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HomeMy WebLinkAboutR-86-0328I A RESOLUTION AUTHORIZING THE CITY MANAGER TO SEEK COMPETITIVE PROPOSALS FOR THE PROVISION OF ADMINISTRATIVE SERVICES, GROUP TERM LIFE INSURANCE, AND GROUP MEDICAL STOP LOSS INSURANCE COVERAGE FOR THE CITY GROUP BENEFITS PLAN. WHEREAS, the City has not sought competitive proposals for administrative services, group life insurance, and group medical stop loss insurance for several years; and WHEREAS, the trustees of the Self -Insurance and Insurance Fund at the their meeting of March 20, 1986, unanimously agreed to recommend that the City Commission authorize the City Manager to seek competitive proposals for these services in order to provide the best possible services at the most reasonable price; NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE CITY OF MIAMI, FLORIDA: Section 1. A. That the City Manager is authorized to seek competitive proposals for administrative services, group term life insurance, and group medical stop loss insurance coverage for the City of Miami group benefit plan utilizing a request for proposals substantially the same as the attached. PASSED AND ADOPTED this 71-h day of MAY , 1986. PREPARED AND APPROVED BY: APPROVXD /ASiTQ FORM AND CORRECTNESS: C A . DOUGf1rTY1 CITY ATTORNEY i i i G7� AVIER L. SUAREZ, MAYOR CITY COMMISSION MEETING OF IV It CITY OF MIAMI. FLORIDA INTER -OFFICE MEMORANDUM �3 TO: The Honorable Mayor & DATE: MAY 60 F'FILMMembers of the City Commission 11900 SUBJECT: Request for Proposal -Group Administrative Services, Life Insurance, Group Health Benefits Stop Loss Insurance FROM: Cesar H. Odlo REFERENCES: City Manager 0 ENCLOSURES: IT IS RECOMMENDED THAT THE ATTACHED RESOLUTION AUTHORIZING THE CITY MANAGER TO SEEK COMPETITIVE PROPOSALS FOR THE PROVISION OF ADMINISTRATIVE SERVICES, GROUP LIFE INSURANCE, AND GROUP MEDICAL STOP LOSS INSURANCE COVERAGE FOR THE CITY GROUP BENEFITS PLAN BE ADOPTED The Equitable Life Assurance Society of the United States has administered the City's self -funded group health benefits plan since 1978, and has underwritten its group life insurance program for a significantly longer period of time. In addition since its first purchase in 1985, Equitable Casualty, a subsidiary of Equitable Life Assurance Society of the United States has underwritten the City's group medical benefit stop -loss insurance. No competitive proposals have been sought during this period. The City Manager had originally requested and received Commission approval to seek competitive proposals for the administrative part of these services in 1984, however, shortly after receiving that approval the City's group benefits plan was modified significantly as a result of labor negotiations and as major plan changes were being implemented effective January of the following year, it was felt that the possibility of changing plan administrators in the middle of such changes could adversely affect the implementation of the plan and the request for proposals were not released. The trustees of the Self -Insurance and Insurance Fund at their meeting of March 20, 1986, again reviewed the need for seeking competitive proposals in this area. While the trustees felt that services provided by the Equitable were not unsatisfactory, they felt that it would be a proper and prudent business decision to review the services available from other firms in this area. A request for proposals substantially in the same form as we would recommend utilizing is attached. 8V-3 8' REQUEST FOR GROUP BENEFITS PROPOSALS CITY OF MIAMI, FLORIDA April 17, 1986 DRAFT it It TABLE OF CONTENTS I. REQUEST FOR GROUP BENEFITS PROPOSAL EMPLOYER CONTACT TIMETABLE INSTRUCTIONS FOR DELIVERY OF PROPOSAL II. BACKGROUND INFORMATION AND REASON FOR REQUEST FOR PROPOSAL GENERAL REASONS FOR REQUEST FOR PROPOSALS OBJECTIVES III. PLAN DESIGN AND FUNDING CONSIDERATIONS PLAN DESIGN HEALTH MAINTENANCE ORGANIZATIONS FUNDING CONSIDERATIONS IV. ADMINISTRATIVE, SERVICE AND INSTALLATION CONSIDERATIONS ADMINISTRATION OF CLAIMS EMPLOYEE RECORDS -KEEPING SERVICING AND INSTALLATION V. CENSUS, EXPERIENCE AND RELATED DATA CURRENT CENSUS VI EXHIBITS ADMINISTRATION FEES QUESTIONNAIRE MATERIALS/FORMS TO BE INCLUDED WITH PROPOSAL i PAGE IV-1 IV-1 IV-2 V-1 c- 86--32Q `i I. REQUEST FOR GROUP BENEFITS PROPOSALS EMPLOYER: City of Miami, Florida c/o Finance Department Risk Management Division 65 S.W. 1st Street Miami, F1 33130 CONTACT: Mr. Donald C. Dunlap Assistant Finance Director Risk Management Division TIMETABLE: Release of Specifications To be determined Deadline for receipt of Proposals To be