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HomeMy WebLinkAboutPR 17869: GROUP MEDICAL, DENTAL INSURANCE; FOR BASIC LIFE, FOR BASIC ACCIDENTAL DEATH AND DISMEMBERMENT City of Port Arthur Memorandum TO: Floyd T. Johnson, City Manager DATE: 08/27/13 FROM: Patricia Davis, Senior Human Resources Anal Dr. Albert T. Thigpen, IPMA -CP, Director of Hum Resources and Civil Service 0 ' RE: P. R. No. 17869 A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE CONTRACTS BETWEEN ITS THIRD PARTY ADMINISTRATOR (ADMINISTRATIVE SERVICES ONLY) FOR THE CITY OF PORT ARTHUR GROUP MEDICAL, DENTAL INSURANCE; FOR BASIC LIFE, FOR BASIC ACCIDENTAL DEATH AND DISMEMBERMENT, AND EXCESS LOSS INDEMNITY WITH BLUE CROSS AND BLUE SHIELD OF TEXAS, INC. COMMENT RECOMMENDATION: It is recommended that the City Council adopt P. R. No. 17869 which authorizes the City Manager to execute contracts between its third party administrator (administrative services only) for the City of Port Arthur group medical, dental insurance; for basic life, for basic accidental death and dismemberment, and excess loss indemnity with Blue Cross and Blue Shield of Texas, Inc. and Dearborn National Life Insurance Company. BACKGROUND: The City of Port Arthur considers its employees to be its most valuable asset and resource. In keeping with this premise major medical health insurance, basic life insurance, basic accidental death and dismemberment are provided for employees. Additionally, the City also provides access to its major medical health insurance coverage, including prescription drug coverage, for its retirees. Although, Blue Cross Blue Shield of Texas provided a zero (0 %) renewal, the City's option to renew thereafter had expired; therefore, in consult with the Purchasing Division and the City's health insurance consultant, a Request for Proposal (RFP) was prepared and promulgated widely. The response to the RFP was very good from highly qualified vendors which included, but was not limited to: Humana, BlueCross Blue Shield of Texas, Aetna, Cigna and TML. The City of Port Arthur has a Preferred Provider Organization (PPO) insurance format which provides participants great latitude in selection of health care providers. This format has been deemed most beneficial for plan participants and most compatible with our organizational culture. The City is self - insured for major medical health insurance coverage. The responses for the various entities were critically reviewed using the criteria shown in the RFP. An additional concern was the aspect of "lasering" which is where the company takes the position of either eliminating individuals from coverage eligibility, or assigning a "higher" stoploss level to the individual. Stoploss coverage or "re- insurance" is acquired to protect the health insurance plan from high dollar claims and provides reimbursement to the plan for all claims which exceed $100,000. "Lasering" is where the company assigns a higher level for reimbursement (e.g. $250,000, etc.) rather than the $100,000 requested. It is the position of the City that we want all plan participants to be covered at the same level. Also, the impact of the Affordable Care Act on the City's health insurance must be taken into account. Each year additional requirements of the Act come into effect which include additional reporting, fees, and coverage requirements. The selected respondent must be able to work closely with the City to ensure we are in compliance. After critical review of RFPs using the review criteria and noting the concerns listed above, the responses were narrowed to two (2) finalists relative to major medical health insurance provision: Humana and BlueCross BlueShield of Texas. The companies were invited to make a presentation to the City regarding their offerings. Following the presentations and final critical review of all submittals, including discussion with the City's health insurance consultant, meetings with the City Manager, Assistant City Manager- Operations and the Purchasing Division, it was determined that the recommendation to execute contracts with BlueCross BlueShield of Texas would be in the best interest of the City and City's plan participants relative to major medical health insurance provision. Mr. Moshier's independent analysis is attached as Attachment "A ". The City of Port Arthur has enjoyed surprising price stability with BlueCross BlueShield of Texas with average rate increases of 2.3% where industry averages are significantly greater at 7 % -11 %. Further, the BlueCross BlueShield network discounts and national availability provide not only significant plan cost savings, but also access for retirees and dependents across the nation. At this time the award of this contract as noted will not result in an increase in premiums for plan participants. It should be noted that there is a need to revisit the impact of retirees on the City's Other Post - Employment Benefits (OPEB) liability and the un- blending of rates as it relates to the City's health insurance. BUDGETARY/FISCAL EFFECT: Approval of P. R. No. 17869 with authorize the City Manager to execute contracts with the following budgetary impact for which funds are available: Expected claims $6,800,000 Administration/Stoploss $1,358,011 Dental .$ 324,000 Basic Life /AD &D ..$ 30,000 Total $8,512,011 EMPLOYEE /STAFF EFFECT: None anticipated. SUMMARY: It is recommended that the City Council adopt P. R. No. 17869 which authorizes the City Manager to execute contracts between its third party administrator (administrative services only) for the City of Port Arthur group medical, dental insurance; for basic life, for basic accidental death and dismemberment, and excess loss indemnity with Blue Cross and Blue Shield of Texas, Inc. and Dearborn National Life Insurance Company. Attachment "A" J.S. Edwards Sherlock INSURANCE AGENCY City of Port Arthur Employee Benefits RFP November 2013 The City of Port Arthur prepared and made available an RFP for employee health insurance, employee dental insurance and employee life insurance coverages on 6/24/13 through it's Purchasing Division. Responses were opened on 7/24/13 and review was initiated. Questions and clarifications were generated and results were preliminarily discussed, resulting in the following recommendations: Life Insurance /AD &D: 4 companies submitted proposals with the incumbent, Dearborn National, offering a significant reduction to current rates for benefits equal to the current plan. Other carrier options, while lower then current rates, were not as favorable as those offered by DN. With that in mind, our recommendation is to accept the newly offered (reduced) rates from DN. Dental Coverage: We received 6 dental quotes that mirror existing dental plan benefits. Review criteria was based on benefits, rates, rate guarantee, and carrier stability. Initial review generated follow -up requests for "best and final" offers from the 3 most competitive carriers. These 3 carriers RFP responses were extremely close in all aspects of the initial review criteria. Aetna, Humana and Blue Cross Blue Shield were asked to take a last look at their proposals and verify that they had offered their best options for the City. After review of the final offers, the following factors entered into this recommendation. Aetna's first year offer would deliver an approximate 8% reduction to current rates and their second year offer indicated a 7% expected increase. Humana did not revise their original offer and was removed from final consideration as a result. A review of BCBS rates for the past 5 years indicates that 3 of those 5 years the City received no adjustment (0 %) to rates. The overall average adjustment for those 5 years was 3.7 %, well below the industry average of 5 -7 % annually. BCBS's 4155 Phelan Boulevard • Beaumont, TX 77707 • P.O. Box 22237, 77720 -2237 Beaumont (409) 832 -7736 • Fax (409) 833-1721 • Houston (713) 224 -8723 final offer in response to our RFP was no change to current rates for this year or next year. That being the case, and with no administrative or service issues with BCBS dental coverage at the City, this recommendation is to accept the final dental proposal from BCBS at no change to current rates with a 2 year guarantee. Reputation, experience, and consistency headline this recommendation. Health Coverage: The health coverage RFP used the following criteria for evaluating responses we received: Plan Cost, Weight =50 %: Total cost to the City and employees /retirees. This includes all financial aspects, not just the monthly fixed costs of administration and stop loss fees. Included in the review were: Administrative performance guarantees. Provider discounts, which impact claim costs to both the City and employees. Review of the DRG payment figures, if included, in the proposal response. _ Recognition of new administrators and stop loss carriers fees for a first year relationship. Recognition of new stop carriers first year claims liability based on the type of contract offered. Termination liability offer/option included. Provider Network, Weight =20 %: Medical facilities and physicians in local area as well as outside of Port Arthur, Texas, the State of Texas, and the United States of America. Discount obtained for the City and employees by utilizing the provider network. 