HomeMy WebLinkAboutItem 08 Approve a Contract with PacificSource Health Plans to Provide Third Party Administrative Services for City's Self-Funded Medical-Rx-Vision Insurance AGENDA ITEM SUMMARY Meeting Date: 5/5/2014
Meeting Type: Regular Meeting
Staff Contact/Dept.: Greta Utecht Staff Phone No: 726-3787
Estimated Time: Consent Calendar
S P R I N G F I E L D C I T Y C O U N C I L Council Goals: Financially Responsible and Stable Government
Services ITEM TITLE: APPROVE A CONTRACT WITH PACIFICSOURCE HEALTH PLANS TO
PROVIDE THIRD PARTY ADMINISTRATIVE SERVICES FOR CITY’S SELF-FUNDED MEDICAL/Rx/VISION INSURANCE
ACTION REQUESTED: By motion:
Authorize City Manager to enter into a contract with PacificSource Health
Plans, in the amount not to exceed $850,000 to provide 2014 Third Party Administrative Services for City self-funded health insurance.
ISSUE STATEMENT:
The City of Springfield has been self-funded since January 2013. In order to
meet federal privacy law under the Health Insurance Portability and Accountability Act (“HIPAA”), the City contracts with a Third Party
Administrator (“TPA”) to process claims and payments. The City also
purchases stop loss insurance for very large claims. PacificSource has been our TPA since January 2013, and was the lowest viable bidder for the 2014 renewal, primarily due to their pricing on the stop loss insurance.
ATTACHMENTS: 1. PacificSource Administrative Services Agreement
DISCUSSION/ FINANCIAL
IMPACT:
The City provides a comprehensive self-funded health insurance plan for all employees. In order to be in compliance with HIPAA, the City has to contract
with a Third Party Administrator. A TPA is the confidential interface between City staff and the employee and his or her health care provider.
PacificSource has been our TPA since January 2013 and was the next-to-low
bidder for renewal of the 2014 contract. In addition to providing TPA services, PacificSource also provides stop-loss insurance, which the City purchases in
order to protect our financial reserves from taking large losses from medical
claims that are $150,000 or over. The cost of stop loss insurance went up dramatically across the country in CY2013, due to the severity of natural
disasters and their impact on individuals. The City of Springfield’s rate increased
by 15.2%. With otherwise positive claim experience, our overall health plan costs are up by a total of 5%, versus a national trend of 9%.
Through our benefits consultants, we solicited and received cost estimates from
seven stop loss insurance carriers, and PacificSource had the second-lowest bid. The lowest bid came from SunLife Assurance Company of Canada, but because
we have had poor customer service in the past from them, we determined that they weren’t a viable choice.
The following is a list of the companies and the percentage increase over 2013
rates for each bid.
• 27.11 %: HM Life Insurance Company
• 24.77%: IHC Risk Solutions – Standard Security Life of NY
• 23.84%: Optum Health – Unimerica Ins. Co.
• 16.21%: Reliance Standard Life Ins. Co.
• 8.51%: SunLife Assurance Co. of Canada
• 29.08%: Symetra Life Ins. Co.
• 15.2%: PacificSource Health Plans