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2013-28256 Reso RESOLUTION NO. 2013-28256 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATIONS OF THE FINANCE AND CITYWIDE PROJECTS COMMITTEE REGARDING THE CITY OF MIAMI BEACH SELF-FUNDED HEALTH CARE INSURANCE PLANS AND DIRECTING THE ADMINISTRATION TO TAKE ACTION ACCORDINGLY WHEREAS, the Finance and Citywide Projects Committee (FCWPC) discussed the Budget Advisory Committee's (BAC) recommendations regarding the City's self-funded health care insurance plans at its meeting of July 8, 2012; and WHEREAS, the FCWPC deliberated on the BAC's recommendations; and WHEREAS, the FCWPC recommended that the City continue with the plans currently offered; and WHEREAS, the FCWPC also recommended that the Administration evaluate the City's premium subsidy structure and offer a more equitable distribution of the subsidy for each of the plans; and WHEREAS, the FCWPC further recommended that the City change its benefit plan from the calendar to the fiscal year; and NOW, THEREFORE, BE IT RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, hereby accept and approve the recommendations and direct the Administration to take action accordingly. PASSED AND ADOPTED THIS 114h DAY OF .J14 2013. ATTEST: � Z _ RA AEL GR RADOI Edward L. Tobin f CITY CLERK Vice-Mayor TAAGENDA120131July 171FCWPC Recommendation City Health Plans Resolution.docx APPROVED AS TO FORM & LANGUAGE & FOR CCTION i ttorn Date V COMMISSION ITEM SUMMARY Condensed Title: A Resolution To Accept The Finance And City Wide Projects Committee's (FCWPC) Recommendations Regarding The City's Self-Insured Health Care Insurance Plans For Active Employees and Retirees. Key Intended Outcomes Supported: N/A Item Summary/Recommendation: Concerns related to the premium costs paid by the City and its enrolled employees and retirees for health care insurance has been a subject of discussion since August 2012. The subject was studied by the Budget Advisory Committee (BAC) with assistance from the Administration and the City benefits plan consultant Gallagher Benefits Services. The BAC made a series of recommendations which the FCWPC discussed at its July 8, 2013, meeting. The Administration recommends approval of the FCWPC's recommendations. Advisory Board Recommendation: The FCWPC recommended: (1) that the City continue with the same plans currently offered; (2) that the Administration should evaluate the City's premium subsidy structure and offer a more equitable distribution of the subsidy for each plan and (3) that the plan year change from the calendar to the fiscal year. Financial Information: Source of # Amount Account Approved funds 0 1 Financial Impact Summary: City Clerk's Office Legislative Tracking: Sylvia Crespo-Tabak, Human Resources Director Sign-Offs: Department Director Assistant City Manager City Manager �C SC-T 4KGB k-i LM T:\AGENDA\2013\July 17\FCWPC Recommendation City Health Plans Summary.docx AGENDA ITEM C�7 K MIA i NAIAMIBEACH City of Miami Beach, 1700 Convention Center Drive,Miami Beach, Florida 33139,www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Mayor Matti Herrera Bower and Me ers of th City Commission FROM: Jimmy L. Morales, City Manager DATE: July 17, 2013 SUBJECT: A RESOLUTION OF THE MAYO AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACC TING THE RECOMMENDATIONS OF THE FINANCE AND CITYWIDE PROJE TS COMMITTEE REGARDING THE CITY OF MIAMI BEACH SELF-INSURED HEALTH CARE INSURANCE PLANS FOR ACTIVE EMPLOYEES AND RETIREES, AND DIRECTING THE ADMINISTRATION TO TAKE ACTION ACCORDINGLY BACKGROUND At the July 8, 2013, Finance and Citywide Projects Committee (FCWPC) meeting, the Committee discussed the Budget Advisory Committee's (BAC) recommendation regarding the self-funded health care insurance plans for City of Miami Beach active employees and retirees (Attachment 1). The City offers its employees, retirees and their eligible dependents the ability to choose health insurance coverage from five self-funded plans: (1) high option health maintenance organization (HMO); (2) low option HMO; (3) point of service (POS); (4) high option preferred provider organization (PPO) and (5) low option PPO. The plans are differentiated by their levels of coverage and associated premium rates. On August 29, 2012, the issue of premium costs paid by the City and its enrolled active employees and retirees for health care insurance was discussed by the Committee of the Whole as part of the Mayor's and Commissioner's proposed budget for FY 2012/13. The Committee of the Whole referred the matter to the BAC for their review and to make recommendations regarding efficiencies and cost savings for the City's medical plans. The Administration and the City's benefit plan consultant, Gallagher Benefits Services (Gallagher) provided the BAC with alternatives to the City's current medical insurance plan options. They reviewed cost components of the current medical insurance plans to identify where they could be reduced; changes in plan benefits coverage that could reallocate cost sharing between the City and enrollees; compared the City's medical plans to other employers (both in the private and public sectors) to search for other plan efficiencies and reviewed the self-funded plan experience of other employers, based on their filings with the State. City Commission Memorandum Health Care Insurance Plans July 17,2013 Page 2 of 2 BUDGET ADVISORY COMMITTEE RECOMMENDATIONS After a deliberate study of all the material and presentations, the BAC made the following summarized recommendations: The plans should remain self-funded. • The City's three premium plans, (Premium HMO, Premium PPO and POS) should be eliminated. • The Standard HMO and Standard PPO should be replaced with the HMO and PPO plans recommended by Gallagher and included the changes recommended by the members of the BAC which reduced the employee's out of pocket expenses and resulted in cost savings to the City. • The plan year should be changed from the current calendar year plan to the fiscal year to help simplify plan budgeting and provide accurate budget projections. • Humana should continue to provide the medical plan administration, Wellness Program and the City's Employee Assistance Program (EAP); • A Medicare advantage plan should not be offered to post-65 retirees; • Symetra should continue to provide reinsurance coverage for the medical plan. In their proposal, Symetra stated that if Scenario B was chosen and they were selected, further rate relief was possible. In addition, since the current reinsurance period may be short (1/1/12 — 9/30/12), a premium reduction may be possible as well. Gallagher is exploring this and other options that mitigate the City's costs with Symetra. • Prescription plan coverage should be "carved out" of the medical plan and provided by a separate prescription benefit manager, Prescription Corporation of America (PCA). • The City should offer a high deductible plan. To comply with the Affordable Healthcare Act, this plan would provide a cost effective option to both the employee and the City. FCWPC RECOMMENDATIONS City Administration presented the BAC's recommendations to the FCWPC and after extensive discussion, left the meeting with three recommendations: 1. The City should continue with the same plans currently offered; 2. The Administration should evaluate the City's premium subsidy structure and offer a more equitable distribution of the subsidy for each of the plans; and 3. The plan year should migrate from a calendar to a fiscal year to enhance staff's ability to forecast the City's liability better during annual budget process. CONCLUSION The Administration recommends acceptance of the FCWPC recommendations. However, as a result of the numerous high priority items for the July 17, 2013, Board of City Commission (BCC) meeting agenda, the Administration has not concluded evaluating its premium subsidy structure and is not in a position to make any recommendations to the BCC at this time. Furthermore, the Administration recommends that as a result of the numerous activities City Commission Memorandum Health Care Insurance Plans July 17,2013 Page 3 of 2 associated with changing the open enrollment period to change the plan year from a calendar to the fiscal year, said change should be implemented in preparation for the FY 2014/15 year. Attach nts AV JLM/K /SC-T T:WGENDA\2013\July 17\FCWPC Recommendation City Health Plans Memo.docx ATTACHMENT 1 A t1\-,A I B E A C H City,of Milami Booth, 11700 Convention Centef Drive,Miami Becch, Florida 13 139,www miomibeachil,gov COMMITTEE MEMORANDUM TO: Finance and Citywide Projects ommifte FROM: Jimmy Morales, City Manager DATE: July 8, 2013 SUBJECT: DISCUSSION REGARDING T E RECOMMENDATIONS OF THE BUDGET ADVISORY COMMITTEE (BAC) REGARDING THE CITY OF MIAMI BEACH SELF-INSURED HEALTH CARE INSURANCE PLANS FOR ACTIVE EMPLOYEES AND RETIREES. BACKGROUND On August 29, 2012,the premiums paid by the City and its enrolled active employees and retirees for health care insurance was discussed by the Committee of the Whole as part of the Mayor's and Commissioners proposed budget for FY 2012113. On October 9,2012,the City Administration also provided members of the Commission information through Letter to Commission(LTC)#259-2012 (Attachment A)regarding the City's self-funded healthcare plans'experience from inception in 2010 through August 2012, The information for each individual plan and enrollment group included: medical plan enrollment by active employees, pre-65 and post-65 retirees; total monthly medical plan premiums; total claims paid-, medical plans' fixed costs; total medical plan expenses and the loss ratio (the percentage of claims paid and plan costs for the premium collected). In LTC#309-2012 dated November 28, 2012, (Attachment B) City Administration reported on the effects a premium rebate could have on the City's group health plans. The concept was to award participants in plans with a relatively low loss ratio a reduced premium or a partial premium refund for the plan year, The City's benefit consultant, Gallagher Benefit Services (Gallagher) advised against such a rebate primarily for two