2 Plan Design, Weight =10 %: Meeting RFP benefit requirements Proposal Plan Management Program, Weight =10 %: Plan integrity safeguards for service delivery and quality as well as financial aspects. Assistance in all aspects of Affordable Care Act implementation. Financial Experience, Weight =10 %: Experience and financial stability of carrier 6 responses were received. After thorough review involving discussion and clarification(s) of the initial submissions, and taking into consideration the criteria listed above, 2 carriers were invited to make presentations to City officials and your consultant. While other carriers might have had certain aspects of their responses that were favorable, it was determined that Humana and Blue Cross Blue Shield had the overall best initial combinations of the areas outlined above. Annual fixed cost (administration and stop loss) totals ended up slightly in the incumbent's (BCBS) favor, totaling approximately $1.35 million vs Humana's $1.51 million. It is important to note that, if selected, Humana would be performing a reduced "first year" amount of administrative services. While BCBS indicates their rates are "firm" and not subject to further review, Humana requires a final "disclosure document" which would need to include up to the minute claims info. In addition, the Humana quote has increased (lasered) the individual stop level on 2 current large claimants from the group level of $100K to $200K on one individual and $250K on another. These increased amounts could potentially make the City liable for up to an additional $250k should those members have claims up to or above the group $100K stop loss level. When comparing expected claims for the next 12 months, there was very little difference in the offers when the proposals developed total figures, $6.8 million for BCBS and $7.0 million for Humana. Both carriers offer optional wellness and employee wellness incentive programs with those costs being estimated at approximately $70,000 annually for either carrier. Both carriers offered to mirror current health benefit plans and both carriers have very sound financial statuses. Both carriers offer "run out" coverage to limit the city's financial liability should a decision to change carriers occur in the future. BCBS offered a 3 year administrative guarantee and Humana 3 offered a maximum adjustment of 10% to the cost of their stop loss coverages next year. Both carriers also included "performance guarantees" tied to network utilization, network discounts and from Humana, wellness program participation. BCBS tied as much as 25% of their annual administrative fees and Humana 10% of their stop loss fees as performance incentive initiatives. When comparing PPO network pricing, a major component in costs for both the City and employees, both carriers tout their provider contracts and the discounts they generate as being "the best available ". BCBS reports for the City indicate that City members have received approximately 65% off of "retail" by using the BCBS provider network for the past 12 month period. Humana has indicated they feel their discounts would be comparable. Both Humana and BCBS will assist the City in the ongoing Healthcare Reform process. PCORI fees remain in place for 2014 and will total approximately $3200 for the City. The Affordable Care Act (ACA) also includes a reinsurance fee that will begin 1/1/14 and will be $5.25 per member per month or approximately $100,000 annually for the City. These fees were not included in any of the RFP responses received. BCBS has been the City's administrator for over a decade. A review of the most recent 5 years data (including the proposal received) indicates an .. average suggested rate adjustment of 2.34% per year... During this same 5. . _ year period, typical rate adjustments have ranged from 7%-11% on average. That being said, and with no indicated financial or administrative incentive to move to another carrier, this recommendation is to remain with BCBS. The relationship with the City and her employees has been mutually beneficial and BCBS indicated their commitment to keep it so by a competitive response and follow up to our RFP. Once again, reputation, experience and consistency are significant contributors to this recommendation. While leaving current health benefits in place (except any changes dictated by ACA) I would suggest consideration be given to a new provision available from BCBS. Blue Distinction Centers are facilities that have proven to offer both expertise and cost efficient care for specialty services such as organ transplants, knee and hip surgeries, and cardio problems. These services typically have a significantly higher cost impact for the covered member and for insurance plan. Offering employees an incentive 4 such as 90% coinsurance (vs normal 80 %) would yield no additional claims liability to the City (as the additional discount from these centers would offset the 10% payment bump) and offer employees and their dependents access to facilities they might not normally consider. Based on my critical and complete analysis of vendor proposal submitted, review of City of Port Arthur health trends, utilization patterns, the evaluation criteria, and using industry standards, my recommendations are as follow: Life Insurance: Dearborn National Dental Insurance: Blue Cross Blue Shield of Texas Health Insurance: Blue Cross Blue shield of Texas I will make myself available to answer any questions that City officials or you might have about the review and this recap. spectfully su fitted, Mickey Mo ier, MEP 5 P.R. No. 17869 08/27/13 — ATT /pd RESOLUTION NO O A RESOLUTION AUTHORIZING THE CITY MANAGER TO EXECUTE CONTRACTS BETWEEN ITS THIRD PARTY ADMINISTRATOR (ADMINISTRATIVE SERVICES ONLY) FOR THE CITY OF PORT ARTHUR GROUP MEDICAL, DENTAL INSURANCE; FOR BASIC LIFE, FOR BASIC ACCIDENTAL DEATH AND DISMEMBERMENT, AND EXCESS LOSS INDEMNITY WITH BLUE CROSS AND BLUE SHIELD OF TEXAS, INC. FUND NO. (S) : 614 — HEALTH INSURANCE FUND WHEREAS, the City Council of the City of Port Arthur deems it necessary and appropriate to provide major medical health care benefits for the City's employees, City Council appointees, and its retirees, and; WHEREAS, the City Council deems it in the best interest of the citizens of Port Arthur to be self- funded and to accept the proposal from Blue Cross and Blue Shield of Texas, Inc. as a third party administrator at an estimated cost of $372,644 per year (administrative charge based on the present number of employees and retirees) as well as at a cost of $935,467 per year for stop loss premium (excess indemnity), and; WHEREAS, the City's group health plan coverage encompasses the enactment of the Patient Protection and Affordable Care Act (PPACA) effectuated on March 23, 2010, with continuing provisions enacted annually, and do hereby affirm to continue to make changes to its existing health plan policies or products as required to comply with the law, and; P.R. No. 17869 08/27/13 -- ATT /pd Page 2 of 5 WHEREAS, such contracting with Blue Cross and Blue Shield of Texas, Inc. complies with Sections 252.021(b), Competitive Requirements for Certain Purchases, 252.024, Section of Insurance Broker, and 252.048, Change Orders, respectively of the Local Government Code; and, WHEREAS, the nature of the premiums to be charged by the City and the summary of benefits are as delineated in Exhibits "A -1 ", "A -2" , "B -1 ", and "B -2" which reflect the costs for administration by Blue Cross and Blue Shield of Texas, the stop loss premium, the expected reserve, and, WHEREAS, the Basic Life Insurance will also be continued per Dearborn National Life which includes provisions to provide basic life insurance coverage to Fire Civil Service personnel at a rate of one times his /her base annual salary in accordance with the 10/1/2011 Collective Bargaining Agreement between the City of Port Arthur, Texas and Local 397 International Association of Fire Fighters, which will cost the City $.22 /per thousand dollar unit, and all other eligible employees coverage will remain a $6,000 death benefit policy, which will cost the City $.19 /per thousand dollar unit /per employee /per month, and, WHEREAS, as part of the Dearborn National Life proposal, the City is also obtaining Accidental Death and Dismemberment insurance on behalf of its employees which will remain at a cost of $.04 /per thousand dollar unit/ per employee (for a $5,000 accidental death and dismemberment policy for all eligible employees) per month. { P.R. No. 17869 08/27/13 -- ATT /pd Page 3 of 5 WHEREAS, as part of the Blue Cross and Blue Shield of Texas, Inc. proposal, the City provides an additional benefit level