City of Laredo

City of Laredo

City’s Self-Funded

Health Plan Workshop

M2005-W-04

1110 Houston Street

Laredo, Texas 78040

August 25, 2005

5:30 p.m.

I. Call to Order.

With a quorum present, Mayor Elizabeth G. Flores called the meeting to order.

II. Roll Call

In attendance:

Elizabeth G. Flores, Mayor

Alfredo Agredano, Council Member, District I

Hector Garcia, Council Member, District II

John C. Galo, Council Member, District III

Johnny Amaya, Council Member, District IV

Johnny Rendon, Council Member, District V

Gene Belmares, Council Member, District VI

Jose A. Valdez, Jr., Mayor Pro Tem, District VII

Gustavo Guevara, Jr., City Secretary

Larry Dovalina, City Manager

Cynthia Collazo, Deputy City Manager

Jaime Flores, City Attorney

Motion to excuse Cm. Ramirez.

Moved: Cm. Agredano

Second: Cm. Amaya

For: 7 Against: 0 Abstain: 0

III. Pledge of Allegiance.

Mayor Elizabeth G. Flores led in the Pledge of Allegiance.

IV. Presentation of the City of Laredo’s current partially Self-funded Health Plan, as

compared to a Fully Insured health Plan by Mr. Ken Wethe, City’s benefit consultant.

Larry Dovalina, City Manager, said that staff has had several meetings with the Health and Benefits Committee where they have discussed very serious insurance issues. He added that the Committee has tried to be as reasonable as possible to the taxpayers and be cognizant of what is affordable to the employees. He acknowledged that the City of Laredo offers benefits that other entities do not offer. He added that the City has worked very diligently on the rising cost of insurance and noted that the problem is not unique to Laredo. The City of Laredo is at a point where some very tough decisions must be made which will affect the employees and the people around them.

Mr. Wethe, Benefit Consultants, gave the following presentation:

Exhibit A

Definition:

Self funded:

A self funded, or self insured plan, is one in which the employer assumed partial financial risk for providing health care benefits to its employees.

Rather than obtaining medical coverage from an insurance carrier, the employer elects to fund the risk up to a certain level where a Reinsurance or Stop Loss Insurance carrier is brought in.

The Stop Loss is designed to limit the employer’s loss to a specified amount, to insure that large, or unanticipated claims, do not upset the financial integrity of a self funded plan.

Self Funded vs. Fully Insured

With self-funding, the employer holds the cash needed to fund benefits, instead of sending the fully conventional premium to the insurance company, only a small fraction of the conventional premium is sent to the reinsurance carrier.

The employer purchases re-insurance for protection, holds the remainder of the claim funds, invests them, segregates them if desired, or uses them for general business purposes until they are needed for the funding of claims.

The employer retains and keeps the funds when claims do no materialize, hence making a profit.

Advantages of Self Funding:

· Flexibility in the benefit plan design.

· Portability from one carrier to another.

· Cost Savings (If you have a good expected claims year, that is the best scenario. But even if you don’t there is a maximum liability in place.)

· That is, money not spent for claims can be re-invested in our health plan.

· These savings may also be used to enhance existing benefits or to add new ones.

· Not subject to Fully Insured Carrier’s profit margin.

· Not subject to Fully Insured Carrier’s premium tax factor.

· Not subject to state mandated benefits.

· Lower operational costs.

City of Laredo/Partially Self-Funded

History:

Prudential

(1987 – 1989) Hartford

(1989) TML – Third Party administrator (not an insurance company)

City of Laredo is “partially self-funded” because we have Stop Loss (after $100,000 insurance company starts paying.)

What does our current Third Party Administrator do for the City of Laredo?

· Go out for bids on City’s behalf (no additional consultants fees).

· Negotiate better rates.

· Provide Employee Educational Training.

· Non-Profit (do not work based on commissions).

· Compliance (Make sure we are in compliance with the law.)

· Retiree billing.

· Continuation of Coverage (C.O.C.) administration.

· Claim and prescription processing and payment for regular employees and retirees.

If the City of Laredo leaves partial self-funding:

· All outstanding claims will have to be processed and paid at an additional cost.

· There may not be continuity of coverage for employees.

· There may not be flexibility to adjust benefits.