reasons: (1)enrollment in most of the City's plans istoo small to be statistically sound with few participants and high claims expenses leading to fluctuating loss ratios; and (2) such a premium rebate could violate Federal laws, such as the Americans with Disabilities Act,as we would be penalizing employees who need medical care and rewarding those who did not. City Administration reported in LTC3 069-2013 dated February 28, 2013, (Attachment C) on the anticipated impact of the Patient Protection and Affordable Care Act(PPACA)on the City's medical insurance plans. To date, the PPACA has: (1) removed lifetime dollar limits from all plans; (2) increased the dependent child coverage age to 26; (3) eliminated pre-existing conditions as a reason to deny coverage to dependent children to age 19; (4) provided for in-network preventive care coverage at no cost; (5) required Form W-2 reporting of the employers' share of health care insurance premium costs, (6) provided for simple language benefit summaries, (7) decreased Flexible Spending Account maximums; (8) imposed the Comparative Effectiveness Fee, effective FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 2 of 14 July 31, 2013,which requires employers to pay$1.00 per covered individual based on the average number of covered individuals in the previous plan year, and (9) requires employers to provide employees with information regarding the Insurance Exchanges as soon as they are available. The Committee of the Whole referred the matter to the Budget Advisory Committee(BAC)for their review and to make recommendations regarding efficiencies and cost savings. The Administration and Gallagher provided the BAC with alternatives to the City's current medical insurance plan options. They reviewed the cost components of the medical insurance plans to identify where they could be reduced. They identified options such as changes in plan benefits coverage to reallocate cost sharing between the City and enrollees; compared the City's medical plans to other employers (both in the private and public sectors) to search for other plan efficiencies and reviewed the self- funded plan experience of other employers based on their filings with the State. UPDATED PLAN STATUS The information in the October 9, 2012, LTC reflected the effect of an unusually high claims experience from September 2011, through August 2012. The claims experience from September 2011, through December 2011, was 28 percent higher than the rest of calendar year 2011, and 22 percent higher than the experience from January 2012,through August 2012. Such a high claims experience, if it continued as an ongoing trend would indicate that significant premium increases would be needed to avoid future funding shortfalls. The situation was anticipated to be further aggravated due to a delay in implementing premium increases pending the outcome of the BAC review. However, based on subsequent experience, Gallagher projected the total medical insurance plan costs for the 2013 Plan Year (January through December) at $17.8 million as of June 14, 2013, based on the prior twelve months of actual claims experience:April 2012,through March 2013. This $17.8 million cost resulted in a projected overfunding of$71,811 for the plan year, despite the fact that premiums were not increased in January 2013. None the less, even with this recent performance improvement, Gallagher estimates that an increase in premiums between ten to 13 percent will be necessary for Fiscal Year 2013/14. The table below shows the employee and City current premium rates versus those projected for FY2013/14. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8, 2013 Page 3 of 14 Active Employees Employee City Coverage 2012/2013 2013/2014 Increase 2012/2013 2013/2014 Increase Level Decrease Decrease Premium EE only $381.74 $431.37 $49.63 $381.74 $431.37 $49.63 HMO Family $945.50 $1,069.43 $123.93 $945.50 $1,069.43 $123.93 Standard EE only $134.72 $152.23 $17.51 $329.84 $372.72 $42.88 HMO Family $472.26 $533.65 $61.39 $679.60 $767.95 $88.35 Premium EE Only $763.90 $863.21 $99.31 $763.90 $863.21 $99.31 PPO Family $1,874.46 $2,118.14 $243.68 $1,874.46 $21118.14 $243.68 Standard EE only $261.70 $295.72 $34.02 $640.72 $724.01 $83.29 PPO Family $908.00 $1,026.04 $118.04 $1,306.64 $1,476.50 $169.86 EE Only $431.06 $487.10 $56.04 $431.06 $487.10 $56.04 POS Family $1,054.86 $1,191.99 $137.13 $1,054.86 $1,191.99 $137.13 Pre-65 Retirees Retiree City Coverage Increase Increase Level 2012/2013 2013/2014 Decrease 2012/2013 2013/2014 Decrease Premium EE only $378.84 $428.09 $49.25 $378.84 $428.09 $49.25 HMO Family $939.01 $1,061.08 $122.07 $939.01 $1,061.08 $122.07 Standard EE only $229.38 $259.20 $29.82 $229.38 $259.20 $29.82 HMO Family $568.54 $642.45 $73.91 $568.54 $642.45 $73.91 Premium EE Only $761.00 $859.93 $98.93 $761.00 $859.93 $98.93 PPO Family $1,867.06 $21109.78 $242.72 $1,867.06 $2,109.78 $242.72 Standard EE only $448.32 $506.60 $58.28 $448.32 $506.60 $58.28 PPO Family $1,099.93 $1,242.92 $142.99 $1,099.93 $1,242.92 $142.99 EE Only $422.16 $477.04 $54.88 $422.16 $477.06 $54.90 POS Family $1,047.48 $1,183.65 $136.17 $1,047.48 $1,183.65 $136.17 FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8, 2013 Page 4 of 14 Post-65 Retirees Retiree City Coverage 2012/2013 2013/2014 Increase 2012/2013 2013/2014 Increase Level Decrease I(Decrease) Premium EE only N/A N/A N/A N/A N/A N/A HMO Family N/A N/A N/A N/A N/A N/A Standard EE only N/A N/A N/A N/A N/A N/A HMO Family N/A N/A N/A N/A N/A N/A Premium EE only $582.11 $657.78 $75.67 $582.11 $657.78 $75.67 PPO Family $1,495.48 $1,689.89 $194.41 $1,309.76 $1,480.03 $170.27 Standard EE only $342.95 $387.53 $44.58 $342.95 $387.53 $44.58 PPO Family $881.01 $995.54 $114.53 $771.60 $871.91 $100.31 EE only $327.89 $370.52 $42.63 $327.89 $370.52 $42.63 POS Family $737.75 $833.66 $95.91 $737.75 $833.66 $95.91 BUDGET ADVISORY COMMITTEE REVIEW On October 16, 2012,the BAC met and to facilitate their discussion, Gallagher provided Committee members with the findings associated with the aforementioned. Gallagher also provided the BAC members with a synopsis of the City's five medical insurance plans, as well as the plans'history from participating in a fully insured health care plan implemented in the late 1980's, to the current self-funded plans that were implemented in 2010. The Administration also apprised the BAC of the medical plans' challenges with an aging employee population and the large number of retiree participants. The BAC concluded that an in depth review of the City's medical insurance plan offerings was required. The members unanimously approved the creation of a subcommittee of two to work with Gallagher and City staff to review and recommend options. The subcommittee examined the feasibility of: • Reverting to a fully-insured medical insurance plan; Reducing the number of medical insurance plans offered; • Restructuring medical plan benefits to parallel private sector plans; • Changing the City's premium subsidy for pre-Medicare retirees; and • Reducing the plans' administrative costs. The Administration and Gallagher met with the subcommittee on November 8, 2012. At the meeting, Gallagher and staff addressed questions related to the current plans and anticipated impact of the Affordable Care Act. At the conclusion of the meeting, the subcommittee instructed Gallagher and City staff to issue a Request for Proposal (RFP) to address: • Underutilization of"Employee Only" coverage due to high premium costs; • High claims costs; • A pharmacy benefit carrier separate from the medical plan carrier; • A comparison between fully-insured health plans and self-funded plans; FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8, 2013 Page 5 of 14 • Reduction in the number of plans offered; • The addition of a high deductible plan to provide an option with a low premium cost and high out of pocket expenses; • Feasibility of offering Medicare eligible retirees a Medicare supplement or Medicare Advantage plans; • Additional employee premium tiers, moving from the current two tier plan into either three or four premium tiers based on the dependent relationship and number of dependents; and • Reduction of the plans' administrative fees. The subcommittee met again on November 27, 2012, to review the final Scope of Services in the RFP. Upon their direction, Gallagher released the RFP on February 8, 2013, with a proposal due date of March 15, 2013. On May 7, 2013, Gallagher and City staff met with the BAC to review the results of the RFP process. Gallagher received responses from Aetna, Humana Cigna and United Healthcare for fully-insured and self-funded health care plans including prescription coverage, Medicare Advantage plans, Employee Assistance Program (EAP), Wellness and Stop Loss coverage. The following single quotes were also received: Prescription Corporation of America for prescription benefits; Engagement Health for Wellness; Ulliance for EAP and Symetra for Stop Loss. FULLY INSURED VERSUS SELF-INSURED Reviewed first were the proposals for fully-insured health plans. The proposed fully-insured plans would increase current City and employee premiums between 34 percent and 72 percent. Including a Medicare Advantage plan to retirees age 65 and over, reduced the increase in premium to between 28 percent and 59 percent. Reducing the number of plan options from five to two and increasing the employees' out of pocket expenses reduced City and employee premium increases to between 2 percent and 46 percent. Gallagher also explained that costs for fully insured plans are rarely reduced during good plan years when claims expenses are low and that premium increases are compounded over time, so a few bad claim years may severely affect premiums. Based on the increase in costs to both the City and employees, the recommendation was that the City remain self-funded. PHARMACY BENEFITS MANAGER Currently prescription benefits are provided by the City's medical plan carrier. At the recommendation of the subcommittee,the RFP included a request for a pharmacy benefit manager. Under this arrangement,the City could take advantage of their negotiated discounts with pharmacy manufactures and rebates from pharmaceutical companies. In addition, a pharmacy benefit manager provides guidance to employees on medication compliance and helps manage drug formularies. Also, they help control spending on expensive specialty drugs. Based on the cost savings to the City,the members of the BAC recommended that the City move its pharmacy benefit to a pharmacy benefit manager. