2000-24195 RESO
1
RESOLUTION NO. 2000-24195
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, REJECTING
ALL PROPOSALS RECEIVED, PURSUANT TO REQUEST
FOR PROPOSALS (RFP) NO. 97-99/00 FOR GROUP
MEDICAL INSURANCE, AND FURTHER AUTHORIZING
THE ADMINISTRATION TO ISSUE A REQUEST FOR
QUALIFICATIONS (RFQ) FOR A BROKER OF RECORD
FOR GROUP MEDICAL INSURANCE.
WHEREAS, on May 10,2000, the City issued Request for Proposals (RFP) No. 97-99/00
for Group Medical Insurance; and
WHEREAS, twenty nine (29) specifications were issued, resulting in three (3) responsive
proposals from Humana (Fully Insured), Humana (Self-Funded), and Administrative Services (Self-
Funded); and
WHEREAS, an Evaluation Committee/Group Insurance Board recommended by the City
Manager met on October 12, 2000 to review and discuss the proposals; and
WHEREAS, the Evaluation Committee failed to select a number-one ranked or number-two
ranked proposer since all proposals were deemed to be less cost effective than the current contract
with Humana for Group Medical Insurance; and
WHEREAS, the Evaluation Committee recommended rejection of all proposals
received; and
WHEREAS, the City's Consultant, Siver Insurance Consultants with the concurrence of the
Evaluation Committee, recommends that the City utilize a broker of record to conduct a Market
Analysis and/or secure proposals; and
WHEREAS, the City Manager has reviewed the recommendation of the Evaluation
Committee, and concurs with its recommendation.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and City
Commission hereby authorize the Administration to reject all proposals received, pursuant to
Request for Proposals (RFP) No. 97-99/00 for Group Medical Insurance and further authorize the
Administration to issue a Request for Qualifications (RFQ) for a Broker of Record for Group
Medical Insurance.
PASSED AND ADOPTED
'000011
this 29th day of November,
~iAS 10
FORM & LANGUAGE
& FOR EXECUTION
ATTEST:.. .4t( kffIM
~J pcwlv-- VChy~~' /).0;'--011
ity Clerk
Mayor
/
SECTION II -SCOPE OF SERVICES
The City requires that all Broker/Agent compensation for the required services be
proposed as the standard commission on premium. Neither the selected broker nor any of
their business partners or affiliates will receive commission from any insurance companies
relative to current/in-force policies purchased by the City.
The City requires that the selected Braker/Agent pravide, at a minimum, the fallawing services:
1. Provide assistance to' the City's Risk Manager in determining the City's Group Medical
Insurance needs.
2. Prepare reparts infarming the City's Risk Manager regarding insurance market
(Market Analysis) canditians that may affect the City's palicies and risk expasures priar
to' palicy renewal.
3. Assist/prepare Request far Propasal (RFP) specificatians and underwriting data
(subject to' the appraval afthe City's Risk Manager) to' submit to' acceptable insurance
markets far the purpase af abtaining propasals far Graup Medical Insurance caverage.
4. Upan directian fram the City, approach all acceptable insurance campanies an behalf
afthe City. A camplete list afthe campanies cantacted, alang with their respanse, must
be submitted.
S. Present to the City all insurance caverage prapasals abtained. This repart must
cantain a camprehensive analysis by the braker afthe prapasals abtained with
recammendatians far the selectian af ane prapasal far the particular risk to' be cavered.
6. Negatiate, an behalf af , and with directian fram, the City with all insurance carriers to'
abtain the best prices, terms and canditians available.
7. Review all insurance palicies and invaices received far palicies purchased by the City
to' assure their accuracy and appropriateness.
8. Review and evaluate existing City palicies to' pravide recammendatians far passible
impravement af price, terms, and canditians.
10. Pravide an annual repart summarizing Graup Insurance caverage in place, anticipated
market canditians, recammendatians and strategies.
/
EVALUATION/SELECTION PROCESS: CRITERIA FOR EVALUATION
The procedure for qualification evaluation and selection is as follows:
I. Request for Qualification (RFQ) issued.
2. ReceiptofRFQ.
3. Opening and listing of all RFQs received.
4. An Evaluation Committee, appointed by the City Manager, shall meet to evaluate each
response in accordance with the requirements of this RFQ. If further information is
desired, proposers may be requested to make additional written submissions or oral
presentations to the Evaluation Committee.
5. The Evaluation Committee shall recommend to the City Manager the proposal or
proposals acceptance of which the Evaluation Committee deems to be in the best interest
of the City.
