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2009-27138 ResoRESOLUTION NO. 2009-27138 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY TO ENTER INTO AN AGREEMENT WITH EYEMED VISION CARE FOR THE ADMINISTRATION OF THE CITY'S GROUP VISION PLAN FOR A FOUR YEAR PERIOD, COMMENCING ON JANUARY 1, 2010, AND ENDING ON DECEMBER 31, 2014, FOR A NOT TO EXCEED FEE OF $12,000 ANNUALLY, PURSUANT TO THE REQUEST FOR PROPOSALS ISSUED BY GALLAGHER BENEFITS SERVICES, THE CITY'S CONSULTANT OF RECORD. WHEREAS, the City currently provides employees and retirees with vision benefits through the group health (medical) plan; and WHEREAS, vision coverage provided to employees and retirees varies based on the medical plan the individual has elected; and WHEREAS, to provide the City's employees and retirees with value added benefit programs, the Administration worked with Gallagher Benefit Services (Gallagher), to issue a Request for Proposals (RFP) for the administration of a group vision benefit; and WHEREAS, the purpose of the RFP was to review the options available while enhancing the coverage provided to the employees and retirees under the medical plan, and controlling plan costs; and WHEREAS, vision benefits will continue to be provided as a part of the medical plan benefit and will only be available to participants enrolled in any of the City's medical plans; and WHEREAS, premium costs will be incorporated into the employee's medical plan contribution; and WHEREAS, after evaluating the respondents, Gallagher recommended the management of the City's vision benefit be awarded to EyeMed Vision Care based on the value of the benefit provided and the cost; and WHEREAS, the City Manager has reviewed the recommendation of Gallagher and recommends accepting the recommendation of Gallagher, and award the administration of the City's vision benefit to EyeMed Vision Care. 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 hereby authorize the City to enter into an agreement with EyeMed Vision Care for the administration of the City's Group Vision Plan for a four year period, commencing on January 1, 2010, and ending on December 31, 2014, for a not to exceed fee of $12,000 annually, pursuant to request for proposals issued by Gallagher Benefits Services, the City's consultant of record. PASSED and ADOPTED this 15th day of July , 2009. MA O Mattie Herrera Bower A EST: C~~C~-~ CITY CLERK Robert Parcher APPROVED AS TO FORM ~ LANGUAGE ~ ~ EXECUTION 7 ,y o9 D to T:\AGENDA\2009\July 15\Regular\Vision Benefit Resolution.doc COMMISSION ITEM SUMMARY Condensed Title: A Resolution authorizing the City to enter into an agreement with EyeMed Vision Care for the administration of the City's group vision benefit. Intended Outcome • Attract and maintain a quality workforce. • Ensure ex enditure trends are sustainable over the Ion term. Supporting Data (Surveys, Environmental Scan, etc.): I. 2007 Employee Satisfaction Survey • 68.8% of employee surveyed participate in medical benefits. • 63.5% of employee surveyed ranked medical benefits as the most important benefit the City could Offer. II. 2007 Internal Support Functions Survey • Overall satisfaction of benefits administration was rated 75.6% as excellent or good combined. III. 2008 Environmental Scan • Motivated and Skilled Workforce turnover rates = 13.86% for 2007 vs. 10.7% for 2006. Issue: Should the City enter into an agreement for a vision benefit plan for its employees and retirees through EyeMed Vision Care? Item Summa /Recommendation: The City currently provides vision coverage through its group health (medical) plan with Humana. In the Administration's efforts to provide the City's employees and retirees with cost effective value added benefit programs and increased employee satisfaction, along with reducing plan costs, the City requested that Gallagher Benefits Services issue an RFP for the City vision benefits. The purpose of the RFP was to review the options available to the City while enhancing the coverage provided to the employees and retirees by the vision benefit of the group medical plan. At the direction of the City Administration, Gallagher Benefits Services issued their RFP No. 10-2589 on May 8, 2009, requesting proposals for the administration of the City's group vision benefit. As a result of this RFP, Gallagher Benefits Services and the City's Group Insurance Board has recommended the City's current vision benefit through Humana not be renewed and the City enter into an agreement with EyeMed Vision Care to provide vision benefits for the employees and retirees of the City enrolled in the City's medical Ian. Advisory Board Recommendation: Financial Information: Source of Amount Account Funds: 1 $8,160 (not to exceed) 560-1793-000322 Administrative fees for Active Em to ees 2 $3,840 (not to exceed) 560-1793-000322 Administrative fees for Retirees 3 OBPI Total $12,000 (not to exceed) Financial Impact Summary: The proposed administrative fees are included in the premium to be charged to each employee and retiree enrolled in the City's medical plan. Although the proposed administrative fees equate to an annual cost increase of approximately $12,000 to the City, the City may realize a cost savings rather than the estimated ex ense as the month) remiums ma ne ate a onion of or all of the ex ense. Ci Clerk's Office Le islative Trackin Sue Radig, Human Resources Administrator I Si n-Offs: Department Director Assistant City'Manager' City Manager _. Ramiro Inguanzo, Human Resources Director Y t ~'~v~ ~4GEMDAITEM ~ I~-~ SATE m MIAMIBEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Mayor Matti Herrera Bower and Members of the City Commission .