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 6 of 14 MEDICARE ADVANTAGE PLANS Offering a Medicare Advantage plan for the post-65 retirees was considered. The costs for these plans are significantly lower as the plans only provide coverage for deductibles, copayments, and coinsurance. However, under current Florida statutes,the City must provide retirees with the same plan offerings it provides active employees. So,although the City could offer a Medicare Advantage Plan, it would need to continue to offer the comprehensive plans. Because the medical plan currently provided to retirees by the City coordinate their payment with Medicare (the City's plans only pay what Medicare does pay)these plans have very low loss ratios(the total premium paid is more than the total plan costs for administration and claims)and fundamentally help offset the cost of coverage for the active employees and pre-65 retirees. Offering a low cost Medicare Advantage Plan to the post-65 retirees could cause a substantial number of them to move to a lower cost plan, creating an increased loss ratio for the plans provided to active employees and retirees, negating the offset the post-65 retiree plan currently provide. For this reason,offering a Medicare Advantage Plan to post-65 retirees was not recommended. PLANS OFFERED To help reduce the City's high claims costs and the number of medical plans offered, Gallagher proposed eliminating the City's three premium plans, the Premium HMO, Premium Preferred Provider Option (PPO) and Point of Service (POS) and recommended changes to the Standard HMO that increased the employees'out of pocket expenses.They also recommended that the City offer a high deductible plan. The members of the BAC and the subcommittee reviewed the three recommended plans, compared them to the City's current Standard HMO and PPO Plans and concurred with Gallagher's recommendation with some minor changes in the employees' out of pocket expenses, A comparison of the City's current Standard HMO and Standard PPO versus the HMO and PPO plans recommended by the members of the BAC can be found in Attachment D, PLAN YEAR City staff also asked the BAC to consider changing the City's plan year from the current calendar plan year to a fiscal year plan. Changing the plan year will simplify budgeting and assist in projecting the plans' yearly financial needs more accurately. SUMMARY OF BAC RECOMMENDATIONS As a result of the May 7, 2013, presentation of the RFP results, the SAC made the following recommendations: The plans should remain self-funded. • The City's three premium plans, (Premium HMO, Premium PPO and POS) should be eliminated. The Standard HMO and Standard PPO should be replaced with the HMO and PPO plans recommended by Gallagher, including the changes recommended by the members of the BAC which increase the employee's out of pocket expenses resulting in lower annual plan costs. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8, 2013 Page 7 of 14 • The plan year should be changed from the current calendar year to the fiscal year to help simplify and provide accurate budget projections. • Humana should continue to provide the medical plan administration,Wellness Program and the City's Employee Assistance Program (EAP); • A Medicare advantage plan should not be offered to post-65 retirees; • Symetra should continue to provide reinsurance coverage for the medical plan. In their proposal, Symetra stated that if Scenario B was chosen and they were selected, further rate relief was possible. In addition, since the current reinsurance period may be short (1/1/13 — 9/30/13), a premium reduction may be possible as well. Gallagher is exploring this and other options that may mitigate the City's costs with Symetra. • Prescription plan coverage should be "carved out" of the medical plan and provided by a separate prescription benefit manager, Prescription Corporation of America (PCA). • The City should offer a high deductible plan. To comply with the Affordable Healthcare Act,which requires employers to enroll all benefit eligible employees automatically in a health care insurance plan effective January 1, 2014,this plan would provide a cost effective option to both the employee and the City. A full copy of Gallagher's presentation including their recommendations to the BAC is included in Attachment E. As noted before, the current medical plans are projected to incur at least a 10 percent, or $1.7 million cost increase for Fiscal Year 2013/14. With the implementation of the recommended changes, the City's medical plan costs would decrease 4.3 percent, or$718,794. These changes represent a total savings to the City of 14.3 percent, or$2.4 million for Fiscal Year 2013/2013 and are illustrated in the table below. Fiscal Year 2014 Projections Current Plan Design BAC Difference Self-Funded No Changes Recommended (Savings) Changes Projected Medical Claims $12,496,696 $10,777,714 $1,719,254 Projected Pharmacy Claims $4,230,904 $3,368,614 $862,291 Administration/Disease Management $714,454 $894,885 -$177,772 Reinsurance-Specific&Aggregate' $1,099,065 $1,098,092 $973 Total Estimated Self-Funded Expense $18,541,393 $16,139,305 $2,404,747 Current Funding $16,858,099 $16,858,099 $0 $ Increase/Decrease $1,683,294 -$718,794 f____$21404,747 % Increase/ Decrease 10.0% -4.3% 14.3% Gallagher's c aims projections based on proprietary discount abTe-s_a_nU5UJ-usted for the proposed pan designs. 2 Prescription Corporation of America identified as the pharmacy benefit administrator under the proposal under a transparent pass through arrangement of all pharmacy rebates and ingredient cost savings. 3 Humana continues to be the medical benefit administrator but with no rebate offset producing a slightly higher administrative fee. 4 Symetra continues to provide reinsurance coverage. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 8 of 14 ANALYSIS OF IMPACT The plan structure recommended by the BAC provides significant savings in overall premium payments. The allocation of these savings to employees is an additional policy decision, Allocating all the savings to the City will result in higher premiums for those employees who previously participated in the City's Standard HMO Plan(approximately 89%of all plan participants are in this plan)while also providing a reduction in the plan benefits. Allocating the majority of the savings to the employee will result in an increase in plan costs to the City,essentially eliminating any benefit to the City for the revised plans. A number of scenarios were evaluated by Gallagher,reflecting varied savings between the City and employee premiums. In all of these scenarios,all plan costs are projected to be$16.13 million.(See Exhibit 1 for benefits comparison.) Scenario 1 Scenario 1 compares the FY 2013114 projected costs for the City's current medical plans versus the BACs recommended plans,sharing the projected plan costs equally between the City and enrollees. Currently the City subsidy for the employee only is 75 percent and 60 percent for family coverage. In this scenario,the subsidy is reduced to 50 percent for the employee only and 50 percent for family coverage. The subsidy for retirees remains at 50%.This proposed subsidy level under this scenario results in an overall premium increase of 10.4 percent to the employee and an overall 2remiurn decrease of 15.5 percent to the City. Active Employees Employee city 2012/2013 2013/2014 201212013 201312014 Coverage Increase Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only NIA N/A. N/A N/A N/A N/A HMO Family N/A N/A N./A NIA N/A N/A Standard EE only $152-23 $310.41 $158.18 $372.72 $310.41 (.S6231) HMO* Family $533.65 $769.66 $236.01 $767,95 $769.66 $1.71 Premium PPO EE Only N/A N/A N/A N/A NIA N/A Family N/A N/A N/A NIA N/A N/A Standard PPO EE only $295-72 $271.85 i Q.,23 8 T) $724.01 $271.85 16) Family $1,026.04 $673.97 352 071 $1,476.50 $673.97 f$802 53) POS EE Only N/A N/A N/A N/A N/A N/A Family N/A N/A N/A N/A N/A N/A High EE Only N/A $180,54 N/A N/A $180.54 N/A Deductible" -Family N/A $447.64 N/A N/A $447.64 N/A *Participants in the Premium HMO, Premium PPO and PUS plans are assumed to move to the Standard HMO and Standard PPO plans, respectively. They may incur substantial savings, but for plans with significantly reduced coverage. "The High Deductible plan is a new plan and therefore has no comparable. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,.201 Page 9 of 14 Pre-65 Retirees Retiree City 2012/2013 '2013/2014 201212013 201312014. Coverage Increase Increase Current Proposed.. Current. Proposed Level (Decrease) (Decrease) Plans Plans Plans Plans Premium EE only N/A NIA. N/A N/A N/A N/A HMO Family N/A. N/A N/A N/A NIA NIA Standard EE only $262.48 $310.41 $47.93 $262.48 $310.41 $47.93 HMO. Family $650.86 $769.66 $118.86 $650,80 $769.66 $118.86 EE Only N/A NIA. NIA N/A N/A NIA Premium PPO Family N/A NIA N/A N/A- NIA N/A .. EE only $509,87 $271.85 (5236.02 $509:87 $271.85 ($238.02 :Standard PPO BOY 7 Family $1;251.27. $673.97 i� � .30g $1,25 .$673.97 1.?7 ($577.:30) EE Only N/A N/A N/A NIA NIA N/A POS. Family N/A N/A NIA N/A NIA N/A High EE Only NIA $180.54 N/A N/A $180.54 NIA Deductible** Family N/A. $447.64 N/A N/A `$447.64 NIA Post-65 Retirees Retiree City 2012/2013. 2013/2014 2012/2013 2013/2014 Coverage Increase. Current Proposed Current Proposed. Level Plane Plans (Decrease) Plans Plans (Decrease) Premium EE only N/A1/A N/A NIA NIA. NIA HMO Family N/A NIA N/A N/A N/A N/A Standard EE drily NIA NlA NIA N/A N/A N/A HMO* Family N/A: N/A N/A N/A NIA NIA. EE,only .N/A N/A N/A N/A NIA NIA Premium PPO Family NIA NIA NIA N/A NIA NIA Standard EE..o ly $387.$3 $437.91 $50.38: $367,53 .$437.91 `$50.38.) PPO* Family $995.54 $1,124.96i 5129.42 $995.54 $1,124.96 .