determined Decision on Carrier To be determined Effective Date of Change October 1, 1986 INSTRUCTIONS FOR DELIVERY OF PROPOSAL Two copies of each company's proposal are requested and should be sent or delivered to arrive at the above office before the close of business on the above indicated deadline. I-1 SG- 328 II. BACKGROUND INFORMATION AND REASONS FOR REQUEST FOR PROPOSAL GENERAL The City of Miami's group benefits are currently administered by The Equitable Life Assurance Society of the United States. Life insurance and accidental death and dismemberment are also provided through The Equitable. Comprehensive group health benefits are self funded through the City's Self -Insurance and Insurance Fund and administered through an Equitable Administrative Services Only contract. Specific stop loss is provided by Equitable Casualty Insurance Company. The current arrangement has essentially been in effect since June, 1978. However, several significant events in plan participation and benefits have occurred during this period. Three of the City's four bargaining units have formed their own benefits plans and the penetration of health maintenance organizations has been substantial in the remaining group. Effective January 1, 1985, the health benefits plan was modified with the adoption of several cost containment measures. REASONS FOR REQUEST FOR PROPOSALS The reduction in the group size, the fact that the plan has not sought competitive proposals for a number of yegrs and the implementation of several cost containment -oriented plan design changes have prompted the request for proposals. While the II-1 8632E Alp 40* I incumbent administrator's performance is viewed as satisfa'tory all available alternatives are being explored. f OBJECTIVES The City has established a precise set of objectives which will be used to judge the quality and cost effectiveness of the proposals received. While cost is a critical factor, quality of available services consistent with the City's expressed needs will also be explored. The combination of services designed to remove City involvement, to the extend practicable, from group benefits administration along with the most reasonable cost consistent with those services will receive favorable consideration. Criteria for selection of an administrator include, but are not limited to the following: o Net cost of insuring/administering the program consider- ing premium and fee payments to insurer/administrator and internal City expenses associated with administering the program. o Meaningful statistical reporting and periodic, brief analyses of plan's financial experience. o Computerized claims payment with minimal City involvement in eligibility certification and in claim questions. o Simplified employee records keeping and reporting procedures. II-2 86-326. T IP III. PLAN DESIGN AND FUNDING CONSIDERATIONS PLAN DESIGN A copy of the current employee booklet is enclosed. This booklet is completely up to date and may be relied upon as an accurate description of current benefits. Changes not noted in current booklet are attached. The current attachment point for the specific stop -loss coverage for the medical benefits portion of the plan is $97,500. Please quote attachment points of $100,000 and alternatively $50,000. The Life Insurance and Accidental Death and Dismemberment plan will not change. The City would desire that one firm provide all the service and coverages required, however the City recognizes that not all qualified firms may be able to provide all services or coverages. The use of sub -contractors is permitted although they must be identified as part of the proposal and the City would consider separate proposals for the insurance portions of this proposal. The firm selected must be able to administer a pre -admission and concurrent review program and supervise rehabilitation benefits. HEALTH MAINTENANCE ORGANIZATIONS The City currently offers a choice of HMO's, in addition to the indemnity plan. These are: CIGNA Healthplan International Medical Center Health Options of Florida, Inc. III-1 It IV. ADMINISTRATIVE, SERVICE AND INSTALLATION CONSIDERATIONS ADMINISTRATION OF CLAIMS As is indicated in the Objectives, a great deal of emphasis is being placed upon efficient, expeditious claim handling. Further, the City wishes to be as far removed from the actual claim payment process as is possible. Totally integrated, fully computerized, direct claims processing with minimal manual involvement by the claim processor seems to be the optimum answer to this objective. The questionnaire at the end of these specifications