· On any “good year” we may not be able to give upgrades to existing benefits (dental, vision, short-term disability, etc.) nor offer new benefits.

· We may have to pay commissions.

More points regarding City of Laredo partially self funding experience:

· No major employee complaints.

· Cutomer service satisfaction.

· All Index Cities (Brownsville, El Paso, Mc Allen, San Antonio, Corpus Christi, and Harlingen) are self-funded, except for Harlingen.

What is our Third Party Administrator doing to lower costs?

· Mail order.

· Plan modifications/administration.

· Disease Management.

· Negotiation with hospitals, physicians and/or networks.

Example: LISD

Fully Insured

Monthly cost High Low

Employee only $272.59 249.68

Employee/Family $778.55 735.20

EE 2471 X $272.59 X 12 = $8,082,839

EF 1220 X $505.96 X 12 = $7,407,254

Total (High Plan) $15,490,093

EE 2471 X $249.68 X 12 = 7,403,511

EF 1220 X $485.52 X 12 = 7,108,013

Total (Low Plan) $14,511,524

Self Funded Fully Insured

(L) $11,362,092 (L) $14,511,524

(H) $11,362,092 (H) $15,490,093

Med. Claims $ $7,704,803

Presc Claims $ $1,328,707

ADMIN $ $ 864,672

Stop Loss $ $1,463,910

$ 11,362,092

Life, AD & D, PAI $297,205 $1,669,545

Supplemental $260,951

Dental $507,078

Employee H & W $604,311

$1,669,545

Other $658,645 $658,645

Total $13,690,282 (L) $16,839,714

(H) $17,818,283

History of Rate Increases

Fiscal Year Fire/Police Regular EE % Increase

2002-2003 $93.28 $103.78 20%

$77.82 $86.48

2003-2004 $98.05 $108.97 5%

$93.38 $103.78

2004-2005 $102.95 $114.42 5%

$98.05 $108.97

2005-2006 $113.25 $125.86 10%

$102.95 $114.42 (Proposed)

Schedule of Benefits

Fiscal Year	Deductible In/Out Net	Out-of-Pocket	Dr./Specialist Co-pays	Emergency Room	Pre/Route Exams	Rx Mail Order
2002-2003	$250/$500 (80%/60%)	$1000/$2000 2 F Members	Dr. $20.00 Specialist $35.00	$25.00 (80%)	$200	Gen/Brand 6/25 Mail Order
2003-2004	SAME	SAME	SAME	$50.00 ($80%)	$400	SAME
2004-2005	SAME	SAME	SAME	SAME	SAME	SAME
2005-2006	Increase to $500/$750	Increase to $3000	SAME	SAME	SAME	Gen/Grand Same Mail Order (90 days)

Benefit comparison

UISD

LISD

WEBB County

City of Laredo

UISD Pays: $247.60/Mo.

LISD Pays: $225.00 Mo.

Webb Pays: $329.72 Mo.

City Pays: Monthly EE $211.37/EF $409.60 Police and Fire $211.37/ EF $434.43

High Plan – OV

$25; Rx: $5/$20/$35 Deb. $200/$600; (80%) EE $25; EC $ 194.66; ES $298.73; EF $496.45; Dual FP $248.85

State Plan – OV

$15; Rx: $5/$10/$35; Ded. $100/$300 (90%)

EE $402.64; EC $1,107.45; ES $1,415.42; EF $2,019.03; Dual Family Plan $1,771.43

Low Plan – OV $25; RX: $10/$20; Ded. $500; (70%/50%) EE $24.49; EC$ 216.39; EF $510,20

High Plan – OV

$25; Rx: $10/$20; Ded. $ 500 (80%/60%) EE $47.59; ES $293.36; EC $242.43; EF $553.55

State Plan – OV

$10; RX; $10/$20; No Ded.; (90%/70%); EE $222.61; ES $626.65; EC $541.95; EF $1,053.47

Plan OV $25 RX $7/$25

Ded. $500

(90% Coverage 10% Employee) EE - $21.67

ES - $195.00

EC - $119.17

Ecldn $130.00

EF - $238.33

Plan – (Proposed)

OV $20/$25

RX: $7/$30

Ded. $500/%750

(80%/60%)

