98-22809 RESO
RESOLUTION NO.
98-22809
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING THE CITY'S OPTION TO
RENEW THE HUMANA HEALTH CARE PLANS CONTRACT FOR THE
GROUP MANAGED CARE HEALTH INSURANCE PLAN, FOR FISCAL
YEAR 1998-1999, WITH THE INCREASED RATE ADJUSTMENTS
PREPARED BY HUMANA.
WHEREAS, on July 3, 1996, the Mayor and City Commission adopted
Resolution No. 96-22039, awarding Bid No. 37-95/00, for the Group Managed Care
Health Insurance Plan, to Humana Health Care Plans (Humana); and
WHEREAS, the Service Agreement entered into between the City and Humana
provided for a one (1) year contract with options to renew for four (4) additional years,
and guaranteed the rate for the first two (2) years; and
WHEREAS, the City renewed the Service Agreement, with the guaranteed rate,
for the contract year commencing on October 1, 1997, and ending on September 30,
1998; and
WHEREAS, Humana has advised that the rates must now be increased, due to
the level of anticipated Plan utilization, said increase commencing with the contract
year commencing on October 1, 1998, and ending on September 30, 1999; and
WHEREAS, the new monthly rates, pursuant to the Service Agreement for the
contract year commencing on October 1, 1998, and ending on September 30, 1999,
are now proposed as follows:
PPO
POS
HMO
Single Coverage
$252.06
$175.41
$155.70
Family Coverage
$618.86
$435.25
$385.99; and
WHEREAS, The Administration's recommendation to renew the Service
Agreement for contract year October 1, 1998, to September 30, 1999, has been
reviewed by the Health Advisory Committee and the Group Insurance Board, and has
their concurrence; and
WHEREAS, the Administration accordingly recommends that the Mayor and
City Commission approve the renewal of the Service Agreement with Humana for the
contract year commencing on October 1, 1998, and ending on September 30, 1999.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the Mayor and the
City Commission herein approve the City's option to renew the Humana Health Care
Plans Service Agreement for the Group Managed Health Insurance Plan, for Fiscal Year
1998-1999, with the increased rate adjustments proposed by Humana and set forth
herein.
1st day of
July
,1998.
PASSED and ADOPTED this
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MAYOR
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CITY CLERK
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F:\A TTO\AGUR\RESOS\HUMANA.CL
APPROVED AS TO
FORM & lANGUAGE
& FOR EXECUTION
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Date
2
~ITY OF MIAMI BEACH
ITY HALL 1700 CONVENTION CENTER DRIVE MIAMI BEACH, FLORIDA 33139
tip :\\ci. miami-beach. fl. us
COMMISSION MEMORANDUM NO. t.t"3 \ - ~ \j
TO:
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Mayor Neisen O. Kasdin and DATE: July 1, 1998
Members of the City ommission
r
...:;' .,,-
Sergio Rodriguez r
City Manager
/
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE
CITY OF MIAMI BEACH, FLORIDA, APPROVING THE CITY'S OPTION
TO RENEW THE HUMANA HEALTH CARE PLANS CONTRACT FOR
THE GROUP MANAGED CARE HEALTH INSURANCE PLAN, FOR
FISCAL YEAR 1998-1999, WITH THE INCREASED RATE ADJUSTMENTS
PREPARED BY HUMANA.
FROM:
SUBJECT:
ADMINISTRATION RECOMMENDATION:
Adopt the resolution.
BACKGROUND:
On July 3, 1996, the City Commission adopted a resolution awarding Bid No. 37-95/00 for the group
managed care health insurance plan to Humana Health Care Plans. The Company agreed to
guarantee for two years the rates applicable to the Preferred Provider Option (PPO), Point of Service
Option (POS), and the Health Maintenance Option (HMO).
The two year rate guarantee will expire on September 30, 1998. Humana has advised us that the
rates must be increased due to the level of plan utilization. A comparison of the present monthly
rates with the new rates appears below:
Single Coverage #Covered
Family Coverage
#Covered
PPO
POS
HMO
$252.06 ($223.84)
$175.41 ($171.04
$155.70 ($151.84)
264
10
394
$618.86 ($549.64)
$435.25 ($424.40)
$385.99 ($376.40)
211
11
379
continued.. .
AGENDAITEM~
DATE (-)-9 R
COMMISSION MEMORANDUM
PAGE 2
The increase represents 12.6% for the PPO, 2.5% for the POS, and 2.5% for the HMO. The City
pays 50% ofthe cost of an employee's or retiree's single and family coverage. Hence, in Fiscal Year
1998/1999, the estimated cost increase for the City that results from the rate hike in the Humana Plan
is $163,783.
The City also contributes to the Police and Firefighter health plans. The amount is 90% of the City's
PPO rate per Police or Fire plan member. That will cause our Fiscal Year 1998/1999 costs to
increase by an estimated $181,499. Hence, the total estimated City contribution to the City plan and
the Police and Fire plans will increase by $345,282 over the current cost of $4,308,650.
Because of the significant cost increase this rate adjustment presents, we requested the Benefit
Services Division of our Broker of Record, Arthur J. Gallagher, to assess the reasonableness of the
rate adjustment, and they are of the opinion that Humana's proposal is in line with industry trends.
~.
The Administration's recommendation to renew Humana's contract has been reviewed with the
Health Advisory Committee and the Group Insurance Board and has their concurrence.
CONCLUSION:
The Administration recommends approval of the proposal to exercise the City's option to renew the
Humana Contract for Fiscal Year 1998/1999 with the indicated rate adjustments.
Funding will be appropriated in Fiscal Year 1998/99 .
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SR:RWB:lsg
Attachment
a: IComm-mem4. 98\HMNA9899. CTR