which is characterized as a Health Savings Account (HSA) benefit level, however, this benefit was implemented for new employees hired on or after January 1, 2012; BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PORT ARTHUR: THAT, the City Council of the City of Port Arthur hereby accept the following contracts to Blue Cross and Blue Shield of Texas, Inc.; attached hereto and made a part hereof, as is fully delineated herein: INSURANCE COVERAGE ADMINISTRATIVE SERVICES EFFECTIVE DATE Administrative Services Blue Cross & Blue Shield November 1, 2013 Only for the City of Port Arthur's Group Medical, Dental Basic Life & AD &D Dearborn National Life November 1, 2013 Excess Loss Indemnity Blue Cross & Blue Shield November 1, 2013 THAT, the City Manager is hereby further authorized to execute the necessary contracts and other documents on behalf of the City of Port Arthur P.R. No. 17869 08/27/13 — ATT /pd Page 4 of 5 subject to the approval of the City Attorney, and to make payment of necessary premium and administrative charges to bind coverage subject to the terms and conditions of the contract for Third Party Administrator Administrative Services and the Contracts for Insurance attached hereto i as required to effectuate said services; and, THAT, the City Manager is hereby directed to take all actions necessary to ensure proper funding of the City of Port Arthur's employee health insurance Fund (pending budget approval) in substantially the same form attached to as Exhibit "C" and made part hereof; and, THAT, a copy of the caption of this Resolution be spread upon the minutes of the City Council. READ, ADOPTED, AND APPROVED this day of AD, 2013, at a Regular Meeting of the City Council of the City of Port Arthur, by the following vote: AYES: Councilmembers P.R. No. 17869 08/27/13 — ATT /pd Page 5 of 5 NOES: Deloris "Bobbie" Prince, Mayor ATTEST: Sherri Bellard, City Secretary APPROVED AS TO FORM: alecia izeno, City Attorney g on APPROVED FOR ADMINISTRATION: w r Dr. A Ibert T. Thigpen, • /.f Human Resources Floyd T. Johnson, City Manager APPROVED AS TO AVAILABILITY OF FUNDS: Deborah Echols, Director of Finance EXHIBIT "A 4" PPO ASO Standard - Network Deductible BlueCross BtueShietd I of texas BENEFIT HIGHLIGHTS Prepared BlueChoice Network for City of Port Arthur Effective 11/01/2013 This is a general summary of your benefits. Please refer to your benefit booklet for additional details and a description of the plan requirements and benefit design. This plan does not cover all health care expenses. Upon receipt of your benefit booklet, carefully review the plan's limitations and exclusions. Overall Payment Provisions !n- Network Out -of- Network Benefits Benefits Deductibles Per - admission Deductible None $200 Calendar Year Deductible $1,000 Individual / $2,000 Individual / Applies to all Eligible Expenses except Inpatient Hospital Expenses (unless $3,000 Family $6,000 Family otherwise indicated) Three -month Deductible carryover applies Yes Yes Deductible credit from prior carrier (Applied on initial group enrollment only) Yes Yes CoShare Stoploss Maximum Deductibles are not applied to the Coshare Stoploss Maximum. Copayment $3,500 Individual/ $4,500 Individual / Amounts are applied but will continue to be required after the benefit $7,000 Family $9,000 Family percentages increase to 100 %. Your benefit booklet will provide more details. Network Deductible & Coshare Out -of- Network Deductible & Coshare Stoploss will only apply toward Stoploss will also apply toward Network Deductible & Coshare Network Deductible & Coshare Stoploss Maximum Stoploss Maximum Credit for Coshare Stoploss Maximum from prior carrier (Applied on initial Yes Yes group enrollment only) Copayment Amounts Required Physician office visit/consultation: Primary Care Copayment Amount for office visit/consultation when $35 Primary Care Copayment services rendered by a Family Practitioner, OB /GYN, Pediatrician, Behavioral Health Practitioner, or Internist and Physician Assistant or Advanced Practice Nurse who works under the supervision of one of these listed physicians Specialty Care Copayment Amount for office visit/consultation when services $50 Specialty Care Copayment rendered by a Specialty Care Provider Refer to Medical /Surgical Expenses section for more information Urgent Care center visit $75 Copayment Amount Refer to Urgent Care Services section for more information Outpatient Hospital Emergency Room/Treatment Room visit $150 Copayment Amount $150 Copayment Amount Refer to Emergency Room/Treatment Room section for more information Maximum Lifetime Benefits Per Participant Unlimited Inpatient Hospital Expenses Inpatient Hospital Expenses All services must be preauthorized All usual Hospital services and supplies, including semiprivate room, intensive 80% of Allowable Amount 60% of Allowable Amount after per - care, and coronary care units admission Deductible Penalty for failure to preauthorize services None $250 A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- PPO -ASO- Standard -with Network Deductible, Split Copay effective 11/1/2012 Page 1 of 5 PPO ASO Standard - Network Deductible - � t3lueGr� E�IueShield of Texas Medical /Surgical Expenses In- Network Out -of- Network Benefits Benefits Medical / Surgical Expenses Services performed during the office visit/consultation when rendered by 100% of Allowable Amount after $35 70% of Allowable Amount after a Primary Care Provider, including lab and x -ray (does not include Certain Primary Care Copayment ** Calendar Year Deductible Diagnostic Procedures and surgical services) Services performed during the office visit/consultation when services 100% of Allowable Amount after $50 70% of Allowable Amount after rendered by a Specialty Care Provider, including lab & x -ray (does not Specialty Care Copayment Calendar Year Deductible include Certain Diagnostic Procedures and surgical services) Lab & x -ray in other outpatient facilities (excluding Certain Diagnostic 100% of Allowable Amount 70% of Allowable Amount after Procedures) Calendar Year Deductible - Physician surgical services performed in any setting 80% of Allowable Amount after 60% of Allowable Amount after Calendar Year Deductible Calendar Year Deductible - Physician inpatient hospital visits 80% of Allowable Amount after 60% of Allowable Amount after Calendar Year Deductible Calendar Year Deductible - Certain Diagnostic Procedures; such as Bone Scan, Cardiac Stress Test, 80% of Allowable Amount after 60% of Allowable Amount after CT -Scan (with or without contrast), MRI, Myelogram, PET Scan. Calendar Year Deductible Calendar Year Deductible -Home Infusion Therapy (Services must be preauthorized) 80% of Allowable Amount after 60% of Allowable Amount after Calendar Year Deductible Calendar Year Deductible -All other outpatient services and supplies 80% of Allowable Amount after 60% of Allowable Amount after Calendar Year Deductible Calendar Year Deductible In Vitro Fertilization Services Not Covered 1� f �a'il• [:Z� t�<1L:�� I •Zai�Y� Extended Care Expenses All services must be preauthorized 100% of Allowable Amount 70% of Allowable Amount after Calendar Year Deductible Skilled Nursing Facility Limited to 25 day maximum each Calendar Year* Home Health Care Limited to 60 visit maximum each Calendar Year* Hos•ice Care Unlimited Special Provisions Expenses Serious Mental Illness Mental Health Care Treatment of Chemical Dependency Inpatient Services (All services must be preauthorized) - Hospital services (facility) 80% of Allowable Amount 60% of Allowable Amount after Per (Inpatient Chemical Dependency treatment must be provided in a Admission Deductible Chemical Dependency Treatment Center) - Physician services 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Outpatient Services (Certain services must be preauthorized; refer to benefit booklet for more details) 100% of Allowable Amount after $35 70% of Allowable Amount after - Services performed during office visit/consultation when rendered by Primary Care Copayment Amount Calendar Year Deductible a Primary Care Provider (does not include psychological testing) -All outpatient services and psychological testing 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible * Benefits used In- Network and Out -of- Network will apply toward satisfying any Annual Maximum benefits indicated "' Primary Care /Specialty Care copayments are defined in the Overall Payment Provisions section in this document. