99-23166 RESO
RESOLUTION NO. 99-23166
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ACCEPTING THE RANKING OF THE RESPONSES
RECEIVED, AS MODIFIED BY THE CITY MANAGER AND THE
ADMINISTRATION, AND AUTHORIZING THE ADMINISTRATION TO ENTER
INTO NEGOTIATIONS WITH THE NUMBER-ONE RANKED FIRMS,
HUMANA; AMERICAN DENTAL; AND HARTFORD LIFE, RESPECTIVELY,
PURSUANT TO REQUEST FOR PROPOSALS NO. 24-98/99 TO PROVIDE
GROUP MEDICAL INSURANCE, GROUP DENTAL INSURANCE, AND GROUP
BASIC/SUPPLEMENTAL /LIFE INSURANCE AND ACCIDENTAL DEATH &
DISMEMBERMENT INSURANCE FOR EMPLOYEES AND RETIREES;
SHOULD THE ADMINISTRATION NOT BE ABLE TO REACH AGREEMENT
WITH THE NUMBER-ONE RANKED FIRMS, AUTHORIZING THE
ADMINISTRATION TO ISSUE A NEW RFP FOR THE GROUP HEALTH PLAN
AND AUTHORIZING THE ADMINISTRATION TO NEGOTIATE WITH ORAL
HEAL TH SERVICES, THE NUMBER-TWO RANKED FIRM FOR DENTAL
INSURANCE; AND STANDARD INSURANCE COMPANY, THE NUMBER-TWO
RANKED FIRM FOR BASIC LIFE/SUPPLEMENTAL/ACCIDENTAL DEATH &
DISMEMBERMENT INSURANCE.
WHEREAS, the City issued a Request for Proposal No. 24-98/99 to provide Group Medical
Insurance, Group Dental Insurance, and Group Basic/Supplemental/ Life Insurance and Accidental Death
& Dismemberment Insurance for Employees and Retirees (RFP); and
WHEREAS, notices were issued for the RFP on January 21, 1999, resulting in nine timely
responses; and
WHEREAS, the Health Advisory Committee met on April 12, 1999, and recommended Humana,
as the number-one ranked respondent for Group Medical Insurance; American Dental, as the number-one
ranked respondent for Group Dental Insurance; and Hartford Life as the number-one ranked respondent
for Basic Life/Supplemental! Accidental Death & Dismemberment Insurance; and
WHEREAS, an Evaluation Committee recommended by the City Manager and approved by the
Mayor and City Commission met on April 20, 1999, and recommended Humana, as the number-one
ranked respondent for Group Medical Insurance; Oral Health Services, as the number-one ranked
respondent for Group Dental Insurance; and Hartford Life, as the number-one ranked respondent for
Basic Life/Supplemental! Accidental Death & Dismemberment Insurance; and
WHEREAS, the City Manager and the Administration have reviewed the responses and the
recommendation of the Evaluation Committee and Health Advisory Committee and concur with the
Evaluation Committee's recommendation as to the Group Medical Insurance, and Basic
Life/Supplemental! Accidental Death & Dismemberment Insurance, but do not concur with the Evaluation
Committee's recommendation for Group Dental Insurance; and
WHEREAS, the City's Dental Plan consists of an indemnity program and a Dental Health
Maintenance Organization alternative; and
WHEREAS, Oral Health Services and American Dental offer the same upgrade Indemnity Plan
at the same rate, and offer different Dental Health Maintenance Organization alternatives; and
WHEREAS, Oral Health Services offers a Dental Health Maintenance Organization alternative
with increased reimbursement levels that, depending on which options selected, will increase premium an
additional $25,000 to $50,000; and
WHEREAS, the Administration does not believe that the difference in the Dental Health
Maintenance Organization alternative is sufficient to justify the increased premium expense; and
WHEREAS, in the alternative, the Administration recommends that American Dental be ranked
as the number-one respondent, and Oral Health Services be ranked as the number-two respondent with
regard the Group Dental Insurance
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission herein accept the ranking of the responses received, as modified by the City Manager and the
Administration, as set forth herein, and authorize the Administration to enter into negotiations with the
number-one ranked respondents, Humana; American Dental; and Hartford Life; respectively, pursuant to
RFP No. 24-98/99, to provide Group Medical Insurance, Group Dental Insurance, and Basic
Life/Supplemental/Accidental Death & Dismemberment Insurance for Employees and Retirees; should
the Administration not be able to reach agreement with the number-one ranked firms, it is authorized to
issue a new RFP for the Group Health Plan; and to further authorize the Administration to negotiate with
Oral Health Services, the number-two ranked firm for Dental Insurance and Standard Insurance Company,
the number-two ranked firm, for Basic Life/Supplemental/Accidental Death &Dismemberment Insurance.