� 129.421 EE only NIA NIA N/A NIA NIA N/A POS Family NIA N/A N/A N/A N/A N/A High EE Only N/A $138.02 N/A N/A $138.02 N/A Deductible`* Family N/A $277.86: 1 NIA N/A $277.86 N/A Participants in the Premium HMO, Premium PPO and P©S plans are assumed to move to°the Standard HMO and Standard PPO plans,'respectively. They may incur substantial'savings,but for plans with significantly reduced coverage. **The High Ded.ucti.bie plan is a new plan arid therefore has no comparable. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 10 of 14 Scenario 2 Scenario 2 compares the FY 2013114 projected casts for the City's current medical plans versus the BACs recommended plans, sharing the costs so the employee realizes a 15 percent savings and the City incurs a 3.9 percent cost increase. The premium subsidy remains as is with the 75 percent for the employee only,60 percent for family coverage and 50 percent for retirees. These subsidies result in an overall premium cost increase to the City of 3.9 percent and an overall premium decrease of 15 percent for active employees and retirees. Active Employees Employee city Coverage 2012/2013 201312014 Increase 201212013 2013/2014 Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only NIA N/A N/A NIA N/A N/A HMO* Family N/A NIA N/A N/A N/A NIA Standard EE only $152.23 $186.25 ($3402) $372,72 $434.58 $61.86 HMO Family $533.65 $553.65 ($20.00) $767.95 $985.68 $217.73 Premium EE Only N/A N/A N/A NIA N/A N/A PPO* Family N/A N/A N/A N/A N/A NIA Standard PPO EE only $295,72 $163.11 (51 32 61 $724.01 $380.59 ($343 421) Family $1,026.04 $484.80 X3541 24) $1,476.50 $863-13 ($61337) POS* EE Only N/A N/A N/A N/A N/A N/A Family NIA N/A N/A N/A N/A N/A High EE Only N/A $108.32 N/A N/A $180.54 N/A Deductible" Family NIA $322,01 N/A $447.64 N/A *Participants in the Premium HMO, Premium PPO and POS plans are assumed to move to the Standard HMO and Standard PPO plans, respectively- They may incur substantial savings, but for plans with significantly reduced coverage. **The High Deductible plan is a new plan and therefore has no comparable. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 11 of 14 Pre-65 Retirees Retiree city Coverage 2012/2013-2013/2014 Increase 201212013 201312014 Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only N/A N/A NIA NIA NIA N/A HMO* Family N/A N/A N/A N/A NIA N/A Standard EE only $262.48 $310.41 (S4793) $262.48 $310.41 ($4793) HMO Family $650.80 $769.66 ($118,86) $650.80 $769-66 ($118,86) Premium EE Only N/A N/A N/A N/A NIA N/A PPO* Family N/A N/A N/A N/A NIA NIA Standard PPO EE only $509.87 $271.85 �S238.02) $509,87 $271.85 ($23802) Family, $1,251,27 $67197 (S57730) $1,251.27 $673.97 (S57730) POS* EE Only N/A N/A N/A N/A N/A N/A Family N/A N/A N/A N/A N/A N/A High EE Only N/A $180.54 N/A N/A $180.54 NIA Deductible" Family NIA $447.64 N/A N/A $447.64 N/A Post-65 Retirees Retiree city Coverage 2012/2013 2013/2014 Increase 2012/2013 201312014 Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only N/A N/A N/A NIA N/A N/A HMO* Family NIA NIA N/A N/A N/A N/A Standard EE only NIA N/A N/A N/A N/A NIA HMO Family N/A N/A N/A N/A N/A N/A Premium EE only N/A N/A N/A N/A N/A N/A PPO* Family N/A NIA N/A N/A NIA N/A I Standard PPO EE only $387-53 $207.83 (31-19 70-i $387.53 $20T83 (S17970) Family $995.54 $539.71 (5455 814) $995.54 $539.71 ($455-63) POS* EE only N/A N/A N/A N/A NIA N/A Family NIA N/A N/A NIA N/A N/A High EE Only NIA 1 $138.02 N/A N N/A $138.02 N/A Deductible" Family] N/A 1 $277.86 N/A E N/A $277.86 NIA *Participants in the Premium HMO, Premium PPO and POS plans are assumed to move to the Standard HMO and Standard PPO plans, respectively. They may incur substantial savings, but for plans with significantly reduced coverage. **The High Deductible plan is a new plan and therefore has no comparable. Scenario 3 Scenario 3 compares the FY 2013114 projected costs for the City's current medical plans versus the FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 12 of 14 BACs recommended plans,sharing the costs so the employee realizes a 14.7 percent savings and the City incurs a 3.7 percent cost increase. The current City premium subsidy of 75 percent for the employee only and 60 percent for family coverage is revised to provide the most savings to employees enrolled in the HMO plan. In this scenario,the subsidy for the HMO plan remains the same.The premium subsidy for the PPO plan is reduced to 65 percent for the employee only and 50 percent for family coverage. These subsidies result in an overall premium cost increase to the City of 3.7 percent and an overall premium decrease of 14.7 percent for active employees and retirees. Due to the changes in both plans which increase co-payments,coinsurance and deductible,(actually adding a deductible to the HMO plan), this cost sharing helps to provide a more affordable option to the employee. Active Employees Employee city Coverage 2012/2013 201312014 Increase 2012/2013 2013/2014 Increase Level Current Proposed (Decrease] Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only N/A N/A N/A N/A N/A N/A HMO Family N/A NIA N/A N/A N/A N/A Standard EE only $152,23 $125,13 $ 27:10°l $372,72 $375.39 $2.67 HMO* Family $533-65 $475.49 (:358 6) $767.95 $900.93 $13198 EE Only N/A NIA N/A NIA N/A N/A Premium PPO Family N/A N/A N/A NIA N/A N/A Standard EE only $295.72 $262.77 (S3295) $724.01 $488,00 (S23601) PPO`* Family $1,026.04 $919-70 10 C- 3 4) $1,476.50 $1,144.93 ($331.57) POS EE Only N/A NIA N/A N/A N/A N/A Family N/A N/A N/A N/A N/A N/A High EE Only N/A $81.33 N/A N/A $244.00 N/A Deductible" Family N/A $309,07 N/A NIA $525.60 N/A Tarticipants in the Premium HMO, Premium PPO and POS plans are assumed to move to the Standard HMO and Standard PPO plans, respectively. They may incur substantial savings, but for plans with significantly reduced coverage. "The High Deductible plan is a new plan and therefore has no comparable. FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8,2013 Page 13 of 14 Pre-65 Retirees Retiree city Coverage 2012/2013 201312014 Increase 2012/2013 2013/2014 Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only NIA N/A NIA N/A N/A N/A HMO Family N/A N/A N/A N/A N/A NIA Standard EE only $262.48 $250.26 (S 12.222) $262.48 $250.26 (S 12.22) HMO* Family $650.80 $688.21 $37.41 $650.80 $688.21 $37A1 Premium PPO EE Only N/A N/A N/A N/A N/A N/A Family N/A N/A N/A N/A N/A N/A Standard EE only $509.87 $375.39 ($134 48) $509.87 $375.39 ($134,48) PPO* Family $1,25127 $1,032.31 ($218.96) $1,251.27 $1,032.31 ($218-96) POS EE Only N/A N/A N/A N/A N/A N/A Family N/A N/A N/A N/A N/A N/A High EE Only NIA $162.67 N/A N/A $162.67 N/A Deductible" Family N/A $447.33 N/A N/A $447.33 N/A Post-65 Retirees Retiree city Coverage 201212013 2013/2014 Increase 2012/2013 2013/2014 Increase Level Current Proposed (Decrease) Current Proposed (Decrease) Plans Plans Plans Plans Premium EE only NIA N/A N/A N/A N/A N/A HMO Family N/A N/A N/A N/A N/A N/A Standard EE only NIA N/A N/A N/A N/A N/A HIVIO* Family N/A N/A N/A. N/A N/A NIA Premium PPO EE only N/A N/A N/A NIA N/A N/A Family N/A N/A N/A N/A N/A N/A Standard EE only $387-53 $343.29 (544.241 $387,53 $343.29 'S k.44,24) PPO* Family $995,54 $981.41 ($14 13') $995-54 $795.62 ($19992) POS EE only N/A NIA N/A N/A N/A N/A Family NIA N/A NIA NIA N/A N/A High EE Only NIA $148.76 N/A NIA $148.76 N/A Deductible** Family NIA $344.77 NIA NIA $344.77 N/A *Participants in the Premium HMO, Premium PPO and POS plans are assumed to move to the Standard HMO and Standard PPO plans, respectively. They may incur substantial savings, but for plans with significantly reduced coverage. "The High Deductible plan is a new plan and therefore has no comparable, FCWPC Budget Advisory Committee Recommendations for City's Medical Plans July 8, 2013 Page 14 of 14 CONCLUSION After working closely with the BAC and Gallagher,the Administration believes these recommended changes help to reduce the plans' administrative fees, increase cost-sharing with employees and retirees and provide affordable health insurance plan options to the City's active employees and retirees. Because of the significant changes to the plan's coverage and increase in the employee's out of pockets expenses, the Administration recommends implementation of Scenario 3, which provides some premium relief to the employee. The Administration also recommends that the City change its plan year from the current Calendar Plan Year(January 1 through December 31)to a Fiscal Plan Year(October 1 to September 30)to match the City's fiscal year. This change will provide the Administration the opportunity to forecast the City's liability better during its annual budget process. Should the Finance and Citywide Projects Committee accept the BAC's recommendations and instruct the Administration to move forward, the Administration will present a resolution amending the proposed health plan changes at the July 17, 2013, City Commission meeting for their discussion. if approved, the Administration will begin the implementation of the plan changes with the selected medical plan carrier. This implementation will include a communication campaign for employee and retirees as well as working with the selected medical plan to make the appropriate changes. Attachments JLM/KGB/SC-T V4 r•I M +� au r•1 pq O N M �. X W O O O O O O O O O O O O O >• O N O O O M Ln v} A^ v* Ln M }' In ° Ln O O v} m v} r--I M O -Ln v} v} v? vt 00 V. N N -O u v} v} �.6 >o\ \o N 1 to v} m U AA. 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Q Q Q Q >? Q a Q SJ Q- Q Q Q a a Q a Q C Y O O a) aJ a) Cl) a) v aJ a) aJ a) w a) _a w a) _a aJ _a a) a v a CL L 0 O � z Z z z z Z a z � E z z z m m z z z z E z O o tIj r-I '4+ ;+ +� '++ '++ +r 'a-+ a-� '+� a+ i a+ +� '+J i+ �+ ++ ++ �+ i. �. 7 U U U U U U U U U U U U U U U U U U U U U U U }. � L/? 3 7 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 3 Q Z d ar -0 -a -a -a v _ -0 -0 -a -a -a -a -a -a -a m _0 _0 -a -a -0 m O Ul t N L a a a s Q VW 111 Ln O m L �cOn N V L W E L O V = � U a a L +- 3 a vi �• v c ° 4�, a s Ln LA V kD 1 4 a .Uc 4 a 4- ` `a a = ? y 0 Q `o = LZ a a mac°, W a L ¢ cLa ca v, ° a, a �. I a) f° Q' _ _ c c c Qj M -0 u vi E v v 3 c E u �- co v L " ra C -a a� s E v i pp O N X � W NO O 0 0 0 O L) Lf1 Lfl Lr1 a aJ aJ =3 3 =) O O O Q Q Q Q U U U i a, a v a, O o 0 3 Z Z Z � +r r U U U u U m Z _0 _0 d 0 � r 3 0 V 3 o� Q aQ 0 0 0 = O o 0 o >. 