Region 1 ESC

1
Region 1 ESC

• Employee
• Benefits
• Procurement
• March 9, 2007

2
Who Is C-CBS?

• C-CBS is the acronym for City-County Benefits
  Services
• C-CBS is an employee benefits consulting firm
  that only works with Texas public entities.
• C-CBS currently represents 42 public entities and
  assists them in managing over 420 million in
  premium or claims dollars
• HGAC following a RFP for Benefits Consultant
  awarded contract to C-CBS
• Employee Benefits
• Property and Casualty
• GASB OPEB Actuarial Analysis

3
C-CBS Employee Benefits Staff

• Terry Hale
• Life and Health Insurance Counselor
• 33 Years Employee Benefits Experience
• Former Executive Director of TMLIEBP
• Bob Treacy
• Life and Health Insurance Counselor
• 23 Years Employee Benefits Experience
• Burke Sunday
• Life and Health Insurance Counselor
• 28 Years Employee Benefits Experience
• Cheryl Wessels
• Certified Government Benefits Administrator
  (CGBA)
• 16 Years Employee Benefits Experience

4
Healthcare Costs(Per Employee Per Year)

• 1969 242
• 1979 623
• 1999 4,821
• 2006 6,629

5
Increases in Health Insurance (cumulative 1988 -
2006)
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Increases in Health Insurance Premiums Compared
to Other Indicators, 1988-2006
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Why Should You Expect Your Healthcare Costs To
Double?Source Centers for Disease Control
(CDC)For Every 100 Employees

• 40-45 have high cholesterol levels
• 33 use tobacco products
• 60 have high risk of heart disease
• 25 have high blood pressure, the 1 risk factor
  for stroke

• 60-70 are overweight or obese
• 60 have no leisure-time activity
• 8-10 have diabetes (2-3 are unaware)
• 15 are bothered by excess stress
• 12 are heavy drinkers

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Trend Factors

• Medical Inflation
• Increased Technology
• Increased Utilization

• HMO Plans 12.1
• PPO Plans 12.5
• POS Plans 12.1
• CDHP Plans 12.7
• Fee for Service 14.4
• Prescription Drugs 21.7

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Is This The Future?
10
Benefit Procurement

• Process Governed by TEC 44.031
• 44.031 PURCHASING CONTRACTS. (a) Except as
  provided by this subchapter, all school district
  contracts, except contracts for the purchase of
  produce or vehicle fuel, valued at 25,000 or
  more in the aggregate for each 12-month period
  shall be made by the method, of the following
  methods, that provides the best value for the
  district
• (1) competitive bidding
• (2) competitive sealed proposals
• (3) a request for proposals, for services other
  than construction services
• (4) a catalogue purchase as provided by
  Subchapter B, Chapter 2157, Government Code
• (5) an interlocal contract
• 6) a design/build contract
• (7) a contract to construct, rehabilitate, alter,
  or repair facilities that involves using a
  construction manager
• (8) a job order contract for the minor
  construction, repair, rehabilitation, or
  alteration of a facility
• (9) the reverse auction procedure as defined by
  Section 2155.062(d), Government Code or
• (10) the formation of a political subdivision
  corporation under Section 304.001, Local
  Government Code.

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Benefit Procurement Continued

• (b) Except as provided by this subchapter, in
  determining to whom to award a contract, the
  district may consider
• (1) the purchase price
• (2) the reputation of the vendor and of the
  vendor's goods or services
• (3) the quality of the vendor's goods or
  services
• (4) the extent to which the goods or services
  meet the district's needs
• (5) the vendor's past relationship with the
  district
• (6) the impact on the ability of the district to
  comply with laws and rules relating to
  historically underutilized businesses
• (7) the total long-term cost to the district to
  acquire the vendor's goods or services and
• (8) any other relevant factor specifically listed
  in the request for bids or proposals.

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Benefit Procurement Continued

• Fully Insured or Self-Funded
• Ingredients for Success!
• It All Starts With the Bid Specifications or
  Request for Proposals (RFP)
• Proper Data Format
• Proper Evaluation Criteria
• Quality of Questionnaire
• Make It Easy Not Hard

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Proper Data Format

• Fully Insured or Self-Funded
• Census In Excel
• All Eligible EE - Gender, Age or DOB, Coverage
  (i.e. EE, EESp, EECh, EEFm), Zip Code,
  Position
• If also procuring Life with salary multiple, LTD
  and/or STD include salary
• Current Benefits and Provider
• Employer Contribution Level(s)
• Experience
• Monthly Claims and (Premium if fully insured)
• Monthly Enrollment
• Large Claimants Including Diagnosis

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Proper Evaluation Criteria

• Do Not Use Purchasing Directors Standard
  Criteria
• Typical
• Price 45
• Quality 25
• Meets District Needs 15
• Past Relations 5
• Other Relevant Factors 10
• Determine What Is Important
• Price and Value
• Quality of Reporting
• Financial Stability
• Quality of Service and Performance Guarantees