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- PPO -ASO- Standard -with Network Deductible, Split Copay effective 11/1/2012 Page 2 of 5 PPO ASO Standard - Network Deductible � illueCross BtueShield C of Texas Special Provisions Expenses, cont. In- Network Out-of- ork Benefits Bennefits efits Emergency Room /Treatment Room Accidental Injury & Emergency Care - Facility charges 80% of Allowable Amount after $150 Copayment Amount (Copayment Amount waived if admitted, Inpatient Hospital Expenses will apply) - Physician charges 80% of Allowable Amount after Calendar Year Deductible Non - Emergency Care - Facility charges 80% of Allowable Amount after $150 60% of Allowable Amount after $150 Copayment Amount (Copayment Copayment Amount & Calendar Year Amount waived if admitted, Inpatient Deductible (Copayment Amount Hospital Expenses will apply) waived if admitted, Inpatient Hospital Expenses will apply) - Physician charges 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Urgent Care Services Urgent Care center visit, including lab & x -ray services (does not include 100% of Allowable Amount after $75 70% of Allowable Amount after Certain Diagnostic Procedures and surgical services) Copayment Amount Calendar Year Deductible Certain Diagnostic Procedures; such as Bone Scan, Cardiac Stress Test, CT -Scan (with or without contrast), MRI, Myelogram, PET Scan, surgical 80% of Allowable Amount after Calendar 60% of Allowable Amount after procedures and all other services and supplies. Year Deductible Calendar Year Deductible Ground and Air Ambulance Services 80% of Allowable Amount after Calendar Year Deductibie Preventive Care Routine annual physical examinations, well -baby care exams, 100% of Allowable Amount 70% of Allowable Amount after immunizations 6 years of age & over, and any other preventive health Calendar Year Deductible services as determined by USPSTF Immunizations for Dependent children through the date of the child's 6th 100% of Allowable Amount 100% of Allowable Amount birthday Speech and Hearing Services Services to restore loss of or correct an impaired speech or hearing function Covered same as any other sickness Covered same as any other sickness Hearing Aid Maximum Hearing aids are subject to a $1, 000 maximum amount each 36 -month period* * Benefits used In- Network and Out -of- Network will apply toward satisfying any Annual Maximum benefits indicated Physical Medicine Services Chiropractic Care -Office Services 80% of Allowable Amount after 60% of Allowable Amount after Calendar Year Deductible Calendar Year Deductible Calendar Year Maximum Limited to 35 visits each Calendar Year* All other Physical Medicine Services rendered by any other eligible Provider will be allowed on the same basis as any other sickness. * Benefits used In- Network and Out -of- Network will apply toward satisfying any Annual Maximum benefits indicated A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- PPO -ASO- Standard -with Network Deductible, Split Copay effective 11/1/2012 Page 3 of 5 PPO ASO Standard - Network Deductible - B1ueCross BlueShield C!_ti of Texas Pharmacy Bene fits Participating Pharmacy* Non - Participating Pharmacy (member files claim) Drug List"* Preferred Drug List 1 Vaccinations obtained through Pharmacies * * ** Yes - Flu vaccinations covered as follows: Select pharmacies participating in Flu 80% of Allowable Amount minus Network — 100% Copayment Amount All other in- network pharmacies — appropriate tier copay applies Retail Pharmacy (Copayment amounts are based on a 30 -day supply. With appropriate prescription order, up to a 90 -day supply is available. Copayment amounts will not apply to Coshare Stoploss Maximum.) Generic Drug $15 Copayment Amount 80% of Allowable Amount minus Copayment Amount Preferred Brand Name Drug $35 Copayment Amount 80% of Allowable Amount minus Copayment Amount Non - Preferred Brand Name $60 Copayment Amount 80% of Allowable Amount minus Copayment Amount Specialty Drugst Available at any pharmacy at applicable generic /brand name and participating/non - participating pharmacy benefit level. Mail Order Program Yes (Copayment amounts are based on a 30 -day supply. With appropriate prescription order, up to a 90 -day supply is available. Copayment amounts will not apply to Coshare Stoploss Maximum.) Generic Drug $15 Copayment Amount Preferred Brand Name Drug $35 Copayment Amount Non - Preferred Brand Name Drug $60 Copayment Amount Generic Incentive- Members who purchase Preferred /Non - Preferred Brand Name Drugs when a Generic equivalent exists will be required to pay the difference between the cost of the Generic and Preferred /Non - Preferred Brand Name Drug, plus the Preferred Brand Name Copayment Amount. All medications with over - the - counter (OTC) equivalents are excluded from coverage except for Omeprazole 20 mg. * To locate a participating pharmacy in your area go to myprime.com or contact customer service at the phone number on the back of your identification card. * *The preferred drug list is available at: bcbstx.com /member /rx_drugs.html * * ** Select pharmacies participating in the Flu Network are contracted to provide vaccination services. Flu vaccinations at all other in- network and out -of- network pharmacies are payable at the non - participating Flu Network pharmacy benefit level. Each pharmacy may have age, scheduling, or other requirements that will apply. You are encouraged to contact the store in advance. Childhood immunizations subject to state regulations are not available under this pharmacy benefit. Refer to your BCBSTX medical coverage for benefits available for childhood immunizations. tFor more information on the specialty drug program, call Prime Specialty Pharmacy at (877)627 -6337. Diabetes Supplies are available under the Prescription Drug benefits of your plan. Diabetic Supplies include insulin and insulin analog preparations, insulin syringes necessary for self - administration, prescriptive and non - prescriptive oral agents, all required test strips and tablets which test for glucose, ketones, and protein, lancets and lancet devices, biohazard disposable containers, glucagon emergency kits, and other injection aids. All provisions of this portion of the plan will apply including Copayment Amounts and any pricing differences that may apply to the items dispensed. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- PPO -ASO- Standard -with Network Deductible, Split Copay effective 11/1/2012 Page 4 of 5 PPO ASO Standard - Network Deductible � BlueCross BtueShielld 1, of Texas NON Standard Covered Benefits • Radial Keratotomy covered • Lasik surgery covered • Effective 7/1/04 - Medicare Assumption/Estimation • Effective 11 -1 -08 - Services, supplies and prescription drugs for the reduction of morbid obesity, including surgical procedures, when medically necessary, covered same as any other illness (note: prescription drugs for morbid obesity are not subject to medical necessity) • Effective 11 -1 -11 - Age limit increased to age 26 for the following benefit: Reconstructive surgery performed on a covered dependent child under the age of 26 due to craniofacial abnormalities to improve the function of, or attempt to create a normal appearance of an abnormal structure caused by congenital defects, developmental deformities, trauma, tumors, infections or disease. EMPLOYEE INFORMATION This is a general Summary of your benefit design. Please refer to your benefit booklet for other details and for limitations and exclusions. The following benefits apply to dependent coverage: • Dependent children are covered to age 26. • Automatic coverage for newborns for the first 31 days following birth. Infants not enrolled for coverage within the first 31 days after birth will not be eligible for coverage until the following open enrollment period or special enrollment event. Payments: Network providers agree to accept amounts negotiated with BCBSTX and are paid according to this BCBSTX- determined Allowable Amount. Covered individuals are responsible for any required Deductibles, Coinsurance Amounts, and Copayments. Plan benefits paid to Out -of- Network providers are also based on the BCBSTX- determined Allowable Amount. Covered individuals will be responsible for charges in excess of the Allowable Amount in addition to any applicable Deductibles, Coinsurance Amounts, and Copayments. For cost savings information, refer to the section on ParPlan Providers and the definition of Allowable Amount in the benefit booklet. Preexisting conditions Provision: Benefits for Eligible Expenses incurred for treatment of a Preexisting Condition will not be available during the twelve -month period following the individual's initial Effective Date, or if a Waiting Period applies, the first day of the Waiting Period. In accordance with state and federal law, certain conditions will not be considered Preexisting Conditions and the Preexisting Condition exclusion will not apply to certain individuals. Details are provided in the benefit booklet. Replacement of Medical Coverage: In compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA), the following provisions apply to each eligible participant who has health coverage under the employer's plan immediately prior to the effective date of the health contract between the employer and BCBSTX (the contract date): • Benefits for eligible expenses incurred for any service or supplies prior to the contract date, are not covered under the contract. • Eligible expenses for services or supplies incurred on or after the effective