$3,000 out of pocket

Employee only $0.00

EF Reg $272.70

EF P & F

$245.38

(10% increase)

Proposed Employee Health Benefits Plan

Increase Medical contribution rate by 10%

Increase Deductible from $250 to $500

Increase out of pocket from $1,000 to $3,000

Increase Mail order for Brand name prescription from $20 to $30

Implement the core benefit medical plan with a reimbursement/savings account

Exhibit B

City of Laredo

Self-Funded Health Plans

For Best & Final Grading

August 18, 2005

Combined Participants: A thru G

Cost

Fixed Max Mercy M of O BC BP TML

First year 15 3 6 12 9 15

Three years 15 3 6 12 9 15

Networks 10 8 2 10 6 4

Expected 10 8 2 10 8 6

Total 50 22 16 44 32 40

Technical

Enrollment 15 7 10 10 12 15

Admin. 10 6 7 7 9 10

Technology 10 6 8 7 10 9

Clients 8 2 5 7 7 8

Stop Loss 7 3 7 6 5 5

Total 50 24 37 37 43 47

Total 100 46 53 81 75 87

Comments:

1. Company Names are as follows:

Mercy – Mercy Health Plans

M of O – Mutual of Omaha

BC – Blue Cross and Blue Shield

BP – Benefits Planners

TML – Texas Municipal League IEBP

2. Cost points formula is the following:

Rank Points

100%

2 80%

3 60%

4 40%

5 20%

City of Laredo

Self-Funded Health Plans

For Best & Final Grading

August 18, 2005

Combined Participants: A thru G

Cost

Fixed Max Mercy M of O BC BP TML

First year 22.5 4.5 9.0 18.0 13.5 22.5

Three years 22.5 4.5 9.0 18.0 13.5 22.5

Networks 15.0 12.0 3.0 15.0 9.0 6.0

Expected 15.0 12.0 3.0 15.0 12.0 9.0

Total 75.0 33.0 24.0 66.0 48.0 60.0

Technical

Enrollment 7.5 3.5 5.0 5.0 6.0 7.5

Admin. 5.0 3.0 3.5 3.5 4.5 5.0

Technology 5.0 3.0 4.0 3.5 5.0 4.5

Clients 4.0 1.0 3.5 3.5 3.5 4.0

Stop Loss 3.5 1.5 3.5 3.0 2.5 2.5

Total 50 24 37 37 43 47

Total 100 45.0 43.5 84.5 69.5 83.5

Comments:

1. Company Names are as follows:

Mercy – Mercy Health Plans

M of O – Mutual of Omaha

BC – Blue Cross and Blue Shield

BP – Benefits Planners

TML – Texas Municipal League IEBP

2. Cost points formula is the following:

Rank Points

100%

2 80%

3 60%

4 40%

5 20%

City of Laredo

Summary of Self-funded Proposals

Provider Discounts – Repriced Claims

Review Date: ; August 24, 2005

Company	Network	Charge	Allowable	Discount	Allowable	Discount	Rank
TML	Current	$1,632,164	$993,686	39.1%	-	-	-
Blue Cross	Blue Cross	$1,632,164	$993,686	39.1%	$495,021	69.7%	1
Mercy Health	Mercy	$1,632,164	$993,686	39.1%	$741,857	54.5%	2
Benefit Planners	Benefit	$1,632,164	$993,686	39.1%	$745,561	54.3%	3
TML – Renewal	TML	$1,632,164	$993,686	39.1%	$758,914	53.5%	4
Mutual of Omaha	M o Omaha	$1,632,164	$993,686	39.1%	$920,308	43.6%	5
Entrust	Health Smart	$1,632,164	$993,686	39.1%	$1,064,868	34.8%	6

Comments:

1. Representative sample of claims for providers with the largest benefit payments for the

nine month period ended 06/30/2005 were selected for repricing. A total of 117 claims

were selected for repricing with gross charges of $1,632,164.

2. Each claim was then repriced in accordance with the provider’s contract with the PPO

network resulting in allowable amount.

