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2014-28719 Reso RESOLUTION NO. 2014-28719 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ACCEPTING THE RECOMMENDATION OF THE FINANCE AND CITYWIDE PROJECTS COMMITTEE TO ISSUE A REQUEST FOR PROPOSAL (RFP) FOR A WELLNESS PROGRAM AS A COMPONENT OF THE EMPLOYMENT BENEFITS WITH THE CITY OF MIAMI BEACH. WHEREAS, at the August 13, 2014 Citywide Projects Committee (FCWPC) meeting, the Administration presented the benefits of a wellness program (Program), as a component of the employment benefits with the City of Miami Beach, which would yield eventual savings to the health plan and provide the benefits of a healthier work force; and WHEREAS, the FCWPC considered and deliberated on the Administration's recommendation regarding the incentives associated with a wellness program, required employee participation and an eventual return on investment and recommended that Staff work with Gallagher Benefit Services, Inc., the City's third party benefits administrator, to develop the criteria for the scope of said Program and pursue the issuance of a Request for Proposals (RFP) for said Program; and WHEREAS, the Administration recommends that the City Commission approve and authorize the issuance of the RPF for a wellness program, based upon criteria to be determined by the Administration as being in the best interest of the City. 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 accept the recommendation of the Finance and Citywide Projects Committee to issue a request for proposal (RFP) for a wellness program as a component of the employment benefits with the City of Miami Beach. PASSED AND ADOPTED this 10th day of September, 2014. ATTEST: Philip Leii or Rafael . Granado, City Clerk , , �.., � APPROVED AS TO 1 = ' ORP ORATED: ORM &LANGUAGE L :I &F R EXECUTION 141 41 Date �; �' y City AttomeY COMMISSION ITEM SUMMARY Condensed Titles: A resolution of the Mayor and City Commission of the City of Miami Beach, Florida, accepting the recommendation of the Finance and Citywide Projects Committee to issue a Request for Propoposal (RFP) for a wellness program as a component of the employment benefits with the City of Miami Beach. Key Intended Outcome Supported: Ensure expenditure trends are sustainable over the long run Item Summa /Recommendation: Well-designed wellness programs, those proven to yield a return on investment(ROI), contain a variety of incentives, and eventually make participation a requirement. According to industry experts,the only proven methodology that yields a real ROI is to require participation and use health care coverage premium reductions as the primary incentive. In an environment where most employees belong to collective bargaining units,terms and conditions of employment are mandatory subjects of bargaining, therefore, a wellness program that provides incentives and requires participation is subject to negotiation. Four of the City's collective bargaining agreements expire September 30, 2015, and the fifth expires April 30, 2016. Should the City decide to pursue a wellness program that requires participation and includes a health care insurance premium reduction incentive, the matter would be a bargaining priority for the Administration. Discussions with industry experts indicate that when organizations offer such programs,five to ten percent of the already healthy employee population takes advantage of them. If the wellness program includes incentives of value to employees, maybe there is a 20 percent participation rate, which is not enough to result in an ROL There is little agreement on the timing and magnitude of the return on investment on a wellness program. There is, however, agreement that a seventy to eighty percent participation level is needed to generate a successful ROL That participation level is achievable when premium reductions are included as an incentive. Premium reductions need to be taken into consideration when calculating the ROL The Administration recently met with representatives from Engagement Health and Humana Vitality,who were the only respondents to the wellness component of the RFP issued in 2012. Based on the RFP submittals, presentations and subsequent question/answer sessions the Administration is comfortable that a wellness program based on incentives could be implemented for a costs of approximately$4.46 per employee per month; approximately$53,000 for the 978 employees who avail themselves of health coverage through the City. This was submitted to the Office of Budget and Performance Improvement as a potential enhancement for FY 2014/15. Given that it is two years since the last RFP was issued, and given that the RFP issued at that time was more comprehensive focusing on health benefits and health care administration, with wellness as a small component, Gallagher believes that we would receive substantially more proposals were the City to issue a new RFP. Further, the RFP scope would include a multi-year program that eventually results in mandatory participation by all general employees, includes health care plan premium reductions as its primary incentive, and yields a significant