HomeMy WebLinkAbout09 - Retiree Health Savings Plan Claims and Reimbrusement AdministrationCITY OF
NEWPORT BEACH
City Council Staff Report
TO:
FROM:
PREPARED BY:
PHONE:
TITLE:
ABSTRACT:
February 28, 2017
Agenda Item No. 9
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Barbara Salvini, Human Resources Director - 949-644-3300,
bsalvini@newportbeachca.gov
Sheri Anderson, Risk Manager, sanderson@newportbeachca.gov
949-644-3307
Agreement for Retiree Health Savings Plan Claims and
Reimbursement Administration
Staff requests the City Council's single source authorization to extend by one (1) year, the
City's contract with Meritain Health, Inc. (Meritain) to administer the City's Retiree Health
Savings (RHS) plan claims and reimbursement program. The services provided by Meritain
are an outsourced function stemming from the City's contract with ICMA-RC for RHS plan
administration services. Prior to the expiration of the ICMA-RC contract in November 2017,
staff intends to initiate a procurement process that consolidates the services provided by the
Meritain and ICMA-RC contracts.
RECOMMENDATION:
a) Determine that the action is exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) and 15060(c)(3) of the CEQA Guidelines because it will
not result in a physical change to the environment, directly or indirectly; and
b) Waive the contract award requirements in Council Policy F-14 and authorize the Mayor to
enter into the proposed one-year administrative services agreement with Meritain to act as
the City's RHS plan claims and reimbursement administrator pursuant to a single source
justification.
FUNDING REQUIREMENTS:
The current adopted budget includes sufficient funding for the RHS plan claims and
reimbursement administration fees. It will be expensed to the Risk Management Administrative
Services account number 01025252-811005.
DISCUSSION:
In 2012, the City, with the help of Benefit Funding Services Group (BFSG), completed a
Request for Proposal (RFP) process for a vendor that would administer the City's RHS
plan. After a competitive process, the City's Deferred Compensation Committee selected
ICMA-RC. Founded in 1972, ICMA-RC is an independent corporation created to manage and
administer plans exclusively for public sector clients.
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Agreement for Retiree Health Savings Plan Claims and Reimbursement Administration
February 28, 2017
Page 2
The company currently services more than a million participant accounts and 9,000 plans
nationally. Meritain, a subsidiary of Aetna, is ICMA-RC's designated third party administrator
of its claims and reimbursement administration. The City contracts separately with Meritain to
facilitate retiree enrollment, premium billing and claims administration for dental and vision
insurance premiums. Meritain bills the City's 298 enrolled retirees on a monthly basis for their
dental and/or vision insurance premiums and then forwards the collected premiums to the City,
which in turn pays the insurance carriers. Meritain's assistance with the enrollment, billing and
claims administration of dental and vision plans for City retirees has saved significant staff time,
improved efficiencies and enhanced customer service.
City staff intend to complete the RFP process for the City's RHS plan prior to the ICMA-RC
contract expiration in November 2017. Retiree premium billing, enrollment services and open
enrollment assistance will be included in the RFP scope of services. Accordingly, staff requests
the City Council's single source approval to continue contracting with Meritain for the remainder
of 2017. Because Meritain has intimate knowledge of the City's retiree health benefits, claims
and administration processes, it is uniquely suited to ensuring no lapse in these processes for
the 2017 benefit year. It is worthy of noting that the 2012 RFP process for these services
yielded a limited number of third party vendors that will facilitate both processes.
Pursuant to City Council Policy F-14, Council approval is required for contracts in excess of
$120,000. While this contract itself does not exceed this threshold, this item, if approved,
represents a fourth consecutive year the City will retain Meritain for the provision of these
services. The cumulative four-year expenditure with Meritain would exceed $120,000 and it is
for this reason that staff seeks the Council's approval for this item.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California Environmental
Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or
reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the
activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code
of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change
to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of the
meeting at which the City Council considers the item).
ATTACHMENT:
Attachment A — Administrative Services Agreement (PSA) with Meritain Health, Inc.
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ATTACHMENT A
2017 RENEWAL AMENDMENT TO
ADMINISTRATIVE SERVICES AGREEMENT
This Amendment ("Amendment") dated as of January 1, 2017 (the "Amendment Effective Date") amends the
Administrative Services Agreement (the "Agreement") entered Into as of January 1. 2013. as amended, by and between
Meritain Health, Inc. ('Meritain") and City of Newport Reach ("Client") as follows.