%, FROM: Jorge M. Gonzalez, City Manager 1 DATE: July 15, 2009 ~~ SUBIECT: A RESOLUTION OF THE MAYOR AND ~ COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, AUTHORIZING THE CITY TO ENTER INTO AN AGREEMENT WITH EYEMED VISION CARE FOR THE ADMINISTRATION OF THE CITY'S GROUP VISION PLAN FOR A FOUR YEAR PERIOD, WITH A NOT TO EXCEED FEE OF 512,000 ANNUALLY, PURSUANT TO THE REQUEST FOR PROPOSALS ISSUED BY GALLAGHER BENEFITS SERVICES, THE CITY'S CONSULTANT OF RECORD. ADMINISTRATION RECOMMENDATION Adopt the Resolution. BACKGROUND/ANALYSIS The City currently provides employees and retirees with vision benefits through its group health (medical) plan with Humana. The vision coverage provided to employees and retirees varies based on the medical plan the individual has elected. Participants who elect coverage under the City's Health Maintenance Organization (HMO) plans are provided routine vision benefits through a local physician group and apre-determined benefit for the purchase of eyewearthrough the network provider. Those participants enrolled in the City's Preferred Provider Organization (PPO) or Point of Services (POS) plans receive routine vision benefits from any one of the plan's network optometrist or ophthalmologists and are provided apre-determined benefit for the purchase of eyewear through any provider, including providers who are not included in the plan network. The Administration, in its efforts to provide the City's employees and retirees with value added benefit programs, worked with Gallagher Benefit Services (Gallagher), the City's consultant of record, to issue a Request for Proposals (RFP) for the administration of a group vision benefit. The purpose of the RFP was to review the options available while enhancing the coverage provided to the employees and retirees under the medical plan and controlling plan costs. Vision benefits will continue to be provided as a part of the medical plan benefit and will only be available to participants enrolled in any of the City's medical plans. In exploring this change in coverage, the Administration understood there may be an additional charge or premium but would incorporate any additional costs into the group health insurance premium. Juiy 15, 2049 City Commission Meeting Group Vision Administrator Page 2 of 3 On May 8, 2009, Gallagher issued RFP No 10-2589 on behalf of the City. Responses were received from the following eight (8) plans: • Advantica Eyecare • Aetna Health Care • Ameritas Group • EyeMed Vision Care • Humana • MetLife • United Healthcare • VSP These plans submitted both fully-insured and self-insured proposals which included routine annual vision examinations; coverage for eyewear at a flat amount, a discount, or a combination of flat amount and discount; coverage for ancillary products such as UV coatings, tinting, tri-focal and progressive lenses; and contact lenses and the necessary care solutions. The plans provide for one (1) annual eye examination and purchase of eyewear for each plan participant and enrolled family member. All plans provided nationwide provider networks which included private optometrist and ophthalmologist offices and nationwide vision centers. Of the eight (8) respondents only (3) provided Gallagher with their "best and final" self- insured proposal. The following chart indicates the proposed monthly administrative fee for each vendor per participant and the rate guarantee term: Plan Administrator Monthly Fee Per Em to ee/Retiree Rate Guarantee Advantica E ecare $1.10 Four 4 ears E eMed Vision Care $.54 Four 4 ears VSP $1.12 Two 2 ears All three (3) plan vendors require both routine examination and the purchase of eyewear to be made from providers in their networks. All three (3) networks include both private optometrist and ophthalmologist offices and nationwide vision centers. In a review of the three (3) provider networks, it was determined that the EyeMed Vision Care network provided a more robust network than the other two (2), as well as the lowest monthly administrative costs to the City. After thoroughly evaluating the respondents, Gallagher Benefit Services recommends the management of the City's vision benefit be awarded to EyeMed Vision Care (EyeMed) (Attachment A) based on the following supporting factors: • EyeMed proposed the lowest administrative service fee • The EyeMed plan provides both comprehensive examinations and hardware benefits for frames and lenses • EyeMed provides the largest provider network in both South Florida and nationwide Juiy 15, 2009 City Commission Meeting Group Vision Administrator Page 3 of 3 FINANCIAL IMPACT The self-funded vision benefit proposed by EyeMed Vision Care includes projected monthly premiums of $8.83 for employee only and $22.51 for family coverage. This projected premium will be incorporated into the employee's medical plan premium, creating an annual total premium cost to the employees and retirees of approximately $228,600. This projected premium payment is based on the City's current medical plan enrollment of 1,072 active employees and 578 retirees. The City will incur a monthly administrative fee of $.54 per employee per month, for a total annual administrative cost of approximately $10,692. As the monthly administrative fee is included in the monthly premium costs, the City is likely to realize a cost savings rather than the estimated $12,000 annual expense. CONCLUSION The Administration has reviewed the recommendations of Gallagher Benefits Services. Based on the improvement in the benefits provided to the City's employees and retirees, the Administration recommends awarding the administration of the City's self-insured group vision plan to EyeMed Vision Care. Attachment A Gallagher Benefits Services Letter of Recommendation "'!