date will be considered for benefits subject to all applicable contract provisions. Members residing in other states may use that state's network through the BlueCard program. To locate a participating provider in your state, please contact 1- 800 -810 -BLUE or visit our web site at bcbstx.com to use our Provider Finder® tool. This benefit plan design includes provisions mandated by the Affordable Care Act of 2010, and is subject to change upon direction by federal and state agencies. Group Executive Name and Title Signature Date (Please type or print) Agent of Record Name Signature Date (Please print or type) BCBSTX Representative Name Signature Date (Please print or type) A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- PPO -ASO- Standard -with Network Deductible, Split Copay effective 11/1/2012 Page 5 of 5 BlueEdge ASO HSA - Embedded Deductible - R �_ -, BlueC BlueShleld Integrated Rx - ' of Texas . BENEFIT HIGHLIGHTS Prepared glue Choice Network for City of Port Arthur Effective 11/01/2013 This is a general summary of your benefits. Please refer to your benefit booklet for additional details and a description of the plan requirements and benefit design. This plan does not cover all health care expenses. Upon receipt of your benefit booklet, carefully review the plan's limitations and exclusions. O In- Network Out -of- Network Overall Payment Provisions Benefits Benefits Calendar Year Embedded Deductible Applies to all Eligible Expenses (unless otherwise indicated) $2,500 Individual / $5,000 Individual / Applies to Out -of- Pocket Maximum $5,000 Family $10,000 Family Family coverage: When one family member meets the individual Deductible, benefits become available under the plan for that individual. NOTE: The individual Deductible amount must be equal to or greater than the minimum family Deductible amount. This qualification is established by the U. S. Treasury for a plan to be considered a qualified HSA plan. Deductible credit from prior carrier (Applied on initial group enrollment Yes Yes only) Out - of - Pocket Maximum Out -of- Pocket Maximum includes Deductible. $5,000 Individual/ $10,000 Individual/ $10,000 Family $20,000 Family Network Deductible & Out -of- Pocket will Out -of- Network Deductible & Out -of- only apply toward Network Out -of- Pocket will also apply toward Pocket Maximum Network Out -of- Pocket Maximum Credit for Out -of- Pocket Maximum from prior carrier (applied on initial Yes Yes group enrollment only) Maximum Lifetime Benefits Per Participant Unlimited Inpatient Hospital Expenses Inpatient Hospital Expenses All services must be preauthorized Inpatient Hospital Expenses 80% of Allowable Amount after Calendar 60% of Allowable Amount after Each admission must be preauthorized Year Deductible Calendar Year Deductible All usual Hospital services and supplies, including semiprivate room, intensive care, and coronary care units. Penalt for failure to .reauthorize services None $250 • Medical /Surgical Expenses Medical / Surgical Expenses - Services performed during the Physician's office visit /consultation, 80% of Allowable Amount after Calendar 60% of Allowable Amount after including lab & x -ray Year Deductible Calendar Year Deductible -Lab & x -ray in other outpatient facilities 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible - Physician surgical services performed in any setting 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible - Physician inpatient hospital visits 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible - Certain Diagnostic Procedures; such as Bone Scan, Cardiac Stress 80% of Allowable Amount after Calendar 60% of Allowable Amount after Test, CT Scan (with or without contrast), MRI, Myelogram, PET Scan. Year Deductible Calendar Year Deductible -Home Infusion Therapy (Services must be preauthorized) 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible -All other outpatient services and supplies 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible In Vitro Fertilization Services Not Covered A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business- BlueEdge "ISO-NSA-Embedded Deductible - Integrated Rx effective 11/1/2012 (rev 02/01/13) Page 1 of 5 BlueEdge ASO HSA - Embedded Deductible - ,- BlueCross Ktue�ield ° � of Texas Integrated Rx `� Extended Care Expenses In- Network Out -of- Network Benefits Benefits Extended Care Expenses (must be preauthorized) 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Skilled Nursing Facility Limited to 25 day maximum each Calendar Year* Home Health Care Limited to 60 visit maximum each Calendar Year* Hospice Care Unlimited Special Provisions Expenses Serious Mental Illness Mental Health Care Treatment of Chemical Dependency Inpatient Services (All services must be preauthorized) - Hospital services (facility) 80% of Allowable Amount after Calendar 60% of Allowable Amount after (Inpatient Chemical Dependency treatment must be provided in a Year Deductible Calendar Year Deductible Chemical Dependency Treatment Center) - Physician services 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Outpatient Services (Certain services must be preauthorized; refer to benefit booklet for more details) 80% of Allowable Amount after Calendar 60% of Allowable Amount after - Services performed during Physician office visit/consultation Year Deductible Calendar Year Deductible (does not include psychological testing) -All outpatient services and psychological testing 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Emergency Room /Emergency Treatment Room Accidental Injury & Emergency Care - Facility charges 80% of Allowable Amount after Calendar Year Deductible - Physician charges 80% of Allowable Amount after Calendar Year Deductible Non - Emergency Care - Facility charges 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible - Physician charges 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Urgent Care Services Urgent Care center visit, including lab & x -ray services 1 80% of Allowable Amount after Calendar 60% of Allowable Amount after I Year Deductible Calendar Year Deductible Certain Diagnostic Procedures; such as Bone Scan, Cardiac Stress Test, CT Scan (with or without contrast), MRI, Myelogram, PET Scan, surgical 80% of Allowable Amount after Calendar 60% of Allowable Amount after procedures and all other services and supplies. Year Deductible Calendar Year Deductible Ground and Air Ambulance Services 80% of Allowable Amount after Calendar Year Deductible Preventive Care Routine annual physical examinations, well -baby care exams, 100% of Allowable Amount 60% of Allowable Amount immunizations 6 years of age & over, and any other preventive health services as determined by USPSTF Immunizations for Dependent children through the date of the child's 6th 100% of Allowable Amount 100% of Allowable Amount birthday * Benefits used In - Network and Out -of- Network will apply toward satisfying any Annual Maximum benefits indicated. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association n,, Ann 11C r a _+n a.. ;u 1.,+,......t..4 0 ..H,. +;,,,. 4114/7/19 a.r „n9/114P1 t Pana BlueEdge ASO HSA - Embedded Deductible - , Blue Cross Blue Shield Integrated Rx f? of Texas Special Provisions Expenses, cont. In- Network Out -of- Network Benefits Benefits Speech and Hearing Services Services to restore loss of or correct an impaired speech or hearing Covered same as any other sickness Covered same as any other sickness function Hearing Aids 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Hearing Aid Maximum Hearing aids are subject to a $1,000 maximum amount each 36 -month period* Physical Medicine Services Chiropractic Care -Office Services 80% of Allowable Amount after Calendar 60% of Allowable Amount after Year Deductible Calendar Year Deductible Calendar Year Maximum Limited to 35 visit maximum each Calendar Year All other Physical Medicine Services rendered by any other Provider will be allowed on the same basis as any other sickness. * Benefits used In- Network and Out -of- Network will apply toward satisfying any Annual Maximum benefits indicated. Pharmacy Benefits Participating Non - Participating Pharmacy* Pharmacy (member files claim) Drug List" Preferred Drug List 1 Vaccinations obtained through Pharmacies Yes - If yes, flu vaccinations covered as follows: Select pharmacies participating in Flu Network – 100% All other pharmacies – apply appropriate tier copay Retail Pharmacy (Benefit payments are based on a 30-day supply. With appropriate $50 Copayment Amount after the Calendar Year Deductible * * ** prescription order, up to a 90-day supply is available.) Mail Order Program (Benefit payments are based on a 30 -day supply. With appropriate $50 Copayment Amount after the Calendar Year Deductible * * ** prescription order, up to a 90 -day supply is available.) No Penalty– Member pays no more than the applicable Generic, Preferred Drug, or Non - Preferred Dnrg Copayment Product selection is permitted, even when generic equivalents are available. * To