The Evaluation Committee shall base its recommendations on the following factors:
1. Specific Expertise regarding the Scope ofthe Project
2. Overall Expertise of the Broker
3. Experience of Broker with Governmental Entities
3. Costs/guarantees
4. Overall response to RFQ.
6. After considering the recommendation(s) of the Evaluation Committee, the City Manager
shall recommend to the City Commission the proposal or proposals acceptance of which
the City Manager deems to be in the best interest of the City.
7. The City Commission shall consider the City Manager's recommendation(s) in light of
the recomme,ndation(s) and evaluation of the Evaluation Committee and, if appropriate,
approve the City Manager's recommendation(s). The City Commission may reject City
Manager's recommendation(s) and select another proposal or proposals. In any case,
City Commission shall select the proposal or proposals acceptance of which the City
Commission deems to be in the best interest of the City. The City Commission may also
reject all proposals.
8. Negotiations between the selected proposer and the City Manager take place to arrive at
a contract. If the City Commission has so directed, the City Manager may proceed to
negotiate a contract with a proposer other than the top-ranked proposer if the negotiations
with the top-ranked proposer fail to produce a mutually acceptable contract within a
reasonable period of time.
9. A proposed contract or contracts are presented to the City Commission for approval,
modification and approval, or rejection.
10. If and when a contract or contracts acceptable to the respective parties is approved by the
City Commission, the Mayor and City Clerk sign the contract(s) after the selected
proposer(s) has (or have) done so.
./
Important Note:
By submitting n RFQ, all proposers shall be deemed to understand and agree that no
property interest or legal right of any kind shall be created at any point during the
aforesaid evaluation/selection process until and unless a contract has been agreed to and
signed by both parties.
. '-T~:'
A*Q~ A.
PROPOSAL ANALYSIS SUMMARY
for
THE CITY OF MIAMI BEACH
Prepared by
SIVER INSURANCE CONSULT ANTS
SIVER RECOMMENDATION
It is apparent from the projected annual costs reflected in the two financial exhibits (attached), that
Humana's Fully-Insured proposal provides the most cost-effective group medical option for the City
of Miami Beach. However, Humana's proposal in response to the RFP does not address certain
service components presently provided under the in-force Humana contract, specifically, the provision
of an On-Site Representative. Premium rates provided in both the Humana renewal and the Humana
proposal are the same. Therefore, it is our recommendation that the City continue under the in-force
Humana contract as previously approved by the Board for an October I, 2000 effective date. In
effect, this recommendation suggests The City of Miami Beach exercise the option to reject any and
all responses received as a result of the RFP process and continue with the original renewal provided
by Humana for October I, 2000, through September 30,2001.
ANALYSIS PROCESS
Copies of all proposals received in response to the Request for Proposal No. 97-99/00 (RFP) were
provided to Siver by the Purchasing Department for our review and analysis. We began the proposal
analysis by confirming if bids met the minimum requiremettts outlined in the RFP.
During the initial analysis phase, we determined that several vendors excluded Retirees entirely,
and/or Retirees eligible for Medicare. In each case, the vendor in question was disqualified for failing
to meet the eligibility requirements of the RFP, as outlined in Section III, Item D, Participant
Eligibility. The disqualifying factors for each vendor is shown in bold print on the Self-Funded Rate
Exhibit, under the heading "Notations". -
The second stage of our review was the preparation of financial spreadsheets and input of proposed
rates based on comparable participant numbers. We completed two rate exhibits. The first exhibit
reflects the only Fully-Insured proposal, submitted by Humana, the incumbent carrier. The second
exhibit reflects Self-Funded proposals, including one presented by Humana. Of the proposals shown
on the Self-Funded Rate Exhibit, only the first two are viable proposals, again, due to Retiree
exclusions. However, for comparison purposes only, the rates from two additional vendors (selected
at random) were included in this exhibit.
We would point out that under a Self-Funded arrangement, only the fixed costs are certain. The
I
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SIVER INSURANCE CONSULTANTS
claims component, shown on our exhibit as "Aggregate Liability", will VllI)' based on actual claims.