ADOPTED this 12th day of
May
,1999.
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ATTEST:
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City Clerk
APPROVED AS TO
FORM & lANGUAGE
& FOR EXECUTION
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CITY OF MIAMI BEACH
CITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
http:\\ci.miami-beach.fI.us
COMMISSION MEMORANDUM NO. 3~-99
TO:
Mayor Neisen O. Kasdin and
Members of the City emission
DATE: May 12, 1999
SUBJECT: A Resolution 0 the Mayor and City Commission of the City of Miami Beach,
Florida accepting the ranking of the responses received, as modified by the City
Manager and the Administration, and authorizing the Administration to enter
into negotiations with the Number-One ranked firms, Humana; American
Dental; and Hartford Life, respectively, pursuant to Request For Proposals No.
24-98/99 to provide Group Medical Insurance, Group Dental Insurance, and
Group Basic/SupplementallLife Insurance and Accidental Death &
Dismemberment Insurance for Employees and Retirees; should the
Administration not be able to reach agreement with the Number-One ranked
firms, authorizing the Administration to issue a new RFP for the group health
plan and authorizing the Administration to negotiate with Oral Health Services,
the Number-Two ranked firm for Dental Insurance; and Standard Insurance
Company ,the Number-Two ranked firm for Basic Life/Supplemental! Accidental
Death & Dismemberment Insurance.
FROM: Sergio Rodriguez
City Manager
ADMINISTRATION RECOMMENDATION:
Adopt the Resolution.
BACKGROUND:
The City of Miami Beach issued RFP Nwnber 24-98/99 on January 21, 1999, to solicit bids for the
Group Medical Insurance, Group Dental Insurance, and Group Basic/Supplemental Life Insurance.
The City's Administration prepared the bid specifications in line with objectives developed with
the Group Insurance Board and the Health Advisory Committee.
The City currently contracts with Hwnana for the Group Managed Medical Care. The City offers
Managed Care Medical (PPO), Point of Service (PaS), HMO and Medicare Supplement Plans.
Plans are available to all full-time eligible employees and retirees. There are two exceptions, all
members of the fire fighters' bargaining unit and some unclassified fire management employees, and
continued...
AGENDA ITEM
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573
DATE
COMMISSION MEMO
RFP #24-98/99
PAGE 2
all members of the police bargaining unit and some unclassified police management employees are
members of their own health trust.
The City currently contracts with American Dental for the Group Managed- Dental Insurance Plans.
The City's plan is available to all full-time eligible employees and retirees, with one exception.
All members of the fire fighters' bargaining unit, and some unclassified fire management employees
are provided dental insurance through their own plan. The City currently contracts with ITT
Hartford to provide Basic Life Insurance and Accidental Death and Dismemberment Insurance. The
City's plan is available to all eligible employees and retirees, with one exception. All members of
the police bargaining unit and some unclassified police management employees are provided
insurance through their own plan.
The RFP-Scope of Services required that the current benefit level for Medical, Dental, and Life
Insurance be maintained. Alternative plans providing increased benefits levels and multiple tiers for
all plans would be considered. Proposals were invited for all three plans (Group Medical, Dental,
and Life) separately or combined.
The RFP- Evaluation/Selection Process required that the City Manager appoint an Evaluation
Committee to evaluate each proposal, meet with the Health Advisory Committee and, then,
recommend to the City Manager the proposals which the Evaluation Committee deems to be in the
best interest of the City and its emplayees/retirees. The Evaluation Committee consists of the
members of the Group Insurance Board and the City consultant.
The Evaluation Committee evaluated proposals on the following factors:
1. Size and financial stability of the Insurance Company
2. Size and quality of the Physician/Dentist and Hospital networks in relationship to the
City's employee/retiree demographics
3. Premium cost and guarantees
4. Benefits provided by the plans
5. Ability to provide insurance benefits and services to out of area participants
6. Response to Medical, Dental and Life Questionnaires
7. Overall response to RFP
In meetings on March 9, 22, and 25, the Evaluation Committee met with responders and analyzed
the proposals according to the RFP Scope of Services. A detailed analysis of benefits was provided
by the Meadowbrook Villari Agency who acted as a consultant.
The Group Insurance Board (Evaluation Committee) and the Health Advisory Committee met on
April 12, 1999 to review the responses to the RFP and determine a proposed course of action.
continued.. .
574
COMMISSION MEMO
RFP #24-98/99
PAGE 3
ANALYSIS:
Request for Proposal Number 24-98/99 was advertised on January 22" with a bid opening date of
February 26, 1999. A pre-bid meeting was held on February 8, 1999. Fifty-seven notices were
mailed. Thirty-six bid specifications were picked up. The City received nine responses from the
following insurance companies.