0 0 0 Q Q N a Q fl. a >1 Q fl. Q Q0. Y a a) aJ a) aJ a1 aJ L. .a m O -0 -0 � O 0 7 U U U U M U U U CL a a _0 -00 -aa _0 _0 _0 -0a 4-J Cl. M v V � La 0 =1 �T N L C E 0 cu V s W V 2 4-0 W CU a a a v a o V a v m oa 7z c o an Z3 vo E ..p v .X 'v^ •X C3 v z a Qj +r o. a O D m o 4 bD 0 0 c c 0 0 4. ;_. a Q. 'L 'L U U N N a, a� d d i Attachment A LTC #272-2012 Health Care Costs i i V i MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC # 259-2012 LETTER TO COMMISSION To: Mayor Matti Herrera Bower and Members of the City Commission FROM: Kathie G. Brooks, Interim City Manager � a 1'ry DATE: October 9, 2012 SUBJECT:Health Care Costs _-C C:7 This Letter to Commission is to provide an update on the City's medical plar costw, in particular, an analysis of the individual medical plan costs versus the premiums paid by both the employees and the City as requested during the Committee of the Whole on August 29, 2012. The plan premium costs for the 2012 Plan Year, January 1 through December 31, 2012, were determined using the medical plan's total costs for the twelve month period beginning September 2010 and ending August 2011, including a 10% adjustment for cost increases. These premiums are supposed to provide all funding for the medical plan. This projected premium cost was determined by actuarial assumptions based on the claims expense; fixed costs paid to the plan administrator, Humana, which include claim administration, provider network, and disease management fees; and stop-loss premiums paid to insure that the City's individual per participant costs are capped at $230,000 annually. For the 2012 Plan Year, the total premium cost was projected to be$17.9 million. For your reference, Attachment A reflects the City's self-funded medical plan experience for each of the City's self-funded years, beginning in 2010 and ending in August 2012., The Attachment reflects the medical plan enrollment by active employees, pre-65 retirees and post-65 retirees, the total monthly medical plan premium, the total claims paid, the medical plan's fixed costs, the total medical plan expense and the loss ratio (the percentage of claims paid and plan costs over the premium collected) for each individual plan, and I enrollment group. ff r The issue of the premiums paid for each pla n offered ed byth e City has been referred to the Budget Advisory Committee (BAC) for their review and recommendation. The Administration is working with our benefit plan consultant to provide the BAC with alternatives to the City's current medical plan options, including reviewing the cost components of the current medical plan to determine areas of cost reduction; changes in plan benefit coverage that share more of the plan costs with employees, therefore reducing premium costs; comparing the City's plans to other employers (both in the private and public sectors) to determine plan efficiencies; and reviewing the self-funded plan experience of other employers based on their filing with the State. In addition, for the 2012 Plan Year, the City's benefit plan consultant, Gallagher Benefit Services, has projected total medical plan costs of$19.1 million as of September 24, 2012, We are committed to providing excellent public service and safety to all who live,work,and play in our vibrant,tropical,historic community. based on the prior twelve months of actual claims experience from September 2011 through August 2012. It is important to note that this includes the impact of the claim experience from September 2011 through December 2011, which was 28% higher than the rest of Calendar year 2011, and 22% higher than the experience of January 2012 through August 2012. If this end of year large claim trend continues, there will be a significant deviation from the current plan projections and the medical plan will experience a shortfall in funding that will need to be made up through additional charge backs to departments. A review of projected claims vs. 2013 premiums will also be discussed with the BAC on October 16, 2012. Should you have any questions, or need additional information, please feel free to contact me. Attachment KGB/sr FAHUMAI$all\Sue\Letters To Commisslon\LTC Health Care Costs Final.docx i Attachment A City of Miami Beach Medical Plan Experience by Plan and Enrollee Class i City of Miami Oeach Medical Plan Experience by Plan and Enrollee Gass Average Enrollees_ Premium Rate Fixed Total Total Plan Class Period EE Famllly EE Famllly Premium Claims Costs Expense Loss Ratio Standard HMO Active 2010 505 364 $ 357.59 $ 886,31 $6,044,617 $5,718,301 $742,583 $6,460,884 106.9% 2011 485 375 $ 393.35 $ 974.94 $6,670,677 $8,664,637 $802,399 $9,467,036 141.9% 2012 YTD 496 381 $ 458.76 $1,137.07 $4,622,428 $4,031,576 $646,149 $4,677,726 101.2% Subtotal 496 373 $17,337,722 $18,414,514 $2,191,131 $20,605,645 118.8% Pre 65 Retiree 2010 48 24 $ 357.59 $ 886.31 $462,629 $362,160 $59,616 $421,777 91.2% 2011 50 36 $ 39335 $ 974.94 $652,498 $1,277,341 $79,260 $1,356,601 207.9% 2012 YTD 59 39 $ 45&76 $1,137.07 $502,621 $984,017 $71,562 $1,055,579 210.0% Subtotal 52 33 $1,617,747 $2,623,518 $210,439 $2,833,957 175.2% Premium HMO Active 2010 67 53 $ 590.59 $1,463.86 $1,400,842 $1,892,387 $102,803 $1,995,190 142.4% 2011 61 48 $ 649.65 $1,610,25 $1,402,398 $1,535,101 $101,872 $1,636,973 116.7% 2012 YTD 53 32 $ 757.68 $1,878.02 $704,411 $1,016,874 $61,466 $1,078,340 153,1% Subtotal 60 44 $3,507,652 $4,444,362:$26(5,141 $4,710,503 134.3% Pre 65 Retiree 2010 7G 42 $ 590.59 $1,463,86 $1,279,897 $1,642,260 631 $1,'!40,892 136.0% 2011 70 40 $ 649.65 $1,610,25 $1,311,197 $2,373,096 354 $2,472,450 18&6% 2012 YTD 65 35 $ 757.68 $1,878.02 $807,132 $1,042,423 567 $1,113,990 138.0% Subtotal 70 39 $3,398,226 $5,057,779 553 $5,327,33Z 156,8% Standard FPO Active 2010 33 11 $ 698.90 $1,714.73 $507,489 $202,216 $35,422 $237,638 46.8% 2011 31 17 $ 76&79 $1.,886.20 $663,579 $851,407 $43,018 $894,425 134.8% 2012 YTD 28 8 $ 896.63 $2,199,86 $302,841 $226,130 $24,4811 $250,610 82,8% i Subtotal 30 12 $1,473,909 $1,279,753 $102,921 $1,382,673 93.8% Pre 65 Retiree 2010 25 16 $ 698,90 $1,714.73 $529,943 $395,265 $34,129 $429,394 81.0% 2011 21 16 $ 768.79 $1,886,20 $554,419 $283,729 $34,505 $318,235 57.4% 2012 YTD 23 14 $ 896.63 $2,199.86 $357,337 $465,710 $26,600 $492,911 137.8% Subtotal 23 15 $1,441,699 $1,144,705 $95,234 $1,239,939 86,0% Post 65 Retiree 2010 37 33 $ 534.63 $1,155.88 $689,410 $427,301 $60,385 $487,686 70.7% 2011 42 39 $ S88.09 $1,283.58 $891,174 $527,086 $76,554 $603,640 67.7% 2012 YTO 43 43 $ 685.89 $1,489.89 $654,342 $353,083 $64,864 $417,948 63.9% Subtotal 41 38 $2,234,926 $1,307,470 $201,803 $1,509,273 67.5% Premium PPO Active 2010 19 5 $1,18G.35 $2,910.64 $441,567 $567,976 $18,808 $586,784 132.9% 2011 14 3 $1,304.99 $3,201.70 $326,670 $100,597 $13,927 $114,524 35.1% 2012YTD 8 3 $1,522.00 $3,734,12 $163,649 $99,396 $7,601 $106,997 65.4% Subtotal 13 4 $931,885 $767,968 $40,336 $808,305 86.7% Pre 65 Retiree 2010 36 11 $1,186.35 $2,910,64 $886,789 $992,858 $37,230 $1,030,088 116.2% 2011 31 8 $1,304,99 $3,201.70 $767,084 $559,523 $32,348 $591,871 77.2% 7.011 YTO 25 4 $1,522.00 $3,734.12 $380,586 $329,715 $19,223 $348,937 01,7% Subtotal 30 8 $2,034,459 $1,882,096 $88,801 $1,970,897 96.9% Post 65 Retiree 2010 110 61 $ 907,46 $1,962,05 $2,636,644 $1,694,247 $143,047 $1,837,294 69,7% 2011 102 53 $ 998,21 $2,178.82 $2,614,255 $1,411,705 $139,827 $1,551,532 59.3% 2022 YTD 97 45 $1,164.21 $2,529,03 $1,584,613 $G98,729 199,784 $798,513 50A% Subtotal 103 53 $6,835,513 $3,804,681 $382,658 $4,187,339 61,3% POS Active 2010 5 G $ 658,12 $1,632,95 $161,958 $137,926 $10,060 $147,986 91.4% 2011 2 8 $ 723,93 $1,796.25 $186,249 $273,620 $10,567 $284,187 152,6% 2012 YTD 3 6 $ 844.31 $2,094.95 $106,156 $152,254 $7,364 $159,618 150.4% Subtotal 4 7 $454,364 $563,799 $27,991 $591791 130.2% Are 65 Retlree 2010 8 5 $ 658.12 $1,632.95 $166,055 $352,731 $11,222 $363,953 219.2% 2011 9 4 $ 723,93 $1,796,25 $161,509 $308,157 $11,290 $319,446 197.8% 2012 YTD 9 4 $ 844.31 $2,094.95 $113,539 $271,685 $9t288 $280,974 247,5% Subtotal 9 4 $441,103 $932,573 $31,800 $964,373 218.6% Perot 65 Retiree 2010 12 7 $ 511.15 $1,105.17 $168,816 $113,989 $16,035 $130,023 77,0% 2011 14 8 $ 562,27 $1,227.27 $215,961 $132,215 $20,263 $152,478 70.6% 2012 YTO 14 12 $ 655.77 $1,424,54 $184,469 $129,422 $19,500 $148,922 80.7% Subtota4 13 9 $SG9,247 $375,62G $55,797 $431,424 75.8% • i i ^ City of Miami Beach ^- Medical Plan Experience by Plan and Enrollee Class Average enrollees Premium Rate Fixed Total Total Plan Class Period EE Famlliy EE Familly Premium Uatms Costs Expense Loss Ratio Total By Year Total 2020 2010 979 639 $15,376,656 $14,499,616 $1,369,971 $15,869,586 103.2% Total 2021 2011 931 653 $16,417,671 $18,298,213 $1,465,185 $19,763,398 120.4% Total 2012 YTD 2012 YTD 924 626 $10,484,125 $9,801,015 $1,129,451 $10,930,466 104.3% 2010-2012YTD Total D45 63.91 $42,278,452 $42,598,844 $3,964,607 $46,563,451 110.1% Subtotal By Plan Standard HMO 2010 553 389 $6,507,246 $6,080,461 $802,199 $6,882,660 105.8% 2011 535 410 $7,323,175 $9,941,978 $881,659 $10,823,637 147.8% 2012 YTD 555 420 $S,125,049 $5,015,593 $717,712 $5,733,305 111.9% Subtotal 548 406 $18,955,470 $21,038,032 $2,401,570 $23,439,602 123.7% Premium HMO 2010 142 95 $2,680,739 $3,534,647 $201,434 $3,736,082 139.4% 2011 131 88 $2,713,595 $3,908,197 $201,227 $4,109,423 151.4% 2012.YTD 119 67 $1,511,544 $2,059,297 $133,033 $2,192,331 145.0% Subtotal 130 83 $5,905,877 $9,502,141 $535,694 $10,037,836 145.4% Standard PPO 2010 94 60 $1,726,841 $1,024,782 $129,935 $1,154,717 66.9% 2011 94 71 $2,109,172 $1,662,222 $154,078 $1,816,300 86.1% 2012 YTD 93 55 $1,314,521 $1,044,924 $115,945 $1,160,869 88.3% Subtotal 94 65 $5,150,534 $3,731,927 $399,958 $4,131,886 80.2% Premium PPO 2010 165 77 $3,965,001 $3,255,081 $199,085 $3,454,166 87.1% 2011 146 64 $3,708,009 $2,071,825 $186,102 $2,257,928 6019% 2012 YTD 130 52 $2,128,847 $1127,839 $126,608 $1,254,447 5819% i Subtotal 147 64 $9,801,857 $6,454,745 $511,796 $6,966,541 71.1% POS 2010 25 19 $496,830 $604,645 $37,317 $641,962 129,2% 2011 25 20 $563,719 $713,992 $42,119 $756,111 134.1% 2012YTD 27 22 $404,164 $553,362 $36,153 $589,514 145.9% Subtotal 26 20 $1,464,714 1 $1,871,998 $115,589 $1,987,587 135.7% Total By Enrollee Gass Active 2010 628 440 $8,556,474 $8,518,805 $909,675 $9,428,480 110.2% 2011 593 450 $9,249,573 $11,425,361 $971,784 $12,397,145 134.0% 2012 YTD 588 430 $5,899,486 $5,526,230 $747,061 $6,273,291 106.3% Subtotal 603 440 $23,705,532 $25,470,397 $2,628,520 $28,098,917 118,5% Pre MC 110*003 2010 192 98 $3,325,313 $3,745,274 $240,829 $3,986,103 119,9% 2011 180 103 $3,446,707 $4,801,845 $256,758 $5,058,604 146.8% ! 