Company	Agent	Year 1	Year 2	Year 3	Total
			Factor Amount	Factor Amount	Factor Amount
TML IEBP Current	Direct	$607,019	-	-	-
TML IEBP	Direct	$619,429	1.2% $626,862	5.0% $ 658,205	1,904,496 1
Blue Cross Blue S.	Robert Laurel	$775,256	12.4% $871,388	4.5% $910,600	2,557,244 2
Benefit Planners	Robert Laurel	$849,733	1.2% $859,930	1.0% $868,529	2,578,192 3
Mutual of Omaha	Robert Laurel	$802,171	18.7% $952,177	7.2% $1,020,734	2,775,082 4
Mercy Health Plan	Direct	$866,614	14.0% $987,940	Not Available	5

City of Laredo

Summary of Self-funded Proposals

For Best & Final Offer – First Year Cost – No HRA

Sorted by Fixed Cost

Company		Admin. Stop Loss Run-Off Run-Off Total	Expected Claims	Total
TML Current	D	$607,019 $1,139,989 $1,747,008	$12,204,524	$13,951,532
TML IEBP	D	$619,429 $1,139,708 $1,759,137	$13,521,919	$15,281,056
Blue Cross	RL	$849,733 $ 916,304 $102,000 $1,868,037	$11,560,333	$13,428,370
Benefit Plnner	RL	$775,256 $1,101,568 $102,000 $1,978,825	$13,116,291	$15,095,116
Mutual	RL	$802,171 $1,174,252 $102,000 $2,078,423	$14,190,264	$16,268,687
Mercy	D	$866,614 $1,209,257 $102,000 $2,177,871	$12,727,265	$14,905,135

City of Laredo

Self-Funded Plan

Best Final Offer – No HRA

Administrative Services		Year 1	Year 2
Administrator	TML	TML	Benefit Planners
PPO Network	PHCS Statewide	PHCS Statewide	& HHQ Outside TX: PHCS
Utilization Review Firm	TML	TML	BP Health Management
Prescription Drug Firm	Caremark Retail	Caremark Retail	Innoviant
Agent	Direct	Direct	Robert Laurel
Stop Loss Insurance
Insurance Company	ING/ReliaStar	ING/ReliaStar	ING/ReliaStar
Managing Underwriter	Direct	Direct	Direct
Placement Agent	American Stop Loss	American Stop Loss	American Stop Loss
Specific Deductible	$100,000	$100,000	$100,000
Specific Contract Basis	63/12	63/12	63/12
Aggregate Contract Basis	63/12	63/12	63/12
Run in Limit – Specific	0	0	0
- Aggregate	0	0	0
Waive Actively at Work	Yes	Yes	Yes
Retiree Coverage (Yes/No)	Yes	Yes	Yes
Additional Information Needed	Signed disclosure	Signed disclosure	Signed disclosure
Annual cost Units	Rate Annual	Rate Annual	Rate Annual
Administration Fees
Medical – EE/RET 2,337	$12.75 $357,561	$12.75 $357,561	$11.75 $329,517
Disease Management 2,337	$ 1.50 $ 42,066	$ 1.50 $ 42,066	$ 2.90 $ 81,328
COBRA/HIPPAA 2,337	$ 0.50 $ 14,022	$ 1.00 $ 28,044	$ 1.10 $ 30,848
Retiree Billing 210	$ 1.00 $ 2,520	$ 1.00 $ 2,520	$ 4.00 $ 10,080
FSA Fee 96	$ 5.00 $ 5,760	$ 3.60 $ 4,147	$ 4.50 $ 5,184
Agent Fee 2,337	None	None	$ 3.50 $ 98,154
Stop Loss Fee 2,337	None	None	$0.50 $ 14,022
PPO Fee 2,337	$ 3.85 $107,969	$3.85 $107,969	$4.50 $126,198
Rx Fee 30,000 Rx or 2,337	No Admin Fee	No Admin Fee	Included
U/R Fee 2,337	$ 2.75 $77,121	$ 2.75 $ 77,121	$ 2.85 $79,925
Set Up Fee	None	None	Included
Other 2,337
Run In Administration 2,337			$102,000
Total Administration	$607,019	$619,429	$877,256
Stop Loss
Specific – EE 2,337	$ 39.68 $ 1,112,786	$39.68 $1,112,786	$ 38.35 $ 1,075,487
Specific - Dep. 1,181	Incl.	Incl.	Incl.
Aggregate 2,337	$ 0.97 $ 27,203	$ 0.96	$ 0.93 $ 26,081
Total Stop Loss	$ 1,139,708	$1,139,708	$ 1,101,568
Total Fixed Cost	$ 1,747,008	$1,759,137	$ 1,978,825
Aggregate De. – EE 2,337	$5433.99 $15,255,656	$602.71 $16,92,399	$584.63 $16,395,364
Aggregate De. Dep 1,181
Total Aggregate Deductible	$15,255,656	$16,902,399	$16,395,364
Expected Claims @ 80%	$12,204,524	$13,521,919	$13,116,291
Total Amount cost – Expected	$13,951,532	$15,281,056	$15,095,116
Second Year Administration		Increase 1.2 %	Increase 1.2%
Third Year Administration		Increase 5.0%	Increase 1.0%