~~ Gallagher Benefit Services, Inc.-- - ------------- June 30, 2009 A Subsidiary of Arthur J. Gallagher & Co. Ramiro Inguanzo, Human Resources Director City of Miami Beach 1700 Convention Center Drive Miami Beach, Florida 33139 Re: Employee Benefits Recommendations Dear Mr. Inguanzo, At the City of Miami Beach's request, we released Request for Proposals (RFP's) for all City employee benefits including Medical, Dental, Life, Accidental Death and Dismemberment, Voluntary and Dependent Life, Statutory Accidental Death and Dismemberment, Employee Assistance Program, Vision, Short and Long Term Disability. A vendor list has been provided illustrating what carriers were supplied the RFP's and those that responded by product (See exhibit A). Recommendations will be discussed briefly below. Medical proposals were requested for claims administration and network access. We requested both duplication of existing benefits and alternate benefit schedules. Responses were received from the incumbent carrier Humana, AvMed, Cigna Healthcare, Aetna United and Blue Cross & Blue Shield of Florida. We recommend renewal with Humana based on the following: 1) Humana offered the lowest administrative fee's to the City including a reduction of current costs 2) Retaining Humana will cause no disruption to member provider relations 3) Physician and hospital reimbursement analysis revealed Humana's strong South Florida discounts Life and Accidental Death and Dismemberment Request for Proposal resulted in thirteen responses including the incumbent carrier, Standard. Short listing and continued negotiations results in the recommendation of Hartford Life for the Basic Life and AD&D, Dependent Life, Retiree Life and Voluntary Life. Reasons are as follows: 1) Lowest Basic Life, AD&D and Retiree cost to City and employees 2) Thirty six month rate guarantee Statutory Accidental Death and Dismemberment Benefit Request for Proposal resulted in two responses, the incumbent Hartford Life and Ace USA. We recommend renewal with Hartford. 1) Hartford offered lowest cost including a 25% reduction in current annual premium 2) No change to current benefits 3) Three year rate guarantee One Boca Place 2255 Glades Road, Suite 400 E Boca Raton, FL 33431 561.995.6706 Fax 561.995.6708 www.ajg.com ~> ' 1~, ;~ Currently Dental coverage (Indemnity/PPO and DMO) are purchased by the City on a fully insured basis for the DMO and self insured for the Indemnity and PPO. In addition to the incumbent response from Comp Benefits, eight addition proposals were received. We recommend awarding MetLife the fully insured DMO plan and self funding the Indemnity/PPO dental coverage. Factors supporting this recommendation are as follows: DMO 1) MetLife offered lowest DMO cost (16% reduction annually) while improving benefits to members 2) Large network of general dentists, Periodontists, Endodontic and Orthodontists. 3) Two year rate guarantee. Indemnity/PPO l) Lowest annual administrative fee's 2) Improved benefits to participating members 3) Thirty six month rate guarantee The Employee Assistance Program is currently provided by Ceridian. Six additional proposals were received and reviewed for cost, benefits provided and Medical Plan integration opportunities resulting from the recent Federal Benefits Law changes impacting Mental Health Parity. Humana is the recommended vendor for the following reasons: 1) Improved benefits via increased face to face visits 2) Low cost relative to benefits provided 3) Medical plan savings opportunity as a result of common vendor coordination The Vision benefits Request for Proposal resulted in eight responses. Similar to the Dental benefits, both fully insured and self insured proposals were received. We are again recommending this benefit be self funded based on the low claims risk and trend predictability. EyeMed is the recommended vendor based upon: 1) Lowest administrative services fee 2) Comprehensive exam and hardware benefits 3) Large tri-county provider network Short and Long Term Disability Benefits RFP's responses were evaluated by vendors offering both coverage's. For continuity of coverage and a seamless transition from short term to long term disability, the objective is to provide continuity of coverage and a seamless transition from short to long term disability with no disruption due to differences in disability definition, medical evaluation and benefits offered. Unum is the recommended carrier. 1) Minimal participation requirement and no termination feature 2) Low overall cost 3) Family Medical Leave Act administration for all employees 4) Twenty four month rate guarantee for Long Term Disability and FMLA Administration ~:~. " ~ s We appreciate the opportunity to work with the City and staff and would be happy to answer any questions you may have. Sincerely, Richard G. Schell Area Vice Preside