Title
AUTHORIZATION TO ENTER INTO AN ADMINISTRATIVE SERVICE AGREEMENT AMENDMENT WITH BLUE CROSS BLUE SHIELD OF ARIZONA
Staff Contact: Jim Brown, Director, Human Resources and Risk Management
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Purpose and Recommended Action
Recommendation
This is a request for City Council to approve entering into an administrative service agreement amendment with Blue Cross Blue Shield of Arizona for employee medical benefits for City of Glendale active employees, retirees and COBRA participants for the Fiscal year 2017-2018 with an option to renew one additional year through June 30, 2019.
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Background
In the fall of 2013, Human Resources & Risk Management conducted an RFP process for employee medical benefits. Human Resources & Risk Management worked with the Total Compensation Committee to review the proposals for administering the city’s self-insured medical benefits plan. Blue Cross Blue Shield of Arizona was selected as the proposal that best matched both the needs of the employees and the City. We subsequently entered into an administrative service agreement with Blue Cross Blue Shield of Arizona to provide employee medical benefits for City of Glendale active employees, retirees and COBRA participants on July 1, 2014 through June 30, 2019.
Analysis
Each year, Blue Cross Blue Shield of Arizona performs an actuarial analysis utilizing the City’s medical claims history to project claims cost and premiums for the upcoming fiscal year. The projections for the expected liability during the upcoming fiscal year originally resulted in an overall increase in premiums of 13.1% for active employees and retirees. With assistance from our benefits consultant, Hays, we made several plan design changes, introduced the Acclaim Network and unblended the retiree claims from the active employee claims. This resulted in lowering the increase in premiums for both active employees and retirees 65 years of age and older. The increase in premiums for active employees is 7.46%, 11.39% for retirees 65 years of age and older and 30.41% for retirees who are less than 65 years of age. This amendment to the existing service agreement includes the increase in premiums which has also been included in the budget for FY17-18.
Previous Related Council Action
On April 23, 2013, Council approved the extension for the Blue Cross Blue Shield of Arizona service agreement through June 30, 2014.
On March 25, 2014, Council approved the contract with Blue Cross Blue Shield of Arizona for the FY14-15 with the option to renew four additional years.
On June 28, 2016, Council approved the administrative service agreement amendment with BCBS with options to renew for three additional years in one year increments.
Budget and Financial Impacts
|
Cost |
Fund-Department-Account |
|
$25,942,316 |
Benefits Trust Fund, 2580-18210-540600 |
Capital Expense? No
Budgeted? Yes
Requesting Budget or Appropriation Transfer? No
If yes, where will the transfer be taken from?