2012 YTD 182 96 $2,161,215 $3,093,551 $199,241 $3,291,791 152.3% Subtotal 185 913 $8,933,234 $11,640,670 $695,827 $12,336,498 138.1% MC Retirees 2010 159 101 $3,494,870 $2,235,536 $219,467 $2,455,003 70.2% 2011 158 100 $3,721,391 $2,071,006 $236,643 $2,307,650 62.0% 2012 YTD 154 100 $2,423,425 $1,181,234 $184,149 $1,365,383 56,3% Subtotall 157 1001 $9,639,686 $5,487,777 $640,259 $6,128,036 63,6% II Attachment B LTC #305-2012 Health Care Premium Rebates MIAMI BEACH OFFICE OF THE CITY MANAGER NO. LTC# 309-2012 LETTER TO COMMISSION TO-, Mayor Matti Herrera Bower and Members of the City Commission r-3 FRom: Kathie G. Brooks, City Manager C= DATE: November 28, 2012 SUBJECT: Health Care Premium Rebates This Letter to the Commission is in response to members of the City Commission who'h-*ye inquired as to why those health plans with low loss ratios do not provide a premiuO-reQe to the plan participants when the premium paid for coverage exceeds the amount'6f' claim cost incurred by the plan. To determine what affects a premium rebate may have on the City's group health plan, and if a premium rebate is a viable option for the City, the Administration contacted the City's Benefit Consultant, Gallagher Benefit Services (Gallagher), for guidance. The plan actuary assigned to the City indicated that while employers have the ability to set prospective premium and contribution rates that reflect experience by plan,they have uniformly avoided retroactively rebating contribution dollars by plan based on claim experience. Gallagher is concerned that such practice would violate Federal laws, such as the Americans with Disabilities Act(ADA), by rewarding employees for not seeking or receiving medical care, yet penalizing employees with illnesses. The City, however, may prospectively incentivize good behavior, for example, by rewarding employees for having a variety of vital signs tested and then giving discounts for hitting goals for things like blood pressure, body mass index and cholesterol. As part of the Budget Advisory Committee's review of healthcare costs, the City will request that it recommend a. program to encourage healthy behaviors and target specific health actions using customized information, financial incentives and ongoing support for employees. More specific to the City, there are a few reasons the actuary has advised us a premium rebate would not be feasible. First, the enrollment in most of the plans is too small to be statistically sound. You can see a very good illustration of this when you look at the enrollment and the associated loss ratios by year and by plan provided in the attachment. As you can see, many plans have few participants and have high claim expenses. When looking at the plan's loss ratio, the percentage of claim cost paid versus plan premium collected from those enrolled, the loss ratios for the plans fluctuate from year to year-, one year having a relatively high loss ratio and a subsequent year with a much lower loss ratio. Even when the plan's enrollment is quite small, the plan's cost may be quite significant. As an example, in 2009, the Premium PPO had twenty-four (24) active employees, and experienced a claim loss ratio of nearly 130%. In 2010, there were seventeen(17)enrollees with a claim loss ratio of only 31%. The Premium PPO currently has eleven (11) active employees in the plan. Through August of 2012, the eleven (11) enrollees had averaged a We crp comnffed ho povdvnq exceNcnt puu 5--n-fce and mlesy to 08 vvho lm wale,cod pby iA au Wbi'mt morkol, hisv c communily, loss ratio of just over 60%. As this shows, with such a small enrolment, even a few moderate claims can cause huge swings in the plan's cost. We see similar results for the other plans as well, especially for the plans with lower enrollments. Even if we combine the enrolment across actives, pre-Medicare retirees and Medicare retirees, we see significant variation from year to year for any given plan. Beginning with the City's 2006 Annual Open Enrollment, the Administration has been educating employees of the premium cost saving provided by Standard HMO and PPO medical plans. This employee education has been successful in moving the majority of employees to the City's two lower cost Standard medical plans. This change in coverage not only provides the employee savings, but also the City, as the premium rates for the Standard plans are lower than those for the Premium plan. For example, for an employee enrolled in the Premium PPO plan, the City's premium subsidy is $1,874.46 versus $1,306.64 for the Standard Plan, providing a monthly savings to the City of $567.82. The 2012 monthly premium cost for the employee and City are included in Attachment B. Currently of the nine hundred seventy three (973) active employees participating in the City's medical plan, nine hundred twenty four(924), or 95%, have elected medical coverage in one of the City's two Standard plans. Additionally, the City subsidizes coverage at no less than fifty percent (50%) of premium cost for the Premium HMO, the Premium PPO and the POS plans. The City subsidy for the Standard HMO and Standard PPO is more, 75% for employee only coverage and 60% for family coverage. So conversely, employees pay no more than fifty percent (50%) of the premium of any plan. Unless a loss ratio, including the administrative fees, drops below fifty percent (50%), the City is still subsidizing the cost of the coverage. Even if experience on any one plan is consistently good, the City is still subsidizing the cost of that plan and employees are not being charged more than fifty percent(50%)of the cost of the coverage. 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W4 W4 N M N N N N N Tf0 T � N Or � L- d N W 01 d go u T � L M 01 U N Q d i Attachment C — LTC # 069-2013 Impact of the Patient Protection and Affordable Care Act to the City of Miami Beach for the 2013 Plan Year _ MIAMI BEACH C7! N. O OFFICE OF THE CITY MANAGER � L NO. LTC# 069-2013 LETTER TO COMMISS$Otj M To: Mayor Matti Herrera Bower and Members of the City Commission FROM: Kathie G: Brooks, Interim City Manager fV v r'l UI DATE: February 28, 2012 SUBJECT: Impact of the Patient Protection and Affordable Care Act to the City of Miami Beach for the 2013 Plan Year We have now entered into the third year of the Patient Protection and Affordable Care Act (PPACA). In order to comply with mandates of the PPACA, the City made the following changes to its health plans during the previous two years which, resulted in little, if any, cost impacts--to the City's medical plans. The following outlines the revised provisions of the PPACA and the impacts associated with these changes to the City's medical plans. Revised Provisions Effective in the 2011 Flan Year ' Lifetime dollar limits removed from all plans This mandate eliminated the City's $2M lifetime limits on its Standard HMO and Standard PPO plans and eliminated the $5 million lifetime limit on its Premium HMO, Premium PPO and POS plans. Dependent coverage increased from age 25 to age 26 The Administration monitored the enrollment of dependent coverage for those over age 25 during the 2011 Annual Open Enrollment period. There were no new enrollments of dependents who were age 25 during the 2011 enrollment period. There were some previously enrolled dependents who attained age 25 during the plan year whose coverage was extended to age 26. At this time, no perceptible cost impact to the plan has been determined. Elimination of pre-existing condition limitations for enrollees up to age 19 Previously, employees would have provided a HIPPA Certification indicating that their dependent had health coverage in the prior 18 months. This certification removed the pre-existing limitation for the dependent. At this time, no perceptible cost impact to the plan has been determined. No recessions, meaning an employer cannot retro-actively terminate an employee's coverage, unless there was an error in the employee's enrollment The City has not experienced a correction in an employee's enrollment that has created a retroactive termination of benefit coverage. Plan enrollments are audited i annually to ensure that the employee is enrolled in the plan option elected. We ore committed ro pioviding exceUenr public service and sclety to all who bve,week,and ploy m our vibrant, troprcol,historic communhy. I i • -Coverage for preventative care received by network physicians provided at no cost sharing by the plan participant In reviewing claims costs, we have not recognized a significant impact to the cost of preventative care to the plans. • New requirements for appeals to the plan for coverage of services not covered by the plan, including plan response deadlines and final, external review from an outside,third party were required The City is contracted with the benefits plan carrier which requires the plan carrier to act as the Plan Fiduciary, eliminating the responsibility from the City to make coverage determinations based on a participant's benefit appeal. The expenses for these required changes were the responsibility of the benefits carrier as Plan Fiduciary and not the City and thus, were absorbed by the City's current plan carrier, Humana. Effective in the 2012 Plan Year • W-2 Form reporting for the employer cost share of the employees elected health care coverage This information is included on the 2012 W-2 Forms received by all employees. Changes were made internally to the City's computer system