Group Medical
1. Humana
2. Foundation Health
3. HIP
Dental
1. American Dental Plan
2. Oral Health Services
3. Protective Dental Care
4. Safeguard Health Enterprises
Life
1. Hartford
2. Standard
The Evaluation Committee expressed concern over the lack of response to the Group Medical
portion of the RFP. With approval from the Legal Department, it was determined that the City's
Consultant could contact certain insurance companies regarding their failure to respond. It was
determined that the primary reasons for not responding was the inability of the insurance carriers
to communicate directly with City representatives regarding questions (Cone of Silence), and a
perception that the City was simply using the RFP process to pressure Humana for a low renewal
rate.
Upon review of all of the bids, it was determined that the following firms did not meet the City's bid
scope of services and would not be considered:
Group Medical-Foundation Health and HIP did not provide benefit levels comparable to the
current plans. Foundation Health offered an HMO plan only, HIP, too, offered an HMO
plan, only, and it excluded any type of Medicare supplement.
Group Dental- Safeguard Health Enterprises and Protective Dental Care did not provide
a plan that would maintain the current benefits level (the indemnity dental plan did not
provide an Orthodontic benefit).
The Evaluation Committee reviewed a detailed benefit analysis provided by the Meadowbrook
Villari Agency and determined as follows:
GROUP MEDICAL
Humana provided Group Medical benefits as required by the Scope of Services in the RFP
and appears to be the only option for our Group Medical Plan at this time.
The following chart compares the annual estimated premium cost and total annual percentage
increase/decrease for each plan with Humana.
continued...
575
COMMISSION MEMO
RFP #24-98/99
PAGE 4
ESTIMATED ANNUAL PREMIUM WITH HUMANA BASED
ON CURRENT ENROLLMENT
PLAN CURRENT PROPOSED PERCENT INCREASE/
PREMIUM PREMIUM .- DECREASE
HMO $2,234,382.60 $2,722,908.86 21.70%
PPO $3,141,757.32 $3,716,989.80 18.31 %
POS $ 123,061.92 $ 145,593,96 18.31 %
TOTAL $5,499,210.84 $6,585,492.62 19.75%
*Rates are guaranteed for one year (10/01199-09/30/00).
DENTAL
The following charts compare American Dental and Oral Health Services regarding the General
Dentist network, annual premium and benefit level. Protective Dental Care and Safeguard Health
Enterprises were not included within the comparison since they did not include an Orthodontic
benefit under their indemnity plans.
COMPARISON OF NETWORKS FOR ADP AND OHS
NETWORK ADP OHS COMMENTS
General Dentist 396 496 OHS has the highest number of dentist in
DadeIBroward DadeIBroward Counties
Counties
General Dentist in 741 748 OHS also provides network in Arkansas,
Florida (excludes Georgia, Alabama, and Tennessee
DadeIBroward
Counties)
Membership 160,438 709,609 OHS has highest ratio of Providers to
Members. Protective has lowest
membership.
continued...
576
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RFP #24-98/99
PAGE 5
COMP ARISON OF ANNUAL PREMIUMIBENEFIT LEVEL FOR INDEMNITY PLANS
OFFERED BY ADP AND OHS
PLAN PREMIUM COMPANY BENEFIT LEVEL
OFFERING PLAN
.-
Shenandoah $200,988.00 American Dental Maximum allowance
Plan D. (Current determined by insurance
Plan) company.
Security SL V -80 $253,097.76 American Dental Higher benefit allowance than
Oral Health Services current plan. Maximum
allowance determined by
msurance company.
Security DNI $313,834.80 Oral Health Services This is the highest indemnity
benefit plan offered.
Maximum allowances are
determined by UCR.
COMPARISON OF ANNUAL PREMIUMIBENEFIT LEVEL FOR DHMO PLANS
OFFERED BY ADP AND OHS
PLAN PREMIUM COMPANY BENEFIT LEVEL
OFFERING PLAN
Prestige 15 $255,902.64 American Dental Office visit $5.00. Charge to
(Current member determined by schedule.
Plan)
8-230/01 $281,322.20 Oral Health Services Office visit $3.00. Higher
benefit level than current
program. Charge to member
determined by schedule.
S-330/01 $318,564.36 Oral Health Services Office visit $3.00. This is the
highest benefit level plan
offered. Charges are determined
by schedule and are
approximately 8% lower for
many procedures as compared to
current plan. Minimal
difference between S230-/0 1 and
S-330/01.
continued...
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COMMISSION MEMO
RFP #24-98/99
PAGE 6
*Proposed Premium is determined by applying monthly rates to current enrollment
data.