ARTICLE 11. TERM;TERMINATION
Notwithstanding anything to the contrary In the Agreement, the parties acknowledge that the renewal Term of the
Agreement begins as of the Amendment Effective Date and continues through and including December 31, 2017
("Renewal Term"), and Section 2.1 of the Agreement is hereby deemed amended to reflect such Renewal Term. Except
as specifically modified by this Amendment, all other provisions concerning the Term and/or termination of this
Agreement, including as set forth in section 2. 1, remains in full force and effect.
ARTICLE III. MERITAIN'S RESPONSIBILITIES
2 1 Section 3 14 of the Agreement is hereby deleted in Its entirety and replaced with the following new
Section 3.14:
"3.14 Offer the use of one or more preferred provider network or other provider discount arrangements (collectively
"PPNs") as a Covered Service under this Agreement. The Client acknowledges that the decision to use a PPN and which
PPN(s) to use is at the sole discretion of the Client. In addition, Meritain makes no representations regarding the value or
cost effectiveness of any PPN adopted by the Client. The Client also acknowledges that each PPN it selects as a
Covered Service, and not Meritain, is responsible for its own provider credentialing, contracting with providers, recruiting,
licensing, accreditation. maintaining adequate staffing. practice and professional standards and all other activities
pertinent to the responsibilities accorded PPNs. Access to the PPN and PPN discounts Is at all times contingent on
Client's compliance with the terms of the PPN and Provider contracts, including without limitation timely funding of Claims
in accordance with the Provider's contracted rates. Sutter Health and Affiliates. the dominant health system in much of
Northern California, uses its bargaining power to insist on unique requirements to participate in participating provider
networks. Aetna's contract with Sutter requires payment of claims by the Plan that Sutter deems medically necessary or
not experimental or investigational regardless of the Plan's determination (but does not require payment for services the
Pian expressly excludes from coverage) ".
2.2 The Agreement is hereby amended by the addition of the following Section 3.24:
"3.24 State Reporting and Remittance Meritain shall file. on Client's behalf, State Reports, and shall remit Client's
payments of State Assessments, under Applicable State Law. to the extent that Meritain's then -current policies and
procedures support a particular State Report or State Assessment. For the purposes of this Section: (i) 'State Reports"
means those reports required to be filed under Applicable State Law with respect to a Plan's eligible Participants or
Claims activity other than any required by any State department of revenue: (ii) "State Assessments" means
assessments or surcharges related to a Plan's Participants or Claims activity levied directly on Client or the Plan other
than any required by any State department of revenue: and (iii) "Applicable State Law" means the Applicable Laws of
any State. Client acknowledges and agrees that: (i) neither Meritain nor its affiliates process or adjudicate claims covered
under any pharmacy benefits plan. and any such claims will not be included within the scope of Meritain's obligations
under this clause. and (ii) Meritain's obligations under this clause are at all times contingent upon Client's timely provision
of all information and funding required for State Reports and State Assessments."
III. ARTICLE W. THE CLIENT'S RESPONSIBILITIES
3 1 Section 4.1 of the Agreement is hereby deleted in its entirety and replaced with the following new section
4.1
`41.1 Maintain and furnish to Meritain current, accurate Plan eligibility and coverage information, and submit to Meritain
written notice of any changes respecting the status of any of the Participants within fifteen (15) days after the Client
becomes aware of any such change. When dependents reach the maximum age specified in the Plan Document. such
dependent wiil no longer be a Participant, and Client hereby directs Meritain to automatically terminate such dependents
from eligibility under the Plan without notice or further instruction from Client. Upon termination of dependent under this
section Meritain will provide notice of such termination to client. Such information shall be provided in a format reasonably
acceptable to Meritain and shall include the following with respect to each Participant: name and address, social security
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number, date of birth, type of coverage, sex, relationship to employee, changes in coverage, date coverage begins or
ends, and any other infonration necessary to determine eligibility and coverage levels under the Plan."
IV, ARTICLE V. FEES
41 Article V of the Agreement is hereby deleted in its entirety and replaced with the following:
`The following services will be provided under this Agreement at the fees and charges Indicated below These fees and
charges are collectively referred to In this Agreement as Service Rates.' Unless otherwise stated, the monthly Service
Rates are calculated by multiplying the following rates by the applicable number of employees enrolled In the Plan each
month and adding the result to the specific fees stated below or elsewhere in this Agreement
The rates set forth in this Article V. are based on information provided to Meritain by the Client, including without limitation,
information regarding the average number of employees enrolled In the Plan Meritain has relied on that information in
developing these rates. Should there be a material change in this information, Meritain shall be entitled to adjust these
rates consistent with its customary rates. All fees listed in this Agreement are subject to change in the event the number
of covered employee lives changes by twenty-five (25%) or more during the Term of this Agreement or in the event the
fees and expenses described in this Agreement change during the Term.
