R92-149 AUTHORIZING APPLICATIONS FOR GROUP HEALTH INSURANCE COVERAGES

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i DEPAR'IN�Tr OF FINANCIAL MANAG� RISK NfP�NA� DIVISION N�hORAI�AK N0. 92-111 Septesnber 15, 1992 MENIO �: Mayor and City Council FROM: James C. Bacon, Jr., City Manager Beth B. Couter, Director of Financial Management Gerard J. Bauer, Risk Manager SUBJEGT: GR�JP HF.�ILTH INSURANCE ADMINIS'TRATOR Transmitted herewith is a resolution and supporting documentation authorizing application and agreesr�ent with Blue Cross/Blue Shield of Illinois (Health Care Services Corporation) for third party administration of the city's self-funded health insurance program for contract year 1992-1993. As has been the practice of the Risk Manag�r�ent Division every third year, a request for proposals (RFP) was recently issued for these services. Of the eleven firnis invited to make proposals, five responded. Ztao came from insurance carriers, two from third party achninistrators who market their programs nationally, and one fran a regional claims administrator. After a thorough review and com�arison of the proposals, including interviews with the leading candidates, staff recomr�ended the retention of Blue Cross/Blue Shield as the city's administrative service agent for the contract year beginning November 1, 1992. The rec�ndation was based on the efficiency of Blue Cross in containing the cost of claims, the quality of service to both the esnployee and the provider p�pulations, and the caripetitiveness of Blue Cross pricing for the services it provides. Though other proposals also appeared to be of high quality, none could match the fee structure proposed by Blue Cross for the co�ning year, as indicated by the following table: FEE/C"OST SL�UE C1�OSS PRUDEDfrIAL Gd�LL�R SEABURY 1�SI Set-Up $ 0 $ 96,478 $ 3,000 $ 1,500 $ 650 Enrol]ment 0 0 0 0 850 Plan Materials 0 0 0 0 1,250 Claims Admin. 43,962 123,750 66,396 65,880 66,026 Cost Cont Prog 11,346 0 15,311 12,810 15,738 Takeover Adm.in 0 5,788 5,788 5,788 5,788 Brokerage Fee 0 0 0 0 0 Total $ 55,308 $226,016 $ 90,495 $ 85,987 $ 90,302 These figures were based on quoted fees, making uniform assumptions about 1992-1993 claims volume, population size, and claims development lag for all proposers. October 31 will mark the carg�letion of the thind year that the city has used Blue Cross for claims administration. During this time, the co[ripany has provided consistently high quality service, while rgnaining very competitive on its pricing. attachments