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Sparks City Council Meeting 11/26/2018

General Business: 9.5

Title: Consideration, discussion and possible approval of an agreement (AC-5538) with Hometown Health Providers Insurance Company (Hometown) to provide third party administrative services for the City’s self-funded Group Health Plan for the period of January 1, 2019 through December 31, 2021 in the amount $18.80 per member per month for a first year estimate of $148,896.
Petitioner/Presenter: Neil Krutz, ICMA-CM, Assistant City Manager/Jen McCall, Senior Human Resources Analyst
Recommendation: To approve an Agreement with Hometown to provide third party administrative services for the City’s self-funded Group Health Plan for the period of January 1, 2019 through December 31, 2021.
Financial Impact: The City currently pays a per employee per month (PEPM) fee to Hometown. PEPM is defined as an employee, retiree or a surviving dependent of a retiree. The monthly average count for employees, retirees and surviving dependents is 660. The current PEPM fee paid to Hometown is $17.91. In each year of the term of this Agreement, rates will increase by 5%. On January 1, 2019, the PEPM will increase to $18.80 PEPM for an estimated total of $148,896. On January 1, 2020 rates will increase to $19.75 PEPM for an estimated total of $156,420 and on January 1, 2021 rates will be $20.74 PEPM for an estimated total of $164,260. Since the number of employees, retirees and dependents of retirees can fluctuate, the exact annual amount is unknown.
Business Impact (Per NRS 237):
    
A Business Impact Statement is not required because this is not a rule.
Agenda Item Brief:

Staff is recommending the approval of a new Agreement with Hometown which provides third party administrator services to the City’s self-funded Group Health Plan.  Third party administrator services include but are not limited to the processing and payment of all medical and dental claims, maintenance and utilization of a preferred provider network of physicians and medical facilities, and utilization review and authorization of hospital in-patient and out-patient admissions.



Background:

Hometown Health has been our third-party administrator since January 1, 2016.  City staff with the assistance of our group health plan broker LP Insurance Services, began a review of the current Agreement with Hometown in early summer, 2018.  City staff, brokers from LP and staff from Hometown discussed in length and negotiated terms for the Agreement presented to council today.



Analysis:

Hometown provides processing and payment of all medical and dental claims, maintenance and utilization of a preferred provider network of physicians and medical facilities, case management for members, utilization review and authorization of hospital in-patient and out-patient admissions. In addition, Hometown administers payments to other benefit providers on the City’s behalf, such as WellDyne Rx, Symetra Life Insurance, our cobra and FSA administrator Infinisource and our Stop Loss Insurance carrier.

Hometown has offered a competitive renewal rate of 5% PEPM each calendar year for a three-year period beginning January 1, 2019 through December 31, 2021.  In addition, Hometown agreed to implement performance guarantees for financial accuracy, claims administration and call center statistics. These guarantees with applicable penalties can be found in the attached Agreement in the  Appendix A - which also outlines the cost for ancillary services such as large case management and contracting with out-of-area providers.

Staff recommends a new Agreement with Hometown, which includes competitive increases to the PEPM and newly established performance guarantees be approved by City Council to support the City’s self-funded Group Health Plan.



Alternatives:

1.  The Council may choose to approve the Agreement with Hometown to provide third party administrative services to the City’s Group Health Plan for the period of January 1, 2019 through December 31, 2021.

2.  The Council may choose not to approve the Agreement negotiated with Hometown to provide third party administrative services to the City’s Group Health Plan for the period of January 1, 2019 through December 31, 2021.

3.  The Council may choose not to approve the Agreement with Hometown to provide third party administrative services the City’s Group Health Plan for the period January 1, 2019 through December 31, 2021 and provide direction to the City Manager.



Recommended Motion:

I move to approve the agreement with Hometown for administrative services and customer support for employees, dependents and retirees covered by the City’s Group Health Plan for the period of January 1, 2019 through December 31, 2021.



Attached Files:
     AC5538 Hometown Agreement 2019-2021.pdf

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