asks some very detailed questions regarding your claims system. You should be very specific, but brief, in responding to these questions. EMPLOYEE RECORDS -KEEPING The City currently maintains all employee records in a computerized personnel file system. This is the file from which medical claim certification lists are developed. Life certification lists are developed. Life beneficiary and coverage amount information is obtained from an employee card file at time of claim. Note that individual dependent names, dates of birth, etc., are not kept in the computerized system. It is intended that the current approach be retained, however, if your employee records keeping system is relatively simple and you can furnish well documented but brief instructions for its day to day operation, the City will give consideration to a change. Your system should clearly demonstrate, however, that a significant portion of the administrative burden is being transferred away from the City. IV-1 8f --32E. SERVING AND INSTALLATION The ready availability of an experienced, salaried representative of the administering company is a service which has a reasonably high priority. Companies should consider this and include in their proposals a description of the responsibility and qualifications of their service representatives, and an indication of the proposed frequency of service calls they would make at the City's administrative headquarters. If a change is made in the City's administrator, the transition and installation will require proper management. Changes in forms, systems and procedures will require a coordinated effort on everyone's part to assure that nothing drops into the cracks. Companies should include in their proposals a description of the manner in which the transition would be managed and an indication of the responsibilities each party would hay.e during the transition. IV-2 8Fw328. LI V. CENSUS DATA Most current etmss data will be inserted here. V-1 86-32.E. Please use the following assumptions in calculating your monthly ASO charge factor: o Claims experience is to be kept separate between actives and retired. No further separation of accounting is required. o No commissions or consulting fees are to be included in your quoted costs. If"you are required to pay a finder's fee or similar charge, please identify this in a separate discussion. o Toll -free claim office telephone service availability to to employees, retirees and family members only. o Standard, no extra charge, monthly statistical reports. Any reports which are needed that require an additional charge will be considered separately. o A normal range of administrative and technical services, including medical conversion, which would apply to a fully insured, conventionally rated risk. o Claims will be handled on a direct basis. Employees will send claims direct to the claim office which will certify eligibility based on a periodic listing to be furnished by the City. VI-1 86-32F: I MMEEF Annual Administrative Charge $ I Monthly Charge Factor $ per List charges for other administrative services separately.. STOP LOSS INSURANCE Monthly Cost Per Covered Employee a. $100,000 attachment point $ ! t b. $50,000 attachment point $ (— Name of insurer yi•A y wF �+Li k".. LIFE AND AD&D Monthly Annual Volume Rate Premium Premium Life /$1000 $ $ - AD&D /$1000 $ $ VI-2 86---32E QUESTIONNAIRE A. General Claim and Service Questions 1. Please indicate the location of the office from which claims would be paid. Death Medical In the event that the City or one of its employees must contact your claim office from outside the local calling area, is a WATS number available? Yes No. If no, what other arrangements will you make for this situation and how much extra, if any, will you charge for this service? 2. Is your medical explanation of benefit payment form (EOB) furnished to the employee , The City , the provider of services ? 