locate a participating pharmacy in your area go to myprime.com or contact customer service at the phone number on the back of your identification card. * *The preferred drug list is available at: bcbstx.com /memberlrx_drugs.html ** *Select pharmacies participating in the Flu Network are contracted to provide vaccination services. Flu vaccinations at all other in- network and out -of- network pharmacies are payable at the applicable tier copay. Each pharmacy may have age, scheduling, or other requirements that will apply. You are encouraged to contact the store in advance. Childhood immunizations subject to state regulations are not available under this pharmacy benefit. Refer to your BCBSTX medical coverage for benefits available for childhood immunizations. Diabetes Supplies are available under the Prescription Drug benefits of your plan. Diabetic Supplies include insulin and insulin analog preparations, insulin syringes necessary for self - administration, prescriptive and non - prescriptive oral agents, all required test strips and tablets which test for glucose, ketones, and protein, lancets and lancet devices, biohazard disposable containers, glucagon emergency kits, and other injection aids. All provisions of this portion of the plan will apply including Copayment Amounts and any pricing differences that may apply to the items dispensed. All medications with over -the- counter (OTC) equivalents are excluded from coverage except for Omeprazole 20 mg. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business - BlueEdge ASO -HSA- Embedded Deductible - Integrated Rx effective 11/1/2012 (rev 02/01/13) Page 3 of 5 BlueEdge ASO HSA - Embedded Deductible - BlueCrossBiueShietd Integrated Rx 161.1 af'Ii xas Non - Standard Covered Benefits Effective 11 -1 -2011: • Radial Keratotomy covered • Lasik surgery covered • Medicare Assumption/Estimation • Services, supplies and prescription drugs for the reduction of morbid obesity, including surgical procedures, when medically necessary, covered same as any other illness (note: prescription drugs for morbid obesity are not subject to medical necessity) • Age limit increased to age 26 for the following benefit: Reconstructive surgery performed on a covered dependent child under the age of 26 due to craniofacial abnormalities to improve the function of, or attempt to create a normal appearance of an abnormal structure caused by congenital defects, developmental deformities, trauma, tumors, infections or disease. EMPLOYEE INFORMATION • The following applies to dependent coverage: - Dependent children covered for matemity benefits. - Dependent children are covered to age 26. Disabled dependent children can be covered beyond age 26. - Automatic coverage for newborns for the first 31 days following birth. Infants not enrolled for coverage within the first 31 days after birth will not be eligible for coverage until the following open enrollment period or special enrollment event. • Payments: Network providers agree to accept amounts negotiated with BCBSTX and are paid according to this BCBSTX- determined Allowable Amount. Covered individuals are responsible for any required Deductibles, Coinsurance Amounts, and Copayments. Plan benefits paid to Out -of- Network providers are also based on the BCBSTX- determined Allowable Amount. Covered individuals will be responsible for charges in excess of the Allowable Amount in addition to any applicable Deductibles, Coinsurance Amounts, and Copayments. For cost savings information, refer to the section on ParPlan Providers and the definition of Allowable Amount in the benefit booklet. • Preexisting conditions Provision: Benefits for Eligible Expenses incurred for treatment of a Preexisting Condition will not be available during the twelve- month period following the individual's initial Effective Date, or if a Waiting Period applies, the first clay of the Waiting Period. In accordance with state and federal law, certain conditions will not be considered Preexisting Conditions and the Preexisting Condition exclusion will not apply to certain individuals. Details are provided in the benefit booklet. • Replacement of Medical Coverage: In compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and Texas State law, the following provisions apply to each eligible Participant who has health coverage under the employer's plan immediately prior to the effective date of the health contract between the employer and BCBSTX (the Contract Date): - Benefits for eligible expenses incurred for any service or supplies prior to the contract date, are not covered under the contract. - Eligible Expenses for services or supplies incurred on or after the effective date will be considered for benefits subject to all applicable contract provisions. • Deductible: The benefits of the Plan will be available after satisfaction of the applicable Deductible. The Deductible may be increased in the future in direct proportion to the increase as determined from the cost -of- living adjustments based on the Consumer Price Index (CPI -U). The Deductibles are explained as follows: 1. The Individual Deductible amount as shown on this Benefits Highlights under "Calendar Year Deductible," will apply to all combined Inpatient Hospital Expenses, Medical- Surgical Expenses, Extended Care Expenses, and Special Provisions Expenses you incur during a Calendar Year and must be satisfied by each Participant under your coverage each Calendar Year before any benefits are available under the Plan. This Deductible, unless otherwise indicated, will be applied to all Eligible Expenses before benefits are available under the Plan. 2. The family Deductible amount as shown on this Benefits Highlight under "Calendar Year Deductible," will apply to all combined Inpatient Hospital Expenses, Medical- Surgical Expenses, Extended Care Expenses, and Special Provisions Expenses each Participant incurs during each Calendar Year and must be satisfied by each Participant under your coverage each Calendar Year before any benefits are available under the Plan. If you have several covered Dependents, all charges used to apply toward a "per individual" Deductible amount will be applied toward the "per family" Deductible amount. When the family Deductible is reached, no further individual Deductibles will have to be satisfied for the remainder of that Calendar Year. No Participant will contribute more than the individual Deductible amount to the "per family" Deductible amount. • Out -of- Pocket Maximum: Most of your Eligible Expense payment obligations are applied to the Out -of- Pocket Maximum. The Out -of- Pocket Maximum may be increased in the future in direct proportion to the increase as determined from the cost -of- living adjustments based on the Consumer Price Index (CPI -U). 1. The Out -of- Pocket Maximum will not include: - Services, supplies, or charges limited or excluded by the Plan; - Expenses not covered because of a benefit maximum has been reached; - Any Eligible Expense paid by the Primary Plan when BCBSTX is the Secondary Plan for purposes of coordination of benefits; - Penalties for failing to obtain preauthorization; 2. When the Out -of- Pocket Maximum for the In- Network or Out -of- Network Benefits level for a Participant in a Calendar Year equals the "per individual" "Out - of- Pocket Maximum" shown on this Benefits Highlights for that level, the benefit percentage automatically increases to 100% for purposes of determining the benefits available for additional Eligible Expenses incurred by that Participant during the remainder of that Calendar Year for that level. 3. When the "Out -of- Pocket Maximum" amount for the In- Network or Out -of- Network Benefits level for all Participants under your coverage in a Calendar Year equals the "per family" "Out -of- Pocket Maximum" amount shown on this Benefits Highlights for that level, the benefit percentage automatically A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association NGF 151+ business - BlueEdge ASO- HSA - Embedded Deductible - Integrated Rx effective 11/1/2012 (rev 02/01/13) Page 4 of 5 BlueEdge ASO HSA - Embedded Deductible - Blue( ;rosr+E%tueshietd integrated Rx (7S V of Texas increases to 100% for purposes of determining the benefits available for additional Eligible Expenses incurred by all family Participants during the remainder of that Calendar Year for that level. No Participant will be required to contribute more than the individual Out -of- Pocket Maximum to the family Out -of- Pocket Maximum. • Members residing in states other than Texas may use that stat's network through the BlueCard Program. To locate a participating provider in your state, please contact 1- 800 - 810 -BLUE or visit our website at bcbstx.com to use our Provider Finder® tool. This benefit plan design includes provisions mandated by the Affordable Care Act of 2010, and is subject to change upon direction by federal and state agencies. • Please be reminded that Health Savings Accounts (HSA's) have tax and legal ramifications, Blue Cross and Blue Shield of Texas does not provide legal or tax advice, and nothing herein should be construed as legal or tax advice. These materials, and any tax - related statements in them, are not intended or written to be used, and cannot be used or relied on, for the purpose of avoiding tax penalties. 