"Aggregate Liability" is detennined by the Stop-Loss underwriter. Utilizing past claims history and
trend factors, an underwriter first estimates the amount of claims anticipated in the upcoming plan
year (expected claims). A margin of 20% to 25% is then added to expected claims, resulting in the
maximum annual claims liability. Our exhibit for Self-Funded Options is based on the annual
maximum claims liability, in combination with the annual fixed costs. The least expensive Self-
Funded option shown is from Acordia, using American and Hartford companies for Stop-Loss
coverage. This proposal reflects an annual maximum liability of $10,420,584, an estimated
$1,713,519 higher than the Fully-Insured Humana proposal. Further, this proposal is invalid, as it
excludes coverage for Retirees. The only valid Self-Funded proposal, other than Humana, is
Administrative Services, utilizing John Alden's Stop-Loss quote. This proposal reflects an annual
liability of$II,445,352 and is $2,739,287 higher than the Fully-Insured Humana quote.
Again, Humana's Fully-Insured proposal provides the most cost-effective group medical plan option
for the City of Miami Beach. As stated above, Humana's proposal in response to the RFP does not
address certain service components presently provided under the in-force Humana contract. To avoid
any negative impact to the City, it is our recommendation that the in-force Humana contract continue
as previously approved by the Board for an October I, 2000 effective date. This recommendation
suggests The City of Miami Beach exercise the option to reject any and all responses received as a
result of the RFP process and continue with the original renewal provided by Humana, in lieu of
accepting the Humana proposal response to the RFP. As the incumbent vendor, this option would
provide continuation of current benefits and provider networks. We did not pursue contact with
other vendor's client references, conduct alternate provider network analysis, or other tasks typically
utilized in our review process since accepting Humana (either the renewal or the new proposal) was
deemed to be in the best interest of the City of Miami Beach.
Based on the vendor responses to the RFP process, it appears savings to the City's Group Medical
Plan can currently be generated only by plan revisions and/or changes in the contribution strategy.
It is our understanding that there may be constraints on the City's ability to revise current benefits,
due to collective bargaining agreements. We might suggest that the City consider union negotiations
regarding future plan design changes, and also consider a review of current employer contributions
at the Active and Retiree levels. Weare available to meet with the appropriate staff to discuss
possible alternatives.
Respectfully Submitted by:
SIVER INSURANCE CONSULT ANTS
~el~
Brenda Sadler
Senior Consultant
September 23,2000
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Insurance
SIVEi
6
9400 Fourth SlIcel North, Suite 119
St. Petersburg, Florida 33702-2525
Post Office Box 21343
St. Petersburg, Florida 33742-1343
Telephone: (727) 577-2780
Fax: (727)579-8692
October 31, 2000
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E-mail: siver@siver.com
Website: http://www.siver.com
Cliff Leonard
Risk Management
City of Miami Beach
1700 Convention Center Drive, Third Floor
Miami Beach, Florida 33139
Subject: Proposal Disqualification
Dear Cliff:
We understand that Bruce Rishty of Wealth Planning, Inc. has contested our
disqualification of the Acordia proposal. This proposal included stop-loss coverage
through American United Life Insurance Company (specific stop-loss) and Hartford
Life (aggregate stop-loss).
During our proposal review, the first Hartford stop-loss quote reviewed was
submitted as part of the proposal from Robey-Barber, a local third-party
administrator. This Hartford stop-loss proposal included specific and aggregate
quotes and listed 11 assumptions, The second assumption shown is "Retirees are
excluded". Attached is a copy of this proposal page for your review. Note the date
on this proposal (provided to Robey-Barber) is 06/21/2000. Upon reading the
assumptions, the Robey-Barber/Hartford proposal was disqualified, as the exclusion
is in violation of State Statutes requiring public entities to offer such coverage to
retirees.
When we reviewed the Acordia proposal and found that Hartford provided the
aggregate quote, we immediately called Acordia's contact, and requested copies of
the assumption pages from the specific and aggregate stop-loss carriers. Attached is
the response from Dave Cook of Acordia. Note item 2 of the Hartford assumption
list states, "Retirees are excluded", The Hartford proposal to Acordia is dated
06/13/2000. As with Robey-Barber, upon reading the assumptions, the Acordia!
Hartford! American proposal was disqualified.
SIVER INSURANCE CONSULTANTS
Cliff Leonard
October 31, 2000
Page 2
The basis of our disqualification was discussed with The City's staff and later with the
Insurance Review Committee. Should you have any questions regarding this issue,
please don't hesitate to call.
Sincerely,
SIVER INSURANCE CONSULTANTS
~/:t.~.
Brenda M. Sadler
Senior Consultant
BMSIky
Enclosure
1:\EWB\CORlUOOO\CITYMIAM\MBIE3S.WPD
MEMORANDUM
TO:
Corey York (j/
Siver Insurance Management Consultants
FROM:
Dave Cook
RE:
City of Miami Beach
DATE:
September II, 2000
The following are the assumption pages for the American United Life Insurance Company
specific quote and Hartford Life's aggregate quote. Each quote requires that more up-to-date
shock claim and monL'1ly paid claim infonnation be provided to finalize the quote. The choice of
effective d:::.rc v"ill also have some intluence on final numbers.