The Client agrees to pay the Service bates set forth in this Agreement subject to the terms and conditions of this
Agreement, as well as other applicable agreements Meritain or its affiliates may have with any network, insurer and/or
prescription drug benefit manager.
Per Employee Per Monti/
unless otherwise specified)
Broker Fee(s) (to be remitted pursuant to Section (c) Remittance Services Below) -
10%
$100.00 enrollment fee
Retiree Premium Billing — Dental & Vision
$5.09
Retiree Enrollment— Dental & Vision
$8.35
Optional and Non -Standard Administrative Fees and Premiums:
Annual Open Enrollment Processing - $1,100.00 fiat fee
Printing Fees — To be billed at cost.
All other fees and requirements of this Article V, unless specifically modified by the Amendment remain in full force and
effect.
V. EXHIBIT B
The Agreement is 'hereby amended by the deletion of Exhibit B in its entirety, and is replacement with the attached new
Exhibit B
Any capitalized term not defined in this Amendment shall have the meaning ascribed to it in the Agreement. Except as
specifically amended by the terms of this Amendment, all surviving terms and provisions of the Agreement are hereby
ratified and confirmed and the Agreement, as modified by this Amendment, remains in fuil force and effect
IN WITNESS WHEREOF, the parties have executed this Amendment on the date indicated below
MERITAIN HEALTH. INC.
(^+lame: David C. Parker
Title: Head of rational Accounts
Date. January 12, 2417
0117 -City of Newport Beach -Renewal -01122017
CITY OF NEWPORT BEACH
Name. Kevin Muldoon
Title Mayor
Date:
APPROVED AS TO FORM:
CITYAVR IEY'S OFFICE 2016 Renewal
Date: ,
By: r
Aron C. -Tarp, City Attorney
K�\07 9-4
EXHIBIT B
DISCLOSURE NOTICE REGARDING INSURANCE COMMISSIONS AND OTHER COMPENSATION
U S. Department of Labor rules permit the receipt of insurance commissions and other compensation by service providers
such as Meritain (and its affiliates) if proper disclosure is given and an appropriate independent pian fiduciary
acknowledges in writing receipt of the information and approves the transaction The commissions and other
compensation to be paid to Meritain are set forth in this Agreement. By signing this Agreement and any Renewal
Schedules of Services and Fees. Client certifies that it is an independent fiduciary of the Plan and that it acknowledges in
writing receipt of the following information and approves the transactions referenced herein
A. Statement of Affiliation
Prodigy Health Group. Inc. is a diversified heatth care services holding company whose subsidianes include American
Health Holding, Inc.. Scrip World, LLC Precision Benefit Services, Inc., Meritain Health, Inc and PERFORMAX. Inc. Each
affiliate is free to recommend to a client, products and services offered by other companies, which may include another
affiliate, however, no affiliate is required to recommend an affiliate and no affiliate is limited or restricted in recommending
the products and/or services of any vendor. Affiliates may be entitled to reasonable commissions and fees from other
companies, including affiliates, and such commissions and fees are earned in the ordinary course of business in arms'
length transactions. In addition, certain inter -company agreements exist amongst the affiliates to provide for the
exchange of certain goods. services, and leases of real property at market-based rates of compensation.
Other Fees
From time to time. Meritain may engage third party vendors to perform or provide services in connection with this
Agreement. In some cases Meritain will pay the vendor as a subcontractor out of fees it has collected pursuant to this
Agreement
When Meritain provides or arranges for subrogation services, Client agrees to pay Meritain an administrative fee of 25%
of the grass savings resulting from such services
In the event Meritain engages an out -of -network discount program, claim auditor, independent case reviewer, cast
management vendor, bill negotiator, discount program or other contingency fee vendor to provide services on behalf of
the Plan, Meritain shall be entitled to retain a contingency fee up to 25% of the net savings resulting from the
engagement.
In cases where Meritain provides direct services, through its employees and agents, to negotiate bills, reduce claim
amounts, access additional discounts or otherwise increase savings on behalf of the Plan. Meritain shall be entitled to
retain a contingency fee up to 25% of the savings resulting from such services.
The disclosures set forth in this Exhibit 13, together with the disclosures set forth in Article V. of this Agreement, represent
Meritain's best reasonable estimate of the total amount of all direct and indirect compensation Meritain may receive in
connection with this Agreement. The actual amount may vary during the course of this Agreement based upon changes
in the number of participants. utilization and other factors external to this Agreement. With respect to all compensation
Mentain actually receives as a result of this Agreement, Meritain will disclose such amounts to Client annually. upon
request, to the extent required to assist Client in filing its Form 5500
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