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A 1- <• S N VI W 01 U1 N 01 l0 fD . 12 n L II 111 I LI I 1 LP DearbOffl * NOtIOfa July 19, 2013 CITY OF PORT ARTHUR • ATTENTION: ELIZABETH VILLARREAL • • • PO BOX 1089 PORT ARTHUR TX 776411089 • • • Subject: Renewal Analysis Group Policy Number: G31118 Anniversary Date: November 1, 2013 Dear Policyholder: Dearborn National would like to thank you for allowing us the opportunity to provide you and your employees with Group insurance products. • We have reviewed the current demographics of your group insurance programs. As a result, we will be applying a decrease to the Basic Life rates. The AD &D rate will remain the same. Rates will be guaranteed until November 1, 2015. Products Current Rates Renewal Rates Life — Class 1 $0.24 per $1,000 $0.19 per $1,000 Life— Class 2 $0.28 per $1,000 $0.22 per $1,000 AD &D 50.04 per $1,000 $0.04 per $1,000 If you have any questions pertaining to your renewal, or would like more information including the availability of other products as well as a quote for additional benefit programs, please contact your local Dearborn National sales office or insurance broker. We value our relationship with you and look forward to providing quality service to you in the future. Sincerely, Underwriting Department In Force Team Cc 701 East 22nd Street, Lombard, IL 60148 b Fax: 312.540.4706 Product and services roarkeied under the Dearborn Natior:a ' brand end the star logo are underwritten and ?or provided by Dearborn h:ationa0 Ltte Insurance Comoany (Downers Grove, IL) in e!! '.tails (excluding New York). the J strut of Columbia. rile United States Virgin Islands. the British Virgin Islands, G!:an1 and Puerto Rb7). City of Part Arthur, Texas. 1 Major Medaccil Healih Insurance Plan ,Recjttekt for Proposal PROPOSAL' StlYciselARY SIIEET - Life Insurance Plan 1 .Name of ComparLy Dearborn National _ . Christi Harvey 2.Canact Name; _ • 3.Telepl�t�ne/Fa Number; Phone: 713 - 663 - 1168 Fax 713 - 467 -4123 4 Oe eratefiif rma,tt All ; &ottve Et `p oyt.e Current Covey a Level �6,'i f)0lLife $0.19 Cost per $1,000 l = � �• - Fire Civil Servrce`, Pntsprnel (1 xbase annual salary wvlrriax.nf$10U,00t1) $0.22 Cost per $1,000 All Active [.rnployee + Fire Cis i1 Service Personnel $5,000 /AD &D $0.04 Cost per $1,000 ' s PLEASE ATTACH OUR BENEFIT SCHEDULE "W ITLI DETAILS ON. PROPOSAL PLAN A. 1, $10,000/ Life Active Full -Tim Employees $0.19 Cost per $1,000 • Fire Civil Service (ix base annual salary, max $100k) $0.22 Cost per $1,000 2. $5,000 /AD &D + Fire Civil Service $0.04 Cost per $1,000 ;.: �..,r.B. -:': 1 $10,000/ Life Active Full-Tim Employees $0.19 Cost per $1,000 Fire Civil Service (1x base annual salary, max $100k) $022 Cost per $1,000 . 2. $10,000 /AD &D +Fire Civil Service $0.04 Cost per $1,000 1. $15,000/ Life Act Full Employees $0.19 p y m Em to Cost per $1,000 C. Fire Civil Service (1 x base annual salary, max $100k) $0.22 Cost per $1,000 2. $15,000 /AD &D + Fire Civil Service $0.04 Cost per 51,000 , . r If _ Page Proposal Summary Sheet Notes 1. The completion, and inclusion, of this sheet is a mandatory part of the RFP process. 2. All formula variables, unusual characters, etc: to be clearly delineated. 3. Slight modifications to this sheet are permissible. 4. Additional sheets may be attached to explain, or clarify, any item shown. CERTIFICATION: I, Brian F. Griffin — an (Printed Name) authorized representative O Dearborn National Life Insurance Company (Printed Name of Company) submit, and certify the accuracy of this proposal surnrary sheet I I4 c July 19, 2013 Authorized Represe tive Signature Date Authorized City Representative Date I'. � i °''� Pace 6 WisBIEDIE wok Mr irif 40. laff E__MI If ILI W41 11111111 119 Vost± It IN rta 'MOW J.S. Edwards Sherlock INSURANCE AGENCY City of Port Arthur Employee Benefits RFP November 2013 The City of Port Arthur prepared and made available an RFP for employee health insurance, employee dental insurance and employee life insurance coverages on 6/24/13 through it's Purchasing Division. Responses were opened on 7/24/13 and review was initiated. Questions and clarifications were generated and results were preliminarily discussed, resulting in the following recommendations: Life Insurance /AD&D: 4 companies submitted proposals with the incumbent, Dearborn National, offering a significant reduction to current rates for benefits equal to the current plan. Other carrier options, while lower then current rates, were not as favorable as those offered by DN. With that in mind, our recommendation is to accept the newly offered (reduced) rates from DN. Dental Coverage: We received 6 dental quotes that mirror existing dental plan benefits. Review criteria was based on benefits, rates, rate guarantee, and carrier stability. Initial review generated follow -up requests for "best and final" offers from the 3 most competitive carriers. These 3 carriers RFP responses were extremely close in all aspects of the initial review criteria. Aetna, Humana and Blue Cross Blue Shield were asked to take a last look at their proposals and verify that they had offered their best options for the City. After review of the final offers, the following factors entered into this recommendation. Aetna's first year offer would deliver an approximate 8% reduction to current rates and their second year offer indicated a 7% expected increase. Humana did not revise their original offer and was removed from final consideration as a result. A review of BCBS rates for the past 5 years indicates that 3 of those 5 years the City received no adjustment (0 %) to rates. The overall average adjustment for those 5 years was 3.7 %, well below the industry average of 5 -7 % annually. BCBS's 4155 Phelan Boulevard • Beaumont, TX 77707 • P.O. Box 22237, 77720 -2237 Beaumont (409) 832 -7736 • Fax (409) 833-1721 • Houston (713) 224 -8723 final offer in response to our RFP was no change to current rates for this year or next year. That being the case, and with no administrative or service issues with BCBS dental coverage at the City, this recommendation is to accept the final dental proposal from BCBS at no change to current rates with a 2 year g»nrantee. Reputation, experience, and consistency headline this recommendation. Health Coverage: The health coverage RFP used the following criteria for evaluating responses we received: Plan Cost, Weight =50 %: Total cost to the City and employees /retirees. This includes all financial aspects, not just the monthly fixed costs of administration and stop loss fees. Included in the review were: Administrative performance guarantees. Provider discounts, which impact claim costs to both the City and employees. Review of the DRG payment figures, if included, in the proposal response. _ Recognition of new administrators and stop loss carriers fees for a first year relationship. Recognition of new stop carriers first year claims liability based on the type of contract offered. Termination liability offer /option included. Provider Network, Weight =20 %: Medical facilities and physicians in local area as well as outside of Port Arthur, Texas, the State of Texas, and the United States of America. Discount obtained for the City and employees by utilizing the provider network. 2 Plan Design, Weight =10 %: Meeting RFP benefit requirements Proposal Plan Management Program, Weight =10 %: Plan integrity safeguards for service delivery and quality as well as financial aspects. Assistance in all aspects of Affordable Care Act implementation. Financial Experience, Weight =10 %: Experience and financial stability of carrier 6 responses were received. After thorough review involving discussion and clarification(s) of the initial submissions, and taking into consideration the criteria listed above, 2 carriers were invited to make presentations to City officials and your consultant. While other carriers might have had certain aspects of their responses that were favorable, it was determined that Humana and Blue Cross Blue Shield had the overall best initial combinations of the areas outlined above. Annual fixed cost (administration and stop loss) totals ended up slightly in the incumbent's (BCBS) favor, totaling approximately $1.35 million vs Humana's $1.51 million. It is important to note that, if selected, Humana would be performing a reduced "first year" amount of administrative services. While BCBS indicates their rates are "firm" and not subject to further review, Humana requires a final "disclosure document" which would need to include up to the minute claims info. In addition, the Humana quote has increased (lasered) the individual stop level on 2 current large claimants from the