Title
Dependent Eligibility Verification Audit Contract (Ordinance S-43756)
Description
Request to authorize the City Manager, or his designee, to enter into a contract with Health Management Systems, Inc. (HMS) for a dependent eligibility verification audit of the City's health plan. Further request authorization for the City Controller to disburse all funds related to this item throughout the life of the contract, as necessary.
Report
Summary
The City's health plan is self-funded through the Health Care Benefits Trust. Premium rates are set annually using past utilization data and the City pays 80% of the employee premium. Almost 8,000 employees have one or more family members ("dependents") enrolled in the City coverage. Health Care Benefits Trust Board members and the City Auditor recommend hiring an outside firm to conduct a dependent eligibility audit ensure covered dependents meet the City's definitions for eligibility.
Procurement Information
A Request for Proposals (RFP) was issued in February 2017 and six firms responded. A selection committee comprised of two representatives from the Human Resources Department (Benefits Division), the City's Health Care Benefits Trust Board Chairperson, and five members of the City's Health Care Task Force representing Firefighters, Police Officers, Police Sergeants and Lieutenants, laborers, and clerical staff reviewed and scored the RFPs. Interviews were conducted with the three firms with the highest evaluation scores. The top three firms were scored following the interviews and HMS was identified as the recommended vendor for this project. The scores, out of 1,000 available points, for the top three firms are:
HMS: 918 points
Consova: 793 points
UnifyHR: 450 points
The committee selected HMS for the following reasons: ability to provide the full scope of services; experience with 55 municipal clients (including Tucson and Los Angeles); experience conducting more than 1,600 dependent audits covering 6 million members nationally; a full range of employee communication tools; performance guarantees; experience and qualifications of key personnel; a proven technology platform; and, other qualifications.
Contract Term
The contract term will be three years starting July 1, 2017. Provisions of the contract will include an option to extend the term for up to two years, in one-year increments, which may be exercised by the City Manager or his designee.
Financial Impact
The Health Care Benefits Trust collects medical and dental premium payments from the City, employees and retirees, and provides payment for claims and administrative expenses. Funding is available in this Trust for costs associated with these services. The cost per audit is $160,000 and the City anticipates conducting two audits during the five-year life of the contract; therefore, total costs for the five-year life of the contract will not exceed $320,000.
Concurrence/Previous Council Action
This contract award was recommended for approval by a vote of 3-0 by the Sustainability, Housing, Efficiency, and Neighborhoods Subcommittee at its June 20, 2017, meeting.
Location
Citywide
Department
Responsible Department
This item is submitted by Assistant City Manager Milton Dohoney, Jr. and the Human Resources Department.