99-23241 RESO
RESOLUTION NO. 99-23241
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, APPROVING
HUMANA, AS THE NUMBER-ONE RANKED PROPOSER,
PURSUANT TO RFP NO. 24-98/99, TO PROVIDE GROUP
MEDICAL INSURANCE FOR EMPLOYEES AND RETIREES;
APPROVING AMERICAN DENTAL PLAN, AS THE
NUMBER-ONE RANKED PROPOSER, PURSUANT TO RFP
NO. 24-98/99, TO PROVIDE GROUP DENTAL INSURANCE
FOR EMPLOYEES AND RETIREES; AND APPROVING
HARTFORD LIFE AS THE NUMBER-ONE RANKED
PROPOSER, PURSUANT TO RFP NO. 24-98/99, TO PROVIDE
GROUP BASIC/SUPPLEMENTAL LIFE INSURANCE AND
ACCIDENTAL DEATH & DISMEMBERMENT INSURANCE
FOR EMPLOYEES AND RETIREES.
WHEREAS, on May 12, 1999, pursuant to RFP No. 24-98/99, the Mayor and City Commission
authorized the Administration to enter into negotiations with the number-one ranked proposers, Humana,
American Dental Plan, and Hartford Life, to provide Group Medical Insurance, Group Dental Insurance,
and Group Basic/Supplemental Life and Accidental Death & Dismemberment Insurance respectively
for Employees and Retirees; and,
WHEREAS, the Administration met with the number-one ranked proposers to negotiate
additional considerations for the Benefit Plans; and,
WHEREAS, the Administration was able to negotiate additional considerations from
Hartford Life and American Dental Plan and was satisfied with the results of negotiations; and,
WHEREAS, the Administration, while disappointed with the proposal from Humana,
recognizes that the proposal is the City's only viable option at this time; and,
WHEREAS, the Group Insurance Board and the Health Advisory Committee met with the
Administration and have concurred with its recommendations; and,
WHEREAS, the Administration recommends that the Mayor and City Commission approve
the award to Humana, to provide Group Medical Insurance; American Dental Plan, to provide Group
Dental Insurance; and Hartford Life, to provide Group Basic/Supplemental Life and Accidental
Death & Dismemberment Insurance, as proposed; and,
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, the Mayor and City
Commission hereby approve Humana as the number-one ranked proposer, pursuant to RFP No. 24-
98/99, to provide Group Medical Insurance for employees and retirees, approve American Dental
Plan, as the number-one ranked proposer, pursuant to RFP No, 24-98/99, to provide the Group
Medical Insurance for employees and retirees; approve American Dental Plan, as the number-one
ranked proposer, pursuant to RFP No, 24-98/99, to provide the Group Dental Insurance for
Employees and Retirees; and approve Hartford Life, as the number-one ranked proposer, pursuant
to RFP No, 24-98/99, to provide the Group Basic/Supplemental Life Insurance and Accidental
Death & Dismemberment Insurance for employees and retirees,
day of
July
,1999.
PASSED AND ADOPTED this 7 th
Attest:
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Robert Parcher, City Clerk
Neise~din, Mayor
APPROVED AS TO
FORM & LANGUAGE
& FOR EXECUTION
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Date
~ITY OF MIAMI BEACH
ITV HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
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TO:
FROM:
SUBJECT:
COMMISSION MEMORANDUM NO. 5() {- 9 q
Mayor Neisen O. Kasdin and
Members of the City Co mission
DATE: July 7,1999
Sergio Rodriguez
City Manager
A RESOL I N OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING HUMANA, AS THE
NUMBER-ONE RANKED PROPOSER, PURSUANT TO RFP NO. 24-98/99,
TO PROVIDE GROUP MEDICAL INSURANCE FOR EMPLOYEES AND
RETIREES; APPROVING AMERICAN DENTAL PLAN, AS THE NUMBER-
ONE RANKED PROPOSER, PURSUANT TO RFP NO. 24-98/99, TO
PROVIDE GROUP DENT AL INSURANCE FOR EMPLOYEES AND
RETIREES; AND APPROVING HARTFORD LIFE AS THE NUMBER-ONE
RANKED PROPOSER, PURSUANT TO RFP NO. 24-98/99, TO PROVIDE
GROUP BASIC/SUPPLEMENTAL/LIFE INSURANCE AND ACCIDENTAL
DEATH & DISMEMBERMENT INSURANCE FOR EMPLOYEES AND
RETIREES.
ADMINISTRA TION RECOMMENDATION
Adopt the Resolution,
CONTRACT AMOUNT AND FUNDING
Group Medical
$6,585,493,00 (Annual Estimate) Premium contributions will be split 50/50 between
employee/retiree deductions and City contributions. City contribution
funding is available from Budget Accounts of various departments, subject
to OMB approval. This estimate is based on the existing number of
employees and retirees enrolled in each of the plans. The estimated
premium represents an annual increase of $543,000 for the City and a like
amount for plan members.
AGENDA ITEM
RtG
DATE~
Group Dental
$509,000.00 (Annual Estimate) Premium contributions will be split 50/50 between
employee/retiree deductions and City contributions, City contribution
funding is available from Budget Accounts of various departments, subject
to OMB approval. This estimate is based on the existing number of
employees and retirees enrolled in the current DHMO and Indemnity plans.
The estimated premium represents an annual increase of$26,055 for the City
and a like amount for plan members.
Group Basic/Supplemental Life/Accidental Death & Dismemberment Insurance
$256,292,00 (Annual Estimate) Premiums are paid one hundred percent by the City.
