Title
Continuation of Blue Cross and Blue Shield of Florida, Inc. Administrative Services Contract (B)
This item involves a request for the City Commission to approve the continuance of BlueCross and Blue Shield of Florida Inc. as the third party administrator and network provider for the City of Gainesville's Self -funded Health Plan.
Explanation
Blue Cross and Blue Shield of Florida, Inc., has been the Administrator of the City's self-funded Group Health Plan since January 1, 1993. The City's contract with Blue Cross and Blue Shield of Florida, Inc., allows for annual renewals upon mutually agreeable rates. The current year renewal negotiations with Blue Cross Blue Shield will result in no increase to the per contract administrative fees for our Group Health Plan.
Blue Cross and Blue Shield continues to have one of the largest networks in our area, and coupled with its nationwide affiliates, provides network coverage throughout the United States and many other countries worldwide. Currently, Blue Cross and Blue Shield is the provider to many large employers in our area including the State of Florida, Shands, the School Board of Alachua County, and the Alachua County Board of County Commissioners. Blue Cross and Blue Shield's market presence in Alachua County allows it to negotiate favorable cost of service contracts with the local medical community. These provider contracts result in substantial savings to the City's health plan and our employees. For the twelve months ending May 31, 2008, the savings realized based on billed versus the Blue Cross and Blue Shield allowance amounted to over sixteen million dollars combined between the two health plans. The network discounts for the City of Gainesville's Health Plans were 63.5% for the Blue Choice Plan and 67.4% for the Blue Options Plan.
In addition to the favorable provider contracts, Blue Cross and Blue Shield maintains a local office that employs approximately thirty people. This local office has a specified individual dedicated to provide claims facilitation services to the City and its employees. This local presence allows employees to have face-to-face contact with a Blue Cross representative that has knowledge of our local providers and removes some of the depersonalization associated a 1-800-number.
The Risk Management Staff has assembled a team of employees consisting of both management and represented employees to look at our health benefit, and in conjunction with the benefits survey, make recommendations for changes and/or improvements in the benefit. One of the primary focuses will be on looking at other provider networks, including fully insured insurance products, and the potential impact to the City's claims and premiums. The results of this process and a recommendation from staff are anticipated to be completed by May 2009.
Blue Cross and Blue Shield presented staff with a four-year renewal option that would lower the City's administrative fees guaranteed for two years, include a three percent increase in year three of the contract, and a zero increase again in year four. The proposed fees are equivalent to an approximately 6% reduction over current administrative fees and would save the City close to $100,000 in the first year. The proposal is provided as an alternative and it is staff's belief that the City should continue the process for vendor selection that has been initiated.
Based on satisfactory past performance, the staff recommends that the City Commission authorize continuance of the Blue Cross and Blue Shield Administrative Services Contract for the City's self-funded Group Health Plan for the 2009 plan year. The City Commission is requested to approve issuance of an annual purchase order in an amount sufficient to cover applicable charges for the administrative services to Blue Cross and Blue Shield of Florida, Inc.
Fiscal Note
Funds of approximately $1,800,000 have been budgeted in the Employee Health and Accident Benefits (EHAB) Fund.
Recommendation
The City Commission: 1) authorize continuing the Administrative Services Contract between the City of Gainesville and Blue Cross and Blue Shield of Florida, Inc. for one (1) additional year; 2) authorize issuance of a purchase order in an amount sufficient to cover applicable charges for the administrative services to Blue Cross and Blue Shield of Florida, Inc.; and 3) authorize the City Manager or his designee to negotiate and execute the extension to the Administrative Services Contract, subject to approval from the City Attorney as to form and legality.
Alternative Recommendation
The City Commission: 1) authorize continuing the Administrative Services Contract between the City of Gainesville and Blue Cross and Blue Shield of Florida, Inc. for three (3) additional years based on the proposal offered by Blue Cross and Blue Shield of Florida, Inc.; 2) authorize issuance of a purchase order in an amount sufficient to cover applicable charges for the administrative services to Blue Cross and Blue Shield of Florida, Inc.; and 3) authorize the City Manager or his designee to negotiate and execute the extension to the Administrative Services Contract, subject to approval from the City Attorney as to form and legality.