3. In the event that a medical claim cannot be completed within a week of its receipt in your claim office due to incomplete information, necessity to contact the provider, unusual backlog of claims to be processed, etc., do you contact claimants to let them know there will be a delay in processing their claim and give them the reasons for the delay? VI-3 86 --3z8. I i� I 4. With respect to each individual employer client, do you i conduct reviews of claim experience periodically to determine instances of overutilization, consistently excessive charges, plan abuse and related problems and do you counsel the employer in how to address these problems? Yes No. If Yes, please furnish an example of your action plan. If no, would you be willing to do so for the City? Yes No. 5. Preadmission certification and concurrent utilization review are required in the administration of the plan. Indicate who will perform this service and describe its operation, including a discussion of all forms and communications to be used. B. Claim Payment System Questions 1. Is your medical claims processing completely computerized (paperless processing), partially computerized or totally manual? VI-4 IV ,0 4. With respect to each individual employer client, do you conduct reviews of claim experience periodically to determine instances of overutilization, consistently excessive charges, plan abuse and related problems and do you counsel the employer in how to address these problems? Yes No. If Yes, please furnish an example of your action plan. If no, would you be willing to do so for the City? Yes No. 5. Preadmission certification and concurrent utilization review are required in the administration of the plan. Indicate who will perform this service and describe its operation, including a discussion of all forms and communications to be used. H. Claim Payment System Questions 1. Is your medical claims processing completely computerized (paperless processing), partially computerized or totally manual? VI-4 2. If your medical claims are computerized, how many months of charge data are maintained in the family history file maintenance for use in detecting duplicate bills and to perform similar editing? 3. What is your average medical claim turnaround time? days. From what point in claim processing do you start to measure turnaround and at what point do you consider a claim to be completed? Does the above number of days include weekends and holidays or just working days? Do you regularly report your average claim turnaround time to your clients? Yes No. Do you regularly report progress on other timeliness objectives, e.g., 85% within 6 working days, to your clients? Yes No. If our answers are "no" would you be willing to provide such a report to the City? Yes No. VI-5 SG --32a. i C. Claim Processor Questions 1. What type of training do you give your new medical claim processors and what, typically, is their business background before coming to work for you? 2. How many medical claims processors are located in the office from which you would pay claims for the City? Would you assign specific processors to handle all of the City's claims or would they be handled by any of your processors on a first come, first served basis? 3. How do you define a medical claim, e.g., is each bill a claim, is each family member's bills received at one time a claim, are all the bills for all family members received at one time a claim, is each "cause" a claim, etc.? VI-6 86---326.. f 1 I 4. What productivity goals have you assigned to your medical claims processors, i.e., how many "claims" do you expect to be completed per processor per day? 5. Please indicate the process followed in quality reviews of each processor's work. Be specific as to "in process" reviews and reviews of completed, after -the -fact claims. Describe how claims are selected for review, the number selected and who is doing the review. D. Miscellaneous Questions 1. What trend factor are you using in projecting medical claims for this proposal? If possible, please identify the portions of these percentages attributable to increased fees, increased utilization, cost shifting and new technology. VI-7 SG--32S. 2. If your company policy permits, please furnish a list of your Florida public employer and private corporate clients with 200 or more employees. Also, if your company policy permits, please identify any similar size Florida clients who have cancelled their plans with you within the past five years. i I 3. What is your source of usual, reasonable and customary i charge data? How frequently are these data updated? Are usual, reasonable and customary determinations completely computerized? Is it your practice to reduce benefits to the appropriate usual, reasonable and customary charge level regardless of how small the difference in charge? If not, what guidelines do your processors use? VI-8 8f --328, 4 4. What controls are regularly employed by your processors to detect duplicate bills, COB situations and to detect and avoid fraud by claimants and providers of services? 5. If selected as their claims administrator, would you provide the City with a periodic report reflecting COB savings? If yes, the samples you are including should show COB savings. How do you define COB savings? e.g., are reductions due to Medicare and automobile no fault include? 