The City of Plano provides benefits to approximately 5,300 members on our self-funded health plan, comprised of 2,100 active members, 2,900 active dependents, 300 pre-65 retirees and 50 retiree dependents. The City currently offers one plan for our members, an in-network only plan that is administered by a third party administrator (TPA) health insurance carrier and has a traditional pharmacy benefit manager arrangement. The City is self-funded, meaning it bears the risk of paying medical and pharmacy claims. The City carries stop loss insurance with an individual stop loss coverage that takes effect at $250,000 to protect the City against the impact of catastrophic claims.
Our current medical TPA provides our health insurance network and is responsible for the payment of the City’s health insurance claims. Failure to award this contract will result in the City having a self-funded plan that is absent of administration, which would impede our ability to offer quality health care to our employees.
Health Plan Goals and Development of Scope of Services
In developing the request for proposals/qualifications for our TPA process, the City ensured the specifications were aligned with the health plan goals depicted below. The scope of the services requested was expanded so that the City was not just seeking a processor of claims, but an extension of the team to help navigate the continuum of health and help the City execute these goals.
Health Plan Goals
1. Health Plan Governance
A. Offer a competitive, affordable and sustainable benefit plan of value to our employees and retirees and is simple to comprehend
B. Expand and strengthen partnerships with providers to better manage the health plan cost of care, improve outcomes, and improve member experience
2. Deliver Outstanding Operational Analysis and Effectiveness
A. Enhance successful business practices to improve operations
B. Improve the health and wellness of our members through robust data analytics
3. Strategic Communication
A. Provide a superior level of communication through:
(1) Transparency,
(2) Ease of Access,
(3) Multi-channel touch points,
(4) Commitment to continuous improvement through feedback and measurement, and
(5) Facilitation of responsive bi-directional communication
4. Population Health Outcomes and Risk Management
A. Improve the health outcomes of our members through high quality health care initiatives
B. Create a culture of wellness at the City.
C. Expand and strengthen care coordination to appropriately address members' needs
5. Financial Stewardship
A. Improve infrastructure needed to make data-driven financial decisions
B. Alignment of long-range investment and actuarial planning that supports Risk Pool goals and objectives
Of the utmost importance to the City was the ability to have timely and transparent data in order to effectively make data-driven financial decisions on plan design and avoid unnecessary and wasteful spending. Additionally, the City felt it was highly important to have resources available to members to help them navigate the health care landscape when they found themselves in the midst of it, so the scope also included advocacy and nurse case management services.
Lastly, the City asked for models of pharmacy benefit management that did not include any prescription drug mark ups in price (as is the current practice of the largest pharmacy benefit managers). As a governmental entity, the City feels transparency is important and therefore gave preference to pharmacy benefit managers that do no mark up the drug cost, and pass along 100% of all pharmacy rebates, and charge an administrative fee based upon the prescription costs.
In April 2019, the City of Plano requested Statements of Qualifications and Proposals from qualified medical third party administrators (TPA) in a two-step process in order to enter into a professional services agreement for the management of the City of Plano health plan. The City was seeking a highly qualified and experienced business partner who will not only administer the health plan but will serve as a true business partner by actively managing the City’s medical plan as outlined in the objectives below:
- Flexible and Accurate Claims Processing;
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Ability to Access and Own Data/Timely and Actionable Reporting;
- Network Access and Direct Contracting;
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Pharmacy Benefit Management;
- Proactive Management of Care through Health Advocacy;
- and
Dedicated Nurse Case Management for Large Claimants
The evaluation committee reviewed and evaluated the RFPs using the following criteria:
Proposal Evaluation Criteria Criteria Weight
Cost 25 points
Flexible and Accurate Claims Processing 15 points
Ability to Access and Own Data/Timely and Actionable Reporting 20 points
Network Access and Direct Contracting 10 points
Proactive Management of Care through Health Advocacy 10 points
Nurse Case Management for Catastrophic Claimants 10 points
Pharmacy Benefit Manager 10 points
Other/Value Added Items 10 points
Total 110 points
The top four vendors were invited to participate in a three-hour finalist presentation. Due to the organizational impact of this initiative, it was imperative that members of Team Plano were involved in the selection of a new TPA. Therefore, Human Resources invited a cross-representation of employees to participate in the finalist presentation. As a result of the presentation, two vendors were selected as finalists. The evaluation team performed site visits for the top two scoring finalists, which solidified our recommendation.
Based upon the highest overall score, the City recommends awarding this RFP to WebTPA.
Pricing
Medical Third Party Administrator
The estimated annual cost of administering the City’s medical plan is approximately $1,279,800 which will be funded in part by the Health Claims Fund and the OPEB trust. This cost includes Flexible Spending Account (FSA) and Consolidated Omnibus Budget Reconciliation Act (COBRA) administration as well as nurse case management costs. This cost is expected to fluctuate from year to year based upon enrollment in the health plan.
Pharmacy Benefit Manager
The estimated annual cost for Pharmacy Benefit Management is approximately $455,116. This annual cost is expected to fluctuate from year to year based upon the number of prescriptions. This change in pharmacy benefit managers will be a change in philosophy for managing the pharmacy portion of the benefits. The pharmacy benefit manager operates as a transparent pharmacy benefit manager, which means that it only charges an administrative fee per script and passes on 100% of rebates back to the City and does not mark up the cost of drug. Under the current contract, the pharmacy benefit manager retains 20% of the rebates and the “spread” of drug price charged to members vs. paid to the wholesaler is not known or disclosed to the City and would not be considered to be a transparent model. The pharmacy benefit manager also offers additional clinical programs that will add to the expected claims savings.