Memorandum

City of Lawrence

Human Resources Div/Administrative Services Dept

TO:	David L. Corliss, City Manager
FROM:	Health Care Committee Lori Carnahan, Human Resources Manager, Administrative Services Frank Reeb, Director, Administrative Services Michelle Spreer, Human Resources Specialist/Benefits, Admin Svs Tammy Bennett, Assistant Director, Public Works Kim Brice, Administrative Support II, Police Department Russell Brickell, Fire Inspection Officer, Fire Department Craig Houfek, Recreation Center Programmer, Parks & Recreation Mike McAtee, Detective, Police Department Mike McMillen, President, IAFF Local 1596 Heidi Nelson, Assistant Director, Finance Department Casey Toomay, Budget Manager, City Manager’s Office Dave Pentlin, Solid Waste Operator II, Public Works Scott Wagner, Management Analyst, Legal Services Jimmy Wilkins, Senior Maintenance Worker, Public Works
CC:
Date:	April 8, 2009
RE:	Benefit Broker/Consultant Recommendations from Request for Proposal

The Health Care Committee (HCC) established a Selection Committee to review the Request For Proposals (RFP) responses for a Benefit Broker/Consultant. The Selection Committee was comprised of Lori Carnahan, Michelle Spreer and Russell Brickell. Based on the Selection Committee’s review, the HCC recommends the City enter into negotiations with Hays Companies to provide services beginning April 15, 2009 for up to three years through a Letter of Agreement. The history and evaluation leading to this recommendation follow.

Project History

The City currently has a self funded Employee Health Care Plan. 2008 plan expenses were $7,483,565. The plan has a historical growth average of 15% including expansion of plan participants due to staff increases, medical inflation and high claims utilization. The City’s HCC monitors and makes recommendations for plan funding and plan design. The City has, in the past, contracted on a per project basis for assistance with healthcare consultants. Beginning with 2009 the City is establishing an ongoing relationship with a single consultant. An RFP for such services was approved for distribution earlier this year.

The RFP was distributed to fifty eight names listed on the Human Resources vendor list on February 18, 2009 and were due back 3:00pm March 11, 2009. Twelve responses were received, and a 13^th was received after the deadline. The twelve timely responses were independently reviewed by the individuals of the Selection Committee. The committee then met and narrowed the number of responses to three that would have references checked and invited for an on-site interview. The Selection Committee invited the entire Health Care Committee, City Manager and one City Commissioner to participate in the on-site interviews. All that participated were asked to review the RFPs and evaluate based on the RFP and interviews. Those involved with the interviews met on Wednesday, April 08, 2009 to review and make a recommendation for implementation effective April 15, 2009.

Project Evaluation

The Selection Committee agreed that all companies who submitted proposals were qualified to provide the services requested. The discussion centered on the quality and quantity of scope of services with relation to the fees charged which varied greatly between respondents. Local presence, public sector knowledge, and familiarity with the Kansas health care market (outside Johnson and Wyandotte Counties) were significant factors as well.

While services, fees and experience varied between respondents, the three who had the best combination for the city were selected to participate in on-site interviews. During the on-site interviews the committee specifically discussed the following:

Monthly and annual reporting for health care (and to some degree other benefit programs). Cost analysis, health care funding projections and plan design options were included.
The ability to supplement and extend the health care analysis and benefit work of the Human Resources Division.
Resources readily available to improve employee benefit programs (specifically health care).
Knowledge and availability of the staff assigned to our account.
Timely, accurate, and informative information provided to the city on legal changes to the health care and employee benefit arena.

Project Funding

The fees for the Employee Benefits Consultant will be taken from the City’s Health Care Reserve fund and were budgeted with the 2009 budget. Ongoing annual fees will be budgeted for 2010-2012 as well. The return on the investment will be achieved through the ability for a single consultant to become an extension of the Human Resources Division by conducting a more extensive utilization analysis of the health care plan on a year to year basis and providing up to date information on legislative or regulatory changes in the benefit arena. They will also be able to have regular and ongoing input on healthcare reinsurance, benefit plan design and contract negotiations.