This also gives us the opportunity to correct a typographical error made on our rate summary.
The actual specific rates for the $200,000 deductible should be $15.64 per single (our sheet
shows $36.50) and $32.17 (our sheet shows $32.14). The correct rates were shown in our
answers to the stop-loss question in the Acordia response to the questiOlUlaire.
If you need any other information, pleasc contact mc.
DPC
Acordi.
One Hillcrest Drive EISI
P.O. Box 1551 (25326-1551)
CharI...,n. WV 2S311.J&91
Vai",: 304.346-0611
Fox: 304.347.0697
SEP 11 '00 11:13
304 347 0746
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DATI!: .
David C"'alc~~:~f WIT
:Er:l.c: '1'U=e en 11. tlrews
M1am:i. Beach, c::!.ty Of
June 13. 2000
Pollo...u.g is clIe proposa), you have l'equeste.1 on the above g%Oup. This
quote it; based on the the accuracy of the s'Ubmitted infO%ll\lltion. We
..Pi',....":!.at:e the c:ozU!:!.d.enc:e ytlU bave sho>rn in our fi:rm and loole fo%W&~
to se~ng ytlu: needs.
The featU%es of this pro.posal a:e as fallows:
"
..'
. Th:l.s proposal assumes t:here are no .ongo:l.ng clai~ in exceos
of SQ% of the lowest quoted specific deductible. If such a
ClaiM shOUld arise.. !:big P=P08aJ. is coontingeut ~= receipt
of detailed information reguding the claiinant and fuxtber
underwriting ~y be necessary based on the information
provided.
. Tltis proposal i.Dclucle. all elig:ible employees and. d.epende:n1:8
an.d. dOBs not requill'e employees to be at work, ailcl d"Pende..es
to be pe:::fo::::ll:l.:og the f'lmceious of a l:l.lc.. person of the s""'"
age ancl sex.
· ~s proposal is su1:lject: to R. E. I'louJ.ton. Inc. '~proving'
the Thi:.:d pa.:t,y Adnlinistrator..
'.
Thill praposal inc:~udes Specific 1w:l'lrance :Fumting,
..
For an ....eu=ed ....d paid (:1.2/12) "o.,t:.:a~e. basis. reduce
. specific rates 17% (x .83) and aggregate factors 15\ ex .85).
* This propc9al is contingSll.t up= receipt aad review of
updat:sd eo<pe:r:i.enc:,. (paid claims. head.counts _Ii shock
ic.fo"";;'tion) . \:hru .:ruiy 31. 2000. The aggregat" factors vill
be fi:a31ized based 0>> t:his updated iZlt'o=ation.: \
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SEP 11 '00 11:14
304 347 0746
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Slop Loss PropnQ~1
Prepared For. /L.. Spence ,,- IEffective 10101/2000
Administrator: ~ Robev BarborJ IDat.:
Prospect: Cltv ofM"lamr Beach THE
loca~ol"l: Miami Beach. FL
/lEES: Med & Rx Single: 833 #EES: Den~ Sin~lfe: HARTFORD
Family: 700 Family:
To..1: 1~2 Tolal: 0
SPECIFIC COV~RAGE
Commission % . :,:,:'Oinlon:1::, ',:::,oiiu",,'i=::::::: ::::,:,:O<;UOil:3:;: .. ::;:Oiliwh:.4:" ::.: D;;U6n:S': ::.'::: Qp~O"ll:
15.0% .. .. .. ..