providing for the printing of the information on the employee's W-2. The City did not incur a cost. • Distribution of a uniform summary of benefits reflecting the scope of coverage by the plan, provided in a 12-page document, written in simple language to be distributed no later than March 2013 Humana is providing the summaries of benefits to the City at no additional cost. These summaries of benefits will be electronically available to all employees in March 2013. Effective in the 2013 Plan Year • The plan year limit for Health Care Flexible Spending Accounts reduced to $2,500 from $5,000 Flexible Spending Accounts are funded solely from employee contributions; therefore, there is no cost impact to the City. i • Annual dollar limits on essential health benefits cannot be lower than $2M The City's plans did not have dollar limits on the benefits provided, (all of the plans have a limitation on the number of annual visits per year) therefore, there is no cost impact to the City. f • Comparative Effectiveness Fees for group health plans PPACA imposes a new fee on group health plans to promote research j comparing effectiveness and risks of medical treatments. The initial fee is due I by July 31, 2013. For the 2013 plan year, the fee is $1.00 multiplied by the average number of covered lives (based on enrollment for the previous year). E For the 2014 plan year, the fee increases to $2.00 per average covered life. For later years, the fee will increase in accordance with medical inflation. The fee will only apply through the 2019 plan year. Currently, the average enrollment for all active employees in the City's five medicals, including the FOP and IAFF i Health Trusts, is 1,494 lives. For 2013, the City's cost for the Comparative Effectiveness Fee will be $1,494. • FICA Tax Increase Effective January 1, 2013, the Medicare withholding increased from 1.45% to 2.35%for wages over$200k(or$250k for married couples filing jointly). • Notice of Insurance Exchanges Employers must provide notice to all employees explaining their right to purchase healthcare coverage through an exchange, their right to possible eligibility for potential government subsidies for healthcare coverage purchased through an exchange, and other features of the exchange. However, as of this date, no guidance has been provided to employers as to what information to share with their employees. The Department of Labor (DOL) has postponed distribution of this notice to employees until the notice can be coordinated with the Health and Human Services (HHS) educational efforts and the Internal Revenue Service (IRS) guidance regarding the minimum value that can be provided. The DOL expects that the timing of distribution of these notices will be in late summer or fall of 2013, coordinating with the open enrollment period for the exchanges. The Administration is currently working closely with its benefit consultants, Gallagher Benefits Services, to monitor any changes in the current mandates, to comply, implement and determine the cost impact of future mandates of the PPACA for plan year 2014 through 2018. Information regarding future impacts to the City's medical plan, including the estimated cost impact to the plans, will be provided to the members of the City Commission as soon as they are available. Should you have any questions, or need additional information, please feel free to contact me. KGB/CG/sr r I I r - I I i I FAHUMA\$all\Sue\Letters To Commission\2013\Impact of PPACA.docx I II II I Attachment Comparison of Current Standard HMO and Standard PPO Plans Versus BAC Recommended HMO and PPO Plans Comparison of Recommended Plan Design Changes HMO Annual Deductible $0.00 $100 Individual $300 Family Annual Out of Pocket Maximium $1,500 Individual $3,000 Individual deductible,co a s,coinsurance $3,000-Family $6,000 Family Primary Care Physician Office Visit $25 co- a $30 co-pay Specialist Office Visit $40 co- a $50 co-pay Deductible then Outpatient Surgery $200 co-pay employee pays 20% $100 co-pay free standing facility Advanced Imaging(PET, MRI, MRA, CAT) $200 co-pay -$200 co-pay outpatient facility $300 co-pay hospital $200 co-pay each Deductible then Inpatient Hospital day for the first $300 a day for the five days first 3 days Urgent Care Services $40 co-pay $50 co-pay Durable Medical Equipment $0.00 $30 co-pay 90 through Mail Prescription Drugs 90 days through Order mandatory Mail Order option for maintenance medications Comparison of Recommended Plan Design Changes PPO • •• -• to s • s • • • s Annual Deductible $500 Individual $500 Individual $750 Individual $1,000 Individual $1,500 Family $1,500 Famil $2,250 Famil $3,000 Family Annual Out of Pocket Maximium $3,500 Individual $7,000 Individual $5,000 Individual $10,000 Individual (deductible,copays,coinsurance) $10,500 Family $21,000 Family $15,000 Family $30,000 Family Primary Care Physician Office Visit $35 co-pay Deductible then $35 co-pay Deductible then 30% 40% Deductible then Deductible then Specialist Office Visit $35 co-pay 30% $50 co-pay 40% Deductible then Deductible then $200 co-pay and Deductible then Outpatient Surgery 20% 40% Deductible then 40% 20% $0 Physician Office X-Ray and Laboratory Testing Deductible then Deductible then Deductible then Deductible then Y ry g 20% 40% 20% 40% Outpatient Facility or hospital Urgent Care Services $35 co-pay 30%Deductible then $50 co-pay Deductible then 40% Prescription Drugs-Retail $10 for 30%after co-pay $10 for Generic Generic plus the cost 30 day supply $`}0 co-pay difference $50 co-pay Not covered Formulary Formulary between generic $60 co-pay and brand name $75 co-pay Brand Name I Brand Name Prescription Drugs-Mail Order 90 days through Mail Order option 90 through Mail Order mandatory 90 day supply $30 for 30%after co-pay $30 for Generic plus the cost Generic $120 co-pay difference $150 co-pay Not covered Formulary between generic Formulary $180 co-pay and brand name $225 co-pay Brand Name Brand Name Attachment E Gallagher Presentation to BAC Results of RFP No. 201308 �` � �g.. �� .°fit �=� • i x s x f � sa a y R'8PF FPO EI ,c s w NNE, h C s}� + y ��.�� z �� ,� �� ate' •�;�^ `� 4::•i� rc Cat c j .2 •F 'r � V c a) �' o v� cy -0 cn co � z3 © x cn � cn � C/) '� cn a- UJ 03 1 a m m V as c 3 `L- >,© O O- p Q c! 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Gomez, AICP, (Contractor), and the City of Miami Beach, Florida (City), for a period of five (5) months,with an effective starting date of July 1,2013, and an end date of November 30, 2013 (the Term). 1. Scope of Work/Services. This Agreement is for the purpose of providing consulting services regarding the Miami Beach Convention Center District Project,pursuant to Request for Qualifications No.22-11/12(the Project); all as more specifically set forth in the Scope of Services, attached as Exhibit"A" hereto. 2. Fee. In consideration of the work and/or services to be provided pursuant to this Agreement, the City agrees to pay Contractor a fee, in the total not to exceed amount of$50,000.00,which shall be paid as follows: The Fee paid to Contractor pursuant to this Agreement shall be payable in five(5)equal installments of$10,000.00 each; due and payable on the last day of each month throughout the Term. 3. Work Schedule. Contractor will be on site at his discretion and will work,on or off-site,the required hours required to provide services effectively and efficiently and within the Project timeline.To facilitate Services to be provided by Contractor, the City will provide office space and the necessary office equipment. Contractor's work and/or services shall be overseen by the City Manager. 4. Termination. This Agreement may be terminated for convenience of either party,with or without cause, by giving written notice to the other party of such termination,which shall become effective upon fifteen (15) days following receipt by the other party of the written termination notice. Upon termination in accordance with this paragraph,the Contractor shall be paid a sum equal to all payments due to him up to the date of termination; provided Contractor is satisfactorily continuing to satisfactorily perform all work and/or services up to the date of termination. Thereafter,the City shall be fully discharged from any further liabilities, duties, and terms arising out of, or by virtue of, this Agreement. 5. Indemnification/Hold Harmless. Contractor agrees to indemnify,defend,and hold harmless the City of Miami Beach and its officers, employees and agents, from and against any and all actions, claims, liabilities, losses and expenses, including but not limited to, attorney's fees, for personal economic or bodily injury, wrongful death, loss of or damage to property, at law or in equity, which may arise or be alleged to have arisen from the negligent acts or omissions or otherwrongful conduct of Contractor,and/or any and all subcontractors, employees, agents, or any other person or entity acting under Contractor's control, in connection with the Contractor's performance of the work and/or services pursuant to this Agreement. Contractor shall pay all such claims and losses and shall pay all costs and judgments which may arise from any lawsuit arising from such claims and losses, and shall pay all costs and attorney's fees expanded by the City in defense of such claims and losses, including appeals. The parties agree that one percent(1%)of the total compensation to Contractor for performance of the work and/or services under this Agreement is the specific consideration from the City to Contractor for the Contractor's agreement to indemnify and hold the City harmless, as provided herein. Contractor and the City hereby agree and acknowledge that this indemnity provision is intended to and shall survive the termination (or earlier expiration)of this Agreement. 