group level of $100K to $200K on one individual and $250K on another. These increased amounts could potentially make the City liable for up to an additional $250k should those members have claims up to or above the group $100K stop loss level. When comparing expected claims for the next 12 months, there was very little difference in the offers when the proposals developed total figures, $6.8 million for BCBS and $7.0 million for Humana. Both carriers offer optional wellness and employee wellness incentive programs with those costs being estimated at approximately $70,000 annually for either carrier. Both carriers offered to mirror current health benefit plans and both carriers have very sound financial statuses. Both carriers offer "run out" coverage to limit the city's financial liability should a decision to change carriers occur in the future. BCBS offered a 3 year administrative guarantee and Humana 3 offered a maximum adjustment of 10% to the cost of their stop loss coverages next year. Both carriers also included "performance guarantees" tied to network utilization, network discounts and from Humana, wellness program participation. BCBS tied as much as 25% of their annual administrative fees and Humana 10% of their stop loss fees as performance incentive initiatives. When comparing PPO network pricing, a major component in costs for both the City and employees, both carriers tout their provider contracts and the discounts they generate as being "the best available ". BCBS reports for the City indicate that City members have received approximately 65% off of "retail" by using the BCBS provider network for the past 12 month period. Humana has indicated they feel their discounts would be comparable. Both Humana and BCBS will assist the City in the ongoing Healthcare Reform process. PCORI fees remain in place for 2014 and will total approximately $3200 for the City. The Affordable Care Act (ACA) also includes a reinsurance fee that will begin 1/1/14 and will be $5.25 per member per month or approximately $100,000 annually for the City. These fees were not included in any of the RFP responses received. BCBS has been the City's administrator for over a decade. A review of the most recent 5 years data (including the proposal received) indicates an average suggested rate adjustment of 2.34% per year. During this same 5 year period, typical rate adjustments have ranged from 7%-11% on average. That being said, and with no indicated financial or administrative incentive to move to another carrier, this recommendation is to remain with BCBS. The relationship with the City and her employees has been mutually beneficial and BCBS indicated their commitment to keep it so by a competitive response and follow up to our RFP. Once again, reputation, experience and consistency are significant contributors to this recommendation. While leaving current health benefits in place (except any changes dictated by ACA) I would suggest consideration be given to a new provision available from BCBS. Blue Distinction Centers are facilities that have proven to offer both expertise and cost efficient care for specialty services such as organ transplants, knee and hip surgeries, and cardio problems. These services typically have a significantly higher cost impact for the covered member and for insurance plan. Offering employees an incentive 4 such as 90% coinsurance (vs normal 80 %) would yield no additional claims liability to the City (as the additional discount from these centers would offset the 10% payment bump) and offer employees and their dependents access to facilities they might not normally consider. Based on my critical and complete analysis of vendor proposal submitted, review of City of Port Arthur health trends, utilization patterns, the evaluation criteria, and using industry standards, my recommendations are as follow: Life Insurance: Dearborn National Dental Insurance: Blue Cross Blue Shield of Texas Health Insurance: Blue Cross Blue shield of Texas I will make myself available to answer any questions that City officials or you might have about the review and this recap. • - spectfully su fitted, Mickey Mo Y ier, MHP 5 I , 0 , ' Z 0 41 r W -& 0 0 0 --.1 O -h D i CO ( . O O 0 Ln mei - - ti W m 1 c D W 0 z- Q o O (D 0 0. 0 N o. = ( N =' f O o A s 0 0 L. i Z. i 3 l O V N 0 O 0) 0 . ! D. : 7 o a) ® \ \ n § k Ca. & \ 2 0 a ` 2 R r Ca $ § (D \ 0 \ J/� % ± :/) 5 -, -,? ��� o c s a E 7 0 Lo m / / CD / \ (.0 > ai ) ? d / \ \ % $ a 7 * -0 $ m e = > { / g \ q \ / S 2 > o r--1- z \ \ / / / $ / 9 2 0 { \ E. 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CD o Ri t o 0 -h D 0 | $ o i $ 5 § § = ca - 0 § m g ' -0 a. 0 . ` 0 @ m $ � & Q. o 0 0 0 3� > X § CO a i § $ - | ■ c P o D ! P k t 3 ) City Of Port Arthur November 1, 2013 - October 31, 2014 Network Discount Guarantee Medical Claims Only Claims Paid 11/01/13 Through 10/31/14 Guaranteed Discount Percentage 60.0% Administration Fee at Risk: $ 37.19 PEPM Actual Discounts Admin Fee Penalty 58.00% or Higher 0.0% 57.20% to 57.99% 5.0% 56.40% to 57.19% 10.0% 55.60% to 56.39% 15.0% 54.80% to 55.59% 20.0% 54.79% or Lower 25.0% 1. BCBS reserves the right to re- evaluate and re- establish the Guaranteed Discount Percentage if Medicare changes its payment systems during the term of this Network Discount Guarantee. 2. Network Discount Guarantee applies only to eligible employees and retirees who enroll in the proposed BCBS benefit plans. 3. BCBS reserves the right to re- evaluate and re- establish the Guaranteed Discount Percentage if the participation changes by more than 10.0 %, or if the distribution of enrolled employees between participating Plans changes significantly. 4. BCBS reserves the right to re- evaluate and re- establish the Guaranteed Discount Percentage if there is a change in the benefit plan design. 5. BCBS will exclude all claims in excess of $100,000 and claims the Employer authorizes to be paid on an exception basis. 6. BCBS reserves the right to void this Network Discount Guarantee if there are less than 752 employees enrolled in the plan. 7. Claims will exclude Medicare - related claims, claims with COB and Rx claims. 8. Both In- Network and Out -of- Network claims are included in the Overall Network Discount Percentage calculation. 9. The formula for the Overall Network Discount Percentage calculation is as follows: (Eligible /Covered Claims less Allowed Claims equals the Provider Savings. The Provider Savings divided by the Eligible /Covered Claims equals the Overall Network Discount %). 10. Network Discount Guarantee excludes Prescription Drugs. 11. Administrative Fee at Risk will be finalized upon sale of the Network Discount Guarantee. 'Amount at Risk is based on current enrollment of 835 HCSC Primary employees. Actual amount at risk is subject to change based on final enrollment of employees who select BCBS coverage. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association City Of Port Arthur November 1, 2013 - October 31, 2014 In Network Utilization Guarantee Medical Claims Only Claims Paid 11/01/13 Through 10/31/14 Guaranteed In Network Utilization 98.0% Administration Fee at Risk: $ 37.19 PEPM Actual In Network Utilization Admin Fee Penalty 96.00% or Higher 0.0% 95.10% to 95.99% 5.0% 94.20% to 95.09% 10.0% 93.30% to 94.19% 15.0% 92.40% to 93.29% 20.0% 92.39% or Lower 25.0% 1. BCBS reserves the right to re- evaluate and re- establish the Guaranteed In Network Utilization if Medicare changes its payment systems during the term of this In Network Utilization Guarantee. 2. In Network Utilization Guarantee applies only to eligible employees and retirees who enroll in the proposed BCBS benefit plans. 3. BCBS reserves the right to re- evaluate and re- establish the Guaranteed In Network Utilization if the participation changes by more than 10.0 %, or if the distribution of enrolled employees between participating Plans changes significantly. 4. BCBS reserves the right to re- evaluate and re- establish the Guaranteed In Network Utilization if there is a change in the benefit plan design. 5. BCBS will exclude all claims in excess of $100,000 and claims the Employer authorizes to be paid on an exception basis. 6. BCBS reserves the right to void this In Network Utilization Guarantee if there are less than 752 employees enrolled in the plan. 7. Claims will exclude Medicare- related claims, claims with COB and Rx claims. 8. Excludes claims for deemed providers. 9. In Network Utilization Performance Guarantee is based on Eligible /Covered Charges. 10. In Network Utilization Guarantee excludes Prescription Drugs. 11. Administrative Fee at Risk will be finalized upon sale of the In Network Utilization Guarantee. Amount at Risk is based on current enrollment of 835 HCSC Primary employees. Actual amount at risk is subject to change based on final enrollment of employees who select BCBS coverage. A Division of Health Care Service Corporation, a Mutual Legal Reserve Company, an Independent Licensee of the Blue Cross and Blue Shield Association