Administrative Services		Year 1	Year 2
Administrator	Mercy Health	Mutual of Omaha	Blue Cross and Blue Shield
PPO Network	MHP/PHCS	Mutual of Omaha	Blue Choice
Utilization Review Firm	MHP	Mutual of Omaha	BlueCross/BlueShield
Prescription Drug Firm	Caremark/Walgreens	Mutual of Omaha	BlueCross/Blue Shield
Agent	Direct	Robert Laurel	Robert Laurel
Stop Loss Insurance
Insurance Company	Companion Life	Mutual of Omaha	Blue Cross and Blue Shield
Managing Underwriter	Summit - Re	Mutual of Omaha	Blue Cross and Blue Shield
Placement Agent	Chris Alexander	Mutual of Omaha	Blue Cross and Blue Shield
Specific Deductible	$100,000	$100,000	$100,000
Specific Contract Basis	24/12	Paid	15/12
Aggregate Contract Basis	125%	Paid	15/12
Run in Limit – Specific	$100,000	$50,000	$100,000
- Aggregate	$2,386,000	$2,659,922	$1,393,085
Waive Actively at Work	Yes	Yes	Yes – as in bid
Retiree Coverage (Yes/No)	Yes	Yes	Yes
Additional Information Needed	Signed disclosure	Signed disclosure	Signed disclosure
Annual cost Units
Administration Fees
Medical – EE/RET 2,337	$15.47 $433,841	$16.47 $461,885	$33.30 $933,865
Disease Management 2,337	8.04 $225,474	$ 3.28 $ 91,984	$ Included in base adm
COBRA/HIPPAA 2,337	0.37 $ 10,376	$ 0.30 $ 8,413	See bid for per occurrence
Retiree Billing 210	$10.00 $25,000	Not Available	Not available
FSA Fee 96	$ 4.95 $ 5,702	$3.75 $ 4,320	Not available
Agent Fee 2,337	0	$ 2.00 $56,088	$3.50 $98,154
Stop Loss Fee 2,337	$0.61 $17,107	N/A	Included in base adm.
PPO Fee 2,337	$1.46 $40,944	$2.50 $70,110	Included in base adm.
Rx Fee 30,000 Rx or 2,337	$0.11 $3,085	Included in ASO fee	Included in base adm.
U/R Fee 2,337	$3.74 $104,885	$3.00 $84,132	Included in base adm.
Set Up Fee	Included	Included	Included
Other 2,337		Nurseline $.90 $25,240	Rx Credit ($6.50) ($182,286)
Run In Administration 2,337	$102.00	$102.00	$102.00
Total Administration	$968,614	$35.80 $904,171	$951,733
Stop Loss	See Attachments 2A
Specific – EE 2,337	39.58 $1,109,982	$16.27 $ 456,276	$17.29 $484,881
Specific - Dep. 1,181	n/a	$48.94 $ 693,578	$25.95 $367,763
Aggregate 2,337	3.54 $ 99,276	$0.87 $ 24,398	$ 2.27 $63,660
Total Stop Loss	$1,209,257	$ 1,174,252	$916,304
Total Fixed Cost	$2,177,871	$ 2,078,423	$1,868,037
Aggregate De. – EE 2,337	$567.29 $15,909,081	$632.50 $17,737,830	$293.10 $8,219,696
Aggregate De. Dep 1,181	n/a		$439.65
Total Aggregate Deductible	$15,909,081	$17,737,830	$14,450,416
Expected Claims @ 80%	$12,727,265	$14,190,264	$11,560,333
Total Amount cost – Expected	$14,905,135	$16,268,687	$13,428,370
Second Year Administration	Increase: 14.0%	Increase 18.7%	Increase 12.4%
Third Year Administration	Not Available	Increase 7.2%	Increase 4.5%