ROI in year three. Every indication is that such a revised RFP will yield responses from more vendors that those who responded to the original RFP. Advisory Board Recommendation: FCWPC Financial Information: Source of Amount Account Funds: 1 $53,000 540-1791-000312 2 OBPI Total Financial Impact Summary: Funds are already included in the FY 2014/15 operating budget City Clerk's Office Legislative Tracking: Sylvia Crespo-Tabak, Human Resources Director Sign-Offs: Department Director Assistant City Manager City Manager Sylvia Crespo-Taba� Kathie G. oks Jimmy L. o ales off%' - - 1 - AGENDA.OTEM 7J I ' M 1 AMI1 DATE MIAMI BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, FL 33139, www.miamibeachfl.gov COMMISSION MEMORANDUM TO: Mayor Philip Levine and City Com issioner FROM: Jimmy L. Morales, City Manager F DATE: September 10, 2014 SUBJECT: Finance and Citywide Projects Lmmittee Recommendation Regarding a Wellness Program as Component of the Employment Benefits with the City of Miami Beach Recommendation At the August 13, 2014, Finance and Citywide Projects Committee (FCWPC) meeting, staff recommended including a wellness plan as a component of the employee benefits with the City of Miami Beach for the reasons provided below and Committee members approved. Therefore, the Administration recommends adoption of the resolution accepting the FCWPC's endorsement of this program. Background Health care costs have been rising approximately eight percent per year and are becoming one of the most expensive employment benefit organizations are facing. In an attempt to control costs, if not reduce, many employers have introduced wellness programs with mixed results. Wellness program proponents and industry experts state that 75 percent of health care dollars go toward the care of chronic illnesses and that 50 percent of those costs are preventable. The critical factor, however, is engaging employees and motivating them to commit to lifestyle changes that result in better health, ergo, lower health care costs. Well-designed wellness programs, those proven to yield a return on investment (ROI), contain a variety of incentives, and eventually make participation a requirement. According to industry experts, the only proven methodology that yields a real ROI is to require participation and use health care coverage premium reductions as the primary incentive. The City contracts with Humana for wellness as part of the administration of its self-insurance plans. Humana has been providing annual biometric screenings through the City's wellness fair. In an ongoing effort to promote health and wellness, Humana will continue to provide these screenings, up to 200 participants, assuming the City remains a medical administrative services only (ASO) client of Humana. In addition, flu shots, provided only to employees covered by the City's Humana health care plans and the most popular factor of the wellness fair, are coordinated by Walgreens and billed through the Humana claims system and are reflected in the City's claims experience. The City's wellness seminars have had little employee participation, not unlike other wellness programs without incentives. We are committed to providing excellent public service and safety to all who live,work and ploy in our vibrant, tropical, historic community. Commission Memorandum Accepting Committee Recommendation Regarding City Wellness Program Page 2 of 4 September 10,2014 Collective Bargaining Implications In an environment where most employees belong to collective bargaining units, terms and conditions of employment are mandatory subjects of bargaining, therefore, a wellness program that provides incentives and requires participation is subject to negotiation. Four of the City's collective bargaining agreements expire September 30, 2015, and the fifth expires April 30, 2016. Should the City decide to pursue a wellness program that requires participation and includes a health care insurance premium reduction incentive, the matter would be a bargaining priority for the Administration. The City has 1,705 employees eligible for health care benefits. If you remove the 524 (31 percent) employees covered by the International Association of Firefighters (IAFF) and the Fraternal Order of Police (FOP), who have their own health trusts, 978 of the resulting 1,181 eligible employees avail themselves of coverage afforded through the City. Of the 1,181 employees, collective bargaining units cover 724 employees, of which 595 have insurance through a City plan. Including IAFF and FOP bargaining unit employees is an added bonus given that a wellness program's goal is to have healthier employees. However, should they not participate, because of provisions in their respective contracts regarding their premium contributions, the City would still benefit if negotiations with units representing general employees are successful. General employees represent 69 percent of employees eligible for health care coverage. Analysis Discussions with industry experts indicate that when organizations offer such programs, five to ten percent of the already healthy employee population takes advantage of them. If