Contract B;asis: 12115 12115 0 0 0 0
Specific Deductible: S100,000 S200.0oo $0 SO SO 50
Specific SinQle: 38.39 17.63 0.00 0.00 0.00 0.00
Rate-s FamHv: 92.14 I 42.31 0.00 0.00 0.00 0,00
Com"",;\<!: 63.10 I 28.97 0.00 0.00 0.00 0.00
Anouat Prem. T o~l: 1.167.677.28 I 536,131.71 0.00 0.00 0.00 0,00
"'> .j'!> AGGREGATE COVERAGE 'L ~ 6'-
AGGREGATE COVERS: Mqdical X AX X
Commission "It . 15.0% :-::=::-:OD!i6Ii'1::'=:: : ,. :oii~iXi:i-: ... :-:000(;,,3::-: . :: :-:'0i.<ini;-~,=:-.': . :Oi>tibi1:S'" ':ijiiiidIl6:=:
Contract Basis: 12115 12115 12112 12112 0 0
Spedfic Deductible: 5100.000 5200.000 5100.000 '200,000 SO SO
Aggl<lgal4 Med Sino,.: 291.41 296.96 239.25 2US'
I=a~o~ Farrii-lv: 757.67 772.84 622.06 e3A.52
Composite: S505.79 ~515.77 $'15.26 $0123.48 $D.oo $0.00
Den Single: "\I.L.U "l?'l.e.S ~'OZ ,l'>\ ':'1'\0.1\
F::lmily: ;
G.:lmpo:si!e: SO.OO I so.OO $0.00 $D.OO #DIV/O! #DIV/O!
Projedad Atbd'lmenl PoU'lt: 9.359.190.72 9.543.734.88 7,684.029Ail 7,835.S20.~2 0.00 0.00
Minimum Attad'lrr.en~ Point 8.4.3.271.65 8.589.361.39 6,915.826.5:1 7.052,0~.83 #DIYIO! lfQIVIQ!
Run-in Limitation: nI. nI. nI, ola 0.00 0,00
MO. Premium R.ate(ee/mo): 2.16 2.38 2.16 2.38 0.00 0.00
Annu31 Aoo~ta Premium: 338.000.00 I S42,000.00 $38.000,00 $42.000.00
Monthly Accounting: nla I
z
-j
Our ProposaJ is has~ upon the following: Assumptions:
1. Quota is based upon the ur:derlying sctledule of benefits whicl-] produced the experience. Any ch<lnges n'ust be approved in advar.ea.
2. Retirees ara axc1uded.
3 Specifl(: Quote includ$S coverage for medi~11 RA daim~.
4.. Acgregate includes a ccnidor ot 25%.
S. Maximums; AQl;regste (POlicy Year); S1,OOO,OOO
6 ~1inimvm attachment pcint calC1Jlated using 90% of Quoted enrollment.
7. Ql.IOte ;Jssume.:l underiyin'J plan complies 'Mth HIPAA regula!ton.s.
8. The :above Adminj~trntof must administer all daims on tl".G Specific and A99r~te cov~aQe and must be on The Hartford's ~jst of approved payors
9. CONVERS10N FEE. $O.75/err.pl<lYe.J/rr'.onth, lnch.;des no oommi.s$lCl'1. not indl.lded ill above rales. (OPfIONAL PROVISION)
10. In the e...~nt a plan ~rticipant roceives health care in the state of New YoM< which a,'! subject to the Ne...... York Healthca~ Reform
Act. WljI ....-ill ~vO( :.lo:. S.13% cad debt and d'l;arity 5urct1arge under Ol,;r Step loss AgreementS.
11 A:f HarttCl'd...standal'd colley pt'Ovisions apply.
Our Propos~l IC Quali-fiod !or the following ~font covsr3g. will be 3ce.optod:
1. 'ihe StqJ loss Medical Dlsdcsura Statement must:e recei\'ed and 3ppru'Jed by 1M Jnder.vr\ter not e.liiar than 45 days, or later tha."l
15 day" prier lo:he eff!:c:jva ck~!'e_ Uflder....ritir'lg J'Tlay require further detail on certain j,xjlvidu2Js btffON ::l.CCQ?ting thO fi$o/(.
_. We l"C:5er..e lh~ light to ~caIQJr.lte the specific ar:d a;~re~ale prerr,ium and ~gcreg.H~ f:lc:orslf tr.a am;1 $Old enrcllment \/aries
by"";. 1 0% from the quoled ljlnrcllrr.itnt
3. Wa ~ese""e t~e ri'iht to recalculate the aggre"Jatoa: Jr.act'lmerH POinl 3:103 ~i"err:ium if the I:lverage cf :he l.a~: 2 months cf cldlms in the currer-t
~riey ~-eriod vanes 'Jy mare l~,j]n 10% ~rom :r,e a'.'Qf;ql1l mor'\t.~ty :.J3im fer 'J;e nr3t 10 months of ~e c\..'n~f1t pclic'l pQriod
.t. ,\ signod :lr:d :ated :;fan document 13 reqUIred .....it;.,I('1 ;.,) ,jays of:1"'Q e~c:i"e ::l~te.
