HomeMy WebLinkAboutItem 06 Approve a Contract with PacificSource Health Plans to Provide Third Party Administrative Services for the City's Self-Funded Medical-Rx-Vision Insurance AGENDA ITEM SUMMARY Meeting Date: 2/16/2016
Meeting Type: Regular Meeting
Staff Contact/Dept.: Laura Turner Staff Phone No: 726-4661
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 negotiate and execute a contract with
PacificSource Health Plans, in the amount of $905,000 to provide 2016
Third Party Administrative Services for City self-funded Medical/Rx/Vision 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 TPA. 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 providing claims
administration for Medical/Rx/Vision services. This Administrative Services Agreement also includes programs for Condition Support and Accordant care –
Rare Disease Management, prenatal management, 24 Hour Nurseline, travel
network and global emergency services.
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.
This year we negotiated an increase of 3.4% in administrative fees, and a 5.1%
increase in stop loss insurance. Stop loss was less than national average (8% )
due to our low usage in 2015. And, because of our overall positive claim experience, our entire medical plan costs, including the clinic expansion in 2016,
are increasing by a total of 3%, versus approximately 7.4% had we remained fully insured.
Because we’ve had the same TPA for several years now, we plan to solicit cost
estimates for TPA services and stop-loss insurance for CY17.
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