Exhibit C

	Original	Amended	Year to Date	Encum.	Variance	Annual
Opening Balance	510,792	100,107	100,107			100.00%
Revenues
Contributions - Health	12,070,683	12,070,683	9,865,275	-	(2,205,408)	81.73%
Insurance Reimburse	525,000	525,000	566,291	-	41,291	107.86%
Interest Earnings	30,000	30,000	9,035	-	(20,965)	30.12%
Discount Earnings	-	-	46,893	-	46,893	100.00%
Net Increase in Invest	-	-	1,358	-	1,358	100.00%
Total Revenues	12,625,683	12,625,683	10,488,852	-	(2,136,831)	83.08%
Total Available	13,136,475	12,725,790	10,588,959	-	(2,136,831)	83.21%
Expenses
Self Insurance Fund
Personnel Services	133,675	133,675	104,504	-	27,171	78.18%
Materials & Supplies	6,130	6,690	2,594	219	3,877	42.05%
Contractual Services	2,789,163	2,788,611	2,324,292	6,813	457,506	83.59%
Group Health Claims	8,036,017	8,036,017	8,566,788	-	(530,771)	106.60%
Prescription Health	1,588,514	1,588,514	1,420,464	-	168,050	89.42%
Other	-	-	6,890	-	(6,890)	100.00%
Total Self Insurance	12,553,499	12,553,507	12,425,532	7,032	120,943	99.04%
Employee Wellness
Personnel Services	233,108	233,108	193,561	-	39,547	83.03%
Materials & Supplies	47,575	68,929	32,269	5,447	31,213	54.72%
Contractual Services	302,293	314,734	137,854	43,489	133,391	57.62%
Total Employee	582,976	616,771	363,684	48,936	204,151	66.90%
Total Expenses	13,136,475	13,170,278	12,789,216	55,968	325,094	97.53%
	-	(444,488)	(2,2,00,257)	(55,968)	(1,811,737)
Adjustment Prior Year	-	33,803	-	-	(33,803)
Adjusted Closing	-	(410,685)	(2,200,257)	(55,968)	(1,845,540)

	Original	Amended	Year to Date	Encum.	Variance	Annual
Opening Balance	510,792	100,107	100,107	-	-	100.00%
Revenues
Contributions -	12,070,683	12,070,683	12,070,683	-	-	0%
Insurance Reimburse	525,000	525,000	933,000	-	408,000	177.71%
Interest Earnings	30,000	30,0000	9,035	-	(20,965)	30.12%
Discount Earnings	-	-	46,893	-	46,893	100.00%
Net Increase in Invest	-	-	1,358	-	1,358	100.00%
Total Revenues	12,625,683	12,625,683	13,060,969	-	435,286	103.45%
Total Available	13,136,475	12,725,790	13,161,076	-	435,286	103.42%
Expenses
Self Insurance Fund
Personnel Services	133,675	133,675	125,405	-	8,270	93.81%
Materials & Supplies	6,130	6,690	3,113	-	3,577	46.53%
Contractual Services	2,789,163	2,788,611	2,789,150	8,220	(8,759)	100.31%
Group Health Claims	8,036,017	8,036,017	11,203,008	-	(3,166,991)	139.41%
Prescription Health	1,588,514	1,588,514	1,704,557	-	(116,043)	107.31%
Other
Total Self Insurance	12,553,499	12,553,507	15,832,123	8,220	(3,286,836)	126.18%
Employee Wellness
Personnel Services	233,108	233,108	232,273	-	835	99.64%
Materials & Supplies	47,575	68,929	38,723	3,963	26,243	61.93%
Contractual Services	302,293	314,734	165,425	51,836	97,473	69.03%
Total Employee	582,976	616,771	436,421	124,551	124,551	79.81%
Total Expenses	13,136,475	13,170,278	16,268,544	64,019	(3,162,285)	124.01%

Adjustment Prior		33,803			(33,803)
Adjusted Closing		(410,685)	(3,107,467)	(64,019)	(2,760,801)

End of Exhibits

Mayor Flores left the meeting at 6:50 p.m.