5. Ar.y a.d.cit~Cl"\.3t informaticn _,oted befcw in .SO'lcial Ccr.c(lior.s".
I~Conr!jrinrui:
lU~aies re stst.;s!prcg:"lcs1s ..,eeead fo: an, OC'\1;OI"'..; c:.lims. Upeated -a,,<;:el1enca r.l3edeoj:t'l~ ;,CO ~ ,:entlrm rectors.
IThc 0:0 .jJ)' 7LC am ~e :!:cded to the 1Z'12 ~QGI"Qo;;;Ih) ~C" ..l!:% ~ the fSdcr.:] tfor 00 ddY iuJ ~nodl & ;lftrn41..;r:-:.
I
SpeciOc (Liretime).
Sl,ooO,Coo
Thi.3 proposal summJol"'J Ls v.lid for 60 daY$ Irom ths
proposal d~te. Dna only fer tho effective d.lte shQ'ollm.
H.lrtford l.ife In5urunce Companill3
200 ~CprTle-~w Street, Sim:sbury CT 06u89
1L't'ld~,....,.;!t!r:
\Phone:
Jc.'1n 600~
(Seo~.e..l'
I
Pro~l Dafa' --l
0612 :t20CO I
lfu: (0&)) a4~-2CS.a
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I'
Insuraru:e
SIVER
Mcz-~
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9400 Fourth Street North, Suite 119
SI Petersburg, Florida 33702-2525
Post Office Box 21343
SI Petersburg, Florida 33742-1343
Telepbone: (727) 577.2780
Fax: (727) 579-8692
October 27, 2000
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! iJJ ' OCT 3 1 2000 J W II
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E.mail: siver@siver.com
Website: http://www.siver.com
Mr. Clifl'Leonard
Risk Management
City of Miami Beach
1700 Convention Center Drive, Third Floor
Miami Beach, Florida 33139
Re: Future Action - Health Plan
Dear Mr. Leonard:
This letter will serve to confirm our thoughts on various options that have been
discussed relative to The City's health plan, subsequent to the Insurance Review
meeting of October 12, 2000.
Market AnalysislProposal Request
In light of the number of vendors disqualified in the recent RFP effort, it has been
suggested that a market analysis might be conducted. The scope of this project would
entail contacting those vendors which responded to the RFP, and in some cases,
vendors which did not respond. It is felt that communication at this time might
enhance future proposal activity and eliminate many of the factors that resulted in
v~ndor disqualification.
Subsequent to the market analysis, the appointed party could, at The City's direction,
solicit proposals from the market for the group health plan.
The concept of assigning an agent and/or broker of record to conduct a market
analysis and/or secure proposals on behalf of The City has some merit. It is our
understanding that, under this arrangement, the appointed party would not be subject
to the "Cone of Silence" as a formal RFP process would not apply. In this case, the
appointed party could negotiate with prospective vendors from the initial phase of the
project.
-'..1-
~,
SIvER INSURANCE CONSULTANTS
Cliff Leonard
October 27, 2000
Page 2
Humana confirms that no commissions are currently built into the rates. Therefore,
if coverage remains with Humana, The City would need to negotiate with the
appointed party on a fee for service basis, or advise Humana to adjust rates to include
commissions. Proposals obtained from alternate vendors would need to identify the
amount of commissions, ifapplicable. In either option, The City will incur additional
costs to pay for the services of an appointed agent/broker. Whether marketing
(analysis an!llor proposal solicitation) is completed through informal vendor contact
or through the formal Request for Proposal (RFP) process, Siver can provide this
role, ifpayment of these services is provided on a fee for service basis (as opposed to
commissions). Siver's fees would be subject to the current contracted rates for The
City of Miami Beach. Our company policy does not allow acceptance of
commissions.
Contribution Adjustment
Employee contributions are frequently utilized as a method of cost-sharing. The
ability to pass additional premium contributions to the employee may be limited by
prior agreements with bargaining units. In the absence of any such agreement(s),
contribution adjustments are a viable method of offsetting current and future rate
increases.
Plan Design Changes
Again, the ability to revise benefits may be subject to prior agreements with the
bargaining units. There are several areas that should be reviewed, based on the typical
benefits provided by employers today. First, by current industry standards, the
prescription drug plan is very rich. Most employers have moved to a three-tiered
approach, with emphasis on cost-sharing for the more expensive brand medications.
We rarely see a $5 co-payment on prescriptions. Even the $10/$14 prescription co-
. payments in the current Point of Service Plan (POS) are quite generous by today's
standards. Considering the percentage of claim dollars typically associated with
prescription drugs, we feel this is an area that should be addressed.