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Quality of Questionnaire

• Collect Necessary General Information
• Vendor Information
• Contact for Questions
• Name of Individual Authorized to Negotiate Final
  Terms and Conditions
• Certificate of Authority
• Annual Financial Report/AM Best Rating/Dun and
  Bradstreet Rating
• Focus and Limit Questions to Evaluation Criteria
• Every Question Should Tie Back To One of the
  Evaluation Criteria
• Make Sure You Have Questions To Provide A Ranking
  for Each Evaluation Criteria

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Make It Easy Not Hard

• Make Specifications and Forms Available
  Electronically in Word
• Make Census Available in Excel
• Provide Monthly Claims (and Premium if fully
  insured) Available in Excel
• Need Prior Plan Year and Current Plan Year
• Provide Large Claim Information in PDF
• Make Schedule(s) of Benefits Available in PDF
• Give The Vendor Time
• Minimum 3 Weeks
• Give yourself another 3-4 weeks to evaluate and
  act plus 4 weeks to implement changes
• Never have opening before 200 P.M.
• Never have opening on Monday or day after holiday

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Benefit Procurement Continued

• Self-Funded
• Is It Price or Plan Cost ?
• 85 of Plan Expenses are the Cost of Claims
• Do You Want The Quote That Is 10 Less On The 15
  Admin and Stop Loss or The One That Provides A
  15 Better Discount On The 85 Claims Cost?
• You Determine Benefits So How Do You Evaluate
  Quality
• Claims Turn Around Time
• Claims Payment Accuracy
• Customer Service Response Time
• Providers In Network
• Provider Discounts
• Performance Guarantees

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Benefit Procurement Continued

• Self-Funded
• Direct Contracts or Contracts Through TPA?
• If Through TPA Make Sure Contract Discloses All
  TPA Revenue
• Stop Loss
• PBM
• Network
• Hospital Audits
• Out-of-Network Fee Negotiations
• Subrogation
• Issue Separate RFP for Stop Loss 2-3 Weeks After
  RFP for Administrative Services
• Rx Formulary Rebates
• Do Not Chase The Rebate
• Watch Your Bottom Line
• Discounts
• Dispensing Fees

19
Agent Myth

• Article 4001.052 of the Texas Insurance Code
  states a person with an Agents License works
  for the Insurance Company and in any dispute
  represents the Insurance Company not the
  insured.
• Agents and Brokers Add An Unnecessary Additional
  Cost
• Agents Say They Are Required This is Not True
• Agents Say They Will Handle Your Enrollment Use
  The Savings To Hire A Staff Person To Handle
  Enrollment
• Agents Say They Will Resolve Claims Problems
  Under The Insurance Code An Agent Can Only
  Represent The Insurance Company , Not The Insured
• If You Must Use An Agent Or Broker, Control The
  Process By Having A Pre-Bid Conference
• Vendors Dislike Receiving Multiple Copies of The
  Same Specifications

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Who Can Assist The District?

• Article 4052 of the Texas Insurance Code provides
  for a Life and Health Insurance Counselor. Only
  a person with a Life and Health Insurance
  Counselor license can offer to give, any advice,
  counsel, make recommendations or provide
  information in respect to the terms, conditions,
  benefits, coverage or premium of any insurance
  policy or contract, with respect to the
  expediency or advisability of altering, changing,
  exchanging, converting, replacing, surrendering,
  continuing or rejecting any such policy, plan, or
  of accepting or procuring any such insurance
  policy, contract, or plan from any insurer or
  issuer of a health benefit plan.

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When In Doubt Use A Consultant

• If You Think You May Need A Consultant
• Make Sure They Have A Life and Health Insurance
  Counselors License
• Contract With The Consultant On A Flat Fee Basis
• Hire The Consultant To
• Analyze Current Benefits and Plan Performance
• Involve The Staff Insurance Committee, If
  District Has One, In Developing Evaluation
  Criteria
• Develop The Specifications or RFP
• Manage The Procurement Process
• Analyze The Proposals
• Make Recommendations To Management and Board of
  Trustees
• Monitor Implementation Process
• Monitor Plan Performance

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Consider Collective Purchasing

• Utilize Chapters 271 Cooperative Purchasing
  Program and 791 Interlocal Cooperation Act
• More Continuity of Benefits Between Districts
• Administrative Savings Through Consolidated
  Specifications
• More Competition For Contract(s)
• Self-Funded Groups
• Do Not Need To Share Risk
• Obtain More Leverage In The Market Place
• Stop Loss
• Administrative Services
• Fully Insured Groups
• Need To Share Risk
• Obtain More Leverage In The Market Place

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Its Time For Questions

• May I be excused? My brain is full.

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www.c-cbs.org