Funding is available from Budget Accounts of various departments, subject
to OMB approval. This estimate is based on current enrollment information.
The estimated premium represents an annual decrease of $35,249,00 in City
costs.
BACKGROUND
On May 12, 1999, the Administration was authorized to enter into negotiations with the number-one
ranked proposers, Humana, American Dental Plan, and Hartford Life for RFP Number 24-98/99
for the Group Medical Insurance, Group Dental Insurance, and Group Basic/Supplemental Life
Insurance and Accidental Death & Dismemberment Insurance, respectively.
ANAL YSIS
The Administration met with the number-one ranked proposers to negotiate additional considerations
for the Benefits Plans.
Hartford Life agreed to the following additional considerations for Basic/Supplemental Life and
Accidental Death & Dismemberment Insurance:
1. To reduce the AD&D rate to .03/100 rather than .033/100,
2. To extend their three-year premium guarantee for a fourth and fifth year if the loss ratio
is at 76% or better.
American Dental Plan agreed to the following additional considerations for Group Dental Insurance:
1. DHMO Prestige rate Guarantee until October I, 2002.
2. Beltone Hearing Discounts added to the enhancement package.
3. Employees, retirees and dependents may participate in any American Dental DHMO
network within Florida. Previously, network accessibility was limited to Miami-Dade,
Broward, and Palm Beach counties.
4. Pre-authorization is not required from the Primary Dentist for in-network Specialty Care
Services (orthodontics/endodontics/oral surgery).
The negotiation process resulted in increased Group Dental Benefits with an acceptable premium
increase, and a reduced premium for Group Life Insurance at the current benefit level.
Humana offered a reduction in premium if the City was willing to reduce the current benefit level.
The proposed annual premium was offered for one year. Humana would not provide any premium
guarantees for future years. The program proposed by Hwnana provides benefits at the current level
with a substantial increase in premium (i.e" 18.31 % for PPO and POS plans, and 21.7 % for HMO
plan). Additional analysis by the Administration indicates that the premium increases similar to
those proposed by Humana are common in both the private and public sector.
When the City issued the RFP on January 21, 1999, Hwnana, Foundation Health, and HIP were the
only insurance companies to respond, An Evaluation Committee met on March 9, 1999 to review
these responses and found that Humana was the only company offering a program that would
maintain the current level of benefits for active employees and retirees. Foundation Health offered
an HMO plan, and HIP offered an HMO plan excluding any type of Medicare supplements. The
Evaluation Committee expressed concern that there were so few responses to the Group Medical
portion of the RFP. With approval from the Legal Department, it was decided that the City's
consultant could contact certain insurance companies to inquire about their failure to submit
proposals. Further action on the Group Medical Plan was deferred until these reasons could be
determined.
On March 22, 1999, the Evaluation Committee re-convened, at which time the Meadowbrook Villari
Agency provided a report illustrating that these reasons were as follows: the inability of the
insurance carriers to communicate directly with City representatives for answers to questions (Cone
of Silence), the length of the RFP, the short time frame involved, and Humana's competitive rates.
The Administration met with the Group Insurance Board on June 1, 1999 and the Health Advisory
Committee on June 17, 1999 to review the recommendations for Group Medical Insurance, Group
Dental Insurance, and Basic/Supplemental Life and Accidental Death & Dismemberment Insurance.
The Group Insurance Board is comprised of the presidents of the American Federation of State,
County and Municipal Employees (AFSCME), the Communications Workers of America (CW A),
the Government Supervisors Association of Florida (GSA), a retiree representative and three
Administration representatives. The Health Advisory Committee is a fourteen-member City body
comprised of individuals from the community who are involved with the health industry.
The Administration believes that there is insufficient time to issue another RFP and implement a
new Group Medical Insurance Plan by October 1, 1999. Implementation of a new plan on October
1, 1999 would not allow sufficient time for the City to properly analyze all possible fully insured and
self-insured options. A complete analysis ofthe current Group Medical Insurance Plan, including
plan design and insured plans vs. self-insured plans, is necessary prior to the issuance of new RFP.
Analysis of the current Group Medical Insurance Plan, including plan design and insured plans vs.
self-insured plans, should be conducted by a qualified Benefits Consultant. Such expertise will be
promptly identified.
Both the Group Insurance Board and Health Advisory Committee agree with the Administration's
belief that there is insufficient time to issue another RFP for Group Medical Insurance and
implement a new plan by October 1, 1999. The Group Insurance Board and Health Advisory
Committee also agree that analysis of the current Group Medical Insurance Plan, including plan
design and insured plans vs. self-insured plans, should be conducted by a qualified Benefits
Consultant prior to the issuance of a new RFP for Group Medical.
F or the contract year effective October I, 1999, the Group Insurance Board and Health Advisory
Committee recommend Humana to provide the Group Medical Insurance for a one year contract.
The Group Insurance Board and the Health Advisory Committee recommend American Dental to
provide the Group Dental Insurance for the three contract years as proposed, and Hartford Life to
provide the Basic/Supplemental Life and Accidental Death & Dismemberment Insurance for the five
contract years as proposed.
CONCLUSION
The Administration recommends that the Mayor and Commission adopt the attached Resolution,
approving the award to Humana, to provide Group Medical Insurance; American Dental Plan, to
provide Group Dental Insurance; and Hartford Life, to provide Basic/Supplemental Life and
Accidep.tfll Death & Dismemberment Insurance for employees and retirees.
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