In addition, at $5 per visit, the physician co-payment in both health plans is extremely
low. We would recorrunend $10 for the HMO plan, and a higher co-payment of$15
or more for the POS plan. Increases in co-payments for hospitalization are indicated,
at minimum on the POS and PPO plans. We recommend $250-$500, or a $100 per
day.co-payment with a maximum of $500 per confinement.
These plan design changes are designed to shift the cost associated with utilization to
impact those participants who actually use the plan most. Before implementing any
./...-,-
SIVER INSURANCE CONSULTANTS
Cliff Leonard
October 27; 2000
Page 3
plan design changes, the underwriter should be contacted for verification of the
anticipated savings. Premium savings should be weighed against the impact to
participants and The City.
Cliff, we are available to discuss these and any other options at your convenience.
Please let me know if a visit or conference call is indicated.
Sincerely, .
SIVER INSURANCE CONSULTANTS
~Nl.~V
Brenda M. Sadler ~
Senior Consultant ~ Q
BMS/ky
J:\E.WB\CORR2000\CITYMIAM\MB lE34.WPD
C!TY OF MIAMI BEACH
cr,( HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
htlp:\\ci.mlami-beach. fl.us
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COMMISSION MEMORANDUM NO..9.0 1-00
TO:
Mayor Neisen O. Kasdin and
Members of the City Commission
DATE: November 29, 2000
FROM:
SUBJECT:
Jorge M. Gonzalez \
City Manager Ij~
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, REJECTING ALL PROPOSALS
RECEIVED, PURSUANT TO REQUEST FOR PROPOSALS (RFP) NO. 97-
99/00 FOR GROUP MEDICAL INSURANCE, AND FURTHER
AUTHORIZING THE ADMINISTRATION TO ISSUE A REQUEST FOR
QUALIFICATIONS (RFQ) FOR A BROKER OF RECORD FOR GROUP
MEDICAL INSURANCE.
ADMINISTRA TION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On May 10,2000, the Mayor and Commission authorized the Administration to issue a Request for
Proposals (RFP) for Group Medical Insurance. Two hundred sixty eight (268) notifications were
issued, resulting in twenty nine (29) specifications being issued. Proposals were received from the
following eight (8) firms:
HUImma
Blue Cross and Blue Shield of Florida, Inc.
Cigna Health Care
Robey Barber Insurance Services
AP A Partners, Inc.
Administrative Services, Inc.
Acordia of WV
Ascendia Healthcare
An Evaluation Committee/Group Insurance Board consisting of the following persons met on
October 12,2000 to review and discuss the proposals:
AGENDA ITEM 12.., F
DATE 11-'2~-Ou
Mary Greenwood, Executive Assistant to the City Manager/Labor Relations and Group
Insurance Board member
Drew Terpak, Fleet Management Director and Group Insurance Board member
T.C. Adderly, Human Resources Director and Group Insurance Board member
John Wheeler, CW A President and Group Insurance Board member
Robin Garber, GSAF representative and Group Insurance Board member
Buddy Dresner, Retired City employee and Group Insurance Board member
Roberto Sanchez, Health Care Consultant and resident of Miami- Dade County
Richard McKinnon AFSCME President and Group Insurance Board member (not present)
Siver Insurance Consultants were present at the Evaluation Committee meeting and provided a
Proposal Analysis Summary (Attachment A). The analysis provided the following information
regarding annual premium/cost and overall compliance with the scope of services:
VENDOR ANNUAL COMMENTS
PREMIUM/COST
Humana (Fully Insured) $ 8,706,065 Complies with Scope of
Services
Cigna (Fully Insured) ..***.**. Unable to determine
premium as proposed
Accordia AdminlWeaUh $10,420,584 Retirees excluded from
Planning (Self-Insured) Hartford Stop-Loss
Robey Barber Admin. $10,587,364 Retirees excluded from
(Self-Insured) Hartford Stop-Loss
Administrative Services $11,445,352 Complies with Scope of
(Self-Insured) Services
Humana (Self-Insured) $14,493,396 Complies with Scope of
Services
Ascendia (Self-Insured) ********* TPA Only-Unable to
determine premium as
proposed
Blue CrosslBlue Shield ********* TP A Only-Unable to
(Self-Insured) determine premium as
proposed
AP A Partners ********* TP A Only-Unable to
determine premium as
proposed
During the Consultant's proposal review, it was determined that the Hartford stop-loss quote,
submitted with the Robey-Barber proposal, for both specific and aggregate insurance excluded
retirees. When the Consultant reviewed the AcordialWealth Planning quote, it was found that
Hartford also provided the aggregate portion of their stop-loss quote. The Consultant contacted
Acordia and has confirmed that retirees are also excluded from the Hartford quote (Attachment B).