Recommendations

The Health Care Selection Committee recommends we offer the Employee Benefits Consultant services to Hays Companies of Kansas City, MO. They were able to provide a broad scope of health care and employee benefit services for a reasonable price. The fee (which is net of commissions and bonuses from service providers) of $50,000 annually for years 1-3 and $55,000 annually for years 4-5 was among the lower 1/2 of those submitted. The scope of services provided for this fee was comprehensive and quality was high. Attached is a list of services provided. The list includes the immediate project of conducting an RFP for all Health Care services to be distributed May 1, 2009 and a report/recommendations received by the Health Care Committee by June 15, 2009. We will be working to develop a final Letter of Agreement within the next two weeks.

Action Request

Authorize City Manager to execute a Letter of Agreement with Hays Co mpanies to provide comprehensive Employee Benefit Consulting Services, to include the services of issuing an Employee Health Care Plan RFP, related analysis, and ongoing employee benefits consulting service, in the amount of $50,000 for 2009.

Scope of Services:

Objective Setting

· Conduct interviews of key benefit decision makers to understand the objectives set forth by your company and to fully understand your business

· Assist/Development of Long-Range Objectives

· Conduct periodic employee surveys as needed

· Conduct quarterly strategy and open items meetings

· Meet with carriers

· Client Service Calendar/Open Items Checklist development to manage ongoing tasks

· Review of current plan documents

Program Design

· Conduct an annual benchmarking analysis to ensure competitiveness of the benefit program

· Benefit modeling

· Funding evaluation

- Claims Audit (once every 3-years)

- Implementation and on-going monitoring

- Negotiate Costs and Performance Guarantees

· Financial evaluation and review

· Review of current voluntary plans and enrollment process

· Integrated health approach

· Disease and Population Health Management and similar programs

· Design and implementation of Wellness Programs

· Routinely inform you of changes and/or trends in the benefit marketplace

3. Vendor Evaluation and Marketing

· Aggressively market your benefit programs

· Hold quarterly meetings to provide updates on market conditions, and plan performance

· Provide a pre-renewal meeting 120 days prior to the renewal to set the strategy for the upcoming renewal and to provide a financial forecast

· Aggressively negotiate and analyze carrier renewals and proposed plans to meet your objectives & help identify innovative cost savings ideas

· Prescription Drug Consulting

- Evaluation of your current program design, vendor evaluation, and set-up

- PBM “RFP”

- Benchmarking & Plan Design Consultation

· Marketing & Consulting for Ancillary Benefits/Vendors

· Develop Request For Proposals

· Monitor published financial information about your current/proposed insurers and alert you should their status change below a A- AM Best rating

· Develop, recommend, negotiate and implement cost effective benefit programs

Data Analysis and Program Monitoring

· Analyze and provide customized monthly reports (Claims)

· Utilization & Benchmarking Reports (Health Plan Intelligence)

- Benefit Modeling

- Benchmarking Analysis by Region

· Network Analysis – discount and access review

· Provide pre renewal forecasting

· Evaluate the need for new programs or approaches consistent with changes in your company

· Identify and analyze trends affecting benefit cost

Implementation, Communication, Compliance Support, and Ongoing Service

· Form 5500 preparation for signature ready

· On-Line Benefits

- Set-up

- Administration, Employee Communication and Maintenance

- Wellness Communication

· Communication & Education (No charge - Inclusive)

- Enrollment Meetings

- Communication materials designed to enhance employee awareness and perception

- Development of Enrollment/Benefit Materials

- Payroll Stuffers/Bulletins (No charge for design)

- Spanish Translations (Free of Charge)

- Hays Group Solutions Newsletter (first 25 free)

- Annual Total Reward Statements

· Account Management Services

- Daily access to account management team

- Specific, Large, or Executive Claim Issues

- Assistance with FMLA, ADA, COBRA/HIPAA, ERISA

- Attorneys on Retainer

- Forecast Trends

· Vendor Monitoring and Management-Monthly, quarterly or as needed meetings

· Act as liaison between you and your insurance carriers

· Keep you advised of legislative issues

Services not included in fee:

Retirement Plan
Onsite Clinic Review and Consultation
Printing Costs
Call Center Support/Patient Advocacy Services
Actuarial Studies
Voluntary/Worksite Benefits Marketing and Enrollment Activities
International Benefit Marketing and Consulting
Risk Management Brokerage
Risk Management Consulting

- Loss Prevention

- Claims Review

- Litigation Management

Alternative Risk Transfer Feasibility Studies

- Captive

- Rent-a-Captive

- Large Deductible & Self-Insured Retention