V. Status report on the Request for Proposal process regarding partially Self-funded Health Plan services by Ken Wethe, City’s benefit consultant, with possible action.

Mr. Wethe, Consultant, continued to discuss the exhibits. He explained that there were five companies that submitted RFP’s to the City. He added that each company was interviewed by a staff of seven key employees and they were assigned pointes by each member.

Cm. Belmares expressed his dissatisfaction with Texas Mutual League. He noted that they should have offered the City of Laredo discounts prior to the Request for Proposal process.

Cm. Garcia advised that the Health and Benefits Committee had previously requested an RFP; however, a time factor did not allow the committee to move forward with that request. He went on to say that the City Manager has been working very hard regarding the health benefits and he has been completely cooperative with the committee and their requests.

Cm. Galo announced that he would like to repeat the process of Request for Proposals for health benefits on an annual basis.

Mr. Wethe recommended that the contract for the health insurance should be for three years but renewed on an annual basis. He went on to say that the benefits and discounts should be monitored yearly.

Motion to authorize the City Manager to negotiate a contract with Blue Cross and Blue Shield and return to Council with recommendations to adopt on outlining continuation of coverage, flexplan, and other pending items.

Moved: Cm. Garcia

Second: Cm. Amaya

For: 6 Against: 0 Abstain: 0

VI. Presentation of Proposed Health Plan Modification as presented during the City Council Budget Workshop by Daniel E. Migura, Jr., Administrative Series Director, with possible action.

a. Contribution Rate Adjustment

b. Plan Modifications

c. Addition of Core Benefits Plan and Reimbursement/Savings Account.

Rosario Cabello, Financial Services Director, went over appendix C.

Cm. Galo asked staff if they had a proposal on other carriers for fully funded plans.

Larry Dovalina, City Manager, explained that the Request for Proposal asked for self funded proposals.

Cm. Garcia advised that the Health and Benefits Committee was not interested in fully insured proposals.

Mr. Dovalina stated that staff will ask for proposals on fully insured and other components in January.

Cm. Galo said that he would be interested in viewing fully funded proposals.

Cm. Valdez and Cm. Garcia agreed that City Council instructed staff to go out for proposals on self funded proposals.

Cm. Galo explained that he did not fully understand the “linguo” of “fully funded” and “self funded”. He was hoping that the workshop would be an educational workshop that would educate Council on the differences and to educate them on the benefits they should consider.

Cm. Galo asked if Blue Cross and Blue Shield could give the City of Laredo a quote for fully funded insurance for the remaining ten months.

Mayor Pro Tempore asked Cm. Galo if that was his motion.

Dan Migura, Administrative Services Director, explained that he must follow the bidding procedure and open the request for proposal to all interested parties.

Jaime Flores, City Attorney, agreed that staff needs to open the proposal process to all interested parties.

Cm. Agredano left at 8:20 p.m.

Cm. Galo said that he would like to amend his motion to include that staff should expedite the procedure and ask for the fully funded proposals as soon as possible.

Mr. Dovalina said that staff must write the Request for Proposals which is time consuming.

Cm. Galo said that he would amend his motion to say that staff can ask for proposals in January.

No vote was called on Cm. Galo’s motion.

Motion to create an incentive that will allow employees an option to be removed from the City of Laredo insurance plan.

Moved: Cm. Galo

Second: Cm. Garcia

For: 5 Against: 0 Abstain: 0

Motion to authorize the City Manager to instruct staff to review the data and return to Council with all three plan modifications including the deductible, the out of pocket, and the three tier prescription plan.

Moved: Cm. Galo

Second: Cm. Garcia

For: 5 Against: 0 Abstain: 0

VII. Executive Session

The City Council hereby reserves the right to go into executive session at any time during this public meeting, if such is requested by the City Attorney or other legal counsel for the City, pursuant to his or her duty under Section 551.071 (2) of the Government Code, to consult privately with his or her client on any item on the agenda, or on a matter arising out of such item.

VIII. Adjournment

Motion to adjourn. Time: 8:35 p.m.

Moved: Cm. Belmares

Second: Cm. Valdez

For: 5 Against: 0 Abstain: 0