6. Describe the measures you would take to assure claim check security and to control potential fraud among your employees. 7. Describe the measures you and your bank would take to control potential fraud in the transfer of monies from the City's general bank account to the plan's bank account. VI-9 836 -328. 8. Describe the approach you would take to assure that the terms of the pre-existing conditions limitation are applied correctly to all claim submission. -- f II I 9. Describe the approach you would take to identify situa- tions and eliminate overpayments where claims for the same condition are filed for both Workers' Compensation and this plan. j i 10. An annual financial statement, pursuant to Section 112.08 of Florida Statutes, must be filed with the Office of Treasurer, Insurance Commissioner, State of Florida by the City. A copy of the instructions is included at the end of these specifications. The City wishes to pass the task of completing this statement to its medical claims administrator. Would you be willing to do this? Yes No. VI-10 MATERIALS/FORMS TO BE INCLUDED WITH PROPOSAL It is requested that in addition to the exhibits in this section your proposal include the following items: o Sample ASO contract. o Sample employee booklet and life, AD&D certificate. o Copy of each available management report, frequency of availability, number of copies available and a summary of their cost to the City and your recommendations as to which reports would be most appropriate. o Example of a summary analysis of claim statistics reports and a suggested action plan. o Claim form and Explanation of Benefit Payment -form. o Medical conversion application and policy. o Narrative description of the method to be used in the transfer of money from the City to the plan bank account. Include copies of forms to be used and reconciliation reports. o Description of qualifications and duties of the salaried representative who would service this account. o Discussion on installation planning, installation team and scheduling and sample implementation schedule. o Discussion of the service you would intend to use in performing preadmission certification and concurrent utilization review. Include copies of forms to be used and communications with employees regarding the certification and review process. VI-11 SC --32®. o Administrative forms and instructions manual you would provide to the City for employee insurance records — keeping purposes. o Copy of your Annual Report. VI-12 86--328. ;TATE TREASURER NSURANCE COMMISSIONER :IRE MARSHAL •� � \M111��, 19 THE CAPITOL TALLAHASSEE 32301 October 4, 1984 DIVISION OF INSURANCE RATING INFORMATIONAL BULLETIN 84-261 TO: ALL SELF FUNDED HEALTH BENEFIT PLANS FOR PUBLIC OFFICERS AND EMPLOXEES FROM: VLL GUNTER, INSURANCE COMMISSIONER AND TREASURER SUBJECT: FILING REQUIREMENTS UNDER SECTION 112.08, FLORIDA STATUTES, AS REVISED BY HOUSE BILL 1145 In order to be authorized to operate or continue to operate, each self -funded health benefit plan must be approved by the Department as actuarially sound. As amended by House Bill 1145, Section 112.08 now provides that prior to approval of a plan, the local government unit must submit its plan, along with a certi- fication prepared by an actuary who is a member of the Society of Actuaries or the American Academy of Actuaries as to the actuarial soundness of the plan, to the Department. In order for the Department to continue to grant such approval, Florida Statute 112.08 now requires that a report must be submitted annually to the Department within 90 days of the end of the plans' fiscal year. Additionally, House Bill 1145 requires that the annual report be prepared by a member of the Society of Actuaries or a member of the American Academy of Actuaries. The annual reporting requirement will be effective for all plans having fiscal years ending on or after June 30, 1984. Attached to this bulletin are forms which should be used to provide the informa- tion necessary for the Department to evaluate actuarial soundness. A memorandum explains the use of these forms. In•addition, a copy of House Bill 1145 is attached. BG:Rp Attachments An Affirmative Action/Equal Opportunity Employer 8f�~-32E . STATE TREASURER INSURANCE COMMISSIONER FINE MARSHAL THE CAPITOL TALLAHASSEE 32301 Memorandum to: Company Addressed Subject: Section 112.08, Florida Statutes, as revised by House Bill 1145. Data required for determining actuarial soundness of self -funded plans for health, accident and hospitalization coverages for local government units of public