HomeMy WebLinkAboutItem 05 Approve a Contract with PacificSource Health Plans for Self-Funded Medical Rx Vision Insurance AGENDA ITEM SUMMARY Meeting Date: 12/4/2018
Meeting Type: Regular Meeting
Staff Contact/Dept.: Tom Mugleston 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: Authorize City Manager to negotiate and execute a contract with PacificSource Health Plans, to 1) provide 2018 Third Party Administration (TPA) Services for
City self-funded medical, prescription and vision claims and 2) purchase stop-loss
medical insurance coverage.
ISSUE STATEMENT: The City provides a comprehensive self-funded health insurance plan for eligible employees, dependents, and retirees. The City contracts with a vendor
to 1) provide Third Party Administrator (TPA) services for self-funded claims below our $150k stop-loss thresh-hold, and 2) purchase stop loss coverage for claims over $150k. This contract will allow the City to continue to obtain these
services.
ATTACHMENTS: 1. Draft PacificSource Administrative Services Agreement
DISCUSSION/ FINANCIAL
IMPACT:
PacificSource has been the City’s third party administrator (TPA) since going
self-funded in January 2013. The city pays all claims lower than $150,000 using
reserves and purchases stop-loss insurance to cover claims $150,000 or over.
Our broker was able to hold the TPA fee increase to 1.7% and the stop loss
coverage premium to a 3.7% increase this year.
2017 2018 Percent Change
TPA Administration Fee $247,981 $252,225 1.7%
Stop Loss Insurance $631,416 $655,080 3.7%
Total $879,397 $907,305 3.2%
Had we remained fully- instead of self-insured, our broker calculates that this year alone, the City would have seen a 14.96% increase in rates, primarily due to
increased state and Federal taxes on fully-insured plans and large health insurance premium increases due to market volatility and uncertainty about future health legislation.
Overall health claim costs increases have also remained low compared to market which allowed us to hold employee premium shares flat for a second year in a row. This is primarily due to employees proactively managing their health and
utilization of the city’s wellness center.
Staff recommends Council authorize the City Manager to negotiate and sign the
contract.
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