Medical Plan Third-Party Administration Services and Stop Loss Coverage_Wellmark THE CITY OF Dubuque
DUB E i"
Masterpiece on the Mississippi 2007.2012.2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Medical Plan Third Party Administration Services and Stop Loss Insurance
Coverage
DATE: March 20, 2017
In August of 2016 the City solicited proposals to provide third party administration
services and stop loss insurance coverage for the City's medial plan. The proposals
were prepared and analyzed by Gallagher Benefit Services, the City's benefit and
actuarial consultant.
Wellmark of Iowa submitted the most competitive proposal. Taking into consideration
their annual administrative services fee of $293,482, the anticipated annual savings
based on Fiscal Year 2016 eligible medical charges is $979,210. The Fiscal Year 2016
medical claims for the City after applying network discounts was $8,590,780.
Wellmark's proposal is projected to provide a savings of 11.4% based on Fiscal Year
2016 claims. As a result of the partnership Gallagher Benefit Services has with major
stop loss carriers, it is anticipated that the City will also save $100,000 in stop loss
premiums. This projected $1,079,210 in savings was anticipated in the Fiscal Year
2018 budget projections.
Personnel Manager Randy Peck recommends City Council approval of the selection of
Wellmark of Iowa as the third party administrator for the City's medical plan. Employees
will still have access to Medical Associates and Great River physicians and Mercy and
Unity Point Hospitals.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
v
Mic ael C. Van Milligen
MCVM:jh
Attachment
cc: Crenna Brumwell, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
Randy Peck, Personnel Manager
2
THE CITY OF Dubuque
FAmedcaC"
DUBUQUE
ri
....................'"...............I
Masterpiece on the Mississippi 2007.2012•2013
TO: Michael C. Van Milligen, City Manage
FROM: Randy Peck, Personnel Manager
SUBJECT: Medical Plan Third Party Administration Services and Stop Loss Insurance
Coverage
DATE: March 16, 2017
In August of 2016 the City solicited proposals.to provide third party administration
services and stop loss insurance coverage for the City's self-insured medical plan. The
proposals were prepared and analyzed by Gallagher Benefit Services, our benefit and
actuarial consultant. Responses were received from Health Choices, our current third
party administrator, Wellmark, UHC (United Healthcare), SISCO (Self Insured Services
Company) and BAS. The following is the annual cost/(savings) of the top three
competitors based on medical claims, after network discounts have been applied, of
$8,590,780 for Fiscal Year 2016:
Carrier Cost/(Savings)
Health Choices ($904,488
Wellmark ($1,272,692)
UHC (United Healthcare) ($670,044)
Wellmark submitted the most competitive proposal. Taking into consideration their
annual administrative services fee of$293,482, the projected annual savings is
$979,210. Wellmark's proposal is projected to provide a savings of 11.4% based on
Fiscal Year 2016 claims. Fiscal Year 2016 claims, after Health Choices discounts have
been applied, were $8,590,780.1
As a result of the partnership Gallagher Benefit Services has with major stop loss
carriers, it is anticipated that we will also save $100,000 in stop loss premiums.
Employees will still have access to Medical Associates, Grand River Medical Group and
Mercy and Unity Point Hospitals.
1 This figure includes $335,231 in coinsurance, copayments and deductibles paid by employees in Fiscal
Year 2016. The City's cost for medical claims in Fiscal Year 2016 was $8,225,549.
The requested action is for the City Council to approve a motion selecting Wellmark of
Iowa as the third party administrator for the City's medical plan. The transition to this
third party administrator will take effect in July, 2017. 1 will forward the Administrative
Services Agreement as soon as it is available.
RP:Imh
2
Medical Plan 5 Year History
Medical Claims Stop Loss Net Medical Percent Administrative
Fiscal Year Paid Reimbursement Claims Paid Change Services Fee
2016 $8,255,549 $1,399,404 $6,856,416 -3.7% $139,725
2015 $7,238,560 $118,405 $7,120,155 18.0% $143,552
2014 $6,133,047 $101,484 $6,031,563 2.0% $140,569
2013 $5,978,844 $68,426 $5,910,418 21.0% $134,702
2012 $5,383,546 $499,906 $4,883,640 -4.9% $131,931
2011 $5,576,233 $440,639 $5,135,594 $127,293
Net Medical Claims Paid Average Annual increase = 6.5%