officers and employees. Section 112.08, Florida Statutes, relating to self-insurance programs, was amended by the 1984 Legislature. Under this section, such programs are required to submit certain reports to the Department of Insurance for the purpose of establishing actuarial soundness. The following information needs to be furnished to this office in connection with the above programs of self-insurance. It is required that the information be provided on the forms attached. _ Prior to implementing such a plan, Exhibits "A" and "C" should be submitted to the Department for review. Each year, within 90 days of the and of the fiscal year, Exhibits 16" and "C" should be submitted to the Department for review. Exhibit "D" should also be submitted if necessary. Additionally, submit Exhibit "E" immediately, and whenever items e on it change., R :tioKE�W O *onan ty Employer SC--326 EXHIBIT A To be submitted prior to the implementation of a new plan. 1. Number of employees to be covered during the first year a. Without dependent coverage b. With dependent coverage 2. Premium rate for each employee a. Without dependent coverage b. With dependent coverage 3. Amount of premium to be paid into -the fund a. By the local government unit b. By the employee 4. Other income expected to come into the fund State source and amount a. b. c. 5. Expected expenses for the first year of the fund a. Salaries b. Consulting Fees c. Office Expense d. Taxes e. Other (if other is greater than 10% of the total of a, b, c and d, explain the costs in detail). 6. a. Expected incurred claims. This represents the total of claims expected to arise from the first policy year, regardless of when they are paid. It is expected that at the end of•the fiscal year, there will be out- standing claims for which some payments have already been made but more payments are expected to be made; outstanding claims for which no payments have yet been made; and claims which have been incurred but not as yet reported. The estimate of incurred claims should include all of these plus the expected claim payments. t. Stop Loss insurance premiums SC-328. EXHIBIT B - PART 1 To be submitted within 90 days of the end of each fiscal year. Benefit Benefit Benefit (a) (b) (c) 1. Type of Benefit 2. Plumber of covered employees a. Single employees b. Employees with dependents 3. Number of claims files 4. Claims Incurred 5. Claim Frequency (3 !- 2) 6. Average Claim (4 s 3) 7. Annual Claim Cost (4 f 2) PART 1 1. Premium Income 2. Other Income (if amount is greater than 10% of (1) explain in detail) 3. Investment Income (if amount is greater than 10% of (1) explain in detail) 4. Total Income (1 + 2 + 3) 5. Claims Paid 6. Claim Reserves - End of Current Year (attach an explanation of how reserves were calculated) 7. Claim Reserves - End of Prior Year (must match with prior report or an explanation must accompany this report) 8. Total Incurred Claims (5 + 6 - 7) 0. Stop Loss Insurance Premiums 10. Payments to amortize unfunded liabilities 8f -'32F EXHIBIT B - PART 2 Continued... 11. Expenses a. Salaries b. Consulting Fees c. Office Expenses d. Taxes e. Other (if other is greater than 10% of the total of a - e, explain the costs in detail) f. Total expenses (a + b + c + d + e) 12. Total Disbursements (8 + 9 + 10 + 11f) 13. Gain or Loss (4 - 11) If 13 is negative complete Exhibit D. If 13 is positive explain what will be done with the funds. 86--12F. EXHIBIT C To be submitted with each report. This is a projection of the next s� three years of the plans operation. (Dollars in Thousands) Year 1 Year 2 Year 3 1. Number of employees 2. Premium Income 3. Other Income (Includes investment income) 4. Total Income (2 + 3) 5. Total Incurred Claims 6. Total Expenses 7. Total Disbursements (5 + 6) 8. Total Cain or Loss (4 - 7) If line 8 is negative, provide an explanation as to why premium rates cannot be increased. EXHIBIT D This report is only to be submitted if the current year ended in a fund deficit. Plans for eliminating such deficit are to be submitted to the Department of Insurance. 1. Past unfunded liability. Total prior unfunded liabilities accumulated at interest, less payments. 2. Amount of additional unfunded liability (from Exhibit B, line 12). 3. Total unfunded liability as of year end. 4. Describe your proposed plan for eliminating the unfunded liability. Consider interest and show the total repayment schedule. 8f - 326, Pia;; Dame: Individual Contact: Address. PhonE : Adrinistrator: Individual Contact: Address: Phone: Actuarial Firm Address: Consultant: Phone: Actuary: Phone: Plan Fiscal Year: 86- 32E t ML -s