Analysis of the proposals submitted by Cigna, Blue CrossIBlue Shield, Ascendia, and AP A Partners
either excluded Retirees entirely, and/or excluded Retirees eligible for Medicare or did not provide
stop loss insurance to cover retiree medical costs. Benefits for "Domestic Partners" (optional benefit
in the RFP) were not proposed by any of the respondents. As a result of the analysis, the following
proposals were determined to be responsive to the RFP.
Insurance Co.! Administrator
Humana (Fully Insured)
Humana (Self-Funded)
Administrative Services (Self-Funded)
Annual Premium
$ 8,706,065
$14,493,396
$11,445,352
The Premium rates for both the Humana proposal and the current contract are the same. The
Analysis determined that Humana's Fully Insured proposal did not address certain service
components presently provided under the current Humana contract, specifically, the provision of an
On-Site-Representative. Since the Humana proposed plan provided fewer benefits, the current
contract was deemed more cost beneficial.
The Evaluation Committee reviewed the Proposal Analysis Summary and concurred with the
findings. The Evaluation Committee failed to select a number-one ranked or number-two ranked
proposer since all responsive proposals were deemed to be less cost effective than the current
contract with Humana for Group Medical Insurance.
The Administration was concerned with the low number of responses to the RFP issued for Fiscal
Year 99/00. In order to solicit a better response to the current RFP (Fiscal Year 00/01), the following
changes were incorporated:
I. Self-Insured and Fully Insured Plans were requested.
2. Commissions were allowed to be paid to agentlbrokers.
3. Plan design changes/multiple benefits level submissions were encouraged.
4. Due dates/deadlines were extended for questions and submissions.
Even with these changes, there were few responses to the current RFP. The low response to the RFP
may be attributed to the current condition of the Group Medical insurance market. After reviewing
the current responses to the RFP, studying industry publications and newspaper articles, contacting
other municipalities, and after consulting with Siver Insurance Consultants, the Administration finds
that the following Group Medical market conditions/ risk factors exist which effect the ability to
purchase group medical insurance at a reasonable cost:
I. Increasing premium (high cost of medical vs. decreasing profit resulting in premium
increases of 10% to 30% nationwide)
2. Limited market participation (many of the major companies have consolidated resulting
in a smaller market).
3. High utilization of benefits by plan membership resulting in higher cost/risk (fifty five
percent of plan participation involves retirees-higher utilization).
Upon completion of the RFP process, the Evaluation Committee has requested that the City's
Consultant contact all proposers to review those factors which resulted in vendor disqualification.
The Evaluation Committee believes that review with the proposers in conjunction with the
recommendations of the Consultant (Attachment C) will enhance future proposal activity.
The Consultant has recommended that the City utilize a broker of record to conduct a Market
Analysis and/or secure proposals on behalf of the City. Assigning a broker of record to conduct the
Market Analysis and/or secure proposals on behalf of the City may further enhance communications
and increase market response The Consultant has suggested that in addition to the Marketing
Analysis and the services provided by a broker of record, that the City may need to consider changes
in either premium contribution and/or plan design.
The City will be required to issue a Request for Qualifications (RFQ) in order to assign a broker of
record. The broker of record will be paid compensation in the form of commissions on insurance
purchased. The City will not allow commissions to be paid on the current Humana contract. The
broker of record will provide services as required by the City.
The Health Advisory Committee met on November 6, 2000 to review the recommendation of the
Evaluation Committee. It is the recommendation of the HAC that all proposals be rejected and the
City reissue the RFP for Group Medical Insurance at the discretion of the City Manager. In
addition, the HAC expressed concerns that the "Cone of Silence" may have discouraged market
response to the RFP by hindering communication. It is the recommendation of the HAC, that the
Mayor and Commission lift the "Cone of Silence" regarding any future RFP's for Group Medical
Insurance. The HAC plans to speak to the Mayor and Commission at the Commission meeting of
November 29, 2000.
The City Administration recommends that the Mayor and City Commission authorize the
Administration to reject all proposals received pursuant to Request for Proposals (RFP) No. 97-99/00
for Group Medical Insurance, and further authorizing the Administration to issue a Request for
Qualifications (RFQ) for a broker of record for Group Medical Insurance.
JMG:MG:cP/~
Attachment~ '0""
f:\RISK\$ALL\Cliff\Bcnefill\rfp-com\::m4.rfp