of Human Resources will have adequate time to prepare information for distribution to employees in October 2011.
FISCAL IMPACT
The net cost of the City's share of the health, dental and life insurance programs in 2012 is estimated to be $ 55.6 million, a $2,588,315 savings over the renewal costs with our current carriers, CIGNA and United Healthcare. These charges have been budgeted in the Employee Benefits Fund (IS 391) in the Citywide Activities Department. There is no local job impact associated with this recommendation.
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
DEBORAH MILLS
DIRECTOR OF HUMAN RESOURCES
APPROVED:
PATRICK H. WEST
CITY MANAGER