*Indemnity rates are guaranteed for one year. DHMO rate guarantees range from two
to three years depending on the plan.
* American Dental and OHS both offer the Security 80 plan at the same rate.
The following estimated annual premium costs were determined for responding dental
insurance companies utilizing enrollment data from our current plan. The amounts combine
Indemnity and DHMO enrollment and represent the lowest premium plans available:
ESTIMATED ANNUAL PREMIUM FOR DENTAL
(UTILIZING LOWEST BENEFIT PLANS)
COMPANY ANNUAL PREMIUM
American Dental $456,890.64
Oral Health Services $534,396.00
*The premium for OHS represents an annual increase of $77,505.36.
LIFE INSURANCE/AD&D
Hartford Insurance and Standard Insurance offer comparable benefits and rates. The
annual premiums quoted and comparisons are as follows.
PREMIUM COMPARISON/LIFE INSURANCE/AD&D
COMPANY CURRENT ANNUAL PROPOSED ANNUAL
PREMIUM PREMIUM
Hartford $291,541. 00 $256,963.00
Standard N/A $256,292.00
* Both plans are guaranteed for three years which realizes a three year
savings of over $103,000.00 to the City.
continued...
578
COMMISSION MEMO
RFP #24-98/99
PAGE 7
Based on review and analysis of all responses to the RFP, the following was determined by
the Health Advisory Committee and Evaluation Committee:
Group Medical
The Health Advisory Committee and the Evaluation-Committee agree that
Humana should be selected as the Number-One ranked firm for negotiations. Should
negotiations fail, the Administration should be authorized to issue a new RFP for the
group health plan only.
Group Dental
The Health Advisory Committee concluded that American Dental was the Number-
One ranked firm for negotiations and that OHS should be selected as the Number-
Two ranked firm.
The Evaluation Committee selected Oral Health Services as the Number-One
ranked firm for negotiations and American Dental was selected as the Number-Two
ranked firm.
Life Insurance/ AD&D
The Health Advisory Committee and the Evaluation Committee agree that Hartford
should be selected as the Number-One ranked firm for negotiations. Both Hartford
and Standard are comparable in rates and benefits. In comparing annual premium,
those administrative costs associated with changing plans, were considered.
The Health Advisory Committee and Evaluation Committee were advised by the
Procurement Department that in the event of comparable rankings, the process
allows the incumbent to be ranked number one for negotiation purposes. If
negotiations fail with the number one ranked firm, the City may negotiate with the
number two ranked firm.
CONCLUSION:
The Commission should accept the ranking recommended by the Evaluation Committee and the
Health Advisory Committee regarding Group Medical and authorize the Administration to
commence negotiations with Humana. While we are disappointed with the poor response to the
Group Medical segment of the RFP, time constraints require that we move quickly to fix the identity
of our insurer quickly. From anecdotal conversations with other jurisdictions and reading industry
trade journals, we are mindful of current upward pressures on health insurance premiums.
continued...
579
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RFP #24-98/99
PAGE 8
We are also displeased with the amount of the increase proposed by Humana. Given the existing
circumstances, we feel it is appropriate to attempt to pursue a middle ground with Humana. Should
negotiations fail, the Administration should be authorized to issue a new RFP for the group
health/medical plan only.
While the Health Advisory Committee and the Evaluation Committee came-to different conclusions
as to who should be ranked number one for the Dental Plan, both groups recognized that ADP and
OHS ranked closely. The Dental Plan consists of an indemnity program and a DHMO alternative.
The current indemnity program from ADP is Shenandoah Plan D. It has been seen by many
employees and retirees as unacceptable in terms of reimbursement levels. Both ADP and OHS offer
an upgrade sponsored by the same company (Security SL V -80) and both offer it at the same prices.
Adoption of the upgrade will increase the annual cost by approximately $52,000 which is shared by
the City and plan members.
In comparing the DHMO programs, we see that both have the same number of dentists on a
Florida-wide comparison, but OHS has 100 more in the DadeIBroward area. We also learned that
reimbursement levels from the OHS Plan may average 8% better than those of ADP. These
enhancements, however, cost an additional $25,000 to the $50,000 annually depending on which
OHS option is selected.
We do not believe that the difference in the DHMO plans is sufficient to justify the increased
premium expense. Accordingly, the Administration recommends that we be authorized to negotiate
first with ADP and second with OHS.
The Commission should accept the ranking recommended by the Evaluation Committee and the
Health Advisory Committee regarding Life Insurance/ AD&D and authorize the Administration to
commence negotiations with Hartford. Should negotiations fail, the Administration is authorized
to commence negotiations with the Number-Two ranked firm, Standard insurance.
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Attachments
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