6. Limitation of Liability. The City desires to enter into this Agreement only if in so doing the City can place a limit on City's liability for any cause of action for money damages due to an alleged breach by the City of this Agreement,so that its liability for any such breach never exceeds the sum of the compensation/fee to be paid to Contractor pursuant to this Agreement, less any amounts actually paid by the City as of the date of the alleged breach. Contractor hereby expresses his willingness to enter into this Agreement with Contractor's recovery from the City for any damage action for breach of contract to be limited to a maximum amount equal to the compensation/fee to be paid to Contractor pursuant to this Agreement, less any amounts actually paid by the City as of the date of the alleged breach. Accordingly,and notwithstanding any other term or condition of this Agreement, Contractor hereby agrees that the City shall not be liable to Contractor for damages in the amount in excess of the compensation/fee to be paid to Contractor pursuant to this Agreement, less any amounts actually paid by the City as of the date of the alleged breach, for any action or claim for breach of contract arising out of the performance or non-performance of any obligations imposed upon the City by this Agreement. Nothing contained in this subparagraph or elsewhere in this Agreement is in any way intended to be a waiver of the limitation placed upon City's liability as set forth in Section 768.28, Florida Statutes. 7. Notices. i All notices and communications in writing required or permitted hereunder may be delivered personally to the representatives of the Contractor and the City listed below or may be mailed by registered mail, postage prepaid (or airmailed if addressed to an address outside of the city of dispatch). Until changed by notice in writing, all such notices and communications shall be addressed as follows: CONTRACTOR: Jorge G. Gomez, AICP 6820 Portillo Street Coral Gables, FL 33146 (305) 666-7983 CITY: Jimmy L. Morales, City Manager City of Miami Beach Office of the City Manager 1700 Convention Center Drive Miami Beach, FL 33139 (305) 673-7000 ext. 7010 i Page 2 Notices hereunder shall be effective: If delivered personally, on delivery; if mailed to an address in the city of dispatch, on the day following the date mailed;and if mailed to an address outside the city of dispatch on the seventh day following the date mailed. 8. Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Florida, both substantive and remedial,without regard to principles of conflict of laws. The exclusive venue for any litigation arising out of this Agreement shall be Miami-Dade County, Florida,if in state court, and the U.S. District Court, Southern District of Florida, if in Federal Court. BY ENTERING INTO THIS AGREEMENT,CITY AND CONTRACTOR EXPRESSLY WAIVE ANY RIGHTS EITHER PARTY MAY HAVE TO A TRIAL BY JURY OF ANY CIVIL LITIGATION RELATED TO, OR ARISING OUT OF, THIS AGREEMENT. 9. Duty of Care/Compliance with Applicable Laws. With respect to the performance of the work and/or service contemplated herein,Contractor shall exercise that degree of skill, care, efficiency and diligence normally exercised by reasonable persons and/or recognized professionals with respect to the performance of comparable work and/or services. In its performance of the work and/or services, Contractor shall comply with all applicable laws, ordinances, and regulations of the City, Miami-Dade County,the State of Florida, and the federal government, as applicable. The Contractor agrees to adhere to and be governed by the Miami-Dade County Conflict of Interest Ordinance, as same may be amended from time to time; and by any and all ethics/standards of conducts as referenced in Chapter 2 of the City of Miami Beach Code(as may be amended from time to time). Contractor covenants that it presently has no interest and shall not acquire any interest, direct or indirectly which should conflict in any manner or degree with the performance of the work and/or services. Contractor further covenants that in the performance of work and/or services under this Agreement, no person having any such interest shall knowingly be employed by the Contractor. No member of or delegate to the Congress of the United States shall be admitted to any share or part of this Agreement or to any benefits arising there from. 10. Ownership of Documents/Patents and Copyrights. Any and all documents prepared by Contractor pursuant to this Agreement are related exclusively to the work and/or services described herein, and are intended or represented for ownership by the City. Any re-use distribution, or dissemination of same by Contractor, other than to the City, shall first be approved in writing by the City Manager,which approval, if granted at all,shall be at the City Manager's sole and absolute discretion. Any patentable and/or copyrightable result arising out of this Agreement,as well as all information, specifications, processes, data and findings, shall be made available to the City, in perpetuity,for public use. No reports,other documents,articles or devices produced in whole or in part under this Agreement Page 3 shall be the subject of any application for patent or copyright by or on behalf of the Contractor(or its employees or sub-contractors, (if any) without the prior written consent of the City Manager, which consent, if given at all, shall be at the Manager's sole and absolute discretion. 11. No Assignment/Transfer. This section intentionally left blank. 12. Liability for Sub-contractors. Contractor shall be liable for its work and/or services, responsibilities and liabilities under this Agreement and the services,responsibilities and liabilities of any sub-contractors(if any),and any other person or entity acting under the direction or control of Contractor(if any). When the term "Contractor' is used in this Agreement, it shall be deemed to include any sub-contractors (if any) and/or any other person or entity acting under the direction or control of Contractor (if any). All sub-contractors(if any)must be approved in writing by the City Manager prior to their engagement by Contractor, which approval, if granted at all, shall be at the City Manager's sole and absolute discretion. 13. Independent Contractor/No Joint Venture. THIS AGREEMENT SHALL NOT CONSTITUTE OR MAKE THE PARTIES A PARTNERSHIP OR JOINT VENTURE. FOR THE PURPOSES OF THIS AGREEMENT,THE CONTRACTOR SHALL BE DEEMED TO BE AN INDEPENDENT CONTRACTOR,AND NOT AN AGENT OR EMPLOYEE OF THE CITY, AND SHALL NOT ATTAIN ANY RIGHTS OR BENEFITS UNDER THE CIVIL SERVICE OR PENSION ORDINANCE OF THE CITY,OR ANY RIGHT GENERALLY AFFORDED CLASSIFIED OR UNCLASSIFIED EMPLOYEES INCLUDING ANNUAL AND SICK DAY ACCRUAL. FURTHER,THE CONTRACTOR SHALL NOT BE DEEMED ENTITLED TO FLORIDA WORKER'S COMPENSATION BENEFITS AS AN EMPLOYEE OF THE CITY OR ACCUMULATION OF SICK OR ANNUAL LEAVE. 14. Waiver of Breach. A party's failure to enforce any provision of this Agreement shall not be deemed a waiver of such provision or modification of this Agreement. A party's waiver of any breach of a provision of this Agreement shall not be deemed a waiver of any subsequent breach and shall not be construed to be a modification of the terms of this Agreement. 15. Severance. In the event this Agreement or a portion of this Agreement is found by a court of competent jurisdiction to be invalid,the remaining provisions shall continue to be effective unless City elects to terminate this Agreement. 16. Joint Preparation. The parties hereto acknowledge that they have sought and received whatever competent advice and counsel as was necessary for them to form a full and complete understanding of all rights and obligations herein and that the preparation of this Agreement has been a joint effort of the parties, the language has been agreed to by parties to express their mutual intent and the resulting document shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other. Page 4 17. Entire Agreement. This writing and any exhibits and/or attachments incorporated (and/or otherwise referenced for incorporation herein)embody the entire Agreement and understanding between the parties hereto, and there are no other agreements and understandings,oral or written,with reference to the subject matter hereof that are not merged herein and superseded hereby. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] Page 5 IN WITNESS WHEREOF, the parties hereto have caused these presents to be executed by the respective officials thereunto duly authorized, this date and year first above written. FOR CITY: CITY OF (MIAMI BEACH, FLORIDA ATTEST: By: Rafael E. , ;0 —Ci ...� my L. orates, City Manager .C) I NCoR C)R A TED: FOR CONTRA JORGE G. GOIMEZ, AICP WITNESS: By: CS M aZ02�) S' n u r Print Name By: l�l� �j D�� PI lVe)D Print Na Me Print Name Approved: Approved as to form & language & for xecution. Office of ud et and Performance Improvem t Atto q6tel Hu a Resources Department Page 6 EXHIBIT i6A99 CITY OF MIAMI BEACH SCOPE OF SERVICES FOR JORGE G. GOMEZ, AICP FOR CONSULTING SERVICES FOR THE MIAMI BEACH CONVENTION CENTER DISTRICT PROJECT (RFQ No.22-11112) 1. SCOPE OF WORK 1. Assist the City Manager with work related to the Project, including preparation of City Commission, City Commission Committee and other City Board, committee and agency reports, and such other technical documents as deemed necessary by the City Manager. 2. Assist the City Manager with presentations to policy makers, community groups and regulatory agencies. 3. Assist the City Manager in negotiations with the selected development team for the Project, including finalization of the Project Master Plan and final Project agreements. 11. METHODOLOGY 1. The City will assist the Contractor by providing office space and the necessary office equipment. 2. Contractor will be on site at his discretion and will work, on or off-site, the required hours to provide services effectively and efficiently and within the Project timeline. 3. Contractor will assist the City in the selection process of the Project development team, and play a leading role, on behalf of the Office of the City Manager in negotiating related Project agreements. 111. TIMELINE AND PAYMENT SCHEDULE Payment for Services, in the total amount of$50,000.00, for the Term of this Agreement, shall be payable in five (5)equal installments of$10,000.00 each; payable on the last day of each month throughout the Term. 110 TOTAL COMPENSATION: $50,000.00