Title
Continuation of Blue Cross/Blue Shield Administrative Services Contract (B)
This item involves a request for the City Commission to approve the continuance of Blue Cross 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 a five percent (5%) increase in administrative fees for our Group Health Plan. The increase is consistent with medical insurance trends and it should be noted that this increase follows a year in which the City's claims grew by close to 20%.
Blue Cross Blue Shield continues to have the 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 Blue Shield is the provider to many large employers in our area including the State of Florida, Shands, the School Board of Alachua County, Alachua County Board of County Commissioner and HCA. Blue Cross 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 ended May 31, 2007 the savings realized based on billed versus the Blue Cross Blue Shield allowance amounted to over thirteen million dollars. This discount rate was approximately sixty-three percent of the billed amount for services.
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 with a 1-800 number.
The Risk Management Staff is currently assembling a team of 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 and the potential impact to our claims and premiums.
Based on satisfactory past performance, the staff recommends that the City Commission authorizes continuance of the Blue Cross and Blue Shield Administrative Services Contract for the City's self-funded Group Health Plan for the 2008 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 her designee to negotiate and execute the extension to the Administrative Services Contract, subject to approval from the City Attorney as to form and legality.