the wellness program includes incentives of value to employees, maybe there is a 20 percent participation rate, which is not enough to result in an ROI. Base components of wellness plans include the following: • Health Risk Assessment (HRA) • Incentive Administration • Weight Loss/Nutrition Programs • Walking • Physical Activity • Stress Reduction • Smoking Cessation • Health Coaching Additional Components may include Biometrics and On-Site Health Coaching Return on Investment (ROD There is little agreement on the timing and magnitude of the return on investment on a wellness program. There is, however, agreement that a seventy to eighty percent participation level is needed to generate a successful ROI. That participation level is achievable when premium reductions are included as an incentive. Premium reductions need to be taken into consideration when calculating the ROL Commission Memorandum Accepting Committee Recommendation Regarding City Wellness Program Page 3 of 4 September 10,2014 Program Phasing Wellness programs offer proceed through varying levels of engagement and participation: • Programs similar to those offered by the City resulting in up to 10 percent participation • Incentive programs • Incentive programs in combination with mandatory health assessments • Incentive programs, mandatory health assessments and premium reductions, resulting in participation levels as high as seventy to eighty percent Wellness Program Request for Proposals As part of the review process for the City's medical plans in FY 2012/13, the City's benefit consultant, Gallagher Benefit Services (Gallagher), issued a Request for Proposal (RFP) to health care vendors for plans with cost containment features, including wellness programs. The Administration recently met with representatives from Engagement Health and Humana Vitality, who were the only respondents to the wellness component of the RFP. Based on the RFP submittals, presentations and subsequent question/answer sessions the Administration is comfortable that a wellness program based on incentives could be implemented for a costs of approximately $4.46 per employee per month; approximately $53,000 for the 978 employees who avail themselves of health coverage through the City. This was submitted to the Office of Budget and Performance Improvement as a potential enhancement for FY 2014/15. Given that it is two years since the last RFP was issued, and given that the RFP issued at that time was more comprehensive focusing on health benefits and health care administration, with wellness as a small component, Gallagher believes that we would receive substantially more proposals were the City to issue a new RFP. Further the RFP scope would include a multi-year program that eventually results in mandatory participation by all general employees, includes health care plan premium reductions as its primary incentive, and yields a significant ROI in year three. Every indication is that such a revised RFP will yield responses from more vendors that those who responded to the original RFP. In addition, implementing the wellness program in phases will allow the City and collective bargaining units time to negotiate while orienting employees to the benefits of participation, at minimum as it relates to having a healthier lifestyle and interacting with a provider. Recommendation At the August 13, 2014, Finance and Citywide Projects Committee (FCWPC) meeting, staff recommended including a wellness plan as a component of the employee benefits with the City of Miami Beach for the reasons provided below and Committee members approved. Therefore, the Administration recommends adoption of the resolution accepting the FCWPC's endorsement of this program. Attach nts JLM/K /SC-T Commission Memorandum Accepting Committee Recommendation Regarding City Wellness Program Page 4 of 4 September 10,2014 ATTACHMENT 1 Example of A Successful Program: Lubbock Independent School District The Lubbock Independent School District (LISD) implemented its wellness plan in 2010. The LISD's wellness plan is independent from its medical plan carrier and managed by pforymWELL who tracks employee participation, manages all screenings, and interacts with employees regarding resources to help them achieve better health. To encourage employee participation, the LISD wellness plan provides incentives in the form of reductions to the employees' health care insurance premiums. • $25 premium reduction each month for completing the HRA, • $25 premium reduction each month for undergoing a biometric screening, and • $25 premium reduction each month for participating in at least three educational seminars each year provided by the wellness plan related to improving a current health condition or promoting health habits. Employees may earn a maximum premium reduction incentive of$75 per month, with an annual premium reduction totaling no more than $900. The LISD has about 3,500 employees in fifty-eight locations. Approximately 2,700 employees (77 percent) participate in the wellness program indicating that the premium reduction investment works. 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