Title
Employee Medical Plan Administrative Services Vendor Recommendations (Ordinance S-44951)
Description
This report requests City Council approval to enter into a contract with BlueCross BlueShield of Arizona and Banner/Aetna to provide medical plan administrative services for the self-funded employee medical insurance. The services provided by BlueCross BlueShield and Banner/Aetna include claims review and processing, controlling claim costs through provider contracting, and managing the cost impact of chronic disease (i.e., diabetes, hypertension) through clinical programs. Funding for this expense is provided in full by the Health Care Trust, with an estimated annual cost of $6,500,000. Further request authority for the City Controller to disburse funds as necessary.
Report
Summary
The City issued a Request for Proposals on May 9, 2018 seeking vendors to provide administrative services only for the self-funded employee medical plans. Four vendors submitted proposals: BlueCross BlueShield of Arizona, Banner/Aetna, Cigna, and United Healthcare. The evaluation committee recommends BlueCross BlueShield of Arizona and Banner/Aetna.
Procurement Information
The City retained Mercer to receive, review and summarize responses, including analysis of the financial offers, strength and cost of provider networks, and value of financial guarantees. Evaluation occurred by a committee composed of the Human Resources Director, Deputy Human Resources Director, Health Care Trust Board Vice Chair, Health Care Trust Accountant, two labor representatives and one retiree representative.
The committee conducted three-hour interviews with each of the vendors.
Proposals were evaluated based on the following criteria: method of approach (500 points); qualifications and experience (250 points); and pricing (250 points). Consensus scoring occurred after interviews were concluded on June 13, 2018, which resulted in the following scores:
- Banner/Aetna: 844
- BlueCross BlueShield of Arizona: 700
- United Healthcare: 659
- Cigna: 650
The committee’s recommendations are made based on the following reasons:
- Risk management programs (Value based care and Clinical services)
- Member services
- Technology and digital resources
- Reporting capabilities
- Demonstrated ability to integrate with other vendors
- Claims cost guarantee
Contract Term
The contract term will be three years beginning Jan. 1, 2019, with two one-year extensions to be exercised at the City’s discretion.
Financial Impact
Funding for this expense is provided in full by the Health Care Trust. The estimated annual cost is $6,500,000.
Department
Responsible Department
This item is submitted by Acting Deputy City Manager Toni Maccarone and the Human Resources Department.