Broken Arrow City Council
Meeting of: 10-06-2015
To: Mayor and City Council
From: Office of the City Manager
Title:
title
Approval of and authorization to enter into an Agreement for Plan Supervisor with CoreSource, Inc. to provide third party administration for the employee health and dental plan for calendar year 2016
End
Background:
The City provides a comprehensive health and dental welfare program for its employees and their families. Since 1989, the City’s plan has been self-insured. With this concept, the City contracts with a third party administrator to administer the plan and pay claims.
The City’s current third party administrator, formerly Mutual Assurance Administrators, has experienced significant changes over the past couple of years since it was acquired by HealthSmart. Most notably, the transition has created gaps in the day-to-day customer service and substantial delays in the deliverables and response times for the City. While these issues may settle out in time, there have been a number of service response and accuracy issues that have created additional unnecessary workload for the Human Resources team.
Due to these concerns and to ensure that the fees associated with the services were competitive with the market, Staff solicited proposals from third party administrators. EmployerAdvocates, the City’s benefits consultant, developed the Request for Proposal and performed an analysis of the proposals received.
In addition to the renewal submitted by HealthSmart, five proposals were received. Staff selected and interviewed three finalists. After due consideration and research, it was determined that a move to CoreSource, Inc. would assist the City in closing some of the service gaps, as well as offer savings in overall administrative fixed costs. CoreSource, Inc. is the third largest independent administrator of self-funded health plans in the country with over 35 years of experience.
The move to CoreSource, Inc. will enable the City to improve efficiency and accuracy by offering greater enrollment automation and access to real time eligibility systems and data. Enhanced overall technology capabilities and compliance resources will further allow the City to increase efficiency and more effectively mitigate regulatory risk exposure. In addition, the CoreSource/PCC PPO network contracts offered the City the greatest flexibility specific to transparency, provider performance analysis, and provider steerage strategy.
HealthSmart’s annual administration fee would be $154,818.00. The proposed annual fee for CoreSource, Inc. third party administration services is $148,000.00. CoreSource, Inc. is expected to process $6,300,000.00 in medical and dental claims in calendar year 2016.
Cost: Administration fees - $148,000.00; Claims - 6,300,000.00
Prepared By: Russell M. Gale, Human Resources Director
Reviewed By: Finance Department
Legal Department
Assistant City Manager
Approved By: Michael L. Spurgeon, City Manager
Attachments: Agreement for Plan Supervisor with CoreSource, Inc.
Recommendation:
To approve the Agreement for Plan Supervisor with CoreSource and authorize its execution.